FEDERAL COURT OF AUSTRALIA

Howard v National Bank of New Zealand Limited [2002] FCA 1257

PROCEDURE – service of originating process outside jurisdiction – respondents in New Zealand instructed their New Zealand solicitors to accept service in New Zealand of Federal Court process – service out of jurisdiction within O 7 r 14 – leave in respect of O 8 not required

PROCEDURE – jurisdiction of Federal Court over proceeding – whether statutory pre-conditions to the invocation of the Court’s jurisdiction existed – jurisdiction conferred by s 86 the Trade Practices Act 1974 (Cth) – jurisdiction conferred by s 39B(1A)(c) the Judiciary Act 1903 (Cth) – what is pleaded is not decisive of the Court’s jurisdiction

Australian Securities and Investments Commission Act 2001 (Cth)  ss 5(1), 51AA, 51AB, 52, 60, 86

Financial Sector Reform (Consequential Amendments) Act 1998 (Cth)  Pt II Div 2

Judiciary Act 1903 (Cth)  s 39B(1A)(c)

Trade Practices Act 1974 (Cth)  s 2(2), Sch 2

Federal Court Rules  O 7 r 1(1), O 7 r 8,  O 7 r 14, O 8 r 1(f),  O 8 r 2

Laurie v Carroll (1958) 98 CLR 310 followed

Kenneth Allison Ltd v AE Limehouse & Co [1992] 2 AC 105 discussed

Sphere Drake Insurance Plc v Gunes Sigorta [1988] 1 Lloyd’s Rep 139 referred to

Tharsis Sulphur and Copper Co v Société Industrielle et Commerciale des Métaux (1889) 60 LT 924 cited

Montgomery, Jones & Co v Liebenthal & Co [1898] 1 QB 487 cited

Reversionary Interest Society Ltd v Locking [1928] WN 227 cited

Manta Line Inc v Seraphim Sofiantes & Midland Bank Plc [1984] 1 Lloyd’s Rep 14 referred to

SCF Finance Co Ltd v Masri (No 3) [1987] 1 All ER 194 referred to

Delco Australia Pty Ltd v Equipment Enterprises Incorporated (2000) 100 FCR 385 not followed

Rein v Stein (1892) 66 LT 469 cited

Boyle v Sacker (1888) 39 Ch D 249 cited

Mondial Trading Pty Ltd v Interocean Marine Transport Inc (1985) 65 ALR 155 at 157 cited

Agar v Hyde (2000) 201 CLR 552 at 570-571 applied

Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 followed

Elders Ltd v Swinbank (1999) 96 FCR 303 at 308, par [18] cited

Australian Solar Mesh Sales Pty Ltd v Anderson (2000) 101 FCR 1 at 9 cited

Dicey and Morris, The Conflict of Laws, 13th ed

Nygh, Conflict of Laws in Australia, 7th ed

Collins, Essays in International Litigation and the Conflict of Laws, corrected ed, Oxford, 1994

GREGORY JOHN HOWARD, BLANCH FRANÇOISE AND MICHELINE MCDONALD v NATIONAL BANK OF NEW ZEALAND LIMITED, P K MURDOCH, KEVIN LUFF, GLENN RUSBATCH, ROD HUTTON, JOHN BOYD AND SIR JOHN ANDERSON

Q 226 OF 2001

DRUMMOND J

11 OCTOBER 2002

BRISBANE

THE COURT DECLARES THAT:

1.                  Delivery of copies of the originating process in this matter to Mr Chan of Messrs Minter Ellison Rudd Watts, Solicitors, Wellington, New Zealand on or about 31 October 2001 is sufficient service of such process on the respondents in this action.

THE COURT ORDERS THAT:

2.                  The notice of motion filed 31 January 2002 otherwise be dismissed.

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

REASONS FOR JUDGMENT

1                     The applicants have commenced proceedings in this Court against the National Bank of New Zealand and a number of its executives, including its Chief Executive Officer.  The originating proceedings were served on the respondents in New Zealand without leave.  An order confirming that service is now sought under O 8 r 2(4) the Federal Court Rules.  The respondents oppose confirmation.  The applicants’ solicitor made some submissions to the effect that Australia, rather than New Zealand, was the appropriate forum for the determination of the dispute.  In a brief written submission, the respondents reiterated the position they clearly enough adopted at the hearing, viz, that that issue will not arise until and unless the Court confirms service on the respondents and that:  “Once jurisdiction is determined, the respondents would be entitled to file an application to have the proceeding stayed on the basis of forum non conveniens, should they choose to do so”.

2                     It will be unnecessary for the applicants to seek confirmation of service under O 8 if it is open to them to rely on O 7 r 14 to show that the respondents have been lawfully served with the originating process in this action.  In Laurie v Carroll (1958) 98 CLR 310, it was said, at 323:

“In an action in personam … wherever a defendant can be legally served with a writ, there the court, on service being effected has jurisdiction to entertain an action against him.  Hence, in an action in personam, the rules as to the legal service of a writ define the limits of the court’s jurisdiction.”

3                     Order 7 r 14 provides:

“Where a respondent in any proceeding has, before or after the commencement of the proceeding, agreed that originating process or any other document in the proceeding may be served on the respondent or on some other person on behalf of the respondent in a manner or at a place (whether in or outside the Commonwealth) specified in the agreement, service in accordance with the agreement shall be sufficient service on the respondent.”

