Official Assignee v Memelink
[2023] NZHC 3044
•31 October 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-363
[2023] NZHC 3044
UNDER the Insolvency Act 2006 IN THE MATTER
of the bankruptcy of Harry Memelink
BETWEEN
THE OFFICIAL ASSIGNEE
Plaintiff
AND
HARRY MEMELINK
Debtor
Hearing: 24 April 2023, 1 May 2023 and 29 May 2023
Last Memorandum filed 21 September 2023.
Appearances:
C R Vinnell and P R W Chisnall for Plaintiff Debtor in Person
J J Pietras for P H McKinley (an interested party)
A O’Connor for Administrator of Body Corporate 68792 Q S Haines as creditor in person
Judgment:
31 October 2023
JUDGMENT OF GRICE J
(PUBLIC EXAMINATION AND AUTOMATIC DISCHARGE)
TABLE OF CONTENTS
Para Nos
Introduction[1]
Notice of objection to automatic discharge of bankruptcy[7]
Public examination[13]
Automatic discharge — legal position[33]
Factors relevant to the discharge[40]
Relationship between the bankrupt and the Link Trust No. 1[43]
THE OFFICIAL ASSIGNEE v MEMELINK [2023] NZHC 3044 [31 October 2023]
The Official Assignee’s Report [54]
The bankrupt’s affairs[55]
Lack of clarity as to ownership of assets[61]
Recordkeeping[65]
Disputes and litigation[67]
Insight into commercial failing and cause of bankruptcy[85]
Causes of bankruptcy [87]
Post-adjudication conduct[98]
Management or control of business[112]
Other activities by Mr Memelink during his period of bankruptcy — trading on exchange platform[125]
Whether the bankrupt breached the prohibition on entering into, carrying
on or taking part in the management or control of any business[134]
Issues raised by Mr Memelink[140]
Service of the application and the public examination record process[152]
Record of public examination/signing of the transcript[152]
Redactions sought[153]
Service of the report[157]
Automatic discharge from bankruptcy [167] Mr Memelink’s interests in securing a discharge from bankruptcy [175] Summary [190]
Conclusion on discharge[198]
Public examination adjourned[209]
Summary and conclusion[212]
Introduction
[1] Mr Memelink was adjudicated bankrupt on 28 August 2018.1 His bankruptcy followed the filing of a proposal by him to creditors under the Insolvency Act 2006.
[2] After the expiration of three years from that date Mr Memelink was entitled to an automatic discharge from bankruptcy unless the Official Assignee or a creditor objected.2 The Official Assignee did object by notice on 16 August 2022. Under s 295(1)(a) of the Insolvency Act, the Official Assignee also applied to the court for a public examination of the bankrupt, which is required following the objection. Mr Memelink remains in bankruptcy pending determination of the objection.
1 Re Memelink HC Wellington CIV-2018-485-363, 28 August 2018.
2 Insolvency Act 2006, s 292.
[3] The Official Assignee seeks orders that Mr Memelink remains bankrupt until the receivership of Link Trust No. 1 (the trust) is concluded and all funds have been distributed.
[4] Mr Memelink appeared for public examination. He opposes the Official Assignee’s objection to his discharge.3
[5] For the reasons that follow, I allow the Official Assignee’s objection to the automatic discharge, consequently prohibiting Mr Memelink to apply for a discharge of the bankruptcy for a period of three years or until the completion of the receivership, whichever is the earlier.
[6] I also adjourn the public examination for 24 months or such earlier date as is sought on notice by the Official Assignee. I am not satisfied that the investigation is complete. There is some way to go to finalise the bankruptcy and receivership of Mr Memelink’s Link Trust No. 1. The process has been complicated by a lack of records, a lack of clarity about the ownership of assets in the Memelink entities — particularly as it relates to Mr Memelink’s personal assets and liabilities and those of his trust — and Mr Memelink’s lack of cooperation and interference with the administration of the bankruptcy by the Official Assignee.
Notice of objection to automatic discharge of bankruptcy
[7] A bankrupt is eligible for automatic discharge three years from the date of the filing of the Statement of Affairs.4 The three-year period expired on 6 September 2022.5 The requirement for Mr Memelink to provide information in the form of a Statement of Affairs to the Official Assignee was not fulfilled until September 2019.6
3 Mr Memelink is a self-represented litigant. He was assisted in the preparation for and in the course of the hearing by his brother-in-law and business associate, Mr Bassett-Burr.
4 Insolvency Act, s 290(1).
5 Section 295.
6 Insolvency Act, s 67.
[8] The Official Assignee issued a summons to Mr Memelink, redated 27 February 2023, for public examination. The examination related to Mr Memelink’s property, conduct and dealings. It took place in April/May 2023.7
[9] Mr Memelink established two family trusts. The Link Trust No. 2 was created in 1995. The Link Trust No. 1 was created on 15 February 1995. The Link Trust No. 1 was used by Mr Memelink to acquire assets and operate businesses. That trust is now in receivership. My references to the trust in this judgment are references to this trust. Mr Memelink is a trustee of the trust and has remained a trustee throughout the period of his bankruptcy. Since August 2019 the other trustee has been Ms Cisca Forster. Mr Memelink says Mr Bassett-Burr, Mr Memelink’s business associate and brother-in-law, also assists and advises him in relation to the conduct of the trust and is an advisory trustee. Both Ms Forster and Mr Bassett-Burr were present in Court during most of the questioning of Mr Memelink in the public examination.
[10] Mr Memelink also had a number of operating companies in which he or the trust were the majority shareholder. As has become apparent from the investigations by the Official Assignee in relation to Mr Memelink’s bankrupt estate, and by the receivers in relation to the Link Trust No. 1, it is difficult to separate the personal assets and liabilities of Mr Memelink from that of his trusts and other entities.
[11] Other entities in which Mr Memelink or the trust had an interest in include Link Technology 2000 Ltd (in liq), Cudby And Mead Ltd (in liq) and R Cameron And Shortts Engineering And Plumbing Supplies Ltd (in liq). All three companies are in liquidation and the Official Assignee was appointed as liquidator for all three on 19 May 2020.
[12]The Official Assignee submits that Mr Memelink:
7 The public examination took place on 24 April 2023. It was recorded and transcribed on 24 April 2023. Part of the record was read back to Mr Memelink by the Registrar on 1 May 2023 and corrections made. Arrangements were made to continue this, however Mr Memelink requested the balance not be read to him by the Registrar. Mr Memelink took the transcript to finish reading it with the assistance of a reader in his own time and returned it to the Registry on 2 May 2023. It was signed with handwritten corrections and notes made by Mr Memelink which have been incorporated into the record.
… has little or no insight into the causes of his bankruptcy, has never accepted that he is bankrupted in any meaningful way and has gone about his business as usual, to the detriment of those seeking to realise his assets to pay his creditors and those who do business with him.
Public examination
[13] Whether or not a creditor is allowed to question a bankrupt is a matter for the Court to determine in its discretion. Insofar as the examination is concerned, s 177 of the Insolvency Act provides:
177 Conduct of examination
(1)The bankrupt must attend the examination, and may be examined as to the bankrupt’s conduct, dealings, and property.
(2)The bankrupt must be examined on oath and must answer all questions that the court asks the bankrupt, or allows the bankrupt to be asked.
(3)The following persons may examine the bankrupt:
(a)the Assignee, or counsel for the Assignee:
(b)any creditor who has proved a claim, or counsel for that creditor.
(4)The bankrupt is not entitled to notice beforehand of who will ask the questions or what the questions will be.
[14] Fry LJ noted that the power of examination was expressly vested in the Court because it was for the Court to determine what was necessary to obtain the information it required. In 1888, his Lordship observed in Re Scharrer, ex p Tilly:8
… The power of examination is … expressly vested in the Court, and the person summoned is not, therefore, in the ordinary position of a witness called by a litigant party in order that he may be examined by the two litigant parties before the Court, but he is, so to speak, the witness of the Court. No doubt it has been the common practice, and I have no doubt it is a convenient practice, to allow the counsel or other representative of the trustee or the official receiver to put the questions, but still the conduct of the examination rests with the Court … I entertain no doubt that this power of examination is not a merely formal one, but that it enables the Court to examine the witness usefully and fruitfully — to sift the matter in hand so far as may be necessary for the information of the Court, and as the Court may require. I am not disposed to determine now the extent to which the examination might go. For aught I can see, it might go as far as the judge might consider necessary in order to bring out the real facts of the case, so far as the witness is capable of giving the information.
8 Re Scharrer, ex p Tilly (1888) 20 QBD 518 at 521–522.
[15] The Courts have consistently noted that the public examination is not a civil trial, and questions may only be put to the examinee with leave of the Court. The object of the examination is not to take testimony, but to obtain discovery, and for that reason questions are not limited to matters regarding disputed issues. The questions are accordingly not asked in order to “make out or strengthen a party’s case.”9
[16] The public examination is an examination by the Court. It may allow creditors who have proved a claim and the Official Assignee (or counsel for those parties) to examine the bankrupt.
[17] Mr Memelink was on oath for the examination. The Official Assignee examined Mr Memelink comprehensively. Mr Pietras and Mr O’Connor put some short, supplementary questions on behalf of the creditors who had proved their debts.
[18] The examination lasted a full day and the Court sat beyond the usual 5 pm adjournment time to complete the questioning of Mr Memelink. A further day was required for the reading of the transcript by the Registrar to Mr Memelink. A further day had been set aside for the reading to continue but Mr Memelink elected to stop that process. The transcript was signed and returned by Mr Memelink on 3 May 2023.
[19] Mr Haines appeared in person as a creditor. He is a solicitor owed legal fees by Mr Memelink for work done before Mr Memelink’s adjudication in bankruptcy. On the date set for the questioning of Mr Memelink for the public examination, Mr Haines had been recognised by the Official Assignee as a creditor of Mr Memelink in respect of liability. The quantum of his claim had not been determined. In those circumstances, as Mr Haines’ debt was not proved, I granted him leave to make submissions and receive a copy of the Official Assignee’s bundle and a copy of the transcript. As his debt had not been proven, he was not permitted to put questions to Mr Memelink. In addition, I did not consider the questions that
9 Havenleigh Global Services Ltd v Henderson [2015] NZHC 1762 [Havenleigh] at [40], quoting Andrew Keay “Bankruptcy Examinations under Section 81 of the Bankruptcy Act” (1992) 17 UQLJ 35 at 43.
