Haines v Memelink [2018] NZHC 3460 (21 December 2018)

Last Updated: 1 February 2019

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-962 [2018] NZHC 3460

IN THE MATTER OF	Mortgage 10757448.4
BETWEEN	QUENTIN STOBART HAINES First Applicant
AND	BPE TRUSTEES (NO 1) LIMITED Second Applicant
AND	HARRY MEMELINK Respondent
AND	LYNX TRUSTEES LIMITED Second Respondent

Telephone conference:	21 December 2018
Appearances:	J Mahuta-Coyle for First and Second Applicants G Manktelow for First and Second Respondent P Chisnall for the Official Assignee
Judgment:	21 December 2018

JUDGMENT OF GRICE J

(Interim injunction restraining dealing with property)

[1] The applicants applied for a without notice interim injunction to prevent the respondents, as mortgagees, taking steps to sell a property owned by the applicant trustees at 3\97 Honi Taipua Street, Manakau, Levin (now renamed 297B Eastern Rise).¹

1. Mr Haines says that the respondents have taken an assignment of a mortgage from Fico Finance which is registered against the title as mortgage 10757488.4.

QUENTIN STOBART HAINES v BPE TRUSTEES NO 1 LIMITED [2018] NZHC 3460 [21 December 2018]

[2] The respondents hold the mortgage as trustees for the Link No 1 Trust.

[3] On 19 December 2018, I directed the application be served and declined to deal with the matter on a without notice basis on the information then before me.²

[4] The applicants have effected service of the proceedings by email on the respondents and the Official Assignee. Counsel for those parties filed memoranda and appeared today.

[5] The first applicant lives in the house and is presently on home detention. It is the approved address for his sentence of home detention.

[6] I have set out the background in my earlier judgment will not repeat it here.³

[7] Since then counsel for the applicants has filed two further memoranda dated 19 and 20 December 2018 and a further affidavit of Mr Haines (initially unsworn).

[8] The further information provided by the applicants points out that the respondents have now listed the property for sale. The Harcourts listing agreement indicates the property will be for sale for the period from 10 December 2018 to 10 March 2019 at a price of $970,000. The listing document was signed on behalf of Lynx Trustees Limited. The actual signatures on the documents are difficult to make out. However, Mr Bassett-Burr for Link Trust Limited is recorded as the client.

[9] Mr Haines says Property Law Act notices were issued by Fico. He did not annex them. However, Mr Memelink provided them and it appears there are expired Property Law Act notices apparently entitling the mortgagee to proceed to sell the property. Nevertheless, Mr Haines says he has not been able to obtain details about what is alleged to be owing under the mortgages by the applicant trust.

[10] The respondents took assignment of the mortgage as part of a refinancing of other loans. It appears the previous business dealings between Mr Haines and

² Haines v Memelink [2018] NZHC 3373.

³ See above, n 2.

Mr Memelink and their various trusts have resulted in a complicated series of transactions. Those parties have guaranteed each others loans. Mr Haines says he is owed significant legal fees (in excess of $1 million) by Mr Memelink.

[11] Mr Haines says he had been advised by the original mortgagee, Fico that he owed no further money under the loans secured by the mortgage. However, it was apparent from an email from Mr Memelink to Mr Haines and others dated 17 December 2018 that Mr Memelink intends to sell the property. The email from Mr Memelink demanded payment of monies owing by Mr Haines (and/or the Trust) but gave no details of the amount owing or other relevant details.

[12] Counsel for the Official Assignee filed a memorandum and affidavit on 20 December 2018. The Official Assignee supports the making of a without notice interim injunction preventing the trustees of the Link No 1 Trust and the Trust taking any steps against the property until further order of the Court.

[13] The affidavit of Sonia Gardner for the Official Assignee filed with the memorandum says that the trustees of the Link No 1 Trust have provided written undertakings to the Court in proceedings relating to Mr Memelink’s bankruptcy.⁴ The undertaking exhibited provides a clear undertaking from the trustees in the Trust that they will not to sell, transfer and/or dispose of any trust property without the written and informed permission of the Official Assignee or by notice or permission granted by this Court.

[14] The Official Assignee says that Mr Memelink has confirmed to him that the respondents are in the process of selling the property and that real estate agents have been instructed. No written and informed consent has been given by the Official Assignee to proceed with that sale. The Official Assignee said that he is hampered by a lack of information from Mr Memelink. Mr Memelink has not addressed the Official Assignee’s request to him for confirmation that the trustees and the Trust will not take any steps to realise the property.

4. Collins & May Law v Memelink CIV-2018-485-686, Minute of Osborne AJ dated 1 November 2018.

[15] The Official Assignee says there is a breach of the undertakings by the respondents. Counsel, Mr Chisnall, submitted that given the impending Christmas break, the only safe course would be for the Court to order that the respondents refrain from taking any steps against the property until further order of the Court.

[16] The Official Assignee noted the transactions involved are complex and cannot be unravelled easily and certainly not in the present timeframe.

[17] Mr Manktelow for the first and second respondents opposed the granting of an interim injunction. He submitted that the respondent trustees are attempting to realise the trust’s assets (including the property) in order to pay Mr Memelink’s debts so that Mr Memelink can obtain an annulment of his bankruptcy.

[18] Nevertheless, Mr Manktelow also indicated that if there were to be an interim injunction granted given that Mr Haines has the benefit of occupying the property which secures a mortgage of some $700,000 he should service the mortgage in the meantime. Mr Manktelow indicated the interest payments amounted to an excess of
$9,000 per month.

