clr/1989/1989_1_437.pdf

(2)(a) of the Courts ofJustice Law, 1960 (Law14/60) theEnglishRulesapplicablearethose inforce on thedaypreceding Independence Day— TheCivilProcedure Rules arenot applicable. Admiralty—Practice —Service out of the Jurisdiction—Governed by Rules23 and 211 ofthe CyprusAdmiraltyJurisdiction Order 1893. Admiralty—Practice —Applications— The Admiralty Jurisdiction Order 1893, Rules 203212— No provision is made for a requirement to referto specificRules upon which anapplication is founded —Reference to Rules totally unconnected with the 15 AdmiraltyJurisdiction —An irregularity, butnot anullity. Admiralty—Practice—Distinction between «nullities* and 'irregularities»—InRe Pritchard (Deceased) [1963] 1All E.R. 873 followed. 20 25 Admiralty—Practice—Service out of the Jurisdiction — Application for leave —Affidavit by an advocate's clerk—Rules applicable — As the affiant in this case could swear to the facts there was no irregularity. Admiralty— Practice —Service out of the Jurisdiction —Leave to effect such service —The prerequisities that have to be satisfied — The matter isone of discretion —Exparte application for leave — 437 Zachariades Ltd.v. Economides

(1989)The duty of the applicant to discloseallmatenal facts— Failure to produce the bill of lading which embodied a foreign junsdiction clause —A matenal fact—Itsnon disclosurehasto be met withthe discharge of the order The pnnciples emanating from thejudgment in this case, where oneof thedefendants mtheactionappliedtohavetheleavetoserve the wnt on him out of the junsdiction set aside, are sufficiently summanzed inthe hereinabove headnotes 5 Application granted withcosts 1^ Cases referredto Nigenan Produce ν Sonora Shipping {1979) 1CLR 395, Asimenos ν Paraskeva

(1982)1CLR 145, Ship «Glonana»andAnother ν Breidi

(1982)1CLR 409, Re Pntchard(Deceased)[1963] 1AllΕR873, Spyropoullos ν Transavia

(1979)1CLR 421, Sol Femes Ltd ν NaoumShipping

(1985)1CLR 15 73, InreHadjiSotenou

(1986)1CLR 429, Inre Williams&Glyn'sBank

(1987)1 CLR 85, Jadranska Slobodna Plovidba ν Photos Photiades & Co

(1965)1 CLR 58, 20 Stavndes ν Ceskoslovenska Obchondi Banka A S

(1972)1CL R 130, George Monro, Limited ν Amencan Cyanamid and Chemical Corporation [1944] 1Κ Β 432, Re adebtor [1983]3All ΕR 545, 2 5 77jeHagen[1908]P 189, Boyce ν Gill[1981]64 LΤ 824, The King ν The Genera! Commissioners for the Purposes of the Income TaxAct fortheDistnctofKensington-Exparte Pnncess Edmond de Pohgnac [1917] 1Κ Β 486, TheAndna [1984]1All ΕR 1126, Leduc ν Ward,20 Q ΒD 475, SS Ardennes (Cargo Owners) ν SS Ardennes (Owners)[1951] 1 Κ Β D 55, 438 30 1 C.L.R. ZachariadesLtd.v.Economides Altobeiquiv. M/VNadaand another

(1985)1C.L.R.

