Haines v Memelink [2024] NZCA 245 (20 June 2024)

Last Updated: 24 June 2024

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA807/2023 [2024] NZCA 245

	BETWEEN	QUENTIN STOBART HAINES First Applicant
	AND	BPE TRUSTEES (NO 1) LIMITED Second Applicant
	AND	QUENTIN HAINES PROPERTIES LIMITED Third Applicant
	AND	HARRY MEMELINK AND CISCA FORSTER AS TRUSTEES OF THE LINK TRUST NO 1 (IN RECEIVERSHIP) Respondents

Court:	French and Mallon JJ
Counsel:	C R Carruthers KC and J P Dallas for First, Second and Third Applicants J D Haig and R O Williams for Respondents
Judgment: (On the papers)	20 June 2024 at 10.15 am

JUDGMENT OF THE COURT

1. The application for an extension of time to appeal under r 29A of the Court of Appeal (Civil) Rules 2005 is declined.
2. Leave is reserved to the parties to make further submissions on costs within 10 working days. Submissions are not to exceed five pages.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Introduction

• [1] For determination is an application under r 29A of the Court of Appeal (Civil) Rules 2005 seeking an extension of time to appeal a decision of Grice J in the High Court.^[1] The decision in question granted summary judgment for liability against the applicants in favour of the respondents. The judgment was issued on 3 August 2021. The application for an extension of time to appeal was filed on 22 December 2023.
• [2] The application is made on the basis that new evidence has come to light which impugns affidavit evidence given by the respondents in the High Court and therefore provides grounds for an appeal. The application is opposed.
• [3] For the reasons we go on to explain, we have decided to decline the application.

Background

• [4] Between 2016 and 2018, Messrs Haines and Memelink together, with associated entities, entered into various commercial dealings. These led to their respective interests being involved in three loan agreements with certain finance companies. The two men fell out in 2018 and become embroiled in litigation.
• [5] The three loans are at the centre of this proceeding. Two were with a finance company called Fico Finance and the third with a finance company called Bright Enterprise Holdings Ltd (Bright). Under the relevant loan agreements, the principal debtors were the applicants, being Mr Haines, his family trust (QSH Trust) and his company. The loans were guaranteed by Mr Haines and Mr Memelink, or entities respectively associated with them including the respondent, Mr Memelink’s family trust (the Link Trust). Two of the loans were secured solely against properties owned by the Link Trust, while one was secured against properties belonging to both the Link Trust and QSH Trust.
• [6] It is common ground that the applicants defaulted on the loans and that the Link Trust repaid them. What was disputed in the High Court was whether as part of the loan arrangements, the finance companies validly assigned their rights under the loan agreements to the Link Trust thus rendering the applicants liable, in effect, to reimburse the Link Trust. The interests acquired under the assignment purported to include rights as second mortgagee over Mr Haines’ family home.
• [7] In 2020, the Link Trust issued proceedings in the High Court for breach of contract against the applicants to recover the amount of the loan repayments. The Link Trust also sought summary judgment on liability based on the rights it alleged it had acquired under the loan agreements.
• [8] The applicants opposed summary judgment. They argued there were defects in the assignments and that, because the loans had been repaid and the mortgages discharged, there was nothing owing and so nothing to assign.
• [9] The applicants also filed a counterclaim pleading breach of contract and tortious interference in contractual relations by the Link Trust and Mr Memelink. One allegation against Mr Memelink and the Link Trust was that they had prevented a timelier and more cost-effective resolution of the loans and were responsible for losses arising from the mortgagee sale of Mr Haines’ family home at the instance of the first mortgagee.
• [10] The Link Trust applied to strike out the counterclaim.
• [11] The summary judgment application and the strike-out application were heard by Grice J. In her subsequent judgment issued on 3 August 2021, the Judge made the following key findings:^[2]

(a) The loans remained extant at the time of assignment and the deeds of assignment had validly assigned the relevant loans to the Link Trust.^[3]

(b) Demands had been made of the applicants and no payment had been forthcoming.^[4]

(c) There was no tenable defence to the claim made by the applicants in so far as liability was concerned.^[5]

(d) The pleadings in the counterclaim were defective but capable of being rectified by amendment.^[6]

• [12] The Judge duly granted summary judgment against the applicants in relation to liability but declined to strike out the counterclaim, giving the applicants an opportunity to amend the pleading within 10 days.^[7] The Judge further directed that a trial dealing with quantum and the counterclaim be set down for hearing.^[8] A fixture was subsequently allocated for three days in February 2024.
• [13] Before the quantum hearing, there were two further developments.
• [14] First, in May 2022, the Link Trust went into receivership. According to affidavit evidence from Mr Shephard, one of the receivers, when the receivers were appointed, there was a “large volume of litigation on foot” instigated by Mr Memelink. Because conducting extensive litigation was outside the purview of the receivership and would unduly increase costs, the receivers sought and obtained a court order that all trust litigation be stayed absent the approval of the receivers or the High Court.^[9]
• [15] Subsequently, the receivers advised the Link Trust that they would need to proceed to have the quantum in the loan proceeding fixed by the High Court so that they could take steps to recover the sums owing from the applicants. The receivers then took over the conduct of this proceeding from Mr Memelink.
• [16] The second development was on 9 January 2024 when the applicants applied to the High Court to adjourn the quantum hearing, citing the application they had filed in this Court in December 2023 for an extension of time to appeal the liability judgment. The High Court declined to adjourn the fixture.^[10] That prompted the applicants to seek a stay from this Court. That too was unsuccessful,^[11] and the quantum hearing in the High Court duly went ahead.
• [17] On 19 March 2024, Grice J delivered a quantum decision entering judgment in favour of the Link Trust against the applicants jointly and severally for various amounts found to be owing.^[12] The details of the awards were as follows:^[13]

(a) Judgment against Mr Haines and BPE Trustees (No 1) Ltd relating to the first Fico Finance loan for the sum of $350,790.35 which included interest of $242,563.20 accrued since the date of assignment of 7 December 2018.

(b) Judgment against Mr Haines, BPE Trustees (No 1) Ltd, and Quentin Haines Properties Ltd in relation to the second Fico Finance loan for the sum of $1,167,217.47 which included interest of $824,425.71 accrued since the date of assignment of 7 December 2018.

(c) Judgment against Mr Haines and BPE Trustees in relation to the Bright loan for the sum of $869,528.31 including accrued interest of $573,232.72 accrued since 7 December 2018.

The new evidence

• [18] The new evidence consists of two letters disclosed by the receivers in September 2023 and an affidavit sworn on 13 December 2023 by Bright’s managing director, Mr Gillman.
• [19] Mr Gillman deposes that the Bright loan was repaid by the Link Trust and that a discharge of a mortgage over the Link Trust’s property was given on 7 December 2018. He further states that Mr Memelink’s lawyer had sought an assignment of the loan and securities to the Link Trust. The loan agreement contained a broadly worded clause permitting assignment. The clause, cl 32.3, read as follows:

The Lender may Assign: The Lender may assign all or part of its rights and benefits under this Agreement and Security Documents or any of them to any one or more banks or financial institutions (each an “Assignee”). ...

• [20] Mr Gillman goes on to state that, on the face of it, the clause did not limit or exclude the general right of Bright at law to assign the loan. However, Bright was anxious to avoid the possibility of any future dispute given the litigious nature of the parties. It therefore required Mr Memelink’s lawyer to give an acknowledgment on behalf of the Link Trust that the loan agreement could not be assigned pursuant to the clause. According to Mr Gillman, the acknowledgment was given by email on 7 December 2018.
• [21] A copy of the email is not attached to the affidavit. Mr Gillman does not say when the request for an assignment was made. He does say that, in light of the email acknowledgment, Bright agreed to execute a deed of assignment after repayment had occurred. The deed, which was attached to the affidavit, was signed by two directors of Bright and dated 7 December 2018.
• [22] Mr Gillman’s affidavit is now relied upon by the applicants as justifying an appeal despite the delay, because his evidence is said to support their claims in the High Court about the assignments being defective, in particular that the loan agreement did not authorise the assignment and that in any event the loan was repaid before the purported assignment took place. It is proposed that this evidence be adduced for the purposes of the substantive appeal should an extension of time be granted.

Principles governing applications for an extension of time

• [23] It is well established, following the Supreme Court decision in Almond v Read, that the discretion as to whether to grant an extension of time is ultimately to be determined by reference to the interests of justice.^[14]
• [24] In making this assessment, factors which are likely to be relevant include the length of the delay, the reasons for it, the conduct of the parties (particularly the applicants), any prejudice or hardship to the respondent or others with a legitimate interest in the outcome, and the significance of the issues raised by the proposed appeal to the parties and more generally.^[15] The merits of the appeal may be relevant, but a decision to refuse an extension of time based substantially on that ground should only be made where the appeal is clearly hopeless.^[16]
• [25] We turn now to address each of the relevant criteria.

