XCHRX RAMBAS MARKETING CO., LLC v. CHOW KAM FAI, DAVID

HCA10190/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10190 OF 2000

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J U D G M E N T

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INTRODUCTION

1. By a summons dated 18 January 2001, the defendant applies for an order that the "proceedings in this action be stayed by reason that Hong Kong is not the forum conveniens". Though not expressly mentioned in the summons, the defendant seeks a stay of the Hong Kong action in favour of the courts of Nevada. Particularly in view of the remarks of the Court of Appeal in Greenwood Limited v. Pearl River Container Transportation Ltd (unreported, 25 May 1994), it would be advisable in future for the court or tribunal in favour of which the applicant seeks a stay of the Hong Kong proceedings, to be identified in the summons or motion. This is so because the availability of another forum having competent jurisdiction said to be the appropriate forum, must be shown before the court even begins to exercise its discretion in this type of application : see the remarks of Bokhary JA in S Megga Telecommunications Ltd v. Etowaru Co. Ltd [1995] 2 HKC 761 at 765I.

2. I would make one other preliminary observation. The summons for a stay in the present case was said to be made under Order 12, rule 8. This is not right; the application is made under the court's inherent jurisdiction : see Hong Kong Civil Procedure 2001 at paragraph 12/8/3; The Messiniaki Tolmi [1984] 1 Lloyds Rep.266. The application for a stay on the basis of forum non conveniens is not a challenge to the court's jurisdiction as such. The court's jurisdiction exists (indeed a forum non conveniens application invariably proceeds on the basis that the court's jurisdiction is founded as of right), but the court is asked, in the exercise of its inherent jurisdiction, to stay the matter in favour of an alternative jurisdiction. Where a stay is granted, it can always be lifted (for example to enforce a security or to facilitate execution). By contrast, under Order 12, rule 8, a successful challenge to the jurisdiction often results in practical terms in the termination of the action.

COURT'S APPROACH IN STAY APPLICATIONS

3. It is unnecessary to dwell long on this aspect. The basic principles originate in recent times from Spiliada Maritime Corporation v. Cansulex Ltd [1987] AC 460. I have already alluded above to the fact that the court will not even begin to exercise its discretion to stay until it is satisfied that there exists an available alternative forum. In Spiliada, at pp.474C-D and 476C, Lord Goff of Chievely (by reference to the judgment of Lord Kinnaird in Sim v. Robinow (1892) 19 R.665) identified the alternative forum as that "in which the case may be tried more suitably for the interests of all the parties and for the ends of justice".

4. In Hong Kong, the court's approach is dealt with in the judgment of Hunter JA in The Adhiguna Meranti [1987] HKLR 904 at 907F-908B, setting out a three stage approach summarising the effect of Spiliada (the page references are to the report of that case in [1986] 3 WLR) :-

"(I) Is it shown that Hong Kong is not only not the natural or appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate than Hong Kong (p.986H). The evidential burden is here upon the applicant. The emphasis is upon 'appropriate' rather than 'convenient' because this is not simply a matter of practical convenience. The purpose is to identify the forum 'with which the action has the most real and substantial connection' per Lord Keith in the Abidin Daver [1984] AC 398. The principal factors are enumerated at p.987D. Failure by the applicant at this stage is normally fatal.

(II) If the answer to (I) is yes, will a trial at this other forum deprive the plaintiff of any 'legitimate personal or juridical advantages'? (pp.987F, 991-3). The evidential burden here lies upon the plaintiff (pp.986A and 987G).

(III) If the answer to (II) is yes, a court has to balance the advantages of (I) against the disadvantages of (II), Abidin Daver per Lord Brandon at p.419. Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that notwithstanding such loss 'substantial justice will be done in the available appropriate forum' (p.991H). The court must try to be objective (p.991F). Proof of this, which can fairly be called the ultimate burden of persuasion, rests upon the applicant for the stay. By these means he establishes that on balance the other forum is more suitable 'for the interests of all the parties and the ends of justice'. This may be another way of saying that the plaintiffs' choice of forum has been shown to be so inappropriate as to deserve the pejorative description of 'forum-shopping' and to be restrained accordingly, cp. Lord Reid in The Atlantic Star [1974] AC 436."

5. There is of course the final stage of the court being satisfied in the overall circumstances and justice of the case whether it would be right to stay the action. It is, at this stage, that the court will consider factors such as the conduct of the parties. For example, the applicant may have led the other party to believe that it was willing to litigate in Hong Kong or had taken steps to submit to the jurisdiction here so that it has waived the right to apply for a stay or that this would be unconscionable in the circumstances. I am not, however, concerned with any such aspect. Although Mr Anthony Houghton, for the plaintiff, refers to the fact that the defendant had sought two extensions of time to serve its Defence before applying for a stay, he did not go so far as to say that the defendant was somehow to be barred from making the present application.

6. It is fair to say that the focus of counsel's arguments in this hearing has been on Stage I. There were some arguments which Mr Houghton directed to Stage II but this was not the main plank of his resistance to the present summons.

STAGE I : ARE THE COURTS OF NEVADA CLEARLY AND DISTINCTLY MORE APPROPRIATE THAN THE HONG KONG COURTS?

7. The burden is on the defendant to show that the courts of Nevada are clearly or distinctly more appropriate than the Hong Kong courts for the trial of the action. Mere convenience is not enough nor is it enough simply to point to factors which connect a case or the parties to any particular jurisdiction. The approach in forum non conveniens applications is not just an exercise in loading up with factors which point to any particular jurisdiction. The court is required to focus on the appropriateness of a forum from the point of view of the trial of the action. This would in part explain the need to identify the particular court in favour of which the action is to be stayed, for it is to the appropriateness of that court for the trial that the court's attention is directed.

8. It was stated by Lord Goff of Chievely in Spiliada at p.477E, "In my opinion, the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum" (emphasis added). That the court in stay applications is looking at the trial of the action can be seen from the other passages in Spiliada at pp.474D, 476C-D & E-F, 477F-G. So when Lord Goff in Spiliada at p.478A-B refers to the examination of "connecting factors" (such as availability of witnesses and the law governing the relevant transaction), he is looking at these factors with a view to the trial of the action.

9. Before me, Miss Liza Jane Cruden, for the defendant, relied on the following connecting factors in support of the defendant's case that the Nevada courts were clearly or distinctly more appropriate than the Hong Kong courts for the trial of the action :-

1. The defendant is willing to undertake to submit to the jurisdiction of the Nevada courts for trial.

2. Most of the relevant witnesses and documents at trial are located in Nevada.

3. Nevada law is the governing law of the relevant transaction or transactions with which the court will be concerned at trial. The situs of the alleged debt owing from the defendant to the plaintiff is Nevada.

The issues in the action

10. Before going into Miss Cruden's submissions on connecting factors, it is necessary to set out briefly the nature of the plaintiff's claim and the defendant's answer to it in order to identify the likely issues at trial. This is necessary in order to put in proper context the defendant's submissions as to why the Nevada courts are clearly or distinctly more appropriate than the Hong Kong courts for the trial of the action.

11. The plaintiff is a Nevada company but is registered as an oversea company in Hong Kong under s.333 of the Companies Ordinance. It is the subsidiary of another Nevada company, Valvino Lamore, LLC ("Valvino"). According to the Statement of Claim, Valvino was the lawful successor to the business formerly carried on by Sheraton Desert Inn Corporation ("SDIC"). This business involved the operation of the Desert Inn in Las Vegas and, in particular, the operation of the casino there.

12. The claim against the defendant is for a gambling debt said to have been incurred by him on 13 August 1995 at the Desert Inn. On that date, SDIC extended a US$5 million credit line to the defendant to enable him to obtain gambling chips to gamble at the Desert Inn. This credit was extended to the plaintiff by his signing three credit instruments known as "markers". These markers are all dated 13 August 2001 and are numbered 3012013, 3012015 and 3012052. It is alleged that the defendant lost the entire sum at the casino and has not made any repayment under the markers except for a payment of US$232,000 to SDIC on 11 April 1996. The outstanding balance of the indebtedness is US$4,768,000.

13. The Statement of Claim goes on to allege that, by a deed of assignment dated 12 October 2000, Valvino, being the successor to SDIC, assigned the gambling debt to the plaintiff.

14. The defendant has not filed an affidavit giving his account of events. The only affidavit from him deals with his connections with Hong Kong and Macau. However, he does in that affidavit verify the matters deposed to on his instructions in the affidavit of his solicitor, Mr Jeff Lane. In Mr Lane's affidavit, the following issues emerge as the defence at this stage to the plaintiff's claim :-

Issue 1 : the plaintiff has no locus standi

15. The defendant's position is that there are some doubts over whether the plaintiff is truly the assignee of the gambling debt. Doubts are expressed over whether despite the Deed of Assignment dated 12 October 2000, Valvino was in a position to assign the gambling debt to the plaintiff in the first place. Although the plaintiff has produced extracts from a land and purchase agreement dated 28 April 2000 which seems to show that all gambling debts formerly held by SDIC were acquired by Valvino, the defendant makes two points. First, the acquisition of the gambling debt was not just by Valvino, it was also by one Stephen A.Wynn. Since there appears to be no assignment of the gambling debt from Mr Wynn to the plaintiff but only from Valvino, there must therefore be some doubt over the effectiveness of the assignment of the gambling debt. Secondly, in any event, the defendant says that Valvino's licence to operate the Desert Inn was, at the time of the purported assignment to the plaintiff, made the subject of an "administrative stay". The effect of such a stay under Nevada law was that at the time of the assignment to the plaintiff, Valvino's operations were curtailed and such operations would include the assignment of debts such as the defendant's gambling debt. The plaintiff has responded to some of the points raised by the defendant. In my view, what the defendant is essentially seeking to do is to put the plaintiff to strict proof of its entitlement to sue and this is an issue which may involve the court having to deal with aspects of Nevada law. Quite precisely what those aspects of Nevada law will be is not apparent from the defendant's evidence.

Issue 2 : the debt has been compromised

16. From Mr Lane's affidavit (as verified by the defendant), there appear to be two possibly three different facets of this defence. Paragraph 10 of the affidavit states :-

" 10. The Plaintiff's claim is for the sum of US$4,768,000. This sum comprises the original US$5,000,000 net of the sum of US$232,000 repaid by the Defendant to The Sheraton Desert Inn Corporation on or around 11th April 1996. I have spoken with the Defendant in relation to the circumstances of this repayment and he has confirmed that the repayment was made by him voluntarily, and at the request of the Sheraton Desert Inn Corporation. The Defendant has advised me and I verily believe that, as the owner of the Legend Club in Macau, which incorporates gaming facilities, he is an internationally recognised 'player' in the gaming industry whose credit and business credibility are recognised in Las Vegas, Europe, Austrialia and other major gaming centres around the world. It is the practice in such gaming centres that, as a matter of professional courtesy, debts between gaming house proprietors are not usually enforced, as it is recognised that such proprietors bring and recommend clientele to each other. In the circumstances of this case, the Defendant was present at The Sheraton Desert Inn on 13th August 1995 with three other clients whose gambling activities he secured by signing the markers. It was an express alternatively an implied agreement between the Defendant and the staff of the Plaintiff that credit would be extended to the Defendant's guests on the understanding that they, and not the Defendant, would be liable for them. The markers signed by the Defendant are not, therefore, enforceable as debts against the Defendant but comprise security for the debts of his guests. The sum of US$232,000 paid by the Defendant, therefore, was intended to and did compromise The Desert Inn's staff's request for settlement of that part of the Debt for which the Plaintiff was considered to be responsible. The arrangement concerned operates as a matter of reciprocal practice as between the proprietors of gaming houses, and evidence will be called at the trial of this matter to demonstrate this. Following payment of the sum of US$232,000, The Sheraton Desert Inn and its successors had taken no further action against the Defendant for recovery of the Debt for some five and a half years until the commencement of this proceedings in December 2000. In the interim, the Defendant had treated the debt as having been settled in full."

In summary :-

(a) There was a practice whereby as a matter of "professional courtesy", debts between proprietors of gaming houses are not enforced. It is unclear whether this is relied on as some sort of implied term or whether it arises as a matter of Hong Kong law or Nevada law (presumably the latter although no details or sources are provided).