1. Application. Application by defendants No. 6 for an order setting aside the issue and/or service of the notice of the writ of summons and/or 5 setting aside the order giving leave to serve notice of the writof summons on them out of thejurisdiction. M.Montanios, forapplicants-defendants No.
2. G. Cacoyannis, for respondents-plaintiffs. Cur.adv. vult. 10 STYLIANIDES J. read the following decision. Two local companies with theirseatatLimassol instituted thisaction against seven defendants. Defendant No. 7 isthe ship «BERNHARD S» and defendants No.6are the owners thereof. On application by the plaintiffs, a Judge of this Court granted 15 leave for services of notice of the writ out of the jurisdiction on defendants Nos.4, 5 and 6, by prepaid double registered post ai their address abroad. Defendants No.6entered a conditional appearance and by the present application they apply for an ordersettingaside the issue 20 and/orserviceofthenoticeofthewritofsummonsand/or setting asidetheordergivingleave toservenoticeofthewritof summons on them out of the jurisdiction. The grounds on which thisapplication isbased are:25
3. The application of the plaintiffs for leave for service aforesaid wasbased on the Civil Procedure Rules, which are notapplicable inAdmiralty actions.
4. That the affidavit in support of the said application was deposed by advocates' clerk and not anyone from the plaintiffs. 30 35
5. That the plaintiffs failed to disclose in that ex parte application material facts known to them.
6. That no good cause of action was made out in the affidavit by the material placed before the Judge who issued the order.There wasno privity of contract between plaintiffs • and applicants - defendants No.
7. The plaintiffs contracted with other defendants and the ship was chartered, to the 439 StylianidesJ. ZachariadesLtd. v. Economides

(1989)knowledge of the plaintiffs, under time-charter to Messrs Rhein-Maas-u. See-Schiffahrtskontor Gmbh, DuisburgRuhrort.And,totheknowledge oftheplaintiffs, the applicants were not responsible for the carriage and/or discharge of the plaintiffs' cargo. The action arose out ofa breach of contract of affreightment of goods of the plaintiffs by ship «BERNHARD» from Limassol to Bahreine. A Bill of Lading was issued at Limassol, not by the Master on behalf of defendants No.

1. Itwasissued andsignedby defendants No.3 on behalf of defendants No.4 and
2. 10 GROUND 1: The plaintiffs in the ex parte application relied on the Civil Procedure Rules,Order6,rule 1(e)and4,5,6, Order5,rule9and Order5(a)and the inherent power and practice of the Court. ItiswellsettledthattheCivilProcedure Rulesarenotapplicable 15 in Admiralty proceedings. Ithasbeen repeatedly pronounced by this Court that in Admiralty proceedings the Rules applicable are the Rules of the Supreme Court of Cyprus in its Admiralty Jurisdiction (the «Rules») and, in all cases not provided by the AdmiraltyRules,thepracticeof theAdmiralty Divisionof theHigh 20 Court ofJustice in England, so far as thesame shall appear to be applicable. Itis,also,wellsettled thattheEnglishRulesapplicable byvirtue ofRule237areinvirtueofsections 19(a)and29

(2){a)ofthe Courts ofJustice Law, 1960 (LawNo. 14/60),thosethatwereinforce on 25 the day preceding Independence Day - (see, inter alia, Nigerian Produce v. Sonora Shipping

(1979)1 C.L.R. 395; Asimenos v. Paraskeva

(1982)1 C.L.R. 145; Ship «Gloriana» and Another v. Breidi

(1982)1C.L.R. 409, pp. 416-417). The Rules on which anapplication forleave to serveabroad in 30 Admiraltyproceedings maybefounded areRules23and24ofthe Rules, which read as follows:«

