Haines v Memelink
[2022] NZHC 3402
•14 December 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2021-485-315
[2022] NZHC 3402
BETWEEN QUENTIN STOBART HAINES
First Applicant
BPE TRUSTEES (NO 1) LIMITED
Second ApplicantQUENTIN HAINES PROPERTIES LIMITED
Third ApplicantAND
HARRY MEMELINK and LYNX TRUSTEES LIMITED
First Respondents
ROY WILLIAM BASSETT-BURR
Second Respondent
On the papers: Counsel:
J D Dallas for Applicants
J G O Livingston for Respondents
Judgment:
14 December 2022
JUDGMENT OF CHURCHMAN J
[Costs and leave to appeal]
Introduction
[1] On 11 November 2022, I granted an application for a non-party costs award against Mr Bassett-Burr.1 In this judgment, I address costs in respect of the hearing that took place regarding the non-party costs order, and also an application by Mr Bassett-Burr for leave to appeal.
1 Haines & Ors v Memelink and Lynx Trustees Ltd & Anor [2022] NZHC 2966.
HAINES v MEMELINK (COSTS AND LEAVE TO APPEAL) [2022] NZHC 3402 [14 December 2022]
[2] Mr Basset-Burr alleges that a grant of leave to appeal is appropriate in the circumstances on the basis that it is ‘seriously arguable’ that the judgment contains errors of law.
[3] Mr Haines opposes the application for leave, and seeks costs of $36,387.75, plus disbursements of $890.
[4] For the reasons below, I am of the view that the application for leave should be dismissed, and costs awarded in the sum of $18,075, plus disbursements of $890.
Leave to appeal
Mr Bassett-Burr
[5] Mr Livingston, on behalf of Mr Bassett-Burr, submits that the non-party costs aspect of this proceeding cannot be regarded as a normal interlocutory application, as the application was filed following the conclusion of the substantive proceedings. He says that such a matter would normally have a right of appeal, as it was in reality a substantive issue for Mr Basset-Burr, which has been finally determined. He says that it is therefore appropriate to grant leave, particularly as if the matter was not advanced by interlocutory application there would have been a right of appeal. He submits that it is impossible for the appeal to cause delay to the substantive matter.
[6] Mr Livingston submits that the appeal has merit. He says that the decision did not address:
(a)the arguments relating to the case being within the ordinary run of cases and bona fides;
(b)the fact that technical issues with the statutory demands were no bar to their enforcement;
(c)arguments relating to the proceeding being inevitable regardless of the non-party’s involvement;
(d)the premature nature of the claim that the receivers of the Link Trust (No 1) (the Trust) are unable to settle Trust debts, as that process is still underway;
(e)the fact that the statutory demands were withdrawn on 17 June 2019;
(f)arguments regarding setoffs, counterclaims, and cross demands between the Haines interests and the Trust; and
(g)evidence which established that the Haines interests have a significant debt to the Trust.
[7] Mr Livingston says that the award of non-party costs is significant and will place Mr Bassett-Burr under significant financial pressure.
Mr Haines
[8] Mr Dallas on behalf of Mr Haines and his interests, properly accepts that it is more likely for leave to be granted where an interlocutory application has the effect of disposing of the proceedings. However, he submits that this is only in situations where there is a bona fide and serious argument on appeal. He says that in the present case there are no bona fide and serious arguments that have been advanced, and that leave should not be granted.
[9] Mr Dallas submits that the proposed appeal appears to be advanced on the incorrect basis that the setting aside of the statutory demands was wrong. He says that the demands were set aside by the High Court, which was an order that was unopposed by Mr Memelink, and that the time to appeal that decision has since long passed.
[10] He submits that the judgment clearly considered the arguments advanced by Mr Livingston, and that insolvency principles are not relevant to the application for non-party costs.
[11] Mr Dallas submits that Mr Livingston’s arguments regarding the solvency of the Trust are misplaced in circumstances where the Trust is in receivership, Lynx
Trustees Limited is in liquidation, and Mr Memelink remains an undischarged bankrupt. He says that calculating the debts owed between the parties to these proceedings is not a simple matter. He says that Mr Livingston’s arguments are not bona fides.
[12]Particularly, he says:
15.The applicant submits that he had no knowledge that the statutory demands were not withdrawn on 17 June 2019 and that everything that occurred after that date was done so solely by Mr Memelink. It is respectfully submitted that this proposition is utter nonsense. The applicant:
15.1engaged Mr Smith to file an application for an adjournment on 28 August 2019.
