Gao v Zhu [2002] VSC 47

Supreme Court of Victoria|2002-02-26|Before: HABERSBERGER, J

On 23 May 2001 the plaintiff, Mr Gao, had a judgment in default of appearance entered in his favour by Master Evans, who assessed damages at $163,000 together with interest of $35,681.37. By summons dated 10 August 2001 the defendant, Ms Zhu, applied to have the judgment set aside pursuant to r. 21.07. On 21 December 2001 Eames, J. handed down his reasons for judgment in respect of that application and a contempt application brought by Mr Gao against Ms Zhu.

The long history of this matter is set out in some detail in the judgment of Eames, J.[1] and it is unnecessary for me to repeat it now. What is important for present purposes are the orders made by His Honour in respect of the application to set aside the default judgment. In so far as they are relevant, they were as follows:

"2. Upon payment into court of the sum of $35,000, the judgment entered in default of appearance against the defendant on 23 May 2001 is set aside. 3. Until the hearing of this proceeding or further order of the court, the defendant is restrained from transferring, dealing, charging or disposing of any of her assets, save that in the event that payment into court of the sum of $35,000 has not been effected, settlement of the property at 168 Hansworth Street, Mulgrave, being the land more particularly described in Certificate of Title Vol.8938 Folio 042, can be completed on condition that the sum of $35,000 from the net proceeds of sale shall be paid into court pending further order. ... 7. The defendant serve on the plaintiff a copy of each and every signed contract of sale for the sale of the property referred to in paragraph 3 herein within three days of the signing of each contract. 8. If within 42 days of the date of this order the defendant has not paid into court the sum of $35,000 and also in that event has not served on the plaintiff a signed contract of sale for the property referred to in paragraph 3 herein, the plaintiff has liberty to apply to the court to vary the terms of these orders."

On 20 December 2001 Mr Gao issued a summons seeking the following order which I quote verbatim:

"[In respect to the order made on 12 December 2001 by the Honourable Justice of Eames] Except the sale of the proceeds of $35,000 be paid to court, the defendant makes another payment about $94,000 to the court, so that the judgment may be set aside under the ground of her testimony sworn on 9th August 2001."

What I understand Mr Gao to be seeking by this summons is that the order of Eames, J. be varied by adding a further requirement that Ms Zhu pay into court the further sum of $94,000 before the judgment can be set aside. That summons was returnable on 12 February 2002.

The 42-day period referred to in paragraph 8 of the orders of Eames, J. expired on 23 January 2002. The sum of $35,000 was not paid into court by that date, nor was a signed contract of sale of the property at 168 Hansworth Street, Mulgrave ("the Mulgrave property") served on Mr Gao.

On 24 January 2002 Mr Gao issued a further summons also returnable on 12 February. It was said in the summons that it was issued "in pursuance of liberty to apply granted by the order of Justice of Eames on 12/12/01". That summons sought the following orders and again I quote verbatim:

"1. In pursuance of paragraph 3 of the order made by Justice of Eames on 12th December 2001 the defendant pays $35,000 to the court. 2. Except the said proceeds, the defendant pays another $94,000 to the court, from which her term deposit commenced on 16th May 2001 and maturated on 16th May 2002 at ANZ Bank. [The deposit is within the jurisdiction of the court.] 3. The defendant pays another about $20,000 to the court with respect to transfer her ownership of vehicle to another, which caused the damages to the plaintiff. [The transfer is within the jurisdiction of the court]. 4. In pursuance of paragraphs 7 and 8 of the order made on 12th December 2001 the defendant has not performed the order. In Pursuant to the order made by Justice of Gallard on 9th July 2001 that the plaintiff's summons filed on 25 June 2001 for further assessment of damage be adjourned to a day to be fixed. 5. In respect to the affidavits filed by the defendant on 24th July 2001 and 9th August 2001 false testimonies were given to the judicial proceeding, which have perverted and would continuously pervert the course of justice. The plaintiff fully requires that the perjury offence be dealt with by the court."

When the matter came before me on 12 February of this year, neither party was represented. It was further complicated by the fact that I had great difficulty in understanding Mr Gao's English. I note from other judgments that I am not alone in experiencing this difficulty.

