Takapana Investments Pty Ltd v Teco Information Systems Co Ltd [1998] FCA 199 (10 March 1998)

Last Updated: 16 March 1998

FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - service - application to have order for service within jurisdiction on company outside jurisdiction set aside - extent of Court's discretion under O 7 r2 - whether service was personal.

Federal Court Rules: O 7 r2, O 7 r9

Rice Growers Co-Operative Ltd v ABC Container Line NV (1996) 138 ALR 480, considered

Amalgamated Wireless (Australasia) Ltd v McDonnell Douglas Corporation (1987) 16 FCR 238, not followed

Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310, applied

TAKAPANA INVESTMENTS PTY LTD v TECO INFORMATION SYSTEMS CO LIMITED

VG 50 of 1997

GOLDBERG J

MELBOURNE

10 MARCH 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 50 of 1997

BETWEEN:	TAKAPANA INVESTMENTS PTY LTD Applicant
AND:	TECO INFORMATION SYSTEMS CO LIMITED Respondent
JUDGE:	GOLDBERG J
DATE OF ORDER:	10 MARCH 1998
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The order of Goldberg J made on 19 August 1997 and the service on the respondent of the application and statement of claim effected in accordance with and by virtue of that order be set aside.

2. The applicant pay the respondent its taxed costs of the respondent's motion including reserved costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 50 of 1997

BETWEEN:	TAKAPANA INVESTMENTS PTY LTD Applicant
AND:	TECO INFORMATION SYSTEMS CO LIMITED Respondent

JUDGE:	GOLDBERG J
DATE:	10 MARCH 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

Introduction and background

On 6 February 1997 the applicant filed an application supported by a statement of claim seeking a declaration that the conduct of the respondent alleged in the statement of claim constituted conduct in trade or commerce which contravened s 52 and s 53 of the Trade Practices Act 1974 (Cth) ("the Act") and claiming damages. The respondent is a company incorporated pursuant to the laws of Taiwan and the applicant had difficulties in arranging service of the application and statement of claim on the respondent. On 18 August 1997 the applicant filed a notice of motion in which it sought an order that service of the application and statement of claim be effected upon the respondent by serving a sealed copy of the application and statement of claim upon Teco Australia Pty Ltd (a company incorporated in Australia) at its office in New South Wales. On 19 August 1997 I ordered that service of the application and statement of claim be effected upon the respondent by leaving a sealed copy of the application and statement of claim with an officer of Teco Australia Pty Ltd apparently above the age of sixteen years, at Teco Australia Pty Ltd's registered office at 335 - 337 Woodpark Road, Smithfield, New South Wales.

Service upon the respondent was effected in accordance with my order and by notice of motion filed 24 September 1997 the respondent sought orders that the application be set aside alternatively that service of the application and statement of claim on the respondent be set aside, alternatively a declaration that the application and statement of claim have not been duly served upon the respondent, alternatively an order that my order of 19 August 1997 be set aside and alternatively an order that the proceeding be stayed. The relief was sought pursuant to O 7 r1 of the Federal Court Rules which was an incorrect reference and on the hearing of the motion I granted the respondent leave to amend paragraph 1 of the notice of motion to seek the relief pursuant to O 9 r7(1) which was the appropriate rule under which the respondent should move.

Although at the ex parte hearing counsel for the applicant sought an order for service under O 7 r2 or alternatively an order for substituted service under O 7 r9 it was accepted by counsel for the applicant that I had made the order pursuant to O 7 r2 and not pursuant to O 7 r9. An order for substituted service pursuant to O 7 r9 is predicated upon the fact that it is "impractical" to serve a document in the manner provided by the rules. However, in order to establish impracticality there should be evidence of some attempt made to effect service in accordance with the rules or there should be evidence led that it is so obviously futile as to not to warrant an attempt at service: Rice Growers Co-Operative Ltd v ABC Container Line NV (1996) 138 ALR 480, 482. No such evidence was placed before me and it was accepted in argument before me that the applicant's right to uphold my order for service depended upon whether I had properly exercised my discretion under O 7 r2.

