Body Corporate 81012 v Memelink

[2022] NZHC 3486

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2021-485-419

[2022] NZHC 3486

BETWEEN

BODY CORPORATE 81012, BODY CORPORATE 68792 AND BODY CORPORATE 378945
Plaintiffs

AND

HARRY MEMELINK AND CISCA

JOHNETTE FORSTER (as trustees of THE LINK TRUST (NO 1)

Defendants

CIV-2020-485-462

BETWEEN

THE OFFICIAL ASSIGNEE IN THE BANKRUPTCY OF HARRY MEMELINK ESTATE 889243
First Plaintiff

THE OFFICIAL ASSIGNEE IN THE BANKRUPTCY OF HARRY MEMELINK ESTATE 895147

Second Plaintiff

AND

HARRY MEMELINK, CISCA JOHNETTE FORSTER AND ROY WILLIAM

BASSETT-BURR as trustees of THE LINK TRUST (NO 1)

Defendants

CIV-2020-485-374

BETWEEN

LYNX TRUSTEES LIMITED (IN LIQUIDATION)
Plaintiff

AND

HARRY MEMELINK

Defendant

Hearing: 13 December 2022

BODY CORPORATE & ORS v MEMELINK & ORS [2022] NZHC 3486 [16 December 2022]

Appearances:

J D Haig for the Receivers

P R W Chisnall C R Vinnell for Official Assignee

G Neil and R Hindriksen for Lynx Trustees Ltd (In liquidation) H Memelink in person

Judgment:

16 December 2022

JUDGMENT OF COOKE J

(Caveat injunction)

[1]                 By interlocutory application dated 9 December 2022 Ian Bruce Shephard and Jessica Jane Kellow, the Receivers of the Link Trust (No 1) apply for an injunction preventing a caveat lodged by the defendants from being registered by Land Information New Zealand, together with other associated orders preventing the defendants from lodging further caveats that would have the effect of preventing the anticipated sales by the Receivers.

[2]                 The application is supported by an affidavit of Mr Shephard dated 9 December 2022. The application is opposed by Mr Memelink and Ms Forster.

[3]                 At the end of the hearing on 13 December I agreed to make the orders in the form set out in [24] below, indicating I would subsequently provide my reasons in writing. These are the reasons.

Background

[4]                 This is a continuation of the long running disputes involving Mr Memelink, various bodies corporate, and other parties. The background has been explained in various judgments of the Court, including that of Churchman J of 31 May 2022.1

[5]                 A very brief summary of the background is that Mr Memelink has alleged that the levying undertaken by the Body Corporate 68702 (the Body Corporate) was inappropriate, and involved significant overcharging of levies. Indeed he has gone as far as alleging that the levies were fraudulent. But he is now not able to personally

1      Body Corporate 81012 v Memelink [2022] NZHC 1244.

pursue those allegations. He was made bankrupt, and remains undischarged, and any claims he could advance are now in the hands of the Official Assignee. For a while he continued to pursue litigation notwithstanding the bankruptcy by acting in his capacity as trustee of the Lynx Trust (No 1) (the Trust).   But in a judgment dated   20 April 2021 his proceedings were struck out.2 Moreover as a consequence of this Court’s judgment of 31 May 2022 Receivers were appointed over that Trust. The Receivers are now acting in accordance with the Court’s receivership orders, including by performing the task of realising the assets of the Trust and paying creditors. The assets include the units in the Body Corporate owned by the Trust.

[6]                 Most recently by judgment dated 8 December 2022 Churchman J made further orders in relation to the receivership, including orders that all proceedings by and against the Trust be stayed unless the Receivers agreed, or as otherwise ordered by the Court.3 During the hearing that led to this judgment the Receivers disclosed they were in the process of selling a unit in the Body Corporate (the Unit) in accordance with the receivership.

[7]                 The day following the hearing before Churchman J, 7 December, a caveat was lodged by Mr Memelink and Ms Forster preventing the sale of the Unit the Receivers had the contract for. The Receivers contend that Mr Memelink lodged the caveat on being made aware of the sale during the course of the hearing, but Mr Memelink said to me at the hearing that he had heard about the sale before the hearing and had earlier sent the caveat in by post.

