Federal Court of Australia
Royal Caribbean Cruises Ltd v Reed (No 3)  FCA 225
RCL CRUISES T/AS ROYAL CARIBBEAN CRUISES ABN 54 150 263 086
DATE OF ORDER:
THE COURT ORDERS THAT:
1. The respondents’ interlocutory application filed 9 March 2021 and the applicants’ interlocutory application filed 11 March 2021 are dismissed.
2. The respondents are to pay the applicants’ costs of both interlocutory applications on an indemnity basis.
3. The respondents are to file and serve their defence on or before 19 March 2021.
4. The applicants are to file and serve their reply on or before 26 March 2021.
5. The proceeding is listed for further case management on 30 March 2021.
(Revised from the transcript)
On the interlocutory applications
1 The respondents to this proceeding appear unconditionally today by their solicitor on an interlocutory application filed by them seeking the following orders:
1. An order that the order made by this Honourable Court on 18 February 2021 permitting the Applicants to serve the Amended Statement of Claim and Amended Originating Application by way of substituted service be set aside.
2. A declaration that service has not been effected on the Respondents in this matter.
2 On the face of it, such orders would be entirely pointless in view of the fact that the respondents have entered an appearance, appeared unconditionally, and invoked the process of the Court by filing the interlocutory application. To give the respondents the relief that they seek would be an affront to common sense. The fact of their application and the need to adjudicate on it makes it necessary for me to explain why.
3 On 7 December 2020, the respondents filed a claim for damages in the United States District Court, Southern District of Florida, Miami Division, against the first applicant in the proceeding in this Court for personal injuries.
4 On 18 December 2020, the applicants commenced this anti-suit proceeding in which they seek to restrain the respondents from pursuing the Florida proceeding on the basis that they are bound by an exclusive jurisdiction clause to pursue their claims in New South Wales, or that the Florida Court is a clearly inappropriate forum on the basis that the proceeding there is vexatious and oppressive.
5 On 1 February 2021, I made orders giving the applicants leave to serve their amended originating application and amended statement of claim on the respondents outside the jurisdiction of this Court in Maryland, USA, where the respondents are resident, in accordance with the requirements for service under the laws of the United States of America. My reasons for those orders are set out in Royal Caribbean Cruises Ltd v Reed  FCA 51.
6 Having made several unsuccessful attempts by a process server to serve the documents on the respondents at their home in Maryland, including in circumstances suggestive of the respondents deliberately avoiding service, the applicants applied for orders for substituted service.
7 On 18 February 2021, I made such orders providing for service of the documents by email to the respondents’ US lawyers with whom the applicants’ lawyers had been in regular communication to do with the Florida proceeding. My reasons for those orders are set out in Royal Caribbean Cruises Ltd v Reed (No 2)  FCA 114.
8 On 18 and 19 February 2021, the applicants effected service under the substituted service orders.
9 On 3 March 2021, the respondents appeared conditionally by a solicitor in this Court who explained that the respondents were considering their position in relation to the proceeding. The matter was listed for further case management on 10 March 2021.
10 On 9 March 2021, the respondents filed an unconditional appearance and their interlocutory application and supporting affidavit of their solicitor, Mr Brookes. The affidavit states:
For good order, I am instructed that in addition to the question of service, the Respondents contest the Amended Statement of Claim and Amended Originating Application in their entirety, on the basis that the Respondents’ position is that the correct forum and law for their claim is the state of Florida and not New South Wales.
11 In the circumstances, there can be no doubt that the respondents are well-aware of the specifics of the case against them as set out in the amended originating application and amended statement of claim. They could not otherwise give Mr Brookes the instructions that he has been given.
12 It is also to be noted that the respondents do not contest the jurisdiction of this Court. Not only have they appeared unconditionally, but they have invoked the process of the Court. The problem they raise is not one of jurisdiction, it is a problem of service. If the challenge to service was a necessary step in a challenge to jurisdiction, different considerations would clearly arise and the fact of the respondents having received notice of the proceeding would take on a very different complexion.
13 At the hearing on 10 March 2021, I indicated to Mr Stanisic who appeared for the respondents and who appears for them today that in view of the respondents’ obvious knowledge of the proceeding, the interlocutory application appeared to be pointless. I also questioned how the bringing of the application could possibly be within the obligations on him, his firm and his clients under the overarching purpose provisions of civil procedure and practice in this Court.
