The Owners of Cargo Lately Laden on Board the Ship Artemis v. Barber Ship Management Ltd
Read the full judgment text of CACV 74/1982 on BabelCite. This Court of Appeal judgment was delivered on 8 July 1983.
1. In the first appeal, the appellants, Artemis Transportation Corporation (hereinafter referred to as Artemis) appeal against a judgment of Power, J., wherein he refused to set aside service of a writ served within the jurisdiction and an order of Mr. Registrar Blackwell giving leave to the respondents, the owners of cargo lately laden on board the ship 'Artemis' (hereinafter referred to as the Cargo Ownors), to issue a concurrent writ of summons and to service notice of the writ on Artemis by
|
CACV000074/1982
_____________
________________ Coram: Huggins, V.-P. & Barker, J.A. Date: 8 July 1983 ___________ JUDGMENT ___________ Barker, J.A.: 1. In the first appeal, the appellants, Artemis Transportation Corporation (hereinafter referred to as Artemis) appeal against a judgment of Power, J., wherein he refused to set aside service of a writ served within the jurisdiction and an order of Mr. Registrar Blackwell giving leave to the respondents, the owners of cargo lately laden on board the ship 'Artemis' (hereinafter referred to as the Cargo Ownors), to issue a concurrent writ of summons and to service notice of the writ on Artemis by post or other means at their disposal. 2. In the second appeal, the appellants, Barber Ship Management Limited (hereinafter referred to as Barbers) appeal against a judgment of Jackson Lipkin, J. refusing to strike out a claim against Barbers endorsed on the same writ in pursuance of Order 18 Rule 19 and/or of the inherent jurisdiction of the Court. 3. Both appeals were heard together as they involved virtually the same, though not wholly identical, considerations. 4. Artemis was a company registered in Liberia. It was a one ship company, that ship being the Artemis. Barbors are a company registered in Hong Kong. They are professional ship managers. It will be necessary later to examine in some detail the relationship between Artemis and Barbers. 5. The events which led up to the issue of the writ herein were as follows. The M.V. Artomis, built in 1973, was bought by the Silverdale Company Limited, a Bermudan Company in 1979, which Company entered into a Management Agreement with Bermudan. Late in 1979 Artemis bought this ship from Silverdale and by agreement the Management Agreement was continued as if it has been made between Artemis and Barbers. Thereaftor Artemis let the ship on time charter to Atlantie Lines, which company subchartered her to Companies Chilena De Navegacion Interoceanica (hereinafter referred to as C.C.N.I.), which company in turn subchartered on a voyage charter to Empresa Forestal Aruaco Ltda. In late November 1980, the ship was loaded in Chile with a caigo of pine logs, the port of discharge being Shanghai. 6. Barbers, in accordance with the terms of the Management Agreement insured the hull of the ship with a Norwegian Insurance Company Unitas, and the cargo with a Norwegian company Assurance foreinger Gard Giensidig (hereinafter referred to as the Gard P.I. Club). Bills of Lading were issued on a C.C.N.I. form and were signed 'For and on behalf of the Master', probably by C.C.N.I., though it is not necessary to decide this. 7. On the 29th/30th December 1980 the ship sank somewhere to the South East of Yokohama, and all the cargo was lost. From the 'Statement of Total Loss' prepared by 'Unitas', it appears that the ship encountered heavy weather, bundles of logs stowed on deck were torn loose and washed away. Tarpaulins above a hold were also washed away, whereupon the hold filled with water. The pump at first worked satisfactorily, but later the ship came down by the head, making steering impossible. Thereafter the pump clogged, the spare anchor became loose, cargo floated out of the hold, and eventually the Master decided to abandon ship, he and his entire crew being safely transferred to a Japanese Coast Guard Patrol vessel. No one actually saw the ship sink, because the Patrol Vessel had to leave for another distress situation. But it is not disputed that she did. 8. What followed thereafter may be of some significance. Unitas sent a copy of the total loss statement to the cargo underwriters, W.S. Webster and in March 1981 they put Websters in touch with the Gard P.I. Club, Artemis' insurers in respect of cargo claims. Thereupon Websters claimed against the Gard P.I. Club on behalf of some of the cargo consignees, and Gard rejected liability on the ground of perils of the seas. 9. Websters thereupon passed the matter on to Clyde & Co., the respondent's solicitors, who by letter dated 23rd November 1981 made a claim against Artemis alone, such letter being addressed 'c/o Barber Ship Management Ltd., 301A Melbourne Plaza, 33 Queen's Road Central, Hong Kong'. No letter before action was ever sent to Barbers. 