Stowe Australia Pty Ltd v Denham Constructions Project Company 810 Pty Ltd
[2014] ACTSC 402
•22 October 2014
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Stowe Australia Pty Ltd v Denham Constructions Project Company 810 Pty Ltd |
Citation: | [2014] ACTSC 402 |
Hearing/Decision Date: | 22 October 2014 |
ReasonsDate: | 23 October 2014 |
Before: | Mossop M |
Decision: | See [3]-[4], [70] |
Category: | Interlocutory application |
Catchwords: | PRACTICE AND PROCEDURE – Application for substituted service of subpoenas – where subpoenas objected to – whether addressee is a senior officer or “a person who has relevant knowledge about the circumstances of the enforcement debtor” – whether the giving of evidence is “necessary in the interests of justice” – whether requirements of s 30(2)(b) Service and Execution of Process Act 1992 (Cth) satisfied – whether it is “impracticable, for any reason, for the document to be served in the authorised way” – whether the alternative way of service reasonably likely to bring the document to the attention of the person to be served – whether an order for substituted service should be made as a matter of discretion |
Legislation Cited: | Building and Construction Industry (Security of Payment) Act 2009 (ACT) Court Procedure Rules 2006 (ACT) |
Cases Cited: | ASIC v Hellicar (2012) 247 CLR 345 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 |
Parties: | Stowe Australia Pty Ltd (Plaintiff) Denham Constructions Project Company 810 Pty Ltd (Defendant) |
Representation: | Counsel: Mr S Robertson (Plaintiff) Mr G Blank (Defendant) |
| Solicitors: Hicksons Lawyers (Plaintiff) Crisp Legal (Defendant) | |
File Number(s): | SC 215 of 2014 |
Background
Yesterday I made orders relating to substituted service of two subpoenas. The background to the applications that led to those orders is somewhat out of the ordinary. The applications for substituted service were made as a way to cut through various arguments that were to be advanced in relation to the validity of the subpoenas, which were initially returnable for the purpose of an enforcement hearing on 11 September 2014. On that date, however, pending argument as to the enforceability of the subpoenas, the subpoenas and the enforcement hearing were adjourned by the Deputy Registrar until this morning.
Yesterday two applications were returnable before the Court. The first, an application dated 16 September 2014, was an application to set aside the subpoenas. The second, an application dated 3 October 2014, was an application seeking, inter alia, orders permitting substituted service of the subpoenas so as to permit the enforcement hearing scheduled for today to proceed.
At the conclusion of the hearing yesterday I made orders substantially in the form sought by the plaintiff and enforcement creditor, Stowe Australia Pty Ltd, permitting service, other than personal service, of subpoenas on two persons associated with the defendant and enforcement debtor, Denham Constructions Project Company 810 Pty Ltd.
Those orders permitted the subpoenas to be served by email on the solicitors acting for the individuals to whom they were directed by 6.00pm yesterday evening. They permitted the amendment of the terms of the original subpoenas so that they correctly reflected a requirement to attend this morning. I also made orders pursuant to the Service and Execution of Process Act 1992 (Cth) (SEP Act) permitting and requiring them to be served by 6.00pm yesterday by email to various identified email addresses. The effect of the orders was that they would be taken to have been personally served when the subpoenas were emailed to those addresses. I dispensed with the requirement under r 2107 of the Court Procedure Rules 2006 (ACT) (Rules), which relates to the filing of a statement by the recipient of the subpoenas. I directed that the orders be entered forthwith.
I indicated at the time of making the orders that I would give reasons today and I now do so.
In order to understand the background to the current applications it is necessary to set out some of the procedural background .
Background
I will refer to Stowe Australia Pty Ltd, the enforcement creditor, as Stowe and Denham Constructions Project Company 810 Pty Ltd, the enforcement debtor, as Denham 810.
Crisp Legal are the solicitors for Denham 810. Hicksons are the solicitors for Stowe.
Stowe is a subcontractor to Denham 810 on a construction project in the Australian Capital Territory known as BCS Gracewood Aged Care Facility Griffith. BCS refers to, as I understand it, Baptist Community Services. Denham 810 is in turn a subcontractor to Denham Constructions Pty Ltd. The relationship between Denham 810 and Denham Constructions Pty Ltd is a matter which I will refer to later in these reasons.
