Plaintiff v Defendant

A person who has the duplicate certificate in his custody, by reason only of being the person whose name is on the certificate as registered proprietor, without any beneficial interest in the land, and who withholds it from such a purchaser in the face of a demand for it to be delivered up, infringes the rights of the purchaser and detracts from his beneficial interest in the property. An injunction should go to restrain him from dealing inconsistently with the property rights of the purchaser.

**29 Although that case involved a withholding by the registered proprietors, I see no difference in principle where the duplicate certificate of title is held by a mortgagee. Assuming the sale is unimpeachable and there are no in personaam rights as against the transferee the discretion would ordinarily go in favour of permitting a regular dealing. The mortgagee's position is unaffected at law. Its security remains in place as do the personal covenants under the mortgage. Of course once there is default, the defendant here could obtain possession and exercise its power of sale. That is why someone in Kousal's position might be expected to pay out the mortgage.

30 In this case, there are two conceivable barriers to the Court exercising its discretion in favour of Kousal. The first is that Kousal's right to be registered may depend on whether Zhou's application to set aside the Magistrates' Court judgment fails or succeeds. The second barrier is whether the sale by the sheriff to the plaintiff is impeachable and liable to be set aside.

31 As for the first possible barrier, I accept Kousel's submission that even if Zhou were to set aside the judgment, that would not retroactively invalidate the warrant of seizure and sale and therefore collaterally annul the sale by the sheriff to Kousal. That is because, as was submitted:**

(a) at all material times there has been a valid and operative order of the Supreme Court by which the judgment debtor owed the judgment creditor money;

(b) the judgment creditor issued a Warrant of Seizure and Sale against the judgment debtor on the proper legal basis of the judgment;

(c) the judgment creditor obtained an order from this Court on 15 October 2010 allowing the property to be sold without reserve (but as I will emphasise later, with the proper protection of the judgment debtor's right) and that order has been valid and operative at all times; and

(d) by operation of s 25 of the Sheriff Act 2009, the plaintiff acquired good title to the property or, to be more precise, acquired the judgment debtor's interest in the property.

32 As for the second possible barrier, things are not so clear. The commencement point is s 3(5) of the Supreme Court Act 1986 which says that "A judgment in any proceeding must be enforced in accordance with Chapter 1 of the Rules of the Supreme Court and not otherwise." Under r 66.02, a judgment for the payment of money may be enforced by, amongst other things, a warrant of seizure and sale. Rule 69.02 abolished the previously used writ of fieri facias. The rules say nothing expressly about any other form of writ permitting the Sheriff to sell for the best price obtainable or some such wording. But the previous (pre-1987) rules did by means of order 43 rule 2 which provided for a writ of venditioni exponas. The rule said:

Where it appears, upon the return of any writ of fieri facias, that the Sheriff or other officer has by virtue of such writ seized, but not sold, any goods of the person directed to pay a sum of money or costs, the person to whom such sum of money or costs is payable shall, immediately after such writ with such return, shall have been filed as of record, be at liberty to sue out a writ of venditioni exponas. [11]

**33 Order 43 rule 3 said that the writ of venditioni exponas "...and all other writs in aid of a writ of fieri facias, may be issued and executed in the same cases and in the same manner as heretofore."

34 According to the Full Court of this Court in Finnegan (Timber) Pty Ltd v Beechey[12] the writ of venditioni exponas was a common law writ which was in aid of execution and was viewed as supplementary to, or a branch of a writ of fi fa rather than a primary or distinct writ giving the sheriff a new authority. It was a writ in aid of execution designed to give the sheriff "alacrity". Commentary in Archbold's Practice of the Queen's Bench Division[13] suggests that the execution creditor under the fi fa may take out the writ venditioni exponas to compel a sale of the goods or land perhaps, I would add, where the Sheriff was being inactive and had failed to sell within a reasonable time. Under the writ, so Archbold's Practice says the sheriff is bound to sell the goods "...and is not bound by the value set upon the goods in his return to the fi. fa."[14] Thus it could be described as a command to sell for what price he could get. This is made plain in the form prescribed for a writ of venditioni exponas under the previous rules which said (with my emphasis): [15]**

...Therefore we, being desirous that the said AB should be satisfied his money and interest aforesaid, command you that you expose to sale, and sell or cause to be sold, the real and personal estate of the said CD by you in form aforesaid taken, and every part thereof, for the best price that can be gotten for the same, and have the money arising from such sale before us in our said court immediately after the execution hereof, to be paid to the said AB; and have there then this writ.

