MEMELINK v HAINES [2021] NZCA 116

MEMELINK v HAINES [2021] NZCA 116 [14 April 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA180/2020[2021] NZCA 116BETWEEN HARRY MEMELINKAppellantAND QUENTIN STOBART HAINESRespondentHearing: 10 November 2020Further submissions filed 25 November 2020, 17 December 2020and 15 February 2021Court: Brown, Duffy and Nation JJCounsel: D G O Livingston and M F Moughan for AppellantD G Dewar, F A M Manning, A O'Connor and J D Dallas forRespondentJudgment: 14 April 2021 at 3.30 pmJUDGMENT OF THE COURTA The appeal is allowedB The order of the High Court adjudicating the appellant bankrupt is setaside.C The proceeding is remitted back to the High Court for rehearing.D The respondent must pay costs to the appellant for a standard appeal ona band A basis and usual disbursements. Order for an additional $750 ofcosts to account for the response memorandum of 15 February 2021.E As between the appellant and the supporting creditors, there is no orderfor costs.____________________________________________________________________REASONS OF THE COURT(Given by Nation J)Introduction[1] The respondent (Mr Haines) sought an order adjudicating the appellant(Mr Memelink) bankrupt for a second time on account of his failure to comply witha bankruptcy notice served by Mr Haines. Mr Memelink contended that the judgmentdebt (a costs order) relied on in support of the order for adjudication should be off-setby a subsequent (and larger) order for costs and disbursements in his favour. It appearsthat both costs orders involved Mr Haines and Mr Memelink in their capacities astrustees.[2] Associate Judge Johnston ruled that, in consequence of Mr Memelink's priorbankruptcy, the amount of the subsequent costs order was the property not ofMr Memelink but of the Official Assignee, stating:1[32] The apparent asymmetry in this — Mr Memelink being liable onGrice J's costs judgment of 20 May 2019 on which Mr Haines' application inthis proceeding is primarily based, but not being entiled to take advantage ofher Honour's 17 February 2020 judgment — is essentially a function of theoperation of pt 2 of the Insolvency Act.[3] Mr Memelink appeals against the order adjudicating him bankrupt.The primary issue in the appeal is whether the Official Assignee or Mr Memelink,albeit in his trustee capacity, is entitled to the benefit of the subsequent costs order.BackgroundThe status of the parties[4] Mr Haines, a solicitor, was retained by Mr Memelink and persons associatedwith him. Mr Haines claimed that Mr Memelink and his interests owed hima significant amount for legal fees, which Mr Memelink disputed. Mr Memelink madecomplaints to the New Zealand Law Society concerning Mr Haines. As a result, by1 Haines v Memelink [2020] NZHC 434 (footnote omitted) [Adjudication decision].2018 their relationship was one of intense mutual distrust. Mr Haines ceased practiceas a solicitor on 23 August 2018. Mr Memelink was adjudicated bankrupt on28 August 2018.[5] The various judgments discussed below concerned Mr Haines andMr Memelink in their trustee capacities. Mr Haines had a family trust, the trustees ofwhich were Mr Haines himself and BPE Trustees (No. 1) Ltd (together referred to asthe Haines Trustees). Mr Memelink also had a family trust, the Link Trust (No. 1), thetrustees of which were Mr Memelink himself and Lynx Trustees Ltd (together referredto as the Memelink Trustees).The interim injunction application[6] Mr Haines lived in a property in Levin owned by the Haines Trustees.[7] In 2018 there were two mortgages secured on the title to the Levin property,the first to Basecorp Finance Ltd and the second to Fico Finance Ltd (Fico). Some ofthe borrowing from Fico was for the benefit of Mr Memelink and the Link Trust(No. 1). The Memelink Trustees were guarantors of the Fico loan.[8] By late 2018 there had been defaults in mortgage payments due to Fico.Mr Haines claimed those defaults were the result of Mr Memelink not making thosepayments. Mr Memelink denied he was responsible for the payments.[9] In December 2018 the Memelink Trustees purchased an assignment of the Ficoloans and Fico's security as second mortgagee over the Levin property. Mr Memelinkthreatened to sell the Levin property. Mr Haines claimed he could not obtaininformation as to the amount due on the Fico mortgage.