Memelink v Mead

[2016] NZHC 3008

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2015-485-854 [2016] NZHC 3008

IN THE MATTER

of an appeal against the decision of Judge

A I M Tompkins

BETWEEN

HARRY MEMELINK Appellant

AND

BRUCE ALAN MEAD Respondent

Hearing:

1 September 2016

(Further evidence received 20 September 2016)

Counsel:

Appellant in Person
J C Gwilliam for Respondent

Judgment:

12 December 2016

JUDGMENT OF CLIFFORD J

Introduction

[1]      In the District Court, Judge Tompkins found that a sum of money transferred by  Mr Mead  (the  respondent)  to  a  bank  account  of  a  company  owned  by Mr Memelink (the appellant) was a loan to Mr Memelink personally.1   It was not, as Mr Memelink had contended, a payment by Mr Mead to that company for trading stock supplied to Mr Mead.

[2]      Mr Memelink now appeals that decision.  He says evidence the Judge found crucial in reaching that conclusion was fabricated.  Without that evidence, Mr Mead

cannot show the disputed sum was a loan.

1      Mead v Memelink [2015] NZDC 18992.

Context

[3]      At  the  relevant  times,  Mr  Memelink  operated  a  woodworking  and  an associated  tool  supply  business  in  New  Zealand  and  Australia  through  the New Zealand company Link Technology 2000 Limited (sometimes referred to as Link  Technology  International),  and  the  Australian  company  Australia  Gas  & Electric Company Pty Limited.   Mr Memelink would also appear to have traded under various versions of those names.

[4]      Between  1993  and  1997  Mr  Mead  worked  for  Link  Technology  in New Zealand.  In December 1997 Mr Mead moved to Australia.  He established his own business, Cool Tools Gold Coast.   It is unclear whether Cool Tools was an incorporated entity or not.   Through Link Technology and/or Australia Gas and Electric Mr Memelink  supplied Mr Mead with Screwgrab  product and Proxxon tools.  Screwgrab is a product which helps move screws and other fasteners where the “head” has been distorted.  Proxxon are specialist woodworking tools.

[5]      In early 2009 Mr Mead made arrangements to return to New Zealand. At one point, he had intended bringing unpaid Proxxon stock back to New Zealand. As best as I can tell, however, he sold his business.  On 20 April 2009 Mr Mead transferred A$40,0002  from his bank in Australia to an Australian dollar account Link Technology maintained in New Zealand.

[6]      After  his  return  to  New  Zealand,  and  when  the  relationship  between Mr Memelink and Mr Mead had broken down, Mr Mead sought to recover that money as an advance by way of loan to Mr Memelink.  Mr Memelink did not pay. Eventually proceedings were issued in the District Court, resulting in Judge Tompkins’ decision which is now under appeal.

The Judge’s decision

[7]      Mr Memelink acted for himself.  Mr Mead was represented by counsel.  The case proceeded on the basis of affidavits that had been sworn by Mr Mead on the one

hand and Mr Memelink’s assistant, Ms Terpstra, on the other.  Mr Mead also relied

2      All amounts are in Australian dollars unless otherwise stated.

on the evidence of a Mr Sean Fitchett, who had sworn an affidavit recounting a conversation in which he said Mr Memelink had admitted to him that he owed considerable money to Mr Mead, but was unable to pay it.  Mr Memelink disputed Mr Fitchett’s account.  Judge Tompkins put it aside as being of no probative value, and I do likewise.

[8]      A limited documentary record was also produced.

[9]      Invoices  produced  by  Mr  Memelink,  which  Mr  Mead  did  not  dispute, established that:

(a)       in March 2002 and May 2003 Screwgrab product with total price of

$36,151.50 was supplied to Cool Tools; and

(b)in March and October 2003 and January 2005 Proxxon tools with a total price of $64,651.59 were supplied to Cool Tools.

