Stettin Bay Lumber Company Pty Ltd v Arya Ship Management Ltd

• Jurisdiction: Papua New Guinea
• Judge: Los J, Doherty J, Andrew J
• Judgment Date: 29 September 1995
• Citation: (1995) SC488
• Court: Supreme Court
• Year: 1995
• Judgement Number: SC488

Supreme Court: Los J, Doherty J, Andrew J

Judgment Delivered: 29 September 1995

SC 488

PAPUA NEW GUINEA

[In the Supreme Court of Justice]

CA 26 of 1994

BETWEEN: STETTIN BAY LUMBER

COMPANY PTY. LIMITED

Appellant

AND : ARYA SHIPMANAGEMENT

LIMITED

Respondent

WAIGANI : LOS J.

DOHERTY J.

ANDREW J.

28TH JUNE, 29 SEPTEMBER 1995

BY THE COURT. This is an appeal against an order of the National Court refusing an application by the Appellant to stay certain proceedings between the parties in the National Court. Insofar as that order was an interlocutory judgment, leave to appeal is required by S.14(3) of the Supreme Court Act and leave has been applied for.

The appeal, being an appeal from an interlocutory judgment for which leave is required, is an appeal against the exercise of a discretion and for the Appellate Court to substitute its discretion for that of the Judge appealed from, it must be shown that the Judge appealed from exercised his discretion upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect him, mistook the facts or did not take into account some matter for consideration : See The Government of Papua New Guinea and Davis -v- Barker (1977) P.N.G.L.R. 386.

The background to this matter is as follows. The ship, "ANDHIKA ASOKA" was chartered by the Respondent pursuant to a bare boat charter. A cargo of logs was loaded by the Appellant onto the ship at Kimbe. Some logs were placed under the deck of the ship and some were placed on the deck of the ship. The ship then departed for Japan where the logs were to be unloaded. At the time the ship sailed for Japan (8th July 1993) a document "Letter of Indemnity" was signed by an officer of the Appellant (S.B.L.C.). Approximately 364 pieces of the logs were lost overboard on the 18th July 1993 when the ship was off the coast of Japan.

The appellant contends that on the 5th August 1993 the Respondent, through its agent, the insurer, provided to the owner of the logs, NISSHO IWAI CORPORATION of Japan, also being the majority shareholder in Stettin Bay Lumber Co. Pty Limited, a letter referred to as the N.E.P.I. letter (which shall be referred to later), which it says, binds the Respondent to have all the issues concerning the loss of or damage to the cargo being determined according to

Japanese law, in Japan (by the Tokyo District Court). Further, it is submitted that the relevant contract, comprising the Bill of Lading and the indemnity, are to be construed according to Japanese law and that it will suffer prejudice in bringing Japanese witnesses of law and fact to Papua New Guinea.

The Respondent commenced proceedings in the National Court by way of Writ of Summons seeking a Declaration that the Defendant was liable to indemnify the Plaintiff in accordance with the provisions of the Letter of Indemnity. Paragraph 4 of the Statement of Claim was as follows:

"On or about the 8th day of July 1993, the Plaintiff and the Defendant entered in to a written agreement whereby, in consideration for the Master of the "ANDHIKA ASOKA" signing a clean Bill of Lading No. PEN/BUL-1 in respect of 779 pieces serial numbered PNG round logs measuring 2,723,868 cubic meters which were loaded on board "ANDHIKA ASOKA" at Penlolo and Buluma by the Defendant and part-stowed on deck with the Defendant's knowledge and agreement and at the risk of the Defendant and the consignee NISSHO IWAI CORPORATION, the Defendant undertook to indemnify the Plaintiff against all the consequences of the Master signing the said clean Bill of Lading No. PEN-BUL-1 as aforesaid. The Plaintiff will refer to the said agreement at the time of trial for its full force and effect."

