Commissioner of Taxation v Caratti

JACKSON J: 1 Ochre Group Holdings Limited is an unlisted public company which went into a members' voluntary liquidation on 14 October 2020. The plaintiff, Jeremy Nipps, is the liquidator of the company. On 1 March 2023, on the application of Mr Nipps, Registrar Trott of this Court made orders providing for the public examination of a number of people and associated production of documents. One of the individuals who is the subject of summonses for public examination pursuant to those orders is Mr Made Sumarya. 2 Mr Sumarya is a director of the company and was a director of the company during the two years ending on the date on which it entered winding up. That matter is relevant because it means that, under s 596A of the Corporations Act 2001 (Cth), Mr Nipps has, in effect, the ability to obtain a summons to examine Mr Sumarya as of right. Mr Nipps now applies for orders for leave to serve the examination summons on Mr Sumarya overseas and, at the same time, orders for substituted service of the summons on Mr Sumarya. 3 Mr Nipps relies in that regard on an affidavit sworn by him in support of the issue of the examination summons, which remains confidential pursuant to r 11.3(7) of the Federal Court (Corporations) Rules 2000 (Cth) and does not need to be referred to for the purposes of these reasons. In addition, he relies on an affidavit of James Alexander Raymond sworn 25 May 2023 and a supplementary affidavit of Mr Raymond sworn 21 June 2023, both of which have gone into evidence. 4 The circumstances which are asserted to require leave to serve overseas and substituted service in respect of Mr Sumarya, as appear from Mr Raymond's affidavits, are as follows. The only address in Australia which Mr Nipps had for service upon Mr Sumarya was an address in North Bondi, New South Wales, which appeared from certain ASIC company records. In addition, however, Mr Sumarya is currently the plaintiff along with others in a proceeding in the Supreme Court of Western Australia against the liquidator arising out of a rejected proof of debt. The plaintiffs in that proceedings, including Mr Sumarya, are represented by a local law firm, Kennedy Vinciullo. Mr Raymond's affidavit contains evidence of attempts by Mr Nipps' solicitors, Mills Oakley, to obtain confirmation from Kennedy Vinciullo that they had instructions to accept service of the examination summons on behalf of Mr Sumarya. 5 The outcome of those attempts, as revealed in a letter dated 29 May 2023 from Kennedy Vinciullo to Mills Oakley, is that, while Kennedy Vinciullo confirmed that they act for Mr Sumarya in the Supreme Court proceeding and have endeavoured to take instructions from him with respect to the public examinations, they are yet to receive any such instructions. So they do not act for him in relation to the public examinations and were unable to confirm whether certain contact details provided to them by Mills Oakley for Mr Sumarya were correct. 6 That letter reflected the substance of earlier communications from Kennedy Vinciullo, from which it appeared unlikely that they would confirm they had instructions to accept service on behalf of Mr Sumarya. Accordingly, in April 2023, Mills Oakley instructed a process server to attempt service of the summons on Mr Sumarya at the address in North Bondi. Shortly after that, the process server advised that the attempt to serve at that address had been made, but the agent spoke to a person at that address who had never heard of Mr Sumarya, so service was not effected. 7 Nevertheless, Mills Oakley do have certain contact details for Mr Sumarya, which appear from a proof of debt in relation to the company dated 23 February 2023 which he submitted in the Supreme Court proceedings via Kennedy Vinciullo. The proof of debt provides an address for Mr Sumarya in Bali, Indonesia, and what appears to be a personal email address for Mr Sumarya. 8 There is evidence in Mr Raymond's first affidavit that Indonesia is not a signatory to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965 (Hague Convention). There is no specific evidence as to any requirements under the laws of Indonesia for service of documents. But there is some evidence, namely information found in a note prepared by the Attorney-General's Department of Australia titled 'Service of Australian civil legal documents overseas ("outgoing requests")' that, because of the absence of bilateral or convention arrangements, service of the summons personally on Mr Sumarya would need to be effected through diplomatic channels. Mr Raymond expresses concern in his affidavit that effecting service via that process could result in lengthy delay. Mr Raymond says that delay in attempting to effect service of Mr Sumarya will delay the progress of the winding up of the company, causing detriment to the company's creditors and members. 9 While that evidence is very general in nature, I note that the examination summonses will be next returnable on 17 July 2023. And I accept that, given the potential complexity of the matters under investigation and their potential importance to the due process of the liquidation, including the return of any dividend for the benefit of creditors, there is a public interest in ensuring that the examinations proceed with due expedition. That public interest may be impeded if Mr Sumarya needs to be served via diplomatic channels in Indonesia. 10 Against that background, the relevant provisions and principles governing the applications for leave to serve outside Australia, and substituted service, are as follows: (1) It is necessary, or at least appropriate, for a party seeking substituted service on a person overseas to first seek leave under the Federal Court Rules 2011 (Cth) to serve outside the jurisdiction: Commissioner of Taxation v Zeitouni [2013] FCA 1011 at [26] (Katzmann J). (2) Rule 10.43 of the Federal Court Rules sets out the requirements as to when an originating application may be served outside Australia with leave of the Court. It provides that if service is not allowed under r 10.42 - and Mr Nipps does not assert in this case that it is allowed under that rule - then an originating application may be served outside Australia with the leave of the Court. (3) The application must be accompanied by an affidavit stating any facts or matters relating to the desirability of the court assuming jurisdiction, including the place or country in which the person to be served is or possibly may be found and whether or not the person to be served is an Australian citizen: r 10.43(3). (4) The Court may give leave if it is satisfied that the proceeding has a real and substantial connection with Australia and Australia is an appropriate forum for the proceeding and, in all the circumstances, the Court should exercise jurisdiction: r 10.43(4). (5) The examination summons is not an originating application and therefore is not directly governed by r 10.43. The rule that does apply to leave to serve examination summonses outside Australia is r 10.44, providing for service outside Australia with the leave of the Court of any document other than originating application. Nevertheless, I consider it is appropriate to take the matters which arise under r 10.43 into account for the purposes of deciding whether to exercise the discretion to grant leave under r 10.44. (6) As for substituted service overseas, r 10.24 and r 10.49 of the Federal Court Rules can provide a basis for such orders. In this case, because Indonesia is not a party to the Hague Convention, the relevant rule is r 10.24. (7) Where there is real urgency for service, and the evidence suggests a serious impracticability in service by other means, the urgency may justify an order for substituted service under r 10.24. While international comity is a consideration against ordering substituted service, and that is a matter that may be taken into account, it is not necessarily conclusive: see Deputy Commissioner of Taxation v Ranguta Limited [2022] FCA 1572 at [26]. (8) In relation to substituted service, the requirements were helpfully summarised by Colvin J in Commissioner of Taxation v Caratti (No 2) [2018] FCA 1500 at [10] as follows: 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 Applying those principles, I am satisfied that this is a case where it is appropriate to give leave to serve the examination summons and associated documents on Mr Sumarya on the assumption that he is in Indonesia, and that it is appropriate to provide for that to occur by way of the means sought in the application for substituted service, namely, service by email on Mr Sumarya at the email address provided in his proof of debt, and also service by email on Kennedy Vinciullo. 12 In relation to leave to serve overseas, having regard to the matters outlined in r 10.43, although as I have indicated they are not directly applicable here, the evidence establishes first that Mr Sumarya is likely to be in Indonesia and, secondly, quite clearly, that the current proceeding for public examinations has a real and substantial connection with Australia, where Australia is the appropriate forum and, in all the circumstances, the Court should exercise jurisdiction. This follows quite straightforwardly from the fact that Ochre Group Holdings Limited is an Australian public company, is subject to the corporations laws of Australia, is being wound up in Australia, and is a company whose affairs were conducted to a very large extent in Australia. For that reason leave to serve the examination summons outside Australia will be given. 13 In relation to substituted service, I am satisfied that it would not be sensible or realistic to effect personal service upon Mr Sumarya in the present circumstances. That is because personal service would be likely required to be conducted via diplomatic channels, which it can be inferred would take at least several months to bring about. That would impede the duly expeditious conduct of the examination summons which, for reasons I have already indicated, would be undesirable and not in the public interest. 14 I am also satisfied that in circumstances where Mr Sumarya has instructed local solicitors to act for him on a matter directly concerning the company, it was appropriate for Mr Nipps' solicitors to seek to effect service via those solicitors rather than to try to effect personal service on Mr Sumarya overseas in accordance with the laws of Indonesia. Of course there has been an attempt to serve Mr Sumarya at the North Bondi address which he has provided in company documents, and that has been unsuccessful and there is no prospect that he will be able to be served at that address. 15 Finally, I am satisfied that service on Mr Sumarya via the two email addresses indicated, namely, what appears to be the personal email address given by him on the proof of debt dated 23 February 2023 submitted to the Supreme Court, as well as the email address of the person who remains his solicitor on the record in relation to proceedings concerning that proof of debt, will have a high probability of bringing the documents to be served to Mr Sumarya's attention: see Ranguta at [33] concerning the appropriateness of service by email overseas and, indeed, whether service by email can truly be said to take place overseas, given the way the technology works. 16 For those reasons, orders will be made largely in terms of the application, authorising substituted service on Mr Sumarya by the methods indicated. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson.