The Owners of and/or Other Persons Entitled To Sue in Respect of the Cargo Lately Laden on Board the Ship or Vessel "Hui Rong" (Lr No. 7525748) v. The Owners and/or Demise Charterers of the Ship or Vessel "Peng Yan" (Lr No. 8020563) and The Owners of the Ships or Vessels Set Out in the Schedule a Annexed Hereto

CACV 269/2008 & 270/2008

CACV 270/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 270 OF 2008

(ON APPEAL FROM HCAJ NO. 76 OF 2007)

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BETWEEN

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AND

CACV 269/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 269 OF 2008

(ON APPEAL FROM HCAJ NO. 12 OF 2008)

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BETWEEN

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Before: Hon Ma CJHC & A Cheung J in Court

Date of Hearing: 17 October 2008

Date of Judgment: 17 October 2008

Date of Handing Down Reasons for Judgment: 1 December 2008

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REASONS FOR JUDGMENT

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Hon Ma CJHC:

1.Where an admiralty action in rem has been instituted, what is the proper approach to be adopted by the court in an application to stay that action on the basis of forum non conveniens? In the present appeals, the competing jurisdictions were Hong Kong and the Ningbo Maritime Court, in the PRC (I will in this judgment, for convenience, use the term ‘PRC’ to mean the Mainland excluding Hong Kong).  The appeals were heard on 17 October 2008 and dismissed, with reasons to be provided.

Facts

2.On 17 March 2007, the bulk carrier “PENG YAN” (which was on a voyage from Huanghua, PRC to Xiji, PRC) collided with a general cargo ship “HUI RONG” (which was on a voyage from Xingang, PRC to Bangkok, Thailand) while in PRC territorial waters.  The location of the collision was Zhou San Dao, off the coast of Ningbo and Shanghai.  The port of registry of PENG YAN was Shenzhen.

3.PENG YAN sustained damage to her bow.  HUI RONG sank with the loss of nine crew members, with another eight missing.  The cargoes carried on board HUI RONG were lost.  Apart from this damage, there was also some oil spill and consequent pollution damage.

4.Inevitably, actions for the loss of the cargoes on board HUI RONG were commenced.  On 5 Mary 2007, certain cargo interests (represented by Richards Butler) commenced in rem proceedings in Hong Kong (HCAJ 76 of 2007) against the owners and charterers of HUI RONG (the vessel carrying their cargo) and also against the owners of PENG YAN.

5.A sister ship of PENG YAN (“PENG WEI”) was arrested on 12 May 2007 in these proceedings.  On 15 May 2007, the release of this vessel was procured upon the defendant owners of PENG YAN providing a letter of undertaking in the sum of US$2.5 million to cover “such sums as may be finally adjudged by the competent Court or on an appeal therefrom or as may be agreed to be recoverable from the above-named colliding ship “PENG YAN” and/or the owners thereof in respect of the said claims, interest and costs”.  The letter of undertaking expressly reserved the right of the defendant owners to dispute the jurisdiction of the Hong Kong courts (thus paving the way for the application for a stay on the basis of forum non conveniens) but did not expressly reserve the right of the owners to limit their liability, whether by reference to statutory or Convention tonnage limitation or otherwise.  This latter aspect is relevant as will be discussed below.

6.The letter of undertaking was supplemented by another letter of undertaking dated 3 April 2008, this time in the sum of US$100,000 to cover an additional cargo claim.  This was in the same terms as the original one.

7.On 28 December 2007, a third letter of undertaking was provided in respect of more cargo claims, this time to those claimants represented by Clyde & Co in the sum of US$5 million.  This was effectively on the same terms as the others.  It was provided to prevent an arrest of either PENG YAN or a sister ship.  The Writ in respect of the relevant cargo claims was issued on 21 January 2008 (HCAJ 12/2008).  This action and HCAJ 76/2007 constitute the present proceedings.  The claims in these actions represent approximately 92% of the cargo claims arising from the losses on board HUI RONG.