10. On the 2nd December 1981 Clyde & Co. issued a writ, naming Artemis and Barbers as defendants. The endorsement on the writ was:
11. On the same day Clyde & Co. served two copies of the writ, one on Barbers personally, and the other on Barbers as agents of Artemis. On the 9th December 1981 Clyde & Co. made application ex parte to Mr. Registrar Blackwell for leave to issue a concurrent writ and serve notice of it, out of the jurisdiction, on Artemis. This application was presumably made ex abundanti cautela, since it was otiose if service on Artemis was properly made on the 2nd December 1981. 12. Power, J. held that service on Artemis within the jurisdiction was good, and further that service on Artemis outside the jurisdiction was also good by virtue of the provisions of Order 11(1)(i)(j) of the Rules of the Supreme Court. It is against this decision that the first appeal is brought. 13. I deal first with the question as to whether service on Artemis was properly made within the jurisdiction. The answer to this depends upon whether Artemis could properly be said to be carrying on business within the colony at the date of such service. The relevant principles in this connection are to be found in Okura & Co., Limited v. Forsbacka Jernverks Aktiebolag(1), wherein Buckley L.J. said, at page 718:
14. The underlining is mine. I add one further matter, and that is that in each case the question as to whether a foreign corporation is carrying on business 'here' is a question of fact. (See The World Harmony(2), per Hewson J. at page 251.) 15. It is now necessary to refer in some detail to the Management Agreement, since it was around this that much of the argument centred. It was dated the 23rd May 1979 and was signed by Earbers and by Agence Maritime Transoceanique S.A. (hereinafter referred to as Agence Maritime) on behalf of Silverdale. On the purchase of the ship and the novation of the agreement, the addendum was signed by Agence Maritime on behalf both of Silverdale and of Artemis. (Incidentally no one signed on behalf of Barbers.) 16. The relevant clauses of the Agreement are:
17. I have set out a large number of the terms of this Agreement because they have an important bearing on almost all aspects of the appeals. It will be apparent that it is an ineptly worded document. One has only to point to clause 13, Redelivery of Vessel, which requires the Managers to redeliver the vessel even though it has sunk. 18. Power, J. came to the conclusion that the effect of this Agreement was that the master and crew of the ship were in the employment of Barbers. I disagree. Clause 6B, speaks of the Managers, on behalf of the owners entering into contracts of services (including service contracts with officers and crews), not in their own name. It would not be expected in a contract of employment that there would be a term explicitly giving the employer the right to sack his employee. It would not be necessary. It is implicit in every contract of employment. But in fact, in this Agreement, there is such a term, because by clause 6B the Managers, on behalf of the Owners, may cancel service contracts with Officers and Crew. The Judge relied on clause 5A for his conclusion 'The Owners are entitled to request transfer of certain personnel with whom they can show reason of dissatisfaction.' But in my judgment the meaning of this term is clear. The Managers manage not only this ship but others, and they have their sources of recruitment, probably through crewing agencies. If the Owners were to sack officers or members of the crew, it might well impair Barbers relationships with these sources or agencies. Hence this clause. There is to my mind no doubt that the master officers and crew were at all times the employees of Artemis. 19. In considering whether or not Artemis were carrying on business in Hong Kong, it is important to realise the limitations which were placed on Barbers. They could not decide:
20. Furthermore, it is necessary only to look at the multitudinous limitations on their authority in the Agreement, e.g.:
21. The foregoing are only examples. In my judgment, the facts point inevitably, in the words of the Okura(1) case (op cit) to the conclusion that Artemis merely had an agent, Barbers, in Hong Kong, and that Barbers at no time did Artemis' work for Artemis in Hong Kong. 22. I have arrived at the above conclusion without consideration as to whether the second requirement expressed by Buckley L.J., namely that the acts relied upon as showing that the corporation was carrying on business in the jurisdiction were done at a fixed place of business, has been fulfilled. It is admitted that during Barbers' management the ship never touched Hong Kong. Consequently all such matters as bunkering, surveying, maintaining to the requisite standard and so on were performed outside Hong Kong. Moreover, there is no evidence to show that any manning took place in Hong Kong. Probably it did not. In the circumstances, I am doubtful if this requirement was satisfied, but it is not necessary in all the circumstances for me to express any conclusion upon it. 23. Suppose the foregoing conclusions are wrong, can the cargo owners show that at the date of the writ Artemis was carrying on business in Hong Kong? This necessitates in the first place a consideration of clause 13B:
