Wolf v Strauss [2011] TOCA 4; AC 14 of 2010 (30 September 2011)

IN THE COURT OF APPEAL OF TONGA
CIVIL JURISDICTION
NUKU'ALOFA REGISTRY

APPEAL NO. AC 14 of 2010
[CV 277 of 2009]

BETWEEN:

1. JUERGEN WOLF
2. BRIGITTA WOLF
Appellants

AND:

1. FRANZ STRAUSS
2. GUDRUN STRAUSS
Respondents

Coram: Burchett J
Salmon J
Moore J

Counsel: Mrs Stephenson for the Appellants
Mr Niu for the Respondents

Date of hearing : 19 September 2011
Date of judgment: 30 September 2011

JUDGMENT OF THE COURT

INTRODUCTION

[1] This is an appeal by Juergen and Brigitta Wolf filed on 27 July 2010 from an order of Shuster J of 21 June 2010. Franz and Gudrun Strauss commenced proceedings against the appellants on 3 December 2009 in the Supreme Court of Tonga. As the plaintiffs (and now the respondents in this appeal) they alleged they had lent the appellants two amounts (EUR 10,000 and EUR 180,000) in 2006, the loan monies had not been repaid in accordance with the loan agreements, and they were entitled to judgment for the entire amount of the loans plus interest. It appears not to be an issue in these proceedings (at least at this interlocutory stage) that the monies had been lent and not repaid in the way contemplated by the parties at the time of the loans.

[2] The appellants applied, in effect, for an order that the Supreme Court proceedings be stayed on the basis that any proceedings to recover the sums lent should be heard and determined in a German court. It was the dismissal of that application by Shuster J by an order of 21 June 2010 that has given rise to this appeal. His Honour determined the matter should be heard in Tonga "because the alleged agreement to provide the Defendant with his loan in EUROS is silent as to the place of trial. Further the property purchased by the Defendant is located here in the Kingdom of Tonga."

[3] We can proceed on the basis, at this interlocutory stage, that the following is uncontroversial. The respondents reside in Dortmund, Germany. The appellants are business people who operate the Seaview Restaurant and Lodge ("the Seaview") and reside in Nuku'alofa, Tonga though they are citizens of Austria.

[4] The appellants seek an order that Tonga is not the appropriate forum to hear this matter, that it should be heard in Germany and the order of Shuster J of 21 June 2010 should be set aside.

CONSIDERATION ON APPEAL

[5] Before considering whether the primary judge erred, it is convenient to discuss the principles which should be applied in determining whether proceedings in a court in Tonga should be stayed because the legal controversy between the parties more appropriately should be heard in a court of another country. We should immediately observe that an application of the type made to Shuster J in the present case does not raise a question of whether the Supreme Court of Tonga has jurisdiction to hear the dispute (it does have jurisdiction in this case because, we assume, the defendants were present in Tonga when the initiating process was served and were therefore subject to the Supreme Court's jurisdiction). Rather the question is whether the Supreme Court should exercise an undoubted discretion it has to stay the proceedings on the basis that they should be heard and determined elsewhere. The first step in determining such an application is to ascertain whether the Supreme Court of Tonga is an inappropriate forum or the forum non conveniens because there is another forum which is clearly more appropriate. If there is a clearly more appropriate forum elsewhere, the second step is to consider whether the Supreme Court should nonetheless exercise its discretion against staying the proceedings because it is in the interests of justice to allow the plaintiffs to continue the proceedings in Tonga.

[6] The leading authority on forum non conveniens is Spiliada Maritime Corp. v Cansulex Ltd [1986] UKHL 10; [1987] AC 460. The law was summarised by Lord Goff of Chieveley at 476 – 478:

(a) The stay will only be granted on this ground where the court is satisfied that there is some other available forum which has competent jurisdiction where the case may be tried more suitably for the interests of all parties and the ends of justice.

(b) The burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay. The evidential burden, however, rests on the party who asserts the existence of certain matters that will assist in persuading the court to exercise its discretion.

(c) The burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum. In all the English cases where a stay has been granted, there has been another clearly more appropriate forum.

(d) The court will first look to see what factors indicate that another forum would be more appropriate or is a forum "with which the action had the most real and substantial connection", including the availability of witnesses, the law governing the relevant transaction and the places where the parties respectively reside or carry on business.

(e) The stay will ordinarily be refused if the court concludes there is no other available forum which is clearly more appropriate.

(f) The stay will ordinarily be granted if the court concludes that there is some other available forum clearly more appropriate to hear the matter. However the stay may nonetheless be refused if, having regard to the interests of justice, it is appropriate for the stay not to be granted.

[7] The authorities identify other matters in addition to those just referred to in 6(d) above including where the relevant events occurred. The principles in Spiliada apply in Tonga. As to their application see, for example, the judgment of Ford CJ in Gough Finance Limited v Westpac Bank of Tonga [2004] Tonga LR 279. His Honour observed at 282:

The discretion is to be exercised having regard to the common-law principles that have been developed in this area of the law but foremost amongst the considerations must always be the "forum conveniens", as it has been historically referred to, and the overall interests of justice.

[8] We now turn to the question of whether the primary judge erred in the exercise of his discretion. His reasons for dismissing the appellants' application were set out at the beginning of this judgment. They were extremely brief. In our respectful opinion, the reasons do not disclose that the primary judge engaged in the evaluation of some features of this case which the authorities establish should be considered. One feature of some significance (and it was and is common ground between the parties) is that the law governing the loan agreements is German law. There is little room to doubt that a German court can more readily ascertain and apply German law. This factor points to the German courts as being the appropriate forum. That is not to say, however, that what is German law cannot be proved in the Supreme Court of Tonga and applied in this matter to the facts as ultimately found.

[9] Another factor pointing to the German courts being the appropriate forum is that it is likely the evidence concerning the circumstances in which the loan agreements were entered into and breached (as alleged) will relate to events in Germany together with the fact that the written terms of the agreements are in German.

[10] Another factor pointing in the same direction is that the respondents as potential witnesses, reside in Germany. Yet another is that there is evidence which suggests one of the appellants, Brigitta Wolf, has a limited command of English though we would see this as a factor of subsidiary significance.

[11] None of these matters appear to have been considered by the learned primary judge having regard to his reasons. They should have been. This is an appealable error. As error has been demonstrated, it is appropriate for us to exercise the discretion which should have been exercised by the learned primary judge.

[12] We have already set out factors which point to the German courts as the appropriate forum. On the other hand factors which suggest the German courts are not the appropriate forum include the fact that the appellants, as potential witnesses, reside in Tonga, the monies advanced under the loan agreements were used to acquire a property in Tonga and, as far as the evidence presently goes, the only assets of the appellants which might be available to satisfy any judgment debt are the assets they acquired in purchasing the Seaview. That is, if any judgment is to be enforced, it will need to be enforced in Tonga. The appellants were not able to say they had assets in Germany which would be available to satisfy any judgment of the German courts.

[13] In the common law world (and elsewhere), statutory provisions are commonly found enabling the registration of a foreign judgment and, so registered, the judgment is to be treated as having a status analogous to that of a judgment of a domestic court and as being enforceable as such. In addition and apart from statute, under the common law the beneficiary of a foreign judgment can sue on that judgment in a domestic court though there are limits on the circumstances in which this can happen: see Halsbury's Laws of England; 4th ed, volume 8, Conflict of Laws, paras 715 and following.

[14] The fact that any judgment obtained in this matter in a German court would, as the evidence presently stands, have to be enforced in Tonga was emphasised by the respondents in the appeal as demonstrating that the German courts were not the appropriate forum. There is obvious force in this argument. It is fortified by the fact that the Registration of Foreign Judgments Act CAP 14 and related subordinate legislation do not provide for the registration of judgments of German courts which would enable their immediate enforcement once registered.

[15] Indeed, the respondents' argument went further. They submitted that to the extent that, under the common law, a foreign judgment might be recognised and sued on in the Supreme Court of Tonga, the common law would not apply because there were no gaps to fill (see s 4 of the Civil Law Act CAP 25) having regard to the field of operation of the Registration of Foreign Judgments Act CAP 14. We doubt that the fact that the Registration of ForJudgments Act CAP 14 has no application to judgments ofts of German courts would, of itself, limit the right of the beneficiary of such a judgment to enforce it, under the common law, by proceedings in the Supreme Court of Tonga: see Henry v Geoprosco International Ltd [1976] QB 726 at 751. However we acknowledge that if this matter was to be heard in a German court, the respondents (as plaintiffs) were successful and they then brought proceedings to enforce the judgment of the German court in the Supreme Court of Tonga, the respondents could not be assured that the enforcement litigation would not be vigorously defended and every point taken. At the very least, it would take time and expense to take the necessary additional steps to sue on the foreign judgment in Tonga to enforce it in the Kingdom.

[16] One last matter should be mentioned. When this appeal first came before the Court of Appeal in April 2011, we raised with counsel for the appellants the possibility that a relevant consideration in determining the appeal might be whether or not, under German law, the appellants had an arguable defence. As things presently stand (and assuming facts which might be gleaned from the documentary and other material before us are proved at trial), the respondents' claim has the appearance of a straightforward action seeking the recovery of a debt. If the law of Germany enables the recovery of debts in much the same way as Tongan law (in the absence of proof to the contrary, foreign law can, in certain circumstances, be presumed to be the same as the domestic law: see for example, Cross on Evidence, 7th ed at par 71005) then it is not readily obvious that a defence of substance could be raised by the appellants. Ultimately whether a defence can be raised will emerge at any trial whether in Germany or Tonga. However it is of some significance that the only response of the appellants' counsel about the existence of a defence when raised again during the hearing of the appeal in September 2011, was that she was then unable to articulate a defence under German law.

[17] In our opinion, having regard to the mix of considerations referred to in the preceding paragraphs (other than the last paragraph), the appellants have not demonstrated that the German courts are a clearly or distinctly more appropriate forum than the Supreme Court of Tonga, which the appellants must do to demonstrate that the Supreme Court is a forum non conveniens so that the proceedings in that Court should be stayed. Even if we were satisfied the German courts are a clearly or distinctly more appropriate forum, we would, as a matter of discretion, not stay the Supreme Court proceedings as it would not be in the interests of justice to do so. The considerations raised by the respondents in resisting the appeal and the stay application point in this direction as does the matter discussed in the preceeding paragraph. Unless the appellants have a defence of substance under German law, there is little to be gained in requiring the proceedings to be heard in a German court and, potentially, doing so would result in significant further delay and additional expense. It is not in the interests of justice for that to occur.

[18] The appeal should be dismissed with costs.

Burchett J
Salmon J
Moore J