Commissioner of the Australian Federal Police v Xin & Ors (No 2)

These proceedings are brought by the Commissioner of the Australian Federal Police against 20 defendants under the Proceeds of Crime Act 2000 (Cth) (which I will refer to as the Statute). The defendants are a mixture of natural persons and corporations, all of which have been served except for the eleventh defendant, Ms Liangfang Shen. Having made various attempts to serve Ms Shen in China, the Commissioner now seeks orders under the Uniform Civil Procedure Rules 2005 (NSW) rr 10.6 or 10.14.

The Commissioner commenced the proceedings on 31 January 2023 by filing a Summons and thereafter obtaining ex parte restraining orders under ss 18 and 19 of the Statute. The property which is the subject of the restraining orders is comprised of numerous items, including real property, bank accounts, cryptocurrency and cars. Without going into unnecessary detail, the restraining orders were made in the context of criminal proceedings being brought against a number of individuals, including Mr Steven Hoitou Xin (first defendant) and Ms Yi Ming Wang (second defendant).

Ms Shen is the mother of Mr Xin and the mother-in-law of Ms Wang.

Amongst the items of property which are the subject of restraining orders are two ANZ bank accounts in the name of Ms Shen. The bank accounts contain approximately $15,000 AUD. Whilst the restraining orders remain in place, the two bank accounts may not be disposed of or otherwise dealt with by any person, including Ms Shen. The two bank accounts are subject to a restraining order under each of s 18 and s 19 because they are suspected, respectively, to be under the effective control of Mr Xin and to be the proceeds or the instrument of specified offences.

More specifically, the Court made the following relevant orders on 31 January 2023:

In each case, Schedule Twenty-Nine is in the following terms:

The ex parte restraining orders were based on the evidence provided by the Commissioner to the Court. The evidence was contained in an Affidavit of 466 pages made by Federal Agent Scott Michael Mathews, together with the even more voluminous exhibits to that Affidavit.

Mr Xin and Ms Wang are both residents of Australia. They were each served personally and are now legally represented in the proceedings.

Ms Shen is a Chinese citizen who is resident in mainland China.

Evidence adduced by the Commissioner in support of the current application sets out the communications between the Commissioner and Ms Shen which have occurred since 31 January 2023. In view of the orders sought by the Commissioner, it is necessary to set out some of the detail of that evidence.

From as early as 8 February 2023, the Commissioner has liaised with the Vice Consul for the Australian Federal Police based at Guangzhou in China. The Vice Consul has sworn an Affidavit dated 16 January 2024 in which he describes oral communications with Ms Shen. The Vice Consul does not speak or read Chinese. He has not therefore spoken directly to Ms Shen. Direct communication with Ms Shen has been undertaken by a locally employed Chinese staff member who, although not a qualified translator, is a native Mandarin speaker.

The Vice Consul’s Affidavit states in paragraph [8]:

Ms Shen did not attend the Australian Consulate on 29 March 2023 about which there were further communications. The Vice Consul’s Affidavit states as follows in paragraph [12]:

There followed a number of weeks during which numerous telephone conversations occurred, usually initiated by the Vice Consul and the locally employed Chinese staff member, although once or twice by Ms Shen. The conversations addressed arrangements for Ms Shen to collect the documents personally, sending the documents by email and Ms Shen’s nomination of a named Australian solicitor to receive documents for her, although the solicitor subsequently said she had no instructions to accept documents for Ms Shen. After the aborted nomination of an Australian solicitor, there were a number of communications on 19 April 2023. The Vice Consul’s Affidavit states as follows in paragraphs [26]-[29]:

On 20 April 2023, an Australian Federal Police officer sent emails to Ms Shen’s email address to which were attached English copies of the Summons, the Vice Consul’s Affidavit, the restraining orders, a letter from the Commissioner to Ms Shen and the judgment of the Court pursuant to which the restraining order had been made on 31 January 2023.

The Vice Consul’s Affidavit states in paragraph [33] as follows:

On 31 July 2023 orders were made in the proceedings extending the time for service of the Summons on Ms Shen until 31 January 2024.

On 23 January 2024, the Commissioner filed a Notice of Motion seeking orders for service of documents in the proceedings on Ms Shen. On 6 February 2024, the Registrar dismissed the motion but extended the time for service of the Summons upon Ms Shen to 28 February 2025.

On 4 April 2024 an Australian Federal Police officer, Ms Li, and a certified interpreter telephoned Ms Shen. An Affidavit from the interpreter dated 5 August 2024 states that during the conversation with Ms Shen words to the following effect were said:

This was the last occasion upon which communication was made directly with Ms Shen. On two subsequent occasions Ms Li and the certified interpreter called Ms Shen’s mobile telephone number. Each time it was answered by an unknown man who said that Ms Shen was sick and unable to talk.

On 30 April 2024, Ms Li sent an email to Ms Shen to which was attached a Chinese translated copy of the Summons and the restraining orders made on 31 January 2023, together with an explanatory letter from the Australian Federal Police dated 5 April 2024.

At no time has Ms Shen filed a Notice of Appearance. There is no evidence of Ms Shen retaining an Australian solicitor to act for her.

The Commissioner anticipates that the criminal proceedings against Mr Xin are unlikely to conclude within 12 months. There is a possibility that they may conclude sooner if a plea is entered but the likelihood and timing of a plea is speculative based on the evidence before the Court on this application.

In order to seek service under the Hague Convention, the requirements of the Chinese authorities include a full translation of all documents to be served. In this case the Commissioner estimates that it will cost approximately $50,000 to translate the relevant documents, which include the lengthy Affidavit and exhibits upon which the Commission relied when obtaining the restraining orders in January 2023.

There is evidence that the formal procedure for the service of documents under the Hague Convention will take more than 12 months and may or may not ultimately be successful.

To date, the Commissioner has not taken any steps to pursue service under the Hague Convention, other than obtaining the estimates set out above.

Against this background, the Commissioner seeks orders as set out in the Notice of Motion filed on 5 August 2024, as follows:

The Schedule One documents are the Summons filed on 31 January 2023, the restraining orders made on the same date and the lengthy Affidavit in support. The Schedule Two documents are various documents generated in the proceedings subsequent to January 2023, such as the Amended Summons, a number of Notices of Motion (including this one) and various interlocutory Affidavits.

The Commissioner’s primary position is that the Court ought to make orders for substituted service under the UCPR 10.14. For the attempts at service which have already been made, an order is sought under r 10.14(3). Regarding documents to be served in the future, orders are sought under rr 10.14(1) and (2).

The Commissioner submits that the above history shows that service on Ms Shen is not practicable and therefore the precondition to the Court making orders under UCPR 10.14 is satisfied. The Commissioner submits that the Court ought to make orders in this case, especially because the proceedings are brought under the Statute and thereby expose Ms Shen to the forfeiture of the funds in the two bank accounts.

The Commissioner emphasises that under s 92 of the Statute, forfeiture may occur without further order of the Court. It is submitted that it is in Ms Shen’s interests for her to be served. The Commissioner further submits that the evidence shows that the documents have already been brought to the attention of Ms Shen. Should the order set out in Prayer 2 of the Notice of Motion be made, the emailing of documents, including the Summons and the existing restraining orders on 20 April 2023, will be taken to have been effective service.

The Commissioner’s alternative position is that the communication on 19 April 2023 between the Vice Consul, the locally employed Chinese staff member and Ms Shen, when viewed in context of the conversations leading up to that date (especially the telephone conversation on 27 March 2023) constituted an agreement by Ms Shen to be served by email. The Commissioner in effect seeks a declaration to the effect that the emailing of documents on 20 April 2023 constituted effective service pursuant to that agreement as permitted by UCPR 10.6.

Part 10 of the UCPR provides for service of documents generally. UCPR 10.1 provides that a party that files a document must serve a copy of the document on each other active party. Being an originating process, the Summons must be personally served on Ms Shen: UCPR 10.20(2)(a). UCPR 10.21(1) provides:

UCPR 10.6 and 10.14 are relevant to the current application. They relevantly provide:

Part 11 of the UCPR relevantly provides for service of documents outside of Australia. UCPR 11.4(1) and Schedule 6 specifies the circumstances in which an originating process may be served outside of Australia without leave of the Court. Schedule 6 relevantly provides:

The claims made by the Commissioner in these proceedings, including the claims for the restraints over the two ANZ accounts which have been imposed under the Statute, fall within Schedule 6. At the very least, they are claims to restrain the performance of acts in Australia (paragraph (d)(i)), the subject matter of the claims is property situated in Australia (paragraph (e)) and they are claims which concern the enforcement of an Australian enactment (paragraph (p)). The Summons may be served outside of Australia without leave of the Court (UCPR 11.4(1)).