4                     Order 7 r 14 appears to have its origin in the English rule, now O 10 r 3 the Rules of the Supreme Court.  The various versions of the English rule in force between 1920 and now are set out in Kenneth Allison Ltd v AE Limehouse & Co [1992] 2 AC 105 at 117 and 118.  Order 7 r 14 is materially different from the English rule in force since 1965.  Firstly, the current English rule only permits service within or out of the jurisdiction where the action arises out of a contract which contains a term submitting disputes to the jurisdiction of the English court and the contract also contains a further term making special provision for service either within or outside England.  Secondly, where service is to be made out of the jurisdiction, the English rule expressly requires leave to serve the writ out of the jurisdiction to be obtained under the English equivalent to Federal Court O 8 before service under the special agreement will be effective.  Order 7 r 14 contains neither of these two limitations on the efficacy of the special agreement as to service permitted by this Federal Court rule.  Unlike the English rule, O 7 r 14 is not limited to actions on contracts with respect to which the parties make a special agreement as to service; instead, it empowers the respondent “in any proceeding”, ie, in a proceeding on any cause of action, contractual or other, to make a special agreement that is confined to service of process in the proceeding.  Nor does O 7 r 14 in terms require leave under O 8 though it provides for an agreement as to service of the originating process on the respondent outside the Commonwealth:  instead, service in accordance with the agreement is declared to be “sufficient service on the respondent” and the applicant is not required to take any further action to validate service, whether it is effected in or outside the Commonwealth.  The Federal Court rule is, however, similar to the forms of English O 10 r 3 in force between 1920 and 1965 and set out in Allison, which made effective a special agreement as to service out of England, without any need to obtain leave to serve the writ initiating the proceeding out of the jurisdiction under English equivalent of
O 8.

5                     It is open to parties to litigation to agree on a mode of service different from those provided for in the rules unless the rules themselves prohibit consensual service.  See Allison at 116 - 117 and 118 - 119.  Consensual service outside the rules of court regulating service has long been recognised in England; it was described in Sphere Drake Insurance Plc v Gunes Sigorta [1988] 1 Lloyd’s Rep 139 at 141 as the third of the “three main ways in which service can be effected”, the other two being personal service inside the jurisdiction and personal service outside the jurisdiction pursuant to leave of the Court under the English equivalent of O 8.

6                     Order 7 r 14 is formal recognition of the availability in this Court of consensual service.  In my opinion, it permits a respondent to agree on a special mode of service of originating (and other) process different from that provided for by the other rules in O 7 and in O 8 that deal with service and it makes service, both within the Commonwealth and outside the Commonwealth, effective provided it is made in accordance with the special agreement. 

7                     Order 7 r 14 is free of the limitations already referred to contained in the nearest equivalent rule in English Rules of the Supreme Court, O 10 r 3.  Moreover, O 7 r 14 does not operate only where there is a formal agreement containing specific provision for the service of process.  If a respondent either before or after the commencement of the proceeding makes an informal and ad hoc agreement with an applicant applicable only to a particular dispute about how service of process issued in connection with that dispute can be effected on the respondent, service by the applicant in the manner so agreed upon will be “sufficient service on the respondent”.  See Allison at 116 - 117.

8                     Tharsis Sulphur and Copper Co v Société Industrielle et Commerciale des Métaux (1889) 60 LT 924; Montgomery, Jones & Co v Liebenthal & Co [1898] 1 QB 487 and Reversionary Interest Society Ltd v Locking [1928] WN 227 are examples of the appointment by formal agreement of an agent to accept service in a particular action or class of actions by a respondent outside the jurisdiction that have been regarded as an act effective to enliven the Court’s jurisdiction to entertain the action against that respondent.  Manta Line Inc v Seraphim Sofiantes & Midland Bank Plc [1984] 1 Lloyd’s Rep 14 is an example of the appointment of an agent to accept service on behalf of a foreign respondent with respect to a particular action by an informal or ad hoc agreement.  There, the plaintiffs sued a former employee resident in Greece to recover secret commissions.  Shortly after issue of the writ, the defendant’s London solicitor informed the plaintiffs’ solicitors that he had instructions to accept service of the writ on behalf of the defendant.  The writ was then served on the defendant’s solicitor, who a week later returned it to the plaintiffs’ solicitor marked with the notation “service of writ accepted without prejudice to dispute jurisdiction”.  The Court of Appeal rejected a submission by the defendant that the agreement to accept service should be regarded in all the circumstances as only a conditional agreement, ie, one which did not waive the defendant’s right to object to jurisdiction.  The Court said:

“… he [the defendant’s solicitor] gave an unqualified agreement to accept service.  An uncommunicated intention, whether or not accompanied by circumspection, cannot affect the rights of the other parties to the contract.” (p 19)

“They [the defendant’s solicitors] were the defendant’s agents, so the defendant accepted service, and he accepted service in this country.  If you once accept service in this country, that is the end of the story.”  (p 20)

9                     In SCF Finance Co Ltd v Masri (No 3) [1987] 1 All ER 194, the giving of instructions by a respondent to her English solicitors to accept service of garnishee proceedings on her behalf was held, when acted on by the plaintiff, to be an agreement by the respondent to submit to the jurisdiction of the Court so as to empower the Court to make a garnishee order nisi against her though she was then out of England and under the rules of the English court such an order could only be made against a person “within the jurisdiction” at the time of the making of the order.  Dicey and Morris, The Conflict of Laws, 13th ed, at par 11-350 suggest that a consensual agreement providing for service on an agent in the jurisdiction of a respondent who is outside the jurisdiction is treated as a voluntary submission by the respondent to the jurisdiction of the court out of which process is issued.  But it is not clear whether the Court acquires jurisdiction over the foreign respondents because, by appointing an agent in England to accept service, the foreign respondents thereby agree to submit to the jurisdiction of the Court or whether jurisdiction, in such cases, is acquired because the foreign respondents are deemed to have been lawfully served in the jurisdiction.

