Application of A.G. Sherlock, in the matter of Deposition & Investment Co Ltd (ACN 000 000 911) & Ors and the Corporations Law (Section 597)
[1991] FCA 419
•26 JULY 1991
Re: The application of ANTHONY GARDINER SHERLOCK
In the matter of: DEPOSIT AND INVESTMENT CO LTD; D AND I BANK LTD and THE
CORP LAW
No. N G3028 of 1991
FED No. 419
Corporations Law - Federal Court - Private International Law
9 ACLC 1029/5 ACSR 229
102 ALR 156
30 FCR 463
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)
CATCHWORDS
Corporations Law - Orders for public examination of persons resident outside Australia - "other than originating process" - Corporations Law s. 597 - Federal Court Rules Order 8 Rule 3.
Federal Court - Service outside Australia - order for public examination - Federal Court Rules Order 8 Rule 3 - Corporations Law s. 597.
Private International Law - Service out of jurisdiction - order for public examination - Federal Court Rules Order 8 Rule 3 - Corporations Law s. 597.
Corporations Law: s. 597, 598
Federal Court of Australia Act 1976: Part IIIA
Service and Execution of Process Act 1901 (Cth)
Federal Court Rules: Order 8 Rules 1, 2, 3
HEARING
SYDNEY
#DATE 26:7:1991
Counsel for Anthony Gardiner Sherlock: P.J.W. Huntington
Solicitors for Anthony Gardiner Sherlock: Sly and Weigall
ORDER
The Court declines to make the orders sought in relation to Chor Kian Yap, Hung-Ben Lim, Magdalene Mok and Jeremy Pitts, however the applicant has liberty to renew his application on reasonable notice for orders in relation to any or all of those persons should they enter the jurisdiction of this Court.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
The applicant, Anthony Gardiner Sherlock, is authorised by the Australian Securities Commission, pursuant to ss. 597 and 598 of the Corporations Law, to apply to this Court pursuant to those sections, for an order that four persons be directed to attend before the Court for examination on oath or affirmation on matters relating to the promotion, formation, management, administration, winding-up or otherwise of certain corporations and to produce before the Court, any books in their possession or under their control relevant to those matters. Other ancillary orders were also sought.
None of the persons presently resides in Australia: three of them reside in Hong Kong and one in Japan. There is no suggestion that the four persons have been present in Australia at any time relevant to this application or that they have submitted to the jurisdiction of the Court.
The question that arises is whether this Court has the power to make an order pursuant to s. 597(3) requiring that a person resident abroad attend before the Court at a certain time to be examined on oath on certain matters relating to a corporation.
It is well established that the Court's jurisdiction in actions in personam depends at common law on the defendant's presence in the geographical jurisdiction of the Court (this Court's jurisdiction being Australia wide) or the defendant's submission to the Court's jurisdiction. There are however statutory extensions to this jurisdiction, dating back to the Common Law Procedure Act 1852 (England), which provide for the service of process out of the jurisdiction where, speaking generally, there is some link between the forum and the subject matter involved. In Laurie v Carrol (1958) 98 CLR 310 Dixon C.J., Williams and Webb JJ. said in a joint judgment, in relation to the Supreme Court of Victoria at 322-3:
"The action is in personam and it is transitory; and in such an action the jurisdiction of the Supreme Court of Victoria depends not in the least on subject matter but upon the amenability of the defendant to the writ expressing the Sovereign's command in right of the State of Victoria. The common law doctrine is that the writ does not run beyond the limits of the State. By the federal Service and Execution of Process Act 1901-1953, however, it may, if endorsed under that statute, be served elsewhere within the Commonwealth and its Territories, the conditions in which this may be done and the consequences being defined by the provisions of the Act. Further, by rules made under s. 139 of the Supreme Court Act 1928 replacing, but based upon, the fifth schedule of that Act and now contained in O.XI, rr. 1-5 of the Rules of the Supreme Court 1957, it is provided that in cases answering any of the descriptions in r. 1, service of the writ or of notice of the writ in any place outside Victoria may be allowed by the court or a judge. It may be that the cause of action which the plaintiffs seek to set up will fall neither within any of the paragraphs of r. 1 of O. XI nor within any of those of s. 11 of the Service and Execution of Process Act 1901-1953. If so that may explain the importance apparently attached by the parties to this appeal. For except for these extensions of the principle of the common law, it remains true that a writ issued out of the Supreme Court of Victoria does not run outside that State. And in actions in personam this must determine the jurisdiction of the court over the defendant. 'The root principle of the English law about jurisdiction is that the judges stand in the place of the Sovereign in whose name they administer justice, and that therefore whoever is served with the King's writ and can be compelled consequently to submit to the decree made, is a person over whom the Courts have jurisdiction', per Viscount Haldane: John Russell and Co. Ltd v Cayzer, Irvine and Co. Ltd.
((1916) 2 AC 298 at 302) Holmes J. regarded the principle as based upon the capacity to exert actual power. 'The foundation of the jurisdiction is physical power, although in civilized times it is not necessary to maintain that power throughout proceedings properly begun, and although submission to the jurisdiction by appearance may take the place of service upon the person ... No doubt there may be some extension of the means of acquiring jurisdiction beyond service or appearance but the foundation should be borne in mind': McDonald v Mabee ((1916) 243 US 90 at 91). It must be remembered that the rule of the common law was non potest quis sine brevi agere and that the original writ thus necessitated issued out of Chancery under the Great Seal in the name of the King. It was directed to the sheriff and, if a writ of summons, it required him to command the defendant to satisfy the plaintiff's claim and in default of his doing so to summon him to appear before the Justices of, for example, the Common Pleas at Westminster to show why he had not done so. It is in this that the source is to be found of our conception of the foundation of the jurisdiction of our own courts in actions in personam and to that source both Viscount Haldane and Holmes J. refer. The defendant must be amenable or answerable to the command of the writ. His amenability depended and still primarily depends upon nothing but presence within the jurisdiction."
The rules of the High Court, of this Court and of all the Australian Supreme Courts contain provisions for the service of process outside the jurisdiction. As noted in Laurie v Carroll, the Service and Execution of Process Act 1901 (Cth) provides for the service within Australia of State and Territorial court process out of each Court's jurisdiction. Recent amendments to the Federal Court of Australia Act 1976 (Part IIIA, inserted by Act No. 70 of 1990) provide for the exercise in New Zealand of jurisdiction by this Court and for the exercise in Australia of jurisdiction by the High Court of New Zealand. Part IIIA includes provision for the issue and service of subpoenas in an Australian proceeding for service in New Zealand (s.32G - s.32L).
Order 8 of this Court's Rules contains rules relating to the service of originating process and other documents outside Australia. Rules 1 and 2 of Order 8 relate to the service of originating process outside Australia and contain detailed provisions as to the cases in which such process may be served. Such cases generally involve some link between the forum and the subject matter involved. Rule 2(2) states the matters of which the Court must be satisfied before authorising service. Apart from requiring that a circumstance mentioned in Rule 1 be made out, the Court must be satisfied that the proceeding is a proceeding in which the Court has jurisdiction.
Rule 3 provides:
"Service outside Australia of a document other than originating process is valid if the service is in accordance with the prior leave of the Court or is confirmed by the Court."
Counsel for the applicant relies entirely on Rule 3 as the statutory source of the Court's jurisdiction to authorise the service of the s. 597 examination orders on persons resident in Hong Kong and Japan.
A section 597 examination order has frequently been called the exercise of an extraordinary power: see In re North Australian Territory Company (1890) 45 LR Ch 87 at 93, Re Rolls Razor Ltd (No. 2) (1970) 1 Ch 576 at 591-2. However, I am satisfied that an order to attend for examination before this Court pursuant to s. 597 is "a document other than originating process" within the meaning of rule 3: see Re Austral Oil Estates Limited (In Liquidation) (1986) 86 FLR 247 at 248, a decision of McLelland J. of the Supreme Court of New South Wales to the same effect with respect to an examination order under s. 541 of the Companies (New South Wales) Code (NSW), the predecessor of the present s. 597. See also B.P. Exploration Co. (Libya) Limited v Hunt (1980) 1 NSWLR 496, a decision of Hunt J. of the Supreme Court of New South Wales at 501-504.
Rule 3 of Order 8 of this Court's rules relates to matters of procedure, not jurisdiction. The present question is one of jurisdiction, not procedure. Rule 3 is a very different provision to Rules 1 and 2. The extensions found in Rule 1 to the common law rule that jurisdiction is based on presence within the geographical jurisdiction of the Court provide significant connecting factors sufficient to justify the Court exercising jurisdiction in relation to persons outside the jurisdiction. The connecting factors are necessary to respect the sovereignty of foreign jurisdiction. However, once they are shown, the Court has power to assume jurisdiction. Rule 3 is couched in very wide terms and would include an examination order, but it must be read as a procedural provision and not as an extension of the Court's jurisdiction to those served persons. To invade the sovereignty of another country's jurisdiction and interfere with its sole power over persons present within it, stronger and clearer language is needed than appears from Rule 3 (see for example, s. 32G and 32L Federal Court of Australia Act). There is therefore no statutory authority to authorise the making of the examination order in this case.
Counsel for the applicant (the application was made ex parte) has informed me that there are no conventions, protocols or treaties in force to which Australia is a party which bear on the question with which this case is concerned.
I should add that it would not be right in my opinion to make the orders and allow the persons served to take the objection; rather the objection is one which the Court itself ought to take at this stage: see Re Anglo-African Steamship Company (1886) 32 ChD 238 per Cotton L.J. at 350.
In the result I am not satisfied that the Court has jurisdiction to make the orders sought; so the Court declines to make them. I should add that if any of the proposed examinees re-enter the jurisdiction of this Court the applicant would have liberty on reasonable notice to renew his application for the orders sought.
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