RONALD Kousal must have thought he had the bargain of a lifetime when he bid $1000 for a five-bedroom house in Melbourne's west - and the offer was accepted.
But his luck ran out yesterday when the Supreme Court of Victoria declared the sale unlawful and overturned it, following a long legal battle by the home's original owner.
The two-storey brick house in Wirraway Avenue, Braybrook, was built in 2006 by Zhipping Zhou.
After Mr Zhou failed to repay a $100,000 civil debt - a debt that he disputes - a warrant of seizure and sale was obtained by the Sheriff's Office in November 2009.
Mr Zhou had $170,000 equity in the property, with the bank retaining a mortgage of $460,000, and was in arrears by almost $8000 to Maribyrnong Council for municipal rates.
The sheriff auctioned the property on December 16, 2010, - without a reserve price. Mr Kousal was the highest bidder and bought the property for $1000, after outbidding the only other bid of $200.
The sale price did not even cover the costs incurred by the sheriff, which amounted to $1152.73 after search and valuation fees were included, and advertising expenses paid.
An earlier auction failed to attract any bids and the property was passed in.
Mr Zhou claimed the sheriff breached his legal duty by selling the property for an amount that was ''illusory, unfair and unreasonable''.
He sought a court order for the sale to be set aside, and sought damages against the sheriff.
He also took action against the buyer, claiming he acted ''unconscionably'', and sought an order that Mr Kousal be permanently restrained from lodging transfer of the property.
But Mr Kousal argued that he bought the property in good faith and had a legitimate expectation that the sale was conducted by the sheriff according to law.
In handing down his judgment yesterday, Justice Vickery ruled the auction and sale unlawful, citing equity laws dating back to the 19th 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,'' Justice Vickery said.
Outside court, Mr Zhou said that while the judgment had been returned in his favour his fight was far from over.
- Andrea Petrie/The Age