14 In that regard, s 37M(1) of the Federal Court of Australia Act 1976 (Cth) provides that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
15 Section 37N(1) provides that the parties to a civil proceeding before the Court must conduct the proceeding in a way that is consistent with the overarching purpose. Also, by s 37N(2), a party’s lawyer must, in the conduct of civil a proceeding before the Court on the party’s behalf, take account of the duty imposed on the party by subsection (1) and assist the party to comply with that duty.
16 Mr Stanisic said that he was acting on instructions and that the application was not pointless because the question of service in this proceeding could have some bearing on the Florida proceeding. He was not, however, in a position to explain what that bearing was. I therefore listed the matter for hearing today so that the respondents could be properly prepared to make submissions in support of it.
17 On 11 March 2021, the applicants filed a conditional interlocutory application supported by affidavit in which they seek the following orders in the event that the respondents’ application is successful:
1. Pursuant to rule 10.48 of the Federal Court Rules 2011 (Cth) that the following documents are taken to have been served on the respondents on 18 February 2021:
(a) a sealed copy of the Amended Originating Application filed on 2 February 2021 and the Amended Statement of Claim filed on 27 January 2021;
(b) a copy of the orders made on 1 February 2021 giving leave to serve the documents out of the jurisdiction; and
(c) a copy of the order made on 18 February 2021 and the interlocutory application dated 17 February 2021
by the applicants having sent an email on that date attaching the documents to the respondents’ lawyers’ email addresses recorded in the applicants’ interlocutory application dated 17 February 2021.
2. The respondents to pay the costs of the interlocutory application, and the respondents’ interlocutory application filed on 9 March 2021, on the indemnity basis.
18 The respondents put the basis for their interlocutory application on two propositions as follows.
19 First, they say that the Maryland Civil Code (which they say is the applicable law governing service on them under my orders of 1 February 2021) provides for personal service by delivery to the respondents or by leaving the documents at their home with a person of suitable age and discretion or by certified mail, none of which occurred.
20 Secondly, the respondents say that as service was never attempted in accordance with the Hague Convention or all the possibilities of the law of a foreign country as required by r 10.49, the condition for the grant of leave to serve by way of substituted service under that rule is not satisfied.
21 The respondents submit that as there was no basis for the substituted service orders, they should be set aside, as should the service purportedly done under those orders. That is the implication of the declaration that they seek by order 2 in their interlocutory application.
22 On the question of the point or purpose to their application, the respondents say the following in their submissions:
23. The Respondents’ position in this regard is to proactively prevent future issues which are foreshadowed to arise in the Florida Proceedings in the hypothetical eventuality that the Applicants are successful on the merits of the subject proceedings and seek to enforce this Honourable Court’s orders and determinations in a foreign jurisdiction. The Respondents’ Application was therefore necessary to ensure that the service issue was not waived in circumstances where the Respondents’ view, as set out in the preceding paragraphs, is that service has not been properly attempted by the Applicants to date.
24. To illustrate by way of an example, if this Honourable Court ultimately finds in favour of the Applicants on the merits of this case, the Respondents seek to preserve their right to contest the service issue in the Florida Proceedings in dealing with any enforcement of this Court’s potential future orders in a foreign jurisdiction.
25. There is a basis for the Respondents’ position in both statute and case law. Rule 12(h)(1) of the Federal Rules of Civil Procedure in the United States of America (which governs the Federal Courts in all 50 states), provides:
(h) Waiving and reserving Certain Defenses.
(1) When Some Are Waived. A party waives any defense listed in Rule 12(b)(2)-(5) by:
(A) omitting it from a motion in the circumstances described in Rule 12(g)(2); or
(B) failing to either:
(i) make it by motion under this rule; or
(ii) include it in a responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of course.
26. Two of the defenses listed in Rule 12(b)(4) and (5) pertain to insufficient process and insufficient service of process:
(b) How to Present Defenses. Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion: ….
(4) insufficient process;
(5) insufficient service of process;
27. Thus, based on the relevant USA court procedure, if the issue of service is not raised in the manner set out in the Respondents’ Application, then there is a risk that it may be deemed to have been waived by the Respondents. This would materially affect certain procedural rights and arguments which might otherwise be open to the Respondents in the Florida Proceedings.
(Emphasis in original.)
