Zepinic v Malanos

HEADNOTE [This headnote is not to be read as part of the judgment] On 25 May 2017, in Zepinic v Chateau Constructions (Aust) Ltd [2017] NSWSC 582, Pembroke J made orders under the Vexatious Proceedings Act 2008 (NSW) (the Act) to the effect that the applicant, Mr Vito Zepinic (Mr Zepinic), was prohibited from instituting proceedings in New South Wales relating to or arising out of the subject matters of various proceedings concerning the construction of a residential property in Turramurra. The respondent, Mr Nicholas Malanos (Mr Malanos), was the Trustee appointed to sell this residential property. Mr Zepinic applied for leave under the Act to commence proceedings against Mr Malanos in relation to his conduct as Trustee and his claim for remuneration. On 19 March 2020, Kunc J (the primary judge) dismissed Mr Zepinic's application as vexatious for the purposes of s 15(1) of the Act. On 7 April 2020, Mr Zepinic filed a Notice of Motion seeking to set aside the primary judge's dismissal of his leave application. This Motion was also dismissed. A further Notice of Motion (the 12 June 2020 Motion) was filed by Mr Zepinic seeking to set aside the dismissal of the Motion of 7 April 2020. The primary judge stayed and dismissed this Motion under s 13 of the Act. Mr Zepinic sought leave from this Court to appeal the primary judge's dismissal, without leave under s 14(2) of the Act. The principal issue before the Court was whether Mr Zepinic's application for leave to appeal amounted to the institution of proceedings within the meaning of s 13(1) of the Vexatious Proceedings Act 2008 (NSW). The Court held (Bell P, White JA agreeing), refusing leave to appeal with costs: 1. The application for leave to appeal amounted to the institution of proceedings within the meaning of the Act. The underlying proceedings were clearly those of the kind to which the vexatious proceedings order of 25 May 2017 related: [10]-[11] (Bell P); [16] (White JA). 2. Even if the application for leave to appeal did not amount to the institution of proceedings under the Act, Mr Zepinic advanced no reason of principle for impugning the orders made by the primary judge: [13] (Bell P); [16] White JA.

Judgment

BELL P: On 25 May 2017, in Zepinic v Chateau Constructions (Aust) Ltd [2017] NSWSC 582, Pembroke J made orders under the Vexatious Proceedings Act 2008 (NSW) (the Act) to the effect that Mr Zepinic was prohibited from instituting proceedings in New South Wales relating to or arising out of the subject matters of various proceedings. His Honour's orders were upheld in this Court (Vito Zepinic v Chateau Constructions (Aust) Limited [2018] NSWCA 317) and a subsequent application for special leave to appeal to the High Court was refused (Zepinic v Chateau Constructions (Aust) Ltd [2019] HCASL 326).
The application for leave to appeal currently before the Court is from orders made by Kunc J (the primary judge) on 17 June 2020: Application of Vito Zepinic (No 3) [2020] NSWSC 761. In those orders, the primary judge gave effect to his earlier reasons for judgment in Application of Vito Zepinic [2020] NSWSC 269 delivered on 19 March 2020 (the principal judgment) and Application of Vito Zepinic (No 2) [2020] NSWSC 693 delivered on 3 June 2020 (the second judgment). In the first of those two judgments, his Honour observed: "1 The plaintiff, Vito Zepinic, is currently subject to orders made under the Vexatious Proceedings Act 2008 (NSW) (the 'Act') arising from his long running dispute with Chateau Constructions (Aust) Limited ('Chateau') in relation to what had been the Zepinic family home at Turramurra (the 'Property'). The putative defendant, Nicholas Malanos, was the trustee appointed to sell the Property (the 'Trustee'). 2 Mr Zepinic applies for leave under the Act to commence proceedings against Mr Malanos in relation to Mr Malanos' conduct as trustee. The relief Mr Zepinic seeks in the proposed proceedings has no reasonable prospects of success. As such, the proposed proceedings are vexatious as an abuse of process under the Act. The Court is therefore required by s 15(1) of the Act to dismiss Mr Zepinic's application."
By a Notice of Motion filed 7 April 2020, Mr Zepinic sought to set aside the principal judgment pursuant to the Uniform Civil Procedure Rules 2005 (NSW) pt 36 r 36.16. The primary judge dismissed that motion for two reasons: (i) leave under the Act should have been but was not sought, and as such, the notice of motion was required to be dismissed pursuant to s 13(3); and (ii) in any event, the motion failed on the merits, being in substance nothing more than an attempt to re-argue the application which led to the principal judgment.
Mr Zepinic then filed a third Notice of Motion (the 12 June 2020 Motion) which sought the following orders: "(1) Pursuant to r 36.15(1) of the UCPR 2005, to set aside judgment delivered on 3 June 2020 (Vito Zepinic v Nicholas Craig Malanos (No 2) [2020] NSWSC 693). (2) Dismiss the defendant's Short Minutes of Order (2009/290598). (3) Dismiss the defendant's Short Minutes of Order (2017/353311). (4) Affirm prayers 1-6 sought in the plaintiff's motion filed in Court on 7 April 2020."
