Body Corporate 68792 v Memelink
[2022] NZHC 3498
•16 December 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2022-485-000802
[2022] NZHC 3498
BETWEEN BODY CORPORATE 68792
Plaintiff
AND
HARRY MEMELINK AND CISCA
JOHNETTE FORSTER as trustees of THE LINK TRUST (NO 1)
DefendantAND
IAIN BRUCE SHEPHARD and JESSICA
JANE KELLOW as receivers of the LINK TRUST (NO 1)
Interested Party
Hearing: 15 December 2022 Appearances:
A O’Connor for the Plaintiff H Memelink in person
I B Shephard in person for the Interested Party
Judgment:
16 December 2022
JUDGMENT OF GRICE J REASONS JUDGMENT
Introduction
[1] I delivered a results judgment granting interim orders restraining the defendants from interfering with the Body Corporate insurance arrangements in terms set out in that judgment.1 I indicated I would deliver my reasons later. I now do so.
1 Body Corporate 68792 v Memelink [2022] NZHC 3489 [result judgment].
BODY CORPORATE 68792 v MEMELINK & FORSTER as trustees of THE LINK TRUST (NO 1) [2022] NZHC 3498 [16 December 2022]
[2] By interlocutory application dated 14 December 2022, the administrator of Body Corporate 68792 (the Administrator) applied for an urgent interim injunction preventing the defendants, in particular Mr Memelink, from interfering with the previous and current insurers and insurance arrangements in relation to the properties at 408 Hutt Road/Wakefield Street, more commonly known as Body Corporate 68792 (the Body Corporate).
[3] The Administrator, Mr Anthony Gambitsis, was appointed by this Court on 5 October 2017.2 Mr Shephard, one of the receivers, addressed the Court in support of the applications for urgent interim orders made by the Administrator.
[4] The background involves a history of complex litigation in which Mr Memelink and his various trusts have dealt with various claims related to Mr Memelink’s financial affairs. It is not necessary to go into detail, but the preceding litigation was described by Churchman J as “long and convoluted”.3 In his judgment of 8 December 2022, Churchman J extended the provisions of earlier orders made appointing receivers to the Link Trust (No 1) (the Trust) to enable the sale of the properties without interference by the trustees and in particular Mr Memelink.4 The further order prohibited the filing of proceedings both by and against the Trust without the consent of the receivers or leave of the Court. In view of the stance of the receivers taken in relation to this matter I take their consent as read in relation to this application.
[5] Mr Memelink was adjudicated bankrupt on 28 August 2018. The effective date of the bankruptcy was 6 September 2022, as this was the date on which the Official Assignee had received enough information to satisfy the requirements for the bankrupt to supply a statement of assets. Receivers (named as interested parties in this proceeding) were appointed to the Trust, the defendant in this action, on 31 May 2022. The Trust owns units in the Body Corporate.
[6] The purpose for the appointment of the trustees was to remove the Trust from the control of Mr Memelink, and to enable the receivers to proceed with an orderly
2 Body Corporate 68792 v Synergy Enterprises Ltd HC Te Whanganui-a-Tara | Wellington, CIV-2015-485-000 202, 5 Ōketopa | October 2017 (Williams J) (minute and directions).
3 Body Corporate 81012 v Memelink [2022] NZHC 3307 at [5].
4 At [35].
sale of the Body Corporate units. However, on 7 December 2022, after he heard the units were to be sold by the receivers, Mr Memelink lodged caveats against the titles to the units. The receivers applied then to this Court, and on 13 December 2022 they succeeded in obtaining orders that the caveats be removed and Mr Memelink not interfere with the sale of the units.5
[7] According to Mr Memelink there are 13 commercial use units in the Body Corporate. The Trust owns seven of those units. The receivers are in a position to sell two of them and one of those sales is about to settle. The receivers intend to clean up the other units owned by the Trust and sell them as well.
