Zepinic v Chateau Constructions

Zepinic v Chateau Constructions - [2016] NSWCA 361 - NSWCA 2016 case summary — Zoe

[4]

The 2009 proceedings

In February 2006 Mr Vito (also known as Vitomir) Zepinic and his wife Mrs Milla Zepinic entered into a contract with the respondent, Chateau Constructions (Aust) Ltd, for Chateau to perform building work at a property in Turramurra of which they were the registered proprietors and in which they resided. There were disputes about the building work, and payment for it, culminating in Chateau commencing proceedings in January 2007 in the Consumer Trader and Tenancy Tribunal (the "CTTT"). Mr and Mrs Zepinic filed a cross-claim in the proceedings. The CTTT made its decision on 18 December 2008, ordering Mr and Mrs Zepinic to pay a substantial amount of money to Chateau. Mr and Mrs Zepinic unsuccessfully appealed to the District Court and thereafter unsuccessfully sought leave to appeal to the Court of Appeal. In 2009 Chateau commenced proceedings in the Equity Division of the Supreme Court seeking to enforce a charge over the property, which it alleged was granted to it by the building contract.
On 8 April 2010 the Equity Division made orders (which were corrected on 9 June 2010) declaring that the property was charged to Chateau for the due payment of a sum specified in the order, that there be a sale of the property and that Mr Nicholas Malanos be appointed as trustee for the sale. In December 2013 Mr Malanos, as trustee for sale, became the registered proprietor of the property. The property was subsequently sold by him to Mr Yin Ye, with the sale being settled on 20 December 2014. At settlement Mr Malanos made a payment to Chateau and otherwise paid or held the proceeds of sale, in accordance with court orders of 18 December 2014.
On 5 September 2016 Pembroke J made orders in the 2009 proceedings directing Mr Malanos to pay into court the balance of the proceeds of sale that he held, declaring that Mr Malanos was entitled to retire as trustee for sale of the property and dismissing a notice of motion filed by Mr Zepinic on 13 May 2016. That notice of motion had sought orders including that the contract for sale of land between Mr Malanos and Mr Ye dated 15 November 2014 be set aside and, alternatively that Chateau pay to Mr Zepinic $3,005,000 as the value of the property. In his judgment, Pembroke J said that he was satisfied that there was no factual or legal basis for any of the orders sought by Mr Zepinic. In light of various applications that had been made by Mr Zepinic over time to the Equity Division and appellate Courts, most of which we have not found it necessary to describe, his Honour directed Chateau "if so advised, to file a notice of motion within 14 days seeking orders pursuant to s 8 of the Vexatious Proceedings Act 2008 (NSW) against Vito Zepinic and any other related party if necessary".
Mr Zepinic is the only applicant for leave to appeal. His proposed grounds of appeal are to the following effect: 1. Chateau is in breach of r 36.16(3)(A) of Pt 11A of the Uniform Civil Procedure Rules ("UCPR"), Pt 6 of the Civil Procedure Rules 1998 (UK) and Articles 5, 6, 7, 15 and 16 of the International Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil or Commercial Matters (these provisions relate to service of originating process outside Australia). 2. Pembroke J "erred in law while delivering judgment on 5 September 2016".
The only arguments in Mr Zepinic's written submissions that were filed in support of his application for leave to appeal that challenge the orders made on 5 September 2016 concern service on him of notices of motion filed in the 2009 proceedings. Mr Zepinic erroneously referred to these notices of motion as "originating process". He asserted that he left Australia on 10 March 2009 to reside in the United Kingdom and that the notices of motion should have been served on him in that country.
The material put before this Court does not reveal the precise date upon which the 2009 equity proceedings were commenced, although it appears to have been in early 2009. In any event neither Mr Zepinic's written submissions nor any other material gives reason to doubt that the summons commencing the proceedings was properly served upon Mr Zepinic. Nor does he suggest that he did not file a notice of appearance in the proceedings specifying, as was his obligation under r 4.5 of the UCPR, a New South Wales (or at least, Australian) address at which notices of motion and other documents filed in the proceedings could be served. In these circumstances, Mr Zepinic's contention that there was a relevant failure to serve him in the United Kingdom must be rejected.
A further and alternative answer to Mr Zepinic's service complaint is that he appeared for himself at, and participated in, hearings in the 2009 proceedings without any suggestion of which this Court has been made aware that he did so on a conditional basis such as might preserve any right he had to complain of a defect in or absence of service. This conduct was inconsistent with a complaint that the Court had no jurisdiction because the originating process had not been served. It therefore constituted a waiver of objections to service (see M Davies, A S Bell, P L G Brereton, Nygh's Conflict of Laws in Australia, (9th ed, LexisNexis Butterworths) at [3.113]). Examples of hearings at which Mr Zepinic so appeared are those that occurred on 18 February 2010 (see Slattery J's judgment of that day: ([2010] NSWSC 265) and the hearing on 5 September 2016 before Pembroke J that led to the orders of that date from which an appeal is sought to be brought.
Neither in his written submissions nor in his oral argument did Mr Zepinic articulate any other argument that could conceivably lead to his success on appeal. Finally, with respect to his proposed appeal against the dismissal of his 13 May 2016 motion, there is also the same absence of necessary parties as is referred to below (at [22]).
In these circumstances, his application for leave to appeal in CA 2016/270038 should be dismissed with costs.

