CATCHWORDS

CORPORATIONS - practice and procedure - substituted service of examination summons - summons issued at time person to whom it was directed present in Australia - summons not personally served before departure of that person from Australia - whether, on the available material, summons came to person's notice before departure - discussion of effectiveness of service of process issued whilst person affected in jurisdiction but departs before service can be effected - whether Court's jurisdiction to order substituted service in such cases depends on process coming to person's notice before departure from Australia.

Corporations Law, s.569B

Laurie v Carroll (1958) 98 CLR 310

Ian Edward Joye v John Sheahan

No. SG37 of 1995

CORAM:    Sheppard, Spender and Hill JJ

PLACE:    Sydney (heard in Adelaide)

DATE:     28 March 1996

IN THE FEDERAL COURT OF AUSTRALIA     )

SOUTH AUSTRALIA DISTRICT REGISTRY     )    No. SG 37 of 1995

GENERAL DIVISION                      )

              On appeal from a decision of a single judge of the Federal Court of Australia

              BETWEEN   :    IAN EDWARD JOYE

                                      Appellant

              AND       :    JOHN SHEAHAN

                                      Respondent

CORAM:    Sheppard, Spender and Hill JJ

PLACE:    Sydney (heard in Adelaide)

DATE:     28 March 1996

                      MINUTES OF ORDER

THE COURT ORDERS THAT:

     1.   The appeal be dismissed.

     2.   The appellant pay the costs of the respondent to be taxed.

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

IN THE FEDERAL COURT OF AUSTRALIA     )

SOUTH AUSTRALIA DISTRICT REGISTRY     )    No. SG 37 of 1995

GENERAL DIVISION                      )

              On appeal from a decision of a single judge of the Federal Court of Australia

              BETWEEN   :    IAN EDWARD JOYE

                                      Appellant

              AND       :    JOHN SHEAHAN

                                      Respondent

CORAM:    Sheppard, Spender and Hill JJ

PLACE:    Sydney (heard in Adelaide)

DATE:     28 March 1996

                    REASONS FOR JUDGMENT

THE COURT:    This is an appeal, by leave, from orders of a single judge of the Court (Branson J) who on 1 June 1995 ordered that an application by a notice of motion dated 17 March 1995 seeking that orders made by Registrar Fisher on 7 February 1995 in respect of substituted service on Mr Ian Edward Joye ('Mr Joye') be dismissed and that Mr Joye pay the applicant's costs of the notice of motion, to be taxed if not agreed.  Her Honour's judgment is reported: (1995) 57 FCR 389.

          As the primary judge indicated, the question before her was the power of a Registrar of the Federal Court to order substituted service upon a person not then present in Australia of a summons issued pursuant to s596B of the Corporations Law to attend for examination about a corporation's examinable affairs.

          The disposition of the appeal depends in large measure on the way the proceedings were conducted before the primary judge.

          On 1 November 1994, an application for the issue of an examination summons directed to Mr Joye was filed, and on 25 November an order was made for his examination under s596B of the Corporations Law.  On 6 December 1994 a summons was directed to Mr Joye to attend the examination.

          On 9 December 1994 the solicitors for Mr John Sheahan, who was the receiver and manager of Courtaus Limited (In Liquidation), ('the receiver'), and the applicant for the issue of the examination summons, advised a firm of solicitors, Speed and Stracey, in Sydney, by facsimile transmission of the obtaining by Mr Sheahan of the order for the examination of Mr Joye.  The facsimile letter enclosed a copy of the order for examination and the summons.  The summons was listed for 10.30 am on 7 February 1995.  The letter concluded:

     "  Please could you tell us by Friday 16 December 1994 whether you have instructions to accept service of the summons and order on behalf of Ian Joye. "

          The primary judge noted that the original letter and copy order and summons were posted to Messrs Speed & Stracey and apparently received by them on 13 December 1994.

          On 13 December, Mr Joye left Australia.  He has not subsequently returned.  On 16 December 1994, Messrs Speed & Stracey wrote to the solicitors for Mr Sheahan advising:

     "  We refer to your letter of 9 December 1994 and advise that we have no instructions to accept service. "

          On 2 February 1995, the receiver by notice of motion sought an order for substituted service upon Mr Joye and on 7 February 1995 the Registrar ordered that personal service of the summons on Mr Joye be dispensed with and that service on him be effected by posting a sealed copy of the summons to attend the examination addressed to the respondent C/o Speed & Stracey, a firm of solicitors, of 15-23 Bligh Street, Sydney and to C/o R. E. Horsell & Co., Chartered Accountants, 235 Pyrmont Road, Pyrmont NSW.  The Registrar ordered that a sealed copy of the order be enclosed with the summons as posted, postage to occur at least 21 days before the date for examination fixed on the summons and postage to occur prior to 28 February 1995.  On 14 February 1995, substituted service was effected as authorised by the order of the Registrar.

