Brkic v White - [2025] NZHC 127

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-001504

[2025] NZHC 127

BETWEEN
GORDON BRKIC, EMILIJA BRKIC and

NAGI FALTUS as trustees of the MADEG TRUST
Judgment Creditors

AND

CAROLINE RUTH WHITE

Judgment Debtor

Hearing: 3 February 2025

Appearances:

P Rice for the Judgment Creditors W Pyke for the Judgment Debtor

Judgment:

12 February 2025

JUDGMENT OF ASSOCIATE JUDGE COGSWELL

This judgment was delivered by me on 12 February 2025 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

C Taylor, Auckland
St Mark Law, Auckland

P Rice, Auckland
W C Pyke, Auckland

BRKIC v WHITE [2025] NZHC 127 [12 February 2025]

Introduction

[1]This is an application to set aside a bankruptcy notice.

[2] The judgment debtor seeks to set the bankruptcy notice aside on the grounds that it is invalid and a nullity because it substantially overstates the amount of the alleged judgment debt by including interest calculated at the rate of 22 per cent per annum from 10 May 2012 to the date of issue of the bankruptcy notice.

[3] On 18 June 2018 the Court granted judgment in the judgment creditors’ favour against the judgment debtor.

[4]The relief in the judgment is expressed as

Judgment is entered for the plaintiffs in the sum of $109,820 with interest calculated at the rate of 22 per cent per annum from 10 May 2012.

[5] The loan agreement between the parties required payment of $109,820 by 10 May 2012. Payment was not made. The judgment creditors made demand for repayment and that demand was not met. The loan agreement provided that in the event of default, interest was payable at 22 per cent per annum from 10 May 2012.

Issues

[6]There are two issues to be determined in this application. They are:

(a)whether the judgment creditors are entitled to recover interest at 22 per cent per annum from the date of breach (10 May 2012) to the date of payment by the judgment debtor?

(b)if the answer to that question is ‘No’, then is the bankruptcy notice invalid or a nullity because interest is overstated or can it be corrected?

Issue 1—what interest is claimable and is it payable before and after judgment

[7] The judgment debtor argues that the right to claim interest under the loan at 22 per cent crystallised at the date the lender first made demand on the borrower for repayment of the loan. The date of the demand is not known.

[8] The judgment debtor says that, whilst the loan records a default rate of 22 per cent per annum, the making of demand under cl 7.1 of the loan has the effect that the amount claimable by the lender including interest at 22 per cent to the date of demand has crystallised, and that the lender is not entitled to 22 per cent default interest from the date of the demand.

[9] Clause 7.1 of the loan…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Brkic v White

Details

AGLC: Brkic v White [2025] NZHC 127
Case: [2025] NZHC 127
Decision Date: 12 February 2025

CaseChat Overview and Summary

The case of Brkic v White was heard in the High Court of New Zealand, Auckland Registry, where Gordon Brkic, Emilija Brkic, and Nagi Faltus, as trustees of the MADEG Trust, sought to enforce a bankruptcy notice against Caroline Ruth White, the judgment debtor. The judgment creditors sought to recover a substantial sum, including interest calculated at the rate of 22 per cent per annum, from the date of the alleged breach to the date of the bankruptcy notice. The judgment debtor contested the validity of the bankruptcy notice, arguing that the inclusion of interest calculated at the rate of 22 per cent per annum was an overstatement and rendered the notice invalid.

The court was required to determine two primary issues. Firstly, whether the judgment creditors were entitled to recover interest at the rate of 22 per cent per annum from the date of the breach up until the date of payment by the judgment debtor. Secondly, if the answer to the first question was no, whether the bankruptcy notice was invalid or a nullity due to the overstatement of interest, or if it could be corrected. The court found that the contractual right to interest did not crystallise upon the lender's demand for repayment, and therefore, interest at 22 per cent was not claimable from the date of the demand. Moreover, the Interest on Money Claims Act 2016 did not apply to this case as the proceedings were initiated before the Act came into effect. Consequently, the contractual interest merged in the judgment, and interest under the Judicature Act 1908 was claimable. The court determined that the loan agreement did not expressly provide for non-merger of the claim to interest in the judgment, and therefore, the right to interest post-judgment was not preserved.

The court held that the bankruptcy notice was invalid and a nullity due to the significant overstatement of the amount owing by the judgment debtor. The principal debt was $109,820, while the interest claimed totalled $292,506.12, almost three times the principal debt. The court noted that the judgment debtor had notified the judgment creditors of the overstatement within the prescribed time. Given the magnitude of the error, the court concluded that the bankruptcy notice could not be rectified and was, therefore, a nullity. The judgment debtor was granted costs on the scale 2B, and the bankruptcy notice was set aside.

Orders