Mr Haines wished to put to Mr Memelink would assist me in relation to the application for discharge.
[20] In the time between the signing of the record of examination by Mr Memelink on 3 May 2023 and the reconvening of the hearing on the 29 May, Associate Judge Johnston delivered a judgment dated 24 May 2023 setting the quantum of Mr Haines’ debt for the purposes of a proof of debt at $525,000 plus GST, totalling $603,750.10 As Mr Haines’ debt had then been proven in the bankruptcy, he indicated at the hearing of submissions in relation to the discharge application on 29 May 2023 that he sought to have Mr Memelink recalled so that he could put some questions to Mr Memelink. Mr Haines then filed a memorandum expanding on the reasons for his seeking leave to examine Mr Memelink. He submitted that while the Court had, by that time, heard considerable evidence in the public examination of Mr Memelink it had not yet decided whether Mr Memelink should be discharged from bankruptcy. Mr Haines submitted that the examination he wished to conduct “is relevant to this core question before the Court”.11
[21] Mr Haines said that under s 179 of the Insolvency Act the public examination of a debtor ended when the Court made an order the examination was ended. However, the Court could not make an order that the examination was ended unless it was satisfied that the bankrupt’s “conduct, dealings, and property had been sufficiently investigated and that the investigation is finished”.12 Mr Haines therefore said the questions were whether the public examination had come to an end, and if it had, whether the Court had the power to reopen the public examination. 13
[22] Mr Haines said the starting point must be that all proven creditors would have the right to examine the bankrupt and that, given each creditor had unique experience in interactions with the bankrupt, it was important they were heard in order to obtain
10 Haines v Official Assignee [2023] NZHC 1203.
11 Memorandum of counsel for the creditor Mr Haines seeking directions, dated 1 June 2023. In fact, it was a memorandum filed by Mr Haines personally and not by his counsel.
12 Insolvency Act, s 179(2).
13 Mr Haines noted that in a minute dated 2 May 2023 following Mr Memelink’s examination, I had indicated that the “examination process was completed on 24 April 2023” but the reading of the transcript had been adjourned.
information relative to the conduct, dealings and property of the bankrupt, and examine matters relevant to the public interest.14
[23] Mr Haines also submitted that an order for the closing of a public examination should not be made while there were still matters to be investigated. He submitted that, in the absence of an express order ending the public examination, no order had been made pursuant to s 179 of the Insolvency Act. Mr Haines submitted that even if the Court determined an order had been made the Court could, in its inherent jurisdiction, order that the public examination reopen. He submitted it was clearly in the interests of justice to allow for a full and complete examination of Mr Memelink.
[24] Mr Haines conceded that the Court had already heard considerable evidence in the public examination of Mr Memelink. He also said that the bulk of his submissions could not be properly considered by the Court as they referred to a bundle of documents which Mr Haines had not put to Mr Memelink and so were not in evidence. At the hearing on 29 May 2023, Mr Haines indicated the thrust of his questions would be:
(a)Responsibility: Mr Memelink’s lack of responsibility as to the circumstances that led to his bankruptcy.
(b)Proposal leading to bankruptcy: at that stage Mr Haines was acting for Mr Memelink, and Mr Haines could give evidence as to the advice that had been given (and taken) regarding the proposal, as well as the input of Mr Bassett-Burr.
(c)Matters which Mr Memelink had asserted which were incorrect and conflicted with the evidence available: this related to his general conduct in matters surrounding his bankruptcy as well as his actions during bankruptcy.
(d)Refinancing of assets: this relates to a finance company, Fico Finance, and mortgage dealings by Mr Memelink involving the Link Trust
14 Referring to Re Paget [1927] 2 Ch 85, [1927] All ER Rep 465.
No.1 and Mr Bassett-Burr. These matters gave rise to litigation between Mr Haines and Mr Memelink and their respective trusts and related entities. That litigation has not yet been completed.15
[25] In his written submissions, Mr Haines submitted that he had a unique perspective that he wished to advance, and that no other creditor had been “affected by Mr Memelink in the same way as [he had] been”. He concluded by saying that his being allowed to ask further questions of Mr Memelink in the public examination was in the public interest and would assist the Court in determining the issue of discharge or whether the examination should be concluded.
[26] I did not make an order that the examination had ended. As contemplated under s 179 of the Insolvency Act, the Court must make an order only when it is satisfied that the bankrupt’s conduct, dealings and property have been sufficiently investigated and the investigation is ended.
[27] I do not consider that Mr Haines’ lines of questioning would assist me in the consideration of the discharge. The questions focused on the disputes between Mr Memelink and Mr Haines. The matters which Mr Haines wished to question Mr Memelink on would have required the hearing to be reconvened, entailing further delays but would be unlikely to assist me in the issues I must determine here.
[28] In addition, some of the issues which Mr Haines seeks to put to Mr Memelink are before the Court in other proceedings — in particular summary judgment proceedings which have been set down for a hearing as to quantum. In these circumstances, there is little to be gained in having relevant matters put to Mr Memelink in this examination when the Court has yet to determine many of the issues in dispute between the Memelink and the Haines interests.16
15 The issues referred to by Mr Haines in relation to these transactions are the subject of litigation in which Mr Haines and his associated entities are defendants: Link No 1 Trust v Haines HC Wellington CIV-2020-485-497; and Memelink v Haines HC Wellington CIV-2021-485-459.
16 The High Court has an inherent jurisdiction to exercise its powers to ensure fairness in the investigative process and to prevent abuse of the process: see Havenleigh, above n 9, at [75].
[29] Insofar as Mr Memelink’s failure to take responsibility for, and his lack of insight as to, the causes of his bankruptcy — including the proposal and advice he received leading up to his bankruptcy — this has been the subject of judicial comment, both in this Court and the Court of Appeal, to which I refer below.
[30] The Court of Appeal noted that Mr Memelink blamed his lawyers and other advisors for his predicament. It rejected those claims. I consider it would not assist the Court to hear any further questions on that matter.
[31] Mr Memelink’s Link Trust No. 1 and the matters giving rise to the receivership — including Mr Memelink’s behaviour during the receivership — are relevant insofar as the assets and liabilities of Mr Memelink personally and those of his trust are unable to be separated due to Mr Memelink’s manner of doing business and lack of accounts. Issues relating to the trust and the receivership were also the subject of questions by the Official Assignee in the public examination. I do not consider allowing Mr Haines to explore specific transactions concerning the Link Trust No. 1 will add much to the information I already have.
[32] To summarise, I do not consider that Mr Haines putting further questions to the bankrupt will assist the Court in its consideration of whether or not to uphold the objection of the Official Assignee to refuse the discharge. The matters Mr Haines wishes to pursue were largely canvassed by the Official Assignee and other creditors in their questions. In relation to the Fico Finance matter, as the events surrounding it are to be considered in an upcoming hearing, I do not consider it would be helpful to have them traversed in this forum.17
Automatic discharge — legal position
[33] The Insolvency Act provides for the Official Assignee to object to the automatic discharge of a bankrupt as follows:
17 Only the issue of quantum is due for hearing in February 2024, as a determination as to liability has been made in Forster v Haines [2021] NZHC 1992. Other proceedings which relate to the events are the subject of a stay application, pursuant to Body Corporate 81012 v Memelink [2022] NZHC 3307 [stay of proceedings decision].
290 Automatic discharge 3 years after bankrupt files statement of affairs
(1)A bankrupt is automatically discharged from bankruptcy 3 years after the bankrupt files a statement of affairs under section 46 or section 67, but may apply to be discharged earlier.
(2)However, a bankrupt is not automatically discharged if—
(a)the Assignee or a creditor has objected under section 292 and the objection has not been withdrawn by the end of the 3-year period referred to in subsection (1); or
(b)the bankrupt has to be publicly examined under section 173 and has not completed that examination; or
(c)the bankrupt is undischarged from an earlier bankruptcy.
[34] The Court has a wide discretion when considering whether or not the bankrupt should be automatically discharged. In Armitage v Established Investments Ltd (in liq)18 the Court of Appeal noted the broad discretion allowed and adopted the principles in ASB Bank v Hogg,19 as follows:20
In conferring a discretion expressed in the broadest terms, the legislation recognises that each case will be different, that the relevant factors may vary from case to case and that the exercise of the discretion must be governed by the circumstances of the particular case having regard to the guidance provided by a consideration of the scheme and purpose of the legislation. In providing for automatic discharge after three years, the legislation recognises that it is not in the public interest that the bankruptcy should endure indefinitely. … The Court is to consider the assignee’s report as to the affairs of the bankrupt, the causes of the bankruptcy, the manner in which the bankrupt has performed the duties imposed on him or her under the Act and his or her conduct both before and after the bankruptcy, and also as to any other fact, matter or circumstance that would assist the Court in making its decision. Clearly the Court apprised of the matter will consider the legitimate interests of the bankrupt, the creditors and wider public concerns, but it is neither required nor entitled to impose threshold requirements in the exercise of the discretion so as to derogate from the breadth of the powers conferred under s 110.
[35] Associate Judge Osborne (as he then was) noted in Havenleigh that the Court was required to reach its decision “when it conducts the examination”, and the onus
18 Armitage v Established Investments Ltd (in liq) [2012] NZCA 439 at [20]. The Court of Appeal was considering the exercise of the Associate Judge’s discretion under ss 110 and 111 of the Insolvency Act 1967. However, the comments equally apply to the Insolvency Act and were applied in Havenleigh, above n 9, at [13].
19 ASB Bank v Hogg [1993] 3 NZLR 156 (CA).
20 At 157–158.
is on the Official Assignee to satisfy the Court that it is in the public interest the bankruptcy should continue beyond the automatic discharge period. His Honour noted that there are otherwise no threshold requirements to the exercise of the discretion, and the Court in reaching its decision may have regard to such matters or circumstances of which it is satisfied.21
[36] In making that discretionary decision, the Court is also informed by the public examination.22
[37] Under s 178 of the Insolvency Act, a record of the examination must be kept in writing and signed by the bankrupt as well as being available for inspection by any creditor at all reasonable times.
[38] When the Court hears an application for discharge or conducts an examination of the bankrupt, it may grant or refuse the discharge or restrict the bankrupt from engaging in business after the discharge and may impose conditions.23 If it refuses an order of discharge, it may specify the earliest date when the bankrupt may apply again for discharge.24
[39] The Official Assignee must prepare and file a report when the bankrupt has applied for a discharge or summoned bankrupt to be publicly examined. Requirements for this report are set out in further detail below.
