Porter, the Trustee of the Property of Thanh Huyen Tran, a Bankrupt v Nguyen
[2019] FCCA 2798
•3 October 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PORTER, THE TRUSTEE OF THE PROPERTY OF THANH HUYEN TRAN, A BANKRUPT v NGUYEN | [2019] FCCA 2798 |
| Catchwords: PRACTICE & PROCEDURE – Application for leave to effect service outside Australia – relevant considerations – service by post in country which is a party to the Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil or Commercial Matters. |
| Legislation: Conveyancing Act 1919 (NSW), ss.7, 66G Bankruptcy Act 1966, ss.27, 77A Judiciary Act 1903, s.79 |
| Cases cited: Fernandez v Univan Leasing 15 AD 3d 343, 790 NYS 2d 155 (2d Dept 2005) Water Splash, Inc. v Menon 581 U.S.___, No. 16-254 |
| Applicant: | PORTER, THE TRUSTEE OF THE PROPERTY OF THANH HUYEN TRAN, A BANKRUPT |
| Respondent: | ANDREW HUU NGUYEN |
| File Number: | SYG 1445 of 2019 |
| Judgment of: | Judge Cameron |
| Hearing date: | 5 August 2019, 24 September 2019 |
| Date of Last Submission: | 24 September 2019 |
| Delivered at: | Sydney |
| Delivered on: | 3 October 2019 |
REPRESENTATION
| Counsel for the Applicant | Mr J Baird |
| Solicitors for the Applicant: | CLH Lawyers |
| No appearance by or on behalf of the respondent. |
ORDERS
The Applicant have leave to serve the following documents filed in this proceeding:
(a)Application dated 11 June 2019;
(b)Affidavit of Jason Lloyd Porter made 5 June 2019;
(c)Further Affidavit of Jason Lloyd Porter made 5 June 2019;
(d)Affidavit of Jonathon Craig Prowse made 12 June 2019;
(e)Affidavit of Darren John Vardy made 12 June 2019;
(f)Affidavit of Sally Nash made 12 June 2019,
on the Respondent, Andrew Huu Nguyen, by sending them to him at 1811 Holly Avenue, Oxnard, CA 93036, United States of America by international registered post with an acknowledgement of receipt to be provided to the applicant.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1445 of 2019
| PORTER, THE TRUSTEE OF THE PROPERTY OF THANH HUYEN TRAN, A BANKRUPT |
Applicant
And
| ANDREW HUU NGUYEN |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
On 11 June 2019 the applicant, Mr Porter, in his capacity as a trustee of the bankrupt estate of Thanh Huyen Tran (“Bankrupt”), sought orders pursuant to s.66G of the Conveyancing Act 1919 (NSW) that statutory trustees be appointed for the sale of a property in Bankstown NSW (“Property”). The Property had been jointly owned by the Bankrupt and the respondent, Mr Nguyen, who is believed to live in the United States of America (“United States”).
On 29 July 2019 Mr Porter filed an application in a case which sought leave to serve the originating application on Mr Nguyen outside Australia.
FACTUAL BACKGROUND
The Bankrupt’s interest in the Property vested in Mr Porter and a Ms Meagher as joint trustees (“Trustees”) following a sequestration order made in this Court on 30 November 2017. On 18 May 2018 this interest was transferred to the Trustees as tenants in common with Mr Nguyen.
Mr Porter notified Mr Nguyen of this appointment and the effect that it might have on the Property by letter dated 4 December 2017.
On 31 January 2018 Mr Porter sought further information about Mr Nguyen’s contact details from the Bankrupt’s legal representatives, AKN & Associates, by issuing a s.77A notice under the Bankruptcy Act 1966.
Between 6 and 13 February 2018 AKN & Associates provided contact information about Mr Nguyen (including his last known contact number and three email addresses) and documentation including an affidavit of Mr Nguyen. In that affidavit Mr Nguyen deposed that:
a)he had lived at an address in Oxnard, California between 2007 and 12 October 2016 (“California Address”);
b)was an American citizen;
c)co-owned the Property with the Bankrupt.
