Yusen Air & Sea Service (S) Pte Ltd v KLM Royal Dutch Airlines

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 15 July 1999
• Neutral Citation: [1999] SGCA 52
• Docket Number: Civil Appeal No 282 of 1998
• Date: 15 July 1999
• Published date: 19 September 2003
• Year: 1999
• Plaintiff Counsel: NK Pillai and Chua Hwee Ping (Niru & Co)
• Citation: [1999] SGCA 52
• Defendant Counsel: Ronald Choo and Michelle Ng (Allen & Gledhill)
• Court: Court of Appeal (Singapore)
• Subject Matter: Civil Procedure,Conflict of Laws,Whether plaintiff can be compelled to elect only one set of proceedings to pursue,Defendant applying to strike out Singapore action,Oral application,Whether good reason exists to depart from usual practice,Plaintiff commencing concurrent proceedings against defendant in New York and Singapore over same subject matter,Striking out,Restraint of foreign proceedings,Whether potential prejudice to party resisting application exists,Whether plaintiff's conduct constitutes an election to proceed exclusively with the New York action

(delivering the judgment of the court): This is an appeal against the decision of Goh Joon Seng J wherein he held that the action of the appellants (`Yusen`) against the respondents (`KLM`) was vexatious and that it amounted to an abuse of process of the court. He affirmed the order of the assistant registrar to strike out Yusen`s action.

The facts

Yusen is a company incorporated in Singapore which carries on business as freight forwarders. KLM, a company incorporated in the Netherlands, is an airline operator which provides airfreight services. Changi International Airport Services Pte Ltd (`CIAS`), who are the second defendants in the action, are cargo handling agents for international carriers in Singapore and they provided cargo handling services to KLM at all material times. CIAS is not a party to this appeal.

On 15 August 1995, New England Circuits Inc (`NECX`) purchased a cargo of integrated circuits weighing 19kg (the `cargo`) from FT Industrial Supplies (Pte) Ltd. Yusen was engaged to arrange for the air carriage of the cargo from Singapore to Boston. Yusen was the consignor and holder of a master air waybill No 074-6859 2576 dated 19 August 1995 which was issued by KLM for the cargo. Under the master air waybill, the cargo was scheduled for delivery to the consignees, Yusen Air & Sea Services (USA) Inc. in Boston which in turn would deliver the cargo to NECX. No value was declared for the cargo in the master air waybill. CIAS was authorised by KLM to receive the cargo in Singapore for carriage to Boston on board a KLM aircraft. The cargo was allegedly delivered to CIAS on 18 August 1995.

However, the cargo never arrived in Boston. The insurers of the cargo (`Federal Insurance Co`), under subrogation from NECX, commenced proceedings against Yusen in New York on 27 May 1997 claiming damages in the sum of US$324,000 which is equivalent to the value of the cargo (the `New York proceedings`). Yusen claimed to be entitled to limit its liability (if any) to US$380 pursuant to art 22 of the Warsaw Convention. This limitation of liability was calculated at a rate of US$20 for every kg of cargo.

On 15 August 1997, Yusen joined KLM as a third party in the New York proceedings seeking contribution and/or indemnity from KLM for its liability towards Federal Insurance Co for the cargo as well as for the costs, disbursements and attorneys` fees incurred by it. According to Yusen, this action against KLM in New York was instituted to prevent the time bar under the Warsaw Convention from setting in and CIAS was not made a third party to the New York proceedings because of its lack of presence in New York.

The next day, Yusen issued an endorsed writ in Singapore against KLM and CIAS (collectively known as the `defendants`) and served it on the defendants on 14 February 1998. The statement of claim was filed on 4 May 1998 with the leave of court. Yusen based its claim against the defendants on negligence and breach of duty as bailees with an additional claim against KLM for breach of contract of carriage. Yusen sought a declaration that the defendants indemnify it in respect of the claim by Federal Insurance Co in New York and it also claimed the loss of air freight in the sum of US$455.61.

Before KLM filed its defence, KLM made an application to strike out Yusen`s writ of summons and statement of claim on the ground that Yusen`s action was an abuse of the process of the court in view of the New York proceedings. But this application was subsequently withdrawn by KLM.

In the defence filed 20 June 1998, KLM denied having received the cargo from Yusen. Alternatively, even if KLM was liable for the loss of the cargo, it claimed a limitation of its liability to a sum of S$942.02 by virtue of art 22(2) of the Warsaw Convention as amended by the Hague Protocol (`amended Warsaw Convention`) and s 6 of the Carriage by Air Act (Cap 32A). Consequently, Yusen amended its statement of claim on 22 July 1998 to include a claim against KLM as a `carrier` under art 18 of the amended Warsaw Convention for the loss of the cargo. A claim for an indemnity from the defendants for the costs incurred and might be incurred by Yusen in the New York proceedings was also added to the statement of claim.