Part 11A of the UCPR provides for service of documents outside of Australia under the Hague Convention. UCPR 11A.2 provides as follows:

Division 2 of Part 11A addresses service in a Convention country, such as China. The relevant provisions are rr 11A.3 and 11A.4 which provide:

Upon the Registrar being satisfied that these requirements have been complied with, the Registrar must forward the documents to the Central Authority (or an alternatively nominated additional authority) of the country in which service is to be effected: UCPR 11A.5(1). When the Registrar receives a Certificate of Service from the Central Authority, the parties will be notified.

Despite the form of the Notice of Motion, the Commissioner’s primary position is that the Court ought make an order under UCPR 10.14.

Unlike UCPR 10.14(1), the provision relevant to the present application, UCPR 10.14(3), does not refer to the practicability of service on the person. Rather, it is concerned with whether steps have already been taken for the purpose of bringing the relevant document to the notice of the person concerned. If such steps have been taken, the Court may make an order under UCPR 10.14(3) regardless of the practicability or impracticability of further steps being taken. In such a case, an order under UCPR 10.14(3) may be appropriate to facilitate the just, quick and cheap resolution of the real issues in the proceedings (see Capral Limited v DNV AS [2024] NSWSC 96 at [65] (Nixon J)).

The Commissioner nonetheless has taken a cautious approach and submits that the Summons, the lengthy supporting Affidavit and the restraining orders cannot practicably be served on Ms Shen, and that it is a matter relevant to the exercise of the Court’s discretion to make an order under UCPR 10.14(3).

For the purposes of UCPR 10.14(1) (and the Commissioner’s submissions on UCPR 10.14(3)), impracticability requires something more than inconvenience but not so much as impossibility: Alstom Limited v Sirakas [2010] NSWSC 669 at [40] (Palmer J). Practicability is concerned with that which is sensible or realistic: Capral Limited v DNV AS at [52]-[53]. Practicability is to be determined according to the circumstances of the case and must have regard to the requirement to do justice to the plaintiff who has demonstrated a prima facie case which may be defeated if personal service is insisted upon and the requirement to do justice to the defendant who is entitled to receive proper and efficacious notice of the proceedings: Alstom Limited v Sirakas at [40].

Short of making an application for service under the Hague Convention, the Commissioner’s evidence demonstrates that everything which might realistically or sensibly be done personally to serve Ms Shen has already been done.

The Commissioner could still make an application for service under the Hague Convention, but he submits that service by that means would not be practicable because of the delay and the cost. In relation to the delay, the submission ought not be accepted. Even if service under the Hague Convention will take another 12 months, there is unlikely to be any material progress in these proceedings within that timeframe. Under s 92 of the Statute automatic forfeiture of the money in the two ANZ bank accounts will not occur in the near future and possibly not for a year and half. If there is a plea, there may be the prospect of automatic forfeiture occurring earlier, but in such a case it would be open to the Commissioner to make an application under s 93 to extend the time before the ANZ bank accounts are forfeited. Presumably the Commissioner would make that application if Ms Shen has not yet been served when forfeiture would otherwise occur.

However, the estimated cost of pursuing service under the Hague Convention is likely to exceed the value of the two ANZ bank accounts. The cost of the translation work required by the Chinese Central Authority has been estimated at $50,000. It may be more. In addition, resources of the Commissioner, including legal resources, will have to be devoted to pursuing service under the Hague Convention. Resources of the Court Registrar, acting as the forwarding authority under UCPR 11A.4(1), will also be required. By virtue of s 57(1)(c) of the Civil Procedure Act 2005 (NSW) the finite resources of the Court is a relevant consideration to the exercise of the Court’s discretion under UCPR 10.14(3). In the circumstances of this case I accept the Commissioner’s submission that service on Ms Shen under the Hague Convention is not practicable for the purposes of UCPR 10.14(1). I will take impracticability of service into account in the exercise of the discretion under UCPR 10.14(3).

However, as the text makes clear, the most important consideration under UCPR 10.14(3) is the steps which have already been taken for the purpose of bringing the documents to the notice of Ms Shen.

The Commissioner’s evidence demonstrates that the Summons and other documents have been brought to Ms Shen’s attention in a way which permits her sufficiently to understand the provenance, essential meaning and importance of the documents. I am satisfied that the sufficiency of the steps which have already been taken may be inferred from the following matters:

Given that steps have already been taken sufficiently to bring the documents to Ms Shen’s notice it is appropriate to make an order under UCPR 10.14(3) that the documents emailed to Ms Shen on 20 April 2023 be taken to have been served on her on that date. The effect of that order is that sending the email is taken to constitute personal service: UCPR 10.14(4).