23 The respondents then cite two US cases which deal with service and waiver of any complaint about service. Neither of those cases is to the point. Whatever complexity there may be to the question of what system of law is to govern the respondents’ personal injuries claims against the first applicant, there can be no doubt that the question of service is to be governed by the procedural law of the forum; that is to say, whether or not there is proper service in this case and whether or not the respondents, by not challenging service, would be regarded as having waived any complaint that they might have about service is a matter for domestic Australian procedural law as applied in this Court. See John Pfeiffer Pty Ltd v Rogerson  HCA 36; 203 CLR 503 at  per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
24 In any event, the respondents’ point about r 10.49 not being enlivened is bad. There clearly was attempted personal service on the respondents in Maryland in accordance with the applicable law there, and it was unsuccessful. There is nothing in r 10.49 which requires all possible or all reasonably possible avenues of service under the law of the foreign country to be exhausted before it can be said that service was not successful. It would be impractical if the rule did so require. The Maryland Civil Code also provides for a court to “order any other means of service that it deems appropriate in the circumstances”, i.e., a form of substituted service. Were the applicants required also to exhaust that avenue?
25 In Park (Trustee) v Tschannen (Bankrupt)  FCA 137; 341 ALR 452, Edelman J held (at ) that r 10.49 “requires that some attempt will have been made for service” and that the “concept of lack of success involves, at least, some attempt”. As no attempt had been made, substituted service was refused. Subsequently, in Park (Trustee) v Tschannen (Bankrupt) (No 2)  FCA 361, his Honour held (at ) that “all reasonable and practicable attempts have been made by the Trustee to effect service” and that “those attempts have failed”. His Honour also held (at ) that “serious efforts have been made to serve [the respondent] in accordance with the Convention requirements”.
26 In interpreting r 10.49, his Honour did not hold that all possible avenues of service under the applicable foreign rules (in that case, the Convention between Australia and Thailand) must be pursued, or even that all reasonable or practicable avenues must be pursued. It was held that, at least, an attempt at service under the applicable rules must be made, and subsequently that in that case serious efforts had been made and that all reasonable and practicable attempts had been made.
27 In Australian Information Commission v Facebook Inc  FCA 531; 144 ACSR 88, Thawley J held (at ) that the wording of “not successful” in r 10.49 “implies that some attempt must first be made” before substituted service will be ordered. In Kukulga v Google LLC  FCA 1229, Anastassiou J held (at ) that “substituted service under r 10.49 is only available when an attempted service … was not successful.”
28 In my view, whether there were other reasonably practical modes of service under the foreign rules that were not attempted is a matter that may go to discretion. That is to say, as a discretionary reason, and heavily dependent on the particular circumstances of the case, an order for substituted service might not be made if reasonable modes of service available to the party have not been pursued in the foreign country. It is not, however, a requirement as a prerequisite of exercising the power under r 10.49.
29 In the present case, personal service on the respondents was undoubtedly attempted on several occasions; serious efforts were made to effect service personally on the respondents at their home in Maryland. Had one of those attempts been successful, that would apparently have been good service under the Maryland Civil Code. They were not successful. Serious and sufficient efforts were made such as to conclude that service had not been successful.
30 Therefore, the prerequisites for ordering substituted service under r 10.49 were met. Also, in particular considering the many attempts that were made at personal service, the respondents’ apparent avoidance of service, and the importance of progressing the matter as quickly as reasonably possible, there would be no discretionary reason against making an order for substituted service.
31 Ms Gleeson, who appeared for the applicants, tendered and relies on the relevant rule for service in Title 1 of the Federal Rules of Civil Procedure for the United States District Court. The relevant rule, r 4(e), provides for two principal modes of service: (1) to follow state law for serving documents, and (2) to do any one of the following:
(A) delivering a copy of the summons and of the complaint to the individual personally;
(B) leaving a copy of each at the individual’s dwelling or usual place of abode with someone of suitable age and discretion who resides there; or
(C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.
32 Ms Gleeson submits that the applicants exhausted those three modes of service and were unsuccessful in each and that that was sufficient to enliven the power under r 10.49, even on the respondents’ interpretation of that rule.
