MEMELINK v BODY CORPORATE 81012, BODY CORPORATE 68792 AND BODY CORPORATE 378945 [2022] NZCA 581

MEMELINK v BODY CORPORATE 81012, BODY CORPORATE 68792 AND BODY CORPORATE 378945[2022] NZCA 581 [29 November 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA275/2022[2022] NZCA 581BETWEEN HARRY MEMELINK ANDCISCA JOHNETTE FORSTER ASTRUSTEES OF THE LINK TRUST (NO 1)ApplicantsAND BODY CORPORATE 81012, BODYCORPORATE 68792 AND BODYCORPORATE 378945RespondentsCourt: Gilbert and Goddard JJCounsel: S J Fraser for ApplicantsA S Olney for RespondentsJudgment:(On the papers)29 November 2022 at 10.00 amJUDGMENT OF THE COURTA The application for an extension of time to file the case on appeal isdeclined.B The application for a stay of the appointment of receivers is declined.C The applicants must pay one set of costs to the respondents for a standardapplication on a band A basis, with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Goddard J)Background[1] The applicants, Mr Memelink and Ms Forster, are the trustees of the Link Trust(No 1) (the Trust). The Trust was established in 1995. At all relevant timesMr Memelink has been a trustee, and his co-trustee has been either Lynx TrusteesLimited (Lynx) or Ms Forster.[2] The original and current trustees of the Trust have been embroiled in litigationwith various bodies corporate in relation to properties held by the Trust. That in turnhas led to litigation with a number of other parties. Mr Memelink was adjudicatedbankrupt in 2018. Lynx was placed in liquidation on 10 September 2019.High Court judgment[3] In April 2022 Churchman J heard three proceedings involving the Trust:(a) The receivership proceeding: Three bodies corporate soughtappointment of receivers over the Trust's assets in order to recoverunpaid levies on Trust properties and related debts.(b) The liquidation proceeding: The liquidators of Lynx brought a claimagainst the current trustees to be indemnified out of Trust property fordebts arising in respect of certain claims against Lynx as a trustee of theTrust, and their reasonable remuneration. The liquidators sought,among other things, orders for sale of Trust properties to satisfy thosedebts.(c) The bankruptcy proceeding: The Official Assignee sought to beindemnified out of Trust property for debts incurred by Mr Memelinkin his capacity as trustee. The Official Assignee sought orders for saleof Trust properties to satisfy those debts.[4] On 31 May 2022 the Judge delivered a judgment appointing receivers of theTrust property.1 The receivers' terms of appointment provided for them to realise Trustassets in order to pay levies and costs owing to each of the three bodies corporate.2The liquidators' claim for an indemnity in respect of obligations incurred by Lynx asa trustee, and the Official Assignee's claim for an indemnity in respect of obligationsincurred by Mr Memelink as a trustee, were also successful.3 Rather than makingseparate orders for realisation of Trust properties to meet those claims, the receiverswere appointed to realise Trust assets in order to meet creditors' claims generally, andon the basis that creditors were to be treated equally.4The trustees' appeal to this Court[5] On 3 June 2022 the applicants filed a notice of appeal from the High Courtjudgment. They also filed an application seeking a stay of the appointment ofreceivers. They sought an urgent hearing of the stay application.[6] The notice of appeal named as respondents the three bodies corporate thatsought the order for appointment of receivers before the High Court. The otherapplicants for relief against the Trust — the liquidators of Lynx and the OfficialAssignee — were not named as respondents. We return to this below.[7] This Court heard the stay application on 20 July 2022. It issued a judgmentdeclining the application on 27 July 2022.5 However the Court accepted that a speedyresolution of the substantive appeal was desirable in the interests of all parties, andallocated a hearing for the appeal on 26 October 2022.6[8] Under r 43 of the Court of Appeal (Civil) Rules 2005 (Rules), the applicantswere required to apply for a fixture and file a case on appeal by 3 September 2022.Arguably an application for a fixture was rendered unnecessary because a hearing datehad already been allocated by the Court. But that did not affect the requirement to file1 Body Corporate 81012 v Memelink [2022] NZHC 1244 [High Court judgment].2 At [101] and [108]–[111].3 At [124] and [162].4 At [124].5 Memelink v Body Corporate 81012 [2022] NZCA 333.6 At [6].a case on appeal. The applicants failed to do so. The result was that the appeal wasdeemed to be abandoned pursuant to r 43(1). A notice of result was issued on6 September 2022.[9] In response to the notice of result, Mr Memelink filed a memorandum dated7 September 2022 requesting an extension of time of two weeks for filing the case onappeal. An extension to the timetable for submissions leading up to the hearingscheduled for 26 October was also sought.[10] Counsel for the respondents filed a memorandum dated 15 September 2022opposing any extension of time for filing the case on appeal. That memorandum alsonoted that security for costs remained unpaid. They said that Mr Memelink had failedto provide an explanation for the delay in progressing the appeal and supportingevidence. An extension should not be granted, the respondents submitted, incircumstances where Mr Memelink had failed to prosecute the appeal diligently, hadfailed to explain why he had not done so, and the appeal lacked merit.