(b) There was an express or implied term to the effect that the persons liable on the markers would be the defendant's three guests or clients, and not the defendant. However, it is also said, "The markers signed by the defendant are not, therefore, enforceable against the defendant but comprise security for the debts of his guests" (emphasis added). This would seem to suggest some liability on the defendant's part under the markers. No details are provided as to when, how or between whom the agreement containing these terms was made or even as to what the other terms of the agreement were. Presumably the agreement must have been made by a representative or representatives of the plaintiff and the defendant and/or his clients.

(c) The sum of US$232,000 paid by the defendant on or about 11 April 1996 was intended to and did discharge that part of the debt for which the defendant was himself responsible. It is not clear whether the defendant is here relying on another agreement made with the plaintiff or is simply relying on the earlier agreement. The allegation does, however, presuppose the existence of a debt incurred by the defendant.

17. Again, while the defendant identifies the dispute, insufficient details are provided to enable an assessment to be made of the precise issues that would arise.

Issue 3 : a marker that has not been negotiated cannot be enforced without proof of an underlying credit agreement

18. The markers state on their face that they are "negotiable". It is alleged by the defendant as a matter of Nevada law (without any sources or authorities being provided) that where the markers have not been negotiated, it will be necessary for the plaintiff to prove and rely on an underlying credit agreement. The plaintiff has produced evidence of Nevada law to the effect that the markers are themselves credit instruments that can be enforced against the person who signed it. Reference is made to Nevada Revised Statutes 463.368 and 463.01467. The defendant has not responded to this. Thus, again, it is difficult to see the precise ambit of any controversy here.

Issue 4 : where a marker is given as security for gambling debts, it is in any event unenforceable

19. It is alleged, again as a matter of Nevada law as well as public policy, that where credit is extended to secure the gambling debts of another person, this is unenforceable. Reference is made in particular to Regulation 5.011 of the Nevada Gaming Commission and State Gaming Control Board Regulations, which makes it a disciplinary offence for a gambling licensee to give credit to a patron to enable that patron to satisfy a debt owed to another licensee or person. The plaintiff has not provided any facts going to the application of this or any other regulation but merely says that credit was extended by the plaintiff to the defendant "to secure the debts of the other members of the defendant's party". It is not obvious in the absence of more facts that this somehow relates to the satisfaction of an indebtedness owed to another licensee or person. It is up to the defendant to provide further details of this. Moreover, there are insufficient details of Nevada law to help identify the precise issues arising under this head.

Issue 5 : jurisdiction is limited to the Nevada State Gaming Control Board

20. As I understand the submission, the defendant appears to be saying that, by reason of the decision of the United States Court of Appeals, Ninth Circuit in Erickson v. Desert Palace Inc., 942 F.2d 694, it may well be that the only forum which could hear the present dispute is the Nevada State Gaming Control Board. However, on a closer reading of that case, it would appear that this would only apply where the relevant gambling debt was not evidenced by a credit instrument : see p.695 (referring to NRS 463.361). By reason of Nevada Revised Statute 463.01467, a marker (such as in the present case) is a credit instrument. I make no decision on this issue but merely question again just what precise issues arise for decision on this aspect of the defence. As an aside, I would also note that despite what seems to be alleged here by the defendant, it appears not to be contended by him that the appropriate forum for the resolution of the action is the Nevada State Gaming Control Board rather than the Nevada courts. If this is not the defendant's contention, then I wonder just how this can be a defence to the claim as such. Still, as I have said, I need not decide the merits.

21. Having now identified the various issues as they appear to me at this stage, I reiterate the fact that it forms no part of my decision to deal with the strengths or weaknesses of each party's case. It is only necessary for me to try to identify the issues between the parties in order to test the various connecting factors relied on by the defendant under Stage I of the court's approach.

22. I now turn to the three connecting factors relied on by the defendant.

Defendant's undertaking to submit to the jurisdiction of the Nevada courts for trial

23. This is of course relevant, in that if the defendant was not willing to submit to the jurisdiction of the Nevada courts, this would suggest that there was no alternative forum that was available for the trial of the action. This was the point made by the House of Lords in Lubbe v. Cape PLC [2000] 1 WLR 1545. However, the availability of an alternative forum is the prerequisite to the court's exercise of discretion in stay applications : S Megga Telecommunications Ltd v. Etowaru Co. Ltd [1995] 2 HKC 761, 765G-I. In other words, this goes to the question whether the jurisdiction exists in the first place. It does not assist much or indeed at all in the exercise of that discretion.