10                  When O 7 r 14 says that “service in accordance with the agreement shall be sufficient service on the respondent”, that means that service of originating process in accordance with the agreement will thereupon enliven the Court’s jurisdiction to entertain the action against that respondent.  That is the purpose of service of originating process, whether it is effected within or outside the jurisdiction:  see Laurie v Carroll at 323.

11                  I can see no reason for reading the rule as if it were prefaced by words to the effect:  “In a case in which a respondent can be legally served with the Court’s originating process”, ie, as if it is intended only to operate as a modification to the requirement imposed by O 7 r 1(1) that originating process must be served personally on each respondent.  Order 7 r 1(1) is prefaced by the words “Subject to the provisions of this Order”.  There is an obvious conflict between r 1(1), which requires personal service and r 14, which allows other forms of service, so long as they are agreed.  On ordinary principles of interpretation, if service of originating process can be effected under one of the other rules in O 7, including r 14, r 1(1) is of no relevance to whether the Court can exercise its jurisdiction to entertain the particular action against the respondent.  Order 7 r 14, which provides for consensual service outside the other rules in O 7 and in O 8, is not a mere modification to the rule requiring personal service, as Sphere Drake at 141 shows.

12                  Order 7 r 14 cannot be read as applying only to respondents physically present in the Commonwealth.  The fact that the rule expressly permits a respondent to agree that originating process issued out of this Court may be served on the respondent at a place outside the Commonwealth is sufficient to show that.  There is no ground for finding an implied qualification in this rule that makes the effectiveness of an agreement as to service by a respondent outside the Commonwealth dependent on it providing for service on behalf of that respondent on someone who is within the Commonwealth.  The wording of O 7 r 14 is too clear to be able to be so read down.

13                  Nor is there any justification for reading O 8 as in some way cutting down the operation that the clear words of O 7 r 14 have.  Order 7 r 14 is not expressed to be subject to O 8 even though it provides for, among other things, an agreement as to service on respondents out of the jurisdiction.

14                  In Delco Australia Pty Ltd v Equipment Enterprises Incorporated (2000) 100 FCR 385, in which O 7 r 14 was not referred to, it was said at 392 and 393 that, whether this Court can exercise the jurisdiction it has in actions in personamover a respondent outside the Commonwealth depends on whether the respondent can be lawfully served with the Court’s originating process.  That is uncontroversial.  But it was also there said that “[t]he limits of this Court’s [extra-territorial] jurisdiction is defined by O 8 and confined to proceedings to which r 1 applies”.  That is not, I think, an accurate statement of the position.  Service of process in cases that come within O 8 r 1 is not the only means by which this Court can acquire jurisdiction over respondents who are outside the Commonwealth.  That is clear from O 8 r 2(1)(c):  if a respondent outside the Commonwealth is served without leave or even without service, but enters an appearance in the action, the respondent thereby “waives objection”, ie, submits to the jurisdiction of this Court by waiving any right it may have to contend that the Court cannot exercise its jurisdiction in the proceedings over the respondent.  Once an appearance is entered, the Court is not required to decide whether to grant leave to serve that respondent under O 8 r 2(2) or whether to confirm any service already effected under O 8 r 2(4), ie, there will be no occasion for the Court to consider whether the proceeding is within O 8 r 1.  Even if an action in personam is one that is not within O 8 r 1, so that a respondent outside the Commonwealth cannot be lawfully served under that Order, such a respondent, by voluntarily submitting to the jurisdiction of this Court, will thereby authorise the Court to exercise its jurisdiction over him.  See also Dicey and Morris, at par 11-107.  Contrary to the dictum in Delco, this Court’s jurisdiction over persons outside the Commonwealth is not confined to proceedings to which O 8 r 1 applies.

15                  In my opinion, service on a respondent out of the Commonwealth of this Court’s originating process in any kind of proceeding effected under an agreement within O 7 r 14 gives this Court jurisdiction in that proceeding over the respondent for the reason stated in Laurie v Carroll at 323:  O 7 r 14 creates a means whereby the Court’s process can be lawfully served on a foreign respondent.

16                  But it may be that consensual service on a respondent who is out of the Commonwealth that is provided for by the express wording of O 7 r 14 should be characterised as giving this Court jurisdiction over such a respondent because the agreement constitutes a voluntary submission by the respondent to the Court’s jurisdiction.  It is therefore necessary to consider whether O 8 r 1(f) requires O 7 r 14 to read as subject to an implied qualification that service on a foreign respondent under an agreement within O 7 r 14 will only be effective if leave to serve is also obtained under O 8.

17                  Order 8 r 1(f) permits service of originating process outside the Commonwealth “where the proceeding is a proceeding in respect of which the person to be served has submitted to the jurisdiction of the Court”.  If a case is within O 8 r 1(f), the Court will only acquire jurisdiction over the respondent if O 8 r 2(2)(a) and (c) are also satisfied.  In my opinion, the existence of O 8 r 1(f) is no reason for construing O 7 r 14 as requiring the grant of leave under O 8 to serve process out of the Commonwealth in the mode provided for by the special agreement even if service under O 7 r 14 operates as a voluntary submission to the jurisdiction.  Order 8 r 1(f) cannot, I think, be understood as requiring a plaintiff to obtain leave to serve or confirmation of service of the originating proceeding on a respondent outside the Commonwealth in every case where, prior to service being effected or after service is effected without prior leave of the Court, that respondent has engaged in conduct that shows, on an objective examination of the circumstances, a voluntary submission to the jurisdiction of the Court.  So much is clear from O 8 r 2(1)(c).  If a respondent submits to the jurisdiction of the Court by entering an unconditional appearance or a conditional appearance that is not followed by the very prompt action required by O 9 rr 6 and 7 to prevent the foreign respondent losing any right it may have to object to this Court exercising its jurisdiction over it, it is unnecessary to rely on O 8 r 1(f) and the associated r 2(2)(a) and (c) to show that the Court in fact has jurisdiction over that respondent.  Order 8 r 2(1)(c) makes it clear that O 8 r 1(f) does not apply to those cases.  Since O 8 r 1(f) plainly does not apply to all cases in which a respondent submits to the jurisdiction of the Court, the wide words of r (1)(f) must be read down.