The orders made by the primary judge from which leave to appeal is sought were as follows: "12. To give effect to the Further Judgment in relation to the 2009 proceedings, the Court orders in those proceedings: 1. The following amounts ordered by the Court in favour of Nicholas Craig Malanos (the 'Trustee') in proceedings number 2017/353311 (the 'Leave Proceedings') with respect to the Trustee's remuneration and expenses and legal costs and disbursements be paid, to the extent available, from the monies held in Court in these proceedings: (a) the amount of $62,678.40 in respect of the Trustee's remuneration; (b) the amount of $295,194.67, in respect of the Trustee's legal fees on a gross sum basis; and (c) the amount of $25,340.00 in respect of the Trustee's notice of motion dated 27 April 2020. 2. Order 1 does not cap or otherwise limit the amount which the Trustee may recover against the Defendants in the event that the funds in Court are insufficient to satisfy the orders for remuneration and expenses and legal costs and disbursements made in the Leave Proceedings. 3. Costs of the Trustee's motion filed 30 April 2020 be paid by Mr Vitomir Zepinic, the second defendant, on an indemnity basis. 13. To give effect to the Further Judgment in relation to the present proceedings, the Court orders in these proceedings: 1. Declare that, pursuant to section 13(2) of the Vexatious Proceedings Act 2008 (NSW) (the 'VP Act'), the Notice of Motion filed by the Plaintiff, Vito Zepinic (also known as Vitomir Zepinic) ('Mr Zepinic') on 7 April 2020 (the 'Zepinic NOM') has been stayed until it is dismissed (or taken to be dismissed) under section 13 of the VP Act. 2. Declare that, pursuant to section 13(3) of the VP Act, the Zepinic NOM was dismissed on 5 May 2020. 3. Mr Zepinic pay the Defendant, Nicholas Craig Malanos' ('Mr Malanos') costs of and incidental to the Zepinic NOM on an indemnity basis. 4. The remuneration of Mr Malanos, as trustee of the sale of the property located at XXX, Turramurra for the period 5 December 2017 to 21 April 2020 be approved in the sum of $62,678.40 (inc GST). 5. Mr Malanos' legal costs of the proceedings be paid on an indemnity basis. 6. Pursuant to section 98(4)(c) of the Civil Procedure Act 2005 (NSW) (the 'Act'), Mr Malanos' legal costs of the proceedings be paid on a gross sum basis in the amount of $295,194.67. 7. Pursuant to s 101(1) and s 101(4) of the Act, Mr Zepinic pay interest on any amount paid by Mr Malanos, or on his behalf, as costs or disbursements or on account of costs and disbursements on the amount of costs and disbursements ('Costs') ordered to be paid as a gross sum with interest calculated from the earlier of the date of payment of those Costs or the date of payment on account for those Costs and continuing until such time as payment or recoupment of those Costs and interest has been made, such interest being calculated in accordance with the rates under rule 36.7 of the Uniform Civil Procedure Rules 2005 (NSW). 8. In addition to the costs in Order 6, Mr Malanos' legal costs of his Notice of Motion dated 27 April 2020 be fixed in the sum of $25,340.00. 14. Finally, in relation to the 12 June Motion the Court orders in these proceedings: 1. Declare that, pursuant to s 13(4)(a) of the VP Act, the notice of motion filed by Vito Zepinic on 12 June 2020 (the '12 June Zepinic NOM') is a proceeding to which sub-sections 13(2) and (3) of the VP Act apply. 2. Declare that, pursuant to s 13(2) of the VP Act, the 12 June Zepinic NOM has been stayed until it is dismissed (or taken to be dismissed) under s 13 of the VP Act. 3. Order that the 12 June Zepinic NOM be dismissed pursuant to s 13(4)(b) of the VP Act. 4. Vacate the listing of the 12 June Zepinic NOM fixed for 9 July 2020."
It will be apparent from a review of these orders that the primary judge in substance had before him an attack by Mr Zepinic on Mr Malanos' claim for remuneration in relation to his role as Trustee for the sale and on aspects of Mr Malanos' conduct as Trustee. This remuneration was to be paid out of funds paid into Court following the sale of Mr Zepinic's property. At [38] of the principal judgment, the primary judge said: "Subject to one qualification I propose to grant leave, pursuant to the inherent jurisdiction of the Court to control its own process and under the Act, to Mr Zepinic to proceed with the payment out motion as a means of crystallising the issue of who is entitled to the remaining funds. However, the one qualification is that I see no utility in the entitlement to the funds in court being debated until the question of the Trustee's costs of the present application has been determined. In reaching this conclusion, I have taken into account that Mr Healey's submissions foreshadowed the possibility of the Trustee making an application for a gross sum costs order to the extent the Court is satisfied that the Trustee is entitled to his costs of the present application."