24. What is material to the exercise of discretion, however, is an examination of where the parties reside, for this will often be relevant in determining the desirability of the trial in one country or another. In the present case, it is somewhat paradoxical that the plaintiff, a Nevada resident, desires trial in Hong Kong whereas the defendant, formerly a resident of Hong Kong and now resident in Macau, desires a trial in Nevada. Upon closer examination, the following facts emerge :-

(1) The defendant, although a Nevada company, does have a presence in Hong Kong in that it is registered as an oversea company under s.333 of the Companies Ordinance. Registration under that section is required where a foreign company establishes a place of business in Hong Kong. The fact that a foreign company carries on business in Hong Kong is relevant when considering forum non conveniens : see Wo Fung Paper Making Factory Ltd v. Sappi Kraft (Pty) Ltd [1988] 2 HKLR 346 at 360.

(2) The defendant, on the other hand, can point to no real connection with Nevada other than the fact that he gambled there and wishes the present litigation to take place there. Hence, there was a real perceived need for him to undertake to submit to the jurisdiction of the Nevada courts. His connections with Hong Kong are, however, much more substantial. In Mr Lane's affidavit the defendant is said to have "limited business and personal interests in Hong Kong". In his own affidavit, the defendant accepts he has "minor business interests in Hong Kong" and provides details of these. He accepts that he has a Hong Kong permanent identity card but states that since 1981, he has been residing in Macau (in fact holds public office there) and spends less than 30 days in Hong Kong in any given year.

(3) What is important in my view in this context is the fact that when the defendant provided his address to the Desert Inn (presumably this was in 1997 when the gambling debt was allegedly incurred), he provided a Hong Kong address, this being "Lot 513, 4 Wing Lung Road" ("the Hong Kong Address"). This was at a time when the defendant was, according to himself, resident in Macau. Furthermore, the defendant also provided to the Desert Inn copies of his Hong Kong permanent identity card and a BDTC passport (which has since lapsed). In the 2nd affidavit of Mr Samuel Ngo (a solicitor with JSM, the plaintiff's solicitors), reference is made to several transactions for the purchase and sale of properties in Hong Kong involving the defendant, in which the defendant gave as his address the Hong Kong Address.

(4) It is also to be noted that Macau is much closer to Hong Kong than Nevada and therefore a trial in Hong Kong must, in terms of his own personal convenience, be more appropriate than Nevada.

25. In the circumstances, while the aspect of the parties' residence is not an overwhelming factor, it is nonetheless one that weighs in favour of the plaintiff.

Most of the relevant witnesses and documents at trial are located in Nevada

26. I examine first the question whether Hong Kong is the natural or appropriate forum. The defendant says it is not. Miss Cruden contends that none of the relevant witnesses who would be required for the trial of the action nor the relevant documents are located in Hong Kong and that there is no real connection with Hong Kong at all. I agree that it appears no relevant witness resides in Hong Kong nor would there seem to be much if any relevant documentation available here. But does it follow that the Nevada courts are clearly and distinctly more appropriate?

Witnesses

27. In applications for a stay based on forum non conveniens, it is often desirable for the parties first to identify the relevant witnesses who will be required to give evidence at trial, the numbers involved and then state the reasons why in any particular jurisdiction it would be more convenient for such witnesses to give evidence. It is important to make a distinction between those witnesses who will most likely be required to give disputed evidence and those whose testimony is not likely to cause controversy. In the case of the latter, unless there is shown a likelihood that their attendance at trial is required, the fact that they are resident in any particular country will not normally be of any significance. Thus, while the court is not at this stage concerned about the merits of the action, it is nevertheless incumbent on the parties to set out their respective cases in sufficient detail so as to identify those issues likely to be controversy at trial. Only then would the location and convenience of witnesses be seen in its proper context.

28. In the present case, it is important to look at the likely issues in the trial and then see to what extent witnesses will be required for attendance. I have already identified the main aspects of the defence under the heading "The issues in the action".

