Victoria Supreme Court Annuls Sale of 5-Bedroom House for $1,000

The Supreme Court of Victoria annulled on Thursday the sale of a five-bedroom house in the state for only $1,000 for being unlawful.

The brick house, which was made up of two floors, was built along Wirraway Avenue in Braybrook by Chinese migrant Zhiping Zhou in 2006. When Mr Zhou reneged in a $100,000 civil debt which he denies, the Sheriff's Office seized the property and sold it in November 2009.

The property, valued at $630,000 had a mortgage of $460,000 and Mr Zhou had $170,000 equity on it. He also owed $8,000 to the Maribymong Council for municipal rates.

The property was auctioned by the sheriff on Dec 15, 2010 without a reserve price. Ronaldo Kousal bid $1,000 for the property and won over the other bid of $200.

In opposing the auction of his house, Mr Zhou charged the sheriff with failing to perform his legal duty because he agreed to bid the house and lot at a price that was illusory, unfair and unreasonable. The court pointed out the sale did not even cover the $1,152.73 costs incurred by the sheriff, which includes search and valuation fees and advertising expenses.

Mr Zhou also included Mr Kousal in his lawsuit for acting unconscionably. He sought a permanent restraining order on the transfer of the property to Mr Kousal.

In his defense, Mr Kousal said he bought the house in good faith and expected the auction made by the sheriff complied with the law.

However, Justice Peter Vickery declared the auction and sale unlawful and cited equity laws that go back to the 19^th century.

"The only proper inference to be drawn from these facts is that the sale pursuant to the second auction was carried through, not for the purpose of applying the proceeds of the sale to the payment of a payable amount due to the judgment creditor, for there were no such funds available, but for the purpose of offsetting, to a substantial degree, the costs incurred by the sheriff in conducting the sale," The Herald Sun quoted Mr Vickery's decision.