Federal Court of Australia

Heenan (Receiver), in the matter of Ruby Apartments Pty Ltd (in liq) v Ralan Paradise No. 1 Pty Ltd (in liq) [2020] FCA 1878

ORDERS

THE COURT ORDERS THAT:

1.    The 158th defendant cease to be a party.

2.    The 204th defendant’s name be amended to “Louise Joy McKinnon”.

3.    The originating application, supporting affidavit of Timothy Heenan and affidavit of Tony Rossiter are deemed to have been served on the following defendants on the following dates:

(a)    for the 162nd, 209th and 232nd defendants, on 21 July 2020.

(b)    for the 13th defendant, on 29 July 2020.

(c)    for the 81st and 82nd defendants, 11 August 2020.

(d)    for all other defendants (apart from the 5th, 6th, 7th, 8th, 9th, 12th, 14th, 15th, 16th, 20th, 21st, 22nd, 29th, 33rd, 35th, 36th, 37th, 41st, 42nd, 43rd, 44th, 49th, 50th, 51st, 56th, 57th, 58th, 59th, 60th, 67th, 69th, 71st, 86th, 89th, 90th, 96th, 97th, 98th, 99th, 100th, 101st, 102nd, 106th, 107th, 108th, 116th, 118th, 119th, 122nd, 125th, 126th, 129th, 132nd, 133rd, 136th, 138th, 139th, 145th, 146th, 148th, 149th, 154th, 169th, 171st, 184th, 193rd, 198th and 199th defendants), 30 June 2020.

4.    The interlocutory application filed 4 June 2020 is dismissed.

5.    Costs are reserved.

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

REASONS FOR JUDGMENT

REEVES J:

INTRODUCTION

1    This is a complicated application for deemed service under rr 10.23 and 10.48 of the Federal Court Rules 2011 (Cth) (the Rules) and a number of incidental orders. It is complicated by the fact that there are 240 named defendants to the proceeding. The application is brought by the joint and several receivers and managers of the property of Ruby Apartments Pty Ltd: Mr Timothy Heenan, Mr Jason Tracy and Mr Salvatore Algeri (together, the Receivers).

FACTUAL CONTEXT

2    Ruby Apartments carried on business letting residential apartments in a building located in Surfers Paradise in South East Queensland (the Surfers Paradise property). It was placed in administration on 31 July 2019 and the Receivers were privately appointed the following day.

3    The Receivers caused Ruby Apartments to continue trading until late 2019 when the business was sold to the 4th defendant, Ruby Management Surfers Paradise Pty Ltd. That sale was completed on 21 January 2020. As a consequence of continuing to trade, the Receivers hold $1.8 million in trust which has to be distributed in varying amounts between the Receivers and the defendants.

4    As there are issues concerning how those distributions are to be made, in their originating application the Receivers have sought orders under s 424 of the Corporations Act 2001 (Cth). Each of the defendants was joined on the basis that they hold an interest in the funds held by the Receivers. They variously comprise owners, tenants and paid guests of the apartments in the building at the Surfers Paradise property (see at [21] below), some service providers (the 2nd and 4th defendants) and Ruby Apartments itself (the 3rd defendant). A schedule annexed to the affidavit made by Mr Heenan in support of the Receivers’ originating application reveals that at least 16 of the defendants reside on the mainland of the People’s Republic of China (the PRC), or in Hong Kong.

5    By interlocutory application, the Receivers have sought several orders as follows:

1.    An order under Federal Court Rules 2011, r 9.08 that the 58th and 158th defendants cease to be parties to this proceeding.

2.     An order under Federal Court Rules 2011, r 8.21 that the 204th defendant’s name be amended to “Louise Joy McKinnon”.

3.     An order under Federal Court Rules 2011, r.10.23 that the originating process and supporting affidavits of Mr Heenan and Mr Rossiter are taken to have been served on the 5th to 240th defendants on the following dates:

(a)    For the 162nd, 209th and 232nd defendants - on 21 July 2020.

(b)    For the 13th defendant - on 29 July 2020.

(c)    For the 5th, 81st, 82nd, 116th, 133rd, 148th, 169th and 184th defendants - on 11 August 2020.

(d)    For all other defendants (apart from the 1st to 4th defendants) - on 30 June 2020.

