Memelink v Haines
[2023] NZHC 2489
•6 September 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2021-485-459
[2023] NZHC 2489
UNDER Part 15 High Court Rules 2016 IN THE MATTER
of a Strike Out of a Statement of Claim
BETWEEN
HARRY MEMELINK AND CISCA
FORSTER as trustees of the LINK TRUST NO. 1
PlaintiffsAND
QUENTIN STOBART HAINES
First Defendant
BPE TRUSTEES (NO. 1) LIMITED
Second Defendant
EASTLIGHT ASSET TRADING NO. 5 LIMITED
Third DefendantSTOBART HOLDINGS LIMITED
Fourth Defendant
Hearing: On the papers Counsel:
J D Haig for Respondents/Plaintiff (in receivership) J D Dallas for Applicants/Defendants
Mr Memelink in person
Judgment:
6 September 2023
JUDGMENT OF GRICE J
(Costs)
MEMELINK v HAINES [2023] NZHC 2489 [6 September 2023]
Introduction
[1] I dismissed the defendants’ application for strike out of the substantive proceedings in this matter on 31 July 2023. This was because there was an order in place for a stay of proceedings (the stay) for the period of the receivership of Link Trust No.1 (the Trust) and no application had been made to lift the stay. I found that it was not an appropriate case for the Court to exercise its discretion to lift the stay of its own motion under the Court’s inherent jurisdiction, taking into account the receivers’ lack of consent to lift the stay.1
[2] I concluded that it was not in the interests of justice to allow the application for strike out to proceed.2 It would not be fair to the other creditors and would divert the receivers from the primary task of realising the assets of the trust and also incur further costs in the receivership.3 I made no determination on the merits of the application for strike out, but held that the application for strike out could not proceed due to the stay of the proceeding.4
[3] I directed the parties to file memoranda on costs if they were unable to reach agreement.5 The receivers (on behalf of the Trust), the defendants and Mr Memelink personally have filed such cost memoranda.
Costs in this proceeding
[4] The receivers and defendants have filed a joint memorandum indicating agreement to an award of costs on a 2B basis in favour of the receivers in the sum of
$11,233 plus disbursements of $160. The costs and disbursements are listed in a schedule attached to the joint memorandum.
[5] I am satisfied 2B is the appropriate categorisation for costs and the amounts claimed as disbursements appear reasonable and appropriate.
1 Memelink v Haines [2023] NZHC 1711 at [41].
2 At [36] and [41].
3 At [36].
4 At [37] and [42].
5 At [43].
[6] Accordingly, I make an order as to costs and disbursements as set out in the parties’ joint memorandum and schedule.
Application by Mr Memelink for disbursements
[7] Mr Memelink is self-represented. Except in exceptional cases a lay litigant is not entitled to recover costs. However, a lay litigant is entitled to reasonable disbursements at the discretion of the Court.6
[8] Mr Memelink has sought the sum of $2,258 as a disbursement, being a two-thirds contribution toward legal expenses he has incurred. Mr Memelink says he consulted solicitors in respect of the application for strike out. In view of the fact the application for strike out was dismissed, Mr Memelink says he should be entitled to a contribution towards his legal costs (as a disbursement).
[9] The plaintiffs in the proceedings are Mr Memelink and Ms Cisca Forster as trustees of the Trust. However, the Trust is currently in receivership, with receivers having been appointed to the Trust by Churchman J in a decision of 31 May 2022.7 The receivers appeared at the hearing on behalf of the Trust. As the successful party, the receivers on behalf of the Trust are entitled to costs from the defendants. Costs and disbursements were ordered.
[10] Mr Memelink appeared at the hearing to oppose the application to strike out the claim.8 Mr Memelink submitted he was affected by any decision regarding a strike out, as he is a beneficiary of the Trust.9 I noted in my decision that Mr Memelink appeared in the proceeding representing the residual interests of the trustees, Mr Memelink having referred to his beneficial interest as a beneficiary of the Trust.10 Notably, he refuted points made in the submissions of both the defendants and the receivers.11 In reaching my decision not to allow the application for strike out, I noted Mr Memelink’s interests in the Trust needed to be considered, as well as the positions
Re Collier (A Bankrupt) [1996] 2 NZLR 438 (CA), confirmed under the new rules in
Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400 at [162].
7 Body Corporate 81012 v Memelink [2022] NZHC 1244.
8 Memelink v Haines, above n 1, at [18] and [24].
9 At [24].
10 At [39].
11 At [24].
of other creditors in the receivership in a situation where a receivership stay of proceedings was in place.12 I indicated I would not strike out the claim without consideration of his (and other beneficiaries) positions.13
[11] However, it was unclear as to exactly whose interests Mr Memelink represented in the application the subject of this costs decision. Mr Memelink could not appear on behalf of the Trust and the Trust’s interests were represented by the receivers who were successful in their opposition to the application. Mr Memelink is also an undischarged bankrupt and so presumably was not appearing in any role that would require the consent of the Official Assignee. While I allowed Mr Memelink to make submissions, his role was not clarified. It is not necessary for the Court to delve into that issue here.
[12] I first deal with the application for a contribution towards the costs of consulting his solicitors on the application. Mr Memelink submits that this is appropriate as costs and disbursements generally follow the event. He says there must be good reason to depart from this rule so that the predictability of the costs regime is maintained, and submits that there is no good reason to so depart in this case.
[13] Mr Memelink’s written submissions on costs were apparently prepared by Mr Livingston, Mr Memelink’s solicitor. Mr Memelink in his memorandum seeking costs attaches an invoice from the firm of solicitors, Livingston & Livingston, which narrates attendances of Mr Livingston, taking instructions from Mr Memelink, drafting the memorandum, reviewing the decision, discussing costs with the receivers and the defendants and drafting a memorandum, presumably seeking costs, to a total amount of $3,421.25, of which two-thirds is sought to be recovered as a disbursement here.
[14] I do not consider it appropriate to award a disbursement being a contribution towards Mr Memelink’s legal fees in this matter. First, as I have outlined, Mr Memelink’s role in this proceeding and the interests which he has been seeking to protect have not been clarified. The legal fees were not directed toward this issue.
12 At [39]
13 At [39].
The submissions that he filed were essentially the arguments by the Trust which were presented by the receivers on behalf of the Trust. Mr Memelink in his oral submissions did not remain focused on the issues before the Court in relation to the strike out.
[15] In his costs memorandum Mr Memelink appears to criticise the actions of the receivers and says that they will “attempt to recover those costs and expenses in priority over unsecured creditors and the beneficiaries of the trust”. However, the receivers properly appeared to defend the matter and the submissions prepared by Mr Livingston did not add materially to the matters argued by the receivers.
[16] Costs and disbursements are in the discretion of the Court. They must be awarded in a principled way. Usually they follow the event, and, as Mr Memelink has indicated, the predictability of the costs regime should be maintained where possible. However, legal costs incurred by a self-represented litigant are not awarded as a disbursement as a matter of course. It is important to note that it is not costs which Mr Memelink is seeking but a disbursement, being legal costs. The comparison he makes in his memorandum as to the amount he seeks being significantly less than that would have been sought under a costs scale award for the steps taken by Mr Memelink in the proceedings is inapt.
[17] This was a case in which the Trust was the successful party and the Trust’s case was argued by the receivers. The submissions of Mr Memelink, both written and oral, did not add anything of significance to those already pursued by the receivers. To award disbursements in the nature of legal costs in this case would be inappropriate.
[18] Mr Memelink points to a previous decision in which the Court has stated he is entitled to claim legal expenses as a disbursement.14 The issue of whether Mr Memelink is entitled to disbursements is in the Court’s discretion. That previous decision is distinguishable from the present situation in several respects, not only because of the nature of the disbursements in issue and Mr Memelink’s role in the case, but also because the Trust was not in receivership at the time of the previous decision.
14 Haines v Memelink [2019] NZHC 2802 at [63].
[19] I also note that s 149 of the Insolvency Act 2006, prohibits an undischarged bankrupt from carrying on business or working for a trust owned by a relative, without the consent of the Official Assignee or the Court. No such consent has been obtained. To sanction the incurring of fees personally by Mr Memelink without the consent of the Official Assignee to enable Mr Memelink to pursue the interests of the Trust would be contrary to the tenor of that provision.
[20] I therefore decline to make the award of disbursements in respect of legal fees incurred claimed by Mr Memelink.
Result
[21] I order the defendants to pay to the receivers costs in the sum of $11,233 plus disbursements of $160 as set out in the parties’ joint memorandum and schedule to that memorandum.
[22] Mr Memelink’s application for a contribution to a disbursement he has incurred for legal fees is dismissed.
Grice J
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