18                  Putting to one side for the moment the apparent difficulty created by O 8 r 1(f), O 8 r 1 defines the cases by reference to their connection with Australia in which a foreign respondent can be compelled to submit to the jurisdiction of this Court.  But the Court will only exercise its authority over a foreign respondent who may not be willing to accept that authority in a case within r 1 where the Court is also satisfied that the subject matter of the litigation is within its jurisdiction and that the applicant has a sufficient case on the merits to justify the Court doing that.  There is no purpose served by requiring leave to be obtained under O 8 r 2(2) or (4) in any case in which a foreign respondent voluntarily submits to this Court’s jurisdiction in a way which completes the Court’s authority over that respondent.

19                  The entry of an appearance by a respondent outside the jurisdiction has long been regarded as such an act of voluntary submission to the jurisdiction of the local court in the action in which the appearance is entered.  But submission by a foreign respondent to the jurisdiction of the local court can take many other forms.  It has long been the law that a respondent outside the jurisdiction can so act to give the local court jurisdiction over it which it would not otherwise have by waiving objection to jurisdiction, eg, by taking a step in the proceeding inconsistent with maintaining that objection - see Rein v Stein (1892) 66 LT 469 - even if it has not entered an appearance - see Boyle v Sacker (1888) 39 Ch D 249.  By such an act of voluntary submission, the foreign respondent does all that is regarded as necessary to authorise the local court to exercise its jurisdiction in the particular matter over that respondent.  In such cases, insistence on the applicant nevertheless applying to the Court for leave to serve outside the Commonwealth (when service has not in fact been effected) or for confirmation of service effected without prior leave can serve no purpose other than to pointlessly inflate the costs of the proceedings.  These considerations, I think, enable the limitation that must be placed on the wide wording of O 8 r 1(f) to be identified.  I think that sub-paragraph should be read as applying only to cases of voluntary submission that are nevertheless not sufficient to complete the Court’s authority over the submitting foreign respondent.  A party to a contract who is outside the Commonwealth will be regarded as having submitted to the jurisdiction of this Court by agreeing that it is to have jurisdiction over that party with respect to disputes arising under the contract; but if the parties have failed to specify in the contract a method by which the foreign respondent party can be served with process, leave to serve out of the jurisdiction will still be necessary to complete this Court’s authority over that respondent.  See Nygh, Conflict of Laws in Australia, 7th ed, at par 4.79 and Mondial Trading Pty Ltd v Interocean Marine Transport Inc (1985) 65 ALR 155 at 157.  That is a common circumstance where O 8 r 1(f) serves a useful purpose; there may be others.

20                  Even if service under O 7 r 14 on a respondent outside the Commonwealth involves a voluntary submission by that respondent to this Court’s jurisdiction, the Court’s jurisdiction over the respondent is completely enlivened immediately service under the rule is effected.  There is therefore no need for the applicant to seek leave under O 8, the whole purpose of which is to enliven that jurisdiction, because it has already been fully invoked.

21                  In past times it might have been arguable that conduct by a respondent showing a voluntary submission to the jurisdiction of the Court was not sufficient, in the face of a provision like O 8 r 1(f), to give the Court jurisdiction over the respondent and that leave to serve outside the jurisdiction was still required to complete the Court’s authority over the respondent.  The courts were, until recent times, cautious about allowing a plaintiff to utilise the Rules of Court permitting extra-territorial service on a respondent.  Of the position in England, Collins, in Essays in International Litigation and the Conflict of Laws, corrected ed, Oxford, 1996, says, at 227 - 228:

“After the Judicature Act 1875, the forerunner of the modern Order 11 was made part of the rules of the Supreme Court.  Those rules provided that notice of a writ, rather than the writ itself, should be served on the defendant abroad.  The reason for this is an interesting one, particularly to public international lawyers.  The judges in 1876 apparently thought that service of the writ would be an interference with the jurisdiction of foreign countries.  From that date until recent times, the courts have consistently emphasised two points:  first, that the exercise of the discretion to serve out of the jurisdiction has international aspects, and second, that as a result the discretion must be exercised most carefully.”

22                  These grounds for caution no longer exist.  The modern approach was stated by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde (2000) 201 CLR 552 at 570 - 571:

“[42]  In Amin Rasheed Shipping Corporation v Kuwait Insurance Co [[1984] AC 50], Lord Diplock said that jurisdiction exercised by an English court over a foreign corporation which has no place of business in England, as a result of granting leave under the relevant rule of court to serve out of the jurisdiction [[1984] AC 50 at 65-66]:

‘is an exorbitant jurisdiction, ie, it is one which, under general English conflict rules, an English court would not recognise as possessed by any foreign court in the absence of some treaty providing for such recognition.  Comity thus dictates that the judicial discretion to grant leave under this paragraph [of the rules] should be exercised with circumspection in cases where there exists an alternative forum, viz the courts of the foreign country where the proposed defendant does carry on business, and whose jurisdiction would be recognised under English conflict rules.’

