INCHCAPE J.D.H. LTD v. BALTRANS EXHIBITION & REMOVAL LTD AND ANOTHER

1996, No.CL257

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H E A D N O T E

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Order 11 rule 1(1)(c) -- service out of the jurisdiction on a "necessary or proper" party

General principles -- Seaconsar v. Bank Markazi [1994] 1 AC 438 (HL)

"proper party" -- Qatar Petroleum Producing Authority v. Shell Internationale Petroleum [1983] 2 Lloyds LR 35 (CA)

"necessary party" -- The Electric Furnace Co. v. Selas Corporation of America [1987] RPC 23 (CA)

forum conveniens -- Du Pont v. Agnew [1987] 2 Lloyds LR 585 (CA)

The "Goldean Mariner" [1990] 2 Lloyds LR 215 (CA)

Per curiam -- observations upon whether lack of evidence is a jurisdiction or merits issue in the context of applications under Order 11 rule 1(1)(c)

1996, No.CL257

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

COMMERCIAL LIST

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J U D G M E N T

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THE APPLICATION

1. On 21^st January 1997 Mr Justice Waung granted leave to the Plaintiff, upon its ex parte application, to issue and serve a concurrent writ out of the jurisdiction upon the 2^nd Defendant, a Chinese corporation, which maintains its registered office in Beijing.

2. In turn, by summons dated 8^th August 1997 issued pursuant to the provisions of Order 12 rule 8 RSC, the 2^nd Defendant moved to set aside that Order. It is this application which is the subject of this judgment.

THE FACTS

3. The material facts can be shortly stated. The Plaintiff, a Hong Kong company, is a supplier of medical equipment. In particular, it is the owner of a piece of equipment known as an "Elan Analyser". The 1^st Defendant, a Hong Kong company, is a freight forwarder, and the 2^nd Defendant is a Chinese commercial airline operating within the PRC.

4. What happened was this. The 1^st Defendant contracted with the Plaintiff to transport the Elan Analyser and ancillary equipment (packed, I understand, in three wooden crates) by land and air from a medical exhibition site in Beijing to another exhibition site in Shanghai. The 1^st Defendant used the 2^nd Defendant for the air carriage leg of the trip. Unfortunately the equipment did not arrive in one piece; to the contrary, it appears to have arrived in several pieces, and the damage in question was revealed only upon the unpacking of the crates at the exhibition site in Shanghai. In the event, the Analyser was sold for scrap, and this case is brought by the Plaintiff to recover the sum of US$80,612.39, which it claims is its net loss.

5. By Amended Points of Claim dated 27^th June 1997 the Plaintiff sues the 1st Defendant, the freight forwarder; as might be expected, the case is framed in contract and tort. It also seeks to recover against the 2^nd Defendant, the air carrier, which had issued the airway bill relevant to the air carriage portion of the Beijing-Shanghai trip; in this connection the plaintiff says that the 2^nd Defendant, as sub-bailee of the cargo, was under a duty safely to deliver the cargo to the 1^st Defendant, as holder of the airway bill, in Shanghai, and that the damage complained of was caused by the negligence or breach of duty of the 2^nd Defendant as sub-bailee. An alternative pleaded case is that the 1^st Defendant, as agent for the Plaintiff, entered into the contract of carriage, evidenced by the airway bill, with the 2^nd Defendant, and that in breach of that contract, the 2^nd Defendant failed to take care of the cargo and deliver it up to the Plaintiff in the same order and condition as it was on delivery to the 2^nd Defendant; in the further alternative, in breach of contract the 2^nd Defendant failed to effect the necessary insurance thereof. As to the contract element of the case, however, Mr Clifford Smith, appearing for the Plaintiff, made it clear during argument that he placed no reliance thereon.