The following attempts were then made to contact Mr Nguyen and to ascertain his position in respect of the property:
a)a letter sent by post and to the three last known email addresses provided by AKN & Associates on 13 February 2018. A response was received from Mr Nguyen the same day from one of the email addresses indicating that he did not understand how the bankruptcy affected him. Mr Porter’s office replied the same day and, inter alia, advised that he seek independent legal assistance;
b)a letter sent by Mr Porter to Mr Nguyen’s email address on 8 March 2018 asking whether Mr Nguyen would prefer to have the property sold or purchase the Trustees’ interest in the property and that, should he fail to nominate his preferred course of action by 23 March 2018, orders would be sought for the appointment of statutory trustees to sell the property;
c)a letter sent by Mr Porter’s solicitors to Mr Nguyen’s email address on 7 December 2018, providing him with searches, transfer and valuation documentation and asking whether he would buy the Trustees’ share in the Property or would “consent and cooperate” in the sale of the Property.
Correspondence then ensued regarding this proceeding:
a)an email sent by Mr Porter’s solicitors on 13 March 2019 asking whether Mr Nguyen had received their prior correspondence, if he would accept service of legal documents by email and if he could provide his bank account details so that payment for his interest in the Property could be made after sale;
b)an email sent by Mr Porter’s solicitors on 14 June 2019 stating that it enclosed the affidavits of Jonathon Craig Prowse made 12 June 2019, Sally Nash made 12 June 2019 and Darren John Vardy made 12 June 2019;
c)an email sent by Mr Porter’s solicitors dated 15 July 2019 enquiring whether Mr Nguyen would receive letters at the California Address:
d)an email sent by Mr Porter’s solicitors dated 9 September 2019 advising that this proceeding had been commenced, briefly summarising the final relief sought and advising that the matter was listed on 24 September 2019. The email addressed a number of other matters and also stated that it enclosed the affidavit of Aaron Edmonds, a solicitor in the employ of Mr Porter’s solicitors, made 13 August 2019 which deposed to the availability of service by post in the United States and specifically in the State of California.
As at the time of the application, no further response from Mr Nguyen had been received despite further attempts to contact him.
As a result of a search undertaken on 15 July 2019 via “Nuwber” (an internet search engine which gathers “publicly available information from third party sources” to allow persons to find “information on people, households [and] property”), Mr Porter thought that Mr Nguyen continued to live at the California Address.
In his affidavit of 19 September 2019 Mr Edmonds deposed that he had received no replies to the emails referred to in that affidavit or any notification that they had not been received at Mr Nguyen’s email address.
PRESENT APPLICATION
In his application in a case, Mr Porter sought leave to serve the initiating application and a number of affidavits on Mr Nguyen by sending them to him at the California Address by international registered post, with return receipt. Leave to serve by email was also sought in the application in a case but not pursued.
HAGUE CONVENTION
Although the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”) expressly provides for a method of service through a system of “Central Authorities” set up in each contracting state, it does not seek to interfere with other, existing and identified methods of service, including service by post.
Articles 1, 3, 5 and 10 of the Hague Convention provide:
Article 1
The present Convention shall apply in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad.
This Convention shall not apply where the address of the person to be served with the document is not known.
…
Article 3
The authority or judicial officer competent under the law of the State in which the documents originate shall forward to the Central Authority of the State addressed a request conforming to the model annexed to the present Convention, without any requirement of legalisation or other equivalent formality.
The document to be served or a copy thereof shall be annexed to the request. The request and the document shall both be furnished in duplicate.
…
Article 5
The Central Authority of the State addressed shall itself serve the document or shall arrange to have it served by an appropriate agency, either –
a)by a method prescribed by its internal law for the service of documents in domestic actions upon persons who are within its territory, or
b)by a particular method requested by the applicant, unless such a method is incompatible with the law of the State addressed.
Subject to sub-paragraph (b) of the first paragraph of this Article, the document may always be served by delivery to an addressee who accepts it voluntarily.
If the document is to be served under the first paragraph above, the Central Authority may require the document to be written in, or translated into, the official language or one of the official languages of the State addressed.
That part of the request, in the form attached to the present Convention, which contains a summary of the document to be served, shall be served with the document.
…
Article 10
Provided the State of destination does not object, the present Convention shall not interfere with –
a)the freedom to send judicial documents, by postal channels, directly to persons abroad,
b)the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination,
c)the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination.
