Stramit Corporation Pty Ltd v C.D.S Roofing Pty Ltd and Schelfout

[2016] VCC 1347

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for Publication

AT MELBOURNE

COMMERCIAL DIVISON
 GENERAL LIST

Case No. CI-15-01167

STRAMIT CORPORATION PTY LTD	Plaintiff
v.
C.D.S. ROOFING PTY LTD and COLIN SCHELFHOUT	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	6 September 2016
DATE OF JUDGMENT:	20 September 2016
CASE MAY BE CITED AS:	Stramit Corporation Pty Ltd v. C.D.S. Roofing Pty Ltd & Schelfout
MEDIUM NEUTRAL CITATION:	[2016] VCC 1347

REASONS FOR JUDGMENT

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Catchwords:              Practice and procedure – Warrant of seizure and sale – Auction by sheriff unsucessful – Application for further auction “without reserve” – Whether order for sale should be made – Order refused – Humphreys v. Pioneer Homes Australia Pty Ltd [2000] VSC 10 and Zhou v. Kousal & Ors  [2012] VSC 187 considered.

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APPEARANCES:	Counsel	Solicitors
For the plaintiff	Mr C. Moloney (solicitor)	Davies Moloney
For the second defendant For the Sheriff	No appearance   No appearance

HIS HONOUR:

1Colin Schelfhout gave a personal guarantee and indemnity to Stramit Corporation Pty Ltd (“Stramit”) so that it would continue to supply steel products on credit to the company C.D.S. Roofing Pty Ltd (“CDS”).

2CDS failed to pay accounts totalling $129,655.26 for products supplied between September 2014 and February 2015. Stramit demanded payment from Mr Schelfhout. Mr Schelfhout failed to pay and this proceeding was issued by Stramit. Judgment in default of appearance was obtained on 3 September 2015 for the total sum of $141,214.60 which included interest and costs.

3A warrant of seizure and sale was issued on 10 February 2016. As a consequence, the Sherrif’s Office advertised a property at 3 Ocean Park Drive, Marengo (“the Marengo property”) for sale on 16 June 2016 by public auction.

4The Marengo property is jointly owned by Mr Schelfhout and his wife. The property contains, what was described in the application for substituted service of the writ as, a holiday home. The advertisement for the sale by auction of the Marengo property was served personally on Mr Schelfhout at the property.

5The auction of the Marengo property was unsucessful. The Sheriff notified Stramit’s lawyers that, “The property was passed in due to the bidding not reaching the reserve price as set down by the Deputy Sheriff”.

6The Marengo property has a number of encumberances including:

a.mortgage to National Australia Bank Ltd;

b.caveat by Stramit Corporation Pty Ltd (interest as chargee);

c.caveat by Zipperlock Steel Buildings Pty Ltd (interest as chargee);

d.caveat by Metroll Victoria Pty Ltd (interest as chargee);

e.caveat by CSR Building Products Ltd (interest as chargee);

f.caveat by Matthew Jess and Paul Burness (interest as chargee).

7The summons before the Court seeks an order, “That the Sheriff sell or cause to be sold without reserve the real and personal estate of… [Mr] Schelfhout”. In fact, the order for sale sought by Mr Moloney on behalf of Stramit had the following further aspects:

a.it was to be limited to the sale of the Marengo property;

b.the sale by the Sheriff was to be “by public auction for the best price reasonably obtainable without a reserve price”;

c.any such sale would be “made conditional and subject to the approval of the Court on application by the Sheriff”;

d.such application by the Sheriff must be by “summons filed within 14 days of the sale of the property [and] must be served on [Stramit, Mr Schelfhout] and the proposed purchaser”.

8The draft order also contained a number of recitals purporting to summarise the effect of a number of Supreme Court decisions and thereby justifying the orders sought. The decisions referred to were:

Wu v Ma [2011] VSC 208 (Mukhtar AsJ) (“Wu”);

Zhou v Kousal & Ors [2012] VSC 187 (Vickery J) (“Zhou”);

J.G. King Pty Ltd v Do [2012] VSC 545 (Lansdowne AsJ) (“J.G. King”);

Greater Bendigo City Council v Rutledge (SCI-2012-01548);

Mercedes-Benz Financial Services Australia Pty Ltd v Watts (SCI-2013-06684).