[19] Mr Manktelow also indicated there should be an undertaking from the Trust not just Mr Haines personally, which has been provided. He submitted that the second applicant knew nothing about this application and he expressed some concern about the ability of Mr Haines personally to meet any undertaking as to damages.

[20] Mr Mahuta-Coyle for the first and second applicants indicated that he had instructions that an undertaking could be obtained from the second respondent on behalf of the trust. This would be in addition to the present undertaking as to damages filed by Mr Haines personally.

[21] Mr Chisnall pointed out as there was a clear breach of the undertaking that Mr Memelink had given to the Court the only “sensible” way to hold matters until the appropriate documentation had been filed with the Court and the information was provided by Mr Memelink was by granting the interim injunction. At present he had no information concerning the financial position of the various parties. The Official
Assignee had been waiting for information from Mr Memelink and it had not been forthcoming.

[22] Mr Mahuta-Coyle opposed the suggestion that Mr Haines be required to pay an occupation rental. He said Mr Haines said there was nothing owing under the mortgage and therefore there was no reason for him to pay any interest. The Official Assignee indicated that given the complexities and the lack of any clarity as to who owed whom what, he supported Mr Mahuta-Coyle in his opposition to the payment by Mr Haines of occupation rent.

[23] In my view the evidence supports:

(a) The applicants have been unable to find out what is owed under the mortgage;

(b) The applicants have an arguable case that they are not creditors to Mr Memelink or his trust so therefore there may be no money owing by them under the mortgages.

[24] I have outlined the relief sought on the substantive proceedings to be filed in this matter in my earlier judgment as follows:⁵

[12] Mr Haines has filed a draft statement of claim which seeks relief by way of a final injunction on the basis the respondents have failed provide any accounting or reconciliation information as to the Fico Loans as required under the Property Law Act 2007 and the Fico loan agreement. Further causes of action are based on failure to account and a claim that the Link Trust is an alter ego of Mr Memelink. Mr Haines seeks an offset of the obligations between Mr Haines and BPE Trustees No 1 Ltd on the one hand and Mr Memelink and Lynx Trustees Ltd on the other.

[25] I am satisfied that the urgency of this matter, given the imminent Christmas break, dictates that an interim injunction should be granted to maintain the status quo.

[26] I am satisfied that damages would not be an adequate remedy if the applicants were successful at trial. Mr Haines is residing in the property under threat of sale. He

⁵ Haines v Memelink [2018] NZHC 3373, 19 December 2018.

is presently on home detention and tied to that property. He is likely to have limited ability to relocate to another approved property at this time of year. Of concern is that addition, Mr Haines said he has been unable to obtain any information from Fico Finance or the respondents who have taken assignment of the Fico Finance Mortgage as to the amount owing and the detail to enable him to ascertain his position or redeem the mortgage. The Official Assignee has not been able to obtain that information either. This prevents Mr Haines from exercising his right to redeem the property. In addition, Mr Memelink and the Link No 1 Trust is in breach of an undertaking to the Court as outlined above.

[27] In those circumstances, I am satisfied that the balance of convenience supports preservation of the status quo by issuing an order that:

(a) The respondents are restrained from taking any steps to sell, transfer and/or dispose of the property registered on the record of title under identifier 435936 (Wellington Land Registration District) situated at 3\97 Honi Taipua Street, Manakau, Levin (now 297B Eastern Rise).

(b) This order is to expire unless extended on 4 February 2019 or further order of this Court (whichever is the earlier).

[28] The applicants are each to file undertakings as to damages. Mr Haines has already done so. This order will not issue until the required undertaking by the second respondent is filed.

[29] Given the complexity of the financial arrangements between the parties it is not clear that Mr Haines owes money to the respondents. I am not prepared to order that Mr Haines pay interest on the mortgage monies.

[30] The matter has been listed for call over in the High Court list for 4 February 2019. A half day has been allocated for the hearing of the interim injunction application on 11 February 2019. Counsel are to advise the Court as soon as possible if that time is not required for the hearing.

Timetable directions

[31] The respondents will file and serve any notice of opposition together with any affidavits in support on or before 16 January 2019.

[32] The applicants will file submissions and any affidavits in response on or before 21 January 2019.

[33] The Official Assignee will file any memorandum to provide an update on progress and its position (in particular in relation to Mr Memelink’s bankruptcy and application for annulment) on or before 25 January 2019.

[34] The respondents will file any submissions in response on or before 30 January 2019.

[35] The applicants will file any submissions in reply on or before 5 February 2019.

[36] The applicants will file the common bundle, chronology and joint authorities on or before 5 January 2019.

[37] Counsel will file a joint memorandum on or before 30 January 2019 to update the Court with progress in for the call over on 4 February 2019.

Electronic documents

[38] Counsel have agreed that the documents will be filed and served electronicially.⁶ The applicants will attend to the provision of the common bundle and other documents following the protocol.

[39] Counsel all agree they will accept service by email at the email addresses already provided to the Court.

⁶ In addition to the requirement that they be filed in hard copy.

Costs

[40] Mr Mahuta-Coyle sought that costs be reserved. He proposes to apply for costs on the basis that the application for injunction was necessary only because Mr Memelink was in breach of his undertaking to the Court as referred to above.

[41] Costs are reserved.

Bankruptcy proceedings

[42] All counsel agreed that it would be useful if the proceedings relating to Mr Memelink’s bankruptcy and his application for annulment were able to be called at the same time as this matter.

[43] Those proceedings⁷ are not being managed with the present proceedings. Nevertheless, this memorandum should assist the Registrar in coordinating the two sets of proceedings.



Grice J

⁷ Collins & May Law v Memelink CIV-2018-485-686.