8.For convenience, I shall hereinafter use the terms ‘Plaintiffs’ to mean the plaintiffs in both actions, ‘Defendants’ to mean the defendant owners of PENG YAN and the ‘Letters of Undertaking’ to refer to the three letters of undertaking referred to above.

9.In March 2008, other cargo claimants (not the Plaintiffs in the present proceedings) commenced actions in the Ningbo Maritime Court.

10.On 30 April 2008, the writs in the present proceedings were served on the Defendants.  The same day, the Defendants commenced a limitation action in the Ningbo Maritime Court to set up a limitation fund (I shall refer to these proceedings in Ningbo as the Ningbo Limitation Action).  A brief word about these proceedings would be of assistance at this point.

11.The Ningbo Limitation Action was brought pursuant to the Maritime Code of the PRC.  Under Articles 204, 207 and 210, shipowners are able to limit their liability (by reference to tonnage) in relation to any claims for loss or damage to cargoes on board ships.  The limitations of liability set out in the Code (including any claims in respect of loss of life or personal injury) apply to the aggregate of all claims that may arise from a single casualty (Article 212).  By reason of Article 213, a shipowner is able to set up a limitation fund to cover the various liabilities from an incident.  The Ningbo Limitation Action was the exercise of rights by the Defendants pursuant to these Articles of the Maritime Code.

12.The limits of liability as set out in the Maritime Code mirror, save in one respect, the limitation scheme which would be available to the Defendants in Hong Kong had a limitation action been commenced here.  Hong Kong is subject to the Convention on Limitation of Liability for Maritime Claims 1976 (see the provisions of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap. 434).

13.The only notable point of difference between the two limitation regimes is that the limitations of liability under the Maritime Code are halved in the case of a ship not exceeding 300 tons and engaging in coastal services within the PRC (see Article 4 of the Provisions Concerning the Limitation of Liability for Maritime Claims for Ships With a Gross Tonnage Not exceeding 300 tons and Those Engaging in Coastal Transport Services As Well As Those for Other Coastal Operations, as promulgated by the PRC Ministry of Communications on 15 November 1993).

14.PENG YAN, whose gross tonnage was 34,886 tons, was at the time of the casualty engaged in a voyage between ports in the PRC.  Accordingly, one of the reasons for the Defendants commencing the limitation action in Ningbo was to try to seek the above mentioned additional limitation in liability.

15.On 5 August 2008, the Ningbo Maritime Court decided that the 50% reduction in what otherwise would be the appropriate limitation fund, was inapplicable.  On 7 August 2008, the Defendants filed an appeal against that decision.  The purpose of the appeal was, as we have been told in an affirmation from the Defendants’ solicitor, simply to buy some time to enable the security ordered by the Ningbo Maritime Court to be paid (so as to constitute the limitation fund).  The appeal was pursued and eventually dismissed on 25 August 2008.  The requisite security was paid (and therefore the limitation fund set up) on 29 August 2008.  I shall have more to say about this aspect presently.

16.The current state of the Ningbo Limitation Action appears to be that there are a total of 29 claimants who have registered claims against the limitation fund.  These claimants comprise cargo interests (including the Plaintiffs) as well as the owners of HUI RONG.  Other claims have been brought against PENG YAN in the Ningbo courts, such as the pollution damage claim brought by the Zhejing Maritime Safety Administration, but these claims are not part of the Ningbo Limitation Action since there are no applicable limitations of liability in relation to such claims.

The applications to stay the Hong Kong proceedings

17.On 11 July 2008, the Defendants issued notices of motion to stay the present proceedings in Hong Kong on the ground of forum non conveniens.  The Defendants also sought orders that the Letters of Undertaking should be returned for cancellation.