BASIS OF THE EX PARTE ORDER

6. The application before Mr Justice Waung was supported by an affidavit sworn by Mr Barber, a solicitor with Richards Butler, the Plaintiff's solicitors. As Mr Barber's supplemental affidavit confirms, the application was made, and granted, solely upon the basis of Order 11 rule 1(1)(c) RSC, the relevant part of which provision reads :-

"... service of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ--

(c) the claim is brought against a person duly served within the jurisdiction ... and a person out of the jurisdiction is a necessary or proper party thereto;"

7. I note two further important requirements which must be met in connection with rule 1(1)(c) :- viz. Order 11 rule 4(1)(d) :-

" An application for the grant of leave under rule 1(1) must be supported by an affidavit stating -

(d) where the application is made under rule 1(1)(c), the grounds for the deponent's belief that there is between the plaintiff and the person on whom a writ has been served a real issue which the plaintiff may reasonably ask the Court to try." (emphasis added)

And O.11, r.4(2) :-

" No such leave shall be granted unless it shall be made sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction under this Order." (emphasis added)

8. On the basis of the evidence placed before him, the learned judge granted the Order which the 2^nd Defendant now seeks to set aside.

RELEVANT PRINCIPLES

9. The general principles to be applied in an Order 11 jurisdictional debate are now, I think, tolerably well-established; see in particular the useful commentary in the Supreme Court Practice 1997, in particular at Marginal Notes 11/1/6, 11/1/7, 11/4/3 and 11/4/10.

10. As a result of the speech of Lord Goff in the leading case of Seaconsar Ltd. v. Bank Markazi [1994] 1 AC 438 (H.L.), it is now accepted that all such applications for leave to serve out under Order 11 involve a three stage evaluation. As Lord Goff put it (op.cit., at 456H) :-

"Accordingly, a judge faced with a question of leave to serve proceedings out of the jurisdiction under Order 11 will in practice have to consider both (1) whether jurisdiction has been sufficiently established, on the criterion of the good arguable case laid down in Korner's case, under one of the paragraphs of rule 1(1), and (2) whether there is a serious issue to be tried, so as to enable him to exercise his discretion to grant leave, before he goes on to consider the exercise of that discretion, with particular reference to the issue of forum conveniens."

11. Order 11 rule 1(1)(c) traditionally has been set somewhat apart from the other categories within Order 11, possibly because there was a tendency for its provisions to be creatively utilised in order to establish jurisdiction when difficulties were encountered in fitting a particular case within the more "substantive" sub-heads of rule 1(1). A substantial proportion of the earlier case law in this area dealt with the situation wherein it was the party sought to be joined who was the real focus of the Plaintiff's claim, and to guard against the use of an existing Defendant as a sort of jurisdictional Trojan Horse, so to speak, the cases established a "ring fence" of protective principle. There has arisen, therefore, a certain amount of commentary and judicial authority upon the precise ambit of the term "necessary or proper party" - see, for example Dicey & Morris, The Conflict of Laws, 1st Ed., Vol.1 at p.324 et.seq. and the cases cited therein; see also Supreme Court Practice 1991 at M/N 11/1/12 (p.89).

12. Some of these cases are considered later in this judgment. At the end of the day, however, the ultimate issue for consideration, in the words of Order 11 rule 4(2), must be whether it appears to the Court that the case is "a proper one" for service out of the jurisdiction.

RIVAL CONTENTIONS

13. The present case is notable in that the party in direct contractual relationship with the Plaintiff for the carriage of these crates of medical equipment from Beijing to Shanghai is the 1st Defendant, with regard to which, of course, no jurisdictional difficulty exists; the 1st Defendant is a local Hong Kong company which has been served and over which jurisdiction has been established as of right. So that there is no question of the 1^st Defendant being, in effect, an artificial player impleaded to facilitate the assumption of jurisdiction; to the contrary, the 1^st Defendant, as contractual carrier, is the Plaintiff's main target, a point which was stressed by Mr Jat Sew Tong for the 2^nd Defendant; in his fetching phrase, the 2^nd Defendant was simply "icing on the cake" as far as the Plaintiff was concerned.

14. Mr Jat's primary submission was that, in the circumstances of this case, the 2^nd Defendant should not be considered a "necessary or proper" party, so that the Plaintiff fell at the first jurisdictional fence, so to speak. He put his case thus. It was the 1^st Defendant, the freight forwarder, against whom there was unquestionably a valid claim. It followed that the 1^st Defendant was under a clear duty, whether such was in contract, tort or bailment, to take all reasonable care of the equipment during the entire carriage, and to deliver it undamaged to the Plaintiff; ergo, this was not a case of mutually exclusive claims against the two Defendants, and accordingly there was no necessity for the Plaintiff to mount a claim against the 2^nd Defendant.

