Yoshinari Tomita v The Unnamed Vessel
Formerly Known as "Amami Taiki Go" and Also Known as "Intrepid"

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY
AD-36/00

BETWEEN YOSHINARI TOMITA
Plaintiff

AND THE UNNAMED VESSEL FORMERLY KNOWN AS "AMAMI TAIKI GO" AND ALSO KNOWN AS "INTREPID"
Defendant

Hearing: 29 November 2000

Counsel: AN Tetley & SJ Park for Plaintiff
JR Gresson for Defendant

Judgment: 8 December 2000

JUDGMENT OF RODNEY HANSEN J 

Solicitors: Norton White, P 0 Box 6623, Wellesley Street, Auckland for Plaintiff
Russell Mc Veagh, DX CX10085, Auckland for Defendant

Introduction

[1] The plaintiff has brought a proceeding in rem in the admiralty jurisdiction to enforce a mortgage over the defendant. The mortgage was granted in Japan and is said to secure the unpaid balance on the sale of the vessel by the plaintiff to a Mr Komiyama. The vessel was bought by a New Zealand boat-builder, Mr Boyd Smith, in Japan in 1999 and shipped to New Zealand. The plaintiff learned of its whereabouts and in August obtained and executed a warrant of arrest over the vessel.

[2] A conditional appearance was entered on behalf of the ship's owner, Mr Smith. By r 773 of the High Court Rules, a conditional appearance has effect as an unconditional appearance unless the Court orders otherwise. Mr Smith seeks an extension of the time within which he is required to apply for such an order and a stay of proceedings pending the determination of related proceedings which he has issued against the plaintiff in Japan. 

[3] Other applications have been resolved without the need for argument. In particular, the defendant withdraws his application for particular discovery, the documents he seeks having been made available as exhibits to affidavits filed on behalf of the plaintiff. An application for security for costs is adjourned pending my decision on the two matters in issue and may be brought on for hearing when the future course of the proceeding becomes clear. An application to require the plaintiff to meet the costs of arrest of the vessel was not pursued, it being accepted that under the rules the Registrar must look to the plaintiff for costs associated with the arrest. 

Background facts 

[4] The defendant's ship is a fifteen-metre power catamaran which was built in Australia in 1989. It was exported to Japan and bought by its first Japanese owner in 1991. It has been bought and sold on at least four occasions since. The plaintiff's company, Blue Lagoon Limited, bought the vessel from its first registered Japanese owner in about 1993. It on-sold the vessel to a Mr Komiyama. On 1 December 1995 Mr Komiyama granted a form of security which has been referred to in argument as a mortgage for the balance of the purchase price totalling JPY18.6M. The mortgage is of a kind known under Japanese law as a neteitoken. There is a difference of opinion between the Japanese lawyers who have given evidence on behalf of the plaintiff and defendant as to whether it is in the nature of a floating charge or a fixed charge. It is agreed, however, that it is unnecessary for the purpose of this hearing to determine the legal incidents of the instrument.

[5] It appears that the mortgage was registered in a registry maintained at the office of Legal Affairs but not at the office of Maritime Affairs which keeps a register equivalent to the New Zealand ships register.

[6] The vessel was sold by Mr Komiyama in February 1996 and sold again in October 1996 to Mrs Masami Yokoyama. She sold it to Mr Smith. It is not entirely clear whether at the time of sale Mr Smith was aware of the existence of the mortgage. The plaintiff's witnesses are adamant that he did. His affidavit, filed before those of the plaintiff, is non-committal on the point and he has not filed an affidavit in reply. I was not invited to reach any view on the issue for the purpose of this decision.

[7] At the time of purchase by Mr Smith, the vessel was in a serious state of disrepair and appears to have been bought for little more than its scrap value. It had lost its operating licence. Its engines had been condemned. Mr Smith carried out extensive works on the vessel in Japan with the initial intention of sailing the vessel to New Zealand. In the end it was conveyed by ship at a cost, I am told, of $75,000. Further work and improvements have been carried out on the vessel in New Zealand. 