[10] The Haines Trustees filed proceedings in the High Court seeking an injunctionrestraining the Memelink Trustees as mortgagee from taking any step to realise theirsecurity over the Levin property.[11] Following a hearing on a Pickwick basis on 21 December 2018 by way of atelephone conference, in order to preserve the status quo Grice J issued an interiminjunction restraining the Memelink Trustees from taking any steps to sell, transfer ordispose of the Levin property.2 The proceedings were adjourned for a full on noticehearing.[12] After a hearing on 11 February 2019, Grice J granted the interim injunction inview of the Memelink Trustees' failure to provide information to the Haines Trusteesto enable the latter to redeem the Fico mortgage. As a condition of the injunctionorder, the Haines Trustees were to jointly and severally pay the interest payable underthe Fico loan, equating to $5,582 per month, to the Official Assignee as administratorof Mr Memelink's affairs.3Costs order on the interim injunction (20 May 2019)[13] On 20 May 2019, Grice J determined costs arising from the grant of an interiminjunction.4 As the Haines Trustees had succeeded in obtaining interim relieffollowing a defended hearing, the Judge accepted that they were entitled to some costs.However the Judge did not consider it appropriate that the Memelink Trustees shouldbe ordered to pay the full amount of costs on a category 2B basis.5 Concluding that inthe circumstances a discount of 50 per cent to the costs sought by the Haines Trusteeswas appropriate, Grice J accordingly ordered:6 costs in favour of the [the Haines Trustees] against the [the MemelinkTrustees] in a sum calculated according to category 2B of the High CourtRules, in terms of the schedule submitted, but discounted by 50 per cent.The amount payable under that order was $4,933.Discontinuance of the injunction proceeding[14] With Mr Haines' involvement, arrangements were made for a third party totake an assignment of the Basecorp Finance Ltd mortgage for $760,000. That thirdparty then sold the property to another party for $813,000 which then leased theproperty back to Mr Haines. The property sale was completed in May 2019. As2 Haines v Memelink [2018] NZHC 3460.3 Haines v Memelink [2019] NZHC 401 at [52] and [56].4 Haines v Memelink [2019] NZHC 1086.5 At [12].6 At [15].a result, Mr Haines remained resident in the property. No surplus was recovered forthe second mortgagee from that sale. Hence the security which Memelink Trusteeshad by way of second mortgage over the Levin property was no longer of any value.[15] In consequence the Haines Trustees had no reason to continue with theproceedings seeking a final injunction restraining the Memelink Trustees from sellingthe Levin property. In further proceedings between the Haines Trustees and theMemelink Trustees, but under a separate proceedings number, the Haines Trusteessought leave to discontinue the injunction proceedings. In a judgment of 31 October2019, Grice J granted leave for the notice of discontinuance to be filed.7[16] In this judgment, Grice J recorded that the Official Assignee appeared at theinjunction hearings, including the discontinuance hearing. The Official Assignee hadindicated she abided the decision of the Court and took no active part in theproceedings. She did not raise Mr Memelink's bankruptcy as a barrier to the Courtdealing with the matter. The second Memelink Trustee, Lynx Trustees Ltd, was inliquidation. The liquidator abided the decision of the Court.8Costs order on the discontinuance (31 October 2019 and 17 February 2020)[17] Although costs are usually awarded to the other party following a notice ofdiscontinuance, the Haines Trustees submitted that as a litigant in personMr Memelink was not entitled to costs. However, the respondents did instruct counselto file a statement of defence on their behalf.9 Accordingly, Grice J awarded costs tothe respondents, the Memelink Trustees, "on a 2B basis for the steps of filing andserving (if that occurred) of a statement of defence together with disbursements relatedto the filing and service of the statement of defence"10 and held:11Actual and reasonable disbursements claimed and as approved by theRegistrar pursuant to r 12(4) are to be paid by the applicants [named in theintituling as Mr Haines and BPE Trustees (No. 1) Ltd] to Mr Memelink.7 Haines v Memelink [2019] NZHC 2802.8 At [8]–[9].9 At [44].10 At [72].11 At [73].