Park (Trustee) v Tschannen

The orders sought for service outside Australia 4 The order for service outside Australia is sought under r 10.44 of the Federal Court Rules. That rule provides, relevantly to this application, that a "party may apply to the Court for leave to serve a document filed in or issued by the Court, other than an originating application, on a person in a foreign country in accordance with a convention". 5 Australia and Thailand are parties to the Agreement on Judicial Assistance in Civil and Commercial Matters and Co-operation in Arbitration between Australia and the Kingdom of Thailand, Australia-Thailand, signed 2 October 1997, [1998] ATS 18 (entered into force 29 July 1998) (the Convention). Chapter II, Article 11 of the Convention provides as follows: Service of documents by post or by diplomatic or consular agencies or by appointed agents Each Contracting Party may serve judicial documents on any persons resident in the territory of the other Contracting Party by registered mail, or, with the consent of the Central Authority of the other Contracting Party, through its diplomatic or consular agencies or by an agent appointed for the purpose by the judicial authority by whom service of the document is required, provided that the law of the other Contracting Party will not be violated and no compulsory measures of any kind will be taken. 6 The documents which the Trustee seeks leave to serve on Mr Tschannen in Thailand are a Form 9 Summons for Examination pursuant to s 81 of the Bankruptcy Act 1966 (Cth) together with a Notice of Filing and Hearing dated 20 November 2015. I am satisfied that these are judicial documents and that they would be served by an order of the courts of a Contracting Party (Australia). 7 The term "resident" is not defined for the purposes of Article 11. On its ordinary meaning it connotes dwelling permanently or for a considerable time (see The Macquarie Dictionary (6th ed, Macquarie Dictionary Publishers, 2013)). Although there is evidence that Mr Tschannen might return to Australia (which may mean that he remains domiciled in Australia), there is evidence that he has been living in Thailand for a year and a half. He left to "get away" from a person in Australia. He does not often have contact with his family in Australia. I am satisfied that he is resident in the Kingdom of Thailand and that documents can be served upon him by registered post under Article 11 of the Convention. 8 On the evidence before the court, Mr Tschannen was born in Australia. There is no evidence that he is a national of any other country. The proposed order will not compel a foreign national to do something in Australia on pain of punishment and discretion is not encumbered by that issue: see Clifton (Liquidator), in the matter of Solar Shop Australia Pty Ltd (In Liquidation) [2014] FCA 891 [10] (White J). 9 The Trustee discovered Mr Tschannen's address in February 2016. Subsequently, Mr Tschannen moved from there. The Trustee again located his address two days ago. An order should be made for service of the documents upon Mr Tschannen by registered mail in Thailand at the address for him currently known to the Trustee.

Rule 10.24 10 The Trustee also seeks orders for substituted service. Those orders are only sought under r 10.49 of the Federal Court Rules. In particular, the Trustee does not rely upon the general provision for substituted service in r 10.24. In the context of s 81 of the Bankruptcy Act, there is a conflict in approach between, on the one hand, the decisions of Southwell v Maladina [2002] FCA 802; (2002) 194 ALR 51 (Dowsett J) and Re Deposit Investment Co Ltd (1991) 30 FCR 463 (Lockhart J) and, on the other hand, the decision in Re Skase (1991) 32 FCR 212 (Pincus J). But in the course of resolving that issue in Southwell, Dowsett J observed at 52 [4] that the power to order substituted service in that case could not be used as a way of effecting service outside the jurisdiction in the absence of any other power to do so. 11 This principle is long standing. In 1891, the English Court of Appeal held that where the defendant was out of the jurisdiction when the writ was issued, if there could not be direct service then there could not be substituted service: Wilding v Bean [1891] 1 QB 100. In that case, the Master of the Rolls (with whom Lindley and Lopes LJJ agreed) said that the case might only be different if the defendant had left the jurisdiction to avoid service of the writ (102). The principle that the general rules of substituted service are concerned with service within the jurisdiction have been applied many times, under different versions of court rules, including by the High Court of Australia in Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310, 325. The principle may have been the reason for the existence of rules such as r 10.49 of the Federal Court Rules. It may also have been the reason for the existence of provisions in Conventions which recognise modes of substituted service as alternatives to direct service: see, for instance, the provisions of the Hague Convention described in Commissioner of Taxation v Zeitouni [2013] FCA 1011 [38], [59] (Katzmann J).