[10]     Mr  Memelink’s  defence,  based  on  a  reconciliation  schedule  prepared  by Ms Terpstra, was that some $38,000 of principal remained owing on those invoices. Mr Memelink also asserted that some $77,000 in interest was also owed.3

[11]     Mr  Mead’s  position  was  that  he  accepted  an  amount  of  money  (some

$12,000) remained outstanding on those invoices.   He had, at one point, been prepared to set that amount off against the debt Mr Memelink owed personally. However, by the time the case came to the District Court he was no longer prepared to do that.  He asserted his limitation defence as regards any money he might have owed to Link Technology and/or Australia Gas and Electricity.

[12]     Understandably, in the context of a short hearing after which he gave an oral decision, the Judge was not able to pay close attention to the documentary evidence. For him, and to use his word, the “crucial” evidence was an exchange of emails included by Mr Mead in his information capsule and in his bundle of documents for

the hearing.  On their face, the documents show copies of emails exchanged between

3      Mr Memelink had, in fact, commenced proceedings in the District Court separately to recover those amounts from Mr Mead. Those proceedings were dismissed as being out of time.

Mr Mead and Mr Memelink on Wednesday 18 March, 30 April and 6 May 2009. As produced,  those  emails  would  appear  to  have  been  forwarded  by Trudy Taylor (Mr Mead’s assistant in Australia as I understand) to Mr Mead by separate emails at

1.36 pm, 1.37 pm and 1.38 pm on 1 July 2009.   The first two of those emails were the most important.  I reproduce them below, in the form in which they appeared in Mr Mead’s information capsule:

[13]     The Judge was persuaded, based on those emails, that Mr Mead had told Mr Memelink the $50,000 was “at the present time a loan” and that, after receiving that email, Mr Memelink had emailed back acknowledging “Thanks Bruce sorry I misunderstood”.

The appeal

[14]     As can be seen, by reference to the times those emails are shown as being sent by Mr Mead and received by him the email by which Mr Memelink is said to have acknowledged the $40,000 was a loan was received before Mr Mead had sent his  email  to  which  Mr  Memelink  was  purported  to  be  responding.     That

“discrepancy”, for want of a better word, was not pointed out to Judge Tompkins and

he would not appear to have seen it himself.

[15]     Mr Memelink based his appeal on the proposition that the “crucial” evidence the Judge relied on did not, on its face and because of that discrepancy, support his conclusion.   In his cross-examination of Mr Mead, Mr Memelink endeavoured to establish that the email trail was incomplete, that it was at best a “cut and paste” job and that it did not show the true picture.  Mr Mead acknowledged he only copied the emails he thought relevant.  He otherwise rejected Mr Memelink’s assertions.

[16]     No other evidence was adduced by Mr Mead to establish the reliability of the documentary hearsay evidence that the emails comprised.

[17]     When cross-examining Mr Mead, Mr Memelink said any acknowledgement he might have made on the question of a loan was a reference to the fact that he had understood Mr Mead was borrowing the money from his wife.    That acknowledgement would appear to run counter to Mr Memelink’s assertion that the emails were “fabricated”.  But it does not address the “timing” issue that appears on the face of the emails themselves.

[18]     He also pointed to other aspects of the documentary record which, he said, supported his contention that the payment of $40,000 by Mr Mead was on account of stock that had been purchased but not paid for.

[19]   I will deal with the email evidence first.   I will then briefly consider documentary evidence.

[20]     Mr Memelink applied in this appeal to adduce further “email” evidence. That was the evidence of Mr Dewsnap.  Mr Dewsnap said he had appeared in the High Court in Auckland as an expert witness on previous occasions for “other email authenticity cases”.   Mr Dewsnap’s affidavit was to the effect that various discrepancies on the copied emails, including the date issue, showed they were fabrications.

