Pan v Bo

Yu Pan (Plaintiff) PARTIES : Xilai Bo (Defendant) Attorney-General of the Commonwealth (Intervener)

COUNSEL : B Adam (Plaintiff) C Hutchins (Sol) (Intervener)

SOLICITORS : Australian Government Solicitor (Intervener)

• 10 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

JUDGMENT 1 HER HONOUR: The plaintiff is a Falun Gong practitioner from the People's Republic of China. He claims that he was arrested in Beijing in early 2000 because of his beliefs and that he was detained and tortured for nearly 5 months. He says that, after his release, police and local communist party staff continued to harass him and to monitor his movements. 2 The plaintiff came to Australia in April 2001 and is now an Australian citizen. He commenced these proceedings against the Minister of Commerce of the People's Republic of China seeking damages for wrongful arrest, battery and false imprisonment in respect of his claims. He contends that the defendant is vicariously liable for the acts alleged. 3 The defendant was part of a Chinese delegation visiting Australia in September 2007. The plaintiff took that opportunity to have the statement of claim served on the defendant personally in Canberra. Default judgment was entered in favour of the plaintiff on 7 November 2007. 4 The motion before the Court raises the issue whether the default judgment should be set aside, not on the application of the defendant (who has never entered an appearance in the proceedings) but on the application of the Attorney-General of the Commonwealth, who seeks leave to appear as an intervener in the proceeding. 5 The Attorney-General says that the judgment should be set aside because the defendant is a foreign State within the meaning of the Foreign States Immunities Act 1985 (Cth) and service of the statement of claim was not effected in accordance with the requirements of that Act.

Circumstances in which the default judgment was entered 6 The proceedings were commenced by summons on 31 March 2006. The plaintiff initially sought to effect service of the summons in Australia by leaving it with a person who was a member of a delegation travelling with the defendant that year. However, the affidavit of service disclosed that the documents were not left with the defendant himself. That attempt at service was, accordingly, ineffective: rule 10.20(2)(a) of the UCPR. 7 On 27 November 2006 Hislop J ordered that the matter proceed by way of pleadings. The original statement of claim was filed on 21 March 2007. It was served, so it is contended, on 4 September 2007. An affidavit of service sworn by Jonathon Solomon states: "Service was effected by personally delivering a copy of the Statement of Claim to the Defendant, Xi Lai Bo, at the Hyatt Hotel Canberra, Commonwealth Ave, Yarralumla, ACT. At the time of service I identified the Defendant by confirming his appearance matched a photograph of him which I was carrying. I approached the Defendant and said: "Are you Xi Lai Bo?" The Defendant indicated that he was Xi Lai Bo." 8 On 5 November 2007, the defendant having failed to file a defence within the time limited by rule 14.3(1) of the UCPR, a Registrar of the Court directed that judgment be entered in favour of the plaintiff, presumably pursuant to rule 16.7 of the UCPR. It appears that there was no written application seeking the default judgment and the Court file does not disclose the existence of any affidavit in support of the application: cf rules 16.3(2)(b) and 16.7(2). There is nothing to indicate that the Registrar's attention was drawn to the Foreign States Immunities Act at the time the application was made. 9 Judgment was entered on 7 November 2007 in the following terms: "Judgment is granted in favour of the plaintiff." 10 The Attorney-General of the Commonwealth is responsible for the administration of the Foreign States Immunities Act. Upon learning of the entry of default judgment, apparently through reports in the media, the Attorney-General sought leave to intervene in the proceeding to make submissions on the procedures for effecting service under the Foreign States Immunities Act and on setting aside the default judgment. If leave to intervene is granted, the Attorney-General also seeks an order that the default judgment be set aside on the ground that the requirements of the Act were not complied with. 11 At the outset of the hearing Mr Adam, who appeared for the plaintiff, indicated that he did not oppose the Attorney-General intervening for the purpose of making submissions on those issues. In those circumstances, it was convenient to proceed to hear the substantive submissions of the Attorney-General on the issues in respect of which leave to intervene was sought so as to enable the Court to determine all issues raised by the application at the same time. 12 Those issues are: a) whether the Attorney-General should be granted leave to intervene; b) whether any requirements of the Foreign States Immunities Act were complied with; c) whether the default judgment should be set aside.