          By notice of motion dated 17 March 1995, application was made on behalf of Mr Joye for an order that the order authorising substituted service be set aside and for a declaration that the order and summons had not been duly served upon him. 

          Before the primary judge an oral application was successfully made to extend the time within which to review the exercise of a power of the Court by a Registrar.

          There was no question raised before the primary judge by either party as to the sufficiency of the material on which the order for substituted service had been made by the Registrar.  The material before the primary judge included the material before the Registrar, which material included the statement by a solicitor for the receiver that at the time the order for substituted service was sought:

     "  Because we have been unable to serve the respondent personally and because he is not due back in Australia until late February, I have been instructed to seek an order for substituted service, that is service upon his solicitors Speed & Stracey, and a fresh date for the examination. "

The material also included an Outgoing Passenger Card signed by Mr Joye , dated 13.12.92, in which he indicated that he was a resident departing temporarily to Canada, and that his intended length of stay abroad was two months.  The sole question before the primary judge was whether there was jurisdiction for the Registrar to make the order for substituted service of the order and summons in issue in this case.

          The contention by the appellant, both on appeal and at first instance, was that substituted service is not available where the party to be served was present in
Australia when the originating process was filed but had left Australia without any intention of evading service, and before the fact of issuing of the proceedings was communicated to him.

          The primary judge concluded on the balance of probabilities that Messrs Speed and Stracey contacted Mr Joye following their receipt of the facsimile transmission dated 9 December 1994 from the solicitors for the applicant, and that Mr Joye learnt from Messrs Speed and Stracey earlier than his departure from Australia on 13 December 1994 of the institution of these proceedings by the applicant and of the desire of the applicant's solicitors to effect service of process upon him.  Her Honour did not conclude that Mr Joye saw the letter of 9 December 1994 from the applicant's solicitors or that he saw the copy order and summons, nor did she find that Mr Joye left Australia on 13 December 1994 by reason of his learning of the institution of these proceedings.  Her Honour noted:

     "  ...it is at least equally likely on the evidence that his plans to leave Australia on that day were already in place. "

          It was conceded on behalf of Mr Joye that if her Honour's factual findings stood, ie, that Mr Joye knew before he departed from Australia that a summons for his examination had been issued and that an attempt was being made to serve it upon him, then there was jurisdiction to make an order for substituted service. 

          The appellant submitted that the factual finding by her Honour as to knowledge was wrongly made, and it was in consequence submitted that the court lacked jurisdiction, relying on Laurie v Carroll (1958) 98 CLR 310.   That decision was much debated both below and on the appeal.

          What Laurie v Carroll actually decided is of no present application.    Unlike the present case, at the time of the issue of the process of which substituted service was subsequently ordered, Laurie was not within the jurisdiction.  In that case, the High Court (Dixon CJ, Williams and Webb JJ) said that, at 316, "...the question in the appeal is whether an order for substituted service upon the defendant-appellant can be sustained."

          Carroll and Laurie were in dispute concerning a tour of Sydney and Melbourne by Dame Margot Fonteyn.  Carroll had made unsuccessful applications in Sydney for a writ of capias ad respondendum to prevent Laurie leaving New South Wales.  Late on the afternoon of 11 June 1957, Laurie in Melbourne telephoned Carroll's Melbourne solicitor.  The conversation ended in a statement that Carroll wished to have a conference without prejudice with Laurie in the presence of Carroll's advisers at some time on the following day, Wednesday, and unless Laurie communicated with him before 9.30 in the morning a writ would be issued.  On Thursday, 13 June 1957, Laurie left Melbourne by air for Sydney, which he left on 20 June for New Zealand and thence to London.

          On 14 June 1957, a writ issued out of the Supreme Court of Victoria.   Laurie, in later court proceedings, formally instructed Melbourne solicitors, and made an affidavit which indicated that he left Victoria on 13th June 1957 and would not return.  This affidavit contained a statement that he had not left Victoria for the purpose of evading service, and a statement that his itinerary had been planned before his departure from London.