15.2was copied into all memoranda, minutes and judgment of the Court by counsel and the Registry.
15.3filed copious voluminous materials in the small hours of the morning on the day of the original hearing on 30 August 2019.
[13] Mr Dallas submits that it is not relevant whether or not Mr Bassett-Burr funded the litigation, rather the fact that he personally put the respondents to cost in defending it. He says that these costs are ongoing, and that both Mr Memelink and Mr Bassett- Burr have a habit of filing appeals and not pursuing them. He submits that the current application, like previous applications is simply a delaying tactic.
Further submissions
[14] Mr Livingston filed submissions in reply. He claims that Mr Dallas has conceded that where a decision finally determines any aspect of a proceedings, that means that leave to appeal should be granted. He repeats the submission that:
A dispositive interlocutory application will almost inevitably be granted leave because it results in the same sort of outcomes as a summary judgment or strike out decision. By direction of Parliament, a summary judgment or strike out appeal does not require the test for bona fide or serious arguments. At any rate, the applicant submits there are bona fide and serious arguments to pursue.
[15] Mr Livingston submits that there are no grounds to suggest that Mr Bassett- Burr had any role except that of passing along emails. He says that there is no reason
to believe that Mr Bassett-Burr (when represented) will not diligently pursue an appeal. He says that preparation has already begun, and that Mr Bassett-Burr’s actions in relation to this matter have been timely.
Relevant law
[16] The parties are in agreement as to the law which applies to applications for leave to appeal in respect of interlocutory applications, and that the application for leave is in respect of an interlocutory application. Section 56 of the Senior Courts Act 2016 provides:
(3)No appeal, except an appeal under subsection (4), lies from any order or decision of the High Court made on an interlocutory application in respect of any civil proceeding unless leave to appeal to the Court of Appeal is given by the High Court on application made within 20 working days after the date of that order or decision or within any further time that the High Court may allow.
(4)Any party to any proceedings may appeal without leave to the Court of Appeal against any order or decision of the High Court—
(a)striking out or dismissing the whole or part of a proceeding, claim, or defence; or
(b)granting summary judgment.
[17] An interlocutory application is relief ancillary to that claimed in a pleading, being collateral to but flowing out of the claimed relief.2 Generally, the following considerations are relevant on an application for leave:3
(a)a high threshold exists, in that the applicant should raise an arguable error of law or fact;
(b)leave should only be granted where the circumstances warrant further delay;
2 Senior Courts Act 2016, s 4; and Trotter v Telfer Electrical Nelson Ltd [2018] NZCA 231, [2019] NZAR 476 at [21].
3 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [9]–[14]; affirmed in Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].
(c)an alleged error should be of general or public importance, or otherwise be of sufficient importance to the applicant to outweigh the lack of any general or precedential importance; and
(d)the interests of justice must favour granting leave.
[18]However, as recently stated by the Court of Appeal:4
The scheme of s 56 is that appeals as of right are reserved for final determinations in respect of a proceeding. A leave filter applies to appeals from decisions on interlocutory applications in order to avoid delay and unnecessary cost. The underlying assumption is that such decisions are made in the course of a proceeding, and appeal rights should be exercised when the proceeding comes to an end. If a procedural decision has affected the ultimate outcome, that issue can be raised in an appeal against the substantive High Court decision that concludes the proceeding: see s 56(6). I consider that s 56(4) must be interpreted purposively, to apply to decisions that have the effect of bringing to an end the whole of a proceeding. Such a decision is, for the purposes of s 56(4), a decision that dismisses the proceeding.
[19] The parties are agreed as to the considerations to apply up until this point. However, Mr Dallas sought to emphasise the requirement that “the arguments in the appeal are capable of bona fide and serous argument”.5 As noted above, Mr Livingston alleged either that leave should be granted simply because the decision was dispositive, or in the alternative that the appeal was bona fides and reasonably arguable.
Analysis
[20] The leave requirement is a filtering mechanism. It is intended to filter unmeritorious appeals which are not bona fides, or in other words, not reasonably arguable. This principle recognises the importance of limited judicial resources, as against the fundamental requirement of access to justice. As has previously been stated:6
The Court of Appeal is a very busy Court. It is understandable that it should wish to avoid being burdened with multiple and possibly unnecessary appeals arising from one piece of litigation.