35 Therefore, as appears to me, a sale by the sheriff under such a writ would be unimpeachable, as would the sheriff's conduct unless it could be shown the sale at the "best price" was in truth not; that is, it was the product of collusion. For otherwise, under a writ of fi fa, at common law the sheriff's duty was to take all reasonable and proper steps to ensure that the best possible price is obtained: see Owen v Daly.[16] In that case, Dean J said:

It is, I think, clearly established that at common law a sheriff selling the chattels, including chattels real, of a judgment debtor is bound to act reasonably in the interests of the judgment creditor and of the judgment debtor in order to obtain a fair price, not necessarily the market value, for it is well recognised that compulsory sales under legal process rarely bring in full value of the property sold (citations omitted). The duty of the sheriff to act reasonably with due regard to the interests of both sides and his liability in damages if he fails to exercise care has been frequently stated.

**36 In Owen v Daly the Court went further and set aside the sale. Dean J acted on evidence that the value of the land as at October 1954 was 5,050l. The owner's interest in the land was 1,500l. The judgment creditor made a bid of 10l which was the only bid made and the price was knocked down to him. The figure of 10l coincided with the sheriff's expenses. The Court was willing to set aside the sale on the basis that a manifestly low price was really no price at all and the sale was not real. The sale was set aside not only because of the grossly low price but also because in many other respects the sale was not properly conducted. Moreover, there was evidence that the judgment creditor was very closely involved in what had been done. In the end, Dean J applied the view that there was no hardship in setting aside the sale but saying, "It might have been difficult to do so if the purchaser had been a stranger, unaware of the facts relating to the conduct of the sale."[17]

37 The question of the sheriff's duties under a fi fa arose in the High Court in Anderson v Liddell[18] a case in which on the facts the Court refused to set aside the sale on the grounds of an undervalue. The successful bid in that case was more than was owed under the judgment and the mortgage but was considerably less than the "market value". The judgment debtor sought to set aside the sale, but failed. In dismissing an appeal, Barwick CJ affirmed that the sheriff was not required to emulate a real estate agent and make use of the trappings of an auction. The sheriff was entitled to accept any bid which is genuinely made and which bears a fair relationship to what is being sold. "[H]e must accept any bid which is not illusory or unfair in the sense of bearing no real relation to the evident worth of the land or interest offered."[19] Kitto J cast doubt on whether the purchaser could be denied a right to have a transfer registered unless the jurisdiction of a court of equity to act in personaam was attracted by some proof of collusion. His Honour explained it this way with an incidental reference to the writ venditioni exponas:**

If it was apparent to the sheriff that in fact and in all probability the bid was so far below the value that he would be acting unreasonably by accepting it, his proper course was to make a return that the property remained unsold for want of a buyer, and to refrain from selling at such a price unless commanded by a _venditioni expona_s to sell for what he could get (citation omitted). For selling in that situation without waiting for a _venditioni expona_s he would be liable for damages at the suit of the appellant, but whether the sale could be set aside in the absence of collusion between the sheriff and the purchaser is by no means clear ...[20]

**38 Mr Harrison as counsel for Kousel submitted that the Court's order of 1 October 2010 was relevantly identical to a writ of venditioni exponas in that it entitled the sheriff to sell at the best price he could get. He says that is what has happened, and the sale is unimpeachable. Although the order relieved the sheriff of any obligation to set a reserve price, it certainly did not permit the sheriff to sell at whatever price he could get. The order permitted the sheriff to sell without a reserve price, "provided that such leave does 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." That proviso, on its own terms, distinguishes the order from the warrant of venditioni exponas. It warned the sheriff that he was not being relieved of his duty to the judgment debtor. He could sell without reserve consistent with his duty.

39 In this case, the sheriff was still acting under the warrant of seizure and sale which, as far as it equates to writ of fi fa, means there is a question whether a sale at a gross undervalue, if that be what truly occurred, can be set aside. But I must emphasize: I am not to be taken as saying Zhou has a case to set aside the sale from the Sheriff to Kousal, or saying anything about its prospects. It may be others Zhou has consulted take a certain view about the impeachability of the case. It is entirely a matter for him. But it is no good complaining about the $1000 price, not bringing a legal proceeding, and expecting the Court to do something about it.

