XCHRX DARYL MARK O'SHAUGHNESSY v. DAVID WILLIAM GUNSON AND ANOTHER

HCA 9218/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9218 OF 1999

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J U D G M E N T

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This is an application by the First Defendant for a declaration by the court to decline jurisdiction or alternatively an order to stay the proceedings.

2. There is an unusual feature in this matter in that the First Defendant is a practising solicitor in Hong Kong. He was represented by a firm of solicitors and counsel. However, those solicitors came off the record and his counsel had to withdraw at the last minute. Despite conventional wisdom, the First Defendant chose to represent himself at the hearing before me. This created a number of problems including inconvenience to his opponent. And, I regret to say, I had considerable difficulties in getting the First Defendant to frame cogent grounds for his application. Anyway, as I understood it, the First Defendant's arguments boiled down to 3 grounds:-

(1) The Plaintiff has not shown that Hong Kong is the appropriate forum. New Zealand is the forum conveniens because (a) the parties herein are connected by a trust which specifies New Zealand law as the proper law and which gives New Zealand courts exclusive jurisdiction and (b) banking transactions for the trust were carried out in New Zealand.

(2) As already mentioned, the Plaintiff is bound by trust deed to resort to New Zealand courts only.

(3) There is on going police investigation of the First Defendant for allegation of theft of funds belonging to the Plaintiff. It is unfair to allow civil proceedings based on the same allegations to proceed at the same time.

3. Ground (1) can be decided by reference to fairly basic principles which are well known. Both parties agree that Re Spiliada [1986] 3 All ER 843 is a convenient authority to rely upon. One only needs to refer to the headnotes for guidance:-

Held - (1) the fundamental principle applicable to both the stay of English proceedings on the ground that some other forum was the appropriate forum and also the grant of leave to serve proceedings out of the jurisdiction was that the court would choose that forum in which the case could be tried more suitably for the interests of all the parties and for the ends of jutice (see p 846 c d, p 847 a to c, p 853 d e and p 854 j, post); dictum of Lord Kinnear in Sim v Robinow (1892) 19 R (Ct of Sess) 665 applied; Société du Gaz de Paris v SA de Navigation 'Les Armateurs Francais' 1926 SC (HL) 13 considered.

(2) In the case of an application for a stay of English proceedings the burden of proof lay on the defendant to show that the court should exercise its discretion to grant a stay. Moreover, the defendant was required to show not merely that England was not the natural or appropriate forum for the trial but that there was another available forum which was clearly or distinctly more appropriate than the English forum. In considering whether there was another forum which was more appropriate the court would look for that forum with which the action had the most real and substantial connection, eg in terms of convenience or expense, availability of witnesses, the law governing the relevant transaction, and the places where the parties resided or carried on business. If the court concluded that there was no other available forum which was more appropriate than the English court it would normally refuse a stay. If, however, the court concluded that there was another forum which was prima facie more appropriate the court would normally grant a stay unless there were circumstances militating against a stay, eg if the plaintiff would not obtain justice in the foreign jurisdiction (see p 846 c d, p 847 a to c, p 854 j, p 855 h j and p 856 a to e, post); Société du Gaz de Paris v SA de Navigation 'Les Armateurs Francais' 1926 SC (HL) 13, The Atlantic Star [1973] 2 All ER 175, MacShannon v Rockware Glass Ltd [1978] 1 All ER 625 and The Abidin Daver [1984] 1 All ER 470 considered.

4. In the present case the connection with New Zealand on account of contractual proper law is not a strong one. There has never been real problem for common law courts, like Hong Kong courts, to grapple with foreign law especially when the foreign law is also the law of a common law jurisdiction. The connection with New Zealand due to banking transactions there is rather tenuous because the evidence shows that the relevant banking transactions and documents are those with the Hong Kong and Shanghai Banking Corporation Limited in Hong Kong. The Plaintiff side has quite properly informed the court that the trust had a trustee resident in New Zealand but he has already resigned for some time and he is not connected with the theft alleged to have been committed by the First Defendant. Moreover, there is no evidence at all that judgment against the Defendants may be enforced in New Zealand. Neither Defendants has significant assets in New Zealand. If there are any real assets available for satisfaction of judgment, they are more likely to be in Hong Kong. There is little point in proceeding in New Zealand only to revert back to Hong Kong for enforcement.

5. On the other hand, the First Defendant is resident in Hong Kong. He works in Hong Kong. Apparently, he administered the trust that is the nexus in this case in Hong Kong. The Plaintiff is now resident in Australia but he is a pilot and comes to Hong Kong often. Another major source of evidence in this case, the Hong Kong and Shanghai Banking Corporation Limited is, of course, based in Hong Kong. The money which the Plaintiff seeks to recover is allegedly misappropriated in Hong Kong.

6. In the premises, I had no difficulty in coming to the conclusion that Hong Kong is the distinctly more appropriate forum than New Zealand.

7. On Ground (3), the applicable principles are also well settled. Mr. Pirie for the Plaintiff cited Prime Computer (Hong Kong) Ltd. v. Frank Sham Tak-keung and others [1992] 1 HKLR 115. Again, one only has to refer to the headnotes:-

Held:

1. The applicable principles governing the discretion to stay civil proceedings where there are concurrent criminal proceedings involving the same subject matter are laid down in Petroliam Nasional Berhad v. Tan Soon-gin [1990] 1 HKLR 4 and in Jefferson Ltd. v. Bhetcha [1979] 1 WLR 898. The burden is upon the defendant to the civil proceedings to show that it is just and convenient that the plaintiff's ordinary right of having his claim processed, heard and decided should be interfered with by reason of such a stay. (See p.117, lines 14-20.)

Whilst it is impossible to produce an exhaustive list of the factors to be taken into account in any given case in deciding whether there should be a stay, as adverted to in Petroliam Nasional Berhad v. Tan Soon-gin (supra) a strong factor in favour of a stay would arise if it were to appear that the civil proceedings, if not stayed, were likely to generate publicity which might reach and influence potential jurors in the criminal proceedings, or lead to the disclosure of the defence with a resultant risk that prosecution witnesses would on the strength of such disclosure fabricate evidence or trim their testimony or that interference with witnesses was something sensibly to be feared as a result of the disclosure of the defence in the course of the civil proceedings. (See p.117, lines 31-39). It was unnecessary to rely upon the Bill of Rights. Both the presumption of innocence and the right of silence are rooted in the common law. There is no statutory or other inroad attempted against either of those rights, which are fundamental to the first defendant. Neither of the decisions in Petroliam Nasional Berhad v. Tan Soon-gin and Jefferson Ltd. v. Bhetcha, (supra) make any inroads into anyone's fundamental rights. They recognise the rights on both sides and provide guidance as to how such rival rights are to be balanced to achieve a just result. Both decisions are consistent with the Bill of Rights. (See p.118, lines 19-30.)

The first defendant had not shown that it would be just or convenient to interfere with the ordinary right of the plaintiff in having his claim processed and heard and decided in the way in which the requested stay would interfere with that right. (See p.118, lines 34-36.)

8. Unfortunately, the First Defendant has not produced any evidence, nor did he make out by way of submission circumstances, to show that it is just and convenient to stay the Plaintiff's case. As Mr. Pirie for the Plaintiff pointed out, the failure on the part of the First Defendant to start to make a case is inexcusable because the First Defendant himself is a lawyer and he had adequate objective legal representation right up to just before the hearing before me.

9. Hence Ground (3) did not even get off the ground and was ruled out.

10. Ground (2) was of some substance. This turned on the interpretation of an exclusive jurisdiction clause in a trust deed. The Clause reads:-

7.(a) Laws of New Zealand apply

Subject to paragraph (b) below, this Deed and the trust, powers and provisions set forth herein shall be governed and construed and shall take effect in accordance with the laws of New Zealand. The Employer, the Trustee, Members, Beneficiaries and all persons claiming under them shall accept and submit to the jurisdiction of the Courts of New Zealand and Courts having appellate jurisdiction therefrom. All proceedings affecting any of the aforementioned persons inter se (whether interlocutory proceedings, proceedings for discovery and the obtaining of evidence or proceedings to enforce or declare any such rights, powers, liabilities and obligations) shall be commenced and issued in the Courts of New Zealand only and not otherwise.

11. Counsel for the Plaintiff suggested that on the plain reading of the clause in question, only "proceedings to enforce or declare any such rights, powers, liabilities and obligations" under the deed need to be taken in New Zealand courts. In this case, vis-a-vis the First Defendant, the Plaintiff is claiming that the First Defendant effectively intercepted payment from the Second Defendant to the Plaintiff and misappropriated the money. The claim is one of conversion based on tort. Moreover, even if it is held that the claim is based on trust, it is trite law that a party who has turned his back to a contractual document cannot claim protection from that document. Mr. Pirie also relied on the case of Grupo Torras v. Al Sabah & others [1996] 1 Lloyds L.R. 7. In that case the defendant stole money from a company registered in Spain and went to England. When sued in England for conversion of the money belonging to the company, the defendant prayed in aid an international convention whereby suits against an European company must be prosecuted in the country of registration of the company. The English Court of Appeal held that the theft had nothing to do with the administration of the company. Hence the Plaintiff could sue for conversion in England.

12. I accept these arguments advanced for the Plaintiff and hold that Ground (3) fails too.

13. In the premises, the First Defendant's summons is dismissed.

14. Mr. Pirie suggested that when I come to consider the question of costs in dismissing the summons, I should award costs to the Plaintiff on an indemnity basis to be paid forthwith because the summons is hopeless in the first place. Obviously, the First Defendant cannot resist order for costs against him. However, although Grounds (1) and (3) are rather weak, Ground (2) relied upon by the First Defendant is not untenable. For this reason, I make an order nisi that the First Defendant do pay the Plaintiff's costs for this application to be taxed if not agreed and to be paid forthwith. The order nisi becomes absolute unless either party applies for variation within 14 days from the date of handing down this judgment.