Intervention by the Attorney-General 13 The issue of the appropriateness of permitting intervention by the Attorney-General was considered in similar circumstances by Simpson J in Yan Xie v Chen Shaoji [2008] NSWSC 224. The claims made by the plaintiffs in those proceedings were based on allegations of unlawful detention and torture, also involving Falun Gong practitioners in the People's Republic of China. 14 The proceedings came before Simpson J at a point when default judgment had been sought but not granted. As in these proceedings, it was alleged that the statement of claim had been served personally on the defendant (there, the Party Secretary of the Chinese Communist Party) whilst he was in Australia. Simpson J considered two competing notices of motion, the plaintiffs' motion seeking default judgment and the motion filed by the Attorney-General of the Commonwealth seeking leave to intervene. 15 On the issue of intervention, her Honour reviewed the relevant authorities in careful detail. It is not necessary for me to repeat that discussion, which I respectfully adopt. Her Honour concluded that the Attorney-General of the Commonwealth ought be granted leave to intervene, principally on the authority of the decision of the High Court in Levy v State of Victoria [1997] HCA 31; 189 CLR 579. 16 Simpson J referred at [30] to the proposition that emerges from Levy that leave to intervene may be granted "where it can be seen that the parties to the particular proceeding may not fully present the submissions on a particular issue, where such submissions would assist the Court to reach a correct determination." Her Honour said: "Axiomatically, that is so where one party has not appeared and has not presented argument." Her Honour concluded that the Attorney-General in that case was in a position to assist the Court to reach a correct determination of important matters of jurisdiction, such as the correct application of the Foreign States Immunities Act. 17 Simpson J also took into account the unique ability of the Australian government (through the Attorney-General) to assist the Court in matters concerning the sovereignty of foreign countries. Her Honour held at [32] that the case fell "within the special category in which the prerogatives of government are involved, permitting the Attorney-General to intervene, whether by right or by leave." 18 Precisely the same considerations arise in the present case. I am satisfied that it is appropriate to grant the Attorney-General the leave sought. Accordingly, I turn to consider the submissions made on behalf of the Attorney-General as to whether the requirements of the Foreign States Immunities Act were complied with.

Does the Act apply to these proceedings? 19 The Foreign States Immunities Act confers immunity on a foreign State from the jurisdiction of the courts of Australia, except as provided under the Act. The Act also limits the ways in which service of initiating process can be effected on a foreign State. 20 The application of those provisions extends to the executive government or part of the executive government of a foreign State or of a political subdivision of a foreign State: section 3(3). 21 The plaintiff says the defendant served as the Governor, the Standing Member and Deputy Secretary of Chinese Communist Party Committee of Liaoning Province of the People's Republic of China during the period when the plaintiff was detained. The various camps at which he says he was detained are in Liaoning province. 22 The fact that a specified person was the government or part of the government of a foreign State at a specified time may be conclusively established by a certificate under s 40(1) of the Act. The Attorney-General tendered two such certificates, one dated 15 November 2007 and signed by Alexander Downer, then Minister for Foreign Affairs and one dated 14 May 2008, signed by Stephen Smith, who is now the Minister for Foreign Affairs. 23 The difference between the two certificates is that the later certificate provides more information as to the different roles held by the defendant but the additional information was not necessary. Each certificate establishes conclusively that the defendant is to be taken to be a foreign State for the purposes of the Act. 24 The plaintiff submitted that the judgment was nonetheless entered regularly because the certificates were not issued until after the default judgment was entered. I do not accept that submission. The certificates, whenever they were created, are conclusive evidence as to the facts and matters stated in them: s 40(5). Those facts existed before the certificate became admissible evidence of them in these proceedings.

