Northro-korea Investments Inc. v. Min Ha Lee

CACV000048/1991

BETWEEN

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Coram: Hon. Sir Derek Cons, V.P., Kempster & Clough, JJ.A.

Date of hearing: 26 September 1991

Date of delivery of judgment: 26 September 1991

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JUDGMENT

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Sir Derek Cons, V.P. :

1. Northrop Corporation, the parent company of the plaintiff in these proceedings, is a well-known aircraft manufacturer. In 1983 it was keen to sell particular fighter aircraft to the Korean Air Force. As a condition of any such sale the Korean Government would have expected the plaintiff to enter into what were called "offset programmes" for the benefit of the Korean economy, either by arranging for some part of the manufacture of the aircraft to be carried out in Korea or for the plaintiff to invest in some undertaking which would bring foreign currency into the jurisdiction.

2. In this instance Northrop decided to invest in a hotel business, and to that end entered into a joint venture agreement with a local company, the Asia Culture and Travel Development Company, to build and operate a hotel to be known as the Seoul Palace. In accordance with the terms of that agreement the plaintiff paid US$6.5 million into a bank account of the local company which was held in Hong Kong with the Korea Exchange Bank. That was in July 1984.

3. The hoped for sale of the fighter aircraft did not eventuate and the hotel venture, at first being said to be only delayed, finally fell through. The plaintiff made enquiries as to what had happened to the US$6.5 million and as a result now suggests that the money was misappropriated and that some US$4.2 million thereof found its way, in 1984 and 1985, into an account maintained in the bank of Tokyo in Kowloon by Mr. Min Ha Lee, the defendant in these proceedings, and chairman of a Korean company, the Dong Yong Express, which had been appointed local agent and sales representative in Korea of the plaintiff. Mr. Lee was also chairman of a construction company associated with the hotel project; he resides in Korea. It is understood that in that Bank of Tokyo account in Kowloon there is to be found a sum of just over US$l million.

4. On 23rd May last year the plaintiff appeared ex parte before Barnett, J. and obtained leave to serve the writ, which he undertook to issue forthwith, outside the jurisdiction under Order 11 rule 1; and also a Mareva injunction restraining Mr. Lee from removing from the bank account monies other than in excess of the US$4.2 million claimed. At that time the only cause of action endorsed on the writ was a claim for conversion.

5. The two orders were continued by Nazareth, J. on 1st June; and then on 26th June Nazareth, J. gave leave to amend the endorsement on the writ to include, as far as these monies were concerned, claims by way of constructive trust and monies had and received to the use of the plaintiff. Nazareth, J. did not grant leave to serve the amended writ out of the jurisdiction although a request to that effect had been included in the summons. In August of last year the defendant applied under Order 12 rule 8 to set aside the leave for service out of the jurisdiction and to discharge the Mareva injunction.

6. The application came before Mr. Robert Kotewall, Q.C., sitting as a deputy judge of the High Court in January and February of this year. Subsequently, in a clear and carefully considered judgment, he held:

That, as the judge pointed out, was sufficient to dispose of the proceedings before him although in effect, but not expressly, he went on to consider the matter as if it had been before him as a fresh application for leave to serve outside the jurisdiction and for a Mareva injunction, a position which the plaintiff had said it would take if necessary. In that respect many issues were for his consideration. Some of them he concluded in favour of the plaintiff and some in favour of the defendant, but the overall effect of his judgment was a refusal of the application for leave to serve outside the jurisdiction, the Mareva injunction naturally falling. He allowed the defendant 80% of the costs which he had incurred.

7. This is an appeal from the decision of Mr. Kotewall. By the notice of the appeal and the respondent's notice all the issues that were before him remain open in the appeal, save that Mr. Ma who appears as he did below, for the plaintiff, has informed us today that the claim in conversion is no longer pursued.

8. We heard this morning his submission as to the availability to the plaintiff of the two fresh causes of action in the Order 12 application. In view of the conclusion to which I have come on the next issue, which we asked Mr. Ma to take out of turn in the course of his submissions, it is not necessary to express any firm opinion upon that issue, and I would only say that as that present advised, I am inclined to think that the judge came to a right conclusion. The sole point on which I am content to base my decision in this appeal assumes, for that purpose, that the plaintiff is able to bring its claim within one or other category of those enumerated in Order 11 rule 1. Leave to serve out of the jurisdiction is therefore permissible, but rule 4(2) provides that:

a concept commonly encapsulated within the Latin tag "forum non conveniens", and is a discretion given to the judge below. In the circumstances he was unwilling to exercise it in the plaintiff's favour.

9. The grounds on which an appellate court may interfere with the exercise of a discretion of a judge below are well established and to be found most readily in, the speech of Lord Diplock in Hadmore Productions v. Hamilton [1983] AC 191 @ 220. Their effect was emphasised by Lord Templeman in Spiliada Maritime Corporation v. Cansulex Limited [1987] 1 AC 460, the leading case on forum non conveniens, where he said at p. 465:

and later :

10. Mr. Ma has argued persuasively before us, mainly by reference to Spiliada. The strong points that he urged were:

These points were considered fully by the judge below. Mr. Ma suggests that he did not give them the weight that they deserved. In my view the most that he can establish is that the judge did not give them as much weight as the plaintiff would have liked. For my part I see no grounds for interference with the judge's discretion in this particular respect.

11. Mr. Ma concedes that if that be so, his appeal is bound to fail. As my brothers took a similar view we found it unnecessary to call on Mr. Dicks, who appears for the defendant, save that he may wish, in a moment, to address us with regard to his respondent's notice as to costs.

Kempster, J.A. :

12. I agree. I am also moved to add that in my view there was never any genuine basis for the exercise of the court's discretion to order service of the plaintiff's writ or notice of such writ outside the jurisdiction. Having regard to an action now nearing judgment in South Korea whereby the plaintiff claims against the defendant and others damages for fraudulent conspiracy it is apparent that the proceedings subsequently brought in Hong Kong, admittedly on an erroneous basis, were instituted solely as a peg upon which to hang a successful application for a Mareva injunction freezing the defendant's assets here.

Clough, J.A. :

13. I agree with everything which has just been said by my Lords.

Representation:

Geoffrey Ma & Paul Shieh (M/S. Denton Hall Burgin & Warrens) for plaintiff/appellant

A.R. Dicks (M/S. Stephenson Harwood & Lo) for defendant/respondent