Flo Rida v Mothership Music Pty Ltd

Court of Appeal (NSW)|2013-06-03|Before: Macfarlan JA, Ward JA, Gleeson JA, MacFarlan JA

Judgment 1MACFARLAN JA: The appellant, Flo Rida, is a rap music artist who was contracted to perform as the headline act at the "Fat as Butter" music festival held in Newcastle on 22 October 2011. However he did not appear and in the present proceedings he and his management agent, Mr Darren Ayre, are sued by the organiser of the festival, Mothership Music Pty Ltd, for damages for breach of contract. 2The primary judge, Gibson DCJ, made an order for substituted service of the District Court Statement of Claim, permitting service of it by email and posting a message regarding it on Facebook. As service by these means did not lead to appearance by Flo Rida or Mr Ayre in the proceedings, judgment was entered against them for $380,400.60 before interest. 3Flo Rida has now appeared conditionally in order to challenge the District Court's jurisdiction and appealed against the judgment against him on the ground that the District Court should not have made the order for substituted service on him. Mr Ayre has not appealed. 4For the reasons that are given below, I consider that the appeal is well founded and the judgment against Flo Rida should therefore be set aside.

The factual circumstances 5Flo Rida was contracted to appear at the music festival by, first, a written agreement of 14 July 2011 signed by Mr Ayre on behalf of his company, VIP Entertainment & Concepts Pty Ltd ("VIP"), and, secondly, a contractual rider dated 15 July 2011 to which both Flo Rida and VIP were parties, signed by Mr Ayre as "ARTIST AUTHORISED REP". The festival took place on 22 October 2011, without Flo Rida's appearance. 6On 31 March 2012 Ms Tiffany Stanley of IMG Strongarm, apparently a management agent for Flo Rida, sent an email to Mr Ayre informing him that Flo Rida would be doing "radio gigs" in Australia from 9 to 19 April 2012. A newspaper article of 3 April 2012 referred to proposed promotional appearances by Flo Rida at Parramatta, New South Wales at 4.30 pm on 12 April 2012 and at Ringwood, Victoria at noon on 14 April 2012. 7On 13 April 2012 Mothership Music filed its Statement of Claim commencing the present proceedings in the District Court. On the same day it sought and obtained from Gibson DCJ interlocutory relief freezing Flo Rida's Australian assets up to a value of $80,000. 8On 14 April 2012 a process server engaged by Mothership Music attempted to serve Flo Rida, commencing at 11.20 am, at Ringwood in Victoria. He was unsuccessful. 9On 18 April 2012, Gibson DCJ made the order for substituted service now challenged. 10Evidence before her Honour comprised, first, an affidavit of Mr Brent Lean sworn on 16 April 2012. A draft of this affidavit had been before her Honour on the application made on 13 April 2012. Mr Lean annexed to his affidavit copies of the email of 31 March 2012 and the newspaper article suggesting that Flo Rida was performing in Parramatta on 12 April 2012, both referred to above at [6]. He also stated that he had formed the opinion that Flo Rida resided and usually worked in the United States and would be returning there after his Australian appearances concluding on 19 April 2012. 11Secondly, an affidavit of Ms Stephanie Borg sworn on 17 April 2012 was before her Honour. Ms Borg's evidence included the following: (a) That she had made attempts to serve Flo Rida with court documents by emails to Ms Stanley and Mr Ayre of 13 April 2012. (b) That certain matters "might have" brought the fact of commencement of proceedings to Flo Rida's attention. These included a Sun Herald article of 15 April 2012, referring to the application made to the Court on 13 April 2012 and to difficulty Mothership Music was having in serving Flo Rida with the order made on that day. Ms Borg also referred to a notice placed on "the Flo Rida Facebook page on Facebook site" which she said that she accessed "via a link that appears on the website ''" that referred to the same court order. (c) That she was "able to post notices on the Facebook wall of Flo Rida" which she said had "a provision to send Flo Rida private messages". 12Also before her Honour was an affidavit of Mr Kyran O'Dwyer, a process server, that evidenced the attempts made from 11.20 am on 14 April 2012 at Ringwood in Victoria to serve the Statement of Claim and other documents on Flo Rida. Mr O'Dwyer also attempted, unsuccessfully, to identify a place where he could serve Flo Rida on 16 April 2012. 13As Flo Rida did not enter an appearance in the proceedings following substituted service in accordance with the order made by the primary judge (see [15] below), the primary judge proceeded, in his absence, to assess damages at a hearing on 3 August 2012 and on the same date to give judgment against him in favour of Mothership Music.

The primary judgment of 18 April 2012 14In her judgment of 18 April 2012, the primary judge referred as follows to the questions of jurisdiction and substituted service: "4 As the affidavit of Mr O'Dwyer shows, the process servers made numerous attempts to serve Mr Flo Rida in New South Wales and Victoria over the weekend and Monday period following my orders, by attending a number of social engagements at which he was appearing but, for various reasons, the process servers were prevented from getting sufficiently near him to serve him in the time-honoured fashion of providing a copy of the relevant documents. 5 I propose to continue the orders [of 13 April 2012] until further order and will make a further return date in the event that the second defendant [Flo Rida] proposes to appear and be represented to challenge the orders that I made. 6 How can I make ... an order [for substituted service] if the second defendant [Flo Rida] has, since the claim was filed, left the jurisdiction? In relation to my power to make such an order I have had regard to the judgment of Young CJ in Eq in Gate Gourmet Australia Pty Ltd (in liq) v Gate Gourmet AG [2002] NSWSC 727, where his Honour considered the question of whether substituted service can ever be ordered where defendants leave the jurisdiction (as I apprehend Mr Flo Rida apparently now has after the claim is filed), other than in the exceptional case where someone has deliberately left the jurisdiction to avoid service. Young CJ in Eq notes authority in England such as Tucker (a bankrupt), Re; Ex parte Tucker [1987] 1 WLR 928, and other earlier cases, suggesting such an order cannot be made, and that these decisions have been referred to in Australia, although without either disapproval or what his Honour calls 'ringing endorsement.' 7 His Honour states at [8]: [8] The English system of having different endorsements for writs to be served inside and outside the country may mean that these cases are distinguishable. Modern Australian authority tends to suggest that if one has a dispute in which Australia is the appropriate forum, then the only real problem about making sure that service is effected is that there should not be any undue trespass into the comity between this country and other foreign nations. I considered those matters in an allied situation in ASIC v Sweeney (No 2) [2000] NSWSC 1211. 8 His Honour went on to note (at [9]) that if the court were to make an order for substituted service, there was every likelihood that, on the return date, there would be representation to enable argument on this jurisdictional issue to be heard. There would therefore be no prejudice, either to the applicants on the motion or any respondent who hoped, as Young CJ in Eq put it, 'to get the best of both worlds by watching what is happening, but never entering the arena' (at [9]). 9 While the factual situation was slightly different in that case, in that it would appear that the person to be served had solicitors in the jurisdiction, who had refrained from filing an address for service, the second defendant would have the same opportunity here. 10 This brings me to the form of the application for substituted service. There have been prior examples of service being effected by Facebook. According to the Sydney Morning Herald ('Australian court serves documents via Facebook' (Nick Abraham, 12 December 2008)), Master Harper, in the ACT Supreme Court, ordered that default judgment could be served on defendants by notification on Facebook, in what the Herald called 'first in Australia and perhaps the world'. Unfortunately, this decision is not available on LexisNexis or Austlii, so I will have to take the Herald's word for it. 11 However, in the Federal Magistrates Court (Byrne v Howard [2010] FMCAFAM 509), Brown FM made an order for substituted service via Facebook and other electronic means including email ([17] to [28]). Such an order could conceivably cover Twitter accounts as well as Facebook accounts if that was necessary. Similar evidence was put before the learned magistrate in that case to the evidence that is before me today. 12 I pause to note that the nature of Facebook has been carefully explained in a number of judgments, including Facebook, Inc. v Callverse Pty Ltd [2008] AUDND 11 at [5], where Facebook was in fact the applicant. The international reach of Facebook is such that it is a matter of notorious fact. 13 Service by email is not controversial, and I note that orders for substituted service via email were made in Specsavers Pty Ltd v Buyinvite Pty Ltd [2012] FCA 230, Bellingen Shire Council v Lamir-Pike [2010] NSWLEC 195 and Asteron Life Limited v Franck [2009] NZHC 450 (noting an example of additional service on Facebook in Axe Market Gardens v Craig Axe (CIV: 2008-485-2676, High Court Wellington, 16 March 2009, Gendall A J), at [9])."

