SAUNDERS & CO LAWYERS v LAND HOMES LTD (in liq) [2022] NZHC 2268

SAUNDERS & CO LAWYERS v LAND HOMES LTD (in liq) [2022] NZHC 2268 [7 September 2022]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2020-409-000371[2022] NZHC 2268BETWEEN SAUNDERS & CO LAWYERSPlaintiffAND LAND HOMES LIMITED (INLIQUIDATION)DefendantHearing: On the papersCounsel: G Brown – Memorandum filed by Liquidator 1 September 2022Judgment: 7 September 2022JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 7 September 2022 at 10.30 ampursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] The liquidators of Land Homes Ltd (in liq) apply for approval of theirremuneration under s 284(1)(e) of the Companies Act 1993.[2] The application is accompanied by copies of the liquidators' initial report, sixmonthly reports and draft final report to be lodged with the Registrar of Companies.The draft final report was prepared and submitted to the Court on the basis that alldistributions have been made and the liquidators' remuneration approved by the Court.[3] Land Homes Ltd was incorporated on 10 May 2017 and operated as a builderof residential homes. It ceased trading in late 2019. The director of the companyadvised the liquidators that the insolvency was the result of a combination of factorsincluding rapid growth, design and resource consent issues leading to delays incompleting builds, and adverse media coverage.[4] The company was put into liquidation by order of the High Court on 1 October2020 and Geoff Brown and Lynda Smart of Rodgers Reidy (NZ) Ltd were appointedjoint and several liquidators. At the time of making the order, the Court approved therates of remuneration of the liquidators and staff working under their supervision.[5] The liquidators have provided satisfactory details of the work undertaken inthe liquidation. In summary, upon their appointment, the liquidators conducted aninitial investigation into the affairs of the company. This included interviewing thedirector and obtaining the company's records from the director, the company'saccountant and third parties. The liquidators were unable to identify any assets ownedby the company. They learned that prior to the liquidation a number of assets werestolen from the company. They confirmed that Police complaints and insurance claimshad been lodged in respect of those matters. The liquidators identified a debt that wasdue to the company but it was written off as not recoverable as the debtor had a rightof set-off under s 310 of the Companies Act.[6] The liquidators' review of the company's financial records did not identify anyeconomic claims or actions to take against the company's director and did not identifyother avenues to recover or claim against third parties.[7] With the liquidators' draft final report is a statement of realisations anddistributions which show total realisations of $18,246. From this, the court costs ofthe petitioning creditor have been paid in full. The balance shall go to paying theliquidators' remuneration and expenses. There shall be no distributions to any othercreditors in the liquidation.Legal principles and their application[8] The principles that apply in considering such applications are set out in thedecisions of Re Roselea Path Ltd (in liq),1 and Madsen-Ries v Salus Safety EquipmentLtd (in liq).2 I am required to be satisfied the remuneration sought by the liquidatorsreflects the fair value of the services rendered to the creditors of the company. I amso satisfied.[9] A significant amount of work has been undertaken. The liquidators have statedthat all avenues for recovery have been pursued and the liquidation can be concluded.[10] I have seen and considered copies of the liquidators' reports to the company'screditors and shareholders. The liquidators' initial report set out the basis upon whichthe liquidators would charge fees and the hourly rates that have been approved by theCourt.[11] The liquidators have provided a breakdown of time records and remunerationin their memorandum which shows the hourly rates to be applied are at a discount onthose approved by the Court. At the Court approved rates the liquidators'remuneration would be $12,336 (plus GST). Due to insufficient recoveries theliquidators propose to write off $2,620.46 of this sum representing 21 percent of thetotal time incurred by the liquidators.[12] The proposed remuneration, before write-offs, represents an average hourlyrate of just $219.38 (excl GST) and just $172.79 (excl GST) after write-offs. This isless than is commonly charged for such work.1 Re Roselea Path Ltd (in liq) [2013] 1 NZLR 207 (HC).2 Madsen-Ries v Salus Safety Equipment Ltd (in liq) [2022] NZCA 101.[13] I am satisfied that work has been performed by staff at an appropriate level ofseniority to ensure the costs incurred were reasonable. The total time spent on the filewas 56.23 hours of which 34 per cent was time of the liquidators, 28 per cent was timeof insolvency staff, and 38 per cent was time of administration and support staff.[14] While the secured and unsecured creditors will not receive any payment in theliquidation, this is in circumstances where the liquidators have found the company hasno assets and no valid claims or avenues to pursue.[15] I am satisfied the liquidators' claimed remuneration reflects the value of theservices rendered to the creditors of the company and I will grant the application forapproval as sought.[16] The liquidators have also claimed disbursements in the liquidation. Iunderstand these are claimed on an "as paid" basis with no mark-up. The total amountof disbursements is $2,041.89, but $529 will be written off representing 26 per cent ofthe total. I am satisfied this is appropriate.Result[17] I grant the application for approval of the liquidators' remuneration in anamount of $9,715.54 (excl GST) and expenses of $1,485.89._______________________O G PaulsenAssociate JudgeSolicitors:Rodgers Reidy (NZ) Limited, Christchurch (Liquidator contact: G Brown)