[8]                 The Receivers seek an order that the caveat he and Ms Forster have lodged be withdrawn, or that Land Information New Zealand be directed not to act on the caveat, and also an injunction preventing any further caveats being lodged by Mr Memelink and Ms Forster without permission of the Court.

[9]                 The application was directed to be given an urgent hearing and this was the basis upon which it proceeded before me. Mr Memelink initially objected to the

2      Memelink v Body Corporate 68792 [2021] NZHC 835, unsuccessfully appealed in Memelink v Body Corporate 86792 [2021] NZCA 640.

3      Body Corporate 81012 & Ors v Memelink & Anor [2022] NZHC 3307.

urgent hearing on the basis that he was not properly served, but I accept Mr Haig’s submission that it was properly served on the solicitors on the record the defendants in this proceeding. Mr Memelink otherwise objected to such an urgent hearing because of his personal circumstances. I accept that there are a number of health difficulties that he faces, and he also explained to me in submissions that he is presently without a place to live, and is sleeping in his car/on the beach. As I explained to him at the hearing I have sympathy for his personal situation, but he has lodged a caveat which prevents the Receivers undertaking their functions, and the Court is required to give urgent relief unless Mr Memelink can persuade the Court there is some justification for the caveat. I accordingly declined his effective application for an adjournment.

Assessment

[10]              The requirements for obtaining an interlocutory injunction under r 7.53 of the High Court Rules 2016 are well established, and set out by the Court of Appeal in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd.4 There are two broad considerations: whether there are serious questions to be tried and where the balance of convenience lies.

[11]              Here the position is straightforward. I consider that there is not only a serious question to be tried, but that the applicant has established that the caveat that the defendants have lodged is an abuse of process. It seeks to undermine the effect of the current Court orders in relation to the receivership. An injunction is appropriate to not only prevent the caveat having any effect, but to prevent any further caveats being lodged which will have the effect of undermining the process contemplated by the Court orders. For these reasons also the balance of convenience favours the grant of the injunction.

[12]              I accept the point that the whole object of the receivership was to realise the Trust assets for the benefits of creditors, and accordingly it contemplates that the

4      Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142.

Trust’s  units  can be sold.    When identifying the basis of the appointment in the judgment of 3 June 2022 Churchman J said:5

The duration of the receivership will be determined by the time taken to procure payment of the outstanding Body Corporate levies and costs orders and the facilitation of a process by which future levies will be paid in a timely way. The terms of the order appointing a receiver clearly anticipate that the receivership might take some time as it will involve the selling or otherwise realising of sufficient trust property to recover not only the outstanding levies and costs but all costs of the receivership, and all of the proven creditor claims that are indemnified and charged against the assets of the trust, as well as accounting to the Inland Revenue Department in relation to the tax obligations of the trust.

(emphasis added)

[13]              The relevant assets of the Trust are the units in the Body Corporate. When dismissing an application for a stay and leave to appeal the judgment out of time the Court of Appeal said:6

On 31 May 2022 the Judge delivered a judgment appointing receivers of the Trust property.7 The receivers’ terms of appointment provided for them to realise Trust assets in order to pay levies and costs owing to each of the three bodies corporate.8 The liquidators’ claim for an indemnity in respect of obligations incurred by Lynx as a trustee, and the Official Assignee’s claim for an indemnity in respect of obligations incurred by Mr Memelink as a trustee, were also successful.9 Rather than making separate orders for realisation of Trust properties to meet those claims, the receivers were appointed to realise Trust assets in order to meet creditors’ claims generally, and on the basis that creditors were to be treated equally.10

(emphasis added)

[14]              So the lodgement of the caveat by Mr Memelink and Ms Forster, who were the parties to the proceedings who actively opposed these orders, is an effective attempt to undermine the effect of the Court’s orders. In my view it is an abuse of process on that ground alone. If Mr Memelink wanted to advance a reason why the Receivers should not be authorised to sell particular units he needed to advance that in these proceedings, and have that determined accordingly. To the extent he effectively did so he was unsuccessful.

