COMPANIA SUD AMERICANA DE VAPORES S.A. v. HIN-PRO INTERNATIONAL LOGISTICS LTD

CACV 243/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 243 OF 2014

(ON APPEAL FROM HCMP NO. 1449 of 2014)

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JUDGMENT
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Hon Lam VP (giving the Judgment of the Court):

1.  By a Notice of Motion of 8 April 2015, the Plaintiff applied for leave to appeal to the Court of Final Appeal in respect of the judgment of this court handed down on 11 March 2015. In the Motion, the Plaintiff formulated the following as questions of great general and pubic importance [“GPI”]:

“ 1. In an application to the Hong Kong Court (Where it is not the agreed or natural forum for the trial of the underlying substantive dispute) under section 21M(1) of the High Court Ordinance (Cap 4) for interlocutory relief in aid of foreign proceedings (“the Application”), in a case where (i) a party to a contract containing an exclusive jurisdiction clause providing for an agreed litigation forum (e.g. England) sued upon the contract elsewhere (e.g. China) in breach of that clause; and (ii) the other party to the contract then obtained in the agreed litigation forum (e.g. England) an interlocutory worldwide Mareva injunction against the defaulting party:

a. What are the legal principles applicable in the said Application, and in particular, whether the first stage test in Refco Inc v Eastern Trading Co [1999] 1 Lloyd’s Rep 159 at 170-171, namely, if the facts would warrant the relief sought if the substantive proceedings were brought in Hong Kong (see §§31 and 41 of the Judgement) is (i) applicable at all, and/or (ii) if applicable, should be applied with the necessary modification that the Hong Kong Court should apply the first stage test as if the contractually agreed forum is Hong Kong (cf §57 of the Judgment);

b. Whether in the light of the English Court of Appeal cases of The Angelic Grace [1995] 1 Lloyd’s Rep 87 and Deutsche Bank v Highlander Crusader Partners LP [2010] 1 WLR 1023 (see §56 of the Judgment), the principle of international comity is necessarily engaged in the Hong Kong Court’s consideration of the said Application, and even if engaged, whether such principle is (i) relevant in the first stage test in Refco (supra), and (ii) relevant to (and if so, to what extent) the “just and convenient” test in the second stage;

c. Whether it was correct for the Court of Appeal to have relied on the general principles regarding anti-suit injunction and comity formulated by Lord Goff in Airbus Industrie GIE v Patel [1999] 1 AC 119 at p.138G-H (see §35 of the Judgment), in the light of the express reservation in Airbus, supra, p.138F, that Lord Goff’s principles formulated were never concerned with “those cases in which the choice of forum has been, directly or indirectly, the subject of a contract between the parties” which did “not fall to be considered in the present case”, particularly in the context of a section 21M application where Hong Kong is necessarily not the contractual forum chosen and agreed upon by the parties.

2. In all the circumstances and especially (i) where the Respondent commenced 75 Actions in various PRC Maritime Courts in breach of the said exclusive jurisdiction clause, (ii) was in contempt of the English Court and (iii) evinced a pattern of evasive and disrespectful behaviour towards the Hong Kong Court, it was plainly wrong, alternatively, inappropriate for the Court of Appeal to accept the undertakings which the Respondent proffered in lieu of injunctive relief pursuant to S.21M and/or Receivership Order.  The extent of the Respondent’s contumacious conduct, the large number of actions and the far reaching effect on the Applicant’s worldwide business render this an application fit for leave under the “or otherwise” ground of S.22(1)(b) of the HKCFAO.”

2.  It is trite that the assessment of whether adequate protection is afforded by the undertaking of the Defendant depends on the facts and circumstances of the case.  With respect, we cannot see how §2 can be regarded as a GPI question.  We will come back to the questions at §1 later. 

3.  The Plaintiff also relied on the “or otherwise” ground under s 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance.

4.  The Defendant and Soar opposed the application. On behalf of the Defendant, its solicitor filed a 3^rd affirmation of Shea Ying Fai [“the Affirmation”] for that purpose.  The Plaintiff took objection to the filing of the affirmation and by a summons of 29 May 2015 applied to have the affirmation expunged.

5.  Pursuant to the directions of the court, the parties lodged written submissions on the Motion as well as the summons for the purpose of having these applications determined on paper.  We have read the submissions and we now give our decision on these applications.

The application for leave to appeal

6.  We have already given our view on the question at §2 of the Motion.  We are prepared to proceed on the assumption (without deciding) that the questions at §1 could potentially raise a GPI point though the present formulation of the same could be improved.

7.  Even so, we do not think we should grant leave to appeal as the resolution of these questions would not have changed the outcome of the appeal in view of our conclusion on discretionary considerations at §§65 to 71 of our judgment of 11 March 2015. 