Rule 10.49 12 Rule 10.49, which is relied upon by the Trustee, provides that "if service was not successful on a person in a foreign country, in accordance with a convention … a party may apply to the Court without notice for an order" of any of the following types: (a) substituting another method of service; or (b) specifying that, instead of being served, certain steps be taken to bring the document to the attention of the person; or (c) specifying that the document is taken to have been served: (i) on the happening of a specified event; or (ii) at the end of a specified time. 13 The substituted service that is sought is service of the required documents, together with the orders for substituted service, by: 3(a) sending a copy of the First Respondent Documents together with a covering letter that states the date of the e-mail transmission by email transmission to 'warren8888@icloud.com'; (b) sending a copy of the First Respondent Documents by email transmission to Alicia Gorham at 'geesha01 @hotmail.com' together with a covering letter stating the date of the email transmission and that Ms Gorham must: i. inform the First Respondent that a copy of the First Respondent Documents are available for collection from JHK Legal; and ii. inform the First Respondent that a copy of the First Respondent Documents have been sent to 'warren8888@icloud.com' by email transmission. (c) sending a short message service (sms) message to Alicia Gorham's mobile telephone number being [Redacted] with the following message: 'Attention Ms Gorham: please be advised that pursuant to an order of the Federal Court of Australia in matter QUO 1053/2015 a Summons issued in the name of Warren Eric Tschannen has been sent by email transmission to geesha01@hotmail.com together with a covering letter to you. Please read these documents carefully. Pursuant to the Order you are required to inform Mr Tschannen that a copy of the Summons is available for collection from JHK Legal and a copy has been sent to 'warren8888@icloud.com' by email transmission. If you have any questions, please contact Alicia Auden at JHK Legal on 07 3859 4500 or alicia.auden@jhklegal.com.au'. 14 The incidental orders to the substituted service orders that are sought by the Trustee are proposed orders 5, 6, and 7 that: 5. Service is deemed effective 5 business days after service in accordance with the following paragraphs is completed: a) in respect of the First Respondent, paragraph 3(a), 3(b) and 3(c) whichever is later… 6. Service in accordance with the Order of this Honourable Court shall be deemed good and sufficient service of the First Respondent Summons … upon the First Respondent… 7. Costs of and incidental to this Application are to be paid from the Bankrupt Estate. 15 The difficulty with the orders sought for substituted service in this case is that r 10.49 requires that some attempt will have been made for service in accordance with the relevant Convention. It provides "if service was not successful on a person in a foreign country". The concept of a lack of success involves, at least, some attempt. This contrasts with the general provision in r 10.24 for substituted service which permits substituted service if "it is not practicable to serve a document on a person in a way required by these Rules" (emphasis added). 16 One reason why r 10.49 requires that steps have been taken to attempt service is principles of international comity. It would not be consistent with comity for an agreed regime to provide for a form of service outside the jurisdiction if the laws of that jurisdiction permitted a party immediately to substitute an alternative form of service. As Dixon CJ, Williams and Webb JJ remarked, if the position were 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": Laurie v Carroll [1958] HCA 4; (1958) 98 CLR 310, 325. Another reason is the importance of personal service and the need for some reason to exist before orders are made for departure from it. As the High Court observed at 323 in Laurie, service was historically closely associated with jurisdiction and it had been assumed that the foundation of jurisdiction was physical power. That historical foundation is one of the reasons for the importance of personal service. The other is its foundations in natural justice. 17 As I have mentioned, the Trustee has located Mr Tschannen in Thailand. But the Trustee has not taken any steps, based on that knowledge and any court order, to attempt service upon Mr Tschannen by any of the methods provided in the Convention: (i) by registered mail, or (ii) with the consent of the Central Authority of the other Contracting Party, through its diplomatic or consular agencies, or (iii) by an agent appointed for the purpose by the judicial authority by whom service of the document is required. An order for substituted service in this case should not be made in the absence of any evidence that any attempt has been made for personal service under any of these methods. 18 In reaching this conclusion, I have also considered whether a power might be exercised under r 1.34 to dispense with compliance with the implied requirement in r 10.49 that an attempt be made at service. I proceed on the basis that there might be instances where the power in r 1.34 could be exercised: see Deputy Commissioner of Taxation v McManus [2015] FCA 959 [13] (Pagone J). But, for the reasons I have explained, those instances are likely to be rare. One rare example might be a case where there is real urgency for service and where the evidence suggests an impossibility or serious impracticability in service by the means contemplated in the Convention. This is not such a case, even taking into account the need for the Trustee to commence the bankruptcy process and the commencement, but current delay, in the public examination.

Conclusion 19 For these reasons, although I will make an order for service out of the jurisdiction, I will not make an order for substituted service. That part of the application will, instead, be provisionally adjourned to 15 April 2016 at 10.45am. If the issue still requires determination then it may be convenient for it to be determined on the papers, including any orders sought to adjourn further the date for the examination. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.