Xie v Zhang
[2025] VSC 263
•9 May 2025 (ex tempore; revised 13 May 2025)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
GENERAL COMMERCIAL LIST
S ECI 2025 01298
| YUAN SHENG XIE | Plaintiff |
| v | |
| ZHI WU ZHANG | Defendant |
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JUDGE: | CONNOCK J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 9 May 2025 |
DATE OF JUDGMENT: | 9 May 2025 (ex tempore; revised 13 May 2025) |
CASE MAY BE CITED AS: | Xie v Zhang |
MEDIUM NEUTRAL CITATION: | [2025] VSC 263 |
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PRACTICE AND PROCEDURE – Debt claim under a promissory note – Writ issued under s 4 of Instruments Act 1958 (Vic) – Time for defendant seeking leave to file an appearance expired and cannot be extended – Right to enter final judgment – Entry of final judgment under s 4 of Instruments Act is not entry of judgment in default of defendant filing an appearance under r 21.01(2) – Appearance under r 21.01(2) – Notice of application given to defendant who failed to seek leave to enter an appearance under s 5 of the Instruments Act 1958 (Vic) – Entry of default judgment under the Supreme Court (General Civil Procedure) Rules 2015 (Vic) is an act of ministerial character of the Prothonotary – Instruments Act 1958 (Vic) ss 3, 4, 5 and 10 and Second Schedule thereto – Supreme Court (General Civil Procedure) Rules 2015 rr 21.01(2) – Rule 2.07(1) of Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 (Vic) ch II not engaged – Kay’s Leasing Corporation Pty Ltd v Burgess [1961] VR 703; Costain Australia Limited v Dennehy [1983] 2 VR 353; Cooper Morison Pty Ltd v Tennozan Pty Ltd [2008] VSC 273; Victorian WorkCover Authority v White [2021] VSC 458; Laminex Group Pty Ltd v Dwan [2023] VSC 595 referred to.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | L Nikolakis, solicitor | AANDI Lawyers |
| For the Defendant | Y Zhang, solicitor | Westlink Legal |
HIS HONOUR:
Introduction
By a writ dated 12 March 2025 filed pursuant to s 4 and the Second Schedule of the Instruments Act 1958 (Vic) (Instruments Act), the plaintiff claims $3,492,880.00 (Sum) from the defendant, said to be due and payable pursuant to the terms of a promissory note dated 7 May 2019. An affidavit of service of Morrie Fahd sworn 20 March 2025 records that the writ was personally served on the defendant at 7:08 am on 14 March 2025.
The defendant did not apply for leave to file an appearance within the relevant 21 day period prescribed in s 5(2) of the Instruments Act and the plaintiff then sought to enter judgment for the Sum and $4,190.70 for legal costs (Costs Amount) pursuant to s 4 of the Instruments Act. Upon so doing, the plaintiff was informed by the Commercial Court Registry that, by reason of the operation of r 21.01(2) of the Supreme Court (General Civil Procedure) Rules 2015 (Rules) and r 2.07(1) of the Supreme Court (Miscellaneous Civil Proceedings) Rules2018 (Vic) (Miscellaneous Rules), it was necessary for the plaintiff first to obtain leave from the Court before judgment could be entered in respect of the Sum and the Costs Amount.
The proceeding came before me for mention and directions on 9 May 2025, with the plaintiff giving notice of that listing to the defendant even though the defendant had not sought leave to file an appearance in accordance with s 5 of the Instruments Act. At the hearing the plaintiff was represented by his solicitor, Mr Nikolakis. The defendant and his solicitor, Ms Zhang, attended by video link from New South Wales. The defendant did not formally ‘appear’, although I granted Ms Zhang the opportunity to be heard.
During the hearing Ms Zhang, on behalf of the defendant, made an oral application for leave to extend the time to enter an appearance and leave to file an appearance out of time. The plaintiff made an oral application for leave to seek to enter judgment in default of appearance pursuant to r 2.07(1) of the Miscellaneous Rules.
For the reasons that follow, each of the oral applications was refused.
Summary proceedings on bills of exchange under the Instruments Act
Summary proceedings on bills of exchange, which are relevantly defined in s 3 of the Instruments Act to include a cheque or a promissory note, are addressed in Part I of the Instruments Act. That Part of the Act provides, in part, as follows:
3 Definitions
In this Part unless inconsistent with the context or subject-matter—
action means and includes proceeding in the Supreme Court or in the County Court or complaint in the Magistrates’ Court;
bill means bill of exchange (including cheque) or promissory note;
holder means the payee or indorsee of a bill who is in possession of it or the bearer thereof;
legal practitioner means an Australian legal practitioner.
