Collin Navigation Co. S.A. v. Perusahaan Pertambangan Minyik and Another

CACV000080/1985

PRACTICE AND PROCEDURE - SERVICE OUT OF THE JURISDICTION - APPLICATION TO SET ASIDE - ESTOPPEL - VEXATIONS PROCEEDINGS - APPEAL

By an agreement dated 1st July 1971 the plaintiffs agreed to construct for and sell to the defendants two tugboats. The defendants failed to take delivery. On 26th February 1980 the plaintiffs, by leave, issued a writ notice whereof they served on the defendants out of the jurisdiction. On 4th February 1982 part of the general indorsement of the writ was struck out as being barred by the provisions of the Limitation Ordinance. The plaintiffs continued to prosecute the balance of their claim which at the material time awaited trial.

On l7th February 1984 the plaintiffs, by leave, issued a further writ notice of which they served on the defendants out of the jurisdiction. The defendants applied to have these proceedings set aside pursuant to Order 12 rule 8 of the Rules of the Supreme Court. Mayo J. acceded to this application on 29th April 1985 holding that the plaintiffs had not shown a good arguable case since their claim was similar to that struck out in the first action and they were, accordingly, estopped from pursuing it in the second.

On appeal to the Court of Appeal:-

Held, dismissing the appeal, that the plaintiffs' second action was not bound to fail by reason of "cause of action" or "issue" estoppel or, in the absence of adjudication as to the entirety of their claim in the earlier action, on the principles explained by Sir James Wigram V-C in Henderson v. Henderson (1843) 3 Hare 100 at pp. 114 - 115 but was vexatious since the same relief could have been sought in that action.

Poulett v. Hill 1893 1 Ch. 277 and Buckland v. Palmer 1984 1 W.L.R. 1109 applied.

IN THE COURT OF APPEAL

BETWEEN

Coram: Hon. Huggins, V.-P., Barker & Kempster, JJ.A.

Dates of Hearing: 15th - 18th January 1986

Date of Judgment: 7th February 1986

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JUDGMENT

___________

Kempster, J.A.:

1. This is an appeal by the plaintiffs, Collin Navigation Co. S.A., against the Order of Mayo, J. made on 29th April 1985 setting aside the earlier Order of Master Clay giving them leave to issue a writ and to serve notice of it on the defendants, Perusahaan Pertambangan Minyik Dan Gas Bumi Negara (Pertamina), out of the jurisdiction. It is but an incident in a long history of business dealings and litigation between these parties. The former were on foot at least from 1971 until 1976 and the plaintiffs kept a running account which shows, for example, sales to the defendants of steel bars, steel frames and cement and the charter of ships. No doubt the defendants were very important customers for the plaintiffs whose commercial judgment may well have been clouded by excessive anxiety to maintain their goodwill.

2. The transaction with which we are specifically concerned was an agreement in writing dated 1st July 1971 for the construction and sale by the plaintiffs to the defendants of two ocean-going tugboats for a price of US$1,994,500 ex Hong Kong shipyard. According to an affirmation made by one of the plaintiffs' directors, Tan Geok Tee, on 11th October 1983, the agreement was subsequently varied by providing for the construction of the boats in Taiwan, for extra equipment and for an extension of time for delivery. A similar agreement for two further tugboats of different specification and price was concluded between the parties on the same day. That agreement has duly been discharged by performance and is relevant partly as a further illustration of the business ties obtaining between the parties and partly because delivery was not effected until 3rd October 1973.

3. The terms of the relevant agreement have featured extensively in argument. Clauses 3, 4 and 7 read as follows:

"

Clause 3

Delivery

The two (2) Tug-Boats shall be delivered by Suppliers and taken over by Purchasers on a mutually agreed date not earlier than Six Months, and not later than Nine Months. At the time of delivery, the said two (2) Tug-Boats are to be in good condition (usual wear and tear excluded). The suppliers will supply the Purchasers with Lloyd's Loadline Certificates. The Purchasers shall allow the delivery period to be extended, in case of the delivery being delayed by reasons of War, Strikes, Lockout, Civil Commotions, Fire, Typhoon, Floods, Bad Weather, Earthquake, break down of Plants, Embargoes, or due to delay of arrival of machineries and spare parts etc. from abroad or time loss for waiting for issuing of official certificates, or any force majeure beyond the power of men. The suppliers will deliver the two (2) Tug-Boats in Indonesian Main Port with an additional delivery expenses of US$25,000.00 per each Tug-Boat.