1. Where the person to be served is out of Cyprus application shall be made to the Court or Judge for an order for leave toserve thewritofsummons ornotice of the writ. 35
2. The Court or Judge before giving leave to serve such writornoticeofthewritshallrequireevidencethatthe Plaintiff has a good cause of action, that the action isa proper one to 440 ^ 1C.L.R. ZachariadesLtd.v.Economides Stylianides J. betriedinCyprus,andevidenceoftheplaceorcountrywhere the Defendant is or may probably be found and of his nationality». Inthe part ofthe Rulesprovidingfor«applications»,Rules2035 212,noprovision ismadeforarequirementtorefertothe specific Rule of Court upon which an application is founded. Nevertheless, the plaintiffs invoked Rules totally unconnected withtheAdmiraltyJurisdictionoftheCourt.Thisisnotanullitybut an irregularity. 10 15 InRe Pritchard(deceased) [1963]1AllE.R. 873,Upjohn, L.J., made thedistinction between irregularityand nullityand atp.881 said:«Iam notsosure thatitissodifficult todrawaline between irregularities,bywhichImean defects inprocedurewhich fall within R.S.C., Ord. 70,and true nullities,though I agree that no precise definition ofeither ispossible». Atpp. 882-883itwassaid:- 20 25 30 35 «Ido not thinkthat the earlier casesof the later dicta on them prevent me from saying that in my judgment the law when properly understood is that R.S.C., Ord. 70, applies to all defects in procedure unless it can be said that the defect is fundamental to the proceedings. A fundamental defect will makeitanullity.TheCourtshouldnotreadilytreatadefect as fundamental and so a nullity and should be anxious to bring the matterwithinthe umbrella ofOrd. 70when justicecan be doneasa matterof discretion, stillbearinginmindthat many cases must be decided in favour of the part entitled to complain ofthedefect exdebitojustitiae.LORDDENNINGin MacFoy's casepointed outthata useful testwaswhether the defect could be waived. I agree with that as agood common sensetestbutIalsoagree withcounsel forthedefendants that itcannot be a completely legaltest, for untilone has decided whether the proceeding is a nullity, one cannot decide whether itiscapable of waiver. The authorities do establish one or two classes of nullity such as the following. There may be others, though for my partIwouldbereluctanttoseemuchextension oftheclasses. (i) Proceedings which ought to have been served but have never come to the notice of the defendant at all. This, of 441 Stylianides J. Zachariades Ltd. v.Economides

(1989)course, does not include cases of substituted service, or servicebyfilingindefault, ofcaseswhereservicehasproperly been dispensed with; see e.g., Whitehead v. Whitehead (otherwise Vasbor);(ii)Proceedings whichhave neverstarted at all owing to some fundamental defect in issuing the 5 proceedings;(iii)Proceedingswhichappeartobedulyissued, but fail to comply witha statutory requirement: ...» Thisdefect isa mere irregularity and isnot fatal - {Spyropoullos v.Transavia

(1979)1 C.L.R. 421; TheShip «Gloriana*(supra);Sol Ferries Ltd. v. Naoum Shipping

(1985)1 C.L.R. 73; In re 10 HadjiSoteriou

(1986)1C.L.R. 429;Inre Williams&GlynsBank

(1987)1 C.L.R. 85). GROUND2: The affidavit in support of the application was sworn by an advocate's clerk. It is undesirable for affidavits to be sworn by 15 advocate's clerks. It isdesirable and expected that such affidavits be sworn by the party, his servant or agent who can swear positivelyto the facts.Thespecific requirement ofOrder 18of the Rules of Court for affidavits for summary judgment is not applicable; therefore the judgment invoked by the applicants - 20 Spyros Stavrinides v. Ceskoshvenska Obchondi Banka A. S.

(1972)1 C.L.R. 130 - is applicable only so far as it relates to affidavits in general. It may be noted that the affiant in the present case stated in paragraph 2 that he knewthe facts of the action and that he was 25 dulyauthorized toswear the affidavits. Admiralty Rule 24, as was decided in Jadranska Slobodna Plovidha v.PhotosPhotiades &Co.

