WRT Holdings Limited v RWS Logging Limited (in liquidation)

[2022] NZHC 1809

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-454-20

[2022] NZHC 1809

BETWEEN

WRT HOLDINGS LIMITED

Plaintiff

AND

RWS LOGGING LIMITED (IN LIQUIDATION)

Defendant

Hearing:	(Determined on the papers)
Appearances:	R L Rodewald, Liquidator of the Defendant company
Judgment:	27 July 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

WRT HOLDINGS LIMITED v RWS LOGGING LIMITED (IN LIQUIDATION) [2022] NZHC 1809 [27 July 2022]

[1]                 RWS Logging Limited (in liq), was placed into liquidation by order of this Court on 13 June 2019.

[2]                 Thomas Leigh Rodewald, Chartered Accountant, was appointed liquidator. The liquidation has been concluded and the liquidators apply for approval of their remuneration and expenses.

[3]                 The liquidators have provided details of the staff involved in the liquidation and their hourly rates. The rates charged are reasonable. Copies of the liquidators’ reports have been provided.

[4]                 An amount owed to the company by a debtor was collected by the liquidators. The liquidators explain the steps taken to recover a motor vehicle and an item of plant belonging to the company. The item of plant was sold at valuation to the wife of one of the directors with a view to avoiding the costs of transporting the item of plant and the costs of sale. Unfortunately, the purchaser defaulted in payment of the instalments for the purchase price and the liquidators had to go to some lengths to trace the item of plant to a third party to whom it had been hired. As the liquidators had taken security for the unpaid instalments, the liquidators were able to sell the item of plant at valuation to the third party who had hired it, thus again avoiding costs of sale. That process took some time and was interrupted by the outbreak of COVID.

[5]                 The liquidators’ reports describe the recoveries made by the liquidators and the liquidators fees charged along the way, together with expenses.

[6]                 Section 255(2)(d) of the Companies Act 1993 provides that the reports must be sent to every known creditor and shareholder.

[7]                 As noted by the Court in Re Roslea Path Ltd (in liq),1 it is open to a liquidator to disclose voluntarily in their second and subsequent reports the amount of fees charged and the largest components of them.

1      Re Roslea Path Ltd (in liq) [2013] 1 NZLR 207 at 209.

[8]                 I note that annexed to the liquidators’ sixth report is an appendix referred to as “Remuneration Report” said to be prepared in accordance with the RITANZ Code of Professional Conduct. The Report draws the attention of creditors and shareholders to s 284(1)(e) of the Companies Act 1993 which provides that they may apply to the Court to review or fix the remuneration of the liquidator. It was noted in Re Roslea Path Ltd (in liq) that the ability to challenge the liquidator’s fees was an additional matter that could be added to a report by the liquidators. The Court in Roslea said:2

If disclosure of that type were made and no steps had been taken by a creditor or shareholder to challenge remuneration by the time the retrospective application were made, we consider that the Court could properly approve the remuneration charged, without the need for detailed information.

[9]                 I am satisfied that the liquidators fees are reasonable. But for their efforts, there would have been no recovery in the liquidation at all. The liquidators, from the recoveries, paid nearly $5,000 to the petitioning creditors’ costs. While the balance of the recoveries were absorbed in liquidators’ fees, the position may have been different had the original purchaser of the plant not defaulted.

[10]              Given the liquidators disclosure in their reports and that the fees are relatively modest, indeed the liquidators have had to write off some of the time recorded, it is appropriate that the liquidators remuneration and expenses are approved and I order accordingly.

Associate Judge Lester

Application by the Liquidator in person

2      Re Roslea Path Ltd (in liq), above n 1, at 246.