Mr Thomas George Mulready is the sole director of Denham 810. Mr Steve McGrath is the sole director and shareholder of Denham Constructions Pty Ltd.
Chronology
On 28 May 2014 an order made under s 26 of the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (Security of Payment Act) in favour of Stowe against Denham 810 was registered in the Supreme Court of the Australian Capital Territory. The judgment was for $469,211.40.
In June and July 2014 there were proceedings before me relating to the adjudication and judgment. During the course of those proceedings Denham 810 put on, and then abandoned, an application to set aside the judgment: see Denham Constructions Project Company 810 Pty Ltd v Smithies & Stowe Australia Pty Ltd [2014] ACTSC 169 at [17]-[18]. It did so in order not to trigger the obligation in s 27(4) of the Security of Payment Act.
On 19 June 2014 a judgment relating to the same substantive amount was entered in the New South Wales District Court as a result of the registration of the ACT judgment.
On 18 July 2014 examination notices relevant to the enforcement of the District Court judgment were served on Crisp Legal, who acted also for Mr Mulready and Mr McGrath. This was done pursuant to the relevant rules in New South Wales. No documents were produced in response to those examination notices. Stowe has not taken any further steps in relation to those examination notices or the failure to produce documents.
On 1 August 2014 orders to attend an enforcement hearing and subpoenas addressed to each of Mr Mulready and Mr McGrath were issued from the registry of this Court.
On 19 and 21 August 2014 the commercial agents engaged by Hicksons attempted to serve Mr Mulready and Mr McGrath at the company address of Denham 810, being 1/48 Topham Road, Smeaton Grange NSW. Those premises were surrounded by a security fence and when entrance was permitted it was only as far as a reception desk. The agents were unable to serve Mr Mulready or Mr McGrath on those days because Mr Mulready was said to be at university (on the first day) or sick (on the second day) and Mr McGrath was said not to be in attendance on either occasion.
On 26 August 2014 the unsuccessful service was reported to Hicksons. Hicksons then wrote to Crisp Legal requesting that they obtain instructions to accept service from Mr Mulready and Mr McGrath of the subpoenas.
On 27 August 2014 Crisp Legal confirmed that they had instructions to accept service and the two subpoenas and examination summonses were served by email on Crisp Legal as well as solicitors who had acted as Crisp Legal’s Canberra agents. Those orders to attend an enforcement hearing were directed to Mr Mulready and Mr McGrath. No notice under the SEP Act was included with the subpoenas that were served.
On 5 September 2014 Crisp Legal took objection (by letter dated 4 September 2014) on behalf of Mr McGrath and Mr Mulready to the subpoenas on grounds including failure to comply with r 2015 and the assertion that Mr McGrath was not a senior officer of Denham 810 and hence outside the scope of the Rules which permitted him to be served with a subpoena. Various objections were also taken in relation to the scope of the documents required to be produced by Mr Mulready. No point was taken about any defect in service as a consequence of the failure to include an SEP Act notice.
On 9 September 2014 Crisp Legal indicated that Mr Mulready and Mr McGrath had made arrangements to appear at the ACT Supreme Court on 11 September 2014.
On 10 September 2014 Crisp Legal produced documents in response to the subpoena addressed to Mr Mulready stating:
Please see attached documents produced in response to the Enforcement Hearing Subpoena addressed to Mr Mulready … We maintain our objection to the enforcement order and subpoena addressed to Mr McGrath.
On 11 September 2014 the enforcement hearing was to take place before the Deputy Registrar. Mr Blank of counsel conditionally appeared for Mr Mulready and Mr McGrath and made an oral application without any prior notice to set aside each subpoena on the grounds that no conduct money was provided, no notice under the SEP Act was served and that both subpoenas were an abuse of process. The Deputy Registrar made orders requiring any application by Denham 810 or any examinee in relation to the subpoenas be filed within seven days and that the matter then be docketed to a judge or the Master. The enforcement hearing was then adjourned until 23 October 2014 at 11.00am.
On 26 September 2014 the proceedings were listed before me on 22 October 2014 and consent orders were made permitting Stowe to file any application in relation to the subpoenas by 5 October 2014.
On 17 September 2014 the orders to attend the enforcement hearing and enforcement hearing subpoenas were served on Crisp Legal. These were the same subpoenas that had been earlier served which provided that the last day for service of the subpoena was 27 August 2014 and the date for appearance of 11 September 2014. This course was apparently adopted because enquiries of the registry indicated that further subpoenas would not be issued. The reasons identified for that and the correctness of those reasons do not need to be traversed for present purposes. Conduct money and an undertaking to pay travel expenses were tendered at the time of service. The documents were served with a notice under the SEP Act.
On 3 October 2014 Stowe filed an application in proceedings in response to Denham 810’s application seeking orders preventing Denham 810 from being heard, staying the proceedings until security for costs was provided and permitting substituted service of amended subpoenas on Mr Mulready and Mr McGrath.
At the commencement of the hearing before me yesterday Mr Blank announced that he appeared for Mr Mulready and McGrath on a conditional basis. He did not announce an appearance on behalf of Denham 810. No application in relation to the subpoenas had been made by either Mr Mulready or Mr McGrath. The application in proceedings had been made by Denham 810 only. After a short adjournment Mr Blank indicated that he then appeared for Denham 810 as well as Mr Mulready and Mr McGrath. Upon his oral application, the application in proceedings dated 22 September 2014 was amended so as to make each of Mr McGrath and Mr Mulready applicants.
Various orders had been sought in the application made by Stowe on 3 October 2014 arising from the fact that Denham 810 was the sole applicant. Those orders related to the provision of security for costs and an issue as to whether Denham 810 should be heard on its application when it had not paid the amount owing under the judgment of the Court. Therefore, as a result of the amendment made to the application to make Mr Mulready and Mr McGrath applicants, counsel for Stowe, Mr Robertson, indicated that he no longer sought orders 1, 3, 4 and 5 in the application in proceeding dated 3 October 2014. Those orders related to security for costs and non-compliance by Denham 810 with previous orders. Mr Robertson submitted that upon the individual recipients of the subpoenas being named as applicants, the basis for the making of orders against Denham 810 had been taken away. That was for the reason that the basis for any order for security had been taken away given that individuals were now applicants, as had the arguments based on failure to pay the money under the judgment because the individual applicants were not subject to that judgment. He sought a fixed sum costs order in amount of $2000 against Denham 810. I reserved the question of costs.
After hearing submissions from the parties I decided that I would first hear Stowe’s application for an order for substituted service. If that order was granted then that would have the effect of bypassing the necessity to make rulings about the validity of earlier attempts at service. The evidence in relation to the earlier attempts at service became relevant only in so far as it provided background to the application for substituted service. The reason for adopting that course was that, even if the arguments about past attempts at service were correct, it would be open to the Court to permit further subpoenas to be issued which could be made returnable in the future. The issue would then become whether or not there was any basis in the circumstances for a departure from the requirement for personal service and when an enforcement hearing should occur. These were issues that would arise in any event on Stowe’s application for substituted service of the amended subpoenas. Adopting this course did not have the effect of denying Denham 810 and the individual applicants of any rights to agitate the validity of the service if I reached the conclusion that an order for substituted service that would permit the examination hearing listed for today to proceed was not appropriate.
In support of Stowe’s application, it read the affidavit of Tatyana Virgara dated 7 October 2014, the affidavit of Scott Gandy dated 11 September 2014 and the affidavit of Christie Farisopoulos dated 19 September 2014. Some additional correspondence was also tendered. Denham 810 read the affidavit of Michael Arnot dated 18 September 2014 and tendered a copy of the construction contract between Stowe and Denham 810.
Issues
The position of Stowe was essentially that orders should be made permitting the existing subpoenas to be amended and re-served in a way likely to bring them to the attention of Mr Mulready and Mr McGrath because the requirements of r 6460 were met and in the circumstances it was appropriate that the examination proceed today.
