Hanwha Total Petrochemical Co., Ltd. and Another v. Changhong Group (HK) Ltd

CAMP 197 /2019

[2019] HKCA 1061

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 197 OF 2019

(ON AN INTENDED APPEAL FROM HCAJ NO 6 OF 2018)

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BETWEEN

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.On 29 January 2019, Anthony Chan J dismissed the application of the defendant, Changhong Group (HK) Limited (“Changhong”), to stay the action of the plaintiffs, who are the consignee and insurer of the cargo on board the tanker Sanchi, for forum non conveniens^[1]. On 1 August 2019, he refused leave to appeal against his decision^[2].

2.Changhong renewed its application for leave to appeal to the Court of Appeal by a summons issued on 14 August 2019.  Having considered the papers and the submissions filed on behalf of Changhong and the plaintiffs, we exercise our discretion under Order 59 rule 2A(5)(a) of the Rules of the High Court to determine this application without a hearing on the basis of written submissions only.

3.The plaintiffs’ claim against Changhong is for the total loss of the cargo as a result of the collision of Sanchi with CF Crystal, a ship owned by Changhong, on the ground that the collision was caused or contributed by the negligence or breach of duty of Changhong, its servants or agents.  The shipowner of Sanchi, Bright Shipping Limited, has sued Changhong in Hong Kong and Changhong has likewise applied to stay proceedings in Hong Kong on the ground of forum non conveniens.  This was also dismissed by the judge but he granted leave to appeal.  We heard the appeal on 4 September 2019 and Changhong was represented by the same legal team.  In our deliberations for this leave application, we have taken into consideration the written and oral submissions made to us on behalf of Changhong in the appeal relating to Bright Shipping in CACV 102/2019.  We hand down our judgments in the appeal and this leave application at the same time.  The two judgments should be read together. 

4.For leave to appeal to be granted under section 14AA of the High Court Ordinance, Cap 4, the court must be satisfied that the intended appeal has a reasonable prospect of success or that there is some other reason in the interests of justice the appeal should be heard.  Reasonable prospect involves the notion that the prospect must be more than fanciful without having to be probable. 

5.For the relevant principles of law and the approach of the appellate court in an appeal against a decision for stay of proceedings for forum non conveniens, we refer to our judgment in CACV 102/2019.

6.For the relevant background matters, we refer to the judge’s decision in the Bright Shipping action^[3] at §§2 to 14, and 20 to 22, as well as those parts of our judgment in CACV 102/2019 giving an overview of the proceedings brought by various parties in Hong Kong and the Shanghai Maritime Court (“SMC”) arising out of the collision.

7.In respect of the 1^st plaintiff (the consignee of the cargo), Changhong has brought an action against it and National Iranian Tanker Co (the shipper of the cargo) in the SMC.  The claim is referred to as a “mis‑declaration” claim and relates to the nature or characteristic of the cargo of gas condensate loaded on Sanchi.  It is alleged that the cargo of gas condensate was highly volatile and dangerous because it was not fit for long distance sea carriage in substantial quantity.  Those proceedings have not yet been served on the 1^st plaintiff.  The judge took the view that those proceedings are irrelevant as the claim, which does not depend on showing any duty of care was owed by the 1^st plaintiff to Changhong, will not be able to meet the double actionability rule applicable to foreign torts^[4].

8.As for the 2^nd plaintiff, it has applied for the registration of its claim against Changhong in respect of property loss from the collision against the tonnage limitation fund set up by Changhong in the SMC and in August 2018 the SMC has approved the registration of this claim. Considering that the plaintiffs had already brought this action in Hong Kong on 19 January 2018, the judge regarded the registration of claim by the 2^nd plaintiff in the SMC as merely a protective step^[5]. The 2^nd plaintiff has not pursued the matter further in the SMC.

9.Changhong relied on the same grounds for stay of this action as in the Bright Shipping action.  Having dismissed the other application, the judge is unable to see why a different outcome is justified here.  He took the view that the plaintiffs are in an even stronger position than Bright Shipping in resisting a stay of proceedings, as there is no relevant ongoing action in the SMC between the present parties and lis alibi pendens cannot be invoked by Changhong.

10.The draft notice of appeal placed before the judge relied on all the grounds of appeal deployed in CACV 102/2019.  The draft notice of appeal in the renewed leave application before us is very similar to the previous draft notice.  In summary, it was contended on behalf of Changhong that the judge had made clear errors of law as regards lis alibi pendens (the same arguments were advanced in CACV 102/2019) and was wrong to hold that the limitation proceedings were not relevant and sufficient to invoke the principles of lis alibi pendens.

11.We have addressed fully and rejected those arguments for the reasons given in our judgment in CACV 102/2019.  We agree with the judge that the present case is not a situation of lis alibi pendens. There is no pending relevant action in the SMC as the issues in the “mis-declaration” claim are irrelevant to the issues that may fall to be determined in the Hong Kong action of the plaintiffs.  Nor do we think the related proceedings in the SMC, whether the limitation proceedings or the liability proceedings, could be decisive in tilting the scales and rendering the SMC as the appropriate forum, for the reasons stated in our judgment in CACV 102/2019. 

12.We decline to give leave to appeal.

13.As this application is wholly without merit, we further order pursuant to Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be considered at an oral hearing inter partes.

14.Costs of the application should follow the event.  We order Changhong to pay the costs of the plaintiffs in this application.

15.Having considered the statement of costs for summary assessment submitted by the plaintiffs, and bearing in mind that the grounds of appeal are the same as those considered in the leave application before the judge, and that the plaintiffs have been represented by the same legal team, we reduce the reasonable fees claimed from $133,982 to $111,922.

16.The costs order nisi and gross sum assessment will be made absolute if no application for variation is made by any party within 14 days of the handing down of this judgment.

Written submissions by Mr Clifford Smith SC, instructed by Clyde & Co, for the 1^st and 2^nd Plaintiffs (Respondents)

Written submissions by Mr Edward Alder, instructed by Reed Smith Richards Butler, for the Defendant (Applicant)