18.Reyes J, the Admiralty Judge, heard the motions on 25 August 2008 and delivered a reasoned judgment the same day dismissing the applications for a stay.  His reasoning was as follows (I have added some comments of my own) : -

(1)  Although the prima facie natural forum for the trial of the action were the courts of the PRC (this being where the alleged negligence of PENG YAN occurred : see The Albaforth [1984] 2 Lloyd’s Rep 91), this was merely a starting point for the consideration of the question of forum non conveniens.  The main question for the court was the application of the basic test formulated in Spiliada Maritime Corporation v Cansulex Ltd. [1987] 1 AC 460, at 476C-D, 477E-F; and in The Adhiguna Meranti [1987] HKLR 904, at 907F-908B.

(2)  Looking then to the trial of the action to see whether it could be shown by the Defendants that the Ningbo Maritime Court was “clearly or distinctly” more appropriate a forum than the Hong Kong courts, the learned judge then considered a number of factors in this regard.

(3)  First, he did not regard the fact that PENG YAN was registered in the PRC and that her owners were PRC based, carried much weight.  In an Admiralty context, it is commonplace for claims (and in particular, cargo claims) to be litigated in jurisdictions other than the ‘home’ of either the ship in question or her owners.  Where ships and sister ships ply their trade worldwide, this is inevitable and in my view, will generally carry little or no weight in the consideration of forum non conveniens issues.

(4)  Secondly, the learned judge then looked at the fact of the PRC nationality of the crew of both PENG YAN and HUI RONG.  Again, this was not considered a matter of sufficient weight.  He pointed out, correctly with respect, that by the very nature of their occupation, crew members were often away from home and that therefore having to attend trial at a foreign jurisdiction would not be unduly inconvenient.  In any event, the crew came from different parts of the PRC and travelling to Ningbo was really no more convenient for a person from, say, Shandong (like the Third Officer of PENG YAN) than coming to Hong Kong.

(5)  Thirdly, it was far from clear in any event what relevant testimony would come from crew members.  The main evidence going to the issue of the respective fault of both ships would come from the reports of the incident compiled by the Hong Kong Marine Department and the Shenzhen Maritime Safety Administration.  There was no evidence why the authors of these reports would find any difficulty in attending a trial in Hong Kong.

(6)  Fourthly, the Defendants referred to the existence of proceedings which had actually been commenced and pursued in the Ningbo Maritime Court.  This was the Ningbo Limitation Action to which reference has already been made.  The Defendants emphasized the point that the issue of the respective fault of the two ships (this involving of course the crucial issue of PENG YAN’s liability) would be decided in the Ningbo Limitation Action.  The shares to which the various cargo interests might be entitled in the limitation fund set up in the Ningbo Limitation Action would also be apportioned in that action.  It is clear, however, that at the time the hearing took place before Reyes J, the Plaintiffs had not yet become parties to the Ningbo Limitation Action.  The position changed by the time the present appeal was heard.  The learned judge was not persuaded that there would be any substantial saving of time or costs if the dispute in the present action were also litigated in the Ningbo Maritime Court.  He observed that the possibility of avoiding multiple actions was a distant one, given it was unlikely that the Ningbo courts would consolidate all the claims that arose from the collision (he referred specifically to the pollution claims and the cargo claims).  The Judge further observed there was nothing unusual about a limitation action taking place in a different forum to the one in which the question of liability was being determined.  Before us, the Defendants’ arguments changed somewhat by reason of the Plaintiffs having at that stage joined in the Ningbo Limitation Action.

(7)  Fifthly, the Judge was of the view it was a relevant factor that the applicable limits of liability were potentially different as between Hong Kong and the Ningbo Maritime Court.  At the time Reyes J heard the motions, there was still in existence the Defendants’ appeal against the order of the Ningbo Maritime Court that the limitation fund should not be reduced by 50% as the Defendants had originally sought (see paragraphs 13 to 15 above).  Although the affirmation evidence before the court was to the effect that the appeal was simply to buy more time to enable the full fund to be established and that once the Defendants were put in funds, the appeal would be abandoned, it remained starkly the fact that the appeal was not abandoned at the time of the hearing below.  Indeed, it never was abandoned and the appeal was in fact proceeded with.  The Defendants had offered to give an undertaking that once they were in funds, the appeal would be withdrawn.  The judge was not impressed by this : he was of the view that it fell short of a guarantee that the requisite security would actually be provided.  He concluded on this aspect in favour of the Plaintiffs, albeit in his own words only ‘marginally’.