9I have been unable to access the latter two cases. I have read the other cases as well as the decision of Beach J in Humphreys v Pioneer Homes Australia Pty Ltd [2000] VSC 10 (“Humphreys”).

10In my view the decisions of Beach J in Humphreys and Vickery J in Zhou demonstrate why I should be cautious about granting the orders sought by Stramit in the present case.

11As Beach J made clear at paragraphs 21 and 22, referring to the judgment of Barwick CJ in Anderson v Liddell (1968) 117 CLR 36 at paragraph 44, the Sheriff in effecting “a sale of land registered in the name of the debtor with a view to satisfying the warrant, can only sell the debtor’s interest in the land”.

12In Wu (effectively the predecessor to Zhou), Mukhtar AsJ had available to him information from which it was possible, at least roughly, to calculate what might be the judgment debtor’s interest in the property to be sold. Notwithstanding, Mukhtar AsJ considered it necessary, whilst permitting the sale “without a reserve price”, to add the proviso that this did “not thereby derogate from, or relieve the Sheriff of a duty at law to the owner of the land when exercising a power of sale”.

13Justice Vickery in Zhou had to consider whether the sale by the Sheriff of the judgment debtor’s interest in the property for $1,000 satisfied the proviso in the order of Mukhtar AsJ. Justice Vickery said at paragraph 108, in relation to the order of Mukhtar AsJ that, “This was a perfectly valid order with which the Sheriff was required to comply”.

14At paragraph 17, Vickery J stated that the “duties of the Sheriff which applied under the common law, by analogy, continue to apply to the Sheriff after the coming into the operation of the Sheriff Act [2009]” and he set out at paragraph 124, “the principles of common law to be applied to a Sheriff’s sale”. In deciding Zhou, Vickery J was satisfied that, in certain material respects, the conduct of the sale did not accord with the common law principles, and accordingly the sale was set aside.

15In J.G. King, Lansdowne AsJ made an order for a sale by auction by the Sheriff without reserve. She rejected a request by the judgment creditor that there be a sale permitted “at a ‘not below’ figure, lower than the previous [sale] reserve”, which figure would reflect the judgment debtor’s interest in the property. Associate Justice Lansdowne considered that “it would be inconsistent with Humphreys to specify a ‘not below’ figure” (paragraphs 8 and 15).

16Instead, Lansdowne AsJ determined that a “sale subject to Court approval is the best means canvassed before me to protect the interests of all the plaintiff, defendant, Sheriff and buyer [whilst accepting] that a necessity for Court approval will add some cost and delay” (paragraph 18).

17Associate Justice Lansdowne at paragraph 16 and 17 anticipated “risks” which might arise from making the orders proposed:

a.“one risk in making the order…for sale at the best price obtainable on the day, is that following Zhou, the Sheriff may take a cautious approach in accepting bids, and no bid may be made which the Sheriff considers a ‘fair price’”;

b.“the other risk is that the Sheriff may accept a figure which is considered too low by the defendant, and so expose the buyer and the Sheriff to further litigation as ensured in Zhou”.

18Associate Justice Lansdowne considered that in the case before her an order for sale “subject to Court approval” was appropriate. She said that the prospect there may be “no sale at all” or no opportunity for a sale would “defeat the plaintiff’s interest in recovery on its judgment and the public interest in the enforcement of judgments generally” (paragraph 16).

19In the present matter, I note the following matters:

a.the property is owned by Mr Schelfhout jointly with his wife;

b.there is no material provided in support of the application which -

i.would assist in valuing the property, let alone the interests of the registered proprietors jointly, or of Mr Schelfhout separately;

ii.clarifies the extent of the encumbrances over the property, and whether Stramit would be likely to have priority amongst the caveatable interests.

20In the circumstances, I propose to refuse the application. I consider that the burden the order would cast on the Sheriff would be such that an effective sale would be very unlikely. It is not in the interest of the parties, the Sheriff and any prospective purchasers to pursue a sale which in the end is most likely to be “an illusory sale”, resulting in further wasted time and expense.

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Certificate

I certify that these 5 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 20 September 2016.

Dated: 20 September 2016

Carla Cianfaglione    

Associate to His Honour Judge Anderson