Memelink v Haines
[2021] NZCA 116
•14 April 2021 at 3.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA180/2020 [2021] NZCA 116 |
| BETWEEN | HARRY MEMELINK |
| AND | QUENTIN STOBART HAINES |
| Hearing: | 10 November 2020 |
Court: | Brown, Duffy and Nation JJ |
Counsel: | D G O Livingston and M F Moughan for Appellant |
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 below concerned Mr Haines and Mr Memelink in their trustee capacities. Mr Haines had a family trust, the trustees of which were Mr Haines himself and BPE Trustees (No. 1) Ltd (together referred to as the Haines Trustees). Mr Memelink also had a family trust, the Link Trust (No. 1), the trustees of which were Mr Memelink himself and Lynx Trustees Ltd (together referred to as the Memelink Trustees).
The interim injunction application
Mr Haines lived in a property in Levin owned by the Haines Trustees.
In 2018 there were two mortgages secured on the title to the Levin property, the first to Basecorp Finance Ltd and the second to Fico Finance Ltd (Fico). Some of the borrowing from Fico was for the benefit of Mr Memelink and the Link Trust (No. 1). The Memelink Trustees were guarantors of the Fico loan.
By late 2018 there had been defaults in mortgage payments due to Fico. Mr Haines claimed those defaults were the result of Mr Memelink not making those payments. Mr Memelink denied he was responsible for the payments.
In December 2018 the Memelink Trustees purchased an assignment of the Fico loans and Fico’s security as second mortgagee over the Levin property. Mr Memelink threatened to sell the Levin property. Mr Haines claimed he could not obtain information as to the amount due on the Fico mortgage.
The Haines Trustees filed proceedings in the High Court seeking an injunction restraining the Memelink Trustees as mortgagee from taking any step to realise their security over the Levin property.
Following a hearing on a Pickwick basis on 21 December 2018 by way of a telephone conference, in order to preserve the status quo Grice J issued an interim injunction restraining the Memelink Trustees from taking any steps to sell, transfer or dispose of the Levin property.[2] The proceedings were adjourned for a full on notice hearing.
[2]Haines v Memelink [2018] NZHC 3460.
After a hearing on 11 February 2019, Grice J granted the interim injunction in view of the Memelink Trustees’ failure to provide information to the Haines Trustees to enable the latter to redeem the Fico mortgage. As a condition of the injunction order, the Haines Trustees were to jointly and severally pay the interest payable under the Fico loan, equating to $5,582 per month, to the Official Assignee as administrator of Mr Memelink’s affairs.[3]
Costs order on the interim injunction (20 May 2019)
[3]Haines v Memelink [2019] NZHC 401 at [52] and [56].
On 20 May 2019, Grice J determined costs arising from the grant of an interim injunction.[4] As the Haines Trustees had succeeded in obtaining interim relief following a defended hearing, the Judge accepted that they were entitled to some costs. However the Judge did not consider it appropriate that the Memelink Trustees should be ordered to pay the full amount of costs on a category 2B basis.[5] Concluding that in the circumstances a discount of 50 per cent to the costs sought by the Haines Trustees was appropriate, Grice J accordingly ordered:[6]
… costs in favour of the [the Haines Trustees] against the [the Memelink Trustees] 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.
The amount payable under that order was $4,933.
Discontinuance of the injunction proceeding
[4]Haines v Memelink [2019] NZHC 1086.
[5]At [12].
[6]At [15].
With Mr Haines’ involvement, arrangements were made for a third party to take an assignment of the Basecorp Finance Ltd mortgage for $760,000. That third party then sold the property to another party for $813,000 which then leased the property back to Mr Haines. The property sale was completed in May 2019. As a result, Mr Haines remained resident in the property. No surplus was recovered for the second mortgagee from that sale. Hence the security which Memelink Trustees had by way of second mortgage over the Levin property was no longer of any value.
