Sheriff selling $630,000 Braybrook house for $1,000 had duty to obtain fair price, court told

The Victorian sheriff had a duty to “obtain a fair and reasonable price,” the Supreme Court was told in the trial surrounding the $1,000 sale of a Braybrook house.

Lawyers for the retailer Zhiping Zhou told the court that Zhou was “vulnerable to the sheriff properly exercising his duty under law.”

“He was exceptionally vulnerable to the price accepted by the sheriff,” barrister Paul Hayes said during the second day of the hearing. The court case continues into the third day on Monday February 13.

The Melbourne man is fighting to reverse the sheriff’s extraordinary $1,000 sale last year of his six-bedroom Braybrook home.

Lawyers for the buyer said their client had no case to answer with regard to acting unconscionably.

Lawyers for Zhou highlighted submissions in the buyer Ronald Kousal’s affidavit that he would search the Government Gazette every Thursday looking for properties coming up for auction. A week before the auction he would contact the sheriff’s office to find out if the auction was going ahead and following a review of the assets, land and any encumbrances set a budget for purchase.

Zhiping Zhou's house was repossessed by the sheriff. It still remains in Zhou’s registered name, according to a title search, although there are warrants of claim registered on title.

The Victoria Supreme Court heard the imposing two-storey brick house had an estimated value of $630,000 but was sold at the Swanston Street, Carlton sheriff's room at 2.30 pm December 16, 2010 in a without reserve auction.

Kousal bought the Wirraway Avenue home for $1,000, apparently beating off a $200 bidder. Its been suggested the costs without actually gaining occupancy and title had already surpassed $119,000 in legal fees, stamp duty and costs.

Anthony Strahan, for the sheriff, had argued the Sheriff's Act made the office ''immune'' from being held responsible for the outcome of such an auction, and the buyer must be protected.



Update News :

What was sold was a house, and  encumberances. Which meant a mortgage debt of $430,000 was passed on to the buyer, the buyer was stll going to have to pay $430,000 to the bank.

Slowly, as per the mortgage.

So, what happened ?

Sherriff tried to sell the house, and it didn’t meet reserve. This made sense, as the bank can make it really painful to take over the mortgage, no one wanted to pay market value, for a suspect house..

Maybe it had problems ???



Sherriff then saw a rule that said ‘if it didn’t meet reserve price first, sell it at no reserve”.  



So Sherriff put it on the list of items to sell at December 16, too close to christmans, which was when  every lawyer and real estate agent was just too busy to be interested in this, a complicated and risky proposition.

(what if the house wasn’t built properly ? Is it really what it appears to be ? Pay $200,000, in fact a variable amount, at the fall of the hammer ? how can you have a bank cheque at the fall of the hammer ???  .. too difficult to get organised to buy that.)


The buyer paid $1000 for the right to own the house,  but he also has to pay $20,000 or so in various costs  , and he gets to pay the mortgage off, which at the time was a sum owing of $430,000.

What did the court say now?

The court reversed the sale.

Man D, was out of pocket $100,000 . L owned him $100,000 still, as the sherriff fails to collect it !.


L was missing  $100,000 to $200,000 !  (L expected all his debts to be cleared and even that Sherriff would return to L some cash !)



So the bank said this was wrong.

1.       The Sherriff cannot use the ‘if reserve not met first time, sell it at no reserve’  and ‘sherriff’s action is final’ and  other laws , to bypass sensibilities and spirit of the law…

2.       The sherriff had to *aim* to sell the house to satisfy all the stake holders, IE that man D got his $100,000, that the bank was able to get paid back on the mortgage, that the buyer was buying something of value, and that L was not having $100 to $200 k go missing , and that running a poorly advertised auction on December 16 (too close to Christmas) was not in this aim !

( it’s the same as saying he was dereliction of duty, that is , corrupt ! His aim was not to do the right thing , in other words. )

3.       That the sherriff had to aim to at least  cover the sherriff’s own costs,which really proves the sherriff didn’t aim to do the right thing

4.        That the sherriff could set  a lower than market value reserve,  but had no reason to set an insanely low reserve (no reserve on an asset worth $150,000 to $250,000 ??? )

What should happen in the future ?

Its clear its old fashioned to sell a house “with encumberance”.

The sherriff should sell the house unencumbered, and collect the cash to pay  off  ALL the debts   within a week of the fall of the hammer…  The sherrif should collect the cash to pay man D and pay the BANK..

So that the buyer can pay full market value with no risk of being annoyed by a bank, or getting into debt over a house not worth what it appears to be worth.. (eg due to structural faults..)

Note :  Very good updated news......... thanks.



$200,000 is missing. So that’s $200,000 in value sold for $1000 in cash.


L=Loser of the house,




BANK= mortgage owner.


What was the sherriff doing ?


Man D, Debt OWNER., was owed $100,000 by L.



D took case to court, and paid money for laywers and court costs, and won a judgement,  Sherrrif was told to  to collect the $100,000, immediately, ASAP.

*Not paid back over 30 years..*



Sherriff was selling the house in order to collect the $100,000, immediately.



BANK owns a mortgage, aka ENCUMBERANCE, and had  a CLAIM (aka caveat) on the land title, but the sheriff has the power to sell the house without paying off the mortgage,

And the buyer B then has to pay the mortgage as if he was L, the loser . if B doesn’t pay the mortgage, bank can then do mortgagee sale, which is  UNENCUMBERED, the buyer must pay the debt (not just take on the mortgage.)