Chateau Constructions (Aust) Ltd v Zepinic (No 5) - [2010] NSWSC 265

No judgment structure available for this case.

CITATION: Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 5] [2010] NSWSC 265
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 18 February 2010

JUDGMENT DATE :
8 April 2010

JURISDICTION: Equity

JUDGMENT OF: Slattery J at 1

DECISION: ORDERS:
1. An order that the operation of caveat number AE479151 lodged in relation to the Turramurra property, the address and title details for which are identified in paragraph 2 of the further amended summons be extended until further order of the Court.
2. A declaration that the defendants have charged the Turramurra property, the address and title details for which are identified in paragraph 2 of the further amended summons, with due payment to the plaintiff of $370.847.35 plus interest (at a rate equal to the rate of the time being prescribed for the purposes of s 101 of the Civil Procedure Act 2005 (NSW)) as ordered by the Consumer, Trader and Tenancy Tribunal on 2 February 2009.
3. Order that there be a sale, in accordance with these orders, of the Turramurra property, the address and title details for which are identified in paragraph 2 of the Further Amended Summons (and hereinafter referred to as “the Property”) but that this order be stayed until further order; and, the making of an order for the lifting of such stay will herein be referred to as “the lifting date”.
4. Order that:
(a) Mr Nicholas Craig Malanos be appointed as trustee for the sale of the Property (the Trustee);
(b) the Property immediately vests in the Trustee upon the making of these orders;
(c) the Trustee conduct and complete the sale of the Property in accordance with these orders and convey the Property upon completion of the sale.
5. Order that:
(a) the Trustee may not conduct a sale of the Property nor incur any costs or expenses in connection with the sale of the Property in the period from the date of the making of these orders up to and including two months after the lifting date;
(b) within two months after the lifting date:
(i) the defendants must:
(A) deliver to the Trustee the Certificate of Title for the Property;
(B) within 7 days after being requested in writing by the Trustee by email sent to [email address not published] deliver to the Trustee any other documents in their possession or under their control relating to the Property that are reasonably required by the Trustee to conduct or complete the sale of the Property.
(ii) the Trustee is to take all reasonably necessary steps required (including but not limited to, appointing a real estate agent and auctioneer) to sell the Property by public auction;
(iii) the Trustee is to obtain a valuation of the Property by a registered valuer appointed by the Trustee and upon receipt of the valuation is to apply to the Court for the setting of a reserved price for the sale of the Property by public auction (the Reserve Price);
(iv) the Trustee must not sell the Property for less that the Reserve Price except by leave of the Court;
(v) the plaintiff is given leave to bid, and purchase the Property, at any public auction of the Property;
(vi) if the plaintiff successfully bids on the Property at public auction and a contract for the sale of the Property is exchanged, the Trustee shall on settlement of the sale allow the plaintiff as a set off against the purchase price, the amounts including interest calculated up to the date of payment as described in Order 2 hereof as remain unpaid by the defendants at the date of settlement, together with such other amounts as may be ordered to be paid by the defendants to the plaintiff upon further application to this Court before the lifting date (“the Further Amounts”.
(c) if, at a public auction of the Property, the Reserve Price is not reached, the Property is to be passed in and the Trustee is to take all reasonably necessary steps required to sell the Property by further public auction or by private treaty at or above the Reserve Price;
(d) if the Property is sold at public auction or by private treaty to a person or entity other than the plaintiff, the Trustee shall, on settlement of the sale of the Property, pay the amounts that remain unpaid by the defendants at the date of settlement, provided that the plaintiff shall give to the Trustee evidence of the orders or agreement by which the Further Amounts are payable, on or before the date of the settlement of the sale;
(e) the Trustee’s costs and expenses incurred in relation to the sale of the Property are to be paid from the proceeds of sale of the Property;
(f) the defendants are to give vacant possession of the Property to the Trustee within two months after the lifting date;
(g) the Trustee is to pay to the defendants the balance of the proceeds of the sale of the Property after deduction of such of the Further Amounts paid to the plaintiff and the Trustee’s costs and expenses incurred in relation to the sale of the Property;
6. Order that:
(a) the Trustee must not sell the Property if on or before two months after the lifting date the defendants pay to the Trustee and the Trustee receives in clear funds the amount of principal and interest identified in Order 2 hereof together with such Further Amounts as may be ordered by the Court before the lifting date in accordance with these orders (“the Payment to the Trustee”).
(b) the Trustee is to make payment to the plaintiff of the Payment to the Trustee within 7 days of receiving the Payment to the Trustee;
(c) upon making payment to the plaintiff of the Payment to the Trustee, the Trustee’s appointment as trustee for the sale of the Property is revoked and the Property will revest immediately in the defendants.
7. Grant to the parties liberty to apply to the Court on 3 days notice in connection with the operation of these orders.
8. Direct that any further written submissions that the defendants have in response to the plaintiff’s written submissions of 5 March 2010 on the question of leave to file and proceed upon the cross-claim, be filed by 16 April 2010.

CATCHWORDS: PROCEDURE - declaration of the existence of a charge made in the absence of the defendants - motion to set aside - no adequate explanation of defendants' failure to appear at hearing where declaration made - no procedural basis shown to set aside declaration - declaration not set aside - defendant's substantive arguments for setting aside declaration would fail in any event - CONTRACTS - building, engineering and related contracts - other matters - defendants' recent attempt to exercise rights of termination of the contract does not displace builder's existing security rights under the charge - existing costs orders confirmed - whether defendants should be given leave to cross claim reserved - EQUITY - equitable charges - enforcement - motion for judicial sale of defendants' property the subject of a charge - orders for judicial sale of property made - stay order for sale until plaintiff's costs assessed - acrimonious dispute - sale in court by a trustee appropriate - leave granted to plaintiff to bid at public auction

LEGISLATION CITED: Civil Procedure Act 2005 (NSW) ss 56, 101

CATEGORY: Principal judgment

CASES CITED: Brewarrina Shire Council v Beckhaus Civil Pty Ltd & 1 Or [2005] NSWCA 248
Brewer v Square (1892) 2 Ch 111
Chateau Constructions (Aust) Ltd v Zepinic [2009] NSWSC 1339
Chateau Constructions (Aust) Ltd v Zepinic [No 2] [2009] NSWSC 1338
Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 3] [2009] NSWSC 1373
Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 4] [2009] NSWSC 1478
Dalby v Pullen (1830) 1 Russ & My 296
Downes v Grazebrook (1817) 36 ER 77
Farrar v Farrar’s Limited (1888) 40 Ch D 395
King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076
Knott v Cottee (No. 4) (1859) 27 Beav. 33
Larrat v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215
Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361
Matthews v Goodday (1861) 31 LJ Chancery 282
Sood v Christianos [2008] NSW SC 1087
Tennant v Trenchard (1869) LR 4 Chancery 537
Wade v Wilson (1882) 22 Ch D 235
Williams v Wellingborough Borough Council [1975] 3 All ER 462
Woolley v Coleman (1882) 21 Ch D 169

TEXTS CITED: E L G Tyler, P W Young and C Croft, Fisher and Lightfoot Law of Mortgage 2nd Australian Edition (2005) Butterworths
G P Stuckey and C D Irwin, Parker's Practice in Equity (NSW) 2nd Ed (1949) Law Book Co of Australasia

PARTIES: Plaintiff: Chateau Constructions (Aust) Limited
First Defendant: Milla Zepinic
Second Defendant: Vito Zepinic

FILE NUMBER(S): SC 4643/09

COUNSEL:
Plaintiff: Mr B Ilkovski
Defendants: Dr Zepinic (self represented)

SOLICITORS: Plaintiff: Toomey Pegg Drevikovsky Lawyers
Defendants: Dr Zepinic (self represented)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

SLATTERY J

THURSDAY 8 APRIL 2010

4643/09 CHATEAU CONSTRUCTIONS (AUST) LTD v MILLA ZEPINIC & VITO ZEPINIC [NO. 5]

JUDGMENT

1 HIS HONOUR:

Introduction

2 Chateau Constructions (Aust) Pty Limited (“Chateau”), a builder, is in dispute with Dr and Mrs Zepinic, the owners of residential property in Turramurra (“the Turramurra property”). The proceedings came before me on 28 September 2009, 8 October 2009, 3 December 2009 and 21 December 2009. I have given the following judgments in the matter:

Chateau Constructions (Aust) Ltd v Zepinic

Chateau Constructions (Aust) Ltd v Zepinic & Anor

3 As a result of the service upon Dr and Mrs Zepinic of my judgment of 3 December 2009 they filed a notice of motion. My judgment of 21 December 2009 set a further hearing date of 18 February 2010 for that motion and gave directions for the preparation of the case for that hearing. Those directions can be found in the judgment of 21 December 2009 at [28]-[33].

4 As a result of those directions Dr and Mrs Zepinic each swore and filed affidavits and they filed affidavits sworn by their two daughters, Violetta and Nina. They served these affidavits on Chateau. They read those affidavits at the hearing on 18 February 2010 largely without objection.

5 When the matter was called on the morning of 18 February 2010 both sides were ready for hearing. However the parties had not fully anticipated at trial all the arguments being deployed by the other. The Court allowed an opportunity for the filing of supplementary submissions after the hearing. Both parties filed supplementary submissions on 26 February 2010 and in reply on 5 March 2010.

6 Those supplementary submissions included evidence the tender of which was foreshadowed by the parties and authorised by the Court on 18 February 2010. It was necessary to formally identify the additional material tendered and to formally mark it as part of the evidence.

7 Leave was granted on 18 February 2010 for documents falling under the category of mere business records to be submitted to the Court. The following documents were tendered by Chateau on 26 February 2010: a letter from Dr Zepinic to the Court dated 24 November 2009 (Exhibit E) and the transcripts of the Consumer, Trader & Tenancy Tribunal (CTTT) proceedings between the plaintiff and the defendants of 26-27 May 2008 and 22-24 September 2008 (Exhibit F).

Dr Zepinic

8 Dr Zepinic is not qualified in law but as litigant in person he capably argued this application before me. He understood the arguments Chateau was putting against him and his wife. I asked on occasions whether he followed what I judged to be the more complex submissions being advanced by the other side and he indicated that he did, see for example (T41/2-4). Dr Zepinic is a man of intelligence and capability. I allowed Dr Zepinic to be assisted by his son-in-law at the bar table. Their joint efforts resulted in the presentation of a detailed oral and written case that dealt with a full range of legal and factual issues capable of arising on Chateau’s application. Although as this judgment reveals I did not always agree with them, their legal submissions at times showed a level of sophistication that would have satisfied the professional standards of a practising lawyer. At other times they displayed a level of suspicion of Chateau that indicates the underlying bitterness that exists in the current dispute.

