Deloitte’s Auckland office had liquidator’s fees for a straightforward company liquidation slashed by the High Court after charging large amounts of time for routine work. Fees claimed of $91,600 were reduced to $30,000.
Salus Safety Equipment Ltd stopped trading in December 2012, subsequently put into liquidation by Inland Revenue for unpaid taxes. The High Court appointed Deloitte liquidator. Creditor claims totalled $215,000. Deloitte wrote to Salus directors alleging they were in breach of Companies Act duties, threatening to sue them personally for the full $215,000 Salus owed creditors. The High Court was told Salus directors admitted liability, paid $50,000 immediately promising to pay the balance at $1000 per week. With all the money in, Inland Revenue preferential claims paid in full and unsecured creditors paid 39 cents in the dollar, Deloitte held a cash balance of $91,100. It sought High Court approval for its fees: a sum of $91,600.
Judge Bell said Deloitte’s bill had all the appearances of padding. Twenty-four different individuals in Deloitte’s office charged time to the job; a total of 422 hours, with 103 hours booked to ‘cash management.’ This was a routine liquidation, Judge Bell said. The company’s business was not complicated. Directors’ co-operation in promptly settling out of court meant the liquidation ran smoothly. The job could have been done more efficiently achieving the same result with fees of $30,000, he said.
re Salus Safety Equipment Ltd – High Court (17.06.20)
20.103