Skase, C.C. v Referral to the Court under Rule 119 of the Bankruptcy Rules
[1991] FCA 599
•03 OCTOBER 1991
Re: CHRISTOPHER CHARLES SKASE
And: REFERRAL TO THE COURT UNDER RULE 119 OF THE BANKRUPTCY RULES
No. Q B1253 of 1991
FED No. 599
Bankruptcy
104 ALR 229
(1991) 32 FCR 212
COURT
IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND
GENERAL DIVISION
Pincus J.(1)
CATCHWORDS
Bankruptcy - issue of summons on person out of the jurisdiction - presumption against application of statute to foreigners and outside jurisdiction - distinction between power to issue and to serve - effect of s.309(2) of the Bankruptcy Act 1966 on ability to order substituted service.
Bankruptcy Act 1966, ss.81, 309(2)
Bankruptcy Rules, rr.113(1), 119(1), 129A
HEARING
BRISBANE
#DATE 3:10:1991
Counsel for the bankrupt: Mr D.A. Savage
Solicitors for the bankrupt: Kenny and Loel
Counsel for the trustees: Mr S.G. Finch
Solicitors for the trustees: Allen Allen and Hemsley
Counsel for the Registrar in Mr T.W. Quinn
Bankruptcy:
Solicitors for the Registrar in Australian Government Solicitor
Bankruptcy:
ORDER
The question of law be answered yes.
A notice in the form set out in the reasons, signed by the District Registrar or a Deputy Registrar, accompanied by copies of a summons under s.81 of the Bankruptcy Act 1966 directed to Joanne Nanette Skase (also known as Pixie Nan Skase) and of this order, be posted to her by the trustees at each of the three addresses mentioned in the reasons.
The said summons be deemed to have been duly served upon the said Joanne Nanette Skase twenty-one days after the filing of an affidavit deposing to due compliance with this order.
There be liberty to apply.
NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
JUDGE1
The trustees of the estate of Mr Skase, who is a bankrupt, have applied to the Registrar under s.81 of the Bankruptcy Act 1966 ("the Act") for the issue of summonses for the examination of the bankrupt and of his wife, Joanne Nanette Skase. The Registrar has stated the facts and referred the matter for hearing and determination by the Court as a special case under Rule 119(1) of the Bankruptcy Rules ("the Rules"). The question of law which the Registrar desires to have determined is stated in the reference as follows:
"Can a summons validly issue to a bankrupt out of the jurisdiction or to another person out of the jurisdiction under section 81 of the Bankruptcy Act 1966?"
The reference says that each summons "in its form, discloses a given address of the witness as out of the jurisdiction and within the country of Spain, at which address they are, or are now generally believed to be, resident or located". The evidence shows that to be so.
When the reference was called on, counsel for the trustees asked that there be heard, in addition, an application for directions as to service.
It was proved that the bankrupt gave an undertaking to the Court to instruct solicitors in Brisbane to accept service on his behalf of any court process (initiating or otherwise) and that he had done so. Accordingly, an order was made for service on those solicitors of the s.81 summons relating to the bankrupt; the evidence showed that their instructions to accept service on his behalf still subsisted. It is therefore necessary to determine the question only so far as Mrs Skase is concerned.
Section 81 of the Act reads, in part, as follows:
"(1) Where a person (in this section called the 'relevant person') becomes a bankrupt, the Court or the Registrar may at any time (whether before or after the end of the bankruptcy), on the application of:
(a) a person (in this section called a 'creditor') who has or had a debt provable in the bankruptcy;
(b) the trustee of the relevant person's estate; or
(c) the Official Receiver;
summon the relevant person, or an examinable person in relation to the relevant person, for examination in relation to the bankruptcy.
(1A) A summons to a person by the Court or the Registrar under subsection (1) shall require the person to attend:
(a) at a specified place and at a specified time on a specified day, being a place, time and day that are reasonable in the circumstances; and
(b) before the Court or the Registrar or, if the Court or the Registrar thinks fit, a magistrate;
to be examined on oath under this section about the relevant person and the relevant person's examinable affairs".
The Rules have the effect that a summons such as that proposed to be served on Mrs Skase must "be served personally on the person to be examined": Rule 129A. This provision is further discussed below. It was argued by Mr Finch on behalf of the trustees that the Court has power under s.81 of the Act to summon a person, not being the bankrupt whose affairs are to be looked at, although that person is out of the jurisdiction.
Special considerations may arise with respect to a summons issued to a bankrupt (as opposed to a person sought to be examined in relation to a bankrupt's affairs) in view of the indications in the Act that the Court may exercise powers in relation to bankrupts who are not physically present within the jurisdiction: see s.40(1)(c)(i) and s.43(1)(b) of the Act.
Counsel for the trustees relied on Re Mendonca; ex parte Commissioner of Taxation (1969) 15 FLR 256 in which Gibbs J. ordered that a petition for a sequestration order be served out of the jurisdiction. In that case, his Honour referred to provisions of the Act and Rules and said:
"These provisions give the Court ample power to order service outside the jurisdiction, and it seems to me that once the Court sees that a petition is presented in circumstances which bring the case within s.43(1), but the debtor has absconded from Australia, the Court will normally order service on the debtor out of the jurisdiction" (p 261).
Although made in the course of a discussion of service of a creditor's petition, those remarks (which are mentioned further, below) throw light on the problem of service of bankruptcy processes generally, out of the jurisdiction.
It is clear that the Parliament could validly provide for issue of a summons against persons resident outside Australia to give evidence with respect to the affairs of an Australian bankrupt. The external affairs power extends to persons outside Australia: Polyukhovich v Commonwealth of Australia (1991) 101 ALR 545. For that reason, the presumption against extra-territorial operation cannot, in its application to the Commonwealth, rest on lack of power; it cannot properly be stated as a mere presumption that "the legislature does not intend to exceed its jurisdiction": cf. The Jumbunna Coal Mine, No Liability v The Victorian Coal Miners' Association (1908) 6 CLR 309 at 363.
The presumption has two aspects and both were referred to by Windeyer J. in Meyer Heine Pty. Ltd. v The China Navigation Company Ltd. (1966) 115 CLR 10:
"The prima facie presumption of English law is that a statute is to be construed as limited in its operation to the territory or the nationals of the state which enacts it" (p 43).
In that case, the High Court had to consider whether a particular Australian statute was caught by the presumption against application "to foreigners in respect to acts done by them outside the dominions of the sovereign power enacting" (p 23).
One reason for the presumption against application of a statute to foreigners in foreign places is the notion that it is contrary to international practice to make laws so applying. This notion is commonly referred to in the cases. For example, in In Re AB. and Co. (1900) 1 QB 541, the then English bankruptcy statute was held not to permit the making of a receiving order against a foreigner resident out of the jurisdiction. Lindley M.R. said that:
"... unless Parliament has conferred upon the Court that power in language which is unmistakable, the Court is not to assume that Parliament intended to do that which might so seriously affect foreigners who are not resident here, and might give offence to foreign Governments" (pp 544, 545).
In Gold Star Publications Ltd. v Director of Public Prosecutions (1981) 2 All ER 257 at 261, Lord Simon, who dissented, spoke of the rule against extra-territorial operation in this way:
"But two concepts lie behind this rule. First, that Parliament does not legislate where it has no effective power of enforcement ... But the second concept does indeed further the appellants' argument: the rule is also based on international comity. Other than quite exceptionally, sovereigns do not meddle with the subjects of foreign sovereigns within the jurisdiction of those foreign sovereigns ..."
Since s.7(1) expressly extends the Bankruptcy Act (and not by way of presumption) to "persons who are not Australian citizens", there would not appear to be much room left for the operation of the presumption against the Parliament's purporting to govern foreigners. The question relates to that aspect of the presumption which would confine statutes so as to operate only within Australia.
Counsel referred me to a number of cases fairly directly relevant to the problem. The first is Re Tucker (a bankrupt); ex parte Tucker (1988) 1 All ER 603 where the English provision then corresponding to s.81 of our Bankruptcy Act was held not to apply to a person who was not at any relevant time in England. The result may have been thought to be almost inevitable, because s.25(6) of the English Bankruptcy Act 1914 seemed plainly to imply that only persons physically present in England could be summoned. However, Dillon L.J. made some general remarks which are of present assistance:
"I note that the general practice in international law is that the courts of a country only have power to summon before them persons who accept service or are present within the territory of that country when served with the appropriate process ... Moreover, the English court has never had any general power to serve a subpoena ad testificandum or subpoena duces tecum out of the jurisdiction on a British subject resident outside the United Kingdom, so as to compel him to come and give evidence in an English court" (p 609).
That decision of the Court of Appeal was distinguished by a single judge in In Re Seagull Manufacturing Co. Ltd. (in liquidation) (1991) 3 WLR 307, decided on 30 April last. There, a statute in general terms - i.e. containing no reference to the problem of extra-territoriality - permitted a director of a company to be summoned for the purpose of examination concerning the company's affairs. The judge held the provision to have an extra-territorial reach, doing so on the basis of what seem to me rather equivocal indications in the statute before him.
The third case is In the matter of Deposit and Investment Company Limited, a decision of Lockhart J. (unreported, 26 July 1991). There, an application was made on behalf of the Australian Securities Commission for an order for the attendance before the Court for examination of certain persons resident overseas with respect to the affairs of companies. Again, the section was couched in terms which made no express or implicit reference to the extra-territoriality problem. Lockhart J. remarked:
"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".
His Honour declined to order the attendance of people not resident in this country.
It is my opinion that the provision with which I am concerned applies so as to permit a summons to be issued against a person of the kind mentioned in s.81 of the Act, wherever that person happens to be at the time of issue of the summons. A distinction must be drawn between the power to issue the summons and the question of service and enforcement. That distinction is, of course, of particular importance in considering originating process such as a writ. There is no rule that a writ may not, without special statutory authority, be issued against a person who is at the time of issue resident outside the jurisdiction; the relevant inhibition is on service, not issue. It seems improbable that the Commonwealth Parliament intended, when it enacted s.81, that there should be no power to issue a summons unless it were shown that the person summoned was, at the time of issue, within the jurisdiction. People are now able to travel in and out of Australia much more freely than they could when the older cases were decided and the location of a proposed examinee on a particular day might be hard to determine. In the absence of any decisive authority, I propose to follow the example set in the Seagull Manufacturing Co. case, and to read the expression "examinable person" in s.81 of the Act literally, without any implication that the person must be present within the jurisdiction at the time of issue of the summons.
The trustees also applied, as I have mentioned, for directions as to service and that application raises questions of a different kind. It was argued for the trustees that a summons in respect of Mrs Skase could be served by an order made under s.309(2) of the Act which reads as follows:
"Where a notice or other document is required by this Act to be served on or given to a person, the Court may, in a particular case, order that it be given or served in a manner specified by the Court, whether or not any other manner of giving or serving the notice or other document is prescribed".
In Re Mendonca (above), after referring to that provision and to Rule 113(1), Gibbs J. remarked that those provisions "give the Court ample power to order service outside the jurisdiction". Rule 113(1) reads as follows:
"Where the Court is satisfied that -
(a) the provisions of the Act relating to practice and procedure and the rules made under the Act do not make provision with respect to the practice and procedure applicable in the circumstances of a particular case; or
(b) difficulty arises or doubt exists as to the practice or procedure applicable in the circumstances of a particular case, the Court may give such directions with respect to the practice and procedure to be followed in the case as the Court considers necessary".
