Sheppard v Coleman

Case

[2013] NZHC 3317

11 December 2013

No judgment structure available for this case.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4074 [2013] NZHC 3317

IN THE MATTER             of an application under the Companies Act

1993 by the liquidators of E & B Management Limited (in liquidation)

BETWEEN  IAIN BRUCE SHEPHARD and CHRISTINE MARGARET DUNPHY as liquidators of E & B Management Limited (in liquidation)

Applicants

ANDPETER COLEMAN as former Administrator of E & B Management Limited (in liquidation)

Respondent

Hearing:                   5 December 2013

Counsel:                  HL Thompson for applicants

DE Smyth for respondent

Judgment:                11 December 2013

JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application to fix administrator's remuneration]

Solicitors:           McMahon Butterworth Thompson, Auckland

McDonald Law, Auckland (S McDonald)

SHEPHARD v COLEMAN [2013] NZHC 3317 [11 December 2013]

The application

[1]      The liquidators of E & B Management Ltd (in liquidation) apply to the Court for orders determining what amount, if any, they must pay to the respondent, the former administrator of the company, on a preferred basis pursuant to Article 1(1)(d) of Schedule 7 of the Companies Act 1993.

[2]      The application raises five specific questions, namely:

a)        On  what  date  did  the  respondent’s  administration  of  the

company end?

b)What  amount  represents  the  respondent’s  reasonable remuneration for services as administrator of the company?

c)        If the respondent’s administration of the company ended before

30 April 2011, is he entitled to claim remuneration for any period after his remuneration ended?

d)       If so:

i)         In what amounts?

ii)       Is that part of Mr Coleman’s claim a preferential claim

under s 312 of the Act as read with Schedule 7?

e)        In the light of the answers to the foregoing questions:

i)What costs and expenses is Mr Coleman able to recover as a preferential creditor?

ii)Is Mr Coleman able to claim any expenses other than as a preferred creditor and, if so, in what amount?

[3]      The liquidators make their application in reliance on ss 239O and 284 of the

Companies Act 1993.  Section 239O provides:

239O   Remuneration of administrator

(1)       The administrator is entitled to charge reasonable remuneration for carrying out his or her duties and exercising his or her powers as administrator.

(2)       The Court may, on the application of the administrator, a director or officer of the company, a creditor, or a shareholder, review or fix the administrator's remuneration at a level that is reasonable in the circumstances.

(3)      A creditor or shareholder may make an application under subsection

(2) only with the leave of the Court.

[4]      The liquidators submit that they are officers of the company and accordingly do not require leave to bring an application under that section.

[5]      In the alternative, they seek directions pursuant to s 284(1) of the Companies

Act 1993, which provides:

284     Court supervision of liquidation

(1)       On the application of the liquidator, a liquidation committee, or, with the leave of the Court, a creditor, shareholder, other entitled person, or director of a company in liquidation, the Court may—

(a)       Give   directions   in   relation   to   any   matter   arising   in connection with the liquidation:

(b)       Confirm,  reverse,  or  modify  an  act  or  decision  of  the liquidator:

(c)      Order an audit of the accounts of the liquidation:

(d)       Order the liquidator to produce the accounts and records of the liquidation for audit and to provide the auditor with such information concerning the conduct of the liquidation as the auditor requests:

(e)       In respect of any period, review or fix the remuneration of the liquidator at a level which is reasonable in the circumstances:

(f)       To the extent that an amount retained by the liquidator as remuneration is found by the Court to be unreasonable in the circumstances, order the liquidator to refund the amount:

(g)       Declare whether or not the liquidator was validly appointed or validly assumed custody or control of property:

(h)       Make an order concerning the retention or the disposition of the  accounts  and  records  of  the  liquidation  or  of  the company.

[6]      The question they raise is what payment, if any, the liquidators must make to the respondent as a preferential creditor of the company.

The opposition

[7]      The  respondent  does  not  oppose  the  court  making  orders  fixing  his remuneration.  He takes a different view from the applicants as to precisely what his entitlement is.