15. Nor was the 2^nd Defendant a proper party because the Plaintiff had not shown that it had a valid claim against the 2^nd Defendant. Even on the assumption that the machine was in good order and condition when it was received by the 2^nd Defendant (and the airway bill would have indicated only its apparent condition) there was no evidence that it was not re-delivered in like good order and condition to the agents of the 1^st Defendant, who themselves had completed the land portion of the journey to the Shanghai exhibition hall; put another way, since the only evidence before the Court was that the machine was found damaged after re-delivery by the 1^st Defendant to the Plaintiff at the Shanghai Exhibition Center, there was no evidence whatever that the machine was damaged in the custody of the 2^nd Defendant, the latter being, of course, one only of the two carriers involved. It followed from this that the Plaintiff had not shown valid claims against the 2^nd Defendant in tort and bailment, whilst the purported claim in contract was a non-starter (as Mr Smith effectively accepted) and the claim for failure to insure was even weaker (both latter points not having been raised in the affidavit seeking leave). And, to cap it off, the Plaintiff's claim against the 2^nd Defendant was time-barred under PRC law, if such was the applicable law.

16. The like arguments were adopted to underpin the assertion that there was no serious issue to be tried on the merits. And in any event, said Mr Jat, Hong Kong patently was not the forum conveniens. In this regard he submitted that the entire incident had occurred in the PRC, the relevant personnel involved in the carriage were in the PRC (the 1^st Defendant's local Chinese agents having dealt with the 2^nd Defendant), and it was plainly more appropriate for substantive legal disputes governed by PRC law (for example as to the cause of action and limitation issues) to be resolved by the PRC Courts themselves.

17. Mr Smith, who appeared for the Plaintiff, adopted a broader and forensically attractive approach. His basic premise was that the 2^nd Defendant is a "necessary or proper party" to the action against the 1^st Defendant because the liability of each Defendant depended upon one investigation (see White Book MN 11/1/12, quoting Massey v. Heynes [1881] 21 QBD 330 (C.A.), and that in this action the common investigation against both Defendants concerned the cause of the damage to the Plaintiff's goods, the extent of that damage, and the loss arising therefrom. Jurisdiction was therefore satisfied, in his submission. If this was the case, there were plainly serious issues to be tried, given that the equipment had patently been damaged during carriage, so that the case then came down to the exercise of the forum conveniens discretion; and in this regard, the Courts had consistently deprecated the bringing of parallel proceedings in two different jurisdictions for the eminently good reason of the consequent risk of inconsistent results and increased costs. Indeed the continuation of related proceedings in a given forum had often been held to be an overriding factor in stay applications, and similar principles applied under Order 11, said Mr Smith. He further suggested that where one Defendant is a necessary or proper party to an action where at least one other Defendant is being sued here, then inevitably there would need to be some very strong reason for discharging service of the writ upon the foreign defendant; and no such strong reason existed in this case.

PRINCIPLES APPLIED

18. Such, therefore, was the outline of the respective arguments, and I turn now to examine the constituent elements of the debate.

(a) Jurisdiction : Good Arguable Case

19. Plainly, who is or is not to be regarded as a "necessary or proper" party within the meaning of Order 11 rule 1(1)(c) is not simply a matter of discretion, but requires a primary determination by the Court upon the facts of the particular case; the term is not one of infinite elasticity, however, and guidance in principle exists.

20. In terms of the "proper" element of the rubric, I drew counsel's attention to the case of Qatar Petroleum Producing Authority & another v. Shell Internationale Petroleum Maatschappij B.V. & anr. [1983] 2 Lloyds LR 35 (C.A.), a decision of Lord Justices Ackner and Dillon on appeal from a decision of Mustill J. (as he then was). The facts are complex, and for present purposes do not, I think, require rehearsing, particularly since the ultimate decision in that case was substantially affected by the existence of parallel arbitration proceedings. What is of considerable assistance, however, is the following extract from the judgment of Ackner L.J. (op.cit., at p.41, bearing in mind that the previous nomenclature of Order 11 rule 1(1)(c) was 1(1)(j)) :