24. The Judge held that the use of the words 'may be' meant that the owners or Managers were given an option to terminate the agreement. But I cannot see how this construction can possibly stand with the adverb 'automatically'. If something is terminated 'automatically' no choice is left. The only way to make sense of the clause is to read 'may be' as meaning 'will be'. Such a construction makes sense of the provisions as to the sale of the ship, and also means that on the ship's being sunk the Agreement is at an end subject only to clause 13F by which after termination Barbers are obligated to complete all current affairs. This can only mean all current affairs arising out of the Agreement. 25. Whether or not I am right about my construction of clause 13B, it appears to be common ground that the Agreement, subject to clause 13F, came to an end on March 29th, 1981, after which date no management fee was claimed or paid. 26. What, then, were the current affairs that remained to be completed? In this connection it is said that there was a conflict between the affidavit of Mr. Vijan, Barbers General Manager, wherein he says that ever since the termination of the management agreement upon the loss of the vessel Barbers have in no way been concerned with the affairs of Artemis, and that of Mr. Ahuja, Barbers Senior Superintendent, wherein he says that all current affairs were completed by the 30th November 1981 by which time all officers and crew had been repatriated and all accounts settled. I do not so regard the affidavits. Mr. Ahuja is merely filling out and completing the picture. Be that as it may, in my judgment repatriating crew and settling accounts cannot be regarded as carrying on Artemis' business in Hong Kong. It was a tidying up exercise after the business had ceased. A fortiori after the 30th November 1981. All that remained for Barbers thereafter was to produce accounts (Barbers' accounts be it noted) and to cooperate in resisting any claims which were being or might be made against Artemis. This was purely the duty of Barbers qua managers, and nothing else. In my opinion the service on Artemis within the jurisdiction was bad. 27. I turn then to consider the relevant provisions of Order 11 Rule 1 of the Rules of the Supreme Court. In so doing, I bear two things in mind, namely:
28. It was submitted generally before us by Counsel for the cargo owners that Artemis had failed to comply with the terms of Order 12 Rule 8, and therefore could not now complain about leave having been given to serve out of the jurisdiction. 29. Order 12 Rule 8(4) reads (so far as relevant):
30. The argument was that there was no affidavit from anyone in Artemis, that the affidavit of Mr. NG Kwok-ying, a solicitor acting for Artemis, wherein he adopted on behalf of Artemis the contents of Mr. Vijan's affidavit, did not verify its truth and that the affidavits filed by or on behalf of Artemis were not full and frank. 31. It might have been better if an affidavit had been filed by someone from Artemis, but in my judgment this does not affect the position. Mr. Ng is a solicitor of the Supreme Court, and it goes without saying, and I accept, that he would not swear an affidavit unless he believed its contents to be true. Moreover, I can see no lack of frankness in the affidavits filed on behalf of Artemis and Barbers. 32. It is next submitted that the Registrar's order giving leave to issue a concurrent writ and serve notice thereof on Artemis out of the jurisdiction was justified by reason of Order 11(1)(i)(c), which allows such service with leave if relief is sought against a person "domiciled or ordinarily resident with the jurisdiction". It has never been contended that Artemis was 'domiciled within the jurisdiction'. The question is, was it resident therein? 33. It is common ground that for a foreign corporation to be so resident, it must be established that its central management and control were within the jurisdiction. For the reasons I have given above, when discussing service within the jurisdiction, I am satisfied it was not. All the policy decisions, all the commercial decisions and many of the managerial decisions were taken outside Hong Kong. It was, somewhat faintly, argued that since the House of Lords held in Swedish Central Railway v. Thompson(5) that a corporation may have more than one residence, we were at liberty to say that, notwithstanding the foregoing consideration, it was open to us to hold that part of the central management and control was in Hong Kong. This decision has caused great difficulties, and for my part, I find it hard to follow. I do not understand how a circle can have two centres. Dicey & Morris(6) seek to explain it by saying "The circumstances of a particular corporation may exceptionally be such that it is impossible to identify one country as the place of central management and control since paramount authority may be divided or even, at any rate in theory, peripatetic." Even if this submission is accepted, and I am far from doing so, and even if in the present case, the paramount authority were divided or peripatetic (and there is no evidence to show that it was), I am satisfied that no part of the division was in Hong Kong at any time. Thus I disagree with Power, J. on this point. But I agree with him that, certainly on the termination of the Management Agreement, Rule 11(1)(i)(c) had no application. 34. Power, J. held that leave was properly given under Order 11(1)(i)(j) which reads:
35. It is well settled that the claim against the party within the jurisdiction must be brought bona fide, and not merely for the purpose of bringing before the Court the defendant who is out of the jurisdiction (see The Brabo(7) and Witted v. Galbraith(8)), and it was submitted on behalf of the appellants that in the present case the action against Barbers was brought mala fide. This is a submission which I emphatically reject. It is apparent from the affidavits of Mr. Anthony Rooth, a partner of Clyde & Co., that he was at all material times acting on the advice of Counsel and there is not a shred of evidence to suggest bad faith on his part. 36. The sole question to be decided under this sub-rule is whether the action was properly brought against Barbers. It was submitted on behalf of the respondents that a different and lower standard of proof was required under Order 11 R. 1(1)(j) than under the other sub-rules of Order 11 R. 1. This is clearly wrong. As Lord Oaksey said in the Vitkovice(4) case (op cit) at page 881:
37. But what is the standard of proof required to show that an action is 'properly brought' against the defendant within the jurisdiction? Counsel for the respondents argued that all he had to show was an arguable case, however slight, and he relied for this submission on two decisions of Brandon, J., namely the Manchester Courage(9) and the Craiova(10). But in my judgment all these two cases decided was that there were, in each, triable issues of fact upon which the Court was clearly not competent to adjudicate at that stage. 38. In the Vitkovice(4) case (op cit) Lord Simonds said at page 879:
39. Lord Radcliffe said at page 883:
and at page 884 he said:
40. I do not read the speeches in the Brabo(7) (op cit) as in any way detracting from these principles. Therefore I base my judgment upon whether the cargo owners have a good arguable case, or a strong argument, against Barbers. 41. As I have said earlier, at this stage a Court cannot decide disputed facts. As Lord Esher M.R. said in Massey v. Heynes & Co.(11) at page 338:
42. But Counsel for the appellants argued the appeals upon the basis of an acceptance of all the facts at present before the Court, so that for the purposes of the hearing there were no disputed facts. 43. Two preliminary matters can be cleared away at once. First it will be recalled that in the writ Barbers were sued, inter alia, in the capacity of owners of the Artemis and in paragraph 13 of his first affidavit Mr. Rooth said:
44. This allegation has been abandoned. But Counsel for the appellants mounted a submission that, since the cargo owners alleged that Barbers were the true owners of the vessel and were liable in contract, they ought not now be allowed to shift their ground and allege, e.g. negligence. This submission was based on Parker v. Schuller(12). That was a case in which the plaintiffs had obtained leave to serve a writ out of the jurisdiction on the basis of a breach of contract within the jurisdiction, namely non-delivery of goods. On appeal this contention was abandoned, since the contract was a c.i.f. contract, and the allegation was that there had been a failure to hand over documents. 45. A.L. Smith M.R. said at page 300:
46. In the present case, the causes of action as argued before us were endorsed on the writ, and therefore I am of the opinion that Parker v. Schuller(12) has no application. 47. Secondly, it is not inapposite in the context of R. 1(i)(j) to remark on the attitude initially taken by the advisers of the cargo owners. It never occurred to them to make a claim against Barbers. The claim was made, as one would expect it to have been, solely against Artemis, the ship owners, and it was only on the approach of the end of the limitation period, and, one suspects as a matter of abundant caution, that Barbers were joined as co-defendants on the writ, without even a letter before action having been sent. 48. It was argued, first, that Barbers were liable in contract. It was submitted that in clause 1 of the Bill of Lading carrier is defined so as to include, inter alios, 'operator' and that clause 3 envisages the possible liability in contract of persons, other than the owner or demise charterer. I disagree. In the first place, in my judgment, 'manager' has a different connotation from operator. An operator may take part in the management of a ship, but the manager does not operate it. Secondly, it is necessary to have regard to the terms of clause 3 of the Bill of Lading; which reads as follows, so far as is relevant:
49. The effect of this clause (the demise clause as it is known) is that the contract was solely between Artemis and the Cargo Owners. (See e.g. The Berkshire(13), where Brandon, J. so construed an almost identical clause.) 50. Secondly it was argued that Barbers would be liable as bailees. This argument was founded mainly on the submission that the master and crew were Barbers' servants. For the reasons given above, in my judgment they were not. It was also submitted that, in some way, by the terms of the Management Agreement, Barbers were in possession of the vessel and, in consequence, of its cargo. I say no more than that I can see no foundation whatsoever for such a contention. 51. Thirdly, it was submitted that Barbers could be liable in negligence. The first head was vicarious liability for the supposed negligence of the master and crew. I have dealt with this supra. The second head was res ipsa loquitur. This was not pursued before us, and rightly so. The 'res' might speak for itself as against Artemis, but there is no reason why it should as against Barbers. 52. The third head was negligence as an independent contractor. A number of suggested instances of possible negligence was adumbrated by Counsel for the cargo owners, but they were based on pure speculation. It is not, in my judgment, sufficient for the cargo owners to say that there may be facts, which on investigation, may show negligence on Barbers' part. There is simply no evidence to show that Barbers in any way failed in their managerial duties. 53. Lord Esher M.R. in Massey v. Heynes & Co.(11) (op cit) said at page 338:
54. In my judgment, had Artemis and Barbers both been within the jurisdiction, Barbers would not have been a proper party to the action. 55. I turn then to consider the second appeal. Here, different considerations apply. It is not for the cargo owners to show that they have a good arguable case, or a strong argument, against Barbers. It is for Barbers to show that this is a plain and obvious case where the cargo owners' action against them must fail. 56. I have earlier in this judgment rehearsed the various arguments as between the cargo owners and Barbers, and it would be a work of supererogation to repeat them. In my judgment this is a plain and obvious case. I can see no way in which the cargo owners can succeed against Barbers in the action as at present constituted. That being so, I would strike out, as against Barbers, the endorsement of the writ under the inherent jurisdiction of the Court. 57. It follows that in my judgment both appeals should be allowed. Sir Alan Huggins, V.-P.: 58. I agree that the appeals should be allowed and, as we are differing from the judge in chambers, will endeavour to state my main reasons shortly. 59. The first question is whether the attempted service on the 1st Defendant by delivery of the writ to the 2nd Defendant in Hong Kong was good as being service through the alter ego of the 1st Defendant. It is argued that before the loss of the Artemis the 1st Defendant was present and doing business in Hong Kong because the 2nd Defendant was its agent and doing business in Hong Kong as such. Mr. Pollock submits that that was not so and he relies on Okura & Co. Ltd. v Forsbacka Jervererks Aktiebolag 1914 1 K.B. 715. Mr. Dicks, on the other hand, relies on a passage in Vol. 1 of Dicey & Morris on the Conflict of Laws (10th ed.) at p. 188 and on The World Harmony 1965 1 Ll.L.R. 244. He points to clause 14A of the Management Agreement as indicating that the 2nd Defendant was performing a substantial part of the functions of an owner. 60. I recognise that one company may undertake so much of the functions of another company that the latter is in reality carrying on the business of the former. That was the situation in The World Harmony. The burden of proof is on the Plaintiff to establish that that is the situation here: The Theodohos 1977 2 Ll.L.R. 428. The mere fact that a person employs an agent (as distinct from a servant) within the jurisdiction does not ipso facto mean that the principal is carrying on business within the jurisdiction. Prima facie each is carrying on his own business. Thus it was conceded that, if a foreign ship owner employed a solicitor in Hong Kong for the purposes of litigation here, the solicitor would not be carrying on the business of the ship owner: see Okura & Co. Ltd. v Forsbacka Jervererks Aktiebolag (supra) at p. 718. It seems to me that the evidence here falls far short of establishing that the 1st Defendant was carrying on business in Hong Kong. I think Mr. Pollock is right when he says that the carrying on of business predicates in this context some possibility of profit making. Such a possibility did not exist within the jurisdiction, for the commercial operation of the Artemis (the only function from which a profit could result) was expressly reserved to the owners by the Management Agreement. In the event that function was transferred to Agence Maritime Transoceanique S.A., a Belgian company. 61. It was contended that the master of the Artemis, on whose behalf bills of lading were signed, was in the employment of the 2nd Defendant by reason of the terms of the Management Agreement. It would be most unusual for the master to be employed by some one other than the ship owner in the absence of a demise charterer and this would arise only if a clear intention were shown. The Management Agreement is not as clearly drafted as it might have been and I am certainly not persuaded that this was the intention. Clause 13E does, indeed, provide that on the manager's giving, in specified circumstances, notice of termination of the Management Agreement "the vessel will be re-delivered to the owners at a safe port", as if the manager had possession. The Agreement was to commence on delivery of the vessel to the 1st Defendant by the previous owners and I find no provision for subsequent delivery to the 2nd Defendant. The intention of the "re-delivery" clause was, I believe, to provide that, upon notice of termination given by the manager, the Management Agreement should not terminate immediately but only on arrival at a safe port, where the owner would be able to take all necessary steps for the continued running of the vessel. The 2nd Defendant was entitled to engage officers and crew as agents (whether disclosed or undisclosed) of the ship owner. The power to engage officers and crew "in their own name on behalf of the owners" meant no more than that. It is true that the 2nd Defendant was required to manage the vessel "as prudent ship owners" "as if it would be their own ship within their fleet" and that the 1st Defendant was "entitled to request transfer of certain personnel with whom they can show reason of dissatisfaction". I think the intention was to recognise that the 2nd Defendant was a professional ship manager, responsible for vessels belonging to several owners, and that it might wish to maintain good relations with the personnel it engaged on behalf of all the owners by transferring a man found to be unsatisfactory by one owner to a vessel of another owner if it thought appropriate, rather than to throw him back into the general pool. If the master, officers and crew were to be employed by the 2nd Defendant it would have been unnecessary to provide that the services rendered to the ship owner should include payment of remuneration and the like, for which the employer would inevitably be responsible. Whilst I appreciate the difficulties which the judge in chambers found in interpreting the Agreement, I have come to a different conclusion as to its overall effect. 62. If the 1st Defendant was not carrying on business in Hong Kong before the casualty, there can be no question of its doing so on the date of the attempted service of the writ, i.e. 2nd December 1981. However, it follows from what I have said about the nature of "business" that, even if the 2nd Defendant had been operating the vessel in the same way as Niarchos (London) Ltd. was operating the Would Harmony, that part of the ship owner's functions could not survive the sinking of the 1st Defendant's entire fleet: all that would have remained would have been the winding of the defunct business. A lawyer who ceased to practise might well continue receiving fees for a considerable period of time afterwards and might have outstanding accounts for books supplied to him on credit, but it would be a mis-use of language to say that he remained in practice during that period. 63. Reliance was placed by the Plaintiff on clause 13B and the judge was impressed by the use of the auxiliary verb "may". No one who appreciated the strict legal distinction between "may" and "shall" could possibly have used "may" with the adverb "automatically". On a fair interpretation, it seems to me, it is the adverb which was intended to be significant. On the total loss of the vessel, therefore, the management period terminated, although various obligations under the Management Agreement continued. That is clearly how the parties understood the situation in the early part of 1981. 64. Accordingly, I think that on any view of the facts service on the 2nd Defendant was not good service on the 1st Defendant. 65. Next it was contended that leave for service outside the jurisdiction was properly given under O.11 r.1(1) (c) on the ground of "ordinary residence" within the Colony pursuant to the application dated 9th December 1981. For this purpose a company is ordinarily resident if the central management and control is within the Colony. Mr. Dicks seeks to draw a distinction between "central management and control" and "ultimate control". I suppose it may be said that in The World Harmony ultimate control remained with World Tankers Corporation although central management and control rested in fact with Niarchos (London) Ltd. That is too legalistic an approach. The ratio decidendi of The World Harmony was that, for all practical purposes, Niarchos (London) Ltd. was acting as the owner. 66. For the reasons given by Barker, J.A. I agree that the Defendants' affidavits in this case, although open to criticism, were not fatally deficient. I would, however, mention the complaint that in the course of his judgment the judge in chambers said
