FEDERAL COURT OF AUSTRALIA Australian Securities and Investments Commission v Antares Energy Ltd (administrators appointed) (No 2) [2018] FCA 212 File number: WAD 588 of 2017 Judge: BANKS-SMITH J Date of judgment: 27 February 2018 Catchwords: PRACTICE AND PROCEDURE – service on defendant residing in United States of America not effected – deemed service – substituted service Legislation: Corporations Act 2001 (Cth) s 674 Federal Court Rules 2011 (Cth) rr 10.23, 10.49(a), 10.49(b) Cases cited: Australian Competition and Consumer Commission v Kokos International Pty Ltd [2007] FCA 2035 Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) (No 3) [2016] FCA 303 British American Tobacco Australasia Ltd v Taleb (No 1) [2012] FCA 1065 Park v Tschannen (2016) 341 ALR 452; [2016] FCA 137 Date of hearing: 27 February 2018 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 23 Counsel for the Plaintiff: Mr S Vandongen SC Solicitor for the Plaintiff: Australian Securities and Investments Commission Counsel for the Defendants: The Defendants did not appear ORDERS WAD 588 of 2017 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: ANTARES ENERGY LTD (ADMINISTRATORS APPOINTED) ACN 009 230 835 First Defendant JAMES ANDREW CRUICKSHANK Second Defendant JUDGE: BANKS-SMITH J DATE OF ORDER: 27 FEBRUARY 2018 THE COURT ORDERS THAT: 1. Pursuant to Rule 10.49(a) of the Federal Court Rules, the plaintiff may serve copies of: (a) the originating process dated 27 November 2017; (b) the concise statement dated 27 November 2017; (c) the interlocutory process dated 28 November 2017; (d) the affidavits of Vincent Geneste sworn 28 November 2017 and 4 December 2017; (e) the orders made by Justice Siopis on 4 December 2017; (f) the interlocutory process dated 26 February 2018; (g) the affidavit of Vincent Geneste sworn 26 February 2018; and (h) these orders, (together the Documents), on the second defendant by: (i) sending a copy of the Documents by Australia Post using Standard International Post to 3837 Greenbrier Drive, Texas, the United States of America; (ii) instructing Process Forwarding International to leave a copy of the Documents with any person over the age of 18 years who answers the door of the house located at 3837 Greenbrier Drive, Dallas, Texas, the United States of America, or if no one answers the door, the leaving a copy of the Documents in the letterbox; (iii) sending a copy of the Documents by email to Michael Stockam at Michael.stockham@tklaw.com and Jasmine S Wynton at jasmine.wynton@tklaw.com with a request the recipients forward the email with attachments to the second defendant; (iv) sending a copy of the Documents by email to katecruickshank@gmail.com with a request the recipient forwards the email with attachments to the second defendant; and (v) sending a copy of the Documents by Australia Post using Express Post (with the Email Track Advice feature) to 35 Leake Street, Peppermint Grove, Western Australia, with a request the recipient forwards them to the second defendant. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT BANKS-SMITH J: 1 The Australian Securities and Investments Commission (ASIC) seeks orders for deemed or substituted service of documents on the second respondent, Mr James Cruickshank. The application was heard on 27 February 2018 and I delivered reasons at the end of the hearing. These are those reasons. 2 The relevant documents are the originating process in these proceedings dated 27 November 2017, the concise statement dated 27 November 2017, a previous interlocutory process dated 28 November 2017, supporting affidavits of Mr Vincent Geneste dated 28 November 2017 and 4 December 2017, orders made by Siopis J on 4 December 2017 granting leave to serve those documents outside Australia (Australian Securities and Investments Commission v Antares Energy (administrators appointed) [2017] FCA 1518), the interlocutory process dated 26 February 2018, a further affidavit of Mr Geneste dated 26 February 2018 and any orders made on this application. 3 In the proceedings, ASIC seeks declaratory relief against the first respondent, Antares Energy (Antares), as to alleged contraventions of the continuous disclosure obligations under s 674 of the Corporations Act 2001 (Cth). ASIC seeks declarations against the second respondent as to his involvement in those contraventions and alleged breaches of his duties as a director of Antares. 4 As at November 2017, it appeared that Mr Cruickshank resided in Texas. ASIC applied under r 10.43(2) of the Federal Court Rules 2011 (Cth) for leave to serve the originating process on Mr Cruickshank in the United States of America 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 (Convention). ASIC also applied under r 10.44(1) for leave to serve the other identified documents on Mr Cruickshank in the United States. 5 On 4 December 2017, Siopis J made orders granting leave as requested. 6 ASIC then asked Process Forwarding International (PFI) to serve the documents on Mr Cruickshank in accordance with the Convention. 7 On 23 January 2018, PFI reported that it had been unable to serve Mr Cruickshank. 8 Following a further request to effect service, PFI reported on 24 February 2018 that it had been unable to serve Mr Cruickshank. 9 The PFI reports by way of certificates were provided to the court, annexed to the affidavit of Mr Geneste dated 26 February 2018. The certificates disclose that representatives of PFI attended at the residence identified as Mr Cruickshank's residence. The first certificate reports that a woman who answered the door said her husband was overseas, would return for Christmas but would then be leaving again. The second certificate reports that someone who identified himself as Mr Cruickshank's son said that Mr Cruickshank was out of the country until early March. 