29. The defendant puts the plaintiff to strict proof that the indebtedness was incurred in the first place by the defendant gambling at the casino of the Desert Inn as alleged in the affidavit of Mr Peter Lexis, the casino manager of SDIC at the material time. It is said that Mr Lexis' attendance at trial is therefore necessary and he is resident in Nevada. I am not entirely convinced that Mr Lexis' attendance at the trial will be necessary. It seems that the extent to which the defendant gambled is neither here nor there once it is accepted that he has not repaid the money owed under the three markers. Of course, it is the defendant's case that the indebtedness under the markers was attributable (at least in part) to the customers he introduced to the casino (see Issue 2(b)) and so to that extent, it may become relevant to inquire exactly how much the defendant himself gambled at the casino. However, even assuming that this defence has substance, it is difficult to see just where the defendant takes issue with Mr Lexis' evidence. As I have said, the defendant has not provided an account of what happened at the casino. In Mr Lane's affidavit, reference is made to the part payment of US$232,000 made by the defendant on or about 11 April 1996, this allegedly being referable to "that part of the Debt for which the [defendant] was considered to be responsible". This does not constitute evidence of what transpired at the casino. In any event, even if Mr Lexis were required to attend, there is no evidence that this would cause any undue inconvenience.

30. I have dealt with the position of Mr Lexis in some detail to illustrate the sort of considerations that a court would look into when considering the aspect of witnesses.

31. In relation to the issue of the plaintiff's locus standi (Issue 1), Miss Cruden refers to the need to have as witnesses for the trial all those persons along the line who would be able to evidence the eventual assignment to and locus standi of the plaintiff and also the issue of the administrative stay. This would include persons working in SDIC, Valvino and the Nevada State Gaming Board. Quite apart from the court not knowing the identities (except Mr Steve Wynn and Mr Marc Rubinstein, the Senior Vice-President General Counsel of Valvino), numbers or circumstances of such persons (as to why it would be inconvenient for them to attend trial in Hong Kong), it is not apparent at this stage whether the evidence they are likely to give would be controversial at all. As I have already said, the defendant essentially puts the plaintiff to strict proof of its locus standi without putting up a positive case. Whether or not the plaintiff's evidence will be controversial is entirely speculative at this stage.

32. When one comes then to consider the other defences raised by the defendant (apart from those aspects involving Nevada law), being essentially those in Issue 2, it is difficult to see who the relevant witnesses are likely to be, the nature of the evidence to be given by such persons (whether disputed or not), the numbers involved and just why it would be inconvenient for them to give evidence in a trial in Hong Kong :-

(1) The so-called practice whereby as a matter of professional courtesy, debts between proprietors of gaming houses are not enforced, is one that is said by the defendant to be recognised in Las Vegas, Europe, Australia and other major gaming centres around the World. There is no evidence to indicate who are likely to be the material witnesses on this issue, much less any indication as to why a trial in Nevada would be more convenient than a trial in Hong Kong.

(2) I have already referred to the absence of any details of the agreement (whether express or implied) that the persons liable on the markers would be the defendant's three guests or clients and not the defendant himself. It is difficult to do much more than to speculate. While the defendant would presumably be a material witness (although he has not said what occurred), the identities of the other witnesses are simply not known. There is no material for the court to find in favour of the defendant here.

(3) There is virtually no detail provided as to the circumstances surrounding the payment of US$232,000 made by the defendant on or about 11 April 1996. Specifically, there is simply insufficient detail as to why the defendant says the payment was "intended to and did compromise The Desert Inn's staff's request for settlement of that part of the Debt for which the .... [defendant] was considered to be responsible".

33. In the premises, I am not satisfied from the point of view of factual witnesses (I will consider the aspect of Nevada law later) that it would be more convenient for a trial to take place in Nevada rather than Hong Kong, much less clearly so. In so finding, I have not lost sight of the submission that even if foreign witnesses were willing and able to come to Hong Kong, the cost of their attendance would be less than if they gave evidence in their "home country" as it were. In Spiliada, at p.478A-B, Lord Goff of Chievely refers to "factors affecting convenience or expense (such as the availability of witnesses)" (my emphasis). However, the expense factor does not arise in the present case because I have simply not been given sufficient details of the identities, numbers and circumstances of witnesses whose testimony is likely to be controversial at trial.