[8] The present application has been brought by the Administrator of the Body Corporate because Mr Memelink has it seems been emailing and attempting to contact the broker and underwriters of the Body Corporate insurance. The Body Corporate is statutorily required under the Unit Titles Act 2010 to have appropriate insurance in place. Without such insurance it would be difficult to sell the units owned by the Trust at least for a price that was not substantially discounted on account of the lack of insurance.
[9] The Administrator of the Body Corporate recounts the difficulty he has had in obtaining insurance. They finally managed to obtain cover at a reasonable cost through a broker.
[10] Email trails produced by the Body Corporate indicate that Mr Memelink has been emailing the broker and copying in past and present underwriters referring to “severe issues and unpaid claims in past”, that the insurance has been cancelled, and alleging “fraud and misconduct” by the Body Corporate as well as referring to the theft and conversion of “over $30,000 of stuff”. Mr Memelink also refers to the matters having been referred as police complaints.
[11] The Administrator is concerned that the reason for these emails and attempts to contact the broker and underwriters is to have the insurance withdrawn so that the
5 Body Corporate 81012 v Memelink HC Te Whanganui-a-Tara | Wellington CIV-2021-485-419, 13 Tīhema | December 2022 (Cooke J) [direction granting interim orders].
Body Corporate is left uninsured. The Administrator has told Mr Memelink that any matters of concern about the insurance should be referred to the Administrator, rather than to the underwriter, the broker or any third party. Most recently the Administrator through his lawyer sent an email dated yesterday asking Mr Memelink to desist and not deal directly with the broker. At the hearing, Mr Memelink did not indicate any intention of redirecting his concerns to the receivers rather than contacting the insurers direct.
[12] The Administrator alleges that the steps taken by Mr Memelink are yet another attempt by him to disrupt the sale of the Body Corporate units, which will damage the interests not only of the Trust, which owns the units, and therefore Mr Memelink and the Trust’s creditors, but also the interests of the other Body Corporate unit owners.
[13] Those unit owners have long been concerned about Mr Memelink’s behaviour, with Mr Memelink’s arguments concerning his and the Trust’s liability for Body Corporate levies having resulted in the other owners having to provide more funds. A description of that background in relation to this Body Corporate is set out in the judgment of Churchman J from May of this year, where he describes Mr Memelink’s litigation history as being “a long history of raising disputes about the claimed illegality of levies and using that as an excuse for not paying anything.”6 There his Honour stated “[n]othing in the information before me in these proceedings indicated that he was likely to change that pattern of behaviour.”7
Assessment
[14] The requirements for obtaining an interlocutory injunction under r 7.53 of the High Court Rules 2016 are well-established and were set out by the Court of Appeal in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd.8 There are two broad considerations, namely whether there is a serious question to be tried and where the balance of convenience lies.9
6 Body Corporate 81012 v Memelink [2022] NZHC 1244 at [60]–[64].
7 At [63].
8 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).
9 At 142.
Serious question to be tried
[15] In this case I have no doubt that there is a serious question to be tried. The Administrator alleges that Mr Memelink is attempting to disrupt the sale of the units by attempting to avoid the insurance over the units. It is arguable that is in breach of the orders made on 13 December 2022 by Cooke J, which provided as follows:10
(a)Land Information New Zealand (LINZ) shall not register caveat instrument number 12628457.1 submitted by Mr Memelink and Ms Forster on 7 December 2022 on Link Trust (No. 1) (the Trust)’s properties comprised in records of title 316958, WN39A/593, WN39A/595, WN39A/604, WN39A/606, WN39A/607, WN39A/608, WN47C/180 and WN47C/182 (all Wellington land district) (the titles) and that if the caveat is so registered, that it be removed under section 142 of the Land Transfer Act 2017 as an abuse of process.