The main point of Mr Gao's application, as I understood it, was that Ms Zhu should also be ordered to pay into court another $94,000 as a condition of having the default judgment set aside. He maintained that Ms Zhu held $94,000 on a 12-month term deposit with the ANZ Bank which commenced on 16 May 2001. At times, Mr Gao seemed to be saying that the $94,000 was still held by the ANZ Bank and, at others, that Ms Zhu had withdrawn this money in breach of the restraining order first made by Gillard, J. on 19 July 2001. However, he was hampered in making out his case by the fact that his subpoena to the ANZ Bank had been served without conduct money and the ANZ Bank had therefore declined to comply with the subpoena. Accordingly, Mr Gao sought and was granted an adjournment to this day.

On 12 February 2002 Ms Zhu also sought an adjournment of an oral application by her that the time in paragraph 8 of the order of Eames, J. be extended. She referred me to a photostat copy of a signed contract of sale of the Mulgrave property, but indicated that it was still unclear whether the purchasers were proceeding with that contract. She also referred me to an earlier contract of sale of that property which was signed and then rescinded on the same day - as I recall, 23 January 2002.

In granting the adjournment to this day, I urged both parties to seek legal representation, through the Victorian Bar's pro bono scheme or otherwise. I stressed to Ms Zhu the seriousness of her position in that, unless she paid into court the required sum of $35,000 or obtained a signed contract of sale of the Mulgrave property, the default judgment against her could not be set aside by me. Even if she were able to take one or other of these steps, it was still a matter of discretion as to whether or not the time laid down in Eames, J.'s order should be extended. Finally, I requested Mr Gao to seek to obtain the services of an interpreter so that I would be fully able to follow his submissions. Both parties appeared again today unrepresented and without interpreter.

The position now is that Ms Zhu has not paid into court the required sum of $35,000, and, although she produced to the court a signed contract of sale, she subsequently informed me that she no longer wished to persist with her application to set aside the default judgment - or, perhaps more accurately, with her application to extend the time within which she had to comply with the order of Eames, J. - and sought to withdraw from the hearing. After discussing with Ms Zhu the ramifications of the course she was proposing to follow, I permitted her to withdraw from the hearing.

One important matter that was not discussed with Ms Zhu before she left the hearing, was what, if any, orders should now be made in respect of the Mulgrave property. In the unusual circumstances of this case I see no reason why the order restraining Ms Zhu from transferring, dealing, charging or disposing of any of her assets should not be continued. However, an exception to the general restraint imposed by Eames, J. on 21 December 2001 was that settlement of the Mulgrave property could be completed "on condition that the sum of $35,000 from the net proceeds of sale shall be paid into court pending further order". As I understand the current situation, it is now not possible to comply with that part of the order. Ms Zhu said that in an attempt to raise the $35,000 she rushed into selling the Mulgrave property. The signed contract of sale dated 8 February 2002, which Ms Zhu produced to the court, evidenced a sale to Suchada Pipatveerawat for the sum of $195,000. Ms Zhu recognized on the last occasion that after payment of the Commonwealth Bank's mortgage debt of at least $178,000, there would not be $35,000 left by way of net proceeds to pay into court. It seems to me that the only logical course is to permit Ms Zhu to complete that sale on condition that all of the net proceeds of the sale, whatever they be, be paid into court. Ms Zhu should understand that she must make that payment into court immediately after settlement which, under the contract of sale, is due to take place on 8 March 2002.

This then left Mr Gao's two summonses still to be dealt with. Eventually, Mr Gao seemed to understand that in the circumstances it was now unnecessary to seek to add further conditions to the order of Eames, J., even if that could have been done in the first place under the liberty to apply reserved by that order. As I understood Mr Gao's submissions, what he then wanted from the court was that Ms Zhu be ordered to pay further sums ($94,000 and $20,000) to the court. This relief was sought as an absolute order and not as a condition of the setting aside of the judgment.

In my opinion, an order of the type sought by Mr Gao is quite inappropriate. The situation now is that the conditions attached to the setting aside of the default judgment by Eames, J. have not been complied with, and therefore the judgment of Master Evans stands. It is not for me to order Ms Zhu to pay further money into court, and I decline to make any such order. Mr Gao can take whatever steps he sees fit in execution of that judgment. Indeed, Mr Gao has already taken steps to enforce his judgment. On 17 July 2001 a Warrant of Seizure and Sale was issued and on 9 November 2001 an oral examination of Ms Zhu was conducted before Master Wheeler.

