Gao v Zhu (No 8) [2003] VSC 66 (28 March 2003)

Last Updated: 31 March 2003

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PRACTICE COURT

No. 6371 of 1999

PENG YUAN GAO	Plaintiff
v
YU JING ZHU	Defendant

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 February 2003
DATE OF JUDGMENT:	28 March 2003
CASE MAY BE CITED AS:	Gao v Zhu (No 8)
MEDIUM NEUTRAL CITATION:	[2003] VSC 66

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PRACTICE AND PROCEDURE - assessment of damages - defendant bankrupt - whether claims are justiciable in this Court - stay of proceeding.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Appeared in person
For the Defendant	No appearance
For Official Trustee in Bankruptcy	Ms S. Gatford	Gadens Lawyers

HIS HONOUR:

1. Before the Court on 10 February 2003 was an application by the plaintiff, Peng Yuan Gao, brought by summons filed on 21 October 2002 seeking an order that his summonses filed on 17 and 18 April 2002 respectively be dealt with by the Court and for an order that a sum paid into court be paid out to him. The summonses referred to seek the following relief:

Summons 17 April 2002

"Defendant pays $30,064 + $20,000 to the Court or plaintiff with respect to contempt of Court by the virtue of disobedience of the Court order made on 19^th July 2001 for purpose of hiding her assets from it would have been asset available for plaintiff in satisfaction of judgment. [Under order 75 & 66 of Rule of Supreme Court]"

Summons 18 April 2002

"The plaintiff's further amended statement of claim filed on 9th July 2001 by the order of Justice Gillard, and further assessment of damages be assessed by the Court."

2. The dispute which gives rise to this litigation is complicated and dates back to 1996. The following brief summary is taken principally from the Statements of Claim of the plaintiff. Mr Gao alleges that in 1996 the defendant, Yu Jing Zhu, left her husband and formed a relationship with him, which lasted some two years. During this period, Mr Gao gave to Ms Zhu $163,000 and transferred into her name a property at 6/68 Raleigh Street, Thornbury which he had purchased for $83,728. She sold this property in 1997 and or 1998 and applied the proceeds of $69,000 for her own purposes. It is clear that the breakdown of the relationship has been the cause of much bitterness for Mr Gao and his Statements of Claim contain many allegations which do little more than demonstrate this.
3. In any case, such bitterness would cause difficulties. In the present, this is compounded by three further factors. First, Mr Gao is unrepresented. This means that he has to find his way through difficult areas of law without legal assistance. I should add that my reading of the file shows that he has been offered assistance on more than one occasion but he has refused this offer. Second, Mr Gao's facility with the English language is limited. He is able to express himself in writing in a moderately comprehensible way but his spoken English is all but unintelligible. This means that he is unable to communicate his arguments and contentions to the Court. Again, he has been offered an interpretation service but he has refused this. Finally, there is a regrettable feature which appears to underlie a good deal of the difficulties of this litigation as appears from my examination of the file. This is Mr Gao's resistance to accept any advice from the Court with respect to the conduct of his case, with respect to the legal principles applicable to his claims and with respect to his obtaining assistance as to the law or the English language. Moreover, whether this be due to a lack of understanding or to simple obduracy, Mr Gao appears unable to accept any answer to his perceived grievances. This has led him to seek to appeal any adverse decision with little or no regard for the prospect of success. The file contains an extraordinary number of examples of this. No less than eight applications for leave to appeal to the Court of Appeal against interlocutory orders have been made over the past 12 months or so[1].
4. In the present application Mr Gao seeks to activate two applications which he brought some 11 months ago. The summons of 17 April 2002 seeking $30,064 and $20,000 for disobedience to a court order of 19 July 2001 is not significantly different from the application brought by him by summons filed on 26 July 2001 in which he sought $30,000 - $35,000 for the same disobedience. This application, with others, was heard on 11 and 12 December 2001 and determined by Eames J on 12 December 2001. Mr Gao's application for leave to appeal to the Court of Appeal against the orders of Eames J was refused on 5 April 2002. Like any litigant, Mr Gao must accept the decision of the Court. His summons of 17 April 2002 will therefore be dismissed.
5. In his summons of 18 April 2002, Mr Gao seeks that further damages be assessed by the Court in accordance with his further Statement of Claim filed on 9 July 2001. This is in fact his fourth Statement of Claim; replacing those filed on 26 October 1999, 17 November 1999 and 30 May 2001. On 30 January 2001 he entered interlocutory judgment in default of appearance and on 7 May 2001 sought an assessment of damages.
6. On 23 May 2001, Master Evans assessed damages in respect of the then current Statement of Claim, that filed on 17 November 1999, other than those in paragraphs 3-5 and he gave leave to replead these excepted claims. The claims in respect of which damages were assessed were those with respect to the following payments made by Mr Gao for the purchase of property in Shanghai, which property was not purchased.

