BODY CORPORATE 68792 v HARRY MEMELINK AND CISCA JOHNETTE FORSTER AS TRUSTEES OF LINK TRUST NO. 1 [2020] NZHC 1685

BODY CORPORATE 68792 v HARRY MEMELINK AND CISCA JOHNETTE FORSTER AS TRUSTEES OFLINK TRUST NO. 1 [2020] NZHC 1685 [13 July 2020]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2020-485-162[2020] NZHC 1685BETWEEN BODY CORPORATE 68792PlaintiffAND HARRY MEMELINK AND CISCAJOHNETTE FORSTER AS TRUSTEES OFLINK TRUST NO. 1DefendantsHearing: 13 July 2020Appearances: Mr Dewer for the ApplicantMr Livingston for the DefendantsMr Chisnall for the Official AssigneeJudgment: 13 July 2020JUDGMENT OF GRICE J[1] This is an application for urgency to set the matter down for hearing. Theapplication is made by Mr Dewer on behalf of the plaintiff.1[2] The application itself was described by Clark J in her minute of 11 June asfollows:I drew Mr Livingston's attention to the very simple statement of claim inrelation to which it seems only two substantial points arise by the denials ofthe defendant. The points in contention are the levies applicable to the sixunits owned by the Link Trust [No. 1] and insurance costs. Mr Livingstonwishes to drill down into the levies to see what is owed. But as Mr Dewerobserved, if indeed a receiver is appointed, it will be that Court appointedofficer's responsibility to be sure any debts claimed appropriately attach to theBody Corporate. The essence of the claim is less about the detail and amountof the debts than what is described as Mr Memelink's "endless non-1 This decision was delivered orally on 13 July 2020. The written form has been edited andfootnoted before distribution.cooperation" and whether a receiver should be appointed. Further, the wholefinancial situation of the Body Corporate was reviewed by Deloitte up to 2018.Mr O'Connor confirmed the Deloitte report, read with a copy of each monthlyinvoice from January 2018 to May 2020 will provide all the relevantinformation that is available.[3] The Judge went on to note that the report in combination with Mr Gambitsis'affidavit was the full extent of material available and able to be provided if an orderfor discovery were to be made and Mr O'Connor undertook to provide thosedocuments to Mr Livingston by 12 June and to keep Mr Livingston updated on anydevelopments or changes in relation to the insurance.[4] Mr Gambitsis has filed an affidavit of 9 July which provides some backgroundto the matter. Mr Gambitsis was appointed the administrator of the Body Corporatewith the cooperation and indeed the nomination of Mr Memelink some time ago.[5] Mr Dewer seeks the matter be accorded some urgency for hearing because hesays that confusion reigns at present in relation to the Body Corporate's affairs. It isowed somewhere in the vicinity of $800,000 by Link Trust No. 1 (the Trust), no levieshave been paid by the Trust since October 2017 and the Body Corporate has beencrippled by the lack of funds.[6] Mr Gambitsis in his affidavit of 9 July refers to the dysfunctional nature of theBody Corporate and it appears that Mr Memelink who swore an affidavit in theseproceedings earlier is of the same view. Mr Gambitsis is also clear in his evidencethat there has been mismanagement of the Trust.[7] Mr Livingston appeared for the Trustees, and Mr Memelink has been presentthrough the hearing. Mr Livingston indicated that he was seeking more time beforethe matter was set down for a hearing in an attempt to get to the bottom of the fulldetail as to the makeup of the levies. In that regard he pointed to the fact there was ahearing scheduled for 16 September in Memelink v The Official Assignee2 in whichthe detail of the levies was to be considered. This proceeding is in relation to proofsof debt accepted by the Official Assignee. Mr Livingston explained that other extant2 Memelink v The Official Assignee Wellington HC CIV-2018-485-363.proceedings, Memelink v Body Corporate 687923 related to levies due but covered adifferent time period. Those proceedings have not progressed as they stalled whileawaiting a forensic report from Deloittes. That report was obtained in 2018 butMr Livingston indicated that the Trustees were unhappy with that report and a furtherreport was being sought from a forensic accountant, Mr Sutherland.[8] Therefore, Mr Livingston said it was appropriate for this matter to be delayedand not be set down for hearing in the near future to enable those other matters to beresolved and for Mr Sutherland to be instructed and prepare a report. He also urgedon the Court that the Trustees were agreeable to paying part of the levies but they wereseeking information as to how the levies were apportioned between insurance andother. Therefore, Mr Livingston said that was an indication that the Trust was notinsolvent.[9] In my view and bearing in mind the comments of Clark J in her minute of11 June 2020 and her earlier judgment of 20 March 2020,4 this matter does need to bemoved on to an early hearing. Clark J mentioned in her judgment that it had beensubmitted that this application was made in some desperation given the ongoingconduct of the Trustee, Mr Memelink, and the non-payment of accruing levies whichwas crippling the Body Corporate. She observed that the matter should be brought toa head without delay and to that end put in place a timetable on 20 March 2020 andthen a further timetable on 11 June 2020. According to the timetable of 11 June 2020the defendant was to file and serve any affidavits in response no later than 20 June2020 and the plaintiff was given a further 10 days to file any affidavits in reply. Thattime should now have expired.[10] The issue before Clark J on 11 June 2020 related to whether further documentswere required. No disclosure was ordered on that date and I note her comments inrelation to the material that was already available and what was necessary for thematter to be dealt with.3 Memelink v Body Corporate 68792 Wellington HC CIV-2016-485-141.4 Body Corporate 68792 v Memelink [2020] NZHC 594.[11] Bearing that in mind it is clear that this matter should be brought to a hearingas soon as possible. However, at the same time some latitude must be allowed toenable the defendant to prepare and ready itself for trial.[12] Mr Dewer has indicated that in his view ample time would be provided if twodays were allocated. That would mean a day and a half for hearing and submissionsand a margin of a half day to ensure it was completed. Mr Livingston considered thematter might take three days. In my view the estimate of two days is more realisticgiven the nature of the hearing and the issues involved to which I have referred earlier.[13] Therefore, I consider the matter should be set down for a two day hearing butthat should be after 30 September 2020. The two days allocated are 5 and 6 October2020. That will accommodate, to some extent, Mr Livingston's concerns and givehim some time to order matters before the hearing.[14] Given this matter has been brought on relatively quickly I consider a furthercase management conference should be set in order to review the timetable to trial.This is allocated for 4 August 2020 at midday.[15] If the matter is able to be resolved and all matters timetabled before that theconference may not be necessary if a joint memorandum is filed.[16] Mr Chisnall seeks no formal standing in this matter at present. However heindicated that he will be filing an affidavit to clarify some matters relating toMr Memelink's bankruptcy relevant to this matter. That is to be filed and served onor before 10 days from today. At the same time he will file a memorandum as to thefuture involvement of the Official Assignee by reference to the High Court Rules2016.5_________________Grice J5 High Court Rules 2016, sch 1.