A Bendigo councillor is locked in a legal battle to save her family home after it was sold at auction by the sheriff.
Julie Hoskin claims the sale should not have been allowed to go ahead, and sought an urgent Supreme Court of Victoria injunction on December 22 to stop the Kennington house being registered to its new owner.
A warrant for the seizure of the house was issued last year after Cr Hoskin failed to meet repayments on a $387,000 debt.
The sheriff initially scheduled the property for auction in May last year but Cr Hoskin was able to negotiate a three-month reprieve while trying to secure finance that would cover her debt.
When mortgage broker Smartline rejected her loan application, deeming her income insufficient to meet the repayments, the sheriff proceeded with the auction.
The house sold on November 23, but Cr Hoskin has since refused to hand over the property, arguing in court last month the sale should be declared invalid because the price achieved was unfair.
Cr Hoskin said in an affidavit the sale price of $389,000 was significantly lower than the value of her property, which she believed to be worth between $750,000 and $825,000.
Justice Jack Forrest granted Cr Hoskin until January 19 to post a $50,000 surety - proof she can pay any legal costs that might be ordered - before her case was considered.
"If the surety is not lodged, the injunction will lapse and the Registrar can do what he likes," Justice Forrest said.
In the courtroom
The sheriff’s lawyer, Anthony Schlicht, defended the sale price in court, saying it “exceeded our reserve by some 30 or $40,000”.
“The conduct of this auction was such that it… should not be impeded,” he said.
Cr Hoskin's lawyer, Claire Nicholson, also claimed the auction should not have proceeded because her client was again close to securing finance that would have covered the debt.
An application for a $400,000 loan from company Albury Properties was conditionally approved two days before the auction, provided Cr Hoskin supplied a signed, independent valuation of the property.
A valuation carried out in October by Bendigo agency Gavin Butler Real Estate did not meet the requirements and the finance was not approved.
Cr Hoskin said in the affidavit she made a transfer of $1000 to the sheriff on the day of auction in a bid to win more time but staff at the sheriff's office told her they did not receive the deposit.
She also said she contacted as many as six people she thought might be able to loan her large sums of money.
“They all said they would get back to me and put out their feelers for people to help me,” Cr Hoskin said.
The interim injunction means the buyer of the house, Mouhammad Mehrabi, is unable to take possession of the property.
He represented himself in court in December, telling Justice Forrest: "Like everyone else, I've purchased the property and I expected to move in.
"We were supposed to move in ASAP and it's just putting us in a struggle at the moment."
According to Cr Hoskin’s affidavit, Mr Merhabi already tried entering the property, on one occasion changing the locks to the front door while the occupant was out.
Cr Hoskin also recounted several text messages she received from the buyer indicating his intentions to take possession of the house and move its contents into storage.
She reported the contact to police who told her it was a matter for the court to resolve.
The debt that prompted the seizure of Cr Hoskin's house is unrelated to the $19,000 in costs being pursued by the City of Greater Bendigo following a High Court challenge to the city’s decision to approve a mosque.
Cr Hoskin was listed as a lead applicant when the High Court threw out the mosque appeal. The applicants were ordered to pay legal costs.
Instead, the Kennington house was auctioned off to repay a debt Cr Hoskin owed to lender ASK Funding. She incurred the debt 10 years ago to pay for a family law proceeding and it had since grown to total $386,819.53.
In her affidavit, Cr Hoskin said she struggled to repay the loan because of a chronic fatigue diagnosis that kept her out of employment until 2013.
Foot injuries in December 2015 and bout of deep vein thrombosis that followed also limited her ability to work.
Until she became a councillor and received a $2400 allowance every month, her only income came from boarders residing at the Kennington home she owned for 35 years.
"I raised my five children in the property and their names are engraved in the floors of their rooms," she said in the affidavit.
Cr Hoskin stated in her affidavit the house is her only home and property, and that she designed the house herself.
As a councillor, Cr Hoskin sits on the City of Greater Bendigo’s financial committee, as well as committees relating to the Bendigo Easter festival and Bendigo Trust.
The Bendigo Advertiser contacted both Cr Hoskin and Mr Merhabi but neither wished to comment.