Application of Vito Zepinic

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”).

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.

The statutory framework governing Mr Zepinic’s application is set out in ss 14 to 16 of the Act:

On 25 May 2017, in Zepinic v Chateau Constructions (Aust) Limited; Chateau Constructions (Aust) Limited v Zepinic [2017] NSWSC 582, Pembroke J reached this conclusion and made these orders:

On 14 December 2018, an appeal by Mr Zepinic and his daughter, Ms Nina Zepinic, against Pembroke J’s orders was unanimously dismissed by the Court of Appeal: Zepinic v Chateau Constructions (Aust) Limited [2018] NSWCA 317.

In between the hearings before Pembroke J and the Court of Appeal, on 22 November 2017, Mr S S Ahmed of Counsel, instructed by Ms M Pavey of SLF Lawyers, approached Ward CJ in Equity sitting as Duty Judge on behalf of Mr Zepinic. Her Honour granted leave for a motion and supporting affidavits to be filed in Court. This was the first step in the process required by the Act, the object of which was an application by Mr Zepinic to commence proceedings against Mr Malanos by summons seeking:

At that first mention of the matter on 22 November 2017, the Chief Judge made orders which included:

The draft summons which Mr Zepinic was seeking leave to file contained these substantive prayers for relief:

Section 102 of the Trustee Act 1925 (NSW) (the “TA”) provides:

The proceedings were listed for further directions before her Honour as Duty Judge on 1 November 2017.

At the return date on 1 December 2017, a legal representative for the Attorney-General indicated that the Attorney would wish to see submissions on behalf of both Mr Zepinic and Mr Malanos. (By the time the matter came before me, the Attorney had read the parties’ submissions and indicated that he did not wish to be heard.) The Court was also informed that the Solicitor-General did not wish to be heard. The Chief Judge made these orders:

In accordance with her Honour’s direction the matter came before the Registrar on 15 March 2018 and was referred to me, sitting as Duty Judge. On that occasion Mr S S Ahmed of Counsel appeared again for Mr Zepinic, Mr D G Healey of Counsel appeared for Mr Malanos and Mr A Loel, solicitor, appeared for Chateau.

The Court embarked upon hearing Mr Zepinic’s application under s 16 of the Act for leave to commence proceedings against Mr Malanos. Mr Zepinic was cross-examined by Mr Healey. Mr Ahmed made his submissions and the proceedings were then interrupted by other urgent matters in the Duty List. However, before adjourning the matter, I raised with the parties the fact that the real dispute appeared to be about the payment of moneys into Court by Mr Malanos in accordance with an order made some time before by Pembroke J, and the question of Mr Zepinic’s entitlement to an accounting from Mr Malanos as trustee. It seemed to me that rather than engaging in what might be described as satellite litigation about whether or not Mr Zepinic should have leave to commence proceedings, a more pragmatic approach might commend itself to the parties. Owing to other matters in the Duty List on that day, I was unable to complete the hearing. Directions were made for the filing of further submissions and the proceedings were stood over to 27 March 2018.

On that day the hearing continued with the same appearances. By that time, the amount which Mr Zepinic sought to have paid into Court had been paid in, so that the first prayer in his draft summons had been rendered otiose. Insofar as Mr Zepinic continued to press for leave to file a summons seeking an account from Mr Malanos, Mr Healey submitted that it would be futile and unnecessary because the complaints and issues raised by Mr Zepinic had been substantially answered. In other words, Mr Zepinic was unable to demonstrate a prima facie case. In practical terms, the issue became whether Mr Zepinic would be able to demonstrate that there was still something in the nature of an account which had not been properly explained by the various materials that had been provided by Mr Malanos to Mr Zepinic’s lawyers. Because of the volume and detail of the material, Mr Zepinic’s counsel was unable to provide a comprehensive response at the time of the hearing.

