LK Law Pty Ltd v Karas (No 2)

Link copied
Case Copied 26 min read

FEDERAL COURT OF AUSTRALIA

LK Law Pty Ltd v Karas (No 2) [2022] FCA 970

File number: SAD 222 of 2021
Judgment of: O'SULLIVAN J
Date of judgment: 19 August 2022
Date of publication of reasons: 2 September 2022
Catchwords: PRACTICE AND PROCEDURE – service – ex parte interlocutory application to serve respondents in the United Kingdom pursuant to rr 10.42, 10.43 and 10.44 of the Federal Court Rules 2011 (Cth) (FCR) – whether applicant has satisfied the elements of FCR 10.42, 10.43 and 10.44 – whether applicant established prima facie case in relation to a cause of action or remedy – whether leave should be granted – Held: leave to serve out of Australia granted  
Legislation:

Australian Consumer Law ss 2, 18, 236, 237

Competition and Consumer Act2010 (Cth)

Corporations Act 2001 (Cth) ss 79, 181, 182, 183, 1317H

Criminal Code Act 1995 (Cth)

Federal Court Rules 2011 (Cth) rr 10.41, 10.42, 10.43

Misrepresentation Act (SA) 1972 s 7

Cases cited:

Australian Competition and Consumer Commission v Yellow Page Marketing BV [2010] FCA 1218

Gore v Australian Securities and Investments Commission (2017) 249 FCR 167; FCAFC 13

Hamilton v Meta Platforms Inc [2022] FCA 681

Hayden and Ors v Teplitzky and Ors (1997) 74 FCR 7

Ho v Akai Pty Ltd (in liq) (2006) 247 FCR 205

Humane Society International Inc v Kyodo Senpaku Kaisha Ltd (2006) 154 FCR 425

Israel Discount Bank Limited v ACN 078 272 867 Pty Ltd (in liq) (formerly Advance Finances Pty Ltd) [2019] FCAFC 90; 367 ALR 71

Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd [2015] FCA 1453; 331 ALR 108

LK Law Pty Ltd & Ors v Karas & Ors [2022] FCA 762

Mining Standards International Pty Ltd v Atlantic Nickel Mineracao Ltda [2022] FCA 623

Nadinic v Drinkwater [2017] NSWCA 114

Thomas A Edison Ltd v Bullock (1912) 15 CLR 679

Tiger Yacht Management v Morris (2019) 268 FCR 548

Town & Country Sport Resorts (Holdings) Pty Ltd and Ors v Partnership Pacific Ltd (1988) 20 FCR 540

Division: General Division
Registry: South Australia
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 54
Date of hearing: 10 August 2022
Counsel for the Applicants: Mr B Roberts QC with Mr T Besanko
Solicitor for the Applicants: Iles Selley Lawyers
Counsel for the Respondents: The Respondents did not appear

ORDERS

SAD 222 of 2021
BETWEEN:

LK LAW PTY LTD

First Applicant

SCIPIO JOHN LIPMAN

Second Applicant

LIPMAN FAMILY PTY LTD (ACN 627 125 580)

Third Applicant
AND:

JASON DEMETRIOS KARAS

First Respondent

J&A KARAS PTY LTD

Second Respondent

KARAS LLP (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

O'SULLIVAN J

DATE OF ORDER:

19 AUGUST 2022

THE COURT ORDERS THAT:

1.Pursuant to rules 10.42, 10.43 and 10.44 of the Federal Court Rules 2011 (Cth), the applicants have leave to serve on the fourth respondent:

(a)the applicants’ originating application, statement of claim and genuine steps statement…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read LK Law Pty Ltd v Karas (No 2) and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2022] FCA 970
Decision Date

CaseChat Overview and Summary

LK Law Pty Ltd and others sought leave to serve legal documents on Mishcon de Reya LLP, a law firm based in the United Kingdom, in relation to ongoing litigation between the parties. The matter came before the Federal Court of Australia, which was required to determine whether the applicants had satisfied the necessary legal requirements to serve the documents outside of Australia. The key legal issues were whether the applicants had fulfilled the criteria set out in Federal Court Rules 10.42, 10.43, and 10.44 for service outside of Australia and whether the applicants had established a prima facie case in relation to a cause of action or remedy. The Court found that the applicants had met the requirements of the relevant Federal Court Rules, and therefore, granted leave for the applicants to serve the documents on Mishcon de Reya LLP in the United Kingdom.

In reaching its decision, the Court considered the principles governing an application for service out of jurisdiction, as outlined in Hamilton v Meta Platforms Inc. The Court found that the applicants had established that the Court had jurisdiction, the proceedings were of a kind mentioned in Rule 10.42, and the applicants had a prima facie case for all or any of the relief claimed. The Court also considered that the applicants need only establish a prima facie case in relation to one cause of action or remedy, not all of the pleaded claims. The Court concluded that the applicants had satisfied the necessary legal requirements, and therefore, granted leave for the applicants to serve the documents on Mishcon de Reya LLP in the United Kingdom.
The Court further ordered that the applicants' originating application, statement of claim, affidavits, and written submissions be served on Mishcon de Reya LLP by international registered post with return receipt to its registered office in London, England. The Court also varied an earlier order to permit service of the affidavits and written submissions referred to in the new order. Finally, the Court ordered that the costs of and incidental to this interlocutory application be the applicants' costs in the cause.

Orders

Orders of the court

1. Pursuant to rules 10.42, 10.43 and 10.44 of the Federal Court Rules 2011 (Cth), the applicants have leave to serve on the fourth respondent:

(a) the applicants’ originating application, statement of claim and genuine steps statement filed on 21 December 2021;

(b) the applicants’ amended originating application and amended statement of claim filed on 26 July 2022;

(c) the affidavits of Nathan Peter Day sworn 26 July 2022, 8 August 2022 and 9 August 2022 and filed in support of the interlocutory application;

(d) the affidavit of Scipio John Lipman sworn and filed in these proceedings on 1 April 2022;

(e) the applicants' written submissions filed on 26 July 2022 in support of the interlocutory application;

(f) a copy of these orders; and

(g) a copy of the orders made on 27 April 2022,

(together the Documents), by sending the Documents by international registered post with return receipt to its registered office, being Africa House, 70 Kingsway, London, England, WC2B 6AH.

2. Order 2 of the orders made on 27 April 2022 be varied to permit service of the affidavits of Nathan Peter Day referred to in order 1(c), the affidavit of Scipio John Lipman referred to in order 1(d) and the written submissions referred to in order 1(e) on the fourth respondent.

3. The costs of and incidental to this interlocutory application are to be the applicants’ costs in the cause.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

When the Application was called on for hearing on 10 August 2022, the Court was informed by Mr Roberts QC, who appeared for the applicants on the Application, that no response had been received from Mishcon.BACKGROUND I set out the factual background to the dispute between the applicants and the respondents at a general level, including the then pleaded causes of action in both the claim and cross-claim in LK Law Pty Ltd & Ors v Karas & Ors [2022] FCA 762, [4], [5], [9]-[56]. I do not repeat the factual background I set out in that decision in full, however for the purposes of this application, I repeat what I said at [11]-[18]:11Both Mr Lipman and Mr Karas are qualified legal practitioners. In 2004, both were equity partners in the legal firm Fisher Jeffries. In or about August 2004, Mr Lipman and Mr Karas established the legal firm (Lipman Karas Pty Ltd) LKPL. Apart from Mr Lipman and Mr Karas, a further nine employees, who had previously been with both Mr Lipman and Mr Karas at Fisher Jeffries, worked at LKPL. (Brackets not in original)12Between 2005 - 2009, Mr Karas spent a considerable amount of his time in Hong Kong working on a substantial litigation matter.13In 2008, Mr Lipman and Mr Karas decided to establish a “Lipman Karas” practice in Hong Kong. As part of investigating how they might establish such a practice, Mr Lipman and Mr Karas sought advice from a Hong Kong firm of solicitors, Tanner De Witt. That advice, in summary, was that LKPL could not immediately establish a legal firm in Hong Kong advising on Hong Kong law using the name Lipman Karas. That was because Mr Lipman was not admitted as a solicitor in Hong Kong. LKPL could, however, register as a foreign law firm in Hong Kong, using the name “Lipman Karas” and advising on foreign law.14The advice from Tanner De Witt continued that after LKPL had practised as a foreign law firm in Hong Kong for three years, a firm practising Hong Kong law under the name “Lipman Karas”, could practice in Hong Kong notwithstanding Mr Lipman was not qualified as a solicitor to practice in Hong Kong.15In October 2008, Mr Karas was admitted to practice in Hong Kong as a solicitor.16The strategy adopted by Mr Lipman and Mr Karas was that over the three-year period, Mr Karas would establish a registered Hong Kong law firm under the name “Karas Lawyers” with Mr Karas being the sole proprietor of that firm. Whilst Mr Karas was practising under the name “Karas Lawyers”, Lipman Karas would establish itself as a foreign law firm practising foreign law in Hong Kong with Mr Tim Kentish (Mr Kentish) as the proprietor of that firm. Mr Kentish was to act as LKPL’s agent in Hong Kong.17On 17 February 2010, the foreign law firm Lipman Karas, as agent for LKPL, and Karas Lawyers entered into an agreement known as an “association agreement”. The association agreement is annexed to the first Karas affidavit at pp 18-23 of annexure JK-1: First Karas affidavit at [19]; Lipman affidavit at [41]. The association agreement recorded, amongst other things, that:Recital C - On 6 November 2009 the Law Society of Hong Kong registered an Association between Lipman Karas and Karas Lawyers in accordance with section 39C of the Legal Practitioners Ordinance.Clause 2.1 - Premises(a)Lipman Karas will permit Karas Lawyers to share and use with Lipman Karas the premises located at 1702, Tower 1, Admiralty Centre, 18 Harcourt Road, Hong Kong (Premises).(b)Lipman Karas will be responsible for all costs associated with the Premises and will maintain contents and public liability insurance in respect of the Premises.Clause 2.3 - IT(a)Lipman Karas will permit Karas Lawyers to share and use with Lipman Karas the information technology infrastructure, including personal computers, servers, printers, photocopiers, fax machines, videoconferencing equipment, mobile telephones and landline telephones (the IT infrastructure).(b)Lipman Karas will be responsible for all costs associated with the IT infrastructure (including consumables) and will maintain the IT infrastructure to a reasonable standard.Clause 2.4 - Staff(a)Lipman Karas and Karas Lawyers will share the resources of staff employed by the respective firms.(b)Each firm will be responsible for the salaries and related on-costs of its respective staff.Clause 3.1 - Premises Fee(a)In consideration of the use of the Premises, Karas Lawyers will pay Lipman Karas an annual fee (Premises Fee) calculated in accordance with the following formula: …18Having spent three years practising as a foreign law firm in Hong Kong, in late 2012 Lipman Karas ceased to practise as a foreign law firm. Mr Karas changed the name of Karas Lawyers to Lipman Karas and began trading as “Lipman Karas” in Hong Kong (LKHK).The claims against Mishcon