[21]     Mr Mead opposed the granting of leave for the introduction of Mr Dewsnap’s affidavit.  My Minute issued after the hearing of the appeal records the approach I took:

[3]       The first related to the time sequence on emails said to have been exchanged  between  Mr  Memelink  and  Mr  Mead  and/or  his  assistant. Mr Memelink had applied to introduce further evidence in the form of an affidavit from a Mr Dewsnap commenting on apparent time discrepancies. Mr Mead opposed that evidence being admitted.  It is not clear on what basis Mr Dewsnap purports to give expert evidence.  However, Ms Terpstra was able to draw my attention to the obvious implication of those discrepancies. That was that if the email trail is correct on its face, and the references to times are to the local times from where the various emails were sent, then what was seen by Judge Tompkins as being an email from Mr Memelink to Mr Mead (acknowledging an earlier email from Mr Mead to Mr Memelink which  identified  the  funds  as  a  loan)  had  on  its  face  been  sent  by Mr Memelink  before  he  could  have  received  Mr  Mead’s  email.    That supported the overall gist of Mr Memelink’s case, that the email trail was incomplete and fabricated.

…

[5]       The discrepancies are plain on the face of the emails.  Mr Gwilliam, in submissions, provided an explanation relating to the effect of printing out an email “trail” in Australia.   The explanation was when that is done the times shown are, as regards an email sent from Australia, the time it was received in New Zealand and, as regards an email sent from New Zealand, the time it was received in Australia.  If that explanation is correct, then there are no time discrepancies.

[6]       Mr   Gwilliam   is   granted   leave   to   file   an   affidavit   from  an independent expert confirming (or otherwise as the case may be) the explanation Mr Gwilliam provided to the Court.   On that basis, and as Ms Terpstra’s  submissions  for  Mr  Memelink  themselves   encapsulated Mr Dewsnap’s “expert” evidence, that evidence is admitted.

[22]     A Mr Blair Revell subsequently provided  that affidavit.   He focused his evidence on the emails of 18 March.  His evidence was:

Referring specifically to the emails dated

(1)       Wednesday 18th March 2009 @ 3.16PM (assumed to be Australia Brisbane time (AEST)) from New Zealand to Australia.  This is the reply email as the emails are displayed from newest to oldest traversing down the page.

(2)       Wednesday  18th  March  2009  @  4.58PM  (assumed  to  be  New Zealand time (NZT)) from Australia to New Zealand.   This is the original email.

This gives an appearance that the original email was sent AFTER the reply email.

Whilst  we  do  not  have  access  to  the  logs  of  the  servers,  it  could  be reasonable that the recorded times were correct, assuming the sending/receiving devices were set to the local time zones.

Per chance, it appears both sites emails are via Google Inc.’s Gmail Email

system.

Matching the times to Brisbane time (AEST) for ease of comparative time zone measurements … would mean that the email reply from New Zealand was 1 hour and 18 minutes later than that of the original email sent from Australia.

[23]     In other words, Mr Revell, for reasons which he does not explain, assumes that the computer in Australia recorded the time at which an email was sent from Australia to New Zealand at the time it was received in New Zealand, whilst it recorded, as one would have expected, the email sent from New Zealand as being received in Australia at an Australian time.

[24]     To  “support”  that  explanation  he  showed  the  records  of  emails  he  had arranged to be sent from Australia to New Zealand and back again.  He recorded the result of that experiment as follows:

As an example

I  emailed  from  my  account  in  Melbourne, Australia  to  my  employee’s account on a machine in Upper Hutt, New Zealand and back again.  Both devices set to related location local time.  Both via Gmail Email systems. At this time of the year there is a 2 hour time difference between Melbourne and New Zealand.

From Melbourne, Australia

from:        Blair Revel <[email protected]>

to:             Alex (LEAT) <[email protected]m>

Sent          19 September 2016 at 08:07am date:

Received    19 September 2016 at 10:08am

New

Zealand time

From Upper Hutt, New Zealand

from:        Alex (LEAT) <[email protected]m>

to:             Blair Revel <[email protected]>

Sent          19 September 2016 at 10:11am date:

Received    19 September 2016 at 08:11am

Australia

Time

Times are drawn from the recipient device’s time zone.