Was service effected in accordance with the Act? 25 Part III of the Act sets out the ways in which service of initiating process may be effected on a foreign State. They are service by agreement and service through the diplomatic channel. Neither of those methods has been undertaken in this case. 26 Purported service of an initiating process on a foreign State in Australia otherwise than as allowed by those provisions is ineffective: s 25. 27 The issue of default judgment is dealt with in s 27 of the Act. It provides: "(1) A judgment in default of appearance shall not be entered against a foreign State unless: (a) it is proved that service of the initiating process was effected in accordance with this Act and that the time for appearance has expired; and (b) the court is satisfied that, in the proceeding, the foreign State is not immune." 28 There is nothing to suggest in the present case that it was proved when application for judgment in default was made to the Registrar that service of the initiating process had been effected in accordance with the Act. I am satisfied that the judgment was entered in contravention of the mandatory prohibition in that section.

Whether the default judgment should be set aside 29 In my view, it follows inexorably that the judgment was entered irregularly or illegally and accordingly it is liable to be set aside by order of the Court: rule 36.15 of the UCPR. 30 However, the plaintiff submitted that the combined effect of ss 38 and 10(7)(b) of the Act is that the proper party to move the Court to set aside a default judgment is the foreign State. 31 Section 38 provides (emphasis added): "Where, on the application of a foreign State or a separate entity of a foreign State, a court is satisfied that a judgment, order or process of the court made or issued in a proceeding with respect to the foreign State or entity is inconsistent with an immunity conferred by or under this Act, the court shall set aside the judgment, order or process so far as it is so inconsistent." 32 Section 10(7)(b) provides: "A foreign State shall not be taken to have submitted to the jurisdiction in a proceeding by reason only that: … (b) it has intervened, or has taken a step, in the proceeding for the purpose or in the course of asserting immunity." 33 The plaintiff submitted that the clear legislative purpose to be discerned from the combination of those two provisions is to cover the field in relation to setting aside default judgments where foreign State immunity is involved, producing the result that no person other than the foreign State may move the Court for an order setting aside a default judgment. 34 I do not accept that submission. Section 38 is concerned with the substantive issue whether a foreign State is immune from the jurisdiction of the Court. The occasion for determining that issue does not arise until a defendant has been duly served with the originating process. The certificates tendered by the Attorney-General and the submissions made on his behalf have demonstrated that service of the originating process has not been effected in accordance with the requirements of the Act. In those circumstances, s 27 prohibited the entry of judgment in default. 35 Further, there is no requirement under UCPR 36.15 for an application by the defendant before a judgment may be set aside. That rule, which is expressed in the passive voice, provides: "(1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith." 36 In my view it would be inimical to the interests of justice to hold that a judgment entered illegally could not be set aside except on the application of the defendant. In the present case, the irregularity or illegality having been drawn to the attention of the Court, it is appropriate for the Court in the exercise of its discretion to set the judgment aside so as to protect the integrity of its processes. 37 For those purposes, it does not matter whether the Attorney-General is a proper applicant. It is sufficient, in my view, that the submissions made by him as intervener have established the irregularity or illegality, so that sufficient cause is established for setting the judgment aside.

Discretion 38 The plaintiff submitted that to set aside the default judgment would be inconsistent with Australia's obligations under international convention, including the Torture Convention. He also submitted that I should exercise my discretion to decline to set aside the default judgment because, otherwise, I would deny the government of the People's Republic of China the opportunity to meet its obligations as a signatory to that Convention. 39 A competing consideration, however, is the fact that, by obtaining default judgment without drawing the Court's attention to the provisions of the Foreign States Immunities Act, the plaintiff has circumvented the provisions of that legislation which were no doubt drawn with due regard to Australia's own sovereignty and its relations with foreign States. In my view, it is more appropriate for the Attorney-General of the Commonwealth to make judgments about those issues than this Court. 40 Accordingly, I am satisfied that it is appropriate for me to exercise my discretion in favour of setting aside the default judgment. 41 I record my gratitude for the assistance provided by Mr Adam, who appeared for the plaintiff pro bono. 42 The orders are: 1. That the Attorney-General be granted leave to appear as an intervener in the proceeding. 2. That the default judgment entered on 7 November 2007 be set aside.

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