Jollands v Wilson - [2016] NZHC 308

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-815 [2016] NZHC 308

UNDER the Companies Act 1993 section 284

IN THE MATTER OF

SILVER OAKS PROPERTY NO.2
LIMITED

BETWEEN

PETER REGINALD JOLLANDS AND CATHERINE JANE JOLLANDS Applicants

AND

GREGORY JOHN WILSON Respondent

Hearing: 16 February 2016

Appearances:

A A Lowe for Applicants
No appearance for Respondent

Judgment:

29 February 2016

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 29 February 2016 at 4:30pm
Pursuant to Rule 11.5 of the High Court Rules

…………………………………………………….
Registrar/Deputy Registrar

Solicitors:
Alexandra Low & Associates Auckland, for Applicants (Liquidators)

JOLLANDS v WILSON [2016] NZHC 308 [29 February 2016]

[1] This judgment fixes the liquidators’ fees and expenses in the liquidation of Silver Oaks Property No.2 Limited. As the liquidators were appointed by the court, their remuneration is limited to the amounts and rates allowed under s 277 of the Companies Act 1993, unless the court orders otherwise.1 When it made the liquidation order on 31 January 2013, the court approved the liquidators’ rates of remuneration. That was subject to the requirement that at the conclusion of the
liquidation the liquidators should apply to have their overall remuneration fixed. The liquidators did not make any such application when the liquidation was terminated on 20 March 2013. When the liquidators applied for directions under s 284 of the Companies Act, I reserved the remuneration question for later determination.2 The shareholders of Silver Oaks Property No.2 Limited have not formally objected to the fees claimed by the liquidators. Their silence does not relieve the court from reviewing the liquidators’ remuneration. The court acts protectively in the interests of those affected by the liquidators’ fees.3

[2] In their invoice of 31 March 2013, the liquidators charged fees of $26,244, exclusive of GST and disbursements. With those added on, their total account was
$33,564.40. Later they received a further lawyer’s bill for $2,756.68. The liquidation ran for seven weeks, from 31 January 2013 to 20 March 2013, when it was terminated under s 250 of the Companies Act.

[3] To review the liquidators’ remuneration, it is necessary to consider not only the course of the liquidation, but also how Silver Oaks Property No.2 Ltd came to be put into liquidation. The company is part of the Silver Oaks group. It had owned two properties, on which motor inns were operated, but had disposed of them. When the company was ordered into liquidation it was the landlord of seven commercial premises at Orewa with rating valuations totalling $4,793,000. Four were rented out for $148,800 plus GST per annum. An agreement to lease was about to be signed for another. The company was negotiating a potential tenant for a sixth property. The properties were subject to a mortgage in favour of a bank to secure group
borrowings.

1      Companies Act 1993, s 276(2).
2      Silver Oaks Property No.2 Ltd, Jollands v Wilson [2015] NZHC 3309, (2015) 27 NZTC 22-037 at [10]-[13].
3      Re Roslea…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Jollands v Wilson

Details

AGLC: Jollands v Wilson [2016] NZHC 308
Case: [2016] NZHC 308
Decision Date: 29 February 2016

CaseChat Overview and Summary

The case of Jollands v Wilson involves the determination of liquidators' fees and expenses in the liquidation of Silver Oaks Property No.2 Limited. The liquidators, Peter Reginald Jollands and Catherine Jane Jollands, were appointed by the court and their remuneration was subject to approval. The shareholders of Silver Oaks Property No.2 Limited did not formally object to the fees claimed by the liquidators, but the court was required to review the liquidators' remuneration to ensure it was reasonable and justifiable. The liquidators charged fees of $26,244, exclusive of GST and disbursements, and their total account was $33,564.40.

The court considered the course of the liquidation, which ran for seven weeks from 31 January 2013 to 20 March 2013, and the circumstances surrounding the company's entry into liquidation. Silver Oaks Property No.2 Limited was part of the Silver Oaks group and had owned commercial premises at Orewa with rating valuations totalling $4,793,000. The company was not insolvent, but Programmed Maintenance Services (NZ) Ltd, a creditor, successfully applied for the company to be put into liquidation. The shareholders and the director of Silver Oaks Property No.2 Limited did not accept that the company ought to have been put into liquidation and contested the company's liability under the guarantee.

The court found that the liquidators' approach to the liquidation was flawed. They maintained a consistent position that the company was insolvent, even though there was evidence to suggest that the company was solvent and disputing its liability to Programmed Maintenance Services (NZ) Ltd. The court also found that the liquidators had charged rates above those allowed by the court when it made the liquidation order and that the liquidators had taken advice from the lawyer for Programmed Maintenance Services (NZ) Ltd on how the application to terminate the liquidation could be opposed. The court held that the liquidators should not have aligned themselves with the interests of the sole creditor and that the shareholders should not be charged the cost of using the creditors' lawyer in resolving the disputed debt.

The court fixed the liquidators' remuneration at $10,295.00 plus GST and allowed other disbursements, totalling $12,808.59. The liquidators were required to show that they had refunded to the company the excess they had taken as fees and expenses. The court's judgment highlights the importance of liquidators acting independently and ensuring that their remuneration is reasonable and justifiable, especially in cases where the company disputes its liability to the creditor and the liquidation is contested.

Orders