Rule 6460 permits the Court to make an order for substituted service if it is satisfied that “it is impracticable, for any reason, for the document to be served in the authorised way” (see r 6460(3)(a)) and “the alternative way is reasonably likely to bring the document to the attention of the person to be served” (see r 6460(3)(b)). Rule 6460(5) permits the Court to make an order even though the person to be served is not in the ACT. Where an order is made then, for any provision requiring personal service on a person, service of a document pursuant to a substituted service order is taken to be personal service of the document on the person: r 6460(6). Plainly enough, when the preconditions in rr 6460(3)(a) and (b) are met, whether or not to make an order for substituted service involves an exercise of discretion.
Enforcement is dealt with in Part 2.18 of the Rules. Rule 2100 permits an enforcement creditor to apply for an enforcement hearing. It requires the creditor to file a draft order and an affidavit in support of the application. Rule 2103 provides that if the Court orders that an enforcement hearing be held it must set a date for the enforcement hearing and, by subpoena, require the addressee of the subpoena to complete, swear and file a statement of the enforcement debtor’s financial position in accordance with r 2106 and to attend Court to answer questions, give information and produce documents stated in the order. Rule 2104 identifies who may be subpoenaed to appear for the purposes of an enforcement hearing. Rule 2104(g) applies where the enforcement debtor is a corporation and permits “any senior officer of the corporation” to be the subject of a subpoena. “Senior officer” of a corporation is defined in r 2000 to include, “the principal officer of the corporation and anyone else who (whether alone or with others) has or has had powers of management, direction or control of the corporation.” “Principal officer” of the corporation is also a defined term and includes “the general manager, chief executive officer, or other person, (however described) having general management of the affairs of the corporation”.
Rule 2105 provides that an enforcement hearing subpoena must be served on the addressee for the subpoena at least 14 days before the date set for the enforcement hearing and that the financial information form required by r 2106 must be served with the enforcement hearing subpoena. Rule 2106 requires that at least eight days before the date set for the enforcement hearing the addressee of the enforcement hearing subpoena must file in court a sworn statement of the enforcement debtor’s financial position. The registrar is then obliged to give a copy of the statement to the enforcement creditor at least five days before the date set for the enforcement hearing. If the enforcement creditor is satisfied with the information in the statement, the enforcement creditor may give notice to the addressee of the subpoena and the registrar that the addressee is no longer required to attend the enforcement hearing: r 2106(4).
Rule 2107 provides that the Court may also issue a subpoena under Part 6.9 - the general provisions relating to subpoenas - to “a person who has relevant knowledge about the circumstances of the enforcement debtor”.
Part 3 of the SEP Act relates to service of subpoenas. Section 30 deals with the time for service and s 31 deals with information that must be provided at the time of service. The regulations identify the form that must be served with the subpoena, which is Form 2 in the Service and Execution of Process Regulations 1993. Section 32 imposes a requirement to tender or pay allowances and travelling expenses sufficient to meet the person is reasonable expenses of complying with the subpoena.
In relation to the time for service, s 30 requires the period between service and the day on which the person is required to comply with the subpoena be not less than 14 days or “such shorter period as the court of issue or the authority of issue, on application, allows”: s 30(1). Section 30(2) provides:
(2)The court or authority may allow a shorter period only if it is satisfied that:
(a)the giving of the evidence likely to be given by the person to whom the subpoena is addressed, or the production of a document or thing specified in the subpoena, is necessary in the interests of justice; and
(b)there will be enough time for the person:
(i) to comply with the subpoena without hardship or serious inconvenience; and
(ii) to make an application under section 33.
In the light of this factual and legislative background the present applications must be determined by answering the following questions:
(i)Is Mr McGrath a senior officer of Denham 810 or “a person who has relevant knowledge about the circumstances of the enforcement debtor”?
(ii)Is the giving of evidence by Mr McGrath and Mr Mulready “necessary in the interests of justice”?
(iii)Are the requirements of s 30(2)(b) of the SEP Act satisfied?
(iv)Is it “impracticable, for any reason, for the document to be served in the authorised way”?
(v)Is the alternative way of service reasonably likely to bring the document to the attention of the person to be served?
(vi)Should an order for substituted service have been made as a matter of discretion?
I will now address each of those questions in turn.
Is Mr McGrath a senior officer of Denham 810 or “a person who has relevant knowledge about the circumstances of the enforcement debtor”?
Denham 810 and Mr McGrath submitted that the evidence did not establish that Mr McGrath was a senior officer of Denham 810 because it was an equally available inference that he was acting in his capacity as an officer of Denham Constructions Pty Ltd, which, under clause 37.5 of the contract between Denham 810 and Stowe, was entitled, on occasions, to act as agent for Denham 810 or, alternatively, because Denham Constructions Pty Ltd was the head contractor. Further, they submitted that any involvement in management was not management “of the corporation” but merely management of a particular project.
The affidavit of Scott Allan Gandy of 11 September 2014, which annexes an affidavit of Mr McGrath dated 9 May 2014 affirmed for the purposes of proceedings in the NSW Supreme Court, provides evidence of Mr McGrath’s role in relation to the Denham 810. In that affidavit Mr McGrath identifies himself as the Managing Director of Denham Constructions Pty Ltd, a position which he has held for approximately 20 years. He also identifies himself as the “project director for projects undertaken by companies in the Denham Group in the Australian Capital Territory”, including the Baptist Community Services project, which is the source of the underlying disputes and adjudications between Stowe and Denham 810.
ASIC searches annexed to the affidavit of Mr Gandy disclose:
(a)Mr McGrath is the sole director and shareholder of Denham Constructions Pty Ltd;
(b)Mr Mulready is the sole director and secretary of Denham 810;
(c)Denham 810 has 10 ordinary shares, all of which are owned by McGrath Holdings Investments Pty Ltd; and
(d)McGrath Holdings Investments Pty Ltd is a company, the shares in which are owned by Mr McGrath, and the director of whom is Mr McGrath.
Therefore, through his shareholding in McGrath Holdings Investments Pty Ltd, Mr McGrath owns, and is in a position to direct or control the operations of, Denham 810.
The actual terms of Mr McGrath’s affidavit make it clear that he was dealing with representatives of Stowe on the basis that in order to resolve disputes between the contracting parties particular representatives of Stowe would need to speak to him. That is consistent with him exercising effective control over Denham 810 and inconsistent with him having a confined role in relation to a project rather than the activities of the corporation as a whole.
Also annexed to Mr McGrath’s affidavit is correspondence dated 24 April 2014 written by Mr McGrath communicating an offer to settle the dispute between Denham 810 and Stowe. It is clear from the terms of the letter that Mr McGrath is exercising the power to make offers on behalf of Denham 810 and to delegate the authority to deal with matters arising out of the offer to settle to other identified persons. That correspondence is not consistent with him performing a limited role of project director in relation to only a project rather than the affairs of the company as a whole. There is earlier correspondence sent to Mr Gandy in June 2013 explaining delays in making payments to Stowe, consistent with Mr McGrath having, in practice, a general management role for Denham 810.
Also included in Mr Gandy’s affidavit is a letter from a firm of chartered accountants forwarding the financial reports for Denham 810 to Mr McGrath at Denham Construction Pty Ltd. The terms of the letter are consistent with the accountants reporting to a client of theirs. The terms of the letter support a finding that Mr McGrath has control over the “project companies” and is in a position to direct the director of Denham 810 to sign the company accounts.
Because of an objection to the form of one portion of Mr Gandy’s affidavit I gave leave for some further oral evidence from Mr Gandy. He explained that in relation to disputes between the contracting parties, on site representatives of Denham 810 reached the point where they could not deal with the dispute and told Mr Gandy that he needed to deal with Mr McGrath who controlled the money.
The ASIC records annexed to Mr Gandy’s affidavit show that there are a large number of companies in the Denham Constructions group. It appears that particular projects are undertaken by separate companies established for that project, each of which bear the name in the form, Denham Constructions Project Company [number] Pty Ltd. The name of the debtor in the present case, Denham Constructions Project Company 810 Pty Ltd, is reflective of that naming system. Mr Gandy gave evidence that, although the request for tender and early works package on the project were carried out at the request of Denham Constructions Pty Ltd (the company of which Mr McGrath is the managing director), the Denham interests insisted, for reasons which were not clearly explained, upon interposing Denham 810 between Denham Constructions Pty Ltd and Stowe. That is consistent with Mr McGrath exercising control though his shareholding over individual project companies.
