Kalimantan Timbers Co (A Firm) v. Mighty Dragon Shipping Co Sa

CACV000057/1979

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Coram: Huggins, J.A., Yang and O'Connor, JJ.

Date of Judgment: 22 April 1980

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JUDGMENT

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Huggins, J.A.:

1. Yang, J. is unable to be present this morning, but he authorises me to say that he is in full agreement with the judgment I am about to read.

2. The questions in issue before the Registrar were (1) whether the Hague Rules were incorporated in a bill of lading and, if so, (2) whether he could, and should, extend the time allowed by an order giving leave to amend a writ by the addition of a second plaintiff, the time limited under the Hague Rules for the bringing of a suit by that second plaintiff having in the mean time allegedly expired. The Registrar ordered an extension of time for an unspecified period provided that any claim by the 2nd Plaintiff should be limited to a claim as owner of the cargo, but the judge in chambers reversed that decision. As I understand the note of his judgment, the judge rested his decision on the grounds that the Hague Rules were incorporated, that the time limit under those rules had expired and that there was no jurisdiction to extend the time once that time limit had expired.

The facts

3. The Plaintiffs, Kalimantan Timbers Co. (the Appellants before us), sued the defendant shipowners in respect of the loss of cargo in the King Dragon I. We now know that the action is brought upon a bill of lading dated 2nd February 1978 and executed in Singapore. This was in fact intended to replace a bill of lading issued in Indonesia in exchange for mate's receipts. That bill was negotiated to the Plaintiffs' bank in Singapore. The substitution was made to avoid "delay experienced in processing shipping documents for shipments from Indonesia to Hong Kong". The new bill of lading provided that "this bill of lading shall be construed and governed by English law". Condition 1 was, so far as was material, in these terms:

The voyage was from a port in Indonesia to Hong Kong, but, one day out, the vessel sank on 5th February 1978 with the loss of all the cargo. The notify party was named as Cosmos Enterprise Corporation Ltd., the party it was sought to join as 2nd Plaintiff. The action was brought on 20th May 1978 and an application to join Cosmos - to which, of course, the consent of Cosmos had necessarily been obtained - was granted on 5th October 1978. The Registrar ordered that the writ be re-served and that the appearance which had been entered should stand as an appearance against Kalimantan only. Under 0.20 r.9 the Plaintiffs should have amended the writ in accordance with that order within fourteen days, but they failed to do so. On 24th January 1979 they applied for an enlargement of time to 10th February 1979 for amendment of the writ. The return date was 7th February 1979 and the summons was endorsed "Estimated time: not exceeding 3 minutes". It must have been apparent that that estimate could not be right unless the application were unopposed and it would seem that the Plaintiffs assumed it would be unopposed. They were mistaken, for on 6th February the Defendants' solicitors, who had on the previous day written a letter which (as it seems to me) questioned the propriety of the order for joinder, gave notice that they were instructed to contend that there was "no justification for the court to exercise its discretion in favour of the Plaintiff": they said they anticipated that the argument would take half an hour and enquired whether the Plaintiffs would agree to "such an adjournment". By that I think they must have meant such an adjournment as would inevitably be ordered as soon as the Registrar learned that the application could not be disposed of within approximately three minutes. This was not, as Mr. Litton has submitted, a request for consent to an adjournment to accommodate the Defendants, but, in effect, a request for an admission that the length of the hearing of the application had been wrongly estimated. When the case was called on before the Registrar, it was adjourned by consent to a date to be fixed. It was apparently appreciated that, if the date fixed were subsequent to 10th February, an order in terms of the summons could not be made, but the summons was not amended. It was not appreciated that any time limit for bringing suit against Cosmos might expire before the application was heard. Not until 9th March was a new date fixed and it was then fixed for 3rd April. On that date the Registrar made his order extending the time. It is not now disputed that before 3rd April 1979 one year must have elapsed from "the date when the goods should have been delivered".