The order for substituted service 15For these reasons, the primary judge made the following order for substituted service: "(4) An order that substituted service be effected on the second defendant by: (a) sending a copy of the Statement of Claim, Notice of Motion dated 13 April 2012, Affidavit of Stephanie Borg sworn 13 April 2012, Orders of Gibson DCJ dated 13 April 2012, together with a copy of this order, by email transmission to the recipients [who were not identified]; and (b) sending a message to the second defendant via the provision to do so appearing on his Facebook page (referred to in the Affidavit of Stephanie Borg sworn 17 April 2012) to the following effect: 'On Friday, 13 April 2012, Mothership Music Pty Ltd commenced proceedings against you in the District Court of New South Wales, Australia seeking damages for breach of contract in respect of your non-appearance on 22 October 2011 at the 'Fat as Butter' Concert at Camp Shortland, The Foreshore Newcastle. In addition, the Court ordered that you do not diminish your assets in Australia below $80,000 and also made additional ancillary orders. These orders were renewed today together with an order that you may be served by the sending to you of this message by your Facebook page. Full details and copies of all relevant documents can be obtained by contacting Neville & Hourn Legal (Level 4, 162 Goulburn Street, Sydney NSW 2010 +61 2 9264 6888 Ref: Stephanie Borg or by email at stephanie.borg@nhlegal.com.au).If you do not file a defence to these proceedings within 28 days of service, the Court may enter judgment against you without any further notice to you.'"

The District Court Act 1973 16Part 3 of the District Court Act 1973 deals with the civil jurisdiction of the Court. Division 2 (headed "Actions: Jurisdiction") of Part 3 includes the following: "Subdivision 1 General jurisdiction in relation to actions 44 Actions (1) Subject to this Act, the Court has jurisdiction to hear and dispose of the following actions: (a) any action of a kind: (i) which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court, and (ii) in which the amount (if any) claimed does not exceed the Court's jurisdictional limit, whether on a balance of account or after an admitted set-off or otherwise, other than an action referred to in paragraph (d) or (e) (b) (Repealed) (c) any action brought to recover an amount not exceeding $20,000, which is the whole or part of the unliquidated balance of a partnership account, or the amount or part of the amount of the distributive share under an intestacy or of a legacy under a will, (d) any motor accident claim, irrespective of the amount claimed, (d1) any work injury damages claim, irrespective of the amount claimed, (e) any proceedings transferred to the Court under section 146 (1) of the Civil Procedure Act 2005, irrespective of the amount (if any) claimed in those proceedings. ... 47 Cause of action or defendant outside the State (1) If a defendant has been duly served with the document commencing an action: (a) the Court has jurisdiction in accordance with this Act to hear and dispose of the action, and (b) a registrar has and may exercise: (i) if the action involves proceedings to which the Civil Procedure Act 2005 applies, the functions conferred on the registrar pursuant to section 12 or 13 of that Act, or (ii) in any other case, the functions prescribed by the civil procedure rules, regardless of whether the cause of action to which the action relates arose wholly or partly outside New South Wales. (2) For the purposes of subsection (1), it is immaterial whether the defendant was within or outside New South Wales: (a) at the time the cause of action arose, or (b) at the time of service of the document commencing the action. (3) For the purposes of this section, a defendant is duly served with a document commencing an action if the defendant is served with the document by or under this Act or in accordance with the Service and Execution of Process Act 1992 of the Commonwealth. ..."

