FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Oswal [2012] FCA 1507

THE COURT ORDERS THAT:

1.    Pursuant to Rule 8.21(1)(d) of the Federal Court Rules 2011, the originating application and statement of claim dated 5 October 2012 be amended to substitute the Commissioner of Taxation for the Deputy Commissioner of Taxation as the applicant in this proceeding.

2.    The applicant have leave to serve the amended originating application and amended statement of claim dated 5 October 2012 on the first respondent pursuant to Rule 10.43(2) of the Federal Court Rules 2011 in the United Arab Emirates through the diplomatic channel pursuant to Rule 10.51 of the Federal Court Rules 2011 and in accordance with the laws of the United Arab Emirates.

3.    In addition, or in the alternative, the applicant have leave to serve the amended originating application and amended statement of claim dated 5 October 2012 on the first respondent pursuant to Rule 10.24 of the Federal Court Rules 2011 by way of substituted service as follows:

3.1    by posting a copy of the amended originating application and amended statement of claim by ordinary pre-paid post to Kennedys, Level 22, 85 Castlereagh Street, Sydney, New South Wales;

3.2    by posting a copy of the amended originating application and amended statement of claim by pre-paid airmail (or equivalent) to Building 99, Jebel Ali, Dubai, United Arab Emirates;

4.    Service in accordance with paragraph 3 of this Order shall be deemed good and sufficient service on the first respondent.

5.    Service of the amended originating application and amended statement of claim be deemed to have been effected on the first respondent 14 days after posting in accordance with paragraphs 3.1 and 3.2 of this Order.

6.    The applicant have leave to serve the amended originating application and amended statement of claim dated 5 October 2012 on the second respondent pursuant to Rule 10.43(2) of the Federal Court Rules 2011 in the United Arab emirates through the diplomatic channel pursuant to Rule 10.51 of the Federal Court Rules 2011 and in accordance with the laws of the United Arab Emirates.

7.    In addition, or in the alternative, the applicant have leave to serve the amended originating application and amended statement of claim dated 5 October 2012 on the second respondent pursuant to Rule 10.24 of the Federal Court Rules 2011 by way of substituted service as follows:

7.1    by posting a copy of the amended originating application and amended statement of claim by prepaid airmail (or equivalent) to P.O. Box 17398, United Arab Emirates;

7.2    by posting a copy of the amended originating application and amended statement of claim by pre-paid airmail (or equivalent) to Apartment No. 4, Building 99, Gardens behind Ibn Battuta [or Baitutta] Mall, Jebel Ali, Dubai;

7.3    by posting a copy of the amended originating application and amended statement of claim by ordinary pre-paid post to Allion Legal, Level 2, 50 King's Park Road, West Perth, Western Australia; and

7.4    by posting a copy of the amended originating application and amended statement of claim by ordinary pre-paid post to Kennedys, Level 22, 85 Castlereagh Street, Sydney, New South Wales.

8.    Service in accordance with paragraph 7 of this Order shall be deemed good and sufficient service on the second respondent.

9.    Service of the amended originating application and amended statement of claim be deemed to have been effected 14 days after posting in accordance with paragraphs 7.1, 7.2, 7.3 and 7.4 of this Order.

10.    The costs of and incidental to this interlocutory application be reserved.

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

REASONS FOR JUDGMENT

Introduction:

1    By originating application and statement of claim dated 5 October 2012 the Deputy Commissioner of Taxation seeks declarations against Mrs Radhika Oswal (Mrs Oswal) and Mercury Services Limited (Mercury) to the effect that certain mortgages in favour of Mercury over two properties of which Mrs Oswal is the registered proprietor are void pursuant to s 89 of the Property Law Act 1969 (WA) (Property Law Act).