4 Dokad Trustees Ltd v Auckland Council [2022] NZCA 177 at [10].
5 Li v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 1171 at [21(d)].
6 Siemer v Heron [2011] NZSC 133, [2012] 1 NZLR 309 at [30].
[21] This must be properly balanced against the principle that litigants should have a right of appeal against a decision that is in reality, dispositive, regardless of whether the matter is interlocutory or substantive. However, whether leave to appeal should be granted is a high threshold, which rests upon an assessment of the merits of the appeal, and whether it raises an issue of proper significance.
[22] In the present matter, context is all important. Mr Bassett-Burr’s general conduct in litigation has not been, as advocated by Mr Livingston, timely and proper. As recently stated by Johnston AJ in a costs matter in a related case:7
Mr Bassett-Burr is Mr Memelink’s brother-in-law. As the shareholder and director of Lynx Trustees, a former trustee of the Link Trust No. 1, he has featured in litigation concerning Mr Memelink’s bankruptcy before. Given the hopeless nature of this claim, it would not be difficult to infer that it was commenced as a cynical, last ditch effort to prevent the Court approving the liquidators’ costs at the instigation of Mr Memelink. That, in my assessment, would be an improper purpose and an abuse of the Court’s processes.
By way of explanation, Mr Livingston suggests that Mr Bassett-Burr’s motivation was to ensure that issues in Mr Memelink’s bankruptcy which he regarded as being unresolved were considered by the liquidators and if necessary the Court. The issues concern claims that Mr Memelink has sought to litigate in the past relating to whether body corporate levies were payable. That, in my assessment, constitutes an attempt to stretch the Court’s credulity beyond endurance. As Mr O’Connor and Mr Neil submit, those historical claims have been dealt with in earlier proceedings by this Court and the Court of Appeal, albeit not in a way that Mr Memelink agrees with.
For those reasons, I have reached the following conclusions. Mr Bassett- Burr’s application was doomed to failure from the outset. The Court is entitled to assume that he was aware of that. There was no legitimate reason for the commencement of the proceeding, other than as some sort of stalling tactic on behalf of the trustees of the Link Trust No. 1 to stop this Court making the order sought by the liquidators.
[23] Both Mr Bassett-Burr and Mr Memelink have been integral participants (and/or parties) in litigation involving Mr Haines, the Trust, Lynx Trustees Limited, and the Official Assignee over the course of a number of years.
7 Body Corporate 68792 v Lynx Trustees Limited (in liq) [2022] NZHC 3125 at [18]–[20].
[24] As I stated in the substantive judgment, this proceeding has had a “long and somewhat convoluted history”, stretching back to May 2019.8 This history has involved judgments in this Court,9 the Court of Appeal,10 and Supreme Court.11
[25] The importance of finality in litigation therefore looms large, and this unusual context is a factor that the Court is entitled to take account of. What Mr Livingston is asking the Court to do is condone further delay in respect of a matter where there is not, in my view, any bona fides or reasonable argument.
[26] To do so at this stage would be inappropriate. Although I accept that the decision that Mr Bassett-Burr seeks to appeal from is essentially dispositive, that is not the only assessment that is required to be made when considering a leave application. In the absence of a bona fide argument, there is no basis for granting leave. That is particularly so give the amount of court time already devoted to this litigation and the context, alluded to in [22] above, of Mr Bassett-Burr’s track record of cynical and last-ditch efforts to thwart the timely conclusion of legal processes.
[27] The previous appeal in relation to the original non-party costs order was concerned almost entirely with the question of whether Mr Bassett-Burr was given adequate notice of the possibility of a non-party costs award. Whether or not a non- party costs order should have been made against Mr Bassett-Burr, is a distinct issue compared to the jurisdictional issue of whether he had adequate notice, and was not addressed by the Supreme Court or the Court of Appeal, which both noted that the Haines interests could make a further formal application in the High Court.12
[28] I consider that the arguments set out in [6] above that Mr Livingston says justify granting leave have nothing to do with the simple issue that was actually involved in this case namely that Mr Bassett-Burr improperly caused notices of demand to be served, failed to withdraw them when put on notice, caused an unnecessary Court hearing and was ordered to pay costs personally as a result.
8 Above n 1, at [2].
9 Haines v Memelink [2019] NZHC 2169.
10 Memelink v Haines [2020] NZCA 205; and Bassett-Burr v BPE Trustees (No 1) Limited [2020] NZCA 457 at [12].
11 Haines & Ors v Memelink and Forester [2021] NZSC 14 at [7].
12 At [15]; and Bassett-Burr v BPE Trustees (No 1) Limited, above n 10, at [23].
[29]These issues have also already been determined:
(a)The fact that the statutory demands should never have been issued was confirmed by them being declared improper.13 The time for appealing that decision has since passed. It is not a matter that is able to be tangentially challenged on an appeal which relates solely to the second non-party costs order made against Mr Bassett-Burr. Nor is it an issue that the Supreme Court or Court of Appeal made contrary findings on.