Factors relevant to the discharge
[40] The function of the Official Assignee’s report to the Court filed in support of his objection is to provide information to the Court to assist it in making his decision as to discharge.25 As Associate Judge Osborne noted in Havenleigh, the report includes the Official Assignee’s conclusions from the investigations, as well as the facts which underlie those conclusions. His Honour noted:26
21 Havenleigh, above n 9, at [25].
22 Insolvency Act, s 298.
23 Sections 298–299.
24 Section 298.
25 Section 296(2) of the Insolvency Act specifically identifies the required contents of the Official Assignee’s report
26 Havenleigh, above n 9, at [46] (footnote omitted).
… The Assignee’s conclusions are entitled to the respect and weight that is appropriate to the Assignee’s public office and standing as an officer of the Court.
[41] Associate Judge Osborne also commented that it was inapt to speak of “admissibility” in terms of the report, but rather it was for the Court as to what weight to place on the matters set out within it. The report is admissible as sufficient evidence of undisputed matters, subject always to the Court’s assessment of the weight to be given to assumptions and opinion, where the underlining facts are disputed by cogent and credible evidence.27
[42] The Official Assignee has filed and served a report dated 5 April 2023 (the Report). Before I go on to consider the issues raised by the Official Assignee in the report I deal with the relevance to this application and conduct of the receivership of the trust and the liquidation of Mr Memelink’s companies.
Relationship between the bankrupt and the Link Trust No. 1
[43] The receivers appointed to the trust are Mr Iain Shephard and Ms Jessica Kellow of the accounting firm, BDO Wellington Ltd. They are Court-appointed receivers. They are required to realise the assets of the trust for the benefit of the creditors of the trust.28
[44] Mr Memelink submits that the affairs of his trust and other entities, and Mr Memelink’s conduct in relation to those entities, should have no relevance to his discharge in bankruptcy.
[45] I disagree. I am entitled to consider factors as they relate to the bankrupt’s affairs, the performance of his obligations under the Insolvency Act, the manner in which he has obeyed court orders, his conduct during the bankruptcy and matters which would assist the court in making a decision as to the discharge.29 The conduct of the trusts, the receivership and of the Memelink-related entities are directly
27 At [51]–[58].
28 Body Corporate 81012 v Memelink [2022] NZHC 1244 [receivership appointment decision].
29 Insolvency Act, ss 296(2) and 298(1).
relevant to the issue of whether Mr Memelink should be discharged from bankruptcy, for the reasons I now set out.
[46] The Official Assignee has reported that the liabilities of Mr Memelink personally are inextricably linked to those of Link Trust No. 1. The Official Assignee has been significantly hampered in administering the bankrupt estate because of this. The causes of that linkage are due to Mr Memelink being unclear as to which entity owns which assets, and apparently changing his mind as to ownership from time to time. An example is the case of the motor yacht, the Catherine Johnson. Mr Memelink was unable to say who owned the vessel. He claimed on different occasions, it was owned by him personally or by the trust. The lack of records has hampered both the receivers of the Link Trust No. 1 and the Official Assignee, in their respective obligations to administer the trust and the estate in bankruptcy.30
[47] In his 31 May 2022 judgment appointing receivers to the Link Trust No. 1,31 Churchman J also dealt with applications brought by the Official Assignee for reimbursement of trust debts, remuneration and the beneficiaries current account from the trust. The recovery of funds, being trust debts proven in the bankruptcy, was sought by the Official Assignee. The Link Trust No. 1 trust deed provided a trustee indemnity out of the trust property. In addition, s 81 of the Trusts Act 2019 provides that a trustee may reimburse themselves out of trust property for expenses reasonably incurred when acting as a trustee.32 Claims pleaded by the Official Assignee included the claims in bankruptcy made by Mr Haines (now proven in the sum of $603,750) as well as a claim in respect of Link Technology 2000 Ltd (in liq) (another Memelink entity) for $1,212,986.33 The Official Assignee also sought summary judgment for the amount of any “further claims in the bankruptcy by the time the matter was determined, which are claims against the bankrupt as trustee of the Trust” and the costs in the administration of the bankruptcy to 5 April 2022 of $665,534.73 (which included $445,586.88 for disbursements, being largely legal fees and costs of insurance).34
30 Mr Memelink alleges the receivers sold the Catherine Johnson vessel at an undervalue.
31 Receivership appointment decision, above n 28.
32 At [127].
33 At [130].
34 At [133] and [153]; and s 296(2) of the Insolvency Act.
[48] The Judge allowed the claims and made a declaration that liability extended to debts that had not yet been admitted in the bankrupt estate but could be in the future. He noted that such debts could be contested under s 238 of the Insolvency Act, which enables the bankrupt or any creditor to apply to the Court for the admission or rejection of a creditor’s claim, or for the reduction of the claimed amount if the Court considers that the claim was improperly admitted.35
[49] The Court also gave summary judgment for the Official Assignee in respect of the claim for indemnity for the Official Assignee’s costs and disbursements in relation to the administration of the bankrupt estate.36 The quantum and any challenge to the reasonableness of the Official Assignee’s costs and disbursements could be made by separate interlocutory application.37
[50] Mr Memelink did not keep proper records as to which entity owned the assets or owed the relevant debts. Mr Memelink blamed his accountants for this failure. The Court of Appeal has rejected this excuse.38 Mr Memelink was responsible for keeping the records. The failure to produce records or accounts hampered the Official Assignee in establishing which assets were those of Mr Memelink personally and which belonged to his trust or other entities.
[51] While the Official Assignee accepted he had sufficient information for the purposes of a statement of affairs by September 2019, the extent of the records’ failures has continued to impede the Official Assignee in his investigations.
[52] A bankrupt is prohibited from directly entering into, carrying on, or taking part in the management or control of any business without the consent of the Official Assignee or the Court.39 Mr Memelink continued to carry on business through his trust following his adjudication in bankruptcy. He carried out business through the trust following bankruptcy in a manner which further caused confusion as to the ownership of assets post-bankruptcy. This is illustrated by the way he
35 At [156].
36 At [162].
37 At [161].
38 Memelink v Collins & May Law [2020] NZCA 62 [leave to appeal decision].
39 Insolvency Act, s 149.
obtained trust funds (which should have been declared in the receivership) and then put them through various entities’ bank accounts to use them personally in trading on an exchange platform. He admitted that he did this in such a way that no one, not even his business associate Mr Bassett-Burr, was aware of this trading. Mr Memelink lost substantial personal and or trust funds in the course of that trading.
[53] In considering the objection to the discharge of bankruptcy, I take into account Mr Memelink’s behaviour and conduct, both in relation to his personal affairs and those of his trusts and other entities. Mr Memelink himself makes little distinction between himself and his business entities. Due to Mr Memelink’s business methods and lack of records, his affairs and those of his trust and other entities are so closely linked that it is impossible to sensibly separate them. The Court is entitled to consider the bankrupt’s wider circumstances and their related entities as long as they are relevant to the scheme and purpose of the Act.
The Official Assignee’s Report
[54] Section 296(2) of the Insolvency Act specifically identifies the required contents of the Official Assignee’s report as being:
(a)the bankrupt’s affairs; and
(b)the causes of the bankruptcy; and
(c)the bankrupt’s performance of his or her duties under this Act; and
(d)the manner in which the bankrupt has obeyed orders of the court; and
(e)the bankrupt’s conduct before and after adjudication; and
(f)any other matter that would assist the court in making a decision as to the bankrupt’s discharge.
The bankrupt’s affairs
[55] The Official Assignee referred to the delay in Mr Memelink providing a satisfactory Statement of Affairs as statutorily required. While a document was initially provided on adjudication, followed by another on 25 September 2018 with handwritten additions, the Official Assignee says it was not until 6 September 2019 that Mr Memelink had provided sufficient information to meet his statutory obligations.
[56] The Official Assignee said in a letter of 17 February 2021 to Mr Memelink’s then solicitor:
(a)Mr Memelink had purported to submit a Statement of Affairs. The first was on 3 September 2018 and was “vastly incomplete”.
(b)Information had been requested on 7 September 2018 and 13 September 2018 by email asking about details of personal and trust creditors, companies’ positions (trading or not), a list of debts which had been paid, and for the document to be signed and dated.
(c)On 26 September 2018, Mr Memelink submitted the second Statement of Affairs which was signed and dated but did not include a list of personal creditors and was scant regarding details of Mr Memelink’s companies. The Official Assignee had insufficient information to assess the value of the shares in the companies. That position was recorded in the Official Assignee’s 29 April 2019 report relating to an annulment application made by Mr Memelink.
(d)From April 2019 onwards, numerous emails and letters were sent to Mr Memelink seeking information, particularly about his companies. On 6 September 2019, Mr Bassett-Burr emailed a “raft of documents including spreadsheets showing the assets owned amongst the group of entities”, which had left a number of unanswered questions related to the companies.40
(e)Notwithstanding the above, the Official Assignee regarded Mr Memelink’s Statement of Affairs obligations as having been completed on 6 September 2019. Mr Memelink would therefore be eligible for an automatic discharge on 6 September 2022.
40 Letter dated 17 February 2021 from Anthony Harper Solicitors Christchurch acting for the Official Assignee to Livingston and Livingston, Mr Digby Livingstone acting for Mr Memelink.
[57] In response to questioning and in his submissions, Mr Memelink asserted that he had provided all the information necessary at the beginning of his bankruptcy. I can see no evidence in support of that assertion. While Mr Memelink may have provided a significant number of emails and other material, the information was incomplete as is set out in the letter of February 2021 referred to above.
[58] The initial documents provided by Mr Memelink purporting to be Statements of Affairs were produced by the Official Assignee. These support the allegations of the Official Assignee that insufficient information was provided by Mr Memelink in the first instance. For example, in the list of creditors’ names are the names of Link Technology 2000 Ltd, Cudby And Mead Ltd and R Cameron And Shortts Engineering And Plumbing Supplies Ltd, but under the date incurred and amounts owed appear the letters “TBC” (meaning “to be confirmed”).
[59] Mr Memelink, in the public examination, was asked about the failure to supply information and he laid the blame on accountants, including the administrator Mr Gambitsis, who had, at Mr Memelink’s instigation, been appointed administrator of one of the bodies corporate. Mr Memelink said that the accounts were not kept up to date because there was “stuff uncompleted”.
[60] In its decision dismissing an application for leave to appeal his bankruptcy, the Court of Appeal commented that Mr Memelink had admitted he had not provided the accounting information to the Official Assignee but blamed his accountants for not keeping the accounts up to date. The Court of Appeal rejected that as an excuse.41 I also reject that excuse.
Lack of clarity as to ownership of assets
[61] Mr Memelink had operated his business affairs largely through his control of the Link Trust No. 1.
41 Leave to appeal decision, above n 38.
[62] The trust owns various properties in Lower Hutt and in the wider Wellington region. It was created in 1995 and Mr Memelink has been a trustee since then. At the present time Mr Memelink and Ms Forster are the trustees.
[63] In his July 2022 decision appointing receivers, Churchman J noted that there was real concern as to the solvency of the trust, a factor which supported the need for the appointment of receivers.42
[64] The Official Assignee referred to a number of examples of the incomprehensibility of Mr Memelink’s business affairs, lack of information and intermingling of Mr Memelink’s personal and entity business affairs (particularly the affairs of the Link Trust No. 1). These included:
(a)Spreadsheet of debts:43 a spreadsheet submitted to the Official Assignee by Mr Memelink setting out the debts Mr Memelink claimed to be owed to his group, which were said to total $16 million. A number of entities in the “Entity Owned” column of the spreadsheet referred to both Mr Memelink personally and his trust or company. For instance, a debt said to be owed for Hutt Park Road Link Tech Plastics Factory for “illegal removal of equipment” with a current estimated value of $6 million was owed to “H Memelink/Link Trust (No.1)/Cudby & Meade”. Other debts were owing to “H Memelink/Link Technology 2000”, and other debts said to be owing to various combinations of companies, Mr Memelink’s trusts and Mr Memelink personally.
(b)Receivers’ report on Link Trust No. 1: the receivers of the Link Trust No. 1 have filed a number of reports in the receivership. In the first report, revised by letter dated 11 July 2022, the receivers reported that during early 2022 the Link Trust No. 1 received payments totalling $675,000 from a third-party lender. From those
42 Receivership appointment decision, above n 28, at [78].
43 The first column of the spreadsheet was headed “Monies Owed – Subject to debt collection or litigation”.
loans Mr Memelink, as trustee, withdrew approximately $350,000 from the trust bank account and deposited it into his personal bank account. In the public examination he admitted that these funds have been paid to CMC Markets, a United Kingdom-based financial service company that specialises in foreign exchange trading. Mr Memelink had secretly been engaged in trading on that platform during his bankruptcy. Mr Memelink accepted that he had transferred the money to his personal account, but said in his examination that “it was done as a – under – it was actually done under proviso of the trust, as a trustee and for the trust income.” He emphasised it was not put into his account “for the purpose of me personally spending it, or using it, … it was on behalf of the trust.” Mr Memelink accepted that the funds for the purpose of the trading with CMC Markets in “contracts for differences” were transacted through his personal bank account. However, Mr Memelink said he intended that the Link Trust No. 1 would take any money from the transactions.
(c)Vessel named “Catherine Johnson”: this was a motor yacht vessel. Mr Memelink was unable to say whether he owned the vessel, personally or by the Link No. 1 Trust. He blamed his previous accountant for withholding information about this, and said the ownership was disputed between the Official Assignee and the receivers. In the course of examination when asked about the ownership, Mr Memelink responded: “I can’t [provide an answer] at the moment because the arguments have never been put forward to me.” Mr Memelink had sworn an affidavit saying that the vessel was an asset of the Link Trust No. 1, but then disputed that the trust was the owner of the vessel. The receivers at that stage intended to value the vessel, presumably with a view to sale. Mr Memelink responded in the examination to a question about the ownership saying:
… at the moment it’s in limbo and I have to get the accountants to work out what and how are and everything else. So it’s a question when you think it’s in ownership and it’s not quite depends on the counsel, we have to get this sorted out.
(d)Property at 129 Awamutu Grove, Waiwhetu: this was listed in Mr Memelink’s Statement of Affairs as a personal property. In the public examination he asserted that it was a trust property of the Link Trust No. 1 because the trust had paid for it. Nevertheless, Mr Memelink agreed “there was a bit of confusion whether it was the trust or me personally.” He said it was an “accounting issue”.
(e)Link Trust No. 2: Mr Memelink formed this trust in 1995. The issues which arise in relation to this trust are:
(i)Mr Memelink made no direct reference to it in either his Statement of Affairs completed in 2018, or subsequently. The information about the Link Trust No. 2 was garnered by the Official Assignee while dealing with the many documents that were received during the bankruptcy. The Official Assignee said the investigation of the trust had been a low priority due to the numerous other matters that he had to follow up with respect to Mr Memelink’s bankruptcy. In response to a question in the examination Mr Memelink said the Link Trust No. 2 was not being used, although he was not sure whether it owned any assets. However, the Official Assignee pointed out to Mr Memelink that it had a New Zealand bank account. During the period of the bankruptcy, the bank account showed payments to an entity named the Avalon Family Trust, with particulars stating “Cisca”. When this was put to him in the public examination, Mr Memelink agreed that payment had been made to that entity. He said he had to do some research on the reason why he did it. Mr Memelink agreed that Ms Forster was not a beneficiary of the Link Trust No. 2, nor of the Link Trust No. 1. Mr Memelink subsequently explained that it had been repayment of a loan to Ms Forster’s trust, the Avalon Family Trust.
(ii)In 2022 the Link Trust No. 2 was receiving rental and product sales which were due and payable not to it, but to other entities in the Memelink group. It was also paying marina rental in respect of the Catherine Johnson vessel. On 7 June 2022, the trust bank account received a deposit with reference “rent unit 12”. This was rental due to the Link Trust No. 1, which had been placed in receivership on 30 May 2022. The receivers had commented that Mr Memelink had been collecting payments from the tenant of this unit in relation to the lease of car parks but had not accounted this income to the Link Trust No. 1
(iii)The Official Assignee also identified deposits from 5 July 2022 into the Link Trust No. 2 bank account from Link Trust No. 1 income for the sale of identity holders to a New Zealand firm “Smart Identity Ltd”.
Recordkeeping
[65] As is apparent from the discussion above, the recordkeeping of Mr Memelink’s personal business affairs and those of his entities was poor. In their first report, the receivers noted that Link Trust No. 1 did not file income tax returns between 2015 and 2021, and that it had not filed a number of GST returns.
[66] The Official Assignee pointed to Mr Memelink’s responses to questions about the draft accounts for Link Technology 2000 Ltd. Mr Memelink attributed the lack of up-to-date accounts to the difficulties he was having with the body corporate creditors. When he was asked about director’s duties in relation to recordkeeping, he said that he left this with the accountants.44 When it was put to Mr Memelink that the financial recordkeeping for the company was woeful, Mr Memelink blamed the Official Assignee for not sitting down with him and going through everything.
44 As noted above, this excuse was rejected by the Court of Appeal in the leave to appeal decision, above n 38.
Disputes and litigation
[67] The Official Assignee pointed out that Mr Memelink had a record of entering into disputes, litigation and then further reviewing, appealing or ignoring any decision which went against him. The Official Assignee referred to the sheer quantity of cases in which Mr Memelink or his entities were involved.
[68] The Official Assignee pointed to the litigation concerning Mr Memelink’s long-standing dispute with the bodies corporate in which the trust held units. Mr Memelink had successfully held off adjudication in bankruptcy in 2017, when Associate Judge Smith refused to adjudicate Mr Memelink bankrupt on the application of Body Corporate 68792 (the Hutt Road Body Corporate) (in administration) and Body Corporate 378945, on the basis that Mr Memelink was not then unable to pay his debts, but merely refused to pay his debts, and there was a genuine dispute as to liability and quantum of those debts, which concerned the body corporate levies. Judgment had not been obtained for a substantial amount of those unpaid levies at that stage.
[69] The Associate Judge’s decision dismissing the application to adjudicate Mr Memelink bankrupt based on outstanding body corporate levies was upheld on appeal. The Court of Appeal noted there was evidence that the debtor was able to pay the debts and “while Mr Memelink’s commercial practices are rightly a cause for concern they appear to be largely motivated by his sincere belief in the merits of his claim against [the Hutt Road Body Corporate].”45
[70] However, some three years after the Associate Judge refused to adjudicate Mr Memelink bankrupt, in a judgment of October 2020 Dobson J ordered Mr Memelink to pay outstanding levies owed to the Hutt Road Body Corporate. In that judgment, His Honour commented that Mr Memelink showed a:46
… self-destructive element in some of the initiatives [he] has pursued and the vigorous opposition he has mounted to attempts by the Body Corporate to recover lawfully payable levies.
45 Body Corporate 68792 v Memelink [2018] NZCA 509, [2019] NZAR 127 at [29].
46 Body Corporate 68792 v Memelink [2020] NZHC 2691 [first receivership decision] at [21].
[71] Litigation brought by Mr Memelink on behalf of the trust in relation to his allegations of mismanagement of and money owing to him by the Body Corporate continued under the direction of Mr Memelink following his bankruptcy.47
[72] The Hutt Road body corporate’s internal disputes were referred to in the judgment of Churchman J appointing receivers to Mr Memelink’s Link Trust No. 1.48 Mr Memelink refused to accept the determination of the Court on those issues and Churchman J noted that Mr Livingston, acting for Mr Memelink, had:49
… yet again tried to reopen arguments the defendant had previously advanced about the legality of body corporate decisions going back as far as 2003. This is an example of the defendant simply ignoring Court decisions he does not like.
[73] His Honour referred to the distress being caused to other Body Corporate owners. He referred to affidavits by the chairperson of Body Corporate 378945, Dr Julia Hennessey, who said that the manner in which Mr Memelink had conducted the business of the trust “brings endless chaos, disruption and disharmony to us as a group of owners”.50 Dr Hennessey said that their ability to enjoy their home had been “very badly affected by Mr Memelink’s conduct for many years”, and that “Mr Memelink’s incessant conduct causes ongoing distress to us”.51 Another unit owner gave similar evidence about the constant disruption of meetings, habitual threats by Mr Memelink to sue him, and the false allegations made by Mr Memelink that he had committed perjury. That owner also referred to Mr Memelink bombarding him with emails, including that on 4 November 2021 Mr Memelink had sent him 99 emails over two-and-a-half hours late one evening about a leak in the roof above his unit.
