Chateau Constructions (Aust) Ltd v Zepinic & Anor

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

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

COUNSEL : Plaintiff: Mr B Ilkovski Defendants: No Appearance

SOLICITORS : Plaintiff: Toomey Pegg Drevikovsky Lawyers Defendants: No Appearance

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4643/09 CHATEAU CONSTRUCTIONS (AUST) LTD v MILLA ZEPINIC & VITO ZEPNIC [NO. 4] JUDGMENT [Ex tempore] 1 HIS HONOUR : These proceedings have come again before me today for hearing on the plaintiff's amended summons. Liberty to amend the summons and bring the matter back today was granted in my orders of 3 December 2009 ( Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 3] [2009] NSWSC 1373). 2 Evidence has been read today in support of the amended summons. I have invited the reading of this evidence so the Court can assess what should next be done in this matter. 3 Chateau moves on its amended summons dated 11 December 2009. In support of that summons Chateau reads affidavits of Andrew Loel of 14 and 21 December 2009, Peter Knox of 10 December 2009, Nicholas Craig Malanos of 11 December 2009 and Donna Ferris of 11 December 2009. 4 On 3 December I made orders for Chateau to serve on the Zepinics my judgment that day, the amended summons and supporting affidavits and Chateau's submissions. Service was directed upon the email address which the defendants, Dr and Mrs Zepinic were using to correspond with the solicitors for Chateau. 5 The affidavit material shows that Chateau has complied with the orders of 3 December 2009 for serving the defendants with this material. Chateau has filed and read substantially all of the evidence that it needs for a hearing on the amended summons. Chateau is in an obvious state of readiness to proceed on the amended summons to gain the relief that it seeks. 6 Chateau, by its counsel, Mr Ilkovski, urges me to make orders in accordance with orders 3 to 9 of the amended summons and in particular orders for the consequential relief appointing a trustee for sale of the property in Turramurra Avenue the subject of the charge and ordering the sale of that property. 7 I have no doubt that Dr and Mrs Zepinic have received the material that I ordered be served upon them. So much is evident from the email correspondence between the solicitors for Chateau and the Zepinics. For this correspondence the Zepinics have used the email address at which they were served under the Court's order of 3 December 2009. A recent email from them (annexure "L" to the affidavit of Mr Andrew Loel of 21 December 2009), sent to Mr Loel on 13 December 2009 at 7.59 pm says: "Dear Mr Loel, thank you for your paper. However, please be advised we have no intention to sell a property! Regards Dr V and M Zepinic."

8 This is a reply to an email from Mr Loel with which he provided Dr and Mrs Zepinic with a copy of Chateau's outline of submissions and notice of the orders sought in the amended summons filed on 11 December 2009. 9 Indeed Dr and Mrs Zepinic have responded to some of the material served on them. Late last week, the Court received an email (Exhibit C) from Dr and Mrs Zepinic, attaching a letter of 16 December 2009 from them to the Court. The email was addressed to the Supreme Court and the subject was: "Letter to his Honour, Justice Slattery". The text of the email was:- "Dear Sir/Madam, Unable to attend in person for a hearing on 21 December 2009. We would highly appreciate if this letter can be delivered to his Honour, Justice Slattery, as soon as possible. Thank you for your assistance and understanding. Dr V and M Zepinic."

10 The email with its attached letter was received by my Associate last Friday morning, 18 December 2009. It was apparently sent London time, by Dr Zepinic on 17 December 2009, at 4.47 am. 11 The correspondence from Dr Zepinic raises many matters. Two of them are of importance for the procedural decision that I must make today. First, on page 1 of the letter, Dr Zepinic said: "In an inability to find tickets attending in person at the hearing, we have organised to submit notice of motion and affidavit of Dr Zepinic to the Registry at Supreme Court of New South Wales on 15 December 2009. The original and other accompanied documents certified by the Australian High Commission in London will be, according to the Royal Mail, TRM, couriered before date of hearing.

We authorise Dr Kuzmanovski to submit original and accompanying documents to the Supreme Court. However, unable to attend in person or being legally represented, in addition to the affidavit of Dr Zepinic we take this opportunity to highlight some points."