[18] That order for costs was for $4,780. A subsequent judgment of17 February 2020 addressed a dispute as to the quantum for disbursements.Mr Memelink was awarded $1,415.22 "together with costs on a 2B basis as claimedfor the preparation of the statement of defence as noted in [the] earlier judgment".12[19] Accordingly, following 17 February 2020 there was an order for costs anddisbursements of $6,195.22 payable by the Haines Trustees in favour of Mr Memelinkas a trustee.Costs order of 3 December 2019[20] On 18 October 2019, solicitors on behalf of Mr Memelink and Cisca JohnetteForster,13 as trustees of the Link Trust (No. 1), issued a bankruptcy notice againstMr Haines based on his failure to pay interest as ordered by Grice J as a condition ofthe interim injunction order.14 Mr Haines filed an application to set aside that notice,supported by an affidavit.[21] On 14 November 2019, counsel for Mr Memelink and Ms Forster fileda memorandum confirming agreement to set aside the bankruptcy notice but leavingthe Court to resolve costs.[22] In a judgment of 3 December 2019, Associate Judge Johnston held thatMr Haines was entitled to costs of $5,508 plus disbursements of $250.15The bankruptcy notice[23] On 19 December 2019, Mr Haines issued the bankruptcy notice againstMr Memelink referred to above.16 The judgment debt relied on in the notice was thecosts order of $5,508 of 3 December 2019. Mr Haines also claimed costs of $828.17As the bankruptcy notice was served on Mr Memelink on 21 January 2020, the last12 Haines v Memelink [2020] NZHC 188 at [18].13 Ms Forster having replaced Lynx Trustees Ltd as a trustee of the Link Trust (No. 1).14 At [12] above.15 Memelink v Haines [2019] NZHC 3154 at [6].16 At [1].17 Which included a fee of $200 for filing the notice and a fee of $150 for serving the notice.day for Mr Memelink to make payment or otherwise comply with the demands in thenotice was 4 February 2020.[24] At some point between 5 pm and midnight on 4 February 2020 Mr Memelinkpaid $5,508 to Mr Haines by electronic bank transfer.[25] The following day Mr Haines filed an application for an order adjudicatingMr Memelink bankrupt. The application stated:b. the debtor owes the creditor, costs in CIV 2018-485-962 of $4,933.00and cost in respect of Bankruptcy Notice CIV 2019-485-773 of$828.00; andc. the debtor has committed an available act of bankruptcy, as follows:The debtor was served with a Bankruptcy Notice dated 19 December2019 on 21 January 2020. The debtor failed to satisfy the BankruptcyNotice by 5pm on 4 February2020; andd. the creditor has no security for the debt.[26] The application was set down for hearing on 25 February 2020.On 20 February 2020, solicitors for Body Corporates 81012, 68792 and 378945 gavenotice of their intention to appear in support of the application and to seek substitutionas creditors. On 24 February 2020, Mr Memelink filed a notice of intention to opposethe bankruptcy application through a new solicitor, Mr Livingston, who is also counselon the appeal.The High Court judgment[27] The Judge commenced by noting that the application proceeded on theorthodox basis of failure to comply with a bankruptcy notice and that Mr Memelinkopposed the orders sought, essentially on the basis that he had paid the amount of thedemand of $5,508, albeit not the claim in respect of costs. Hence it was necessary forthe Judge to first determine whether Mr Memelink had committed an act of bankruptcyentitling Mr Haines to commence the proceeding.[28] The issue identified by the Judge was whether the electronic transfer of fundsin payment of the amount of the costs order of 3 December 2019 occurred withintime.18 The Judge ruled that, given most financial transactions are conductedelectronically, the Courts should not truncate the ten working day period by insistingthat the judgment debt be paid by 5.00 pm on the tenth working day.19[29] While the Judge was satisfied that payment was likely made before midnighton 4 February 2020, that did not resolve the matter because the costs of $828 were leftoutstanding. Because Mr Memelink did not pay the costs or apply to the Court to fixcosts, the Judge considered Mr Haines' submission that Mr Memelink had committedan act of bankruptcy to be unanswerable.20[30] Before turning to consider the exercise of the discretion the Judge paused tomention a curiosity, described as unusual but by no means unique. The application forthe order for adjudication did not rely on the judgment debt on which the bankruptcynotice was founded (the costs order of 3 December 2019), but instead on the differentdebt payable pursuant to the costs judgment of 20 May 2019. The Judge observedthere could be no objection to that course. Section 13 of the Insolvency Act 2006states that a creditor may apply for an order adjudicating a debtor bankrupt where thedebtor owes the creditor $1,000 or more and the debtor has committed an act ofbankruptcy within the period of three months before the filing of the application.21Both requirements were met here.[31] The Judge proceeded to address the issue of set-off of the two unpaid costsorders — that of 20 May 2019 in favour of Mr Haines, and that of 17 February 2020in favour of Mr Memelink — in this way:[28] On Mr Memelink's behalf, Mr Livingstone contended that a factorthat should also be weighed in the balance in considering whether or notto make an order is a recent costs judgment of Grice J in yet anotherproceeding in favour of the trustees of the Link No. 1 Trust againstMr Haines which exceeds the amount claimed by Mr Haines in thisproceeding.18 Adjudication decision, above n 1, at [16].19 At [17].20 At [20]–[21].21 At [24]–[25].[29] The contention that this costs judgment is relevant is resisted byMr Haines. In his synopsis of submissions, Mr Haines' solicitor,Mr Dallas, put the argument this way:On 17 February 2020 her Honour Justice Grice released acosts decision in CIV-2018-485-962 ordering costs in favourof the Link No. 1, the trust associated with Mr Memelink. Itis respectfully submitted that these costs are not an obligationowed by Mr Haines to Mr Memelink but are instead anobligation that Mr Haines owes to the Link Trust No. 1 andcannot therefore be argued as a set off.[30] I am assuming that what Mr Dallas meant by that submission isthat any entitlement arising out of that costs judgment is one enjoyed bythe trustees of the Link Trust No. 1 in their capacities as trustees, ratherthan in their personal capacities.[31] Whilst it is difficult to see how far Mr Dallas can go with thatcontention, because the legal owner of a chose in action is entitled toenforce it, albeit on behalf of the beneficial owner, there is a point here.The chose in action arising from Grice J's judgment (or at leastMr Memelink's interest in it) is the property of the Official Assignee byreason of Mr Memelink's status as a bankrupt.The Judge concluded in the terms recited at [2] above.[32] Against the points made for Mr Memelink, namely that he had paid the debtrelied on in the bankruptcy notice and that he was able to pay his debts, the Judge saidit was necessary to have regard to the following matters:22(a) Mr Memelink had committed an act of bankruptcy.(b) In the ordinary course of events, that entitled his creditors to theprotection afforded by the Insolvency Act.(c) There were at least four creditors collectively pursuing large claims.(d) There was a need to protect the public and have Mr Memelink's affairsproperly investigated on the Court's behalf by the Official Assignee asan officer of the Court.22 At [33].On balance, the Judge concluded Mr Haines was entitled to an order adjudicatingMr Memelink bankrupt.23[33] On 6 April 2020, Mr Memelink filed a notice of appeal against the order foradjudication. On 21 April 2020, the Official Assignee filed a notice of appearance inthis Court indicating she abided the decision of the Court. On 11 June 2020, noticesof appearance of interested parties were filed on behalf of Body Corporate 68792 andBody Corporate 81012.Issues on appeal[34] Mr Livingston filed a comprehensive statement of issues in the followingterms:1. If there was an act of bankruptcy did Mr Memelink owe Mr Hainesmore than $1,000 (as a certain amount