Also annexed to Mr Gandy’s affidavit was a search of the internet that discloses at least one website, “zoominfo.com”, which identifies a Thomas Mulready as being a “building cadet” at Denham Constructions Pty Ltd, located at Smeaton Grange, New South Wales. The relevant entry indicates that it was updated on 30 August 2013. There was no evidence as to how this entry was generated. It is evidence which I would give little weight in the absence of corroborating information. However, there is also evidence that when the process servers attempted to serve Mr Mulready at the office in Smeaton Grange he was said to be at university, consistent with him being a relatively junior employee of a Denham entity, appointed and effectively controlled by the shareholder. That is also consistent with the terms of the letter from the accountants which were indicative of Mr McGrath being in a position to direct Mr Mulready to sign Denham 810’s accounts.
In the light of the above evidence it is very clear that Mr McGrath has powers of management, direction and control of Denham 810 and hence is a senior officer of the corporation for the purposes of the Rules.
It has been easier to reach that conclusion because no evidence was called from Mr Mulready or Mr McGrath to contradict the evidence that was put forward by Stowe, notwithstanding that Denham 810 and indeed, Mr McGrath were clearly in a position to do so. These are issues where clearly Denham 810 and Mr McGrath were the parties who had the best capacity to put forward such evidence. The statement of Lord Mansfield in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 (discussed in ASIC v Hellicar (2012) 247 CLR 345) that “[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted" appears to be appropriate in the circumstances of this case.
Further, had I not been satisfied that Mr McGrath was a senior officer of the corporation I was satisfied that he is a “person who has relevant knowledge about the circumstances of the enforcement debtor” for the purposes of r 2107. That was on the basis that he has clearly been involved in and aware of the financial affairs of Denham 810 as a result of his shareholding, and the consequential exercise of power in relation to the conduct and decisions of the company. Even without the evidence to which I referred above, which in my view demonstrates the control and management of the company, he would be a person with relevant information simply because of his undeniable role as the managing director of the head contractor, Denham Constructions Pty Ltd. In that role he would be able to provide information relevant to the sources of income available to Denham 810.
In reaching that conclusion I did not accept the submission made by the examinees and Denham 810 that the scope of r 2109 was confined in the same way that O 43 r 31, which was considered in McCormack the National Australia Bank Ltd (1992) 35 FCR 303, in particular at 305-306, was. In my view r 2109(2) needs to be considered on its own terms and is substantially broader than the terms of paragraphs (c) and (d) of O 43 r 31 considered in McCormack.
Therefore, I was satisfied that it was open to issue an enforcement hearing subpoena under r 2104 to Mr McGrath and would have, if necessary, in any event, be open to issue an ordinary subpoena to him under r 2107.
Is the giving of evidence by Mr McGrath and Mr Mulready “necessary in the interests of justice”?
Stowe has a judgment against Denham 810 which, as a consequence of the abandonment of an earlier application to stay the judgment, is not stayed and may be enforced. The scheme established by the Security of Payment Act is one which reflects the fundamental underlying policy of ensuring cashflow to subcontractors. It is based on the principle which may be summarised as “pay now, argue later”. Judgments entered as a consequence of the registration of adjudication certificates are defeasible in the sense that while they give rise to enforceable obligations and the full range of enforcement powers of the court, they do not ultimately affect the contractual entitlements of the parties and hence the financial relations between the parties may need to be adjusted when contractual entitlements are fully determined. However, the fundamental policy of the Security of Payment Act is to ensure swift access to payment. In my view, the legislative policy behind the security of payment regime is a significant factor in determining where the interests of justice lie.
In the present case, notwithstanding that Stowe has had the benefit of an enforceable judgment since 28 May 2014 and has acted with reasonable diligence in seeking payment of that judgment from Denham 810 and invoking the processes to assist with enforcement, it has not yet been able to obtain a hearing in relation to enforcement.