8.  As submitted by Mr Barlow SC, citing the decision of the Appeal Committee of the Court of Final Appeal in CSAV Group v Jamshed Safdar (2007) 10 HKCFAR 629, in the context of an interlocutory appeal (and the present appeal is an interlocutory one) leave should generally be refused unless it could be clearly seen that (i) the proposed appeal raised a GPI question; (ii) the result of the appeal would turn on how that question was answered; and (iii) such result was likely to make a significant contribution to the just disposal of the litigation. 

9.  In the present case, in view of our conclusion on the discretionary considerations (and with our rejection of the question at §2 of the Motion as GPI question, such conclusion cannot be challenged in the Court of Final Appeal), criterion (ii) cannot be satisfied.  On the contrary, it can clearly be seen that the resolution of the questions at §1 could not change the result of this interlocutory appeal.

10.  The fact that the Defendant is seeking to strike out the Originating Summons cannot give rise to a different analysis.  In the event that the Originating Summons were struck out, the Plaintiff could appeal against that decision and seek interim protection in terms of the withholding of the release of the undertaking of the Defendant or similar injunctive relief pending appeal. 

11.  Whether these circumstances could support leave on “the otherwise” limb should, in line with the usual practice, be a matter for the determination of the Appeal Committee.  What we can say in this judgment is that, with respect, we do not find the contention in the submissions of Mr Scott SC under §2 of the Motion to be reasonably arguable. 

12.  As far as this court is concerned, leave is refused and the Motion is dismissed with costs.

The summons to expunge the Affirmation

13.  The summons was taken out in the following circumstances. 

14.  After the filing of the Motion by the Plaintiff, this court gave directions on 22 April 2015 for the determination of the same on the basis of written submissions only.  Those directions provided for the filing of written submissions.

15.  On 6 May 2015, counsel for the Plaintiff lodged their written submissions.

16.  On 19 May 2015, at the same time as counsel for the Defendant and Soar filed their submissions opposing the Motion, the Affirmation was filed on behalf of the Defendant.  In the Affirmation, the solicitor referred to instances where, according the Defendant, the Plaintiff allegedly acted in breach of an assurance given by counsel for the Plaintiff at the hearing for interim stay on 17 December 2014.  It was also said that counsel for the Defendant regarded such assurance as a cross-undertaking from the Plaintiff.  The solicitor asked the court to dismiss the Motion on the ground of the Plaintiff’s breach of such cross-undertaking.

17.  An argument along similar lines was advanced in the written submissions opposing the Motion filed on 19 May 2015.

18.  Solicitors for the Plaintiff wrote a letter to the court on 21 May 2015 complaining about the filing of the Affirmation without leave of the court. They requested the court to direct that the Affirmation be inadmissible. 

19.  The court indicated on 28 May 2015 that it was not minded to entertain such request by correspondence and that if the Plaintiff wished to apply for the exclusion of the Affirmation, it had to pursue the same by issuing a summons.

20.  The Plaintiff issued such a summons on 29 May 2015, 2 days after its counsel filed their written reply on the Motion.  The written reply of 27 May 2015 dealt with the arguments concerning the breach of cross-undertaking and the admissibility of the Affirmation at §37 to 39.

21.  The court gave directions for the paper determination of the summons.  Submissions were filed by the parties accordingly.

22.  In the submissions of Mr Scott of 15 June 2015 in the context of the summons, he advanced three main grounds to seek to have the Affirmation expunged:

(a) The Affirmation failed to satisfy the test of Ladd v Marshall;

(b) The Affirmation is not relevant for the purpose of the Motion; and

(c) The content of the Affirmation is objectionable in that it is argumentative and largely contains legal submissions rather than factual matters.  This should be viewed against the 10-page limit on submissions to be filed in the Motion. 

23.  Mr Scott also alluded to the absence of directions for the filing of any affirmation in this court’s directions of 22 April 2015.  He further submitted that if the Affirmation is admitted, the Plaintiff asked for leave to file an affidavit in response.

24.  In our judgment, none of the grounds advanced by Mr Scott provides sufficient reason for expunging the Affirmation.  First, as submitted by Mr Barlow, there is nothing in the rules prescribing that a party must obtain the leave of the court before filing an affirmation in the context of an application seeking leave to appeal to the Court of Final Appeal.  By the nature of this sort of application, usually no affidavit or affirmation needs to be filed by either party.  However, as explained below, there could be occasional and rare exceptions. 

25.  Having said that, in terms of case management, bearing in mind the court’s indication that the Motion was to be dealt with on paper, we are of the view that pursuant to his duty under Order 1A Rule 3 and also as a matter of courtesy, the solicitors for the Defendant should have informed the court of its client’s intention to file evidence in opposition to the Motion soon after the giving of the directions on 22 April 2015.  Normally, if evidence is to be filed by a party, an opportunity should be given to the other side to respond.  Thus, if evidence is only filed after the Plaintiff has filed its submissions on the Motion, it would disrupt and prolong the course of the paper determination of the Motion.  Had the solicitors for the Defendant indicated prior to 6 May 2015 that the Defendant would file evidence, this court would have given directions for such evidence and evidence in reply to be filed before the filing of first round of submissions by the Plaintiff.  This omission on the part of the Defendant’s solicitors, however, can and will be taken into account when considering the question of costs.

