The Owners and/or Those Entitled To Sue in Respect of a Cargo Lately Laden on Board the Ship or Vessel "Sargodha" v. The Owners of the Ship or Vessel "Sargodha" & Other Ships or Vessels Listed in Schedule a Annexed Hereto and Another

HCAJ000410/1996

IN THE HIGH COURT OF THE HONG KONG SAR

COURT OF FIRST INSTANCE

ADMIRALTY JURISDICTION

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ADMIRALTY ACTION IN REM AGAINST THE SHIP "SARGODHA"

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Coram: The Hon. Mr. Justice Waung in Court

Date of Hearing: 23 January 1998

Date of Handing Down of Judgment: 12 February 1998

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JUDGMENT

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1. This is an application by the Defendant for stay of the proceedings in favour of Pakistan on the ground of an exclusive jurisdiction clause or alternatively on the ground of forum non conveniens

2. By a Bill of Lading dated 25th January 1996 issued by the Defendants, the Defendants agreed to carry a cargo of 264,000 bags of Rice from Karachi, Pakistan to Jakarta, Indonesia. The Plaintiffs owners of the cargo under the Bill of Lading discovered the cargo to be partly damaged upon discharge and brought the claim here in Hong Kong. The Defendants Pakistan National Shipping Corporation disputes the claim and moved this Court to stay the Hong Kong Action on the ground that the Bill of Lading provided for the exclusive jurisdiction of the Pakistan court to resolve the dispute or alternatively on the ground that the appropriate and natural forum for the resolution of the dispute is the Pakistan Court.

3. There is no dispute between the parties at the hearing that there is a binding exclusive jurisdiction clause in the Bill of Lading and that the burden is on the Plaintiffs to show good reason why they should be allowed to sue in Hong Kong in breach of that exclusive jurisdiction clause. This is the principle contest at the hearing as Mr. Coleman rightly concedes that if he could not overcome that burden on the exclusive jurisdiction clause, then there must be a stay of proceedings and the alternative forum non conveniens ground for stay will become irrelevant. At the hearing, recognising the difficult burden for him to discharge and the substantial body of material all pointing to stay, Mr. Coleman raised only one issue to persuade the Court that there should be no stay and that issue is the matter of alleged no defence by the Defendants owners to the claim.

4. The Plaintiffs claim is for damage to 10,275 bags of rice, of which 7,157 bags were alleged to be damaged due to seawater leakage through hatch covers Nos. 2, 3 and 4 and the remaining 3,118 bags were alleged to be found damaged due to being loaded wet (fresh water). The primary material relied upon by Mr. Coleman for the Plaintiffs that there is no defence to the claim of the Plaintiffs is the poor condition of the hatch covers as disclosed in the evidence. It would certainly seem from the evidence that there is a strong case by the Plaintiffs against the Defendants that in respect of the 7,157 bags of seawater damage there might not be a strong defence or any defence at all. The cracks in the hatch covers due to the bad state of repairs, the old age of the fleet and the general deteriorating financial condition of the Defendants with little funds to properly maintain the ships and hatches all seem to suggest that in relation to the sea-water damage to the 7,157 bags, the cause of the damage was probably due to acts of the Defendants for which it ought to be liable to the Plaintiffs under the Bill of Lading.

5. The answer of Mr. Smith for the Defendants is that the above considerations go nowhere sufficient to show let alone prove that there is no defence to the claim of the Plaintiffs. Firstly, Mr. Smith triumphantly pointed to the matter of 3,118 bags alleged by the Plaintiffs to be pre-loading wet damaged which ought to be detected and claused in the Bill of Lading but was not. There is one aspect of the claim of the Plaintiffs which is not even pleaded in the Statement of Claim and in relation to which there is clearly a genuine dispute. The Plaintiffs' claim however is for damage to 10,275 bag not just 7,157 bags and in the circumstances, it is clear to the Court that the suggestion of Mr. Coleman that there is no defence to the Plaintiffs' claim cannot be made out. Secondly, Mr. Smith said that in any event there is a serious dispute on quantum. The claim of the Plaintiffs as can be seen from paragraph 10 of the Statement of Claim under Particulars of Damage is that all 10,275 bags each weighing 50 kg were damaged. In other words it is alleged that 513,750 kgs of rice were damaged. But Survey Report by the Plaintiffs' own surveyor dated 19th March 1996 shows that only 822 kg. of rice were damaged and this document bears the hand-written signature of the Master agreeing to the 822 kgs of damage. This 822 kgs figure cannot possibly stand together with the 513,750 kgs of the Plaintiffs claim and it follows that there is also a triable dispute on quantum. The only ground of no defence to the claim, relied on by Mr. Coleman to persuade the Court to refuse the stay turns out to be not solid ground.

6. In the course of the hearing, reference was also made by Mr. Coleman to the time bar in Pakistan but as he rightly recognised that time bar point alone would not enable him to persuade the Court to refuse the stay. But the facts in any event are also against him as I had clearly come to the view that the Plaintiffs only got themselves to blame if they were found to be time barred in Pakistan. The Defendants solicitors had given clear warnings that reliance would be placed on the Pakistan exclusive jurisdiction clause and that the Defendants are objecting to Hong Kong jurisdiction. The Plaintiffs took a calculated step and gambled on Hong Kong proceedings and took no step whatsoever in Pakistan. I do not accept that the behaviour of the Plaintiffs was reasonable. This is the typical situation found by the Privy Council in The Pioneer Container [1994] 2 A.C.324 at page 349 where the cargo claimants deliberately allowed the time bar to elapse. In my judgment, time bar does not help the Plaintiffs.

7. Mr. Coleman as a last resort suggested to the Court that if the Plaintiffs abandon their claim in respect of the 3,118 bags pre loading damage, the court can then refuse the stay and allow the action to proceed in Hong Kong in relation to 7,157 bags. This is not a course which is either fair or right as firstly there is still the dispute on quantum and secondly it is to change totally the nature of the Plaintiffs' case at the end of the application hearing. The Defendants might well have put their evidence very differently in support of the stay application and the Court does not suddenly move the goal posts at the tail end of a hearing.

8. The undisputed authority such as The El Amria requires strong reason to be shown for not honouring an exclusive jurisdiction clause. It is clear to me that no such strong reason had been shown. Accordingly, this Action must be stayed in favour of the Court of Pakistan. The Plaintiffs must also pay the costs of the Action including the costs of this Motion for stay.

Representation:

Mr. Clifford Smith for the Defendants instructed by Messrs Crump & Co.

Mr. Russell Coleman for the Plaintiffs instructed by Messrs Richards Butler