In consequence the Haines Trustees had no reason to continue with the proceedings seeking a final injunction restraining the Memelink Trustees from selling the Levin property. In further proceedings between the Haines Trustees and the Memelink Trustees, but under a separate proceedings number, the Haines Trustees sought leave to discontinue the injunction proceedings. In a judgment of 31 October 2019, Grice J granted leave for the notice of discontinuance to be filed.[7]
[7]Haines v Memelink [2019] NZHC 2802.
In this judgment, Grice J recorded that the Official Assignee appeared at the injunction hearings, including the discontinuance hearing. The Official Assignee had indicated she abided the decision of the Court and took no active part in the proceedings. She did not raise Mr Memelink’s bankruptcy as a barrier to the Court dealing with the matter. The second Memelink Trustee, Lynx Trustees Ltd, was in liquidation. The liquidator abided the decision of the Court.[8]
Costs order on the discontinuance (31 October 2019 and 17 February 2020)
[8]At [8]–[9].
Although costs are usually awarded to the other party following a notice of discontinuance, the Haines Trustees submitted that as a litigant in person Mr Memelink was not entitled to costs. However, the respondents did instruct counsel to file a statement of defence on their behalf.[9] Accordingly, Grice J awarded costs to the respondents, the Memelink Trustees, “on a 2B basis for the steps of filing and serving (if that occurred) of a statement of defence together with disbursements related to the filing and service of the statement of defence”[10] and held:[11]
Actual and reasonable disbursements claimed and as approved by the Registrar pursuant to r 12(4) are to be paid by the applicants [named in the intituling as Mr Haines and BPE Trustees (No. 1) Ltd] to Mr Memelink.
[9]At [44].
[10]At [72].
[11]At [73].
That order for costs was for $4,780. A subsequent judgment of 17 February 2020 addressed a dispute as to the quantum for disbursements. Mr Memelink was awarded $1,415.22 “together with costs on a 2B basis as claimed for the preparation of the statement of defence as noted in [the] earlier judgment”.[12]
[12]Haines v Memelink [2020] NZHC 188 at [18].
Accordingly, following 17 February 2020 there was an order for costs and disbursements of $6,195.22 payable by the Haines Trustees in favour of Mr Memelink as a trustee.
Costs order of 3 December 2019
On 18 October 2019, solicitors on behalf of Mr Memelink and Cisca Johnette Forster,[13] as trustees of the Link Trust (No. 1), issued a bankruptcy notice against Mr Haines based on his failure to pay interest as ordered by Grice J as a condition of the interim injunction order.[14] Mr Haines filed an application to set aside that notice, supported by an affidavit.
[13]Ms Forster having replaced Lynx Trustees Ltd as a trustee of the Link Trust (No. 1).
[14]At [12] above.
On 14 November 2019, counsel for Mr Memelink and Ms Forster filed a memorandum confirming agreement to set aside the bankruptcy notice but leaving the Court to resolve costs.
In a judgment of 3 December 2019, Associate Judge Johnston held that Mr Haines was entitled to costs of $5,508 plus disbursements of $250.[15]
The bankruptcy notice
[15]Memelink v Haines [2019] NZHC 3154 at [6].
On 19 December 2019, Mr Haines issued the bankruptcy notice against Mr Memelink referred to above.[16] The judgment debt relied on in the notice was the costs order of $5,508 of 3 December 2019. Mr Haines also claimed costs of $828.[17] As the bankruptcy notice was served on Mr Memelink on 21 January 2020, the last day for Mr Memelink to make payment or otherwise comply with the demands in the notice was 4 February 2020.
[16]At [1].
[17]Which included a fee of $200 for filing the notice and a fee of $150 for serving the notice.
At some point between 5 pm and midnight on 4 February 2020 Mr Memelink paid $5,508 to Mr Haines by electronic bank transfer.
The following day Mr Haines filed an application for an order adjudicating Mr Memelink bankrupt. The application stated:
…
b.the debtor owes the creditor, costs in CIV 2018-485-962 of $4,933.00 and cost in respect of Bankruptcy Notice CIV 2019-485-773 of $828.00; and
c.the debtor has committed an available act of bankruptcy, as follows:
The debtor was served with a Bankruptcy Notice dated 19 December 2019 on 21 January 2020. The debtor failed to satisfy the Bankruptcy Notice by 5pm on 4 February2020; and
d. the creditor has no security for the debt.