4 Commencement of proceedings in the Supreme Court
Any proceeding in the Supreme Court upon a bill after the same has become due may be by writ in the form contained in the Second Schedule to this Act and indorsed as therein mentioned. And it shall be lawful for the plaintiff on filing an affidavit—
(a)where the defendant is a natural person, of personal service of such writ upon him or, where the Court makes an order for substituted service, of service in accordance with that order; or
(b)where the defendant is a company within the meaning of the Corporations Act, of service of such writ on the company in accordance with section 109X of that Act; or
(c)where the defendant is a registered body within the meaning of the Corporations Act, of service of such writ on the registered body in accordance with section 601CX of that Act—
and a copy of the writ and the indorsements thereon, in case the defendant has not obtained leave to appear and appeared to such writ according to the exigency thereof, at once to enter final judgment for any sum not exceeding the sum indorsed on the writ together with the interest at the rate specified (if any) to the date of the judgment, and such sum as is from time to time specified in the Rules of the Supreme Court for costs unless the plaintiff claims more than such sum, in which case the costs shall be assessed in the ordinary way; and the plaintiff may upon such judgment issue execution forthwith.
5 Appearance may be entered
(1)The defendant may, within the relevant period after the service of a writ under section 4, enter an appearance to the writ if the defendant has made application to the Supreme Court and—
(a)paid into court the sum endorsed on the writ; or
(b)filed affidavits satisfactory to the Court which disclose—
(i)a defence; or
(ii)such facts as would make it incumbent on the holder to prove consideration; or
(iii)such other facts as the Court deems sufficient to support the application—
and the Court has given leave to appear to the writ and defend the action upon such terms as to security or otherwise as to the Court seems fit.
(2)In subsection (1) relevant period means—
(a)if the defendant resides within 80 kilometres of the post office corner of Bourke and Elizabeth Streets Melbourne—16 days; and
(b)if the defendant resides beyond that distance—21 days
6 Court may allow proceeding to be defended after judgment
After judgment the court may under special circumstances set aside the judgment and if necessary stay or set aside execution and may give leave to appear to the writ and to defend the proceeding if it appears to be reasonable to the court so to do, and on such terms as to the court seem just.
…
10 Practice in actions to apply
The practice and procedure for the time being applicable to and regulating actions at law shall (so far as the same are not inconsistent herewith) extend and apply to all proceedings taken under this Part.
As can be seen, there is no express right for a defendant to enter an appearance in response to the service of a writ pursuant to s 4 of the Instruments Act. Rather, s 5 permits a defendant, within the ‘relevant period’ after the service of the writ, to seek leave to file an appearance and defend the action on such terms as to security or otherwise as to the Court seems fit. In so doing, it is necessary for the defendant to apply to the court within the relevant period for leave to appear, and to pay into Court the sum indorsed on the writ, or file affidavits satisfactory to the court which disclose a defence; such facts as would make it incumbent on the holder to prove consideration; or such other facts as the Court deems sufficient to support the application.
In this case the defendant resides in New South Wales and therefore the relevant period is the 21 day period referred to in s 5(2)(b) of the Instruments Act.[1]
[1]The affidavit of service also contained a notice pursuant to the Service and Execution of Process Act 1992.
It is important to note the ‘relevant period’ under s 5 of the Instruments Act cannot be extended. I refer in this regard to the decisions in Kay’s Leasing Corporation Pty Ltd v Burgess (Kay’s Leasing),[2] Costain Australia Limited v Dennehy,[3] and Cooper Morison Pty Ltd v Tennozan Pty Ltd.[4]
[2][1961] VR 703, 704, 705 (Gowans J).
[3][1983] 2 VR 353, 354 (Brooking J).
[4][2008] VSC 273, [9] (Cavanough J).
