Newocean Petroleum Co Ltd v O.w. Bunker China Ltd (In Provisional Liquidation) And Another

CourtHigh Court (Hong Kong)
Judgment Date11 July 2016
Subject MatterMiscellaneous Proceedings
Judgement NumberHCMP1474/2016
HCMP1474/2016 NEWOCEAN PETROLEUM CO LTD v. O.W. BUNKER CHINA LTD (in provisional liquidation) AND ANOTHER

HCMP 1474/2016








(in provisional liquidation)
1st Defendant


Before: Hon Kwan and Barma JJA
Dates of Written Submissions: 13 and 24 June 2016
Date of Judgment: 11 July 2016




Hon Kwan JA (giving the judgment of the court):

1. On 18 March 2016, Deputy High Court Judge Le Pichon gave a decision (“the Decision”) dismissing the summons of the 2nd defendant to set aside the order of Master S Lo on 27 April 2015 granting leave to the plaintiff to issue a concurrent writ for service out of jurisdiction on the 2nd defendant which is resident in Singapore. Leave to serve the concurrent writ out of the jurisdiction was granted pursuant to Order 11 rule 1(1)(d)(ii) (in respect of a claim in contract) and rule 1(1)(f) (in respect of a claim in conversion).

2. The judge refused the 2nd defendant’s application for leave to appeal by a decision on 31 May 2016 (“the Leave Decision”).

3. By a summons issued on 13 June 2016, the 2nd defendant renewed its application for leave to appeal to this court. We exercise our power under Order 59 rule 2A(5) to determine this application without a hearing on the basis of written submissions only.

4. For the reasons given below, we grant leave to appeal limited to that part of the judge’s order granting leave to serve the concurrent writ out of the jurisdiction pursuant to Order 11 rule 1(1)(d) (the contract claim). We decline to grant leave to appeal in respect of that part of the order granting leave to serve the concurrent writ out of the jurisdiction pursuant to Order 11 rule 1(1)(f) (the claim in conversion).

The claim in contract

5. The plaintiff’s claim against the 2nd defendant in contract is for the price of the bunkers. The only foundation for any contract between the plaintiff and the 2nd defendant, as argued before the judge, is the allegation of an agency relationship. The judge stated her conclusion in this way in §64 of the Decision:

“On those facts, I do not consider it wholly unarguable that an agency relationship did arise. From D2’s perspective, the identity of the physical supplier [i.e. the plaintiff] could not have been material since it contracted with an intermediate bunker trader without stipulating the identity of the supplier. In other words, how OWBS [i.e. the intermediate bunker trader] chose to discharge its obligations under the D2–OWBS contract would not appear to have been material or of concern to D2. It could be said that D2 implicitly authorized OWBS to employ such means as would enable the latter to discharge its obligations to D2. Arguably, on the present state of the case law, there was an agency chain running from D2 and ending with OWBC who contracted with the physical supplier.”

6. The judge’s decision on the contract claim is in conflict with two recent decisions of the Court of First Instance: Newocean Petroleum Company Limited v Rio Tinto Shipping (Asia) Pte Ltd (the RTS case), HCA 446/2015, 15 April 2016, Anthony Chan J, §§23 to 41; and Newocean Petroleum Company Limited v O.W. Bunker China Limited, Regional Container Lines Public Company Limited & RCL Feeder Pte Ltd (the RCL Feeder case), HCA 384/2015, 29 June 2016, Deputy High Court Judge Manzoni, SC, §§54 to 71.

7. We note also that whilst Mr Sussex, SC acknowledged before the judge that the plaintiff’s pleaded case in contract requires ‘fine-tuning’ (§15 of the Leave Decision), he subsequently made a further concession before Deputy Judge Manzoni as recorded in §59 of the RCL Feeder case:

“During the course of argument Mr Sussex accepted that the thrust of his argument, based on the Res Cogitans case, had shifted away from a claim in contract for the price, and had become a claim for the value of the bunkers in conversion. That claim is premised upon there being a different set of conditions as between the plaintiff and OW China to the ones between the 3rd defendant and OW Singapore. Mr Sussex conceded that he could no longer in fact maintain a claim for the price of the bunkers as a claim under contract.”

8. It is not necessary to recite the arguments advanced by Mr Coleman, SC in support of his contention that the judge had erred in not setting aside leave to serve out of the jurisdiction in respect of the claim in contract. We are satisfied that an appeal against that part of the judge’s order does have a reasonable prospect of success. We would not limit the grounds of appeal to paragraph 3 of the draft notice of appeal. We give leave to the 2nd defendant to file and serve a notice of appeal against that part of the judge’s order within 14 days of this decision.

The claim in conversion

9. The crucial point here is whether the plaintiff has made out a good arguable case of a claim in conversion so that leave to serve out of the jurisdiction should be granted under Order 11 rule 1(1)(f). As Mr Sussex has acknowledged, this is a case which raises complicated issues of law and fact. For the court to exercise its “long arm” jurisdiction under Order 11 rule 1, all that is required at this stage is for the plaintiff to establish a good arguable case that falls within one of the limbs in that provision. Mr Coleman sought to argue that a good arguable case does not exist in relation to the claim in conversion. This is an attempt to dismiss the claim summarily and does not have reasonable prospects of success in view of the fact that the claim relies on the reasoning of Males J in the Res Cogitans case ([2015] 2 Lloyd’s Rep 563), and that reasoning has the endorsement of the English Court of Appeal ([2016] 1 Lloyd’s Rep 228) and the Supreme Court ([2016] UKSC 23).

10. The contract construed in the Res Cogitans case was the standard term contract of the O.W. Bunker Group, the terms of which are the same as the contract made between the 2nd defendant in the present case and OWBS (referred to as “the D2-OWBS contract” in the Decision), and “materially identical” to the terms of the contract between the 3rd defendant in the RCL Feeder case and OWBS (§33 of the RCL Feeder case).

11. The material...

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