[74] Churchman J was satisfied that Mr Memelink’s failure to pay the levies and other debts and his behaviour had caused the bodies corporate, particularly the Hutt Road Body Corporate, to be “in a parlous financial state.”52
47 The body corporate dispute proceedings were dismissed by the Court of Appeal on 2 December 2021: Memelink v Body Corporate 68792 [2021] NZCA 640.
48 Receivership appointment decision, above n 28.
49 At [49].
50 At [57].
51 At [57].
52 At [59].
[75] His Honour noted that Mr Memelink’s disruptive conduct in respect of the Hutt Road Body Corporate had been the subject to prior judicial comment, referring to comments by Simon France J in earlier proceedings relating to Lynx Trustees Ltd. In 2019 Simon France J referred to the onerous nature of the task of the administrator of the body corporate due to “what is seen as the obstructive and unreasonable conduct of persons associated with [Lynx Trustees Ltd]”.53
[76] Churchman J noted Mr Memelink’s long history of raising disputes about the claimed legality of levies as an excuse for not paying anything. His Honour concluded that nothing in the proceedings before him indicated that he was likely to change that pattern of behaviour.54
[77] The reasons for the appointment of the receivers included Mr Memelink’s behaviour towards the other owners of the bodies corporate and his interference with their affairs to the detriment of the bodies corporate, the poor governance of the Link Trust No. 1, and the dysfunction of the bodies corporate largely caused by Mr Memelink, as well as the likely insolvency of the trust.
[78] The terms of the order appointing the receivers were varied in December 2022. The varied order provided for more extensive powers by the receivers, akin to those given to liquidators under the Companies Act 1993, to realise the assets of the trust and provide a process to determine the debts properly claimable against the trust, with appropriate recourse to the Court.55 In particular, the orders provided for a special process for dealing with claims by the trustees, Mr Memelink and Ms Forster.
[79] The varied terms included a stay of proceedings against the Link Trust No. 1. Churchman J noted that the stay of proceedings involving the trust:56
…. would increase the likelihood of Trust assets being realised for the benefit of creditors. Mr Memelink’s litigiousness is well-documented, and extant
53 At [61], referring to the comments of Simon France J in Lynx Trustee Ltd v Body Corporate 68792
[2019] NZHC 1521 at [4].
54 At [63].
55 Stay of proceedings decision, above n 17.
56 At [31].
litigation and unpaid cost orders represent a risk to the efficacy of the receivership …
[80] The appointment of receivers to the Link Trust No. 1 did not prevent Mr Memelink from trying to control or influence the management and prevent the sale of the trust assets. Mr Memelink, for the trustees, had attempted to place caveats on a body corporate title and interfered with insurance arrangements.57 To deal with those actions the receivers and/or the administrator of the body corporate sought and obtained, interim injunctions from this Court. Orders were granted preventing Mr Memelink or Ms Forster from taking steps likely to interfere with the sale of the interests in the Hutt Road Body Corporate. The orders prohibited, in general terms, interference by Mr Memelink or Ms Forster in relation to the sale and management of the trust property and the assets under the control of the receivers.
[81] Mr Memelink also sought the blanket recusal of Churchman J from determining any further proceedings involving him as a party, alleging bias and impartiality.58 That blanket application was dismissed on 19 April 2023. In the course of his judgment, Churchman J noted that Mr Memelink had:59
… on a number of occasions before me, represented himself or his interests. He not infrequently becomes fixated about issues that are irrelevant or repeats issues that he has already fully addressed. This wastes the Court’s time. He clearly has a deep personal animosity towards Mr Haines and takes every opportunity to disparage Mr Haines, irrespective of whether his comments about Mr Haines’ character have any relevance to the issues before the Court. This also wastes the Court’s time. I have, from time to time, had cause to require Mr Memelink to limit his comments to issues that are relevant to the matters the Court has to decide in the case before it. That is not evidence of bias.
[82] Mr Memelink, in the public examination and in his submissions in relation to the examination and automatic discharge, again repeated his allegations concerning the Body Corporate levies, disputing that they were owing. He remains adamant that the Body Corporate levies were unlawful, describing the circumstances surrounding their setting as “fraud to the point of theft.”
57 Body Corporate 81012 v Memelink [2022] NZHC 3486 [caveat decision]; and Body Corporate 68792 v Memelink [2022] NZHC 3498 [insurance decision].
58 Body Corporate 810812, 68792 and 378945 v Memelink [2023] NZHC 835, (2023) 26 PRNZ 264
at [6].
59 At [15].
[83] The Official Assignee noted that Mr Memelink did not accept that he had engaged in an extraordinary number of disputes and litigation unusual for a normal business person. He said he does an incredible amount of “stuff” and had over 220 small claims cases, of which he had won 214. It was put to him that he was involved in 118 judicial decisions between 2015 and 2023. Mr Memelink acknowledged that. He said that he would continue to file proceedings if he could.
[84] Churchman J in his judgment appointing the receivers commented that Mr Memelink simply ignored Court decisions he did not like.60 The Court of Appeal said no injustice arose in its dismissal of an application for stay of the receivership.61 When these comments of the Court of Appeal were put to Mr Memelink in the examination, he said that the Court was wrong and “it’s a massive injustice because they don’t know half of it.”
Insight into commercial failing and cause of bankruptcy
[85] Shortly before the hearing on this matter reconvened on 29 May 2023, in a separate proceeding, Mr Memelink pursued various applications which were treated as applications for leave to bring proceedings on behalf of the trust. The applications were aimed at removing the receivers and appointing someone nominated by Mr Memelink, removing the trust from receivership62 or permitting Mr Memelink greater participation in the administration of the receivership and sale of assets. The applications, submissions and affidavits filed by Mr Memelink made extravagant allegations against a number of other people, including the Official Assignee and his staff. Allegations were also made about the impropriety of steps in the sale of various assets in the bankruptcy process in which the Official Assignee and the receivers had cooperated. The Official Assignee’s resources were diverted to participating in proceedings in relation to matters which had recently been determined by Churchman J and the Court of Appeal.
60 Receivership appointment decision, above n 28, at [49].
61 Memelink v Body Corporate 81012 [2022] NZCA 333 [CA stay decision] at [6].
62 These applications were subsequently dismissed on 31 July 2023: Body Corporate 81012 v Memelink [2023] NZHC 1749.
[86] Mr Memelink takes no responsibility for his bankruptcy. He continues to blame his lawyers and accountants. He maintains that the bankruptcy should never have happened, and the cause was the advice he received, as well as the attitude of the judges involved.
Causes of bankruptcy
[87] Mr Memelink was adjudicated bankrupt on a creditor’s petition. Mr Memelink had prepared a creditors’ proposal, dated 23 August 2018 prepared by Mr Haines (his then lawyer). That showed that Mr Memelink was insolvent. Mr Memelink maintained that the creditors’ proposal was incorrect and that he signed (but did not read) it, at the instigation of Mr Haines.
[88] The Court of Appeal dismissed an application for leave to appeal the adjudication.63 The Court questioned the ability of the Memelink entities to pay their debts. It noted the appeal on its merits was unlikely to be successful and was critical of Mr Memelink’s approach to litigation as follows:
[11] Two points about this. First, as we explain at [28] and following below when considering the merits of the proposed appeal, Mr Memelink largely proposes to re-run arguments he unsuccessfully put to the High Court in support of his annulment. Thus, a different outcome on appeal is improbable.
[12]Second, if the “Memelink Group” really does have equity of around
$8.5 million, then why has Mr Memelink not paid the debts that led to his bankruptcy, or at least the judgment debts and those he does not dispute?
[13] The answer, which emerges from the mass of material filed in support of Mr Memelink’s application, is that Mr Memelink’s modus operandi is prevarication, disputation and obfuscation.
[14]Mr Memelink also deposes:
18. Since the unsuccessful annulment, a large number of proceedings that were stayed until the annulment decision was made have come off hold, and I have been extremely busy responding to these.
That is distinctly not an acceptable explanation for the delay involved in this application.
63 Leave to appeal decision, above n 38.
[89] The Official Assignee submitted that the causes of Mr Memelink’s bankruptcy were his behaviour and his attitude toward creditors. Mr Memelink said in his public examination that when he disputed a debt and did not pay it, “there’s reason for it, good reasons”, and that he always paid the debts that he was “meant to pay”.
[90] In the first decision in which the body corporate sought to recover its levies and had unsuccessfully sought the appointment of receivers, Dobson J noted that Mr Memelink’s approach to business was recorded in an affidavit as follows:64
I have always elected to carry out business in a manner that keeps the maximum amount of money in my bank account as possible. To achieve this, I elect to pay my bills at the last opportunity. By keeping funds in my account, I am able to be in a position to act on opportunities in a dynamic way.
[91] When questioned about this in the public examination Mr Memelink said that the affidavit had been drafted by Mr Haines, and those were not Mr Memelink’s words, although he agreed he signed the affidavit. In his response he went on to say that all his lawyers say they read affidavits to him but never did. Mr Memelink said the lawyers had just said “sign here” and so he did just that.
[92] Mr Memelink said he had been “extremely rich” in answer to questions in public examination in relation to his adjudication. He agreed he never accepted his adjudication, said he was bankrupted on a “false affidavit” and said the Judge had a “conflict of interest”. He also blames his bankruptcy on a financial situation caused by a “massive fraud” and “liars and officers of” the body corporate, as well as his lawyers and accountants. Mr Memelink also says that the Official Assignee refused to work with him or to allow him to see the relevant files to properly defend claims against him. He also says that the Official Assignee “lied to the Court” and misled it.
[93] The Official Assignee noted that the bankruptcy claims originally admitted by the Official Assignee totalled $99,152.98 and the total admitted claims by unsecured trust creditors (including the Body Corporate levies) totalled $484,172.33. Since then, those figures have been adjusted. It is evident that even at this stage of the
64 First receivership decision, above n 46, at [16].
bankruptcy, the Official Assignee is having difficulty in ascertaining the creditors and debtors in Mr Memelink’s bankruptcy. There have been a number of disputed claims that have come before the Court requiring resolution, largely due to the lack of reliable records and lack of cooperation by Mr Memelink.
[94] Associate Judge Johnston on 15 October 2020 upheld or slightly amended various claims which had been allowed by the Official Assignee. Those claims had been challenged by Mr Memelink, who also brought a crossclaim against a body corporate.65 Initially there were 10 claims challenged, but that reduced to four by the time of the hearing. Since then, further claims have been admitted, including the admission of an amount owing to Mr Haines referred to above, for the sum of
$603,750.66
[95] In the latest summary to creditors,67 annexed to an affidavit of 12 May 2023, the Official Assignee estimated the total claims at $5,227,680.51. This included a number of disputed debts, including Mr Haines’ claim recorded there at
$1.15 million, which was subsequently allowed by the Court at $603,750.68 The summary of assets in the report totalled $10,707,224.79, of which approximately
$3.5 million comprised book debts and interests in the trust which require further investigation but are not likely to be recovered in full. The Official Assignee comments in his report to creditors that:
The administration has to date been complicated and drawn out. It would appear that this will be the case with the ongoing administration of the bankruptcy.
[96] The recovery of the assets is complicated by Mr Memelink’s interference (including applications to the Court necessarily requiring the Official Assignee’s attention). The extent of the recoveries in the bankruptcy remains uncertain. Mr MacDonald for the Official Assignee says the present level of admitted claims which have not been paid total $300,563.01. He said that position remains uncertain due to the number of issues and disputes in the bankruptcy. The debts incurred by
65 Memelink v Official Assignee [2020] NZHC 2709.
66 Haines v Official Assignee, above n 10.
67 New Zealand Insolvency and Trustee Service Insolvency Summary Report, 9 May 2023. Annex the affidavit of Robert Gordon McDonald dated 12 May 2023.
68 Haines v Official Assignee, above n 10.
Mr Memelink (on behalf of the trust) as well as substantial ongoing bankruptcy and litigation costs must also be taken into consideration.
[97] I am satisfied that there remain creditors unpaid whose debts total to a substantial figure.
Post-adjudication conduct
[98] The Official Assignee submitted that the provision of information by Mr Memelink was unsatisfactory. The Statement of Affairs was finally deemed sufficient to meet the bankrupt’s obligations, on 6 September 2019, over a year after Mr Memelink was adjudicated bankrupt.
[99] The Official Assignee said that Mr Memelink provided information from time to time, but it was often copious, lacking in focus and sometimes incomprehensible. The information often dealt with the matters on which Mr Memelink was fixated. The Official Assignee says that on other matters — such as his receipt of funds and trading on the CMC Markets platform — Mr Memelink was not helpful.
[100] Mr Memelink has demonstrated to the Court on numerous occasions his approach to providing information (orally and in writing). His written material is often late, it is usually copious, incomprehensible, and fixated on the causes of his bankruptcy and bodies corporate disputes. His applications and submissions orally and in writing in this case reflect that approach.
[101] Mr Memelink alleges that Official Assignee officers told him different things such as what he could continue to do as a trustee. Face-to-face discussions with Mr Memelink may lead to misunderstandings and are not conducive to the efficient administration of the bankrupt estate. I am satisfied that the Official Assignee approached the dealings with Mr Memelink appropriately. It was entitled to require responses and was reasonable to require Mr Memelink to provide information in writing.69
69 The Official Assignee points out that early in the bankruptcy in response to a summons for public examination, Mr Memelink would not appear as he said he was not prepared.
[102] When the Official Assignee had established that the majority of the bankruptcy debts were incurred by Mr Memelink as trustee, he requested Mr Memelink, as trustee, to realise the trust assets to pay those debts, pointing out to Mr Memelink that the equity in the trust property needed to be realised to meet all trust creditors before the bankruptcy could be resolved. The Official Assignee indicated that if the Link Trust No. 1 would not do that then the Official Assignee would need to look to Mr Memelink’s indemnity.70
[103] Mr Memelink did not realise the trust assets to pay the debts as suggested. Therefore, the Official Assignee was required to seek summary judgment based on the indemnity against the trust assets.71 Mr Memelink said the judgment was wrong and unsuccessfully attempted to have it stayed. His appeal was deemed abandoned.72
[104] When examined about this, Mr Memelink blamed the Official Assignee for not pursuing or allowing him to pursue his various claims through the courts. He believed these were more than enough to cover his debts.
[105] Mr Memelink has continued to pursue litigation. The receivers of the Link Trust No. 1 and administrator of the bodies corporate were required to bring proceedings to prevent Mr Memelink from interfering with the administration of the Body Corporate.73 Orders were issued directing Mr Memelink and Ms Forster not to interfere with the conduct of the receivership. Mr Memelink has filed a series of applications seeking the removal or replacement of the receivers.74
[106] The Official Assignee also referred to an instance of Mr Memelink disrupting the realisation of assets owned by a Memelink company (of which the Official Assignee was the liquidator). The Official Assignee (in cooperation with the receivers) was trying to clear out chattels owned by Mr Memelink/his company from the units owned by Link Trust No. 1. To that end, various items for sale were put on Trade Me, an online sales site. Mr Memelink, hiding behind his sister’s Trade Me
70 Letter from the Official Assignee’s solicitor to Mr Memelink (16 October 2019).
71 Receivership appointment decision, above n 28.
72 CA stay decision, above n 61; and Memelink v Body Corporate 81012 [2022] NZCA 581.
73 Insurance decision, above n 57; and caveat decision, above n 57.
74 These were heard and dismissed recently in Body Corporate 81012 v Memelink, above n 62.
identity and account, purported to purchase a majority of the items for sale and then failed to settle. This was put to Mr Memelink in evidence. Mr Memelink blamed his brother-in-law (Mr Bassett-Burr) for sending the relevant emails through Trade Me to buy the assets but agreed that he had drafted the emails for Mr Bassett-Burr to send. Mr Memelink said the liquidator was selling the machinery too cheaply and so he had stepped in to try and help. Mr Memelink said he only failed to settle the purchase because of the unreasonable terms of sale requiring the collection of the purchased goods.
[107] Mr Memelink also commented that the Official Assignee had allowed theft of his company’s goods and the Official Assignee and staff were “now becoming thugs and crooks”.
[108] Mr Memelink diverted income during the bankruptcy to his personal account and did not declare it to the Official Assignee. Mr Memelink used a Link Trust No. 2 bank account to receive funds paid from a purchaser of identity card holders between July 2022 and September 2022. This was income owing and payable to the Link Trust No. 1. In the public examination Mr Memelink explained his actions saying: “[w]hat happened after receivership, panic set in, people still wanted product, and they had to buy it, so we supplied it”. Mr Memelink further explained that he wanted to make sure “things kept flowing so that there would be an income for the trust”.
[109] Mr Memelink also acknowledged he had diverted funds to pay other accounts, including the Avalon Family Trust, a trust associated with Ms Forster. He said that he paid the money to Ms Forster’s trust because she had paid for some of his legal bills for an appeal.
[110] Mr Memelink was entitled to income derived from royalty agreements for items manufactured in the United States. He personally held the patents for those items (identity cardholders). Mr Memelink said he believed his Link Trust No. 1 or Link Technology (200) Ltd (in liq) was entitled to the money. During his bankruptcy, in order to bring the royalty funds into New Zealand, Mr Memelink entered into a personal account with foreign exchange company, FIRMA. In that document he
described himself as a “business owner” and asserted he was not an undischarged bankrupt. Under examination he explained that he did not read this document and claimed that FIRMA knew all about his bankruptcy. Mr Memelink acknowledged that payments totalling $115,538.14 were transferred into a personal account. The funds were then used by Mr Memelink to trade on a CMC Markets platform.
[111] Mr Memelink also paid money out of his personal bank account with the ASB between 9 December 2022 and 9 March 2023. He paid in excess of $50,000 to Mr Bassett-Burr. In the public examination, Mr Memelink explained that he was repaying a debt that he or the trust owed. When it was put to him that he was paying creditors (whether personal or otherwise) as he deemed fit, Mr Memelink responded that this was because the Official Assignee was “doing nothing” or that the receivers would not meet or talk to him. Mr Memelink further responded as follows:
A … I have the right to have some money out of the trust but over the years I paid – because of the Quintin Haines situation, because the body corp and their fraud and theft, and this court not supervising their administrators, defrauding me and defrauding everybody, so the Court and the lawyers have indirectly caused my actions here and panic to try and mitigate damages because nobody does anything.
…
Q So Mr Memelink, this is self-help remedy you’re taking? A What self-help?
Q You’re deciding what’s right and you’re helping yourself to funds?
A I’m not helping myself to funds, I’m doing the best I can to mitigate damages that the Court and the OA has caused. They’re sitting on hundreds and thousands of dollars, they don’t pay anyone out. So I have tried to do it myself, for the little that I’ve done because all this time, five years they’ve done nothing, done zero, so I paid also – they let me pay out all the other creditors and they said that I could do it, but I had to borrow money off Paul Parry to do that.
Management or control of business
[112] In Tregurtha v Police, Fisher J said that in determining whether a person has taken part in the management of a business:75
75 Tregurtha v Police HC Auckland AP123/93, 15 October 1993 at 4.
… A broad value judgment was required. It is not so much a matter of taking individual transactions and pointing to the positive and responsible role which may have been taken by [a director and general manager of the business] or other incidents in which the appellant may not have participated. Rather it is a case of starting from the positive end and asking what evidence there was of participation by the appellant to a relatively responsible level within this business.
[113] I now outline the evidence that supports my findings that Mr Memelink has continued carrying on business through his trust despite the prohibition from doing so.
[114] The Official Assignee warned Mr Memelink, in writing, on a number of occasions that, pursuant to s 149 of the Insolvency Act, as an undischarged bankrupt he could not, without permission of the Official Assignee or the Court, enter into or carry out or take part in management or control of any business. Examples of those warnings include letters of 16 October 2019, when the Official Assignee noted that the Official Assignee had no direct control over the trust assets but pointed out that Mr Memelink that he appeared to “remain in control of the trust’s assets and business.” The Official Assignee also expressed concern that Mr Memelink maintained control of the Link Trust No. 1 assets and business, as the appointment of Ms Forster was as a “trustee … in name only”.76
[115] Dobson J in his judgment in the first receivership decision dated 13 October 2020 noted that:77
… Mr Memelink’s bankruptcy has not constrained his activities in directing the business of the trust in all aspects of its property management and ownership business, including initiatives to purchase further properties, negotiating sales, and dealings with tenants.