(8)  Although the Judge concluded it had not been shown by the Defendants that there was a forum clearly or distinctly more appropriate than Hong Kong, he nevertheless considered the submissions made by the Plaintiffs based on loss of personal or juridical advantages should the Hong Kong proceedings be stayed.  Though unnecessary to decide, he nevertheless dealt with these points but was not persuaded that there would be any loss of such advantages.

The issues on appeal

19.In this appeal, the Defendants challenged the Judge’s decision in three respects : -

(1)  There was a failure to take fully into account the importance of the fact that the natural forum for the adjudication of the dispute between the parties were the courts of the PRC (and specifically the Ningbo Maritime Court), the PRC being where the alleged tort took place.  In other words, the Judge had failed to apply The Albaforth principle referred to in paragraph 18(1) above.

(2)  The learned judge failed to consider the factor based on multiplicity of proceedings (see paragraph 18(6) above).  I have indicated earlier that the Defendants’ arguments here changed on appeal.  In the Court below, the argument proceeded merely on the basis that the dispute between the parties in the Hong Kong proceedings ought to be litigated in the Ningbo Maritime Court as that was clearly or distinctly the more appropriate forum (there being at the time of the hearing below no existing proceedings between the parties there).  By the time the appeal was heard, the Plaintiffs had joined as parties to the Ningbo Limitation Action.  The argument before us therefore proceeded on the basis that there should be a stay on the ground that there were concurrent proceedings in the PRC and that a stay was needed to avoid a multiplicity of proceedings over the same subject matter.  This was really an argument based on lis alibi pendens.

(3)  The Judge was wrong in his view that the limitation amounts in the Ningbo Limitation Action differed from what otherwise would be the position in Hong Kong.  Here, the Defendants contended that the Judge did not take fully into account the undertaking that had been offered to the court to the effect that once the Defendants were put in funds by their insurers, the appeal from the decision of the Ningbo Maritime Court refusing the 50% reduction in the limitation amount (see paragraph 15 above), would be withdrawn.

20.I will presently deal with these issues in turn.  All relate principally to the aspect of whether the Ningbo Maritime Court was clearly or distinctly the more appropriate forum.  The issues raised in the Court below by the Plaintiffs in respect of the asserted loss of personal or juridical advantages, were not pursued on appeal.

The approach to applications for stay based on forum non conveniens in admiralty proceedings

21.Before dealing with the three issues identified above, I would reiterate that the basic approach of the court in determining applications for stay based on forum non conveniens in admiralty proceedings is the same as in any other action, that is, the application of the principles enunciated in Spiliada and Adhiguna Meranti.

22.The basic approach is well known : where jurisdiction in Hong Kong has been founded as of right, a stay will only be granted where it is shown that there is another forum which is clearly or distinctly more appropriate.  Only if this has been shown will questions of the deprivation of personal or juridical advantages and any consequential balancing exercise, arise.

23.In admiralty proceedings, the founding of jurisdiction as of right usually arises upon an arrest of the ship in question or a sister ship.  The court has on numerous occasions emphasised this unique feature of the admiralty jurisdiction : see for example, The Convenience Container [2007] 2 HKLRD 575.  In The Kapitan Shvetsov [1998] 1 Lloyd’s Rep 199, this court alluded to the importance of the jurisdiction of the admiralty court having been founded as of right in this way.  The foundation of the court’s jurisdiction to arrest is of course the provision of security for various types of maritime claims and it is this facet that gives the admiralty jurisdiction its uniqueness.  Where jurisdiction is founded by an arrest, then, notwithstanding that there may be little or no connection with Hong Kong other than the fact of arrest, the burden on the party applying for a stay based on forum non conveniens is still to demonstrate that there is another jurisdiction that is clearly or distinctly more appropriate.  The legal burden is not on the party suing in Hong Kong to demonstrate the appropriateness of continuing proceedings here.  Further, as cases like The Kapitan Shvetsov (at 217(2)) and The Caspian Basin [1997] 2 Lloyd’s Rep 507 (at 525(2)) show, the existence of parallel proceedings in admiralty matters is by no means unusual, nor should the mere existence of such by itself incline a court towards staying an action on the ground of forum non conveniens (as to this latter point, see The Abidin Daver [1984] AC 398, at 423F-H).