(b)The decision Mr Bassett-Burr seeks to appeal did not misstate the test for assessing a statutory demand.
(c)The outcome of other litigation between these or related parties has no bearing on the present discrete issue of whether a non-party costs order should be made against Mr Bassett-Burr as a result of him putting Mr Haines to the trouble and expense of unnecessarily having to move to set aside the notices.
(d)As should have been apparent from my decisions of 30 August 2019, 13 May 2021, and 11 November 2022, I am of the view that the tests for ordering non-party costs were met in these proceedings.14
(e)The present matter is not the appropriate forum to enter into arguments regarding the parties respective alleged debts to each other. That is a matter that is properly addressed in the liquidation and receivership respectively. Therefore, “established insolvency principles” and their application are entirely irrelevant.
(f)Having recently presided over another matter involving the Trust, being an application by the receivers to vary the terms of their appointment, it has become clear that, contrary to the optimistic but baseless claims
13 Above n 9, Haines & Ors v Memelink & Anor [2021] NZHC 1063, at [32]–[33].
14 Above n 9; and above n 1.
often repeated by Mr Memelink and Mr Bassett-Burr, the Trust is insolvent.15
[30]Accordingly, the application for leave to appeal is dismissed.
Costs
Mr Haines
[31] Mr Haines seeks an order for costs on a 2B basis with an uplift of 50 per cent. He seeks also that two matters be awarded on a 2C basis with an uplift of 50 per cent. In total he seeks an award of $36,387.75 plus disbursements of $890. As to costs, Mr Dallas submits that Mr Bassett-Burr’s submissions contained significant errors of fact and law.
[32] He says that Mr Bassett-Burr also filed submissions in reply to Mr Haines’ reply submissions, which included a table setting out the financial position of the Trust which was inaccurate and/or misleading. He says that this justifies an increased time provision for step 24 (preparation of written submissions) and step 30 (preparation of affidavits, list of issues or authorities; and agreeing common bundle).
[33]Mr Dallas seeks increased costs on the bases that:
(a)the application was unnecessary, Mr Bassett-Burr’s liability having already been determined, as distinct from the procedural issue of inadequate notice;
(b)counsel wrote to Mr Bassett-Burr prior to the filing of new proceedings, giving him an opportunity to settle the matter by withdrawing the notices;
(c)it is normal for a 50 per cent uplift to be awarded where statutory demands have been issued improperly;
15 Body Corporate 81012 & Ors v Memelink & Anor [2022] NZHC 3307 at [27]; see also above n 1, at [12].
(d)Mr Bassett-Burr alleged that the application was an abuse of process in his notice of opposition;
(e)Mr Bassett-Burr made untenable statements and allegations in his evidence;
(f)Mr Livingston intended to seek indemnity costs in the event that Mr Bassett-Burr was successful, illustrating an acceptance that such an award would be appropriate in the circumstances; and
(g)Mr Bassett-Burr’s opposition was “clearly ill-conceived, incorrect and a needless waste of Court time and resources”; and
(h)Mr Livingston insisted on an in-person hearing, which is unusual on an application for costs. That cause unnecessary costs to be incurred.
Mr Bassett-Burr
[34] Mr Livingston submits that step 30 does not apply to interlocutory applications. He says that the ‘Preparation of affidavits, list of issues or authorities; and agreeing common bundle’ is already provided for in respect of interlocutory applications in step 22 and step 25. He says that the application was heard in one hour, and that therefore there was no increase in the amount of time that the steps in these proceedings would ordinarily take. He submits that he communicated in a timely manner and abided by timetabling requirements.
[35] Mr Livingston submits that he did not provide misleading or inaccurate material to the Court, and has not breached his obligations to the Court. He says that the correct categorisation is 2B. He submits that Mr Dallas did not provide a proper settlement offer to him, in that no position that was more favourable than which the Court could order was put before him.
[36] Mr Livingston says that the defence of the matter was necessary and had merit. He says that every ground advanced for the setting aside of the statutory demands was rejected in Memelink v Haines [2021] NZHC 1992. He says that his submissions do
not form a basis for increased costs, and that Mr Dallas has been unable to show a factor that was exceptional which warrants increased costs. In the alternative, he says that if an uplift is warranted, 20 per cent would be more appropriate.