4.    Such further or other orders as may be appropriate.

5.    Costs reserved.

(Emphasis in original)

6    It is relevant to note the Receivers had previously filed an interlocutory application seeking orders for substituted service under r 10.24. That application was abandoned in favour of the present application.

7    Some of these orders may be disposed of briefly. First, due to slight variations in how the 158th defendant’s name was recorded in the books of Ruby Apartments, that defendant has erroneously been joined to these proceedings as both the 158th and the 192nd defendant. I therefore consider it appropriate that the 158th defendant cease to be a party. The converse situation existed with respect to the 58th and 129th defendants, who the Receivers originally understood to be the same person. However, they have subsequently established that those defendants are in fact brothers. I will therefore make proposed Order 1 in respect of the 158th defendant, but not the 58th.

8    Turning next to proposed Order 2, the 204th defendant’s name has been spelt incorrectly in the first and second schedules of the originating application. That is, her given name is recorded as “Loiise” rather than “Louise”. That error appears to be a typographical error and I will therefore make the order sought with respect to that defendant.

9    Next, I record that I do not consider it necessary to make proposed Order 3 above in respect of the 1st to 4th defendants as they have, subsequent to the present application being filed, agreed to accept service by email as allowed under r 10.28 of the Rules.

10    Further, I also do not consider it is necessary to make that order in relation to the 7th, 8th, 9th, 12th, 14th, 15th, 16th, 20th, 21st, 22nd, 29th, 33rd, 35th, 36th, 37th, 41st, 42nd, 43rd, 44th, 49th, 50th, 51st, 56th, 57th, 58th, 59th, 60th, 67th, 69th, 71st, 86th, 89th, 96th, 97th, 98th, 99th, 100th, 106th, 107th, 108th, 116th, 118th, 119th, 122nd, 125th, 126th, 129th, 132nd, 133rd, 136th, 138th, 139th, 145th, 146th, 148th, 149th, 154th, 169th, 171st, 193rd or 199th defendants because service is deemed to have been effected on those defendants under r 10.11 by virtue of the notice of appearance they filed subsequent to the filing of the present application.

11    The same applies to the 6th, 90th, 101st, 102nd and 198th defendants by virtue of the notice of appearance they have since filed.

12    Finally, because of the following set of circumstances, I consider it is necessary to exclude the 5th and 184th defendants from the deemed service order sought in proposed Order 3 above. On 30 June 2020, the 5th to 240th defendants were sent an email containing a hyperlink to download documents, including the originating process and the supporting affidavits of Mr Heenan and Mr Tony Rossiter (the originating documents). On 18 July 2020, the legal representative for the 5th, 81st, 82nd and 184th defendants requested that a hard copy of that email be posted to those defendants at specified addresses within the PRC. That email was posted, by express international post, through Australia Post on 28 July 2020. As at 19 August 2020, the Australia Post website recorded that delivery of the hardcopy email to the 5th defendant had not occurred as it was being held by customs in the PRC and that delivery to the 184th defendant had been attempted but had not in fact occurred. For these reasons, I consider any application in respect of those two defendants ought to be deferred until such time as the Receivers can provide evidence that delivery of the relevant documents to them has been duly effected.

RELEVANT PRINCIPLES

13    The following principles are relevant to proposed Order 3 above as it applies to the remainder of the defendants. First, the originating documents ought to be served personally on each defendant to a proceeding (r 8.06) by leaving the document with that individual (r 10.01). However, where it is not practicable to effect personal service on a person, a party may apply for orders deeming service on that person. Rule 10.23, which applies to service on a person in Australia, provides:

A party may apply to the Court, without notice, for an order that a document is taken to have been served on a person on a date mentioned in the order if:

(a)    it is not practicable to serve a document on the person in a way required by these Rules; and

(b)    the party provides evidence that the document has been brought to the attention of the person to be served.

(Note omitted)

14    Secondly, although the Receivers have applied for orders under r 10.23 only, as mentioned above, several of the defendants reside in the PRC. In that situation, where service is to be effected outside Australia, the party effecting service must comply with the requirements of Division 10.4 of the Rules. In particular, under r 10.43(2), the leave of the Court is required to serve a document on a person in a foreign country in accordance with the “Hague Convention” or the law of the foreign country concerned. The “Hague Convention” referred to in that rule is the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Convention), to which the PRC is a party. As such, service on its residents ordinarily ought to be effected in accordance with the articles of the Convention and Division 10.6 of the Rules, which sets out the process for effecting service in a Convention country where leave is granted under r 10.43.