(b)Mr Memelink and Ms Forster, jointly and severally and whether personally, as trustee or by their servants, agents or otherwise are permanently restrained from:
(i)Lodging or attempting to lodge any caveats against the titles and any other properties owned by the Trust, including all those held in the names of Mr Memelink and Ms Forster as trustees;
(ii)Instructing, directing or causing any person or entity to lodge or attempt to lodge any caveats against titles to the Trust’s properties;
(iii)Taking any steps to interfere with, impede or delay the sale of the Trust’s properties; and
(iv)Seeking to affect a transfer of any of the titles to the Trust’s properties or register any other transfer dealings in relation to the title(s) to the Trust’s properties.
(c)Mr Memelink and Ms Forster be permitted to apply to the Court for leave to lodge caveat(s) on the title(s) to the Trust’s properties if they consider they have a lawful reason to do so.
[16] The Administrator says that Mr Memelink is unlawfully interfering with contractual relationships, being the insurance contract between the Body Corporate and the underwriters. The details of that allegation have yet to be explored. However, it is clear on the evidence that Mr Memelink has been emailing the broker, and the content of the emails may well have the effect of the underwriter/broker withdrawing
10 Direction granting interim orders, above n 5 (bold emphasis in original, italic emphasis added).
the insurance on the property. It is arguable this is unlawful in breach of the court order set out at [15](b)(iii) above. I am satisfied there is a seriously arguable case on that basis.
Balance of convenience
[17] The balance of convenience also clearly favours the granting of the interim orders as sought, for reasons I now set out.
[18] Mr Memelink submitted there were a range of matters that were relevant to this application. Most of them relate to the disputes he has with the receivers concerning the management of the receivership and his contention that the Body Corporate levies that have been imposed on the Trust were done so unlawfully and were excessive. These matters date back to other litigation which has subsequently been dealt with or stayed concerning the use by the Body Corporate of a building fund which Mr Memelink said had been put aside for replacement of the roof on the commercial units. Mr Memelink says the required work was never done. Mr Memelink also indicated that earlier administrators of the Body Corporate had taken illegal steps without notice to the owners, and that votes taken at the meetings were illegal. He alleged fraud against those administrators. Mr Memelink said the insurance is in fact void because of lack of disclosure to the underwriter, and indicated the underwriter had been complicit. Mr Memelink said he as a Body Corporate unit owner had been deceived by the Administrator and there was a lack of accountability on the part of the Administrator.
[19] Mr Memelink says he has a number of grievances over the actions of the Administrator (and earlier administrators) which have not been dealt with. These concern the levies (which the Trust has not paid since 2018) and the “invalid and overcharged insurance”. The complaints also related generally to the conduct of the Administrator and earlier administrators and the receivers appointed to the Trust. He says the receivers have unlawfully trespassed Mr Memelink from the offices which contain the Trust’s computers and paperwork regarding the dispute.
[20] Mr Memelink went into some detail in his submissions concerning the levies and the “invalid and overcharged Body Corporate insurance”. Mr Memelink says the
trustees (referring to himself in particular) are not seeking to invalidate the Body Corporate’s insurance, but rather are seeking to make sure that the “insurance will actually pay out in a claim event.” Mr Memelink says the Administrator acts like “a law unto his own without any accountability.”
[21] As Mr Memelink has realistically recognised, the Court cannot embark in this proceeding on an enquiry in relation to the varied matters he has raised. Quite apart from anything, the complaints he makes are largely against the receivers of the Trust and the liquidators (presumably the liquidators of the earlier trustee company). While the receivers have been served as interested parties and Mr Shephard appeared before the Court, the receivers are not named as defendants or plaintiffs in this action. The liquidators have had no involvement in this action.
[22] Mr Memelink accepts that the Court will not be in a position to deal with all the allegations he has made but suggests that the Court make “cautious comments on the trespass notice preventing the trustees from having access to its offices or the body corporate refusing to supply information regarding the levies”, which he suggests the receivers might pay attention to.
[23] As I indicated, these proceedings are not the appropriate vehicle to deal with issues concerning the receivership. The proceedings involving the appointment and powers of the receivers remain extant following the making of the interim orders on 13 December 2022. Mr Shephard advised the Court that the receivers have confirmed the present insurance cover and reviewed the policy in view of Mr Memelink’s expressed concerns. In his opinion it gives satisfactory cover. The receivers have also appointed inspectors to inspect the property to confirm there are no difficulties with the buildings which might jeopardise the current warrant of fitness for them.11 Those reports are awaited.