[11] The applicants filed a case on appeal on 19 September 2022. At the same timethey filed a second application for a stay in relation to the High Court judgmentappointing receivers.[12] On 20 September 2022 the respondents filed a memorandum of counsel notingthat the case on appeal filed by the applicants did not comply with the Rules.In particular, it omitted all of the affidavit evidence before the High Court and thenotes of evidence taken during the hearing in the High Court. It also contained a draftaffidavit filed in this Court in support of the first stay application, which had not beenbefore the High Court.[13] On 26 September 2022 the applicants filed a second affidavit of Mr Memelinkin support of the application for stay. Although described as an affidavit, the documentcontains extensive submissions responding to the memorandum of counsel for therespondents of 20 September 2022, interspersed with some evidence. Mr Memelinkalso filed further memoranda dated 16 October 2022, 2 November 2022, 9 November2022 and 13 November 2022.[14] Because the appeal was deemed to be abandoned, the hearing scheduled for26 October 2022 did not proceed.[15] The two matters that are now before this Court are the applicants' applicationfor an extension of time to file the case on appeal, and their second application for astay. Those applications are opposed by the respondents.[16] Mr Memelink initially represented himself — and, it appears, Ms Forster —in connection with the appeal. It seems he personally filed the notice of appeal andother documents on behalf of both applicants, and appeared on behalf of both himselfand Ms Forster at the hearing before this Court on 20 July 2022. At some point —the exact date is not clear — Mr Fraser was instructed as counsel for the applicants.Mr Fraser has filed submissions on behalf of the applicants in relation to theapplications for an extension of time and for a stay.Application for extension of timeRelevant principles[17] The principles applicable to an application for extension of time under r 43 ofthe Rules are the same as those explained by the Supreme Court in Almond v Read inrelation to r 29A (extension of time to bring an appeal).7 The ultimate question whenconsidering the exercise of the discretion is what the interests of justice require.Factors that may be relevant include:8(a) the length of the delay;(b) the reasons for the delay;(c) the conduct of the parties, in particular the applicant;(d) any prejudice or hardship to the respondent or to others with alegitimate interest in the outcome; and7 Wislang v Attorney-General [2022] NZCA 341 at [9], citing Almond v Read [2017] NZSC 80,[2017] 1 NZLR 801.8 Almond v Read, above n 7, at [38].(e) the significance of the issues raised by the proposed appeal, both to theparties and more generally.[18] The merits of the proposed appeal may, in principle, be relevant to the exerciseof the discretion to extend time. But a decision to refuse an extension of time basedsubstantially on that ground should be made only where the appeal is clearly hopeless.9Submissions for the applicants[19] Mr Fraser submits that in this case the delay was several days. The extensionsought was only two extra weeks to file a casebook. This would still have been ampletime before the scheduled hearing date of 26 October 2022. Mr Fraser says there wasa "slip up" in handover to counsel.[20] The reason for the delay, Mr Fraser says, included issues with a pendingcomplex application for legal aid and finding counsel at short notice. This was not acase of indecision on the part of the applicant.[21] There would have been no prejudice to the respondents if the original date of26 October had been kept. There has been no prejudice to the receivers, who havecontinued to conduct the receivership, or to other parties. The orders have been, andare being, implemented.[22] Mr Fraser submits that the issues raised by the appeal are significant.He identifies two legal issues which he says are raised by the appeal:(a) Whether there is a "pay now argue later" principle which meansBody Corporate levies are unable to be disputed until they have beenpaid.(b) Whether the High Court granted relief and made decisions about issuesthat were not pleaded before it, without involvement of affected parties.The order made by the Judge appointing the receivers in respect of all9 At [39(c)].Trust property, to deal with claims by all creditors of the Trust, had notbeen sought as a remedy by the bodies corporate, the Official Assigneeor the liquidators. This relief went significantly beyond the limitedappointment sought by the bodies corporate in relation to the leviespayable to them. Other creditors were not named as parties in theproceeding. The High Court was not in a position to adjudicate on suchmatters.Discussion[23] We do not accept the submission that this is a case where the relevant delaywas short and did not cause any relevant prejudice, for four main reasons.