Silence from creditors does not remove the duty to test whether charges reflect fair value
The High Court of New Zealand approved liquidators' remuneration but flagged a discrepancy in the fee schedule and suggested clearer disclosure to creditors.
In Commissioner of Inland Revenue v Poseidon Group Limited (In Liq) [2026] NZHC 1840, the liquidators of a property development company applied for approval of overall remuneration of $61,009.30, excluding goods and services tax (GST) and disbursements. The court decided the application without a hearing.
The court reviewed the fees under s. 284(1)(e) of the Companies Act 1993 (the Act). Following an earlier High Court decision, it said that fixing remuneration meant weighing whether the charges were fair and reasonable against the work undertaken and the result achieved. It described "value" as "an elusive concept which goes beyond mathematical application of hourly rates to hours spent by individuals involved in administering a company's affairs".
The court said that it had received no objection to the fees. Even so, it said that the absence of a challenge did not remove its duty to be satisfied that the remuneration reflected the value of the services provided to creditors, an approach the Court of Appeal has confirmed.
The company was incorporated on January 14, 2016 and ran a property development and sales business. The liquidators recorded that its insolvency arose from difficulties selling its property portfolio. They identified a claim against a related party, secured it with a legal notice on that party's property, and, after negotiations, reached a settlement that yielded $131,180.78. The Commissioner of Inland Revenue, which brought the liquidation, recovered its priority costs claim in full and a further $35,833.33 towards a separate priority claim of $229,485.91, a return of 15.6 cents in the dollar.
The liquidators recorded that 200 hours were spent incurring fees of $80,481.50, of which $19,472.20 was written off, leaving the $61,009.30 for which approval was sought. After the write-off, the average hourly rate fell to $305.05 excluding GST, which the court said sat in the middle of the usual range.
The court said that the fee table appeared to overstate the totals because, for most staffing categories, the recorded figure exceeded the hours worked multiplied by the maximum approved rate. It said that clarification was unnecessary, as approval was sought only for the reduced figure, but noted that the draft final report might need to be corrected.
The court also said that a direct invitation for creditors to raise queries with the liquidators would be preferable to pointing them to the statutory right to seek a court review. Satisfied that the remuneration reflected the fair value of the services provided, it approved the sum sought.
