FEDERAL COURT OF AUSTRALIA Zhao v Goodman [2011] FCA 1438 Citation: Zhao v Goodman [2011] FCA 1438 Appeal from: Zhao v Goodman [2011] FMCA 518; Goodman v Zhao [2011] FMCA 578 Parties: YAN SHOU ZHAO v MARLA SHOSHANA GOODMAN File number(s): NSD 1070 of 2011 NSD 1332 of 2011 Judge: NICHOLAS J Date of judgment: 25 November 2011 Cases cited: Henderson v Henderson (1843) 3 Hare 100; (1843) 67 ER 313 Fox v Percy (2003) 214 CLR 118 Port of Melbourne Authority and Anshun Pty Ltd (1981) 147 CLR 589 Zhao v Goodman & Anor [2010] NSWCA 2 Date of hearing: 25 November 2011 Place: Sydney Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 20 Counsel for the Appellant: The Appellant appeared in person Counsel for the Respondent: Mr S Ahmed Solicitor for the Respondent: Mills Oakley Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1070 of 2011 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: YAN SHOU ZHAO Appellant AND: MARLA SHOSHANA GOODMAN Respondent JUDGE: NICHOLAS J DATE OF ORDER: 25 NOVEMBER 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1332 of 2011 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: YAN SHOU ZHAO Appellant AND: MARLA SHOSHANA GOODMAN Respondent JUDGE: NICHOLAS J DATE OF ORDER: 25 NOVEMBER 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1070 of 2011 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: YAN SHOU ZHAO Appellant AND: MARLA SHOSHANA GOODMAN Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1332 of 2011 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: YAN SHOU ZHAO Appellant AND: MARLA SHOSHANA GOODMAN Respondent JUDGE: NICHOLAS J DATE: 25 NOVEMBER 2011 PLACE: SYDNEY REASONS FOR JUDGMENT (Revised from Transcript) 1 There are two appeals before me. The first is an appeal against orders made by Lloyd-Jones FM on 8 July 2011 dismissing the appellant's application for a review of a registrar's decision made on 17 May 2011 refusing to set aside a bankruptcy notice directed to the appellant. 2 The second appeal is against a sequestration order made by Driver FM on 28 July 2011 against the appellant's estate. The two appeals have been listed to be heard together. The appellant, who is self-represented, appeared before me today. He also appeared on his own behalf before Lloyd Jones FM and Driver FM. 3 To understand the issues raised in these appeals it is necessary to recount, at least in summary form, the history of what began as a home building dispute between the appellant and the respondent. 4 In 2000 and 2001 the appellant, a licensed builder, constructed a dwelling for the respondent upon land at Dover Heights. In 2006 the respondent commenced proceedings in the District Court of New South Wales alleging that the building work performed by the appellant in 2000 and 2001 was defective and incomplete. The appellant, who was represented by counsel at that time, also filed a cross claim by which he sought to recover payments allegedly due to him under the building contract. The pleadings filed in those proceedings were in evidence before Lloyd-Jones FM. 5 The original proceedings in the District Court were heard by District Court Judge Johnstone over some 14 days. His Honour delivered judgment on 1 October 2008 entering a verdict for the respondent against the appellant for $157,847.30 plus interest. His Honour also entered a verdict in the respondent's favour on the appellant's cross claim. 6 The appellant filed an appeal against his Honour's judgment. On 5 February 2010 the Court of Appeal, in a detailed judgment, dismissed the appeal with costs. The appellant then sought leave to appeal to the High Court without success. 7 On 23 March 2011 the appellant filed a statement of claim in the District Court claiming $68,820 plus interest from the respondent. The statement of claim and the defence in that matter were also in evidence before Lloyd-Jones FM. The matters the appellant sought to raise in this second proceeding before the District Court involved the same matters, or closely related matters, to those which had been the subject of earlier adjudication by the District Court. All such matters were directly and immediately concerned with the building contract and the parties' obligations under it. 8 On 4 April 2011 the respondent issued the bankruptcy notice which is the subject of the first appeal to this court. The bankruptcy notice was served on 18 April 2011. On 6 May 2011 the appellant filed an application to have the bankruptcy notice set aside. On 17 May 2011 Registrar Hedge dismissed the application. The appellant then sought to review the registrar's decision. The federal magistrate who heard that application also declined to set aside the bankruptcy notice. His Honour provided written reasons on 8 July 2011. 9 On 20 May 2011 the appellant commenced yet another proceeding in the District Court, this time seeking $230,593.18 plus interest. It too related to the same matters, or matters closely related to the subject matter of the District Court's previous adjudication. 