Sheppard v Coleman - [2013] NZHC 3317

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:

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 Sheppard v Coleman

Details

AGLC: Sheppard v Coleman [2013] NZHC 3317
Case: [2013] NZHC 3317
Decision Date: 11 December 2013

CaseChat Overview and Summary

In the case of Sheppard v Coleman, the liquidators of E & B Management Ltd applied 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. The application raised five specific questions, including the date on which the respondent's administration of the company ended, what amount represented the respondent's reasonable remuneration for services as administrator of the company, and if the respondent's administration of the company ended before 30 April 2011, was he entitled to claim remuneration for any period after his remuneration ended. The court found that the administration of the company ended on 1 March 2011, and that the respondent was not entitled to be paid remuneration for his attendances after that date. The court fixed the respondent's remuneration at $12,650, and noted that he had already been paid this sum. The respondent was also entitled to receive a disbursement as a preferential claim in the sum of $711.77. The liquidators sought costs on a 2B basis, but the court concluded that the costs of this application were best met by the company itself and would, of course, be part of the liquidators' costs. No order for costs was made.

Orders