Dr Zepinic then sets out a series of points about the history of this matter. 12 Second, on the following page, the letter says:

"Once again we express our regret of not being able to attend or be legally represented for a hearing before you, Your Honour, on 21 December 2009. Please be also advised that we submitted our notice of intention to appeal to the Court of Appeal regarding reasons for judgment by his Honour, A Colefax SC, from the District Court of New South Wales."

13 Until this letter was received, the Court was unaware that there was any attempt to file a notice of motion or an affidavit of Dr Zepinic or that any attempt had been made to file a Notice of Intention to Appeal to the Court of Appeal in relation to the reasons for judgment of his Honour, Judge Colefax SC. I am told by counsel for Chateau that it has not been served with any of these documents in conformity with the rules of Court. 14 When this hearing commenced I sought submissions from Mr Ilkovski about this letter. I indicated to him that there was nothing on the Court file to indicate that Dr and Mrs Zepinic had filed a motion or affidavit. I also indicated that inquiries had been made of the Court of Appeal Registry whether a Notice of Intention to Appeal had been filed. After an adjournment for these inquiries to be pursued, it emerged that indeed there was a motion and an affidavit filed in these proceedings. Because these documents had been filed so recently they had not yet met up with the Court's file for this matter. The inquiries also revealed that the Court of Appeal Registry had received a Notice of Intention to Appeal. 15 Dr Zepinic's notice of motion dated 14 December 2009 was filed on 15 December 2009. His affidavit in support, which I assume is complete by the way it reads internally, although it only has paragraphs numbered from 7 to 12, was also filed on 15 December 2009. Finally, the Notice of Intention to Appeal was filed in the Court of Appeal on 15 December 2009. These are documents apparently corresponding with what is said in Dr and Mrs Zepinic's letter (Exhibit C). 16 Mr Ilkovski has highlighted a number of obvious problems with these documents. The Notice of Intention to Appeal does not seek a stay either upon Colefax DCJ's judgment or of the District Court judgment based on the orders of the Consumer Trader and Tenancy Tribunal (CTTT) (Exhibit D). A Notice of Intention to Appeal does not automatically operate as a stay.