26.  However, the failing of the Defendant’s solicitors in that regard per se should not be a ground for expunging the Affirmation in the present circumstances.  It is necessary to consider whether the Affirmation is relevant to the Motion.  As observed, generally evidence is not necessary in an application for leave to appeal to the Court of Final Appeal.  However, we do not agree with Mr Scott that the only issue in such an application is whether the Motion raised GPI questions.  The raising of such questions only satisfies the threshold in s22(1)(b) of the Hong Kong Court of Final Appeal Ordinance.  After the threshold has been met, the grant of leave is still a matter of discretion.  In many cases, this court has refused leave on the basis that the point raised is not reasonably arguable.  Further, this court has also refused leave in respect of questions which had not been argued before us, see for example The Law Society v A Solicitor CACV 78 of 2014, 10 July 2015.  In the present case, as we have decided above, leave is refused because the question raised would not affect the outcome of the appeal.  There could be other instances where this court would refuse to grant leave as a matter of discretion. 

27.  Mr Barlow relied on the alleged breach of cross-undertaking as a ground for resisting leave.  We shall comment on the substantive merit of that contention later.  However, as a matter of principle, there could be instances where this court can exercise the discretion to refuse leave on the basis of contumelious breach of an undertaking or a court order by the party seeking leave. 

28.  As submitted by Mr Scott, it is wrong to deploy an affirmation or affidavit for the purpose of putting forward submissions. The court has repeatedly emphasized this: see Alfred Dunhill Ltd v Sunoptic SA [1979] FSR 337 at p.352 and 373; Nelson Delivery Service v Wong Kan CACV 136 of 1986; Robert Lee Flickinger v Director of Immigration [1988] 1 HKLR 81 at p.  94E to F; R Leslie Deak v Deak Perera Far East Ltd [1991] 1 HKLR 551 at 560-1; Oh Jae-Hoon Eugene v Richdale [2003] 4 HKC 318 at §15 to 17.

29.  However, on our reading, the Affirmation primarily sets out the factual materials based on which counsel advanced the submissions of breach of cross-undertaking in his written submissions.  We accept Mr Barlow’s explanation that it would not be appropriate for the point to be raised without an affirmation since these factual matters could be disputed.  Thus, the Affirmation is relevant in the present context. 

30.  At the same time, this also implies that the solicitors for the Defendant should have appreciated the need to give the Plaintiff an opportunity to answer these allegations.  This underscores our comment above as to the duty to bring this to the attention of the court in a timely fashion.

31.  Once the relevance and the purpose of the Affirmation have been properly identified, it can readily be seen that the test in Ladd v Marshall is inapplicable. 

32.  For these reasons, we would not make an order expunging the Affirmation.

33.  We then turn to the question whether we should give an opportunity to the Plaintiff to file evidence in reply.  As mentioned earlier, normally we would have taken such a course.  However, in the special circumstances of the present case, we do not find it necessary to do so. First, for the reasons given above, we have been able to reach a determination on the Motion without any regard to the allegation of breach of cross-undertaking.  Second, having regard to the circumstances in which Mr Scott informed the court as to the stance of the Plaintiff (as set out at §22 of the judgment of 18 December 2014 on interim stay), we cannot accept the characterization of that statement from counsel as a cross-undertaking from the Plaintiff.  This court has never regarded that as a cross-undertaking and we cannot understand how the Defendant could have laboured under such misapprehension.

34.  In the circumstances, subject to questions of costs (which will be dealt with below) it is sufficient that we make no order on the summons.  

Costs

35.  Subject to what we shall say regarding the costs of the Affirmation and the summons of 29 May 2015, we order the Plaintiff to pay the costs of the Defendant and Soar in respect of the Motion. 

36.  In respect of the Affirmation and the summons, in view of what we said as to the breach of duty on the part of the Defendant’s solicitors under Order 1A Rule 3 (and had the solicitors complied with such duty, we believe the matter could probably have been dealt with by way of a timetable for the filing of evidence as opposed to a summons seeking to have the Affirmation expunged) and the lack of merit in the challenge based on alleged breach of cross-undertaking,  and in view of our decision not to expunge the Affirmation, we believe a fair course to take is to order that each party shall bear its own costs in respect of the summons and the Affirmation. 

37.  With these in mind, and after due consideration of the statement of costs of the Defendant and Soar, we fix the costs that the Plaintiff has to pay to the Defendant and Soar at $235,620.