HRNG ADELAIDE, 14 October 1996 (hearing), 20 December 1996 (decision) #DATE 20:12:1996 #ADD 29:1:1997

Counsel for appellants: Mr T Gray QC with Mr M Hoffman and Mr J Karas

Counsel for respondent: Mr K Hargrave QC with Mr S Wisking

The facts which give rise to this matter, and the relevant provisions of the Supreme Court Rules, are set out in the judgment of Nyland J. There is no need to repeat them.

I agree with Nyland J that the appeal should be allowed. My reasons for so concluding are as follows.

First, I agree with the reasons given by Nyland J for rejecting the argument advanced by the appellant based upon Rule 7.02. I need say no more about that.

I turn now to Rule 18.07. The Rule is unfortunately expressed. It is, read literally, capable of bearing the rival meanings put forward by the appellant and by the respondent.

In considering whether, properly interpreted, it gives the Court power to allow service of a summons out of Australia in any case, it is appropriate to bear in mind the approach taken by the Rules in the past. It is the case, as was remarked by Debelle J in the judgment under appeal, that until Rule 18.07 was brought into its present form in 1992, that the Rules did not give the Court a general discretion to grant leave to serve a summons out of the jurisdiction. The power in relation to summonses was confined to summonses relating to identified claims. There was, as Debelle J remarked, a general discretion in relation to an originating proceedings other than a summons. That that should be so seems curious, but it does appear to be the case. Rule 18.07(1)(a) as it previously stood provided as follows: "18.07(1) Service out of the jurisdiction may be allowed by the Court of the following process or notice thereof, that is to say, (a) a summons, or other originating proceedings: (i) in relation to any infant or person under disability, or (ii) under any Statute under which proceedings can be commenced

otherwise than by summons; (iii) under any Rule or practice whereunder proceedings can be commenced otherwise than by summons;"

It will be noticed that it appears to allow service of an originating proceeding other than a summons without regard to the type of claim made. Provision to a like effect appears to have been made by Order 11 Rule 7(1)(b) of the 1947 Supreme Court Rules. Sub-paragraphs (a) and (b) of sub-rule (1) provided as follows: "7.(1) Service out of the jurisdiction may be allowed by the Court or a Judge of the following processes or notice thereof, that is to say, (a) originating summonses in any case where, if the proceedings were commenced by writ of summons, they would be within Rule 1 of this Order - (b) any originating summons, petition, notice of motion, or other originating proceedings - (i) in relation to any infant or mental defective, or (ii) under any Statute under which proceedings can be commenced otherwise than by writ of summons;

(iii) under any Rule or practice whereunder proceedings can be commenced otherwise than by writ of summons;"

It also appears to be the case that in no other Australian State do the Rules of Court give a general discretion to allow service out of Australia of a summons. That suggests that a wider reach was not intended, but in the end one must come back to the terms of the Rule itself. It is appropriate also to bear in mind, as was submitted by the appellant, that Rule 220 of the New Zealand High Court Rules gives that Court a general discretion to allow service out of the jurisdiction: see Cockburn v Kinzie Industries Inc [1988] NZHC 184; [1988] 1 PRNZ 243. It should also be borne in mind, as was again pointed out by the appellant, that the Rules of the Supreme Courts of a number of the Canadian Provinces likewise give a general discretion. It therefore cannot be said that a general discretion to allow service out of the jurisdiction is something unknown in the common law world.

I turn now to the terms of Rule 18.07. To my mind, there are three possible meanings.

First, the Rule might refer only to an originating process which is not a summons. That is the contention of the respondent, and the view taken by Debelle J. Secondly, the Rule might refer to such an originating process and to a summons which does not make a claim the subject matter of which is of the type identified in Rule 18.02. Thirdly, the Rule might refer only to a summons of the type just referred to.

In my opinion the third possible meaning can be rejected. First, because on that reading the Rules would make no provision at all for service out of Australia of an originating process which is not a summons. Secondly, because if the third meaning were the intended meaning the word "summons" would surely have been used rather than the expression "originating process".

The first meaning has, as Debelle J pointed out, the support of history. It is consistent with the pattern which the Rules took until Rule 18.07 was amended in 1992. The difficulty with this approach is that if that was the intention one would have expected the Rule to be expressed as follows: "An originating process which is not a summons ... "

The fact of the matter is that the words used are, as I have suggested in identifying the second meaning, apt to embrace both an originating process which is not a summons and a summons making a claim the subject matter of which is not one of those identified by Rule 18.02. As to that it might be answered that the appropriate way to identify a summons making a claim of a type not identified in Rule 18.02 would be better achieved by words other than those founds in Rule 18.07(1). It could be said that the originating process with which Rule 18.02 deals is the summons, not a summons making a claim of an identified type. While that possible answer has some force, it leaves unanswered the point that if the intention were to refer to forms of originating process other than a summons, one would have expected the Rule to say just that and not to refer to an originating process which does not fall within Rule 18.02.