33 The difficulty with that approach is that it takes one back to the three options under Maryland state law, one of which was not attempted, being service by certified mail. So one is left with having to decide whether failure to utilise that option constituted service being “not successful” in Maryland for the purposes of r 10.49. For the reasons that I have given, the applicants’ attempts at service in Maryland were, in my view, “not successful” within the meaning of the rule; it was not necessary for the applicants to exhaust every mode or every reasonable mode of service before the power to order substituted service under r 10.49 was enlivened.
34 The respondents’ interlocutory application should accordingly be dismissed for those reasons.
35 There is, however, a more fundamental reason why the interlocutory application should be dismissed, which is that the respondents now have proper notice of the proceeding and they are before the Court. The manner of that notice or service is, therefore, irrelevant.
36 In Hope v Hope  4 De GM & G 328; 43 ER 534 at 539-540, Lord Cranworth LC speaking in the context of orders for substituted service stated:
The object of all service is of course only to give notice to the party on whom it is made, so that he may be made aware of and may be able to resist that which is sought against him; and when that has been substantially done, so that the Court may feel perfectly confident that service has reached him, everything has been done that is required.
37 That exposition has been adopted in many Australian judgments, for example, Warren v Legal Services Commissioner  QCA 150 at 3, Howship Holdings Pty Ltd v Leslie [No 2] (1996) 41 NSWLR 542 at 544 and Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd  VSC 199l; 30 VR 141 at .
38 In United Group Resources Pty Ltd v Calabro (No 4)  FCA 791, McKerracher J dismissed three notices of motion by conditional respondents who sought a declaration under then O 9 r 7(1)(c) of the Federal Court Rules 1979 (Cth) (now repealed) that the originating process had not been duly served on them. That proceeding involved over 1,500 respondents, several hundred of whom contended that they were not personally served. McKerracher J found (at ) that “given that the conditional respondents each instructed the solicitors concerned to enter conditional appearances, it must be inferred that the originating process came to their notice.”
39 His Honour went onto say the following (at ):
it must be inferred that all of the conditional respondents are well aware that he or she is a party to the proceeding having instructed solicitors and counsel. This is far from a situation of ‘the bailiff’ appearing on the door step for the first time to effect execution of a judgment or order.
40 In Warren v Legal Services Commissioner, the Queensland Court of Appeal dismissed an appeal in which the appellant, who was an Australian legal practitioner, argued that she had not been served in accordance with the applicable rules, despite confirming both orally and by affidavit that she had received a copy of the application. Fraser JA (Morrison JA and Philippides JA agreeing) adopted the observation (at 4) that it would be “…remarkable to the point of seeming absurdity… that the defendant who, on his own affidavit admits that he received the writ… should be held not to have been served.” See Pino v Prosser and Hassan  VR 835 at 837 per McInerney J.
41 Had it been necessary for me to get to the applicants’ interlocutory application, I would have made an order that the relevant documents are to be taken to have been served on the respondents on 18 and 19 February 2021 by emailing them to the respondents’ US solicitors under r 10.48. That rule has two requirements.
42 The second one is that there is evidence that the documents have been brought to the attention of the person concerned. In view of the respondents’ appearance today, there is no doubt about that.
43 The first requirement is 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.
44 With regard to the meaning of “practicable”, Lindgren J in Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA  FCA 875; 15 ACSR 347 at 366 included within the considerations of practicality the “special circumstances in the present case which make it desirable that the litigation be progressed quickly and efficiently.”
45 In Ricegrowers Co-Operative Ltd v ABC Containerline NV  FCA 1663; 138 ALR 480 at 482, Tamberlin J held that the word “practicable” should be given a wide meaning and that the simple question was whether it was practicable to serve by one of the prescribed methods. The expression “not practicable” was, in his Honour’s view, essentially identical in meaning to the term “impractical”:
In order to establish impracticality some attempt, at least, should be made to effect service in accordance with the rules, or evidence should be led that it is so obviously futile as not to warrant an attempt at service.
46 In Sanum Investments Ltd v ST Group Ltd (No 2)  FCA 1047, Foster J at , after an analysis of the authorities, concluded that they:
support the proposition that, in order to prove that service is impracticable, an applicant is not required to prove that it is impossible or futile to effect service as required. In addition, in the context of r 10.48 [of the Federal Court Rules], an applicant for relief under that rule is not required to undertake service in accordance with the strict requirements of the relevant law before seeking relief pursuant to r 10.48. It should also be remembered that, although mere inconvenience may not be enough to constitute “impracticability”, r 10.48 [of the Federal Court Rules] is intended to ameliorate the stultification of cases against foreign defendants caused by an unduly cumbersome and uncertain set of requirements governing service of this Court’s process in a foreign country. In my judgment, once this Court is satisfied that its process and other documents have come to the attention of the foreign defendants, it should not hesitate to deem service to have been effective if there is any suggestion that the law of the relevant foreign country as to service will unreasonably delay or even frustrate the progress of the proceeding.