Documents

34. The defendant submits that most if not all of the relevant documents in the case are located in Nevada. Mr Lane, in his affidavit, identifies in paragraph 21 specific categories of such documents. It may well be that most if not all of the relevant documents are in Nevada but that is not the end of the analysis. It is, I think, necessary to see how this fact affects the critical question whether the courts of Nevada are clearly and distinctly more appropriate than the Hong Kong courts for the trial of the action. In other words, is there an appreciable risk that relevant documents would somehow be unavailable in a trial in Hong Kong as opposed to a trial in Nevada?

35. In my judgment, I am not satisfied that relevant documents will not be made available for a trial in Hong Kong. There is no evidence to suggest this. There is no suggestion made by the defendant that the plaintiff will withhold relevant documents in a trial in Hong Kong. In Mr Lane's affidavit, he says that the plaintiff's solicitors have so far refused to produce certain documents, but fairly goes on to say that the plaintiff's position is merely that such documents should be disclosed at the proper time (during the discovery process). Mr Lane makes the point that no problem would arise in Nevada since the courts there would have power to compel the production of documents. I am sure this is the position but I would reiterate that there is nothing to suggest any difficulties of production were the trial to take place in Hong Kong. As far as the plaintiff is concerned, the Hong Kong courts can compel the production of relevant documents. As for third parties such as the State of Nevada Gaming Control Board, while I accept that the courts here will not have powers of compulsion, there is nevertheless no evidence to suggest that there may be any difficulties in obtaining relevant documents.

36. Accordingly, I am not satisfied from the point of view of documents either that it would be more convenient for a trial to take place in Nevada rather than Hong Kong.

Nevada law is the governing law of the relevant transaction or transactions with which the court will be concerned at trial. The situs of the alleged debt owing from the defendant to the plaintiff is Nevada

37. In Spiliada, at p.478A-B, express reference was made by Lord Goff of Chievely to connecting factors "such as the law governing the relevant transaction". The case relied on for this proposition was Credit Chimique v. James Scott Engineering Group Ltd (1982) SLT 131, a decision of the Outer House of Scotland.

38. In Credit Chimique, the pursuers were an association of banks claiming on a guarantee against a Scottish company. The guarantee was subject to French law. The defenders (the company) asserted that under French law, they were not liable under the guarantee. Complicated issues of French law were involved. The Outer House held that the action should be stayed (or to use its proper term, sisted) on the basis of forum non conveniens. In doing so, the court laid emphasis on the aspect of the complicated issues of French law.

39. At p.135, after considering the relevant authorities, the Lord Ordinary (Lord Jauncey) stated as follows :-

"In this state of the authorities, I consider that there can be no hard and fast rule as to the effect of the necessity for the application of foreign law on a plea of forum non conveniens but that each case must depend upon its own circumstances. In some cases the questions of foreign law likely to be involved may be numerous and complex and in such cases the necessity to apply the law might properly be a factor which the court would take into account in deciding whether or not to exercise its discretion to sustain the plea."

40. I start therefore with an examination of the issues of foreign law that are likely to arise in the trial of the present action. I have already touched upon these in discussing Issues 1, 3, 4 and 5. In my view, it is difficult to see whether there is in fact any real controversy between the parties on Nevada law.

Issue 1

41. I have already said that the defendant's position is essentially that of putting the plaintiff to strict proof of its entitlement to sue. While I have little doubt that the chain of transfers or assignments down the line from SDIC to the plaintiff (apart from the Deed of Assignment dated 12 October 2000 from Valvino to the plaintiff which is subject to Hong Kong law) will on the whole probably be subject to Nevada law, I cannot find any real dispute of Nevada law between the parties (not at this stage at any rate). Much less can I find whether any such disputes are likely to involve difficult issues which a Hong Kong court would have difficulty in resolving.

Issue 3

42. The defendant's case is that, according to Nevada law, an un-negotiated marker cannot be enforced without evidence of the original credit agreement. The important question is to identify just what precisely would be the issues in controversy between the parties. Again, I have not been able to find any.