Considerations of comity, and consequent restraint, have informed many of the reported decisions about service out of the jurisdiction.  [See, eg, Contender 1 Ltd v LEP International Pty Ltd (1988) 63 ALJR 26 at 28‑29 per Brennan J, 82 ALR 394 at 398-399; Vitkovice Horni a Hutni Tezirstvo v Korner [1951] AC 869 at 877, per Lord Simonds; Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 481, per Lord Goff of Chieveley.]  It is, however, important to notice that rules of court, or local statutes, providing for service outside the jurisdiction are now commonplace – at least in jurisdictions whose legal systems have been formed or influenced by common law traditions.  Further, as the Court of Appeal rightly noted in its reasons in these matters, contemporary developments in communications and transport make the degree of ‘inconvenience and annoyance’ [Société Générale de Paris v Dreyfus Brothers (1885) 29 Ch D 239 at 243 per Pearson J] to which a foreign defendant would be put, if brought into the courts of this jurisdiction, ‘of a qualitatively different order to that which existed in 1885’ [(1998) 45 NSWLR 487 at 507].

[43]    The considerations of comity and restraint, to which reference has so often been made in cases concerning service out of the jurisdiction, will often be of greatest relevance in considering questions of forum non conveniens [Pt 10 r 6A(2)(b)].  The starting point for the present inquiry, however, must be the terms of the Rules, not any general considerations of the kind just mentioned.”

23                  This statement reinforces, in my opinion, the correctness of construing O 7 r 14 as meaning what its clear words say.  If a respondent in or outside the Commonwealth agrees in a formal or informal ad hoc way that the originating process in a particular case may be served on it at a place in or outside the Commonwealth, service in accordance with that agreement will be effective to give this Court jurisdiction in the action over that respondent.  Where service in such a case is outside the Commonwealth, it will be unnecessary to invoke O 8.  In accordance with the principle in Agar v Hyde, O 7 r 14 should be read as providing for a consensual procedure for serving not only respondents in the Commonwealth, but also respondents outside the Commonwealth, which will be effective to entitle the Court to exercise over both local and foreign residents such jurisdiction as it may have in actions in personam.

24                  It is now appropriate to consider whether the respondents were served lawfully with the applicants’ originating process by force of O 7 r 14.  In the course of the dispute between the parties which has generated this litigation, the New Zealand Banking Ombudsman, at the instigation of the applicants, conducted an investigation into their complaints with a view to attempting to resolve the dispute.  There were also extensive discussions between the applicants, their present solicitor and officers of the bank and the bank’s New Zealand solicitors in New Zealand.  The Ombudsman’s investigation became protracted.  On 18 June 2001, the Bank’s Company Secretary, Mr Boyd, who had been involved in the discussions, wrote from Wellington to Mr Cusack, the applicants’ solicitor, who practices in Brisbane.  Mr Boyd said that the Bank did not believe that mediation was likely to achieve finality and he enclosed “the Bank’s proposed statement of claim in draft form”.  He also said:

“5.       The Bank does not believe filing a proceeding in Australia will satisfactorily resolve the issues.  We have serious reservations regarding the jurisdiction of the Australian courts to deal with what is a New Zealand contract governed by New Zealand law affecting property situated in New Zealand.  If a decision is made to file any proceedings in Australia, you will understand that the Bank will be required to take appropriate steps to protect its position.

6.         In order to allow you time to obtain instructions, the Bank will be agreeable not to file its claim until 2 July 2001.”

25                  Shortly before Mr Boyd sent this letter, the applicants had requested the Banking Ombudsman to re-open or to continue her investigation into their complaints against the bank.  By facsimile of 3 September 2001 to Mr Cusack in Brisbane, Mr Chan, of Minter Ellison Rudd Watts, the Bank’s New Zealand solicitors, referred to this request and said this:

“The Bank agreed to this request but expressly stipulated that the investigations must be completed by 31 August 2001. …  The deadline set by the Bank has now passed and the matter has failed to progress. 

This dispute has dragged on for several years and the parties appear to be no closer to resolution.  The Bank seeks finality and considers that the most practical solution now is to obtain a judicial determination.

The Bank intends to commence a proceeding in the High Court of New Zealand on 10 September 2001.  You have previously been supplied with a copy of the draft statement of claim. …

Would you please let us know whether you have instructions to accept service.”

26                  There is no evidence before me as to Mr Cusack’s reply, if any.  By letter dated 10 September 2001, the Banking Ombudsman informed Mr Cusack that she had “concluded that [she] should decline to conduct any further investigation of [Mr Cusack’s] clients’ complaint”.

27                  On 11 September 2001, the Bank commenced proceedings against the applicants in the High Court of New Zealand in Wellington.  The applicants filed an objection to jurisdiction in the New Zealand proceeding and, on 25 October 2001, the applicants commenced the present proceedings against the Bank and the other respondents in this Court.  On 13 November 2001, a notice of conditional appearance was filed in these proceedings by the one firm of solicitors on behalf of all seven respondents.  These proceedings were soon after adjourned on 15 November 2001 to a date to be fixed within twenty-one days after the determination of the applicants’ protest to the New Zealand High Court’s jurisdiction to hear the Bank’s action.  That protest was heard in May and apparently was dismissed.  In the meantime, however, the applicants had filed their motion seeking confirmation of service of their proceedings in this Court on the respondents in New Zealand, notwithstanding the adjournment of 15 November.