The District Court's territorial jurisdiction 17The District Court is an inferior court of limited jurisdiction which is defined by statute (Falls Creek Ski Lifts Pty Ltd v Yee (1995) 37 NSWLR 344 at 345 - 349 per Gleeson CJ, with whom Rolfe AJA agreed). As a result, common law principles concerning the jurisdiction of superior courts, which have inherent as well as statutory jurisdiction, are of little, if any, relevance in determining whether the District Court has jurisdiction in particular cases. 18Section 44 of the District Court Act identifies the subject matter of actions over which the District Court is to have jurisdiction. Section 47 identifies the necessary territorial connection. 19The existence of a sufficient territorial connection under s 47 depends on due service. This is defined as service of the initiating process on the defendant "by or under this Act" or in accordance with the Service and Execution of Process Act 1992 (Cth) ("SEPA"). The latter Act permits service elsewhere in Australia than New South Wales, but not outside Australia. 20For the following reasons, the reference to service "by or under this Act" includes service in accordance with the Uniform Civil Procedure Rules ("UCPR"). 21The District Court Act does not itself contain any provisions regulating the manner of service of initiating process. However s 161 provides for the Rule Committee established under the Act to make rules concerning a variety of matters including service of "notices, documents and other instruments relating to proceedings" (s 161(2)(ag)). Such rules were formerly contained in Part 8 of the District Court Rules 1973. Since the enactment of the Civil Procedure Act 2005 ("the CPA"), and the making under that Act of the UCPR, the mode of service of initiating process in the District Court has been regulated by Part 10 of the UCPR. The UCPR were made pursuant to the rule making powers conferred on the Uniform Rules Committee by s 9(1) of the CPA. 22Section 10(1) of the CPA provides that "[r]ules of court are taken to include the uniform rules to the extent to which they are applicable in that court". Section 21 of the Interpretation Act defines "rules of court" to mean "rules made by the person or body having power to make rules regulating the practice and procedure of the court or tribunal". As the Uniform Rules Committee has power to make rules concerning the District Court, given the applicability of the CPA to the District Court (see s 4, Sch 1), in my view the effect of s 10 is that the UCPR are to be treated as if they were rules made under s 161 of the District Court Act to the extent that they are stated to apply to that court. It follows that service of a District Court Statement of Claim in accordance with the UCPR is service as contemplated by s 47(1) and (3) of the District Court Act, that is, service "under this Act". 23This analysis does not lead to the conclusion that Part 11 of the UCPR, which is concerned with the service of documents outside Australia, is applicable to the District Court, as by its terms, that Part is confined in its application to the Supreme Court (UCPR r 11.1; Studorp Ltd v Robinson [2012] NSWCA 382 see [106] - [108]). That leaves service of District Court process to be regulated by Part 10 of the UCPR. 24Section 47 of the District Court Act does not stipulate that a condition of jurisdiction is that the defendant was in the jurisdiction when the proceedings were commenced. There is no occasion therefore to consider what the common law principle was in that regard (compare Laurie v Carroll [1958] HCA 4; 98 CLR 310). However to attract jurisdiction under that section the initiating process must, as I have said, be duly served on the defendant. 25It follows from these conclusions that Mothership Music's submission that presence within New South Wales when the action is commenced is sufficient to found jurisdiction must be rejected. The asserted consequence of the submission was that once that condition was satisfied, originating process could be served anywhere, whether within or without New South Wales and irrespective of any other authority to serve the process outside New South Wales. For the reasons I have given, this submission cannot stand in the face of the terms of s 47 of the District Court Act by which the territorial reach of the District Court's jurisdiction is established. Under that section, jurisdiction over a defendant is determined by due service, not presence within New South Wales when the action is commenced. 26I add that in my view the asserted condition of the presence of Flo Rida in New South Wales when the action was commenced was in any event not shown to be satisfied. The highest Mothership Music's case rose in this respect was evidence that Flo Rida was likely to have been in New South Wales for an appearance commencing at 4.30 pm on Thursday 12 April 2012 and was in Victoria for an appearance at Ringwood at noon on 14 April 2012. This did not establish on the balance of probabilities that he was in New South Wales on the intervening day, Friday 13 April 2012, when the action was commenced. Whether on the evening of 12 April he remained in New South Wales or travelled to Victoria, or indeed went elsewhere, was not revealed by the evidence. 