[24] First, Mr Memelink's position before this Court in July 2022 was that he wasready to proceed immediately with his appeal, and would welcome an early fixture.A fixture was allocated in late October. It was incumbent on the applicants to doeverything necessary to enable that early fixture to proceed. But they failed to takethe basic steps necessary to enable the substantive appeal to be resolved promptly andefficiently. They failed to file a case on appeal on time. They failed to either paysecurity for costs or make a proper application for waiver of security, supported byrelevant evidence, well in advance of the allocated hearing date. In the context of anaccelerated path to hearing the substantive appeal, the delay involved was significant.It derailed the timetable, resulting in the appeal being deemed abandoned and theallocated fixture not proceeding.[25] If the delays had not occurred, the appeal would already have been heard anda decision could be expected before the end of 2022. As matters now stand, if anextension of time is granted a hearing is unlikely to be available before mid-2023, witha result in the second half of 2023. As this Court said, it was "in everyone's interestsfor the appeal to be heard swiftly".10 That opportunity has been lost.[26] Second, the delay continues. The case on appeal filed by the applicants was,as the respondents submit, seriously deficient. It did not include any of the evidence10 Memelink v Body Corporate 81012, above n 5, at [6].before the Judge in the week-long hearing before the High Court. In his replysubmissions Mr Fraser argues that the case on appeal was compliant because none ofthe evidence is relevant to the two issues he has identified as the issues on appeal.But the notice of appeal raises wider issues about receivership being a "last resort"that was not justified in this case, and about the terms of receivership that werejustified. Those are questions that are fact-specific, and require reference to theevidence. Nor is it open to an appellant to unilaterally decide to omit material from acase on appeal. An appellant is required to prepare the case on appeal in consultationwith the respondent.11 If there is disagreement about the inclusion of a document, itmust be included but the fact of the disagreement must be noted (as potentially relevantto costs).12 The respondents consider that the evidence should be included in the caseon appeal. In those circumstances, a compliant case on appeal had to include theevidence.[27] It is therefore very clear that r 43 has not been complied with. The applicantswere on notice of this issue. But they have not fixed it.[28] Third, even if time is extended to file a compliant case on appeal, theapplicants' failure to pay security for costs would mean the appeal is liable to be struckout under r 37(1) of the Rules. No application to dispense with security, properlysupported by evidence about both applicants' means, was ever filed. So the questionof security would also need to be resolved.[29] Fourth, this litigation needs to be seen in a wider context of delay on the partof the trustees of the Trust in pursuing resolution of proceedings on their merits.The trustees of the Trust have in the past commenced proceedings in relation tobody corporate levies, then failed to progress them satisfactorily. In April 2021proceedings brought by the trustees against one body corporate were struck out forwant of prosecution.13 The trustees appealed to this Court. The appeal wasdismissed.14 This Court considered that the High Court Judge was entitled to concludethat there had been inordinate delay, which was inexcusable. The excuses11 Court of Appeal (Civil) Rules 2005, r 39(1).12 Rule 39(4).13 Memelink v Body Corporate 68792 [2021] NZHC 835.14 Memelink v Body Corporate 68792 [2021] NZCA 640.Mr Memelink offered for his failure to progress the proceeding were not relevantimpediments.15[30] The receivership was itself a response to protracted delays on the part of theTrust in meeting claims against it, even where those claims had been determined bythe courts or where there had been ample opportunity to pursue any challenges to thedebts in question but those opportunities had not been taken. Further delay meansfurther prejudice. The need for a prompt resolution of the challenge to the receivershipwas recognised by this Court in July 2022 when it allocated an early fixture for theappeal. There are real difficulties for the respondents and other creditors of the trust,for the receivers, and for third parties dealing with the receivers, if the challenge to thereceivers' appointment remains alive for a further substantial period.[31] The trustees' conduct in commencing this appeal, then failing to progress it,then seeking extensions of time is indicative of the use of proceedings to delay andfrustrate claims against the Trust, rather than a genuine desire to resolve issues on themerits promptly. This points strongly against granting an extension of time.[32] We also accept the respondents' submission that the reasons for the(continuing) delay in complying with the Rules have not been adequately explained.There are references in the extensive material filed by Mr Memelink to an applicationfor legal aid. But the details of that application and the steps taken to advance it havenot been disclosed. And in circumstances where the applicants had obtained an urgentfixture, they could not then sit back and wait to see if legal aid might at some futuredate be granted: they needed to take the basic steps required to comply with the Rulesand keep the appeal on track. Mr Memelink is an experienced participant in litigationwho could have taken the necessary steps himself. And it seems the applicants havenow managed to obtain legal representation: they have not explained why they did notdo so more promptly following the allocation of a fixture by this Court in late July2022.