The applicant's claim

The applicant's claim arises out of an agreement entered into with the respondent on or about 16 March 1993 whereby the respondent agreed to supply from time to time specified computer monitors to the applicant on certain terms and conditions. The applicant alleges that in breach of the terms of the agreement the computer monitors supplied by the respondent were defective and not in accordance with the terms of the agreement and that the respondent failed to pay the applicant the costs of carrying out repairs on the defective computer monitors during the warranty period. The applicant accordingly alleges that it suffered loss and damage. In an alternative claim, the applicant alleges that it was induced to enter into the agreement by reason of various representations which were false and misleading and that as a consequence the respondent engaged in conduct in trade and commerce that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 and s 53 of the Act. Consequential loss and damage is alleged. The final cause of action is that in making the representations the respondent owed the applicant a duty to take care which was breached.

The submissions

The applicant had submitted on the ex parte application and repeated again on the motion to set aside the order for service that the causes of action alleged in the statement of claim establish that the Federal Court has jurisdiction to hear and determine the proceeding against a foreign corporation because the causes of action came within O 8 r1(a), (aa), (ab)(iii) & (vi), (ac), (ad), (b), (c) and (n).

On the ex parte application and on the motion to set aside the order for service the applicant submitted that the evidence disclosed that the respondent had a "presence" within the jurisdiction and it referred to the fact that both the respondent and Teco Australia Pty Ltd were both subsidiaries of Teco Electric and Machinery Co Ltd of Taiwan, that Huang Mao-Hsiung (Ted Huang) was a director of both companies, that Teco Australia Pty Ltd was using in Australia trademarks, the registered owner of which was Teco Electric and Machinery Co Ltd and that a variety of advertising promotional material used in Australia referred to the Teco group, including the respondent. However, in my opinion the evidence is insufficient to establish that the respondent either had a presence within the jurisdiction or was carrying on business in the jurisdiction through a subsidiary or through an agent. It is true that there are some references to the fact that the respondent had requested that the applicant make enquiries or seek assistance in relation to a number of matters from Teco Australia Pty Ltd. However, there does not appear to be any regular relationship between the respondent and Teco Australia Pty Ltd during which relationship the enquiries occurred. I am not satisfied on the evidence that the respondent did, at the relevant times or does, carry on business in Australia through Teco Australia Pty Ltd. That company is not a subsidiary of the respondent, both companies being subsidiaries of Teco Electric and Machinery Co Ltd and the evidence does not support the proposition that the respondent was using Teco Australia Pty Ltd as its agent for the purpose of doing business.

The applicant sought to uphold my order for service pursuant to O 7 r2 of the Federal Court Rules. That rule, so far as relevant, provides:

"(1) Personal service of a document is effected on -

(a) an individual - by leaving a copy of the document with him;

(b) a corporation - by leaving a copy of the document with some person apparently an officer of or in the service of the corporation and apparently of or above the age of sixteen years -

(i) at the registered office of the corporation; or

(ii) if there is no registered office at the principal place of business or the principal office of the corporation; and

(c) ...

(d) ...

or as the Court or a Judge may direct."

I also note, as it is relevant to the respondent's submissions, that O 7 r9 provides for substituted service where "for any reason it is impractical to serve a document in the manner set out in the Rules" and that O 8 provides for "the service abroad of judicial documents".

The applicant submitted that my discretion as to the method of service to be directed under O 7 r2(1) was unfettered in the sense that it was only constrained by considerations of practicality and fairness. Mr Anderson, who appeared for the applicant, relied upon the decision of Wilcox J in Amalgamated Wireless (Australasia) Ltd v McDonnell Douglas Corporation (1987) 16 FCR 238 in which the applicant had issued proceedings against an American corporation and other respondents and the American corporation sought to set aside the service of the proceeding on it. Evidence was led before the court in relation to the respondents' activities in Australia which was relevant to the question whether McDonnell Douglas Corporation carried on business in Australia. Wilcox J did not consider it necessary to reach any final conclusion on that question but as the matter had been pressed he concluded that McDonnell Douglas Corporation did not carry on business in Australia although it did carry on business in Australia through its agent, McDonnell Douglas Information Systems Pty Ltd. Wilcox J took the view that it was not necessary to make these findings because of the view he took of the scope of O 7 r2. At 241 his Honour said that O 7 r2 was "unambiguously worded". His Honour then summarised the rule and continued:

"The effect of the rule, as I understand it, is that prima facie personal service is effected upon a corporation by leaving it with an appropriate person at the registered office or at the principal place of business. If that is done, no further question arises. However, the rule ends by giving to the Court and to a judge of the Court, a general discretion to direct a different method of personal service. If service is effected in accordance with that direction the process has been personally served. And if the direction requires service within Australia, the corporation has been served within the jurisdiction.