(1965)1 C.L.R.58,should be interpreted andapplied notinadifferent wayfrom Order 11ofthe old English Rules. 30 In the Annual Practice 1958, p. 148, it isstated in relation to Order 11,rule 1 thattheaffidavit insupportshouldbemadebythe plaintiff or hissolicitor, or anybody who can swear tothe facts. Inthe circumstancesof thiscase ground2 fails. GROUND 3: 35 Thejudiciary of the country exercises one of the powers of the State.Itspower isprimarilyexercised overthepersonswithin the jurisdiction and the nationals of the country. The nationals of a 442 IC.L.R. Zachariades Ltd.v.Econumides StylianidesJ. country owe allegiance to itand have the corresponding benefits of their nationality. A foreigner owes no allegiance and, if he is outside the jurisdiction, the extension of the jurisdiction of this Court isan «assumedjurisdiction»which the Court has discretion 5 toexercise. Indoingsothe Court actswith caution. In George Monro Limited v. American Cyanamid and Chemical Corporation, [1944] 1K.B.432, Scott,L.J., said atp.437:- 10 15 «Service out of thejurisdiction atthe instance of our courts is necessarily prima facie an interference with the exclusive jurisdiction of the sovereignty of the foreign country where service is to be effected. I have known many continental lawyers of different nations in the past criticize very strongly our law about service out of the jurisdiction. As a matter of international comity it seems to me important to make sure thatnosuch serviceshallbe allowedunlessitisclearlywithin both the letter and the spirit of Or.XI». This principle is accepted in International Law and was embodied in the Convention on the Service Abroad of Judicial andExtrajudicial DocumentsinCivilorCommercialMatters,done 20 atThe Hague, onthe 15th dayof November, 1965,ratified inthis country under Article 169.3 of the Constitution, by Law No. 40/ 82. The following prerequisites must be satisfied under Rule 24 for grant of leave for service out of thejurisdiction:25 (i)That evidence must be produced to the Court or Judge that theplaintiff hasa good cause of action. (ii)That theaction isaproper one to be tried inCyprus. (iii)Evidence astotheplace orcountry where the defendant is ormay probably be found. 30 (iv)His nationality. Theprerequisite (ii)above isof fundamental importance. Thejurisdiction of the Court isessentially discretionary and the Courtmay, ifitseemsfit, declinetoexercisesuchjurisdiction and allowservice of the writ ornotice thereof out of the jurisdiction. 35 The application wasmade exparte without notice. The Court in determining a dispute or in granting a remedy 443 StylianidesJ. ZachariadesLtd. v. Economides

(1989)normally hears both parties.The rule audi alteram partem iswell rooted in the system of our administration of justice. For the proper administration ofjustice,however,andtheissueof prompt and effective orders,adeviation ismade withouttheCourt having the opportunity tohear theotherparty. Bydefinition «anexparte 5 application», isone in which the party against whom the order is sought is absent. It is accordingly the duty of the applicant to inform the Court ofany factswhichheknows,which mightturnin that person's favour, or influence the Court in exercising its discretion -{Readebtor, [1983]3AllE.R.545, atp.551). 10 In The Hagen, [1908] P. 189,atp. 201,Farwell, L.J., said:«... inasmuch as the application ismade ex parte, full and fair disclosure isnecessary, asinallexparte applications, and failure to make such full and fair disclosure would justify the Courtindischargingtheorder,evenalthoughthepartymight 15 afterwards be ina position tomake another application». In Boyce v. Gill,[1891] 64 L.T. 824, Kekewich,J. stated (atp. 825):«What the Court would have done ifailthe facts had been known I cannot say.Insuch a case Ishould notthinkofdoing 20 so; but possibly the court would have come to a different conclusion, and said thatthe interim order wasno necessary. IfIhad hadtheknowledgeInowhavethatnoseriouspractical inconvenience was likely to arise, Imight have come to that conclusion. But, according to my view, on ex parte motions 25 the court should be in a position to weigh all matters which might influence it, so asto decide whether itisa case to give notice of motion rather then that an injunction should be granted. At best the court runs the risk of making an order which maydoharm,andtheundertakingindamagesgivenby 30 a plaintiff isnotsatisfactory. Itisoftheutmostimportance that thecourtshouldbeabletorelyuponthestatementofcounsel, and the affidavits. Itisof utmost importance thatthere should be a full disclosure ofthe facts». See, also, the Judgment of Lord Cozens-Hardy, M.R., in The 35 King v. The General Commissioners for the Purposes of the Income TaxActs for the DishictofKensington -Exparte Princess Edmondde Polignac. [1917] 1K.B.486, atpp.504-505. 444 1C.L.R. Zachariades Ltd.v. Economides StylianldesJ. In TheAndria [1984] 1All E.R. 1126, at pp. 1135-1136 itwas said:- 5 10 15 20 25 «Itisaxiomaticthatinexparteproceedingsthereshould be full and frank disclosure to the court of facts known to the applicant, and that failure tomake such disclosure may result in the discharge of any order made on the ex parte application, even though the facts were such that, with full disclosure, an order would have been justified (see R. v. Kensington Income Tax Comrs, ex p. Princess de Polignac [1917] 1K.B.486).Examplesofthisprinciplearetobe found in the case of exparte injunctions (Dalglish v.Jarvis

