Memelink v Collins & May Law
[2020] NZCA 62
•25 March 2020 at 2.00 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA501/2019 [2020] NZCA 62 |
| BETWEEN | HARRY MEMELINK |
| AND | COLLINS & MAY LAW |
| Court: | Cooper and Wild JJ |
Counsel: | Applicant in person |
Judgment: | 25 March 2020 at 2.00 pm |
JUDGMENT OF THE COURT
AThe application is declined.
BEach of the separately represented sets of creditors who opposed this application is entitled to their costs of preparing their memorandum in opposition to the application, on a band A basis plus usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Wild J)
The application
Mr Memelink seeks an extension of time to appeal a judgment delivered by Associate Judge Johnston in the High Court on 28 August 2018.[1] Mr Memelink’s application is about a year out of time.
The background
[1]Re Memelink HC Wellington CIV-2018-485-363, 28 August 2018.
The judgment Mr Memelink seeks to appeal adjudicated him bankrupt. The Associate Judge’s reasons, delivered the following day, refer to a proposal to creditors which Mr Memelink filed on 23 August 2018, under sub-pt 2 of pt 5 of the Insolvency Act 2006. Mr Memelink did not alert his creditors to that proposal. Rather, he asked the Associate Judge to adjourn the hearing of the bankruptcy proceedings to enable Mr Memelink to put his proposal to his creditors for their vote. The creditors represented at Court opposed an adjournment and the Associate Judge refused it.
In his reasons, the Associate Judge noted:
[5] On the figures disclosed by Mr Memelink in his proposal he has assets of $6,000, secured debt of $2,605,000 and unsecured debt (including the judgment debts to Collins & May) of $2,945,714.26. So, on his own analysis, Mr Memelink’s assets are exceeded by his liabilities by more than $5,500,000. Essentially, the proposal that he intended putting to his creditors was that the secured creditors be paid in accordance with the contractual arrangements they have with him and the unsecured creditors share $600,000.
The Associate Judge summarised his reasons for adjudicating Mr Memelink bankrupt in this way:[2]
…
(c) in the end, this case involves two undisputed judgment debts. Collins & May served bankruptcy notices on 12 June 2018. Mr Memelink took no steps in response to the service of those notices. Collins & May issued proceedings on the strength of those notices on 4 July 2018. Mr Memelink did not file notices of opposition. Two working days prior to the hearing of Collins & May’s applications, he lodged a proposal which, as I understand it, has not yet been served on his creditors, and on the strength of that sought an indefinite adjournment which would force Collins & May to await the outcome of the process whereby that proposal is put to Mr Memelink’s creditors for approval and, if approved by his creditors, the Court’s approval is sought.
[13] In my view, to accede to Mr Memelink’s request for an adjournment in those circumstances would be inconsistent with the purposes and relevant provisions of the Insolvency Act and an injustice from Collins & May’s perspective.
[2]At [12(c)]–[13].
On 7 September 2018 Mr Memelink applied to annul his adjudication as bankrupt. Successive applications by Mr Memelink to adjourn that application were dismissed. The application was eventually heard by Associate Judge Lester on 5 and 6 June 2019. The Associate Judge dismissed the application in a judgment he delivered on 14 June 2019.[3] That judgment sets out, and then carefully works through, the three grounds for annulment advanced by Mr Memelink. They were:
(a)Associate Judge Johnston was disqualified from hearing the bankruptcy proceedings by conflicts of interest.
(b)Mr Memelink did not pay the judgment debts founding the adjudication proceedings because of flawed legal advice.
(c)Mr Memelink’s creditors were using the bankruptcy process for collateral purposes: they were abusing the process.
[3]Memelink v Official Assignee [2019] NZHC 1357.
It is clear from the judgment that Associate Judge Lester permitted Mr Memelink, in his oral submissions, to range well beyond the grounds in his application and the content of the affidavits supporting it. Equally clear is that the Associate Judge then allowed Mr Memelink, in his reply, to range far beyond points raised by counsel for the creditors opposing annulment.
The Associate Judge found none of the grounds for annulment to be made out. He concluded:
[74] Once the Court was presented with unpaid judgment debts, unpaid and undisputed supporting creditors and an insolvent debtor’s proposal, an order for adjudication was at the very least an outcome reasonably open to the Court.
The present application was filed on 2 October 2019; that is, some three months after annulment was refused.