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The jurisdiction of the Court is engaged by these proceedings, the applicants have standing to bring the proceedings and the action is not oppressive, vexatious or otherwise an abuse of process. The Court can assume jurisdiction over Mishcon by service of these proceedings: Humane Society International Inc v Kyodo Senpaku Kaisha Ltd (2006) 154 FCR 425 at [10] (Black CJ and Finkelstein J). There is no other apparent reason which might cause the Court to consider exercising its discretion against the applicants.Conclusion It is for the reasons set out above that pursuant to FCR 10.42, 10.43 and 10.44, the applicants will be granted leave to serve:(1)the applicants’ originating application, statement of claim and genuine steps statement filed on 21 December 2021;(2)the applicants’ amended originating application and amended statement of claim filed on 26 July 2022;(3)the affidavits of Nathan Peter Day filed in support of the applicants’ interlocutory application;(4)the affidavit of Scipio John Lipman sworn on 1 April 2022;(5)the applicants’ written submissions filed on 26 July 2022 in support of their interlocutory application; (6)a copy of the orders made on 27 April 2022; and(7)a copy of the orders to be made on this Application granting leave to the applicants to serve the Documents set out above on the fourth respondent by sending the Documents by international registered post with return receipt to its registered office, being Africa House, 70 Kingsway, London, England, WC2B 6AH.

Ratio Decidendi

Legal Principle Established

In Hamilton v Meta Platforms Inc [2022] FCA 681 at [4], [5], Cheeseman J summarised the applicable principles governing an application for service out of the jurisdiction as follows:4… In the interlocutory application for leave to serve out of Australia, [the applicant] must establish first, that the Court has jurisdiction in the proceedings (r 10.43(4)(a)); second, that the proceedings are of a kind mentioned in r 10.42 of the Rules (r 10.43(4)(b)); and third, that he has a prima facie case for all or any of the relief claimed in the proceedings: (r 10.43(4)(c)). The application for leave to serve out must be accompanied by an affidavit stating (1) the name of the foreign country where the person to be served is or is likely to be; (2) the proposed method of service; and (3) that the proposed method of service is permitted, relevantly in the present application, under the Hague Convention: r 10.43(3). If [the applicant] establishes each of the matters in rr 10.43(3) and (4) of the Rules, the Court has a residual discretion as to whether to grant leave: Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2006] FCAFC 116; 154 FCR 425, 428 at [3] (Black CJ and Finkelstein J); Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd [2015] FCA 1453; 331 ALR 108, 119 at [66] (Edelman J, when his Honour was in this Court).5[The applicant] need not establish a prima facie case in respect of all of his pleaded claims. He need only establish a prima facie case in relation to one cause of action or remedy: r 10.43(4)(c) of the Rules; Israel Discount Bank Limited v ACN 078 272 867 Pty Ltd (in liq) (formerly Advance Finances Pty Ltd) [2019] FCAFC 90; 367 ALR 71, 84 at [48] (Yates, Beach and Moshinsky JJ).CONSIDERATION FCR 10.42 is subject to FCR 10.43. It provides that an originating application may be served on a person in a foreign country in a proceeding that consists of, or includes, any one or more of the kinds of proceeding mentioned in the table to that Rule. “Foreign country” is defined in FCR 10.41 as meaning a country other than Australia. The claims advanced by the applicants in the ASoC include proceedings based on a contravention of the Corporations Act and contraventions of the ACL comprising Schedule 2 to the Competition and Consumer Act2010 (Cth). These claims come within items 13 and 15 of the table to FCR 10.42. Accordingly, subject to FCR 10.43, the requirements in FCR 10.42 are met.FCR 10.43 The first requirement in FCR 10.43 is that in FCR 10.43(2) the application for leave to serve an originating application on a person in a foreign country must be in accordance with a convention; the Hague Convention; or the law of a foreign country: FCR 10.43(2). The applicants propose to serve the originating application and the accompanying documents identified in the application in the United Kingdom (being the United Kingdom of Great Britain and Northern Ireland) (United Kingdom) using the Hague Convention: first Day affidavit [30]-[35].