(1850)2 Mac&G231,42 E.R.89),exparteordersmadeforserviceof proceedings out of the jurisdiction under RSC Ord 11 (77ie Hagen [1908]P. 189at 201, [1908-10]AllE.R. Rep.21at26 per Harwell L.J.) and Mareva injunctions {Negocios delMar SA v.DoricShipping Corp. S.A., TheAssios [1979] 1Lloyd's Rep. 331). In our judgment, exactly the same applies in the .caseofanexparteapplicationforthearrestofashipwhere,as here, there hasnotbeen full disclosure ofthematerial factsto the court. Accordingly,thecourthavinginthepresentcaseissuedthe warrant of arrest on the basis of an affidavit which failed to disclose material facts,theappropriatecoursewastomakean unconditional orderforthedischarge ofthesecurityobtained by reason of the arrest. For these reasons, although we shall (forthereasonswehavegiven)setasidethedeclaration made by thejudge, we shall dismiss the appeal from hisorder that theletter of undertaking be discharged». Itwassubmitted by counsel for the applicants -defendants No. 6 30 thatintheBillofLadingthereisaforeignjurisdiction clausewhich reads:- 35 «Jurisdiction. Any dispute arising under thisBill of Lading shall be decided in the country where the carrier has his principal place of business, and the law of such country shall apply except asprovided elsewhereherein». Inthe affidavit insupport of theapplication of the plaintiffs the affiant statedthataBillofLadingwasissued,buttheBillofLading was notproduced totheJudge and nomention, whatsoever, was made of theexistence oftheforeignjurisdiction clause.Thiswasa 40 material fact which might influence the mind of the Judge in the 445 StylianidesJ. Zachariades Ltd. v. Economides

(1989)exercise of his discretion.The Bill of Lading was producedby the applicants - defendants No. 6 in thisapplication. Itissubmitted by counsel for the applicants this was a material fact. Counsel for the plaintiffs-respondents referred the Court to Jadranska Slobodna Plovidha v.Photos Photiades & Co. (supra). 5 Furthermore, as itis well settled, the Bill of Lading is evidence of the contractand notthe contractitseIf-(Leduc v. Ward, 20Q.B.D. 475; S.S. Ardennes (CargoOwners) v. S.S. Ardennes (Owners) [1951J1K.B.D.55). In the Slobadna case itwas hotly disputed whether the foreign 10 jurisdiction clause was part of the contractand the Court decided that thisshould be left to the trialCourt. Counsel for theplaintiffs made elaborate argument on whether theCourtwould have decided thatCyprus isforum convenient for the case. With respect, theprinciple enunciatedin TheHagen and 15 inthe TheAndria (supra) isto theeffect thattheηon-disclosure of material fact has to be met by the Court with discharge of the order.The Courtisnotinclinedtoreviewthe previous orderinthe light of the undisclosed material fact of the foreign jurisdiction clause and decide which isthe forum convenient. 20 InAltobeiqui v.M/VNada and Another

(1985)1C.L.R.543,A. Loizou J. {as he then was) discharged an order for service out of thejurisdiction for failure todisclose aforeign jurisdiction clause in the Bill of Lading. In the present case there was no full and frank disclosure of all 25 the relevant facts in the affidavit filed insupport of theapplication toserve notice of the writ outof thejurisdiction. In the light of all the above, Ihave reached the conclusion to discharge the order for service of the notice of the writ on defendants No. 6 and set itaside. 30 Extensive argument was advanced by both counsel on all aspects of the fourth ground. As in this ground questions of fact and of finding whether there is prima facie a good cause of action are involved, Ishall abstain from dealing with it.Indoingso Iavoid prejudicing any future application forservice outof thejurisdiction 35 on defendants No. 6, in which thesame questions may arise. 446 1C.L.R. Zachariades Ltd.v.Economides StylianidesJ. Inthe result, the order giving leave for service of notice of the writ of summons on defendants No. 6 and the service pursuant thereto are hereby set aside. Costs against the plaintiffs-respondents. Such costs to be 5 assessed bythe Registrar. Application granted with costs against respondents-plaintiffs. 447