Gao v Zhang
[2005] VSC 197
•24 May 2005
| IN THE SUPREME COURT OF VICTORIA AT MELBOURNE PRACTICE COURT | Not Restricted |
No. 5934 of 2001
| PENG YUAN GAO | Plaintiff |
| v | |
| YAN ZHANG | Defendant |
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JUDGE: | Hollingworth J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10, 24 May 2005 |
DATE OF JUDGMENT: | 24 May 2005 |
MEDIUM NEUTRAL CITATION: | [2005] VSC 197 |
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Appeal – appeal from Master’s order staying the proceeding pursuant to r. 63.03(3) – relevant factors – effect of plaintiff’s impecuniosity – appeal dismissed.
Supreme Court (General Civil Procedure) Rules 1996 r. 63.03
Australia & New Zealand Banking Group Ltd v Parker (unreported), Coldrey J, 7 March 1997, applied.
Exell v Exell [1984] VR 1, considered.
Thompson v Ronstan International Pty Ltd [2000] VSC 47, considered.
Valimi Pty Ltd v Maniotis [2001] VSC 157, applied.
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | In person | |
| For the defendant | Mr B Carew | Clayton Utz |
HER HONOUR:
The appeal
This is an appeal from the order of a master made on 28 April 2005. On that day Master Kings ordered pursuant to rule 63.03 of the Supreme Court (General Civil Procedure) Rules 1996 that the proceeding be stayed pending the payment of the defendant's costs taxed in the sum of $8,052.80 (“the Costs”). The master also adjourned sine die a summons filed by Mr Gao on 3 March 2005, in so far as it sought the inspection of certain documents that had been produced on subpoena, and otherwise dismissed his summons.
By notice of appeal dated 29 April 2005, Mr Gao appeals against all orders made by the master. The present appeal is by way of re-hearing. The material which was before me included affidavits sworn by Mr Gao on 4 May 2005, 19 April 2005 and 3 March 2005. Mr Gao also handed up to me a number of other documents, including affidavits, exhibits and judgments from other applications or appeals by him, most of which were irrelevant to this appeal. He also relied upon an affidavit of financial situation (“the financial affidavit”) which was attached to his most recent application to the Prothonotary to waive court fees, dated 3 March 2005, and a letter from Insolvency & Trustee Service Australia, which I will mention again shortly.
The defendant relied upon the affidavit of Tiffany Veschetti affirmed on 23 February 2005, which had been filed in support of her summons of the same day seeking a stay.
Unfortunately, Mr Gao’s appeal proceeded in a very unsatisfactory manner. Mr Gao frequently interrupted me, declined to answer questions that I asked him, spoke too quickly - given his strong accent - to be comprehended and insisted upon addressing me on issues which were irrelevant to the present appeal. His submissions were not of a great deal of assistance. I note from judgments given by other judges of this court that I am not the first judge to experience such problems with Mr Gao.
That said, one has considerable sympathy for a litigant appearing in person, particularly a litigant for whom English is not their first language. When this appeal first came before me in the Practice Court on 10 May 2005, it appeared that there may be some factual dispute about Mr Gao's financial position and that an argument might be advanced on his behalf that a stay ought not be ordered because of his financial position. As the defendant’s lawyers had not previously seen the financial affidavit, or had an opportunity to consider whether to lead any evidence in relation to Mr Gao’s financial position, I adjourned the appeal in order to allow the defendant’s lawyers to consider their position. When the matter resumed on 24 May 2005, I allowed the defendant’s counsel to cross-examine Mr Gao in relation to his financial position.
On 11 November 2002, Master Bruce made orders for taxation and payment of the Costs. The Costs arise from a number of different orders made by judges and masters of this court, in relation to two lines of appeal pursued by Mr Gao. The first line of appeal was from orders made by Master Wheeler on 16 April 2002, and the second line of appeal was from orders made by Master Kings on 25 June 2002. Mr Gao pursued both lines of appeal all the way to the High Court. He was unsuccessful in both lines of appeal. There have in fact been five interlocutory costs orders made against Mr Gao in respect of the two lines of appeal, but only four of them were taxed as part of the Costs.
Rule 63.03
Rule 63.03 relevantly provides as follows:
“(1) The Court may in any proceeding exercise its power and discretion as to costs at any stage of the proceeding or after the conclusion of the proceeding.
(2) Costs which a party is required to pay under any of these Rules or an order of the Court shall, unless the Court otherwise orders, be paid forthwith.
(3) Where the Court makes an interlocutory order for costs, the Court may then or thereafter order that if the party liable to pay costs fails to do so:
(a) if the party is the plaintiff, the proceeding shall be stayed or dismissed;
(b) if the party is a defendant, his defence shall be struck out.”
The procedure under r 63.03(3) is new. Under the previous rules, the Full Court in Exell v Exell[1] questioned whether there was power to make orders of the kind referred to in r 63.03(3), and concluded that if the power existed, no such orders should be made except in the most exceptional circumstances or as a last resort. Since the introduction of the new rule, it is no longer necessary to establish “exceptional circumstances”.
[1][1984] VR 1 at 8-9.