10 Mr Geneste deposes as follows: (a) On 21 February 2018, ASIC was notified by the Australia Federal Police that Mr Cruickshank had arrived in Sydney. Mr Geneste and his colleague Ms Lim then attended a property in Peppermint Grove and spoke to a person who identified herself as Mr Cruickshank's mother. (b) The following conversation ensued: Ms Lim: Is James Cruickshank here? Mother: No. Ms Lim: Are you his mother? Mother: Yes. Ms Lim: Do you know what time James will be arriving? Mother: No, he doesn't tell me these things because he doesn't want me to worry. Ms Lim: Can you please call him? Mother: No, he can't be contacted right now. He's on a plane. Ms Lim: We have some documents to give to James. Would it be ok if we left them with you? Mother: No, I don't want to accept them. Ms Lim: How long will James be staying in Perth? Mother: Not long. He said it would only be a short stay. Ms Lim: Can we leave our business cards with you and can you please ask James to call us as soon as possible? Mother: Yes. (c) The following day Mr Geneste and Ms Lim again went to the residence. The following conversation then ensued: Ms Lim: Is James here? Mother: No, he's not here and I don't know where he is. He's not staying here. Ms Lim: Is he in Perth? Mother: Yes. I have spoken to him and passed on your message and contact details. Ms Lim: Do you know where he's staying? Mother: No and I don't have to tell you anything. Mr Geneste: Yesterday you told us that he would be staying with you. Mother: I don't know where he's staying in Perth. Ms Lim: We have court documents to serve on Mr Cruickshank. ASIC has commenced proceedings in the Federal Court against Antares Energy Ltd and Mr Cruickshank. We are required to serve the documents on Mr Cruickshank. We would like to see him so we can give them to him personally. We will leave a copy of the documents here on your doorstop. Mother: No, I'm not accepting them. Ms Lim: I understand. But we will leave a copy of the documents in your letterbox. Can you please draw his attention to them. The next court hearing is on 5 April. Mr Geneste: (showing the envelope) This is the parcel of documents. On the front it says, 'Attention: James Andrew Cruickshank'. I will leave it in your letterbox. Can you please let James know that we have left it in your letterbox. Mother: Yes. (d) In April 2016 Mr Cruickshank gave Mr Geneste his mobile phone contact number. Mr Geneste rang the number twice on 21 February 2018 but the call was diverted to voicemail, the voicemail message stating that it was Mr Cruickshank's phone. On 22 February 2018 Mr Geneste called the number and left a message as follows: 'Hello James, this is Whee-Jong Lim and Vincent Geneste from the Australian Securities and Investments Commission. Today is 22 February and the time is 10.15am. We have just spoken to your mother at 35 Leake Street in Peppermint Grove. We have left court documents for you in her letterbox. ASIC has commenced proceedings in the Federal Court against yourself and Antares Energy Ltd. The next court hearing is on 5 April 2018. We have conveyed all of this information to your mother. Please call us if you have any queries. You have our contact details'. (e) Mr Geneste sent the same message to the number by text. Ms Lim left a similar voicemail message the same day and again on 23 February 2018. (f) Mr Geneste sought contact details for Mr Cruickshank from the administrators of Antares. The administrators told him that they communicate with him via lawyers and provided the contact details for those lawyers. The lawyers apparently act for him in proceedings in the United States. (g) A white pages search in Texas reveals a landline number in the name the same as that of Mr Cruickshank. A search of the same name as his wife's name revealed the same landline number. (h) In May 2017, ASIC was provided with certain documents by the administrators. Those documents included some emails received or sent by Mr Cruickshank utilising an email address that, according to Mr Geneste, based on their content appears to be the email address of his wife. 11 I note from the above that there is no evidence of recent contact with Mr Cruickshank on the mobile phone number provided in 2016. There is no evidence of any contact by ASIC with the identified lawyers in the United States and it is not known whether they have instructions to accept or not accept service of documents on his behalf. 12 I also note that the message that the mother said she passed on to Mr Cruickshank was as conveyed by Mr Geneste and Ms Lim at the first visit to the house: that is, that they had 'some documents' to give to him. The information about the proceedings and the nature of the documents was not provided to the mother until the second visit. There is no evidence as to whether after the second visit she conveyed to Mr Cruickshank the message about court documents being left in the letterbox for him. 13 ASIC seeks orders that there has been deemed service of the relevant documents under r 10.23. Alternatively, it seeks orders for substituted service under r 10.49(a). In the further alternative, it seeks orders under r 10.49(b) specifying that instead of being served, certain steps be taken to bring the documents to Mr Cruickshank's attention. Deemed service – r 10.23 14 Rule 10.23 provides that: A party may apply to the Court, without notice, for an order that a document is taken to have been served on a person on a date mentioned in the order if: (a) it is not practicable to serve a document on the person in a way required by these Rules; and (b) the party provides evidence that the document has been brought to the attention of the person to be served. 