The assessment of a gross sum costs order was the subject of the hearing which led to the second judgment on 3 June 2020. At [36]-[41] of that decision, the primary judge noted: "36 I asked Mr Zepinic more than once whether he wished to address the quantum of the amounts sought by Mr Malanos. Mr Zepinic declined. I understood him to confine his opposition to both notices of motion to two submissions, to which I now turn. 37 First, Mr Zepinic submitted that Mr Malanos could not claim remuneration or costs after 6 September 2016 because Mr Malanos had retired as trustee on 6 September 2016 pursuant to orders made by Pembroke J. With respect to Mr Zepinic, that submission is rejected as being based on a misconception. 38 On 5 September 2016 (and entered on 6 September 2016) Pembroke J made orders in the original proceedings, which included: '2. Subject to the payment of his costs from the fund constituted by the balance of the sale proceeds in respect of [the Property], order that the trustee pay the net amount of that fund into court. 3. Declare that the trustee is entitled to retire as trustee for the sale of the property.' 39 The fact is - and the Court finds - that Mr Malanos has not retired as trustee for the sale of the Property, although I readily accept his evidence that he very much wishes to do so now. He has continued as trustee while dealing with the years of litigation brought on by Mr Zepinic. 40 I also accept Mr Healey's submission that even if Mr Malanos had retired as trustee, he would still have been entitled to costs that he had properly incurred relating to the performance of his role as trustee for sale of the Property, including costs that he might incur in defending his conduct as such. 41 Mr Zepinic's second objection was what he described - without any proper foundation in the evidence, I hasten to add - as Mr Malanos' 'criminal conduct' in relation to two trusts which he established consequent upon the sale of the Property. This submission is also rejected as based on a misconception."
The primary judge also recorded at [44]-[46] that the various amounts claimed by Mr Malanos for his remuneration had been properly proved to the satisfaction of the Court by Mr Malanos' affidavit evidence, that the amount claimed by him for his remuneration for the period was fair and reasonable and that the amount claimed for legal costs and disbursements, including on the indemnity basis, had been properly proved by the affidavits of Mr Malanos and his solicitor and were fair and reasonable.
It is against this background that the application for leave to appeal to this Court falls to be considered. That application can be dealt with in short compass for two reasons.
The first reason is that, as with Mr Zepinic's application for leave to proceed in other proceedings in this Court (see Zepinic v Chateau Constructions (Aust) Ltd [2020] NSWCA 291), Mr Zepinic has not sought leave under s 14 of the Act to institute this application for leave to appeal. That fact has automatic consequences under s 13 so long as these proceedings fall within the scope of the vexatious proceedings order.
For the same reason as the primary judge gave in the second judgment at [19], they do. In that judgment, his Honour observed that it was sufficient to note that: "one of the matters under the Act about which Mr Zepinic is prohibited from instituting proceedings in New South Wales is proceedings 'relating to the [Property], including, but not limited to, the sale of that property completed in or about December 2014'. There can be no doubt that the subject matter of the application which was dealt with by the Principal Judgment, and now the Zepinic Motion, relates to that matter, together with other matters the subject of Pembroke J's orders."
It should be noted in this context that, in a directions hearing before this Court on 22 September 2020, Mr Zepinic was directed to file and serve submissions as to why these proceedings did not fall within the terms of the vexatious proceedings orders, and why the proceedings should not be dismissed, on the basis that leave to commence the proceedings had not relevantly been sought under the Act.
To that end, Mr Zepinic filed submissions of eight closely typed pages on 6 October 2020 together with extensive annexures. These submissions included a lengthy chronological account of the history of litigation involving Mr Zepinic dating back to 2010. In these submissions, it was contended that Mr Zepinic's application against Mr Malanos was "unrelated to the vexation [sic] proceedings order". That submission must be rejected. It is flatly inconsistent with the fact that, when he commenced his proceedings against Mr Malanos which led to the principal judgment, Mr Zepinic recognised that those proceedings fell within the vexatious proceedings order because he sought leave under the Act, this leave being refused by the primary judge on the basis that the claims Mr Zepinic sought to pursue were held to have no reasonable prospects of success: see [2] above.
Secondly, even if Mr Zepinic did not require leave under the Act, in his Summary of Argument in support of his application for leave to appeal, he advances no reason of principle for impugning the orders made by the primary judge. As the primary judge noted at [36] of the second judgment, reproduced at [7] above, Mr Zepinic did not address the quantum of the amounts sought by Mr Malanos.
In my opinion, the application for leave to appeal must be dismissed with costs, both because of the failure of Mr Zepinic to obtain the requisite leave under the Act and because his application for leave to appeal does not satisfy the well-established criteria for the grant of leave in any event.
WHITE JA: I agree with Bell P.

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