2    By ex parte interlocutory application dated 18 December 2012 the Deputy Commissioner seeks orders:

(a)    giving him leave to file an amended originating application and amended statement of claim substituting the Commissioner of Taxation (the Commissioner) for the Deputy Commissioner of Taxation as the applicant in this proceeding pursuant to r 8.21(1)(d) of the Federal Court Rules 2011 (the Rules);

(b)    giving him leave to serve the amended originating application and amended statement of claim on Mrs Oswal and Mercury outside of Australia in the United Arab Emirates (UAE) pursuant to r 10.43(2) of the Rules;

(c)    giving him leave to serve Mrs Oswal and Mercury by substituted service pursuant to r 10.24 of the Rules.

Evidence

3    The evidence relied on in support of the orders sought is an affidavit of Aris Zafiriou sworn 18 December 2012.

Substitution of Commissioner as applicant

4    Rule 8.21(d) of the Rules permits an applicant to apply for leave to amend an originating application to, inter alia, correct the identity of a party to the proceeding. The rule covers, among other things, cases of misnomer, clerical error or misdescription: see by analogy, Bridge Shipping Pty Limited v Grand Shipping SA (1991) 173 CLR 231 at 261.

5    It is clear from para [1] of the statement of claim that it was intended that the Commissioner should be the applicant in this proceeding. The styling of the originating application and the statement of claim a proceeding brought by the Deputy Commissioner of Taxation as applicant is clearly a clerical error.

6    There is no barrier, such as the expiry of a limitation period, to this relief. Accordingly, leave will be granted to file an amended originating application and amended statement of claim correcting the clerical error and naming the Commissioner as the applicant in this proceeding.

Leave to serve amended originating application and amended statement of claim out of the Australia:

7    Rule 10.43(4) of the Rules provides that for the Court to give leave to serve an originating application out of Australia it must be satisfied of three things:

(a)    that the Court has jurisdiction in the proceeding;

(b)    that the proceeding is of a kind mentioned in r 10.42 of the Rules, in which an originating application may be served on a person outside of Australia; and

(c)    the party, in this case the Commissioner, has a prima face case for the relief claimed in the proceedings.

8    I will deal with each in turn.

Jurisdiction

9    Section 39B(1A)(a) of the Judiciary Act 1903 (Cth) (Judiciary Act) gives the Federal Court jurisdiction in any matter in which the Commonwealth is seeking an injunction or declaration.

10    In Commonwealth v Westwood (2007) 241 ALR 381 (Commonwealth v Westwood) Sackville J at [52] said:

The expression ‘the Commonwealth’ as used in s 39B(1A)(a) of the Judiciary Act, is not to be construed narrowly. It includes statutory corporations which are agencies or instrumentalities of the Commonwealth: Edensor [43], per Gleeson, Gaudron and Gummow JJ; Austral Pacific Group Ltd (in liq) v Airservices Australia (2000) 203 CLR 136; [2000] HCA 39 at [48] (and cases cited there) per McHugh J. However, it is not only a corporation that can be “the Commonwealth” for the purposes of s 39B(1A)(a) of the Judiciary Act. In Commonwealth v Lyon (2003) 133 FCR 265; 203 ALR 553; [2003] FCAFC 284 at [21] (Lyon), the Full Federal Court considered it “likely” that the Commissioner of the Australian Federal Police was to be regarded as the Commonwealth for this purpose.

11    Sackville J held in Commonwealth v Westwood at [53], that the Director of Military Prosecutions was “the Commonwealth” for the purpose of s 39B(1A)(a) of the Judiciary Act because he held a statutory office, was appointed by the minister, held office on terms and conditions determined by the minister, exercised statutory functions integral to the maintenance and enforcement of discipline in the Defence Force of the Commonwealth, and was authorised to represent the service chiefs in proceedings.

12    That reasoning is equally applicable to the Commissioner. The Commissioner’s office is created by statute and he is appointed by the Governor General: s 4 of the Taxation Administration Act 1953 (Cth) (TAA). He has general administration of the TAA, the Income Tax Assessment Act 1936 (Cth) and the Income Tax Assessment Act 1997 (Cth). His remuneration is set by the Remuneration Tribunal: s 5A of the TAA. For these reasons, the Commissioner is within the expression “the Commonwealth” in s 39B(1A)(a) of the Judiciary Act.

