Federal Court of Australia

Chen v Insight Investment Management Pty Ltd (No 2) [2025] FCA 937

ORDERS

THE COURT ORDERS THAT:

Deemed and substituted service

1.    The requirement under r 15.08(2) of the Federal Court Rules 2011 (Cth) for the respondents/cross-claimants to personally serve the notice of cross-claim dated 23 June 2025 on the second cross-respondent is dispensed with.

2.    Pursuant to r 10.24 of the Rules, service of the notice of cross-claim dated 23 June 2025, statement of cross-claim dated 13 June 2025, originating process dated 20 May 2024, concise statement dated 20 May 2024 (Originating Documents), orders dated 12 June 2025, 3 July 2025, 24 July 2025 and these orders (Orders) be effected by:

(a)    handing a copy of the Originating Documents and Orders to any person apparently over the age of sixteen years, but, if this is not possible, leaving them in the letterbox or affixing them to the front door in a sealed envelope addressed to Mr Yuan-Sheng Xie at 24 Kuranda Crescent, Berwick, Victoria, 3806, Australia;

(b)    sending a copy of the Originating Documents and Orders by pre-paid post addressed to Mr Yuan-Sheng Xie at 24 Kuranda Crescent, Berwick, Victoria, 3806, Australia;

(c)    sending a copy of the Originating Documents and Orders by email to kim@reccapital.com.au with the subject line “Court Orders and Documents attached – VID423/2024 LUYI CHEN & ANOR v INSIGHT INVESTMENT MANAGEMENT PTY LTD & ANOR”;

(d)    sending a text message to 0402 676 956 in the following terms:

(i)    Court proceedings have been commenced against you by Insight Investment Management Pty Ltd and John Yang Xu in the Federal Court of Australia, proceeding number VID423/2024. On 6 August 2025, orders were made that service of the notice of cross-claim dated 23 June 2025, statement of cross-claim dated 13 June 2025, originating process dated 20 May 2024, concise statement dated 20 May 2024 (“Originating Documents”) and orders dated 12 June 2025, 3 July 2025, 24 July 2025 and 6 August 2025 (“Orders”) are to be served on you by: delivering a copy of the Originating Documents and Orders by hand to 24 Kuranda Crescent, Berwick, Victoria, 3806, Australia; sending a copy of the Originating Documents and Orders by pre-paid post to 24 Kuranda Crescent, Berwick, Victoria, 3806, Australia; sending a copy of the Originating Documents and Orders to kim@reccapital.com.au; and sending you this text message.

3.    Pursuant to r 10.23 of the Rules, the Originating Documents will be taken to be served 14 days after the respondents/cross-claimants complete all of the steps in order 2.

4.    Until the second cross-respondent files a notice of address for service in accordance with r 15.09 of the Rules, service of any other document in this proceeding be effected by the way provided in order 2(b) and (c).

5.    By 4:00pm on 20 August 2025, the respondents/cross-claimants (or a solicitor acting on behalf of the respondents/cross-claimants) file an affidavit:

(a)    verifying that order 2 has been complied with; and

(b)    stating whether the respondents/cross-claimants received a bounce back email, out of office, return to sender or similar notification which may indicate that the second cross-respondent did not receive the email sent in accordance with order 2(c).

6.    Prior to effecting service of the Originating Documents in accordance with order 2, the cross-claimants file an amended notice of cross-claim listing the time and date for hearing as 4 September 2025 at 10:00am.

Other

7.    Costs reserved.

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

REASONS FOR JUDGMENT

NESKOVCIN J:

1    On 12 June 2025, the Court granted the respondents leave to issue a Notice of cross-claim on Rec Capital Pty Ltd and Mr Yuan-Sheng Xie, the first and second cross-respondents respectively.

2    On 25 July 2024, the respondents filed an interlocutory application seeking orders ex parte for deemed and substituted service of the Notice of cross-claim on the second cross-respondent, Mr Xie, pursuant to rr 10.23 and 10.24 of the Federal Court Rules 2011 (Cth). The application was listed before me for hearing on 5 August 2025. The applicants were excused from appearing at the hearing as they did not wish to be heard on the application.

3    In effect, to be satisfied that orders for substituted service should be made, the respondents were required to establish that:

(a)    it is not practicable to serve documents on Mr Xie in a way required by the Rules; and

(b)    in all probability, the mode of substituted service that is proposed by the respondents will bring the relevant documents to the attention of Mr Xie.

4    The respondents relied on the following eight affidavits:

(a)    two affidavits of Mr Geoffrey Dunlop, Process Server, sworn on 26 June 2025 regarding attempted service on Mr Xie;

(b)    two affidavits of Ms Helen Steele, Process Server, sworn on 7 and 23 July 2025 regarding attempted service on Mr Xie;

(c)    an affidavit of Ms Isobelle Watson, Law Clerk, sworn on 14 July 2025 regarding a search of the Australian Electoral Roll for details concerning Mr Xie;

(d)    an affidavit of the second respondent, Mr John Yang Xu, sworn on 21 July 2025 regarding his previous contact with Mr Xie;

(e)    an affidavit of Ms Kristy Macdonald, Legal Assistant, affirmed on 25 July 2025 regarding service on the first cross-respondent; and

(f)    an affidavit of Mr Samuel McMahon, solicitor for the respondents, sworn on 1 August 2025 regarding contact details for the first cross-respondent, Rec Capital, and an email that was sent to a known email address of Mr Xie.