payable immediately or on adate in the future that is certain) on:a) 5 February 2020 (the date of the Creditors Petition);b) 25 February 2020 (the date of the hearing); andc) 9 March 2020 (the date of the judgment) -In light of the following debts:(i) $4,933 in costs awarded in Mr Haines' favour on 20 May 2019;(ii) $4,780 in costs awarded in Mr Memelink's favour on31 October 2019 and disbursements of $1,415.22 awarded on17 February 2020, bringing the total offset to $6,195.22; and(iii) $5,508 in costs awarded in Mr Haines' favour on 3 December2019 (paid 4 February 2020) -And if so, whether or not an application for adjudication could bemade by the creditor and granted by the Court.2. Whether the following submissions establish that the judge erred inprinciple, took into account irrelevant considerations, disregardedrelevant considerations:(a) the fact that the respondent relied upon a separate debt in hisapplication for adjudication to the debt set out in the bankruptcynotice was a relevant consideration;23 At [34].(b) evidence that the respondent was acting unreasonably oroppressively ought to have been taken into account;(c) the fact that the debts before the Court established that therespondent was, on balance, significantly in debt to theappellant was a relevant consideration;(d) the existence of creditors pursing large claims, who were notparties to the proceedings, was an irrelevant consideration;(e) the fact that the appellant was already bankrupt meant that theneed to protect the public and have the appellant's affairsproperly investigated on the Court's behalf by the OfficialAssignee as an officer of the Court was an irrelevantconsideration and/or Johnston AJ erred in principle byconsidering it;(f) there exist relevant policy considerations in favour ofexercising the discretion not to adjudicate the appellantbankrupt that ought to have been taken into account.(g) That it was plainly wrong3. Whether the Judge was plainly wrong that a judgment debtor, who isbankrupt, cannot offset the debts of a judgment creditor, with a debtheld against the judgment creditor, in light of sections 101 and 102 ofthe Insolvency Act, which places the assets of a bankrupt in thepossession of the Official Assignee, in particular, in light of Rule14.17 of the High Court Rules, apply which holds that costs awards inproceedings must be set off against each other.[35] Although observing that a notice of support of the judgment on other groundshad not been filed by the respondent, Mr Livingston also identified a number of furtherissues raised in the submissions for Mr Haines, including the proposition that the timefor compliance with the bankruptcy notice expired at 5.00 pm on 4 February 2020.[36] While the statement of issues made reference to the set-off proposition, inparticular in the context of r 14.17 of the High Court Rules, the question of theapplication of s 104 of the Insolvency Act was not raised. Nor was that provisionreferred to in the submissions of any of the parties. In our view it is necessary toconsider the application of that section as the first issue.Discussion[37] The status of a bankrupt's property is addressed in pt 3 subpt 1 of theInsolvency Act. Section 101(1) provides:101 Status of bankrupt's property on adjudication(1) On adjudication,—(a) all property (whether in or outside New Zealand) belongingto the bankrupt or vested in the bankrupt vests in the Assigneewithout the Assignee having to intervene or take any otherstep in relation to the property, and any rights of the bankruptin the property are extinguished; and(b) the powers that the bankrupt could have exercised in, over, orin respect of any property (whether in or outsideNew Zealand) for the bankrupt's own benefit vest in theAssignee.Section 102 then addresses the status of property acquired during bankruptcy. Bothof those sections were noted by the Judge in a footnote to the reference to pt 2 of theInsolvency Act in [32] of the judgment.24[38] However both those sections state that they are subject to s 104. That sectionprovides:104 Property held in trust by bankruptProperty held by the bankrupt in trust for another person does not vest in theAssignee.