15    However, as with domestic service, parties may apply under r 10.48 for orders deeming service on a person in a foreign country. That rule is in substantially the same terms as r 10.23 set out above with the exception that r 10.48(a) requires the party to demonstrate that “it is not practicable to serve the document on the person in a foreign country in accordance with a convention, the Hague Convention or the law of a foreign country” (emphasis added). As such, the authorities applicable to r 10.23 are, for the most part, equally applicable to r 10.48.

16    Thirdly, the word “practicable” has a wide meaning which depends on the nature of the particular proceedings, including the relief sought and the requirement that litigation be progressed quickly and efficiently (see Australian Securities and Investments Commission v China Environment Group Ltd [2013] FCA 286 at [11]-[12] and Ross v Cotter [2015] FCA 310 at [1]). Personal service need not be impossible or futile to be “not practicable” (see Federal Commissioner of Taxation v Zeitouni (2013) 306 ALR 603; [2013] FCA 1011 at [66] and the cases cited therein)).

17    Rather, rr 10.23 and 10.48 are wide enough to capture circumstances where further attempts at service would not be “sensible or realistic”, even if possible or feasible (see Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2007] FCA 124 at [14]; Statewide Secured Investments Pty Ltd v Tarrant [2011] FCA 1067 at [9]; British American Tobacco Australasia Limited v Taleb (No 1) [2012] FCA 1065 (British American Tobacco) at [28]-[29]; Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) (No 3) [2016] FCA 303 at [8] and Commissioner of Taxation v Caratti (No 2) [2018] FCA 1500 at [10]).

18    In British American Tobacco, Dodds-Streeton J observed (at [46]):

There is … a distinction between, on the one hand, evidence that a document has been brought to a person’s attention and, on the other hand, evidence that the person accorded it attention or acknowledged it. In my view, r 10.23(b) does not require the latter. Such a requirement would materially reduce the ambit and efficacy of the provision for deemed service, which is characteristically invoked precisely because service is being evaded or is otherwise difficult …

19    Her Honour concluded (at [50]):

… where there is evidence of actions, steps and circumstances which alone or in combination support, on the balance of probabilities, an inference that the documents have been brought to the relevant person’s attention, the requirement in r 10.23(b) will be satisfied.

CONSIDERATION

20    As mentioned already, on 30 June 2020, the 5th to 240th defendants were sent an email (the 30 June email) containing a hyperlink to the originating documents. That email requested that each defendant confirm their account details and asked for confirmation that the email had been read, in the form of a “read receipt”. With the exception of the defendants mentioned at [28] below, the lawyer for the Receivers, Mr Jess Owen, deposed that he received confirmation that the 30 June email had been delivered to the 5th to 240th defendants. He also deposed that he had been informed that a number of the defendants spoke Mandarin. Consequently, he arranged for a translator certified by the National Accreditation Authority for Translators and Interpreters to translate the correspondence into Mandarin, a copy of which was attached to the 30 June email. In another affidavit, Mr Owen deposed that, as various international email servers and websites could not be accessed from within the PRC due to government restrictions, he had made arrangements with a lawyer in the PRC who confirmed she was able to access and download the documents from the hyperlink provided in the 30 June email. The Receivers relied on these facts in asserting that the documents had been provided to, and were accessible by, the defendants by way of the 30 June email.

21    The email addresses for the defendants were drawn from the following sources:

(a)    For the 5th to 200th defendants (the apartment owners) – a communications schedule recording the email addresses for owners of apartments in the Surfers Paradise property;

(b)    For the 201st to 235th defendants (the guests) – a schedule prepared by the Receivers based on refund requests completed by those defendants; and

(c)    For the 236th to 240th defendants (the tenants) – a schedule prepared by the Receivers based on tenancy forms received from those defendants.

22    The Receivers contended that service ought to be deemed to have been effected on the 55th, 85th, 151st, 152nd, 202nd, 204th, 205th, 212th, 213th, 214th, 217th, 222nd, 227th, 229th, 231st, 235th, 238th, 239th and 240th defendants because, between 30 June 2020 and 21 July 2020, those defendants confirmed their account details as requested. Accordingly, they contended it should therefore be inferred that those defendants received the 30 June email.