There is no limitation imposed upon the ambit of the discretion given by r2. I see no reason for reading in any such limitation. No doubt, in considering whether the discretion should be exercised and, if so, in what manner, any judge will have regard to the degree of likelihood that service effected in a particular way will speedily come to the notice of persons responsible for the conduct of the corporation's affairs. In a case where the respondent is an overseas corporation that question requires consideration of whether service within the jurisdiction pursuant to such an order will be likely to be quickly known to the persons who are directing the affairs of the overseas corporation."

The applicant submitted that I should follow the reasoning of Wilcox J as it was a clear statement of the scope of the discretion committed to the Court under O 7 r2. Mr Horgan, who appeared for the respondent, submitted that the discretion given to the Court under O7 r2 was limited because of the specific provisions found in O 7 r9 as to substituted service and O 8 as to service overseas. He relied upon the decision of the High Court in Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310 which he submitted was authority for the proposition that the issue of service is one related to the jurisdiction of the court and that an order for substituted service cannot be made where at the time of the issue of the writ personal service was not possible upon the defendant.

Mr Horgan submitted that although Wilcox J was referring to personal service he had in effect ordered substituted service. He also sought to distinguish Amalgamated Wireless (supra) on the basis that there was evidence in that case that the respondent was carrying on business in Australia through an agent which evidence is absent in the present case. However, I do not consider that Amalgamated Wireless (supra) can be distinguished in this way because Wilcox J's reasoning in relation to the scope and operation of O 7 r2 was independent of any finding that the respondent was carrying on business in Australia. Mr Horgan submitted that the Court cannot use its discretion under O 7 r2 to extend the rules for service out of the jurisdiction because the Court has shaped its rules for extended jurisdiction by reference to the substituted service provisions in O 7 r9 and the service overseas provisions in O 8. He submitted that the ex parte order which I had made allowed for service other than personal service and resulted in the procedure or mechanism whereby the provisions of O 8 were avoided. In short, Mr Horgan submitted that the scope of the discretion of the Court under O 7 r2 was limited by reference to the fact that it referred to personal service and was also limited by reference to what was to be found in O 7 r9 as to substituted service and O 8 as to service overseas.

Mr Horgan said that Wilcox J's attention was not drawn to the significance of O 7 r9 as to substituted service and O 8 as to service overseas as constraining or limiting factors on the extent of the discretion granted under O 7 r2. However, I do not consider that that submission accurately reflects Wilcox J's analysis insofar as O 8 is concerned. At 241 Wilcox J said:

"It is submitted on behalf of McDonnell Douglas Corporation that this rule (O 7 r2) is inapplicable to the case of a company which is not carrying on business within Australia. It is said that the fundamental rule is that a respondent is only subject to the writ of the court if within Australia and that O 7 must be read as providing only for usual cases, where the respondent is within Australia. The contrast, it is said, is with O 8, which deals with service outside the jurisdiction.

I do not see any reason to read down O 7, r2 in the manner contended. Historically, no doubt, it is correct to say that a plaintiff could only obtain redress against a defendant if able to serve that defendant within the realm. But in more recent times provisions have been made to permit service outside the jurisdiction. Order 8 is an example of such a provision. The reason, of course, for such provisions is that travel has become easier. Even if events occur within the jurisdiction, which give rise to a cause of action, a defendant may have departed the jurisdiction before service can be effected. In a commercial context, for example in relation to some matters which might arise under the Trade Practices Act 1974 (Cth), it is arguable that a cause of action could accrue against a particular respondent, notwithstanding that such respondent had never been within the jurisdiction in the traditional sense; that is, in the case of an individual, physically within Australia or, in the case of a corporation, conducting business within Australia.