A distinction may be drawn between dismissal or permanent stay of the proceeding and a stay until the plaintiff has paid the costs required to be paid; a court may be less disposed to order the former, which obviously has more serious consequences for a plaintiff than the latter. In the present case, the master only ordered a stay pending payment of the Costs.
Nature of Mr Gao’s claim in this proceeding
Mr Gao says that I should not order a stay because of the very nature of this proceeding. He says he is not able to pay the Costs because his money was taken by the defendant, Ms Zhang.
As best as I can understand Mr Gao’s statement of claim, he appears to be alleging that Ms Zhang falsely represented to him that she would marry and enter into a business venture with him; that because of those representations he gave her substantial sums of money totalling more than $225,000; that when neither the marriage nor the business eventuated, she refused to repay the money to him. He claims the repayment of the amount he paid to Ms Zhang, as well as interest and costs. He alleges he made the payments to her around late November and December 1999. This proceeding was issued in May 2001.
Unfortunately, I am not in the position to assess at this stage the strength or weakness of Mr Gao's claim or Ms Zhang's defence. This case is one which appears likely to turn almost entirely on credit, which can only be assessed by cross-examination at trial. The question of whether or not Mr Gao is entitled to any money from Ms Zhang is a matter that will have to await determination at trial.
The general rule provided for in r 63.03(2) is that interlocutory costs are to be paid forthwith, unless the court otherwise orders. It would make the general rule largely, if not entirely, redundant if a plaintiff could resist an application for a stay merely on the basis that he has a claim against the defendant for an amount in excess of the interlocutory costs.
The Costs have been ordered against Mr Gao because he has brought applications and appeals which have been found by various members of this court and the High Court to be without merit. Whether or not he ultimately succeeds at trial, he will have to pay the Costs.
Mr Gao’s financial position
Based on the financial affidavit and the oral evidence of Mr Gao, for present purposes I am prepared to proceed on the basis that Mr Gao is presently unable to pay the Costs.
The defendant's counsel took me to several cases dealing with the question of impecuniosity in the context of r 63.03(3). In two of those decisions, judges of this court have held that a party’s inability to satisfy a costs order due to impecuniosity was insufficient to defend an application for a stay.
In the case of Australia & New Zealand Banking Group Ltd v Parker[2], five separate interlocutory costs orders were made. Each of them flowed from the conduct of the case by the defendants. None of the costs orders had been appealed. No stay had been sought in relation to them and none of the costs had been paid.
[2]Unreported, No 5329 of 1994, Coldrey J, 7 March 1997.
Coldrey J noted that the law had changed since the decision in Exell's case and that it is no longer necessary for special circumstances to be shown. He said that relevant factors might include both the conduct of the party against whom costs orders had been made, as well as the circumstances of the parties. At the end of his reasons for decision, he noted that at the heart of the defendants' failure to pay was the argument that they could not afford to both satisfy the costs orders and prepare to defend themselves at trial. Notwithstanding their impecuniosity, his Honour thought it was an appropriate case for the exercise of his powers under r 63.03 because the costs had been occasioned by the defendants’ conduct of their case. He ordered that the defendants’ counterclaim be stayed until the relevant costs were paid.
Bongiorno J explained the relevant principles in the decision in Valimi Pty Ltd v Maniotis[3]. In that case the plaintiffs had been the subject of seven interlocutory orders for costs, totalling around $28,000. As in this case, the costs had been ordered in respect of repeated interlocutory applications and appeals which had been unsuccessful due to the plaintiff’s fault. After considering Exell’s case and the subsequent change to the rules, his Honour noted, in particular, the following:
"[30] Modern litigation is expensive. If plaintiffs wish to bring complex claims before the courts it is incumbent upon them and their lawyers to ensure that their formulation of those claims does not invite attack or require substantial amendment. It might be one thing to suffer one or even two orders for interlocutory costs in the course of preparing a complex matter for trial. However, where the number of orders and their total value ... are as high as they are in this case it seems to me that the sanction provided for by r 63.03(3) to stay the action until such costs are paid must be considered.
[31] In a claim as complex as this no assessment can be made on the material presently available of the likelihood of either side prevailing. ... [i]t is clear from a perusal of the pleading that upon the trial of this action substantial questions of credit will need to be determined thus rendering it impossible to even guess the ultimate outcome. In my view such a trial (which will itself be a costly exercise for all parties) should only be permitted to proceed if the parties are at least put on a relatively even footing before it commences. That can only be done if the plaintiffs pay the amount of the outstanding costs which they presently owe. The amount of those costs and the circumstances in which they were incurred outweigh any other considerations, such as the plaintiffs' impecuniosity, the danger that the plaintiffs may not be able to prosecute their claim for some time or perhaps at all, and any other considerations which might, in other circumstances, have caused me to refuse to exercise the discretion conferred by r 63.03(3) in the defendants' favour."
[3][2001] VSC 157.
I was also referred to the decision of Beach J in Thompson v Ronstan International Pty Ltd[4]. In that case, his Honour refrained from considering whether a plaintiff's impecuniosity would be a relevant factor.
[4][2000] VSC 47.
I respectfully agree with the reasoning and the conclusions of Coldrey and Bongiorno JJ in the cases just discussed. Impecuniosity is not of itself a reason for not exercising the power under r 63.03(3).
Alleged fund
Mr Gao also sought to resist a stay on the basis that there is an alleged fund reserved or set aside for his benefit in other proceedings which could or should be used to pay the Costs. The factual position in relation to this argument is not entirely clear.
It is apparent that in another proceeding in this court[5], Mr Gao has sued Ms Zhu for approximately $230,000. The Zhu proceeding was issued in August 1999. Like this proceeding, the Zhu proceeding apparently arises out of a claim by Mr Gao that a woman with whom he had entered into a romantic relationship or agreement to marry wrongfully took money or property from him. Apparently, Ms Zhu is an undischarged bankrupt. Mr Gao informs me - although I have not seen any documents in support of this - that funds in the vicinity of $90,000 have been paid into court in the Zhu proceeding.
[5]No 6371 of 1999.
Exhibit A in this proceeding is a letter from the trustee in bankruptcy of Ms Zhu's estate at Insolvency & Trustee Service Australia to Mr Gao, dated 15 September 2003. That letter supports the suggestion that some funds were being held, although whether they were being held by the trustee or the court is not clear. In that letter the trustee offered to settle the Zhu proceeding on a particular basis which might have entitled Mr Gao to receive some of those funds. In fact, Mr Gao informs me that he rejected that offer and that no further offer has been made by the trustee.
The evidence before me is quite unsatisfactory as to the existence and terms of any such fund. However it is not necessary for me to reach any conclusion as to those matters, for the following reasons. It is common ground that the defendant in this case, Ms Zhang, is not a party to the Zhu proceeding and has no interest in any fund which might be held by Ms Zhu’s trustee or the court in the Zhu proceeding. There is therefore no question that the Costs could be set off against, or ordered to be satisfied out of, any such fund.
If there are in fact funds available to Mr Gao in the Zhu proceeding, then he will be in a position to pay the Costs at such time as those funds become available to him. In that case, the stay will only operate until such time as he is able to pay the Costs out of the fund. If, on the other hand, he never becomes entitled to any funds in the Zhu proceeding, then the stay will continue until such time as he satisfies the Costs from some other source.
Conclusion in relation to the defendant’s summons
Given the number of costs orders made against Mr Gao, the circumstances in which they were made and the fact that it is not possible to even speculate as to the ultimate outcome in this proceeding prior to trial, notwithstanding Mr Gao’s impecuniosity I conclude that this is an appropriate case in which to make an order staying the proceeding pending the payment of the Costs.
Mr Gao’s summons
Mr Gao also appealed from the master’s orders made on his summons dated 3 March 2005, which was in the following terms:
“1. In pursuance of the Court rule [I66.16] the Court might stay of execution orders made for costs in the proceeding until conclusion of the proceeding based on plaintiff sustained seriously damage resulted from the deceit, his amended statement of claim & etc.
2. In pursuance of the Court rule [I42.01.30] & [42.01.8] plaintiff be permitted to inspect & have copy of the production being subpoenaed.
3. According to circumstance of the proceeding, this application might hear & determine before a Justice.
4. Defendant pay plaintiff’s cost for this application.
5. Such further or order orders as the Court may deem fit.”
The master adjourned sine die paragraph 2 and otherwise dismissed the summons.
Mr Gao seemed to be complaining that the master had not given his summons proper consideration. In fact, as can be seen, his summons really only contained two substantive applications, those in paragraphs 1 and 2.
Paragraph 1 of the summons appears to seek a stay of execution of the Costs until the conclusion of this proceeding, on the basis that Mr Gao suffered serious damage from the defendant’s alleged deceit. Rule 66.16 empowers the court to stay execution of a judgment (which includes an order), for such time and on such terms and conditions as the court thinks fit. The court’s discretion is a wide one[6], but the starting point is that a person who obtains a judgment or order is entitled to have it enforced without delay[7].
[6]Joskovitz v Bonnick [1964] VR 654.
[7]State Bank of Victoria v Parry [1989] WAR 240.
As mentioned earlier, I am not in a position to assess the likelihood that Mr Gao will succeed at trial in his damages claim against Ms Zhang. As a matter of principle, a possible entitlement to damages at trial is not a sufficient reason to stay the execution of an interlocutory costs order.[8]
[8]Joskovitz v Bonnick at 657.
There has also been considerable delay by Mr Gao in making the stay application. The Costs were taxed and ordered to be paid in November 2002. Mr Gao has waited more than 2 years before seeking a stay of execution. In so far as he has challenged any of the orders which form part of the Costs, he has been unsuccessful.
For these reasons, Mr Gao has not persuaded me that there should be an order staying execution of the Costs.
In relation to paragraph 2 of Mr Gao’s summons, the master ordered that the application be adjourned sine die. Given that the proceeding is to be stayed pending payment of the Costs, I agree with the master that Mr Gao’s application to inspect subpoenaed documents should not proceed whilst the proceeding is stayed.
Conclusion
For these reasons I will order that the appeal be dismissed and the plaintiff pay the defendant's costs of this appeal including reserved costs.
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