The delay

• [26] The last day for filing the appeal was 31 August 2021. The application was not filed until 22 December 2023, a delay of more than two years. On any view of it, that is an inordinate delay.
• [27] In an affidavit sworn by Mr Haines, dated 22 December 2023, he offers an explanation for the delay. He says after receiving disclosure of the two December 2018 letters from the receivers in September 2023, he approached the directors of Fico Finance who refused to make a statement against Mr Memelink and the assignment for fear of further litigation. Mr Haines also approached the directors of Bright, but they were overseas and unable to be contacted by email. On their return, he contacted Mr Gillman who instructed a senior barrister to review Bright’s conveyancing file. Mr Haines further claims Mr Gillman advised he had previously not been prepared to provide an affidavit for fear of litigation.
• [28] The explanation is not entirely consistent with the sequence of events given by Mr Gillman. In his affidavit, Mr Gillman says although he was overseas in September 2023 he did receive the request, so presumably he must have been contactable by email. Mr Gillman also says nothing about any earlier request for an affidavit or any fear of litigation.
• [29] We note too that Mr Haines practised as a lawyer until approximately August 2018, and would have been well aware of the ability to obtain access to the finance companies’ documents. So too would have been the lawyer who represented him and his interests throughout.
• [30] On the basis of the evidence before us, the explanation as to why the documents could not have been obtained earlier is inadequate. There is also no explanation for the failure to contact Mr Gillman prior to the 2021 High Court hearing, let alone from 20 August 2021 to September 2023.
• [31] In so far as Mr Haines also seeks to rely on belated discovery of documents, that also cannot provide an adequate explanation for the delay. The Bright loan documents, including the document containing the clause about assignment, had been discovered and were part of the evidence relied on by Grice J in 2021.^[17] As for the two 7 December 2018 letters discovered by the receivers in September 2023, they are far from being a smoking gun. The letters simply provide repayment figures and discharge instructions to the conveyancing lawyer acting for the Link Trust. In our assessment, for reasons we explain when addressing the merits of the proposed appeal, they do not take matters any further. We therefore have difficulty accepting that the previous non-disclosure of them could justify the delay.

Conduct of the parties

• [32] Counsel for the Link Trust submits that the timing of the application to extend time to appeal, combined with the subsequent attempts to vacate the February 2024 fixture for the quantum hearing, indicates that this application was a strategy to prevent the quantum hearing taking place.
• [33] That may well be so. But, on the other hand, the applicants have persisted with the application so we would not be prepared to attribute any bad faith or abuse of process.
• [34] We are not aware of any disentitling conduct on the part of the applicants independent of their inaction. The Link Trust on the other hand can be criticised for its conduct in failing to make full discovery in 2019, although, for the reasons already traversed, we are not persuaded that failure has been of significance.

Prejudice or hardship to others with legitimate interest

• [35] In our view, there is no doubt the inordinate delay has caused prejudice. The receivers’ decision to proceed with the quantum hearing was in reliance on the fact that the liability judgment had not been challenged for over two years. Reopening it now will be to the obvious detriment of the Link Trust’s creditors. We accept the submission advanced on behalf of the receivers that any appeal will add further cost and delays to the receivership including potential wasted costs involved in the quantum hearing.

Significance of the issues raised

• [36] We accept that the issues raised are of importance to Mr Haines and his interests. However, there are no issues of general or public importance. Further, the importance to Mr Haines must be tempered by the fact that the proposed appeal itself is limited to the Bright loan.

The merits

• [37] As Mr Haines acknowledges, he and his interests received a benefit from the Link Trust repaying the loans. The flip side is that by resisting reimbursement to the Link Trust, the applicants will gain a windfall.
• [38] The proposed appeal will rely on the new evidence: the two letters and Mr Gillman’s affidavit.
• [39] As indicated, we do not consider that the letters, which simply set out the figures required to redeem the loans, assist the applicants.
• [40] Further, the letters appeared to have been preceded by an email to the solicitor for the Link Trust from Bright’s solicitor dated 6 December 2018. We do not have this email in our files, but it was described by Grice J in the liability judgment as recording that immediately upon the deed of assignment being signed, the solicitor would accept payment of the amount required to repay the loan.^[18]
• [41] The deed of assignment itself relevantly states the following:

BACKGROUND:

1. The Assignor is the Lender under a Term Loan Agreement dated 21 February 2017 (“the Loan”).

1. The Loan was entered into the Assignor as the Lender and Quentin Stobart Haines and BPE Trustees (No. 1) Limited as trustees of the QSH Family Trust as the Borrower. The initial sum advanced was $260,400.00. The amount due and outstanding is $319,030.41

2. The sum total owing to the Assignor is $319,030.41 (“Debt”).

100. The following securities (“Securities”) are held by the Assignor as security for the payment of the Loan

- Unlimited All Obligations Deed of Guarantee and Indemnity dated 21 December 2016 provided by Quentin Stobart Haines;

4. The Assignees have agreed to purchase the Debt and the rights of the Assignor under the Loan from the Assignor for $319,030.41 (“Purchase Price”) on 7 December 2018 (“Settlement Date”).
5. The parties have agreed to enter into this Deed to record the agreements reached.

