Haines v Official Assignee - [2023] NZHC 1203

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2018-485-363

[2023] NZHC 1203

UNDER the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Harry Memelink

BETWEEN

QUENTIN STOBART HAINES

Applicant

AND

THE OFFICIAL ASSIGNEE

Respondent

HARRY MEMELINK

Bankrupt

Hearing: 22 March 2023

Appearances:

C R Carruthers KC for Applicant

P W R Chisnall for Official Assignee H Memelink in Person

Judgment:

24 May 2023

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction and background

[1] Mr Harry Memelink was adjudicated bankrupt in August 2018. The bankruptcy has been anything but straightforward. It has given rise to an unusual amount of litigation, of which this is merely the most recent example.

[2] In or about October 2016 Mr Memelink engaged the applicant, Mr Quentin Haines, initially in Mr Haines’ capacity as an employed solicitor with Simpson & Co,

HAINES v THE OFFICIAL ASSIGNEE [2023] NZHC 1203 [24 May 2023]

and then as a solicitor practising on his own account, to act for him in relation to a number of contentious matters.

[3] By mid-2018, Mr Memelink was facing bankruptcy proceedings commenced by a firm of solicitors, Collins & May, the firm having secured a costs judgment against him. The firm’s application was supported by a large number of other parties who or which claimed to be creditors. Shortly before the fixture, Mr Memelink filed a proposal pursuant to pt 5 of the Insolvency Act 2006.

[4]Mr Haines was plainly the driving force behind this application.

[5] Immediately prior to the application being filed, Mr Haines rendered a fee note to Mr Memelink in respect of services provided to him from the time that he was originally engaged — improbably, Mr Haines had not previously rendered an invoice.

[6] The invoice was not a lengthy document. It was addressed to “Harry Memelink & the Trustees of the Link No. 1 Trust”. It was headed “RE: Agreed Legal Fees”. The narration was in these terms:

TO:our fee for professional services rendered and disbursements incurred, including but not limited to:

· All legal fees bought [sic] over from Simpson & Co and Simco Lawyers pursuant to agreement with James Clifford Simpson

· All legal fees from 1 April 2017 for ALL cases and ALL matters and attendances

· This fee has been agreed because the actual time spent on these files is more than 4000 hours. To settle all fees this fee has been agreed

[7]Mr Haines’ fee was $1m plus GST, a total of $1,150,000.

[8] Mr Memelink’s proposal identified Mr Haines as an unsecured creditor for the amount of his fee note, and he swore a supporting affidavit that included Mr Haines’ fee amongst his unsecured debts.

[9] Mr Memelink’s application pursuant to pt 5 of the Insolvency Act came before the Court on 23 August 2018, and was declined.

[10] Mr Memelink was adjudicated bankrupt at the hearing of Collins & May’s application on 28 August 2018. On the basis of his…

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.

Continue reading Haines v Official Assignee

Details

AGLC: Haines v Official Assignee [2023] NZHC 1203
Case: [2023] NZHC 1203
Decision Date: 24 May 2023

CaseChat Overview and Summary

Quentin Stobart Haines applied for a review of the Official Assignee's decision to reject his proof of debt in the bankruptcy of Harry Memelink. The Official Assignee had rejected Mr Haines' proof of debt on the basis that he had breached his professional obligations by rendering a $1,150,000 invoice for legal services. The Official Assignee accepted liability but could not assess quantum. The matter came before Associate Judge Johnston who was required to determine whether Mr Haines' proof of debt should be allowed, and if so, in what amount. The Court held that it was bound to make the assessment called for by s 252 of the Insolvency Act. It assessed the value of Mr Haines' proof of debt on the basis of the evidence before it and directed the Official Assignee to accept Mr Haines' proof of debt for an amount of $525,000 plus GST totalling $603,750. The Court reserved the issue of costs.

In reaching the decision, the Court considered the decision of the Lawyers and Conveyancers Disciplinary Tribunal which had concluded that Mr Haines' invoice was a sham and had been rendered in breach of his professional obligations. The Court accepted the Tribunal's decision and found that the invoice itself could not provide a proper evidential foundation for a determination of a proper fee. However, the Court held that Mr Haines was entitled to reasonable remuneration for his services. It assessed the value of Mr Haines' proof of debt on a quantum meruit basis, taking into account the nature of the work carried out, the amount of time spent on Mr Memelink's matters, and the appropriate hourly rate to apply. The Court accepted the assessments of Mr McMenamin and Mr Davie that Mr Haines could justify 1,400 and 2,000 hours respectively. It also accepted the Court's assessment of an appropriate hourly rate of $375. On those bases, the Court concluded that Mr Haines would be able to justify a total fee of $525,000.

Orders