28                  In his affidavit filed in support of the motion for confirmation of service, the first applicant, Mr Howard, said:

“134.   The bank’s solicitors in New Zealand initially informed Mr Cusack that they had instructions to accept service on behalf of each of the respondents in New Zealand except Mr Luff and a sealed copy of the application and statement of claim were sent to the respondents’ solicitors.  They later advised that they had instructions to accept service for Mr Luff as well.”

29                  Mr Howard exhibits to his affidavit a facsimile of 30 October 2001 from Mr Chan (of Minter Ellison Rudd Watts, the Wellington solicitors for the respondents) to Mr Cusack in Brisbane.  It reads:

“1.       We refer to your fax dated 26 October 2001.

2.         We have instructions to accept service on behalf of The National Bank of New Zealand Limited, Mr P K Murdock, Mr Glen Busbatch, Mr Rod Hutton, Mr John Boyd and Sir John Anderson.

3.         We have not been able to make contact with Mr Luff and therefore, at this point, we do not have instructions to accept service on his behalf.  We will let you know if and when we do receive those instructions.”

30                  Mr Howard also exhibits Mr Cusack’s reply of 31 October 2001 to Mr Chan, which was in the following terms:

“In accordance with your advice contained [in] your letter of 30 October 2001 we enclose herewith by way of service a sealed copy of the application and statement of claim in the above action for each of the respondents for whom you act.”

31                  Mr Nyein, of Wellington, now the Bank’s Company Secretary and Corporate Solicitor, has sworn a lengthy affidavit in opposition to the applicants’ motion.  Though Mr Nyein deals with Mr Howard’s affidavit and with the circumstances in which the Bank commenced the action in New Zealand and in which the applicants commenced their action in this Court, he does not dispute what Mr Howard has to say about Minter Ellison Rudd Watts having instructions as at 30 October 2001 to accept service of the originating proceeding in this Court on behalf of all respondents other than the third respondent, Mr Luff.  Nor does he dispute what Mr Howard has to say about the respondents’ New Zealand solicitors subsequently informing Mr Cusack that they had obtained instructions to accept service on Mr Luff also.

32                  It is to be noted that Mr Howard, in his affidavit, says:

“129.   Mr Boyd and Mr Nyein were strongly opposed to the idea of proceedings being instituted in Australia and we do verily believe that the bank’s termination of the Ombudsman’s reference was specifically designed to allow the bank to commence its proceedings in New Zealand before we had an opportunity to commence proceedings in Australia …”

33                  Mr Nyein deals, in his affidavit, with what Mr Howard here says.  He rejects the allegation by Mr Howard that the bank embarked upon a tactic to steal a march on the applicants and supports his rejection with a chronology of relevant events that occurred between 6 June and 25 October 2001.  The Bank’s position, at least as at this last date, is quite clear:  it then considered that the New Zealand court, rather than the Australian court, was the proper forum in which the dispute should be resolved.

34                  The communication to an applicant by solicitors for a respondent out of the jurisdiction of instructions to accept service, but reserving to the defendant the right to object to jurisdiction “with particularity and precision” will not amount to a submission to jurisdiction.  See Sphere Drake at 143.  Nor could such an arrangement be the basis for an agreement sufficient for the purposes of O 7 r 14.  Mr Chan’s facsimile of 30 October 2001, however, is free of ambiguity.  It was his firm, Minter Ellison Rudd Watts, that issued the proceedings on 11 September 2001 on behalf of the Bank in the New Zealand court.  Yet, without expressing any qualification, he responded to Mr Cusack’s inquiry by stating that “we have instructions to accept service on behalf of” all the respondents in the action in this Court other than the third respondent, with whom Mr Chan had not yet then been able to make contact.

35                  In express terms, Mr Chan invited Mr Cusack to serve the process issued by the applicants out of this Court on the respondents by delivering service copies of the material to Minter Ellison Rudd Watts at their office in Wellington.  Mr Cusack acted on that invitation.  There is no suggestion from Mr Chan or from any of the respondents, that Minter Ellison Rudd Watts did anything other than accept delivery from Mr Cusack of the relevant documentation as unconditional service of the process of this Court on the respondents.  Neither the Bank nor any of the other respondents has put any material before this Court suggesting that Mr Chan did not, on 30 October 2001, truly have unqualified instructions to accept service at the Wellington office of the Australian proceedings on their behalf.  In this state of the evidence, which I infer to have been quite deliberately left by the respondents as it is, it is understandable that I was not asked by counsel to infer that when Mr Chan sent his facsimile of 30 October 2001, he did so under some unexplained mistake as to, or mistaken belief about, the true nature of the instructions he then had from the respondents and which he later received from Mr Luff.

36                  Although the Bank commenced the New Zealand proceedings in early September 2001 knowing that the applicants had in mind suing in Australia and having earlier, by Mr Boyd, told Mr Cusack they thought New Zealand was the proper forum in which to resolve the dispute, I think I must accept that Minter Ellison Rudd Watts did have unqualified instructions as at 30 October 2001 from all respondents other than Mr Luff, and that those solicitors obtained similar instructions from Mr Luff some time later, to accept service on their behalf of the originating process issued by the applicants out of this Court and that they did receive from Mr Cusack the service copies of the originating application and the statement of claim by way of service of that documentation on the respondents.  In my opinion, Mr Chan, in making his unqualified response to Mr Cusack’s inquiry that his firm had instructions to accept service of the process issued out of this Court by the applicants on behalf of the respondents, agreed as agent for those respondents that that process could be served on them by delivery of the relevant documentation to his firm in Wellington.  I can see no reason why delivery to the respondents’ agents in New Zealand of service copies of that process in the circumstances referred to should not be service that complies with O 7 r 14 and as such sufficient to give this Court jurisdiction over the respondents.  In so far as O 7 r 14 requires a contractually binding agreement as to service, such an agreement came into existence when Mr Cusack acted upon what Mr Chan said by delivering to Mr Chan service copies of the documentation.  Once that occurred, it was too late for the respondents to raise any objection to this Court’s jurisdiction over them in this action:  see Manta Line and Dicey & Morris, at p 302, note 73.

37                  Order 7 r 8 has nothing to do with this case.  Order 7 r 14 does not operate only subject to O 7 r 8.  Nor did Mr Chan endorse the service copies of the originating process as provided for by that rule and,  in any event, there is nothing to suggest he was at the time of service “a solicitor” within this rule, ie, a solicitor entitled to practice in the Federal Court of Australia by force of Part VIIIA the Judiciary Act 1903 (Cth).  That he did not go beyond what he said in his facsimile of 30 October 2001 and undertake to enter an unconditional appearance on behalf of the respondents is of no assistance to the respondents.  He agreed unconditionally on behalf of the respondents to accept service of the applicants’ originating process, ie, to do all that O 7 r 14 requires, once service is effected, to give this Court jurisdiction in this action over those respondents.  Once O 7 r 14 was satisfied, the respondents lost their right to object to this Court’s jurisdiction in this action.

38                  It is unnecessary for the applicants to seek confirmation under O 8 r 2(4) of service on the respondents.

Jurisdiction

39                  The issue whether this Court does in fact have jurisdiction in the applicants’ action was raised by the respondents in the context of O 8 r 2(2)(a) in the course of opposing the application for an order under O 8 r 2(4) confirming service.  This Court is a court of limited jurisdiction and this issue is, of course, a different question entirely from whether the Court can exercise such jurisdiction it has in a particular case over a respondent resident outside the Commonwealth.  In submitting that O 8 r 2(2)(a) was not complied with, the respondent contended that the matters alleged in the statement of claim could not “be breaches of sections 51AA, 51AB, 52 or 60” of the Trade Practices Act 1974 (Cth) because:

“(a)     They are matters concerning conduct that is alleged to have taken place entirely within New Zealand; and

(b)       They are matters concerning the supply, or possible supply, of financial services and conduct engaged in in relation to financial services.”

40                  The dispute arises out of certain loan transactions which the applicants entered into with the Queenstown branch of the respondent Bank.  In compliance with O 4 r 1 and the requirement of Form 5 to state, among other things, the legislative basis of the Court’s jurisdiction to hear the application and grant the relief sought, the applicants, in their originating application, state that the relief claimed is:

“for damages, injunctive and declaratory relief under the law of Queensland and pursuant to Sections 52 [the reference should be to “82”] and 87 of the Trade Practices Act1974 (as amended) for conduct engaged in by the First Respondent and in which the other Respondents were knowingly concerned, aided, abetted and or counselled, whilst the First Respondent was carrying on business in Australia for the supply and possible supply of banking and financial services to each of the Applicants who at all material times were residents of Brisbane, Queensland, Australia and consumers of such services.  The conduct of the First Respondent and the other Respondents which the Applicants say was engaged in by such Respondents in Australia included conduct engaged in in Australia in contravention of Section 51AA, Section 52 and Section 60 of the Trade Practices Act 1974 (as amended) and such conduct was engaged in or alternatively made, done and or effected in Australia by means of telephonic, postal and facsimile communication between such Respondents in New Zealand and the Applicants in Australia and in the premises the Applicants say this Honourable Court has jurisdiction to hear and determine the Applicants’ claims without recourse to the extended applications of Parts IV and V of the Trade Practices Act 1974 (as amended) provided for by Section 5(3) of the Trade Practices Act 1974 (as amended).”

41                  It is apparent from the body of the application that s 51AB, as well as s 51AA, is relied on.  These claims are developed at length in the statement of claim.

42                  As to the respondents’ first contention, the applicants disavow reliance upon s 5(1), which extends the operation of the provisions of the Trade Practices Act they rely on to conduct engaged in outside Australia by corporations carrying on business within Australia.  The applicants submit that:  “The representations made and the conduct perpetrated through letters and facsimile transmissions were breaches of the T.P.A. committed in Australia by the Respondents in New Zealand”.  If that contention is factually correct - and the limited material available to me suggests there is some substance in it - then the Bank and the other respondents involved in the conduct in question could be found to have contravened those provisions of the Act by conduct taking place in Australia:  see Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 at 40, par [147].

43                  As to the respondents’ second contention, the applicants’ complaints that various provisions of the Trade Practices Act have been contravened by the respondents are complaints of conduct in relation to financial services and the supply of financial services within the meaning of that term in s 4 of the Act.  Neither Pt IVA (unconscionable conduct) nor Pt V (consumer protection) now applies to conduct engaged in in relation to financial services or to the supply or possible supply of financial services.  The regulation of unconscionable conduct and of consumer protection of the kind provided for in Pt V the Trade Practices Act in relation to financial services is now the subject of Div 2 of Pt II the Australian Securities and Investments Commission Act 2001 (Cth).  The transfer of responsibility from the Australian Competition and Consumer Commission to the Australian Securities and Investments Commission for the regulation of conduct that would otherwise have come within Pts IVA and V of the Trade Practices Act in relation to financial services took effect on 1 July 1998:  see s 2(2) the Financial Sector Reform (Consequential Amendments) Act 1998 (Cth).

44                  At least some of the respondents’ conduct about which the applicants complain may well have occurred after July 1998.  But I do not think the contentions advanced by the respondents show that this Court has no jurisdiction to deal with the applicants’ action.