The other provision of the Act and Rules which needs to be kept in mind is Rule 129A, referred to above, which requires that such a summons as that which I am considering "be served personally on the person to be examined". The word "prescribed" which is used in s.309(2) is defined as meaning "prescribed by this Act or by rules under this Act": s.5. Therefore, the Court may exercise its power under s.309(2), even in a case where a Rule specifically requires personal service, as Rule 129A does. It is true that Rule 15, dealt with by the Court in Re Mendonca, made express reference to the possibility of an order under s.309(2) of the Act, whereas Rule 129A is on its face absolute in its requirement of personal service. Nevertheless, it appears to me that s.309(2) should be held (following Re Mendonca) to have the effect of permitting an order for substituted service out of the jurisdiction. The decisions in Re Trimbole; ex parte Deputy Commissioner of Taxation (1984) 4 FCR 586 and Amalgamated Wireless (Australasia) Ltd. v McDonnell Douglas Corporation (1987) 77 ALR 537 give some added support to this view.
Mr Quinn, who appeared instructed by the Australian Government Solicitor to assist the Court, drew attention to the existence of a Convention between the United Kingdom and Spain regarding Legal Proceedings in Civil and Commercial Matters (of June 27, 1929), to which Australia acceded from 10 November 1933. Part 2 makes provision for service of judicial and extra-judicial documents in terms which do not require to be recited here; on the evidence, there could be no expectation that Spain would co-operate in serving under the Convention. The reason for that lack of expectation is, according to the evidence, that:
"It is the Australian Government's current policy to refuse to serve overseas subpoenas or summonses to attend foreign courts where the sanction for non-attendance is penal or may result in confiscation of property or something other than having judgement (sic) recorded against the person to be served in default of appearance".
Non-attendance after service of a s.81 summons may ultimately result in penal sanctions: see s.264A of the Act.
To put this point more simply, one can hardly expect the Spanish authorities to assist Australian courts in relation to a matter of a kind in which Australia would not assist Spanish courts.
It appears to me, however, that the case is one in which it is appropriate to make an order for substituted service. It is true that there may be difficulties about enforcement if Mrs Skase does not comply with the summonses, but this is not to say that the service is necessarily futile; Mrs Skase may comply. The case is one in which an order for substituted service is particularly likely to be effective because the trustees' endeavours under s.81 of the Act have received a considerable amount of publicity - some of which was commented upon by Mr Quinn and is further mentioned below.
In Re Trimbole (above), Sheppard J. said, in effect, that to purport to serve an Australian court process in a foreign country (other than pursuant to a convention) would be inconsistent with international comity and his Honour directed that notice of the presentation of the petition be given to the debtor. I propose to direct that notice of this order, accompanied by copies of the relevant documents, be served by post at three addresses mentioned in the evidence; it appears to me extremely likely that this course will bring the matter to the attention of Mrs Skase. It will be further ordered that the summons under s.81 of the Act directed to Mrs Skase shall be deemed to have been duly served twenty-one days after the filing of an affidavit deposing to compliance with the order for posting.
I revert to the question of assertions in the press as to the course of the trustees' management of the estate. A number of press clippings have been placed before me which contain remarks (some, correctly or otherwise, attributed to a trustee) of a character which no responsible trustee would, as an officer of the Court, consider making. The impression created by some of this material is that the District Registrar has been pressed for a long time to issue a summons against the bankrupt, but has failed to do so. As was conceded by the counsel for the trustees, this is quite untrue. It is also suggested in this material that one of the trustees holds an opinion that the bankrupt has been guilty of offences; if he does, it is not one which should be publicly expressed. I have thought it desirable to make reference to these points in case it is thought necessary by the trustees' legal advisers to discuss with them the permissible limits of public comment in matters of this sort and, in particular, the limits imposed by the law as to contempt of court.
The question of law put before the Court by the Registrar will be answered yes. As to the directions sought, it will be ordered that a notice in the form set out below, signed by the District Registrar or a Deputy Registrar, accompanied by copies of a summons under s.81 of the Act directed to Joanne Nanette Skase (also known as Pixie Nan Skase) and of this order be posted to her by the trustees at each of the three addresses listed below and that the said summons shall be deemed to have been duly served upon the said Joanne Nanette Skase twenty-one days after the filing of an affidavit deposing to due compliance with this order. There will be liberty to apply.
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