Practice and procedure - Order for service of notice of writ out of jurisdiction - Application to set aside - Whether service contrary to the domestic law of the People's Republic of China

Application to set aside service of notice of writ dismissed

First Plaintiff : Mr W S Martin QC & Mr D M Fairweather

Second Plaintiff : Mr W S Martin QC & Mr D M Fairweather

Adams v Cape Industries Plc [1990] Ch 433

Akai Pty Ltd v People's Insurance Co Ltd [1998] 1 Lloyd's Rep 90

Australian Commercial Research & Development v ANZ McCaughan Merchant Bank [1990] 1 Qd R 101

Boyle v Sacker (1888) 39 Ch D 249

BP Australia Ltd v Kirki Shipping Corporation, unreported; SCt of WA (Master Adams); Library No 940612; 1 November 1994

Castagna v Conceria Pell Mec Spa, unreported; NSW Ct of Appeal; 15 March 1996

Kent v Lechmere Financial Corporation [2002] WASC 75

Leal v Dunlop Bio-Processes International Ltd [1984] 2 All ER 207

Lindgran v Lindgran [1956] VicLawRp 34; [1956] VLR 215

Rein v Stein (1892) 66 LT 469

Williams & Glyn's Bank Plc v Astro Dinamico Compania Naviera SA [1948] 1 Lloyd's Rep 453

1 PULLIN J: This is an application under O 12 r 7 to set aside the service of notices of the writ on the third and fourth defendants.

2 The writ of summons was issued on 20 October 2003. It named four defendants. The first defendant is a wholly owned subsidiary of the second defendant; the second defendant is a wholly owned subsidiary of the third defendant, or alternatively the fourth defendant; and the third defendant was a wholly owned subsidiary of the fourth defendant. The first and second defendants are companies incorporated and registered in Australia. Both of these defendants have entered an appearance. The third and fourth defendants are companies located in the People's Republic of China.

3 On 17 November 2003, Master Sanderson made orders granting the plaintiffs leave to serve the notice of the writ out of the jurisdiction and upon the third and fourth defendants in the People's Republic of China; that service to be by way of facsimile addressed to nominated persons in Beijing.

4 The third and fourth defendants entered conditional appearances.

5 On the day the writ was issued, the plaintiffs issued a chamber summons seeking an interlocutory injunction restraining all four defendants from disclosing information concerning what was described as the Channar joint venture to a company called Lynas Corporation Ltd, or to its servants or agents, in connection with the independent valuation, shareholder and other approvals and the vendor financing referred to in the announcement made by Lynas to the Australian Stock Exchange in connection with the proposed transaction referred to in the announcement, without the prior approval of the first plaintiff.

6 When the application for an injunction came on for hearing on 22 October 2003, counsel appeared for the first and second defendants and gave undertakings on behalf of those defendants in terms of the application. The injunction application was then adjourned.

7 On 6 December 2003, an application was made to enter the action into the expedited list, and that was adjourned until 11 November 2003.

8 On 11 November 2003, an order was made entering the case into the expedited list, and orders were made that the plaintiffs file and serve a statement of claim and that by 28 November 2003 the first and second defendants file a defence or defences to the statement of claim.

9 Two matters were listed before me in the expedited list on 18 November 2003. The first was the summons for directions concerning the programming of the case to trial, and the second was the relisted application for the interlocutory injunction against all defendants. At that hearing, counsel for the third and fourth defendants expressed a wish to have the Court deal with these defendants' application to set aside service. The plaintiffs wished to have the Court hear the application for an interlocutory injunction. A solution was worked out by the parties. The result was that the third and fourth defendants gave an undertaking in lieu of an injunction. The undertaking was in writing, but it contained within it a statement that the undertaking was given:

"Without conceding the validity of the writ or the concurrent writ in this action, the regularity of service of the writ, the concurrent writ, or the notice of the writ in this action or any matter alleged by the Plaintiffs."

10 The transcript reveals that counsel for the third and fourth defendants also stated that the efficacy of service of the notice of writ was in issue. He also said that the undertaking would be reduced to written form and that the filing of the undertaking would be without "without prejudice" to any issue relating to the conditional appearance.

11 The undertaking given was one which was to expire at the same time as the undertaking given by the first and second defendants. The third and fourth defendants also consented to orders on the same day made for the programming of various interlocutory steps, including its own pleading. This all happened at the same time as counsel expressly reserved the third and fourth defendants' position concerning the conditional appearances.