The passage was unhappily worded, but I am persuaded that the judge meant no more than that the court should not, in the circumstances indicated, hesitate to draw an inference which, where the primary facts were not contradicted, was reasonable. 67. On the evidence it is quite impossible to hold that for all practical purposes the 2nd Defendant was acting as the owner of the Artemis. The 1st Defendant is a Liberian company and I would have thought that in the absence of evidence to the contrary the central management and control was in Liberia, although that is a presumption which could readily be rebutted. The fact is that we just do not know where the directors resided or met or to whom (if anyone) they had transferred the central management and control. All we do know is that Agence Maritime Transoceanique exercised the operational control and that it executed the Management Agreement with the 2nd Defendant on behalf of the 1st Defendant. That Agreement was concerned only with the physical management of the Artemis and, although the Artemis was apparently the sole profit earning asset of the 1st Defendant, the Agreement did not give central management and control of the company to the 2nd Defendant. For some purposes a corporation can be ordinarily resident in more than one place, but I have grave doubts whether it can for the purpose of O.11 r.1(1)(c), for management and control which is divided is not "central". Even if it can, I am satisfied that on the evidence the 1st Defendant was not ordinarily resident in Hong Kong. 68. The final contention on behalf of the Plaintiff is that the 1st Defendant could properly be served out of the jurisdiction, because it was a proper party to an action properly brought against the 2nd Defendant: O.11 r.1(1)(j). An action is not properly brought against a party within the jurisdiction simply because a cause of action can be framed against it. An action against such a party which is bound to fail is not properly brought, and the test is whether that party would have been sued if the party in fact outside the jurisdiction had been within the jurisdiction: Witted v Galbraith 1893 1 Q.B. 577. In deciding whether it would have been sued, what is to be considered is whether there is a good arguable case: Vitkovice Horni A Hutni Tezirstvo v Korner 1951 A.C. 869. It has been contended that that case is not good authority, because The Brabo 1949 A.C. 327 was not cited. In The Brabo the relevant facts were not in dispute and the law was held to be clear. I do not think that anything there said by Their Lordships would have affected the decision in the later case. 69. Mr. Pollock contends that the Plaintiff can rely only upon such cause of action as was disclosed at the time of the ex parte application for leave to serve out of the jurisdiction: a party may not change his cause of action between the ex parte and inter partes stages: Parker v Schuller (1901) 17 T.L.R. 299. In that case a plaintiff was not allowed to rely on a different breach of the same contract, the original breach alleged being non-delivery of documents. In the present case the cause of action disclosed by the first affidavit of Mr. Rooth was that the 2nd Defendant "may have been true beneficial owner of the vessel". That is an allegation which Mr Dicks no longer feels able to advance and one must turn to Mr. Rooth's second affidavit (dated 22nd March 1982, after the making of the ex parte order) for the cause of action now alleged by the 2nd Defendant, namely that the master of the Artemis was the servant of the 2nd Defendant, which was therefore liable to the Plaintiff both in contract (under the bill of lading or as bailee) and in tort. As I understand him, Mr. Dicks argues that the allegation of true beneficial ownership was merely a possible alternative to the main basis of the application for leave to serve the 1st Defendant out of the jurisdiction but in truth it was the only allegation made to support an application under O.11 r.1(1)(j). Mr. Dicks says that Parker v Schuller does not cover the present case and should be restricted to its own facts. In my view it is entirely in point and on that ground I would reverse the decision of the judge under O.11 r.1(1)(j), subject to the question of costs if that be the only ground upon which the Appellants succeed. 