FEDERAL COURT OF AUSTRALIA AIA Australia Ltd v Richards [2017] FCA 84 File number: NSD 1853 of 2016 Judge: ALLSOP CJ Date of judgment: 10 February 2017 Catchwords: PRACTICE AND PROCEDURE – where the applicant seeks leave to serve the respondent in Latvia – whether proposed manner of service permitted by Hague Service Convention – whether requirements in r 10.4(3) and (4) of the Federal Court Rules 2011 (Cth) satisfied – application granted Legislation: Federal Court Rules 2011 (Cth) rr 10.42, 10.43 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Opened for signature 15 November 1965. 658 UNTS 163 arts 5, 8, 10. (entered into force 1 November 2010) Cases cited: Bell v Steele [2011] FCA 1390; 198 FCR 291 Deputy Commissioner of Taxation v Cheung Kong Infrastructure Holdings Ltd [2013] FCA 707; 96 ATR 44 Deputy Commissioner of Taxation v Power Assets Holdings Ltd (previously known as Hongkong Electric Holdings Ltd) [2013] FCA 708; 96 ATR 51 Kadam v MiiResorts Group 1 Pty Ltd (No 2) [2016] FCA 1343 Davies M, Bell AS, Brereton PLG, Nygh's Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, 2014) Practical Handbook on the Operation of the Hague Service Convention (Permanent Bureau of the Hague Conference on Private International Law, 2006) Date of hearing: 6 February 2017 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Insurance List Category: Catchwords Number of paragraphs: 26 Counsel for the Appellant: Ms R Francois Solicitor for the Appellant: William Roberts Lawyers Counsel for the Respondent: The respondent did not appear ORDERS NSD 1853 of 2016 BETWEEN: AIA AUSTRALIA LTD Appellant AND: VINCENT BRIAN RICHARDS Respondent JUDGE: ALLSOP CJ DATE OF ORDER: 10 FEBRUARY 2017 THE COURT ORDERS THAT: 1. The applicant have leave to file and serve the amended originating application, amended statement of claim and affidavits of Mr Brian Silva sworn on 19 October 2016 and 30 January 2017 upon the respondent in Latvia in accordance with Article 10(a) of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at The Hague on 15 November 1965 by: (a) sending the documents by international registered post with an acknowledgement of receipt to be provided to the applicant; and (b) having a translation of the documents into Latvian accompany the documents sent by international registered post. 2. The proceeding be listed for further case management at 9:30am on Monday 1 May 2017. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT ALLSOP CJ: Background 1 This is a proceeding from the Federal Court Insurance List in which the applicant, AIA Australia Ltd, seeks declaratory relief and an award of damages in relation to a contract of life insurance between it and the respondent, Vincent Brian Richards. It is alleged that the respondent made false and/or fraudulent representations when making claims under a "Disability Income Plan" encompassed within the life insurance policy. The representations were to the effect that the applicant suffered from a "Total Disablement" within the meaning of the policy. The applicant alleges that these representations were false as the respondent was allegedly working as an acupuncturist in Riga, Latvia and Stockholm at the time of making the relevant claims. 2 The respondent lives in Riga, Latvia. As a result, leave is sought by the applicant to serve its amended originating application, amended statement of claim and two affidavits of Brian Silva sworn on 19 October 2016 and 30 January 2017 upon the respondent in Latvia in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at The Hague on 15 November 1965 (the Hague Service Convention). Leave to Serve Outside the Jurisdiction 3 Leave is required under r 10.43(1) of the Federal Court Rules 2011 (Cth) for an applicant to serve an originating application outside of Australia. The party seeking leave is to apply under r 10.43(2). That application must satisfy the requirements in r 10.43(3) and (4). 4 Rule 10.43(3) provides that: The application under subrule (2) must be accompanied by an affidavit stating: (a) the name of the foreign country where the person to be served is or is likely to be; and (b) the proposed method of service; and (c) that the proposed method of service is permitted by: (i) if a convention applies - the convention; or (ii) if the Hague Convention applies - the Hague Convention; or (iii) in any other case - the law of the foreign country. 5 The applicant filed two affidavits of Brian Silva, dated 19 October 2016 and 30 January 2017 where he deposed as to these matters. Service Permitted by the Hague Service Convention 6 Latvia is a Contracting State to the Hague Service Convention. Therefore, it is necessary to establish that the proposed method of service is a method permitted by the Hague Service Convention: Federal Court Rules 2011 (Cth) r 10.43(3)(c)(ii). An issue at the case management hearing before me was the appropriate method of service under the Hague Service Convention in the circumstances of this case. 7 The Hague Service Convention contemplates several mechanisms (or "channels" as they are described in the Practical Handbook on the Operation of the Hague Service Convention (Permanent Bureau of the Hague Conference on Private International Law, 2006)) for service. The "main channel of transmission" is service under Article 5 of the Hague Service Convention through the "Central Authority" of the receiving State. The Convention also permits service through several "alternative channels": Practical Handbook at [183]. 8 The Silva affidavit of 19 October 2016 contemplated service through the Central Authority, as did the 30 January 2017 affidavit. At the case management hearing, and in its subsequent written submissions, the applicant referred to service by way of the alternative channels provided under Article 8 or Article 10 of the Hague Service Convention. Service under Article 8 9 Article 8 is referred to in the Handbook (at [189]) as the "direct diplomatic or consular channel". A Contracting State may declare it is opposed to service under Article 8 except where the document is to be served on a national of the State from which the documents originate: Article 8(2); see also Practical Handbook at [190]; Davies M, Bell AS and Brereton PLG, Nygh's Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, 2014) at [3.32]. Latvia has declared its opposition to Article 8: In accordance with paragraph 2 of Article 8 of the Convention the Republic of Latvia declares that it is opposed to the service of documents under Article 8 of the Convention within its territory, unless the document is to be served upon a national of the State in which the documents originate. 10 It follows that service of the documents upon the respondent in Latvia under Article 8 would only be permitted if the respondent is an Australian national. 11 In its submissions, the applicant rightly characterised the evidence as to the respondent's nationality as "equivocal". The "Application for Priority Protection Superannuation Term Life of American International Assurance Company (Australia) Ltd" dated 30/05/2002 that was tendered by the applicant at the case management hearing indicated that the respondent was either an Australian citizen or Australian permanent resident in 2002. However, he was born in the United Kingdom and so it is unclear whether he actually was an Australian citizen at that time or whether he remains one now. The applicant also referred to statements made by the respondent to the applicant's investigators that he "comes from Australia". Furthermore, reference was made to correspondence sent to the court by the respondent that indicated he was seeking to become a permanent resident of Latvia. Given the opacity of this evidence, the applicant has not established that service under Article 8 of the Hague Service Convention would be permitted in the circumstances of this case. Service under Article 10(a) 12 In the alternative, the applicant submitted that service would be permitted under Article 10(a) of the Hague Service Convention. Article 10(a) is termed the "postal channel" in the Practical Handbook (at [195]). Article 10(a) states that: [p]rovided the State of destination does not object, the present Convention shall not interfere with… the freedom to send judicial documents, by postal channels, directly to persons abroad … 13 The Practical Handbook states at [196] that "transmission … through postal channels includes service of process upon the addressee". On previous occasions, this Court has granted leave to serve documents by international registered post and considered this to be compliant with Article 10(a): see Deputy Commissioner of Taxation v Power Assets Holdings Ltd (previously known as Hongkong Electric Holdings Ltd) [2013] FCA 708; 96 ATR 51 at [15]-[22] (Gordon J); Deputy Commissioner of Taxation v Cheung Kong Infrastructure Holdings Ltd [2013] FCA 707; 96 ATR 44 at [15]-[22] (Gordon J); Bell v Steele [2011] FCA 1390; 198 FCR 521 at [13] and [16] (Collier J). 14 Latvia does not object to service by post under Article 10(a). However, it has made the following declaration: In accordance with Article 10 of the Convention the Republic of Latvia does not object to the freedom to send a judicial document, by postal channels, directly to an addressee within the Republic of Latvia (paragraph (a) of Article 10) if the document to be served is in Latvian or it is accompanied by translation into Latvian and it is sent to the addressee using a registered postal letter (with an acknowledgement of receipt). 15 Therefore, provided that the documents are sent by registered post with an acknowledgement of receipt and accompanied by a translation into Latvian then it would appear that service by that means would be permitted in this case under Article 10(a) of the Hague Service Convention. Other requirements 16 In seeking leave under r 10.43(2), the applicant must also satisfy the Court pursuant to r 10.43(4) that: (a) the Court has jurisdiction in the proceeding; and (b) the proceeding is of a kind mentioned in rule 10.42; and (c) the party has a prima facie case for all or any of the relief claimed in the proceeding. 17 As noted by the applicant at the case management hearing on 6 February 2017, the application of r 10.43(4) has recently been illustrated by Edelman J in Kadam v MiiResorts Group 1 Pty Ltd (No 2) [2016] FCA 1343. Jurisdiction 18 Like Edelman J in that case, I am satisfied that the Court has jurisdiction given part of the claim in the present matter arises under a Commonwealth statute; in this case, the Insurance Contracts Act 1984 (Cth). Proceeding within r 10.42 19 Furthermore, I am satisfied that this is a proceeding of a kind mentioned in r 10.42. Most obviously, the proceeding is one in relation to a contract that was made in Australia and in which the applicant seeks orders for the dissolution of the contract or otherwise affecting that contract along with orders for damages or other relief in relation to a breach of contract. Prima facie case 20 The applicant submitted that its amended statement of claim combined with the documents annexed to the Silva affidavits established a prima facie case. The principles for determining whether there is a prima facie case for the purposes of r 10.43(4)(c) were summarised by Edelman J in Kadam [2016] FCA 1343 at [53]-[54]: Finally, as to r 10.43(4)(c), the test for a prima facie case is well established. It is satisfied if, on the material before the Court, inferences are open which, if translated into findings of fact, would support the relief claimed: Perdaman Chemicals and Fertilisers Pty Ltd v ICICI Bank Ltd [2013] FCA 175 [58] (McKerracher J); Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102, 110 (French J); Ho v Akai Pty Ltd (in liquidation) [2006] FCAFC 159; (2006) 24 ACLC 1,526, 1,529 [10] (the Court). The approach to whether there is a prima facie case "should not call for a substantial inquiry": Ho v Akai, 1,529 [10] (the Court); WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472, 476 (Beaumont J); Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539, 549 (the Court). 21 The causes of action pleaded against the respondent require the applicant to prove: (1) that the applicant and respondent had entered into a contract of life insurance that included the "Disability Income Plan"; (2) that to obtain the benefits under the "Disability Income Plan" the respondent was required to be suffering from a "Total Disablement"; (3) that a "Total Disablement" was defined under the policy as meaning that the respondent was: (a) unable to perform one of the important duties of his occupation (as an anaesthetic nurse) that he must be able to perform to earn an income; and (b) was following the advice of a medical practitioner; and (c) was not working. (4) that the applicant lodged claims with the applicant seeking the monthly benefit under the "Disability Income Plan" over the period February 2016 to October 2016; (5) that in those claims the respondent falsely and/or fraudulently represented to the applicant that he suffered from a "Total Disablement" within the meaning of the policy, had suffered from it since 2002, did not perform duties of any other occupation (paid or unpaid) during the claim period, did not have a return to work plan, that there were daily restrictions upon him that prevented him from performing the usual duties of his occupation and that the information on the claim form was true, correct and complete; (6) at the time of making these claims, the respondent was, contrary to these representations, intending to perform or performing the duties of another occupation and was capable of performing the duties of his usual occupation; and (7) that the applicant believed the respondent was thus suffering under a "Total Disablement" within the meaning of the policy. 22 The evidence filed in support of these allegations was as follows. Annexure O of the Silva affidavit of 30 January 2017 consists of the contract documents. These include a letter confirming the respondent's purchase of the policy and the policy terms. The "Priority Protection Policy Schedule" states that the insurance cover includes "Disability Income". In clause 2 of the "Policy Terms and Conditions" also contained within that annexure "Total Disablement" is defined as pleaded by the applicant. The terms of the "Disability Income Plan" are in clause 6 of the "Policy Terms and Conditions". Clause 6 states that a "Total Disablement Benefit" is included in the "Disability Income Plan". 23 Also annexed to that affidavit, as Annexure P, are the claim documents alleged to have been submitted by the respondent over the course of 2016. These provide support for the applicant's allegations in regard to the representations allegedly made by the applicant. In these claim documents, the respondent states that he does not have a return to work plan and is unable to perform his occupation, though might if his health improves. He also states that he is unable to perform "all" duties of his usual occupation due to "pain, stiffness and depression". He states "pain, stiffness and depression" to be daily restrictions upon his ability to work. He also ticked a box confirming that his "continued Total Disablement" was "due solely and directly to [his] injury/sickness". The period of total disablement was stated to be from 2002 to present. The respondent also declared at the bottom of each claim form that all information in the form was "true, correct and complete". 24 In order to demonstrate the respondent's representations to be false, the applicant annexed to the 30 January affidavit, as Annexure Q, surveillance reports obtained by its investigators in Riga and Stockholm. These reports included photographs, emails and text messages. They demonstrate a person, alleged to be the applicant, performing acupuncture and, importantly, appearing to operate an acupuncture business. Further, in Annexure I of the 30 January affidavit there is correspondence from the respondent where he states: Yes the information is true. I am doing some acupuncture treatments. But not able to this as a full career but as a step back into the workplace. 25 The surveillance evidence and correspondence from the respondent appears to indicate that he was performing another job. An inference could then be drawn that he was capable of performing his original occupation and that he was working at the time of making the claims. If this evidence is not contradicted, these inferences could be translated into factual findings that the representations made by the respondent as to his alleged disablement were false and that the respondent was not suffering from a "Total Disablement" within the meaning of the policy at the time. Such findings would support the relief claimed. Accordingly, I am satisfied that the material before the Court establishes a prima facie case in respect of the matters alleged by the respondent in its amended statement of claim. The requirement in r 10.43(4)(c) is therefore satisfied. Orders 26 For the reasons given above, the requirements for leave in r 10.43 are satisfied in this case. I make the following orders: 1. The applicant have leave to file and serve the amended originating application, amended statement of claim and affidavits of Mr Brian Silva sworn on 19 October 2016 and 30 January 2017 upon the respondent in Latvia in accordance with Article 10(a) of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at The Hague on 15 November 1965 by: (a) sending the documents by international registered post with an acknowledgement of receipt to be provided to the applicant; and (b) having a translation of the documents into Latvian accompany the documents sent by international registered post. 2. The proceeding be listed for further case management at 9:30am on Monday 1 May 2017. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop. Associate: Dated: 10 February 2017