FEDERAL COURT OF AUSTRALIA Australian Competition & Consumer Commission v Kokos International Pty Ltd [2007] FCA 2035 PRACTICE AND PROCEDURE – service – substituted service – order for leave to serve out of jurisdiction – service out of jurisdiction unable to be effected – mother and sister living in jurisdiction – co-directors of company with proposed respondent – solicitors instructed by company and mother and sister – proposed respondent entering and re-entering jurisdiction – substituted service by delivery to mother's address - copy to solicitors for company Laurie v Carroll (1958) 98 CLR 310 cited Australian Securities and Investments Commission v Sweeney (No 2) (2001) 38 ACSR 743 cited Australian Competition & Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2002] FCA 1183 cited Mercator Property Consultants Pty Ltd v Christmas Island Resort Pty Ltd [1998] FCA 1150 cited The Swan Brewery Co Ltd v Atlee [1998] FCA 277 cited Commissioner of Taxation v Ma (1992) 92 FCR 569 cited AUSTRALIAN COMPETITION & CONSUMER COMMISSION v KOKOS INTERNATIONAL PTY LTD (ACN 009 404 611), CHUL WOO KIM, IAE EDU NET PERTH PTY LTD (ACN 109 963 304), YOUNG GIL PAE, SANG-HONG JUNG T/A NANURI EDUCATION CENTRE (BN 088 22 876), REBEKAH CABALT AND STUDY OVERSEAS NOW PTY LTD WAD312 OF 2006 FRENCH J 18 DECEMBER 2007 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD312 OF 2006 BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION Applicant AND: KOKOS INTERNATIONAL PTY LTD (ACN 009 404 611) First Respondent CHUL WOO KIM Second Respondent IAE EDU NET PERTH PTY LTD (ACN 109 963 304) Third Respondent YOUNG GIL PAE Fourth Respondent SANG-HONG JUNG T/A NANURI EDUCATION CENTRE (BN 088 22 876) Fifth Respondent REBEKAH CABALT Sixth Respondent STUDY OVERSEAS NOW PTY LTD Seventh Respondent JUDGE: FRENCH J DATE OF ORDER: 18 DECEMBER 2007 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. Service on Seow Bing Yeo of: (a) the notice of motion dated 6 August 2007; (b) the affidavit of Bianca Sumner sworn 6 August 2007; and (c) any orders made by the Court on 17 August 2007 in Japan through the diplomatic channel be dispensed with. 2. A copy of the notice of motion dated 6 August 2007, the affidavit of Bianca Sumner sworn 6 August 2007, the orders made by the Court on 17 August 2007 and a copy of these orders be served on Seow Bing Yeo on or before 30 December 2007 by: (a) personal service on any person apparently over the age of 18 years at 2/15 Evelyn Street, Gosnells, Western Australia 6110; or (b) leaving them in the letterbox of 2/15 Evelyn Street, Gosnells, Western Australia 6110. 3. Service in accordance with either Order 2(a) or 2(b) of this order shall be deemed good and sufficient service of the documents referred to in Order 2 on Seow Bing Yeo. 4. The documents referred to in Order 2 shall be deemed to be served on Seow Bing Yeo seven days after service in accordance with either Order 2(a) or 2(b) of this Order. 5. A copy of the notice of motion, the affidavit of Bianca Sumner sworn 6 August 2007, the orders made by the Court on 17 August 2007 and a copy of these orders be delivered to Messrs Bowen Buchbinder Vilensky, Solicitors at 14th Floor, 251 Adelaide Terrace, Perth. 6. The return date for the motion for joinder of Mr Seow Bing Yeo to be 4 February 2008 at 9.30 am. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD312 OF 2006 BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION Applicant AND: KOKOS INTERNATIONAL PTY LTD (ACN 009 404 611) First Respondent CHUL WOO KIM Second Respondent IAE EDU NET PERTH PTY LTD (ACN 109 963 304) Third Respondent YOUNG GIL PAE Fourth Respondent SANG-HONG JUNG T/A NANURI EDUCATION CENTRE (BN 088 22 876) Fifth Respondent REBEKAH CABALT Sixth Respondent STUDY OVERSEAS NOW PTY LTD Seventh Respondent JUDGE: FRENCH J DATE: 18 DECEMBER 2007 PLACE: PERTH REASONS FOR JUDGMENT ON MOTION FOR SUBSTITUTED SERVICE 1 On 1 November 2006 the Australian Competition and Consumer Commission (the ACCC) commenced proceedings against Kokos International Pty Ltd (Kokos), Chul Woo Kim, IAE EDU Net Perth Pty Ltd (IAE), Young Gil Pae, Sang-Hong Jung and Rebekah Cabalt. The application sought pecuniary penalties, injunctions and other orders against the various respondents pursuant to ss 76, 80 and 86C of the Trade Practices Act 1974 (Cth) (the Act) and under the Competition Policy Reform (Western Australia) Act 1996. In addition declaratory relief was sought against the various respondents. The application alleged contraventions of s 45 of the Act and/or of the Competition Code (WA) (the Code). The contravention was said to involve price fixing in the provision of educational consultancy services to overseas students of Korean origin. 2 The corporate respondents and Sang-Hong Jung are each said to have been in the business of providing educational consultancy services to students of Korean origin. These services involved providing information to students about courses in secondary and tertiary education institutions in Western Australia and arranging for their enrolment at the institutions of their choice. The respondents were remunerated by commissions paid by the institutions. These were paid by remitter after payment of the relevant tuition fee or by permitted deduction from a tuition fee collected for the students and sent to the institution. 3 The corporate respondents and Ms Jung are said to have made oral and written agreements in 2004 and 2005 under which they agreed not to offer or to accept discounted tuition fees. Any party to the agreement that offered or agreed to accept a discounted tuition fee would be referred to a "Counsel of Korean Agency" comprising representatives of each of the parties to the agreement. Such party would be banned from enrolling students in the relevant institution for a period of three months. It is alleged that copies of the written agreement were sent to a number of educational institutions. The conduct of the corporate respondents and Ms Jung is said to have been in contravention of s 45 of the Act and the Code. The other natural person respondents are said to have been involved in the contraventions. 4 Since the proceedings commenced Study Overseas Now Pty Ltd (Study Overseas Now) has been joined as a respondent. On 17 August 2007 an order was made giving the ACCC leave to serve on Mr Seow Bing Yeo, a director of that company, a notice of motion seeking his joinder, such service to be effected out of the jurisdiction in Japan through a diplomatic channel. There was evidence that Mr Yeo was working in Japan on a three year working visa. 5 The first to fourth respondents appear to have reached substantial agreement with the ACCC as to the disposition of the proceedings. Statements of agreed facts and joint submissions have been filed along with proposed consent orders. The solicitors for the fifth and sixth respondents have ceased to act for them. The fifth respondent, Sang-Hong Jung, is now apparently out of the jurisdiction. The sixth respondent, Ms Cabalt, is unrepresented. 6 On 27 November 2007 the ACCC filed a motion seeking the following orders: 1. Service on Seow Bing Yeo of: (a) the Notice of Motion dated 6 August 2007; (b) the affidavit of Bianca Sumner sworn 6 August 2007; and (c) any orders made by the Court on 17 August 2007 in Japan through the diplomatic channel be dispensed with. 2. A copy of the Notice of Motion dated 6 August 2007, the affidavit of Bianca Sumner sworn 6 August 2007, the orders made by the Court on 17 August 2007 and a copy of these orders be served on Seow Bing Yeo on or before 6 December 2007 by: (a) personal service on any person apparently over the age of eighteen years at 2/15 Evelyn Street, Gosnells, Western Australia 6110; or (b) leaving them in the letterbox of 2/15 Evelyn Street, Gosnells, Western Australia 6110. 3. Service in accordance with either Order 2(a) or 2(b) of this Order shall be deemed good and sufficient service of the documents referred to in Order 2 on Seow Bing Yeo. 4. The documents referred to in Order 2 shall be deemed to be served on Seow Bing Yeo 7 days after service in accordance with either Order 2(a) or 2(b) of this Order. 5. Such further or other orders, directions and relief as may be necessary or as the Court deems fit. 7 A number of affidavits were relied upon in support of the order for substituted service. They were: (i) Affidavits of Bianca Sumner, one sworn on 26 November 2007 and two on 14 December 2007. (ii) Affidavit of Hilary Frances Shanks sworn 26 November 2007. For the purposes of the motion, I find the following facts based upon the affidavit evidence. 8 The Department of Foreign Affairs and Trade has advised the ACCC that it would require an address for service or at least a location or vicinity of a person to be served in Japan on an application for service in that country. Neither the Department nor the Australian Embassy in Japan was able itself to make any inquiries on behalf of the ACCC to that end. No assistance was able to be provided by the Japanese Fair Trade Commission. 