" It is of course well settled that we must approach the exercise of our jurisdiction under R.S.C., O.11, particularly in relation to r.1(1)(j) with caution (see The Brabo, (1948) 82 Ll.L.Rep. 251; [1949] A.C. 329 at pp.258 and 338). Moreover, the case must fall within the spirit as well as the letter of the Order (Johnson v. Taylor Bros. & Co., [1920] A.C. 144 at p.153). It is well accepted that the question whether a person out of the jurisdiction is a 'proper party' to an action against a person who has been served within the jurisdiction must depend upon whether, supposing both parties had been within the jurisdiction, they would have been proper parties to the action (see Massey v. Heynes, (1888) 21 Q.B. 330 at p.338 per Lord Esher, M.R.). R.S.C., O.15, r.4, so far as is material to the question we have to decide, provides that two or more persons may be joined together in one action where if separate actions were brought by or against each of them, as the case may be, some common question of law or fact would arise in all the actions." (emphasis added)

21. In this context I referred also during the present application to the judgment of Mr Justice Phillips (as he then was) in The"Goldean Mariner" [1989] 2 Lloyds LR 390, wherein the learned judge observed :-

" Mr. Tomlinson, Q.C. for the defendants, in an otherwise admirable skeleton argument, advanced the following proposition :

... Logic suggests that an underwriter against whom a claim can be made is neither a necessary nor a proper party to an action against another underwriter on the same or on a related risk.

In my view, logic is to the contrary effect. Where a number of underwriters are sued in relation to loss arising from the same casualty each is plainly a proper party to an action instituted against another. Mr. Gruder relied upon the test propounded by the authors of the 11th edition of Dicey & Morris at p.313 :

The question whether Y is a proper party to an action against X depends on this : Supposing that both X and Y had been in England, would they both have been proper parties to the action? If they would, and only one of them, X, is in the country, then Y is a proper party and leave may be given to serve him out of the jurisdiction. It is not necessary that the alleged liability of Y be joint and several with that of X.

That test is well supported by the authorities there cited for it, and I am satisfied that it is correct, at least in relation to the old rule. The plaintiffs were readily able in this case to satisfy that test."

22. So far as the "necessary" element of the equation is concerned, assistance is derived from the case of The Electric Furnace Co. v. Selas Corporation of America [1987] RPC 23 (CA), a patent case wherein the plaintiffs alleged infringement by both Defendants of a patent directed to a method of treatment of a continuous strip of steel moving through a steel furnace. The 1^st Defendant was a U.S. company who had designed the furnace, and the 2^nd Defendant had been responsible for its installation. The Plaintiff had duly served the 2^nd Defendant within the jurisdiction, and had obtained leave to serve out of the jurisdiction on the 1^st Defendant under Order 11 rule 1(1)(j) (the equivalent at that time of the current Order 11 rule 1(1)(c)).

23. Argument in Selas provided echoes of Mr Jat's approach in the present case, it being submitted before the Court of Appeal that, inter alia, it was not necessary to join the 1^st Defendant in order for justice to be done to the plaintiff, nor that any real advantage would be conferred upon the Plaintiff by so doing. This argument was shot down in terms, Slade L.J. observing as follows (op.cit., at p.32) :-

" I respectfully agree with Pearson J., and fully accept, that the court should be very careful before it allows a writ to be served out of the jurisdiction, and that in exercising its discretion it is a relevant factor whether it is necessary for the jurisdiction to be invoked. However, I cannot, and do not, derive the principle from this passage that leave must never be given under Order 11 unless it is strictly necessary. The very wording of paragraph (j), which I quoted earlier in this judgment, though that paragraph is not directly relevant in the case before us, belies this proposition. The disjunctive word 'or' in that paragraph shows that in an appropriate case leave may be given for the service of a writ out of the jurisdiction in a case where a person out of the jurisdiction is a proper party to an action properly brought against a person duly served within the jurisdiction, even if he is not a necessary party. The necessity or otherwise of the joinder is, in my judgment, only one relevant factor for the court to consider.

...

I would accede to Mr. Gratwick's argument on the point of principle to this limited extent. It does seem to me that if the court takes the view that service out of the jurisdiction in a particular case is likely in practice to achieve no potential advantage whatever for the plaintiff, this would ordinarily not be a proper case for service out of the jurisdiction within the meaning of Order 11, rule 4(2).

...

However, it seems to me that if a plaintiff has a good cause of action for damages against two defendants, one in this country and one out of the jurisdiction, it must, at least ordinarily, be of potential advantage to him to obtain a judgment in this country against the foreign defendant as well as against the defendant in the United Kingdom, because this will enable him to choose against which of the defendants he will seek to enforce his judgment. This right of choice may well be valuable to him, for a number of quite different reasons. The respective financial situations of the two defendants may be one reason, but there may be several other good reasons. For example, it may be practically easier to enforce the judgment against one defendant than against the other. Alternatively he may prefer, for good commercial reasons, to enforce his judgment against one defendant rather than against the other." (emphasis added)

24. On the basis of the foregoing statements of principle, which I accept, I do not consider that Mr Jat's submission in terms of the primary jurisdictional issue is well-founded. To the contrary, upon the (crucial) assumption that sufficient evidence exists to underpin the action, in my view a good arguable case is made out that the 2^nd Defendant is a "necessary or proper party" within the terms of Order 11 rule 1(1)(c). Had the 2^nd Defendant been available for service within the jurisdiction, plainly (on the basis of sufficient evidence) it would have been "proper" to join the 2^nd Defendant as a party to this action, whilst in terms of "necessary" joinder Mr Smith has made the point that it is in any event an advantage to the Plaintiff to be able to enforce any judgment against the 2^nd Defendant; although he does not suggest that the 1st Defendant is not good for any judgment, he points out that the 1^st Defendant's terms and conditions of carriage are subject to an express package limitation, and the Plaintiff should therefore be permitted alternatively to attempt to obtain, and thereafter enforce, judgment in the full amount against the 2^nd Defendant.

25. The interesting issue which arises in this particular case is whether the obvious paucity of evidence against the 2^nd Defendant (of which Mr Jat naturally has made much) is a jurisdiction or a merits issue within the Order 11 analysis. The point was not, I think, developed in argument, and I have been unable to identify any authority directly on the point. Nor perhaps does reference to other substantive sub-heads of Order 11 rule 1(1) particularly assist. Take, for example, rule 1(1)(d)(i). In Seaconsar, op.cit., (at p.454A-455B) Lord Goff made it clear that satisfaction of the jurisdictional requirement depended not upon mere assumption as to the existence of a contract, but upon establishing that there was in fact such a contract made within the jurisdiction; compliance with this head, therefore, necessarily involved an examination of the merits at the primary jurisdictional stage. By parity of reasoning in the present case, it could possibly be argued that, in considering Order 11 rule 1(1)(c), consideration of the merits should be "hoisted" into the jurisdictional analysis, so to speak, so that if clearly there is no evidence underpinning the claim itself then, ex hypothesi, it is not "proper" to join the foreigner as a party to the existing action.

26. Such is not, I think, mere arid discussion; the differing burdens upon the Plaintiff dependent upon whether "jurisdiction" or "merits" is in issue seem to me to render this of significance. However, whilst instinctively I should like to hold that this is a matter going to jurisdiction, in terms of basic principle I think that (probably) it is not. It seems to me that the fundamental rationale of the "proper party" element within Order 11 rule 1(1)(c) is to facilitate the trial of a common question of law or fact, and if this be the correct basis for the jurisdictional requirement under rule 1(1)(c), this requirement must be satisfied in the present case; looked at in these terms, the commonality of the issues in these proceedings arising from the carriage of this equipment from Beijing to Shanghai depends not upon analysis of the strength of the specific case against one of the undisputed carriers.

27. Accordingly, contrary to Mr Jat's contentions, I hold that a good arguable case has been made out that the 2^nd Defendant is a "necessary or proper" party to this action, although perhaps ultimately it does not greatly matter whether jurisdictional compliance is established either as "necessary" or "proper"; the requirements under Order 11 rule 1(1)(c) are disjunctive, as Slade L.J. pointed out in Selas, op.cit., and I have accepted the arguments advanced by Mr Smith as to the potential advantage accruing to the Plaintiff from the joinder of the 2^nd Defendant, and hence satisfaction of the "necessary" element within the rule.

(b) Serious issue to be tried

28. The jurisdictional basis under rule 1(1)(c) having been established, the focus of the argument moves into the discretionary arena and to a consideration of whether there is a serious issue to be tried in the Plaintiff's case against the 2^nd Defendant.