In the end, without any great feeling of satisfaction, I have come to the conclusion that the words used should be given the meaning which they are capable of bearing, notwithstanding, as was pointed out by Debelle J, that this means that Rule 18.07 now represents a significant departure from the scope of the previous Rules. All I can say is that in my opinion that factor is not sufficiently telling to cause me to depart from the literal meaning of Rule 18.07. I do not regard the conclusion to which I have come as so unlikely that the literal meaning of the words should be rejected. I accept that there is an element of impression in this.

I should add that in coming to the conclusion that I have reached I am, unlike Nyland J, uninfluenced by the fact that but for this conclusion an originating process which is not a summons would be able to be served out of Australia in situations in which a summons cannot be served out of Australia. Having regard to the provisions of the Rules which I have set out above, it appears that that has always been the case, odd as it may be.

It is for those reasons that I agree that the appeal should be allowed, the order of Debelle J of 22 March 1996 should be set aside, and for that order should be substituted an order dismissing the application made by the first defendant to set aside the order of Judge Bowen Pain made on 6 December 1995 and to set aside service of the Notice of Summons and Statement of Claim on the first defendant, and an order that the first defendant pay the plaintiff's costs of the application.

I agree with the Chief Justice that the literal meaning of Rule 18.07 should prevail. I also agree with what Nyland J has written with respect to the appellant's argument based on Rule 7.02.

This is an appeal from a decision of a judge of this court setting aside service of the within proceedings upon the respondent in Hong Kong, pursuant to leave granted by a master of this court. The appellants are the plaintiffs in the proceedings. They are three companies in liquidation. The liquidation is being administered in South Australia. The respondent is the first defendant. It is a banking corporation which is incorporated in and carries on business in Hong Kong. The second defendant in the proceedings is a company incorporated in Victoria. It is a wholly owned subsidiary of the respondent. Its registered office is in Sydney.

On 7 December 1995, the appellants served a summons on the second defendant at its office in Sydney. The summons was served on the respondent on 8 December 1995 in Hong Kong pursuant to leave granted by a master of this court on 6 December 1995. That leave was granted pursuant to Rule 18.07. The respondent applied to the court to set aside the order granting leave on the basis that the master had no jurisdiction to make the order. On 22 March 1996, a judge of this court ordered that the order made on 6 December 1995 granting leave to serve the proceedings on the respondent out of the jurisdiction be set aside and that leave be revoked.

The issue for determination on this appeal is whether Rule 18.07 empowers the court to grant leave for service of a summons outside of Australia. If Rule 18.07 does confer such power, the respondent does not contend that leave should not have been given or that the forum was not convenient. Accordingly, it is unnecessary to have regard to discretionary considerations to determine the issue arising on this appeal. Further, the respondent does not dispute that the court has power to make a rule such as 18.07 with the scope for which the appellants contend.

The respondent argues, however, that the plain and ordinary construction of Rule 18.07 is that it does not apply to originating process which comes within Rule 18.02, that is, it does not apply to a summons. Accordingly, Rule 18.07 does not empower the court to grant leave to serve summonses outside Australia.

Service out of the jurisdiction generally is dealt with by Rule 18. Rule 18.01 provides that an affidavit is to be filed if a summons is to be served out of the jurisdiction.

Rule 18.02 deals with cases in which a summons may be served out of Australia. It provides that a summons may be served out of Australia without leave of the court whenever the subject matter of the claim is or relates to a matter which falls within the categories enumerated in paragraphs (a) to (n) of that Rule.

Rule 18.03 previously dealt with the procedures with respect to service out of the State but within Australia and was existent at the time that the judge heard the within application. That rule was, however, repealed as from 20 June 1996 as the provisions of s8(4) of the Commonwealth Service and Execution of Process Act 1992 now apply to service interstate.

Rules 18.04, 18.05 and 18.06 are of no relevance to these proceedings.

Rule 18.07(1) is in the following terms: "An originating process which does not come within Rule 18.02, or other process of the Court, may be served out of the State with the leave of the Court."