Jurisdiction 

[8] Under r 773(1) a party intending to defend an action in the admiralty jurisdiction must enter an appearance by filing a memorandum. In this case the defendant entered a conditional appearance pursuant to r 773(6) which provides: 

"A defendant to an action may enter a conditional appearance in the action, but a conditional appearance has effect as an unconditional appearance unless - 

(a) A Judge otherwise orders; or 

(b) The defendant applies to the Court, within the time fixed for the purpose, for an order under subclause (7) and the Court makes an order under that subclause." 

Subclause (7) of the rule provides as follows: 

"A defendant to an action may at any time before entering an appearance in the action, or, if the defendant has entered a conditional appearance, within 10 days after the day on which that conditional appearance is entered, apply to the Court of an order -

(a) Setting aside the notice of proceeding or service of the notice on the defendant; or

(b) Declaring that the notice has not been duly served on the defendant; or

(c) Discharging any order giving leave to serve the notice on the defendant out of the jurisdiction."

[9] The defendant elected not to make an application under r 773(7). Instead an order is sought extending the time within which such an application may be made. It was not explained why the defendant has chosen to proceed in this way. I can infer only that there is a wish to keep alive the right to challenge the Court's jurisdiction.

[10] On the face of it, the Court has jurisdiction. Section 4(1)(c) of the Admiralty Act 1973 ("the Act") provides that the Court shall have jurisdiction in respect of any claim in respect of a mortgage of or charge on a ship or any share therein. By s 5(2) of the Act the admiralty jurisdiction of the Court may be invoked by an action in rem in respect of all questions and claims specified in s 4(1). When jurisdiction does not depend on any factual precondition, it is sufficient for a plaintiff to establish that on the pleadings the claim comes within the statutory jurisdiction: Baltic Shipping v Pegasus Lines SA [1996] 3 NZLR 641 at 655. The plaintiff contends that on this principle jurisdiction is established and is beyond attack.

[11] In the normal course of events, any issue of jurisdiction is considered before the Court embarks on a hearing of the proceeding, whether substantively or in any interlocutory way: Advanced Cardiovascular Systems Inc v Universal Speciality Limited [1997] 1 NZLR 186. In that case the Court held that a protest to jurisdiction must be considered before any question of exercising the discretionary jurisdiction to stay on the ground of forum non conveniens. In Williams and Glyns Bank Plc v Astro Dinamico Compania Naviera S.A. and anor [1984] 1 Lloyd's Rep 453 (HL) (which was not referred to in the Advanced Cardiovascular Systems case), it was held that in some cases it is appropriate to determine an application for stay before considering jurisdiction. It is not necessary for me to do more than acknowledge that the rule may not be absolute as the jurisdictional issue is not before me and I do not hold that it may not be raised in the future.

[12] As prima facie there is jurisdiction and no grounds have been suggested to me on which an application under r 773(7) could succeed, I can find no basis for extending the time within which an application under r 773(7) can be made. I decline that application. This does not necessarily close the door to a later challenge to jurisdiction as I note that r 773(6)(a) permits a Judge to order that a conditional appearance not take effect as an unconditional appearance. There is no time limit as there is for an application under subclause (b) of the rule.

Application for stay 

[13] The defendant seeks a stay of proceedings on the ground known as forum non conveniens. It is submitted that it is more suitable and in the interests of justice that the case be tried in the Japanese Court. 

[14] Counsel agree that the applicable principles are set out in Spiliada Maritime Corp v Consulex Limited [1987] AC 460 (HL). Based on the summary at pp 476-8 of the judgment of Lord Goff, they may be paraphrased as follows: 

[a] The basic principle is that a stay will only be granted on the ground of forum non conveniens where the Court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action.

[b] The burden of proof rests on the defendant to persuade the Court to exercise its discretion to grant a stay, although each party will have the burden of proving the existence of particular matters which they seek to advance in support of their position.

[c] Where the country in which proceedings have been brought has jurisdiction, the burden on the defendant is not just to show that it 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.

[d] In determining the question of whether there exists another forum which is clearly more appropriate for the trial, the Court will consider factors which establish the "natural forum" as "that with which the action has the most real and substantial connection". 

[e] A stay will be refused if the Court concludes that there is no other available forum which is clearly more appropriate for the trial of the action.

[f] If the Court concludes that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless justice requires that a stay should not be granted.

[15] Solely for the purpose of this application, the applicant accepts that the Court has jurisdiction as of right. However, it is submitted that other factors favour having the dispute determined in the Japanese Court. By reference to the factors identified in Kidd v van Heeren [1998] 1 NZLR 324, Mr Gresson submitted:

[a] Considerations of cost and convenience overwhelmingly favour proceeding in the Japanese Court. With the exception of the applicant owner, and perhaps his wife, all witnesses are resident in Japan. The issues will be determined according to Japanese law. A hearing in New Zealand would require Japanese lawyers to attend in order to give expert evidence.

[b] The location in Japan of key documents and the registries in which relevant transactions were registered.

[c] The need to translate documents for the New Zealand Court and to interpret oral evidence. Mr Gresson pointed to the delays which had already occurred because of the need to translate documents and evidence. 

[d] The fact that proceedings had already been issued by the applicant against the mortgagee in the Kobe District Court. Mr Gresson said that he had been informed that the proceeding could be determined by April 2001. He acknowledged, however, that this would be subject to appeal and a final determination could take much longer. 

[e] As the applicant has invoked the jurisdiction of the Japanese Court, all other parties and witnesses would be subject to the jurisdiction of the Court. Conversely, the applicant has no means of securing the attendance of any other parties or witnesses before the New Zealand Court.

[16] Mr Gresson emphasised that he was seeking only what he described as a "partial interim stay". Acknowledging that the Japanese Court had no jurisdiction over the vessel itself, he accepted that it could not grant the relief sought by the plaintiff in this proceeding. The stay is sought pending the determination by the Japanese Court of the validity and effect of the underlying transaction.

[17] For the plaintiff, Mr Tetley took issue with the claim that considerations of cost and convenience were heavily in favour of the Japanese Court. The New Zealand Court having jurisdiction as of right, he submitted that there had not been shown the clear and distinct advantage required by Spiliada. He said expert evidence on Japanese law could be given in New Zealand. Evidence could be given by video link. Translation services are readily available. The disadvantages relied on by the applicant could be overcome without significant extra cost.

[18] However, the critical and, Mr Tetley submitted, decisive issue was that the Japanese Court could not give the plaintiff the security against the ship provided by the admiralty action in rem. The Japanese Courts do not have jurisdiction over the vessel. They can determine only issues concerning the underlying debt. Mr Tetley suggested that the proceeding may have been brought for the purpose of demonstrating the existence of a competing jurisdiction and therefore should be disregarded: Meadows v ICI [1989] 1 QB 181, 188-189. I am not prepared to draw this inference but I accept that the mere filing of the proceedings is not conclusive. It is not clear what they will determine but it is clear that they will not dispose of the ultimate issue before the New Zealand Court.

[19] Had both Japanese and New Zealand Courts been equally capable of determining issues associated with the mortgage and enforcing it, I would have been inclined to the view that Japan was the appropriate forum. It has the "most real and substantial connection" with the transaction giving rise to the mortgage and, to the extent that it may be relevant, to the sale and purchase of the vessel. But the Japanese Courts cannot provide the plaintiff with the security offered by the New Zealand proceedings. Mr Gresson acknowledged this by the terms on which he sought a stay. He accepted that even a determination favourable to his client in Japan may not dispose of the New Zealand proceeding. The question would then arise as to whether and on what basis the New Zealand Court would give effect to the judgment of the foreign Court.

[20] Mr Tetley said that to stay proceedings on the terms proposed would be equivalent to permitting a pretrial issue to be determined by a foreign Court. The analogy is not entirely inapt and there are the added concerns that the precise terms of the issue is not known nor when it is likely to be determined. At this stage, all that is known is that the proceedings have been filed. It is not known what issues will be determined and how any determination may be given effect to in New Zealand. I cannot exclude the possibility that even after the disposition of the Japanese proceedings, the New Zealand Court could be required to adjudicate on critical issues.

[21] I may have taken a different view if the applicant had offered security for the plaintiff's claim in return for the release of the ship. The plaintiff would then have ceased to rely on the in rem action. But in the absence of alternative security on satisfactory terms, I am satisfied that the plaintiff should be permitted to continue with the action. 

Result

[22] The applications by the defendant for an extension of time to file an application under r 773(7) and for a stay of proceedings is refused. Costs are reserved. The proceeding is adjourned for a directions conference to be fixed by the Registrar on the earliest practicable date after the Court resumes sitting in 2001.