Issue 4

43. I refer to my earlier remarks under this head. Again, the issues likely to be in controversy at the trial are obscure.

Issue 5

44. As discussed above in dealing with this issue, I am also not satisfied that there are any real issues of controversy here.

Witnesses

45. Miss Cruden submitted that as Nevada law will feature in the trial, it would be more convenient and far less expensive to have the trial in Nevada rather in Hong Kong. A trial here would involve both parties having to call Nevada lawyers to give evidence and this would add considerably to the expense of the proceedings. In the present application, both parties have engaged Nevada lawyers. However, in view of my conclusion that no real controversy regarding Nevada law has been raised at this stage, this factor falls away since it follows I am not convinced that there will be any necessity to call witnesses to deal with Nevada law or if any issues do arise, it may be that affidavit evidence will suffice. In any event, even if it had been shown that such witnesses were necessary at trial, I would then have found it necessary to look closely at the costs involved, a matter on which there has been no evidence.

Conclusion on foreign law

46. In cases where substantial and difficult issues of foreign law are involved, the court may well be compelled to stay the proceedings where there is an appreciable risk that justice will not be done. This risk may in certain circumstances be attributable to factors such as expense, but in the usual case would arise where the court was somehow concerned with the possibility that it might reach a wrong conclusion on an important aspect of foreign law. In Credit Chimique, at p.136, Lord Jauncey said : "In the present case the risk of the Scottish court reaching the wrong conclusion on one or more of the questions of law involved is by no means remote whereas it must be presumed that such a risk does not exist in the French court". The courts in Hong Kong (particularly the Commercial Court and the Admiralty Court), given the international identity and nature of the type of commercial litigation and litigants here, are often accustomed to dealing with aspects of foreign law. It does not therefore follow at all that once it is shown that issues of foreign law arise, that this will necessarily be a powerful, much less a decisive, factor in favour of a stay. On the other hand, however, it is unrealistic not to acknowledge the fact that complicated issues of foreign law may arise with which the Hong Kong courts will not feel itself confident to deal; it is all a question of degree : see Muduroglu Ltd v. T.C. Ziraat Bankasi [1986] QB 1225, 1246A-F (English Court of Appeal), per Mustill LJ.

47. In the present case, given that no substantial controversy on issues of Nevada law has been demonstrated, the risk of injustice in the sense just referred to, does not arise. I would also add this. Over the years, on quite a few occasions, the Hong Kong courts have had to deal with aspects of the Nevada law relating to gambling. A quick reference to some of the cases cited by Mr Houghton demonstrates this : GNLV Corporation trading as Golden Nugget Hotel and Casino v. Wong Hoi Lam (unreported, 25 May 1992, Godfrey J), Wong Hon v. Sheraton Desert Inn Corp. (t/a Desert Inn Resort & Casino) [1995] 3 HKC 331, Las Vegas Hilton Corporation v. Lo Yuk Leung [1998] HKCU 33. In these circumstances, while it might be an exaggeration to say that the Hong Kong courts have developed an expertise for these aspects of Nevada law (so that this may be treated as being almost akin to the "Cambridgeshire" factor referred to in Spiliada at pp.485E-486C), it is nonetheless fair to say that at least the Hong Kong courts have not found such aspects to be beyond their capability.

48. For the reasons given above, I do not consider the factor of Nevada law to be significant in favour of a stay.

Conclusion on Stage I

49. It will be evident from the above that I am not satisfied the defendant has discharged the burden of showing that the Nevada courts are clearly and distinctly more appropriate than the Hong Kong courts. This is ordinarily decisive in favour of the court refusing a stay (see Spiliada at p.478B-C and The Adhiguna Meranti at p.907G-H). I see no reason in the present case to differ from this standard approach.

STAGE II : WOULD THE PLAINTIFF BE DEPRIVED OF ANY LEGITIMATE PERSONAL OR JURIDICAL ADVANTAGES?

50. In view of my conclusions on Stage I, it is unnecessary to decide this point although I must say I would have been hard pressed to find in favour of the plaintiff here (on whom the burden of proof rested).

DECISION ON APPLICATION

51. For the reasons stated above, I dismiss the defendant's summons. I also make a costs order nisi in favour of the plaintiff.