Haines v Memelink

[2019] NZHC 1086

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2018-485-962

[2019] NZHC 1086

BETWEEN

QUENTIN STOBART HAINES

First Applicant

AND

BPE TRUSTEES (NO 1) LIMITED

Second Applicant

AND

HARRY MEMELINK

Respondent

AND

LYNX TRUSTEES LIMITED

Second Respondent

On the papers

Counsel:

J K Mahuta-Coyle for First and Second Applicants G Manktelow for First and Second Respondents

P Chisnall for the Official Assignee

Judgment:

20 May 2019

JUDGMENT OF GRICE J

(Costs on interlocutory application)

[1]    On 11 March 2019 I granted an application for an interim injunction restraining the sale of Mr Haines’ home.1 It was owned by Mr Haines’ family trust and the trustees were the first and second applicant (the Haines’ interests). I had earlier granted an interim order restraining the sale of the property, on the basis of a “pickwick” without notice application, on 21 December 2018.2 An earlier without notice application had been declined.3

1      Haines v Memelink [2019] NZHC 401.

2      Haines v Memelink [2018] NZHC 3460.

3      Haines v Memelink [2018] NZHC 3373.

QUENTIN STOBART HAINES v BPE TRUSTEES (NO 1) LIMITED [2019] NZHC 1086 [20 May 2019]

[2]    The  injunction  concerned  an   application   by   Mr Haines   to   prevent   Mr Memelink’s trust, the trustees being the first and second respondents (the Memelink interests), from selling Mr Haines’ residence by using their powers of sale under a mortgage. The injunction was granted on the basis that there had not been appropriate provision of information of the amounts owing under the mortgage. I said:4

[52]      I conclude the balance of convenience supports the granting the interim injunction on conditions. The balance favours the grant only because of the failure by the respondents to provide information to the applicants to enable them to redeem the mortgaged property.

[53]      The conditions will require the applicants to service the interest repayments on an amount attributable to the former Fico loan secured under the second mortgage. In the context of the interim injunction application I do not accept Mr Haines’ claim of equitable estoppel based on outstanding legal fees or an arrangement that the respondents service the Fico loan. The loan was refinanced by the respondents. They should not have to continue servicing it pending resolution of the disputes. The claim put forward by the applicants based on what actually remained secured under the Fico assigned mortgage is a technical argument which does not preclude the applicants from servicing the refinanced Fico loan in the interim.

Interim orders

[54]      The respondents, as second mortgagees over the property at 3/97 Honi Taipua Street, Manukau, Levin presently occupied by the first applicant, are restrained from selling the property until further order of the court on the following conditions:

(a)The applicants jointly and severally will contribute toward the interest on the monies borrowed by the respondents in order to repay the Fico Finance loan and secured under the mortgage at the rate of 12.95 per cent per annum.

(b)The amount of the interest payments are $5,582 per month.

(c)The obligation under this order will accrue from 15 March 2019 and be payable monthly to the Official  Assignee  as  administrator  of Mr Memelink’s affairs. The first payment to be made on 15 April 2019.

[55]      The respondents will on or before 15 March 2019 provide to the applicants details of the amount owing under the second mortgage with sufficient particulars to inform the respondents as to how the amount is made up at, together with details of the amounts they repaid to Fico Finance in return for the transfer of the above mortgage to them. This should provide the applicants with sufficient information to redeem the mortgaged property if they wish to do so.

4      Haines v Memelink, above n 1, at [52]–[57].

[56]      A review of this injunction will take place three months from the date of this judgment subject to any further order of this court.

[57]      The proceedings are to be called for a case management conference on 21 March 2019 before Associate Judge Lester or such other date as is fixed by  the  Registrar.   Other  matters  to  be  called  at  that   time   relate  to   Mr Memelink’s bankruptcy and proceedings involving the Haines and Memelink interests.

[3]    I understand that the application for the annulment of Mr Memelink’s bankruptcy has not yet taken place but is due to be heard shortly. There have been a number of other proceedings filed by the parties, relating to their business affairs since these proceedings were filed.

[4]    The parties to these proceedings have also filed a number of memoranda relating to compliance with my orders of 11 March 2019. Those matters should be dealt with or timetabled to a hearing.

Costs

[5]    I reserved leave for the parties to apply for costs and set out a timetable for the exchange of submissions.

[6]    First, I note the costs claimed by the Haines interests are calculated on a category 2B basis as set out in the High Court Rules 2016. No specific criticism has been made of the calculations. The figures claimed in the schedule of costs and disbursements appear unexceptional. Therefore, insofar as the quantum is concerned I am satisfied it is an appropriate category 2B as applied in the applicants’ schedule.

[7]    I now turn to who is to pay costs. The Haines’ interests have applied for costs. They say that they were successful in obtaining both the first and second injunctions; and have restrained the respondents from selling the property. Therefore, they say that makes them the substantially successful parties.

[8]    The Memelink interests oppose the costs application on the basis the application should never have been filed. This submission is contained in an “Urgent Memorandum  to  Her  Honour  Judge  Grice”  dated  8  April  2019  prepared  by Mr Memelink personally seeking my direction on a number of issues, including an

allegation that the applicants misled the Court. The grounds that the Memelink interests rely on for this submission are that they believe the Mr Haines and his lawyer knew of “the true situation regarding the Basecorp loan default” that:

a.     The court has been misled

b.    An abuse of process has occurred

c.     This is a vexatious action on Haines’ party

d.    That both Haines and his lawyer have failed in their duties to the court first, that they knew that the Basecorp PLA had expired and that Haines was therefore in default of his duties and mortgages

e.     Haines was knowingly perverting the course of justice, making it extremely unjust and unfair situation for the trustees, as well as causing additional cost and hardship

f.     Haines has broken the codes of conduct and ethics and his oath that a lawyer shall not lie or mislead the court or anyone

g.    Haines has come to court with “unclean hands”

[9]    These however are matters largely relating to the grant of the interim injunction. As I noted in a Minute 9 April 2019, these matters might be issues for an appeal.

[10]   In a memorandum dated 1 April 2019, counsel for the Memelink interests specifically opposed the application for costs. In that memorandum counsel noted that the Official Assignee would abide the Court decision as to costs (Mr Memelink being bankrupt at all material times).

[11]   As I noted in my 11 March 2019 judgment the complexity of the business arrangements between the Haines’ and Memelink interests the subject of these proceedings make it difficult to predict the merits in the proceedings.5 However, I was able to conclude that the Haines’ interests claim, that the amounts owing to them were offset by legal fees said to be owing to Mr Haines, did not give rise to a serious question to be tried at that time. I found the legal fees were not enforceable (because they were the subject of a Law Society complaint). I further found the circumstances did not give rise to an equitable estoppel.6 However, I found that the Memelink interests had taken an assignment of the relevant second mortgage and attempted to sell the house without the Official Assignee’s consent, and without providing the Haines’ interests with information enabling them to redeem the mortgage if they chose

5 At [41].

6 At [42].

to do so. While granting the injunction I did so on the condition that the Haines’ interests serviced the interest repayments on the second mortgage. The position in that regard will be a matter for review of the interim orders at the substantive proceedings.

[12]   In those circumstances I consider it is not appropriate that Memelink interests be ordered to pay the full amount of costs claimed. The material filed in support of the application for interim injunction and the hearing time was largely taken up with arguments that the Memelink interests owed the Haines’ interests money and the alleged debt based on Mr Haines’ legal fees. The imposition of the conditions in favour of Memelink interests in some respects marked a success for the Memelink interests as well.

[13]   Nevertheless, the Haines’ interests did succeed in obtaining an interim injunction following a defended hearing. I therefore consider they are entitled to some costs.

[14]   In the circumstances I think a discount of 50 per cent to the costs sought by the Haines’ interests is appropriate.

[15]   Accordingly, I order costs in favour of the applicants against the respondents in a sum calculated according to category 2B of the High Court Rules, in terms of the schedule submitted, but discounted by 50 per cent.

Grice J

Solicitors:

Brittens Lawyers, Palmerston North