We note that by virtue of s 3 of the Carriage by Air Act, the relevant convention governing the liability of the carrier involved in the present air carriage of cargo from Singapore to Boston is the Warsaw Convention and not the amended Warsaw Convention since the United States of America is only certified as a contracting party to the Warsaw Convention. However, this irregularity in the statement of claim is immaterial for the purposes of this appeal.

The summons for directions was heard on 15 July 1998 and the trial was then fixed for hearing between 26 October and 6 November 1998. The affidavits of evidence-in-chief of the witnesses were ordered to be exchanged by 16 September 1998.

In the meantime, Federal Insurance Co moved for partial summary judgment in the New York proceedings to strike out the limitation of liability raised by Yusen and to hold Yusen liable for the losses as claimed. Yusen cross-moved for partial summary judgment limiting its liability to Federal Insurance Co (if any) to US$380 pursuant to art 22 of the Warsaw Convention. KLM also moved for partial summary judgment seeking a similar limitation of liability (if any) to Yusen. On 13 August 1998, the United States District Court of the Southern District of New York dismissed the application of Federal Insurance Co and granted the motions of Yusen and KLM. This decision is now the subject of an appeal in New York.

Following the ruling, KLM applied on 31 August 1998 to stay all further proceedings in Singapore against it. It was averred in the supporting affidavit that the continuance of the present action in Singapore after the New York court had made a ruling on the limitation of the respective liabilities of Yusen and KLM would result in unnecessary additional inconvenience and expense to both parties.

During the hearing before the assistant registrar on 5 October 1998, KLM made an oral application to strike out Yusen`s claim. Yusen objected to the oral application. The assistant registrar then gave directions for Yusen to file a supplementary affidavit by 9 October 1998 in response to the striking out application and the hearing was adjourned to 12 October 1998.

Decisions below

At the hearing, the assistant registrar struck out Yusen`s claim against KLM and ordered costs on an indemnity basis to be fixed at $5,000. The appeal to the judge-in-chambers was heard on 22 October 1998. The learned judge affirmed the decision of the assistant registrar and fixed costs at $1,500. He held that Yusen`s action in Singapore was vexatious, it being a duplication of its claim for indemnity in the New York proceedings. He primarily relied on the case of Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65 (` Australian Commercial Research `) to hold that a plaintiff who had commenced two sets of proceedings for the same subject matter in two different jurisdictions must be put to an election as to which set of proceedings he wished to pursue. In this case, Yusen had elected to join KLM as a third party in the New York proceedings. The New York proceedings had reached a stage where both Yusen and KLM had obtained a declaration limiting their respective liabilities under the Warsaw Convention. In his opinion, having so elected, Yusen should not be permitted to abuse the process of the court by pursuing a parallel claim against KLM for similar relief in Singapore.

Action against CIAS

In the meantime, the action between Yusen and CIAS proceeded to trial before Chan Seng Onn JC from 9 to 13 November and 16 to 20 November 1998. The principal defence of CIAS was that Yusen never delivered the cargo to CIAS. It was alleged that another cargo weighing 9 kg was delivered instead. The judicial commissioner accepted the defence and accordingly dismissed Yusen`s claim. Yusen has appealed against the decision vide CA 313/98.

The appeal

This appeal requires the consideration of the applicable principles governing a situation where a plaintiff commences two sets of proceedings, one the local forum and another in a foreign jurisdiction against the defendant in respect of the same issues arising from the same underlying factual matrix. Such lis alibi pendens can come about in two ways: first, where the same plaintiff sues the same defendant in Singapore and abroad; and second, where the plaintiff sues the defendant in Singapore and the defendant sues the plaintiff abroad, or vice versa. It is settled law that, in the latter situation, the existence of concurrent proceedings in another jurisdiction is only an additional factor to be considered under the test laid down by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 (` Spiliada `) in deciding whether to stay the local proceedings ( De Dampierre v De Dampierre [1988] AC 92; The Hooghly Mills Co Ltd v Seltron Pte Ltd [1995] 1 SLR 773 ). However, in the former situation, the English courts have taken the view that, except in very unusual circumstances, such a plaintiff would be put to an election and he would have to decide which jurisdiction he wishes to pursue his claim. The leading authority on this point is the judgment of Sir Browne-Wilkinson V-C (as he then was) in the case of Australian Commercial Research .

In that case, the plaintiffs entered into a placement agreement with ANZ UK and five other broker companies which were subsidiaries of ANZ Banking Group Ltd (collectively known as `ANZ brokers`) for the purpose of raising extra capital through the placement of their shares. The ANZ brokers agreed, inter alia, to use their best endeavours to obtain placement of the shares. The plaintiffs were dissatisfied with the performance of the...