However, the parties accepted that a pragmatic approach to determining what was really in dispute should be maintained and the Court made these directions:

On 4 May 2018 the parties informed the Court that there had been a significant narrowing of the issues. According to Mr Zepinic’s counsel, there were ten issues that remained. There were five that it was hoped could be resolved between the parties. The other five were described as “substantive” and which would require the assistance of the mediation which I had ordered on the previous occasion.

The Court ordered that the mediation was to occur no later than 29 June 2018 and the matter was listed for further directions before me on 10 July 2018.

The mediation took place on 4 July 2018. Mr Zepinic attended the mediation himself, without the assistance of his solicitor or counsel. When the matter came back before me on 10 July 2018, Mr Ahmed informed the Court that, from his client’s point of view, three “key matters” remained outstanding. Mr Ahmed also said “It seems to us that this application, insofar as we are seeking an accounting, has now reached its end in the sense that no more can be done. We have sought an account, there have been concerted efforts by us to get documents. Your Honour ordered Dr Zepinic to go to mediation, that matter was ventilated for the better part of a day. That is probably as far as we are going to get”. (T1:41-45). Mr Ahmed submitted that the Court should in its inherent jurisdiction review Mr Malanos’ conduct.

In circumstances where it appeared that Mr Zepinic no longer wished to press for the relief (an account) in respect of which he had originally sought leave, Mr Healey submitted that the appropriate course was to dismiss Mr Zepinic’s application with costs. Mr Healey submitted that, in the interests of efficiency, his client was likely to bring an application for a gross sum costs order. However, Mr Ahmed responded that his client wished to have the opportunity to reformulate the relief in respect of which he would seek leave and also wished to add an application for moneys to which he said he was entitled to be paid out of Court.

In an endeavour to bring all these matters together, the Court made these directions:

The proceedings were relisted for directions on 28 August 2018 at the request of Mr Zepinic’s legal representatives. On that occasion the matter then took another turn.

Mr Ahmed, in what was to be his last appearance for Mr Zepinic in these proceedings, informed the Court that his solicitors had filed and served a summons, affidavit and submissions in conformity with the Court’s orders made on 10 July 2018. However, on the same date, Mr Zepinic had filed in the Court registry his own documents: an amended summons, three affidavits affirmed by him, a notice of motion and submissions. Mr Ahmed went on to say (T2:13-34):

I granted leave to Mr Zepinic’s solicitors to file their notice of ceasing to act in Court. Mr Ahmed and Mr Zepinic’s former solicitors then withdrew and Mr Zepinic came to the Bar table to represent himself.

As a result of Mr Zepinic continuing the proceedings unrepresented, and owing to other interlocutory delays, the Court vacated the hearing for 30 August 2018. In fixing the matter for hearing on 28 and 29 November 2018, the Court also directed Mr Zepinic to file and serve full written submissions and any affidavits in reply to Mr Malanos’ submissions on or before 12 October 2018.

At a further directions hearing on 22 October 2018 Mr Healey, for Mr Malanos, raised concerns about a number of serious allegations made against Mr Malanos in Mr Zepinic’s latest round of submissions. He also drew attention to the fact that it was unclear precisely what relief Mr Zepinic now sought in respect of which he was seeking leave to commence proceedings under the Act. Accordingly, the Court made these directions:

The final hearing took place on 28 and 29 November 2018. Mr Zepinic appeared for himself and Mr Healey for Mr Malanos. The court book comprised 9 volumes together with two additional volumes of judgments and orders in various proceedings involving Mr Zepinic. At the conclusion of the hearing it was necessary to make these further directions:

Mr Zepinic provided his submissions referred to in Order 2 in the previous paragraph on 29 January 2019. However, for whatever reason, a copy of his submissions was not served on Mr Malanos’ legal representatives. That fact was not drawn to the Court’s attention until 26 February 2019. Mr Malanos did not exercise the liberty which the Court had granted to him to seek to make any submissions in reply to Mr Zepinic’s submissions of 29 January 2019.

The Court therefore had a great deal of material to consider, including the parties’ extensive written submissions. The procedural history of Mr Zepinic’s dispute with Chateau has become, to say the least, byzantine in its complexity, a fact which I formed the view Mr Zepinic attempts to deploy to his advantage. As a judge with no prior involvement in these matters, I record my gratitude to Mr Healey for the clear and painstaking exposition of that procedural history in his written submissions and other materials which he provided to the Court.

On 31 July 2018 Mr Zepinic filed a Notice of Motion seeking the following relief (the “payment out motion”):

On 31 July 2018 Mr Zepinic also filed an Amended Summons seeking:

On 26 October 2018 Mr Zepinic filed a Summons seeking:

Prayers 4-14 of the Plaintiff’s Submissions of 10 October 2018 were:

At the hearing on 28 November 2018, Mr Zepinic confirmed to the Court that the relief which he sought in the proceedings that he sought leave to commence was what I have set out in paragraphs [29] to [32] above (T8:29-T9:21).

Having identified the relief which Mr Zepinic wants in the proceedings for which he seeks leave, three preliminary points should be made before turning to the substance of his application.

First, while nothing ultimately turns on it, I accept Mr Healey's submission that Mr Zepinic's application is in an irregular form, having been commenced by a Notice of Motion which appears to have been given a fresh proceedings number. In the absence of any specific provision in the Court's rules otherwise, an application for leave to bring proceedings under the Act should ordinarily be commenced by a summons in fresh proceedings. The originating process in respect of which leave is sought should either be annexed to that summons or attached to the affidavit in support.

Second, it may be accepted that the three separate forms of process (including by reference to written submissions) is an unsatisfactory way to identify the relief sought, and not in compliance with the directions which I have made. Nevertheless, given the history of these proceedings and Mr Zepinic's determination to persist, I am satisfied that this is a case where substance should take precedence over form. Mr Zepinic has indicated what he wants and the Court will deal with it accordingly.

Third, I propose to deal immediately and shortly with the payment out motion. There appears to be no dispute that after all other interested parties (including Chateau and the Trustee) have been paid whatever it is to which they may be entitled, whatever is left of the proceeds of sale of the Property belongs to Mr and Mrs Zepinic. Payment out of the moneys now held in court will have to be dealt with. In my view, the desire of Mr Zepinic (presumably on behalf of himself and his wife as the former registered proprietors of the Property) to be heard on the question of the moneys in court is not vexatious or otherwise made impermissible by s 15 of the Act.

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. As I note in the final paragraph of these reasons, that is a matter yet to be determined.

With no disrespect intended, Mr Zepinic's oral and written submissions were lengthy, repetitive and not always easy to follow. Nevertheless, before turning to consider the specific relief which he says he now seeks, it is convenient to deal with what might be described as four overarching themes in Mr Zepinic's application.

First, many of Mr Zepinic's submissions appear to be directed towards an attack on orders made in earlier proceedings such as the appointment of Mr Malanos as Trustee and for the sale of the Property, together with other orders in relation to the disbursement of funds. To the extent that any of the relief sought by Mr Zepinic in the present application is directed to those matters, I accept Mr Healey's submission that Mr Zepinic is engaging in what might be referred to as a classical example of abuse of process. The Property has been sold and the proceeds have been disbursed in accordance with orders of the Court. In relation to those matters, Mr Zepinic has either not appealed or his appeals have been unsuccessful. Third parties’ rights have now intervened. On any view, even if otherwise satisfied of the formal prerequisites under the Act, the reagitation of those matters is not something for which the Court would grant leave.

Second, it is apparent from Zepinic's oral and written submissions that he is much exercised about, and deeply suspicious of, what are referred to in tax returns submitted by the Trustee as the "Mr & Mrs Zepinic Trust" and the "34 Turramurra Avenue Trust". Much of Mr Zepinic's application appears to be addressed to obtaining copies of documents in relation to those trusts and asserting that somehow the Trustee has established an independent trust for his own benefit which he was not entitled to do, including wrongfully using the Zepinic name.

