Guihing Argicultural & Development Corporation and Others v. The Owners of the Ship "Palawlan"

HCAJ000322/1981

Admiralty Law - Stay of proceeding on ground Hong Kong not the natural forum - the principles to be applied to such an application - the weight to be given to the suggestion that the plaintiff is "forum shopping".

IN THE SUPREME COURT OF HONG KONG

ADMIRALTY JURISDICTION

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BETWEEN

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Coram: Hon. Power, J.

Date: 27 October 1982

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JUDGMENT

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1. In November 1981, the plaintiffs took out a writ against the defendants, The Owners of the Ship "Palawan" which alleged that the owners of that ship were at all material times the demise charterer of the ship "Cabo Bojeador" and that they were liable to the plaintiffs for damages for breach of contract and/or duty in and about the loading/handling custody care and discharge of the plaintiffs' cargo of bananas and the carriage thereof on board the "Gabo Bojeador" in June and July 1981. This writ was amended on the 23rd April 1982 to add the words "and the non delivery of the plaintiffs' said cargo to Japan". On the 27th November 1981 the Ship "Palawan" was arrested in the western anchorage of Hong Kong harbour. Although it appears no where in the papers before this Court, it seems clear that a bond was posted and the ship was released. On the 8th January 1982 the solicitors for the defendants took out a summons asking that the proceedings brought by  the plaintiffs be stayed. It is that summons which now comes before me. There have been three affidavits filed, two by Mr. Biggs for the applicants/defendants, and one by Mr. Rooth for the respondents/plaintiffs.

2. I feel that I should deal at the outset with a submission which Mr. Ma, who appeared for the applicants, made or more than one occasion, that the Court could not, at this stage, be satisfied as to the extent of the issues which would finally have to be canvassed. He pointed to the wide manner in which the respondents had pleaded their case in the writ and suggested that a whole range of matters, commencing with the condition of the cargo when loaded, would have to be canvassed. This being so, he submitted that the Court must at this stage approach the matter upon the basis that quite a large number of witnesses might have to be called whose residence and place of work was likely to be in the Philippines.

3. I feel that I should make it that I do not accept this contention. Exhibited to the affidavit of Mr. Rooth was "AR-6", the Sea Protest of Darius S.J. Lacorte, Jr., the master of the "Cabo Bojeador". In that he set out that the vessel under his command sailed from Davao City in the Philippines at 1300 hours on the 14th June 1981 bound for Japan with a cargo of 1,167.2 metric tons of fresh bananas totalling 94,340 boxes, stowed under deck in four reefer hatches. He said that while at sea on the 16th June at about 2.45 a.m. the engineer on duty observed a decrease in the ampheres of Auxiliary Generator No.4 and notified the chief engineer and the electrician. He said that, while an inspection was being carried out of Auxiliary Generator No.4, Auxiliary Generator No.2 was seen to have a burned out armature. He told of the emergency measures that were then taken and said that at 2.30 p.m. on the same date, he diverted the vessel to Manila and that in consequence of this, the cargo of fresh green bananas was taken to Manila instead of Yokohama, Japan. This version of events given by the master is borne out by extracts from the Deck Log Book and the Engineer's Log Book, Exhibit "AR-5" to Mr. Rooth's affidavit. In his affidavit Mr.Rooth stated that he believed it "to be common ground between the parties that the vessel sailed from Davao on the 14th June 1981 but, on the 16th June 1981, developed generator trouble which made it impossible for her refrigerating equipment to continue operating. She therefore discontinued her voyage and instead docked in Manila for repairs. Because of the perishable nature of unrefrigerated bananas, the whole cargo (less 267 cartons which for various reasons were not sold) had to be sold at Manila, fetching only net proceeds of P296,258.48 (equivalent to US$37,639.20)." This statement of what Mr. Rooth said he believed to be common ground was never called into question by the applicants in the affidavit in reply of Mr. Biggs. It seems clear that the cause of the whole incident was the failure of the Auxiliary Generator No.2 and that what will have to be determined in the action is how far the applicants were responsible for that failure. This, I am satisfied, is the issue to which the Court hearing the matter will be addressing itself and as to which witnesses will have to be called. The applicants must also, it seems tome, take this view as it is stated in the first affidavit of Mr. Biggs that the "persons must likely to be called as witnesses in the claim herein are the master and crew of the Cabo Bojeador". It is true that the applicants, in the second affidavit of Mr. Biggs, suggested that there were other witnesses whose evidence might called. It seemed to me at the only further evidence suggested, which be relevant, was that which might come persons concerned with the general maintenance procedures adopted for vessels operated by the applicant company. I consider that the manifest likelihood is that the relevant evidence would come from the chief engineer and the electrician and, perhaps, from a person or persons involved in the general maintenance procedures and that it is unlikely that any witnesses beyond those persons would be required to give oral evidence. I have made these preliminary remarks because I think it is essential at the outset to indicate the breadth of the action as far as it can, at this stage, be guaged.

4. Before going any further, I turn to consider the law which is applicable to an application of this kind. The definitive statement of the law in this regard appears in MacShannon v. Rockware Glass Ltd. ⁽¹⁾ This decisioin amplified and explained the statement of law which had been made earlier in the "Atlantic Star". ⁽²⁾ The importance of the "Atlantic Star" case lay in its qualification of the principles set out in St. Pierre v. South American Stores (Gath & Chaves) Ltd. ⁽³⁾ which, up until that time, had been regarded as laying down a definitive and settled statement of the law. The stringent principles laid down in the St. Pierre case were modified to the extent that it was no longer necessary for the defendant, seeking an order that the action be stayed, to prove that its continuance would be oppressive or vexatious to him. It is unfortunately not easy to spell out the exact nature of the change as laid down in MacShannon's case as all five of the learned judges delivered judgments which laid varying emphases upon different aspects of the problem. I am satisfied from the judgments of Lord Diplock, Lord Salmon and Lord Fraser that the rule to be now applied can be properly stated as follows:-

(1) A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantage of prosecuting his action in an English Court if it is otherwise properly brought. The right of access to the Kong's Court must not be likely refused.

(2) In order to justify a stay, two conditions must be negative:-

(a) the defendant must satisfy the Court that there is another forum to whose jurisdiction he is amenable on which justice can be done between the parties at substantially less inconvenience or expense, and

(b) the stay must not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him of he invoked the jurisdiction of the English Court.

The bruden of proving the positive condition is clearly on the defendant and if he fails in this then the stay must be refused. If he satisfies this burden then, I am satisfied, that the plaintiff cannot avoid the granting of a stay unless he places before the Court evidence sufficient to raise the issue of deprivation of a legitimate advantage. If the plaintiff fails so to do then the defendant must succeed and the stay be granted. Once the plaintiff produces such evidence, then the onus is upon the defendant to leave the Court satisfied that to refuse to let the trial go on would not deprive the plaintiff of a legitimate advantage. In the outcome then the onus is upon the defendant to satisfy the Court as both the positive and the negative conditions. The decision in Macshannon's case was considered by Mr. Justice Sheen in the "Wellamo". ⁽⁴⁾ He adopted the principle set out on that case and added that, when considering inconvenience, the Court should have regard to every aspect of the litigation and in particular:-

(a) the convenience of the parties themselves;

(b) the convenience of the witnesses;

(c) the disruption caused to others by the absence of the witnesses from their place of work and

(d) the cost involved in litigation in (the present forum) as compared with litigation in "the other forum".

5. In the present case, as in the reported cases, considerable use was made of the term "the natural forum". It is true that the Court when considering 2(a), does look to see where the natural forum is. It is, however, important to bear in mind that the Court is not concerned au fond with whether the defendant has established that the natural forum is elsewhere but with the extent to which the matters which establish the place of the natural forum affect the quest ions of inconvenience and considering the positve condition is not whether it has been established that some other place is the natural forum but whether, wherever the natural forum may be, it has been shown that there will be substantially less inconvenience and expense if the matter is tried elsewhere. If the latter is not shown then the fact that the matter is not to be heard in its natural forum is of no real consequence.

6. I now turn to consider the facts. Mr. Ma was quick to emphasize that these proceedings rested solely upon the presence of the "Palawan" in Hong Kong. He stated that the litigation had no connection with Hong Kong other than the fact that the "Palawan" had been arrested in Hong Kong waters. He pointed to a letter from the Britannia Steam Ship Insurance Association Limited, Exhibit "AR-3" to the affidavit of Mr. Rooth, in which that company, representing the P. & I. Club, undertook to pay any judgment, up to a total of 110,000,000 Yen., in consideration of the respondents' not arresting any ship of the applicant. He said that the arrest was not necessary to obtain security and that it had been undertaken with the sole purpose of founding jurisdiction, i.e. that the respondents were forum-shopping. As to this practice, Lord Wilberforce said in the Atlantic Star, ⁽⁵⁾ "Forum-shopping" is a dirty word; but it is only a pejorative way of saying that, if you offer a plaintiff a choice of jurisdiction, he will naturally choose the one in which he thinks his case can be most favourably presented; this should be a matter neither for surprise nor for indignation." His lordship returned to discuss the term on page 473 where he said: "Forum-shopping is, indeed, inescapably involved with the concept of maritime lien and the action in rem. Every port is automatically an admiralty emporium. This may be very inconvenient to some defendants; but the system has unquestionably proved itself on the whole as an instructment of justice." In the present case it seems to me undeniable that the plaintiffs were forum shopping. However that may be, I must bear in mind is that the "right of access to the King's Court must not be likely refused" and that I am not here concerned with a mere balance of convenience.

7. Mr. Ma then turned to demonstrate that the positive condition referred to above had he made out. He submitted that it had been shown the justice would be done between the parties at substantially less inconvenience and expense in the Philippines.

8. He dealt first with the convenience of the parties themselves submitting that, while it was true that some of the respondents were Japanese, the remainder of the repondents and the applicant were Filipino and the contracts which gave rise to the action were contracts between Japanese and Filipinos. He submitted that none had any connection with Hong Kong. He said that forcing the parties to litigate in Hong Kong when the applicant and some of the respondents were Filipino would clearly be a grave inconvenience to the Filipinos. On the other hand he submitted that the Japanese parties would not be more inconvenienced by having to go to the Philippines than they would by having to come to Hong Kong. It is at this stage necessary to look at the parties. There are thirteen respondents in all. Seven of them are the Japanese receivers of the goods and six of them are the Filipino shippers. It is stated in the affidavit of Mr. Rooth that the respondents are "in reality the Japanese interest". Mr. Rooth states that the Filipino shippers were brought in only as a precaution pending full investigation of title to the bananas. The applicant is, I am told, a substantial Filipino Corporation. It is true that neither the named respondents nor the applicant have any real contact with Hong Kong and neither envisaged that the contract would be performed other than in the Philippines and in Japan. In this regard Mr. Ribeiro, who appeared for the respondents, submitted that the "real defendant" was not the owner of the ship "Palawan", but was the P. & I. Club, which was represented by the Britania Steam Ship Insurance Association Limited. He referred in this regard to the letter "AR-3". He submitted that the "real plaintiffs" were the Japanese insurers to whom the named plaintiffs had subrogated their rights. He referred in this regard to the statement in the affidavit of Mr. Rooth in which he said that "except for one plaintiff, the Japanese insurers had paid the claims and brought the action by subrogation. Mr. Ribeiro argued that the convenience of the "real plaintiffs", the Japanese insurers, and "real defendant", the P. & I. Club, would not in anyway be better served by having the case heard in the Philippines than by having it heard in Hong Kong. While agreeing that this did riot prove anything positive in his favour that he submitted undermined the contention of Mr. Ma that the convenience of the parties were served by having a case heard in the Philippines.

9. He submitted also that one must bear in mind, in this regard, that, according to Paragraph 15 of the statement of one Alfredo D. Valmonte, a Filipino lawyer ("AR-8" to Mr. Rooth's affidavit), a court in the Philippines might require the cargo owners and the insurers to send representatives to give pre-trial depositions. If this be so then it might well be argued that the convenience of the plaintiffs, whether the named plaintiffs or the “real plaintiffs" would be better served if the matter was heard not in the Philippines. However, I do not consider much weight can be given to this possibility as the procedure in the Philippines allows for the admission of facts (See Valmonte statement at paragraph 14) and, it seems to me most likely, that the basic facts, concerning which no issue was raised in the affidavits before me, would be admitted and that the witnesses would not be required to present themselves to give evidence on deposition. There is some force in Mr. Ribeiro's argument as to the convenience of the "real defendant" but, it is, nonetheless, a fact that the named defendant is the party through which the litigation will have to be defended. The witnesses will be its employees and it will have to make them available to give evidence. The exhibits if any, will come from its custody. It seems to me that its convenience must be served by having the litigation in the Philippines. However, bearing in mind the ease with which one can travel by air from the Philippines to Hong Kong, I do not consider that, if this consideration stood alone, too much should be allowed to turn upon it.

10. Mr. Ma then turned to consider the convenience of the witnesses. He pointed out that the witnesses would be Filipino and that no one can say how many witnesses might eventually be required after more investigations have been carried out in the Philippines. As I have already indicated, I am satisfied that the number of witnesses to be called will be small. Mr. Ma said that the witnesses would be able to give their evidence in Tagaloc if they gave it in Philippines and would give it to a judge who understood their dialect. That may be so, however, the opinion of one Joaquin L. Misa, a Filipino lawyer ("APB-2" to the 2nd affidavit of Mr. Biggs) was that "since there are very few stenographers who can record in the Philippine National Language, the language almost exclusively used in Philippine Courts is English." Mr. Ma said that the expense of bringing people to Hong Kong to give evidence would be substantial. However, it was pointed out by Mr. Ribeiro that the home port of the ship Davao is almost as far from Manila as Manila is from Hong Kong. He suggested that it would not really be any more inconvenient for the witnesses to come and give their evidence in Hong Kong than it would be for them to give it in the Philippines. It was suggested by Mr. Ma that the expert evidence would have to be brought from the Philippines, however, it was pointed out by Mr. Ribeiro that so far the only expert known to have conducted an enquiry resided in Hong Kong. (Paragraph 16(3) of Mr. Rooth's affidavit). The real thrust of Mr. Ma's arguments in this regard was that there must be less disruption for witnesses if the trial were conducted in the Philippines. Mr. Ribeiro on the other hand pointed to delays that might occur in the Philippiness during a trial and said that there was no likelihood of any such delays in Hong Kong. Mr. Valmonte said, at paragraph 18 of "AR-8", that when a case is ready for hearing it "is assigned a fixed date by the Court but not a fixed time on that day. The state of the lists in Manila is such that some times criminal and civil cases are on the same judge's list for hearing in the same day. It is not usual for a single case to be allocated to a judge for the whole of one day. If the case is likely to be protracted, it is possible for either party to petition the Court for hearing on successive mornings or afternoons but there is no guarantee that the Court will agree. As a result, the trial can sometimes be fragmented over several days with short hearings each day." Mr. Misa conceded that Mr. Valmonte's description of the procedure in the Courts of the Philippines was "generally correct". If it is, it seems to me that witnesses might be inconvenienced by having had to attend Court on several days. However, in this regard, I consider that I must proceed upon the basis that once the matter got to trial the Philippines' Court would, as was suggested by Mr. Misa (paragraph 6(d) of "APB-2") give a lawyer prepared to proceed, "priority in allocating trial time". I have no doubt that if the trial itself proceeded expeditiously in the Philippines, that the convenience of most of the witnesses would be better served than if they had to be brought to Hong Kong.

11. Further in this regard Mr. Ma submitted that the Philippine law would play an important part in the hearing as it was agreed, in the Bills of Lading, that they would be "subject to Philippine laws". He said that such law would have to be set out for the Court if the hearing was in Hong Kong and that this would involve, at the very least, expert evidence by affidavit and might involve the bringing of experts from the Philippines to give oral evidence. Mr. Ma had to concede that his suggestion of the possibility of the need for oral expert evidence was, to some extent, conjectural but he said it was conjecture which he was entitled to enter into in the circumstances. I am not able to agree with him. Mr. Rooth in his affidavit said that he accepted that the Bills of Lading were governed by Filipino law; however, he said that that law applicable follows the United States carriage of Goods by Sea Act 1936 ("COGSA"). He went on to say that, "On the basis of the above and of my experience with numerous cargo claims involving similar clauses in Bills of Lading, I respectfully submit that difficulties faced by a Hong Kong court in applying 'COGSA' legislation would be minimal and should not be exaggerated. Such legislation is based on the "Hague Rules" contained in the International Convention for the Unification of Certain Rules relating to Bills of Lading at Brussels of August 23rd 1924 and are widely incorporated in Bills of Lading with only very minor differences of detail in various countries. The Hong Kong courts are of course entirely familiar with such Hague Rules as enacted in the Carriage of Goods by Sea Ordinance (Cap. 46). If it is desired (and relevant) to highlight any differences under the Filipino version of the Hague Rules, there is no reason why this cannot, at least in the first instance, be done by written statements from Filipino lawyers."

12. What Mr. Rooth was saying was that he expected minimal difficulty in this regard. This paragraph of Mr. Rooth's affidavit was not adverted to in the affidavit in  reply by Mr. Biggs and nor was it touched upon in the opinion of Mr. Misa who states that he gave his opinion after having been "specifically ..... referred" to the affidavit of Mr. Rooth. In my view the only fair approach, in such circumstances, is to proceed upon the basis that the likelihood of difficulties is minimal. However it seems to me unarguable that the Court best able to determine a matter under Philippine law is a Court in the Philippines and that if, which seems unlikely, difficulties did arise during a hearing in Hong Kong their resolution might occasion both expense and delay.

13. Given the ease with which one can travel by air from the Philippines to Hong Kong it did not seem to me to have been made out, all other things being equal, that any added disruption would be caused to others by the absence of witnesses from their place of work if the trial was held in Hong Kong rather than in the Philippines. Mr. Ma then turned to submit that further inquiries would have to be carried out in the Philippines before the trial and that it would be more convenient and less expensive if they were handled in the Philippines by the lawyers who were conducting the litigation. There seems to me to be some substance in this submission. It is true that Hong Kong solicitors could give instructions to surveyors or lawyers in the Philippines to carry out the necessary inquiries, however, this would, almost certainly, increase the overall cost of the litigation.

14. Finally as regards the positive condition Mr. Ma submitted that the litigation could be carried out more cheaply in the Philippines. This submission was based not only on the added cost of bringing witnesses to Hong Kong and carrying out further enquiries in the Philippines, but also upon statement by Mr. Misa (paragraph 4 of "APB--2") that, as regards his firm, "Our own charges are far below those that are generally known to be the rates of Hong Kong lawyers". Mr. Rooth, in para. 19 of his affidavit, set out information he had received from a Mr. Clarke of their firm's London office in which Mr. Clarke said that it was "his experience that attorneys in that jurisdiction (the Philippines) tended to charge high contingency fee, generally in the range of 25% of the total claim plus interest". Mr. Valmonte (paragraph 38 of "AR-8") set out four "bases on which Philippine attorneys compute their fees". Three of these bases appeared to me to involve the charging of contingency fees; only one did not. This was his fourth basis which he said was on "time and trouble" basis plus expenses. Mr. Misa (paragraph 4 of "APB-2") said that contingency fees were frowned upon and made subject to the supervision of the Court. He said that his own firm charges contingency fees only when a client was obviously unable to pay and would not be able to obtain justice unless such a fee was charged. He did not, however, deny that attorneys "tended" to charge such fees nor did he suggest that the figure of 25% was wrong. Having carefully considered the information from Mr. Clarke and the statements of the two Filipino attorneys, I have no reason to feel any doubt as to the correctness of Mr. Clarke's statement in this regard. I appreciate Mr. Ma's submission that it would be for the respondents themselves to ensure that they went to a firm which charged them upon a proper and fair basis, however, I am not satisfied that it has been established that the litigation could be conducted at substantially less expense in the Philippines.

15. Having considered all the above matters I must now ask myself whether the applicant has established the positive condition. Approaching the matter, as 1 think I must, that the trial in the Philippines once commenced, would proceed expeditiously, I find that I am satisfied that there would be substantially less inconvenience if the matter were heard in the Philippines.

16. I have not, when dealing with the positive condition, dealt with the question of delay, although it might be suggested that it can properly be considered thereunder, as I have thought it more appropriate, in the circumstances of the present case, to examine it when dealing with the negative condition. I must now be satisfied that the stay will not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him if the action were heard in this jurisdiction.

17. The thrust of Mr. Ribeiro's argument in this regard was that if the plaintiffs are forced to litigate in the Philippines they will have to do so in a system where, in Mr. Valmontet's words (paragraph 10 of "AR-8") "the Court lists are inundated with cases". Mr. Misa sought to meet this suggestion by saying (paragraph 6(d) of "APB-2") that "much is made of our Courts' calendar being clogged with a great number of cases. That the Courts have a backlog of cases is true". It is difficult to know exactly what he meant by this. Was he simply saying that the Courts had a manageable backlog of cases or was he conceding that it was worse than that. He did not see fit to deny, in a specific way, Mr. Valmonte's suggestion that the Courts were "inundated" with cases. The matter, however, did not rest there. Mr. Rooth stated, at paragraph 19(2) of his affidavit, that Mr. Clarke had informed him that he had been involved in five cargo claims arising out of the loss of a ship in January 1971 and that all of these claims were commenced in 1972. Mr. Clarke said that the earliest judgment was given five years later and the latest was giver nine years later. Mr. Clarke said that in the course of such litigation he encountered constant frustrations and delays. Mr. Misa (paragraph 3 of "APB-2") gave an explanation as to the case which involved nine years delay. He did not, however, give any explanation as to the delay in the other cases and, indeed, did not see fit to comment upon them other than to say that the Courts of the Philippines allowed parties to try cases at their own pace. He certainly expressed no surprise that it took from five to seven years to obtain judgments at first instance.

18. In the light of what Mr. Valmonte and Mr. Clarke have said I accept that litigants are likely to encounter very considerable delay. I am satisfied that the plaintiffs are likely to suffer such delay if the matter is heard in the Philippines. I have no doubt that it is proper for me to take the possibility of such delay into account when dealing with the negative condition. I refer to the "E1 Amria" ⁽⁶⁾ where Brandon L.J. said, "In saying what I have said about the undesirability and impracticability of making a general comparision between the merits of procedure of the English Court on the one hand and the relevant foreign Court on the other, I must not be taken as excluding the possibility that it would be right to take into account the fact if it be clearly established by admission or uncontradicted evidence, ...... (b) that the determination of the dispute by the foreign Court would involve very great delay by comparision with its determination by the English Court." I make it plain that I am not making any comparision between the merits of procedure of the Hong Kong Courts and those of the Philippines. I am simply concluding, upon the basis of the evidence before me, that, given circumstances that are, very probably, beyond the control of the Courts themselves, the respondents would be likely to be involved in substantial delay if they are forced to litigate their claim in the Courts of the Philippines. I am unable to make any exact estimate as to the time it would take to receive a judgment at first instance in the Courts of this Colony, however, I am satisfied that the respondents would not suffer such delay as they are likely to encounter in the Philippines. There is, I am satisfied, no likelihood that the matter would take anything like 5 years to come to judgment.

19. I turn finally to a matter which I have already touched upon when considering the positive condition. Would it be to the respondents' financial detriment if they are required to conduct their litigation in the Philippines? In this regard I am in some doubt as to whether the applicant can be said to have satisfied the onus which lies upon him to show that the respondents would not suffer, financial detriment given that the respondents, if a stay is granted, will be forced to litigate in a jurisdiction where, I am satisfied from the affidavits, there is a tendency to charge contingency fees of 25%. However, as the finding above as to delay effectively resolves the matter in the respondents' favour, I do not intend to canvass the question of financial detriment further.

20. I am satisfied that a stay would deprive the respondents of a legitimate advantage in that he would be forced to litigate in the Philippines where he would suffer inordinate delay. The application for stay is, therefore, refused.

21. Subject to there being any further application with regard thereto the applicant is ordered to pay the respondents' costs of this application to be taxed.

(1)    (1978) A. C. 795.

(2)    (1974) A. C. 436.

(3)    (1936) 1 K. B. 382.

(4)    (1980) 2 Lloyd's Law Reports 229.

(5)    (1974) A.C. 436 at 471.

(6)    (1981) 2 Lloyd's Law Reports 121 at 127

Representation:

Mr. G. Ma (Richards Butler) for Appellant/Defendant.

Mr. R. Ribeiro (Clyde & Co.) for Respondent/Plaintiff.