13    The originating application seeks declaratory relief under s 39B of the Judiciary Act. Such relief would also be available under s 21 of the Federal Court of Australia Act 1976 (Cth).

14    Therefore, this is a matter in which the Federal Court has jurisdiction under s 39B(1A)(a) of the Judiciary Act.

Rule 10.42

15    Rule 10.42 of the Rules specifies the kinds of matters in which an originating application may be served on a person in a foreign country. Item 21 of the table in r 10.42 is a “[p]roceeding in which the subject matter, to the extent that it concerns the person to be served, is property in Australia”.

16    The subject matter of this proceeding are two properties in Perth: one at 2 Bay View Terrace, Peppermint Grove (Peppermint Grove property) and one at 72 Philip Road, Dalkeith (Dalkeith property). Mrs Oswal is sued as the registered proprietor of those properties. Mercury is sued as the holder of a registered mortgage over those properties. The Commissioner seeks declarations, in effect, setting aside the mortgages over the Peppermint Grove property and Dalkeith property in favour of Mercury. His action comes squarely within the following statement in LexisNexis Butterworths, Practice and Procedure, High Court and Federal Court of Australia, Vol 2 at [r 10.42.115]:

In any claim where the claimant seeks the Court’s aid to construe, rectify, set aside or enforce any Act, deed, will, contract or liability affecting property within the jurisdiction, it may be possible to serve a party who is outside Australia under r 10.42 . . .

(Emphasis added.)

17    Accordingly, the matter in r 10.43(4)(b) of the Rules is satisfied.

Prima facie case - principles

18    In Humane Society International Inc v Kyodo Senpaku Kaisha Ltd (2004) 212 ALR 551 at [23] Allsop J said, with reference to the relevant rule in the Federal Court Rules 1979 (Cth) (the 1979 Rules):

A prima facie case for relief is made out if, on the material before the court, inferences reached at a somewhat lesser degree of scrutiny than is called for in circumstances such as consideration of a no-case submission are open which, if translated into findings of fact, would support the relief claimed: see generally Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110; 4 ACSR 795 at 803; Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317 at 325, 340; 200 ALR 607 at 611 [17], 626 [97]; Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390; Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 at 372-3; 136 ALR 733 at 740-1.

(Original emphasis.)

19    In WSGAL Pty Limited v Trade Practices Commission (1992) 39 FCR 472 at 476 Beaumont J observed that “[t]he kind of evidence adduced on a preliminary inquiry of this kind should be in proportion to the nature of such an interlocutory issue. … [t]he purpose is to determine by way of a mini rather than a mega trial whether the applicant has a prima facie case”. This was cited with apparent approval by Lindgren J in Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 at 372.

20    In the same vein, in Ho v Akai Pty Limited (in liquidation) ACN 001 500 714 [2006] FCAFC 159, the Full Court stated at [10]:

As has been observed on many occasions, the prima facie case requirement has to be met at the outset, usually on an ex parte basis, and without the advantage of discovery and other procedural aids to the making out of a case: see e.g. Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390. It "should not call for a substantial inquiry": WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 476; see also Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549. For present purposes it is sufficient to say that a prima facie case for relief is made out if, on the material before the court, inferences are open which, if translated into findings of fact, would support the relief claimed: Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110. Or, to put the matter more prosaically as Lee J did in Century Insurance (in provisional liquidation) v New Zealand Guardian Trust [1996] FCA 376:

“What the Court must determine is whether the case made out on the material presented shows that a controversy exists between the parties that warrants the use of the Court’s processes to resolve it and whether causing a proposed respondent to be involved in litigation in the Court in Australia is justified”.

(Original emphasis.)

Section 89 of the Property Law Act

21    Section 89 of the Property Law Act provides as follows:

(1)    Except as provided in this section, every alienation of property made, whether before or after the coming into operation of this Act, with intent to defraud creditors is voidable, at the instance of any person thereby prejudiced.

(2)    This section does not affect the law of bankruptcy for the time being in force.

