Commissioner of Taxation v Caratti

1. The applicant do prepare and submit a minute of orders for substituted service. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLVIN J: 1 The Commissioner of Taxation seeks orders concerning the service of various court documents on Ms Kuhnert, the forty-ninth respondent. The orders sought would dispense with personal service and also deem service by email at a particular email address (Email Address) to be good and sufficient service effected on 4 July and 27 July 2018. They would also provide for documents to be personally served on an adult person at a specified address in Beckenham. 2 In these proceedings the Commissioner obtained orders in May 2017 requiring that the documents stored in a shipping container be delivered up and held in safe storage. Some 62 parties were originally joined as respondents being all those persons who had been identified as possibly having a claim to ownership or legal professional privilege or both in respect of the documents. 3 On 9 April 2018, I made orders referring matters concerning claims to privilege for inquiry and report by a referee: Commissioner of Taxation v Caratti [2018] FCA 465. The orders have since been varied and the referee process is ongoing. There has not yet been any adjudication of any claims to privilege by the court and confidentiality in respect of the documents is being maintained. However, it is necessary to ascertain the position with respect to service upon each of the respondents before any adjudication of those claims. 4 By r 10.23 of the Federal Court Rules 2011 (Cth) a party may apply without notice for an order that a document is taken to be served on a specified date if it is not practicable to serve the document in the way required by the rules and the party provides evidence that the document has been brought to the attention of the party to be served. 5 As was noted by Flick J in Speedo Holdings BV v Evans [2011] FCA 1089, the former rule as to deemed service required only that it be shown that steps had been taken to bring the document to the attention of the person to be served. The current rule in requiring that it be shown that the document 'has been brought to the attention of the party' may impose a more onerous requirement: at [10]. 6 In Australian Securities and Investments Commission v Antares Energy Ltd (administrators appointed) (No 2) [2018] FCA 212, there was evidence that the mother of the party to be served had apparently passed on information to him that there are some documents and had provided details to contact ASIC. There was also evidence that messages had been left using a mobile phone number that had not been shown to be currently maintained or accessed. It was found that the evidence did not satisfy the requirement that the document to be served had been brought to the attention of the person to be served. On the other hand, delivery by email to addresses that had been used in the course of the proceedings together with receipt of delivery confirmations has been held to satisfy the requirement: Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) (No 3) [2016] FCA 303 at [11]. 7 The Federal Court Rules also make provision for a substituted form of service to replace that provided for in the Rules. If it is not practicable to serve a document in the way required by the Rules then under r 10.24, a party may apply for an order (a) substituting another method of service; or (b) specifying that instead 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 on the happening of a specified event or at the end of a specified time. 8 I note that both r 10.23 and r 10.24 use the phrase 'not practicable to serve a document'. 9 As to whether it is not practicable to effect service, there has been some exploration in the cases as to whether there is a material semantic difference between a requirement that personal service be 'impractical' before substituted service may be ordered compared to a requirement that personal service is 'not practicable': Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2007] FCA 124 at [8]-[14]; Commissioner of Taxation v Oswal [2012] FCA 1507 at [32]-[37]; Australian Competition and Consumer Commission v Safety Compliance Pty Ltd at [7]-[11] and Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 664 (and cases there cited). 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. 11 The affidavit evidence before me concerning notification of the proceedings to Ms Kuhnert is to the following effect. 12 The Commissioner sent a considerable number of court documents to the Email Address on 4 July and 20 July 2018. There has been no notification that the email was not delivered. 13 The Commissioner has also obtained a mobile telephone number from confidential records. On 5 July 2018, an officer of the Australian Public Service employed by the Australian Taxation Office called the mobile number. The person who answered the call identified herself as Ms Kuhnert. The nature of the present proceedings was explained to her and she was told that she had been included as a party to the proceedings as a potential owner of documents. 14 Ms Kuhnert was told that she could be heard by the Court directly or by a lawyer or if she had no interest in the proceedings she could declare that she did not want to be heard. She was told that the officer understood that she had received an email from the Australian Government Solicitor that included a notice of discontinuance which she could sign, scan and return if she did not want to be a party to the proceedings. She was told that if there was no response, the Commissioner may have to apply for substituted service. She said that she did not want to be a party to the proceedings and undertook to read the email and then sign and return the notice of discontinuance. Ms Kuhnert has not signed and returned the notice of discontinuance. 15 During the course of the conversation she was asked for her email address and she provided the Email Address. She was not asked for details of her residential address or whether arrangements could be made to serve the documents personally. 16 It is evident that the conversation with Ms Kuhnert was directed to arranging for the proceedings to be discontinued by consent. 17 The notice of discontinuance attached to the email of 4 July 2018 provided for consent by Ms Kuhnert to the discontinuance of the proceedings by the Commissioner with no order as to costs. I infer from the proposal to discontinue that the Commissioner was then of the view that Ms Kuhnert is not a necessary party to the proceedings. However, the Commissioner now seeks orders for deemed or substituted service and seeks to continue the proceedings against Ms Kuhnert on the basis that it is not yet known whether she may have a claim to the documents in the shipping container and there is information to suggest that she may have a claim. 18 There is no evidence that Ms Kuhnert has actually received the court documents. The difficulty with concluding that they have been brought to her attention is that the emails were raised with her in the context of a conversation in which the discussion was about discontinuance of the claim and that is no longer the position. The terms of the conversation were to direct her attention to discontinuance of the proceedings not the consideration of documents that form part of the proceedings. 19 Since July, there have been further unsuccessful attempt to contact Ms Kuhnert on her mobile phone. Messages have been left but those calls have not been returned. There also have been attempts to locate the residential address of Ms Kuhnert but they have been unsuccessful. There is evidence that she did live at the Beckenham address some time ago. However, when the address was visited a person at the address said it was no longer her current address. 20 The Commissioner has obtained a current company search of a company that is another party named in these proceedings. The record shows that Ms Kuhnert is a director of the company and her address is shown as the Beckenham address. This provides some evidence that if documents addressed to Ms Kuhnert were left at that address they may be brought to her attention. 21 In those circumstances, I am not satisfied that orders should be made for deemed service based upon the delivery that has occurred to the Email Address. I am satisfied that it is appropriate for orders to be made for substituted service on the basis that it is not practicable to serve Ms Kuhnert personally and that appropriate orders should be made specifying that steps be taken to bring to the attention of Ms Kuhnert by email to the Email Address and by letter to the Beckenham address that the Commissioner intends to continue the proceedings against Ms Kuhnert and providing a general description of the nature of the proceedings. The orders should otherwise provide for the documents listed in the application to be sent to the Email Address as attachments and for the documents to be delivered to the Beckenham address marked as being for Ms Kuhnert. 22 I direct that the Commissioner bring in a minute of orders to reflect these reasons. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.