Courts - Jurisdiction - "Long arm" jurisdiction - Application to set aside issue of writ and service of notice of writ

Rules of the Supreme Court 1971 (WA), O 2 r 1, O 5 r 9, O 7 r 1(1), O 10 r 1(1), O 10 r 4(1), O 12 r 6, O 12 r 7, O 58 r 23

Issue of writ and service of notice of writ set aside

Action dismissed against first and second defendants

Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552

Bell Group NV v Aspinall (1998) 19 WAR 561

Biggs v DPP (1997) 17 WAR 534

Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350

Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571

Contender 1 Ltd v LEP International Pty Ltd [1988] HCA 60; (1988) 82 ALR 394

Newcombe v AME Properties Ltd (1995) 14 WAR 259

Official Solicitor v Stype Investments Ltd [1983] 1 WLR 214

Slingsby v Slingsby [1912] 2 Ch 21

Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679

Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71

1 PULLIN J: On 14 March 2002, the first and second defendants entered a conditional appearance denying the jurisdiction of this Court. On the same day, they issued a chamber summons seeking to have the question decided pursuant to O 12 r 7, and in consequence they ask for orders that the writ of summons and service of the notice of the writ of summons, be set aside and the action dismissed. Alternatively, the first and second defendants apply for an order setting aside the ex parte orders made by Acting Master Chapman in chambers on 25 January 2002, whereby he granted the plaintiff leave to serve notice of the writ on the first and second defendants, out of the jurisdiction. That application is made pursuant to O 58 r 23, on the basis that the plaintiff failed to disclose material facts to the Acting Master and on the basis that additional material is now available which would warrant the setting aside of the order.

2 The first and second defendants are companies located outside of Australia. They were incorporated in the British Virgin Islands, and they both have their principal place of business in Monaco.

3 As a result, the plaintiff had to consider jurisdictional questions before commencing proceedings.

4 The Rules of the Supreme Court 1971 (WA) require a grant of leave:

(a) to issue the writ if it or notice of writ, is to be served out of the jurisdiction. This is because of O 5 r 9, which reads:

"A writ for service out of the jurisdiction or of which notice is to be given out of the jurisdiction shall not be issued without the leave of the Court ...";

(b) to serve notice of a writ out of the jurisdiction. This is because of O 10 r 1(1), which reads:

"Service of a writ or notice of a writ out of the jurisdiction is permissible with the leave of the Court whenever -

(a) the subject matter of the action, so far as it concerns the party to be served, is -

(i) ...

(ii) any shares ... of a corporation ... having its principal place of business within the State; ...

(d) the action is for ... the execution (as to property situate within the jurisdiction) of the trusts of any written instrument, of which the person to be served is a trustee, which ought to be executed according to the law of Western Australia or if the action is for any relief or remedy which might be obtained in any such action as aforesaid."

5 These important provisions are not mere procedural provisions which govern proceedings after they have been properly instituted. These are provisions which confer jurisdiction on the court. The common law doctrine is that the writ does not run beyond the limits of the State. Laurie v Carroll [1958] HCA 4; (1957-58) 98 CLR 310 at 322. The foundation of the jurisdiction of the Court is physical power, and where a writ cannot legally be served upon a defendant, the court can exercise no jurisdiction over him. In an action in personam, and whenever a defendant can be legally served with a writ, the court, on service being effected, has jurisdiction to entertain an action against him. Hence, in an action in personam, the rules as to the legal service of a writ define the limits of the court's jurisdiction: Laurie v Carroll (supra) at 323. The rules made pursuant to s 167(1)(i) of the Supreme Court Act 1975, namely O 10 r 1(1), permit service on a defendant outside the jurisdiction. This is called "long arm" jurisdiction: Australian Securities & Investments Commission v Edensor Nominess Pty Ltd [2001] HCA 1 at [2]. The court, by these rules, has decided to supervise the extension of its jurisdiction and to ensure that only in appropriate cases will a writ issue for service outside the jurisdiction. Thus, O 5 r 9 requires an application to be made to the court for leave to issue a writ which is to be served out of the jurisdiction. The court has to grant leave before the proper officer seals the writ, whereby the writ "issues" (see O 5 r 6). Order 5 r 9 does not permit an order nunc pro tunc. Then, before service is effected, it is necessary to obtain the leave of the court to serve out of the jurisdiction, by showing that the subject-matter of the action falls within the description of one of the sub-paragraphs of O 10 r 1(1). Order 10 r 4(1) requires an affidavit to be filed which states the grounds on which the application is made and which states that it is the deponent's belief there is a good cause of action. The affidavit should depose to facts and not to unsupported conclusions: Stanley Kerr Holdings Pty Ltd v Gibor Textile Enterprises Ltd [1978] 2 NSWLR 372 at 375. The affidavit should not be formal or perfunctory: GAF Corporation v Amchem Products Inc [1975] 1 Lloyds Rep 601 at 608; save that it must, in a formal way, identify the sub-paragraph or sub-paragraphs of O 10 r1(1) which are relied upon.

6 An application for leave to issue the writ under O 5 r 9 and an application under O 10 r 1 for leave to serve any writ issued as a result of the grant of leave under O 5 r 9, may be heard at the same time: Koranna Nominees Pty Ltd v Roberts, unreported; FCt SCt of WA; Library No 4289; 15 October 1991, per Smith J at p 2 and p 3.

7 It was argued by counsel for the plaintiff in this case that it did not matter that some of the subject-matter of the action concerned property not located in Western Australia and not falling within any of the provisions of O 10 r 1(1). In effect, the plaintiff was arguing it could elect to rely on some claims with nexus to this State and not rely upon claims with no nexus. In this regard, reference can be made to the Victorian Supreme Court Rules 1988, where leave is not necessary before issue or service. Instead, leave to proceed will be required if no appearance has been entered, at which time it must be shown that the subject-matter of the claim has the necessary nexus with the State. In Victoria, it seems that where proceedings have been commenced and the writ served out of the jurisdiction then, on the application for leave, if it appears that some causes of action are within the Rules and some are without, the plaintiff can elect not to proceed with the causes of action which do not fall within the Rules. See Williams v The Society of Lloyd's [1994] VicRp 19; [1994] 1 VR 274 at 292 and Shantou Hesheng Commercial Development Co v P & O Swire Containers Ltd [1999] VSC 347; [1999] 3 VR 478 at 480. The plaintiff will not be allowed to proceed with causes of action for which service cannot be sustained under the Rules. As is said in Williams v The Society of Lloyd's (supra) at 292: "Such claims cannot be tacked on to the claims which the plaintiff is justified in serving out of the jurisdiction". See also Delco Australia Pty Ltd v Equipment Enterprises Inc [2000] FCA 821; (2000) 100 FCR 385 at 393 and AIS v Jumbo Scheepvaart (1988) 14 NSWLR 507 at 517. In my view, under the system in this State the plaintiff must demonstrate when he applies for leave, that all of his claims fall under the provisions of O 10 r 1(1). No question of election arises.

8 When a defendant challenges the jurisdiction of the court after entering a conditional appearance and applies to set aside the writ and service of the writ - see O 12 r 6 and r 7 - the plaintiff is required to sustain service on the ground or grounds relied upon by him in the affidavit upon which the order is made, and he cannot at that stage sustain the service upon some other ground. See Koranna Nominees v Roberts (supra), per Burt CJ at p 5.

9 The writ was issued when it was sealed by the proper officer on 23 January 2002. No application for leave was made under O 5 r 9. The writ was generally endorsed. It read:

"The plaintiff claims as against the first defendant to be the sole beneficiary of an oral trust constituted in or about 1991 of which the first defendant is the trustee, and the plaintiff seeks the following relief:

1. a declaration of this Honourable Court that the first defendant acts as the trustee of the said trust of which the plaintiff is the sole beneficiary;

2. a declaration enumerating the real and personal assets of the first defendant which are held on trust for the plaintiff; and

3. an order that the first defendant do transfer the said assets to the plaintiff.

The plaintiff claims as against the second defendant to be the sole beneficiary of an oral trust constituted in or about 1991 of which the second defendant is the trustee, and the plaintiff seeks the following relief:

1. a declaration of this Honourable Court that the second defendant acts as the trustee of the said trust of which the plaintiff is the sole beneficiary

2. a declaration enumerating the real and personal assets of the second defendant which are held on trust for the plaintiff; and

3. an order that the second defendant do transfer the said assets to the plaintiff.

The plaintiff seeks the following relief from the third defendant:

1. a declaration of this Honourable Court that the sum of $292 500 paid by the plaintiff to the first defendant on 21 December 2001 was money beneficially owed by the plaintiff; and

2. an (sic) declaration as to the beneficial ownership of any sums found to be owing by the third defendant to the first defendant or the second defendant."

10 On the same day, an ex parte motion was filed, which came before Acting Master Chapman on 25 January 2002. The motion sought an order that "leave be granted for the plaintiff to serve the notice of writ of summons filed herewith out of the jurisdiction". The Acting Master made an order in terms of the summons.

11 The ex parte motion was supported by an affidavit of Jeremy Mark Malcolm sworn 23 January 2002, which read in part:

"2. I was the solicitor for the plaintiff in Supreme Court action CIV 2960 of 2001 between the present plaintiff as plaintiff and the present first defendant as defendant.

3. Following various correspondence by facsimile and several telephone conversations between myself and Steven Penrose of the solicitors for the first defendant, Mr Penrose told me and I believe that he had instructions from his client to accept service of the Writ of Summons. Mr Penrose personally attended my office to accept service of the Writ of Summons.

4. Subsequently an interlocutory injunction was granted in those proceedings by the Honourable Justice Wallwork on 20 December 2001 (annexed hereto and marked with the letter 'JMM1' is a copy of the order). The matter was then adjourned to 15 January 2002.

5. A conditional appearance was filed by the defendant in those proceedings on 28 December 2001.

6. On 15 January 2002, the solicitors for the first defendant argued that the plaintiff had not complied with Order 10 Rule 1 of the Rules of the Supreme Court of Western Australia. The Honourable Justice Miller found that for the first defendant that Order 10 Rule 2 of the Rule of Supreme Court of Western Australia had not been complied with and the application was dismissed.

7. The plaintiff, who informs me and I believe to be a citizen of Australia, has given me instructions to issue a fresh Writ of Summons and therefore, the plaintiff seeks leave of the Supreme Court of Western Australia in accordance with Order 10 Rule 2 of the Rules of the Supreme Court to serve the Writ of Summons out of the jurisdiction on the first and second defendants.

8. As the endorsement of the Writ of Summons indicates, this action is for declaratory and injunctive relief in respect of trust assets claimed to be held by the first and second defendant for the plaintiff.

9. The assets that are in dispute includes shares in an Australian listed public company, the third defendant (which was common ground between the parties at the injunction application in Supreme Court matter CIV 2960 of 2001).

10. Attached herewith and marked with the letters 'JMM2' is a statutory demand by the first defendant to the third defendant which shows the address of the first defendant, on which the plaintiff seeks leave to serve the Writ of Summons.

11. I am informed by my client that it is within his direct knowledge that the address of the second defendant is the same as that of the first defendant, and I believe that to be true.

12. For the foregoing reasons I humbly seek leave to serve the Writ of Summons out of the jurisdiction on the first and second defendants."

12 Mr Malcolm's affidavit refers to the earlier proceedings between the plaintiff and the first defendant ("Lechmere") in CIV 2960 of 2001. In that case, Lechmere entered a conditional appearance and took out a summons seeking to have the jurisdictional issue decided. The plaintiff in those proceedings also applied for an injunction, and the two matters came before Justice Miller, who decided to hear the defendant's application to decide the jurisdictional issues.

13 Miller J made an order that the writ of summons and its service on the defendant should be set aside and that the plaintiff's action against the defendant should be dismissed on the ground that the Court had no jurisdiction in respect of the subject-matter of the claim or the relief therein. I was handed a copy of the written outline of submissions of the defendant in support of the defendant's chamber summons to set aside the service of the writ of summons and dismissal of the action, dated 14 January 2002, in action 2960 of 2001. These were the submissions put to Justice Miller. In short, the submissions pointed out that leave was not obtained under O 5 r 9 of the Rules of the Supreme Court. The submissions also referred to O 10 r 1, and noted that:

b. Lechmere is incorporated in the British Virgin Islands.

c. the company from which the plaintiff alleges the funds in question originated, namely Drysdale Investments Corporation, is also incorporated in the British Virgin Islands.

d. the funds are held in Lechmere's bank account in London.

e. the action has no connection at all with Western Australia.

14 No written reasons for decision were published by Miller J, but Mr Malcolm made a note of his Honour's oral reasons for decision, which note reads as follows:

"This is an application for interim injunction, Lechmere represented by solicitors, question has judgment properly issued out of O 5 r 9 without leave of court. We refer to BP Australia 940692. Writ was addressed to Lechmere, Monaco, to be served on Tottle Christensen. Exchange of correspondence that afternoon. Telephone conversation. Penrose got instructions, eventually agreed to accept all documents. In my view can't overcome O 5 r 9. Plaintiff contends acceptance of service ok, but O 5 r 9 can't be avoided. Do not accept they took service in a formal sense. Agreed to get instructions to accept service. Application dismissed. Unnecessary for me to make any decision on other points. I would have found the court has no jurisdiction, he is not a resident. Money was not actively moved outside jurisdiction by Lechmere it was paid overseas. Plaintiff says appearance became unconditional, the argument on merits was under protest. In any event transactions have nothing to do with Australia. Hear parties. I dismiss the writ."

15 Immediately after the dismissal of the action 2960 of 2001, the solicitors for the plaintiff and for the first defendant exchanged letters as follows. On 16 January 2002, Mr Malcolm wrote to the first defendant's solicitors saying:

"Please advise if you have instructions to accept service of a fresh Writ of Summons against Lechmere Financial Corporation at the suit of Andrew Kent."

16 The solicitors for Lechmere responded by letter dated 17 January 2002, stating that they did not have instructions to accept service. The letter continued:

"We note that on 15 January 2002 the Honourable Justice Miller dismissed action 2960 of 2001, an action Mr Kent had commenced against Lechmere.

As you are aware, in his reasons His Honour found that the plaintiff's failure to comply with the requirements of Order 5 was sufficient to warrant dismissal of the action. In addition, His Honour went on to consider each of the bases the plaintiff relied upon in opposition to the application and to reject each and every one of those bases. Why then do you contend that any 'fresh' writ would not:

1. suffer the same fate?;

2. be an abuse of the process of the Court?

17 Mr Malcolm responded in his letter of 17 January 2002, stating:

"As the Honourable Justice Miller's comments as to the substantive grounds of the proceedings were of course entirely obiter, it would not be an abuse of process for fresh proceedings to be issued. In any case, I am also seeking instructions as to whether to appeal against his Honour's decision.

Please also obtain instructions as to whether you will accept service of the appeal if I am instructed to institute the same, and also whether you will accept service of the process on behalf of Drysdale Investments Corporation, whom I intend to join as a defendant to the second writ along with Aspermont Ltd."

18 The solicitors for the first defendant responded by letter dated 24 January 2002, stating that they did not have instructions to accept service and stating:

"In the event you make an exparte application with respect to any of these matters to which you adverted in your most recent letter we expect you to refer the following matters to the Judge's attention:

1. the recent exchange of correspondence between our firms;

2. the fact that the proceedings numbered 2960 were dismissed by the Honourable Justice Miller on the basis that the Supreme Court of Western Australia had no jurisdiction in respect of the claim; and

3. the fact that, in his reasons (and regardless of your contention that part of His Honour's reasons were obiter, a contention with which we do not agree) His Honour considered and rejected each and every one of the grounds upon which Mr Kent relied upon in opposition to our client's application to dismiss the proceedings."

19 Following that exchange of correspondence, the ex parte motion was taken out, seeking leave to serve the notice of writ out of the jurisdiction, and brought on before Acting Master Chapman. The correspondence that I have referred to above was not disclosed to Acting Master Chapman, nor were the reasons for decision of Miller J drawn to Acting Master Chapman's attention. An order was then made by Acting Master Chapman, as I have indicated above.

20 There can be no doubt at all that the plaintiff's solicitor was aware that the provisions of O 5 r 9 and O 10 r 1(1) had to be complied with in relation to the new proceedings.

21 The plaintiff, notwithstanding Miller J's reasons, ignored the provisions of O 5 r 9. No leave was sought to issue the writ. The writ was issued on 23 January 2002 without leave. The plaintiff could not have been under any misapprehension about the need to obtain leave pursuant to O 5 r 9. On that basis, the writ is defective, although not a nullity: see O 2 r 1 and BP Australia Ltd v Kirki Shipping Corporation, unreported; SCt of WA; Library No 940612; 1 November 1994. Mr Malcolm, appearing for the plaintiff, attempted at one stage to argue that the writ had "reissued" after Acting Master Chapman had made his order on 25 January 2001, but this argument was abandoned when it became clear that no such thing occurred. It was also faintly argued by Mr Malcolm that the application before Acting Master Chapman was an application under O 5 r 9, and that the order he made was an order granting leave to issue the writ. That argument is completely untenable as a reference to the wording of the application and the order made makes obvious.

22 The plaintiff then applied for an order under O 2 r 1(2). Counsel for the plaintiff cited Bill Discount Services Pty Ltd (In Liquidation) v Dill-Macky, unreported; FCt SCt of WA; Library No 6700; 7 May 1987, in which Brindsden J referred to Pontin v Wood [1962] 1 QB 594, where it was stated that the English equivalent of O 2 r 1 enabled the court to give its aid to regularise the procedures of a known genuine case containing technical defects. Order 2 r 1 reads:

"(1) Where in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of anything done or left undone, been a failure to comply with the requirements of these Rules, whether in respect of time, place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.

(2) ... the Court may, on the ground that there has been such a failure as is mentioned in paragraph (1) ... make such order ... dealing with the proceedings generally as it thinks fit."

23 There may be an argument that O 2 r 1 does not overcome irregularities or defects flowing from non-compliance with O 5 r 9 or O 10 r 1(1), because these Rules are substantive in the sense that they confer jurisdiction. However, I will assume, but not decide, that the language of that order is wide enough to apply to the present circumstances. The plaintiff referred to Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158, at p 20, in which Ipp J referred to the power of the Court under O 2 r 1 as being a broad remedial power. He said that, in an appropriate case and to avoid injustice, an irregularity concerning the service of a writ (because it was served after the 12-month period of validity prescribed by O 7 r 1(1)) could be cured under that provision. He noted, however, that the discretionary power must be exercised with care and caution.

24 I would be most reluctant to cure an irregularity caused by non-observance of O 5 r 9 when a Judge of this Court has pointed out to the plaintiff, in reasons for decision in earlier proceedings, the provisions of O 5 r 9 and has dismissed the earlier proceedings for non-compliance with the Order. The plaintiff alleges that there would be injustice if the irregularity is not cured. The plaintiff says that it would lose the benefit of an injunction it has obtained, restraining the first and second defendants from disposing of funds in a London bank account. There is a history behind the existence of the injunction which reaches back into other litigation, but for the purpose of this application I need only note that the injunction in this case was last granted at a time when the defendants' present application challenging the jurisdiction of the court had been filed. The injunction was granted by McKechnie J as a matter of expediency, knowing that the issue about jurisdiction was live and remained to be determined. If the defendants can make out grounds for their present application, then those grounds would have been grounds justifying the dismissal of the action at the time the injunction was ordered by McKechnie J. Success by the defendants on their application will dispose of the proceedings, leaving no basis for the grant of an injunction. This is what happened in the proceedings determined by Miller J. In my opinion, there is therefore no injustice which the plaintiff can point to if the defendants are entitled to their orders. I should say also that on an application under O 2 r 1 to remedy the failure to obtain leave under O 5 r 9 before issuing the writ, it is relevant to know whether there are other problems or irregularities with the plaintiff's attempt to affect service: see BP Australia Ltd v Kirki Shipping Corporation (supra). There are other problems.

25 There has been non-compliance with O 10. In the first place, there has been technical non-compliance in that the affidavit did not state that in the deponent's belief, the plaintiff had a good cause of action. Further, the affidavit does not state any material facts which would allow the court to conclude that the case was a proper one for service out of the jurisdiction. The affidavit is perfunctory. Further, it does not state the grounds on which the application was made. In addition, there is a more fundamental problem which the plaintiff faces. In my view, on the material presently before the Court, the plaintiff is unable to bring the claim within any of the sub-paragraphs of O 10 r 1(1). The writ insofar as it constitutes a claim against the first defendant is, according to the endorsement, a claim in respect of which the subject-matter of the trust is "real and personal assets". Counsel for the plaintiff conceded in oral submissions to me, that some of the assets are within Australia and some are outside of Australia. He submitted that assets said to be within Australia consisted of shares of an Australian company whose principal place of business is within Western Australia. He argued that this satisfied O 10 r 1(a)(ii). That is what counsel for the plaintiff submitted, but the submission was not backed by evidence. The affidavit which was before Acting Master Chapman did not depose to the fact that the principal place of business of the third defendant was in Western Australia. Supplementary affidavit material refers to the fact that the third defendant employs 50 Australian staff and occupies two Australian offices, but there is no effort made to depose that the third defendant's principal place of business is in Western Australia.

26 Even if that were so, the subject-matter of the action also relates to property which is outside of Western Australia. The concession by counsel for the plaintiff that there are assets outside of Australia as well as the shares referred to above, means that there could not be compliance with O 10 r 1(1) in relation to all of the subject-matter of the action.

27 The plaintiff also argued that he now wished to rely on the grounds in O 10 r 1(d) and (h). As I have already said, Koranna v Roberts (supra) makes it clear that reliance cannot be placed at this stage on some ground which was not relied upon when the original leave was granted. In any event, there is no material before the Court to provide support for a grant of leave under O 10 r 1(1)(d) or (h).

28 In addition, if it were necessary to decide the matter, I would be satisfied that the first and second defendants have made out grounds to set aside the order of Acting Master Chapman on 25 January 2002, on the grounds of non-disclosure and the additional material now before me. Mr Malcolm's affidavit placed before Acting Master Chapman did not disclose Justice Miller's reasons for decision, showing that Justice Miller found that there was no jurisdiction because of the failure to obtain leave under O 5 r 9, and did not disclose the contents of the exchange of correspondence which took place after Justice Miller made his order, details of which are set out above.

29 The result is that I agree that the issue of the writ and service of notice of the writ should be set aside as against the first and second defendants. The action against them must be dismissed.