FEDERAL COURT OF AUSTRALIA Australian Competition & Consumer Commission v Chaste Corporation Pty Ltd (in liq) (ACN 089 837 329) [2002] FCA 1183 PROCEDURE – service outside the Commonwealth – leave for service of originating application and statement of claim outside the Commonwealth – availability of substituted service Federal Court Rules O 8 r 2 Australian Securities and Investment Commission v Sweeney (No 2) (2001) 38 ASCR 743 followed AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v CHASTE CORPORATION PTY LTD (IN LIQUIDATION) (ACN 089 837 329) AND BRADDON RALPH WEBB Q 252 OF 2001 DRUMMOND J 16 SEPTEMBER 2002 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 252 OF 2001 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: CHASTE CORPORATION PTY LTD (IN LIQUIDATION) (ACN 089 837 329) FIRST RESPONDENT BRADDON RALPH WEBB SECOND RESPONDENT JUDGE: DRUMMOND J DATE OF ORDER: 16 SEPTEMBER 2002 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The applicant be granted leave to join the following persons as respondents in this proceeding: (a) Orlawood Pty Ltd (ACN 059 294 334); (b) Peter Clarence Foster; (c) Jillian Louise Foster; (d) Sean Petrie Allen Cousins; (e) Constantine Xenoudakis; (f) Kevin McMullan; (g) Ken Cooper; and (h) Stephen D'Alton. 2. The applicant be granted leave to amend the application and statement of claim in the terms of the draft amended application and draft amended statement of claim annexed hereto. 3. The applicant be granted leave to serve the amended application and amended statement of claim on Peter Foster and Jillian Foster outside of the Commonwealth. 4. The applicant may serve the amended application and amended statement of claim annexed hereto and a copy of these orders on Peter Foster and Jillian Foster by serving those documents: (a) on Sean Cousins; and (b) on Braddon Webb. 5. Each of Peter Foster and Jillian Foster are deemed to have been served with the amended application and amended statement of claim and these orders upon the happening of the last of the events referred to in paragraph 4(a) and (b) of Order 4. 6. The notice of motion in relation to pars 6, 7 and 8 be adjourned sine die, with liberty to the applicant to bring the matter back before the Court, if and when it is so advised. 7. The costs of and incidental to the notice of motion be reserved as against all of the respondents that have been ordered to be joined today. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 252 OF 2001 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT AND: CHASTE CORPORATION PTY LTD (IN LIQUIDATION) (ACN 089 837 329) FIRST RESPONDENT BRADDON RALPH WEBB SECOND RESPONDENT JUDGE: DRUMMOND J DATE: 16 SEPTEMBER 2002 PLACE: BRISBANE REASONS FOR JUDGMENT 1 I have before me a notice of motion by the Australian Competition and Consumer Commission ("the Commission") seeking to join eight additional respondents to the proceedings. The proceedings brought by the Commission allege that Chaste Corporation Pty Ltd ("Chaste") contravened the Trade Practices Act 1974 (Cth) ("the Act") in a number of respects in relation to the business carried on from October 1999 to September 2001 in Australia. This business consisted of the marketing of a weight loss product called TRIMit. The evidence is that Chaste's business was confined to Australia. 2 Chaste was wound up in December 2001. The liquidators do not oppose the motion: see exhibit 1 made 16 September 2002. The principals of Chaste were the second respondent, Mr Webb, through his company, Orlawood Pty Ltd, one of the entities now sought to be joined, Mr Peter Foster and Ms Jillian Foster. Those three entities, together with the other five persons named in par 1 of the motion, are sought to be joined on the basis that they were each involved in the various contraventions of the Act by Chaste within the meaning of s 75B(1) of the Act. 3 The proposed amended statement of claim outlining the case sought to be made against the proposed new respondents is such as to indicate that, save in relation to Mr Foster, Ms Foster, and Mr Ken Cooper, the joinder and pleading amendments sought should be allowed. The position in relation to the Fosters and Mr Cooper is complicated, because they appear, on the material before me, not to be within Australia. 4 The Commission has asked that I adjourn the motion so far as it relates only to an application for leave to serve Mr Cooper outside the Commonwealth and so far as it seeks an order for substituted service of the amended application and amended statement of claim on Mr Cooper, ie, that I should adjourn pars 6 and 7 of the motion. I was informed from the bar table that the Commission has an expectation that it will be able to serve Mr Cooper within Australia. The motion in relation to pars 6, 7 and related par 8 will therefore be adjourned sine die, with liberty to the Commission to bring the matter before me, if and when it is so advised. 