(3)    This section does not extend to any estate or interest in property alienated for valuable consideration and in good faith or upon good consideration and in good faith to any person not having, at the time of the alienation, notice of the intent to defraud creditors.

22    Section 89 of the Property Law Act is the modern manifestation of the statute 13 Eliz I c5, entitled “An Act against fraudulent Deeds, Gifts, Alienations, etc” 1571 (Statute of Elizabeth). Section 37A of the Conveyancing Act 1919 (NSW) (Conveyancing Act) is the New South Wales modern manifestation of the Statute of Elizabeth and is substantially identical to s 89 of the Property Law Act. In Marcolongo v Chen (2011) 242 CLR 546 (Marcolongo), the High Court considered the application of s 37A of the Conveyancing Act. Accordingly, the reasoning in Marcolongo is of equal application to s 89 of the Property Law Act. The principles derived from Marcolongo as applied to s 89 are as follows:

(a)    s 89 of the Property Law Act applies to conveyances and assignments made with intent to hinder or delay creditors and renders void against all creditors so hindered or delayed the conveyance or assignment, that being the language of the Statute of Elizabeth (at [12], [19], [22] – [23] and [28]);

(b)    there is no superadded requirement to be found in s 89 of the Property Law Act to show dishonesty or fraud over and above an intention to hinder or delay creditors and there is no requirement to find an animus against a particular creditor: an intention to hinder or delay creditors is the relevant species of fraud (at [29]- [33] and [56]);

(c)    the fact that a conveyance or assignment of property is made voluntarily is a fact which may, on its own, support an inference of the existence of the intention to hinder or delay creditors, but need not do so (at [25]-[26]). At the same time, the fact that the conveyance was made for value does not necessary establish the absence of the relevant intention (at [12]). The intention required by the statute is an actual intention, but ordinarily the existence of the actual intention will be inferred from the objective facts ([26]); and

(d)    there is no requirement in s 89 of the Property Law Act that the intent to hinder or delay creditors be the sole or even the predominant purpose of the conveyance or assignment and it does not matter if the relevant intention was formed because of or at the instigation of another (at [57]).

23    The reasoning in Marcolongo was applied to s 89 of the Property Law Act by Lee AJA at [529] in Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157.

24    Earlier, at first instance in Bell Group Ltd (in liq) v Westpac Banking Corporation (2008) 39 WAR 1 (Bell v Westpac) Owen J, prior to Marcolongo, had reviewed in detail at [9082]-[9192] the authorities relevant to s 89 of the Property Law Act. Owen J at [9146] collected together a number of principles. Excising those propositions affected by Marcolongo and the Court of Appeal’s decision, Owen J said:

. . .

3.    Intention can be established by inference.

4.    If the natural and probable consequences of the disposition are such that its effect will be to defeat or delay creditors, the necessary inference can be drawn and a court might more readily do so. But a finding to that effect is a finding of an actual or real intention, not one that is imputed to the disponor by virtue of a legal presumption.

5.    The essence of the concept of defrauding creditors lies in a disposition which subtracts from the property which is the proper fund for the payment of the debts, an amount without which the debts cannot be paid ….

6.    Other relevant circumstances from which the necessary inferences might be drawn include:

(a)     the insolvency or difficult financial circumstances of the disponor (although establishing insolvency at the time of the disposition is not a necessary element); and

(b)     whether the transaction was voluntary or the consideration was colourable, negligible or trivial.

…

8.    It is not necessary that the disposition affects creditors as a class generally; it is sufficient if one or some creditors are adversely affected. In this context 'creditor' is not confined to those to whom a debt is (at the time of the disposition) presently due and owing. It extends to impending liabilities and future creditors ...

25    In Marcolongo, French CJ, Gummow, Crennan and Bell JJ noted at [21] that the parties had, in effect, accepted the conclusion of the majority of the Supreme Court of New Zealand in Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 (Regal Castings v Lightbody) “that the indefeasibility provisions of the Torrens system allowed for the enforcement against the registered proprietor of in personam remedies given by the [Statute of Elizabeth] and its local representative”. The High Court also noted in Marcolongo that the approach of the Supreme Court of New Zealand was consistent with the academic view of the Torrens system.