The application was set down for hearing on 25 February 2020. On 20 February 2020, solicitors for Body Corporates 81012, 68792 and 378945 gave notice of their intention to appear in support of the application and to seek substitution as creditors. On 24 February 2020, Mr Memelink filed a notice of intention to oppose the bankruptcy application through a new solicitor, Mr Livingston, who is also counsel on the appeal.
The High Court judgment
The Judge commenced by noting that the application proceeded on the orthodox basis of failure to comply with a bankruptcy notice and that Mr Memelink opposed the orders sought, essentially on the basis that he had paid the amount of the demand of $5,508, albeit not the claim in respect of costs. Hence it was necessary for the Judge to first determine whether Mr Memelink had committed an act of bankruptcy entitling Mr Haines to commence the proceeding.
The issue identified by the Judge was whether the electronic transfer of funds in payment of the amount of the costs order of 3 December 2019 occurred within time.[18] The Judge ruled that, given most financial transactions are conducted electronically, the Courts should not truncate the ten working day period by insisting that the judgment debt be paid by 5.00 pm on the tenth working day.[19]
[18]Adjudication decision, above n 1, at [16].
[19]At [17].
While the Judge was satisfied that payment was likely made before midnight on 4 February 2020, that did not resolve the matter because the costs of $828 were left outstanding. Because Mr Memelink did not pay the costs or apply to the Court to fix costs, the Judge considered Mr Haines’ submission that Mr Memelink had committed an act of bankruptcy to be unanswerable.[20]
[20]At [20]–[21].
Before turning to consider the exercise of the discretion the Judge paused to mention a curiosity, described as unusual but by no means unique. The application for the order for adjudication did not rely on the judgment debt on which the bankruptcy notice was founded (the costs order of 3 December 2019), but instead on the different debt payable pursuant to the costs judgment of 20 May 2019. The Judge observed there could be no objection to that course. Section 13 of the Insolvency Act 2006 states that a creditor may apply for an order adjudicating a debtor bankrupt where the debtor owes the creditor $1,000 or more and the debtor has committed an act of bankruptcy within the period of three months before the filing of the application.[21] Both requirements were met here.
[21]At [24]–[25].
The Judge proceeded to address the issue of set-off of the two unpaid costs orders — that of 20 May 2019 in favour of Mr Haines, and that of 17 February 2020 in favour of Mr Memelink — in this way:
[28] On Mr Memelink’s behalf, Mr Livingstone contended that a factor that should also be weighed in the balance in considering whether or not to make an order is a recent costs judgment of Grice J in yet another proceeding in favour of the trustees of the Link No. 1 Trust against Mr Haines which exceeds the amount claimed by Mr Haines in this proceeding.
[29] The contention that this costs judgment is relevant is resisted by Mr Haines. In his synopsis of submissions, Mr Haines’ solicitor, Mr Dallas, put the argument this way:
On 17 February 2020 her Honour Justice Grice released a costs decision in CIV-2018-485-962 ordering costs in favour of the Link No. 1, the trust associated with Mr Memelink. It is respectfully submitted that these costs are not an obligation owed by Mr Haines to Mr Memelink but are instead an obligation that Mr Haines owes to the Link Trust No. 1 and cannot therefore be argued as a set off.
[30] I am assuming that what Mr Dallas meant by that submission is that any entitlement arising out of that costs judgment is one enjoyed by the trustees of the Link Trust No. 1 in their capacities as trustees, rather than in their personal capacities.
[31] Whilst it is difficult to see how far Mr Dallas can go with that contention, because the legal owner of a chose in action is entitled to enforce it, albeit on behalf of the beneficial owner, there is a point here. The chose in action arising from Grice J’s judgment (or at least Mr Memelink’s interest in it) is the property of the Official Assignee by reason of Mr Memelink’s status as a bankrupt.
The Judge concluded in the terms recited at [2] above.