Mrs Zepinic

9 Although I did not formally grant leave to Dr Zepinic to appear for his wife, in substance he conducted his case on behalf of them both and she acquiesced in this course. She did not seek to be separately heard.

Matters in Issue on 18 February 2010

10 There were several matters in issue on 18 February 2010. First, Chateau wished to pursue the relief in its amended summons. The remaining issues to be dealt with on the amended summons before any orders for a judicial sale could be made were those raised in paragraphs [19], [20] and [21] of my judgment of 21 December 2009, which provided:

“[19] First there is the question, if Chateau were otherwise to make out its claim for orders for judicial sale of the Turramurra property, whether Chateau would be granted leave itself to purchase the property. In light of the discussion with the Court Mr Ilkovski has submitted that Chateau proposes to amend its summons to make it clear that it will now only seek leave to bid at a public auction.

[20] Secondly, an issue exists as to whether the liquidator Mr Malanos or perhaps the Public Trustee should be in charge of the proposed sale. Another possibility is that the sale could be put in the hands of the defendants themselves, a course which is open on the authorities concerning orders for judicial sale. This is a discretionary matter I will have to consider.

11 The remaining relief sought in the amended summons was for the appointment of trustees for sale and the consideration of matters incidental to the proposed sale, including the setting of a reserve price. Both sides indicated on 18 February 2010 that having read my judgment of 21 December 2009 they appreciated that these matters were to be determined that day. Indeed, that is the only relief Chateau was seeking at the hearing that day. The balance of the matters considered on 18 February 2010 were issues raised by Dr and Mrs Zepinic.

12 The second issue was Dr and Mrs Zepinic’s motion of 15 December 2009. This motion (“the December motion”) sought the setting aside of my orders of 28 September 2009. It appeared to the Court that in substance what Dr and Mrs Zepinic were really seeking in the December motion was that not only the orders for the extension of the caveat made on 28 September 2009 be vacated but that the declaration that Chateau had an interest in the Turramurra property made on 3 December 2009 also be set aside. In discussion with the parties the Court suggested that the pleadings should better reflect the real matters in issue so there is no room for future misunderstanding. In the course of the luncheon adjournment on 18 February 2010 an agreement was made about an amendment to order 1 in the Zepinics’ motion. The amended motion clearly sought relief for the setting aside of the 3 December 2009 declaration.

13 Thirdly, there were issues between the parties in relation to the costs orders already made. The Zepinics’ December motion sought that Chateau pay the Zepinics’ costs of the proceedings on an indemnity basis. The Court explained to the parties that the Zepinics’ claim for relief in relation to costs in the December motion would indirectly involve making orders to vacate my prior costs orders. Under these orders the Zepinics were required to pay Chateau’s costs of the prior hearings on an indemnity basis. Dr Zepinic seemed to be alert to the need to put submissions to explain why prior costs orders should be vacated. Aspects of his written submissions dealt with the question of why the Calderbank letter considered in my judgment of 3 December 2009 was not a sufficient basis for making the indemnity costs order that I made.

14 Fourthly, Dr and Mrs Zepinic sought to advance their cross-claim. The immediate procedural difficulty with this application was that the cross-claim had been filed in Court in mid December 2009 after the Court had made the declaration on 3 December 2009. It was unclear how the document had been filed without leave. But it had been filed and served on Chateau. The December motion did not refer to it. Upon this being pointed out by counsel for Chateau, so that the issue of whether or not the Zepinics could rely upon the cross-claim could be could be dealt with on the pleadings, the Zepinics amended their motion to include an order for an extension of time within which to file their cross-claim. Argument in favour of making that order for extension was put by the Zepinics and opposed by Chateau.

15 Mr Ilkovski submitted that he was not ready to deal with the issues raised in the cross-claim itself. That was understandable. My orders on 21 December 2009 did not deal with the cross-claim. What the Zepinics wanted to do with their cross-claim was not obvious on 21 December 2009. The cross-claim was not referred to in any way in the December motion. I dealt with this issue on the basis that were I to find in favour of the Zepinics that the issues raised by the cross-claim would need to be the subject of further evidence at a subsequent hearing. Thus the sole question for 18 February 2010 was whether or not the Zepinics would now be permitted to rely upon the cross-claim. Were that to be decided in favour of the Zepinics, directions would soon be needed to prepare for the later hearing of the cross-claim.

16 Finally, although this was dealt with first, the Court sought an explanation from Dr Zepinic about his failure to appear before the Court on 3 December 2009 and 21 December 2009. I had directed in paragraph [32] of my judgment of 21 December 2009 that such an explanation be provided:

“[32] On the next occasion I would also expect Dr and Mrs Zepinic to give the Court a proper and detailed explanation of why they have not appeared today in person or by a legal representative. I do not regard the correspondence with the Court and Dr Zepinic’s affidavit on their own as an adequate explanation.”

17 These issues to be determined were heard in the following order:

(a) An explanation for the Zepinics’ non appearance on 3 December 2009 and 21 December 2009;

(b) Whether the orders of 28 September 2009 (extending the caveat) and 3 December 2009 (the declaratory relief) should be vacated and if so, consideration of whether there was a basis to make those orders;

(c) Whether any existing costs orders should be vacated and whether any costs orders should be made against Chateau.

(d) Whether the Zepinics were entitled to rely upon the cross-claim; and

18 I will deal with each of those issues in the same order in this judgment.

Explanation for the Zepinics’ Non Appearance in December 2009

19 Dr and Mrs Zepinic failed to appear before me on 3 and 21 December 2009. Dr and Mrs Zepinic advanced two matters to explain their non-appearance in December 2009. The first was a dispute with their former solicitor, Mr Roskov. The second was their inability to obtain lawyers to appear on their behalf. Neither explanation is persuasive. It is necessary to analyse their explanations for non-appearance on these occasions. Their explanations for their non-appearance on both days overlap to an extent.

3 December 2009

20 The starting point for the appearance on 3 December 2009 is that prior to that date the matter was last before the Court on 8 October 2009. Between then and 3 December 2009 the parties expected to argue and resolve the Zepinics’ proceedings in the District Court appealing against the Consumer, Trader & Tenancy Tribunal’s (“the CTTT”) decision in favour of Chateau. As my previous judgment indicated, his Honour Judge Colefax gave judgment on 20 November 2009. Dr Zepinic says that he was informed on 25 November 2009 by Mr Roskov of Colefax DCJ’s judgment and that he emailed Mr Roskov on 29 November 2009 reiterating that Mr Roskov should focus on these caveat proceedings scheduled for hearing on 3 December 2009, although Dr Zepinic’s affidavit erroneously says the hearing was listed on 4 December 2009.

21 Dr Zepinic’s emailed letter to Mr Roskov on 29 November concludes with the following paragraph:

Pecunia non olet

22 On the one hand this e-mail tersely invited Mr Roskov to succeed in the case. On the other hand it concluded by suggesting that his services were no longer needed. Both the tone and content of this e-mail makes it reasonable to view it as a termination of Mr Roskov’s services. That is how Mr Roskov interpreted the letter. About the same time Dr Zepinic had also sent the National Australia Bank an email requesting payment of $370,847.00 from the Zepinics’ mortgage account be directed to Chateau. On 1 December 2009 Dr Zepinic received an email from Mr Roskov inviting him to discuss this email with the NAB. Dr Zepinic says that due to time differences between Sydney and London he did not have time to contact Mr Roskov before he received an email on 2 December 2009 from Mr Roskov. In that email Mr Roskov referred to the email sent on Sunday 29 November 2009 and says:

“We note your last sentence in both attachments whereby you have indicated that you do not think that you require any further legal representation on your matters. We understand from the contents of your email that our retainer on all matters has now been terminated.”

23 Mr Roskov’s letter warned Dr Zepinic that he had 28 days from the date of Colefax DCJ’s decision to submit an appeal. It was recommended that Dr Zepinic seek legal advice as to the prospects of appeal by 18 December 2009. The letter then concluded with Mr Roskov saying:

“We reiterate that you have terminated our retainer and that we are no longer acting on behalf of your wife, Milla Zepinic and yourself on all matters.”

24 Dr Zepinic notes in his affidavit that this email was received only the day before the hearing scheduled for 3 December 2009 in the Supreme Court.

25 Whilst this letter was only received on 2 December, the letter was only a response to Dr Zepinic’s letter of 29 November 2009, which had initiated the termination. It is clear from the letter of 29 November 2009 that Dr Zepinic not only did not want Mr Roskov to appear further but that he did not want further legal representation of any kind on his behalf. It is therefore not surprising that Dr Zepinic did not arrange an appearance in Court through a lawyer on 3 December 2009.

26 Dr Zepinic’s explanation for not attending Court on 3 December 2009 was that he had a meeting with Mr Roskov on 17 November 2009 and then was advised on 2 December 2009 that Mr Roskov was not going to represent Dr Zepinic any more. When the Court put to him that it must have been obvious by 2 December 2009 that Mr Roskov was not going to appear and that there are many other lawyers available in Sydney to represent him, Dr Zepinic said: “It is impossible to engage anybody without a file”. It is difficult to accept that this is the explanation for Dr Zepinic not engaging another lawyer on 2 December and I do not accept it.

27 It is equally difficult to understand why Dr Zepinic did not take action to engage other lawyers between Sunday 29 November 2009 and Thursday 3 December 2009. He had three full working days to do so. Mr Roskov’s reaction to Dr Zepinic’s letter of 29 November 2009 was predictable. The failure of any appearance on that day is best explained by the existence of the last paragraph of Dr Zepinic’s email of 29 November. He seemed disenchanted with lawyers generally. He did not wish to engage another one, even if he and his wife could not be at Court themselves.

21 December 2009

28 Dr Zepinic had more time to find alternative legal representation for the hearing on 21 December 2009. During the period leading up to 21 December Mr Roskov continued to be unavailable to represent the Zepinics, yet he failed to secure alternative representation.