23    With respect to the 85th, 128th, 206th and 232nd defendants, the Receivers submitted that, between 30 June 2020 and 2 August 2020, those defendants variously sent emails to the Receivers’ legal representatives seeking further information. That being so, they contended it should be inferred that those defendants also received the 30 June email.

24    Between 30 June 2020 and 2 July 2020, the 68th, 75th, 76th, 77th, 79th, 80th, 85th, 111th, 167th, 201st, 208th, 219th and 221st defendants sent “read receipts” in response to the 30 June email confirming it had been received. The Receivers contended it should be inferred that those defendants sent the read receipts because they had received the 30 June email.

25    On 8 July 2020, the lawyer for the Receivers received two emails, purportedly on behalf of 37 of the defendants who are also apartment owners. The defendants mentioned in each of those emails included the 10th, 18th, 19th, 26th, 27th, 38th, 52nd, 87th, 104th 134th, 172nd, 174th, 175th, 182nd and 189th defendants. Those emails were responsive to the 30 June email and the Receivers therefore contended it should be inferred those defendants had received the originating documents.

26    With respect to the 104th defendant, William Roberts Lawyers, who were ultimately instructed by those defendants who filed the notices of appearance at [10] and [11] above, informed the Receivers that it had previously been instructed by the 104th defendant but those instructions had since been withdrawn. As a result, the 104th defendant was not included in either notice of appearance. Nonetheless, the Receivers contended it could be inferred that he had received the 30 June email as he had initially provided instructions to William Roberts Lawyers.

27    The 11th, 17th, 23rd, 24th, 25th, 28th, 30th, 31st, 32nd, 34th, 39th, 40th, 45th, 46th, 47th, 48th, 53rd, 54th, 61st, 62nd, 63rd, 64th, 65th, 66th, 70th, 72nd, 73rd, 74th, 78th, 83rd, 84th, 88th, 91st, 92nd, 93rd, 94th, 95th, 103rd, 105th, 109th, 110th, 112th, 113th, 114th, 115th, 117th, 120th, 121st, 123rd, 124th, 127th, 130th, 131st, 135th, 137th, 140th, 141st, 142nd, 143rd, 144th, 147th, 150th, 153rd, 155th, 156th, 157th, 159th, 160th, 161st, 163rd, 164th, 165th, 166th, 168th, 170th, 173rd, 176th, 177th, 178th, 179th, 180th, 181st, 183rd, 185th, 186th, 187th, 188th, 190th, 191st, 192nd, 194th, 195th, 196th, 197th, 200th, 203rd, 207th, 210th, 211th, 215th, 216th, 218th, 220th, 223rd, 224th, 225th, 226th, 228th, 230th, 233rd, 234th, 236th and 237th defendants are variously apartment owners, guests and tenants of Ruby Apartments (see at [21] above). The Receivers contended it should be inferred that those defendants received the 30 June email because:

(a)    for those defendants who were apartment owners, the 30 June email was sent to the email address which those apartment owners had previously used to correspond with the Receivers;

(b)    for those defendants who were guests, the 30 June email was sent to the email address each guest provided in a refund request form issued by the Receivers;

(c)    for those defendants who were tenants, the 30 June email was sent to the email address each tenant provided in a tenancy form issued by Ruby Apartments.

28    The Receivers initially received a “failed delivery” notification with respect to the 30 June email that was sent to the 162nd, 209th and 232nd defendants. Alternative email addresses were subsequently obtained for those defendants and a second email containing a link to the originating documents was sent on 21 July 2020. The Receivers received confirmation in the form of a delivery receipt that the second email had been delivered to the newly obtained email addresses and contended that it could therefore be inferred those defendants had in fact received the second email. They submitted that service on those defendants therefore ought to be deemed to have occurred on 21 July 2020. As already mentioned at [23] above, the 232nd defendant has also since communicated with the Receivers.

29    A failed delivery notification was also received with respect to the 13th defendant. On 22 July 2020, that defendant contacted the Receivers and requested that material in relation to these proceedings be mailed to an address in New South Wales. The Receivers did so and, according to the Australia Post website, printed copies of the 30 June email and originating documents were delivered to the defendant on 29 July 2020. The Receivers therefore contended that service ought to be deemed to have been effected on that defendant on that date.