If it had been intended that O 7, r2 be limited to respondents who are within the jurisdiction in the traditional sense, this might easily have been stated. For example, O 7 could have been headed `Service of respondents who are within the jurisdiction'. Alternatively, the discretion given by r2 might have been limited, so as to apply only where the corporation was within Australia in the traditional sense. This has not been done and, it seems to me, deliberately not done. There is much to be said, as a matter of policy, for allowing the determination of the appropriate method of personal service to be unconstrained, except by considerations of practicality and fairness.

If my interpretation of O 7, r2 is correct, it matters not whether or not McDonnell Douglas Corporation carries on business in Australia. The position simply is that the rule is available and has been used in the present case."

His Honour then said that if he was wrong in his construction of the rule and it was available only in respect of a corporation which carries on business, either itself or through an agent, within Australia, his finding that the company carried on business in Australia through its agent meant that the rule was available in the present proceeding. His Honour then refused leave to appeal because he regarded the matter as quite clear and said that even if one accepted the alternative view of O 7 r2 the issue was a factual one.

The respondent submitted that the reasoning of Wilcox J was inconsistent with statements of principle found in Laurie v Carroll (supra). In particular Mr Horgan referred to the passage at 322 where the High Court said:

"Primarily the question is one of jurisdiction. The action is in personam and it is transitory; and in such an action the jurisdiction of the Supreme Court of Victoria depends not in the least on subject matter but upon the amenability of the defendant to the writ expressing the Sovereign's demand in right of the State of Victoria. The common law doctrine is that the writ does not run beyond the limits of the State".

At 323 the High Court continued:

"The defendant must be amenable or answerable to the demand of the writ. His amenability depended and still primarily depends upon nothing but presence within the jurisdiction."

The respondent submitted that Wilcox J's reasoning in Amalgamated Wireless (supra) was inconsistent with, and failed to have regard to, these principles relating to the relationship between jurisdiction and the ability to serve.

I was initially attracted to, and persuaded by, the reasoning of Wilcox J in Amalgamated Wireless (supra) and indeed, it was on the basis of that reasoning that I made the order for the manner of service on the respondent on 19 August 1997. However, on further reflection, I have reached the conclusion that the order which I made ex parte should not have been made and should be set aside. The Federal Court Rules make provision for three types of service - personal service (O 7 r2), substituted service (O 7 r9) and service overseas (O 8). If the construction of O 7 r2 contended for by the applicant is correct then there is little need for recourse to O 7 r9 which requires a threshold to be overcome, namely that it is impractical to serve in the manner set out in the Rules, before recourse can be had to it: Rice Growers Co-Operative (supra). I accept the proposition stated by Wilcox J in Amalgamated Wireless (supra) at 241 that O 7 r2 gives a court or a judge "general discretion to direct a different method of personal service". However, in my opinion that general discretion is constrained by the need to direct personal service. I do not consider that what is factually described as substituted service is a form of personal service; rather it is an alternative to personal service or a consequence of personal service not being able to be effected. In Amalgamated Wireless (supra), at 241, Wilcox J said that there was much to be said:

"as a matter of policy, for allowing the determination of the appropriate method of personal service to be unconstrained, except by considerations of practicality and fairness."

I agree, with respect, with his Honour's formulation of the policy but it seems to me that personal service, properly characterised, must have an element or component of service "on the person" in the order ordering such service.

The structure of the Federal Court Rules relating to service, that is to say, the three generic types of service to which I have referred, appears to me to record or reflect the principles relating to the relationship between jurisdiction and service referred to by the High Court in Laurie v Carroll (supra). Notwithstanding the discretion committed to the court or a judge in O 7 r2(1) I consider that the principles in Laurie v Carroll (supra) apply to the jurisdiction of the Federal Court and the extent to which its rules regulate the service of its process. The structure of those rules is such that, in general terms, it can be said that the Federal Court has jurisdiction over persons physically present within the jurisdiction at the time the process was filed or issued or persons who by their actions or activities or the consequences thereof (which fall within a sub-paragraph of O 8 r1) are accepted as being amenable to the jurisdiction of the Court.

The order which I made was, in effect, an order for substituted service within a scope of O 7 r9(1) but it was not predicated upon any impracticality in serving the application and statement of claim "in a manner set out in the Rules", that is, in the manner of personal service. Order 7 r9(1) provides for what is colloquially called "substituted service" but as the rule states it is a means of bringing the relevant documents "to the notice of the person to be served". At the time the application was filed the respondent was not physically present in Australia so that the order did not have regard to the principle re-affirmed in Laurie v Carroll (supra) that where process may not be served personally it cannot be served indirectly by substituted service.

