Arko Ship Leasing Ltd (Formerly Known As Arko Satellite Ltd) and Another v. Winsmart International Shipping Ltd and Another

HCMP 3172/2015

MISCELLANEOUS PROCEEDINGS NO. 3172 OF 2015

(ON AN INTENDED APPEAL FROM HCAJ 213 OF 2009)

_______________

_______________

_________________

J U D G M E N T
_________________

Hon Poon JA (giving the Reasons for Judgment of the Court) :

Introduction

1.By a summons dated 30 November 2015, the plaintiffs sought an extension of time to file the notice of appeal against the judgment of Ng J dated 19 October 2015, dismissing the plaintiffs’ claims and entering interlocutory judgment on liability against them on the defendants’ counterclaims with damages to be assessed.

2.The plaintiffs’ summons, as rightly submitted by Mr Bartlett, SC for the 1^st defendant, was procedurally misconceived because the proper way to commence an appeal is by service of the notice of appeal on the intended respondent and even if leave were granted to the plaintiffs to file the notice of appeal out of time, it would get them nowhere.  Mr Bell, SC, for the plaintiffs, very fairly conceded that it was a mistake to seek an extension of time to file the notice of appeal.  Although the plaintiffs’ summons is thus procedurally misconceived, we do not think either Mr Bartlett or Mr Alder, for the 2^nd defendant, seriously pressed the point that the plaintiffs’ application should be dismissed on that basis alone.  So we will treat the plaintiffs’ application, despite the mistake in the summons, as one for extension of time to serve the notice of appeal on the defendants.

The four factors

3.It is well settled that in dealing with an application like the present, the court will take into account :

(1) the length of the delay;

(2) the reasons for the delay;

(3) the chances of the appeal succeeding if time for appealing is extended; and

(4) the degree of prejudice to the potential respondent if the application is granted.

4.We will consider them in turn.

Length of delay and reasons for delay

5.These two factors can be dealt with very briefly.

6.Ng J handed down his judgment on 19 October 2015.  By virtue of Order 59, rule 4(1)(c), a notice of appeal should have been served within 28 days of the date of the judgment, that is, 16 November 2015.

7.According to the evidence of Mr Frederick Ho Chun Ki of Messrs Ho Tse Wai, Phillip Li & Partners, who had conduct of the litigation, his firm tried to file the notice of appeal on 16 November 2015 but were not allowed to do so because they were unable to file the sealed order of the judgment, which was not yet available, together with the notice of appeal.

8.It would appear that Mr Ho was then under the misconception that a notice of appeal had to be filed in order to trigger the appeal process.

9.On either 17 or 18 November 2015 (the documentary evidence on the actual date is not entirely clear), the plaintiffs’ solicitors served the notice of appeal on the defendants’ solicitors by hand delivery.  There was a delay of 1 or 2 days in service.

10.Mr Bartlett submitted that there was a further delay of 10-odd days when the present summons was only taken out on 30 November 2015.

11.In our view, the delay in serving the notice of appeal and the delay in taking out the present application are insubstantial.

12.That said, Mr Ho has been unable to explain the delay satisfactorily.  He only said, without any reason in support, that he and the handling clerk thought that the deadline for service was 17 November 2015.  He had not explained why it had taken the plaintiffs almost another fortnight from 17 of 18 November 2015 to take out the present application either.  At the outset of his oral submissions, Mr Bell again very fairly conceded that the delay due to Mr Ho’s mistake was inexcusable.

13.This brings us to the third factor.

Chances of success

14.Because the delay was inexcusable, according to the well established principle, the plaintiffs have to satisfy us that their proposed appeal has a reasonable prospect of success.  For present purposes, we would outline the background facts briefly as follows.

15.The proceedings below arose out of the sinking of a container feeder barge “Ying Gao 306” (“the Vessel”) in Hong Kong waters near Green Island in the afternoon of 30 April 2009.  When the Vessel sank, there were 49 containers on board fully laden with cargo.

16.At the material times, the 1^st plaintiff was the charterer of the Vessel, operating the Vessel by employing its own master and crew on board.  The 2^nd plaintiff was the shipping agent of the 1^st plaintiff, responsible for completing departure and arrival port formalities for vessels chartered by the 1^st plaintiff as well as collecting and paying shipping charges on its behalf.