29. In applications of this type the courts have always been concerned about the strength of the case against a foreign party sought to be impleaded pursuant to the provisions of Order 11. Lord Justice Mustill (as he then was) succinctly expressed the position thus in TheEras Eil Actions [1992] 1 Lloyds LR 570, at 588 :

"... This is not to say that there is no minimum level of conviction about the soundness of the claim. This would not be consistent with the authorities, nor would it be right. If the claim is too weak, it would be wrong to put the foreigner to the trouble and expense of coming to England to answer it. ..." (emphasis added)

30. And as Lord Goff noted inSeaconsar, op.cit., at 452B-E :-

"... if in support of the plaintiff's ex parte application an affidavit is sworn in proper form deposing to facts which, if proved, provide a sufficient foundation for the alleged cause of action, that should generally be enough for present purposes. This is no doubt what a number of judges have referred to when they have used the expression 'prima facie case' in this context. The problem arises from the fact that the court will consider, on an application to set aside leave so given, affidavit evidence on the part of the defendant, and will take such evidence into account when deciding whether or not to exercise its discretion in favour of the plaintiff. But the court cannot resolve disputed questions of fact on affidavit evidence; and it is consistent with the statement of the law by Lord Davey that if, at the end of the day, there remains a substantial question of fact or law or both, arising on the facts disclosed by the affidavits, which the plaintiff bona fide desires to try, the court should, as a rule, allow the service of the writ. If this approach is correct, the standard of proof in respect of the cause of action can broadly be stated to be whether, on the affidavit evidence before the court, there is a serious question to be tried." (emphasis added)

And, further, at 456G :

" Once it is recognised that, so far as the merits of the plaintiff's claim are concerned, no more is required than that the evidence should disclose that there is a serious issue to be tried, it is difficult to see how this matter, although it falls within the ambit of the court's discretion, has not in practice to be established in any event. This is because it is very difficult to conceive how a judge could, in the proper exercise of his discretion, give leave where there was no serious issue to be tried." (emphasis added)

The question, therefore, is whether in this case the affidavits before the Court disclose a case against the 2^nd Defendant which merits consideration at trial.

31. In terms of the Plaintiff's evidential shortfall, Mr Jat drew my attention to the content of Mr Barber's affidavits in support of the application, in particular in so far as such evidence purported to support a substantive cause of action against the 2^nd Defendant. The totality of the evidence used to implead the 2^nd Defendant, said Mr Jat, was effectively contained in paragraphs 7 and 8 of the first affidavit of Mr Barber, which for convenience I reproduce hereunder :

"7. The equipment was in good condition when delivered by the Plaintiffs or their servants or agents to the First Defendants and appears to have been in good condition when delivered by the First Defendants to the Second Defendants as evidenced by the clean Air Waybill.

8. Some time between the date of delivery of the cargo to the Second Defendants or their servants or agents in Beijing and the re-delivery of the cargo by the First Defendants to the Plaintiffs or their servants or agents in Shanghai, severe damage was caused to the equipment. The Plaintiffs instructed the Shanghai Import and Export Commodity Inspection Bureau of the People's Republic of China to inspect the cargo and the inspection was carried out on 28^th September 1994. On 29^th September 1994 an inspection certificate was prepared."

Little, if anything, was added by paragraphs 4, 5 and 6 of Mr Barber's third affidavit, said Mr Jat, which was the only other relevant material before the Court going to the merits of the case.

32. I agree that the evidential cupboard is pretty bare. As "thin" cases go, this is perhaps as good an example as any; indeed, the less charitable might say that as the 'evidence' currently stands, the Plaintiff's chances of getting home against the 2^nd Defendant look distinctly remote.

33. Mr Smith's response to this line of argument is to say, in terms, that since the equipment was crated up his client "cannot know when the loss occurred", and that it "may not be the 2^nd Defendant's fault" although it is "equally possible that the loss did occur by some negligence on their part". The 2^nd Defendant's negligence during the air carriage leg of the trip was therefore "one of a number of possible causes" and that it was "not fanciful" to suggest that it could well have been the 2^nd Defendant who permitted damage to the cargo. An inquiry was clearly necessary as to the cause of this damage, and precisely the same investigation were required to take place in China as would be required here. Essentially, therefore, the case was put thus : the crated goods clearly had had a bad bump, there was as good a chance as any that this had happened on the 2^nd Defendant's "watch", so to speak, and discovery may shed some light upon the situation.

34. Is this enough for Order 11 purposes? In my judgment it is not. Service out of the jurisdiction is to be regarded as an exceptional jurisdiction, and the wide-ranging and authoritative case law that has developed over the last quarter of a century in particular has reflected this fact. Against this backdrop, I do not think it is sufficient successfully to implead a foreign carrier and to subject that carrier to the process of our Courts on the basis solely of undisputed participation in the combined carriage. In my view it is not good enough to say, as Mr Smith now does, that it is "as likely as not" to have been the 2^nd Defendant's responsibility simply by reason of the overall factual matrix. The 2^nd Defendant was not the sole carrier; had it been so the position may (possibly) have been different. As I understand the facts, the 1^st Defendant's agents were involved at both the Beijing and at the Shanghai ends of the journey for the non-air carriage parts of the overall trip, and even taking into account the lesser burden of a "serious issue to be tried", 'evidence' such as this does not in my view suffice to enable the Plaintiff to get its foot in the door, and to persuade the Court to exercise its jurisdiction over a foreigner otherwise not susceptible to our judicial process.

35. In this connection I have further borne in mind what this application is not. It is not an application by the 1^st Defendant to serve a third party notice out of the jurisdiction on the 2^nd Defendant : see Order 16 rule 3(4), and White Book MN 16/1/22. Indeed, in this application I have heard nothing from or on behalf of the 1st Defendant.

36. It seems to me to be axiomatic that a plainly weak case on the merits must be a key consideration in the evaluation by the Court in arriving at its conclusion as to whether the case is "a proper one" for the exercise of its discretion within the terms of Order 11 rule 4(2); in considering a similar type of argument, Slade L.J. put the matter thus in Selas, op.cit. at p.30 :

"... the principal points of alleged inadequacy in the evidence really go more to the question whether, on the evidence, the plaintiffs have established an arguable case for infringement on the merits. This, I accept, was an important point for Whitford J. to consider, because the establishment of an arguable case on the evidence must be one of the necessary requirements of Order 11, rule 4(2), which precludes the court from granting leave unless it is satisfied that 'the case is a proper one for service out of the jurisdiction under this Order'.

There appears to be no doubt that it was strenuously argued before the learned judge that, apart from the alleged non-disclosure of material facts, even on the evidence submitted to him no good arguable case had been shown. If the evidence before him had consisted solely of the rather sparse evidence contained in Mr. Harriss's first affidavit, for my part I would have seen some force in the submission." (emphasis added)

37. Nor does the fact that there is within the jurisdiction an existing action relevant to the loss necessarily assist in the merits context; as Lord Goff observed in Seaconsar; op.cit., at 456 :

" I wish also to refer to the view expressed by Stuart-Smith L.J. in the Court of Appeal that it was relevant to take into account the fact that proceedings in respect of the first presentation would in any event take place in England, and that this factor provided an additional and cogent reason why the court should exercise its discretion in favour of Seaconsar in relation to the second presentation ... However, if the plaintiff's case is not sufficiently strong on the merits, I cannot see that that weakness can be compensated for by the fact that other related proceedings are to proceed within the English jurisdiction. That is a matter which may be relevant to the question whether England is the forum conveniens for the proceedings in question. ..." (emphasis added)

38. At the end of the day, therefore, and given the present state of the evidence, I do not consider that the Plaintiff has surmounted the burden of showing that there is a serious issue to be tried on the merits in its case against the 2^nd Defendant. Participation in the carriage apart, there does not appear to be a scintilla of evidence that the damage in question is to be placed at the 2^nd Defendant's door. Accordingly, in the exercise of my discretion upon an Order 11 application, I am disinclined to uphold the ex parte Order permitting service out of the jurisdiction solely upon the basis of adverse inference arising from the factum of carriage, given that the 2^nd Defendant was not the sole carrier. In this regard, therefore, the Plaintiff has not been able to get its case off the ground.