5      Body Corporate 81012 & Ors v Memelink [2022] NZHC 1312 at [12].

6      Memelink & Forster v Body Corporate 81012 & Ors [2022] NZCA 581 at [4].

7      Body Corporate 81012 v Memelink, above n 1.

8      At [101] and [108]–[111].

9      At [124] and [162].

10 At [124].

[15]              Secondly, and in any event, the defendants have no status that would allow them to have an interest providing a basis for a caveat. As the Official Assignee of Mr Memelink’s personal  bankruptcy  explained  any  assets  personally  held  by  Mr Memelink, including any interest in claims, are vested in the Official Assignee. Further, any interest in litigation that Mr Memelink has brought as trustee or beneficiary of the Trust is subject to the Court’s orders in the receivership. Churchman J explained in the judgment dated 8 December 2022 why an order staying proceedings was appropriate.11

I agree that a stay of proceedings involving the Trust would increase the likelihood of Trust assets being realised for the benefit of creditors. Mr Memelink’s litigiousness is well-documented, and extant litigation and unpaid cost orders represent a risk to the efficacy of the receivership. The rationale for the rule in s 248(c) of the Companies Act is to prevent wasteful expenditure of assets in a liquidation through litigation.12 That rationale applies to the Trust in this case, as an applicable risk in the receivership of the Trust, which is to be managed as if it were a company in liquidation.

[16]              In his oral submissions opposing the grant of the injunction Mr Memelink submitted, in forthright and sometimes emotional terms, that the background circumstances showed that significant injustices have occurred, and that he could prove his allegations if he was given more time. I will not attempt to summarise the points that he advanced as I focus on any matter referred to during those submissions that could give rise to an interest in land justifying a caveat.

[17]              One matter he did emphasise related to a proceeding the Trust had recently brought against the Body Corporate in CIV-2022-485-122. As he explained those proceedings were called in a Judge’s Chambers List on 23 May 2022 with no appearance for the defendants. Mr Memelink sought a judgment by way of formal proof at that stage, although that application was declined because it appeared that the proceedings were related to the other proceedings that had been struck out by the Court, and other parties needed to have an opportunity to be involved.13 Mr Memelink argued that the sale of the Unit would defeat the claim he made in this proceedings as he needed to be a member of the Body Corporate to bring such proceedings under the

11     Body Corporate 81012 & Ors v Memelink & Anor, above n 3, at [31].

12     Commissioner of Inland Revenue v Robertson [2017] NZHC 31, (2017) 28 NZTC 23-000 at [113] and [114]; and JK Trading Ltd v RimPro-Tec (in liq) [2019] NZHC 376 at [7].

13     The Lynx Trust (No 1) v Body Corporate 68792, Minute 23 May 2022.

Unit Titles Act 2010. This is the one proceeding brought by Mr Memelink/the Trust that technically may remain on foot.

[18]              I accept Mr Haig’s submission that any rights arising from this proceeding could not sustain the caveat, however. First, it is unclear whether that proceeding could give rise to an interest in land, although I note Mr Memelink’s argument in that respect. Secondly, there would be a question whether this proceeding could survive the earlier decision of the Court striking out the proceedings that had been brought by Mr Memelink. And in any event the proceedings are now stayed in accordance with the orders made by Churchman J.

[19]              Moreover I also accept Mr Haig’s point in relation to Mr Memelink’s claims more broadly. The whole object of the receivership is that the Receiver’s will address all the assets and liabilities of the Trust. If the Receivers are persuaded there are claims to be advanced by the Trust as Mr Memelink alleges, then it may be consistent with their functions to advance those claims. That is a matter to be assessed by them. And the whole object of the  receivership  is  to  enable  such  tasks  to  be  undertaken. Mr Memelink is not able to separately advance those matters personally, or as trustee.

[20]              For these reasons it is appropriate the Court make orders that have the effect of removing the caveat from the title. As I understand it, however, the caveat has presently simply been lodged, but not yet registered by the Registrar. The lodgement nevertheless prevents dealings in the land. In those circumstances the applicants sought orders of a similar kind to those made by the Court in ASB Bank Ltd v Lambert, a case involving similar circumstances.14 The Court there ordered that the caveat “be removed immediately”, and the applicants sought similar orders here.15

[21]              Rather than making orders requiring Mr Memelink and Ms Forster to take steps to withdraw the caveat they have lodged, it seems to me that the more appropriate course is to make orders directed at the Registrar. Under s 142 of the Land Transfer Act 2017 the Court may order that a caveat be removed. That power seems to me to be broad enough for the Court to make orders ordering that a caveat that has been

14     ASB Bank Ltd v Lambert [2013] NZHC 2135.

15 At [48].

lodged, but not yet registered, be “removed”. To interpret the section more technically so that it only applies to caveats that have been formally registered would not involve interpreting the text of the enactment in light of its purpose. For those reasons at the end of the hearing I made the order in the form set out in paragraph [24] below.

[22]              The further orders sought by the applicant are in the nature of injunctive relief preventing the defendants taking further steps frustrating the sale process embarked upon by the Receivers. Such orders were made in ASB Bank Ltd v Lambert. The Court there explained:16

Given Mrs Lambert’s attitude and approach there is every reason to believe she will continue to try to disrupt this mortgagee sale process. She has a record of doing so and a firm belief she is right to do so.

I am prepared, therefore, to make injunctive orders sought. Mrs Lambert will not have the right to lodge or attempt to lodge caveats against the title, or to instruct or direct anyone else to lodge caveats, or to take steps to interfere or impede or delay the sale of the property, or to seek to affect a transfer title to the property. However, these orders will be subject to Mrs Lambert’s right to apply to this Court for leave to lodge a caveat or present a transfer or to delay any mortgagee sale with respect to the property at Wood Bay Road, Titirangi.

In other words, if Mrs Lambert believes she has a lawful reason to lodge a caveat against the title or to do any of the other things she has prohibited to do by the injunction with respect to the Titirangi property, then she may apply to the Court for an order permitting her to do this. This will protect Mrs Lambert’s “rights” but will ensure that she is only able to exercise those rights if the Court approves her doing so. The necessity for that restriction arises directly from her conduct with regard to this litigation and her past conduct of registering unmeritorious caveats.

[23]              The findings concerning Mrs Lambert apply equally to Mr Memelink. Such orders are accordingly appropriate in the present case as well. I accept that it is likely that Mr Memelink and Ms Forster will continue the long standing campaign evidenced by the various proceedings that have been before the Courts. They should be ordered not to lodge any further caveats. Their right of access to the Court is preserved by the leave they will have, and which they already have in this proceeding in relation to the receivership. That strikes the appropriate balance.

[24]              Accordingly for the above reasons, at the end of the hearing I made the following orders the terms of which I later approved for sealing:

16     At [45]–[47].

(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.

[25]              Finally the applicant sought costs on a 2B basis against both Mr Memelink and Ms Forster as the defendants in this proceeding. The only question is whether the

costs award should be against Ms Forster as well as Mr Memelink. In his submissions Mr Memelink argued that Ms Forster should not be faced with obligations of this kind. But the caveat was lodged in the names of both Mr Memelink and Ms Forster. Moreover she is the party to this proceeding with Mr Memelink, and the application was served on her solicitor on the record and then opposed. In those circumstances it is appropriate the costs award be awarded against her as well as Mr Memelink. So I award costs on a 2B basis against Mr Memelink and Ms Forster on a joint and several basis.

Cooke J

Solicitors:

Meredith Connell, Auckland for Plaintiff in CIV-2020-485-374 Steve Hill Law, Lower Hutt for Plaintiff in CIV-2021-485-419 Anthony Harper, Christchurch for Plaintiff in CIV-2020-485-462

ccS J Fraser, Wellington for H Memelink and Lynx Trustees Ltd J D Haig, Wellington for Receivers