As the learned judge commented, there is a degree of ambiguity in this Rule. Does it mean that the Court has authority to grant leave to serve a summons outside Australia where the subject matter falls outside the matters listed in Rule 18.02? Or does it mean that Court only has authority to grant leave to serve an originating process which is not a summons? Mr Gray QC who appeared for the appellant contended for the former view. In so doing, he relied in part on the terms of Rule 7.01.

Rule 7.01 provides that every action under these rules shall be commenced by summons. Rules 7.02 provides: "7.02 A summons under these Rules shall be deemed to be, and be treated as, a writ, motion, petition, originating summons or any other form of originating process which is referred to in any Statute or statutory instrument."

He then referred to Rule 66 which deals with motions and petitions. In Lunn Civil Procedure South Australia Vol 1, at p 9299, the learned author comments:

"Although the intention of the new rules is that the summons should be the only form of originating process, this rule has been retained to cover those actions where the use of motions or petitions is prescribed by statute, and R 7.02 does not apply. It is envisaged that in due course legislation will be enacted to do away with any requirement for the use of motions and petitions. �"

The term "originating process" is not defined in the Rules. Mr Gray argued, however, that the phrase "originating process" in Rule 18.07 necessarily included a "summons". Accordingly, on a proper construction of Rule 18.07, the phrase "an originating process which does not come within Rule 18.02" included a summons where the subject matter of the claim did not relate to one of the fourteen categories set out in Rule 18.02. I am not, however, persuaded that this interpretation of Rule 7.02 is correct. I do not think that this rule means that whenever the term "originating process" is used in the Rules, it should be read as meaning including a summons. Rather, I believe that the rule is directed at the situation which arises in which some other statutory instrument refers to a form of originating process (such as a motion or petition). In those cases, the relevant "originating process" can be construed as a summons within the meanings of these rules.

The respondent argued that in Rule 18.07, the phrase "which does not come within Rule 18.02 means "which is not a summons coming within Rule 18.02" and argued that it is the originating process itself which must not come within Rule 18.02. This was dependent upon whether or not the process was a summons. If it was a summons it was a form of process which would come within Rule 18.02 and consequently Rule 18.07 was inapplicable.

The respondent argued that paragraphs (2), (3) and (4) of Rule 18.07 confirmed that the Rule was aimed at forms of originating process other than a summons.

If the respondent is correct, this would mean that the court would have an expanded jurisdiction with respect to any proceedings commenced by a motion or petition as compared with those commenced by summons. Proceedings commenced by motion or petition would be able to be served out of Australia provided the court was satisfied with respect to the usual considerations on the exercise of discretion to grant leave, whereas proceedings commenced by summons would only be able to be served out of Australia if the subject matter of the claim was or related to one of the fourteen categories set out in Rule 18.02.

Rule 18.02 was amended in 1992 to insert the words "without leave of the court". At the same time, Rule 18.07 was amended by deleting sub-rules (1), (2) and (3) completely and replacing them with new Rules (1), (2) and (3). The appellant submitted that the intention in effecting those amendments was to create a regime pursuant to which service could be effected without leave pursuant to the terms of Rule 18.02 and with leave pursuant to Rule 18.07.

The respondent argued, however, that Rule 18.07 was aimed at residual forms of originating process still permitted under the Rules but did not satisfy the first of the two requirements proposed by Rule 18.02. Rule 18.02 would be rendered otiose or easily avoided if a plaintiff could always make application to Rule 18.07 for leave to serve a summons outside of Australia. Accordingly the court should not adopt construction of Rule 18.07 which would have the consequence of circumventing Rule 18.02 which is confined to specific heads of jurisdiction. As the learned judge who made the aforesaid order said: "An amendment of that kind would have been of almost breathtaking proportion as it would have provided a means for the Court to assume jurisdiction whenever it was satisfied it should do so. The Court has never had such a wide power and I do not think it was intended to confer it by a legislative side wind in the form of the 36. amendment to Rule 18.07. Had it been the intention to confer such a wide discretion, the Rule would have been expressed in other terms which would have left no doubt as to its intention."

In answer to this, however, Mr Gray sought to rely on comparable rules in other jurisdictions. He argued that the within proceedings could have been served upon the respondent as of right had the proceedings been commenced in any of Victoria, Queensland, NT or ACT. In my view, however, the relevant rules in those States/territories do not assist in resolving this issue. The rules in each of those States and Territories are in different terms from Rule 18.07. Victorian Order 7.01(1)(l) provides that the originating process may be served out of Australia without order of the court where the proceeding is properly brought against a person duly served within or out of Victoria and another person out of Australia is a necessary or proper party to the proceeding. The Queensland Order 11(2)(p) and Northern Territory Order 7.01(1)(n) and ACT Order 12(2)(g) are in similar terms. By contrast, however, the New South Wales Rule 10.1(a)(1) is more restricted. It has not been amended in the same way as the Victorian, Queensland, ACT and Northern Territory Rules. On the facts of this case if the New South Wales rule applied, leave would not be able to be granted.