[33] We do not consider that the appeal raises any issues of wider significance.The High Court judgment did not proceed on the basis that a Body Corporate levy has15 At [37].the same status as a judgment debt. The judgment did proceed on the basis that a levygives rise to an immediate debt. That is plainly correct. And a receiver can beappointed to ensure the payment of debts: it is not necessary for judgment to have beenentered on those debts before the Court can appoint a receiver. Mr Memelink hadopportunities to pursue his challenges to the various levies to which he objects, but asnoted above he did not seek to resolve those issues in a timely way.[34] Nor is there any issue of wider significance in relation to the scope of the reliefgranted. The prospect of receivers being appointed was squarely on the table at thehearing. That was the primary relief sought by the bodies corporate. In addition,access to Trust assets to meet claims was sought in both the liquidation proceedingand the bankruptcy proceeding. The prospect that the Court would make orders forrealisation of Trust assets to meet claims by multiple creditors was squarely on thetable. Against that backdrop, it is not surprising that the orders appointing thereceivers were generalised to apply to other creditors before the Court, rather thanmaking separate orders in each of the three proceedings and then attempting to addresshow those orders interacted. Nor is it surprising that the receivers were givenresponsibility for realising assets to meet the claims of all creditors, in order to ensurethat all Trust creditors would be treated equally.[35] We have not undertaken a detailed analysis of the merits of the appeal: that isneither necessary nor appropriate. But nothing in the material filed by the applicantsor their counsel suggests to us that the appeal has any particular merit, and certainlynone that outweighs all the factors identified above.[36] In those circumstances, and in particular having regard to the applicants' failureto progress the appeal in a timely way to enable the allocated fixture to proceed, weconsider that it would be contrary to the interests of justice to grant an extension oftime to file a compliant case on appeal.[37] That view is reinforced by another difficulty with this appeal. As explainedabove, the relief that was granted was not confined to the claim by the bodiescorporate. The appointment of receivers on the basis that creditors are to be treatedequally was also expressly identified as relief granted in the liquidation proceeding.16The terms of appointment reflected submissions made by the Official Assignee inrelation to the appropriate scope of any appointment of a receiver, and effectivelysuperseded the orders sought by the Official Assignee in relation to access to Trustproperty to satisfy the right of indemnity.17 All three sets of plaintiffs were heard onthe terms of appointment of the receiver, at the original hearing and at a teleconferenceon 3 June 2022 which resulted in a judgment approving for sealing a draft orderappointing the receivers.18 A successful appeal by the applicants would have amaterial effect on the interests of the liquidators of Lynx, and of the Official Assignee.[38] In those circumstances the liquidators of Lynx and the Official Assignee shouldhave been named as respondents in any appeal in relation to the appointment of thereceivers. The need to add them as parties, and provide them with a proper opportunityto participate in the proceedings, would add materially to the further delays that wouldbe caused if an extension were now to be granted.Application for stay of receivership[39] Because the appeal is deemed abandoned, and we have declined an extensionof time under r 43 of the Rules, no question of granting a stay pending appeal arises.[40] But we would not in any event have granted a stay. The trustees' earlierapplication for a stay was declined. They had the opportunity to bring their substantiveappeal on for hearing in October, but failed to do so. Nothing in the material filed byMr Memelink suggests that there is any proper basis for reconsidering the earlierdecision to decline a stay, especially against that backdrop.[41] We add that although Mr Memelink has filed extensive material raisingconcerns about the conduct of the receivership, that is not a basis on which a stay couldbe granted. Any issues in relation to the conduct of the receivers are properly thesubject of an application for directions to the High Court. Indeed we understand thatthere are live applications before that Court in relation to the terms of appointment of16 High Court judgment, above n 1, at [124].17 At [98].18 Body Corporate 81012 v Memelink (No 2) [2022] NZHC 1312.the receivers, and the conduct of the receivership. That is the proper forum for dealingwith those issues.Result[42] The application for an extension of time to file a case on appeal is declined.[43] The application for a stay of the appointment of receivers is declined.[44] Costs should follow the event in the normal way. Although there are twoapplications before the Court, they were effectively dealt with as a single application,so only one set of costs is justified.[45] The applicants must pay one set of costs to the respondents for a standardapplication on a band A basis, with usual disbursements.Solicitors:Kevin Smith Law, Wellington for ApplicantsSteve Gill Law, Lower Hutt for Respondents