Date	Amount	Type of Payment
October 1996	8,000	Cash
25 October 1996	140,000	CBA Draft
6 November 1996	15,000	TT
	$163,000

Accordingly, judgment for $163,000 plus $35,681.37 interest was given by the Master.

7. The Statement of Claim of 30 May 2001 was filed pursuant to leave granted by the Master. This pleading was struck out by the Master on 18 June 2001 when he dismissed Mr Gao's further claim for assessment of damages. The current Statement of Claim, that filed on 9 July 2001, was filed by leave of Gillard J on 9 July 2001.
8. It seems that, notwithstanding his extensive efforts to execute the judgment of 23 May 2001, nothing has been recovered from the defendant.
9. On 17 August 2001, the defendant sold a property at 853 Springvale Road, Mulgrave which she had purchased in September 2000. By order of Gillard J, the proceeds of sale of this property, namely $85,947.47, were paid into court on 17 August 2001. This is the sum in court referred to in the summons of 21 October 2002.
10. On 10 April 2002, the defendant became bankrupt on her own application and the Official Trustee became her trustee in bankruptcy.
11. This is a most significant event in this litigation; it gives Mr Gao the right to prove in her bankruptcy for the amount of any provable debt. This he has not yet done. It means, also, that any claim for a provable debt may not be continued in this Court. Mr Gao may proceed in this Court only for a non-provable claim. Broadly speaking, such a claim is one for unliquidated damages unless it is made by reason of a contract promise or breach of trust[2]. Further, it has meant that the Official Trustee has become interested in the sum paid into court by the bankrupt.
12. The consequences of this event for the purposes of Mr Gao's claim in this Court are:

(1) He must identify and separate his non-provable claims against the bankrupt defendant from the claims which may not proceed in this Court.

(2) He should first seek to recover what he can from the bankrupt estate. There are two very practical reasons for this. First, if he is unable to recover any money from the estate in respect of his provable claims it is unlikely that he will recover any from the bankrupt herself from a judgment obtained in this Court. Second, it may be that, in his claim in this Court, he will have to bring to credit money received from the bankruptcy.

13. When this proceeding came before Gillard J on 10 July 2002 upon Mr Gao's application to join the Official Trustee in Bankruptcy as defendant, his Honour drew attention to these matters[3]. He observed that the form of the Statement of Claim of 9 July 2001 was such that it was difficult to determine whether any and, if so, what claims were not provable and therefore justiciable in this Court. He refused Mr Gao's application to join the Official Trustee. Mr Gao's reaction to this was to seek leave to appeal to the Court of Appeal.
14. And so the matter has come back before me. There was no appearance by the defendant. The Official Trustee was, however, legally represented, apparently because of the concern of the Trustee that the Court should be informed as to the present situation and, further, a concern with respect to the sum of money which was in court.
15. Before me, there was some uncertainty as to whether the competing claims of Mr Gao and the Official Trustee to the sum in court should be brought in this Court, under whose order the payment in was made, or in the Federal Court which has control of the bankruptcy. I was told that the Official Trustee was still considering the courses of action open to him and that this might depend upon further investigations which he proposed to undertake by examination of the bankrupt or otherwise. I therefore directed that he have until 5 April 2003 to bring any application in this Court and that such application be made returnable in the Practice Court on 5 May 2003.
16. A further difficulty was raised by the Official Trustee. This was that it is possible that the present application could not be maintained having regard to the provisions of s. 58(3) of the Bankruptcy Act. This matter was not able to be argued before me and the orders which I made were made without prejudice to the right of the defendant or the Official Trustee to contend that this application should be stayed pursuant to that provision.
17. In any event, it was apparent to me that an assessment of damages could not take place, at least until the non-provable claims had been identified. At the time, I had not had the opportunity to examine the file in this matter to see how the proceeding had been managed. I directed that Mr Gao by 24 April 2003 file a fresh Statement of Claim identifying those non-provable claims which he wished to pursue in this Court.
18. Having since read the file in some detail, I am persuaded that, in any event, there is much to be said for the view that the proper management of this Court demands that the proceeding be halted until the rights of Mr Gao in the bankruptcy have been resolved and he has received from the bankrupt estate (if any) the sums to which he may be entitled. Accordingly, I will re-list the matter in order to enable him to show cause why I should not stay the proceeding until these matters have been dealt with in the bankruptcy or until further order. I will restore to him liberty to renew his application for payment to him of the sum in court in the event that the Official Trustee fails to make this application referred to in [15] above.
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[1] This is in fact the eighth judgment given in the proceeding. See [2001] VSC 500 (Eames J); [2002] VSC 47 (Habersberger J); [2002] VSC 53 (Habersberger J); [2002] VSC 64 (Habersberger J); [2002] VSC 26 (Gillard J); [2002] VSCA 8 and [2002] VSCA 19.

[2] Bankruptcy Act s. 82(2).

[3] [2002] VSC 285 at [8].