LEGISLATION
By virtue of items 4 and 5 of part 2 of schedule 3 to the Federal Circuit Court Rules 2001, (“Rules”) the following provisions of the Federal Court Rules 2011 (“FC Rules”) apply to this case.
FC Rules Division 10.4 – Service outside Australia
Division 10.4 of the FC Rules provides for service of documents outside Australia.
Rule 10.41 provides:
10.41Definitions for Division 10.4
In this Division:
“convention”, for a foreign country, means a convention (other than the Hague Convention), agreement, arrangement or treaty about service abroad of judicial documents to which the Crown in right of the Commonwealth or, if appropriate, in right of a State, and a foreign country are parties.
“foreign country” means a country other than Australia.
“Hague Convention” means the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965.
Rule 10.42 relevantly provides:
10.42When originating application may be served outside Australia
Subject to rule 10.43, an originating application, or an application under Part 7 of these Rules, 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 following table.
…
Item Kind of proceeding in which originating application may be served on a person outside Australia 1 Proceeding based on a cause of action arising in Australia …
21 Proceeding in which the subject matter, to the extent that it concerns the person to be served, is property in Australia
Rule 10.43 provides relevantly as follows:
10.43 Application for leave to serve originating application outside Australia
(1)Service of an originating application on a person in a foreign country is effective for the purpose of a proceeding only if:
(a)the Court has given leave under subrule (2) before the application is served; or
(b)the Court confirms the service under subrule (6); or
(c)the person served waives any objection to the service by filing a notice of address for service without also making an application under rule 13.01.
(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 a convention, the Hague Convention or the law of the foreign country.
(3)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.
(4)For subrule (2), the party must satisfy the Court 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.
…
FC Rules Division 10.6 – Service under Hague Convention
Division 10.6 of the Rules provides for service of documents under the Hague Convention.
Rule 10.61 relevantly provides:
…
Convention country means a country, other than Australia, that is a party to the Hague Convention.
…
Rule 10.63 provides:
10.63Service abroad of local judicial documents—application of rules 10.64 to 10.68
(1)Subject to subrule (2), rules 10.64 to 10.68 apply to service in a Convention country of a local judicial document.
(2)Rules 10.64 to 10.68 do not apply if service of the document is effected, without application of any compulsion, by an Australian diplomatic or consular agent mentioned in Article 8 of the Hague Convention.
Rules 10.64 to 10.67 set out the steps to be followed when using the Hague Convention’s “Central Authorities” procedure for service outside Australia.
EVIDENCE
Exhibit 1 was a bundle of documents which had been exhibited to Mr Porter when affirming his affidavit in support of the application in a case on 29 July 2019. Included amongst those documents was a copy of the Hague Convention and a list of the Hague Convention’s contracting states which, amongst other things, noted whether a state’s ratification is subject to reservations, declarations, notifications or depository communications. Exhibit 2 was a different version of that document. That list discloses that neither Australia nor the United States have made such an objection.
Mr Porter relied on the affidavit of Mr Edmonds affirmed 13 August 2019 in which Mr Edmonds deposed to the effectiveness and acceptability in the United States of service by post. In that connection Mr Edmonds annexed to his affidavit an extract from s.1013 of the Californian Code of Civil Procedure which provides for service by post in California.
Mr Edmonds also referred to the following American reported decisions:
a)Fernandez v Univan Leasing 15 AD 3d 343, 790 NYS 2d 155 (2d Dept 2005)
b)Cantara v Peeler 267 AD 2d 997, 701 NYS 2d 556 (4th Dept 1999)
c)Ackermann v Levine 788 F2d 830, 839 (2d Cir 1988)
d)In re Cinar Corp. Securities Litigation, 186 FSupp 2d 279 (SDNY 2002)
e)Water Splash, Inc. v Menon 581 U.S.___, No. 16-254; and
f)Otsuka v Balangue 92 Cal. App. 2d 788.
Their ratios are relevantly to the effect that the Hague Convention permits service by post in those participating states which otherwise permit such service and which have not objected to its continued availability notwithstanding the operation of the convention in their respective jurisdictions.
AUTHORITIES
In AIA Australia Ltd v Richards [2017] FCA 84 Allsop CJ considered a situation similar to the present and said:
… 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 [on the Operation of the Hague Service Convention] (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 …
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).
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).