27Mothership Music submitted that Mr Lean's draft affidavit annexed to Ms Borg's affidavit of 13 April 2012 provided this evidence. However Ms Borg's affidavit simply stated that she was instructed by Mr Lean of, and verily believed, the matters of fact stated in Mr Lean's draft affidavit which she annexed. Mr Lean's draft asserted a belief, based upon the newspaper article of 12 April 2012, that Flo Rida "is" in New South Wales. However the draft was undated and did not, as Mothership Music submitted on appeal, "speak" as at 13 April 2012. It could equally be regarded as "speaking" as at 12 April 2012. In any event, Mr Lean's opinion, if it is to be understood as speaking as 13 April 2012, was unsupported by the purported source of his belief because the newspaper article referred only to Flo Rida's presence in New South Wales on 12 April 2012. 28Personal service on the defendant is the primary means of service for which Part 10 of the UCPR provides. That did not occur in relation to Flo Rida. The question then is whether UCPR r 10.14 permitted the making of an order for substituted service on him, that is, service other than by personal service. Unless the primary judge's order for substituted service was properly made and overcame the apparent lack of jurisdiction to proceed with the action against Flo Rida, the appeal must succeed and the primary judgment for damages set aside.

The order for substituted service 29The factual circumstances in relation to which the making of the order for substituted service needs to be considered are as follows. According to the evidence, Flo Rida was in New South Wales on 12 April 2012 and in Victoria on 14 April 2012, and was likely to be returning to the United States on or soon after 19 April 2012 (see [6] and [10] above). The evidence thus suggested that Flo Rida was in Australia when the order for substituted service was made on 18 April 2012 but did not show whether he was then in New South Wales or elsewhere in Australia. However, the latter is not of present significance as, whilst in Australia but outside New South Wales, he could have been personally served with the District Court Statement of Claim under the provisions of the Service and Execution of Process Act. 30UCPR r 10.14, which is contained in Part 10 of the UCPR and therefore applicable in the District Court, relevantly provides as follows: "10.14 Substituted and informal service generally (cf SCR Part 9, rules 10 and 11; DCR Part 8, rules 5 and 16; LCR Part 7, rules 5 and 16) (1) If a document that is required or permitted to be served on a person in connection with any proceedings: (a) cannot practicably be served on the person, or (b) cannot practicably be served on the person in the manner provided by law, the court may, by order, direct that, instead of service, such steps be taken as are specified in the order for the purpose of bringing the document to the notice of the person concerned. (2) An order under this rule may direct that the document be taken to have been served on the person concerned on the happening of a specified event or on the expiry of a specified time. (3) If steps have been taken, otherwise than under an order under this rule, for the purpose of bringing the document to the notice of the person concerned, the court may, by order, direct that the document be taken to have been served on that person on a date specified in the order. (4) Service in accordance with this rule is taken to constitute personal service." 31It is convenient to consider first whether an order for substituted service under this rule could properly have been made if the evidence had indicated that Flo Rida had departed Australia before the order was made. In my view this would not have been a proper use of the power conferred by r 10.14. The legislature, acting through the Uniform Rules Committee, has refrained from giving jurisdiction to the District Court based on personal service of its process outside Australia and, in respect of the Supreme Court, has carefully confined the circumstances in which jurisdiction so based may be exercised. It would be a subversion of the policy underlying these provisions to permit avoidance by the simple device of a substituted service order. 32This conclusion derives support from the decision of Austin J in ASIC v Sweeney (No 2) [2001] NSWSC 477; 38 ACSR 743. It is unnecessary to repeat his Honour's helpful analysis of the authorities, including Laurie v Carroll [1958] HCA 4; 98 CLR 310. It is sufficient to note that in holding that there could not be substituted service of a writ issued out of the Supreme Court of Victoria, a superior court of record, if the writ could not be served personally at the time it was issued, the High Court in Laurie v Carroll observed: "Were it otherwise the strict conditions regulating and limiting service out of the jurisdiction upon defendants abroad would be ineffective; for they could be avoided by obtaining an order for substituted service within the jurisdiction" (at 325). In other words, "want of jurisdiction cannot be overcome by an order for substituted service" (ibid at 332). 33Rogers CJ Comm D's observation in Arhill Pty Ltd v General Terminal Company Pty Ltd (1990) 23 NSWLR 545 at 551 that "a foreigner, resident abroad, will not lightly be subjected to a local jurisdiction" accorded with this approach. His Honour referred in this context to Siskina v Distos Compania Naviera S.A. [1979] AC 210 in which at 254 - 5 Lord Diplock described the jurisdiction of local courts over foreigners as "exorbitant" jurisdictions, running "counter to the normal rules of comity among civilised nations", and said that any rules that allow foreign service, and that therefore create an exception to jurisdiction being territorial, should be construed strictly in favour of the foreigner". 34The decision of McClellan CJ in Filipowski v Frey [2005] NSWLEC 166 is not inconsistent with my conclusion. Unlike the present case, that case was concerned with the making of an order for substituted service by a superior court of record, the Land and Environment Court, and with a situation in which the defendant, as his Honour found, was within the jurisdiction when proceedings were commenced because he had voluntarily submitted to it (at [22]). 35My conclusion referred to in [31] above is also supported by the text of r 10.14 which refers to a document which "cannot practicably be served on a person" or "cannot practicably be served on a person in the manner provided by law". Both these alternatives contemplate the existence of a practical difficulty in service. They do not embrace a situation where the relevant document cannot lawfully be served on the defendant because he is outside Australia. 36However, as Austin J recognised in ASIC v Sweeney, an order for substituted service may, depending upon the circumstances, be made in respect of a defendant who is overseas if personal service on that defendant whilst overseas would be permissible, for example where service of a Supreme Court Statement of Claim could be effected in accordance with Part 11 of the UCPR. (As I have noted earlier, Part 11 is not applicable to the District Court.) Similarly, it may, depending on the circumstances, be appropriate to make a substituted service order in respect of a defendant who is outside New South Wales but may be served elsewhere in Australia under the Service and Execution of Process Act. 37Returning to the present case, the question is whether the order for substituted service was properly made on 18 April 2012 when the evidence suggested that Flo Rida was leaving Australia on the next day or soon thereafter. In my view the order ought not to have been made in the absence of evidence that the means of substituted service sanctioned by the order were likely to bring service of the statement of claim to Flo Rida's attention whilst he was in Australia. Due to the apparent proximity of his departure, there was no basis in the evidence for any confidence that that would occur. In the absence of that confidence, the effect of the order was tantamount to ordering substituted service on a defendant who was overseas and not lawfully able to be personally served overseas. As I have indicated, it is not permissible to make an order for substituted service in those circumstances. It is unnecessary to consider in the present case whether the position would have been different if the evidence had indicated, which it did not, that Flo Rida had left, or intended to leave, Australia for the purpose of evading service. 38I should add in conclusion that in my view the evidence before the primary judge did not in any event constitute a sufficient basis for the making of the substituted service order insofar as that order provided for notice to be given to Flo Rida by means of Facebook. The evidence (see [11(b) and (c)] above) did not establish, other than by mere assertion, that the Facebook page was in fact that of Flo Rida and did not prove that a posting on it was likely to come to his attention in a timely fashion (see Chappell v Coyle [1985] 2 NSWLR 73 at 77). 39Similarly, the order was defective insofar as it related to substituted service by email as the intended recipients of the emails were not identified in the order (see [15] above).

ORDERS (1) Appeal allowed. (2) Orders made on 18 April 2012 set aside. (3) Judgment entered against the appellant on 3 August 2012 set aside. (4) Orders made on 3 August 2012 set aside. 40WARD JA: I agree with Macfarlan JA. 41GLEESON JA: I agree with Macfarlan JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 August 2013

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