In Kay’s Leasing, Gowans J addressed the issue as follows:
Section 5 of the Act reads as follows: “A judge of the Supreme Court shall upon application where the defendant resides within fifty miles of the post office corner of Bourke and Elizabeth Streets Melbourne within eight and where the defendant resides beyond that distance within sixteen days from such service give leave to appear to such writ and to defend the action, on the defendant paying into court the sum indorsed on the writ or upon affidavits satisfactory to the judge which disclose a defence or such facts as would make it incumbent on the holder to prove consideration or such other facts as the judge deems sufficient to support the application; and on such terms as to security or otherwise as to the judge seems fit”.
In the present action the defendant did not obtain leave to appear within the period of eight days which was applicable, and no appearance was in fact entered within the eight days. In these circumstances he has applied that he be granted leave to enter an appearance out of time, and that he be granted leave to defend the action.
It seems to me that on the face of the provisions contained in s 5 the duty which is cast on a judge to give leave is conditioned by the obligation on the part of the defendant to make his application within the time specified in the section.
It is true that s 10 of the Act provides that: “The practice and procedure for the time being applicable to and regulating actions at law shall (so far as the same are not inconsistent herewith) extend and apply to all proceedings taken under the Part”. The practice and procedure applicable to actions at law would of course embrace the ordinary power in the rules to extend any time fixed by the rules themselves. It would not embrace power to extend the time fixed by statute; and if it did, the question would arise whether the rule giving power to extend time would not be inconsistent with the provisions of s 5 stipulating the times applicable according to the distance of the defendant's residence from the post office referred to.
The difficulty in the way of the defendant in this case lies in the fact that the only power of the judge is conditioned in the way described by the provisions of s 5. It has been pointed out that s 6 enables the court or a judge after judgment to set aside the judgment and if necessary stay or set aside execution and to give leave to appear to the writ and to defend the action if it appears to be reasonable to the court or judge so to do under special circumstances.
But although it may appear incongruous that it is within the power of the court to set aside judgment in the circumstances referred to in s 6 and yet that the judge should be left without power to give leave to defend where the time for appearance has elapsed but no judgment has been entered, that is not sufficient to enable me to read into the Act a power to give leave to appear to the writ and defend the action when the appearance cannot be entered within the time provided for by the writ itself according to the form set out in the Second Schedule, and in conformity with the provisions of s 4.
This view appears to have been the view taken by a’Beckett, J, in Noonan v Townsend (1894) 20 VLR 341.
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My conclusion, therefore, is that where the time for appearance has gone by without an application for leave to appear having been made, and where it would not be possible for the defendant to appear within the time specified in s5, it is not within my power to grant leave to appear and defend the action or to extend the time for making application or entering an appearance.
[His Honour then discussed the facts disclosed by the defendant’s affidavit in support of his application, and continued:--] But it does not seem to me necessary to determine whether a defence is sufficiently made out on the material before me.
The position of the defendant is that, having regard to the provisions of the Act, he has not made application for leave within the time necessary, and he could not enter an appearance within the time necessary, and that means that I have not the power, even if I thought it proper to exercise it, to grant the application set out in the summons.
If the plaintiff proceeds in consequence of my decision to enter judgment, the defendant has open to him the proceedings set out in s6 as was pointed out by a’Beckett, J, in Noonan v Townsend, supra, and nothing I have said as to the material before me would preclude another judge from exercising the power conferred by s6 if he thought fit to do so upon the same or other materials.
The result is that I must refuse this application.
Defendant’s oral application to extend the time for seeking leave to appear and for leave to file an appearance out of time
The short answer to the defendant’s oral application for leave to extend the time for seeking leave to appear and enter an appearance out of time is that the relevant period is not capable of being extended. Consequently, the defendant’s application must fail. I refer in this regard to the terms of s 5 and the Second Schedule to the Instruments Act, and the observations in the authorities mentioned above.
Further, and in any event, at the time the oral application was made no affidavit material had been filed and there had been no payment of the Sum into Court. Consequently, the defendant had not complied with any of the requirements in s 5(1) of the Instruments Act, meaning that the oral application would have failed even if it had been made within time. I add that this is not intended to convey any criticism of the defendant’s solicitor, who it was apparent was engaged in urgent circumstances and at very short notice.
Plaintiff’s application for leave to seek to enter judgment in default of appearance pursuant to r 21.01(2) of the Rules and r 2.07(1) of the Miscellaneous Rules
The plaintiff’s oral application for leave pursuant to r 21.01(2) of the Rules and r 2.07(1) of the Miscellaneous Rules to seek to enter judgment in default against the defendant must also be refused. This is because r 21.01(2) of the Rules and r 2.07(1) of the Miscellaneous Rules do not apply to a plaintiff seeking ‘… at once to enter final judgment for any sum not exceeding the sum indorsed on the writ together with the interest at the rate specified (if any) to the date of the judgment …’ pursuant to s 4 of the Instruments Act. In short, the leave sought by the plaintiff is not required. I elaborate further below.