The Albaforth principle

24.In The Albaforth, it was said at 96(2) in the judgment of Robert Goff LJ, that :

“If the substance of an alleged tort is committed within a certain jurisdiction, it is not easy to imagine what other facts could displace the conclusion that the Courts of that jurisdiction are the natural forum”.

25.No doubt this is correct as far as it goes.  However, as confirmed by this court in Esquel Enterprises v Tal Apparel Ltd [2006] 2 HKC 384, this is but a starting point.  The basic principle or test is that stated by Lord Goff of Chieveley and Hunter JA in Spiliada and Adhiguna Meranti (see paragraph 22 above).  The decision of The Albaforth, of course, predated Spiliada.

26.I believe the underlying reason for The Albaforth principle is that, often in tortious claims, there are one or more elements that have a real connection with the place of the commission of the alleged tort.  Thus, for example, where the extent of loss and damage (a requisite element to be proved in all tortious claims) in a particular location is an important issue, the place of the tort must be an important factor in determining the appropriateness of any given forum.  Distillers Co. (Biochemicals) Ltd. v Laura Ann Thompson [1971] AC 458, an authority referred in The Albaforth, was a case involving the use of Thalidomide in Australia.  Delivering the judgment of the Privy Council, Lord Pearson said at 468D :

“The defendant has no major grievance if he is sued in the country where most of the ingredients of the cause of action against him took place”.

The factual issues in that case involved the warnings that had been given by the manufacturers of the drug in New South Wales and the extent of the use of Thalidomide there.

27.Other examples where the location of the tort is important from the point of view of the trial of the action include misrepresentation claims where the alleged misrepresentation is acted upon in a particular country : see The Albaforth itself; Diamond v Bank of London and Montreal Ltd. [1979] QB 333.

28.It is therefore important when applying The Albaforth principle in the context of forum non conveniens applications, to examine just how close a connection there really exists with any given forum.  In some cases, the place of the commission of the tort may be decisive; in others, perhaps not weighty at all.  The underlying principle to be firmly borne in mind is the basic test in Spiliada and Adhiguna Meranti.  The place of the commission of the tort may in some cases be quite fortuitous and may provide no more than a convenient starting point or prima facie position.  The court is required to look into more substantial factors in the application of the basic test.  The present case involved a collision where, quite often, there is no obvious or natural forum : see Spiliada  at 477C-D.

29.In my view, the approach of the Judge cannot really be faulted.

Multiplicity of proceedings

30.This became the main focus of the appeal.  I have already mentioned above how the argument as presented to us by the Defendants, differed from that before the judge below.  Put simply, the Defendants’ submissions can be distilled into the following.  The issues of the liability of PENG YAN, of the fault to be attributed to that ship and HUI RONG, and of the quantum of the Plaintiffs’ claims (these being issues raised for determination in the Hong Kong proceedings) are all to be decided in the Ningbo Limitation Action.  The amount of security available to the Plaintiffs in the Ningbo Limitation Action is now no different from the security that is available in Hong Kong.  Following the unsuccessful appeal in the PRC, the applicable limits of liability under the Maritime Code of the PRC are now the same as those that would be applied in Hong Kong under the 1976 Convention (see paragraph 15 above).

