KORONIADIS v BANK OF NEW ZEALAND CA522/2013 [2015] NZCA 244

KORONIADIS v BANK OF NEW ZEALAND CA522/2013 [2015] NZCA 244 [12 June 2015]IN THE COURT OF APPEAL OF NEW ZEALANDCA522/2013[2015] NZCA 244BETWEEN ATHANASIOS KORONIADISAppellantAND BANK OF NEW ZEALANDRespondentCourt: French, Cooper and Winkelmann JJCounsel: Appellant in personJ Toebes for RespondentJudgment:(On the papers)12 June 2015 at 2.30 pmJUDGMENT OF THE COURTA The appellant's application for leave to file amended grounds of appeal isgranted.B The respondent's application for leave to adduce further evidence is granted.C Costs on both applications are reserved.____________________________________________________________________REASONS OF THE COURT(Given by French J)Introduction[1] Mr Koroniadis is appealing a decision of Gendall J entering summary judgment against him in favour of the Bank of New Zealand (the bank) under a guarantee.1 The principal debtor is a company in receivership and liquidation.[2] The appeal has been set down for hearing on 18 June 2015.[3] At issue are two interlocutory applications:(a) an application by Mr Koroniadis to apply for leave to amend the grounds of appeal; and(b) an application by the bank for leave to adduce further evidence.[4] By consent both applications are being dealt with on the papers.Background[5] The relevant background was summarised as follows in a previous judgment of this Court granting Mr Koroniadis an extension of time to appeal.2[6] The bank provided financial accommodation to the company by way of a term loan for $1.1 million and an overdraft facility. As security, the bank took personal guarantees from Mr Koroniadis and his brother, who were directors of the company, as well as a general security agreement from the company (GSA) and a registered first mortgage over a commercial property in central Wellington owned by the company (the property).[7] The bank claimed that the company had defaulted in payments under the term loan. In August 2012, the bank made demand on the company to pay the debit balance of the overdraft account and the arrears on the loan facility. The demand was not complied with, and the bank therefore appointed receivers under the GSA.1 Bank of New Zealand v Koroniadis [2013] NZHC 1700 [Substantive High Court judgment].2 Koroniadis v Bank of New Zealand [2014] NZCA 197.[8] On 5 October 2012 the bank issued notices under s 119 of the Property Law Act 2007 (the Act). The notices required the default to be remedied by 9 November 2012. The company was served with the s 119 notice on 5 October 2012, but the bank had trouble serving Mr Koroniadis with a copy of the notice, as required by s 121 of the Act.3 The notice was finally served on him on 19 November 2012. By this time, the date by which the default had to be remedied had already passed.[9] None of the company's defaults under the loan arrangements were remedied.The bank sought summary judgment against Mr Koroniadis as guarantor for the balance loan amount as at 7 January 2013 ($1,070,795.32) together with a current account loan balance ($36,436.70) plus default interest and costs. Summary judgment was also sought against his brother, who did not oppose the application. Judgment against the brother was given by default against him and he has since settled with the bank.[10] Justice Gendall granted summary judgment against Mr Koroniadis. The defences advanced in the High Court were said to "relate almost entirely to process issues".4 They raised questions over the service of demands, notices and other documents pursuant to the requirements of the Act and issues over whether it could be established that Mr Koroniadis received those documents. They included:(a) that the bank should prove the applicant received the notice of demand under the guarantee dated 7 January 2013, and the notice to the covenantor under s 121 of the Act;(b) that the notice to the covenantor was received after the remedy date specified in that notice;(c) that the bank had not proved service on Mr Koroniadis of the demand under the guarantee of 7 January 2013; and3 The bank was required by s 121 of the Property Law Act 2007 to serve this notice on Mr Koroniadis "as soon as possible" because as a guarantor he was a covenantor (as defined ins 4 of the Act) in respect of the property.4 Substantive High Court judgment, above n 1, at [23].(d) that the applicant had made arrangements to pay the outstanding overdraft amount but this was refused by the bank, or alternatively that the bank added conditions improperly requiring repayment also of a debt owing by a related third party company.[11] Justice Gendall found that these defences were "quickly disposed of".5 In relation to the s 121 notice, he found that the bank had served Mr Koroniadis with the s 121 notice "as soon as possible" after service on the mortgagor as required bys 121 of the Act. The Judge was further satisfied that any delay in service on Mr Koroniadis could not in the circumstances have caused any prejudice or lost opportunity to him to remedy the defaults.6 As regards the notice of demand under the guarantee, the Judge found that the absence of proof of service of the 7 January 2013 notice had not in any way prejudiced Mr Koroniadis. In any case, the Judge found that on the balance of probabilities, Mr Koroniadis had received the notice. Mr Koroniadis had clearly also received a further copy of the notice on 28 March 2013 when he was served with the proceedings, and subsequently received two further copies of the notice.7 In relation to [10](d) above, the Judge found Mr Koroniadis's claims to be unsupported by evidence, and seemingly incorrect.8[12] The Judge concluded that Mr Koroniadis was "quite unable to advance any arguable defence to the bank's summary judgment application" and that the bank "clearly has satisfied the Court here that [Mr Koroniadis] has no defence to its claimagainst him as guarantor".9 Judgment was entered in the sum of $1,107,232.02, with interest of $72,066.23 and costs of $13,352.00 plus disbursements totalling $2,256.00.[13] Subsequent to the application being made, the bank applied to have Mr Koroniadis adjudicated bankrupt. The act of bankruptcy relied on was non-compliance with a bankruptcy notice based on Gendall J's 8 July 2013judgment.5 At [27].6 At [34].7 At [37] and [39].8 At [44]–[45].9 At [57].