Rule 21.01 of the Rules applies to a proceeding commenced by writ under the Rules, and r 21.01(2) provides as follows:
Where a defendant does not file an appearance within the time limited, the plaintiff may enter or apply for judgment against that defendant in accordance with this Order unless Rule 2.07(1) of Chapter II applies.
Note: Rule 2.07(1) of Chapter II provides that, in a Commercial List that is managed by a Commercial List Judge, an order of a Commercial List Judge is required before judgment in default of an appearance can be entered.
Rule 21.01(3) addresses the requirements for seeking to enter judgment in default of an appearance, including the requirement to file a notice requesting the Prothonotary to search for an appearance, an affidavit proving service of the writ, and where the indorsement of claim on the writ does not constitute a statement of claim in accordance with r 5.04, a statement of claim.
I addressed the operation of r 2.07(1) of the Miscellaneous Rules in Victorian WorkCover Authority v White[5] as follows:
[1]The plaintiff wishes to enter judgment in default of appearance against the defendants pursuant to rr 21.01 and 21.03(1)(a) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) in respect of what it characterises as a claim for the recovery of a debt. The claim against the defendants is made under s 17K(6)(a) of the Dangerous Goods Act 1985 (Vic) (Act) and the total sum alleged to be owing is $35,981,112.22 (Total Sum).
[2]In other circumstances the administrative step of seeking to enter judgment in default of appearance would be taken by the plaintiff through the Prothonotary in accordance with the Rules without first making an application to the Court for leave to take that step. However, this proceeding is managed by a Commercial List Judge so r 2.07(1) of ch II of the Rules of the Supreme Court[6] is engaged. Paragraph 16.5 of Commercial Court Practice Note SC CC 1 reinforces the position by providing that judgment may not be entered administratively in a proceeding within a Commercial List unless the List Judge gives leave to do so. When introduced, each of these requirements was essentially based upon case management, cost, and efficiency considerations, including preventing what is colloquially known as ‘snapping on’ judgment in default. However, the requirements do not otherwise alter the essentially administrative process for entering judgment where leave is granted to pursue that course, or change the character of the act of the Prothonotary in entering judgment in default.
[3]It follows that before the plaintiff can seek to enter judgment in default of appearance pursuant to rr 21.01 and 21.03 of the Rules it is necessary for it to obtain an order from the Court granting it leave to take that step, which is what in substance the plaintiff seeks in this application.
[4]The application was not made by summons, although written notice of the application was given to the defendants even though no appearances have been filed. If and to the extent a summons was required by the Rules to be filed in relation to the application, in my view, cost, efficiency, and the other relevant considerations under the Civil Procedure Act 2010 (Vic) make it appropriate to dispense with that requirement.
[5]If leave is granted, it will be open to the plaintiff to utilise the procedures under rr 21.01 and 21.03(1)(a) of the Rules to seek to enter judgment in default of appearance against the defendants for the Total Sum through the Prothonotary in the usual way.[7]
[5][2021] VSC 458, [1]–[5]. See also Laminex Group Pty Ltd v Dwan [2023] VSC 595, [1], [7]–[11].
[6]Entitled Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 (Vic).
[7]As observed by McInerney J in The City Mutual Life Assurance Society Ltd v Giannarelli [1977] VR 463, 469, … the entry of judgment in default of appearance by the Prothonotary is an act of “ministerial character” … and cannot be regarded as being, or as being equivalent to, a judge in the exercise of powers committed to him [or her] in relation to the trial.’ See also Bass Coast Council v Hollole [2017] VSC 803, [1] (Mukhtar AsJ).
If the plaintiff in this case had been seeking to enter judgment in default of the defendant filing an appearance under r 21.01(2), then r 2.07(1) of the Miscellaneous Rules would apply. However, the plaintiff in this case was not seeking to enter judgment in default of an appearance in the manner contemplated by r 21.01(2) of the Rules or r 2.07(1) of the Miscellaneous Rules. A plaintiff seeking to exercise the right ‘… at once to enter judgment …’ pursuant to s 4 of the Instruments Act is not seeking to enter judgment in default of a defendant filing an appearance in accordance with the Rules. Rather, the plaintiff is seeking to exercise an express statutory right ‘at once to enter final judgment’ in the circumstances described in s 4 of the Instruments Act, which relevantly include the defendant having not sought or obtained leave to appear (and appeared) in response to the writ in the manner contemplated by s 5 of the Instruments Act.