Analysis
[37] Costs are a matter of the Court’s discretion. Typically, costs follow the event. That is the position in the present case, which is accepted by the parties. I am satisfied that 2B is the appropriate categorisation for these proceedings. The issues in respect of costs are:
(a)has Mr Dallas incorrectly included particular steps;
(b)is an increased time allowance justified for the steps proposed; and
(c)is an award of increased costs justified.
[38] Firstly, I accept Mr Livingstone’s submission that it appears that step 30 is already provided for in respect of interlocutory applications by steps 22, 23, and 25. Accordingly, Mr Dallas is unable to claim costs for step 30. In Tandem Group Ltd v ASB Bank Ltd, the Court held that the preparation of affidavits for an interlocutory application is encompassed within step 22 or 23.16 However, given the relatively small amount of time that is allocated for those steps (0.6 days), there is an argument that where larger amounts of evidence are concerned, there should be “little reluctance in awarding costs at band C (two days) for these steps”.17 While it is true that Mr Haines filed a greater amount of material than Mr Bassett-Burr, I accept that 0.6 days would not have been a sufficient or reasonable amount of time to fully assess the material filed. Accordingly, it is appropriate to award step 22 at band C.
[39] A party seeking increased costs bears the onus of convincing the Court to award them,18 and a clear basis must be shown for such an award.19 This entails
16 Tandem Group Ltd v ASB Bank Ltd [2021] NZHC 1135 at [13]–[23].
17 David Bullock and Tim Mullins The Law of Costs in New Zealand (LexisNexis, Wellington, 2022) at [2.53].
18 Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232. 3 June 2011.
19 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [28].
establishing that there has been a failure by the party paying costs to act reasonably.20 Conduct found to be unreasonable must be in relation to the proceeding, rather than conduct that took place prior.21 Mr Dallas’ submissions allege that there were a number of ways in which Mr Bassett-Burr and/or Mr Livingston acted unreasonably.
[40]Rule 14.6 of the High Court Rules 2016 provides:
(3)The court may order a party to pay increased costs if—
(a)the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i)failing to comply with these rules or with a direction of the court; or
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding;
…
[41] Mr Dallas’ application was essentially based on ss (3)(b)(ii) and (3)(b)(v). He first alleged that Mr Bassett-Burr had taken or pursued an unnecessary step or an argument that lacked merit. To justify increased costs on this basis, generally something more than the fact that a party has lost is required. Increased costs have been awarded where there was “no basis” for a claim, or where a claim was hopeless
20 At [27].
21 Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160]; Corrick v Silich [2018] NZCA 221, [2018] NZCCLR 1 at [60].
or fundamentally misconceived.22 It is therefore a discretion that requires a good reason for its exercise. I accept that Mr Livingston made arguments without merit, put incorrect information before the Court, and sought an in-person hearing for a costs matter, which is unusual. On that basis alone, I am satisfied that an award of increased costs is appropriate, given the undertaking of unreasonable conduct in the proceedings. I am again troubled by Mr Livingston’s insistence that the Trust is in fact solvent. Not only is there no rational basis for that assertion, but it is also essentially irrelevant to the present matter.
[42] Generally, an uplift of 50 per cent is the upper limit of what is appropriate in the circumstances.23 In the present case, I am of the view that increased costs of 50 per cent would in effect constitute over recovery. I instead consider that increased costs of 25 per cent is more appropriate.
[43] For completeness, I note that I accept Mr Livingston’s argument that Mr Dallas did not put a complete offer in respect of costs to him, merely stating that “In the absence of a response an application on notice will be prepared and filed and costs for that application will become an issue”. While I take that statement to mean that in the event of a settlement there would be no issue of costs as between the parties, that of itself cannot create a presumption that where a party refuses to settle, they should have increased costs awarded against them on that basis. Something more in terms of an offer is required.24
22 Weaver v HML Nominees Ltd [2016] NZHC 473 at [59]; and Oxygen Air Ltd v LG Electronics Australia Pty Ltd [2020] NZHC 1863 at [22]–[23].
23 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [48].
24 Thompson v Continental Car Services Ltd [2018] NZHC 2009 at [20].
Result
[44] The application for leave to appeal is dismissed. I award costs to Mr Haines in the sum of $18,075 plus disbursements of $890.
Churchman J
Solicitors:
J D Dallas, Wellington for Applicants
Livingston & Livingston, Wellington for Respondents
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