45                  In Bray, the applicant relied, in its case based on s 45 the Trade Practices Act, on the extended operation given to that section by s 5(1).  It was contended that whether the defendant was carrying on business in Australia within s 5(1) raised a question as to the jurisdiction of the Court and that it should be determined as a preliminary issue.  Merkel J rejected both these contentions.  As to the first, his Honour said:

“[189]            …  It is not a statutory precondition to the invocation of the court’s jurisdiction under the TPA that the foreign respondents have carried on business in Australia.  Rather, under s 86 jurisdiction is conferred on the court ‘in any matter arising under this Act in respect of which a civil proceeding has … been instituted under [Part VI]’.  In so far as the proceeding claims damages and injunctive relief it is instituted under Pt VI of the TPA.  As was pointed out in Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 162 …:

‘Section 86 is not a self-contained grant of jurisdiction; it operates by reference to proceedings for which provision is made elsewhere in Pt VI, proceedings which are described in terms of the particular relief which the court is empowered to grant.’

[190]  Jurisdiction is the authority which a court has to decide the range of matters that can be litigated before it; in the exercise of that jurisdiction a court has powers expressly or impliedly conferred by the legislation governing the court and such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred: see Harris v Caladine (1991) 172 CLR 84 at 136 … and Edensor at 348.  As was pointed out in Edensor (at 348):

‘The claims for relief illuminate the scope of a controversy which constitutes a matter and once the Federal Court has jurisdiction to determine a controversy it has power in the exercise of that jurisdiction to give the remedies sought.’

[191]  For the purposes of the present proceeding, s 45 of the TPA prescribes the norm of conduct and other provisions, such as ss 80 and 82, provide remedies while s 86 confers jurisdiction to administer them: cf Edensor at 348.  In the present case there is a justiciable controversy as to whether the applicant (and group members) are entitled to damages and injunctions by reason of the alleged contravention of s 45, as extended by s 5(1), by the foreign respondents.  The applicability of s 5(1) might turn out to be a critical element of the cause of action against the foreign respondents, but the applicability of s 5(1) is not a condition precedent to the court entering upon the ‘inquiry’ or to the invocation of the court’s jurisdiction to proceed.  …  In any event even if, contrary to my view, the court’s jurisdiction is required to be determined as a preliminary issue, for the reasons set out earlier it is inappropriate to do so at this stage.”

46                  Merkel J had earlier said that the general rule is that this Court is not under a duty to forthwith determine if it has jurisdiction to proceed with the hearing as soon as that is raised as a bona fide issue:  it is for the Court to determine, in the interests of justice, the time at which and the manner in which a jurisdictional issue should be resolved.  See p 49, par [187].  However, he accepted at par [188] that, where a statutory pre-condition to the invocation of the Court’s jurisdiction was required to exist before the proceeding can be commenced or the Court’s jurisdiction can be invoked, the Court might be under an obligation to determine the facts upon which its jurisdiction depends as a preliminary issue.

47                  For the reasons given by Merkel J in pars [189] to [191] of his judgment, I do not regard any of the points raised as determinative of whether the Court has jurisdiction to deal with the applicants’ action.  If the conduct relied on by the applicants all took place in New Zealand or if the subject matter of their complaints concerns activity with respect to financial services, then the applicants may fail to prove the case they have set up.  But I do not think that it is a statutory pre-condition to the existence of the jurisdiction conferred on this Court by s 86 the Trade Practices Act that the conduct complained of occur in Australia (given that the applicants do not rely on s 5(1)) or that that conduct must not be related to financial services.

48                  Even if ss 51AAB and 51AF should be construed as jurisdictional bars to this Court exercising the jurisdiction conferred on it by s 86 the Trade Practices Act in respect of conduct relating to financial services after 1 July 1998, s 39B(1A)(c) the Judiciary Act 1903 gives this Court jurisdiction “in any matter … arising under any laws made by the Parliament”.  The applicants complain of conduct by the respondents which they plead constitutes contraventions of various provisions of the Trade Practices Act and gives them the rights to relief claimed under ss 80, 82 and 87 of that Act.  But so far as concerns conduct which took place after 1 July 1998 upon which the applicants rely, that conduct can all, I think, be said to amount to contraventions of the provisions of Div 2 of Pt II the Australian Securities and Investments Commission Act corresponding to the provisions in the Trade Practices Act relied on, ss 51AA, 51AB, 52 and 60, and to entitle the applicants under ss 12GD, 12GF and 12GM the Australian Securities and Investments Commission Act to the same relief claimed under ss 80, 82 and 87 the Trade Practices Act.  This Court would appear to have jurisdiction to deal with those complaints by force of s 12GJ(1) the Australian Securities and Investments Commission Act.  But this Court also has jurisdiction under s 39B(1A)(c) the Judiciary Act 1903 (Cth) to entertain the applicants’ action, whether the federal claims contained in it ultimately be framed in reliance on the Trade Practices Act or the Australian Securities and Investments Commission Act:  see Elders Ltd v Swinbank (1999) 96 FCR 303 at 308, par [18].  Whether a pleading should be struck out under O 11 r 16 is governed by whether the statement of claim shows a reasonable cause of action.  But whether this Court has jurisdiction to hear and determine a proceeding is not governed by the pleading:  whether an action is within this Court’s jurisdiction because it involves a matter arising under Commonwealth statutory law involves “a question of substance and not of form” and what is pleaded is not decisive of the Court’s jurisdiction.  See Australian Solar Mesh Sales Pty Ltd v Anderson (2000) 101 FCR 1 at 9.

Associate:

Dated:              14 October 2002