          On 21 June 1957, an ex parte order was made granting leave to serve the writ by substituted service within the jurisdiction.  The order directed that substituted service of the writ and other documents should be on the Melbourne solicitors that Laurie had instructed.  There was affidavit evidence that Laurie had told a friend on 13 June that "a man was trying to serve a writ on him" and:

     "  They tossed it out in New South Wales but my solicitor has advised me to get out of Victoria and back to New South Wales as quickly as possible; I am going today. "

     The Court considered (at 324) the rival theories as to whether the exercise of the sovereign authority is constituted by the issue of the command or the communication of the command.  The Court expressly (at 327) refused to follow Watt v Barnett [1878] 3 QB 183, where the Court of Appeal had decided that an order for substituted service on a resident of France, who resided beyond the jurisdiction at the issue of the writ and had not come within the jurisdiction then or
thereafter had been regularly made.  The High Court said at 327:

     "  It seems impossible to reconcile such a decision with principle or with subsequent authority. " 

The Court said at 328:

     "  If a defendant knowing of the issue of the writ goes abroad before personal service or, although he does not positively know of the fact of the issue of the writ, goes abroad to evade service, doubtless he may be treated as under notice of the obligation of its command.  But without deserting the traditional principle which has governed the jurisdiction of our courts in actions in personam and finding a new basis of jurisdiction, it is impossible to go back to a point when no writ had been issued, no exercise of jurisdiction had taken place, and to say that because there had been a time when the defendant was amenable to the jurisdiction so that it might then have been exercised over him and because he had quitted the jurisdiction in order that he might cease to be amenable to it, he none the less remained subject to the jurisdiction. "

          The Court rejected the observations of Lord Reading in Porter v Freudenberg [1915] 1 KB 857, where, concerning "the general rule...that an order for substituted service of writ of summons within the jurisdiction cannot be made in any case in which, at the time of the issue of the writ, there could not be at law a good personal service of the writ because the defendant is not within the jurisdiction", his Lordship said:

     "  This general rule is not applied where the Court is satisfied that the defendant went outside the jurisdiction before the issue of the writ in order to evade the service of the writ within it: " [original emphasis]

At 331, the High Court said:

     "  Does the statement of Lord Reading mean that if the most transient visitor quickens his departure because he fears that if he delays a writ will be issued and served personally upon him he thereby renders himself liable to an exercise by substituted service of the very jurisdiction which otherwise must depend on his actual physical presence?...It surely is somewhat absurd to say that a complete stranger to the jurisdiction who comes for the most temporary purpose remains liable to its exercise by substituted service, after he has left the jurisdiction, if, but not otherwise, he is animated by a desire to avoid personal service in fixing the time of his departure. "

          The core reasoning of Laurie v Carroll appears at 332:

     "  ...it is surely incongruous that he should be held liable to comply with the mandate of a writ issued after his departure. "

and later:

     "  The better view appears clearly enough to be that on that hypothesis [namely, that the defendant having left the jurisdiction definitely, before issue of the writ] the defendant is no longer amenable to the territorial jurisdiction exercised by an ordinary writ for service within the jurisdiction and the want of jurisdiction cannot be overcome by an order for substituted service.  His motive for leaving cannot matter.  It cannot give jurisdiction. "

          What Laurie v Carroll decided was that substituted service could not be ordered where a person was not in the jurisdiction at the time of issue of suit, but had accelerated his departure because of the threat of suit.  In this sense, the Court decided that where a person is outside the jurisdiction, presence in the jurisdiction at the time of issue of the writ was a necessary (but not necessarily
sufficient) element before substituted service could properly be ordered.

          The primary judge concluded (57 FLR at 399) that mere presence at the time of issue of the order and summons was sufficient to confer jurisdiction to make an order for substituted service.

          In Laurie v Carroll at 332, the Court agreed with the observation of Lord Sumner in Johnstone v Pedlar (1921) 2 AC 262 at 292 that local allegiance owed by an alien temporarily present in England "begins no earlier than and continues no longer than the presence of the alien...within the realm,..." [emphasis added]

          In the light of the High Court's observations at 328 that:

     "  If a defendant knowing of the issue of the writ goes abroad before personal service or, although he does not positively know of the fact of the issue of the writ, goes abroad to evade service, doubtless he may be treated as under notice of the obligation of its command. "

earlier referred to, it seems likely that mere presence, without more, at the time of issue is insufficient.  It would be a curious result if the mere transient presence of a traveller at the international transit lounge of an Australian airport or in Australian air space, at the time of the issue of the writ, but where that person had no knowledge of the proceedings let alone any intention to evade service, would entitle an order for substituted service later to be made on that person.