Applicable principles
In determining an application such as this, the Supreme Court in Almond v Read states the question is always: what do the interests of justice require?[4] The Supreme Court then set out the considerations relevant in answering that question.[5] We deal with each in turn.
The length of the delay: reasons for the delay
[4]Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].
[5]At [38]–[39].
As we have noted, the delay is about a year. Mr Memelink, as is his wont, blames a former lawyer for this. He points the finger at Mr Guy Manktelow, who advised him to seek annulment rather than to appeal. In his supporting affidavit Mr Memelink asserts:
4. This advice was in contradiction to [that] of the Official Assignee, Ms Sonia Gardener, who supported my applying for an appeal once she understood that “Memelink Group”, comprising myself, my companies and my trust I had around $15M of assets and $6.5M debt (including disputed debts and Mr Haines fraudulent $1M invoice).
Two points about this. First, as we explain at [28] and following below when considering the merits of the proposed appeal, Mr Memelink largely proposes to re‑run arguments he unsuccessfully put to the High Court in support of his annulment. Thus, a different outcome on appeal is improbable.
Second, if the “Memelink Group” really does have equity of around $8.5 million, then why has Mr Memelink not paid the debts that led to his bankruptcy, or at least the judgment debts and those he does not dispute?
The answer, which emerges from the mass of material filed in support of Mr Memelink’s application, is that Mr Memelink’s modus operandi is prevarication, disputation and obfuscation.
Mr Memelink also deposes:
18.Since the unsuccessful annulment, a large number of proceedings that were stayed until the annulment decision was made have come off hold, and I have been extremely busy responding to these.
That is distinctly not an acceptable explanation for the delay involved in this application.
The two delay considerations go against granting this application.
Conduct of the parties, particularly the applicant
In the memorandum of 11 November 2019 filed in respect of this application, the Official Assignee (OA) states:
3.1 Mr Memelink has failed to co-operate with the Official Assignee in his bankruptcy, particularly in that:
(a) He has failed to complete his statement of affairs as required by s67 of the Insolvency Act 2006;
(b) He has failed to provide information which enables the Official Assignee to have a thorough understanding of his creditors, assets and liabilities.
Responding in a memorandum on 20 November 2019, Mr Memelink disagrees, although he accepts he could not provide the OA with up-to-date accounting information “due to personal, company and trust yearly accounts lapsing”.
In a letter to Mr Memelink on 21 August 2019, the OA advised she had, after examination, admitted claims by six unsecured creditors against Mr Memelink personally and four claims by unsecured creditors against Mr Memelink in his capacity as trustee of the Link Trust (No 1). She advised that she had not yet made a decision to admit or reject three further claims. Mr Memelink has applied to oppose admission of all but one of the claims, and this application is progressing toward a hearing in the High Court. One of the debts admitted by the Official Assignee is the judgment debt of $121,967.58 owed to the law firm Collins & May for unpaid costs awarded against Mr Memelink and his trust by this Court[6] as a result this Court’s earlier judgment of 23 November 2017.[7]
[6]Collins & May Law v Memelink and Renshaw as Trustees of the Link Trust (No 1) [2018] NZCA 29.
[7]Collins & May Law v Memelink and Renshaw as Trustees of the Link Trust (No 1) [2017] NZCA 541.
We note that the Supreme Court, in a judgment on 11 October 2019, dismissed an application by Mr Memelink for an extension of time to apply for leave to appeal against the judgment of this Court just referred to.[8] The leave application was filed over a year out of time. Yet again, Mr Memelink blamed a former lawyer for the delay. But the Supreme Court observed:
[12] What is clear, however, is that Mr Memelink was certainly put on inquiry before his email to his then lawyer in June 2018 and yet the application was only filed in September 2019, more than a year later. There is no reasonable excuse for the delay.
[8]Memelink and Lynx Trustees Ltd as Trustees of Link Trust (No 1) v Collins & May Law [2019] NZSC 114.
As to the merits of the proposed appeal, the Supreme Court stated:
[13] Mr Memelink … submits that the Court of Appeal erred on the facts and that the Court was deprived of certain documents which would have changed the result. He does not, however, identify with any precision those documents or explain why they would have led to a different result. …
All of this reflects poorly on Mr Memelink and exemplifies the modus operandi we refer to in paragraph [13] above. This consideration also weighs against granting the application.