17 There are other problems with the motion. It seeks dismissal of the judgment of 28 September 2008 extending the operation of a caveat over the Turramurra property and dismissal of the amended summons filed on 11 December 2009. The motion may arguably be out of time for seeking to set aside orders entered on 28 September 2008. The motion seems to seek summary dismissal of the amended summons. Given that the amended summons now only seeks consequential relief, the principal declaratory relief sought having been granted on 3 December 2009, it is not easy to comprehend what the author of the motion had in mind. 18 As I have indicated earlier in the course of this judgment, Chateau's case is now in a state of clear readiness to obtain the orders which it seeks on the amended summons. On what I have seen, if the defendants were present and legally represented today, I would expect that this matter would proceed to finality within the day. Minor issues have been the subject of submissions today. Some of these issues may result in further amendments to the summons. I set them out below. Those issues are the following. 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. 21 Thirdly, an issue arises about the setting of a reserve price for any auction sale that were to take place pursuant to the orders I am being asked to make. I have indicated that I am reluctant to delegate to a trustee for sale the setting of a reserve price for an auction. Chateau has indicated that it will not oppose the reserve being determined by the Court. 22 What then is to be done? Looked at as a whole the Zepinic's correspondence with the Court and Chateau is in substance an application for adjournment. Despite this Dr and Mrs Zepinic have not sought to appear at this hearing in person and have not sought to engage legal representatives. 23 On most kinds of application, the communications that these defendants have made with the Court would not provide any grounds for adjournment of this hearing. There are two related aspects of this matter, though, that make an adjournment different from in the ordinary case. The orders Chateau seeks if made will seriously interfere with the ordinary right of the Zepinics to enjoy ownership of the Turramurra property. The orders proposed involve a very substantial alteration to their ordinary property rights. 24 The full effect of the orders Chateau seeks is clear from the amended summons, served about a week before this hearing. The gravity of the orders sought and the short notice in relative terms for the seeking of relief of such a kind with defendants who are overseas, prompts the Court to pause before proceeding today. 25 Mr Ilkovski has urged upon me that I should make the orders requested and then stay them for a period. I do not see that there is much advantage in this course. Chateau can do nothing with stayed orders. Very little time should be lost by reason of the orders that I am proposing to make. 26 On the other side, I recognise that there is potential unfairness to Chateau in an adjournment. It would be unjust for the defendants to gain an advantage of any kind merely by not appearing at this hearing and by not engaging lawyers to appear to represent their interests. Notwithstanding the correspondence received from the Zepinics, which claims an inability to attend Court, there are grounds to hold the view that the Zepinics may be attempting to gain such an advantage. However, I will not decide such questions now. In indicating that there may be grounds for such a view I refer to the matters set out in my previous judgment: ( Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 3] [2009] NSWSC 1373 at [29]-[38], [66] and [67]) . I also refer to the material in Mr Loel's affidavit of 21 December 2009 identifying changes of legal representation that have already occurred with the Zepinics in these proceedings: 15. During the course of the proceedings between Chateau and Dr and Mrs Zepinic in the Consumer Trader and Tenancy Tribunal, in the District Court of New South Wales and in these proceedings, the Zepinics have instructed, at least, the following firms of solicitors: (a) LAC Lawyers, from about January 2007 to about March 2007 (b) Schreuder Partners Lawyers, from about March 2007 to about October 2007; (c) Gray & Perkins Lawyers, from about December 2007 to about September 2008; (d) Makinson & D'Apice Lawyers, from about December 2008 to about February 2009; (e) Macquarie Lawyers, from about 5 March 2009 to about 11 September (f) Hancock Allis & Roskov Lawyers & Notaries Public, from about 14 August 2009 to about November 2009. 27 It may be that despite all this history there is a genuine reason that Dr and Mrs Zepinic cannot attend and also cannot obtain legal representation to be here today. 28 I have decided that I will give the defendants one last opportunity to appear before the Court to answer the relief sought in the amended summons. I am familiar with the history of this matter. It will be adjourned back before me. I will adjourn the current hearing so that this judgment, and in particular what I am about to say, can be given to the Zepinics and so that they will have one last opportunity to respond and appear or engage a lawyer to appear for them. 29 I wish to make clear the gravity of the orders that Chateau seeks and their consequences for Dr and Mrs Zepinic. If the orders Chateau seeks are made the Turramurra property will be vested in a trustee for sale and sold. The process of selling the Turramurra property could be taken entirely out of the hands of the defendants. Such orders involve a serious displacement of the Zepinic's ordinary rights over their property. The law will permit such orders to be made if the circumstances justify them. I hope that the Zepinics appreciate the gravity of the situation and appreciate that at an adjourned hearing there is a distinct possibility that these orders will be made. 30 I will adjourn the proceedings until 18 February 2010 for hearing before me. I expect the defendants to be ready to present their motion which has now been filed in these proceedings, if that motion is to be pursued against the relief sought in the amended summons. Looking ahead now there is ample time for Dr and Mrs Zepinic to engage lawyers to represent them, for them to file evidence, and for them to serve evidence well in advance of a February hearing, so that Chateau has time to react to that evidence and proceed. 31 In light of the history of this matter, the defendants should understand that any attempts to further delay the hearing of the amended summons would only be contemplated in the most exceptional and compelling of circumstances. If the defendants do not attend or if they engage lawyers at the last minute who are not ready for a hearing on that occasion, they can expect that the matter will proceed. 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. 33 ORDERS:

(1) I will adjourn the amended summons for hearing before me to 10am on Thursday 18 February 2010.

(2) As soon as these reasons for judgment become available to the plaintiff, I direct the plaintiff to serve them on the defendants at both, the email address at which the defendants were served of my 3 December 2009 orders, and by international airmail on the residential address in the United Kingdom, which is the address for service in the defendants' Notice of Intention to Appeal. **********

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