Against the points made for Mr Memelink, namely that he had paid the debt relied on in the bankruptcy notice and that he was able to pay his debts, the Judge said it was necessary to have regard to the following matters:[22]
(a)Mr Memelink had committed an act of bankruptcy.
(b)In the ordinary course of events, that entitled his creditors to the protection afforded by the Insolvency Act.
(c)There were at least four creditors collectively pursuing large claims.
(d)There was a need to protect the public and have Mr Memelink’s affairs properly investigated on the Court’s behalf by the Official Assignee as an officer of the Court.
On balance, the Judge concluded Mr Haines was entitled to an order adjudicating Mr Memelink bankrupt.[23]
[22]At [33].
[23]At [34].
On 6 April 2020, Mr Memelink filed a notice of appeal against the order for adjudication. On 21 April 2020, the Official Assignee filed a notice of appearance in this Court indicating she abided the decision of the Court. On 11 June 2020, notices of appearance of interested parties were filed on behalf of Body Corporate 68792 and Body Corporate 81012.
Issues on appeal
Mr Livingston filed a comprehensive statement of issues in the following terms:
1. If there was an act of bankruptcy did Mr Memelink owe Mr Haines more than $1,000 (as a certain amount payable immediately or on a date in the future that is certain) on:
a) 5 February 2020 (the date of the Creditors Petition);
b) 25 February 2020 (the date of the hearing); and
c) 9 March 2020 (the date of the judgment) -
In light of the following debts:
(i) $4,933 in costs awarded in Mr Haines’ favour on 20 May 2019;
(ii) $4,780 in costs awarded in Mr Memelink’s favour on 31 October 2019 and disbursements of $1,415.22 awarded on 17 February 2020, bringing the total offset to $6,195.22; and
(iii) $5,508 in costs awarded in Mr Haines’ favour on 3 December 2019 (paid 4 February 2020) -
And if so, whether or not an application for adjudication could be made by the creditor and granted by the Court.
2. Whether the following submissions establish that the judge erred in principle, took into account irrelevant considerations, disregarded relevant considerations:
(a) the fact that the respondent relied upon a separate debt in his application for adjudication to the debt set out in the bankruptcy notice was a relevant consideration;
(b) evidence that the respondent was acting unreasonably or oppressively ought to have been taken into account;
(c) the fact that the debts before the Court established that the respondent was, on balance, significantly in debt to the appellant was a relevant consideration;
(d) the existence of creditors pursing large claims, who were not parties to the proceedings, was an irrelevant consideration;
(e) the fact that the appellant was already bankrupt meant that the need to protect the public and have the appellant’s affairs properly investigated on the Court’s behalf by the Official Assignee as an officer of the Court was an irrelevant consideration and/or Johnston AJ erred in principle by considering it;
(f) there exist relevant policy considerations in favour of exercising the discretion not to adjudicate the appellant bankrupt that ought to have been taken into account.
(g) That it was plainly wrong
3. Whether the Judge was plainly wrong that a judgment debtor, who is bankrupt, cannot offset the debts of a judgment creditor, with a debt held against the judgment creditor, in light of sections 101 and 102 of the Insolvency Act, which places the assets of a bankrupt in the possession of the Official Assignee, in particular, in light of Rule 14.17 of the High Court Rules, apply which holds that costs awards in proceedings must be set off against each other.
Although observing that a notice of support of the judgment on other grounds had not been filed by the respondent, Mr Livingston also identified a number of further issues raised in the submissions for Mr Haines, including the proposition that the time for compliance with the bankruptcy notice expired at 5.00 pm on 4 February 2020.
While the statement of issues made reference to the set-off proposition, in particular in the context of r 14.17 of the High Court Rules, the question of the application of s 104 of the Insolvency Act was not raised. Nor was that provision referred to in the submissions of any of the parties. In our view it is necessary to consider the application of that section as the first issue.
