Memelink v Official Assignee - [2022] NZHC 953

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

CIV-2018-485-363

[2022] NZHC 953

UNDER the Insolvency Act 2006

IN THE MATTER

of an application pursuant to pt 9

BETWEEN

HARRY MEMELINK

Applicant

AND

THE OFFICIAL ASSIGNEE

Respondent

PHILLIP MCKINLEY

Interested Party

Hearing: 16 March 2022

Appearances:

D Livingston for Applicant P Chisnall for Respondent

J Pietras for Interested Party

Judgment:

12 May 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction and background

[1] Mr Harry Memelink was adjudicated bankrupt in August 2018. He applies pursuant to s 238 of the Insolvency Act 2006 for an order cancelling or reducing a determination made by the Official Assignee in relation to a claim against his bankrupt estate made by Mr Phillip McKinley. Mr McKinley has cross-claimed pursuant to s 239 for an order increasing the amount of the same determination. Both applications are opposed.

MEMELINK v THE OFFICIAL ASSIGNEE [2022] NZHC 953 [12 May 2022]

[2]The background can be summarised briefly.

[3] At all material times the trustees of the Link Trust (No. 1) owned a rural property near Paekākāriki. As at the date of this judgment the trustees are Mr Memelink and Ms Cisca Forster. At the time of some of the events that are relevant to this case Mr Memelink had a different co-trustee or different co-trustees. However, for present purposes, that is unimportant. Mr Memelink has been a trustee throughout. He says that in relation to the matters that are in issue in this proceeding he was acting as a trustee. Mr Memelink accepts that if Mr McKinley has a claim (which of course Mr Memelink does not accept) then he would be personally liable. But he says that in those circumstance he would be entitled to be indemnified from the trust assets. No one contradicts those propositions.

[4]The property consists of 113.25 acres on which there is a dwelling.

[5] As at May 2018 the dwelling had been unoccupied for some time, had apparently been vandalised and was in an extremely dilapidated condition.

[6] Mr Memelink and Mr McKinley both say that around this time they entered into an agreement concerning the farm and the dwelling, though their accounts of what they agreed are different.

[7] Mr Memelink’s evidence is that he agreed on behalf of the trustees that they would lease the property to Mr McKinley. He says that the arrangement required Mr McKinley to renovate the dwelling so that he and his family could live in it, and that, in recognition of the effort and expense that that would involve, Mr McKinley would be given a rent-free period. He says that it was agreed that in due course Mr McKinley would fatten cattle on the property, and that the parties would share equally in any profit from the farming operation. Mr Memelink says that he never agreed that Mr McKinley would be paid for his time or reimbursed for out-of-pocket expenses. Somewhat inconsistently Mr Memelink says that when…

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 Official Assignee

Details

AGLC: Memelink v Official Assignee [2022] NZHC 953
Case: [2022] NZHC 953
Decision Date: 12 May 2022

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Memelink v Official Assignee was heard, involving a dispute over a claim made against the bankrupt estate of Mr Harry Memelink by Mr Phillip McKinley. Mr Memelink, a trustee of the Link Trust (No. 1), had entered into an agreement with Mr McKinley concerning a rural property near Paekākāriki. The agreement involved leasing the property to Mr McKinley, who was to renovate the dwelling and share profits from farming operations. Mr McKinley submitted a claim for $175,801.65, which the Official Assignee reduced to $24,999.92. Both Mr Memelink and Mr McKinley appealed this decision.

The legal issues centered on whether the Official Assignee properly exercised their discretion under the Insolvency Act 2006 in assessing Mr McKinley's claim and whether the determination was reasonable. The court had to decide if the Official Assignee should have engaged more with Mr Memelink and whether the Official Assignee's decision was supported by evidence. The court analyzed the Official Assignee's approach, noting that while the general principle of audi alteram partem applies, the Official Assignee had the discretion to limit engagement due to Mr Memelink's previous behavior. The court concluded that the Official Assignee's determination was fair and reasonable, as the process was thorough, and the evidence supported the conclusion that Mr McKinley was to be reimbursed for out-of-pocket expenses but not for his time.

The court dismissed both Mr Memelink's and Mr McKinley's applications, confirming the Official Assignee's determination. The decision was based on the premise that the Official Assignee had acted within their discretion and that the evidence supported the allowed expenses. The court left costs to be resolved between the parties, reserving its position on costs until further notice.

Orders