[116] The Official Assignee gave a number of specific examples of Mr Memelink continuing to control a business through the Link Trust No. 1. For example, Mr Memelink issued an invoice on behalf of “Link Trust No. 1-Cudby & Meade Furniture Division”, for storage of goods at one of the trust’s properties. Cudby and Meade Ltd was in liquidation at that time.
76 Letter from Anthony Harper to Mr Memelink and Mr Bassett-Burr (2 September 2019).
77 First receivership decision, above n 46, at [6].
[117] Another example of Mr Memelink carrying on business is supported by an invoice found in the investigation. On 26 May 2022 Mr Memelink issued an invoice in the name of “Link Trust (No. 1) Link Technology Division” to “ID Solutions” for the supply of 15,000 black ID cardholders for $12,762.70. This was prior to the appointment of receivers over the Link Trust No. 1 but after the liquidation of Link Technology 2000 Ltd. Mr Memelink admitted this activity when questioned about it in the public examination.
[118] Mr Memelink acknowledged that the trust and his personal affairs and Link Technology Ltd were “intertwined”. He referred to them helping each other out, saying:
… all these years and I had no reason to suspect there’s ever going to be a problem with fraud and paying hundreds of thousands of dollars for body corp on without prejudice bases, continuously paying out, arguably…
[119] An undischarged bankrupt may not be appointed a trustee, but as noted by Churchman J, a subsequent bankruptcy does not explicitly disqualify an existing trustee.78 His Honour recognised that Mr Memelink was effectively the sole trustee because of the inability or failure of Ms Forster to act in any meaningful way as a trustee.79 Churchman J in the course of the judgment appointing receivers to the trust noted that while Ms Forster was formally a trustee, she “played no substantive role in the conduct of the Trust’s affairs.”80 The Judge accepted on the evidence that Ms Forster was a trustee in name only and the only reason for that role “would appear to be her close relationship with Mr Memelink”.81 The Judge noted that Ms Forster deferred entirely to Mr Memelink and had little knowledge or interest in the affairs of the trust, and could therefore “not be expected to act with the level of insight, responsibility and good faith expected of a trustee”.82
[120] When the Judge’s comments about Ms Forster and her role in the trust were put to him in the course of the public examination, Mr Memelink said: “I totally refute what the Judge has written there”. He said that Ms Forster remained a trustee and
78 Receivership appointment decision, above n 28, at [70].
79 At [71]
80 At [66].
81 At [68].
82 At [69].
that she had “witnessed” everything. In the course of his examination in relation to the comments made by Churchman J about Ms Forster, Mr Memelink said: “I’m saying that is a dishonest statement from the Judge.”
[121] Mr Memelink relied on an affidavit (entitled “Affidavit of Cisca Johnette Forster Setting the Record Straight” dated 22 May 2023) to refute the allegation that he was effectively a sole trustee. Mr Memelink relied on that affidavit to support his submission that he was acting only as one of two trustees, and therefore it was not only him guiding the trust’s business and affairs. Ms Forster in her affidavit said she was the subject of “unfair and Constant Defamation and Slander” by a legal executive (from a firm of lawyers) and by Churchman J. Ms Forster sets out academic and other achievements. She says she was instrumental “in aiding the Trust on several occasions to do with Insurance rules and regulations”. Ms Forster said she was Mr Memelink’s ACC caregiver and was assisting him (including as his “reader writer”) for some time. She has also been involved in her own family trust which has helped Mr Memelink’s trust financially.
108 Minute of Grice J, 2 May 2023; and minute of Grice J, 1 May 2023. The minute of 1 May 2023 also records the administrative arrangements that were made to assist Mr Memelink going through the transcript.
[183] In his various submissions in relation to the discharge and public examination, insofar as it is possible to discern given the confusing submissions, Mr Memelink specifically points to the further matters which he says support a discharge:109
(a)Mr Memelink continued trading through the other entities but then the Official Assignee closed the bank accounts “without telling” him, at which point he “did things through the trust.”
(b)The Official Assignee refused to carry on with cases “that should have been carried on” or at least to “let [him] do it”.
(c)He wants to work with the Official Assignee, but the charges are a significant disincentive to engagement. Mr Memelink had offered his help for free.
(d)Mr Memelink should have been allowed to continue with his business, for instance he should have been allowed to keep the Cudby And Meade Ltd factory running (a furniture factory), and the receivers/Official Assignee “let people steal the stuff”.
[184] In a memorandum dated the day before the public examination hearing, 23 April 2023, Mr Memelink indicated that he had new information of some “very [serious] developments tha[t] affect all parties including the OA and [its] office.”
[185] Mr Memelink enlarged on this in his submissions the following day, in a memorandum dated 24 April 2023. In that memorandum Mr Memelink referred to having had discussions with Crown Law regarding claims against the government for his:
… false bankruptcy and the way the Courts, and officers of the Courts have conducted themselves; the Official Assignee, Lynx Liquidators, Trust Receivers, lawyers and the Court appointed administrator of BC68792. The Court has failed to supervise its Officers who have mislead [sic] and
109 Mr Memelink filed a number of written documents. They largely raised the same matters. For instance, written submissions were said to be prepared with the assistance of a friend and by “voice recording”, which appears to be by way of computer voice transcription. The submissions are difficult to follow and in places make no sense.
committed fraud and theft. The NZ police are investigating BC68792 and Mr Haines. There will be other complaints filed shortly for theft of goods from Trust properties while under the control of the Official Assignee and the Receivers.
[186] The memorandum went on to refer to the circumstances of Mr Memelink’s bankruptcy and again asserted it was the fault of his lawyers and the Court that he had been adjudicated bankrupt.
[187] In that memorandum Mr Memelink summarised his “observations and complaints against the OA”, although he said it was not an exhaustive list. These were:110
(a)being made bankrupt for debts of the trust and not his personal debts;
(b)confusion over what information was required;
(c)failure to provide support to a disabled person;
(d)not pursuing litigation or allowing him to pursue litigation;
(e)telling him and the trust not to pay legitimate bankruptcy debts directly, but to give all monies to the Official Assignee;
(f)liquidation of companies with no debt, millions of dollars in assets and good share value;
(g)failure to value companies;
(h)fire-sale of company assets (in particular, Cudby And Mead Ltd), with more pending;
(i)lack of a collaborative approach to the bankruptcy and little support;
110 Memorandum of Mr Memelink, 24 April 2023 at [20].
(j)confusion over the ability to continue as trustee and trade trust stock; and
(k)unclear delineation of roles between the Official Assignee and the receivers over responsibility and control of asset sales.
[188] Those matters have largely been dealt with earlier in this judgment. On the material before me there is nothing to suggest the Official Assignee (either as the administrator of the bankruptcy or as liquidator) has done anything other than carry out his obligations.
[189] In the Havenleigh proceedings, Associate Judge Osborne noted the public examination, with its focus on the bankrupt’s insolvency, conduct and dealings, is not a forum for the investigation of complaints which the bankrupt may have as to the conduct of the Official Assignee.111 The Associate Judge noted that bankrupts from time to time have complaints about the Official Assignee and their officers and staff and there are avenues to pursue those complaints.112
Summary
[190] Guidance as to the exercise of the Court’s discretion and the principles to be applied is suggested by 296(2) of the Act, which sets out what the Official Assignee must report on. The information provided to the Court in that report assists it in making the decision as to the bankrupt’s discharge.113 I accept the Official Assignee’s submission that the information in the Official Assignee’s report, and in Mr Memelink’s evidence on examination, established the behaviours outlined by the Official Assignee supporting the continuation of the bankruptcy:
(a)a lack of acceptance of the bankruptcy — Mr Memelink considers he is a wealthy man, through ownership of assets personally and through his trusts;
111 Final Havenleigh decision, above n 103, at [16].
112 At [16].
113 Havenleigh, above n 9, at [45].
(b)an inability to observe the legal duties as trustee and director or to recognise the distinction between his entities and his personal affairs;
(c)a policy of disputing rather than paying the debts;
(d)a propensity to enter into disputes, litigation, reviews and appeals with parties that seek to act contrary to his views;
(e)disregard of statutory requirements and court orders;
(f)a tendency to blame his advisers, the Official Assignee, insolvency practitioners and other people, including the judiciary, and his health disabilities for his difficulties; and
(g)continuing to operate businesses and act as if he were not bankrupt.
[191] A graphic instance of Mr Memelink’s attitude to his bankruptcy was provided in response to a question about his trading on the CMC Markets platform. He expressed pride in being the first trader to trade over a billion dollars on that platform, despite losing over a million dollars114 in trades and suffering a significant net loss. Mr Memelink did this trading while he was an undischarged bankrupt. This alone exhibits his lack of insight into the causes of his bankruptcy and disregard of his obligations as a bankrupt. Mr Memelink agreed that he had kept his trading secret from the Official Assignee. After responding to the questions about Mr Bassett-Burr’s involvement as Mr Memelink and the trust’s adviser in the CMC trading, the transcript records Mr Memelink’s answers as follows:
A … I didn’t expect to even [be] going to bankruptcy. Q All right, did Mr Bassett Burr give you permission?
A I can’t remember, I actually don’t think so, I’m not sure.
QWould he have given you permission, surely you would’ve discussed it with [Mr Bassett-Burr]?
A No I didn’t.
114 Mr Memelink lost over $1 million in that trading, although he says it was far less than that if taken as a net figure.
Q So did you tell him about your trading with CMC then? A No I didn’t.
Q So he didn't know about your trading out of that?
[192] Mr Memelink has expressed on numerous occasions his view that were it not for the “hassles” with the bodies corporate and his advisors, he would not be in the position he is now. He said in the public examination:
… all the companies would be running beautifully and profitably, they were, there was no debts to the companies, and I wouldn’t have had any hassles and I wouldn’t have lost them. So it’s the actions of the OA that’s caused this as well.
[193] In his view he was operating as a successful and wealthy businessman, using business techniques, which included paying his debtors at the last moment and disputing debts, to give him funds to make other acquisitions.
[194] Mr Memelink does not accept the fact of the bankruptcy, the receivership of his trust or the liquidation of his companies. He seeks to relitigate the circumstances surrounding his adjudication in bankruptcy and his historical disputes with the body corporate historic disputes before the courts at every opportunity. He refuses to accept determinations of the courts and does not comply with orders or legal requirements if they do not suit him.
