Memelink v Haines - [2021] NZCA 116

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA180/2020
[2021] NZCA 116

BETWEEN	HARRY MEMELINK Appellant
AND	QUENTIN STOBART HAINES Respondent

Hearing:	10 November 2020 Further submissions filed 25 November 2020, 17 December 2020 and 15 February 2021
Court:	Brown, Duffy and Nation JJ
Counsel:	D G O Livingston and M F Moughan for Appellant D G Dewar and F A M Manning for Respondent A O’Connor and J D Dallas for supporting creditors as Interested Parties
Judgment:	14 April 2021 at 3.30 pm

JUDGMENT OF THE COURT

A The appeal is allowed

BThe order of the High Court adjudicating the appellant bankrupt is set aside.
CThe proceeding is remitted back to the High Court for rehearing.
DThe respondent must pay costs to the appellant for a standard appeal on a band A basis and usual disbursements. Order for an additional $750 of costs to account for the response memorandum of 15 February 2021.
EAs between the appellant and the supporting creditors, there is no order for costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Nation J)

Introduction

The respondent (Mr Haines) sought an order adjudicating the appellant (Mr Memelink) bankrupt for a second time on account of his failure to comply with a bankruptcy notice served by Mr Haines. Mr Memelink contended that the judgment debt (a costs order) relied on in support of the order for adjudication should be off‑set by a subsequent (and larger) order for costs and disbursements in his favour. It appears that both costs orders involved Mr Haines and Mr Memelink in their capacities as trustees.
Associate Judge Johnston ruled that, in consequence of Mr Memelink’s prior bankruptcy, the amount of the subsequent costs order was the property not of Mr Memelink but of the Official Assignee, stating:[1]
[32] The apparent asymmetry in this — Mr Memelink being liable on Grice J’s costs judgment of 20 May 2019 on which Mr Haines’ application in this proceeding is primarily based, but not being entiled to take advantage of her Honour’s 17 February 2020 judgment — is essentially a function of the operation of pt 2 of the Insolvency Act.
[1]Haines v Memelink [2020] NZHC 434 (footnote omitted) [Adjudication decision].
Mr Memelink appeals against the order adjudicating him bankrupt. The primary issue in the appeal is whether the Official Assignee or Mr Memelink, albeit in his trustee capacity, is entitled to the benefit of the subsequent costs order.

Background

The status of the parties

Mr Haines, a solicitor, was retained by Mr Memelink and persons associated with him. Mr Haines claimed that Mr Memelink and his interests owed him a significant amount for legal fees, which Mr Memelink disputed. Mr Memelink made complaints to the New Zealand Law Society concerning Mr Haines. As a result, by 2018 their relationship was one of intense mutual distrust. Mr Haines ceased practice as a solicitor on 23 August 2018. Mr Memelink was adjudicated bankrupt on 28 August 2018.
The various judgments discussed…

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 Memelink v Haines

Details

AGLC: Memelink v Haines [2021] NZCA 116
Case: [2021] NZCA 116
Decision Date: 14 April 2021 at 3.30 pm

CaseChat Overview and Summary

The Court of Appeal of New Zealand was presented with an appeal in the case of Memelink v Haines. The appellant, Harry Memelink, appealed the order adjudicating him bankrupt for a second time. This followed a decision of the High Court, which held that Mr. Memelink had committed an act of bankruptcy by failing to comply with a bankruptcy notice served by the respondent, Quentin Stobart Haines. The primary issue in the appeal was whether the Official Assignee or Mr. Memelink, albeit in his trustee capacity, was entitled to the benefit of a subsequent costs order.

The Court of Appeal found that the subsequent costs order was the property of Mr. Memelink in his capacity as trustee, and not the Official Assignee. The amount of the subsequent costs order more than offset the amount of the judgment debt relied upon in support of the order for adjudication. Consequently, the $1,000 debt requirement in s 13(a) of the Insolvency Act was not satisfied, and the adjudication order should not have been made. The appeal was allowed, the order adjudicating Mr. Memelink bankrupt was set aside, and the proceeding was remitted back to the High Court for rehearing. Mr. Memelink was entitled to costs from Mr. Haines for a standard appeal on a band A basis, together with usual disbursements, and an additional $750 of costs to account for the response memorandum of 15 February 2021. There was no order for costs between the appellant and the supporting creditors.

Orders