Evidence supporting prima facie case:

26    I will now describe the essential elements of the Commissioner’s case.

27    Mrs Oswal, an Indian national, together with her husband, Mr Pankaj Oswal (Mr Oswal), was a part owner of the Burrup group of companies which owned and operated an ammonia plant in Western Australia. As at 2010, the Oswals and the Burrup group of companies had a very large exposure to the ANZ Bank, in excess of USD1.5 billion.

28    Also, in 2009 and 2010, the Australian Taxation Office (ATO) commenced and conducted an audit in relation to the taxation affairs of the Oswals and the Burrup group of companies. One of the matters the subject of the audit was a trust referred to as the Burrup Trust of which Mr Oswal was trustee and Mrs Oswal a beneficiary. That audit culminated in assessments issued to Mrs Oswal in February 2011 for tax, interest and penalties which gave rise to a tax-related liability of $178,210,810.14. On 9 August 2011, the Commissioner obtained judgment against Mrs Oswal for $186,321,791.011.

29    On 3 December 2010, the ANZ Bank made demands on Mr Oswal and Mrs Oswal on personal guarantees each had provided in connection with the debts of the Burrup group of companies. On 13 December 2010, the Oswals left Australia and have not returned. On 16 December 2010, the ANZ Bank appointed receivers to entities within the Burrup group of companies. On 24 December 2010, the Mercury mortgage was registered over the Peppermint Grove property and the Dalkeith property.

30    The Commissioner relies in the following matters, taken in combination, as supporting an inference that the Mercury mortgage was an “alienation of property” made with the intention to hinder or delay execution by Mrs Oswal’s creditors against the Peppermint Grove property and the Dalkeith property:

(a)    the Mercury mortgage was made very soon after financial disaster had, in effect, overtaken the Oswals. The ANZ Bank had made demands on personal guarantees given by the Oswals for in excess of USD1.5 billion and appointed receivers to the Burrup group of companies. Moreover, the Mercury mortgage was made after the ATO had commenced an investigation into the taxation affairs of the Oswals and only shortly before that culminated in very large assessments being issued to Mrs Oswal;

(b)    the Mercury mortgage was made at a time after Mrs Oswal departed Australia for the UAE from where they have not returned. The only executed copy of the Mercury mortgage, which is incomplete, purports to be witnessed by a Mr Ramesh Sodum (Mr Sodum) with an address in Western Australia. The evidence indicates that on the date of the purported execution of the Mercury mortgage, 24 December 2010, Mr Sodum was in Australia. Mrs Oswal was not;

(c)    aside from the Mercury mortgage, the Peppermint Grove property and the Dalkeith property were unencumbered and available to satisfy Mrs Oswal’s unsecured creditors. According to Mrs Oswal’s evidence, the Mercury mortgage secures effectively the whole of the equity in the Peppermint Grove property and the Dalkeith property. The natural and probable consequence of the Mercury mortgage was to remove the Peppermint Grove property and the Dalkeith property from the pool of assets available to satisfy the claims of Mrs Oswal’s unsecured creditors;

(d)    according to Mrs Oswal’s evidence given in an affidavit provided pursuant to an order obtained by the Commissioner as ancillary to a freezing order made against Mrs Oswal by the Court, the Mercury mortgage secured amounts advanced by Mercury in 2009 and 2010. Even if this is so, that is not good consideration for the provision of a security. In Re Hyams; Offical Receiver v Hyams (1970) 19 FLR 232 at 254 Gibbs J stated:

It is clear that the mere existence of an antecedent debt is not consideration for the giving of security in respect of that debt; “in order to have consideration for a further security there must be an agreement, express or implied, to give some time or some further consideration, or else there must be an actual forbearance which ex post facto may become the consideration to support the deed” ...

This was quoted with approval by Owen J in Bell v Westpac at [9180]. There is no suggestion in Mrs Oswal’s evidence of any further consideration of the kind referred to by Gibbs J.

(e)    further, Mrs Oswal’s evidence is to the effect that no written loan agreement existed between her and Mercury in connection with the purported advances secured by the Mercury mortgage;

(f)    Austrac searches undertaken by the ATO have not produced any evidence to support the assertion that the Mercury mortgage was to secure advances made by Mercury to Mrs Oswal in 2009 and 2010;

(g)    the documentation of the Mercury mortgage is, at the least, unsatisfactory. No complete, executed copy of the Mercury mortgage appears to exist. The complete copy produced by Mrs Oswal in her affidavit is unexecuted, undated and names a mortgagee other than Mercury;

(h)    the evidence supports an inference that Mercury is a company related to Oswals in some way. The address for Mercury in the UAE, which appears on the Mercury mortgage, is very similar, if not identical, to an address Mrs Oswal has given on court documents. Investigations in the UAE have indicated that the address given in the Mercury mortgage is a residential address and the persons in residence are a family of Indian appearance; and

(i)    according to the evidence which was before the Court in Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Oswal (No 7) [2012] FCA 1185 at [38]-[47], the Mercury mortgage was prepared and registered on the instructions of Mrs Oswal and her agents. That evidence does not reveal the involvement of anyone for or on behalf of Mercury. The evidence before the Court in that case does not give the Mercury mortgage the appearance of an independent, arm’s length transaction. Further, the evidence before the Court in that matter was to the effect that the mortgage was to secure monies to be advanced and not, as Mrs Oswal deposes, monies already advanced by Mercury. There is no evidence, either from Mrs Oswal or disclosed in Austrac searches, that any such advances were ever made.

31    It is to be recalled that the circumstances of the creation of the Mercury mortgage lie within the knowledge of Mrs Oswal and are not within the knowledge of the Commissioner. As Hill J remarked in Andrew (as trustee for the estate of Ward (dec’d)) v Zant Pty Ltd (rec and mgr apptd) (2004) 213 ALR 812 (Andrew v Zant) at [20], with reference to s 121 of the Bankruptcy Act 1966 (Cth), but equally applicable to s 89 of the Property Law Act, although the onus to make out the relevant intention lies on the moving party, that:

… where all the facts concerning a particular transaction are within the knowledge of persons other than the trustee in bankruptcy (and where, as here the person who was insolvent is dead) a “very slight degree of proof should be sufficient to shift that burden” …

Application for substituted service:

32    It is clear that the power of the Court to order substituted service in r 10.24 of the Rules is available in cases where leave to serve out of the jurisdiction has been obtained under r 10.43. In Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2007] FCA 124 (Humane Society International), Allsop J at [6]-[7], with reference to O 7, r 9 of the 1979 Rules, the predecessor to r 10.24 of the Rules, stated:

[6]     There is ample authority in support of the proposition that Order 7 rule 9 applies to service outside the jurisdiction in addition to service within Australia: Takapana Investments Pty Ltd v Teco Information Systems Co Ltd (1998) 82 FCR 25; Swan Brewery Co Ltd v Atlee [1998] FCA 277; Mercator Property Consultants Pty Ltd v Christmas Island Resort Pty Ltd [1998] FCA 896 and Immerman v London Pie Co Pty Ltd [2000] FCA 97 at [17].

[7]     Leave having been granted, the Court’s discretion to order substituted service is enlivened: Mondial Trading Pty Ltd v Interocean Marine Transport Inc (1985) 65 ALR 155 at 157; Rice Growers Co-operative Ltd v ABC Containerline NV (1996) 138 ALR 480 at 483; Commissioner of Taxation v Ma (1999) 92 FCR 569 at [14]; ASIC v Sweeney (No 2) (2001) 38 ACSR 743; [2001] NSWSC 477 at [40]- [41] and ACCC v Chaste Corp Pty Ltd (in liq) [2002] FCA 1183 at [11].

See also, Australian Competition & Consumer Commission v Kokos International Pty Ltd [2007] FCA 2035 at [18]-[25] per French J; Applecross Pte Ltd (ARBN 079 372 722) v Lim (No 2) [2010] FCA 589 at [8] per McKerracher J.