29 The correspondence Dr Zepinic and Mr Roskov exchanged before 3 December is sufficient on its own to explain why Mr Roskov did not appear at any later point of time for Dr Zepinic. There was further correspondence after 3 December between the attorney and his former client about the winding up of the retainer from which Dr Zepinic could assume there was no future prospect of Mr Roskov representing him and Mrs Zepinic.

30 Dr Zepinic says he needed the release of his file in order to brief an alternative lawyer. Dr Zepinic asked Mr Roskov by email for the release of the file on the afternoon of 6 December 2009. He had apparently not received any response from Mr Roskov when he emailed again on the 8^th December 2009, stressing that timing was important and seeking a response. There was a response on 11 December. This response is not in evidence. It was not attached to the chain of correspondence annexed to Dr Zepinic’s affidavit of 8 February 2010.

31 Mr Roskov’s email of 22 December 2009 said:

“We note that we have not received a reply from you to our email dated 11 December 2009. We would be obliged if you would attend to this at your earliest convenience.”

32 The Court can infer something of what must have been in the email of 11 December 2009. A later email sent by Dr Zepinic to Mr Roskov on 23 January 2010 permits this. That email relevantly provides as follows:

“Dear Mr Roskov,

1. I am requesting for the fourth time that you release our file. I feel it necessary to remind you that your lack of cooperation is making it difficult for us to progress with the legal proceedings against us.

2. Please confirm if you have paid Dr Hutcheson’s invoice for the report you requested from him. Please include Dr Hutcheson’s report in our file. If you have not paid Dr Hutcheson’s invoice, please explain why you have not, given that all payments due to your company have been settled on 18 November 2009.

3. Please confirm if you have sent any further instruction to Dr Hutcheson following your letter dated 12 October 2009 requesting Dr Hutcheson to ‘attend to the preparation of a building defects reports’ and if so please include these in our file.

4. Please include in our file the report prepared by Mr Mihjlov that you have billed us for and which we have paid your company on 18 November 2009.

5. Please provide us with an itemised bill for all services rendered by your company and for which, I reiterate, all payments due to your company have been settled on 18 November 2009.

6. Your further failure to cooperate will be duly noted.

33 It appears that Dr Zepinic took the view that he did not have to pay for the report of an expert witness Dr Hutcheson because it had been invoiced to Mr Roskov. Dr Zepinic was denying that he had authorised Mr Roskov to engage Dr Hutcheson. There may have been some other explanation but there was certainly a continuing stand-off between them about this issue throughout December 2009 sufficient for Dr Zepinic to realise Mr Roskov would not be representing him on 21 December.

34 The failure of Dr Zepinic to arrange representation on 21 December is only explained by statements by Dr Zepinic from the bar table. Dr Zepinic has not provided explanatory evidence in accordance with my directions of 21 December. Dr Zepinic’s arguments fail for the following reasons.

35 Dr Zepinic says that he could not arrange an alternative lawyer because no one would take his case without a file. He gave an example of a lawyer in London, a Mr Hudson, who advised he could not take the case without the files. Mr Hudson also advised Dr Zepinic that no one else would take the case without a file. Even if all of that is right, the appropriate solution was for Dr Zepinic to attend himself in Sydney and appear as he ultimately did on 18 February 2010. There is no evidence that due to competing professional commitments or other difficulty in travelling to Sydney he was unable to be in Australia on 21 December. Indeed the evidence demonstrates a readiness on his part to travel internationally to deal with this litigation, as he did both in November 2009 and in February 2010. Instead the December motion was filed which is dealt with later in this judgment.

36 Second, it is difficult to see why the absence of a lawyer was a problem for Dr Zepinic at all. On 18 February he articulately argued his case in Court without a file. A comprehensive set of volumes of evidence was put together on his behalf and became Exhibit 1 on the application, all without access to Mr Roskov’s file.

37 Third, I do not accept in this case that it was not objectively possible to engage a lawyer to appear on 21 December because of the absence of a file. I had given three judgments in these proceedings by then all of which had been served on Dr Zepinic. These judgments set out in considerable detail the evidence and reasoning grounding the conclusions the Court reached. An unrepresented litigant of Dr Zepinic’s capacity could read and absorb them and brief the attorney of his choice. Chateau has served all the affidavits and legal process on Dr Zepinic in accordance with my directions at his email address. It is difficult to understand why this material could not simply have been given to lawyers before 3 and 21 December 2009. To the extent that Dr Zepinic thought that he needed to advance material about the underlying dispute which had been canvassed in the CTTT or before Colefax DCJ, much of that material was still in his possession. Exhibit 1 shows this.

38 Fourthly, the orders made on 3 December and 21 December were regular despite Dr Zepinic’s absence. Both judgments on those days indicate that I was satisfied as to the notice of the hearing given to him. The extent of the notice given is extensively set out in both judgments.

39 What has now emerged from the evidence is somewhat startling. Mr Roskov requested Dr Zepinic on 9 November to return to Sydney. Dr Zepinic then returned between 14 and 21 November. He then leaves Sydney again on 21 November, some two weeks before 3 December. He does not stay on. There is no evidence that he had pressing overseas commitments after 21 November that required him to leave the country before 3 December. The issue about the non-payment of Dr Hutcheson was already brewing. When he was questioned about this issue, the transcript is instructive:

“HIS HONOUR: Mr Zepinic, I'm particularly interested in Mr Ilkovski's point about why you couldn't stay on past 21 November. It is only about 2 weeks from there until 3 December. Looking at paragraph 52 of your affidavit, why couldn't you stay on for 2 more weeks?

SECOND DEFENDANT: I was invited by my lawyer to come quickly to Sydney to prepare him for hearing scheduled on 4 December. So I met with him on 17 November, your Honour, and I returned to London. So I didn't know anything what is going on to be honest about this hearing except the letter.

HIS HONOUR: But the hearing on 3 December was set on 8 October from memory.

SECOND DEFENDANT: Yes, but it wasn't required my presence on 4 December because I had legal representative at that time, on time when I had meeting with Mr Roskov.

HIS HONOUR: Is there anything else you want to say about that? We need to move on to issue number 2.

SECOND DEFENDANT: Asking and making comparison between my attendance in Sydney with a lawyer to prepare a case is different than 21 December that I didn't have a lawyer and didn't have opportunity to engage any lawyer because of technicality of not having the file.

HIS HONOUR: Is there anything else you want to add, because I want to go straight to issue 2?

40 None of what is said here explains why Dr Zepinic was not able to stay on in Australia for the hearing on 3 December. The only possible explanation is that he expected Mr Roskov to appear for him and he felt free to leave to go overseas. Even if this is right, these events should have made him more conscious on 29 November of the need to replace Mr Roskov with another lawyer on 3 December 2009. Accordingly I do not accept that the defendants have provided an adequate explanation for their non-appearance on 3 and 21 December 2009. I would decline to revisit my decisions made on those days on this basis alone. In deference however to the submissions had been put in the alternative, briefly indicate my conclusions about them below.

Vacating the Orders of 28 September 2009 and 3 December 2009

41 The second issue is whether the orders of 28 September 2009 and 3 December 2009 should be vacated. The orders of 28 September 2009 were the original orders extending the caveat. On 3 December 2009 Chateau’s interest in the Turramurra property was declared. In relation to this second issue the course of evidence threw up a preliminary procedural matter.

A Preliminary Procedural Matter

42 When Dr Zepinic was concluding his cross-examination of Mr Loel, the question arose as to the extent of the cross examination which he could undertake and the issues which were before the Court on this application. The Court pointed out to Dr Zepinic that although the declaration had been made in his absence in the UK, the Court was prepared to examine the evidence that had been the foundation for the declaration (T39/30-34). This was pointed out to Dr Zepinic so there was no misunderstanding on his part that the Court was prepared to deal with the matter that day on the basis that his motion to set aside the declaration might be successful. He was invited to put argument as to why the declaration should not have been made in the first place. Were the declaration to be set aside it would be able to be remade. This was emphasised to him a number of times.

43 The Court explained to Dr Zepinic that he should understand that he could not only argue before the Court that the declaration should be set aside but when cross examining he could ask all those questions that he would wish to ask as to why the declaration should not have been made in the first place (T41/6-10).

44 The identification of this issue caused counsel for Chateau to seek clarification whether the Court was really intending to open up the issue of the making of the declaration on the hypothetical basis that it had not been made and that fresh consideration was being given to whether it would be made (T40/3-6). From the Court’s perspective the issue was one of convenience. It was pointed out to counsel for Chateau that as I was unlikely to give an ex tempore judgment that day, if Dr Zepinic were to succeed on his application to set aside the declaration it would be necessary to come back on a future occasion to argue the question as to whether or not the declaration should have been made in the first place.

45 I indicated to Mr Ilkovski and Dr Zepinic that I wished to hear any evidence and submissions not only on the question of whether or not there was a basis to set aside those two orders but in the event that I did set them aside, whether or not they should have been made in the first place. The Court made clear to Dr Zepinic that he would need to argue why those two orders, having been made in his absence, should now be set aside. I pointed out to him that he should also now put any argument and Mr Ilkovski should respond about whether there was a basis in the evidence for the making of the orders in the first place. I directed this course to promote the just, quick and cheap resolution of the issues in dispute: s 56 Civil Procedure Act 2005 (NSW). Compliance with this direction would reduce the need for a second hearing in the event that I found in favour of the Zepinics, and set aside the declaration and the caveat.

Dr and Mrs Zepinic’s argument on the second issue

46 In summary Dr Zepinic first sought to argue that Chateau had repudiated the building contract and that as a consequence the provision in the building contract securing sums due to the builder over the Turramurra property no longer existed. Dr Zepinic stated this second issue succinctly. He said that as the builder had repudiated the building contract, the builder does not have a caveatable interest, the caveat is invalid and unsupported, should not have been extended and the declaration should not have been made.

47 The Court raised with Dr Zepinic the question of whether the issue of repudiation or breach that could lead to repudiation had been decided by the CTTT. Dr Zepinic’s response was that the decision taken by the CTTT was now the subject of an appeal. The Court pointed out to him that although the decision might be subject to an appeal whilst it remained on foot it was a binding determination between Chateau and Dr Zepinic and Mrs Zepinic for the purposes of determining whether there was a caveatable interest. Dr Zepinic was invited to put his submissions on the basis that his factual contention was correct about breach and that the contract had been repudiated. The Court asked him to deal with the question why, if he did not advance the repudiation case before the CTTT, he should be able to advance it now in these proceedings. He was also asked why, when there is a subsisting CTTT judgment, which is a principal ingredient of the equitable charge said to constitute the caveatable interest, the declaration and caveat orders should be set aside on the basis that there is not an equitable charge over the property.