Discussion
The status of a bankrupt’s property is addressed in pt 3 subpt 1 of the Insolvency Act. Section 101(1) provides:
101 Status of bankrupt’s property on adjudication
(1) On adjudication,—
(a)all property (whether in or outside New Zealand) belonging to the bankrupt or vested in the bankrupt vests in the Assignee without the Assignee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished; and
(b)the powers that the bankrupt could have exercised in, over, or in respect of any property (whether in or outside New Zealand) for the bankrupt’s own benefit vest in the Assignee.
…
Section 102 then addresses the status of property acquired during bankruptcy. Both of those sections were noted by the Judge in a footnote to the reference to pt 2 of the Insolvency Act in [32] of the judgment.[24]
[24]Recited at [2] above.
However both those sections state that they are subject to s 104. That section provides:
104 Property held in trust by bankrupt
Property held by the bankrupt in trust for another person does not vest in the Assignee.
In their discussion of s 104, Heath and Whale explain:[25]
Property held by a bankrupt in trust for any other person does not pass to the Official Assignee on bankruptcy as a result of s 104. Clearly, where the bankrupt is a trustee of a trust, the bankruptcy in no way affects the property of the trust. There need not be an express trust. It may arise by implication under one of the recognised equitable categories, or be imposed by the Court as a remedial constructive trust. …
Section 104 is a restatement of the broad and historical bankruptcy law principle that only the bankrupt’s beneficial interest in property is available to the Official Assignee for creditors. …
[25]Paul Heath and Mike Whale Heath and Whale: Insolvency Law in New Zealand (3rd ed, LexisNexis, Wellington, 2018) at [4.37].
Although s 104 does not appear to have been drawn to the Judge’s attention, the fact that the costs order on the discontinuance of 17 February 2020 was an order in favour of the Link Trust (No. 1) was the basis of the argument advanced on behalf of Mr Haines and recorded in the judgment at [29].[26] The Judge interpreted that submission to mean that any entitlement arising out of that judgment was one enjoyed by the trustees of the Link Trust (No. 1) in their capacities as trustees rather than in their personal capacities.
[26]At [31] above.
Mr Haines’ argument in the High Court appears to have assumed that the costs judgment of $4,933 was against Mr Memelink personally, rather than in his capacity as trustee. However that appears not to have been the case.[27] Hence if Mr Haines’ submission on the status of the costs order of 17 February 2020 had been accepted, then on our analysis there would have been a costs judgment of $4,933 in favour of the Haines Trustees against the Memelink Trustees and a costs judgment of $6,195.22 in favour of the Memelink Trustees against the Haines Trustees.
[27]At [13] above.
But such a conclusion was defeated by the Judge’s view that the chose in action arising from the costs order on the discontinuance was the property of the Official Assignee by reason of Mr Memelink’s status as a bankrupt.[28] In our view that conclusion failed to take account of the effect of s 104. The judgment in favour of the Memelink Trustees did not become the property of the Official Assignee.
[28]Adjudication decision, above n 1, at [31]. This is recited at [31] above.
It follows that the submission made by Mr Haines in the High Court, that as a consequence of the discontinuance costs judgment there was a debt owed to the Link Trust (No. 1), was correct. That amount more than off-set the interim injunction costs award of $4,933 in favour of the Haines Trustees. On that analysis 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.
Submissions for supporting creditors
Mr O’Connor appeared as counsel for interested parties, Body Corporates 378945, 68792 and 81012.
He argued that if the Court accepted that Mr Haines had not established at the adjudication hearing there was a debt due to him for more than $1,000, the Judge could and should still have made an order adjudicating Mr Memelink bankrupt because Mr Memelink’s debts due to the Body Corporates were for considerably more than $1,000.
Three creditors, Body Corporates 68792, 81012 and 378945, filed notices of appearance in support of Mr Haines’ application, each claiming Mr Memelink owed them substantial debts. They were represented by counsel at the commencement of the hearing on 25 February 2020 but when the hearing was delayed counsel for Mr Haines assumed the role of representing them. As well as supporting Mr Haines’ application, they had given notice that they sought to be substituted as an applying creditor.