12 On 25 November 2003, the application I am now dealing with came on for hearing, as did the summons for directions. The summons for an interlocutory injunction was also listed, because the undertakings by all defendants were due to expire on that day. Undertakings as before were given by all defendants, but counsel for the defendants again made the position of the third and fourth defendants clear. He said that:

"The third and fourth defendants have reserved their right to challenge the validity of the writ and the concurrent writ and the service of the writ ... and/or notice of the writ."

13 There was then discussion about the time that would be taken to hear this application, and it was adjourned on the basis that the listing co-ordinator would fix a date. In the meantime, counsel for the defendants asked for an extension of time in which to file a defence. The point was raised about whether an obligation should be imposed upon the defendants when the issues relating to jurisdiction remained in issue, this being a reference to the application to set aside the writ and to set aside service of the notice of writ. The issue was avoided by extending the time for the filing of a defence until a time after this application was dealt with.

14 Rule 1 provides that service of a writ or notice of a writ out of the jurisdiction is permissible with the leave of the court whenever the action falls within O 10 r (1). There is no dispute that it does.

"Unless service is to be effected within the Commonwealth of Australia, leave granted under Rule 1 ... shall be leave for service out of the jurisdiction of notice of the writ and not the writ itself."

"(1) An application for grant of leave under Rule 1 or 2 shall be supported by an affidavit stating the grounds on which the application is made and that, in the deponent's belief, the plaintiff has a good cause of action, and showing in what place or country the defendant is, or probably may be found.

(2) No such leave shall be granted unless it shall be made sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction under this Order."

"Where leave is given under this Order to serve notice of a writ out of the jurisdiction, the notice shall subject to any direction given by the Court as to the manner in which such notice shall be served or brought to the notice of the defendant, be served in the manner in which writs are served."

"(1) Order 9 Rule 1 and Order 72 Rule 4 shall apply in relation to the service of a writ or notice of a writ, notwithstanding that the writ or notice is to be served out of the jurisdiction.

(2) Nothing in this Rule or in any order or direction of the Court made by virtue of it shall authorize or require the doing of anything in a country in which service is to be effected which is contrary to the law of that country.

(3) A writ or notice of a writ which is to be served out of the jurisdiction -

(a) need not be served personally on the person required to be served, if it is served on him in accordance with the law of the country in which service is effected; ..."

The Domestic Law of the People's Republic of China Concerning Service of Documents

20 Affidavits have been placed before me to prove the domestic law of the People's Republic of China concerning the service of documents. The main affidavit is that of Shouzhi Zhang, who is a practising lawyer in Beijing. His expertise was not called into question. Mr Zhang exhibited to his affidavit an English translation of Articles 262 and 263 of Ch 29 of the Civil Procedure Law of the People's Republic of China.

21 Another translation was put before me by an affidavit of Katrina White, a solicitor employed by the solicitors acting for the third and fourth defendants. The two versions are the same in substance, although there is some slight difference in wording in the two translations. It is not necessary to set out these provisions, and I should not seek to construe the articles because it is accepted that the proper interpretation of these provisions is as set out in Mr Zhang's affidavit. That being the case, I should accept the evidence and act upon it: Scruples Imports Pty Ltd v Crabtree & Evelyn Pty Ltd (1983) 1 IPR 315. Relevantly, Mr Zhang says:

"According to the law of the People's Republic of China (including Articles 262 and 263 of the Civil Procedure law of the People's Republic of China), no foreign organisation or individual may themselves serve documents issued by foreign courts within the territory of the Republic.

Where, for example, a party in Australia wishes to serve a person in China with documents issued by an Australian court in civil proceedings, a formal request by the Australian court should be sent through diplomatic channels seeking the assistance of Chinese authorities in serving the documents as a matter of comity.

The request for service should:

(a) be addressed to the 'Australian Embassy or Consulate stationed in the People's Republic of China';

(b) set out the name of the requesting court;

(c) set out the names and descriptions of the parties;

(d) set out (in the case of a corporation) the identity and address of the corporation to be served;

(e) set out the nature and quantity of the documents to be served;

(f) state that the Australian Government will reciprocate in assisting with the service of documents from Chinese judicial authorities;

(g) state that the party in Australia is seeking service of documents will reimburse Chinese judicial authorities for the cost incurred in serving the documents;

(h) be sealed by the requesting court;

(i) be accompanied by translations in full character Chinese of the request for service and the documents to be served; the translation should bear the signature of the translator attesting to the authenticity of the translation."

