Warner v Hung, in the matter of Bellpac Pty Ltd

Interlocutory Hearing 4. The hearing of the Interlocutory Process filed 7 December 2012, so far as it relates to the sixth, ninth and eleventh defendants, be stood over to not before 9.30 am on 12 March 2013. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1063 of 2012

BETWEEN: ANTHONY JOHN WARNER AND STEVEN KUGEL IN THEIR CAPACITIES AS JOINT AND SEVERAL LIQUIDATORS OF BELLPAC PTY LIMITED (RECEIVERS AND MANAGERS APPOINT) (IN LIQUIDATION) ACN 101 713 017

BELLPAC PTY LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 101 713 017

AUSTCORP INTERNATIONAL LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 003 132 090

CHJARAT NRE COKING COAL LIMITED (FORMERLY KNOWN AS GUJARAT NRE MINERALS LIMITED)

JUDGE: GRIFFITHS J DATE: 18 FEBRUARY 2013 PLACE: SYDNEY

Introduction 1 The Court has before it interlocutory applications seeking leave to serve an originating application and other materials by way of substituted service in respect of one defendant in these proceedings which I will briefly describe. An application is also made for leave to serve an originating application in respect of another defendant outside Australia under rule 10.43. 2 The proceedings have a rather complicated background. The subject matter of the proceedings is a contest as to the beneficial ownership of certain convertible bonds which were originally issued to a company, Bellpac Pty Ltd (Bellpac), which is now in liquidation. The convertible bonds were originally issued to Bellpac by a company formerly called Gujarat NRE Minerals Limited (now call Chjarat NRE Coking Coal Limited). There was then a series of purported transfers of the convertible bonds to various other companies and/or individuals. The general background facts to the matter were described by Emmett J on 30 September 2012 in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (No 2) [2012] FCA 1123. Emmett J's decision is currently under appeal and the appeal is to be heard shortly, as I understand it. 3 As I believe the facts to be, there is a total of some $10 million worth of convertible bonds that are in dispute. Emmett J's decision dealt directly with only $2 million worth of those bonds. The applications before me today relate to only two of the 14 defendants in the current proceedings which were commenced by way of an originating process filed in the Court on 27 July 2012. The two defendants in question are Mr Alfred Wong, who is the third defendant, and a Mr Osmond Kwok, who is the eighth defendant. I shall deal first with the application in respect of Mr Wong, which is an application made under rule 10.24 for substituted service in respect of Mr Wong.

Mr Alfred Wong 4 Mr Wells, who appeared for the liquidators, relied upon two affidavits sworn by his instructing solicitor. The first is an affidavit of Mr Breene sworn 7 December 2012, which also had a lengthy exhibit to it, which became exhibit A on the interlocutory application. Mr Breene's second affidavit is an affidavit sworn 18 February 2013. Unlike Mr Kwok, Mr Wong was a party in the proceedings before Emmett J. I was taken to a series of correspondence either sent to or received from Mr Wong relating to those earlier proceedings before Emmett J. 5 It is evident that Mr Wong has, in various correspondence about those proceedings, used an email address which is alfred@greatpacific.com.au, and has also used a Sydney post office box address, which is GPO Box 3364, Sydney, New South Wales 2001. One or other of those contact addresses has been used in relation to Mr Wong as recently as 29 October last year. I am satisfied on the basis of the material to which I have been taken that if leave were granted under rule 10.24 and the relevant materials were sent to Mr Wong at both his email address and also at his GPO address, that material is likely to come to his attention. The question then arises as to, whether for the purposes of r 10.24, the liquidator has established that it is not practicable to serve the relevant documents on Mr Wong in the manner specified in r 10.1 of the Federal Court Rules 2011. 6 Mr Breene deposes in the first of his affidavits that in May last year, after posting a letter to Mr Wong, he received an unopened envelope which had marked on it that the recipient had moved overseas. He further says that he is unaware, as at the date of swearing of his affidavit, of any address at which Mr Wong may be personally served. As I have indicated, however, there is evidence which demonstrates that communication has successfully been achieved with Mr Wong as recently as late October last year by using his email address. It would appear on the basis of the evidence that that means of service, together with posting the material to the GPO address, are practicable ways of achieving service in circumstances where, as matters stand at the moment, personal service cannot reasonably be effected. 7 I am therefore prepared to make an order under r 10.24 that the originating process can be served on the third defendant, Mr Wong, by way of forwarding to Mr Wong a copy of that originating process together with the two affidavits of Mr Breene relied on in support of this application, together with a copy of the court's orders and a copy of these reasons. 8 I am also prepared to accept that upon service being effected in the manner that I have described above, namely by way of email and by way of posting the material to the GPO box number, that those documents will be taken to be served upon Mr Wong once there has been compliance with those requirements.