70. Is there, in any event, a proper cause of action against the 2nd Defendant? First it is said that the 2nd Defendant, as manager, was party to the bills of lading. The argument goes like this: the bills of lading were signed for and on behalf of the master and the master was the servant of the 2nd Defendant: therefore the 2nd Defendant was party to the bills of lading. The suggestion that the master of a vessel can be the servant of a person other than the ship owner or a demise charterer is an unusual one and would require very strong evidence to support it. Mr. Dicks, as we have seen, seeks such evidence in the Management Agreement. For reasons I have already given I reject the argument that the master was the servant of the 2nd Defendant. Equally I reject the contention that the 2nd Defendant was ever in possession of the cargo and was a sub-bailee. It is said that the 2nd Defendant was sued as "operator of the vessel under the Management Agreement". This appears to me to be a purely semantic argument and assumes that the word "operator" has the same meaning in the bill of lading as in the Management Agreement. It is a word of general import and equally appropriate to the activities of a ship manager as to those of a ship owner. Term 1 of the bill of lading includes this definition of carrier:
It is to be noted that "operator" is there linked to "demise charterer". "Carrier" always includes a demise charterer but only includes a time charterer "if bound hereby". This, it seems to me, is an indication that "operator" does not have the same extended meaning as it has in the Management Agreement, where "operation" is sometime used as a synonym for "management". The attempt to make the 2nd Defendant a party to the bill of lading therefore fails. 71. Then it is said that the 2nd Defendant is liable in tort by reason of negligent storage of the cargo. No particulars of negligence have been given, because, it is said, res ipsa loquitur. I cannot accept that this is a proper case for the application of that principle. Even if it were, there is no case of negligence made out against the 2nd Defendant once it is concluded that the 2nd Defendant acted throughout solely as manager of the vessel. That is not to say that I think a case of mala fides has been made out against the Plaintiff, but, applying (as we must) the same test as is applicable in a case under O.11 r.1(1)(c), I am not persuaded that the Plaintiff has a good arguable case that the action was properly brought against the 2nd Defendant. 72. Should the Plaintiff's action against the 2nd Defendant be struck out as vexatious or an abuse of the process of the court? We are not to attempt to try disputed matters of fact upon affidavits and it is for the 2nd Defendant to show that this is a plain and obvious case where the action must fail. I think it is such a case. This is the only point upon which Barker, J.A. and I are not ad idem. He takes the view that it is enough if the cause of action sought to be relied upon was included in the endorsement on the writ. Normally one would expect the affidavit in support of the application under O.11 r.1(1)(j) to refer to any relevant cause of action alleged in the writ, but if the plaintiff by his affidavit limits (expressly or impliedly) the ground of his application to one of several causes of action alleged in the writ, I think it is his affidavit which is the deciding factor and that he could not, on appeal, rely on a ground which he had not relied upon before the judge, even if it was included in the writ. The Master of the Rolls said in Parker v Schuller (supra) that the cause of action sought to be relied upon on the appeal was
However, the other two judges appeared to base their decision solely upon the fact that the cause of action then relied upon was not that in the affidavit. Collins, L.J. said that
Romer, L.J. said that
In the light of these judgments I do not find it necessary to inquire whether the indorsement on the writ in the present case was or was not wide enough to cover the cause of action now sought to be relied upon: even if it was (as Barker, J.A. thinks) I am of opinion that the Plaintiffs have tied themselves by their affidavits. In my view Parker v Schuller is entirely in point and on that ground I would have reversed the decision of the judge under O.11 r.1(1)(j), subject to the question of costs if that had been the only ground upon which the Appellants succeeded. However, in the event I think nothing turns upon this point, for the Appellants get home on another ground. (1) [1914] 1 K.B. 715 (2) [1965] 1 Lloyd's Report 244 (3) [1977] 2 Lloyd's Report 428 (4) [1951] A.C. 869 (5) [1925] A.C. 495 (6) The Conflict of Laws, Vol. 2, page 729 (7) [1949] A.C. 326 (8) [1893] 1 Q.B. 577 (9) [1973] 1 Lloyd's Law Report 386 (10) [1976] 1 Lloyd's Law Report 536 (11) Vol. 21 Queen's Bench Division 330 (12) 17 Times Law Report 299 (13) [1974] 1 Lloyd's Law Report 185 Representation: Mr. Gordon Pollock, Q.C. & Mr. Edward Chan instructed by Messrs. Ince & Co. for the appellant. Mr. Anthony Dicks instructed by Messrs. Clyde & Co. for the respondent. |