Solicitors:
Clifford Chance (Plaintiffs)
Norton Rose Fulbright (First and Second Defendants)
Lander & Rogers (Third Defendant)
Hamilton Locke (Respondents)
File Number(s): 2024/23372
[2]
JUDGMENT
I published my principal judgment in this matter on 15 February 2024. [1] I will use the same abbreviations here.
I dismissed, with costs, the plaintiffs' application to continue the interlocutory injunction granted by Rees J on 23 January 2024 restraining the defendants from enforcing any rights under the Syndicated Facility Agreement. I ordered the plaintiffs to pay the defendants' costs of the application.
The defendants have now filed notices of motion seeking orders under s 98(1) of the Civil Procedure Act 2005 (NSW) that the Majority Shareholders of the plaintiffs, JIC Nature Capital Pte Ltd and Tamar Alliance Health Ltd, pay those costs.
Questions as to service of the defendants' motions on JIC and Tamar arise.
That is because, as I stated in the principal judgment, [2] JIC and Tamar, both Chinese state-owned corporations, are incorporated in Singapore and the Cayman Islands respectively and, subject to what I set out below, have no presence in Australia.
The defendants have purported to effect service of their motions on JIC and Tamar by delivering the motions and supporting material to Clifford Chance. The defendants seek orders to the effect that such delivery should stand as service on JIC and Tamar.
Clifford Chance are the solicitors for the plaintiffs, and as I recorded in the principal judgment, [3] throughout the events leading to the commencement of these proceedings, acted also for JIC and Tamar.
Clifford Chance continued to act for JIC and Tamar at the time that the defendants' motions were delivered, although not in relation to the motions.
On or around 4 March 2024, the day before the motions were listed before me for directions, JIC and Tamar retained Hamilton Locke "for the purpose of the … Notices of Motion". [4]
On 5 March 2024, Mr Graves from Hamilton Locke appeared before me on behalf of JIC and Tamar, albeit without submitting to the Court's jurisdiction. I made directions for JIC and Tamar to provide any submissions on which they sought to rely in relation to the question of service. Those submissions, by Mr Elliott SC, are now to hand. The defendants have replied to those submissions. I have heard oral argument.
[3]
Service of the motions
As I have said, although JIC and Tamar have retained solicitors in New South Wales, subject to what I say below, they have no presence here.
The Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") make provision for service of documents outside Australia.
An "originating process" may be served outside Australia:
1. without leave, in the circumstances referred to in Sch 6 to the UCPR; [5] or
2. with leave, if the Court is satisfied that the claim has a real and substantial connection with Australia, Australia is an appropriate forum and, in all the circumstances, the Court should assume jurisdiction. [6]
Any document other than an originating process may be served outside Australia with leave. [7]
The defendants' motions do not seek leave under UCPR r 11.5.
[4]
Service without leave?
The notices of motion are not "originating process". For that reason, UCPR r 11.4 is not engaged and service on JIC and Tamar without leave is not available.
In that regard:
1. the expression "originating process" is defined in s 3 of the Civil Procedure Act to mean:
"… the process by which proceedings are commenced, and includes the process by which a cross-claim is made …";
1. neither the Civil Procedure Act nor the UCPR defines the word "proceedings";
2. however, UCPR r 6.2 provides that a person "may commence proceedings in the Court by filing a statement of claim or a summons"; making clear that it is only by those means that proceedings may be "commenced";
3. on the other hand, UCPR r 18.1 provides that "an interlocutory or other application is to be made by motion"; and thus,
4. a notice of motion is a means by which an interlocutory application may be made; not a means whereby "proceedings are commenced".
Here, the "proceedings" were commenced by the plaintiffs' summons. What is before me are the defendants' interlocutory applications, made within those proceedings, for a third party costs order.
Such an interlocutory application may be made against a person not a party to the proceedings, a matter acknowledged in terms by UCPR r 18.5. That rule provides that a notice of motion seeking relief against a person not a party to proceedings must be served personally. [8]
In those circumstances, it is not necessary for me to decide whether any of the subclauses in Sch 6 to the UCPR are engaged. However, I will do so.
ASIV relied on subparagraphs (d)(ii) and (o) in Sch 6.
Subparagraph (d)(ii) provides that an originating process may be served outside Australia without leave when, relevantly:
"… the claim … is for … ancillary relief in respect of any matter or thing in or connected with Australia, where such relief is sought in relation to judicial … proceedings commenced … in … Australia …".
Subparagraph (d)(ii) must be seen in the context of its surrounding subparagraphs which provide that service may be effected outside Australia when the claim is "for an injunction to compel or restrain the performance of any act in Australia" [9] or [10] "for a freezing order or ancillary order under Division 2 of Part 25 in respect of any matter or thing in or connected with Australia". [11]
The notices of motion seek a third party costs order. I cannot see how such an order could be characterised as "ancillary" relief. To what relief would such an order be "ancillary"? If granted, a third party costs order would be stand-alone relief, available to the defendants in addition to, and not instead of or "ancillary" to any other order: for example the existing costs order.
An ancillary order is an order in aid of another order or form of relief, to render that other relief more effective. [12] An example, adverted to in subpar (d)(iii), is to be found in UCPR r 25.12, which deals with orders "ancillary to a freezing order"; commonly asset disclosure orders. Another example might be an order ancillary to or in aid of an injunction of the kind specified in subcl (d)(i). Another example is an order for preliminary discovery. [13]
It is also hard to see in respect of what "matter or thing in or connected to Australia" a third party costs order could be. I was initially attracted to the proposition that such "matter or thing" could be the dispute between the parties. However, as Mr Elliott pointed out, the required "ancillary relief" must be "sought in relation to" judicial proceedings, suggesting that the "matter or thing" must be something different to the dispute itself. That conclusion is confirmed by the reference in subcl (d)(iii) to a freezing or ancillary order "in respect of any matter or thing in or connected with Australia"; obviously not a reference to the dispute giving rise to the making of the freezing or ancillary order.
As to subclause (o):
1. that subclause refers to a claim that "affects the person … in respect of his or her membership of a corporation incorporated in Australia";
2. the defendants' claims against JIC and Tamar for a third party costs order may well arise because of JIC's and Tamar's shareholding of the plaintiffs; but
3. I doubt that such claims "affect" JIC or Tamar "in respect of" that shareholding, as such shareholding will remain unaffected no matter what the outcome of the defendant's application.
In any event, because the motions are not originating process, UCPR r 11.4 is not available to the defendants.
[5]
Service with leave?
Alternatively, the defendants seek leave to serve JIC and Tamar pursuant to UCPR r 11.8AB.
Mr Elliott's submissions make clear that JIC and Tamar understand that each of the defendants seek such leave. Mr Elliott devoted a considerable portion of his submissions to this question.
Mr Elliott submitted that there "appears to be no case in which leave has been granted to serve a notice of motion, let alone one seeking a substantive financial order against an overseas party". My attention has not been drawn to any such case. However, circumstances alter cases.
Mr Elliott submitted that there are a number of reasons why such leave should not be given.
Mr Elliott submitted that the authorities "make it plain that leave should not be granted where the court's ability to sanction non-compliance with the order made or sought to be made does not exist or is constrained" and drew attention to cases where leave to serve a subpoena on a foreign entity has been refused. Thus, in Arhill Pty Ltd v General Terminal Co Pty Ltd, [14] Rogers CJ Comm D set aside a subpoena directed to a foreign corporation and held that the Court should not lightly subject a foreign corporation to a subpoena in respect of conduct outside the jurisdiction, particularly if the utility of the subpoena was not clear and the administration of justice could be advanced by other means. [15]
The circumstances before his Honour were very different from those before me. A subpoena is a command from the Court. What is sought here is leave to serve an application for an order which, if made, would command performance of its terms. That may be a reason to decline to make the third party costs order sought by the defendants. But I do not see it as weighing heavily on the question whether leave should be granted under UCPR r 11.8AB.