30    As already mentioned above (see at [12]), a hard copy of the 30 June email was also posted to the 81st and 82nd defendants at specified addresses in the PRC. The Australia Post website records that delivery to those defendants had occurred by 11 August 2020 and the Receivers contended an inference ought to be drawn that those defendants received the documents on that date.

31    There are, as mentioned above, 240 named defendants to this proceeding, at least some of whom reside in the PRC. Mr Owen deposed in his affidavit that, based on previous experience, he estimated the cost of service on those defendants in the PRC would be approximately $700 per person. Accordingly, the Receivers claimed that significant costs would be incurred in effecting personal service on each of those defendants, which costs would necessarily be deducted from the fund held by the Receivers thereby reducing the distributions available to the defendants.

32    In this respect, I interpose to note that, due to the Corona Virus Disease 2019 (COVID-19) pandemic, personal service on those defendants located in the PRC, or in Hong Kong and, to a lesser extent, some parts of Australia, is likely to be difficult.

33    For these reasons, I am satisfied that there are costs and logistical impediments to effecting personal service on many, if not all, of the defendants. While those impediments do not make it impossible to effect service, I am satisfied that, in the circumstances outlined above, it would not be sensible or practicable for the Receivers to continue attempting to effect personal service as required under the Rules.

34    The key issue for consideration is, therefore, whether I am satisfied that the Receivers have provided sufficient evidence that the originating documents have been brought to the attention of each of the defendants to which this application relates.

35    Without repeating the assertions made above, I agree with the Receivers’ contentions regarding the inferences that can be drawn with respect to those defendants mentioned at [22] to [24] and [27] and [28] above. That is, I am satisfied that the Receivers have taken appropriate steps to bring the originating documents to the attention of those defendants and I will make proposed Order 3 above in respect of them.

36    I am also satisfied that the Receivers have brought the originating documents to the attention of those defendants to whom they posted the originating documents, both in Australia and the PRC (see at [29] and [30]). Accordingly, I will make proposed Order 3 above with respect to those defendants.

37    With respect to those defendants mentioned at [25] above, I do not accept the Receivers’ contention that it can be inferred those defendants received the 30 June email because they were included in group correspondence purporting to have been sent on their behalf. The same applies with respect to the 104th defendant (see at [26] above). I am, however, satisfied that the 30 June email was delivered to individual email addresses previously used by each of those defendants (see at [21(a)]), and that the delivery confirmation mentioned at [20] above evidences that the Receivers have taken reasonable steps to bring the originating documents to the attention of those defendants. I will therefore make proposed Order 3 above with respect to each of them.

38    To sum up, for the reasons set out above, I will make orders that:

1.    The 158th defendant cease to be a party.

2.    The 204th defendant’s name be amended to “Louise Joy McKinnon”.

3.    The originating application, supporting affidavit of Timothy Heenan and affidavit of Tony Rossiter are deemed to have been served on the following defendants on the following dates:

(a)    for the 162nd, 209th and 232nd defendants, on 21 July 2020.

(b)    for the 13th defendant, on 29 July 2020.

(c)    for the 81st and 82nd defendants, 11 August 2020.

(d)    for all other defendants (apart from the 5th, 6th, 7th, 8th, 9th, 12th, 14th, 15th, 16th, 20th, 21st, 22nd, 29th, 33rd, 35th, 36th, 37th, 41st, 42nd, 43rd, 44th, 49th, 50th, 51st, 56th, 57th, 58th, 59th, 60th, 67th, 69th, 71st, 86th, 89th, 90th, 96th, 97th, 98th, 99th, 100th, 101st, 102nd, 106th, 107th, 108th, 116th, 118th, 119th, 122nd, 125th, 126th, 129th, 132nd, 133rd, 136th, 138th, 139th, 145th, 146th, 148th, 149th, 154th, 169th, 171st, 184th, 193rd, 198th and 199th defendants), 30 June 2020.

4.    The interlocutory application filed 4 June 2020 is dismissed.

5.    Costs are reserved.

Associate:    

Dated:    24 December 2020

SCHEDULE OF PARTIES