          However, it is unnecessary to reach a conclusion whether mere presence would be sufficient to confer jurisdiction in the light of the concession on behalf of Mr Joye that his present within the jurisdiction at the time of issue, and knowledge of the issue of a summons for his examination prior to leaving Australia would confer jurisdiction to make an order for substituted service.

          For, if the factual findings of the primary judge are not able to be successfully challenged, it would not be prudent to go further and essay a conclusion on the basis of a different, and therefore hypothetical, factual basis.

          The submission on behalf of Mr Joye is that her Honour's conclusion that there was communication between Speed and Stracey and the appellant as to the issuing of the examination summons before he left Australia was merely a choice between two guesses, the evidence being silent on the question.  It was submitted that a preference for one guess as more likely than another was not a course available to the primary judge.

          The inference drawn by the primary judge is expressed to be made in the light of four factors, namely, that:

     "  (a)  Messrs Speed and Stracey were in December 1994 acting for Mr Joye in ongoing proceedings in this Court;

        (b)  they were, in effect, requested by the applicant's solicitors to seek instructions with respect to the acceptance of service by them on Mr Joye's behalf of the order and summons;

        (c)  Mr Joye was apparently using a Sydney address [namely, 235 Pyrmont St., Pyrmont NSW] at about this time; and

        (d)  Messrs Speed and Stracey's letter of 16 December 1994 to the applicant's solicitors does not refer to an inability to contact Mr Joye; "

          In addition, the primary judge referred to the absence of any evidence put before the court from any person connected with Messrs Speed and Stracey as to the actions, if any, undertaken by that firm following the receipt of the advice and documentation provided by the respondent's solicitors on 9 December 1994.  Her Honour noted that Messrs Speed and Stracey were the solicitors for Mr Joye in the proceedings in the Court until 20 March 1995.  Her Honour said:

     "  It has not been suggested that any difficulties have stood in the way of the obtaining of such evidence on behalf of Mr Joye, or that such evidence would be privileged.  I assume that such evidence, if obtained, would not assist Mr Joye (Jones v Dunkel (1959) 101 CLR 298). "

          The criticism on behalf of the appellant of the reliance on Jones v Dunkel is that a failure to call evidence cannot be used to fill an evidentiary gap;  it can only strengthen an inference for which there is already some probative evidence.

          The only question on this aspect of the matter is whether on the evidence before the primary judge it was open to her to draw the inference which she did.  It should be recalled that the terms of the letter of 16 December from Speed and Stracey was:

     "  We refer to your letter of 9 December 1994 and advise that we have no instructions to accept service. "

One would be permitted to infer that a well known and reputable firm such as Speed and Stracey, on receipt of the letter from the respondent's solicitor of 9 December would at least have sought instructions.  The client was not in Australia after Tuesday, 13 December.

          The careful reticence of the reply, "We have no instructions to accept service" is the evidence which brings the principle of Jones v Dunkel into application.

          Mr Joye's solicitors did not say either "We have sought instructions and our instructions do not permit us to say that we will accept service", nor did they say "We have not been able to get instructions as to whether to accept service and therefore we advise that we cannot accept service".

          The nature of the reply by the solicitors, and in particular, as her Honour noted, the absence of any reference to an inability to contact Mr Joye, permitted the inference
that they had contacted him and that he gave them instructions and those instructions were the basis of their communication of Friday 16 December, an inference which the considerations of Jones v Dunkel would fortify.  If that was what occurred, the probability is that it occurred before Tuesday, 13 December, when Mr Joye departed Australia, a conclusion which again the considerations of Jones v Dunkel would fortify.  Those considerations lead to the conclusion that, after the issue of the Order and Summons, and with knowledge of those proceedings, Mr Joye departed the jurisdiction.

          The appellant argued the matter below and on the appeal on the basis that if those were the facts, then there was jurisdiction to order substituted service.

          The appeal should therefore be dismissed with costs.

                             I certify that this and the  preceding thirteen (13) pages are a true copy of the reasons for judgment herein of the Court.

                                      Associate

                             Date:

Counsel for the appellant    :         Mr B A Coles QC

instructed by                :         Cowell Clarke, T/A for Speed & Stracey

Counsel for the respondent   :         Mr J Sulan QC

instructed by                :         Piper Alderman

Date of Hearing              :         17 November 1995