15 Relevantly, it is not clear to me that the court documents have been brought to the attention of Mr Cruikshank. At its highest there is some evidence that his mother has apparently passed on information to him that there are 'some documents' and has passed on ASIC contact details. There has not been any response to messages left by way of the mobile phone number. Whether that is a currently maintained or accessed mobile phone number is not clear. This is not a case where, for example, the documents have been provided to a known email address: compare Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) (No 3) [2016] FCA 303 [10]; Speedo Holdings B.V. v Evans [2011] FCA 1089 and see generally British American Tobacco Australasia Ltd v Taleb (No 1) [2012] FCA 1065 [36] – [51]. It is possible that Mr Cruikshank has collected the documents from the letterbox. But there is simply no evidence to that effect or other evidence that persuades me that the documents have been brought to his attention. I consider the circumstances of this case support orders for substituted service, rather than deemed service. Substituted service – r 10.49(a) 16 Rule 10.49 provides that: If service was not successful on a person in a foreign country, in accordance with a convention, the Hague Convention or the law of a foreign country, a party may apply to the Court without notice for an order: (a) substituting another method of service; or (b) specifying that, instead of being served, certain steps be taken to bring the document to the attention of the person; or (c) specifying that the document is taken to have been served: (i) on the happening of a specified event; or (ii) at the end of a specified time. 17 As is apparent from the rule, orders for substituted service may be made where orders have first been made granting leave for service outside of Australia but it has not been possible to effect service: Australian Competition and Consumer Commission v Kokos International Pty Ltd [2007] FCA 2035. 18 I am satisfied that the plaintiff has attempted but been unable to effect service in accordance with the orders of Siopis J. Therefore, it is open to me to consider making orders for substituted service under r 10.49: Park v Tschannen (2016) 341 ALR 452; [2016] FCA 137 [15]. 19 It is proposed that substituted service be made by: (a) sending a copy of the documents by Australia Post using Standard International Post to 3837 Greenbrier Drive, Dallas, Texas; (b) instructing PFI to leave a copy of the documents with any person over the age of 18 years who answers the door of the house located at 3837 Greenbrier Drive, Dallas, Texas, or if no one answers the door, then leaving a copy of the documents in the letterbox; (c) sending a copy of the documents by email to Michael Stockam at michael.stockham@tklaw.com and Jasmine S Wynton at jasmine.wynton@tklaw.com with a request the recipients forward the email with attachments to the Mr Cruickshank; (d) sending a copy of the documents by email to katecruickshank@gmail.com with a request the recipient forwards the email with attachments to Mr Cruickshank; and (e) sending a copy of the documents by Australia Post using Express Post (with the Email Track Advice feature) to 35 Leake Street, Peppermint Grove, Western Australia, with a request the recipient forwards them to Mr Cruickshank. 20 The details of addresses in Texas and Peppermint Grove and the email addresses are in accordance with those referred to in Mr Geneste's affidavit. 21 I am satisfied that in the circumstances, the proposed method for substituted service gives rise to a reasonable probability that Mr Cruickshank will be informed of the documents. There is evidence that Mr Cruickshank resides at least for certain periods at the relevant residence in Texas. There is some evidence by the PFI reports that he will be returning there in March 2018. There is evidence that he is in contact with his mother, that she resides at the Peppermint Grove address and that at least in recent days he has been in Perth. Taking into account those matters, the steps that have been taken to date to effect service, the reluctance of his mother to provide information as to his whereabouts on 22 February 2018 and her refusal to accept the documents on his behalf, I consider it is appropriate to make orders for substituted service in the terms sought. 22 In reaching this view I have taken into account that there is no evidence that the identified Texas lawyers have instructions to accept service on Mr Cruickshank's behalf. However, in Australian Competition and Consumer Commission v Kokos the court made orders for substituted service that included an order that the relevant documents be provided to solicitors who had stated that they did not act for the intended recipient. Regardless, the solicitors had indicated some degree of concern for the recipient's interest. In this case, there is some evidence of the solicitors acting for Mr Cruickshank although not in these particular proceedings. As in Australian Competition and Consumer Commission v Kokos, there is some prospect that as a practical matter, provision of the documents to the Texas lawyers may have the result that they come to Mr Cruickshank's attention. Bringing the documents to the attention of Mr Cruickshank – r 10.49(b) 23 In light of my determination as to substituted service, it is not necessary to consider the alternative proposed orders under r 10.49(b). However, for completion I note that ASIC sought to rely on telephone contact by the identified landline and mobile phone numbers and by sending and delivering the documents to the Peppermint Grove address. In light of my doubts as to the reliability of the mobile phone number and the prospect that Mr Cruickshank may be in the process of returning to Texas, I consider the substituted service order is more likely to have the result that the documents are brought to Mr Cruickshank's attention. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Banks-Smith. Associate: Dated: 1 March 2018