Mr Gray, however, also relied on the Rules of Court in New Zealand and in British Columbia to provide support for the argument that there was a general discretion outside of the enumerated categories to grant leave to serve out of the jurisdiction. In New Zealand service out of the jurisdiction is covered by Rules 219 and 220 of the New Zealand High Court Rules. Rule 219 covers the enumerated categories in which service is without leave and includes provision similar to the Victorian set of provisions, that is, 219(h) where any person out of New Zealand is a necessary or proper party to a proceeding properly brought against some other person duly served or due to be served within New Zealand. Rule 220 governs the general discretion and provides that service is allowed with leave (1) in any other proceeding which the court has jurisdiction to hear and determine.

In Cockburn v Kinzie Industries Inc [1988] NZHC 184; (1988) 1 PRNZ 243 at 248, Hardie Boys J confirmed that Rules 219 and 220 operated in the alternative. At p247 he stated: " ... I consider that r 220 must be construed in a way that gives it practical effect. I do not think that it was intended to refer only to proceedings in which the court already has jurisdiction. If it were, there would be little point to it. I think it clear that it was intended to enable the Court to assume jurisdiction in every kind of case which it is otherwise competent to deal with. This intention has been obscured by the use of the word 'jurisdiction' in the clause 'which the Court has jurisdiction to hear and determine'."

His remarks were approved by the Privy Council in Kuwait Asia Bank [1991] 1 AC 187 at p198: "Rule 220 of the High Court Rules covers any case which does not fall within the categories in rule 219, and allows any document to be served out of New Zealand by leave of the court, including a statement of claim."

Service outside British Columbia is covered by Rule 13. Rule 13(1) relates to service outside British Columbia without an order of the court and sets out enumerated categories. Rule 13(3) applies to application for leave to service out of the jurisdiction. It states that in any case not provided for in sub-rule (1), the court may grant leave to serve an originating process or other document outside British Columbia.

These rules are discussed in the The Conduct of Civil Litigation of British Columbia Vol.1 by Mr Justice P Peter Fraser and John W Horn at paragraph 8.11. In particular, the authors state at p198: "A British Columbia court may assert jurisdiction over a foreign defendant, (that is to say, a defendant neither resident or domiciled in British Columbia) where none of the circumstances set out in Rule 13(1) are present. It may assert jurisdiction over a defendant served in British Columbia or over a defendant served elsewhere who submits to or attorns to the jurisdiction of the court and it may assert jurisdiction by granting leave under Rule 13(3) in other circumstances than those set out in Rule 13(1). A British Columbia court may properly assert jurisdiction over a

foreign defendant whenever there is a real and substantial connection between the defendant or the cause of action or the

thing litigated over and British Columbia. The situations enumerated in Rule 13(1) are in effect where there is prima facie such a connection. If a connection other than those enumerated can be established, leave to serve may be granted under Rule 13(3). If the prima facie connection established under Rule 13(1) turns out not to be a real and substantial connection, the court may decline jurisdiction under Rule 14(6)(c). In determining whether there is such a real and substantial connection, considerations of forum conveniens are not relevant. The Court of Appeal held that, in determining whether the Courts of British Columbia should assert jurisdiction over non-resident foreigners, international comity must be considered, because 'it cannot be in the commercial interest of Canada as a trading nation that it should acquire a reputation for enmeshing foreign merchants in lawsuits not grounded jurisdictionally on a footing generally accepted in the civilized world."

In my view this lends support to a wider construction of Rule 18.07 as contended by the appellant as opposed to that of the respondent. Further, if the respondent is correct an originating process which is not a summons would be treated differently from one which is a summons. This would mean, for example, that in this action third party proceedings would be able to be served out of Australia with leave, yet the appellant would be precluded from joining a necessary and proper defendant. I do not think such a construction can be correct.

I therefore consider that Rule 18.02 deals with a situation in which leave is not required and 18.07 enables the court to give leave in any other case, subject to the usual discretionary restrictions. I would therefore allow the appeal. I would set aside the order made on 22 March 1996 and reinstate the order made by the master on 6 December 1995.