SINOSTAR CORPORATION LTD. v. COASTRAND SHIPPING LTD. AND ANOTEHR

HCCL252/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.252 OF 1998

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J U D G M E N T

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1. In May 1997 the Plaintiff herein, allegedly the owner of a certain cargo of plastic scraps, engaged the 1st Defendant, a freight forwarder, and the 2nd Defendant, a carrier, to transport this cargo from Hong Kong to China.

2. The 2nd Defendant's vessel departed Hong Kong waters, I am told, on 28th May 1997. When the vessel entered Chinese waters in the course of its journey from Hong Kong, it was stopped and searched by a Marine Police patrol boat of the People's Republic of China. The PRC police found ten out of the eleven containers shipped by the Plaintiff contained what they alleged to be plastic contraband goods. It is pleaded by the Defendants that the vessel was detained for investigation from 28th May 1997 to 24th June 1997, as a result of which investigation the PRC authorities confiscated ten out of the eleven containers. The remaining container apparently was found to infringe environmental protection requirements, but was returned to Hong Kong. I have further been informed this morning that it appears, in light of certain correspondence emanating from the PRC authorities, that it is proposed to sell off the ten confiscated containers.

3. That broad factual matrix provides the background for this application, which is an application for summary judgment by the Plaintiff against the 1st and 2nd Defendants pursuant to a summons issued on 26th October 1998 under the provisions of Order 14, rule 1, Rules of the High Court. I pause to note that from a procedural standpoint this summons postdated the constitution of the pleadings, which appear to have been concluded in or about July 1998, and which contain, beside the claim from the Plaintiff, a counterclaim on the part of the 2nd Defendant for damages accruing by reason of the detention of its vessel by the PRC authorities.

4. One of the principal themes running through the Defence is that this regrettable detention incident occurred because it is alleged that the Plaintiff knowingly misstated the nature of the cargo on the shipping order, and thus on the bill of lading. I do not know whether this is right or whether this is wrong. Similarly, I do not know whether in fact the Plaintiff owns these goods or whether it does not, although Mr Kerr, who appears for both Defendants on this application, has drawn to my attention recent affidavit material filed on behalf of the Plaintiff which would tend to indicate (I put it no higher) that the plastic material, which was the subject of the seizure and for the value of which the Plaintiff now claims, is in fact owned, in part at least, by a third party named Tak Fung, which in turn has its own claim against the Plaintiff for loss of the alleged plastic scraps. Mr Kerr also has drawn my attention to invoices which refer to the alleged plastic scraps as 'plastic rolls', which possibly provides some indication of why the PRC authorities regard this cargo as contraband since it appears not to be 'scraps', at least in the commercial sense of having little intrinsic value, but to the contrary would seem to possess a very real commercial value.

5. But to come back to the manner in which this Order 14 application is mounted by Miss Chan, who appears today on behalf of the Plaintiff. The claim is in fact divided into two. By far the major part of the claim is for the sum of HK$1,415,479.13, which sum constitutes primarily the value of the plastic material which has now apparently been lost, together with the value of the containers in which they were contained. The second element of the Order 14 is for the relatively small sum of HK$69,541.50, which is claimed for the late return and damage to certain other containers which I am told have nothing to do with the seized goods, but which are said to have been the subject of damage allegedly suffered by the Plaintiff because these containers, which had been in the possession of the 1st Defendant, had not been timeously returned.

6. Let me deal with this latter element first. This aspect of the claim appears to have effectively been settled by what seems to me to be an admirable commercial arrangement. There had been another associated action between these parties, which was anticipated to be the subject of cross-application for summary judgment and consolidation today, namely HCCL232 of 1998. This case, however, was settled yesterday evening pursuant to a Consent Order submitted by the parties. The subject of this Order was the present 1st and 2nd Defendants' application for freight accrued due for a voyage other than the fateful voyage in which the 2nd Defendant's ship was seized together with what are said to be the Plaintiff's goods. Had the matter not been settled, the Plaintiff in this case, I think, was going to argue that these two cases be consolidated and that in the circumstances the present Defendants' claim for freight should be the subject of a de facto set-off, notwithstanding the normal legal principle to the effect that freight as such is not susceptible to set-off. In any event, this matter has now been compromised, as I have said, and Mr Kerr tells me this morning that with regard to the present sum of $69,541.50, his clients intend to accept a figure of $60,000 and to set it off against the judgment of some $280,000 that was signed in favour of his client last night. For her part, Miss Chan and those instructing her are content with this commercial solution to the problem.

7. I now turn, therefore, to the main thrust of the present Order 14 application, and that is the Plaintiff's claim for the sum of HK$1,415,479.13. I do not want to say a great deal about this claim because in my judgment this matter clearly must be ventilated at trial, and I do not wish to compromise the position if the case be put before any other judge. Suffice to say that upon reviewing the papers to which both Counsel have fairly taken me, I am quite unable to conclude that this is or was in any sense a suitable matter for Order 14 proceedings. I do not know what the result of the trial (if there be a trial) will be, but it is not easy to discern why even before the taking out of the summons for summary relief it could have been thought that there were no triable issues. Perhaps the summons for summary relief in this action, that is, HCCL252/98, was taken out as a quid pro quo for the summons for summary relief taken out by Mr Kerr's clients in HCCL232/98. Its issuance was certainly subsequent to that other summons, but in the circumstances perhaps it is not worth speculating. However, what in my view is wholly obvious, and indeed that which the affidavits make abundantly clear, is that this case is redolent with triable issues; indeed a further triable issue has even turned up in the course of argument today, namely whether the Plaintiff has any property in the goods lost at all.

8. In summary, this is likely to be a difficult case at trial, and I should have thought the issues will be particularly sensitive to the evidence as will be presented. I will of course approach it with an open mind. Suffice to say for present purposes, as an application for summary judgment, and even looked at through the most rose-tinted glasses, this case does not come within the rubric and the practice involved in Order 14 applications.

9. That being the conclusion of this Court, after listening to the way both Counsel have put their cases, in my judgment the only fair result on this application is to dismiss it, which I so do. The Commercial Court, like many other Courts in this jurisdiction, is extremely busy. One day has been allotted in the Court's diary to an application which at bottom was really a non-starter. Practitioners should realise as clearly as they might that Order 14 applications are likely to be sympathetically received in this Court only in the clearest and most obvious cases. How many times, one wonders, does the Court have to ventilate this simple proposition?

Costs

10. I now come to the question of costs. Mr Kerr asks for his costs. Miss Chan in a spirited rearguard defence, which I suspect she felt she had to mount notwithstanding her personal feelings on the matter, has argued against a stringent costs order. Given the fact that I have seen fit to dismiss this Order 14 summons, it is clear that the Defendants must have their costs of and occasioned by the application. The issue is not totally straightforward, however, because, as Miss Chan pointed out, the other element of the application regarding the $69,000 odd, which now of course has been susceptible to sensible commercial settlement, also formed part and parcel of this application. So I have to take a view. In my judgment, after taking everything into consideration, the appropriate costs order is that the Defendants herein shall have 90% of their costs of and occasioned by this Order 14 application, in any event, such costs to be taxed if not agreed.

11. That being all for this morning, I thank both Counsel for their assistance.