Mr Osmond Kwok 9 I turn now to deal with Mr Kwok, who is the eighth defendant in the proceedings and is in a different position to Mr Wong, primarily because it is believed that Mr Kwok resides in Hong Kong. Accordingly, as I have indicated, the liquidators seek an order under r 10.43 for service of the originating application outside Australia. I am satisfied that the relevant requirements of that rule have been established to my satisfaction, in particular, I consider that Mr Breene's first affidavit adequately identifies the name of the foreign country where Mr Kwok is to be served, namely, Hong Kong. And I am also satisfied that the proposed method of service is one which is authorised under the relevant laws applying to the service of an originating process in Hong Kong. Those requirements set out in order 10 of the Rules of the High Court 1988 (Hong Kong). 10 Order 10 is headed Service Of Originating Process and its general provisions set out in subrule 1 of order 10 require that a writ must be served personally on each defendant by the plaintiff or his agent. Then, in subrule 2, provision is made for there to be service of a writ on a defendant within the jurisdiction by sending a copy of the writ by registered post to the defendant at his usual or last known address or if there is a letterbox for that address, by inserting through the letterbox a copy of the writ enclosed in a sealed envelope addressed to the defendant. 11 There are additional and important requirements imposed by r 10.43(4) of the Federal Court Rules 2011. This rule requires, first, that if leave is to be granted to serve an application outside the jurisdiction, the Court needs to be satisfied that the Court has jurisdiction in the proceeding. Secondly, that the proceeding is of a kind mentioned in r 10.42 and, thirdly, that the party has a prima facie case for all or any of the relief claimed in the preceding. I am satisfied that the Court has jurisdiction in the proceeding, particularly by reference to the overlap between the facts and matters agitated in these proceedings and those which arose and were the subject of determination by Emmett J in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (No 2) [2012] FCA 1123, in which, as I have already noted, Mr Wong was a party, although Mr Kwok was not. I also am satisfied that the proceedings the subject of the originating application fall within r 10.42 as they fall within items 6(b) and 14. 12 That then brings me to the requirement that the applicant demonstrate under r 10.43 that it has a prima facie case for all or any of the relief claimed in the proceeding. In my view, that requirement is also satisfied in circumstances where the liquidators are seeking to impugn the title which Mr Kwok may assert he has in the bonds against a background of the findings of Emmett J to the effect that the purported transfers of the bonds from Bellpac to Shan Pei Investment Limited were ineffectual and also the subsequent purported transfer of the bonds from Shan Pei Investment Limited to Mr Wong were ineffectual. Mr Kwok is an alleged transferee downstream from Mr Wong. His entitlement to the bonds will necessarily turn on whether it will be demonstrated that Mr Wong had title to make those transfers. 13 As I have already indicated, Emmett J has made findings which say that those transfers were ineffectual and while it is true that Emmett J's decision is currently on appeal, I am satisfied for the immediate purposes of this application that the applicant has demonstrated that there is a prima facie case of an entitlement to relief sufficient to warrant an order for service outside the jurisdiction. Accordingly, for all those reasons, I am prepared to make an order under r 10.43(2) that the applicants be granted leave to serve the originating process in these proceedings on the eighth defendant, Mr Kwok, in the Hong Kong Special Administrative Region of the People's Republic of China, such service to be effected in accordance with order 10 of the Rules of the High Court 1988 (Hong Kong). 14 I believe it is also appropriate that I make an order that not only should service of the originating process occur in accordance with order 10 of the Rules of the High Court 1988 (Hong Kong) but that service should also be made in that matter in respect of the affidavits of Mr Breene relied upon for this application, together with a copy of my orders and a copy of these extempore reasons. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.