TGIF 15 July 2022 – Court grants leave for service of summons outside the jurisdiction

This week’s TGIF considers a decision of Georges (Liquidator), in the Matter of SIRA Pty Ltd (In Liquidation) [2022] FCA 768, in which liquidators were granted leave to serve a summons for examination on a company based in Singapore.

Key takeaways

• Service of documents outside the jurisdiction requires a grant of leave and courts will require evidence that the proposed method of service is permitted by international convention or the law of the foreign country.
  
  
• Traditionally, there has been reluctance to grant leave to serve a subpoena or similar document in another country on the basis that requiring a foreign national to do something in Australia is an infringement of the sovereignty of the other country.
  
  
• Notwithstanding this, the principle of international comity is afforded little discretionary weight by courts given the extraterritorial operation of sections 596A and 596B of the Corporations Act 2001 (Cth).

What happened?

On 30 May 2022, the Liquidators of SIRA Pty Ltd (in liq) obtained orders under sections 596A, 596B and 597(9) of the Corporations Act 2001 (Cth) (the Act) for the issuing of summonses for examination and production of documents. One of the companies subject to the orders was based in Singapore.

Service of documents outside of Australia is governed by Division 10.4 of the Federal Court Rules 2011 (the Rules). That Division specifies, amongst other things, that:

• leave must be granted by a court prior to service; and
  
  
• the proposed method of service must be either permitted by an international convention or the law of the foreign country.

As a result, the Liquidators sought leave pursuant to rule 10.44 of the Rules to serve the orders by way of private agent to the company in Singapore.

As Singapore is not a contracting party to the Hague Convention, the Liquidators adduced evidence that the proposed method of service (by private agent) was permitted under the Singapore Court rules.

The decision

The Court was satisfied that the matters necessary for a grant of leave under rule 10.44 were established.

On the question of discretion, the Court noted a traditional reluctance to grant leave to serve subpoenas or like process (i.e. a summons) for examination, on the basis that an order requiring a foreign national to do something in proceedings to which they have not submitted is an infringement of the sovereignty of that other country.

Notwithstanding this, the Court determined that the principle of international comity should not preclude granting leave. In reaching this conclusion, Justice McEvoy observed the following:

• the Singapore Court rules expressly contemplated service in Singapore of any process connected with civil proceedings pending before a foreign court;
  
  
• the apparent intent of Parliament that a court is to have the power to summons persons for examination, whether or not they are resident in or a citizen of Australia; and
  
  
• the risk of adversely affecting international comity on the basis of the absence of a sufficient connection with Australia was accommodated by the discretion provided to a court as to whether to issue the summons.

His Honour also referred to the decision of Waller v Freehills (2009) 177 FCR 507, in which the Full Court considered that Parliament would have already considered the risk of intrusion upon the sovereignty of a foreign state arising from service of a summons and the criminal consequences of non-compliance. In that decision, the Court inferred that Parliament has concluded that any ‘international opprobrium’ is justified in ‘the public interest for the protection of interests of Australian creditors and contributors’.

Comment

This decision serves as a useful reminder to insolvency practitioners and their advisers of the requirements for service outside the jurisdiction, the scope of the evidence required and the extraterritorial application of sections 596A and 596B of the Act.

It further reassures creditors and contributories of insolvent companies that the protections enshrined in the Act are effective, even when those who may have information about the corporation are based overseas.