4. It may assist in understanding all that is involved if I indicate how it came about that the application to join Cosmos was made. Kalimantan sued "as owners of cargo and/or the holders and/or endorsees of bills of lading". It would seem that they had insured the cargo with the People's Insurance Co. of Malaya Ltd. Kalimantan sold the cargo to Cosmos and the new bill of lading was endorsed by Kalimantan to the Chartered Bank and by the Chartered Bank to the Hang Lung Bank Ltd., Cosmos's bank. Cosmos signed a letter of subrogation in respect of all their rights and remedies relating to this cargo in favour of the insurers, who had presumably received a similar letter from Kalimantan, because the Plaintiffs' solicitors say that their instructions in the matter came from the insurers. What precisely the respective rights of Kalimantan and Cosmos are alleged to be we do not know, but the Registrar who made the order for joinder must have been satisfied that Kalimantan had shown the existence of a question to be decided which fell within 0.6 r.2(b)(ii). The Plaintiffs' solicitors say that they delayed "filing the amended writ of summons" until they had received confirmation from the Defendants' solicitors that they had instructions to accept service of the amended writ. The Notice of Appeal before us incorrectly recites that Mr. Registrar Barnett ordered on 3rd April 1979 that Cosmos be added as 2nd Plaintiff. That order was made on 5th October 1978 and there has been no appeal against it. The error originated in the Defendant's Notice of Appeal dated 20th April 1979 to the judge in chambers, which similarly mis-states the terms of the order of 3rd April 1979. It would have saved this court a great deal of trouble had the order been included in the appeal record, as it ought to have been included.

Are the Hague Rules applicable?

5. The answer to this must depend upon Condition 1 of the bill of lading, the terms of which I have already set out. There is no direct evidence whether at the place of shipment there was in force "any Statute Ordinance or Law controlling or restricting the free right to contract for the carriage of goods by sea". The learned judge said:

"It was argued that the defendant should have adduced evidence that no Indonesian law applied. I agreed with the defendant's counsel that the defendant was entitled to assume, in the absence of any other evidence, that Indonesian law is the same as that of Hong Kong."

Mr. Litton submits that it was wrong to make that assumption and that there was an onus on the Defendant to prove that there was no such law in Indonesia as was contemplated by the condition. Whether the assertion by the solicitor that

"By the terms of the Bill of Lading exhibited as 'DAF-8' to the Affidavit of David Alastair Fraser filed herein on the 1st March, 1979, the Hague Rules applied to the Contract of Carriage evidenced thereby."

is to be taken as impliedly asserting that the law of Indonesia was the same as that of England is immaterial, because there was no indication that the solicitor was qualified to speak to the law of Indonesia.

6. In my judgment Cons, J. came to the right conclusion on this point.

7. It is then argued that the Rules may nevertheless not be applicable by reason of a deviation and that it would be wrong at this stage to assume that, if the Rules would otherwise apply, they can necessarily be relied upon by the Defendant: the possibility of a deviation would be a matter for enquiry at the trial. We are told that the judge rejected this argument because there was no evidence before him that deviation or other fundamental breach was in issue. Mr. Mills-Owens contended not only that it was for the Plaintiffs to show that a prima facie case of fundamental breach could be made out, but also that, even if that were wrong, the immunity could be claimed in spite of a fundamental breach, that being the true interpretation of Article III r.6. As I understand Suisse Atlantique Societe D'Armement Maritime S.A. v N.V. Rotterdamsche Kolen Centrale 1967 1 A.C. 361 and Photo Production Ltd. v Securicor Transport Ltd. 1980 The Times Feb. 19, that is correct. Mr. Mills-Owens has cited authorities from other jurisdictions which show that this view has been adopted there, but I do not think it is necessary to refer to them. I see no reason to think that the construction contended for by the Defendant is unreasonable: see The New York Star 1979 1 Lloyd's Rep. 298, 302. Even if a fundamental breach would be material, I agree that the mere fact that the vessel sank is not evidence from which a fundamental breach could properly be inferred and that it was for the Plaintiffs to raise the issue.

Does Article III r.6 of the Hague Rules cover actions in tort?

8. The material part of this rule is:

"... the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered."

It is contended on behalf of the Plaintiffs that the immunity conferred by the rule is confined to liability for damages for breach of the contract of carriage and that, as the present action is framed also in tort, it would be wrong to refuse an extension of time solely on the ground that the extension would defeat that limited immunity. Mr. Mills-Owens submits, on the other hand, that the immunity conferred by the rule is a complete discharge ''from all liability in respect of loss or damage" and that there is no justification for a restrictive interpretation of those words. He relied upon The Makefjell 1976 2 Lloyd's Rep. 29, where the Court of Appeal in England interpreted the words "claims arising under this bill of lading" as applying to a claim in tort as well as to a claim in contract: he submitted that the wording of the rule is even wider than that. He relied also upon The Sindh 1975 1 Lloyd's Rep. 372, but I think that case can be distinguished because it concerned a French contract which was to be construed in accordance with French law, and according to that law the exclusive jurisdiction clause required the dispute to be determined in one of two French tribunals. It would have been contrary to the intention of the parties to permit an action in tort to be brought in the English courts.

9. In my judgment there is no reason to give the rule the restrictive interpretation argued for by the Plaintiffs.

Has suit been brought within one year?

10. This question resolves itself into the further question, By whom must suit be brought? It is submitted on behalf of the Plaintiffs that, as Kalimantan took out their writ on 20th May 1978, "suit had been brought" within the year: it mattered not that Cosmos was still not party to the suit, the order of joinder being in effect nothing more than an order giving leave to join and the joinder not having been effected in accordance with such leave. Mr. Mills-Owens contended that that was too wide an interpretation of the rule and that suit must have been brought by the person against whom the time bar was pleaded. Here, he said, Cosmos was even now not party to any claim against his client and its right to damages had therefore been discharged.

11. It must be accepted that the words "loss or damage" are ambiguous: see Carver's Carriage by Sea 12th edition 193 (224). However, one must have regard to the intention of the rule, which was to relieve the carrier from liability to an action for damages, and an action must always be founded upon the particular loss or damage alleged to have been suffered by the plaintiff. There will be cases where, by reason of subrogation, another person may sue in respect of that selfsame loss or damage and I apprehend that, if the party in whom the original right of action was vested brought his action within one year, it would be no answer to a claim by the person who had come to stand in his shoes that that person had not commenced proceedings until the year had elapsed. I think it was on a similar basis that Firestone Plantations Co. v. The United States of America 1945 A.M.C. 746 can be explained, for there the rights of the intervener were, by assignment, the same as those of the libellant. So long as the condition attached by the Registrar remains, that is on all fours with the present case. Cons, J. does not mention the American case and it would seem not to have been drawn to his attention. Different considerations would apply if the condition were not attached and, of course, different considerations might apply where the claim was such that the plaintiff to be joined had suffered greater damage than the original plaintiff. It is true that in The Merak 1965 2 W.L.R. 250 it was said that "suit" should be given a wide interpretation, so as to include an arbitration, but the object of the rule does not require that a suit to establish a different liability, although arising in respect of loss or damage to the same cargo, should be excluded from the time bar. Davies, L.J. said at p. 273:

"The object of Article III, rule 6, of the Hague Rules would appear to be not to specify any particular mode of procedure for the settlement of disputes but rather to ensure that such disputes are speedily notified and speedily settled."

In a case such as Firestone Plantations Co. v The United States of America the original writ is indeed "in respect of the whole loss", to use Mr. Litton's words, but in other cases it is the particular liability of each possible claimant which is discharged: there "the dispute" between the intervener and the defendant must, as it seems to me, be different from that between the plaintiff and the defendant, although there may, of course, be issues common to both disputes, and that is why the Rules of Court permit intervention in an existing suit instead of insisting upon the bringing of a separate action. We have not been referred to the French text of the rules and I derive no assistance in the present case from James Buchanan & Co. Ltd. v Babco Forwarding & Shipping (U.K.) Ltd. 1978 A.C. 141. Mr. Litton is correct when he says that Cons, J.'s decision involves construing the word "suit" as "suit brought by the person concerned", but Roskill, J. (as he then was) was able to construe "unless suit is brought within one year" as "unless suit is brought before the court within one year": Compania Colombiana de Seguros v Pacific Steam Navigation Co. 1965 1 Q.B. 101. Indeed, at p.129 he said:

"'Suit brought' must mean suit brought by the person properly entitled to bring it."

That was a case of subrogation, but I think his words are applicable.

12. I agree with the judge that Cosmos did not become a party upon Kalimantan's applying, with the consent of Cosmos, to join it as a party, nor upon the order that it be joined as a party, nor upon the filing of the application for enlargement of the time for amending the writ: it would not become a party until the writ was in fact amended (O.15 r.8(4)(a)), but in respect of a claim for loss of this cargo I think time stopped running under the rules when suit was brought by Kalimantan in the same capacity, i.e. as owner.

The Discretion

13. What I have said is enough to dispose of the appeal, for it has not been suggested that, if the time has not expired, it would be just to refuse an extension of time, but, lest it be held that the time limit did expire, I go on. It is not, I think, in dispute before us that there is a discretion to extend time in spite of the limitation period although the judge took the view that there was no discretion and consequently did not consider this aspect of the case. With respect to him I think there is a discretion. It was so held in The Puerto Acevedo 1978 1 Lloyd's Rep. 38, 40:

"R.S.C., 0.15, r.6, gives a wide discretion to the Court to add a defendant. That discretion extends to a case where, on the face of it, the one year limitation under the Hague Rules has gone by. If justice requires it, the additional defendant can be joined, even though it does mean depriving him of the time bar under the Hague Rules".

It is true that the matter was there dealt with ex parte and the court recognized the possibility that objection could be taken at a later stage, but that does not alter the fact that the court had no doubt the jurisdiction existed. Bridge, L.J. thought the matter "beyond argument".

14. It therefore remains for decision whether the circumstances are such that it would be right to give the Appellants a locus poenitentiae, Mr. Litton relies upon the question from the judgment of Bowen, L.J. in Cropper v Smith (1884) 26 Ch. D. at p.710 which appears in the 1979 Supreme Court Practice 345 (20/5-8/6):

"It is a well established principle that the object of the Court is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights . . . I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or grace. . . . It seems to me that as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected if it can be done without injustice, as anything else in the case is a matter of right".

However, that leaves the question whether an extension of time can here be granted "without injustice". For his part Mr. Mills-Owens relies upon Mabro v Eagle, Star & British Dominions Insurance Co. Ltd. 1932 1 K.B. 485, a case under the Limitation Acts. The party sought to be added was alleged to be the person really interested in the insurance in question. Scrutton, L.J. said at p.487:

"In my experience the Court has always refused to allow a party or a cause of action to be added where, if it were allowed, the defence of the Statute of Limitations would be defeated. The Court has never treated it as just to deprive a defendant of a legal defence. If the facts show either that the particular plaintiff or the new cause of action sought to be added are barred, I am unable to understand how it is possible for the Court to disregard the statute. It has been suggested that we might allow the joinder without prejudice to any defence against the claim, but I cannot see why the parties should be put to the expense of allowing an action to proceed which is barred in law".

That is a principle which has been applied in more recent cases. Braniff v Holland & Hannen and Cubitts (Southern) Ltd. 1969 1 W.L.R. 1533 was another case under the Limitation Acts. There the plaintiff obtained leave to amend its writ and statement of claim for the purpose of joining a second defendant. As in our case the writ was not amended within the time allowed and application was made for an extension of time. By then the period of limitation had expired. Although the proposed second defendant was aware of the intended claim against it, it was held that the extension of time ought not to have been granted. However, it is argued that our case is distinguishable in that the application for an extension here was made, but not heard, within the limitation period. This seems to me an important distinction. Whilst it is truly said that Cosmos could have safeguarded its position by instituting an action, that would not have been necessary had it been possible to hear the application for an extension of time on the day it was filed, or even on the return day. I think that was a ground upon which, in the exercise of the court's discretion, it would have been proper to depart from the strict rule. The learned Registrar did depart from the strict rule and, for my part, I think he was entitled so to do. It matters not that Kalimantan and Cosmos have no joint interest and that the application to join Cosmos and the application for enlargement of time were made by Kalimantan. I would allow the appeal and restore the order of the Registrar with the addition of a time limit of four days from today.

22nd April 1980.

Representation:

Litton, Q.C. & R. Tong (Baker & McKenzie) for Appellant.

Mills-Owens, Q.C. (Norton, Rose, Botterell & Roche) for Respondent.