40 Mr Harrison says, correctly, that Zhou has been given ample opportunity by the Court to consider bringing a claim but has not done so. He submits that until such time as Zhou brings a claim to set aside the sale or to seek equitable relief in personaam against Mr Kousal, it would be a miscarriage of this Court's discretion under s 116A to refuse the application just because the court apprehends that question. I accept that submission. But I still think Zhou should be given one last opportunity to obtain legal advice on his predicament. In modern litigation, the Court must have regard to the disadvantage of the litigant in person. Zhou is a mature Chinese man who barely speaks English. I do not know his personal circumstances. I have on courtroom occasions tried in vain to speak to him. I cannot be sure that he understands the significance of this case and the events leading up to it. He emotionally asserts that the person who obtained a default judgment against him is a liar who was not even in Australia. He tells me he has been to the Public Interest Law Clearing House and that Legal Aid cannot help him. He says lawyers are too expensive and Legal Aid are going to try to find a cheaper lawyer. He does not understand how someone has bought his home for $1000. Through his poor English, Zhou tells me that the house next door which is smaller than his recently sold for $700 000. On 30 June his wife appeared in Court for the first time. Her English was a little better but she too does not seem to understand the state of affairs.

41 Accordingly, this application was granted on 30 June 2011 but on certain conditions designed to give Zhou more time to comprehend the predicament he is in and obtain legal advice. I think the just course (seeing as the three month time limit expires on 20 July 2011) is to order Suncorp Metway to produce the duplicate certificate of title to the Registrar on 18 July 2011 next and Kousal abstain from lodging the transfer until noon on 19 July 2011 being one day before the expiration of the three-month time limit. That gives Mr Zhou approximately two weeks to consider his position and, if necessary, move the Court for any orders or extensions of time as he may be advised. The Court can do no more.

42 Finally I wish to say something about applications to the Court by the execution creditor to sell without reserve price, as raised in my judgment in Guan Feng Wu v Li Ma and Zhiping Zhou[21]. I have not had the benefit of submissions from a contradictor but I think sufficient has occurred in this case for me to say the following.

43 First, the rules of this Court do not provide for the making of an order akin to the pre 1987 writ of venditioni exponas. Secondly, if that writ was the product of the common law and a branch of the writ of fi fa then I can see a basis for contending that the Court has power ancillary to the power to issue the warrant of sezure and sale to allow the sheriff to sell without reserve. Thirdly, under the "old" rules the application was made by the execution creditor, who after all took out the writ of fi fa in the first place. Under the current rule 66.15 it is the sheriff that is permitted to bring an application "...in aid of the enforcement of a warrant of execution...". But the sheriff might not be motivated or regard himself as bound to do so, leaving it to the execution creditor to seek the Court's order. Fourthly, for my part, I do not think these applications ought be made ex parte any longer which I believe has been the practice. They should be on notice to the debtor and quite possibly to the registered mortgagee. It may move the debtor to do something and avoid the problems that have occurred here. Fifthly, such an order if granted may attract other conditions such as requiring the auction to take place on site or with additional advertising. Sixthly, the Court may have to fix a "not below" price for itself on the evidence to ensure the execution process has utility. That may require proper evidence of the debtor's equity in the land. Seventhly, as was remarked in 1982 by the Chief Justice in General Credits v Beattie[22] it may be time to revisit Rules of Court about this subject which may be ill-adapted to modern conditions.**

[1] The Court was constituted by an Associate Justice on a referral of powers under rule 77.05.

[2] [2011] VSC 208.

[4] See Notice to Produce filed 10 September 2010

[5] See s 27E of the Transfer of Land Act.

[6] [2000] VSC 423

[7] Unreported, No 4239 of 1997, 18 February 1997.

[8] Unreported, No 1251 and 1252 of 1997, 5 December 1997.

[9] See s.27E of the Transfer of Land Act.

[10] [1971] VicRp 61; [1971] VR 479 at 481-2.

[11] According to the commentary under the "old" Williams, Practice of the Supreme Court of Victoria, the real estate as well as the goods of the judgment debtor were seizable under a writ of fi fa by operation of s 208 of the Property Law Act.

[12] [1983] VicRp 81; (1983) 2 VR 215 at 216(F.C.).

[18] [1968] HCA 12; (1967) 117 CLR 36.

[19] [1968] HCA 12; (1967) 117 CLR 36 at 46.

[20] [1968] HCA 12; (1967) 117 CLR 36 at 49.

[21] [2011] VSC 208.

[22] [1982] VicRp 56; [1982] VR 551 at 552.