9 Despite their inability to obtain an address for service of Mr Yeo in Japan, officers of the ACCC have had a number of telephone conversations with him. An extended voluntary interview was conducted by telephone on 9 June 2006. Further telephone conversations took place on 19 and 27 September 2007 and 30 November 2007. 10 It is clear that Mr Yeo is aware of these proceedings and of the fact that the ACCC wishes to seek to join him as a respondent. In the course of his conversation with Mr Hilton of the ACCC on 27 September 2007 he asked what would happen if he were not served. He asked if he were right to assume that nothing would happen. Mr Hilton told him that he was correct but that the ACCC would keep the matter open until he was served. Mr Yeo refused to provide an address for service of process on him. He had instructed Perth-based solicitors Bowen Buchbinder & Vilensky to act for the company, Study Overseas Now. 11 On 30 November 2007 Mr Yeo told Mr Hilton by telephone that he was still consulting with his solicitors on the question of service. He said as soon as he had any information he would contact the ACCC. He also told the ACCC in an earlier telephone conversation that it was his intention to come back to Australia "in the near future". 12 As appeared from the initial conversation with Mr Yeo in 2006, Mr Yeo was instrumental in establishing the business of Study Overseas Now in Western Australia. He was a director along with his mother, Ms Patricia Yeo, and his sister, Ms Belinda Yeo. An incoming passenger card which Patricia Yeo completed in April 2006 showed her address in Perth as Unit 2, No 15 Evelyn Street, Gosnells. The address to which Belinda Yeo returned was an address in Bibra Lake. A letter was sent to each of them by the ACCC at their addresses on 10 April 2007. The letters elicited a letter in reply dated 20 April 2007 from Bowen Buchbinder & Vilensky who said they were acting for the two women. On 6 August 2007 the solicitors also said they had received instructions to accept service of the joinder application on behalf of Study Overseas Now. They said they did not act for and had no instructions to accept service on behalf of Mr Yeo. 13 On 7 August 2007 the solicitors for the ACCC wrote to Bowen Buchbinder & Vilensky asking if they would provide a current address for Mr Yeo. The solicitors replied, asserting, notwithstanding that they did not act for Mr Yeo, that the ACCC was "estopped" from joining Mr Yeo to the proceedings. There was more rhetoric than law in that statement but it was indicative of a degree of concern for Mr Yeo's interests. 14 It appears from incoming passenger cards that Mr Yeo has departed and re-entered Australia on more than one occasion in the past year. 15 Order 7, r 9 of the Federal Court of Australia Rules (the Rules) provides: (1) Where for any reason it is impractical to serve a document in the manner set out in the Rules, the Court may by motion in an existing proceeding made ex parte order 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 to be served. (2) Where the Court makes an order under sub-rule (1), the Court may order that the document be taken to have been served on the happening of any specified event, or on the expiry of any specified time. 16 Order 8, which provides for service outside Australia, contains a specific provision for substituted service in O 8, r 7. That rule applies where an official certificate or declaration is sent to the Court by a government or a court of a foreign country stating that attempts to serve a document on a person in that country in accordance with a convention or through the diplomatic channel have not been successful. In that event the Court may order such steps be taken as are specified in its order for the purpose of bringing the document to the notice of the person to be served. 17 The threshold condition upon the exercise of the power to order substituted service is that set out in O 7, r 9 namely that "for any reason it is impractical to serve a document in the manner set out in the Rules". The mechanisms for service set out in the Rules cover a number of ways of effecting service including personal service or service by prepaid mail to the last known address of the party to be served. There is also a deemed service of originating process where the respondent files an appearance or defence or appears in court. 18 There is authority for the proposition that an order for substituted service cannot be made in respect of a party outside the jurisdiction where leave has not been granted to serve that party out of the jurisdiction. There is, however, authority for the proposition that where such leave has been granted and service out of the jurisdiction cannot be effected, then an order for substituted service may be made. I do not consider that substituted service under O 7, r 9 is precluded by the provisions of O 8, r 7 which operates where there is an official notification that attempts to serve a document on a person in a foreign country have not been successful. In the present case, although the ACCC is aware that Mr Yeo has been in Japan on a three year working visa, it has been unable to obtain an address at which he can be served. In the circumstances it is not practical to attempt to effect service. In that circumstance it does not seem that O 8, r 7 has application. This leaves open the possibility of resort to the more general provisions of O 7, r 9. 19 There is authority for the proposition that no order for substituted service should be made in relation to a person out of the jurisdiction who has not been the subject of an order for leave to serve out of the jurisdiction: Laurie v Carroll (1958) 98 CLR 310 at 329. 20 The ACCC submitted that an order for substituted service can be made against a defendant who was out of the jurisdiction when the proceedings were issued but in relation to whom an order for service out of the jurisdiction has, or could have, been made. At this point the document to be served on Mr Yeo is a motion for his joinder. It is not the originating process itself. 21 In Australian Securities and Investments Commission v Sweeney (No 2) (2001) 38 ACSR 743, Austin J referred to what the High Court said in Laurie 98 CLR 310 and in particular a passage in which the Court stated at 333-334: In all these circumstances the substance of the matter was that, unless the case could be brought within O XI or the Service and Execution of Process Act, a contingency that must have appeared very dubious, the Supreme Court by ordering substituted service was really asserting a jurisdiction over the defendant Laurie which otherwise it could not possess … 22 Austin J in Sweeney (No 2) 38 ACSR 743 referred to the passage quoted in the High Court and said: In this passage their Honours acknowledged the proposition that substituted service cannot be ordered if direct personal service is not available in the circumstances – and the corollary, that if under the rules direct personal service could have been effected, although the defendant was outside the jurisdiction, then substituted service is also permissible. 23 Sweeney (No 2) 38 ACSR 743 was applied by Drummond J in Australian Competition & Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2002] FCA 1183. 24 I also have regard to the observations of Nicholson J in Mercator Property Consultants Pty Ltd v Christmas Island Resort Pty Ltd [1998] FCA 1150 and The Swan Brewery Co Ltd v Atlee [1998] FCA 277. See also Commissioner of Taxation v Ma (1999) 92 FCR 569 where Emmett J observed that where respondents are out of Australia it is not appropriate to consider an order under O 7, r 9 for substituted service unless some leave is at least obtained to serve the proceedings outside the jurisdiction pursuant to O 8. 25 In this case Mr Yeo's mother and sister have addresses in Perth. Their solicitors have, in the course of correspondence with the ACCC, made an observation directed to the protection of Mr Yeo's interest. The same solicitors have acted for the company of which Mr Yeo, his mother and his sister were co-directors or for which they worked. In the circumstances, in my opinion, service of the notice of motion by delivery to the mother's address in Gosnells is likely to bring the motion to Mr Yeo's attention. I am also of the view, that as a practical matter, service on the solicitors would be likely to yield the same result. Mr Yeo has entered and re-entered Australia from time to time over the last two years and has been in contact with the ACCC. He has declined to cooperate with the ACCC by providing an address for service. In my opinion this is a case in which the orders sought on the motion should be made. I will direct also that a copy of the order be given to the solicitors albeit they are not instructed to represent Mr Yeo. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 18 December 2007 Counsel for the Applicant: Mr W Keane Solicitor for the Applicant: Corrs Chambers Westgarth Date of Hearing: 29 November 2007 Date of Written Submissions: 11 December 2007 Date of Judgment: 18 December 2007