[39] In their discussion of s 104, Heath and Whale explain:25Property held by a bankrupt in trust for any other person does not pass to theOfficial Assignee on bankruptcy as a result of s 104. Clearly, where thebankrupt is a trustee of a trust, the bankruptcy in no way affects the propertyof the trust. There need not be an express trust. It may arise by implicationunder one of the recognised equitable categories, or be imposed by the Courtas a remedial constructive trust. Section 104 is a restatement of the broad and historical bankruptcy lawprinciple that only the bankrupt's beneficial interest in property is available tothe Official Assignee for creditors. [40] Although s 104 does not appear to have been drawn to the Judge's attention,the fact that the costs order on the discontinuance of 17 February 2020 was an order24 Recited at [2] above.25 Paul Heath and Mike Whale Heath and Whale: Insolvency Law in New Zealand (3rd ed,LexisNexis, Wellington, 2018) at [4.37].in favour of the Link Trust (No. 1) was the basis of the argument advanced on behalfof Mr Haines and recorded in the judgment at [29].26 The Judge interpreted thatsubmission to mean that any entitlement arising out of that judgment was one enjoyedby the trustees of the Link Trust (No. 1) in their capacities as trustees rather than intheir personal capacities.[41] Mr Haines' argument in the High Court appears to have assumed that the costsjudgment of $4,933 was against Mr Memelink personally, rather than in his capacityas trustee. However that appears not to have been the case.27 Hence if Mr Haines'submission on the status of the costs order of 17 February 2020 had been accepted,then on our analysis there would have been a costs judgment of $4,933 in favour ofthe Haines Trustees against the Memelink Trustees and a costs judgment of $6,195.22in favour of the Memelink Trustees against the Haines Trustees.[42] But such a conclusion was defeated by the Judge's view that the chose in actionarising from the costs order on the discontinuance was the property of the OfficialAssignee by reason of Mr Memelink's status as a bankrupt.28 In our view thatconclusion failed to take account of the effect of s 104. The judgment in favour of theMemelink Trustees did not become the property of the Official Assignee.[43] It follows that the submission made by Mr Haines in the High Court, that asa consequence of the discontinuance costs judgment there was a debt owed to the LinkTrust (No. 1), was correct. That amount more than off-set the interim injunction costsaward of $4,933 in favour of the Haines Trustees. On that analysis the $1,000 debtrequirement in s 13(a) of the Insolvency Act was not satisfied and the adjudicationorder should not have been made.Submissions for supporting creditors[44] Mr O'Connor appeared as counsel for interested parties, Body Corporates378945, 68792 and 81012.26 At [31] above.27 At [13] above.28 Adjudication decision, above n 1, at [31]. This is recited at [31] above.[45] He argued that if the Court accepted that Mr Haines had not established at theadjudication hearing there was a debt due to him for more than $1,000, the Judge couldand should still have made an order adjudicating Mr Memelink bankrupt becauseMr Memelink's debts due to the Body Corporates were for considerably more than$1,000.[46] Three creditors, Body Corporates 68792, 81012 and 378945, filed notices ofappearance in support of Mr Haines' application, each claiming Mr Memelink owedthem substantial debts. They were represented by counsel at the commencement ofthe hearing on 25 February 2020 but when the hearing was delayed counsel forMr Haines assumed the role of representing them. As well as supporting Mr Haines'application, they had given notice that they sought to be substituted as an applyingcreditor.[47] Section 44 of the Insolvency Act states:44 Substitution of creditor(1) The court may substitute another creditor (Creditor 2) for the creditormaking the application for adjudication (Creditor 1), if—(a) Creditor 1 has not proceeded with due diligence or at thehearing of the application offers no evidence; and(b) the debtor owes Creditor 2 $1,000 or more.(2) In that case, Creditor 2 must file another application for adjudication,but can rely on the act of bankruptcy to which Creditor 1's applicationrelated.