I therefore feel compelled to disagree with Wilcox J's proposition that any form of service ordered pursuant to O 7 r2(1) is personal service simply because the order is made pursuant to the discretion granted by that rule. His Honour's reasoning was that as O 7 r2(1) gives a discretion to effect a different method of personal service, any service ordered pursuant to that rule is personal service because there is no limitation on the ambit of the discretion. It follows from his Honour's reasoning that he did not regard the form of service directed pursuant to O 7 r2(1) as requiring a component of "personal" service. The form of service in the circumstances before his Honour did not have a personal component as the form of service directed was service on a respondent outside the jurisdiction by service on a firm of Australian solicitors within Australia who had originally held instructions to accept service but whose authority to do so had apparently been withdrawn. Wilcox J said that if it had been intended that O 7 r2 be limited to respondents within the jurisdiction in the traditional sense, that might easily have been stated. In my opinion it was stated in the sense that the rule relates to "personal" service.

Unlike his Honour I am of the opinion that there is a limitation imposed upon the ambit of the discretion given by O 7 r2(1) which is a limitation that the form of service directed must have some "personal" component in it. What that personal component may be will vary from case to case and I do not need to set out exhaustively what might be covered by the alternative forms of personal service which might be allowed under O 7 r2(1). It might, in the case of an individual, cover a situation of leaving a copy of a document at his or her place of residence or place of employment. This might be done by post or by leaving a document with another person living at the person's residence or working at his or her place of employment. In the case of a corporation it might cover delivering a copy of a document to a director of the corporation or to its chief executive officer or to a senior manager albeit not at the registered office of the corporation or at its principal place of business. Order 7 r4 does not bear upon this issue as its provisions rather relate to service of documents other than originating or initiating process as can be seen from the reference to "the proper address" of a person to be served.

I have sought to give examples of forms of what might fairly be called "personal service" other than the form of personal service specified in the sub-paragraphs of O 7 r2(1) to answer the argument that the only types of service properly described as "personal" are those set out in O 7 r2(1) so that if the court or a judge has a discretion to direct some other service under that rule it must, of necessity, be a form of service which does not have or require a personal component. By "personal component" I mean a component which has a close connection to the person to be served.

I consider that as a matter of judicial comity I should follow earlier decisions of single judges of this Court unless I am satisfied that the decision is clearly wrong: Towney v Minister for Land and Water Conservation for New South Wales (1997) 147 ALR 402, 412; Esso Australia Resources Ltd v Commissioner of Taxation of the Commonwealth of Australia (unreported, Foster J, 21 November 1997), 7. After considerable consideration I have reached the conclusion that I should not follow the reasoning of Wilcox J in Amalgamated Wireless (supra). Not only is there is some tension between the principles identified in Laurie v Carroll (supra) and Wilcox J's reasoning, there is also the need for any form of service directed under O 7 r2(1) to contain an element or component of "personal" service rather than simply being seen as a form of substituted service, that is to say a form of service which will bring the documents to the notice of the person to be served in circumstances where there cannot be seen to be a personal element or component in the service.

The fact that the causes of action alleged in the statement of claim may come within one or more of the sub-paragraphs of O 8 r1 is not relevant to the issue whether service was properly directed under O 7 r2(1). It is open to the applicant to take such steps as it may be advised in relation to taking advantage of the provisions of O 8 r1, on which issue I express no view.

It follows therefore that the respondent is entitled to an order that my ex parte order made on 19 August 1997 be set aside and that the service on the respondent of the application and statement of claim effected in accordance with and by virtue of that order be set aside. It is not appropriate that orders be made granting declaratory relief setting aside the application or staying the proceeding. As the respondent has succeeded it should have its costs of the motion.

I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg

Associate:

Dated: 10 March 1998

Counsel for the Applicant:	Mr S M Anderson
Solicitor for the Applicant:	Andrew Robinson Corporate Solicitor IPEX Information Technology Group
Counsel for the Respondent:	Mr S R Horgan
Solicitor for the Respondent:	Baker & McKenzie
Date of Hearing:	23 February 1998
Date of Judgment:	10 March 1998