48 Dr Zepinic’s answer to these questions was to say that the CTTT had not determined the repudiation issue. The difficulty with this answer is that the decision of the CTTT dismissing the Zepinics’ cross-application commences in the following way:

“At the outset of the proceeding in May 2008, I raised my concern as to the nature of the orders sought, given that both parties continued to maintain that the contract was “on foot”.

…

On the 1 of September 2008 the proceedings were listed before me for directions. At that time the Zepinics were still legally represented. I again raised the issue of the ramification of the contracts being “on foot”.

Counsel for Chateau advised me that his client had prepared the document requested under my previous directions in relation to this issue. The Zepinics’ solicitor advised me that the Zepinics’ document complying with this direction would be filed and served on the 3 of September 2008.

Brewarrina Shire Council v Bechaus Civil Pty Ltd & Ors

When the proceedings commenced on 22 September 2008 both parties continued to maintain that the contract was on foot. (Indeed it came out in the course of the proceedings that Mr McNair of Chateau is continuing to “look after” the Zepinics’ property pending the outcome of these proceedings).

As I explained to them, I was of the view that in light of the Brewarrina Shire Council case, it was not open to the Zepinics to seek to sue Chateau for rectification and completion work while the contract was still “on foot”.

On hearing from the parties on this issue I dismissed the Zepinics’ application after giving my reasons orally. Accordingly, I made the corresponding orders on 22 September 2008. I have addressed the matter briefly here for the sake of completeness and because the Zepinics raise it in some detail, in their written submissions.

I now turn to Chateau’s claim.”

49 The CTTT found that the Court of Appeal’s decision in Brewarrina Shire Council v Beckhaus Civil Pty Ltd & 1 Or [2005] NSWCA 248 would have created a legal impediment for Dr and Mrs Zepinic suing Chateau for rectification and completion of work while the building contract was being alleged to remain on foot. The CTTT dismissed the Zepinics’ cross-claim on the basis that the principle in Brewarrina required that result, unless the Zepinics were prepared to abandon their contention that the contract was on foot. They were not prepared to abandon their contention that the contract was on foot. The cross-claim was accordingly dismissed. Thus the proceedings were resolved procedurally upon the assumption that the contract continued on foot.

50 That procedural assumption is inconsistent with the position now being taken by Dr and Mrs Zepinic in these proceedings. Their current argument is the reverse contention, that the contract was repudiated by Chateau, that they accepted that repudiation and the contract is no longer on foot. It may not matter whether the application by the member of the CTTT of the principle in Brewarrina was correct or not. To the extent that the alleged repudiation by Chateau that Dr and Mrs Zepinic rely upon is said to be long-standing and to go back to a time at or before the CTTT proceedings, the important issue is that Dr and Mrs Zepinic advanced their case and obtained a ruling before the CTTT on the basis that the contact was still on foot. They clearly affirmed the contract at that time. Dr and Mrs Zepinic did not put to the Court on the application before me any argument that would explain how their alleged right to accept Chateau’s alleged repudiation survived their clear affirmation of the contract before the CTTT.

51 In an attempt to deal with this difficulty the Zepinic’s closing written submissions emphasised that they had as recently as 25 August 2009 and 8 September 2009 and well after the CTTT decision served further notices of termination on Chateau. They sought to rely upon these notices as the basis for saying the contract was now at an end.

52 The notice of termination that Dr and Mrs Zepinic served on Chateau on 25 August 2009, approximately 12 months after the making of the CTTT decision and shortly before the current proceedings first came before the Court was in the following terms.

“Dear Sirs

RE: Notice

We refer to the Building Contract entered into between us in respect of our property at 34 Turramurra Avenue, Turramurra.

We enclose by way of service upon you Notice of Breach of that Building Contract in accordance with clause 25.

Please note that unless the above defaults are terminated within 10 business days of service upon this Notice upon you, we will terminate the Contract.

Yours sincerely

signature of Vito Zepinic	signature of Milla Zepinic
Vito Zepinic	Milla Zepinic"

53 The letter of 25 August 2009 attached a list of alleged defects and failures to complete the building works most of which related back to the time of the works. The notice itself is a clear affirmation that up to that point at least the contract was regarded as being still on foot. This is certainly inconsistent with any assertion by Dr and Mrs Zepinic that the contract had come to an end long before now.

54 There are many difficulties with Dr and Mrs Zepinic’s argument based upon the notice of 25 August 2009 or the one in similar terms on 8 September 2009 that the contract has come to an end and that Chateau can no longer assert the rights to an equitable charge arising under it. Even if one accepts for argument's sake that the notice of 25 August 2009 or the one on 8 September 2009 were effective to terminate the building contract because of Chateau’s prior breaches, the termination would only at best be effective from September 2009. Chateau’s accrued rights under the building contract, including the benefit of its 2008 judgment in the CTTT, would ordinarily survive that determination. Termination of the performance of a contract for breach or repudiation is a species of election and therefore takes effect from the time of election, that is from the time of exercise of the right to terminate: Larrat v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 226. Thus reliance upon these notices of termination does not dissolve Chateau’s rights that are the basis of its caveat and the Court’s declaration of 3 December 2009.

55 The other potential difficulty for Dr and Mrs Zepinic in relying upon termination notices in late 2009 is that the breaches, which are relied upon, will be said by Chateau to have been waived. Whether such a waiver may have occurred is debatable under the contract and is not an issue, which I need to decide now.

56 Chateau also argued that if the issue was whether or not the declaration was to be made again, that on the evidence the declaration should be made again.

57 Dr and Mrs Zepinic’s further argument was that the CTTT judgment on which Chateau’s caveat was founded, was flawed. They said that the material from the CTTT showed that the builder’s progress claims and the owner’s defect claims were both before the CTTT. But the Zepinics complained that the tribunal did not take their evidence into account. The Zepinics’ complaint was that their case before the District Court had been dismissed upon the technicality that their appeal to the District Court from the CTTT was out of time. The Zepinics said that the reason that their appeal was not filed in time was the fault of their lawyer. Because it was dismissed on this basis they say their evidence was not heard. It was pointed out to the Zepinics that this was a matter for the Court of Appeal to consider on the appeal from the decision of the District Court. The Court told Dr and Mrs Zepinic that this caveat proceeding was not the appropriate vehicle to reopen the decision of the CTTT or the District Court. Finally in response to this Dr Zepinic said that any decision of this Court should be stayed until the decision by the Court of Appeal. That submission is considered below in issue 5.

58 The Zepinics next argued in criticism of the CTTT decision that they did not know how much they would have to pay Chateau in costs. The Court pointed out to Dr Zepinic that this could quickly be remedied by directing an assessment of costs and a calculation of interest. Dr Zepinic complains that he is not in the position to know exactly what the amount due from him is said to be. That is not a proper answer to Chateau’s case that it has a charge over the property based upon the CTTT’s judgment. Nevertheless as I find on issue 5 of this judgment there is some validity in this criticism and that is reflected in my final orders.

59 Finally Dr Zepinic argued that were he to lose in these proceedings that any builder in the future could walk away from the middle of a job and require full payment from the owner through a Supreme Court decision. What other builders might do in the future is not an answer to Chateau’s arguments in this case.

The Zepinics’ Cross-Claim

60 Dr Zepinic contended that I should give leave to file the cross-claim and allow Dr and Mrs Zepinic to advance a case based upon it. The relief sought in the Zepinics’ cross-claim was the following:

(a) $531,224.00 (inclusive GST) being damages for breach of the Building Contract;

(b) $93,913.28 for payments to suppliers of materials used in works paid by the cross-claimant which should be paid by cross-defendant;

(c) $43,368.60 for additional concrete used to increase the size of the dwelling foundations as a result of an unapproved variation;

(d) $468,000.00 loss of income (rental loss) for negligence to provide an Occupation Certificate and hand-over the house;

(e) Legal costs;

61 Chateau argues in response on this fourth issue that the Zepinics cannot rely upon the cross-claim because it makes allegations about the defects in the building, which the CTTT has decided upon and which issue the District Court has not reopened. Argument about the cross-claim raises the same questions as the Court has determined as to whether the declaration should have been made.

62 Chateau also argued that the time for filing of the cross-claim could not and should not be extended. Chateau’s point was that the cross-claim was filed after final relief was given in the proceedings and that the Court cannot make an order for extension of time for filing of the cross-claim under UCPR r 1.12. This is because final relief is the end of issues in the proceedings and that a cross-claim cannot be filed without the leave of the Court when all other issues have been determined.

63 I have become concerned upon reviewing the course of written submissions after the hearing on 18 February 2010 that Chateau in its final written submission raised a new and substantial analysis of the degree of overlap between the Zepinics’ proposed cross-claim and the allegations previously made in the CTTT proceedings. That material included an analysis of the similarity between the pleadings in the cases. It seems to me that the course of submissions has not permitted the Zepinics an opportunity to reply to that material which I think they should have before I decide the question of whether the cross-claim should be permitted to proceed. This question can be decided separately from the other matters the subject of this judgment. If I do give leave for the cross-claim to proceed, the effect that that may or may not have on the stayed orders for judicial sale can be considered at that time.

The Costs Orders

64 Dr and Mrs Zepinic seek the setting aside of the indemnity costs order made on 3 December 2009. First they say they did not receive a Calderbank letter dated 11 September 2009. Secondly they say Chateau is said to have deliberately misled the court about the Calderbank letter of 11 September 2009, thereby inducing the court to make the indemnity costs orders. I do not accept either of these arguments.

65 My reasoning for making the indemnity costs order on 3 December 2009 against Dr and Mrs Zepinic based upon the Calderbank letter of 11 September 2009 is set out in my judgment of that date: Chateau Constructions Pty Limited v Zepinic & Anor [No 3] [2009] NSWSC 1373 at [44] to [59].

66 There is an obvious factual misdescription in [44] of my 3 December 2009 judgment. It appears that Dr and Mrs Zepinic are advancing their first argument based upon this wrong description. The error appears in paragraph [44] of the 3 December 2009 judgment. That it is a simple misdescription is readily discernible from a reading of paragraphs [44] to [46] of the judgment. Those paragraphs are reproduced below.