A further reason for refusing to order Ms Zhu to pay the sum of $94,000 into court is that, despite the ANZ Bank responding to a fresh subpoena from Mr Gao, it is not clear to me whether the $94,000 is still held by the ANZ Bank. Ms Zhu seemed to be saying on the earlier hearing, that it was really her mother's money which had been put into Ms Zhu's name in order to help her obtain the loan from the Commonwealth Bank to fund the purchase of the Mulgrave property. I understood Ms Zhu to say that the $45,000 she contributed to the $233,000 purchase price of the Mulgrave property came from the $94,000 and that the balance was repaid to her mother. Settlement of that transaction took place on 16 July 2001. There is no evidence before me that the withdrawal of the $94,000 from the ANZ Bank, if that is what happened, took place after the making of the restraining order.

A further reason for refusing to order Ms Zhu to pay the sum of $20,000 into court is that this matter was dealt with by Eames, J. when his Honour found that Ms Zhu had been guilty of contempt of court in selling her Mazda 323 motor vehicle "well knowing that she had been prohibited by order of Gillard, J. from dealing with such an asset in that way."[2] On that occasion, Mr Gao sought an order that he be paid in the order of $30,000 to $35,000, representing what he claimed was the lost value of the vehicle which would have been an asset available to him in satisfaction of judgment. His Honour refused to make such an order.[3] Instead, he fined Ms Zhu $2,000 but wholly suspended payment of that fine upon the defendant paying into court the sum of $2,000.[4] That has now been done.

That disposes of the first summons issued by Mr Gao and the first three paragraphs of Mr Gao's second summons.

Paragraph 4 of the summons dated 24 January 2002 has, it appears, been based on misunderstanding of what has happened in the past. On 9 July 2001, Gillard, J. ordered that leave be granted to the plaintiff to bring his summons filed 25 June 2001 for hearing before a judge. That summons sought leave to file a further amended statement of claim. The next order made by Gillard, J. on that day was that the plaintiff have leave to file and serve a further amended statement of claim and that a copy of the further amended statement of claim be served personally on the defendant. Mr Gao apparently thought that the order granting him leave to bring his summons of 25 June 2001 before a judge was an order operating at some time in the future, whereas it was simply leave to bring that summons before Gillard, J. His Honour then made an order, as I have said, allowing the filing and serving of a further amended statement of claim. The further amended statement of claim was filed on 9 July 2001 and, according to an affidavit sworn by Mr Gao on 11 July 2001, it was served personally on Ms Zhu at 7.50 that morning. It appears that no defence has been delivered and Mr Gao would therefore be entitled again to enter a default judgment for further damages to be assessed. It is therefore unnecessary to make any order in respect of the fourth paragraph of Mr Gao's second summons.

The fifth paragraph of that summons alleges that two of the defendant's past affidavits contained "false testimonies" and "requires that the perjury offence be dealt with by the court". This is not an appropriate way to deal with such allegations, in my opinion, and I therefore refuse to make any orders in respect of this paragraph of the summons.

The remaining matter is the question of the subpoenas issued by Mr Gao. At this stage it is possible that both the Bank of Melbourne and a Ms Evelyn Liaw have not complied with the subpoenas said to have been served on them. I am not in a position to deal with this issue now. I will refer Mr Gao to the Prothonotary for assistance in respect of this issue and for further investigation as to what, if any, compliance there has been by those two respondents to the subpoenas.

Finally, there is the question of costs. The costs of the application before Eames, J. were reserved. I made no order as to the costs of the hearing on 12 February 2002 because both parties were not ready to proceed on that occasion. Although both parties have been unrepresented throughout this part of the proceeding, no doubt Mr Gao has incurred some costs and, in my opinion, Ms Zhu should be ordered to pay those costs. The orders of the Court will be:

1. That paragraph 3 of the order made by Eames, J. on 21 December 2001 be vacated and that in lieu thereof order that until the hearing of this proceeding or further order of the court, the defendant is restrained from transferring, dealing, charging or disposing of any of her assets, save that she is entitled to complete the sale of the property at 168 Hansworth Street, Mulgrave, being the land more particularly described in Certificate of Title Vol. 8938 Folio 0-42, to Suchada Pipatveerawat for the sum of $195,000 pursuant to a contract of sale dated 8 February 2002, on condition that immediately after settlement of the sale of that property the defendant pay into court all of the net proceeds of the sale received by her, together with a statement explaining how the net proceeds have been calculated, pending further order.

2. That the defendant pay the plaintiff's costs of the application before Eames, J. on 11 and 12 December 2001 and of this day.

3. That the plaintiff's summons dated 20 December 2001 and the plaintiff's summons dated 24 January 2002 be dismissed with no order as to costs.

4. That this order be drawn up and signed by the Judge pronouncing the order pursuant to Rule 60.04(1) of the Rules of Court.

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