Bank of New Zealand v Athanasios Koroniadis

JurisdictionNew Zealand
CourtHigh Court
Judgment Date16 February 2015
Neutral Citation[2015] NZHC 180
Date16 February 2015
Docket NumberCIV-2013-485-2905

[2015] NZHC 180



UNDER The Companies Act

Bank of New Zealand
Judgment Creditor
Athanasios Koroniadis
Judgment Debtor

J Toebes for Judgment Creditor

A Koroniadis in person

Application for an order lifting a halt order under s38 Insolvency Act 2006 (Court may halt application) and for debtor to be adjudicated bankrupt — debtor and brother had guaranteed a company's loans — bank held mortgage over company's property — creditor issued a notice to remedy a default under s119 Property Law Act 2007 (Notice must be given to current mortgagor of mortgaged land of exercise of powers) but failed to serve it on debtor — halt order made pending appeal against summary judgment in Court of Appeal (CA) — judge had noted two possible areas for appeal — CA had granted an extension of time to appeal saying the matters were worthy of investigation — bank argued that possible points of appeal no longer applied due to changes in circumstances and the debtor should therefore be immediately adjudicated bankrupt — argued that debtor was not diligently pursuing appeal as was waiting for last day in each period to file documents — debtor was litigant in person — whether the halt order should be lifted because the debtor's appeal lacked merit — whether debtor was abusing the halt order indulgence by filing on the last day of the specified time periods.

The issues were: whether the halt order should be lifted because K's appeal was without merit; and whether K was abusing the halt order indulgence by filing on the last day of the specified time periods.

Held: There was merit in BNZ's argument that the CA would address matters as they stood. The real issue was whether the question of whether there was or was not merit in K's appeal should be decided now in the HC, or in four months' time in the CA.

The BNZ had been in a position to put to the CA the same matters which it now said rendered K's appeal hopeless. If these matters were decisive in the BNZ's favour, as it now submitted, it seemed at least possible that K's application for a time extension would have been refused. But the BNZ apparently did not raise them and did not apply to strike-out the proceedings in the CA.

K had in the meantime expended time and resources on his appeal. Whether there was any merit in his arguments was not the subject of significant argument in the CA. Having regard to the BNZ's own delays in raising matters which it now said demonstrated clearly that there was no merit in the appeal, and to the fact that a fixture had now been allocated for the hearing of the appeal in approximately four months' time, the Bank's argument that the appeal would fail on the merits and should be determined now, and not in the CA, was not persuasive.

K was a litigant in person. The requirement to pursue his appeal diligently was not intended to deprive him of the full time periods allowed under the rules.

Application dismissed.



This is an application by the Judgment Creditor (the Bank) for an order lifting a “halt” order made in this Court on 25 October 2013, under s 38 of the Insolvency Act 2006. The halt order had the effect of staying an application by the Bank to have Mr Koroniadis adjudicated bankrupt, while Mr Koroniadis pursued an appeal to the Court of Appeal against the judgment on which the bankruptcy proceeding was based.


The Bank says that Mr Koroniadis has failed to diligently pursue his appeal, which relates only to procedural issues and is, in the Bank's view, devoid of merit. The Bank says that it should not be delayed any further in the pursuit of its bankruptcy proceeding. It asks for an immediate order for adjudication in bankruptcy.


Mr Koroniadis opposes the Bank's application, saying that the justice of the case requires that he be permitted to have his appeal heard by the Court of Appeal.


Since the Bank applied to have the halt order lifted, the Court of Appeal has allocated a date for the hearing of Mr Koroniadis' appeal. That date is 18 June 2015.


On 8 July 2013 the Bank obtained summary judgment against Mr Koroniadis for $1,196,290.54. The judgment arose out of a loan made by the Bank to Miramar Development Ltd (in receivership) (Miramar). Mr Koroniadis and his brother guaranteed loans from the Bank to Miramar.


The Bank held a first mortgage over a property owned by Miramar in Edwards Street, Wellington.