" Chateau applies for Costs

[44] The third question is Chateau’s claim for indemnity costs against Dr and Mrs Zepinic. The basis for this application is twofold. Chateau first submits that the Zepinics have failed to respond to a Calderbank letter sent to Mr Roskov, their legal representative, on 11 September 2009.

[45] Chateau’s second basis for seeking indemnity costs is that no material has been advanced to the Court to support any defence to Chateau's contention that it had a caveatable interest in the property. I will deal with both those submissions in turn.

The Calderbank Letter

Calderbank

67 In paragraph [44] the words "Mr Roskov, their legal representative" should read "Dr and Mrs Zepinic”. It is clear from paragraph [46], where its full relevant terms are set out, that the Calderbank letter of 11 September 2009 was sent directly to Mr and Mrs Zepinic at their residential address in The Chase in Turramurra. There is no other suggestion that a Calderbank letter was sent to Mr Roskov on 11 September 2009. The actual letter is addressed to Dr and Mrs Zepinic at their residential address.

68 The short answer to Dr and Mrs Zepinic’s first argument about the Calderbank letter of 11 September is that there is evidence that it was sent to their Chase Turramurra address where it could be expected to come to their attention. The fact that the second Calderbank letter in the same terms was sent to Mr Roskov on 16 September 2009 is not a basis to infer that the first letter was not sent. Mr Loel and Mr Roskov, who was acting for Dr and Mrs Zepinic, were communicating from about 14 September 2009 about the caveat lapsing notice. The Calderbank letter was sent to Mr Roskov as a result of a request that he made to Mr Loel on 16 September 2009. It had been represented to Chateau’s attorneys at the time the letter was sent that Mr Roskov was acting for Dr and Mrs Zepinic. There is no evidence from Mr Roskov that he did not receive the letter or that if he did he did not tell Dr and Mrs Zepinic about it. As their agent for the purpose of receiving such letters he can be assumed to have informed them of the contents of the second letter. I find that Dr and Mrs Zepinic had notice of both the Calderbank letters of 11 and 16 September 2009.

69 I do not accept Dr and Mrs Zepinic's submission that Chateau has misled the Court about whether the second letter was sent as a result of their asking for more time. The motivation for sending the second letter is not of great importance. Both letters were sent as I have found and speak for themselves. Their transmission and receipt justifies the indemnity cost orders I made on 3 December 2009.

The Amended Summons

Orders for Judicial Sale

70 The declaration has not been set aside. The caveat remains extended. It is now necessary to consider whether any and if so what consequential relief should be granted to Chateau to enforce the equitable charge. Chateau seeks the remedy of an equitable chargee of judicial sale of the property.

71 Dr and Mrs Zepinic did not contest the Court's power to enforce Chateau’s charge over the Turramurra property. Rather they took issue with the appropriateness of orders for judicial sale at this time and with aspects of the sale structure that Chateau proposes. After a brief statement of the Court's power to grant the remedy of judicial sale to an equitable chargee, it is necessary to deal with each of the specific objections that Dr and Mrs Zepinic took to the Court now making orders for judicial sale of the Turramurra property.

The jurisdiction to order judicial sale

72 The principal remedies of an equitable chargee are judicial sale (Matthews v Goodday (1861) 31 LJ Chancery 282 and 10 and Tennant v Trenchard (1869) LR 4 Chancery 537) and the appointment of a receiver (E L G Tyler, P W Young and C Croft, Fisher and Lightfoot Law of Mortgage 2nd Australian Edition (2005) Butterworths at [2.8]). Upon default an equitable chargee is entitled as of right to an order for sale: Sood v Christianos [2008] NSW SC 1087. It is doubtful that r 27 UCPR, which confers power on the Court to dispose of land by sale, itself empowers the court to order sale of property by a second mortgagee under an unregistered mortgage: King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [79] per Campbell J. But the court has inherent jurisdiction to order a sale of property to enforce an equitable charge: King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [80], [81] and [134].

73 There are discretionary aspects to the exercise of the jurisdiction to order judicial sale: King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [119]. This is an appropriate case for the exercise of that discretion. The building contract contains the equitable charge to secure the obligations Dr and Mrs Zepinic owed to Chateau. The charging clause contains a protective mechanism that prevents misuse of its power. The charge only arises in respect of moneys payable under the building contract "to the extent a court or tribunal has made an order that the owner pays the money to the builder". Chateau has obtained an order from the CTTT that Dr and Mrs Zepinic pay Chateau the identified judgment sum of $370,847.35 plus interest. Dr and Mrs Zepinic have not paid this sum to Chateau despite the CTTT entering judgment. The course of these proceedings, of the proceedings before the CTTT and of the proceedings in the District Court all give good grounds to infer that unless Chateau has access to the remedy of judicial sale Dr and Mrs Zepinic are unlikely to satisfy the outstanding CTTT judgment. Dr and Mrs Zepinic are in default. They have not fielded any defence to the remedy. It should be granted.

74 Dr and Mrs Zepinic raise issues about the form and the timing of the remedy of judicial sale in this case. Chateau itself has also identified issues relating to the form of draft remedy that it has moulded. The several issues about the form and timing of the remedy are considered next.

Opportunity to redeem

75 First, Chateau itself identifies the discretionary issue whether to order an immediate sale or to allow some further time in which redemption can take place: King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [111] and [119]. Chateau does not press for an immediate sale but proposes the sale be delayed until after 30 June 2010. Chateau concedes that the likely market value of the property, the fact that but for the charge the property is otherwise unencumbered and the amount of the defendants’ likely equity in the property following discharge, all prompt the conclusion that immediate sale is not required.

76 Two expert witnesses specialising in residential property sales, and conducting business on the upper North shore of Sydney, give evidence about the current fair market value of the property, Donna Ferris and Peter Knox. They give slightly different ranges for the market value of the property but their combined range is $1,665,000-$1,900,000. The property is unencumbered but for the present charge. Even the highest total figure suggested for costs by Mr Andrew Loel on behalf of Chateau of $702,100 with the CTTT judgment ($370,847.35) and interest up to 18 February 2010 ($35,255.89) as claimed in the further amended summons taken together give a figure of approximately $1,110,000. Even at the most pessimistic end of the range of experts’ opinion, there is ample equity in the property to satisfy the value of the charge. Circumstances do not require rapid sale in order to preserve the value of the charge in the face of diminishing equity in the property.

77 I add as a brief aside at this point that Dr and Mrs Zepinic complain in the course of their submissions that they have not received a proper itemised bill of costs from solicitors on behalf of Chateau. I am not presently deciding the validity of Chateau’s claim for costs identified in the previous paragraph. There was discussion about the provision of bills of costs in the course of legal submissions on 18 February 2010. It is desirable that, Chateau provides all bills of cost to the defendants as soon as possible. Chateau can expect that all its claims for costs will be contested. The various bills of costs that seem likely to be issued are identified later in this judgment. Their existence or creation is relevant to whether or not a stay of orders for judicial sale is granted. An itemised bill will have to be prepared for an assessment of costs to take place. Dr and Mrs Zepinic should be put in the position where they know exactly what is the full extent of Chateau’s final claim for costs. This is particularly so where Chateau claims entitlement to deduct all its costs, the subject of assessed costs orders, from the proceeds of the Turramurra property after judicial sale. There are likely to be issues as to whether all parts of such bills are covered by the charge. If such a bill has not been served I am prepared to make directions as to its service upon application by Dr and Mrs Zepinic. I will grant liberty to apply for this purpose and for other consequential matters arising out of this judgment.

78 The protracted and acrimonious disputes between Chateau and Dr and Mrs Zepinic since early 2006 suggest that too tight a sale timetable that does not allow Dr and Mrs Zepinic sufficient opportunity to pay out the charge is likely to lead to more court contests about the sale. From the content of the submissions that he has advanced to this court it can be inferred that Dr Zepinic at least does not appear to accept that judicially ordered sale of the Turramurra property should be taking place at all. A sufficient period should be allowed to permit Dr and Mrs Zepinic to reconcile themselves to the reality that the sale will take place if they do not meet their judgment obligations and to permit them a full opportunity to take whatever commercial steps they choose to raise finance to pay out their existing obligations to Chateau and secure for themselves the Turramurra property to which they are plainly very attached. There has already been significant time allowed to Dr and Mrs Zepinic whilst these proceedings have been advancing from their initial appearance before me in the Equity duty list on 28 September 2009. Too long a period may itself be counter-productive.

79 In my view the proper period to allow for this redemption from this point would be a little over a further four months. Were there not other factors in play, the further period I would allow to permit redemption would be a period expiring on 31 August 2010. However, for the reasons, which appear below, I have decided that the best course is to make the order for judicial sale but stay its operation for a period to allow Chateau to complete the assessment of its costs. It is ultimately difficult to fix a redemption period in circumstances where a final assessment of costs has not yet been undertaken. Nevertheless the other important structural features of the order for judicial sale can be fixed now.

The Amount of the Charge

80 It is necessary to determine the amount of the charge. The terms of the charge make clear how this should be done. The charge provides that:

"The Owner charges the site with the due payment to the Builder of all moneys that are, or may become payable under this contract, to the extent that a Court or tribunal has made an order that the Owner pays the money to the Builder.”

81 The only Court or tribunal orders that presently require Dr and Mrs Zepinic to pay a precise sum to Chateau are the CTTT orders of 2 February 2009 for the payment of money in the sum of $370,847.35 together with interest payable on the outstanding balance of that sum for the time being. Dr and Mrs Zepinic have not paid Chateau any part of that sum or interest upon it. That sum together with interest up to date is the amount of the charge. The orders I will make in these proceedings reflect that this is presently the quantum of the charge.

82 There are presently no other orders for Dr and Mrs Zepinic to pay a precise money sum to Chateau. The CTTT made orders for costs in Chateau’s favour in the CTTT proceedings on 15 April 2009, which orders were made the subject of a "Notice of Order" in the CTTT on 1 May 2009. Further orders for costs were made in Chateau’s favour when Colefax DCJ dismissed Dr and Mrs Zepinic's District Court appeal from the CTTT orders. I also made indemnity costs orders in these proceedings on 3 December 2009. A previous section of this judgment confirms that these indemnity costs orders continue. None of these costs orders in the CTTT, in the District Court or in this Court have yet been assessed. If and when an assessment of those costs takes place and a certificate of the determination of those costs issues, the costs order may be registered in a court of competent jurisdiction and enforced as an order of that court. Once that occurs the quantum of the charge may alter in the quantified amount of the supplementary costs orders. Until that happens the amount of the charge to be declared is $370,847.35 plus interest. It is necessary though to make directions to accommodate the relatively complicated costs assessment process, which is yet to take place.