The Third and Fourth Defendants' Submissions

22 These defendants point to O 10 r 10(2) and submit that the order which was made by Master Sanderson granting leave to serve the notice of writ on the third and fourth defendants by facsimile, was contrary to the law of the People's Republic of China.

23 The plaintiffs submit that this provision does not apply, because it states that "nothing in this Rule or in any order or direction of the Court made by virtue of it" is a restriction which applies therefore only to O 10 r 10 and not to O 10 r 6, which is the provision that Master Sanderson must have relied upon to give directions as to the manner in which the notice of writ should be served.

24 I disagree with the plaintiff's submission. In my opinion, the fourth word in O 10 r 10(2) "Rule" must be a mistake in drafting. The intention must have been to refer to the "Order" rather than to the "Rule", so that it should be read as saying that nothing in "Order" 10 or by any order or direction of the court made by virtue of "it", should authorise or require the doing of anything in a country in which service is to be effected which is contrary to the law of that country. If O 10 r 10(2) is not read in that way, it is absurd, because O 10 r 10 does not authorise the court to make any orders. If a provision in legislation is patently absurd, then a court may construe the provision in a way which will make sense of it and promote the purpose of the provision in question: Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1 at 21 and Director of Public Prosecutions (Nauru) v Fowler [1984] HCA 48; (1984) 154 CLR 627. See below. Thus, O 10 r 10(2) should read:

"Nothing in this Rule Order or in any order or direction of the Court made by virtue of it shall authorize or require the doing of anything in a country in which service is to be effected which is contrary to the law of that country."

25 Read in this way, service of a notice of writ may not be ordered contrary to the law of the People's Republic of China.

Is Service Contrary to the Law of the People's Republic of China?

26 The policy in O 10 r 10(2) is manifest. It is that the jurisdiction of the Supreme Court of Western Australia should be exercised in a manner that recognises and respects the sovereignty of foreign states. A writ of summons is, on its face, a command by the sovereign to the defendants to enter an appearance. The command is made under the seal of the Supreme Court. The seal of the Court is that referred to in s 15 of the Supreme Court Act 1935. The command in the writ is an exercise of sovereign power.

27 Jurisdiction according to English law is based on the act of personal service: Johnson v Taylor Bros & Co Ltd [1920] AC 144 at 154. Originally this meant service within the jurisdiction. Today many court systems throughout the world permit the service of process outside the territorial jurisdiction of the State in question. Order 10 is the provision in the Rules of this Court permitting the extension of jurisdiction to persons served outside the original reach of the court. There is a presumption, however, that domestic legislation is not intended to breach the principle of international law, which is that a sovereign power is bound to respect the subjects and rights of all other sovereign powers outside its territory: Australian Securities Commission v Bank Leumi Le-Israel (1995) 134 ALR 101 at 123. However, that presumption may be rebutted by explicit language stating that the legislation is to have effect beyond the territory of the legislating nation: Australian Securities Commission v Bank Leumi Le-Israel (supra) at 123. Comity between nations, however, calls for each State to respect the laws of other sovereign States so far as is possible. Order 10 r 10(2) provides for this.

28 Thus, if the domestic law of the People's Republic of China prohibits the service of a notice of writ by the method ordered by Master Sanderson, then, in my opinion, the service must be set aside. The question is, however, whether it does so.

29 This is not to say that Master Sanderson was obliged to enquire about the domestic law of the People's Republic of China when making his order. This is because, in the absence of any evidence as to the foreign law, the court looks to the lex fori; Szechter v Szechter [1971] P 286 at 296, per Sir Jocelyn Simon P. This is sometimes expressed by saying that there is a presumption that foreign and domestic law are the same. The presumption may be rebutted. Proof of foreign law is usually a matter for proof in each case, and judicial notice will not usually be taken of the foreign law of a country or inferred from previous decisions. See "Cross on Evidence", 41,005. Evidence has now been led about the domestic law of the People's Republic of China, and if that law governs the situation and prohibits service in the manner ordered, it must be observed by reason of O 10 r 10(2).