[14] Mr Koroniadis made an application to halt the bankruptcy proceeding under s 38 of the Insolvency Act 2006 while he pursues his appeal in this Court. This was granted by Associate Judge Bell on 25 October 2013.10 His reason for doing so was this:[13] In this case it is my judgment that Mr Koroniadis ought to be given the opportunity of trying to demonstrate to the Court of Appeal that he should have an extension of time for his appeal. There may be potential grounds for his appeal that he may wish to advance which may be worthy of consideration by the Court of Appeal. During the hearing today I have discussed two of them.[15] Associate Judge Bell then briefly discussed two of the points which he considered may be worthy of consideration by this Court:[14] One of them concerns the acceleration of the loan by the Bank of New Zealand. The bank did serve notices under s 119 of the Property Law Act. Service of a notice under s 119 is necessary before any acceleration clause can operate. The definition of acceleration clause in s 4 of the Property Law Act covers both clauses where acceleration happens automatically and clauses where acceleration is not automatic but gives the occasion for a balance payable under a loan to be called up. The table loan facility in this case seems to be subject to a provision under which the balance payable under the facility is not repayable automatically on default, but only on the bank making demand. The bank does not seem to have included any evidence on its summary judgment application that it had called up the balance after the time for complying with the notice under s 119 had expired.[15] The other matter concerns the question of service of a notice under s 121 of the Property Law Act. The bank had difficulty serving Mr Koroniadis with a copy of the notice under s 119. The notice was issued on 5 October 2012 and required any defaults to be remedied by 9 November 2012. In fact Mr Koroniadis was not served until 19 November 2012, which was after the date for remedying the default. [Gendall J] accepted the bank's case that it had complied with s 121 because it had served the notice on Mr Koroniadis as soon as possible.[16] There remains the point whether the service must still be made on a former mortgagor or covenantor or other person required to be served under s 121 before the time for remedying the default has expired. Notices under s 121 serve a different purpose from notices under s 122. The purpose of notices under s 122 of the Property Law Act seems to be to give guarantors or former mortgagors the opportunity to exercise the power of redemption under s 97 of the Property Law Act. The purpose of serving a notice under s 119 on a former mortgagor or covenantor or other person under s 121 seems to be to give them an opportunity to remedy the mortgagor's default within the time provided under s 119. I understand from Mr Toebes that the10 Bank of New Zealand v Koroniadis [2013] NZHC 2865.requirements of s 121 may not have been the subject of any earlier considered decisions. The implications of serving a notice under s 121 outside the period for compliance is a matter that may be worthy of consideration by the Court of Appeal.[16] On 22 August 2014, Mr Koroniadis filed an amended notice of appeal in this Court. This amended notice of appeal reflected the potential grounds of appeal discussed by Associate Judge Bell, as set out in the preceding paragraph.[17] Mr Koroniadis filed a counterclaim against the bank. On 21 October 2013 Associate Judge Bell granted summary judgment in favour of the bank as counterclaim defendant.11Application for leave to amend the notice of appeal[18] The original notice of appeal was filed on 5 August 2013. As already mentioned, Mr Koroniadis filed an amended notice of appeal on 22 August 2014. The further amended notice which is the subject of the current application was filed on 24 February 2015.[19] In opposing leave, the bank says the grounds for appeal in the most recent iteration are meritless, subject to res judicata, based on totally untruthful allegations and constitute the actions of a vexatious litigant.[20] The amendments consist of:(a) The reinstatement of a ground from the original notice of appeal that the High Court denied Mr Koroniadis the ability to have legal representation.(b) The addition of a new ground that the High Court incorrectly found that Mr Koroniadis would need to put evidence before the Court to establish non-service of the notice of demand dated 7 January 2013.(c) Further particulars of three existing grounds.11 Bank of New Zealand v Koroniadis [2013] NZHC 2775.[21] The amended notice of appeal runs to some 20 pages. We agree it is repetitive and prolix. However having regard to the fact that Mr Koroniadis is self-represented, our preference is to grant leave and for the issues raised by the bank to be addressed at the appeal hearing proper.[22] The bank is not prejudiced if leave is granted because the fixture will not be jeopardised and because so called new grounds of appeal are not new in substance. Insofar as there are any assertions of fact not in evidence, then plainly they will not be able to be relied upon.[23] We accordingly grant Mr Koroniadis leave to file the amended notice of appeal.Application to adduce further evidence[24] An application for leave to adduce further evidence consists of an affidavit from a bank manager detailing payments received by the bank in reduction of thecompany's debt since the appeal was filed and also deposing to the service of anupdated demand for payment on Mr Koroniadis on 15 January 2014.[25] Mr Koroniadis opposes the application. He does so on the grounds of lack of relevance and also on the grounds that a notice to the Companies Office exhibited to the affidavit incorrectly named one of the receivers.[26] The affidavit is in the form of updating information which is not disputed. It will assist the Court. It is directly relevant to the arguments discussed by Associate Judge Bell and it may result in a reduction of the judgment sum. Concerns about the content of one of the exhibits are not a reason for denying leave.Result[27] An application for leave to adduce further evidence and the application to file an amended notice of appeal are granted.[28] The costs in respect of each application are reserved.Solicitors:JTLaw, Wellington for Respondent