83 In the course of submissions the Court raised with the parties the possibility of logistical problems and unfairness arising from the assessment of costs in several jurisdictions. Chateau responded to this by applying for the entry of judgment in this Court in the amount of $370,847.35 plus interest and by undertaking not to enforce the money judgment obtained in the District Court and only seeking to enforce the costs orders as part of the enforcement of the charge in this Court.

84 My further consideration of this issue causes me to conclude that it may create confusion and other problems if an attempt is made to duplicate in this court the existing judgment of the CTTT or the judgment of the District Court. It is sufficient for the Court to declare the amount of the charge in accordance with these reasons.

85 But it should also be clear from these reasons that upon the appropriate assessment of costs and entry of costs orders (either in those other jurisdictions or in this Court) that the precise amount of Chateau’s charge may and probably will increase in time. But it is not necessary for the Court now to become involved in or to otherwise provide for the outcome of that costs assessment process. Nevertheless, so that Dr and Mrs Zepinic can have certainty and so that Chateau can have the opportunity to realise the full value of its charge, it is important that the costs assessment process be rapidly expedited. Because of these kinds of considerations I have granted a stay on the orders for judicial sale made in this judgment but also granted liberty to apply. This liberty to apply would encompass any disputes that might arise about quantifying the total amount to be paid to Chateau from the sale proceeds of the Turramurra property.

Appointment of a trustee for sale and conduct of the sale

86 The parties are at issue about whether a trustee for the sale should be appointed and if not so appointed whether Dr and Mrs Zepinic should be permitted to conduct the sales process themselves. Chateau seeks the appointment of Nicholas Craig Malanos, an official liquidator and registered trustee as trustee for sale of the Turramurra property. Mr Malanos consents to the appointment. Dr and Mrs Zepinic oppose the appointment and seek to conduct any sale themselves.

87 The principles that govern the mechanics of an order to judicial sale are clear. The Court must decide whether the sale should be “in court” by a trustee appointed by the court or “out-of-court” by one of the parties; there is no general rule that conduct of the sale will be given to the mortgagor on a sale out of court; where the mortgagee has the best interests of getting the highest price and appears to be a responsible person then, subject to the court fixing a reserve and the proceeds of sale being paid into court, conduct of the sale may be given to the mortgagor out of court: Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361, per Young J at 380.

88 I have reached the conclusion that in the present case the sale should be conducted by a trustee appointed by the Court and should not be conducted by either of the parties. Mr Malanos is a person suitable for appointment as trustee of the sale and I will appoint him to that role. The method of sale for the trustee set out in the orders below should obtain the best available price and minimise disputes about the sale process. Dr and Mrs Zepinic disagree with this course but their arguments for opposing it are not persuasive.

89 If the sale process is placed in the hands of either party and not conducted in court it is likely that the sale process will be paralysed by further disputes between the parties. The history of the dispute between the parties compels this conclusion. This is the principal reason for appointing a trustee for sale rather than authorising sale out-of-court and placing the sale process in the hands of one of the parties.

90 Chateau’s final written submissions oppose sale out-of-court and particularly oppose allowing Dr and Mrs Zepinic to conduct the auction. In doing so Chateau’s submissions criticise the past conduct of Dr and Mrs Zepinic and question their suitability to conduct a sale. I do not take the course of ordering a sale in court and appointing a trustee for sale because I accept all these submissions. For example I agree with Dr and Mrs Zepinic that in the present age their residence in London does not prevent them conducting a sale in Sydney. Nor do I accept that whatever the findings about Dr and Mrs Zepinic not appearing in court on 28 September 2009, 3 December 2009 and 21 December 2009 that such conduct necessarily bears upon their fitness to conduct a sale of the Turramurra property. Chateau also contends that Dr Zepinic does not have the qualifications or appropriate skills to obtain the highest price for the property. I disagree with this contention. Were it only a question of skill and ability, there is little doubt that Dr Zepinic has the capacity to direct the effective sale of the Turramurra property. But the issue is not just one of skill and ability. Chateau makes several points with which I do agree and which are decisive on this issue.

91 First, it is plain from statements that Dr Zepinic makes throughout his oral and written submissions that he strongly opposes selling the Turramurra property. I am not convinced that his opposition will dissolve or even reduce were I to make orders for sale out-of-court. To appoint a person with an entrenched attitude of opposition to the sale to conduct the sale invites turmoil. Of the many examples of Dr Zepinic's attitude in opposition to sale a few will suffice. Dr Zepinic’s e-mail to Mr Loel on 17 December 2009 declares that Dr and Mrs Zepinic "have no intention to sell a property". In submissions in reply Dr and Mrs Zepinic acknowledge the power of the Court to order sale of the property but submit "that such a decision would be an irreversible destruction of [Dr and Mrs Zepinic's] property rights and should not be taken lightly and definitely not as the only option for a remedy.” Dr and Mrs Zepinic submit that Chateau’s description of them, as "avowedly against a Court order" is an "outrageous and offensive" description. I do accept that it is a correct description of their current attitude to sale.

92 During the hearing on 18 February 2010 some illuminating exchanges took place when this issue of who was to control the sale was debated. Dr Zepinic’s answers to the Court’s questions on this subject demonstrate his outlook. The court asked Dr Zepinic about his attitude to judicial sale. It is necessary to include the full exchange on the subject (T 85/25 –T87/46).

“HIS HONOUR: It may not be that complicated, Dr Zepinic. What I'm about to ask you about only arises if I find against you on all the other things, but I still need to consider this because I don't know where I'm going to go on all of this yet. Now, that is Chateau has conceded that if I got to the point of making a judicial sale order, and I have got the power to do that, as my judgment pointed out, they don't want to buy a private treaty but they would have the right to be at an auction along with everybody else.

They also say that the question of reserve price will have to be debated after the trustee, whoever that is, comes along and gives evidence before me about what is the property worth, and you will have a chance to be involved in that I suspect, but the trustee will put something forward, and if you disagree then maybe you will get a chance to come and put your valuation forward, but I will have to make a decision, but that's a subsequent matter. The thing I'm really concerned about, though, is the issue of who will be the trustee for sale. In other words, if I make these orders it can be the liquidator, Mr Melanis, who signs the consent. It can be the public trustee or it can be you and your wife, or you. Now, which of those do you want, firstly?

SECOND DEFENDANT: First, before, I don't understand, your Honour, any decision by Supreme Court that my house should be sold and that builder breach all that was in the home building contract.

HIS HONOUR: If I'm against you on all these arguments I have the power to make an order and you have the power to go to the Court of Appeal and to have them to tell me that I'm wrong. Can I just say that we have gone past that question. I still have to decide it, and I don't know what I'm going to do, but in relation to the fifth issue, it concerns a situation as to what happens if I do make these orders, and the critical question is, "Who has control of the sale?" Now, it's 10 past 4 and I only want to spend a couple of minutes on this because I want to adjourn, in fairness to the court reporting staff and my staff. Now, Mr Ilkovski says it should not be you because you are based in London and because you are opposed to the sale. What do you say to that? Firstly, do you want to have control of the sale?

SECOND DEFENDANT: I beg your pardon?

HIS HONOUR: Do you want to have control of the sale?

SECOND DEFENDANT: Of course.

HIS HONOUR: Right. I thought you would.

SECOND DEFENDANT: I argue about Mr Ilkovski's argument that I'm in London and I'm unable to deal with selling my house, and at the same time he doesn't accept my disadvantage in some issues here or in London, so it's very clear I would like to have control over my house, me and my wife, once in my life.

HIS HONOUR: Because it's yours?

SECOND DEFENDANT: Yes it is.

HIS HONOUR: But what he also says, and this is the last point, he says that through your involvement in this litigation you have shown a complete opposition to the idea of a sale and a failure to accept decisions of the CTTT and you may not accept a decision of mine if I was to be against you. I don't know, but that you would not be the appropriate person to be in charge of the sale because you would not want the sale to go ahead.

SECOND DEFENDANT: I disagree with his comments, your Honour.

HIS HONOUR: You say you would be completely cooperative?

SECOND DEFENDANT: Yes, of course, your Honour, and first of all, your Honour, while we are talking to sell a house, why not talking how much money should be paid maybe. It's my mortgage. I can ask to do a payment.

HIS HONOUR: You're saying, are you, if orders are made for a sale that what might happen is that the money might be raised by a mortgage and there will never have to be a sale?

SECOND DEFENDANT: Why not?

HIS HONOUR: Well maybe that's what will happen, I don't know, but I have to deal with a situation where there is a sale. Follow?

SECOND DEFENDANT: No. I don't accept, I'm sorry, your Honour.

HIS HONOUR: You don't accept what?

SECOND DEFENDANT: I don't accept to sell my house.

HIS HONOUR: Right.

SECOND DEFENDANT: Your Honour, I'm sorry

HIS HONOUR: Just tell me this: Would you ever accept that this court had the power to direct that your house be sold?

SECOND DEFENDANT: But, your Honour, I will accept any decision by this court, but I please to understand how much emotion it will be for us to sell this house once, considering issue, my house was taken from me and my family.

HIS HONOUR: I understand the difficulties.

SECOND DEFENDANT: Put here, this building this court is not a building with concrete and bricks. This is a family in new adopted country. That's my whole point.

HIS HONOUR: And that is why I do understand that and that is why I have given you the opportunity, Dr Zepinic, on 3 December, 21 December and today, I've given adjournments to you to allow you to come along and to defend your right to hold this house.

SECOND DEFENDANT: And I appreciate that, your Honour.

HIS HONOUR: And I've done that because I appreciate that it is a residence that you live in and that is important to you, as it would be to any person, but it is particularly important to you. Now, I understand that, but a point may come, if I find against you on these other issues, where I need to decide if you're in charge of the sale or not.

SECOND DEFENDANT: Well, I'm fully responsible for any taking responsibility about my house, your Honour.

HIS HONOUR: You're fully?

SECOND DEFENDANT: Fully responsible for anything regarding my house.

HIS HONOUR: You want to take responsibility?

93 Dr Zepinic and Mrs Zepinic have a deep attachment to the Turramurra property. The fact that it might be taken from them by court order is a direct challenge to the security they feel in their property in this country compared with the grave instability they have experienced elsewhere. I am conscious of the intense difficulty that a sale order must have for Dr and Mrs Zepinic. It is partly for this reason, as well as to accommodate a mechanism for ascertaining the quantum of the charge that I have stayed the operation of the judicial sale order as I have in the orders below. The delay will allow Dr and Mrs Zepinic every opportunity to pay out what is owed to Chateau and keep the Turramurra property once the sum is ascertained with precision.

94 Other parts of Chateau’s submissions supporting judicial sale are also persuasive. Complications arise in a sale out-of-court where the party given conduct of the sale is a litigant in person. Now that Mr Roskov no longer represents Dr and Mrs Zepinic these complications arise. Where a party to the proceedings is given conduct of the sale that party's solicitors are considered as between the vendors and the purchaser to be the agent of all parties to the suit: Knott v Cottee (No. 4) (1859) 27 Beav. 33 and Dalby v Pullen (1830) 1 Russ & My 296 and see also G P Stuckey and C D Irwin, Parker's Practice in Equity (NSW) 2nd ed (1949) Law Book Co of Australasia at 284. The role of the solicitor for the party conducting the sale is a difficult one. It involves balancing the conflicting interests of the parties to allow the solicitor to act in their common interests when dealing with the purchaser. It is doubtful that a party to the proceedings will generally be able to perform such a role satisfactorily. A solicitor’s professional training and detachment and duties owed to the Court make a solicitor rather than a party the appropriate performer of this role. On this ground alone I would be reluctant to appoint a party such as the Zepinics to conduct the sale of the Turramurra property.

95 Mr Malanos is appropriately qualified for appointment as trustee for sale. Chateau advances him for appointment. Dr and Mrs Zepinic expressed concern that he may favour Chateau because of this. Their concerns are met by several considerations. His appointment as an official liquidator provides him with experience in acting objectively even though he has been appointed by one of several parties whose interests conflict. He sees no impediment to his appointment. He has declared that neither he nor his firm, Worrell's Insolvency and Forensic Accountants, has acted for Chateau or for Dr or Mrs Zepinic. He says "I am not aware of any conflict of interest or duty that would make it improper for me to act as trustee for the sale of the property." It is the court that appoints him as trustee for sale. He is accountable to the Court for his performance in that role. It can be expected that his performance will be scrutinised closely by the parties and the Court can hear any issues that arise out of that scrutiny.

96 Mr Malanos has declared that he will, to the best of his ability, comply with the orders proposed in the amended summons. The orders in the further amended summons are very similar in substance to those in the amended summons. I am satisfied Mr Malanos should be appointed trustee for sale under the orders for judicial sale made below.

97 Dr and Mrs Zepinic’s own case reinforces the appointment of an independent trustee such as Mr Malanos to conduct the sale. Their daughter Violeta, for example, gives evidence of aggressive confrontations with employees of Chateau. I do not need to determine what happened during these incidents. The mere fact such allegations are being made between the parties is another reason why neither party should be given conduct of a judicially ordered sale.

98 I am also satisfied that the orders for judicial sale that Chateau proposes will be effective to obtain the best available price and minimise disputes. This will be achieved by the appointment of the independent trustee for sale, the obtaining of an independent valuation, the conduct of the sale by public auction, the Court setting a reserve price and a prohibition on the trustee selling the property below the reserve price except by leave.

Leave for Chateau to bid at a public auction

99 The parties are in dispute about whether or not Chateau should have leave to bid at any public auction that results from orders for judicial sale of the Turramurra property. Chateau asks for the Court's leave to bid and purchase the property at a public auction. Dr and Mrs Zepinic resist this course.

100 It is well established that a mortgagee and a chargee cannot sell property under a power of sale to itself: Farrar v Farrar’s Limited (1888) 40 Ch D 395 at 409. Where a sale is made by the court and the mortgagee has obtained leave to bid the mortgagee may then purchase: Downes v Grazebrook (1817) 36 ER 77 and Williams v Wellingborough Borough Council [1975] 3 All ER 462.

101 I have accepted Chateau’s submission for the appointment of an independent professional trustee for sale in this case. That trustee for sale has obligations to the parties and to the Court to achieve the best market price on sale. I do not doubt the capacity of the proposed trustee to deal at arms length both with Chateau and with Dr and Mrs Zepinic. Allowing Chateau to bid at the auction will assist in maximising the sale price obtained.

102 Dr and Mrs Zepinic's submissions in reply raised concerns about how the sale might be conducted and the fact that Chateau may be seeking to profit at Dr and Mrs Zepinic's expense by purchasing the property to redevelop it and thereby to take advantage of State government approved rezoning of the land which now allows five-storey buildings to be erected on it. Whatever a purchaser, including Chateau, may wish to do to develop the land after judicial sale is a matter for that purchaser. The important present consideration is to ensure that Dr and Mrs Zepinic obtain the best price on sale and are able to maximise their proceeds from the sale after payment out of the charge. That is best achieved by allowing Chateau to bid and to purchase at auction.

Setting the reserve price

103 Chateau asks the Court to set the reserve price for the proposed public auction. The courts have repeatedly fixed a reserve price when ordering sale: Woolley v Coleman (1882) 21 Ch D 169 at 173 and Brewer v Square (1892) 2 Ch 111 at 115. Chateau does not seek to have the Court delegate the power to set the reserve price to the appointed trustee for sale. The orders that I make below provide a practical mechanism for the setting of the reserve price. This will occur by the trustee obtaining a valuation of the property from a registered valuer appointed by the trustee and upon receiving the valuer's report the trustee will apply to the court for the setting of a reserve price.

Stay Argument

104 Dr and Mrs Zepinic also argued that I should not make orders on the amended summons until the Court of Appeal had dealt with the appeal from the decision of Colefax DCJ. Their argument was that if the Court of Appeal were to set aside the decision of Colefax DCJ and uphold the Zepinics’ appeal to the District Court against the CTTT decision, the basis of the equitable charge under the building contract would dissolve. It was submitted therefore that it was inappropriate to make any orders for judicial sale of the property and that there should be a stay until the Court of Appeal had dealt with the matter.

105 In answer to the submission Mr Ilkovski for Chateau pointed out that Dr and Mrs Zepinic had only filed a holding appeal in the Court of Appeal and they were free to discontinue the proceedings in the Court of Appeal at any time. He further argued that the timetable for the judicial sale orders that Chateau was proposing was sufficiently extended and that sale would not take place in the short term hearing during which the trustee for sale would approach the Court to fix a reserve price and other sale preliminaries were resolved.

106 Upon examining the timetable proposed I generally agree with the submissions advanced by Chateau. Whether I make the orders for judicial sale on the further amended summons, even upon the shortest anticipated timeframe for their execution, the property will not be listed publicly for sale for several months. That gives ample opportunity to Dr Zepinic to approach the Court of Appeal for a stay at a later point of time, if he is so advised, after he has filed a full notice of appeal in the appeal proceedings specifying grounds of appeal.

107 But as I have foreshadowed above there is another reason why a stay should be granted. Because the many costs orders made against Dr and Mrs Zepinic have not been formally assessed and become money judgments against them it is doubtful that they fall within the Chateau charge. Making unconditional orders for judicial sale now, granting to Dr and Mrs Zepinic a period during which redemption could occur, would be unsatisfactory. On the one hand Dr and Mrs Zepinic would be subject to an order for judicial sale but would not know with precision the sum that it was necessary for them to raise during the period allowed to them for redemption. On the other hand until the costs orders are assessed and become judgments of a court, Chateau would face an argument from Dr and Mrs Zepinic that there is not an order for the payment against them of more than $370,847.35 together with interest and that the payment of that sum should be sufficient to allow them to redeem the mortgage at this time. Chateau should be allowed the opportunity to use its best endeavours to turn its bills of costs into judgments that can be enforced under the terms of the charge without argument.

108 Courts do sometimes order judicial sale and direct an account of what is due: Wade v Wilson (1882) 22 Ch D 235. Here though there will be uncertainty as to what is due until final cost assessments have occurred. Because of considerations such as these the appropriate course in the circumstances is to make the orders for judicial sale but to order a stay upon execution of those orders for a period. There is an obvious incentive in the structure of these orders for Chateau to complete its costs assessment and obtain final judgments for costs in the short term although the orders do not require Chateau to take any particular steps along that path.

Conclusion and Orders

109 In the result I have found that Dr and Mrs Zepinic have not given an adequate explanation for their non-appearance before me on 3 and 21 December 2009. I am not prepared to set aside the orders made on those occasions for that reason. Even if I were prepared to set them aside I do not accept Dr and Mrs Zepinic’s arguments that the orders should not have been made. But for the reasons already explained there will be a stay on these orders pending Chateau completing assessment of its costs and obtaining judgments for a precise sum of costs.

110 Chateau has been substantially successful in its application before me. The normal applicable principle would be that costs follow the event. I have not yet formally made an order for costs but will do so in accordance with this principle unless Dr and Mrs Zepinic inform me within seven days that they contend some other principle applies and file submissions in support of that position. I will then determine the question of costs in chambers. The orders below do not include a costs order for that reason. Accordingly I make the following orders and declaration based upon the further amended summons.

111 The Court orders;

1 An order that the operation of caveat number AE479151 lodged in relation to the Turramurra property, the address and title details for which are identified in paragraph 2 of the further amended summons be extended until further order of the Court.

2 A declaration that the defendants have charged the Turramurra property, the address and title details for which are identified in paragraph 2 of the further amended summons, with due payment to the plaintiff of $370.847.35 plus interest (at a rate equal to the rate of the time being prescribed for the purposes of s 101 of the Civil Procedure Act 2005 (NSW)) as ordered by the Consumer, Trader and Tenancy Tribunal on 2 February 2009.

3 Order that there be a sale, in accordance with these orders, of the Turramurra property, the address and title details for which are identified in paragraph 2 of the Further Amended Summons (and hereinafter referred to as “the Property”) but that this order be stayed until further order; and, the making of an order for the lifting of such stay will herein be referred to as “the lifting date”.

(a) Mr Nicholas Craig Malanos be appointed as trustee for the sale of the Property (the Trustee);

(b) the Property immediately vests in the Trustee upon the making of these orders;

(a) the Trustee may not conduct a sale of the Property nor incur any costs or expenses in connection with the sale of the Property in the period from the date of the making of these orders up to and including two months after the lifting date;

(A) deliver to the Trustee the Certificate of Title for the Property;

(ii) the Trustee is to take all reasonably necessary steps required (including but not limited to, appointing a real estate agent and auctioneer) to sell the Property by public auction;

(iii) the Trustee is to obtain a valuation of the Property by a registered valuer appointed by the Trustee and upon receipt of the valuation is to apply to the Court for the setting of a reserved price for the sale of the Property by public auction (the Reserve Price);

(iv) the Trustee must not sell the Property for less that the Reserve Price except by leave of the Court;

(v) the plaintiff is given leave to bid, and purchase the Property, at any public auction of the Property;

(c) if, at a public auction of the Property, the Reserve Price is not reached, the Property is to be passed in and the Trustee is to take all reasonably necessary steps required to sell the Property by further public auction or by private treaty at or above the Reserve Price;

(d) if the Property is sold at public auction or by private treaty to a person or entity other than the plaintiff, the Trustee shall, on settlement of the sale of the Property, pay the amounts that remain unpaid by the defendants at the date of settlement, provided that the plaintiff shall give to the Trustee evidence of the orders or agreement by which the Further Amounts are payable, on or before the date of the settlement of the sale;

(e) the Trustee’s costs and expenses incurred in relation to the sale of the Property are to be paid from the proceeds of sale of the Property;

(f) the defendants are to give vacant possession of the Property to the Trustee within two months after the lifting date;

(a) the Trustee must not sell the Property if on or before two months after the lifting date the defendants pay to the Trustee and the Trustee receives in clear funds the amount of principal and interest identified in Order 2 hereof together with such Further Amounts as may be ordered by the Court before the lifting date in accordance with these orders (“the Payment to the Trustee”).

(b) the Trustee is to make payment to the plaintiff of the Payment to the Trustee within 7 days of receiving the Payment to the Trustee;

7 Grant to the parties liberty to apply to the Court on 3 days notice in connection with the operation of these orders.

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15/04/2010 - Typographical error - Paragraph(s) Catchwords

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Citations

Chateau Constructions (Aust) Ltd v Zepinic (No 5) [2010] NSWSC 265

Most Recent Citation

Re Carter Holt Harvey Woodproducts (Australia) Pty Ltd (No 1) [2017] VSC 499

Cases Citing This Decision

20

Zepinic v Chateau Constructions (Aust) Limited [2018] NSWCA 317

Zepinic v Chateau Constructions (Aust) Ltd; Zepinic v Chateau Constructions (Aust) Ltd [2016] NSWCA 361

Zepinic v Chateau Constructions (Australia) Ltd [2014] NSWCA 248

Cases Cited

7

Statutory Material Cited

1

Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248

Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 3] [2009] NSWSC 1373

King Investment Solutions v Hussain [2005] NSWSC 1076

CITATION:	Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 5] [2010] NSWSC 265 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	18 February 2010
JUDGMENT DATE :	8 April 2010
JURISDICTION:	Equity
JUDGMENT OF:	Slattery J at 1
DECISION:	ORDERS: 1. An order that the operation of caveat number AE479151 lodged in relation to the Turramurra property, the address and title details for which are identified in paragraph 2 of the further amended summons be extended until further order of the Court. 2. A declaration that the defendants have charged the Turramurra property, the address and title details for which are identified in paragraph 2 of the further amended summons, with due payment to the plaintiff of $370.847.35 plus interest (at a rate equal to the rate of the time being prescribed for the purposes of s 101 of the Civil Procedure Act 2005 (NSW)) as ordered by the Consumer, Trader and Tenancy Tribunal on 2 February 2009. 3. Order that there be a sale, in accordance with these orders, of the Turramurra property, the address and title details for which are identified in paragraph 2 of the Further Amended Summons (and hereinafter referred to as “the Property”) but that this order be stayed until further order; and, the making of an order for the lifting of such stay will herein be referred to as “the lifting date”. 4. Order that: (a) Mr Nicholas Craig Malanos be appointed as trustee for the sale of the Property (the Trustee); (b) the Property immediately vests in the Trustee upon the making of these orders; (c) the Trustee conduct and complete the sale of the Property in accordance with these orders and convey the Property upon completion of the sale. 5. Order that: (a) the Trustee may not conduct a sale of the Property nor incur any costs or expenses in connection with the sale of the Property in the period from the date of the making of these orders up to and including two months after the lifting date; (b) within two months after the lifting date: (i) the defendants must: (A) deliver to the Trustee the Certificate of Title for the Property; (B) within 7 days after being requested in writing by the Trustee by email sent to [email address not published] deliver to the Trustee any other documents in their possession or under their control relating to the Property that are reasonably required by the Trustee to conduct or complete the sale of the Property. (ii) the Trustee is to take all reasonably necessary steps required (including but not limited to, appointing a real estate agent and auctioneer) to sell the Property by public auction; (iii) the Trustee is to obtain a valuation of the Property by a registered valuer appointed by the Trustee and upon receipt of the valuation is to apply to the Court for the setting of a reserved price for the sale of the Property by public auction (the Reserve Price); (iv) the Trustee must not sell the Property for less that the Reserve Price except by leave of the Court; (v) the plaintiff is given leave to bid, and purchase the Property, at any public auction of the Property; (vi) if the plaintiff successfully bids on the Property at public auction and a contract for the sale of the Property is exchanged, the Trustee shall on settlement of the sale allow the plaintiff as a set off against the purchase price, the amounts including interest calculated up to the date of payment as described in Order 2 hereof as remain unpaid by the defendants at the date of settlement, together with such other amounts as may be ordered to be paid by the defendants to the plaintiff upon further application to this Court before the lifting date (“the Further Amounts”. (c) if, at a public auction of the Property, the Reserve Price is not reached, the Property is to be passed in and the Trustee is to take all reasonably necessary steps required to sell the Property by further public auction or by private treaty at or above the Reserve Price; (d) if the Property is sold at public auction or by private treaty to a person or entity other than the plaintiff, the Trustee shall, on settlement of the sale of the Property, pay the amounts that remain unpaid by the defendants at the date of settlement, provided that the plaintiff shall give to the Trustee evidence of the orders or agreement by which the Further Amounts are payable, on or before the date of the settlement of the sale; (e) the Trustee’s costs and expenses incurred in relation to the sale of the Property are to be paid from the proceeds of sale of the Property; (f) the defendants are to give vacant possession of the Property to the Trustee within two months after the lifting date; (g) the Trustee is to pay to the defendants the balance of the proceeds of the sale of the Property after deduction of such of the Further Amounts paid to the plaintiff and the Trustee’s costs and expenses incurred in relation to the sale of the Property; 6. Order that: (a) the Trustee must not sell the Property if on or before two months after the lifting date the defendants pay to the Trustee and the Trustee receives in clear funds the amount of principal and interest identified in Order 2 hereof together with such Further Amounts as may be ordered by the Court before the lifting date in accordance with these orders (“the Payment to the Trustee”). (b) the Trustee is to make payment to the plaintiff of the Payment to the Trustee within 7 days of receiving the Payment to the Trustee; (c) upon making payment to the plaintiff of the Payment to the Trustee, the Trustee’s appointment as trustee for the sale of the Property is revoked and the Property will revest immediately in the defendants. 7. Grant to the parties liberty to apply to the Court on 3 days notice in connection with the operation of these orders. 8. Direct that any further written submissions that the defendants have in response to the plaintiff’s written submissions of 5 March 2010 on the question of leave to file and proceed upon the cross-claim, be filed by 16 April 2010.
CATCHWORDS:	PROCEDURE - declaration of the existence of a charge made in the absence of the defendants - motion to set aside - no adequate explanation of defendants' failure to appear at hearing where declaration made - no procedural basis shown to set aside declaration - declaration not set aside - defendant's substantive arguments for setting aside declaration would fail in any event - CONTRACTS - building, engineering and related contracts - other matters - defendants' recent attempt to exercise rights of termination of the contract does not displace builder's existing security rights under the charge - existing costs orders confirmed - whether defendants should be given leave to cross claim reserved - EQUITY - equitable charges - enforcement - motion for judicial sale of defendants' property the subject of a charge - orders for judicial sale of property made - stay order for sale until plaintiff's costs assessed - acrimonious dispute - sale in court by a trustee appropriate - leave granted to plaintiff to bid at public auction
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) ss 56, 101
CATEGORY:	Principal judgment
CASES CITED:	Brewarrina Shire Council v Beckhaus Civil Pty Ltd & 1 Or [2005] NSWCA 248 Brewer v Square (1892) 2 Ch 111 Chateau Constructions (Aust) Ltd v Zepinic [2009] NSWSC 1339 Chateau Constructions (Aust) Ltd v Zepinic [No 2] [2009] NSWSC 1338 Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 3] [2009] NSWSC 1373 Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 4] [2009] NSWSC 1478 Dalby v Pullen (1830) 1 Russ & My 296 Downes v Grazebrook (1817) 36 ER 77 Farrar v Farrar’s Limited (1888) 40 Ch D 395 King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 Knott v Cottee (No. 4) (1859) 27 Beav. 33 Larrat v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361 Matthews v Goodday (1861) 31 LJ Chancery 282 Sood v Christianos [2008] NSW SC 1087 Tennant v Trenchard (1869) LR 4 Chancery 537 Wade v Wilson (1882) 22 Ch D 235 Williams v Wellingborough Borough Council [1975] 3 All ER 462 Woolley v Coleman (1882) 21 Ch D 169
TEXTS CITED:	E L G Tyler, P W Young and C Croft, Fisher and Lightfoot Law of Mortgage 2nd Australian Edition (2005) Butterworths G P Stuckey and C D Irwin, Parker's Practice in Equity (NSW) 2nd Ed (1949) Law Book Co of Australasia
PARTIES:	Plaintiff: Chateau Constructions (Aust) Limited First Defendant: Milla Zepinic Second Defendant: Vito Zepinic
FILE NUMBER(S):	SC 4643/09
COUNSEL:	Plaintiff: Mr B Ilkovski Defendants: Dr Zepinic (self represented)
SOLICITORS:	Plaintiff: Toomey Pegg Drevikovsky Lawyers Defendants: Dr Zepinic (self represented)