33    The threshold requirement for obtaining an order for substituted service is whether it is “not practicable” to serve a document on a person in accordance with the ordinary requirements of the Rules. In Humane Society International at [8]-[14] Allsop J, with reference to the terms of O 7, r 9 of the 1979 Rules which used the synonym “impractical”, expressed the view that it was not necessary to show that service in accordance with the 1979 Rules was impossible or futile, but that the rule extended to cases where, in the circumstances of the case, service in accordance with the 1979 Rules was not sensible or realistic. Allsop J questioned the approach taken by Tamberlin J in Ricegrowers Co-operative Ltd v ABC Container Line NV (1996) 138 ALR 480 at 482.

34    The view of Allsop J has been applied in relation to r 10.24 of the Rules by Flick J in Statewide Secured Investments Pty Ltd v Tarrant [2011] FCA 1067 (Statewide Secured Investments) at [6]-[9] and by Dodds-Streeton J in British American Tobacco Australasia Limited v Taleb (No 1) [2012] FCA 1065 at [25]-[29]. In Statewide Secured Investments, Flick J stated at [16], citing Alstom Ltd v Sirakas [2010] NSWSC 669, that “the discretion to order substituted service may more easily be exercised in the circumstances where the Court can be reasonably satisfied that the methods of substituted service which are ordered will bring documents to the attention of the party to be served”.

35    The reasons submitted by the Commissioner, and which I accept, as to why it is not sensible or realistic for service to be carried out on Mrs Oswal through the diplomatic channels in the UAE are stated at paras [66] to [67] of the Zafiriou affidavit, but may conveniently be summarised as follows:

(a)    Mrs Oswal is not in Australia. Her last known address was in the UAE, but she is also an Indian national and has business interests in Singapore. Consequently, it is not possible to know with certainty her whereabouts to effect personal service;

(b)    service through the diplomatic channels through the UAE will likely take four to six months;

(c)    Mrs Oswal has instructed solicitors in Sydney, Australia, in connection with this proceeding. They have corresponded with the Australian Government Solicitor in relation to it. However, they have specifically declined to accept service on behalf of Mrs Oswal. They have also declined to state her current address.

36    I also accept the Commissioner’s submissions as to the reasons why it is not sensible or realistic for service to be carried out on Mercury through the diplomatic channels in the UAE. Those reasons are stated at paras [70] to [75] of the Zafiriou affidavit, but may be summarised as follows:

(a)    Mercury is not an Australian company, but appears to be a company registered in the UAE;

(b)    there is little available information about Mercury: there is no UAE register of companies disclosing matters such as the identity and address of its directors and UAE companies do not appear to be required to maintain a registered address;

(c)    the only address available for Mercury is that which appears on the Mercury mortgage. It is not known who might be present at that address to accept service on behalf of Mercury; and

(d)    service through the diplomatic channels through the UAE will likely take four to six months.

37    The method of substituted service must be one which, in all reasonable probability, will bring the document to the attention of the person to be served: Porter v Freudenberg [1915] 1 KB 857 at 889.

38    The proposed method of substituted service in relation to Mrs Oswal is service on Kennedys, the solicitors she has retained in Sydney in connection with this proceeding, and by posting a copy of the amended originating application and amended statement of claim to her address in the UAE. Since Mrs Oswal has retained Kennedys in connection with this proceeding, those methods are very likely to bring the documents to be served to her attention.

39    The proposed method of substituted service in relation to Mercury is to post the amended originating application and amended statement of claim to its addresses in the UAE or, alternatively, to serve it on the solicitors who prepared the Mercury mortgage and Mrs Oswal’s solicitors in connection with this matter, Kennedys. Since it is likely that there is a connection between Mrs Oswal and Mercury, service by those methods will, in all reasonable probability, bring the documents to the attention of Mercury.

Conclusion

40    For those reasons, the orders sought in the interlocutory application of 18 December 2012 should be made.

Associate:

Dated:    21 December 2012