Exscs Limited (formerly Smart Climate Solutions Limited) (in liquidation)

[2025] NZHC 2404

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2024-419-290 [2025] NZHC 2404

UNDER AND

the Companies Act 1993

IN THE MATTER             of the liquidation of EXSCS LIMITED

(FORMERLY SMART CLIMATE
SOLUTIONS LIMITED) (in liquidation)

BETWEENTHE COMMISSIONER OF INLAND REVENUE

Plaintiff

ANDEXSCS LIMITED (FORMERLY SMART CLIMATE SOLUTIONS LIMITED) (in

liquidation) Defendant

Hearing:                   On the papers

Attendances:           Memorandum filed by W Somerville for the liquidators of the Defendant

Judgment:                22 August 2025

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

[Approval of Liquidators’ Remuneration]

This judgment was delivered by me on 22 August 2025 at 3.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

PriceWaterhouseCoopers, Hamilton

RE EXSCS LTD (IN LIQ) [2025] NZHC 2404 [22 August 2025]

Introduction

[1]    The liquidators of EXSCS Limited (formerly Smart Climate Solutions Limited (in liq)) (Company), Wendy Somerville and Malcolm Hollis of PricewaterhouseCoopers have completed the liquidation and now apply for approval of their overall remuneration of $58,893.67 excluding GST.

[2]    The memorandum filed by the liquidators attaches a summary of the liquidators’ fees by hours worked, staff level and the hourly rate applied, together with detail of the work completed.

[3]    In addition, the memorandum attaches copies of the six-monthly reports provided to creditors and shareholders as required by s 255 of the Companies Act 1993 and a draft of the liquidators’ final report pursuant to s 257 prepared on the basis that all distributions have been made and the liquidators’ remuneration has been approved.

[4]    The issue I have to consider is whether the Court is satisfied that the remuneration for which approval is sought reflects the fair value of services rendered by the liquidator to the creditors of the Company.1

[5]    In Madsen-Ries v Salus Safety Equipment Ltd (in liq) the Court of Appeal held:2

… even where there is no challenge to the liquidator’s remuneration this does not absolve the Court from the obligation to be satisfied that the remuneration approved reflects the value of the services rendered to the creditors of the company.

[6]    I set out the background below before considering whether the remuneration ought to be approved.

Background

[7]    The Company was incorporated in June 2018. The liquidators were advised that the Company’s insolvency related to cash flow issues stemming from supply chain

1      Re Roslea Path Limited (in liq) [2013] 1 NZLR 207 (HC) as approved in Madsen-Ries v Salus Safety Equipment Ltd (in liq) [2022] NZCA 101.

2      Madsen-Ries v Salus Safety Equipment Ltd (in liq), above n 1, at [54].

issues and staffing shortages experienced following COVID-19. Prior to the liquidation of the Company, a related entity was placed into receivership which further exacerbated the Company’s cash flow position, as a large account receivable was then considered a bad debt.

[8]    Ultimately, the company was placed into liquidation on 4 November 2024 following a winding up application by the Commissioner of Inland Revenue as a result of overdue tax obligations.

[9]    The Commissioner of Inland Revenue was awarded petitioning creditor costs and disbursements of $1,379.00.

[10]   The liquidators’ draft final report records that the director was fully cooperative with the liquidators, met them on appointment to discuss the affairs of the Company and worked with them to provide all information requested.

[11]   At the date of liquidation, the company owned an air conditioning and refrigeration maintenance and repairs business in Cambridge and was still trading.

[12]   The liquidators assessed the potential value to creditors from continuing the current trading operations of the business, identifying one job that would produce a beneficial outcome for creditors. They therefore continued trading in a limited capacity until the job was completed. Following completion, the liquidators ceased trading and worked through the sale process.

[13]   The Company’s tangible assets included several vehicles and miscellaneous stock held on site. The liquidators engaged a third-party independent agent to conduct a valuation of the Company’s physical assets.

[14]   The liquidators were presented an offer to purchase all assets of the business including the trading business, tangible assets and intellectual property owned by the Company. With the approval of the general security holder, the liquidators accepted the offer and funds totalling $160,000 were received as proceeds of the sale.

[15]   According to the books and records of the Company, there were accounts receivable owing to the Company of $503,741, of which $348,413 related to a debtor that was placed into receivership prior to the Company’s liquidation.

[16]   The liquidators wrote to debtors regarding the outstanding amounts owed and received funds totalling $89,787. The liquidators conducted a review of the remaining accounts receivable with the assistance of the director. A number of outstanding amounts listed were small in quantum or disputed by the debtors. As a result, the liquidators determined it was not economical to pursue the remaining accounts receivable.

[17]   The liquidators reviewed the actions of the director and affairs of the Company but did not identify any recovery actions available.

[18]   In addition, the liquidators completed a questionnaire from the Registrar of Companies in relation to the affairs of the Company and actions of the director and provided requested documentation in support.

Creditor outcomes

[19]   The general security holder received a distribution totalling $134,441 from the sale of assets subject to their security interest. The distribution was at a rate of 29 cents in the dollar.

[20]   The Commissioner of Inland Revenue was paid the costs and disbursements awarded by the Court of $1,379 in full.

[21]   The liquidators received four preferential claims totalling $17,023 from employees in relation to unpaid wages and holiday pay. These claims were distributed in full to employees.

[22]   In addition, the liquidators received a preferential claim of $342,365 from Inland Revenue in relation to unpaid GST and PAYE. A distribution has been made of $37,660 in relation to this claim, being 11 cents in the dollar.

[23]   The liquidators report they received six unsecured claims totalling $322,146 but there has been no distribution to unsecured creditors due to insufficient recoveries.

[24]   The liquidators are satisfied that there are no further avenues of recovery and so are finalising the liquidation.

Should the liquidators’ remuneration be approved?

[25]   The liquidators have provided a breakdown of their time records and charges confirming that the hourly rates that have been applied are in accordance with those approved by the Court.

[26]   A breakdown is also included of the liquidators’ fees by staffing category which shows that about 22 per cent of the hours were completed at liquidator /director level, 77 per cent at associate level, and 1 per cent at support staff level. In total, 248 hours were spent for fees incurred of $74,795.00. However, the liquidators are only seeking approval of fees of $58,893.67, relating to 196 hours spent (calculated by the liquidators as 195 hours), with the same time apportionment between staff levels as for the 248 hours.

[27]   In addition, disbursements of $2,944.68 were incurred, including administration fees of $595.00. I include the administration fee together with the total fees for which approval is sought in order to calculate a comparable hourly rate as some liquidators do not charge administration fees. The average hourly rate on this basis is $306.55.

[28]   The average hourly rate on this basis is in the middle of the range and appears to be appropriate considering the tasks undertaken which are set out in detail in an annexure to the liquidators’ memorandum.

[29]   Furthermore, the six-monthly reports to the creditors and shareholders record the liquidators’ activities up to the date of that report and provide a detailed fee and disbursement analysis. The reports include a reference to s 284 of the Companies Act which provides a right to seek a review of the liquidators’ remuneration with leave.

The liquidators’ memorandum confirms that no objections to any of the liquidators’ fees charged have been received.

[30]   In the circumstances, I am satisfied that the categories of work undertaken by the liquidators were necessary to wind up the affairs of the company and that the remuneration for which approval is sought reflects the fair value of services rendered by the liquidators to the creditors.

Result

[31]   For the reasons set out above, the liquidators’ remuneration of $58,893.67 (exclusive of GST and disbursements) is approved.

Associate Judge Sussock