With respect to Mr Zepinic, his concerns are based on a complete misconception. This question is compendiously dealt with in Mr Healey's written submissions which I have substantially reproduced and gratefully adopt in paragraphs [43] to [46] below.

The position in relation to the trusts may be summarised as:

The following appears from the documents provided to Mr Zepinic:

It is clear from the foregoing that the Trustee did not pay tax on any net capital gain on sale of the Property. By the private tax ruling, the Trustee was not liable for tax on the sale. The Trustee declared rental income where received and the tax applicable was paid by the Trustee. The Trustee earned interest and tax was deducted at source in respect of it with TFN withholding tax credited to the Trustee and the Trustee paid tax and deposited tax refunds in the trust bank account.

There can be no doubt that there was a trust established by the Court of which Mr and Mr Zepinic were the beneficiaries (with Chateau and the Trustee claiming priority interests over its assets) and when the Property was sold, the trustee continued to hold the proceeds on trust for Mr and Mrs Zepinic. The Court is satisfied that there is nothing untoward or unusual about any of this.

The third broad area of complaint advanced by Mr Zepinic relates to both the Trustee's own remuneration and legal fees incurred by the Trustee. Both before and after the present application was commenced, Mr Zepinic (or his then legal representatives) was provided, as the evidence before me demonstrates, with relevant narrative bills and similar records. I accept Mr Healey's submission that it is difficult to imagine what more could be provided to Mr Zepinic to assuage his concerns. Mr Zepinic himself adduces no evidence to support his assertions that the charges are excessive or unreasonable. In the absence of any such evidence, I do not think it is any part of the Court's role to conduct some review, informal or formal, of those accounts, especially on an application of this kind. To the extent that Mr Zepinic has standing to do so, there are other authorities to which he can make complaint about those matters. He has failed to demonstrate any basis on which proceedings in this Court are the appropriate or convenient forum for those matters to be ventilated.

The fourth trope that ran through a number of Mr Zepinic’s submissions relied on this argument. Mr and Mrs Zepinic left Australia in March 2009 and moved to London. In respect of a number of notices of motion Mr Zepinic contended that they had not been property served upon him in accordance with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the “Convention”) as given effect in Part 11A of the Uniform Civil Procedure Rules 2005. He therefore argued that various orders were void or liable to set aside.

Mr Zepinic has raised this argument before, at all times unsuccessfully and including in the Court of Appeal. While I am not strictly bound by the following Court of Appeal dicta, I respectfully agree with and adopt them.

In Zepinic v Chateau Constructions (Aust) Limited [2013] NSWCA 214 McColl JA said (emphasis added):

The Court of Appeal had occasion to consider Mr Zepinic’s arguments under the Convention again in Zepinic v Chateau Constructions (Aust) Ltd [2016] NSWCA 50. On that occasion the Court was constituted by McColl and Leeming JJA. Their Honours said:

Mr Zepinic does not contend he was unaware of the relevant notices of motion. Having reviewed the several judgments in which Mr Zepinic is taking the points about service, his litigious conduct does appear to display a tendency to invoke the jurisdiction of the Court when it suits him and on other occasions to question jurisdiction over him by claiming to have been ineffectively served. Fortified by the observations made in the Court of Appeal on at least two occasions, I conclude that any reliance by Mr Zepinic on the Convention has no reasonable prospect of success.

I will next consider each of the prayers for relief sought by Mr Zepinic.

These prayers are an attempt to re-litigate matters that were decided some years ago. Third party rights have intervened through such matters as the sale of the Property. Furthermore, for the reasons set out in paragraph [48] to [52] above, insofar as this relief relies on an argument concerning service under the Convention, it has no reasonable prospect of success.

Mr Juratovich is an accountant. Mr Zepinic has not posed any particular questions for the proposed referee to answer. A reference is not an occasion to conduct a roving royal commission. Furthermore, Mr Zepinic has been unable to demonstrate even a prima facie case of anything that warrants investigation and report into the Trustee’s conduct.

This order is futile. The Trustee has paid into Court what the Trustee had.

