Gao v The Official Trustee in Bankruptcy

REASONS FOR JUDGMENT THE COURT: 1 The appellant ("Mr Gao") is a self-represented litigant for whom English is not his first language. He seeks to appeal from orders of Sundberg J on 4 October 2002 refusing him leave to join the Commonwealth Bank of Australia ("CBA") as a respondent to proceedings he filed against the Official Trustee in Bankruptcy ("the Official Trustee"), and Sundberg J's orders of 6 November 2002 dismissing those proceedings pursuant to O 20 r 2 of the Federal Court Rules on the ground that they disclosed no reasonable cause of action. Mr Gao also seeks leave to appeal from orders made by Ryan J on 19 December 2002, made in respect of notices of motion filed by Mr Gao relating to the mode of appeal from the orders made by Sundberg J, and the evidence that might be put before the Full Court on that appeal. 2 The litigation in the Federal Court and in the Federal Magistrates Court (as well as other proceedings in the Supreme Court of Victoria) concerns the bankrupt estate of Yu Jing Zhu ("Zhu"). In proceedings V 7028 of 2002 in the Federal Court, Mr Gao refers to his proceedings 6371 of 1999 in the Supreme Court of Victoria against Zhu. The Supreme Court proceedings Mr Gao describes as follows: "The nature of the proceeding is that ZHU had taken advantage of marriage with plaintiff and plaintiff's sponsorship for her stay in Australia permanently to deceive significant sum of money from plaintiff, and to deceived plaintiff into believing that plaintiff was the father of Vicki GAO born on 2 Feb. 1998 and had taken the advantage of the said unbeknown to plaintiff had sold plaintiff's Thornbury flat for less than market value about $31,000, and had give false testimonies to the Court for making denigrating remarks about plaintiff." 3 That passage gives some indication of the language difficulties of Mr Gao, but also provides some insight into why Mr Gao has pursued his complaints about aspects of the Official Trustee's administration of Zhu's bankrupt estate with such vociferous and uncompromising zeal. 4 The proceedings in the Supreme Court of Victoria commenced with the writ and statement of claim on 17 December 1999. On 30 January 2001 Gao entered judgment against Zhu in default of defence. He sought an assessment of damages on 7 May 2001, and on 23 May 2001 Master Evans assessed damages at $163,000 plus interest of $35,681. On 16 May 2001, Zhu had opened a term deposit account with the ANZ Bank in the sum of $94,000. There were significant withdrawals of $23,100 on 28 May 2001, $40,000 on 29 June 2001 and $30,064.78 on 20 July 2001, by which time the entirety of the term deposit had been dispersed. The last amount was constituted by a bank cheque payable to Zhu in the sum of $25,064.78 and $5,000 cash. On 6 September 2001 an amount of $85,974.47 was paid into the Supreme Court of Victoria by Zhu, and is still being held by the Supreme Court. 5 On 10 April 2002 Zhu presented a debtor's petition under s 55 of the Bankruptcy Act 1966 (Cth) ("the Act"). The petition was accepted by the Official Trustee with the consequence that Zhu became bankrupt: ss 55(4A), 57A. Pursuant to s 58(1), the property of Zhu vested forthwith in the Official Trustee. 6 Section 58(3) provides: "Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor: (a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or (b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding." It is important in the present case to note also s 58(5) which provides: "Nothing in this section affects the right of a secured creditor to realize or otherwise deal with his or her security." 7 Zhu was the registered owner of property at 168 Hansworth Street, Mulgrave ("the Mugrave property"). The trustee organised a kerbside valuation of that property, and by letter of 15 April 2002 Ray White advised: "Under the current market conditions we believe that the property could achieve a price around $250,000." The property was subject to a mortgage to the CBA. Also on 15 April 2002 the trustee wrote to the CBA seeking information as to the mortgage and the loan amount, and the trustee was advised by the CBA that Zhu owed $183,477.60 and was in default under the mortgage. Notwithstanding claims by Mr Gao that the CBA never had possession of the Mulgrave property, an officer of the Official Trustee deposes to discussions with the CBA and the advice to the Official Trustee that prior to 5 June 2002 the bank had entered into possession of the property and intended to sell the property at auction during July. Again despite claims by Mr Gao to the contrary, the Official Trustee denies that at any stage he "ever instructed the bank to sell the property." 8 On 10 August 2002 the CBA sold the Mulgrave property at auction for $200,000 with settlement due to occur on 9 October 2002. On 13 August an officer of the Official Trustee was advised concerning the purchase price of $200,000 by a real estate agent who had been involved in attempts by Ms Zhu to sell the property prior to her bankruptcy : "With the status of the market at present, properties are selling at the lower end of their valuations. If the vendor of the property had been prepared to wait several months it might get $230,000 but $200,000 was not ridiculously low." 9 The officer from the Official Trustee concerned with Ms Zhu's bankrupt estate, Mr Philip Bezemer, swears: "The Trustee has not been provided with any evidence that the sale process undertaken by the Commonwealth Bank of Australia was in any way defective or that the process of the sale of the Property at auction did not realise the market value of the Property on that day. In the circumstances and in the absence of an appropriate indemnity from creditors of the Bankrupt, the Trustee does not intend taking any step in relation to challenging the sale of the Property by the Commonwealth Bank of Australia." 10 On 16 September 2002, in proceedings V7028 of 2002, Mr Gao made application to the Federal Court (which application was amended on 23 September 2002) seeking against the respondent to that application, the Official Trustee: