Chang v Chang

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0102

HOLLY CHANG (OTHERWISE KNOWN AS HONG CHANG)	Applicant
v
VICTOR CHANG (OTHERWISE KNOWN AS SHENGLI CHANG)	Respondent

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JUDGES:	WALKER JA and J FORREST AJA
WHERE HELD:	Melbourne
DATE OF HEARING:	17 November 2022
DATE OF JUDGMENT:	23 November 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 256
JUDGMENT APPEALED FROM:	Chang v Chang (Supreme Court of Victoria, Irving AsJ, 23 June 2022); S ECI 2021 01122

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PRACTICE AND PROCEDURE – Application for leave to appeal, request for extension of time and stay application – Appeal from default judgment of Associate Judge – Appeal inappropriate where application to set aside default judgment not made – Where procedure under r 21.07 available but not pursued – Insufficient reasons for delay of four months in bringing applications – Insufficient prejudice to applicant where applicant may seek to set aside default judgment – Applications refused.

Supreme Court (General Civil Procedure) Rules 2015, rr 21.07, 64.08.

Lee v Yap [2021] VSCA 297; Brown v Fraser (1896) 22 VLR 22; MZWXC v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 172; Singh v Minister for Immigration, Citizenship and Multicultural Affairs [2022] FCA 905, referred to.

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Counsel
Applicant:		In person
Respondent:		Mr C Banasik
Solicitors
Applicant:	Peer Legal
Respondent:	--

WALKER JA
J FORREST AJA:

This application to extend the time for seeking leave to appeal the decision of an Associate Justice arises out of a bitter family dispute between Mr Victor Chang (otherwise known as Shengli Chang; ‘Victor’) and Ms Holly Chang (otherwise known as Hong Chang; ‘Holly’).[1]
[1]Without any disrespect to the parties, first names are used because of the common surname.
On 15 April 2021, Victor issued a proceeding in this Court against Holly. The statement of claim sought declarations and equitable compensation from Holly in relation to alleged breaches of trust and fiduciary duties.
Despite numerous attempts to serve Holly with the Writ it was unable to be served personally.
On 31 March 2022, Judicial Registrar Keith extended the validity of the Writ to 15 June 2022. At the same time, the Registrar made orders for substituted service of the Writ upon Holly.
Pursuant to those orders, substituted service was effected on 6 April 2022 by: post to an address in Siddeley Street, Docklands; email to Holly’s email address; email to the email address of a solicitor who had previously acted for Holly; and SMS to Holly’s mobile phone number. Under the terms of the Judicial Registrar’s order, service was deemed to have been effected on 13 April 2022.
Holly did not enter an appearance to the Writ.
On 19 May 2022, Victor filed a summons pursuant to r 21.01 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’). It included an application for judgment under r 21.04 of the Rules.
On 31 May 2022, Victor’s solicitor sent an email to Holly informing her of the application for default judgment and of the date and time that the application had been listed for hearing.
On 10 June 2022, McDonald J referred the summons for hearing and determination by Irving AsJ. Also on that day, Victor’s solicitor sent an email to Holly informing her of the date and time of the hearing and provided a ‘zoom link’ for the audio-visual hearing.
On 14 June 2022, Irving AsJ heard the application for judgment audio-visually. Victor was represented by counsel. Holly, despite being notified of the hearing, did not attend.
The relevant parts of the reasons of Irving AsJ are as follows:
In January 2015, the plaintiff decided to sell the Elwood Property. On 27 February 2015, the plaintiff and the defendant executed a contract of sale with a purchaser. On 6 May 2015, 2 days before settlement, the defendant directed that 50% of the proceeds of sale be transferred to her. In May and June 2015, the defendant threatened to release to the media the plaintiff’s confidential and personal information that the defendant had obtained in 2014 from misappropriating the plaintiff’s iPad, if the plaintiff did not release the 50% sale proceeds to her. On 3 June 2015, the Australian Financial Review published an article referring to the confidential information. On 4 June 2015, the defendant threatened the plaintiff that further articles revealing the confidential information would be published. On 5 June 2015, the plaintiff instructed his solicitor to release 50% of the sale proceeds, being $894,933.20, to the defendant.
The plaintiff’s statement of claim seeks declarations that the defendant held her legal title in the Elwood Property on trust for the plaintiff, such trust being formed by either proprietary estoppel, common intention constructive trust or resulting trust. By reason of the material facts pleaded in the plaintiff’s statement of claim and the defendant’s failure to file an appearance, I am satisfied that the plaintiff has proven the elements necessary to establish that the defendant held her legal title in the Elwood Property on trust for the plaintiff and that she breached her fiduciary duties as trustee.
The plaintiff’s statement of claim seeks a declaration that the plaintiff has a charge over Mercedes Benz E250 bearing registration YIE 848 being the luxury vehicle the defendant purchased with the money misappropriated from the plaintiff’s Australian bank accounts. In the alternative, the plaintiff’s statement of claim seeks a declaration that the defendant holds the vehicle on trust for the plaintiff. By reason of the material facts pleaded in the plaintiff’s statement of claim and the defendant’s failure to file an appearance, I am satisfied that the plaintiff has proven the elements necessary to establish that the defendant breached fiduciary duties owed to the plaintiff by misappropriating the sum of $99,037.66 from the plaintiff’s bank accounts to purchase the luxury car.
By reason of the material facts pleaded in the plaintiff’s statement of claim and the defendant’s failure to file an appearance, I am satisfied that it is appropriate to award the plaintiff equitable compensation in the amounts of $894,933.20 and $99,037.66.
The plaintiff’s statement of claim seeks interest. The plaintiff submits a number of possible bases for the calculation of equitable compensation in the nature of interest in relation to the Elwood Property sale funds:
(a)Simple interest at the rate prescribed by s 2 of the Penalty Interest Rate Act 1983 (PIRA Rate) from the date of breach;
(b)Compound interest at a mercantile rate from the date of breach until the commencement of the proceeding, and the PIRA Rate thereafter;
(c)Simple interest at a mercantile rate from the date of breach until the commencement of the proceeding, and the PIRA Rate thereafter;
(d)Compound interest from the date of breach until present;
(e)Simple interest from the date of breach until present;
(f)Simple interest at the PIRA Rate from the date of commencement of proceedings.
The plaintiff seeks simple interest in relation to the funds misappropriated and used by the defendant to purchase the luxury car and has submitted a numer [sic] of possible bases, in terms of rate and commencement date, for calculation of that interest.
The principles applicable to the Court’s power to award interest in its equitable jurisdiction were set out by Kyrou J in Talako v Talako [2009] VSC 579. I also note and follow the principles referred to in Ahrkalimpa Pty Ltd v Schmidt (No 4) [2019] VSC 246, [20] and Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (No 2) (2019) 58 VR 129, [53]–[56]. It is necessary for this Court to determine the date interest ought to accrue, the rate of that interest and whether simple or compound interest should be awarded.
The evidence before the Court indicates that the plaintiff was aware of the material facts relating to the Elwood Property sale proceeds from 5 June 2015, and in relation to the misappropriation of funds from his Australian bank accounts from about late 2018. The plaintiff has put no evidence before the Court to explain why, in these circumstances his proceeding was not commenced until 15 April 2021. It would be contrary to equitable principles to reward the plaintiff with respect to delay that is unexplained and of his own making. It is appropriate that interest be awarded from the commencement of the proceeding.
The plaintiff submits that [his] primary contention for interest at the PIRA Rate from the date of breach is supported by authority. The plaintiff asks the Court to infer that the defendant has made a gain from the funds secured from the proceeds of the sale of the Elwood Property.
In this case, I am satisfied that the defendant obtained the funds by fraud and misappropriation. On the evidence before the Court, I am not, however, satisfied that the inference of the defendant’s gain is reasonably made out. The plaintiff concedes that the evidence shows that the defendant made a very modest gain of $3,000 from selling a property after using the plaintiff’s funds to purchase that property. The funds from that sale were, according to the plaintiff, used to discharge the mortgage on the defendant’s property at 22 Tacoma St, Park Orchards, Victoria. There is no evidence of the current value of the defendant’s property at 22 Tacoma St, Park Orchards, and in the absence of such evidence I am not satisfied it is reasonable to draw the inference contended for by the plaintiff. In all of the circumstances of this case, I believe that in relation to the 50% of the sale proceeds of the Elwood Property, it is appropriate to award simple interest calculated pursuant to the PIRA Rate from 15 April 2021. The amount of interest calculated in this way to 14 June 2022 is $106,656.42.
In relation to the plaintiff’s funds misappropriated by the defendant to purchase the luxury motor vehicle, the plaintiff does not seek compound interest but has put forward a number of possible bases for the calculation of simple interest. In all the circumstances of this case, I am satisfied that it is appropriate to award simple interest calculated at the PIRA Rate from 15 April 2021, being $11,803.12 as at 14 June 2022.
Finally the plaintiff’s statement of claim seeks declarations of equitable charges over the defendant’s property at 22 Tacoma St, Park Orchards, and the defendant’s Mercedes Benz as security for the respective awards of equitable compensation. The defendant has filed no appearance and so offered no defence in relation to the charges sought by the plaintiff. In these circumstances, it is appropriate to declare the charges sought by the plaintiff.
I will award costs in the sum of $5,652.70 as sought by the plaintiff.[2]
[2]The Reasons appear at paragraphs [L]–[X] of Other Matters within the Orders of Irving AsJ dated 23 June 2022.
The orders of Irving AsJ read as follows:
The Court declares that the defendant breached the fiduciary duties she owed to the plaintiff as trustee of a 50% share in 31 Ormond Esplanade, Elwood, more properly described as lot 1 on PS518183C being volume 10816 of folio 025 (the Elwood Property) by preventing the release of the proceeds of the sale of the Elwood Property to the plaintiff on or about 8 May 2015, and by asserting an entitlement to half of the proceeds of sale together with seeking half of the proceeds of sale be released to her.
The Court declares that the defendant held the amount of $894,933.20 received on or about 10 June 2015, being proceeds from the sale the Elwood Property, on trust for the plaintiff.
The Court declares that the defendant breached the fiduciary duties she owed to the plaintiff as his agent and general attorney by misappropriating amounts totalling $99,037.66 over the period 16 April 2011 to 21 April 2011.
The defendant pay the plaintiff equitable compensation in the amount of $993,970.86 comprising:
(a)$894,933.20; and
(b)$99,037.66.
The defendant pay the plaintiff interest on the aforesaid sums in the amount of $118,459.54, comprising:
(a)$106,656.42 on the amount referred to in paragraph 4(a); and
(b)$11,803.12 on the amount referred to in paragraph 4(b).
The Court declares that the defendant’s property situated at 22 Tacoma Street, Park Orchards in the state of Victoria, more properly described as lot 2 on plan of subdivision 602546X, volume 11083 folio 242, is charged with payment of the amount referred to in paragraph 4(a).
The Court declares that the defendant’s vehicle bearing registration YIE 848 is charged with payment of the amount referred to in paragraph 4(b).
The defendant pay the plaintiff’s cost fixed in the amount of $5,652.70.[3]
[3]Orders of Irving AsJ, 23 June 2022, orders [1]–[8].
The judgment was authenticated on 23 June 2022.
In May and June 2022, Holly attended the Ringwood Magistrates’ Court in relation to an intervention order sought by Holly and Victor’s father.
In July and August 2022, Holly lodged caveats on properties at 29 Howitt Street, South Yarra, 72 Wellington Street, St Kilda and 13 Mell Street, Toorak.
In September 2022, Holly appeared at the Melbourne Magistrates’ Court in relation to the intervention order.
On 31 October 2022, a bankruptcy notice, under the Bankruptcy Act 1966 (Cth) was issued at the request of Victor. The judgment debt formed the basis for the bankruptcy notice.
On 8 November 2022, Holly lodged an application for leave to appeal the orders made by Irving AsJ.

This application

Holly is self-represented. Her application for leave to appeal includes the following:
Extension of time requested:
YES. the defendant not filing a defence within 28 days as the reason below:
-        the defendant, on 13 September 2022 . by search a court file or record , there is the default judgement proceeding SECI 2021 01122 made by by The Honourable Associate Justice Irving on 23 June 2022
-        the statement of claim form was served at the wrong address
-        the defendant mother pass away and father was sick. defendant was in grieving.
-        the defendant can’t afford a lawyer to file a defence in time.
Stay applied for:
YES, the defendants wish make an application to have the orders stayed. in force pending the outcome to grant leave of appeal and the cross claim proceeding SECI 2022 04357

Principles in relation to an extension of time for an application for leave to appeal

Holly’s application for an extension of time in which to file her application for leave to appeal is made pursuant to r 64.08.
In Lee v Yap,[4] this Court summarised the relevant principles as follows:
The underlying object of [r 64.08] is to provide to the Court a discretion to extend time with a view to avoidance of an injustice. In Kambouris v Kiatos, McLeish JA and Riordan AJA identified the principal relevant factors that are ordinarily taken into account on such an application in the following terms:
In deciding whether an extension of time to seek leave to appeal should be granted, the Court will take into account several factors, including: (a) the length of delay; (b) the reasons for delay; and (c) the extent of any prejudice suffered by the respondent if the extension is granted. An extension of time will not be granted if the appeal ‘is so devoid of merit that it would be futile to do so’.
The exercise of the discretion to extend time must be undertaken taking into account that the overarching purpose of the Rules is to facilitate ‘the just, efficient, timely and cost effective resolution of the real issues in dispute’. It is also relevant that, upon the expiry of the time limited for the appeal, a successful litigant has an interest in knowing that a claim has been determined with finality.[5]
[4][2021] VSCA 297.
[5]Ibid [44]–[45] (citations omitted).

Consideration

For the following reasons, Holly’s application for the extension of time should be refused.
First, there is a different, and more appropriate avenue for Holly to challenge the default judgment, namely, making an application under r 21.07 of the Rules to set aside the judgment of Irving AsJ. This would be the usual method by which to challenge a default judgment entered under Order 21.[6] It is the practice of this Court (and has been for many years) to refuse to entertain an appeal (or an application for leave to appeal) where a judgment entered in default of appearance can be set aside.
[6]We also note for completeness that, generally, appeals from decisions of an Associate Judge lie to the Trial Division constituted by a single judge: see s 17(3) of the Supreme Court Act 1986 and r 77.06 of the Rules.
This is demonstrated by three Victorian decisions, two of which are of some antiquity.[7] It is only necessary to elaborate on one of these decisions. In Brown,[8] judgment was entered in default for the plaintiff because the defendant did not enter a defence. The defendant then appealed from the default judgment to the Full Court. Williams, Holroyd and Hood JJ dealt with the matter succinctly, as follows:
We think this application to set aside a judgment ought not to have been made to this Court by way of appeal in the first instance. The objection to the judgment should have been brought before the primary Judge by way of an application to rehear the motion for judgment. That appears to be the English practice, and is a convenient practice to follow. If it were not followed application might be made to the Court of Appeal in the first instance which ought to have been made to the Judge below. The appeal will be struck out with costs.[9]
[7]Adams v Cronin (Supreme Court of Victoria, Court of Appeal, Winneke ACJ, Phillips and Hayne JJA, 6 September 1996) (‘Adams’); Brown v Fraser (1896) 22 VLR 22 (‘Brown’); and Crotty v Clarke (1896) 22 VLR 594 (‘Crotty’).
[8](1896) 22 VLR 22.
[9]Ibid 23. See also Adams (Supreme Court of Victoria, Court of Appeal, Winneke ACJ, Phillips and Hayne JJA, 6 September 1996) 7–8; Crotty (1896) 22 VLR 594, 605–6 (Williams, Holroyd and Hood JJ).
A similar, although not as definitive, approach has been adopted by the Federal Court. In MZWXC v Minister for Immigration and Multicultural and Indigenous Affairs,[10] which involved an attempt to appeal from a dismissal of an application for review of an administrative decision following the applicant’s failure to attend the hearing, Young J said as follows:
The appropriate course for the applicant to adopt would have been to apply to have the decision of O’Dwyer FM set aside pursuant to r 16.05(2), rather than appealing in this Court. It has been doubted, in any event, whether this Court can entertain an appeal from a decision to dismiss an application for want of appearance: see the judgments of Sundberg J in MZWIK v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 185 (‘MZWIK’) and VOAQ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1505.[11]
[10][2006] FCA 172.
[11]Ibid [9].
And as to the utility and desirability of this approach, more recently Colvin J said as follows:
[T]his court should not encourage the pursuit of appeals in instances where a reinstatement procedure is available but has not been pursued. The reinstatement procedure is available as a quick and efficient mechanism to deal with instances where it is fair and reasonable for a party to be allowed to proceed to a substantive determination. The pursuit of an appeal is expensive and time consuming and undermines the integrity of the processes of the Circuit Court in giving effect to the overarching purpose of facilitating the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible.[12]
[12]Singh v Minister for Immigration, Citizenship and Multicultural Affairs [2022] FCA 905, [20].

Given the existence of the alternative remedy in the form of r 21.07, we consider that an appeal is not the appropriate avenue and, for that reason, an application for leave to appeal would not succeed. As a consequence, on this ground alone, the grant of an extension of time should be refused.
We readily accept that, for a litigant in person, determining which procedural step should be utilised in response to a judicial decision is daunting. In this respect it should be clear to Holly (as was discussed in the hearing of her applications) that this Court’s refusal of leave to proceed with an appeal does not prevent her from exercising her rights under r 21.07.
Second, the delay of a period of nearly four months is extensive. We are satisfied that Holly deliberately avoided personal service of the Writ and statement of claim and that those documents were then served in accordance with the orders for substituted service. We accept that Holly was aware of the existence of the Writ by at least 13 April 2022 (see [5] above) and that Holly was aware of the default judgment hearing before Irving AsJ on 14 June 2022 (see [8]–[9]). She elected not to file an appearance and not to appear at that hearing. She did nothing to challenge the entry of judgment until she was served with a bankruptcy notice.
Third, it is relevant to consider the issue of any potential prejudice to Holly occasioned by the refusal of this application. In a case where judgment has been entered in default, and Holly has not had a chance to put her defence to a Court, this would ordinarily be regarded as significant. However, for the reasons set out above, Holly will have the opportunity (if she wishes to exercise it) to seek to set aside the judgment under r 21.07 and, if successful, mount her defence at that time. Thus, she in fact suffers no, or very little, prejudice by way of the refusal of an extension of time.
We also observe that in the course of the hearing, Victor by his counsel gave an undertaking in relation to the disposition of the assets and the bringing of a creditor’s petition. That undertaking was expressed to remain in place for one month. That will provide ample time for Holly to make an application under r 21.07, should she wish to do so.
In summary, we are not persuaded to extend the time for bringing the application for leave to appeal. It follows that the stay application in respect of the orders of Irving AsJ should also be refused.
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[2022] VSCA 256

23 November 2022