Prejudice
The creditors represented by Messrs O’Connor and Dewar oppose this application. They submit there is prejudice and hardship to them, in the sense that they are entitled to closure of this long-running bankruptcy matter. The gist of their opposition is that “the application for leave plainly outlines an intention to have a second bite at the cherry”.
We accept the basis for the creditors’ opposition and that this very late attempt to set aside the bankruptcy prejudices the creditors.
This consideration, also, is against granting the application.
Significance of the issues raised by the proposed appeal
In his application Mr Memelink states:
8.This appeal is important for public interest and justice, particularly at a time when legal practitioners and the legal system in general are coming under increased scrutiny, and public demands for increased levels of transparency, ethics, competence and fairness.
In his supporting affidavit Mr Memelink adds:
21.This appeal is important for the sake of public interest and justice, as other parties will be looking to this High Court judgment for guidance in their cases.
The creditors opposing this application reject this assertion of public interest and so do we. While the bankruptcy decision is of obvious importance to Mr Memelink, the issues he seeks to re-litigate are not of public interest. Mr Memelink’s wont to criticise, seemingly, every lawyer who acts for him, as well as many of those acting for parties he is in dispute with, does not elevate this case to one of public interest.
The merits of the proposed appeal
In Almond v Read the Supreme Court said:[9]
[39] We accept that the merits of a proposed appeal may, in principle, be relevant to the exercise of the discretion to extend time. This is because there will be occasions on which the court will risk facilitating unjustifiable delaying tactics on the part of dilatory or recalcitrant litigants if it does not consider the merits. …
[9]Almond v Read, above n 4, at [39].
We intend looking at the merits of this proposed appeal for that very reason.
The six grounds set out in the application may be condensed to three, and we will deal with each in turn.
1. Erroneous decision
The application asserts Associate Judge Johnston erred in his understanding of the true situation and came to an incorrect series of conclusions resulting in his decision to adjudicate Mr Memelink bankrupt. Under this head Mr Memelink complains the Associate Judge incorrectly thought Mr Memelink:
(a)had had a large amount of time to arrange alternative counsel;
(b)was capable of representing himself; and
(c)was “bluffing” when he told the Associate Judge that he had “the funds to settle the current petitioning creditors’ debt immediately” and had “a lot of substantial money coming in”.
The transcript of the hearing and the Associate Judge’s reasons provide no support for any of these three points, quite the contrary. Mr Memelink several times mentioned to the Associate Judge that being self-represented placed him “in a very difficult position” and was “through no fault of [his] own”. The Associate Judge asked other counsel what they had to say about the fact that Mr Memelink had been left to fend for himself because his former lawyer, responsible for filing the proposal documents, was no longer available to Mr Memelink. He also asked Mr Memelink what steps he had taken to obtain new legal representation. At one point, when Mr Memelink again raised the point that he was “without a lawyer” and was “sort of floating in a boat without oars at the moment”, Mr Memelink agreed with the Associate Judge that he had reasonably successfully represented himself in court in the past.
It is clear that any concern Mr Memelink had about representing himself was confined to the detail of the proposal to creditors, which had been prepared and filed by his former lawyer, Mr Haines, two days earlier. However, as Associate Judge Lester pointed out in his annulment decision, what Mr Memelink had said to Associate Judge Johnston showed “he understood what a proposal by an insolvent person was”.[10] In our view, it also demonstrated that Mr Memelink had grasped the broad detail of his proposal.
[10]Memelink v Official Assignee, above n 3, at [33].
Mr Memelink does not explain how the fact that he was self-represented before Associate Judge Johnston disadvantaged him. He was simply seeking an adjournment of the bankruptcy proceedings so that his proposal could go to his creditors. The Associate Judge well understood that request, but refused it.
We turn to Mr Memelink’s assertion that Associate Judge Johnston thought he was “bluffing” in two respects. “Bluffing” is Mr Memelink’s word, not the Associate Judge’s. The Associate Judge said nothing to indicate his view of Mr Memelink’s two assertions. The fact is that Mr Memelink had not paid the judgment debts on which the bankruptcy proceedings were based. And, as we understand the position, he had still not paid them when his annulment application was heard by Associate Judge Lester in June 2019. These debts, amounting to $126,967.58, also appear in the OA’s report of 21 August 2019 to Mr Memelink. That report lists the creditors’ claims the OA had admitted, following examination.
2. Conflicts of interest
Associate Judge Johnston’s suggested conflict of interest with Mr Memelink himself was considered at length and dismissed by Associate Judge Lester.[11] We do not accept he erred in his approach to that issue. Mr Memelink is now seeking to suggest Associate Judge Johnston was conflicted because of his involvement, in his judicial capacity, in another proceeding. We reject that. The transcript records Mr Memelink telling the Associate Judge that he had no issue with the Judge hearing the bankruptcy proceedings. These further suggested conflicts were not raised on the annulment application and are unfounded afterthoughts by Mr Memelink.
3. Fraud and misleading conduct by Mr Memelink’s former lawyer, Mr Haines
[11]Memelink v Official Assignee, above n 3, at [10]–[24].
Again, this ground was argued before, and dismissed by, Associate Judge Lester. Among the debts listed in Mr Memelink’s proposal was a debt of $1,150,000 to QH Law, Mr Haines’ law firm. That related to an invoice dated 22 August 2018 rendered by QH Law for legal fees of $1,000,000 plus GST of $150,000. In his supporting affidavit, Mr Memelink accepts that Mr Haines emailed this invoice to him very early on the morning of 23 August 2018, but claims not to have had the chance to see the email and invoice until immediately prior to the adjudication hearing.
Mr Memelink asserts that Mr Haines included this invoice in the proposal to “increase [Mr Haines’] chances that the Official Assignee would accept, and pay-out for his fraudulent $1M + GST invoice …”. Associate Judge Lester’s response to these points was to say:[12]
[32] Assuming this is correct, deducting this debt from the unsecured indebtedness and leaving the secured indebtedness to one side, Mr Memelink was still insolvent. However, I note in the transcript of the adjudication hearing, Mr Memelink said:
In regards to my newly stated debts, these have been invoiced by my former lawyer since his exit from practice in the Court of Appeal – in the Court of Appeal affidavit, - sorry. Apologies. I just want to [inaudible] your Honour. I’ve been presented with a very large but seriously discounted invoice which represents several years of work on a large number of cases from the Tribunal to three in the Court of Appeal.
Large amounts of these fees specifically relate to defending the vexatious proceedings of the clients of Mr Dewar and Mr O’Connor. Mr Dewar and Mr O’Connor claim that Fico does not support the proposal. However, no proof of this is provided and it is also unknown what impact that the support or otherwise of any creditors will have on the voting outcome of my proposal without the creditors’ meeting. The asset that has been provided as security for the proposal is an asset of Link Trust No. 1 and will not be available to my creditors when an order of bankruptcy be made. I reiterate my previous statement that I have the funds to settle the current petitioning creditors’ debt immediately. However, given the other unapproved debts which now claim substitution I have required the scrutiny of the trustee before they’re included under my proposal.
…
[39] In my view, this means that the position that Mr Memelink conveyed to the Court was that he was insolvent. That position was not altered by deleting from his unsecured debt what he says is the disputed invoice from QH Law. Having positively adopted the proposal, Mr Memelink cannot now be heard to say that not all the true facts were before the Court. Mr Memelink cannot ask the Court to give him an adjournment on the basis that he wished to advance the proposal but disavow the proposal when the adjournment was declined. He cannot “appropriate and reappropriate”.[13]
[12]Memelink v Official Assignee, above n 3.
[13]In the last sentence of paragraph [39] we think the Associate Judge intended to say “approbate and reprobate”.
The grounds of the proposed appeal are without merit. They largely repeat matters advanced when Mr Memelink unsuccessfully applied for an annulment of his bankruptcy. Quite apart from the lack of any merit in the grounds, it is inappropriate for Mr Memelink to attempt to relitigate matters disposed of by a judgment of the High Court that he did not appeal.
Result
The application is accordingly declined.
Costs
Each of the separately represented sets of creditors who opposed this application is entitled to their costs of preparing their memorandum in opposition to the application, on a band A basis and usual disbursements.
Solicitors:
Robertsons Law, Auckland for Respondent, abiding the Court’s decision
Surridge & Co, Porirua for creditors BC 68792, Gambitsis Crombie Ltd and Geoffrey Fawcet, in opposition
Thomas Dewar Sziranyi Letts, Lower Hutt for creditors BC 378945 and BC 81012, in opposition
Anthony Harper, Christchurch for Official Assignee, abiding the Court’s decision
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