Shailain Hirachand Jhaveri v. Rajendra Jhaveri and Others

CACV000009/1990

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Coram: Hon Sir Derek Cons, V-P, Kempster and Penlington, JJA

Date of Hearing: 1 May 1990

Date of Judgment: 1 May 1990

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JUDGMENT

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Kempster, JA :

1. This is an appeal by the 2nd, 3rd and 4th defendants from an order of Godfrey J made on 29 December 1989 itself dismissing an appeal from an order of the Registrar of the Supreme Court dismissing inter partes applications to set aside an order made ex parte by Master Jones granting the plaintiff leave to issue concurrent writs of summons and to serve sealed copies of such writs on the four defendants in India or, alternatively, to strike out the Statement of Claim under Order 18 rule 19, or, in the further alternative, to stay the proceedings on the basis of forum non conveniens. The 1st defendant, who has served a Defence, does not appeal.

2. The plaintiff and the four defendants are engaged in the diamond trade and of Indian nationality. The plaintiff carries on this trade in Hong Kong and the defendants do so in India. The orders impugned depend on the proper exercise of the court's discretion under O11 r1 (1) (d) the material parts of which read : -

The affidavit filed pursuant to O11 r4(1) was made by Miss Garrett, a solicitor, on the plaintiff's behalf and stated, on the basis of information given her by him, which she believed, that an oral agreement had been concluded between the parties in Hong Kong on or about 14 May 1987 as alleged in the Statement of Claim pursuant whereto the plaintiff had given packets of precious stones to the 1st defendant, that the defendants had failed to implement their part of the bargain and that the return of the stones, delivered by way of security, had been sought in vain. By an affidavit made on 30 November 1989, some months later, Miss Garrett deposed to the effect that her instructions had really been that "the precious stones had been handed by the plaintiff to the 4th defendant". There were certain other errors which are less material. She did not explain how the errors came about.

3. The Statement of Claim alleges that the plaintiff was indebted to the 1st defendant, that the 1st defendant was indebted to the 2nd, 3rd and 4th defendants, among others, that by the oral agreement the 1st defendant would sign consignment notes evidencing receipt of the stones delivered to the 4th defendant and that the 2nd, 3rd and 4th defendants would, in effect, lend the plaintiff monies to discharge his indebtedness to the 1st defendant and hold the stones until repaid. The plaintiff's pleading goes on to allege that he began to pay instalments of his indebtedness to the 1st defendant but that no loan or instalment of loan was forthcoming from the other defendants. The relief sought is the return of the stones or damages representing their value.

4. Letters from the plaintiff to the 1st defendant and to the Hong Kong Customs and Excise Department dated 8 and 25 February and 14 April and from his solicitors to the 1st defendant dated 7 November, 1988, assert that the stones were handed over to the 4th defendant for sale or return. Such an agreement would be consistent with the terms of the documents exhibited to Miss Garrett's affidavit which evidence sales rather than deliveries. However, in an affirmation which he made personally on 14 November 1989 the plaintiff alleges a different agreement; namely that the 4th defendant would pledge the stones in Hong Kong and that the fruits of that pledge should be paid to the plaintiff who in turn would repay the 1st defendant. The 1st defendant would then repay his creditors including the other defendants.

5. Unquestionably there are disparities between the terms of these letters, of the Statement of Claim and of the affidavits made by or on behalf of the plaintiff both as to the identity of the recipient of the stones and to the reason for their delivery. But, as Godfrey J found, for the purposes of O11 rl they do not affect the jurisdiction to make an order since it is common ground that the stones were handed over by the plaintiff to one or other of the defendants in the presence of all of them in Hong Kong on or about 14 May 1987 and there is no suggestion that any consideration was furnished to the plaintiff in consequence or that the stones have been returned. This was sufficient to entitle the judge, on all the materials before him, tentatively to conclude that the plaintiff was probably right in asserting an agreement between them all or between the plaintiff and some of them. Attock Cement v Romanian Bank (1989) 1 WLR 1147. As Staughton LJ said at p 1157 : -

Adopting that statement of principle, as I happily do, I do not disagree with the finding.

6. A determination that the plaintiff was probably right as to the conclusion of such an agreement is not enough. It is common ground, as Godfrey J stated at the outset of his judgment, that the plaintiff must also show a good arguable case for the relief claimed in the action. That necessarily involves a good arguable case on the pleading. which the plaintiff seeks to have served outside the jurisdiction. Metall Und Rohstoff AG v Donaldson Lufkin & Jenrette Inc and Anrs (1983) 3 WLR 563 at p 581. When seeking to determine that further question the master or judge will normally look at the materials adduced in support of the plaintiff's pleaded case as was explained by Hunter JA in Wo Fung Paper Making Factory Ltd v Sappi Kraft (Pty) Ltd (1988) 2 HKLR 346 at pp 357 and 358. But that does not help in the situation arising in the instant proceedings where the plaintiff himself has advanced differing versions of the agreement reached on 14 May 1987. It is not enough to conclude that a plaintiff may have a good arguable case if, in due course, he condescends to plead it.

7. In my opinion Godfrey J failed to address this outstanding question, which derives from Oll r4(2), albeit he had already directed himself that it was necessary so to do. Further, looking again at all the materials before him, he could not have concluded that the plaintiff had demonstrated a good arguable case on his pleading. In the premises he erred in law and we are entitled to exercise our own discretion on the materials now before us. Perhaps I should explain, in conclusion, that the appellant defendants do not seek to resurrect their arguments based on defects in the Statement of Claim or on the doctrine of forum conveniens.

8. I would allow this appeal and quash the order for service out of the jurisdiction.

Cons, V-P :

9. I am grateful to my Lord for his recital of the matters pertinent to this appeal. In my view it is not a case like Attock Cement v Romanian Bank where the judge had to consider two quite separate questions, namely one, whether as a matter of fact the case came within Oll rl, and two, whether the plaintiff had a good arguable case. This is one of those where the second question naturally encompasses the first. If the plaintiff has a good arguable case then clearly his case is within the rule.

10. As I read his judgment, the judge below only looked at the situation from the angle of the first question. He only put to himself whether tentatively he accepted that there was in fact an agreement between all of them. He found that there was. He did not go on to consider whether there was a good arguable case to support the agreement actually pleaded in the Statement of Claim.

11. It is therefore necessary for this court to consider the exercise of the discretion afresh. Here I regret I must part company to some extent from the view taken by the judge. He accepted, I think, as I do, that on the whole of the evidence it is likely that the stones were handed over to the 4th defendant. But to my mind it by no means necessarily follows from that that there was an agreement between the plaintiff and all four of the others. No doubt there was discussion and some agreements made. But it is not difficult to envisage results other than a binding agreement involving everybody there.

12. Then we have the basic inconsistency between the correspondence on the one hand and the claim and deposition on the other. I am not satisfied by the suggestion that the plaintiff's present understanding of what occurred on 14 May only came about following discussions with the plaintiff's legal advisors. In the face of such a clear and thus unexplained inconsistency I find myself unable to accept that the plaintiff has shown a good arguable case.

13. For these reasons I agree with my Lord that the appeal should be allowed and the orders below set aside.

Penlington, JA :

14. I am satisfied on the authority of Attock Cement v Romanian Bank that in this context "a good arguable case" means that the plaintiff is probably right in his claim as . formulated. Here however the judge below find that because of the inconsistencies he is not prepared even tentatively to find that the pleaded case is probably right. I do not think it was open to him to grant leave on the basis that the plaintiffs did have a good case on the basis that there was some agreement for the return of the stones even if it was not the one pleaded.

15. I find the affidavits filed by the defendants unconvincing but, with some reluctance, would also allow this appeal.

Representation:

Clifford Smith (M/s Holman, Fenwick & Willan) for D2-D4/Appellants

Allman-Brown (M/s Fairbairn, Catley, Low & Kong) for Plaintiff/Respondent