Background

[8]      A  full  summary  of  the  background  facts  is  contained  in  the  judgment of Priestley J.1   I shall refer to that judgment later in this judgment.  For the purposes of this application the following will suffice.

[9]      E  &  B  Management  Ltd  operated  a  commercial  fishing  business.    The business included the operation of a fishing vessel which had been seized by the Ministry of Fisheries on or about 1 February 2011.  That arose because the company had continued to fish after its permit to fish had been suspended for exceeding its annual  catch  entitlement  (ACE) in  certain  fish  species.   On that  same day,  the company was placed into voluntary administration.  The respondent was appointed administrator on 1 February 2011 under Part 15A of the Companies Act 1993 by the company.    Under  his  administration  the  company  continued  to  fish  under  the authority of a fishing permit owned by Mr Simon Rusbridge.

[10]     On 8 March 2011, the Chief Executive of the Ministry of Fisheries made an application to the High Court for an order appointing interim liquidators of the company.  Included with that application was a statement of claim seeking an order placing the company into liquidation under s 241(2)(c)(iv) of the Companies Act

1993.  The statement of claim alleged that the administrator had caused the company to frustrate the objects of Parts 15A and 16 of the Companies Act 1993, and had failed  generally  to  comply  with  the  provisions  of  Part  15A.    In  particular,  the Ministry alleged that the respondent had not convened a watershed meeting within the period provided in s 239AT of the Companies Act 1993.  In short, it was alleged

that a watershed meeting had not been convened on or before 8 March 2011.

1      Chief Executive of the Ministry of Fisheries v E & B Management Ltd (administrator appointed)

[2011] NZCCLR 18 (HC).

[11]     Associate  Judge  Bell  directed  that  the  application  be  served  on  the respondent.  The application was heard on 23 March 2011.  It was opposed by the respondent with counsel’s assistance.

[12]     In  a  judgment  on  that  application  delivered  on  1 April  2011,  Priestley J granted the Ministry’s application and appointed the applicants as interim liquidators of the company pursuant to s 246(1) of the Companies Act 1993.  His Honour, under the Conclusion section of the judgment recorded:2

The defendant’s financial position may well be precarious. Unfortunately the actions taken by Mr Coleman since 1 February 2011 have arguably made the defendant’s position worse. Certainly this is the case if, despite Kiwi Fishing Limited  holding  its  ACE  for  the  defendant’s  benefit  (Mr  Coleman’s assertion), it does not avail to reduce significantly the increased Deemed Value liability which has built up during the period of Mr Coleman’s administration.

I consider the interests of all creditors need objective evaluation and investigation  of  the  defendant’s  situation.  It  is  too  late  now  for  that assessment to be carried out by Mr Coleman within the timelines and in the manner contemplated by Part 15A. It can only, in my view, be ascertained by an independent liquidator.

[13]     The substantive proceeding was called in the High Court on 24 June 2011. At that time Associate Judge Bell placed the company into liquidation and appointed the applicants liquidators.

[14]     I address each question.

On what date did the respondent’s administration of the company end

[15]     It is common ground that the respondent was appointed as administrator of the company under Part 15A of the Companies Act 1993 on 1 February 2011 by the combined operation of ss 239D and 239I of the Companies Act 1993.

[16]     Pursuant to s 239AT, the respondent was required to convene a watershed meeting within the convening period, namely, 20 working days after the date on which he was appointed.  Under s 239AV, the watershed meeting is required to be held within five working days after the end of the convening period.  The convening

period ended, in this case, on 1 March 2011.  That required the watershed then to be held on or before 8 March 2011.

[17]     A watershed meeting was not convened.  An application was made orally to Priestley J on 23 March 2011 for an order extending the convening period, in the course of the hearing of the application to appoint an interim liquidator.  Priestley J records in his judgment that the oral application was made by the respondent and his counsel.3  The application was made after the expiry of the convening period.

