FEDERAL COURT OF AUSTRALIA Caason Investments Pty Limited v Cao [2012] FCA 1502 Citation: Caason Investments Pty Limited v Cao [2012] FCA 1502 Parties: CAASON INVESTMENTS PTY LIMITED v SIMON XIAO FAN CAO, CHARLES MAO, LARRY MARSHALL, GEORGE SYCIP, JI RAN LAURIE KAN, IAN RICHARD NEAL and ANTHONY JOHN SURTEES File number: NSD 1558 of 2012 Judge: EMMETT J Date of judgment: 18 December 2012 Legislation: Australian Securities and Investments Commission Act 2001 (Cth) Corporations Act 2001 (Cth) Federal Court of Australia Act 1976 (Cth), Part IVA Federal Court Rules 2011 (Cth) rr 10.42, 10.43 Date of hearing: 18 December 2012 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 8 Counsel for the applicant: EAJ Hyde Solicitor for the applicant: Piper Alderman Counsel for the respondents: The respondents did not appear IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1558 of 2012 BETWEEN: CAASON INVESTMENTS PTY LIMITED Applicant AND: SIMON ZIAO FAN CAO First Respondent CHARLES MAO Second Respondent LARRY MARSHALL Third Respondent GEORGE SYCIP Fourth Respondent JI RAN LAURIE KAN Fifth Respondent IAN RICHARD NEAL Sixth Respondent ANTHONY JOHN SURTEES Seventh Respondent JUDGE: EMMETT J DATE OF ORDER: 18 DECEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. This application be heard instanter. 2. Pursuant to rules 10.42, 10.43 and 10.44 of the Federal Court Rules 2011 (Cth): a. Leave be granted to the Applicant to serve the Originating Application, Statement of Claim, Genuine Steps Statement, this Interlocutory Application and the affidavit of Amanda Kim Banton sworn on 17 December 2012 (collectively, the Documents) on the First Respondent in the United States of America by making an application for a request for service of the Documents to the Registrar, in the Registrar's capacity as a forwarding authority under the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. b. Leave be granted to the Applicant to serve the Documents on the Second Respondent in the United States of America by making an application for a request for service of the Documents to the Registrar, in the Registrar's capacity as a forwarding authority under the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. c. Leave be granted to the Applicant to serve the Documents on the Third Respondent in the United States of America by making an application for a request for service of the Documents to the Registrar, in the Registrar's capacity as a forwarding authority under the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. d. Leave be granted to the Applicant to serve the Documents on the Fourth Respondent in the United States of America by making an application for a request for service of the Documents to the Registrar, in the Registrar's capacity as a forwarding authority under the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. e. Leave be granted to the applicant to serve the Documents on the Fifth Respondent in the Special Administrative Region of Hong Kong, the People's Republic of China, by making an application for a request for service of the Documents to the Registrar, in the Registrar's capacity as a forwarding authority under the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. THE COURT DIRECTS 3. The applicant to notify all respondents of the return date of Friday, 22 February 2013 at 9:30 am for first directions. 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 1558 of 2012 BETWEEN: CAASON INVESTMENTS PTY LIMITED Applicant AND: SIMON ZIAO FAN CAO First Respondent CHARLES MAO Second Respondent LARRY MARSHALL Third Respondent GEORGE SYCIP Fourth Respondent JI RAN LAURIE KAN Fifth Respondent IAN RICHARD NEAL Sixth Respondent ANTHONY JOHN SURTEES Seventh Respondent JUDGE: EMMETT J DATE: 18 DECEMBER 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This proceeding has been brought by the applicant, Caason Investments Pty Limited (Caason), as a representative party under Part IVA of the Federal Court of Australia Act 1976 (Cth). The group members to whom the proceeding relates are persons who acquired interests in the shares issued by Arasor International Limited (Arasor) in reliance upon representations made by the respondents to the proceeding and have suffered loss or damage by reason of the wrongful conduct of the respondents. The respondents to the proceeding are seven individuals, one of whom continues to be a director of Arasor. The others were directors of Arasor at the time when the false and misleading representations were said to have been made. 2 Caason has applied by interlocutory application filed today for leave under the Federal Court Rules 2011 (Cth) for the originating application, statement of claim, genuine step statement, the interlocutory application and the affidavit in support to be served on five of the respondents who reside outside of Australia. Four of them are believed to reside in the United States of America and the fifth is believed to reside in the Special Administration Region of Hong Kong. 3 Under r 10.43(1), service of an originating application on a person in a foreign country is effective for the purpose of a proceeding only if the Court has given leave under r 10.43(2) before the application is served, the Court confirms the service under r 10.43(6), or the person served waives any objection to the service. Under r 10.43(2), a party may apply to the Court for leave to serve an originating application on a person in a foreign country in accordance with the Hague Convention or the law of the foreign country. Under r 10.43(3), that application must be accompanied by an affidavit stating the name of the foreign country where the person to be served is, or is likely to be, the proposed method of service and that the proposed method of service is relevantly permitted by the Hague Convention, if the Hague Convention applies. Under r 10.43(4), the party must satisfy the Court that the Court has jurisdiction in the proceeding, that the proceeding is of a kind mentioned in r 10.42 and that the party has a prima facie case for all or any of the relief claimed in the proceeding. 4 The statement of claim that has been filed in the proceeding make allegations that false and misleading statements were contained in four documents published by Arasor. The first was a prospectus lodged with the Australian Securities and Investments Commission on 25 August 2006. The second was the 2006 annual report published by Arasor and lodged with the Australian Securities Exchange (ASX). The third was the report of Arasor for the half year ended 30 June 2007, published and lodged with ASX. The fourth was the 2007 annual report published by Arasor and lodged with ASX. The allegation in the statement of claim is that there were misleading statements made in all four documents. 5 For the purposes of this application, it is necessary to be satisfied that Caason has a prima facie case for any of the relief claimed in the proceeding. For the purposes of the application, the Court's attention has been taken to the allegation in the statement of claim concerning representations as to the connection between Arasor and Bharat Sanchar Nigam Limited (BSNL), which was said to be India's largest government-owned telecommunications service provider. 6 The thrust of the allegation is that BSNL was a customer of Arasor and that Arasor had outstanding purchase orders from BSNL. The statement of claim alleges that statements to that effect were false and misleading because there were no outstanding purchase order from BSNL. I am satisfied, from the evidence of Ms Amanda Banton in an affidavit sworn 17 December 2012, that Caason has established that it has a prima facie case for at least part of the relief claimed in the proceeding. The affidavit contains hearsay evidence to the effect that Caason relied upon the representations in the prospectus in deciding to invest in shares in Arasor and that it suffered damage as a consequence of that investment. 7 The evidence of Ms Banton also satisfies me that the five respondents, being Simon Xiao Fan Cao, Charles Mao, Larry Marshall, George Sycip and Ji Ran Laurie Kan, reside outside Australia. All but Mr Kan reside in the United States. Mr Kan resides in the Special Administrative Region of Hong Kong. 8 The claim in question is brought under the Corporations Act 2001 (Cth) and the Australian Investments and Securities Commission Act 2001 (Cth). I am satisfied that the Federal Court has jurisdiction in relation to the proceeding. The proceeding is also of a kind mentioned in r 10.42, in that it is based on a cause of action arising in Australia and is based on the contravention of an Act of the Australian Parliament that was committed in Australia. In all of the circumstances, I am satisfied that it is appropriate for leave to be given for the applicant to serve each of the first five respondents out of Australia. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 7 January 2013