[25]     As can be seen, Mr Revell’s conclusion “times are drawn from the recipient device’s time zone” is inconsistent with his own report.  That is, as presented, the email record shows the time (Australian time) at which the email was sent from Melbourne and the New Zealand time at which it was received in New Zealand.  On the return, that recording process is reversed so that a New Zealand time shows as the time of dispatch and an Australian time is shown as the time of receipt, all as would be expected given the two hour time difference.

[26]     Put very simply, I see no satisfactory explanation in that evidence as to why a computer in Australia would record the time at which an email was sent by reference to the time at which it was received in New Zealand.

[27]     The email  exchange,  and  particularly that  on  18  March,  was  the  crucial evidence.  Given the analysis I have set out above, I am not able to conclude that it is more likely than not that the emails were sent in the sequence the Judge assumed they were.  Without that evidence, I am not satisfied that it is more likely than not that Mr Memelink acknowledged to Mr Mead the payment was a loan.

The documentary evidence

[28]     I therefore turn to the balance of the evidence that Mr Gwilliam pointed to as supporting the Judge’s decision, and to the documentary evidence Mr Memelink suggested showed that approximately $40,000, the sum transferred, was a debt due to his company.

[29]     Turning to the documentary evidence, Ms Terpstra annexed to her statement of evidence emails she had exchanged with a Sonja Hill, who I understand was Mr Mead’s wife at the time or, at least, a person who worked for him at Cool Tools.

Those emails were dated 26 June 2004, 16 May 2006 and 2 May 2008 on their face, and their authenticity was not disputed, contained acknowledgements that as at those dates  Cool Tools  owed  $30,000,  $43,217.92  and,  after  an  enclosed  payment  of

$5,000, $46,105.42 respectively on each of those dates.

[30]     In his bundle of documents, Mr Mead had produced a Cool Tools “Aged Payables” summary as at 30 June 2011.  It showed, as at that date, $12,171 owing to Australia Gas and Electric.  It was that amount which Mr Mead had originally been prepared to credit against the repayment of the asserted loan.  Ms Terpstra annexed a schedule of card transactions which had been provided by Cool Tools: that reflected Cool Tools owing to Australian Gas and Electric as at 30 June 2009 that sum of

$12,171.  In her evidence, Ms Terpstra asserted that the schedules were incomplete. Her reconciliation schedule showed the sum of $38,844.32 as owing, excluding any interest.  As best as I can tell, that was not inconsistent with the basis upon which Sonja Hill had, at various points, calculated what she thought was the amount outstanding.

[31]     There was therefore evidence both ways as to the amount of money owing by Mr Mead to Link Technology/Australian Gas and Electric, at the time the payment of the amount of $40,000 was transferred from Australia to New Zealand and before the limitation point was taken.   Mr Mead himself acknowledged that, at the time that amount was transferred, he and Mr Memelink had it in mind that they might in some way continue in business together. At one point Mr Mead referred to the payment as buying him a job in Mr Memelink’s business:

A.        Of course it is to do with the $40,000 Harry because I sent that back to you, as I said before, in effect buying myself a job which hasn’t happened.

Q.       So what was expected? Was there going to be share transfers –

A.       Yes. Q.    – or –

[32]     Given those uncertainties of the evidence as to the nature of the payment, and the difficulty I have identified with the times shown on the crucial emails, I am not persuaded on the balance of probabilities that the payment of $40,000 was a loan.  I therefore allow this appeal.

Result

[33]     The appeal is allowed.  Mr Memelink being self-represented, there will be no order as to costs or, in this case, disbursements.   There has been no satisfactory explanation as to why the question of the times on the emails matters were not addressed at the original hearing in the District Court.

“Clifford J”

Solicitors:

Main Street Legal Limited, Upper Hutt for Respondent