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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Te Hsing Maritime SA v CertAsig SA & Anor [2012] EWHC 2577 (Comm) (15 June 2012) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2012/2577.html Cite as: [2012] EWHC 2577 (Comm)

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IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION

		Commercial Court 7 Rolls Buildings Fetter Lane London EC4A 1NL
		15 June 2012

MR STEPHEN MALES QC:

1. This is an application for security for costs. The action is concerned with a claim under a marine hull insurance policy for what is said to be a constructive total loss as a result of a fire on the vessel concerned on 12 July 2009. The claim for a constructive total loss is for the sum of US $1.3m. There is also a claim for some US $240,000 in respect of salvage and general average. The trial is due to begin on 9 July this year (that is to say three weeks on Monday), with an estimate of three days, including half a day's reading.
2. The application is made under CPR 25.13 on the basis that the Claimants are resident out of the jurisdiction and are not resident in a Brussels or Lugano state. It is accepted that the Claimants are resident out of the jurisdiction, in Taiwan, which means that this condition is satisfied and security for costs can be awarded in the event that it is just to make such an order.
3. The argument on this application, at any rate in the skeleton arguments, has ranged widely over a number of factors, including whether the application is made too late; whether it is relevant that the First Claimant has been dissolved; the significance of the general average claim, including whether the Defendants' liability for general average is sufficiently certain to stand effectively as security for their costs; and the significance of the Claimants' ATE policy.
4. There are also extensive issues in the witness statements and the skeleton arguments about the quantum of the costs which are claimed. The total figure for the costs up to the end of trial which the Defendant seeks amount to some £240,000.
5. However, it is convenient to start with the issue whether a costs judgment would be enforceable against the Claimants in Taiwan. It is established, pursuant to the decision of the Court of Appeal in Nasser v United Bank of Kuwait [2002] 1 WLR 1868, which was recently followed and applied by Mr Justice Hamblen in Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm), that security for costs is not available against a person resident out of the jurisdiction except in respect of additional obstacles to and burdens of enforcement of a judgment over and above the obstacles or burdens which would be encountered in a Brussels or Lugano state. Thus, security will only be ordered on this ground if a costs judgment here will not be enforceable at all in the Claimant's own state, or if enforcement there will involve additional obstacles or burdens in addition to the obstacles and burdens applicable in a Brussels or Lugano state.
6. In the former case, where the costs judgment is not enforceable at all, there is in principle, and subject to any other considerations, no reason why security should not be ordered in the full amount of the costs likely to be incurred in the English action. In the latter case, where the costs judgment is enforceable but there are additional obstacles to be overcome, the security, if otherwise appropriate, will be limited to the additional cost or the consequences of delay in overcoming such obstacles. As held by Mr Justice Hamblen in Dumrul, the applicant for security has to show not merely that there is a risk that such obstacles exist or that their existence is a real possibility, but that there is likely to be an obstacle or burden.
7. It is therefore necessary to consider the evidence about the enforceability of English costs judgments in Taiwan. That evidence is contained at paragraphs 25 and following of the witness statement of the Defendant's solicitor, Mr Clift. He explains, on the basis of advice from local lawyers, that there are circumstances in which a court in Taiwan will not enforce a final and irrevocable foreign court judgment, and he sets them out. The only one which is potentially relevant is the fourth one, that is to say that judgments of foreign courts will not be recognised or enforced if the judgment comes from a country which does not reciprocally recognise judgments of the courts of Taiwan.
8. Although there is no reciprocal convention or treaty between the United Kingdom and Taiwan, Mr Clift goes on to explain that the Taiwanese courts have been prepared to enforce English judgments because the English Court of Appeal has enforced Taiwanese judgments. There are a number of judgments of the Taiwan Supreme Court which show that English judgments are enforceable in Taiwan. Although those are not binding precedents, Mr Clift explains that they have persuasive influence on lower court decisions.
9. On the basis of this evidence, as Miss Cowey for the Defendants inevitably had to accept, the Defendants are unable to show that an English costs judgment in this action will not be enforceable in Taiwan; on the contrary, the evidence is that it will be.
10. That leaves the possibility that additional expense and delay may be involved over and above what would be involved in enforcing an English judgment in another Brussels or Lugano state. Mr Clift's evidence, again on the basis of information from Taiwanese lawyers, is that such enforcement is time-consuming and may be subject to appeals. There may also be additional court fees and bonds which have to be paid as a percentage of the amount of the judgment which it is sought to enforce; but it goes on to explain that these fees are recoverable from the losing party, so the additional burden to the applicant seeking to enforce the judgment is not the loss of those fees but the fact that the applicant will be out of his money during the period while those enforcement proceedings take place.
