Federal Court Allows Substituted Service for Statutory Demand Dispute

OUTCOME: Allowed

FEDERAL COURT OF AUSTRALIA

[COMPANY] v [RESPONDENT] [2011] FCA 1067 Citation: [COMPANY] v [RESPONDENT] [2011] FCA 1067

Parties: [COMPANY] ([NAME] [PHONE]) v [NAME] [RESPONDENT] number: NSD 1529 of 2011

Judge: FLICK J

Date of judgment: 15 September 2011

Catchwords: CORPORATIONS – application to set aside statutory demand – interlocutory application for substituted service

Legislation: Corporations Act 2001 (Cth) ss 459G, 459H, 459J Federal Court Rules 2011 (Cth) r 10.24 Federal Court Rules (Cth) O 7 r 9 Uniform Civil Procedure Rules 2005 (NSW)

Cases cited: [COMPANY] v [NAME] [2010] NSWSC 669, considered Hadgkiss v Aldin [2006] FCA 1164, cited [COMPANY] v [NAME] [COMPANY] [2007] FCA 124, considered [COMPANY] v [NAME] (1996) 138 ALR 480, considered [COMPANY] – A Division of [NAME] v [NAME] [COMPANY] [2010] NSWSC 736, 77 NSWLR 148, cited [COMPANY] v [COMPANY] (1998) 82 FCR 25, cited

Date of hearing: 15 September 2011

Place: [RESPONDENT]: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 16

Counsel for the [RESPONDENT]: [NAME]

Solicitor for the [RESPONDENT]: [NAME] ([NAME])

Counsel for the Defendant: [redacted]

IN THE FEDERAL COURT OF AUSTRALIA [RESPONDENT] 1529 of 2011

BETWEEN: [COMPANY] ([NAME] [PHONE])

[RESPONDENT]

Defendant

[RESPONDENT] OF ORDER: 15 SEPTEMBER 2011 [RESPONDENT]

THE COURT ORDERS THAT:

1. Pursuant to Rule 10.24 of the Federal Court Rules 2011 (Cth) the [RESPONDENT] is ordered to effect service of: (a) the Originating Process filed on 8 September 2011; and (b) the Affidavit of Mr [NAME] sworn on 6 September 2011; and (c) a copy of these Orders on the Defendant on or before 5.00 pm on Friday 16 September 2011 by: (i) delivering those documents to the Defendant at [ADDRESS], Newport Beach in the State of New South Wales; and (ii) transmitting a scanned copy of the documents (in PDF format) to the last known email address of the Defendant being [EMAIL]; and (iii) sending a copy of the documents by express post to the last known postal address of the Defendant being [NAME], Newport Beach, in the State of New South Wales.

2. For the purpose of Rule 10.24 of the Federal Court Rules 2011 (Cth), upon the [RESPONDENT] satisfying the terms of Orders 1(i) to 1(iii) inclusive, the documents will be taken to have been personally served upon the Defendant, [NAME] [RESPONDENT].

3. These Orders may be entered forthwith and an authenticated copy is to be provided to the [RESPONDENT].

4. Costs reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA [RESPONDENT] 1529 of 2011

BETWEEN: [COMPANY] ([NAME] [PHONE])

[RESPONDENT]