Mr Elliott also drew attention to authorities to the effect that leave to serve a document outside the jurisdiction should not be granted if the granting of leave would be inconsistent with established criteria of international law with regard to comity. [16] Mr Elliott submitted that the order for costs sought "would be an order to an overseas party demanding payment, and as such, an intrusion into the powers of the government and authorities in the Cayman Islands and Singapore to determine the rights of, and regulate, their subjects".
But JIC and Tamar are no strangers to this jurisdiction. They are the majority shareholders in and have board control of the plaintiffs. The plaintiffs are actively engaged in commercial activities within this jurisdiction. Through their control of the board of the plaintiffs, JIC and Tamar have been actively involved in and in control of the activities of the plaintiffs leading up to and giving rise to these proceedings. I have explained the role of JIC and Tamar in that regard in detail in the principal judgment, [17] particularly the involvement of their nominated director, Mr Niu, in the development of the "Strategy". Indeed, it was, I would infer, on the instructions of their nominee directors that these proceedings were commenced. In those circumstances, I do not see that the granting of leave would involve an intrusion into "the powers of the governments of the Cayman Islands and Singapore".
Finally, Mr Elliott submitted that it would not be appropriate to grant leave unless the claim was of a kind that would, if made in an originating process, fall within the species of claims in Sch 6.
I do not see UCPR r 11.4 as the relevant comparator to the question of whether leave should be granted under UCPR r 11.8AB. Rather, the relevant comparator is UCPR r 11.5, which deals with whether originating processes may be served outside the jurisdiction. The circumstances relevant to the exercise of discretion under that rule - that the claim has a real and substantial connection with Australia, that Australia is the appropriate forum for the resolution of the application and that in all the circumstances the Court should assume jurisdiction - are satisfied here. [18] The application for a third party costs order is said to arise directly from JIC's and Tamar's conduct in this jurisdiction, and that is said to have guided the activities of the plaintiffs and led them to make an application which has failed, and in respect of which an adverse costs order has been made. The claim has a real and substantial connection with this jurisdiction which is, indeed, in my opinion, the appropriate forum for its resolution.
In those circumstances, I am satisfied that this is a case where it is appropriate to grant the defendants leave to serve their application for third party costs on JIC and Tamar outside the jurisdiction.
[6]
Should service be taken to have been effected?
The defendants seek an order that their motions and supporting affidavits be taken to have been served on JIC and Tamar by delivery to Clifford Chance on 23 February 2024.
Mr Elliott did not direct any submissions to this question. He accepted that if leave to serve JIC and Tamar was not required, or if such leave was required and was granted, delivery to Clifford Chance should be taken as good service.
Nonetheless, I shall deal with the point.
UCPR rr 10.14(1) to (4) provides:
"10.14 Substituted and informal service generally
(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.
(3A) An application for an order under this rule must be supported by an affidavit by the applicant that includes -
(a) a statement as to the applicant's knowledge of the whereabouts of the person to be served, and
(b) a statement as to any communications that have occurred between the applicant and the person to be served since the cause of action in the proceedings arose (including any communications by telephone, fax or electronic mail).
(4) Service in accordance with this rule is taken to constitute personal service."
UCPR r 10.14(1) is directed to circumstances where a document "cannot practicably be served" on a party. There is no evidence here that the defendants' motions could not "practicably be served" on JIC or Tamar in Singapore or in the Cayman Islands, save that this would obviously cause delay.
However, the defendants do not move under UCPR r 10.14(1) but, rather, under UCPR r 10.14(3), which does not require a finding that service of the relevant document "cannot practicably" be achieved. That is made clear by the fact that UCPR r 10.14(3) is directed to circumstances where steps have been taken "otherwise than under an order under this rule" for the purpose of bringing a document to the notice of "the person concerned". [19]
The defendants delivered their Notices of Motion, and affidavits in support, to Clifford Chance who, as I have said, have been acting for JIC and Tamar throughout the circumstances giving rise to this litigation.
I accept that JIC and Tamar have not retained Clifford Chance in relation to the defendants' application for third party costs. But such an application was foreshadowed by ASIV in the earlier hearing before me and Clifford Chance, and thus JIC and Tamar, must have been aware that at least ASIV would, if successful, seek a third party costs order.
There can be no doubt that JIC and Tamar are well aware of the facts the nature of the defendants' application. That is made clear from Mr Elliott's submissions, and from Clifford Chance's communications to the solicitors for the defendants since publication of the principal judgment.
It is true that the general principle is that an order for confirmation of informal service within New South Wales would not be made if a foreign defendant is not amenable to the jurisdiction of the Court other than through personal service within the jurisdiction. [20]
However, that principle does not apply where service on the foreign entity is or would be permitted either under UCPR r 11.4 and Sch 6 without leave or under UCPR rr 11.5 or 11.8AB with leave. [21]
Thus, in Flo Rida v Mothership Music Pty Ltd, [22] Macfarlan JA (Ward and Gleeson JJA agreeing) said:
"… or 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 …". [23] (Emphasis added.)
As I propose to make an order under UCPR r 11.8AB granting the defendants leave to serve their motions overseas on JIC and Tamar, such service is "permissible". The defendants' applications have been brought to the attention of JIC and Tamar. They are well aware of their nature and content. Accepting, as Mr Elliott submitted, that the overriding purpose of the Civil Procedure Act to achieve the just, quick and cheap resolution of proceedings does not expand the Court's jurisdiction over a foreign entity, the making of the orders sought is consistent with that overriding purpose and is critically relevant to how these proceedings should be managed. I see this case as an example of the "exceptional circumstances" to which Ball J referred in Independent Liquor & Gaming Authority v Melco Resorts & Entertainment Ltd, [24] where "strict compliance with the rules relating to service abroad" is not required.
[7]
Orders
In those circumstances, I order that:
1. Pursuant to UCPR r 11.8AB, the defendants have leave to serve their Notices of Motion of 23 February 2024, and supporting affidavits, on JIC Nature Capital Pte Ltd and Tamar Alliance Health Ltd outside Australia.
2. Pursuant to UCPR r 10.14(3), those documents be taken to have been served on those parties by delivery to Clifford Chance on 23 February 2024.
3. I reserve the costs of this application.
4. I confirm the tentative hearing date of 3 April 2024 for the hearing of the defendants' motions.
[8]
Endnotes
Nature's Care Holdings Pty Ltd v Chen (No 2) [2024] NSWSC 107.
At [3(a)-(b)].
For example, at [86], [91], [92] and [115].
According to an email of 4 March 2024 from Clifford Chance to ASIV's solicitors.
UCPR, r 11.4.
UCPR, r 11.5.
UCPR, r 11.8AB.
UCPR, r 18.5(a).
Subparagraph (d)(i).
"[W]ithout limiting subparagraph (ii)".
Subparagraph (d)(iii).
See, for example, I C F Spry, "The principles of equitable remedies: specific performance, injunctions, rectification and equitable remedies (4th ed, 1990, Law Book Co) at 550-551.
See Brighton Automotive Holdings Pty Ltd v Honda Australia Pty Ltd [2021] VSR 757 at [56]-[59] (Button J).
(1990) 23 NSWLR 545.
Ibid at 551, 553-555.
A matter to which Rogers CJ Comm D referred in Arhill Pty Ltd v General Terminal Co Pty Ltd (supra) at 550, 553.
For example, at [22], [93], [94], [104] and [125].
UCPR, r 11.5(5).
See the recent observations of Nixon J in Capral Ltd v DNV AS [2024] NSWSC 96 at [65]-[66].
See Laurie v Carroll (1958) 98 CLR 310; [1958] HCA 4, and my observations in Mobis Parts Australia Pty Ltd v XL Insurance Company SE [2016] NSWSC 1357 at [18].
See Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114 at [40], [46] (Austin J); Building Insurers' Guarantee Corporation v Eddie [2008] NSWSC 195 at [20] (Rein AJ (as his Honour then was)); and Floth Pty Ltd v Bulseco [2015] NSWSC 2076 at [6] (Brereton J (as his Honour then was)).
[2013] NSWCA 268.
At [36].
[2022] NSWSC 294 at [22]-[23], [34].
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Decision last updated: 13 March 2024