Memelink v Official Assignee

[2019] NZHC 2639

Jefferies v Police [2019] NZHC 2702

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-173

[2019] NZHC 2639

BETWEEN

HARRY MEMELINK and

LYNX TRUSTEES LIMITED as trustees of Link Trust (No. 1)
Applicants

AND

THE OFFICIAL ASSIGNEE

Respondent

Hearing:

15 October 2019

Counsel:

Applicant in person

No appearance for Lynx Trustees Ltd D Kerr for respondent

Judgment:

16 October 2019

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction

[1]                  Before the Court are applications pursuant to s 239 of the Insolvency Act 2006 for orders reversing two decisions of  the  Official  Assignee  as  the  assignee  of  Mr Malcolm Grindlay’s estate in bankruptcy.

[2]The impugned decisions are:

(a)A decision made on 5 March 2019 rejecting a claim by Mr Harry Memelink in his personal capacity against the estate.

(b)Another decision made on 5 March 2019 allowing in part and rejecting in part a claim by the trustees of the Link Trust (No. 1). At all material

MEMELINK and LYNX TRUSTEES LTD v THE OFFICIAL ASSIGNEE [2019] NZHC 2639

[16 October 2019]

times down to mid-2019 Mr Memelink and Lynx Trustees Ltd were the trustees of the trust, but I am informed that since then the trustees have been Mr Memelink and Ms Cisca Forster.

[3]                  The applications are opposed, the Official Assignee’s notice of application being dated 2 August 2019.

Preliminary matters

[4]Two preliminary matters:

(a)First, and obviously, the intitulment to the proceeding was incorrect from the outset. There should have been two applicants, Mr Memelink in respect of the first application and the trustees of the trust in their capacities as such in respect of the second application. I direct that  Mr Memelink be treated as the first applicant and the trustees be treated as the second applicants.

(b)Second,  and  more  importantly,   at   the   outset   of   the   hearing Mr Memelink referred to the change of trustee in mid-2019. He explained to me that Lynx Trustees had resigned and that Ms Forster had been appointed. Effectively, he sought an order amending the intitulment accordingly. For the Official Assignee, Mr Kerr objected to the removal of Lynx Trustees but raised no objection to the joinder of Ms Forster. No doubt the Official Assignee’s position on this is related to costs. I am concerned about making any order joining Ms Forster as an applicant when there is no evidence before the Court of her willingness to be joined as such. I make an order joining her as a third-named second applicant, relying on Mr Memelink’s assertion as to her appointment, but I record that I do so only on the basis that no costs order will be made against Ms Forster in her personal capacity without her being given an opportunity to be heard.

Relevant law

[5]Section 239 of the Insolvency Act provides:

(1)A creditor whose claim has been rejected by the Assignee may apply to the court for an order modifying or reversing the Assignee’s decision.

(2)The creditor must apply within 15 working days after the creditor receives the Assignee’s notice of rejection of the claim, or within the additional time that the court allows.

(3)The court may—

(a)reverse or modify the Assignee’s decision in whole or in part; or

(b)confirm it.

(4)A creditor has no right to prove for a debt or liability that has been rejected by the Assignee, unless the creditor has made an application under this section.

[6]                  In Edmonds Judd v Official Assignee, the Court of Appeal said that in applications under this section the Court must “consider what in its view is the correct order to make on the material before the Court as measured by the standard of reasonableness” paying  “due  regard”  to  the  decision  or  decisions  of  the  Official Assignee.1

Mr Memelink’s application

[7]                  The background to Mr Memelink’s application (and, indeed, the trustees’ application) is the sale by him of a business to Mr Grindlay and his wife, Mrs Robyn Grindlay. Without going into any detail, Mr Memelink commenced proceedings in this Court to enforce the sale and purchase agreement. In a judgment dated 31 October 2016, Collins J awarded Mr Memelink damages of $176,786.67 together with interest against the Grindlays.2 In a judgment dated 16 November 2017, the Court of Appeal set that judgment aside.3 Unusually, the Court concluded that it could not deal with the merits of the case by reference to the record and directed a re-hearing. No re-hearing took place. There is precious little material before the Court as to why. It

1      Edmonds Judd v Official Assignee [2000] 2 NZLR 135 (CA) at 144.

2      Memelink v Grindlay [2016] NZHC 2589.

3      Grindlay v Memelink [2017] NZCA 520.

would seem that certain procedural orders were made requiring Mr Memelink to take steps in the proceeding, which he did not do in a timely way. In the course of this hearing he explained that he was let down by his solicitors or counsel. In any event, on 28 August 2018, Mr Memelink was himself adjudicated bankrupt. It would appear that the Official Assignee as the assignee of Mr Memelink’s estate in bankruptcy has no interest in pursuing the case.