Defendant

JUDGE: FLICK J DATE: 15 SEPTEMBER 2011 PLACE: [RESPONDENT] FOR

JUDGMENT 1 The [RESPONDENT] in the present proceeding ([RESPONDENT]) and the Defendant (Ms [NAME] [RESPONDENT]) have apparently been involved in litigation since about 2008. 2 For present purposes it is sufficient to note that Ms [RESPONDENT] served a statutory demand upon the [RESPONDENT] in late August 2011. The Originating Process as filed by the [RESPONDENT] in this Court on 8 September 2011 seeks an order pursuant to either s 459H or 459J of the Corporations Act 2001 (Cth) setting aside that statutory demand. The affidavit presently filed in support of the Originating Process is an affidavit of Mr [NAME]. 3 Section 459G of the Corporations Act, it should be further noted, provides as follows: Company may apply (1) A company may apply to the Court for an order setting aside a statutory demand served on the company. (2) An application may only be made within 21 days after the demand is so served. (3) An application is made in accordance with this section only if, within those 21 days: (a) an affidavit supporting the application is filed with the Court; and (b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company. The [RESPONDENT] maintains that the statutory demand was served upon it on 30 August 2011 and that the 21 day period prescribed by s 459G expires next Tuesday 20 September 2011. 4 Given the constraint as to time, the [RESPONDENT] brings the present interlocutory application as "the cautious approach". That application is pursuant to Rule 10.24 of the Federal Court Rules 2011 for substituted service upon Ms [RESPONDENT] of the Originating Process, the Affidavit of Mr [RESPONDENT] and the Orders to be now made. 5 The Orders as sought should be made. 6 Rule 10.24 provides as follows: Substituted service If it is not practicable to serve a document on a person in a way required by these Rules, a party may apply to the Court without notice for an order: (a) substituting another method of service; or (b) specifying that, instead of being served, certain steps be taken to bring the document to the attention of the person; or (c) specifying that the document is taken to have been served: (i) on the happening of a specified event; or (ii) at the end of a specified time. The counterpart to Rule 10.24 was previously to be found in Order 7 r 9 of the now repealed Federal Court Rules. Rule 9 was expressed in terms of it being "impractical to serve a document in the manner set out in the Rules". 7 When construing the former Order 7 rule 9, [NAME] [COMPANY] v [NAME] (1996) 138 ALR 480 at 482 observed: Substituted service The meaning of the expression "practicable" for the purpose of a substituted service application under the corresponding UK rule was considered by the Court of Appeal in [COMPANY] [COMPANY] v Burnell [1991] 2 All ER 388. Lloyd LJ considered that the word "practicable" should be given a wide meaning and that the simple question was whether it was "practicable" to serve by one of the prescribed methods (at 390). The expression "not practicable" is in my view essentially identical in meaning to the term "impractical". In order to establish impracticality some attempt, at least, should be made to effect service in accordance with the rules or evidence should be led that it is so obviously futile as not to warrant an attempt at service. … In O'Neil v Acott (1988) 59 NTR 1, the [ADDRESS] of the Supreme Court of the Northern Territory considered the words "impracticable to serve". Asche CJ with whom Nader and Rice JJ concurred, referred to the remarks of Mason J in Foxe v Brown (1984) 58 ALR 542 at 547, where his Honour said: Furthermore, the question is not whether reasonable effort has been shown by the [RESPONDENT] over a particular period but whether at the date on which the application for substituted service is made, the [RESPONDENT], using reasonable effort, is unable to serve the defendant personally. (Emphasis added) This decision has been applied by other Judges of this Court: e.g., [COMPANY] v [COMPANY] (1998) 82 FCR 25 at 26 per Goldberg J. When commenting upon [NAME], Allsop J in [COMPANY] v [NAME] [COMPANY] [2007] FCA 124 observed as follows that the term "impractical" may not be subject to the constraint suggested by [NAME]: [14] [COMPANY] v [NAME] (1996) 138 ALR 480 at 482 [NAME] said that "not practicable" in an English Rule to which he was referred was "essentially identical" in meaning to "impractical" in O 7 r 9. In that case, [NAME] seemed to express the view that futility or inability to serve was an essential requirement for invocation of the rule. Whether that gives full breadth to the language of the rule may be open to debate. On one view of the language of the rule, "impractical" may be wide enough to cover circumstances where in the light of the nature of the claim and the circumstances of the applicant and respondent service through the method provided for by following the Rules is not sensible or realistic, even if it is possible or feasible. It is unnecessary to deal with this question here. … 8 When commenting upon the requirement imposed by the Uniform Civil Procedure Rules 2005 (NSW) that documents "cannot practicably be served", Palmer J in [COMPANY] v [NAME] [2010] NSWSC 669 observed: [40] "Impracticable" does not mean "impossible": see eg Re [NAME] [1971] Ch 982, at 994; nor does it mean "inconvenient": see eg [NAME] [COMPANY] v El-Sayed [2009] NSWSC 207. Whether personal service is "impracticable" must be decided according to the particular circumstances of the case at the time that the application for substituted service is made and must have regard to: - the requirement to do justice to a [RESPONDENT] who has demonstrated a prima facie case which may be defeated or frustrated if personal service of the originating process upon the defendant is