WIN MORE SHIPPING LTD v. DIRECTOR OF MARINE

HCAL 1520/2018

[2019] HKCFI 168

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 1520 OF 2018

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D E C I S I O N

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1.  The issue before the court is whether the Applicant should be granted leave to serve the papers filed in this application for leave to apply for judicial review on Bureau Veritas Marine China Co Ltd (“BV”) out of the jurisdiction with a view to it being joined as the 2^nd Putative Respondent. The application is an unusual one in that most applications for judicial review are directed against decisions made by persons or bodies within the jurisdiction. Since the application is an ex parte one, I have not received submissions from BV on whether there is any reason in principle why judicial review may not lie against a person outside the jurisdiction who has made a relevant decision which is otherwise amendable to judicial review in Hong Kong, or why leave may not be granted for service out of the jurisdiction in judicial review proceedings. On the other hand, the Applicant has made submissions on the basis that the usual principles governing service of proceedings out of the jurisdiction under Order 11 of the Rules of the High Court, Cap 4A, are applicable in judicial review proceedings. I am prepared to proceed on the basis that, in principle, judicial review proceedings are not excepted from the service out regime and, on the facts of the present case, I consider that a proper case for service out has been made out.

2.  In what follows, unless the context indicates otherwise, references to Rules shall be to Order 11 of the Rules of the High Court.

BACKGROUND FACTS

3.  The Applicant, Win More Shipping Limited, is the registered owner of a Hong Kong registered vessel known as Lighthouse Winmore (“the Vessel”).

4.  BV is a PRC company with its head office in Shanghai.  It has a branch office in Hong Kong.  Apparently, it also has solicitors in Hong Kong, namely, Reed Smith Richards Butler, although, as I understand it, they do not have instructions to accept service of proceedings on behalf of BV in Hong Kong.

5.  BV is a “classification society”, and also a recognized organisation / appointed security organisation authorized to issue, inter alia:

(1)   Safety Management Certificate (“SMC”) under the Merchant Shipping (Safety) (Safety Management) Regulation, Cap 369AX;

(2)   International Ship Security Certificate (“ISSC”) under the Merchant Shipping (Security of Ships and Port Facilities) Rules, Cap 582A; and

(3)   MLC Statement of Compliance, the equivalent certificate in Hong Kong of an MLC Certificate issued under the Maritime Labour Convention (pending the coming into force of the Merchant Shipping (Seafarers) (Working and Living Conditions) Regulation, Cap 478AF).

6.  The Vessel’s class was provided by BV, and its SMC, ISSC and MLC Statement of Compliance (hereinafter collectively referred to as “the Statutory Certificates”) were also issued by BV.  They were due to expire on 30 October 2019 / 4 November 2019, but for the fact that they were cancelled on 2 February 2018 (see further below).

7.  On 24 November 2017, the Vessel called at the port of Yeosu, South Korea.  In late November/early December 2018, the Vessel was detained by the South Korean Port Authority, originally because of various deficiencies concerning the Vessel’s equipment giving rise to safety concerns, and subsequently because of an alleged violation of UN Security Council Resolution 2397 relating to sanctions imposed on North Korea.

8.  On 3 February 2018, BV issued a letter to the Applicant giving notice of the withdrawal of the Vessel’s class and that the Statutory Certificates would lose their validity on the effective date of the class withdrawal.  On 5 February 2018, BV informed the Marine Department that the class of the Vessel had been withdrawn on 3 February 2018, and the effective date of cancellation of the Statutory Certificates was on 3 February 2018 due to “service termination”.

9.  The Applicant alleges that Mr Chan Kit, Vice-President of BV, admitted to Mr Gong (the sole director and shareholder of the Applicant) over the telephone that BV withdrew the Vessel’s class and cancelled the Statutory Certificates because of its concern about the stigma to BV caused by the detention of the Vessel due to the suspected violation of the UN Security Council Resolution and the negative impact on its share price and market value arising therefrom, and further told Mr Gong that after the release of the Vessel from detention BV would issue the requisite interim statutory certificates so that the Vessel could sail to a dry dock for permanent repairs.  The court has not received any evidence from BV at this stage, and is in no position to express any view on the veracity of this allegation.

10.  By a letter dated 24 May 2018, the Director of Marine (“the Director”) informed the Applicant that, in view of the withdrawal of the Statutory Certificates, he intended, after the end of the period of 90 days from the date of service of the letter, to direct the Vessel’s registration to close under Section 64(4) of the Hong Kong Merchant Shipping (Registration) Ordinance, unless he was satisfied that it would be inappropriate to do so by any representation made by or on behalf the Applicant within that period.

11.  On 1 August 2018, the Applicant made the present application for leave to apply for judicial review of:

(1)   the Director’s decision to close the registration on 24 May 2018 (“the Decision”); and

(2)   the Director’s failure and/or refusal and/or delay to make a request to the United Nations Security Council Sanctions Committee (“the Committee”) to release the Vessel from detention pursuant to paragraph 9 of the UN Security Council Resolution 2397 (“the Failure”).

12.  In the original Form 86, the Applicant sought an order of certiorari to quash the Decision, a declaration that the Decision and the Failure were illegal, and an order of mandamus to direct the Director to make a request to the Committee for the release of the Vessel from detention.

13.  Notwithstanding the Director’s stated intention to close the registration of the Vessel after the period of 90 days from 24 May 2018, as a matter of fact (and as confirmed by the Director), the Vessel has not yet been de-registered as of todate, the Director having been advised that he should not proceed with the de-registration of the Vessel pending the determination of the present application for judicial review.

14.  On 9 August 2018, the Applicant applied to amend the Form 86 to, inter alia, join BV as the 2^nd Putative Respondent in order to challenge its decision to withdraw the class of the Vessel and cancel the Statutory Certificates (“the Withdrawal”).  The Applicant argues that BV, in issuing the Statutory Certificates, was carrying out the statutory duties of the Director and as such must act in accordance with the relevant statutory provisions, rationally and fairly, and that BV could only withdraw or cancel the Statutory Certificates after it had inspected the Vessel and found that its conditions failed to comply with the relevant statutory provisions, including the Merchant Shipping (Safety) (Safety Management) Regulation, and the Merchant Shipping (Security of Ships and Port Facilities) Rules.  The Applicant contends that BV’s decision is unreasonable, irrational, illegal and/or procedurally irregular.  In the draft Amended Form 86, the following additional relief are sought against BV: (i) an order of certiorari to quash the Withdrawal, and (ii) a declaration that the Withdrawal is illegal.

15.  The Applicant also seeks an extension of time to apply for leave to apply for judicial review against BV.

16.  On 10 August 2018, the court ordered a rolled-up hearing of (i) the application to amend the Form 86, (ii) the application for an extension of time to apply for judicial review of the decision of BV to withdraw the class of the Vessel and cancel the Statutory Certificates, and (iii) the substantive application for judicial review.  The court also directed the Applicant to serve the relevant papers on the Putative Respondents, and gave directions for the filing of evidence and fixing of a date for the rolled-up hearing.  The rolled-up hearing has since been fixed to take place on 14 and 15 March 2019.

17.  As explained by the court in a subsequent letter to the Applicant’s solicitors dated 24 September 2018, although the court had directed the Applicant to serve the papers on, inter alia, BV, the court did not grant leave to the Applicant to serve BV out of the jurisdiction, and it was incumbent on the Applicant to obtain such leave if it wished to do.

18.  On 20 August 2018, the Applicant applied, by way of the 1^st Affirmation of Brenda Chark, for retrospective leave and leave to serve, inter alia, the Form 86, the draft Amended Form 86, and the court’s order dated 10 August 2018, out of the jurisdiction on BV.

19.  On 24 September 2018, the court directed that the application for leave to serve out of the jurisdiction should be dealt with at an ex parte oral hearing, and directed the Applicant to file further evidence (if so advised) to show that the present case was a proper one for leave to be granted for service out of the jurisdiction, and that the requirements of Order 11, rule 4(1), (2) and (3) of the Rules of the High Court, Cap 4A had been complied with.

20.  On 14 January 2019, the Application filed the 2^nd Affirmation of Brenda Chark in support of the application for leave to serve out of the jurisdiction.

DISCUSSION

21.  As can be seen from the 2^nd Affirmation of Brenda Chark and the Applicant’s skeleton submissions dated 14 January 2019, the Applicant relies on Rule 1(1)(b), (c) and/or (f) in support of the service out application.

22.  At first sight, it would appear that Rule 1(1) is not relevant because it only applies to the service of a writ out of the jurisdiction.  Rule 9(1), which incorporates the provisions of Rule 1(1) by reference, also seems to have no application because it concerns only with the service of an originating summons, notice of motion or petition out of the jurisdiction.  In the present case, leave to apply for judicial review has not yet been granted, and thus no originating summons has been issued under Order 53, Rule 5(1).

23.  The relevant provision appears to be Rule 9(4), which states as follows:

“… service out of jurisdiction of any summons, notice or order issued, given or made in any proceedings is permissible with the leave of the court …”.

24.  The following rules of Rule 9 are also relevant for the present purpose:

“(5) Rule 4(1), (2) and [(4)[1]] shall, so far as applicable, apply in relation to an application for the grant of leave under this rule as they apply in relation to an application for the grant of leave under rule 1.

(7) Rules 5, 5A, 6, 8 and 8A shall apply in relation to any document for the service of which out of the jurisdiction leave has been granted under this rule as they apply in relation to a writ.”

25.  In Hong Kong Housing Authority v Hsin Yieh Architects & Associates Ltd [2005] 1 HKLRD 801, at paragraphs 27 to 35, Reyes J expressed the view, in relation to an application for service out of the jurisdiction under Rule 9(4), that Rule 1(1) was not material.  That case concerned the service of a summons issued in an existing action against (amongst others) B+B in Hong Kong on its insurer, AXA, which was outside the court’s jurisdiction, claiming costs of the action against AXA under the old Section 52A(1) of the High Court Ordinance.  As a matter of fact, the learned Judge also made an order joining AXA as a defendant to the proceedings, and leave to serve on AXA outside the jurisdiction was granted under Rule 1(1)(c) (ie the necessary or proper party limb).  When the matter reached the Court of Appeal [2006] 1 HKLRD 316, it was dealt with on the basis of whether leave for service out ought to be granted under Rule 1(1)(c).  The Court of Appeal did not express any disapproval of Reyes J’s view that Rule 1(1) was not material in relation to an application for leave to serve out of the jurisdiction under Rule 9(4).  Reyes’s view was based on the judgment of the English Court of Appeal in National Justice Compania Naviera SA v Prudential Assurance Co Ltd (No 2) [2001] 1 All ER 37 (referred to in paragraphs 29 to 34 of his decision).

26.  It would, however, be anomalous if an applicant, whose application for leave to apply for judicial review has not yet been granted, may obtain leave for service out without having to satisfy any of the statutory grounds under Rule 1(1), whereas an applicant, who has obtained such leave and wishes to serve the originating summons out of the jurisdiction, has to make out one or more of the grounds for service out under Rule 1(1).  The answer, I believe, lies in applying the statutory grounds under Rule 1(1) as part of the discretionary considerations when deciding whether to grant leave for service out under Rule 9(4).

27.  In the present case, I consider BV to be a “proper” party to the application against the Director under Rule 1(1)(c) in view of the fact that the stated basis of the Director’s Decision was the decision by BV to cancel or withdraw the Statutory Certificates.  I would add that I do not consider either Rule 1(1)(b) or (f) has application, because there is no claim for any injunction against BV, and the withdrawal or cancellation of the Statutory Certificates by BV cannot be regarded as a “tort”.

28.  To obtain an order for leave to serve out of the jurisdiction, the Applicant also has to comply with the requirements of Rule 4(1), (2) and (4) so far as applicable, by virtue of Rule 9(5).

29.  One particular matter which the Applicant has to show, under Rule 4(1)(b), is that it has a “good cause of action”.  There can, I believe, be serious arguments as to whether BV’s decision to withdraw or cancel the Statutory Certificates is amenable to judicial review, and whether the Applicant ought to be granted an extension of time to apply for leave to apply for judicial review against BV in the circumstances of this case.  I do not, however, have to come to any firm conclusion on these matters at this stage, which will have to be determined at the rolled-up hearing.  On the materials before me, I consider that the Applicant has raised “serious issues to be tried” on these matters, and that should be sufficient for leave to serve out of the jurisdiction to be granted.

30.  I am also satisfied that the other requirements of Rule 4(1) and (2) have been met in the present case.

DISPOSITION

31.  For the foregoing reasons, leave is granted to the Applicant to serve all the papers which have been filed in these proceedings, and the court’s previous orders or directions dated 1 August 2018, 13 August 2018 and 24 September 2018, as well as the order herein, on BV out of the jurisdiction in accordance with Rule 5A.

32.  There is one other matter that should be mentioned.  As pointed out at the hearing, if leave to serve out is granted, the papers ought to be served on BV though the judicial authorities of the Mainland in accordance with the provisions of Rule 5A which, according to Ms Chark, will take at least 6 weeks.  Taking into account the time that BV may need to prepare its evidence in opposition to the application and also the Applicant’s position that the applications against the Director and BV ought to be heard together, the rolled-up hearing scheduled on 14 and 15 March 2019 may be derailed.  On the other hand, the Vessel is currently under detention.  The issue relating to the “Failure” on the part of the Director to make a relevant request to the Committee for the release the Vessel from detention ought, in my view, to be determined as soon as practicable.

33.  In these circumstances, as soon as the Applicant shall have successfully served the papers on BV out of the jurisdiction, the Applicant shall try to agree directions with BV and the Director on the further conduct of these proceedings (including any possible challenge to the court’s jurisdiction by BV).  In the event that directions cannot be agreed, the Applicant shall be at liberty to fix a 30-minute hearing at least 2 weeks before the date currently fixed for the rolled-up hearing to seek further directions from the court.

34.  The costs of this application for leave to serve out of jurisdiction shall be reserved.