(c) Forum Conveniens

39. I turn, finally, to consider the issue of forum conveniens, the third element in the Order 11 analysis, and I bear in mind here Lord Goff's comments upon the separate nature of this consideration (Seaconsar, op.cit. at 456C) :

"... I cannot see that a case particularly strong on the merits can compensate for a weak case on forum conveniens. Likewise, in my opinion, a very strong connection with the English forum cannot justify a weak case on the merits, if a stronger case on the merits would otherwise be required. In truth, as I see it, the two elements are separate and distinct. ..." (emphasis added)

40. Unlike the situation in Seaconsar, op.cit., where there was no issue upon the point, on the facts of this case Hong Kong as the forum conveniens is very much in issue. Mr Jat's recital of the relevant connecting factors is met by Mr Smith's inviting submission that the courts are wary of permitting parallel proceedings in separate jurisdictions. This case is necessarily "anchored" in Hong Kong against the 1^st Defendant, says Mr Smith, not only because it is a Hong Kong company but also because the 1^st Defendant's terms of carriage contain a binding exclusive jurisdiction clause. Ergo, the entire matter should be dealt with here.

41. There is no doubt that the burden upon a Plaintiff seeking Order 11 relief is to show that Hong Kong is clearly the appropriate forum, although in considering this element the significance of the different Order 11 grounds will vary from case to case : see the judgment of Bingham L.J. (as he then was) in Du Pont v. Agnew [1987] 2 Lloyds LR 585 at 588 :

" Where the exercise of jurisdiction by the English Court is resisted not by a party duly served within the jurisdiction but by a party served pursuant to O.11, r.1 of the Rules of the Supreme Court, the Court's task is essentially the same : to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice. But in this case the burden is on the plaintiff to persuade the Court to exercise its discretionary power to permit service on the defendants outside the jurisdiction. The plaintiff must show that England is clearly the appropriate forum. In considering whether this is clearly shown, the significance of the different O.11 grounds will vary greatly from case to case ..." (emphasis added)

42. Does the inherent disadvantage of parallel proceedings outweigh the otherwise overwhelming Chinese connecting factors in this case? I think in the particular circumstances of this case the answer is probably no. I have noted earlier in this judgment the observations of the English Court of Appeal in The "Goldean Mariner" [1990] 2 Lloyds LR 215 (C.A.), a case in which the Court was considering an appeal from the judgment of Mr Justice Phillips, wherein the learned judge had granted leave to serve out of the jurisdiction against a number of foreign underwriters in a hotly contested marine insurance action. Mr Justice Phillips had laid great stress upon the necessity of determining the litigation against all concerned (there were in that case a total of some 18 defendants) in a single hearing binding upon all those involved, and he had noted that the justice of the case demonstrably required that all parties to be brought before a single tribunal. Although not dissenting from the exercise of the judge's discretion in this regard, Lord Justice Lloyd nevertheless observed as follows, op.cit. at p.222 :

" I agree with Mr. Tomlinson that caution must always be exercised in bringing foreign defendants within our jurisdiction under O.11, r.1(1)(c). It must never become the practice to bring foreign defendants here as a matter of course, on the ground that the only alternative requires more than one suit in more than one different jurisdiction. But I see no reason to suppose that the Judge did not have this important consideration well in mind when he exercised his discretion in the present case. As with the renewal of the writ, I can see no ground for us interfering with the discretion which he exercised." (emphasis added)

43. At the end of the day I do not consider that the existence of the present proceedings against the 1^st Defendant is sufficient in the circumstances to overcome the existing (and otherwise overwhelming) connecting factors with China and to render Hong Kong the forum conveniens, albeit there is, perhaps, some tension inherent in any such balancing process; notwithstanding Lord Goff's observation as to the separate and distinct nature of the elements of merits and forum, I suspect that, as a matter of judgment, the exercise of the Court's discretion under the forum conveniens head in a rule 1(1)(c) analysis is at least tinged by the views formed as to the merits of the case against the party sought to be joined.

44. Accordingly, and not without some hesitation in circumstances in which I have found that the jurisdictional hurdle within Order 11 rule 1(1)(c) has been negotiated successfully, in the exercise of my discretion I am also against the Plaintiff on the basis of forum conveniens.

ORDER

45. It follows from the foregoing that, on the basis of the papers presently before the Court, in my judgment the case is not a "proper one for service out of the jurisdiction". Accordingly, the Order of Waung J. must be discharged and the service upon the 2^nd Defendant set aside, and I make an Order in terms of paragraph 1 of the 2^nd Defendant's summons dated 8^th August.

46. In light of the conclusion I have reached in this case, there can I think be little dispute but that the costs of this action, including the costs of and occasioned by this application, must be to the 2^nd Defendant, to be taxed if not agreed, and I make also an Order nisi in these terms.