47 I adopt those observations with regard to the meaning of the words “not practicable” in r 10.48. It is therefore necessary to consider the factors that are relevant to whether it is “not practicable” to pursue further attempts to serve the documents under the applicable laws in the USA.
48 In this proceeding the applicants seek an anti-suit injunction. The success or otherwise of that claim for relief may turn, in part, on the extent to which the Florida proceeding has progressed. Also, if the applicants are successful, any progression of the Florida proceeding in the period that the present proceeding is being progressed towards judgment, including any time lost by exhausting all avenues for service under the Maryland Civil Code, will be lost. There is therefore considerable advantage to the parties to know, sooner rather than later, what the outcome is.
49 Finally, there is another similar proceeding in this Court in which the applicants seek an anti-suit injunction against other claimants in US proceedings. There is some overlap between the two proceedings, at least with regard to applicable legal principles and possibly also to some degree in the evidence between the two proceedings. There is, therefore, significant utility in the two cases being progressed together.
50 In the circumstances, I am satisfied that there are considerations of urgency, or at least expediency, that make it impractical to serve the respondents in the manner otherwise required by the Maryland Civil Code.
51 The prerequisites for relief under r 10.48 are, accordingly, met and the applicants would be entitled to relief under their conditional interlocutory application. However, since the condition for relief in that application has not been realised, i.e., the success of the respondents’ interlocutory application, I should dismiss it.
Thereafter, after hearing the parties on costs
52 The applicants have been successful on the respondents’ interlocutory application and would have been successful on their interlocutory application had it been required to be decided.
53 I consider that it was prudent for the applicants to file their interlocutory application in view of the respondents persisting with theirs, even after the discussion at the hearing on 10 March 2021 where I raised questions of utility and the apparent inevitability of an order of deemed service under r 10.48. In the circumstances, the applicants should have their costs on both applications.
54 Moreover, there was no reasonable basis for the respondents’ interlocutory application. It should never have been brought. The civil practice of this Court is concerned with practical justice. The pointless technical point against service taken by the respondents in circumstances where they do not contest jurisdiction, have appeared, and are well lawyered-up to get on with the case, has served only to waste the time and resources of the Court. It is not in accordance with the respondents’ and their lawyers’ obligations under ss 37M and 37N of the Act.
55 In the circumstances, and with reference to s 37N(4), I exercise my discretion in ordering that the costs be paid on an indemnity basis.
56 Ms Gleeson has submitted that the respondents’ local solicitors be jointly and severally liable with the respondents for those costs. That is an available course under s 43(3)(f) of the Act. There must be unreasonable conduct by the solicitors, more than merely acting in circumstances where there were no reasonable prospects of success. It must be something akin to an abuse of process or using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success. See Levick v Deputy Commissioner of Taxation  FCA 674; 102 FCR 155 at  per Wilcox, Burchett and Tamberlin JJ.
57 This is a very close case. It is hard to imagine what utility it was thought that there might be in bringing the respondents’ interlocutory application. It would appear that the respondents’ US lawyers advised that the application was required or necessary for a reason to do with US law and possible future proceedings in the US. That is a matter on which the local solicitors would necessarily have depended primarily on the US lawyers’ guidance.
58 Mr Stanisic has sought to explain the point to me in his submissions on the merits of the application and I have dismissed it for the reasons given. It is also to be taken into consideration that I brought the hearing of the interlocutory applications on quickly in order to avoid further delay in the principal proceeding. The considerable difference in time zones between here and where the US lawyers are located, as well as the short time between when the application was filed and when it was brought on for hearing may also have played a role in the local solicitors and the US lawyers not coming to a common position or understanding on the utility of the application.
59 In the circumstances, I am not ultimately convinced that in this case the respondents’ solicitors should be liable for the costs of the respondents’ interlocutory application, although, as I have said, it is a close case.
60 In the circumstances, I will order that the respondents are to pay the applicants’ costs on both interlocutory applications on an indemnity basis.