insisted upon; and - the requirement to do justice to a defendant who is entitled to receive proper and efficacious notice of proceedings commenced against him or her. [41] One factor, out of an infinite variety of possible factors which may affect the question whether personal service is practicable is whether the evidence in support of an application for substituted service satisfies the Court there is a real possibility — not a remote or fanciful possibility — that an attempt at personal service of originating process will result in the defeat or frustration of the [RESPONDENT]'s proceedings. Just as freezing orders are often made ex parte for fear that a forewarned dishonest defendant will remove assets before the Court's orders fasten upon them, so also may substituted service be ordered if there is a real possibility that the defendant, forewarned by an attempt at personal service, will take measures to ensure that further attempts are unsuccessful. Another factor may be that the time taken in effecting personal service may result in a delay which will completely frustrate the [RESPONDENT]'s proceedings … [42] In all cases, the practicality or impracticality of personal service will be coloured by the degree to which the Court can be assured that substituted services will efficaciously bring the proceedings to the proper notice of the defendant. The more likely it is that substituted service will not be efficacious, the more difficult it will be to persuade the court to dispense with personal service. 9 Notwithstanding the difference in language now employed in the current Rules, there is no reason why the expression in Rule 10.24, namely "not practicable", should be given any meaning more constrained than that previously given to Order 7 r 9. Concurrence is expressed with the views tentatively set forth by Allsop J in [COMPANY]. Rule 10.24 should not be given any meaning requiring the necessity to prove the impossibility of service of documents upon a party in accordance with the Rules or any requirement to prove that further attempts to effect service in accordance with the Rules would otherwise be futile or not sensible or feasible. 10 An order for substituted service pursuant to Rule 10.24, as with the former rule (Hadgkiss v Aldin [2006] FCA 1164 at [3] per Nicholson J), must be based on a reasonable probability that it will inform the person served as a result of the form of service identified. 11 Rule 10.24 would in all probability not permit substituted service of a statutory demand upon a corporation: cf. [COMPANY] – A Division of [NAME] v [NAME] [COMPANY] [2010] NSWSC 736, 77 NSWLR 148 per Barrett J. But where a proceeding has been instituted by the corporation seeking to have a statutory demand set aside, Rule 10.24 does permit substituted service to be ordered upon the person who served the statutory demand. 12 In support of the application for substituted service, the [RESPONDENT] has provided a copy of a letter dated 24 August 2011 from Ms [RESPONDENT] addressed to the [RESPONDENT]. That letter enclosed the statutory demand now sought to be set aside. The heading to that letter set forth Ms [RESPONDENT]'s address at Newport Beach, a Post Office Box number and an email address. The [RESPONDENT]'s evidence included evidence as to attempts to serve Ms [RESPONDENT] at that Newport Beach address and at her place of employment at the [COMPANY] in Crows Nest. The [NAME] who attempted service at the Newport address on 9 and 12 September 2011 deposed to having attended at that address, having seen at that address a person identified as the "life-partner" of Ms [RESPONDENT] and having unsuccessfully attempted to gain access to the property after having engaged a "security intercom" at the front gate, he was unable to elicit a response despite "prolonged and persistent activation of the button on that intercom". A side gate, according to the [NAME], appeared to have been "barricaded to keep out callers". Lights which were observed to have been on at the outset were apparently turned off. Evidence of a different [NAME] was also relied upon. That evidence was as to attendance at the [COMPANY] on 13 September 2011 when the [NAME] was advised that Ms [RESPONDENT] was "in Theatre all morning" and that it was unknown whether she would be working that afternoon. No attempt was made to serve Ms [RESPONDENT] at the [COMPANY] on any other occasion. 13 Such evidence may fall short of establishing an "inability" or "impossibility" to personally serve Ms [RESPONDENT] in accordance with the Rules. 14 A conclusion should nevertheless be reached that it is "not practicable" to serve upon Ms [RESPONDENT] the Originating Process and the affidavit of Mr [RESPONDENT] in the manner otherwise required by the Rules. "[A]nother method of service" should be ordered. Orders should be made as authorised by Rule 10.24. 15 The methods of service suggested by the [RESPONDENT], it is concluded, will bring to the notice of Ms [RESPONDENT] the fact that the present proceeding has been commenced and bring to her notice the Originating Process and the Affidavit relied upon in that proceeding. 16 As suggested by Palmer J in [COMPANY], the discretion to order substituted service may more easily be exercised in circumstances where the Court can be reasonably satisfied that the methods of substituted service which are ordered will bring documents to the attention of the party to be served. The Orders now made will do justice as between the parties: they will ensure that the interests of the [RESPONDENT] are protected and will also ensure that Ms [RESPONDENT] is properly informed as to the present proceeding seeking to have her statutory demand set aside.

ORDERS The Orders of the Court are:

4. Costs reserved. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.

Associate: Dated: 16 September 2011