OPERATIVE PART:

1. ASSIGNMENT

In consideration of the Purchase Price paid to the Assignor by the Assignees on the Settlement Date, the Assignor transfers, assigns and sets over to the Assignees free of all securities interests and encumbrances of any nature, all its right, title and interest in and to the Loan Agreement, Securities and the Debt.

2. RIGHT TO ASSIGN

The Assignor confirms that it is obliged to assign its rights under the Loan Agreement, Securities and the Debt to the Assignees and warrants that:

2.1 The Debt is due and outstanding to the Assignor by the Borrower; and

2.2 The Assignor is the sole and unencumbered owner of the legal and beneficial rights and interests in the Loan Agreement, Debt and Securities.

3. NO OTHER WARRANTY:

Except as may otherwise be contained in this Deed, the Assignor makes no warranty or representation in respect of the Debt, Loan Agreement, or Securities.

4. EVIDENCE OF DEBT

The Assignor shall on the Settlement Date provide to the Assignees, in addition to the executed copy of this Deed:

4.1 A statement of the Debt outstanding;

4.2 If requested by the Assignee, a notice of this assignment to any borrower and any guarantor;

4.3 The Assignor undertakes that all legislation and other legal requirements have been complied with in respect of the Loan from its commencement to the ... present time.

b) Documentation provided to include the following documents duly signed where applicable:

• - Unlimited All Obligations Deeds of Guarantee and Indemnity referred to in the Background of this Deed;
• - Trustees certificates;
• - Underlying spreadsheets or similar used to calculate, interest, fees etc, plus invoices supporting the various external charges, such as broker, legal etc

• [42] The deed of assignment containing the warranties given by Bright was signed by Mr Gillman and one other director.
• [43] The email of 7 December 2018, discussed above at [20]–[21], which Mr Gillman refers to in his affidavit might put a different complexion on matters. However, he does not produce the email. Nor, significantly, does he explain in his affidavit how he reconciles giving the warranties he did in the deed of assignment with the claims he now appears to be making, albeit somewhat obliquely.
• [44] The loan agreement did not contain any prohibition on assignment and Mr Gillman’s interpretation of cl 32.3 is not evidence.
• [45] Any assessment of the merits of the proposed appeal is obviously provisional without a full hearing but, for the above reasons, our view is that they appear to be weak.

Overall assessment

• [46] The fact that the merits are weak would not be sufficient to decline an extension of time but, when combined with the inordinate delay and the prejudice to third parties, we are not persuaded it would be in the interests of justice to grant an extension of time.
• [47] In the event we were to arrive at that conclusion, the Link Trust sought to “submit as to costs on the basis that solicitor/client costs are to be paid in accordance with the contractual provisions in the assigned loans”.
• [48] It is the usual practice of this Court not to deal with costs in a separate judgment. However, in light of the fact that this is a claim for solicitor/client costs, we reserve leave to the parties to file submissions on costs within 10 working days. Submissions must not exceed more than five pages.

Outcome

• [49] The application for an extension of time to appeal under r 29A of the Court of Appeal (Civil) Rules 2005 is declined.
• [50] Leave is reserved to the parties to make further submissions on costs within 10 working days. Submissions are not to exceed five pages.

Solicitors:
JD Dallas, Wellington for First, Second and Third Applicants
Gibson Sheat, Wellington for Respondents

---

^[1] Memelink v Haines [2021] NZHC 1992 [Liability judgment].

^[2] Liability judgment, above n 1.

^[3] At [110]–[112].

^[4] At [156].

^[5] At [122], [150] and [184]–[185].

^[6] At [171].

^[7] At [172] and [186].

^[8] At [187].

^[9] See Body Corporate 81012 v Memelink [2022] NZHC 3307. The litigation that was stayed also included a claim brought by the Link Trust against Mr Haines and three others relating to the sale of the Mr Haines’ family home. Mr Memelink alleged that the sale was engineered by the Haines’ interests to ensure there was no surplus available to the Link Trust as second mortgagee.

^[10] Memelink v Haines HC Wellington CIV-2020-485-497, 26 January 2024.

^[11] Haines v Memelink [2024] NZCA 7.

^[12] Memelink v Haines [2024] NZHC 588 [Quantum judgment].

^[13] At [111].

^[14] Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].

^[15] At [38].

^[16] At [39].

^[17] See for example the liability judgment, above n 1, at [25].

^[18] Liability judgment, above n 1, at [91].