[24] Mr Shephard advised that the receivers would not distribute any funds from the sale of the units until they had directions from the Court. He indicated that as part of the process of distribution of the proceeds Mr Memelink and his trust would have a right to dispute any distributions and make any claims. Mr Shephard indicated that
11 This was another matter raised by Mr Memelink.
an orderly removal of Mr Memelink’s items, including his paperwork, would be undertaken.
[25] Mr Shephard also pointed out that the court order made at the time of the appointment of the Administrator had directed that no one should be residing in the units. There was at present a dispute between the receivers and Mr Memelink as to whether Mr Memelink was in fact residing in a unit. Mr Memelink said he was not residing in the unit in question but that he kept his documents in the unit and used its shower and laundry facilities as he was living in his car or on the beach and had no accommodation.
[26] The receivers are officers of the Court. They have an obligation to carry out the receivership in a lawful manner and report to the Court. Mr Shephard indicated that he had appeared in person because the receivers’ lawyers were not available on such short notice. He indicated that the receivers would be reporting to the Court and seeking directions in due course.
[27] The Administrator was also appointed by the Court and has obligations to the Body Corporate unit owners as well as statutory obligations under the Unit Titles Act. Those obligations include to insure the Body Corporate property. The Administrator has done that. The receivers have reviewed the insurance cover and are satisfied that it provides appropriate cover for the units. Mr Memelink’s actions may well have the effect of that insurance cover being withdrawn by the underwriters. It is the Administrator’s responsibility to deal with any issues which should be drawn to the attention of the broker, and Mr Memelink has been advised that he should deal directly with the Administrator.
[28] The Administrator says that not only has Mr Memelink been interfering with the insurance arrangements, but he has also taken a number of other steps which have disrupted the “good order of the Body Corporate” such as interrupting lawn contractors retained by the Administrator, removing fire equipment, interfering with other unit holders as they go about their legitimate business, living on the premises despite being asked to leave, and breaking and entering the units to use the shower facilities. The Administrator says he has arrangements in hand in relation to those
matters but has been unable to prevent Mr Memelink from corresponding with the underwriter and broker.
[29] Mr Memelink also says the injunction is an application to prevent his freedom of speech. That is simply not the case. Mr Memelink’s complaints can be made to the receivers or the Administrator, whose responsibility it will then be as to how those complaints are dealt with. There is therefore an avenue available to Mr Memelink for any grievances of his to be raised.
[30] As I indicated earlier, the orders in place that were made on 13 December 2022 and the earlier orders for the appointment of the Administrator were to ensure the orderly management and now the sale of the Trust assets. Mr Memelink is interfering with this by contacting the broker and past and present underwriters of the Body Corporate insurance. The receivers have reviewed the insurance and are in the course of inspecting the building to satisfy themselves there are no difficulties with the warrant of fitness for the building, both of which were raised by Mr Memelink as issues. The steps that Mr Shephard tells me the receivers have taken in both regards appear appropriate.
[31] In conclusion, the balance of convenience favours the making of the interim and orders sought.
Result
[32] I confirm the interim orders made in my result judgment of 15 December 2022 as follows:12
(a)Mr Memelink and Ms Forster, jointly and severally and whether personally, as trustee or by their servants, agents or otherwise are restrained until further order of the Court from:
12 Result judgment, above n 1, at [2]–[3].
(i)contacting or engaging with (or causing any person or entity to contact to engage with) in any way whatsoever either current or former Body Corporate insurers and/or brokers; and
(ii)taking any steps whatsoever to (or causing any person or entity to) interfere with insurance matters involving Body Corporate 68792.
(b)The plaintiff is directed to file and serve the statement of claim and other documents on or before 23 December 2022.
Grice J
Solicitors:
Mana Law, Porirua
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