ROYAL SKARKIA LIFE INSURANCE LTD. v. SPARKLE CONSULTANTS (HK) LTD. AND OTHERS

DCCJ 2837/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2837 OF 2005

--------------------

--------------------

DECISION

1.  This is the third Defendant’s application for an order that all further proceedings in this Action be stayed, or that this Action be dismissed, on the ground that there is an agreement referring to the exclusive jurisdiction of the Isle of Man and that the law of the Isle of Man governs the claims herein. 

2.  This case concerns a broker contract entered into by the Plaintiff, a company incorporated in Isle of Man, and the 1^st Defendant, a limited company incorporated in Hong Kong.  Subsequently, the 3^rd Defendant, a Hong Kong citizen, signed a guarantee in favour of the Plaintiff.  The broker contract and guarantee were drafted and prepared by the Plaintiff.  The governing law for the broker contract and the guarantee is the Isle of Man. In the guarantee there is a provision for exclusive jurisdiction in the Isle of Man.  Despite this provision, the Plaintiff commenced proceedings in Hong Kong against the 3^rd Defendant.  Hence the 3^rd Defendant took out the present application.  The only question that needs to be determined in this hearing is whether the Plaintiff should be allowed to continue this Action against the 3^rd Defendant in Hong Kong or whether the Action should be stayed or dismissed.

3.  On 10.8.2005 the 3^rd Defendant took an application for an order to be made that 28 days more be granted to him to file his defence.  This application was fixed to be heard on 22.8.2005.  By applying for such leave, the 3^rd Defendant evinced an intention that he intended to submit himself to the jurisdiction of the Hong Kong Courts.

4.  On 18.8.2005, the 3^rd Defendant and the Plaintiff signed a consent summons for an order by consent that:

1.	The 3rd Defendant do have leave to file and serve the defence on or before 3rd September 2005.
2.	The hearing schedule for 22nd August 2005 be vacated.
3.	There be no order as to costs.

5.  The said summons was heard on 22.8.2005, and Master Poon, in the presence of the 3^rd Defendant, made an order in terms of the consent summons.  The 3^rd Defendant submitted himself to the jurisdiction of the Hong Kong Courts by making the said consent application.  Even if I am wrong in making such a finding, by applying the principles laid down in The El America case [1981] 2 Lloyd’s 119, I would not grant the Defendant’s application.  In that case the court set out the principles governing the discretion which the court should exercise where there is an exclusive jurisdiction clause in favor of another jurisdiction.  I now consider these principles in turn. 

In what country the evidence on the issues of fact is situated or more readily available, and the effect of that on the relative convenience and expenses of trial as between the [Hong Kong] and foreign Courts

6.  The 3^rd Defendant is a Hong Kong Citizen, currently residing in Hong Kong.  Hong Kong is the most convenient place to conduct the trial, at least so far as the 3^rd Defendant is concerned, if he wishes to give evidence to defend himself against the Plaintiff’s claim in the trial. 

7.  The present Action should be heard in the jurisdiction where it could be most conveniently and most effectively dealt with in view of the size of the claim.  If the Plaintiff is forced to bring the action in the Isle of Man, the 3^rd Defendant would have to travel long distances to attend the trial in the Isle of Man.  Given that the amount of claim is a very small sum (HK$450,198.60 plus costs and interest), there appears to be no justification to incur the travelling expenses.

Whether the law of the foreign Court applies and, if so, whether it differs from English law in any material respects

8.  Although the law of the Isle of Man (“Manx law”) was the proper law of the contract, there should be no difficulty for the Hong Kong Court to apply Manx law as the principles of Manx contract law are largely the same as those of English contract law (p.63 of Bundle A).  In paragraph 10e of his written submissions, the 3^rd Defendant opines that the laws of evidence and trial of the Isle of Man Courts and the Hong Kong Courts are similar.

With what country either party is connected, and how closely

9.  At all material times, the 3^rd Defendant is a Hong Kong citizen who resides and carrying on business in Hong Kong.  He is not in any way connected with the Isle of Man at all.

Whether the Defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages.

10.  Is there genuine desire on the part of the 3^rd Defendant to conduct a trial in the Isle of Man?  The only evidence, which is unsubstantiated, advanced by the 3^rd Defendant on this issue is that he had “tried to identify some lawyers of the Isle of Man from the internet”.  He has not at any stage suggested any defence to the Plaintiff’s claim by disclosing a proposed defence.  On 2.9.2005, 1 day before the expiry of the period within which he was granted leave to file his defence he took out the present application.  There is no explanation offered by him why he suddenly changed his stance.  It seems that the purpose of the present application appears to be a tactic deployed by him to seek to delay the progress of this Action.

Whether the Plaintiffs would be prejudiced by having to sue in the foreign Court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious, or other reasons be unlikely to get a fair trial.

11.  If the Plaintiff is forced to bring the action against the 3^rd Defendant in the Isle of Man, and the 3^rd Defendant ignores the foreign action, the default judgment obtained against him would not be enforceable in Hong Kong.  Even if the 3^rd Defendant agrees to submit to the jurisdiction of the courts of the Isle of Man, the Plaintiff would have to go through the procedure of enforcing the Manx judgment, if the Plaintiff is successful in such action, by starting an action in the High Court in Hong Kong, as there does not exist any reciprocal enforcement arrangement between Hong Kong and the Isle of Man.  This would mean added delay and extra costs on the part of the Plaintiff.  In the circumstances, there would be serious prejudice caused to the Plaintiff if a stay is granted as the Plaintiff would have no choice but to bring the action in the Isle of Man and the judgment (if obtained by default) would be unenforceable in Hong Kong.

12.  Due to the reasons aforesaid, I dismiss the 3^rd Defendant’s application.

Costs

13.  I make an order nisi, to be made absolute in 14 day’s time, that the 3^rd Defendant is to pay the costs of this application to the Plaintiff, to be taxed, if not agreed.