There is clearly a significant issue as to whether the subpoenas served on 27 August 2014 or 17 September 2014 were validly served. The service on 27 August 2014, in so far as it was served on Crisp Legal, is prima facie ineffective because of the failure to attach the SEP notice: see Energy Conservation Systems Pty Ltd v Downer EDI Engineering Electrical Pty Ltd (2008) 221 FLR 393 at [23]; Elan Copra Trading Pty Ltd v J K International Pty Ltd (2005) 195 FLR 229 at [30], [33], and [38]. I accept that there may be an argument, not essential to develop before me yesterday, that service on the Canberra agent of Crisp Legal was effective. Further, the service on 17 September 2014 was prima facie after the date permitted for service on the face of the subpoena. Once again, I accept that there may be an argument about the effect of the adjournment of the return of the subpoena by the Deputy Registrar until today. However, counsel for Denham 810 emphasised that, in his submission, there had never been valid service of the subpoenas.
I assume for the purposes of the argument that the submission of counsel for Denham 810 is correct, although I do not need to finally determine it. However, it is clear that both Mr McGrath and Mr Mulready had actual notice of the subpoena’s having:
(a)given instructions to permit Crisp Legal to accept service on their behalf;
(b)given instructions to Crisp Legal to engage in correspondence about the terms of subpoenas and alleged defects in them;
(c)engaged counsel to appear at the enforcement hearing on 11 September and make submissions, including the new submission based on non-compliance with the SEP Act; and
(d)given instructions to appear before me yesterday and seek to join Denham 810’s application to have the subpoena’s set aside.
Further, they had both been on notice of the adjourned date of the enforcement hearing of today since 11 September 2014.
There was no evidence of any difficulty for either man to attend the court hearing. There was evidence from Mr McGrath’s May 2014 affidavit that he regularly attends Canberra for site meetings on the Baptist Community Services project. Stowe has undertaken to pay for transport to Canberra and has previously, on 17 September 2014, offered to provide airline tickets and Cabcharge vouchers to facilitate transport of Mr Mulready and Mr McGrath from their residential addresses to the Court.
In my view the interests of justice lie in permitting the enforcement hearing to proceed today, the date which has been set to the knowledge of Mr Mulready and Mr McGrath since 11 September 2014. To further delay the conduct of the enforcement hearing would, in my view, have a tendency to frustrate the purpose of the legislative scheme. The information that both examinees might provide may be significant for the purposes of enforcement of the judgment of the Court. There has been no explanation for the non-payment of the judgment that might undermine the utility of the examination process. Indeed, the absence of any such explanation tends to reinforce its significance. There is no evidence of any countervailing difficulty or inconvenience on the part of Mr Mulready or Mr McGrath that might affect my assessment of where the interests of justice lie.
Are the requirements of s 30(2)(b) of the SEP Act satisfied?
For the reasons given in relation to my assessment of the interests of justice I was satisfied that there would be enough time for Mr Mulready and McGrath to comply with the subpoena without hardship or serious inconvenience. In relation to making an application under s 33 I was satisfied, having regard to their representation before me yesterday, the opportunity they have had to contest the terms of the subpoenas, and their likely representation today, they would have enough time to make any application that they need to make under s 33.
Is it “impracticable, for any reason, for the document to be served in the authorised way”?
On this issue Denham 810 and the examinees submitted that it had not been established, for the purposes of r 6460, that it was “impracticable, for any reason, for the document to be served in the authorised way”. They submitted that the two attempts at service undertaken by the commercial agents at the examinees place of work was not sufficient to demonstrate impracticability. They submitted that the fact that the examination hearing was listed for today was not a sufficient reason to find that service in the ordinary way would be impracticable.
I accept that, in an ordinary case, for example involving the service of an originating process, the evidence of attempted service in the present case would not be sufficient to demonstrate impracticability: see Civil Procedure ACT at [6460.5]. However, this is not a usual case. Following the attempts at service the solicitors for the examinees obtained instructions to accept service and accepted documents as having been served. Only upon the return date was any point taken about non-compliance with the SEP Act. On that date the examination hearing was listed for today. In my view, the concept of impracticability is not limited to the ability to locate and physically serve, in the authorised manner, the recipient of the document. That is emphasised by the use of the words “for any reason”. In my view, the question of practicability or impracticability also takes into account the procedural circumstances of the case, including when the matter has been listed. Taking these considerations into account, it is impractical to serve the documents personally.
I accept that it would not be impracticable to serve the documents personally if the enforcement hearing was adjourned. However, the threshold of impracticability would almost never be met if time considerations and the interests of justice in proceeding with the case were put to one side.
Therefore, contrary to the submission of Denham 810 and the examinees, I was satisfied that it was impracticable for the document to be served in the authorised way.
Is the alternative way of service reasonably likely to bring the document to the attention of the person to be served?
Having regard to the fact that Crisp Legal has acted for both Mr Mulready and Mr McGrath since no later than 11 September 2011, I was satisfied that notification of the lawyers at that firm will be sufficient to result in the terms of the amended subpoenas being brought to their attention. Making it easier to reach that conclusion based on the evidence before me was the fact that there was no evidence of any difficulty with notice being given by email in the manner proposed and plainly, the examinees and their lawyers were the ones that would be expected to know whether that method was likely to be ineffective.
Further, the examinees had previously instructed their solicitors to accept service of the subpoenas on their behalf. There was no evidence before me that those instructions had ever been withdrawn. There was no indication that the instructions had been withdrawn when, during the course of the proceedings, they were effectively invited by counsel for Stowe to indicate if they had in fact been withdrawn.
Should an order for substituted service have been made as a matter of discretion?
An additional matter raised by the examinees and Denham 810 was that it would not be appropriate to dispense with the 14 day notice period required by the Rules because those Rules incorporated a requirement that the examinees file in the Court a sworn statement of the enforcement debtor’s financial position. I was not satisfied that this is a significant matter telling against an order for substituted service. Stowe invited me to dispense with that obligation under r 6. It appeared to me to be appropriate to do so. The rule is primarily for the benefit of the enforcement creditor, being designed to provide information to the enforcement creditor and if the enforcement creditor is satisfied, to permit the enforcement creditor to indicate that the examinees are no longer required to attend the enforcement hearing: r 2106(4). In the current case I am not satisfied that insistence on the obligation would produce any useful information beyond that which is already available to the enforcement creditor, and that to insist on compliance would only serve to unnecessarily further delay the conduct of the enforcement hearing. It is for that reason that I made an order pursuant to r 6 of the Rules dispensing with r 2106. It appears to me that I should also have made an order dispensing with r 2105(2), which requires service of a copy of the form to be completed under r 2106 at the time of the service of the enforcement hearing subpoena. There is obviously no point in serving the form if the substantive obligation has been dispensed with. Therefore I will, in addition to the orders that I made yesterday in relation to each of the subpoenas, make an order pursuant to r 6 of the Rules dispensing, nunc pro tunc, with the obligation under r 2105(2).
More generally, in my view, consistently with the legislative policy expressed in the terms of the Security of Payment Act, it is appropriate that examination hearings in relation to the enforcement of judgments of the Court entered pursuant to the operation of that Act proceed as soon as reasonably possible. Clearly if there was some element of unfairness or difficulty arising from the making of an order for substituted service to require attendance at such a hearing at short notice, that would be a very powerful factor weighing against making an order for substituted service, notwithstanding the legislative policy. However, in the present case I was satisfied that the examinees had actual notice of the terms of the subpoenas and the adjournment of the examination until today. There was no evidence to suggest any difficulty or impracticability in their attendance and there was evidence that they would be reasonably able to do so. In those circumstances I consider it appropriate that, where the threshold requirements for an order for substituted service have been met, the orders should be made.
It was for those reasons that yesterday afternoon I made the orders that I did. I will now also make the following order:
In relation to the service of the McGrath subpoena and Mulready subpoena, referred to in the orders made on 22 October 2014, the requirement of r 2105(2) is dispensed with nunc pro tunc.
I will hear the parties further as to how, procedurally, to deal with the outstanding issues in relation to costs.
| I certify that the preceding seventy-one [71] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Master Mossop. Associate: Date: 17 April 2015 |
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