[48] Section 43 says:43 Court may halt application while underlying debt determined(1) This section applies if the debtor appears in opposition to a creditor'sapplication and the debtor says either—(a) that he or she does not owe a debt to the creditor; or(b) that he or she does owe a debt to the creditor, but the debt isless than $1,000.(2) The court may, instead of refusing the application, halt the applicationso that the question of whether the debt is owed, or how much of thedebt is owed, can be resolved at a trial.(3) As a condition of halting the application, the court may require thedebtor to give security to the creditor for any debt that may beestablished as owing by the debtor to the creditor, and for the costs ofestablishing the debt.[49] Before the Judge could have made an order adjudicating Mr Memelinkbankrupt, the Judge would have to be satisfied there were debts due as claimed by thecreditors who appeared in support of the applications. Part 18 of the High Court Rulesapplies to applications under the Insolvency Act.29 Rule 18.15 requires evidence inproceedings under the Insolvency Act to be given either by means of an agreedstatement of facts or by affidavit. Here, the supporting creditors filed notices ofappearance but no affidavits proving the debts they claimed.[50] The supporting creditors should have the opportunity to be substituted ascreditors given it is likely that, in light of this judgment, Mr Haines will not bepursuing his application. Applying s 44, these supporting creditors will be entitled toask the Court for an opportunity to file their own applications, to issue a summonsagainst Mr Memelink and to file the affidavits required to establish that Mr Memelinkis indebted to them in the way they claim.[51] For that reason, the bankruptcy proceedings brought by Mr Haines must beremitted back to the High Court. It will be for Mr Haines, the creditors who filednotices of appearance in those proceedings, and any other creditor who might wish tobe heard in the proceedings to determine how they wish to proceed. Mr Memelinkwill also continue to be a party to those proceedings. It will be for the Judge to decidehow those proceedings are progressed.Postscript[52] At the hearing we invited counsel for Mr Memelink to file a memorandumaddressing the meaning of the phrase "if 2 or more creditors join in the application"in s 13(1)(a) of the Insolvency Act. The appellant did so on 25 November 2020.[53] Then on 17 December 2020 counsel for Mr Haines filed an unsolicitedmemorandum purporting to respond to submissions made by Mr Livingston during29 High Court Rules 2016, r 18.1(b)(ix).the hearing. On 15 February 2021 counsel for Mr Memelink filed a detailedmemorandum responding to Mr Haines' memorandum.30 In that memorandumMr Memelink sought a costs uplift for the reason that his legal costs had beenincreased on account of Mr Haines post-hearing conduct.[54] In view of our conclusion we do not find it is necessary to address any of thematerial in the three post-hearing memoranda. However we accept that thepost-hearing events should be reflected in the costs award.Result[55] The appeal is allowed.[56] The order made on 9 March 2020 adjudicating Mr Memelink bankrupt is setaside. The proceeding brought by Mr Haines is remitted back to the High Court atWellington for rehearing.[57] Mr Memelink has succeeded on his appeal. He is entitled to costs fromMr Haines for a standard appeal on a band A basis together with usual disbursements.We order an additional $750 of costs to take account of the further work involved inpreparation of the response memorandum of 15 February 2021.[58] Mr Livingston advised the Court that Mr Memelink accepts as between thesupporting creditors and Mr Memelink costs should lie where they fall. We agree thatthere should be no costs order in relation to the interested parties and orderaccordingly.Solicitors:Livingston & Livingston Ltd, Wellington for AppellantThomas Dewar Sziranyi Letts, Lower Hutt for Respondent and Interested Parties30 This was foreshadowed in a memorandum of 14 January 2021 seeking one month to respond tothe respondent's memorandum and explaining that an amendment would be sought to the legalaid grant to enable the appellant to do so.