[18]     The applicants rely on s 239E(2)(b) which provides:

239E   When administration ends

2)However,  the  administration  of  a  company  may  also  end  in  the following instances:

(b)       if  the  convening  period  expires  without  the  watershed meeting having  been  convened  or  without  an  application having been made to extend the convening period, the administration ends at the end of that period[.]

[19]     The applicants submit that, by reason of s 239E(2)(b), the administration ended at the end of the convening period, that is, 1 March 2011.

[20]     I accept the applicants’ submission.  My reasons are as follows:

(a)       Section 239E(2)(b) deals with the facts that are applicable to this case.

Administration ended on 1 March 2011 because no watershed meeting had been convened and no application to extend the convening period had been made by 1 March 2011;

(b)      Section 239E(2)(c) provides:

239E   When administration ends

(2)      However, the administration of a company may also end in the following instances:

(c)       if an application has been made to extend the  convening  period,  which  has  expired after the application was made, the administration ends when the application is refused or otherwise disposed of without the convening period being extended;

Section 239E(2)(c) does not apply because no application to extend the convening period was made before the convening period expired;

(c)       There is no inconsistency with s 239AT(4). That provides:

239AT Administrator must convene watershed meeting

4)The application to extend may be made before or after the convening period has expired.

Where an application is made after the expiry of the convening period the court has a discretion to allow an extension of the convening time retrospectively.4   In short, the court undoes the effect of s 239E(2)(b) relying on s 239AT(4);

(d)If an application made after the expiry of the convening period is refused,  then  s 239E(2)(b)  continues  to  apply  with  result  that  the administration, which ended with the expiry of the convening period remains in that concluded state.

[21]     Counsel referred me to the judgment of Heath J Re Nylex (New Zealand) Ltd.5   That case is distinguishable for the specific reasons referred to by Priestley J.6

In short, Heath J was dealing with a situation where an application to extend the

4 At [51].

5      Re Nylex (New Zealand) Ltd, HC Auckland CIV-2009-404-1217, 11 March 2009.

6      Chief Executive of the Ministry of Fisheries v E & B Management Ltd (administrator appointed), above n 1, at [50]–[51].

convening period had been made before the convening period expired.  It therefore fell specifically within the provisions of s 239E(2)(c).

[22]     My conclusions are consistent with the analysis undertaken by Priestley J, although his Honour does not make a finite conclusion that the administration ended on 1 March 2011.  Indeed, in the analysis that was undertaken by his Honour it was not necessary for him to do so.

[23]   The above analysis answers the first question.   The result is that the administration of the company ended on 1 March 2011.

[24]     I now consider the second question.

What amount represents the respondent’s reasonable remuneration for services as administrator of the company?

[25]     The starting point for this inquiry is s 239O of the Companies Act 1993, which provides:

239O   Remuneration of administrator

(1)       The administrator is entitled to charge reasonable remuneration for carrying out his or her duties and exercising his or her powers as administrator.

(2)       The Court may, on the application of the administrator, a director or officer of the company, a creditor, or a shareholder, review or fix the administrator's remuneration at a level that is reasonable in the circumstances.

(3)      A creditor or shareholder may make an application under subsection

(2) only with the leave of the Court.

[26]     Counsel for both parties accepted that the liquidators have standing to make this application under s 239O.   Irrespective of that concession, the liquidators are entitled to seek the court’s direction on this question in reliance on s 284(1) of the Companies Act 1993.

[27]     The respondent lodged a claim with the liquidators on 22 September 2011 for fees of $87,299.38, for expenses of $1,593.33 and for the cost of fees rendered to

him by lawyers instructed by him of $2,751.55 and $29,541.31 respectively.   The total claim made was $121,185.57.

[28]     In respect of the expenses, counsel agree that of the $1,593.33 claimed as still owing I can approve on a consent basis a payment of $711.77.   Accordingly, no further examination of that issue will be undertaken.

[29]     The parties are agreed that the respondent’s hourly rate of $170 per hour is a reasonable hourly rate for someone of the respondent’s experience.  What is in issue is the time spent, the value of it to the company, and the period to be covered.

[30]     The respondent rendered fees for the period ended 1 March 2011, based on

230.25 hours which, at $170 per hour, equates to $39,142.50.

[31]     There is no reference in s 239O of the Companies Act 1993 as to who sets the remuneration of the administration in the first instance.  It is presumed that in most cases it will be a matter of negotiation between the proposed administrator and the company where the appointment is made pursuant to s 239I, that is by the company.

[32]     In  Re  Roslea  Path  Ltd  (in  liq)  a  full  court  undertook  an  extensive investigation of the applicable principles.7

[33]     The   court   concluded   that   the   approach   to   fixing   an   administrator’s remuneration should not differ from the court’s approach to fixing a liquidator’s remuneration in general.8

[34]     The   court   observed   that   the   onus   of   establishing   that   the   claimed remuneration is “reasonable” is on the liquidator or, as the case may be, the administrator.  Further, the benefit of any doubt, based on inadequacy of information provided by an administrator or liquidator should be resolved in favour of, in the

case of a liquidator, the creditors.9

7      Re Roslea Path Ltd (in liq) [2013] 1 NZLR 207 (HC).

8 At [183].

9      At [141]–[143].

[35]     I shall not attempt an exhaustive examination of the list of factors to be taken into account because cases will very often throw up their own particular special circumstances.  It is, however, possible to extract some of the important factors that need to be considered in determining the reasonableness of an administrator’s fee. They are:

(a)       In measuring the reasonableness of the administrator’s charge, the

court will consider the work undertaken and the result achieved;

(b)The  reasonableness  of  the  remuneration  reflects  the  value  of  the services rendered.  Value goes beyond a mathematical application of hourly rates to hours spent by the administrator in administering the company’s affairs;

(c)      An  analogy  may  properly  be  drawn  with   cases  dealing  with challenges to costs rendered by solicitors where specific factors are taken into account as follows:10

(a)       the skill, specialised knowledge, and responsibility required

(b)      the time and labour expended

(c)       the  value  or  amount  of  any  property  or  money involved

(d)      the importance of the matter to the client and the results achieved

(e)       the complexity of the matter and the difficulty or novelty of the questions involved

(f)       the  number,  and  importance  of  the  documents prepared or perused

(g)       the urgency and circumstances in which the business is transacted

(h)      the reasonable costs of running a practice.

(d)      A relevant factor, and described as the appropriate test in Medforce I11

is  a  determination  of  whether  the  time  spent  would  have  been

10 At [103].

undertaken  by  a  reasonably  prudent  person  faced  with  the  same situation.12

(e)      It must be borne in mind that an administrator has no choice but to carry  out  certain  statutory  duties  for  which  the  administrator  is entitled to be paid.13

[36]     The respondent adopted the practice of rendering tax invoices on a weekly basis.   The notations in the relevant tax invoices are short.   In the first week, the notation records:

Meeting with the director in Tauranga.   Collating creditors’ schedule and contact details.  Preparation of statutory notices and advertisements for the first creditors’ meeting.

A claim of 47.5 hours is made in respect of that week and for those services.

[37]     In the second week, a claim of 52.25 hours is made. The notation is:

Arranging creditors’ meeting.     Preparing meeting documents and information.   Negotiate for release of vessel and  bond with Ministry of Fisheries. Attend and chair first meeting of creditors.

[38]     In the third week, a claim of 54 hours is made. The notation is:

Research  and  investigate  circumstances  leading  to  seizure  of  Pacific Explorer and inventory of fish.   Prepare brief to solicitors and liaise with solicitors regarding bonding of vessel.   Review lawyer fee proposals for interlocutory application for release of Pacific Explorer from seizure.

[39]     The fee rendered at the end of the fourth week, claims 52.75 hours and contains the following notation:

Liaise with Mike Sullivan of Oceanlaw regarding establishment of demise charter arrangement for Pacific Explorer.   Review charter agreement, fish sale agreement, fishing on behalf agreement as prepared by Oceanlaw.  Meet with director in Tauranga – financial position of company and assessment of financial viability of proposed demise charter fishing arrangement.