31.There is a certain attraction in the simplicity of the Defendants’ submissions, but upon closer analysis, it amounts to saying no more than, at its highest, there exist parallel proceedings in Hong Kong and in the Ningbo Maritime Court.  As stated above, this is by no means unusual in admiralty matters and specifically within this rubric, limitation actions (see paragraph 23 above).  It may have been of some relevance had it been shown that the Ningbo Limitation Action was near conclusion but this was not the case.  Rather, the impression I gained at the hearing was that the Ningbo Limitation Action was not at an advanced stage.

32.I have of course not lost sight of the argument that there may be a risk of inconsistent findings were the Hong Kong courts and the Ningbo Maritime Court to adjudicate on those issues common to both proceedings.  I have already identified some of these issues.  This factor was not before the Judge below since it will be recalled that the Plaintiffs were not at that time parties to the Ningbo Limitation Action.  The latest affirmation from the Defendants, however, indicated that they now are.

33.Nevertheless, it seems clear that the reason for the Plaintiffs joining in the Ningbo Limitation Action was really only as a protective measure in case a stay was granted in Hong Kong.  From the affirmation evidence filed on behalf of the Plaintiffs, their primary stance was not to litigate in the Ningbo Maritime Court.  Without a stay, I daresay the Plaintiffs would most likely withdraw or modify their participation in the action there.

34.The risk of inconsistent findings is, therefore, in my judgment, more apparent than real.  One is accordingly left in more or less the same position as the Judge below in having to determine whether a trial in the Ningbo Maritime Court would, compared with a trial in Hong Kong, be clearly or distinctly more convenient.  Here, the careful analysis undertaken by the Judge directed at what was likely to occur at trial (which analysis was not really challenged on appeal) clearly justified his conclusion it could not be shown that the Ningbo Maritime Court was clearly or distinctly the more appropriate forum for the trial of the disputes.

35.In his judgment, the Judge remarked that nothing prevented the owners from pleading limitation in the Hong Kong action and arguing that, in the determination of liability, the court should for some reason recognize any limitation decree by the Ningbo Maritime Court (see paragraph 35 of the Judgment).  The Judge, however, also mentioned in his judgment the possible difficulties that may arise in the recognition by the Hong Kong courts of a PRC limitation decree.  There may or may not be such difficulties, but at the present stage, it cannot be said that insuperable difficulties would be caused by the existence of contemporaneous proceedings in the Ningbo Maritime Court and in Hong Kong.  Certainly, it cannot be said that this aspect was sufficiently strong to justify a stay.

36.I have so far proceeded on the assumption that the Hong Kong proceedings and the Ningbo Limitation Action are indeed parallel proceedings.  Strictly speaking, however, they are not and there are important differences.

37.First, the security for the Hong Kong proceedings comes in the form of the Letters of Undertaking (this is of course not the position in the Ningbo Limitation Action where a limitation fund has been established).  I have earlier noted the fact that they do not contain any express reservation of the Defendants’ right to limit liability by reference to the 1976 Convention (or indeed any other applicable limitation).  The only reservation was to challenge the jurisdiction of the Hong Kong courts.

38.It is the Plaintiffs’ position that whatever limitation may be applicable in the Ningbo Limitation Action under the PRC Maritime Code, this would be inapplicable as far as the Hong Kong proceedings are concerned.  They contend that on the true construction of the Letters of Undertaking, the Defendants have unconditionally undertaken to secure any damages ordered to be paid up to the limits set out in them.  This was the price that was exacted to enable the arrested ship to be released or to prevent further arrest.  The Defendants of course contend otherwise.  Mr Clifford Smith SC (for the Defendants) submitted forcefully that the Plaintiffs’ position was untenable.  He submitted it was unnecessary to set out in a letter of undertaking the full extent of any defence that would reduce or eliminate what otherwise might be the liability of the Defendants.

39.Mr Russell Coleman SC (for the Plaintiffs) pointed out, on the other hand, that the omission to refer to tonnage limitation in the Letters of Undertaking in the present case reflected the position in cases like The ICL Vikraman [2004] 1 Lloyd’s Rep 21, at 25(2) (paragraph 8).  It was at least arguable that tonnage limitation would not avail the Defendants in the Hong Kong actions.