30 It is important to note that what has been served is a notice of the writ, and not the writ itself. As was said by Sir James Hannen in Beddington v Beddington (1876) 1 PD 426:

"Service of process upon a foreigner not a subject of Her Majesty in another country may involve unpleasant questions of jurisdiction, whereas if it were not formally served upon, but only notice of the proceedings given to, such foreigner, no such consequences can arise."

31 The notice of writ which was served in this case is not a command by the sovereign but a notice by the solicitors for the plaintiffs that a writ has issued and of the consequences which may flow if no appearance is entered.

32 I was informed that the notice of writ which was served had a seal upon it. I was not shown the document, but I was told that it had on it the seal of the Central Office. As a result, the defendants say that the notice of writ was "issued" by the Court.

33 The parties did not refer me to any provision which required the plaintiffs to file a copy of the notice of writ in the Central Office of the Supreme Court, and I am not aware of any. Nevertheless, a copy was filed, and there is good sense in a party applying for leave under O 10 to inform the Court about what the notice will contain. If the Central Office seal was placed on the notice of writ, then, in my opinion, it did no more than authenticate the copy which was placed on the court file. See O 67 r 6.

34 In my opinion, the notice of writ was not "issued" (ie "put forth authoritatively": Macquarie Dictionary) by the Supreme Court. The notice of writ is, on its face, a notice signed by the solicitors for the plaintiffs. If anyone "issued" this document, it was the plaintiffs' solicitors. The notice of writ does not constitute a command by the Crown or the Court.

35 In my opinion, a service of the notice of writ is not contrary to the law of the People's Republic of China, as described by Mr Zhang. A service of the writ, rather than notice of the writ, would be contrary to that law, because a writ is issued by the Court. Order 10 r 3 requires the service of a notice of the writ, rather than service of the writ itself, to avoid the "unpleasant questions of jurisdiction" to which Sir James Hannen referred.

36 In my opinion, therefore, there is no basis for setting aside service of notice of the writ.

37 As a result of that conclusion, it is not strictly necessary for me to deal with the other submissions. I will, however, deal briefly with two of them. The first was the plaintiffs' submission that if the service had been contrary to the domestic law of the People's Republic of China, and if service should otherwise have been set aside, that the third and fourth defendants submitted to the jurisdiction by reason of the undertakings and agreement to orders for directions. What will amount to submission to the jurisdiction was stated in Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158; (1999) 21 WAR 79. A step taken by a party in the course of proceedings that is not consistent with, or relevant to, a challenge to the jurisdiction will usually be a submission to that jurisdiction. What that case also makes clear, however, is that the Court must consider the matter objectively in the context of all the relevant circumstances. A party is not to be taken to have submitted to the jurisdiction of a court if the party protests that the court does not have jurisdiction: In re Dulles' Settlement (No 2) [1951] 1 Ch 842. In my opinion, the third and fourth defendants did not, by any of its conduct, submit to the jurisdiction. At all times, the counsel appearing for the third and fourth defendants made it clear beyond question that any steps taken were steps which were without prejudice to the application to set aside service of the notice of writ.

38 The second submission I mention is the brief and undeveloped submission on behalf of the plaintiffs that O 10 r 10 does not apply because the People's Republic of China is said to be a "party" to the Hague Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil and Commercial Matters 1965 ("Hague Convention") and because the provisions of O10 r 1A(1), read:

"Rules 9 to 11 shall not apply to the service of process in a foreign country which is a party to the Hague Convention."

39 There is no definition of "Hague Convention" in O 10. There is a definition of "Hague Convention" in O 11A. It is defined there to mean "Hague Convention" as I have defined it above. Order 11A is not to take effect until Australia accedes to the Convention.

40 The commentary in Civil Procedure Western Australia par 10.1A.1 reads:

"Rule 1A will not take effect until Australia accedes to the convention ... "

41 I am inclined to the view that the commentary is correct in its statement that O 10 r 1A does not take effect until Australia accedes to the convention, but I will not decide the point, having received no detailed submissions on the point from the parties. I have proceeded on the basis that O 10 r 10 does apply. In any event, O 10 r 10(2) is a statement of a principle of international law which is presumed to apply in the absence of legislation to the contrary.

42 I dismiss the application by the third and fourth defendants to set aside the writ.