11     Re Medforce Healthcare Services Ltd (in liquidation) [2001] 3 NZLR 145 (HC).

12     Re Roslea Path Ltd (in liq), above n 7, at [105].

13     At [70]–[105].

[40]     The  following  period  runs  across  the  time  when  the  convening  period expired. The notation in that fee invoice is:

Review  proposed  fish  sale  and  fishing  on  behalf  of  agreements  with S Rushbridge in Hamilton.   Execute agreement and affirm affidavits with Beadman and Rushbridge in Hamilton.  Prepare affidavit in support of court application for release of fishing permit from suspension.

In respect of this invoice, 23.75 hours cover the period up to 1 March 2011.

[41]     The respondent’s actions as administrator were examined by Priestley J.  At the  time  of  that  hearing  on  23 March  2011,  the  respondent  had  provided  no restructuring plan.  He had not provided relevant information to creditors.  He had failed to convene the watershed meeting.

[42]     His Honour records, from the evidence placed before him the following:14

[34]      That said, it is clear that Mr Coleman has failed to meet various Part

15A timelines and obligations. In that regard an affidavit filed by a partner of the chartered accounting firm of Deloitte in Wellington,

Mr  D  S  Vance,  is  instructive.  Mr  Vance  has  had  considerable experience with company insolvencies and restructuring.

[35]     Mr Vance, helpfully, summarises the various temporal obligations set out in Part 15A so far as an administrator is concerned. These are:

Day 3   Notice of appointment advertised and sent to creditors. Day 8   First meeting of creditors.

Day 10 Secured creditor decision period ends.

Days 0-20       Investigation into company’s affairs and preparation

of restructuring plans.

Day 20 Administrator sends proposed restructuring report and notice of meeting to creditors.

Day 25 Watershed meeting.

[36]      Mr Vance makes the following observations about Mr Coleman’s

administration:

(a)       No notice of advice of appointment or notice of the first creditors’ meeting  appears  to  have  been  received  by  the plaintiff.

14     Chief Executive of the Ministry of Fisheries v E & B Management Ltd (administrator appointed), above n 1, at [34]–[36].

(b)       A formal notice of the 11 February meeting does not seem to have been dispatched.

(c)      The plaintiff was only advised of the creditors’ meeting after

a number of requests and then only by email.

(d)      Aimex Limited (a creditor to the tune of $73,000 (supra

[10]) received no notice of the meeting.

(e)       There was no apparent notice of appointment nor advice of the meeting. Mr Coleman did, however, publicly advertise the meeting date in the Bay of Plenty Times on 5 February

2011.

(f)       A Debtorlink notice (a service which provides to subscribers a search for classified advertising relating to insolvency appointments)    was    not    received    by    Deloitte    until

15 February 2011.

(g)      The  watershed  meeting  should  have  been  convened  by

1 March  2011  and  held  by 8  March.  It  has  been neither convened nor held.

(h)       No  application  has  been  made  to  extend  the  convening period.

(i)        No   restructuring   plan   or   relevant   information   on   the financial position of the defendant has been provided to creditors.

(j)       A search of the company’s office reveals that Mr Deadman is

recorded  as  being  either  a  shareholder  or  director  in

17 companies,  69%  of  which  have  either  failed  or  been struck off.

(k)       Some of the administrator’s transactions arguably protect the interests of Mr Rushbridge, whereas Mr Coleman’s principal duty is to protect the interests of the defendant’s creditors.

[43]     His Honour’s comments on the objectives of Part 15A and the importance of the   steps   to   be   taken   are   of   considerable   importance   in   determining   the reasonableness of Mr Coleman’s remuneration.  His Honour recorded the following:

[29]      Part 15A of the Act, which is relatively new legislation, states that the Part’s object (s 239A) is to provide for the business and affairs of an insolvent company to be administered in such way as:

(a)       maximises  the  chances  of  the  company,  or  as  much  as possible of its business, continuing in existence; or

(b)       if  it  is  not  possible  for  the  company  or  its  business  to continue  in  existence,  results  in  a  better  return  for  the

company's creditors and shareholders than would result from an immediate liquidation of the company.