Miramar fell into default on the loan in 2012. The defaults were not remedied, and the Bank issued a notice under s 119 of the Property Law Act 2007 (the Act) in respect of its first mortgage over the Edwards Street property. The notice was served on Miramar on 5 October 2012, and specified a remedy date for defaults of 9 November 2012. The Bank had difficulty serving a copy of the notice on Mr Koroniadis, as it was required to do by s 121 of the Act. The notice was finally served on him on 17 November 2012, being a date after the remedy date specified in the notice issued under s 119 of the Act.


Various defences raised by Mr Koroniadis in opposition to the Bank's summary judgment application were dismissed by Associate Judge Gendall in his judgment given on the Bank's summary judgment application. A counterclaim which Mr Koroniadis had issued against the Bank was subsequently dismissed, by judgment of Associate Judge Bell given on 21 October 2013.


The Bank initiated bankruptcy proceedings against Mr Koroniadis. A bankruptcy notice was issued on 24 July 2013, and when Mr Koroniadis did not pay the amount stated in the notice, the Bank filed a creditor's application for adjudication in bankruptcy in August 2013.


In the meantime, on 5 August 2013, Mr Koroniadis filed an appeal to the Court of Appeal against the judgment of Associate Judge Gendall. That was the last day on which Mr Koroniadis was entitled to file an appeal. Unfortunately, he did not attend to service of his appeal on the Bank that day – a service copy of the notice of appeal was not served on the Bank until the following day.


That meant that he had not filed his appeal in time. Mr Koroniadis says that this was a genuine mistake. In any event, he subsequently filed an application for extension of time to commence his appeal under r 29A of the Court of Appeal (Civil) Rules 2005.


Mr Koroniadis applied under s 38 of the Insolvency Act 2006 for an order halting the bankruptcy proceeding brought against him while he pursued his appeal. The application for a halt order was granted by Associate Judge Bell in a judgment given on 25 October 2013.


In giving judgment on the halt application, the Associate Judge identified two points in the summary judgment decision of Associate Judge Gendall on which he thought Mr Koroniadis ought to be given the opportunity to try to persuade the Court of Appeal that he should have an extension of time for his appeal.


One of the points raised by Associate Judge Bell concerned the operation of an “acceleration” clause in the Bank's loan documents. The particular acceleration clause in this case did not provide for the balance of the loan to become repayable automatically in the event of default by the borrower – the Bank was required to make demand before that would occur. In this case, the Bank did serve notices on Miramar and Mr Koroniadis specifying Miramar's default, and requiring that the default be remedied within a period specified in the notice. 1 But there was no evidence before the Judge hearing the Bank's application for summary judgment that the Bank had called up the balance after the time for complying with the default had expired.


The second point identified by Associate Judge Bell related to the question of service of the Bank's s 119 default notice on Mr Koroniadis. 2 The s 119 default

notice was not served on Mr Koroniadis until after the date specified for remedying the default. Associate Judge Gendall had accepted the Bank's case that it had sufficiently complied with s 121, because it had served the notice on Mr Koroniadis “as soon as possible”, as required by the wording of the section. The point that Associate Judge Bell considered worthy of consideration on appeal was whether the service had to be made on the former mortgagor or covenantor (in this case Mr Koroniadis) under s 121 before the time for remedying the default had expired. The Associate Judge noted that the purpose of serving a s 119 notice on a covenantor such as Mr Koroniadis appeared to be to give such a person an opportunity to remedy the mortgagor's default within the time provided in the s 119 notice, and of course that could not be done if the covenantor did not receive a copy of the default notice before the expiry of the default period.

The Associate Judge noted counsel's advice that the requirements of s 121 relating to this point had not been the subject of any earlier considered decisions.


The Associate Judge stated that, in light of those possible appeal points, he was reluctant to deprive Mr Koroniadis of the opportunity of at least raising them with the Court of Appeal, and doing so himself (as opposed to an appeal being pursued by the Official Assignee in Mr Koroniadis' bankruptcy).


The Associate Judge ordered a halt to the proceeding, pending further order of the Court, and directed that the Bank's bankruptcy application was to be listed in the first available bankruptcy list after the Court of Appeal had given any relevant decision on the application by Mr Koroniadis for an extension of time under r 29A of the Court of Appeal (Civil) Rules, or (if that application was successful) determining the merits of the appeal.


The Bank was also permitted to bring its bankruptcy application back on for hearing if there was a “proper basis for contending that Mr Koroniadis is not...

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