In relation to Mr Loel’s affidavit and the costs certificates, the Court accepts Mr Healey’s submission that there is no evidence the Trustee ever had the costs certificates. The Trustee was never entitled to them. They belong to Chateau and Mr Zepinic is entitled to inspect the Court file to obtain copies if he wishes. Moreover, the Court also accepts Mr Healey’s submission that, in any event, the Court has made orders consistent with those costs certificates and the Trustee has complied with them. Mr Zepinic has not identified any reason why the Court would not give him access to the relevant files. I see no reason why he should not have access to those files if he asks for it.

Insofar as Mr Zepinic seeks material relating to the Trustee’s communications with the ATO, the Court is satisfied by the Trustee’s evidence that Mr Zepinic has been provided with all relevant primary documents. Furthermore, Mr Zepinic’s apparent concerns underlying his request for those documents suffer from the misconception dealt with in paragraphs [41] to [46] above.

This prayer is, again, motivated by the same misconception dealt with in paragraphs [41] to [46] above. Furthermore, s102 of the TA (see paragraph [9] above) has no application because there has been no order for accounts.

Section 12 of the TA provides:

As will be apparent from its terms, s 12 is also irrelevant to the present circumstances because there was no instrument whereby the Trustee was appointed.

This prayer is either or both misconceived and otiose.

The Court accepts Mr Healey’s submission that from the time orders were made in 2010 which gave the Trustee immediate right to the title of the Property, the Trustee was entitled to the benefit, and was subject to the obligations, of the lease which Mr Zepinic arranged. Mr Zepinic’s material discloses not even a prima facie case for an entitlement of the kind alleged.

This claim relates to personal items which Mr Zepinic alleges went missing from the Property. Mr Zepinic has presented no other evidence beyond his own assertions that there was such property, that it had the value which he alleges and that the property is missing. In the context of the history of this matter and Mr Zepinic’s status as a vexatious litigant, in the absence of any independent corroboration the Court is not satisfied that this is a bona fide claim and would not, in the exercise of its discretion, grant leave to bring it.

The evidence demonstrates that the services were done pursuant to orders of the Court approving the Trustee incurring the relevant expenditure. With the unremarkable exception of the absence of a receipt for withholding tax, the Trustee has provided receipts for those payments. Mr Zepinic has not demonstrated any basis on which he would be entitled to an order of this kind.

This claim has no reasonable prospects of success for the same reasons given in relation to Prayer 4 in paragraphs [56] above.

This proposed relief is tied to the appointment of a referee and would therefore fail for the reasons given in relation to the referee in paragraph [55] above. Furthermore, Mr Zepinic has failed to provide any evidence upon which the Court could be satisfied that there was any basis to call the Trustee’s legal costs or remuneration into question.

These prayers fall away because, for the reasons set out in the preceding paragraphs, the Court concludes that the various relief sought in the Amended Summons has no reasonable prospects of success.

I will next consider the proposed Summons filed by Mr Zepinic on 26 October 2018. Much of it repeats relief sought in the Amended Summons.

This has no reasonable prospects of success for the reasons set out in paragraphs [48] to [52] above.

This has no reasonable prospects of success for the reasons set out in paragraph [40] above.

This has no reasonable prospects of success for the reasons set out in paragraphs [42] to [46] and [59] above. Insofar as this prayer refers to s 6 of the TA, it is of no application because that section deals with the registration of a new trustee by deed. As I have explained above, that is not how the Trustee was appointed. Insofar as the prayer refers to s 86 of the TA, which deals with indemnity to a trustee or a person claiming through the trustee by impounding the interest of a beneficiary, Mr Zepinic has made out no case for the applicability of that section. In particular, he has presented no evidence suggestive of a breach of a trust by the Trustee. I assume the reference to s 104 of the TA (which deals with the Court’s rule making power) is an error which should refer to s 102.

Quite apart from Mr Zepinic having demonstrated no jurisdictional basis for such an order to be made, it is otiose because the Trustee has paid the balance of the proceeds of the sale of the Property in his possession into Court.

I will next consider the prayers for relief incorporated by reference from Mr Zepinic’s submissions of 10 October 2018.

This prayer has no reasonable prospects of success by reason of the matters set out in paragraph [56] above.

This prayer has no reasonable prospects of success by reason of the matters set out in paragraph [63] above.

I assume this is the same amount as that referred to in prayer 11 of the Amended Summons and, on that basis, it fails to disclose any reasonable prospects of success by reason of the matters set out in paragraph [67] above.

I assume this is the same amount as that referred to in prayer 11 of the Amended Summons and, on that basis, it fails to disclose any reasonable prospects of success by reason of the matters set out in paragraph [67] above.

Other than mere assertion, Mr Zepinic has not demonstrated any basis as a matter of fact or law why this relief should be granted.

Other than mere assertion, Mr Zepinic has not demonstrated any basis as a matter of fact or law why this relief should be granted.

This prayer has no reasonable prospects of success for the reasons set out in paragraphs [65] above.

Other than mere assertion, Mr Zepinic has not demonstrated any basis on which he might have an entitlement to this relief.

This prayer has no reasonable prospects of success and, in any event, would not be a matter in respect of which the Court would grant leave for the reasons set out in paragraph [64] above.

Given the views to which the Court has come in relation to the prayers sought to be incorporated from Mr Zepinic’s submissions of 10 October 2018, these prayers themselves also have no reasonable prospects of success.

For convenience, I will again set out s 15 of the Act, together with s 6:

Mr Healey submitted that Mr Zepinic’s application must be dismissed because the affidavit which had been filed by Mr Zepinic’s then solicitor (and then incorporated by reference into an affidavit of Mr Zepinic’s) purportedly for the purposes of s 14(3)(b) of the Act (listing all other proceedings Mr Zepinic had instituted) did not “substantially comply” because it omitted at least two sets of proceedings. It is unnecessary for me to determine that question because of the clear view to which I have come as set out in the next paragraphs.

It will be apparent from the analysis I have set out above of the various prayers for relief in respect of which Mr Zepinic seeks leave, that the Court is well satisfied that the proceedings which Mr Zepinic proposes are vexatious proceedings and proceedings which have no prima facie ground for the purposes of s 15(1) of the Act.

The analysis I have set out above demonstrates my reasons as to why there is no prima facie ground for the proceedings. Insofar as I have concluded the proceedings are vexatious, I am satisfied for the purposes of s 6 of the Act that the proposed proceedings are an abuse of the process of the Court (a matter to which I will return), that given their repetitive particularity they have been instituted to harass or annoy, or to cause delay or detriment to the resolution of the Trustee’s appointment, and that the proposed proceedings are intended to be instituted without reasonable ground.

Insofar as what may constitute an abuse of process, it is well settled that attempts to re-litigate matters or other otherwise propound multiple claims that have no reasonable prospects of success can constitute an abuse of process. I am satisfied they do in this case. Mr Zepinic’s various claims are a melange which attempt to relitigate matters that have been decided adversely to him some years ago, combined with complaints about the Trustee’s conduct which he has comprehensively failed to demonstrate have any reasonable basis or prospects of success. The irresistible conclusion is that the proceedings in respect of which Mr Zepinic seeks leave are yet another example of the vexatious conduct which led to the orders made by Pembroke J that I have set out in paragraph [4] above.

By reason of the conclusions set out in paragraphs [87] to [89] above, I have no hesitation in giving effect to the mandatory requirement in the chapeau of s 15(1) of the Act that Mr Zepinic’s application should be dismissed.

The Trustee’s submissions included reasons why, if the application were dismissed, Mr Zepinic should pay the Trustee’s costs on the indemnity basis. An application for a gross sum costs order was also foreshadowed. Mr Zepinic’s various submissions did not engage with the Trustee’s submissions as to costs. The Court will give the parties an opportunity to propose short minutes for the determination of the costs arguments.