Section 44 of the Insolvency Act states:
44 Substitution of creditor
(1)The court may substitute another creditor (Creditor 2) for the creditor making the application for adjudication (Creditor 1), if—
(a) Creditor 1 has not proceeded with due diligence or at the hearing of the application offers no evidence; and
(b) the debtor owes Creditor 2 $1,000 or more.
(2)In that case, Creditor 2 must file another application for adjudication, but can rely on the act of bankruptcy to which Creditor 1’s application related.
Section 43 says:
43 Court may halt application while underlying debt determined
(1)This section applies if the debtor appears in opposition to a creditor’s application and the debtor says either—
(a) that he or she does not owe a debt to the creditor; or
(b)that he or she does owe a debt to the creditor, but the debt is less than $1,000.
(2)The court may, instead of refusing the application, halt the application so that the question of whether the debt is owed, or how much of the debt is owed, can be resolved at a trial.
(3)As a condition of halting the application, the court may require the debtor to give security to the creditor for any debt that may be established as owing by the debtor to the creditor, and for the costs of establishing the debt.
Before the Judge could have made an order adjudicating Mr Memelink bankrupt, the Judge would have to be satisfied there were debts due as claimed by the creditors who appeared in support of the applications. Part 18 of the High Court Rules applies to applications under the Insolvency Act.[29] Rule 18.15 requires evidence in proceedings under the Insolvency Act to be given either by means of an agreed statement of facts or by affidavit. Here, the supporting creditors filed notices of appearance but no affidavits proving the debts they claimed.
[29]High Court Rules 2016, r 18.1(b)(ix).
The supporting creditors should have the opportunity to be substituted as creditors given it is likely that, in light of this judgment, Mr Haines will not be pursuing his application. Applying s 44, these supporting creditors will be entitled to ask the Court for an opportunity to file their own applications, to issue a summons against Mr Memelink and to file the affidavits required to establish that Mr Memelink is indebted to them in the way they claim.
For that reason, the bankruptcy proceedings brought by Mr Haines must be remitted back to the High Court. It will be for Mr Haines, the creditors who filed notices of appearance in those proceedings, and any other creditor who might wish to be heard in the proceedings to determine how they wish to proceed. Mr Memelink will also continue to be a party to those proceedings. It will be for the Judge to decide how those proceedings are progressed.
Postscript
At the hearing we invited counsel for Mr Memelink to file a memorandum addressing the meaning of the phrase “if 2 or more creditors join in the application” in s 13(1)(a) of the Insolvency Act. The appellant did so on 25 November 2020.
Then on 17 December 2020 counsel for Mr Haines filed an unsolicited memorandum purporting to respond to submissions made by Mr Livingston during the hearing. On 15 February 2021 counsel for Mr Memelink filed a detailed memorandum responding to Mr Haines’ memorandum.[30] In that memorandum Mr Memelink sought a costs uplift for the reason that his legal costs had been increased on account of Mr Haines post-hearing conduct.
[30]This was foreshadowed in a memorandum of 14 January 2021 seeking one month to respond to the respondent’s memorandum and explaining that an amendment would be sought to the legal aid grant to enable the appellant to do so.
In view of our conclusion we do not find it is necessary to address any of the material in the three post-hearing memoranda. However we accept that the post‑hearing events should be reflected in the costs award.
Result
The appeal is allowed.
The order made on 9 March 2020 adjudicating Mr Memelink bankrupt is set aside. The proceeding brought by Mr Haines is remitted back to the High Court at Wellington for rehearing.
Mr Memelink has succeeded on his appeal. He is entitled to costs from Mr Haines for a standard appeal on a band A basis together with usual disbursements. We order an additional $750 of costs to take account of the further work involved in preparation of the response memorandum of 15 February 2021.
Mr Livingston advised the Court that Mr Memelink accepts as between the supporting creditors and Mr Memelink costs should lie where they fall. We agree that there should be no costs order in relation to the interested parties and order accordingly.
Solicitors:
Livingston & Livingston Ltd, Wellington for Appellant
Thomas Dewar Sziranyi Letts, Lower Hutt for Respondent and Interested Parties
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