5 So far as leave to serve Mr and Ms Foster is concerned, as sought by par 3 of the motion, O 8 r 2 the Federal Court Rules provides that: "(2) The Court may, by order, give leave to serve originating process outside the Commonwealth in accordance with Division 2 or 3 of this Order or, subject to subrule (2B), on such terms and conditions as it considers appropriate, if the Court is satisfied that: (a) the Court has jurisdiction in the proceeding; and (b) rule 1 applies to the proceeding; and (c) the party seeking leave has a prima facie case for the relief sought by the party in the proceeding." 6 I am satisfied that O 8 r 2 (2)(a) is satisfied in relation to the proceedings intended to be brought against Mr and Ms Foster. As I have said, the evidence before me indicates that the basis for the claims made against Mr and Ms Foster is that they are each involved in contraventions of various provisions of the Trade Practices Act alleged to have been committed within Australia by Chaste. The Court plainly has jurisdiction in such a proceeding. 7 I am also satisfied that the proceedings intended to be brought against Mr Foster and Ms Foster are within O 8 r 1 (a) and (b), given the nature of the case sought to be made out against them to which I have already referred. I am also satisfied that the proceedings intended to be brought against the Fosters are within O 8 r 1 (j), an injunction being sought against Chaste and the Fosters to restrain conduct in the future of the kind which is the subject matter of the case sought to be made out now against Chaste. Order 8 r 2(b) is therefore satisfied. 8 I am also satisfied that on the material before me, particularly the affidavit of Mr DC Johnson filed 23 August 2002 ("Mr Johnson's affidavit"), there is a prima facie case against each of the Fosters in respect of the claims sought to be made against them by the proposed amended proceedings, a prima facie case, that is, to the relatively low level of cogency required for the purposes of O 8 r 2 (2)(c). 9 I will therefore make an order in terms of par 3 of the motion. 10 The Commission also seeks an order for substituted service of the amended application and amended statement of claim on each of the Fosters by serving the documents on four named persons and by serving the documents by e-mail to the particular e-mail address set out in par 4 of the motion. 11 I was referred to the decision of Austin J in Australian Securities and Investments Commission v Sweeney (No 2) (2001) 38 ACSR 743, where his Honour, in effect, held that so long as leave can be obtained to serve a respondent out of the jurisdiction, once such leave has been obtained, the Court's discretion to order service pursuant to such leave by substituted service is enlivened. It is on that basis that I will consider the evidence before me as to whether service on any of the named repositories of the amended application and amended statement of claim will be likely to come to the attention of each of the Fosters. 12 Firstly, service is sought by par 4(a) of the motion by delivering the documents to a Mr Sean Cousins, one of the people to be joined as a respondent in the proceedings. Mr Cousins is a barrister. He has, in fact, appeared in earlier proceedings in the present action on behalf of Mr Webb. I have been told from the bar table that Mr Cousins remains in legal practice on the Gold Coast. The evidence before me in Mr Johnson's affidavit indicates that over a period of some years, Mr Cousins has acted as the legal representative for Mr Foster, if not Ms Foster also. I do not, however, regard that evidence as sufficient to justify a finding that service of the amended proceedings on Mr Cousins is likely for that reason to come to the attention of Mr Foster, let alone Ms Foster. There is an absence of any evidence indicating that Mr Cousins, at the moment, has a retainer of the kind from each of the Fosters that would enable a Court to be satisfied that the retainer would require Mr Cousins to inform the Fosters of delivery of the documents contemplated by the Commission on him, by way of substituted service on the Fosters. 13 However, the material goes beyond showing that Mr Cousins has only had a legal retainer from the Fosters. The material indicates that during the period that Chaste operated, Mr Cousins' involvement went beyond that of retained lawyer, and amounted to an involvement in the business activities of Chaste. The evidence is dealt with at par 36(b), (c) and (d) of Mr Johnson's affidavit. The exhibit referred to in sub-par (d) has Mr Cousins giving Mr Webb what appears to be some tactical business advice, as opposed to legal advice, in relation to planned operations by Chaste in New Zealand, and it concludes with Mr Cousins saying: "Bearing in mind my role last year as Manager during the initial phase I suspect I have probably a lot of useful information and advice for them [ie, the New Zealand people] as well. I managed the operation from its virtual inception to launch." 14 The letter is dated over a year ago, 18 June 2001. But it, with the other information before me, indicates the existence of such an involvement by Mr Cousins at a business level in the activities of Chaste that I think makes it likely that delivery of the material to Mr Cousins will come to the notice of the Fosters. 15 Secondly, by par 4(b) of the motion, substituted service is sought by e-mailing the documentation in question to a particular e-mail address. The evidence indicates that it is an e-mail address used by Mr Peter Foster. There is no suggestion, however, that Ms Foster has any connection with this particular e-mail address. The difficulty, it seems to me, with making an order for substituted service by delivery of the material by e-mail to that particular address is that the evidence as to its usage is confined to one e-mail sent from this particular address as long ago as August 2001 to an employee of Chaste asking her to transfer about $13,000 in funds to: "Peter C. Foster (External Account) Account No. 1426663 Colonial National Bank Lautoka, Fiji Branch Details: 662 466 (0010)" 16 Not only is that the sum total of the evidence put before me that service by delivery to that particular e-mail address is likely to come to the notice of the Fosters, but there is no evidence to indicate that it was acted on, which might give the Court some little further assurance that e-mail service to that address would be likely to come to the notice of at least Mr Foster. As I have said, there is nothing to indicate that Ms Foster has any connection with that e-mail address, or that delivery of service copies intended for her to that e-mail address would be likely to come to her attention. 17 Thirdly, substituted service is also sought by par 4(c) of the motion on a Mr Michael McInnes, who is a solicitor on the Gold Coast. The evidence indicates that he had a retainer, subject to certain limitations, from the Fosters. But for the same reasons that I would not have been prepared to order substituted service on Mr Cousins, if the evidence indicated only that his relationship with the Fosters was one of retained legal adviser, I am not prepared to accept that delivery of the material to Mr McInnes would be likely to come to the notice of the Fosters. 18 Fourthly, by par 4(d) of the motion, substituted service is sought by delivery of the material to Mr Webb. The evidence indicates that the shares in Chaste were held in the following way: one share was held by The World Marketing Trust, of which Mr and Ms Foster were beneficiaries, and the other share was held by Orlawood Pty Ltd beneficially for Mr Webb, the second respondent. 19 Mr Webb is presently resident in Townsville. There is an old e-mail dated 25 March 2001 from an e-mail address which the evidence indicates was used by Mr Foster in Fiji. By this e-mail, it appears that Mr Foster gave Mr Webb his up-to-date contact details. Given the business relationship between Mr Webb and Mr and Ms Foster in respect of Chaste's activities and this e-mail, which indicates, not surprisingly, that Mr Foster has, on at least one occasion, ensured that Mr Webb was kept informed of where he could be contacted, I am prepared to accept that if the material in question is delivered to Mr Webb it is likely to come to the attention of both his business associates in Chaste, Mr and Ms Foster. 20 Finally, by par 4(e), substituted service of the material is sought by delivery of the material on a Ms Gael Chudleigh. The material is confined to par 40 of Mr Johnson's affidavit. In my opinion, it falls a long way short of being sufficient to satisfy the Court that delivery of the material to her will be likely to come to the attention of both Mr and Ms Foster. 21 I will therefore make an order for substituted service on Mr and Ms Foster in terms of par 4(a) and (d) of the motion. In view of O 8 r 2 and the evidence before me, it is appropriate to make an order in terms of par 5 of the motion, so far as each of Peter Foster and Jillian Foster are deemed to have been served with the amended application and amended statement of claim, and these orders, upon the happening of the last of the events referred to in paragraph 4(a) and (d) of the notice of motion. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond. Associate: Dated: 23 September 2002 Counsel for the Applicant: Mr S Couper QC and Ms M Brennan Solicitor for the Applicant: Australian Government Solicitor Solicitor for the Second Respondent: There was no appearance. Date of Hearing: 16 September 2002 Date of Judgment: 16 September 2002