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. (at [12]-[15])
The Chief Justice’s decision was followed by Rares J in Ahmed v Al-Hussain Pty Ltd t/as The Cheesecake Shop [2018] FCA 1741. In TheOwners Strata Plan No 87231 v 3A Composites GmbH [2019] FCA 811 Wigney J made orders permitting overseas service by post in a country which was party to the Hague Convention.
CONSIDERATION
Requirements of application for leave to serve outside Australia
As recorded earlier, under r.10.43(2) of the FC Rules, a party may apply to the Court for leave to serve an originating application on a person in a foreign country in accordance with a convention, the Hague Convention or the law of the foreign country. The application in a case presently under consideration sought service by international post but did not identify whether that method was in accordance with a convention, the Hague Convention or the law of the foreign country
Nevertheless, it was implicit in the arguments raised that service by post was a method of service in accordance with the laws of the United States.
Necessary affidavit evidence
The FC Rules set out various issues which must be addressed by an applicant seeking leave to serve a document outside Australia. The relevant provisions were quoted earlier.
Dealing first with the matters mentioned in s.10.43(3), Mr Porter deposes in his affidavit of 29 July 2019 that:
a)Mr Nguyen is or is likely to be in the United States;
b)(referring to the relief sought in the application in a case) international registered post with return receipt was the intended method of service; and
c)service by post is permitted by the Hague Convention.
Mr Porter’s affidavit therefore satisfied the requirements of r.10.43(2).
Further, in relation to the first point, the evidence supported the contention that Mr Nguyen is or is likely to be in the United States.
As to the third point, it was implicit that the Hague Convention applied to this application notwithstanding that Mr Porter did not seek to employ the method of service which it provided. The Hague Convention expressly states that unless the state of destination objects, the convention “shall not interfere with … the freedom to send judicial documents, by postal channels, directly to persons abroad …”. The material annexed to Mr Edmonds’s affidavit of 13 August 2019 satisfies me that service by post is permitted in the United States. Further, Mr Porter has adduced evidence in the form of a treaty status table which satisfies me that the United States has not qualified its participation in the Hague Convention by any reservation or notification and this persuades me that that convention permits service by post of initiating process in the United States.
Consequently, to the extent that Mr Porter had to prove the potentially contentious matters referred to in his affidavit, I find that he has done so.
Criteria for the grant of leave
Rule 10.43(4) sets out the criteria for the grant of leave.
Rule 10.43(4)(a): Does the Court have jurisdiction in the proceeding?
Mr Porter’s submission on whether the Court has jurisdiction in this matter was limited to reliance on s.27 of the Bankruptcy Act which relevantly provides:
27 Bankruptcy courts
(1)The Federal Court and the Federal Circuit Court have concurrent jurisdiction in bankruptcy, and that jurisdiction is exclusive of the jurisdiction of all courts other than:
(a)the jurisdiction of the High Court under section 75 of the Constitution; or
(b)the jurisdiction of the Family Court under section 35 or 35A of this Act.
However, the situation in this case is not disposed of simply by reliance on that section because Mr Porter does not seek relief under the Bankruptcy Act. What he wants is the appointment, pursuant to s.66G of the (NSW) Conveyancing Act, of trustees to conduct the sale of the Property and, presumably, to account for the proceeds.
Section 66G relevantly provides:
66G Statutory trusts for sale or partition of property held in co-ownership
(1)Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.
…
When read with the definition of “Court” in s.7 of the Conveyancing Act, it becomes apparent that that s.66G confers the power to order relief on the Supreme Court of New South Wales, not on this Court. However, even though the Conveyancing Act does not, and cannot, confer the relevant jurisdiction on this Court, s.79 of the Judiciary Act 1903 does, in cases where the Court is exercising federal jurisdiction in New South Wales. That section relevantly provides:
79 State or Territory laws to govern where applicable
(1)The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.
…
The effect of s.79 is that, in the course of exercising federal jurisdiction in a particular State or Territory the Court will “pick up” the law of that State or Territory as surrogate federal law. That “picking up” was considered in Austral Pacific Group Ltd (In liq) v Airservices Australia (2000) 203 CLR 136 at 143–143 [11]-[13], Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 587 [58]ff and Coshott v Prentice (2014) 221 FCR 450.