As a further reason why an order ought to be made under UCPR 10.14(3) the Commissioner submits that it is in Ms Shen’s interests for service formally to be made on her. The Commissioner points out that Ms Shen is currently exposed to the risk that any interest she has in the ANZ bank accounts will be automatically forfeited under s 92 of the Statute. Formal service will permit Ms Shen to make any application she wishes to make in the proceedings in order to have her interest in the bank accounts excluded from the restraining orders and, ultimately, any forfeiture which occurs. The difficulty with this submission is that the documents have already been brought to Ms Shen’s attention. Thus Ms Shen is already able to take any steps in the proceedings which she considers appropriate in her own interests. She would first have to file a Notice of Appearance (UCPR 6.1(1)), but as a named defendant she would be entitled to do so without any further order of the Court. Formal service on Ms Shen would not add anything to her current ability to protect her interests.

It is further appropriate to make the orders in accordance with Prayer 3 of the Notice of Motion so as to facilitate service of the documents listed in Schedule Two. In this respect, the evidence makes clear that the email address specified in Prayer 3 is Ms Shen’s email address.

Quite properly on an ex parte application, the Commissioner has raised an issue about whether it is open to the Court to make an order for substituted or informal service under UCPR 10.14 in circumstances where China is a signatory to the Hague Convention. As set out above, UCPR 11A.3(1) provides that Division 2 (including UCPR 11A.4) “applies to service in a Convention country of a local judicial document” and UCPR 11A.2 provides that Part 11A (including UCPR 11A.4) “prevails to the extent of any inconsistency” between it and any other provisions of the UCPR. UCPR 11A.4 provides that a person “may” apply to the Registrar for a request for service in a Convention country of a local jurisdiction document.

The Commissioner submits that there is nothing in Part 11A which precludes an order being made under UCPR 10.14(3). The Commissioner relies on a number of cases where an order for substituted service has been made (or contemplated with apparent approval) even though the person to be served is located in a Convention country: Independent Liquor & Gaming Authority v Melco Resorts & Entertainment Limited [2022] NSWSC 294; Jacobsen v Jacobsen [2017] NSWSC 1590 at [135]; Capral v DNV AS; Australian Information Commission v Facebook Inc [2020] FCA 531; Ford, in the matter of Careers Australia Group Ltd (in liq) v Mansfield [2022] FCA 173.

Where there is a judicial document from one Convention country to be served on someone located in another Convention country, the Hague Convention specifies how service is to be effected. This is apparent from the Preamble to the Convention which provides:

It is also apparent from Article 1 which relevantly provides:

The text makes clear that the provisions of the Hague Convention presupposes that there is a judicial document “to be served abroad” and that there is an “occasion to transmit a judicial document for service abroad”. The Hague Convention is not concerned with the anterior question of whether the judicial document has to be served abroad (Volkswagen Aktiengesellschaft v Schlunk (1988) 486 US 694 at 700) much less the question of whether a judicial document has to be served at all. For proceedings before the Supreme Court of New South Wales, those anterior questions are determined by the Uniform Civil Procedure Act and the Uniform Civil Procedure Rules.

UCPR 10.1 requires that a party that files a document must serve a copy on each other active party. As set out above, UCPR 10.20(2)(a) requires the Summons to be served on Ms Shen personally. The specifics of personal service are addressed in UCPR 10.21. As Ms Shen is in China, the UCPR requirements for personal service mean that she must be served abroad.

However, the requirement of service under UCPR 10.1(1) applies “unless the court orders otherwise”. The chapeau of UCPR 10.20(2) states that the requirement that an originating process be served personally is “except as otherwise provided by these rules”. One rule which otherwise provides is UCPR 10.14(1). In the circumstances specified in that rule, the Court may order that “instead of service” steps specified in the order be taken for the purpose of bringing the document to the notice of the person concerned. The nature and effect of an order under UPCR 10.14(1) is that “service” is dispensed with. UCPR 10.14(1) contemplates that the Court may be willing to dispense with “service” because it is satisfied that the substituted steps specified in the order will achieve the purpose of service and thereby make service unnecessary.

The operation of UCPR 10.14(1) is confirmed by UCPR 10.14(2) which provides that the Court’s order may direct that the document “be taken to have been served” on a date specified in the order etc. An order under UCPR 10.14(1) does not operate so that taking the steps specified in the order will constitute “service”. Rather, once the steps have been taken the document will be taken to have been served by virtue of the Court’s order. Both rr 10.14(1) and (2) presuppose that “service” will not in fact occur. As Austin J said in ASIC v Sweeney No.2 [2001] NSWSC 477 at [58] “substituted service is not service at all. It is a procedure by which the Court makes an order for certain things to be done instead of service”.