17.The 1^st defendant and its associated company in the Mainland carried on the business of carriage of container cargo between Hong Kong and ports in Guangdong.  They would either use their own chartered vessels to carry the cargo or would engage other feeder service providers to do so.  The 2^nd defendant carried on business as ocean-going cargo carrier.  By a connecting carrier agreement dated 1 July 2005, it engaged the 1^st plaintiff to provide connecting service between Hong Kong and ports in Guangdong.

18.On 29 April 2009, as found by the Judge, the 1^st defendant engaged the 1^st plaintiff, as undisclosed principal of the 2^nd plaintiff, to provide feeder service to carry 28 containers of cargoes from Huangpu, Guangzhou to Hong Kong and 21 containers of cargoes from Hong Kong to Huangpu, by virtue of two contracts respectively (“the Contracts”).

19.The Vessel’s certified deadweight tonnage and hence its cargo carrying capacity was 1,380 tonnes.  As found by the Judge, the owner of the Vessel had imposed, and instructed the 1^st plaintiff as its bareboat charterer to comply with, a safety guideline limiting the Vessel’s carrying capacity in Hong Kong coastal waters to 80% of its deadweight tonnage, that is, 1,104 tonnes.  If loaded at more than 80% of its deadweight tonnage in Hong Kong waters, the Vessel could become unsafe.

20.As said, in the afternoon on 30 April 2009, the Vessel sank in Hong Kong waters near Green Island with the 49 containers on board fully laden with cargo.  At the time of sinking, the gross weight of the cargo, that is, the net weight of the cargo plus packaging on board was 1,115.095 tonnes.  The gross weight of the containers, that is, gross cargo weight plus tare weight of containers (“Gross Container Weight”) on board was 1,297.46 tonnes.  The Gross Container Weight of the 49 containers exceeded 80% of the Vessel’s deadweight tonnage.  The Judge found that the Vessel sank because of overloading.  He further found that it was the error of the Vessel’s master who allowed the Vessel to be overloaded.

21.The plaintiffs sued the defendants for loss and damage based on three causes of action, namely, misrepresentation, breach of implied terms and negligence.

22.On implied terms, the plaintiffs alleged that the Contracts contained various implied terms by virtue of past dealings and/or as a matter of law in order to give business efficacy.  The implied term that concerns us in the present application is :

“ The 1^st defendant must provide accurate information on the gross weight of the containers which would be relied upon by the 1^st plaintiff for the calculation of charges and the planning of a safe voyage within the loading capacity of the Vessel.”  (“the Term”)

23.The plaintiffs further alleged that the 1^st defendant misrepresented to the 1^st plaintiff the Gross Container Weight of the 28 containers under the 1^st Contract and of the 21 Containers under the 2^nd Contract.  By reason of the misrepresentation, the Vessel was loaded with 49 containers with the Gross Container Weight exceeding her safe and proper capacity.  The overloading adversely affected the Vessel’s stability or made it unseaworthy.  As a result, the Vessel sank.

24.The plaintiffs’ case against the 2^nd defendant was twofold.  First, as principal, it was vicariously liable for the 1^st defendant’s negligence.  Second, the 2^nd defendant owed an independent duty of care to the 1^st plaintiff in respect of the weight statements given in its own bills of lading.  The 2^nd defendant had breached such a duty of care by reason of the matters complained of.

25.The defendants counterclaimed for loss and damage arising from the sinking of the Vessel essentially on the plaintiffs’ liability as bailee and contracting/sea carrier of the same.

26.After a careful and detailed analysis of the factual and expert evidence, for the reasons that he gave, the Judge relevantly found that the Contracts did not contain any of the implied terms contended for by the plaintiffs including the Term; and that the 1^st defendant did not make any misrepresentation as alleged.

27.The notice of appeal raised 3 grounds of appeal :

“ 1. The learned Judge erred in law and in fact (at paragraph 107) in holding that the Contracts between the 1^st Plaintiff and the 1^st Defendant were perfectly effective and workable in practice even without [the Term]. The learned Judge ought to have found that it was an implied term for the 1^st Defendant to inform the 1^st Plaintiff of the gross weight of the containers which would be relied upon by the 1^st Plaintiff for the calculation of charges and the planning of a safe voyage within the loading capacity of Yinggao 306 (“the Vessel”) by reason of the following:

(a) Regulation 3(4) of the Merchant Shipping (Safety) (Carriage of Cargoes) Regulation (Cap 369AV) requires the shipper to provide the gross cargo unit, being the gross contained weight.