[8]                  Prior to his adjudication, Mr Memelink had lodged a  claim  with  the  Official Assignee as the assignee of Mr Grindlay’s bankrupt estate in respect of this alleged debt.

[9]                  On 6 November 2018, the Official Assignee as the assignee of Mr Memelink’s bankrupt estate formally withdrew this claim.

[10]              Notwithstanding that withdrawal, the Official Assignee as the  assignee  of Mr Grindlay’s bankrupt estate determined Mr Memelink’s claim.

[11]              The Official Assignee rejected Mr Memelink’s claim on the same grounds that, just as the Court of Appeal had concluded, there was insufficient evidence in support of the claim.

[12]              As the applicant, Mr Memelink of course bears the burden of establishing that the Official Assignee’s determination was wrong.

[13]              Seemingly in support of both of these applications, Mr Memelink swore affidavits dated 26 and 28 March 2019. These affidavits constitute the only evidence in support of the applications.

[14]              The narrative component of the affidavits is minimal and adds virtually nothing to the background.  The  exhibits  consist  of  copies  of  Collins  J’s  judgment  of  31 October 2016 concerning Mr Memelink’s claim, the sealed judgment of the District Court at  Lower Hutt in favour of the trustees obtained by default against   Mr and Mrs Grindlay, a copy of Mr Memelink and the trustees’ solicitor’s letter to the

Official Assignee explaining their claims, the Official Assignee’s formal notifications in relation to the claims and some peripheral material.

[15]In short, the evidence in support of these applications takes matters no further.

[16]              Attached to Mr Memelink’s outline of submissions is additional documentation. This of course is not evidence. Nevertheless, I allowed Mr Memelink to talk to it during the course of the hearing. However, in the end, the view I take is that it does not add materially to the picture.

The Link Trust (No 1) claim

[17]              Apparently,  as  part  of  the  sale   and   purchase   arrangements   between Mr Memelink and Mr and Mrs Grindlay for the sale of the business, the trustees of the Trust leased premises to Mr and Mrs Grindlay.

[18]              By default, the trustees secured judgment in the District Court against Mr and Mrs Grindlay for $45,335 in respect of unpaid rental.

[19]              The amount of this judgment debt formed part of the trustees’ claim against Mr Grindlay’s estate in bankruptcy. However, their claim also sought additional unpaid rental from the date of the judgment.

[20]              From the evidence before the Court, primarily in the form of an affidavit sworn by Ms Florestina Fagasoaia-Mead in support of the Official Assignee’s opposition to this application, it is apparent that the Official Assignee sought further information relating to the trustees’ claim (over and above the amount of the judgment debt) and raised questions as to whether the lease between trustees and Mr and Mrs Grindlay had terminated upon the entry of judgment and whether the trustees had taken steps to mitigate their loss. In the course of his submissions, Mr Memelink told me that he had provided “a mountain of information” to the Official Assignee in response to that, and several other requests, but none of that information was placed before the Court for the purposes of this application.

[21]              The Official Assignee accepted the trustees’ claim in respect of the judgment sum, but rejected the claim for further rent on the basis of a lack of supporting evidence.

[22]              Again, it was for the trustees to put evidence before this Court supporting their claim that the Official Assignee’s decision was wrong. They have not done so.

Mr Memelink’s submissions

[23]              In the course of his submissions Mr Memelink made a number of assertions. Amongst other things,  he  said  that  he  personally  had  a  strong  claim  against  Mr and Mrs Grindlay for breach of the contract for sale and purchase of the business; that the trustees had a strong claim for additional rental; that he had been misled by the Official Assignee, or rather a number of officials  at  the  Insolvency  and  Trustee Service; and that the reason why he had not complied with various obligations in relation to the litigation against Mr and Mrs Grindlay or responded promptly to requests for information by the Official Assignee was that he had been let down by a series of solicitors and counsel. None of these assertions were supported by the evidence.

[24]              In the end, Mr Memelink accepted that he was not in a position to prove that the Official Assignee had been wrong to reject his claim or that of the trustees (beyond the amount of the judgment debt). This he ascribed to his inability to access the Official Assignee’s files and the files of various solicitors, but again there was no affidavit evidence to establish this.

[25]              Mr Memelink also told me that he had offered to abandon this application, but that offer had been met by an indication that the Official Assignee would agree to its abandonment if Mr Memelink would agree to an order for scale costs or to costs being reserved so that they could be dealt with at a later stage, a proposal that Mr Memelink apparently declined.

Conclusion

[26]              In the end, the Court is not in a position to conclude that the Official Assignee’s determinations in relation to either of these claims was wrong, and I confirm them and dismiss these applications.

[27]              I reserve costs. If the parties are unable to settle costs, then they may file memoranda and I will deal with them on the papers.

Associate Judge Johnston