[30]     The various subparts which follow relate to the appointment and investigation powers of an administrator. Section 239AN obliges an administrator to call a first creditors’ meeting within eight days to decide whether to appoint a creditors’ committee and whether to replace the administrator. It seems that the 11 February meeting to which both Messrs Eccle and Coleman refer was such a meeting.

[31]     A critical part, however, of the Part 15A process is the watershed meeting. As s 239AS clearly states, the watershed meeting is the creditors’ opportunity to decide on a company’s future and in particular whether a deed of company arrangement should be executed. Section 239AV stipulates a watershed meeting must be held within five days after the end of the s 239AT(2) 20 day convening period.

[32]     No such watershed meeting has been held. I note Mr Coleman’s statement that he was in a position to send out notices of a watershed meeting on Monday 28 March.

[44]     What the above summary reveals is that the respondent had, by-and-large, failed to carry out his statutory obligations in a number of important respects.  The failure,  as  it  transpires,  was  particularly important  because it  led  to  the court’s conclusion that an interim liquidator should be appointed.  Further, it is telling, in my view, that his Honour concluded that:

[there is] no evidence which suggests any sensible or frank communication between Mr Coleman and the plaintiff about his plans and objectives. That communication failure would have heightened suspicions and reinforced the plaintiff’s fears.

[45]     This  case  is,  if  ever  there  was  one,  an  important  lesson  for  future administrators as to their statutory responsibilities.   There is little point in an administrator carrying on an investigation and ignoring the requirements of Part 15 in terms of the convening of a watershed meeting if the result is ultimately to lay the company open to the appointment of a liquidator by the court.   The prospects of being able to have the company carrying on its business are simply removed.  The importance of the creditors in the process is emphasised by the fact, pursuant to s 239AS of the Companies Act 1993, that the watershed meeting is a meeting of creditors to decided the future of the company.

[46]     Mr Smyth set out a number of matters which he invited me to take into account as being matters that were of benefit to the company, even arising from the shorter  period  when  Mr Coleman  assumed  his  role  as  administrator.    They  are summarised in bullet point form in his letter of 23 August 2013 to the liquidators’

solicitors, when he made the following points:

Establishing a viable future business model within the compliance framework imposed by the Fisheries Act particularly in the light of the company relying on its fishing vessel, the FV Pacific Explorer, being able to continue fishing whilst the company most likely maintained a deemed value debt in excess of $1000 in the short term.

Understanding    the    requirement    and    financial    benefits    of rationalisation of the business activities being undertaken by EBML prior to Voluntary Administration.

Achieving the release of the FV Pacific Explorer from seizure by the

Ministry of Fisheries.

Achieving  the  release  of  the  Rushbridge  Fishing  Permit  from Suspension which was a pre-requisite under the Fisheries Act, in any event,  to  the  FV  Pacific  Explorer  being  able  to  legally  continue fishing under any fishing arrangement.

Understanding the implications of the Ministry of Fisheries selling the seized inventory of fish at discounted prices without due regard for the ACE liabilities relating to same.

Maintaining the commitment and support  of the company’s  major customer, Progressive Enterprises Limited, who recognised E & B Management  Limited  as  a  preferred  supplier  for  fresh  fish  and required  continuity  of  supply  performance  for  this  preferential supplier relationship status to continue.

Maintaining  the  support  of  the  predominant  Quota  owner,  Vela Fishing Limited who were a major unsecured creditor of EBML and exposed to a significantly increased negative financial impact if the contracted quota was not caught in the remaining 8 months of the Fishing Year and during the relevant fishing season.  The quota parcel relied on by EBML was every much sought after form other major fishing companies.

Maintaining the support and commitment of the employed Officers & Crew of the Fishing Vessel FV Pacific Explorer.

Defending  against  the  post-administration  repossession  of  the  FV Pacific Explorer as endeavoured by Pacific Trawling Limited.

Defending   against   the   post-administration   securitisation   by   the Minister of Fisheries of the ACE inventory owned by E & B Management Limited so that it was available for the mutual benefit of all creditors.

[47]     Unfortunately, the strategy that Mr Coleman was following was brought to an end finally with the appointment of the interim liquidators with the result that the planning and the steps that he had undertaken produced little, if any, real value to this company.  Indeed, Priestley J concluded:15

Unfortunately the actions taken by Mr Coleman since 1 February 2011 have

arguably made the defendant’s position worse.

[48]     One of the liquidators, Ms CM Dunphy, has looked at the overall claim and has  noted  that  the  respondent  has  already been  paid  $12,650  in  respect  of  the invoices that I am considering.  That, she says, amounts to some 74 hours of time. She concludes that would be an adequate fee for carrying out the administrator’s statutory requirements leading up to the convening of the watershed meeting.   I could, perhaps, speculate by adding, or possibly an application to the court to extend the convening period.  That represents a little less than a third of the fees rendered for the period leading up to the end of the administration on 1 March 2011.

[49]     I have  been  provided  with  no  independent  evidence  to  suggest  that  this analysis is incorrect.

[50]     As I conclude that there really was no value to the company and its creditors by what was actually undertaken and where the company now is at, I conclude that a figure of $12,650 is the appropriate remuneration to be paid to the administrator during the time of administrator.

[51]     It is necessary to consider the two major disbursements.  That is the invoices rendered by the two legal firms.   The larger of the two is rendered by Stace Hammond.   It relates to the opposition to the appointment of interim liquidators. That work was all done outside the period of administration and therefore is not

approved as part of the remuneration payable to the administrator.

15 At [65].

[52]     The second account relates to the balance unpaid in respect of the Oceanlaw invoices.    Mr Shephard  notes  that  these  invoices  were  addressed  jointly  to  the company and Mr Rusbridge.  He also notes that the amount claimed is still owing to Oceanlaw.  It represents the unpaid balance of the final invoice from Oceanlaw dated

31 March   2011.      That   relates   to   services   provided   after   the   respondent’s

administration had come to an end.

[53]     I note that Mr Rusbridge got his permit back.  He received from Oceanlaw the proceeds of the catch that had been on the vessel when it was seized.  He has refused to pay that money to the company.   There is no benefit to the company, therefore, in the work undertaken by Oceanlaw.   Payment of this invoice is not justified.

[54]     I now set out my conclusions and the orders that are appropriate:

(a)       I declare that the respondent’s administration of the company ended

on 1 March 2011;

(b)The  respondent  is  not  entitled  to  be  paid  remuneration  for  his attendances after that date and, in particular, is not entitled to recover the Oceanlaw outstanding account and the Stace Hammond outstanding account;

(c)       I fix the respondent’s remuneration at $12,650 and note that he has

already been paid this sum;

(d)The respondent is entitled to receive a disbursement as a preferential claim in terms of Item 1(1)(b) of the Seventh Schedule of Companies Act 1993, in the sum of $711.77 in addition to the costs and expenses which he has been paid already.

Costs

[55]     The liquidators seek costs on a 2B basis.  They have, in fact, obtained a result in line with what was sought when their application was filed.  On the other hand, I

bear in mind that Mr Coleman was, during the time of the administration, acting for the company, having regard to ss 239V and 239W of the Companies Act 1993.   I conclude therefore that the costs of this application are best met by the company itself and will, of course, be part of the liquidators’ costs.  This is consistent with the position that applies in respect of liquidators.16

[56]     Accordingly I make no order for costs.

JA Faire

Associate Judge

16     Mana Property Trustee Ltd v James Development Ltd (No 2) [2010] NZSC 124, [2011] 2 NZLR

25.

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