11. While it may well be that there are additional delays and expenses in seeking to enforce a judgment in Taiwan (and I am prepared to accept that there are), there is no very clear attempt in the Defendant's evidence to quantify these. The Defendant's evidence was directed to seeking an order for the full amount of the costs which it expects to incur in this action, and that evidence does not really provide any firm evidence of what would be the additional cost of enforcement proceedings in Taiwan. Therefore, while I am prepared to accept that there would be some such additional costs, I do not have evidence before me which enables me to reach a precise conclusion about their likely quantum, or to conclude that they would be significant.
12. Being, if I may say so, helpful and constructive, Miss Cowey pointed to the delay which would be involved in enforcing in Taiwan and, on the assumption that the Defendant were to obtain a judgment here for the full amount of the costs which it is said are likely to be incurred (that is to say of the order of £240,000) and having regard to the current low sterling interest rates, she suggested that each year of delay would cost in effect about £10,000. Clearly that is based on the assumption that the Defendant obtains judgment for the full amount of the costs which are currently estimated. In the event that those figures were to be reduced on assessment, the cost incurred as a result of the delay would be correspondingly reduced.
13. In addition, Miss Cowey referred to the cost of arrest in Singapore (the cost of arresting, that is to say, vessels owned by the Second Defendant, which I will mention in a moment). It is not entirely clear to me whether those costs would be regarded as something which constitutes an additional burden compared with enforcing in a Brussels or Lugano state, but in any event, the costs are unlikely to be significant, probably somewhere between £5,000 and £10,000.
14. That means, doing the best I can on such evidence as there is and taking account of the figures which I have mentioned, that the likely additional cost comprising a burden or obstacle of enforcing in Taiwan, as distinct from in a Brussels or Lugano state, will be no more than about £20,000 at the most, and may well be considerably less.
15. The question then arises whether I should make such an order in that sort of amount in the light of the other factors which I mentioned at the outset. At this stage I should mention two points. The first is that although the First Claimant has been dissolved, the Second Claimant appears to be a company with substantial assets and has expressly accepted that any costs order made in the Defendant's favour in this action will be made against both Claimants jointly and severally, and Mr Watthey accepts on their behalf that this should be recorded in the order which I will make.
16. The second point to mention is that, as Mr Dorman (the Claimant's solicitor) explains in his witness statement, the Second Claimant manages currently five vessels and, according to Lloyd's List Intelligence, is the beneficial owner of all five vessels, so that the Second Claimant is a substantial company in its own right with considerable assets. Mr Dorman confirmed what is in any event implicit in that paragraph, which is that it is not simply that Lloyd's List Intelligence says that the Second Claimant is the beneficial owner of those vessels, it is in fact their owner. Again, the Claimants accept that this should be recorded in the order which I will make.
17. Those two matters will therefore be firmly on the record for the future in the event that they become relevant. There is no basis in the evidence, and it has not been suggested, that the Second Claimant would be likely to dispose of the vessels or manipulate their trading pattern in order to avoid those vessels being arrested as part of any enforcement proceedings.
18. It seems to me in all the circumstances that, taking account of the very modest amount of security which is the maximum which I would be prepared to order, the reasonable possibility at any rate that the Defendants may have a liability in general average (to which I will return in a moment) and the fact also that there ought to be no difficulty for the Defendant in enforcing any costs order against one of the vessels of which the Second Claimant is the beneficial owner, in the exercise of my discretion I conclude that it is not just to make the order for security and I dismiss the application.
19. I ought to say a little more about the general average position which I have just mentioned. The position there is that the Claimants have a claim for, as I said, some US $240,000. There is unfortunately no adjustment as yet, although I am told that that is imminent. The Defendants' position is that they put the Claimants to proof but do not make a positive case as to why they should not pay their share of general average. They have accepted that if the general average claim against them is a valid claim, then it is likely to be worth of the order of US $85,000. Taking those matters into consideration, it seems unlikely, although perhaps it is not impossible, that the Defendants would be able to reduce their liability for general average, as a credit to which at any rate the Claimants would be entitled, below the figure somewhere between £10,000 and £20,000 which I would be thinking of if I were to make an order for security for costs. Therefore it may very well be that the Defendants in effect already have security in the form of their potential GA liability in a sum which would cover any order for security for costs which I might make.
20. In the light of the decision which I have reached, for the reasons which I have given, it is unnecessary to consider the other matters referred to in argument, such as the Claimant's ATE policy and the rights and wrongs, whatever they may be, of the timing of this application which, although it has had something of a history, is in fact made very close to the commencement of the trial, and I do not rest my decision on those factors.
21. Accordingly, the application will be dismissed.
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