(b) The 1^st Defendant, being the shipper in this case, could have access to information from its customers to the tare weight of the container.

(c) The 1^st Plaintiff’s being the actual feeder carrier, would only be able to see the tare weight stenciled on the door of the container after the Contracts have been concluded and when, on some occasions, receiving the containers from any ocean carrier.

2. As a consequence of Ground 1 above, the learned Judge erred in finding (at paragraphs 152 and 156 of the Judgment) that the sinking of the Vessel was caused by overloading which was Master Pang’s error by allowing the Vessel to be overloaded, and the consequent loss of containers and cargo inside was due to the fault of the 1^st Plaintiff as bareboat charterer, contracting carrier and bailee.  The learned Judge should have found that the 1^st Defendant was in breach of the implied term by wrongfully providing the 1^st Plaintiff the incorrect gross weight of the 49 containers, which caused the Vessel to be overloaded and sank, and the consequent loss of the containers and cargo inside was due to the fault of the 1^st Defendant.

3. It follows that the learned Judge erred in finding that the counterclaim of the 2^nd Defendant has succeeded against the 1^st Plaintiff and should have found that the 2^nd Defendant’s counterclaim has failed as the consequent loss of containers and cargo inside was due to the fault of the 1^st Defendant.”

28.As presently formulated, Ground 1 is pivotal.  If the plaintiffs fail to show that Ground 1 has a reasonable prospect of success, then Grounds 2 and 3 will not take their case any further.

29.Paragraph 107 of the Judgment was the concluding paragraph of Part XI on the issue whether the Term should be implied into the Contracts.  It can be readily seen and Mr Bell has fairly admitted that the plaintiffs made no reliance on or even reference to Regulation 3(4) the Merchant Shipping (Safety) (Carriage of Cargoes) Regulation at the trial in support of their case that the Term should be implied into the Contracts.  We fail to see how they can now.  This disposes of factor (a) in Ground 1.

30.As to factors (b) and (c), we agree with Mr Bartlett that they are re-runs of points already dealt with by the Judge.  We are not satisfied that the plaintiffs have raised any reasonably arguable point based on them in support of their case that the Term should be implied into the Contracts.

31.In the course of his oral submissions, Mr Bell tried to criticize various findings made by the Judge.  But those criticisms do not feature in the Notice of Appeal.  Mr Bell justified his submissions by saying that they were closely linked to factors (b) and (c).  With respect, we disagree.  If the plaintiffs wanted to challenge those findings made by the Judge, they must be expressly identified in the notice of appeal. Cogent reasons why the Judge got them wrong must be clearly set out, too. Failing that, we will not entertain Mr Bell’s criticisms.

32.We are not satisfied that the plaintiffs have raised a reasonably arguable case that the Term should be implied into the Contracts.

33.Even if the Term were to be implied into the Contracts, that would not take the plaintiffs’ case any further.  As rightly submitted by Mr Bartlett and Mr Alder, in order to succeed on their claims against the defendants, the plaintiffs must prove not only the Term but also the misrepresentation as contended.  For it was Mr Bell’s submissions below that the plaintiffs’ claims against the defendants were predicated upon the common thread of the misrepresentation alleged.  But the Judge had found against the plaintiffs on the misrepresentation.  And there is no appeal by the plaintiffs against the Judge’s finding on this point.  That being the case, the plaintiffs’ claims must fail even if the Term were to be implied into the Contracts.

34.For the above reasons, we are not satisfied that the plaintiffs have shown that their proposed appeal has a reasonable prospect of success on Ground 1.  The same is also true for Grounds 2 and 3.

Prejudice

35.In light of our conclusion on the third factor, it is not necessary for us to consider the fourth factor of prejudice.

Conclusion

36.We dismiss the plaintiffs’ application with costs to the defendants, to be taxed if not agreed.

Mr Andrian Bell, SC, leading Ms Tanie W Y Toh, instructed by Ho Tse Wai, Philip Li & Partners, for the 1^st & 2^nd applicant (1^st & 2^nd plaintiff)

Mr Jeremy Bartlett, SC, instructed by Stephenson Harwood, for the 1^st respondent (1^st defendant)

Mr Edward Alder, instructed by Ince & Co., for the 2^nd respondent (2^nd defendant)