24 January 2011
The decision in Fang Guo Quan & Another v. Choi Ming Sang & Another (DCPI 1468/2008) considers whether Hong Kong is the appropriate forum to hear a traffic accident case involving Hong Kong residents that occurred in the PRC.
The plaintiffs were Hong Kong residents travelling on a coach from Guangzhou, PRC to Hong Kong. The tickets were purchased at the 2nd defendant's office in Hong Kong. The 1st defendant was the driver of the coach and a Hong Kong resident. A traffic accident occurred in the PRC and a total of 17 passengers were injured, including the plaintiffs. The plaintiffs commenced a personal injuries action in Hong Kong. The 2nd defendant took out a summons to stay the proceedings on the ground of forum non conveniens, stating the proper forum should be the Court of Dongguan City, PRC, where the accident occurred.
The Court dismissed the summons and decided the most appropriate law was the laws of Hong Kong. The Court of Appeal affirmed the decision and dismissed the 2nd defendant's application for leave to appeal.
The Court applied the 3-stage test summarised in The Lanka Muditha  1 HKLR 741 and later applied in the Court of Appeal in Esquel Enterprises Ltd. & Another v. TAL Apparel Ltd & Another  2 HKLRD 363 when reaching its decision:
"(I) Is it shown that Hong Kong is not only not the natural and appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate than Hong Kong …
(II) If the answer to (I) is yes, will a trial at the other forum deprive the plaintiff of any legitimate personal or juridical advantages. The evidential burden here lies on the plaintiff.
(III) If the answer to (II) is yes, a court has to balance the advantages of (I) against the disadvantages of (II) … Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that notwithstanding such loss substantial justice will be done in the available appropriate forum … Proof of this … rests upon the applicant for the stay."
In coming to its conclusion, the Court considered (amongst other things):
- All the parties were Hong Kong residents or companies incorporated in Hong Kong. The parties and their agents were in the PRC only temporarily and there was no agreement that PRC law was the applicable law.
- If PRC law was the applicable law, the Hong Kong courts can apply foreign law and so this consideration is less important.
- The fact that many witnesses were situated in the PRC was irrelevant, since there was no suggestion it would be difficult for the witnesses to come to Hong Kong.
- Even if the PRC court was more appropriate, the damages to be assessed would be substantially less than that assessed in the Courts of Hong Kong, in effect depriving the plaintiffs of the opportunity of receiving higher damages (relevant to Stage II).
The take away here is that an accident occurring outside of Hong Kong does not preclude the action from being commenced in Hong Kong.
The number of operators and frequency of travel between the PRC and Hong Kong are likely to increase, given the growth of cross-border insurers.
Having said that, insurers should be cautious when drafting clauses on "Geographical Limits" and "Jurisdiction" of motor liability policies, especially if there is no intention to cover accidents occurring or actions commenced outside of Hong Kong. Likewise, if wider coverage is offered, when calculating premiums, insurers should not rely solely on the potential location of accident as determining the forum of the litigation (which inevitably will have bearing on the potential claims payment of a policy).
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