Notwithstanding that the relief prayed for is found in a State Act, two recent cases illustrate that this matter is nevertheless one involving the Court’s exercise of its jurisdiction under the Bankruptcy Act. In Weston v Jeffrey, in the matter of Jeffrey [2019] FCA 554, in connection with circumstances not entirely dissimilar from those in this case, Charlesworth J said at [49]-[50]:
The Trustee’s duties, functions and powers in connection with [the bankrupt’s] property are conferred by the Bankruptcy Act. They include:
(1)a duty to determine whether the bankrupt’s estate includes property that can be realised to pay a dividend to creditors (s 19(1)(a));
(2)a duty to take appropriate steps to recover property for the benefit of the estate (s 19(1)(f));
(3)a duty to apply the proceeds of the property of the bankrupt in the order prescribed in s 109 of the Bankruptcy Act;
(4)a duty to declare and distribute dividends amongst the creditors who have proved their debts, with all convenient speed (s 140(1));
(5)a duty to distribute as dividend all moneys in hand (s 140(2));
(6)the power to sell all or any part of the property of the bankrupt (s 134(1));
(7)the power to otherwise administer the property of the bankrupt in any way specified in ss 134(1)(a) to (n), or in any other way (s 134(1)(m)).
The Trustee seeks relief in this proceeding for the purpose of exercising powers and functions conferred by a law of the Parliament in respect of the Trustee’s interest in property, being an interest that owes its existence to a law of the Parliament. The Trustee’s capacity to commence proceedings in respect of the land is a capacity that itself is exercisable by virtue of (at least) s 19(1)(f), s 58(1), s 116(1)(a) and (b) and s 134(1)(m) of the Bankruptcy Act.
In Cooper v Fernihough, in the matter of the bankrupt estate of Phillip George Fernihough [2019] FCA 727 Charlesworth J also said:
As to the sale of the property, this Court in the exercise of its original jurisdiction in bankruptcy may make an order for the sale of co-owned property, although such orders cannot be made under s 30 of the BA so as to affect the rights of a non-bankrupt co-owner: Coshott v Prentice (2014) 221 FCR 450 (at [95] – [104]). The power to make orders for sale may be sourced in such laws of a State that may be picked up and applied in accordance with s 79 of the Judiciary Act 1903 (Cth). In this case, the relevant power is that conferred by s 126 of the Property Law Act 1969 (WA). It provides that on an application such as the present, the Court shall direct a sale of the property “unless it sees good reason to the contrary”. (at [72])
As the present proceeding concerns Mr Porter as trustee of the Bankrupt’s estate taking steps to administer that estate, the Court’s jurisdiction under the Bankruptcy Act is engaged and so by virtue of s.79 of the Judiciary Act s.66G of the Conveyancing Act is picked up as a surrogate federal law. Consequently the Court has jurisdiction to consider and decide Mr Porter’s application for relief in the form of the appointment of trustees for sale of the Property.
Rule 10.43(4)(b): Is the proceeding one which is mentioned in rule 10.42?
The proceeding is based on a cause of action under the Conveyancing Act of New South Wales and its subject matter is real property in that State. It is therefore a proceeding which satisfies the requirements of r.10.42.
Rule 10.43(4)(c): Does the applicant have a prima facie case for all or any of the relief claimed?
The test for a prima facie case “should not call for a substantial inquiry” and will be satisfied if, on the material before the Court, inferences are open which, if translated into findings of fact, would support the relief claimed: Kadam v MiiResorts Group 1 Pty Ltd (No 2) [2016] FCA 1343 at [53]-[54]; AIA Australia Ltd v Richards at [20].
As a result of the bankruptcy of the Bankrupt, Mr Porter is a joint tenant of one half of the Property, as tenant in common with the respondent. Being a trustee of the Bankrupt’s estate he has a duty to get in the Bankrupt’s assets in order to pay her creditors. As joint tenant of half of the Property he is also entitled to seek orders under the Conveyancing Act: Sutherland as Trustee of the Property of Kerrie Nisic aka Kerrie Tsaprounis, a Bankrupt v Tsaprounis [2014] NSWSC 1255 at [3]. In such circumstances he has a prima facie case for orders for the sale of the property.
CONCLUSION
I am satisfied that Mr Porter should have the orders he seeks subject to the correction of the date of the originating application which was misdescribed in the application in a case as “12 June 2019”.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
3 October 2019
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