Body Corporate 378945 v Memelink - [2022] NZHC 890

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

CIV-2020-485-721

[2022] NZHC 890

UNDER The Insolvency Act 2006

IN THE MATTER

of the bankruptcy (or proposal, as the case may be) of Harry Memelink

BETWEEN

BODY CORPORATE 378945

Plaintiff

AND

HARRY MEMELINK

Defendant

Hearing: 28 March 2022

Appearances:

C T C Bell for Plaintiff down to and including 28 March 2022; D Dewar since 28 March 2022

D Livingston for Defendant
A O’Connor for Body Corporate 68792 (a supporting creditor)

Judgment:

29 April 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1] On 25 June 2020, this Court delivered judgment in an appeal in which the judgment debtor, Mr Harry Memelink, sought to challenge a decision of the District Court declining him further time within which to bring a substantive appeal. The appeal was unsuccessful.1 Cooke J both declined the appeal and subsequently ordered that Mr Memelink pay the judgment creditor, Body Corporate 378945 (“the Body Corporate”), costs in the sum of $8,365.

[2]Initially, Mr Memelink did not pay those costs.

1 Memelink v Body Corporate 378945 [2020] NZHC 1461.

BODY CORPORATE 378945 v MEMELINK [2022] NZHC 890 [29 April 2022]

[3] The Body Corporate commenced enforcement proceedings. Having sealed the judgment, it obtained a bankruptcy notice from this Court on 3 December 2020. It says that this bankruptcy notice was served twice. Different service agents were involved (Mr Spriggs and Mr Desmond). The Body Corporate appears to have effected service twice as a result of a misunderstanding between its own solicitors and the solicitors acting for the supporting creditor, another body corporate (“BC 68792”). Following service Mr Memelink paid the costs that Cooke J had ordered him to pay, that is to say, the $8,365 referred to earlier.

[4] The bankruptcy notice as issued by the Court was in the orthodox statutory format. On the second page, it said that, in addition to the judgment debt, the judgment creditor was claiming costs of $828, including disbursements. Mr Memelink did not pay this these costs.

[5] It is Mr Memelink’s failure to pay this amount that has resulted in this bankruptcy proceeding which has occupied half a day of the High Court’s time, during which I heard witnesses for both parties cross examined and detailed submissions from counsel.

[6] The issue is not complicated. The Body Corporate says, and has filed affidavit evidence to the effect, that the bankruptcy notice that was served by its solicitors’ service agent, Mr Barry Spriggs, during the morning of 3 August 2021 was complete. Mr Memelink says that it did not include the second page, so that he did not know that the Body Corporate was claiming costs of $828.

[7] The parties being at odds as to whether the bankruptcy notice served by Mr Spriggs included the claim for costs, they are also divided on whether Mr Memelink was obliged to pay those costs and therefore whether Mr Memelink committed an act of bankruptcy when…

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.

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Details

Case: [2022] NZHC 890
Decision Date: 29 April 2022

CaseChat Overview and Summary

Body Corporate 378945, the judgment creditor, sought to have Harry Memelink, the judgment debtor, declared bankrupt. The court was required to decide whether the bankruptcy notice served on Memelink was complete and if his failure to pay the costs component of the notice constituted an act of bankruptcy. The court also had to determine if the Body Corporate's application could proceed based on a supporting creditor, Body Corporate 68792, which had filed a notice of its claim. The court found that the bankruptcy notice served on Memelink was complete and that his failure to pay the costs component of the notice constituted an act of bankruptcy. However, the court held that the Body Corporate's application could not proceed based on the supporting creditor as it would be against the language of s 13(a) of the Insolvency Act to treat a supporting creditor as joining in the application.

The court dismissed the Body Corporate's application for adjudication of bankruptcy against Memelink. The court found that the Body Corporate could not establish an indebtedness to it on Memelink's behalf which would satisfy the terms of s 13(a) of the Insolvency Act. The court also held that treating a supporting creditor as joining in the application would be against the language of s 13(a) of the Insolvency Act and that any change to the orthodox position should be done by the legislature or by an appellate court. The court reserved the issue of costs and invited the parties to submit memoranda in relation to costs in the usual way.

Orders