5    At the hearing, I was satisfied that it was appropriate to make orders for deemed and substituted service of the Notice of cross-claim and other documents on Mr Xie. I made orders substantially in the form sought by the respondents. These are my reasons for making the orders.

Background

6    On 25 May 2024, the applicants commenced this proceeding against the respondents by an originating process and concise statement which allege that the respondents made false or misleading representations in an investment brochure and investment guide that caused the applicants to invest $400,000 in another company’s pre-IPO investment. The applicants seek damages against the respondents under ss 1022B(1) and/or 1041I of the Corporations Act 2001 (Cth) and/or s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

7    On 16 May 2025, the respondents filed an interlocutory application seeking, among other things, leave to file the Notice of cross-claim and a statement of cross-claim (Cross-Claim Documents). The respondents allege in the Cross-Claim Documents that Mr Xie provided Mr Xu with the investment brochure and investment guide that Mr Xu passed on to potential investors, including the first applicant. The respondents allege that the investors suffered loss when the investment failed and the funds were not returned to investors, including the respondents. The respondents seek damages pursuant s 236 of the Australian Consumer Law being Sch 2 to the Competition and Consumer Act 2010 (Cth) or s 12GF of the ASIC Act against Mr Xie and Rec Capital, on the basis that it was involved in Mr Xie’s alleged wrongful conduct.

8    Mr Xu said that he met Mr Xie, known to him as Kim Xie, in early 2021. Mr Xu said that he had a number of meetings and telephone conversations and exchanged emails with Mr Xie from time to time between early 2021 and August 2023. Mr Xu said that he used the following details to contact Mr Xie:

(a)    mobile telephone number: 0402 676 956; and

(b)    email address: kim@reccapital.com.au.

9    Mr Xu said that he is no longer in contact with Mr Xie.

10    According to a company search extract for Rec Capital, Mr Xie is the sole director of Rec Capital, having been appointed when it was incorporated. Mr Xie’s address noted on the company search extract and the registered office of Rec Capital are the same property address in Mount Waverley, Victoria (Mount Waverley address).

11    Initial attempts by Mr Dunlop to serve Mr Xie at the Mount Waverley address were unsuccessful and enquiries made by Mr Dunlop of the current occupant of the property confirmed that Mr Xie does not reside at that address.

12    Mr McMahon, who undertook searches of Rec Capital’s website, said that the only physical address appearing on the website is an address in Collins Street, Melbourne (Collins Street address).

13    Mr Dunlop attempted service on Mr Xie at the Collins Street address. Mr Dunlop was advised that there was no record of Mr Xie or Rec Capital at that address. Mr Dunlop then made a telephone call to the mobile telephone number Mr Xu had for Mr Xie. Mr Dunlop said that he spoke to a male person, who declined to provide his name, and who advised Mr Dunlop that Mr Xie had given him the telephone number and he has had no further contact with Mr Xie. The respondents submitted that the Court should find that the person who answered the phone was Mr Xie.

14    Ms Watson undertook a search of the Australian Electoral Roll and found one person with the name “Yuan-Sheng Xie” listed at an address in Berwick, Victoria (Berwick address).

15    Ms Steele attempted service of the Cross-Claim Documents on Mr Xie at the Berwick address on six occasions, without success. Ms Steele stated that the Berwick address is an occupied, residential address and that someone was present in the property when attempts were made to serve the Cross-Claim Documents on Mr Xie.

16    On 31 July 2025, Mr McMahon sent an email to kim@reccapital.com.au which stated:

Dear Mr Xie,

We act for John Yang Xu and Insight Investment Management Pty Ltd (ACN 652 527 510).

We have legal documents to deliver to you.

Please advise the most convenient address for the documents to be delivered to you.

Please confirm by no later than 3.00 pm tomorrow 1 August 2025.

17    On 1 August 2025, Mr McMahon received an email from kim@reccapital.com.au as follows (emphasis added):

Dear Mr. McMahon,

I acknowledge receipt of your email.

I note that your message references "legal documents" but does not specify the nature of the documents, the legal basis for delivery, or why you believe I am involved in the matter. I have no known legal obligation to respond to such a request or provide my personal address without proper context or due legal process.

I also note the imposition of an arbitrary deadline, which may be construed as attempting to assert authority where none has been established. I do not consent to personal service by email or informal request.

If you believe formal service is required, please proceed through the appropriate legal channels, including proper disclosure of your client's position and my alleged involvement.

Kind regards,

Kim Xie

Founder & Ceo

+61 402 676 956

kim@reccapital.com.au

www.reccapital.com.au

Relevant Principles

18    Rules 10.23 and 10.24 of the Rules provide:

10.23    Deemed service

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:    Without notice is defined in the Dictionary.

10.24    Substituted service

If it is not practicable to serve a document on a person in a way required by these Rules, a party may apply to the Court without notice for an order:

(a)    substituting another method of service; or

(b)    specifying that, instead of being served, certain steps be taken to bring the document to the attention of the person; or

(c)    specifying that the document is taken to have been served:

(i)    on the happening of a specified event; or

(ii)    at the end of a specified time.

Note:    Without notice is defined in the Dictionary.

19    In Commissioner of Taxation v Caratti (No 2) [2018] FCA 1500, Colvin J observed at [10]:

The preponderance of authority is to the effect that the current rule requires the applicant for orders for substituted service to demonstrate that it is not sensible or realistic to effect personal service even though it may be possible or feasible to do so. This will usually be done by taking steps to effect personal service and providing evidence as to any difficulties that have arisen in doing so. It is not necessary to go so far as to demonstrate that there is an inability to effect personal service or that it would be extraordinarily difficult to do so. Further, there must be a proper evidential basis upon which to conclude that in all probability the mode of substituted service that is proposed will bring the relevant documents to the attention of the party to be served.

20    In relation to the meaning of “practicable”, in Kosmos Capital Pty Ltd v Turiya Ventures LLC [2019] FCA 528, Jackson J observed at [50]:

In the context of r 10.23(a), the word ‘practicable’ has a wide meaning which will depend on the circumstances of the particular proceeding: Australian Securities and Investments Commission v China Environment Group Ltd [2013] FCA 286 at [11]-[15]. Rule 10.23 does not require the applicant to prove the impossibility of service of documents upon a party in accordance with the rules, or that further attempts to effect service in accordance with the rules would be futile or not sensible or feasible: Speedo Holdings BV v Evans [2011] FCA 1089 at [12]. The question is not whether reasonable effort has been shown by the applicant over a particular period, but whether at the date on which the application regarding service is made, the applicant, using reasonable effort, is unable to serve the respondent personally: Foxe v Brown (1984) 58 ALR 542 at 547 as applied in O’Neil v Acott (1988) 59 NTR 1 at 2. Evidence of attempts to serve, attempts to speak by telephone and lack of knowledge of whereabouts will be relevant to the question of practicability: see eg Ross v Cotter [2015] FCA 310 at [2].

21    The term “not practicable” is also to be interpreted and applied in a way that best promotes the overarching purpose, which is to facilitate the just resolution of disputes according to law, as quickly, inexpensively, and efficiently as possible: University of New England v Boerner [2024] FCA 191 at [8] (Wheelahan J), referring to s 37M of the Federal Court of Australia Act 1976 (Cth).

Consideration

22    The precondition to engaging rr 10.23 and 10.24 is that it is “not practicable” to serve a document on a person in a way required by the Rules. That does not require the respondents to demonstrate that there is an inability to effect personal service on Mr Xie or that it is impossible to do so. Rather, the respondents were required to demonstrate that it is not practicable to serve Mr Xie personally, in the sense that it is not sensible or feasible to do so. Therefore, the question was whether, at the date of the application, the respondents, using reasonable efforts, were unable to serve Mr Xie personally.

23    Having regard to the numerous attempts to effect personal service of the Cross-Claim Documents on Mr Xie and his apparent attempts to evade service, I was satisfied that the respondents had established that they, using reasonable efforts, were unable to serve Mr Xie and that it is not practicable to serve Mr Xie in a way required by the Rules.

24    The next matter that the respondents were required to establish was that in all probability the proposed mode of substituted service will bring the Cross-Claim Documents to the attention of Mr Xie. This requires that there be a proper evidential basis upon which to conclude that, in all probability, the proposed mode of substituted service will bring the relevant documents to the attention of the party to be served.

25    The respondents provided evidence of attempts to serve the Cross-Claim Documents on Mr Xie at the Berwick address, which is occupied and listed on the Australian Electoral Roll as an address for “Yuan-Sheng Xie”. The respondents also provided evidence that an email sent recently to an email address, which Mr Xu used for prior communications with Mr Xie, received a response the next day. Thus, the email address is currently in use. The email in response was from a person using an email signature that included the name “Kim Xie” and other contact details for Rec Capital, including the mobile telephone number.

26    I was satisfied that the proposed methods of substituted service, namely leaving the Cross-Claim Documents at and mailing them to the Berwick address, emailing the Cross-Claim Documents to the email address kim@reccapital.com.au and sending a text message to the mobile telephone number, are likely to bring the Cross-Claim Documents to the attention of Mr Xie.

27    Accordingly, I made orders for substituted service substantially in the terms sought by the Respondents.

Associate:

Dated:    13 August 2025

SCHEDULE OF PARTIES