Clause 4

Payments

The full payment of the total price of the two (2) Tug-Boats is U$$1,994,500.00 (U.S. Dollars One Million Nine Hundred Ninety-Four Thousand and Five Hundred Only) to be paid in cash not later than Six Months, after delivery.

Clause 7

This Irrevocable Contract is effective as from the day of signing of this Contract until the completion of payment. The Purchasers will continue to undertake full responsibility under any circumstances, and to fulfill this Irrevocable Contract, and to guarantee full payment not later than six months, and take delivery of the two (2) Tug-boats in Djakarta immediately after receipt of Supplier's notice of readiness. Meanwhile, the Purchasers will also undertake full responsibility for any additional expenses incurred due to Purchasers delay in taking delivery of the two (2) Tug-boats after the notice of readiness has been served."

4. The combined effect of these express terms and of such implied terms as were required to give them business efficacy was, in my opinion and subject to the variations agreed, to require the plaintiffs to give notice of readiness not later than nine months after 1st July 1971 and the defendants thereupon to nominate an Indonesian Main Port and to pay the price in cash not later than six months after delivery had been effected. The defendants were also required to indemnify the plaintiffs against such additional expenses as they might incur in relation to the tugboats between the respective dates when notice of readiness was received by the defendants and the vessels were delivered in Indonesia. Allowing for the extensions specified in clause 3 time was of the essence.

5. Notice of readiness was given on or about 28th September 1972. No complaint was or has been made on grounds of lateness or of the plaintiffs' premature request for payment. The defendants ignored the notice as such, as, indeed, they did the agreement itself save that on 13th June 1975 they responded to a request which had been made by the plaintiffs on 14th January 1973 and furnished names for the tugboats. The plaintiffs displayed infinite patience and continued to maintain that the agreement was executory and alive and - wrongly - that the price was due for payment. Certainly they waived the defendants' continuing breach of their obligation to take delivery. This attitude was reflected in the terms of the general indorsement on a writ which, pursuant to leave, they issued on 26th February 1980 and notice of which they served on the defendants out of the jurisdiction. Paragraphs 2 and 4 of the Indorsement read:

"Particulars- (C)" primarily constituted a claim for the price pursuant to sections 51(l) and 20, Rule 5(l), of the Sale of Goods Ordinance (Cap. 26), though damages for non-acceptance pursuant to section 52 were claimed in the alternative, while the substantive words were reasonably apt to embrace claims for damages for neglecting to take delivery within the parameters of clause 7 on the basis of repudiation and also under section 39 of the Ordinance without so alleging.

6. On 4th February 1982, at a hearing when both sides were represented by leading counsel, Bewley, J., by what was midway between a default and a consent order, struck out "Particulars - (C)" as being barred by the provisions of the Limitation Ordinance (Cap. 347). That order has not been appealed and, right or wrong in whole or in part, is conclusive to prevent the plaintiffs reviving as against the defendants their claims made under sections 51 or 52. Res Judicata pro veritate accipitur. (Co Litt 103a).

"If an issue has been distinctly raised and decided in an action, in which the parties are represented, it is unjust and unreasonable to permit the same issue to be litigated afresh between the same parties - ''

Per Lord Maugham L.C. in New Brunswick Rail Co. v. British and French Trust Corporation Ltd. ⁽¹⁾ at p. 20.

7. Such remaining parts of the plaintiffs' claim as they elected to pursue have been made explicit in a Re-Amended Statement of Claim. It does not include any reference to the two tugboats or to damages for neglecting to take delivery; whether or not the parameters of such damages are to be regarded as defined by clause 7 of the agreement. Summary judgment has been entered for certain sums and issue been joined on the balance. The action is set down for an early hearing. Although the point has not been taken by the defendants I feel unable to ignore the principle, well known to all pleaders, that a claim in the writ not repeated and not sought to be repeated in the Statement of Claim is treated as abandoned. Cargil v. Bower ⁽²⁾; Harris v. Ashford ⁽³⁾. No cause of action for breach of the agreement of 1st July 1971 remains presently available to the plaintiffs in that action at least.

8. Meanwhile there had been some "without prejudice" contact between the parties in 1981 but on 29th December of that year the plaintiffs sold the two tugboats and thereby irrevocably accepted as a repudiation the defendants' seven or more year's display of cynical indifference to their contractual obligations. The price obtained exceeded that payable by the defendants under the contract so it was hardly surprising that the plaintiffs showed little interest in contesting the summons heard on 4th February 1982 albeit in the affirmation already referred to Mr. Tan said that he had been advised that the plaintiffs' claim was misconceived.