10 On 17 June 2011 the respondent filed a creditor's petition in response to which the appellant filed a notice of opposition. The appellant sought to have the creditor's petition dismissed or perhaps adjourned (it is not entirely clear) on the basis that he had commenced new proceedings in the District Court claiming the amounts previously referred to. 11 On 26 July 2011, Driver FM made a sequestration order in relation to the appellant's estate. In coming to that decision, the federal magistrate referred extensively to the reasons of Lloyd-Jones FM and appears to have been satisfied that an appeal against that decision would have no serious prospects of success. In any event, his Honour proceeded to make a sequestration order in relation to the appellant's estate. The sequestration order is the subject of the second appeal to this court. 12 On 12 September 2011 both of the proceedings commenced by the appellant against the respondent in the District Court were dismissed by consent, with no order as to costs. Apparently the appellant's trustee in bankruptcy gave the necessary consent on the appellant's behalf. 13 I first turn to the appellant's appeal against the federal magistrate's decision declining to set aside the bankruptcy notice. The respondent contends that this decision was interlocutory and that leave to appeal is required. Even if that is so, I would be minded to grant leave to appeal in the event I was satisfied that the appellant had a reasonably arguable appeal. However, it appears to me the federal magistrate's decision refusing to set the bankruptcy notice aside was plainly correct. 14 The basis upon which the appellant sought to set aside the bankruptcy notice was that he had a cross claim for the various amounts claimed in the District Court proceedings commenced by him in March and May 2011. The difficulty is that those claims, if they were not raised in the original proceedings, were not maintainable by the appellant in the face of the earlier adjudication. Whether or not they duplicated claims made by him in his original cross claim, they were inextricably bound up with the subject matter of the original adjudication. 15 It is clear that both proceedings commenced by the appellant were bound to fail on the basis that they were precluded by the principle referred to in Henderson v Henderson (1843) 3 Hare 100 at 115; (1843) 67 ER 313 at 319 as explained by the High Court in Port of Melbourne Authority and Anshun Pty Ltd (1981) 147 CLR 589 at 598. 16 Before me the appellant suggested that the judgment against him in the District Court was obtained by the respondent by means of false evidence. Leaving aside his general assertions to that effect, there is nothing to suggest that there is any substance to this claim. As I have mentioned, there was a lengthy hearing in the District Court at which the appellant was represented by counsel. Both Judge Johnstone, the trial judge, and the Court of Appeal (Zhao v Goodman & Anor [2010] NSWCA 2) gave detailed reasons for decision. Judge Johnstone made adverse credit findings against Mr Zhao, preferring the evidence of Mr and Mrs Goodman. 17 In the Court of Appeal, where the appellant represented himself, it was observed by Tobias JA (with who MacFarlan JA and McClelland CJ at CL agreed) that "most, if not all, of the submissions of the appellant seek to assert that [the trial judge] in effect erred by failing to accept the appellant's evidence." In that context, Tobias JA referred to Fox v Percy (2003) 214 CLR 118 at 129 [29]. His Honour made further reference to the trial judge's credit findings in the context of specific issues raised by the appellant in his appeal. 18 In the circumstances, the first of the appeals brought by the appellant must be dismissed. As to the second of the appeals brought by the appellant, its fate hinges on the outcome of the first appeal. Unless the appellant is able to overturn the earlier decision refusing to set aside the bankruptcy notice, there does not seem to be any basis for concluding that the sequestration order should not have been made. In particular there are no grounds, in my view, shown for looking behind the judgment obtained against the respondent in the District Court. 19 While it is not clear from what was put to me by the appellant, it may be that he also takes issue with the federal magistrate's decision to proceed to hear the application for the sequestration order rather than merely adjourn it, so that the District Court proceedings could instead take their course. However, there is no suggestion on the material before me that his Honour's decision not to adjourn the creditor's petition, if that is indeed what the appellant asked the federal magistrate to do, was affected by any legal or factual error, or involved any misapplication of principle. 20 In the circumstances, the second appeal must also be dismissed. The appellant should pay the respondent's costs of the appeals. There will be orders accordingly. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas. Associate: Dated: 14 December 2011