As earlier noted, if the defendant to a writ issued pursuant to s 5 of the Instruments Act has not sought to obtain leave within the ‘relevant period’, it is not possible for that period to be extended, as has been consistently held in this Court. As is the case here, it is the absence of the obtaining of leave to appear by the defendant that (relevantly) triggers the plaintiff’s entitlement to seek ‘at once to enter final judgment’ under s 4 of the Instruments Act. It is not the failure by the defendant to file an appearance in the manner addressed in r 21.01 of the Rules or r 2.07(1) of the Miscellaneous Rules.
I add that there is nothing associated with the introduction or history of r 21.01(2) of the Rules or of r 2.07(1) of the Miscellaneous Rules, or their respective terms, that suggests that these rules were intended to apply to the special summary procedure provided for in Part I of the Instruments Act. Indeed, were r 21.01(2) of the Rules and r 2.07(1) of the Miscellaneous Rules to be construed as adversely impacting on a plaintiff’s entitlement to exercise the statutory right created by s 4 of the Instruments Act, such a construction would operate so as to add an impermissible restriction on a plaintiff’s express right to enter judgment under s 4 of the Instruments Act.
That the rights under Part I of the Instruments Act are distinct from the relevant Rules is evident from the provisions in that Part, and is reinforced by the terms and operation of s 10 of the Instruments Act, which expressly applies the Court’s practice and procedure ‘so far as the same are not inconsistent [with Part I]’. If r 21.01(2) of the Rules and/or r 2.07(1) of the Miscellaneous Rules were to apply, they would be inconsistent with the express statutory right in s 4 ‘at once to enter final judgment’. The said rules do not engage.
It may also be noted that rr 5.03, 21.01 of the Rules, and r 2.07(1) of the Miscellaneous Rules, address a writ filed under the Rules in the form of Form 5A, and not a writ filed pursuant to s 4 of the Instruments Act in the form of the Second Schedule to the Instruments Act. Further, in the context of a writ filed in the form of Form 5A pursuant to the Rules, a defendant has an entitlement as of right to enter an appearance, whereas a defendant to a writ issued pursuant to s 4 of the Instruments Act has no such right.
Consequently, and although it was understandable why the Registry considered that it was desirable that the matter be referred to the Court in case the plaintiff was required to obtain leave, it is in my view clear that the qualifications in r 21.01(2) of the Rules and r 2.07(1) of the Miscellaneous Rules do not engage with the special procedure provided for in Part I of the Instruments Act, including the exercise of the right’ at once to enter final judgment’ pursuant to s 4 of the Instruments Act.
The result means that, although the plaintiff’s application for leave pursuant to r 2.07(1) of the Miscellaneous Rules has been refused, the plaintiff is at liberty to seek to exercise the statutory right in s 4 of the Instruments Act in respect of the Sum and the Costs Amount in the ordinary way — but subject of course to satisfying the Prothonotary that the relevant statutory requirements have been satisfied.
I add for completeness that, even if the relevant rules referred to above had been engaged, leave would have been granted to the plaintiff to seek to enter judgment in any event, noting in this context that the ‘relevant period’ for the defendant to seek leave to file an appearance cannot be extended.
Other matters
As things transpired at the hearing I stood the matter down for a period to enable the solicitors to speak with each other with a view to exploring whether there was any scope for resolving the proceeding, or narrowing any issues. When the matter returned before me, I was informed by the plaintiff’s solicitor that progress had been made and that discussions were going to continue.
Conclusion and proposed orders
For the reasons referred to above, the defendant’s oral application for leave to file an appearance out of time is refused, and the plaintiff’s application for leave to enter judgment in default of appearance pursuant to r 21.01(2) of the Rules and r 2.07(1) of the Miscellaneous Rules, is also refused.
Orders will be made recording the dismissal of the applications, reserving costs, reserving liberty to apply, and, as suggested by the parties was appropriate, adjourning the directions hearing until 30 May 2025.
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