9. On 17th February 1984 the plaintiffs sought and obtained leave to issue and to notify the defendants of the fresh writ, indorsed with Statement of Claim, which was set aside by Mayo, J. and gives rise to the present appeal. By that Statement of Claim the plaintiffs once more purport to claim from the defendants damages for breach of the contract of 1st July 1971 which they positively aver was brought to an end on 29th December 1981 by acceptance of the defendants' repudiation. The damages claimed are computed by reference to the provisions of clause 7 and, being so restricted, allow the defendants no credit for the difference between the contract price and the resale price of the tugboats.

10. At the hearing before Mayo, J. the defendants contended that the plaintiffs had not established a good arguable case since they were estopped by the order of Bewley, J. from relying on a cause of action which had been held time-barred and, on wider principles, from making a claim for damages which could have been advanced in the earlier action. The plaintiffs sought to side-step these submissions by seeking leave so to amend their Statement of Claim as to approbate and claim under clause 7 of the agreement rather than for damages for its breach. Mayo, J. declined to accede to such application but by the Notice of Appeal this Court was itself invited to allow the amendment. However, it has become common ground that the function of a judge on an application under Order 12 rule 8 of the Rules of the Supreme Court is to determine the viability of the claim in respect of which leave has already been given to issue a writ and to serve it, or notice of it, out of the jurisdiction. Further, until and unless the Court has determined the substantive appeal in the plaintiffs' favour there is no action in which we can exercise a discretion. The application has not been pursued.

11. The issues narrow down to an inquiry as to whether the plaintiffs are estopped or precluded, on one or more grounds, from raising in a second action a claim for damages incurred by reason of the defendants' delay in taking delivery.

12. Mayo, J. held that the second action was bound to fail by reason of "cause of action" estoppel on grounds of similarity with claims made in the first. I am not persuaded that the second action would be sure to fail on this account or on account of issue estoppel. Having regard to the circumstances in which the order of 4th February 1982 was made it is incumbent upon the Court to ascertain with precision what it determined and I take the view that in the context of damages only a claim based on non-acceptance was deemed statute barred. If I am right the wider ground falls for consideration since the plaintiffs' first writ, even after "(C)" of the Particulars had been struck out, still included and includes the words "the plaintiff claims against the defendant for - damages for failure to take delivery - the plaintiffs further claim against the defendant for damages for breach of contract - ". As such it would have permitted them to include in the Re-Amended Statement of Claim the damages sought to be claimed in the second action.

"- where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

Per Sir James Wigram V-C in Henderson v. Henderson ⁽⁴⁾ at pp. 114 - 115. These words were quoted with approval by Somervill L.J. in Greenhalgh v. Mallard ⁽⁵⁾ at p. 258 and by Lord Kilbrandon in an appeal from this Court in Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. ⁽⁶⁾ at p. 590. They were also referred to with approval by Lord Wilberforce in an appeal from the Full Court of the Supreme Court of Queensland. Brisbane City Council v. A.G. ⁽⁷⁾ at p. 308. But the earlier action, in its entirety, has not yet been the subject of adjudication although on foot for six years. It is the further well-known and analogous principle, not canvassed in argument, that it is vexatious to commence a second action asking for relief which might have been sought or obtained in the first which, in my opinion, constitutes an insurmountable objection to the plaintiffs' attempt to bring the defendants once more before the Hong Kong Courts. Poulett v. Hill ⁽⁸⁾. Buckland v. Palmer ⁽⁹⁾ at p. 1115.

13. If I am right it is unnecessary to determine whether the cause of action pleaded in the second action was in any event doomed because it had been abandoned in the first; whether it was barred by the Limitation Ordinance or whether in keeping the contract alive the plaintiffs were in breach of their duty to mitigate continuing losses.

14. I would dismiss the appeal.

Sir Alan Huggins V.-P.:

15. I agree.

Barker, J.A.:

16. I agree and there is nothing I can usefully add.

(1)    1939 A.C. 1

(2)    (1878) 10 Ch.D. 502

(3)    (1950) 1 All E.R. 427

(4)    (1843) 3 Hare 100

(5)    (1947) 2 All E.R. 255

(6)    1975 A.C. 581

(7)    (1978) 3 W.L.R. 299

(8)    1893 1 Ch. 277

(9)    1984 1 W.L.R. 1109

Representation:

Mr. G. Newman, Q.C. & Mr. W. Chan (W.I. Cheung & Co.) for appellant/plaintiff

Mr. N. Philips, Q.C. & Mr. Andrew Li (Denton Hall Burgin & Warren) for respondent/defendant