Commissioner of Taxation v Ma [1999] FCA 1509 (20 October 1999)

Last Updated: 2 November 1999

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Ma [1999] FCA 1509

PRACTICE & PROCEDURE - service of originating process - motion for declaration that originating process not duly served or order that service of originating process be set aside -- where notice of motion not filed within 14 days of filing notice of conditional appearance - whether to dispense with compliance with Federal Court Rules

Federal Court Rules, O 9 r 6, O 9 r 7

COMMISSIONER OF TAXATION v PING MA & ORS

N690 OF 1999

EMMETT J

20 OCTOBER 1999

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 690 OF 1999

BETWEEN:	COMMISSIONER OF TAXATION Applicant
AND:	PING MA First Respondent GUO QIANG PAN Second Respondent MU ZHANG Third Respondent CITIBANK LIMITED Fourth Respondent
JUDGE:	EMMETT J
DATE OF ORDER:	20 OCTOBER 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The conditional appearance filed on 28 July 1999 does not have effect for any purpose as an unconditional appearance.

2. The requirements of Order 9 rule 7(2) be dispensed with in so far as that rule would preclude any application for orders under Order 9 rule 7.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 690 OF 1999

BETWEEN:	COMMISSIONER OF TAXATION Applicant
AND:	PING MA First Respondent GUO QIANG PAN Second Respondent MU ZHANG Third Respondent CITIBANK LIMITED Fourth Respondent

JUDGE:	EMMETT J
DATE:	22 OCTOBER 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 On 21 July 1999, I made orders ex parte on the application of the applicant, the Commissioner of Taxation ("the Commissioner"). The orders included orders restraining the first respondent from selling, disposing of, transferring, encumbering or otherwise dealing with moneys in an account with the fourth respondent.

2 I also made an order abridging the time for service to 23 July 1999 of the amended application that I gave leave to file. Order 7 was in the following terms:

"Direct that service be effected on the first and third respondents by facsimile communication to Mr Niall Carney, Barrister, at Room 1341, Beijing International Hotel, Beijing."

That order was made in the light of evidence that was then before me that Mr Carney had intimated that he had instructions to act for the first respondent. The amended application was made returnable before me at 9.30am on 28 July 1999.

3 On that day Mr Svehla, of counsel, appeared for the first respondent and proffered a notice of conditional appearance on behalf of the first respondent, which was filed in court. The notice of conditional appearance was signed by Mr Alexander John Wakefield of Holman Webb, solicitors.

4 In the course of the directions hearing on 28 July 1999, Mr Svehla indicated that he understood that I had, in effect, made an order in the nature of an order for substituted service by the Order 7 to which I have just referred. I have heard evidence today from Mr Wakefield that, when he saw the order, he understood that I had made an order for substituted service, although he had some doubts as to the appropriateness of such an order if one had been made. It was on that basis that he prepared the notice of conditional appearance and instructed Mr Svehla to appear. His understanding was that Mr Svehla would contest whatever service had occurred at that stage.

5 In the course of directions on 28 July 1999, I indicated that Order 7 was not intended to have that effect and should be treated as a direction concerning service of notice of the injunctions and other orders that I made on that day. Mr Wakefield was entitled to assume, in the circumstances, that there was no service which could be the subject of an application under the Rules.

6 Order 9 Rule 6 provides as follows:

"(1) A respondent may enter a conditional appearance.

(2) A conditional appearance shall have effect for all purposes as an unconditional appearance, unless the Court otherwise orders or the respondent applies under and in accordance with Rule 7 and the Court makes an order under that rule."

7 Order 9 Rule 7 relevantly provides as follows:

"(1) The Court may, on application made by a respondent to any originating process on notice of motion filed within the time fixed by subrule (2) by order:

(a) set aside the originating process;

(b) set aside the service of originating process of the respondent;

(c) declare that the originating process has not been duly served on the respondent;

(d) discharge any order giving leave to serve the originating process outside Australia or confirming service of the originating process outside Australia.

(2) Notice of a motion under subrule (1) may be filed by the respondent before he enters an appearance or within 14 days after the date of entry of a conditional appearance by him."

Mr Wakefield said, in evidence before me today, that he did not turn his mind to the question of Order 9 Rule 7(2) prior to today.

8 On 29 July 1999, I made further orders ex parte on the application of the Commissioner. The proceedings and the Commissioner's motion for orders relating to service were stood over for directions on 10 September 1999. On that day, Mr Svehla again appeared for the first respondent and indicated that the first respondent wished to contest service purported to be effected pursuant to the orders that I made on 29 July 1999. I also gave leave to the first respondent to file a motion to set aside service, such motion to be returnable before me on 20 October 1999.

9 Pursuant to that leave, the first respondent filed a notice of motion on 19 October 1999 seeking the following orders:

"1. A declaration pursuant to Order 9 Rule 7(1)(c), that the originating process has not been duly served on the first respondent.

2. In the alternative an order pursuant to Order 9 Rule 7(1)(b) that service of the originating process on the first respondent be set aside."

In the course of the hearing of that motion, today, counsel for the Commissioner drew attention to the provisions of Order 9 Rule 7. That prompted an application ore tenus on behalf of the first respondent for either an order under Order 9 Rule 6(2) or an order under Order 3 waiving compliance with the time provisions of the Rules.

10 There are good policy reasons for a provision such as Order 9 Rule 7(2). An applicant is entitled to know, as soon as possible, whether or not there is an issue as to service on a respondent. A respondent must move swiftly if, having filed a conditional appearance, the respondent wishes to contest service. I do not consider that any appropriate basis has been made out for waiving the time provision. However, in the circumstances that I have outlined, I consider that it is appropriate that the conditional appearance filed on 28 July 1999 not, at this stage, have effect for all purposes as an unconditional appearance.

11 The first respondent has made it clear, on every possible occasion, that she wishes to contest any purported service. On one view, that appearance by Mr Svehla on 28 July 1999 was itself an application pursuant to Order 9 Rule 7, albeit not by motion on notice. Clearly, strict compliance would have required that a motion be filed within 14 days after 28 July 1999. At that point, however, so far as the first respondent was concerned, there would have been no utility in filing a motion.

12 Rule 7(2) contemplates that a respondent will have some time to contemplate whether or not a motion contesting service would be filed. The rule assumes that the motion to set aside service be filed after service, not before. In the circumstances of this case, the first respondent would have been deprived of the opportunity of deliberation for 14 days after the filing of the notice of conditional appearance, on the question of whether to file a motion seeking to contest service which was effected only pursuant to directions made on 29 July 1999. I have evidence before me that, by 5 August 1999, there was purported service in accordance with the orders I made on 29 July 1999. Even so, it is, in a sense, only fortuitous that that service occurred before the expiration of the 14 days that would have been required by Order 9 Rule 7(2).

13 In the circumstances, I consider it appropriate to order that the conditional appearance filed on 28 July 1999 should not have effect for any purpose as an unconditional appearance. In the circumstances, I will also make an order dispensing with the requirements of Order 9 Rule 7(2) insofar as that rule precluded any application under Order 9 Rule 7 to set service aside. I am satisfied that any non-compliance with Rule 7 was not a result of neglect for which the first respondent should be penalised.

14 The question of the costs of this application is a matter on which I have not yet heard argument and, accordingly, I shall reserve the costs of this application.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated: 1 November 1999

Counsel for the Applicant:	D.B. McGovern
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	J.T. Svehla
Solicitor for the Respondent:	Holman Webb
Date of Hearing:	20 October 1999
Date of Judgment:	20 October 1999