[195] The Official Assignee is required to ascertain the bankrupt’s debts and liabilities, realise the bankrupt’s property and distribute the assets in accordance with the provisions of the Insolvency Act. Mr Memelink not only failed to cooperate but took active steps to disrupt the Official Assignee in his task of investigating and realising the assets. Mr Memelink interfered with both the bankruptcy and the receivership process. One example is his attempted acquisition of assets on the Trade Me platform using his sister’s Trade Me account. He dictated the correspondence which was then sent by his brother-in-law to purchase the assets and then failed to settle.
[196] Mr Memelink’s activities in relation to the trust following his bankruptcy are relevant to this application because not only are his personal business affairs entwined
with those of the trust but he was carrying on, managing or controlling the trust business while he was a bankrupt.
[197] Mr Memelink makes extravagant allegations against anyone who disagrees with him, including judges and the Official Assignee. He has little insight into the causes of his bankruptcy. Mr Memelink complains not only about the Official Assignee but also the receivers of the Link Trust No. 1, as well as judges. That is in the context of numerous other complaints about people he has had dealings with, such as the members of the bodies corporate and his former lawyers.
Conclusion on discharge
[198] I am satisfied that the Official Assignee has shown good cause that Mr Memelink should not be automatically discharged from bankruptcy and he be prohibited from applying for a discharge for a further 3 years. I have reached this conclusion by reference to the bankrupt’s affairs, the causes of his bankruptcy, the manner in which the bankrupt has failed to comply with the duties imposed on him under the insolvency regime and his conduct before and after bankruptcy. I have taken into account the interests of the bankrupt, the creditors, the public interest and commercial morality in reaching this conclusion.
[199] Mr Memelink was adjudicated bankrupt almost five years ago. The three-year period did not start until the required Statement of Affairs was adequately completed in September 2019. The way Mr Memelink has run his business affairs and lack of records means it has not been possible for the Official Assignee to separate Mr Memelink’s personal dealings from those of his business entities, particularly his family trust.
[200] Mr Memelink has breached his obligations under the Insolvency Act. He failed to provide information (including accounting records; financial and other personal information) as required. He did not keep proper accounting records. He did not disclose to the Official Assignee financial information (including the existence of bank accounts). Mr Memelink has refused to assist in the realisation of the bankrupt’s property to enable the Official Assignee to realise and distribute the
proceeds among creditors.115 In addition, he has actively disrupted the realisation of assets, for example intervening in the sales on Trade Me. He has continued to carry on business including the businesses of the trust. In addition, he has incurred further debt by secret exchange trading using funds he borrowed on behalf of the trust while bankrupt.
[201] An important reason that Mr Memelink should not be discharged lies in the public interest in ensuring that bankrupts cooperate in the administration of the bankrupt estate. The requirements imposed by the bankruptcy here have not been effective due to the actions of the bankrupt and the administration has not been effective as a result.
[202] The Official Assignee has pointed out that, as at May 2023, he has incurred the sum of approximately $265,000 in costs and $506,355.40 in legal fees to deal with issues and disputes raised by Mr Memelink.
[203] The interests of Mr Memelink in being discharged are that his discharge would allow him to start a business again and use his talents to build it up. His lack of insight into the causes of his bankruptcy mean little weight can be attached to his personal interests at this stage. His bankruptcy was largely due to the manner in which he carried out business. This included delaying paying his creditors until the last moment and resorting to litigation readily as well as refusing to accept final determinations of the court, not keeping business records and blaming his advisors for his business failings. How a person carries on business is a matter for them as long as it is lawful, but it is a relevant factor when looking at the weight to be placed on a bankrupt being able to commence business freely again in circumstances where for a large part of the bankruptcy period Mr Memelink has ignored the prohibition on carrying out business. Weighing against his interests are the interests of the creditors in recovering from the bankrupt estate and the interests of the business community in ensuring the effectiveness of the bankruptcy regime. Mr Memelink’s conduct following bankruptcy, including in relation to the trust and the receivership, weighs
115 Insolvency Act, ss 139–146.
heavily against allowing him to be discharged despite the effluxion of three years. The objectives of the bankruptcy have not been achieved.
[204] Section 298 of the Insolvency Act confers discretion on the Court as to the orders to be made on an application for discharge. Such discretion is to be exercised having regard to all the circumstances of the case. Section 298 provides:
298 Court may grant or refuse discharge
(1)When the Court hears an application under section 294 for discharge, or conducts the examination of the bankrupt under section 295, the Court may, having regard to all the circumstances of the case,—
(a)immediately discharge the bankrupt; or
(b)discharge the bankrupt on conditions (which may include a condition that the bankrupt consents to any judgment or order for the payment of any sum of money); or
(c)discharge the bankrupt but suspend the order for a period; or
(d)discharge the bankrupt, with or without conditions, at a specified future date; or
(e)refuse an order of discharge, in which case the Court may specify the earliest date when the bankrupt may apply again for discharge.
(2)If the Court discharges the bankrupt on the condition that the bankrupt consents to any judgment, ...
[205] The Official Assignee seeks that the bankruptcy continue for an indeterminate time tied to the duration of the receivership.
[206] It is premature to allow Mr Memelink’s discharge in bankruptcy despite the effluxion of the statutory three years. Mr Memelink has largely ignored the constraints of bankruptcy. A discharge, whether suspended or even on conditions, would be contrary to the objectives of the bankruptcy regime. The bankruptcy has been impeded due to Mr Memelink’s non-cooperation and his carrying on business under the guise of being a trustee throughout most of the bankruptcy period. However, I do not consider that it is appropriate to allow the bankruptcy to continue for an unspecified time tied to the receivership process without the bankrupt being able to apply for a discharge. Although the recovery of assets and administration on behalf of the creditors of the trust in receivership and of the creditors proving in the
bankruptcy are closely related here, the bankruptcy and trust receivership are carried out under different regimes. The bankruptcy process is carried out pursuant to a detailed and well-established statutory regime with safeguards for the bankrupt and creditors. The Official Assignee is a statutory officer with obligations in relation to the administration of a bankrupt’s estate. The bankrupt’s ability to apply for a discharge should not be tied to a separate process which is not governed by the statutory insolvency regime. Nevertheless, Mr Memelink should be entitled to apply for a discharge if the receivership process, which will realise assets for the benefit of creditors, is completed within the three-year period.
[207] Accordingly, I order that Mr Memelink be prohibited from making an application for discharge until a date which is the earlier of: the expiry of a further three years or the termination of the receivership.116 That combines, for the benefit of the bankrupt, a specific period of prohibition but also gives him the ability to apply for a discharge earlier if the trust receivership is brought to an end. The further three-year period takes into account the slow progress made to date because of Mr Memelink’s interference in the administration of the bankrupt estate and the lack of records. The terms of the receivership included a stay regarding proceedings by and against the Trust, which has only been in place since December 2022 (the stay). The stay was intended to make the receivership more effective and should have prevented Mr Memelink pursuing actions through the Trust. However, the stay did not prevent Mr Memelink from bringing applications seeking to remove the receivers only shortly after an application for a stay of the receivership was dismissed by the Court of Appeal without proper grounds. This diverted the receivers, the Official Assignee, and their resources.
[208] A three-year period is a realistic length of time for the Official Assignee to progress the bankruptcy. A shorter period would be insufficient given the complications in Mr Memelink’s affairs and his conduct to date. There are procedures available for Mr Memelink to dispute claims made in the bankruptcy and for
116 In Re Fawcett [2014] NZHC 924 the bankrupt made an application for discharge following an objection by the Official Assignee to his automatic discharge in circumstances where he was facing criminal charges resulting from post adjudication conduct. An order was made that the bankrupt was able to make a fresh application on the earlier of the expiry of a further six-month period or the resolution of the criminal proceedings.
complaints against the Official Assignee which are not affected by the three-year prohibition. In addition, if the receivership is completed within the three years, then Mr Memelink may apply for a discharge. The completion of the receivership would likely mean that progress had been made in realisation of assets to enable the effective operation of the trustee indemnity. The terms of the varied receivership orders also provide a process for creditor claims allowing the trustees to apply for leave to challenge the receivers’ decisions in relation to creditor claims.117 I also bear in mind that Mr Memelink’s behaviour and resort to litigation has added to the costs of the bankruptcy which must also now be accounted for.
Public examination adjourned
[209] In view of the lack of progress in the administration of this bankruptcy, I am not in a position to make an order that the public examination is ended. I am not satisfied that the bankrupt’s conduct, dealings and property have been sufficiently investigated and that the investigation is finished.118 This position is largely due to Mr Memelink’s behaviour during the period of bankruptcy. In addition, the litigation involving the Haines and Memelink interests has yet to be completed.
[210] I therefore adjourn the public examination for a period of two years, or such earlier date as directed by the Court. Leave is reserved to the Official Assignee to apply accordingly.
[211] The matter will be placed in a list at the expiration of two years from the date of this judgment for call to consider a time to be fixed for the examination and for a timetable to be put in place.
Summary and conclusion
[212] My conclusion is that the grounds of the Official Assignee’s objection to Mr Memelink’s automatic discharge from bankruptcy are made out. I uphold that objection and refuse to discharge Mr Memelink from bankruptcy. This refusal is
117 Body Corporates 81012, 68792 & 378945 v Memelink [2022] 3307. The orders appointing receivers sealed 8 December 2022.
118 Insolvency Act, s 179(2).
based on his lack of cooperation, his activities and interference in the administration of the bankruptcy. I have considered his behaviour and actions in relation to the receivership of the trust and liquidation of his companies, but those factors are merely additional reasons for my conclusion that he not be automatically discharged.
[213] Mr Memelink is prohibited from making an application for discharge on a date which is the earliest of: the expiration of three years from this judgment or at the conclusion of the receivership of the Link Trust No. 1.
[214] The public examination is adjourned for two years but may be brought on earlier by application by the Official Assignee or a creditor or on the Court’s own motion.
[215] If any issue as to costs arises, any application must be made together with supporting submissions by way of memorandum filed and served on or before 10 days from the date of this judgment. Any response should be filed and served within a further 10 days and any reply within a further three days.
Grice J
Solicitors/Counsel
Anthony Harper, Christchurch
P R W Chisnall, Barrister, Wellington Thomas Dewar Sziranyi Letts, Lower Hutt
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