40.Mr Smith may or may not be right, but this is an issue which the court is unable at this stage to determine (indeed we were not expressly invited to do so).  Ultimately, this aspect was one which, in my view, strongly militated against a stay being granted.  Put simply, the Plaintiffs would be secured in the Ningbo Limitation Action only to the extent of the limitation fund established there.  In Hong Kong, they could be secured in respect of a considerably larger amount.  The existence of security for a claim is a relevant factor in the consideration of stay applications based on forum non conveniens : see Spiliada at 483D.  As mentioned earlier, one of the orders sought by the Defendants in the application for stay was the cancellation of the Letters of Undertaking.

41.The second difference is that in HCAJ 76/2007, the Plaintiffs claim against, in addition to the Defendants, the owners and charterers of HUI RONG, with whom the Plaintiffs’ cargo interests had contractual relations.

42.Lastly, it is worth a reminder that the Ningbo Limitation Action was commenced the very day that the writs in the present proceedings were served.  While it is to be acknowledged that the owners of PENG YAN were free to commence a limitation action wherever they chose (see The Volvox Hollandia [1988] 2 Lloyd’s Rep 361), this cannot be given undue weight by itself.

43.In my judgment, this ground of appeal similarly fails.

The undertaking issue

44.The Defendants contended the Judge fell into error in failing to take sufficient account of the undertaking offered by the Defendants to withdraw the appeal against the decision of the Ningbo Maritime Court not to apply the 50% reduction in liability under the Maritime Code (see paragraph 18(7) above), once funds were available.

45.This point can be disposed of shortly.  At the hearing below, the position was that the said appeal from the decision of the Ningbo Maritime Court was still in existence and had not been withdrawn.  Accordingly, there obviously remained the possibility that the limitation fund in the Ningbo Limitation Action would only be 50% of the applicable limitation in Hong Kong (assuming tonnage limitation was applicable in the first place).  In the affirmation placed before us for the purposes of the appeal, it was revealed that in fact, on the same day as the hearing below (that is, 25 August 2008), a series of coincidences occurred : (1) the motions for stay were dismissed, (2) the funds necessary to constitute the full limitation fund in Ningbo did however materialize that day and (3) the decision of the Ningbo Maritime Court was upheld on appeal by the Zhejiang Higher People’s Court.  It is not clear the order in which these three events occurred except it appears that the fact the Defendants were put in funds was only known to the Defendants’ solicitors after Reyes J had already given his decision to dismiss.

46.In spite of these matters revealed in the new affirmation, the Judge was entirely correct, in my view, in his analysis.  It was far from clear that there would definitely be in existence 100% limitation fund in the Ningbo Limitation Action.  The latest affirmation reinforces this conclusion.  The appeal was in fact at no stage withdrawn (not even an adjournment appears to have been sought).  Indeed, it was proceeded with and a decision of the Zhejiang Higher People’s Court was given.  One must ask rhetorically here : if the appeal had gone in favour of the Defendants, would they still have constituted the fund to the extent of 100%?

47.This ground also falls away.

Conclusion

48.For the foregoing reasons, the appeals were dismissed.  I would also make an order nisi that the costs of the appeals be to the Plaintiffs to be paid by the Defendants, such costs to be taxed if not agreed.

Hon A Cheung J :

49.I agree.

Hon Ma CJHC :

50.The appeals having earlier been dismissed, we now make an order nisi that the costs of the appeals be to the Plaintiffs to be paid by the Defendants, such costs to be taxed if not agreed.

CACV 269/2008

Mr Russell Coleman, SC, instructed by Messrs Clyde & Co for the Plaintiffs

Mr Clifford Smith, SC & Mr Nigel Kat, instructed by Messrs Holman Fenwick Willan for the Defendants

CACV 270/2008

Mr Russell Coleman, SC, instructed by Messrs Richards Butler for the Plaintiffs

Mr Clifford Smith, SC & Mr Nigel Kat, instructed by Messrs Holman Fenwick Willan for the 3rd Defendant