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Consort Shipping Line Ltd v FAI Insurance (Fiji) Ltd [1998] FJHC 205; Hbc0383.97s (29 October 1998)

IN THE HIGH COURT OF FIJI
AT SUVA

CIVIL ACTION NO. 0383 OF 1997S

BETWEEN:

CONSORT SHIPPING LINE LIMITED
Plaintiff

AND:

FAI INSURANCE (FIJI) LIMITED
Defendant

H. Lateef for the Plaintiff
R.K. Naidu for the Defendant

DECISION

This is an application for leave to appeal against my Decision herein dated 17 July 1998. As I delivered my decision on that occasion ex tempore it may be useful now to set out the relevant facts.

On 10 September 1997 the Plaintiff issued a generally indorsed Writ claiming damages arising from an accident to 2 of its vessels covered by a policy of insurance with the Defendant.

On 10 October 1997 the Defendant acknowledged service of the Writ and indicated its intention to defend.

The next step in the proceedings was a Summons filed on 28 May 1998 by the Plaintiff which sought a declaration:

"..... that the dispute between the Plaintiff and the Defendant in respect of the Plaintiff's claim dated 22 May 1997 in terms of Marine Hull Policy be referred to Arbitration pursuant to Clause 3.11 of the said policy".

The Summons was supported by an affidavit filed on the same day by Justin Smith, the Plaintiff's Managing Director which exhibits a copy of the policy of insurance. As emerges from paragraphs 7, 9 & 10 of the affidavit the Plaintiff first issued proceedings but when those proceedings were disputed advised the Defendant that they wished the matter be resolved by way of arbitration as specified in the policy.

On 17 July the Summons came on for hearing. The first matter which called for consideration was the nature of the Plaintiff's application and the relief sought.

In the past few years there has been a distinct tendency to overuse and misuse actions and applications seeking declaratory relief. A useful summary of the restricted purpose and scope of such relief is to be found in the notes to O.15 r16 of the 1988 White Book to which practitioners are respectfully referred.

In the present case the application for a declaration was obviously inappropriate since what was being sought was an Order not a declaration. The question that then arose was what course the court should follow.

Although Fiji does not have an equivalent to Section 49(2) of the English Supreme Court Act 1981 the general effect of Sections 18, 23 and 25 of our own High Court Act (Cap. 13) is to bring the practices of this Court into broad harmony with those adopted by the High Court in England and Wales. Section 49 requires the Court:

" ....... so (to) exercise its jurisdiction in every cause or matter before it as to secure that, as far as possible, all matters in dispute between the parties are completely and finally determined and all multiplicity of legal proceedings with respect to any of those matters is avoided."

With this provision in mind and taking the view that no adverse consequences would ensue to either party I treated the summons as an application for a stay of the legal proceedings brought under the provisions of Section 5 of the Arbitration Act (Cap 38).

Although doubtless it will be seldom be the case that a Plaintiff who has initiated legal proceedings then applies for their stay under section 5 Mr. Lateef pointed out that the Plaintiff could easily have withdrawn its Writ.

Having closely examined section 5 of the Act I concluded that an appearance having been entered and no pleadings having been delivered the Court had jurisdiction to stay the legal proceedings commenced by the Plaintiff and to refer the matter to arbitration providing it was satisfied that:

(a) there was no sufficient reason not to refer the matter to arbitration; and

(b) the Plaintiff was first, when the writ was issued and secondly, now ready and willing to "do all things necessary to the proper conduct on the arbitration".

At the conclusion of the hearing I delivered the following brief decision:

"I am satisfied that Section 5 of the Arbitration Act gives the Court power to stay proceedings at the request of any party including the Plaintiff. The Plaintiff is here asking for a stay and says that it is ready to proceed to arbitration. The application is cast as a request for a declaration. In reality it is an application for a section 5 stay. The stay will be granted."

In support of his application for leave to appeal against that decision Mr. Naidu suggested that I had plainly erred in my interpretation of section 5 in that the Plaintiff having commenced legal proceedings I could not possibly be satisfied that the Plaintiff was at all material time prepared to go to arbitration. He also submitted that the effect of my Decision if left undisturbed was finally determinative of the mode by which this dispute between the parties would be resolved.

Mr. Lateef did not oppose the application. He told me that the Defendant was refusing to go to arbitration. He wanted the Court of Appeal to order it to submit. In my view, however, the wishes of a Respondent to an application for leave to appeal are of limited relevance; the paramount consideration has to be whether it is in the interests of justice that leave to appeal should be granted. Furthermore, there must be a presumption that such orders as orders to submit to arbitration should be made at first instance rather than the appellate level.

Having heard Mr. Naidu's submission I was not satisfied either that I had erred in law in interpreting the meaning of section 5 or in my assessment of the Plaintiff's readiness to submit to arbitration.

While it may well be the case overseas that the issuance of legal proceedings is strongly suggestive of the proposition that the Plaintiff is not prepared to arbitrate it is my experience in Fiji that writs are frequently issued almost as a first rather than as a last resort. Accepting Mr. Smith's undisputed evidence in the round I am fully satisfied that he is more than willing to have this dispute resolved by a qualified marine arbitrator who, as it seems to me is likely to be able to handle the matter far more expeditiously then the High Court. The fact that the Defendants inserted an arbitration clause in their own policy of insurance tends to support my view.

The only reasons advanced by Mr. Naidu for not wanting to go to arbitration where purely legalistic: "we prefer to stay in the High Court because that is where the Plaintiff commenced the proceedings". I was not impressed by this argument.

As for the final argument involving the mode of the resolution of this dispute I do not think that the character of the mode of resolution is anyway near as important as the quality of that mode and I do not think that a decision as to the mode is a predominant matter which should now indicate that leave should be granted (see the authorities referred to in Re: Richard Krishnan Naidu - HBJ 7/98S).

The application fails and is dismissed.

M. D. Scott
Judge

29 October 1998.

HBC0383.97S