[5]

The 2016 proceedings

On 31 March 2016, Mr Zepinic and his daughter, Ms Nina Zepinic, commenced Equity Division proceedings against Chateau claiming the following orders: "1 To invalidate the 'Contract of sale of land - 2005' dated on the 15th of November 2014 between Nicholas Craig Malanos and Yin Ye in regard to selling the property at … TURRAMURRA NSW 2074 (Folio: …). 2 To make vacant the above stated property in prayer 1, free of people and goods, free of any damages, covenants, or debts within seven days of the Court judgment. 3 Defendant to pay to the Plaintiff the sum of $120,804, plus interest from the 1st of November 2013, as financial loss of the rent under Tenancy Agreement signed on the 28th of November 2012 until the 27th of November 2015. 4 Defendant to pay to the Plaintiff future loss of rent of $8,691 per month from the 28th of November 2014 until the date of the Court's judgment/orders. 5 Defendant to pay to the Plaintiff the costs of this proceedings including filing feels, legal consultancy fees, and service fees."
By notice of motion filed in the proceedings on 3 June 2016 Chateau sought an order summarily dismissing the proceedings. Mr and Ms Zepinic responded on 8 June 2016 by filing a document headed "NOTICE OF MOTION: DEFAULT JUDGMENT FOR LIQUIDATED CLAIM" seeking orders to the effect of those that they sought in the originating process.
By the judgment of 5 September 2016 against which Mr and Ms Zepinic seek to appeal, Pembroke J ordered that the proceedings be dismissed and that the Zepinics' notice of motion filed on 8 June 2016 be dismissed.
The grounds of appeal stated in the Zepinics' proposed notice of appeal are in the following terms: "1 The respondents are in breach of r14.3(1) of the UCPR 2005, and the Article 5, 6, 7, 15 and 16 of The Hague Convention. 2. Hon. Justice Pembroke erred in law while delivering judgment on 5 September 2016" (sic).
The first proposed ground can readily be disposed of as it raises a service question similar to that raised in the leave application arising out of the 2009 proceedings. The point has no substance in relation to the present Equity Division proceedings at least for the reason that the proceedings were commenced by the Zepinics themselves and there is no question therefore of service of the originating process upon them. Rather, it was for them to serve their originating process on Chateau, as they presumably did.
The second proposed ground was sought to be supported by an argument that Ms Nina Zepinic was the "owner" of the Turramurra property at all relevant times and that its sale to Mr Ye should accordingly be invalidated. His Honour however referred to evidence before him strongly indicating that she in fact had no relevant interest in the property and that the various court proceedings arising out of the building work on the property had for many years been conducted on the unquestioned assumption that Mr Vito Zepinic and Mrs Milla Zepinic were the "effective practical, as well as legal, owners of the property" ([13]). His Honour referred, inter alia, to the terms of the 2006 building contract and to the pleadings in the CTTT.
His Honour described the source of the Zepinics' contrary argument as documents, apparently dated 2004, creating a trust in favour of Nina Zepinic. However his Honour expressed "reservations about the reliability and veracity of those documents" and opined that in any event "any such trust is both irrelevant and too late" ([19]). He continued: "The contention that Nina is the true owner by reason of a trust created in 2004 cannot avail Dr Zepinic. It certainly cannot justify the 'setting aside' of an already completed arms-length contract between the trustee and a third party. The argument entirely ignores the legal significance of the paramount interest of the registered proprietor, which is at the core of our system of property dealings: Section 42 Real Property Act 1900 (NSW)."
The Zepinics' written submissions to this Court primarily attempted to demonstrate that Chateau was in breach in the Court below of various rules and directions made (including r 14.3(1) of the UCPR relating to the time within which a defendant must file a defence) to support their claim for the entry of default judgment against it. Quite apart from the fact that a number of the orders sought by the Zepinics in the proceedings were not for liquidated amounts (and thus did not attract the default judgment procedure), there was no reason why Pembroke J should not have dealt, as he did deal, with Chateau's earlier-filed motion for summary judgment before dealing with the Zepinics' motion for default judgment. If, as his Honour concluded, the Zepinics' proceedings were without foundation and should be dismissed, the question of entry of default judgment in favour of the Zepinics did not arise.
Neither in their written submissions nor in their oral argument did the Zepinics identify any reason why Pembroke J's reasoning leading him to dismiss their proceedings was in error. Indeed, it was clearly correct: in the absence of any allegation of fraud on the part of the purchaser (Mr Ye), or any personal equity binding him, he was entitled to deal with the registered proprietor (Mr Malanos) and acquire the property free of any equitable interests that Nina Zepinic may have had or claimed as against her parents as registered proprietors (see ss 42 and 43 of the Real Property Act and Frazer v Walker [1967] 1 AC 569 at 580 and 585).
Moreover, the Zepinics' proceedings were fundamentally flawed by reason of the absence as parties to the proceedings of Mr Malanos and Mr Ye who were the parties to the sale contract that the Zepinics sought in the proceedings to invalidate (see John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [132]-[133]).
For these reasons, an appeal by the Zepinics would have no chance of success. As a result, their application for leave to appeal should be dismissed with costs.

At a glance

Court

Decision date

Before

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (4)

Cited By (2)