Paragraph 8 of the Statement of Claim states that on or about July 1993, NISSHO IWAI CORPORATION (as the owners of the said logs) and its underwriters made claim against the Plaintiff for Japanese Yen, Y65,000,000

for the value of the loss of the said logs including interest and costs. Paragraph 9 stated "that on or about the 5th day of August 1993, the Plaintiff gave a written undertaking to the owners and underwriters of the said logs to pay such sums as might be found to be due to the owners and underwriters by the Tokyo District Court and by way of damage arising out of the loss of the said logs together with interest and costs and in consideration for the said owners and underwriters refraining from arresting or otherwise detaining the Plaintiff's vessel "ANDHIKA ASOKA" as security for the claim for the aforesaid logs. The Plaintiff will refer to the said undertaking at the time of trial for its full force and effect." Paragraph 10 then stated that the Plaintiff had repeatedly requested the Defendant to indemnify the Plaintiff pursuant to the agreement but that the defendant had denied that it was liable to indemnify the Plaintiff.

The Plaintiff was asserting that if it was liable for the loss of or damage to the cargo then the defendant is liable to it pursuant to the letter of indemnity.

The Plaintiff then sought (as already referred to) a declaration that the Defendant was liable to indemnify the Plaintiff in accordance with the provisions of the Letter of Indemnity of the 8th July 1993.

The application by the appellant to stay these proceedings relied upon the fact that the question of liability and assessment of loss or damage to the cargo was to be submitted to the jurisdiction of a Tokyo District Court to be determined in

accordance with Japanese law and that no such determination had been submitted to that Court and that the plaintiff's action was premature and an abuse of process. The expense involved in having experts in Japanese law travel to Papua New Guinea was relied upon and the defendant denied that it had any liability to the Plaintiff pursuant to the letter of indemnity. Several grounds were advanced for why the indemnity was not binding or effective against the defendant.

The National Court refused to grant the stay on the basis that any proceedings in Japan were for the loss of cargo due to negligence and that the proceedings in Papua New Guinea were separate proceedings pursuant to the Letter of Indemnity and not based on negligence. The Court agreed with the plaintiff/respondent's submission that :

"The Plaintiff/Respondent says that defendant is not a party to the action taken out in Japan. The defendant is a P.N.G. Company and that the letter of indemnity is governed by P.N.G. Law. There are no proceedings in Japan concerning the Letter of Indemnity. The Plaintiff says it is entitled to bring the action against the defendant in P.N.G." The learned trial Judge found that the Plaintiff's action was not frivolous and vexatious and did not amount to an abuse of process. He found that the proper forum for determining the plaintiff's claim was in Papua New Guinea and not in Japan and that the proceedings were not premature as they were distinct from and not dependent upon the issue of negligence.

The first ground of appeal was that the learned trial Judge failed to refer to the Courts inherent jurisdiction to stay proceedings. He did however refer to ORDER 12 RULE 40 of the National Court Rules, which gives a general power to stay proceedings. There is nothing to show that the Court was unaware that it had an inherent jurisdiction to grant such an order. It was submitted that such cases as THE ATLANTIC STAR (1973) 2 ALL E.R. 175 show that the Court has an inherent jurisdiction to grant a stay if the disadvantage to the defendant outweighs any advantage to the Plaintiff. But again there is nothing to show that the trial Judge transgressed this principle. He simply considered that the plaintiff's action was distinct from any proceedings for negligence and that as a matter of law the Plaintiff was entitled to proceed under the Letter of Indemnity. In my opinion this ground has no merit. Nowhere is it shown that the trial Judge wrongly exercised his discretion by failing to consider the inherent power of the Court to grant a stay of proceeding.

Grounds 3 (b) & (c), (d), (e), (f).

These grounds of the appeal allege that the trial Judge failed to properly take into account certain affidavit evidence and that he failed to give sufficient weight to that evidence. This, it is submitted, led to the failure to conclude that the applicant would suffer prejudice if the stay were not granted.

The affidavit evidence was that of MR. KENJI MINOHARA sworn on the 11th March 1994 and MR. ROBERT LOYER also sworn on the 11th March 1994. The substance of this evidence was that on 5th August 1993 the North of

England Protecting and...