Despite the heading of UCPR 10.14 (“Substituted and informal service generally”), UCPR 10.14(1) and (2) provide for a substitute for service, not for service by substituted means.

Construed harmoniously, UCPR 10.14(3) operates in the same way. An order under UCPR 10.14(3) operates to dispense with “service”. The Court may be willing to make such an order if it is satisfied that steps have already been taken for the purpose of bringing the document to the notice of the person concerned.

In this respect, it must be remembered that service of documents is the servant, not the master. Leaving aside claims in personam where the jurisdiction of the Court does not arise other than by service on the defendant (eg Louie v Carroll (1958) 98 CLR 310; [1958] HCA 4), the purpose of service is to ensure procedural fairness by bringing to the attention of a person matters which the person needs to know in order to ensure any subsequent interference with the person’s rights does not occur without the person having an opportunity to be heard (see Independent Liquor & Gaming Authority v Melco Resorts & Entertainment Limited at [2] (Ball J)). The requirement that the person be served, and provision for the means by which that is to be achieved, serve that purpose. Service is an important servant because it allows for a measure of certainty in the process and it relieves the Court of having to enquire into the efficacy of the steps taken in the circumstances of each case. However, the ultimate objective is procedural fairness.

Service also provides a practical procedural framework for progressing a case, such as calculating the date by which a defence must be filed (UCPR 14.3(1)), interrogatories must be answered (UCPR 22.4(1)) or the incompetency of an appeal objected to (UCPR 51.41(1)). In this respect, it is noteworthy that both UCPR 10.14(2) and (3) are concerned to address the date on which the document is taken to have been served.

The provisions of UCPR 10.14 are to be construed in this light. They are concerned not so much with the means of “service” but with taking steps for the purpose of bringing the document to the notice of the person concerned.

In this context, the Hague Convention and UCPR Part 11A have no application where the Court makes an order under UCPR 10.14(3). An order under UCPR 10.14(3) answers the anterior question of whether the judicial document has to be served at all. The effect of the order is that there is no judicial document “for service abroad”. Nor is there an occasion to transmit a judicial document “for service abroad”. By virtue of the Court’s order, service has been dispensed with. The same applies to an order under UCPR 10.14(1)

UCPR 11A.2 addresses the circumstance where there is inconsistency between the provisions of UCPR Part 11A and any other provisions in the UCPR. There is no inconsistency between Part 11A which addresses service in a Convention country, and UCPR 10.14(3) which addresses the anterior question of whether service is required.

There is nothing in UCPR 11A which precludes orders being made under UCPR 10.14 in this case.

In light of the orders to be made under UCPR 10.14(3) it is not necessary to determine the Commissioner’s alternative contention about UCPR 10.6. Had it been necessary I would have rejected it.

The evidence of an agreement by which Ms Shen is said to be bound is set out above. To obtain an order under UCPR 10.6 it is necessary for the Commissioner to prove that an agreement occurred in the conversation between Ms Shen and the locally employed Chinese staff member on 19 April 2024. The Commissioner correctly submits that what was said on that occasion is to be understood in the context of what was said in the earlier conversations, especially the conversation on 27 March 2023. Even in that context, the words spoken on 19 April 2023 did not constitute an agreement for the purposes of UCPR 10.6. The evidence rises no higher than an agreement to “receive” documents. There was no agreement that receipt would constitute personal service for the purposes of the proceedings in the Supreme Court of New South Wales. It cannot be said that there has been service in accordance with an agreement as required by UCPR 10.6.

UCPR 10.6 also refers to service in accordance with and “acknowledgement” by which the person to be served is bound. Whilst “agreement” and “undertaking” contemplate an arrangement made before service occurs, “acknowledgement” suggests that a communication which occurs after service may provide a basis for service under UCPR 10.6(1). Assuming that is right, the conversation with the Australian Federal Police officer and the official translator on 4 April 2024 cannot be relied upon to establish the necessary acknowledgement. The conversation occurred almost a year after the event said to have been acknowledged. Having regard to the passage of time and the words used by Ms Shen, she should not be taken to have acknowledge that service occurred for the purpose of the proceedings. Once again, the evidence does not establish an acknowledgement that goes any higher than her receipt of the documents.

I make the following orders: