Afsc Operations Ltd and Another v. Creator Pacific Ltd and Others
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HCAJ 57/2020 [2026] HKCFI 4273 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ADMIRALTY ACTION NO 57 OF 2020 ______________ BETWEEN
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_______________ D E C I S I O N _______________ A. INTRODUCTION 1.The 2nd Plaintiff was and is the owner of the Aviation Fuel Service Facility at the Hong Kong International Airport (“the Facility”) which was and is operated by the 1st Plaintiff. Within the Facility, there was and is a jetty that projects out into the water from Sheung Sha Chau (“the Jetty”). The 2nd Plaintiff is also the registered owner of the land on which the Jetty was constructed. 2.The 1st Defendant was and is the registered owner of the subject barge “Hai Zhuang Bo 38” (“the Barge”). The 2nd Defendant was and is the owner and/or operator of a wharf situated at Tsing Chau Tsai, as well as the owner and/or operator of the tugs “Hoi Lian” and “Hai Man”. 3.The 2nd Defendant and Hong Kong River Engineering Company Limited (“HKR”) entered into a written contract dated 28 August 2017 (“2017 Tug Agreement”), under which the former agreed that it would from time to time upon request provide tug boat services to vessels nominated by HKR or other parties thereto at the rates and on the terms set out. It is the 2nd Defendant’s case that HKR entered into the 2017 Tug Agreement on its own behalf and as an agent on behalf of all other companies (including the 1st Defendant) in the Prosper Construction Holdings Limited Group (“the Parent Company”). 4.On 16 September 2018, the super Typhoon Mangkhut started to affect the weather of Hong Kong adversely. Upon the 1st Defendant’s request, the 2nd Defendant orally agreed to provide tug services of Hoi Lian and Hai Man to the Barge, for so long as the 1st Defendant required such services or the 2nd Defendant was reasonably able to provide such services over the period covered by Typhoon Mangkhut (“2018 Tug Agreement”). The services were upon the implied terms of the 2017 Tug Agreement. 5.The two-wires of Hoi Lian and Hai Man were fastened forward to the bow of the Barge, with one tug on the Barge’s starboard bow, and the other one on her port bow. Shortly after the hurricane signal no.10 came into force on the same day, the port anchor wire of the Barge parted. 6.It is the Plaintiff’s case that, due to the negligence of both Defendants, the Barge drifted out of control and collided with the Jetty on several occasions (“the Collision”). 7.At the material time, the Captain of the Barge, Mr Law Fook Yau (“Mr Law”), was working on the Barge. 8.On 27 August 2020, the Plaintiffs commenced this action against the 1st Defendant. The 2nd Defendant was joinedas a party on 17 September 2021. The Plaintiffs claimed against both Defendants for their breaches of duties and/or negligence in relation to the operation of the Barge, which allegedly led to the Collision. 9.The defences are, amongst others, that the 1st Defendant, 2nd Defendant, their servants and agents, were not negligent; that the cause of the Collision was an Act of God and/or inevitable accident; and that the Plaintiffs were contributorily negligent. 10.On 8 November 2022, the 2nd Defendant issued a Third Party Notice indorsed with a statement of claim (“TPSOC”) to claim against HKR under the indemnity clauses of the 2017 and 2018 Tug Agreements. 11.Before this Court are 4 applications:
B. JOINDER SUMMONS B1. The basis for joinder 12.The Plaintiffs seek to join HKR as the 3rd Defendant with consequential and material amendments to ASOC, namely:
13.The 1stDefendant and HKR oppose on the ground that the joinder would deprive HKRof a limitation defence. If HKR is joined, the 1st Defendant would seek a stay of the Plaintiffs’ action against HKR until after judgment in the action between the Plaintiffs and the Defendants (“Main Action”). 14.The 2nd Defendant takes a neutral stance provided that the joinder does not interfere with the trial. The progress of this action will be delayed by at least another year, possibly longer, given the Plaintiffs’ consistent pattern of procedural delay. The 2nd Defendant has provided a guarantee to fend off the Plaintiffs’ action in rem against the 2nd Defendant. Any delay will add financial strain on the 2nd Defendant. B2. Legal principles on limitation period 15.The Collision occurred on 16 September 2018, so the six-year limitation period for contractor tort expired on 15 September 2024. The Plaintiffs were time-barred when the Joinder Summons was issuedon 4 December 2025. At this hearing, the Plaintiffs no longer rely on section 26 (postponement of limitation period for fraud, concealment or mistake) but only section 31 of the Limitation Ordinance, Cap 347 (“LO”), which provides as follows:
16.The knowledge relevant to this joinder application is the “knowledge of the identity of the defendant” in section 31(5)(c) of the LO, i.e. the identity of Mr Law’s employer being HKR. 17.Section31(7) extends the concept of knowledge to include “constructive knowledge”, i.e. matters of which the plaintiff ought reasonably to have been aware, even though he was in fact ignorant of them: Andrew McGee,Limitation Periods, 9th ed., at §6.23. This is an objective test, not a subjective one. 18.Under section 31(7), the relevant date of knowledge was not when the plaintiff first knew he might have a claim for damages but an earlier date, namely, when the plaintiff first knew enough to justify setting about investigating the possibility that he might have a claim against that defendant: Haward v Fawcetts [2006] 1 WLR 682 (HL) at §23 and 128[1]. 19.Section 31 is commonly used in actions involving latent defects, classic examples being damages for latent building defects or financial loss arising from negligent professional advice: Clerk and Lindsell on Torts, 24th ed, at §30-71. 20.Leave to amend should not be given if the effect of this would be to deprive the defendant of an accrued limitation defence, which would be lost as a result of the operation of the relation back rule in section 35(1)(b). In that situation, the correct approach is to refuse leave to amend, unless the plaintiff can show that the defendant does not have a reasonably arguable case on limitation. See Global Bridge Assets Ltd v Sun Hung Kai Financial Ltd [2012]4 HKLRD 474, §§21-22, Kwan JA; Sun FocusInvestment Ltd v Tang Shing Bor [2012] HKLRD 738 at §§10-15, Fok JA. B3. Relevant date of knowledge 21.Mr Smith SC, counsel for the Plaintiffs, contends that:
22.Mr Wright, counsel for the 1st Defendant and HKR, however, contends there were other objective facts which would have put the Plaintiffs on inquiry into the employment of Mr Law, latest by 7 November 2022. 23.Firstly, I agree with Mr Wright that the fact that Mr Law stated that he was employed by the 1st Defendant in the Marine Incident Report was not conclusive. That Report was not to explain or determine his employment status but to report a marine incident and to investigate to find out whether there are any new lessons to be learned and what actions needed to be taken to prevent recurrence. 24.Secondly, without disrespect, the submission of Mr Smith SC overlooks“constructive knowledge”under section 31(7) of LO. The facts ascertainable by the Plaintiffs or the need to investigate the employer issue arose much earlier than 2 February 2023:
25.Thirdly,the Plaintiffs’ claim is in negligence. Both the 1st and 2ndDefendantsdeny liability. The 2nd Defendant claims, amongst others, that HKR should be liable instead. 26.The 2nd Defendant’s seeks indemnity or contribution against HKR:
27.The acts or omissions causing damage to the Plaintiffs had to be those of, the employees of the 1st Defendant, 2nd Defendant and/or HKR. The relationship among 1st Defendant, 2nd Defendant and HKR should have alerted the Plaintiffs to investigate whose employee Mr Law was. 28.Fourthly, there is no suggestion that, as a matter of law, only one entity could be vicariously liable for the negligence of Mr Law.
29.Fifthly, Mr Smith SC contends that the Third Party Notice and the TPSOC are not relevant for determining the Date of Knowledge because they do not concern Mr Law as the captain of the Barge or his employment by HKR. 30.I am not able to agree. The requisite knowledge required to put the Plaintiffs on inquiry under section 31(7) of LO does not specifically have to be the knowledge of Mr Law’s employment. Other observable facts (such as those in paragraph 24 above) could have justified setting about investigating as to his employment status. 31.Sixthly, if the information available by 8 November 2022 was sufficient to prompt the 2nd Defendant to issue third party proceedings against HKR founded on the conduct of HKR’s employees, that should equally have alerted the Plaintiffs to investigate whose employees were responsible. 32.I find that the Date of Knowledge was, latest, 8 November 2022. The 3-year Extended Limitation Period would have expired, by 7 November 2025. The Joinder Summons was time-barred. 33.Alternatively, HKR plainly has a reasonably arguable defence in limitation period. The Court should, and I do, refuse leave to join HKR: Golden Bridge Assets andSun Focus. B4. Exercise of the Court’s discretion 34.Assuming I am wrong and the Date of Knowledge is 2 February 2023, the Court has discretion to allow amendment and addition of parties, under Order 15, rule 6(2)(b) and Order 16, rule 4(4), to ensure that all relevant matters in dispute in the action can be effectually adjudicated upon by the court and that all relevant parties are before it: Wing Mou Construction Co. Ltd v Cosmic Insurance Corporation Ltd HCCT 40/2001, 20 June 2002, at §15, Ma J (as Chief Justice Ma then was). 35.The factors relevant to the exercise of discretion include the individual prejudice to the parties in the event an order is or is not made, the stage that the action has reached when the application ismade, any delay in making the application and any delay that may be caused should an order be made: Wing Mou at §15(6). 36.There is no place for the application of a mechanical rule that the court will invariably refuse an application simply because a party is guilty of serious delay without any good explanation. The court must conduct an overall balancing exercise: Chan Cheung Ming Jacky v Siu Sin Man [2014] 5 HKLRD 89 at §27, Lam VP (as he then was). 37.Whilst the ultimate concern of the Court is to achieve a just resolution of the case, it does not mean that a party should be permitted to raise any arguable case at any point in the proceedings, simply on payment of costs. If a party has been afforded a reasonable opportunity to advance its case, the just resolution of the case does not require that he should be allowed a further opportunity in spite of his own inordinate and inexcusable delay. See Securities and Futures Commission v Andrew Liu [2022] HKCFI 697 at §§22-23, Coleman J. 38.By2 February 2023, there were still over 1 ½ years before expiry of the primary 6-year limitation period on 15 September 2024. The damage was not latent. And yet the Plaintiffs have failed to raise any inquiry about or sought to amend their case on the employment status of Mr Law until they issued the Joinder Summons. 39.Such failure was inconsistent with the Plaintiffs’ assertion that they had been misled into thinking that the 1st Defendant was the employer of Mr Law. The Plaintiffs now seek to justify their failure to investigate by elevating a single remark in the Marine Incident Report into a definitive statement of employment status. 40.The Plaintiffs’ issue of the Joinder Summons after almost 2 years and 10 months from the date of 2 February 2023 constituted unexplained, inordinate and inexcusable delay. 41.The Court has balanced the prejudice to the parties. If the joinder application is permitted, HKR would be prejudiced in the sense of losing the limitation defence under LO. On the other hand, if the joinder is refused, the Plaintiffs can no longer sue HKR because even the Extended Limitation Period had expired. However, the Plaintiffs would not suffer any prejudice because the 1st Defendant has admitted that Mr Law was its employee who had acted under its absolute and entire control, and hencewould be vicariously liable if negligence of Mr Law is established. 42.No trial dates have yet been fixed, but that does not mean that the Plaintiffs are entitled to another opportunity to amend their SOC. This action has reached the stage of being ready for setting down for trial, except for the issue of expert directions. It does not serve the ends of justice to permit the Plaintiffs, after unexplained, inordinate and inexcusable delay, to disrupt the setting down by its joinder application. 43.Exercising my discretion, I dismiss the Joinder Summons. C. STAY SUMMONS 44.The Stay Summons is now rendered otiose upon dismissal of the Joinder Summons. However, for completeness’ sake, I just deal with the Stay Summons briefly on the assumption that HKR is joined as a party. 45.The legal principles for a case management stay have recently been summarized in Ling Meng Chu Pearl v U Po Chu [2026] HKCFI 4022 at §§23-25, Au-Yeung J. Materially, a stay on case management grounds will only be granted in “rare and compelling circumstances”. 46.Mr Wright submits that HKR has these potential defences:
47.It does not appear to me that HKR needs to substantially elaborate on or vary any matter raised in 1st Defendant’s Defence as regards negligence on the part of the Captain of the Barge. On an employment issue, there is no reason to expect expert evidence. All procedures on pleading, discovery, and exchange of witness statements can be comfortably dealt with in the period leading up to the trial (expected to be no less than 12 months away). 48.Mr Law’s negligence, if established, will cause the 1stDefendant and/or HKR to be liable for damages. I fail to see why HKR should not be there at the trial of the Main Action to defend itself. 49.Mr Yu and Mr Law have to give evidence on negligence, employment and control of Mr Law. There is no reason for the Court to hear them twice, if there is a management stay, with the risk of inconsistent findings. 50.The fact that the employment status of Mr Law does not involve the 2nd Defendant is irrelevant, because it is not uncommon for a case to involve issues concerning only one defendant but not the others. 51.For the reasons given, there are no rare or compelling circumstances to order a stay. The Stay Summons is dismissed. D. EXPERT DIRECTIONS SUMMONS D1. Issues for expert 52.The Plaintiffs’ case on negligence of the 1stand/or 2ndDefendant in the navigation and/or management of the Barge and of the 2 tugs is pleaded in §9 of the ASOC. Aside from establishing a duty of care against the Defendants, the Plaintiffs have to demonstrate that the Defendants did something or omitted to do something which a seafarer, exercising reasonable care and skill, would not have done or would have done. 53.The parties have agreed upon a set of 21 questions for the expert(s), with 2 amendments proposed by the Plaintiffs:
54.The Defendants object to the proposed amendments on the basis that the Plaintiffs have no pleaded case along those lines. 55.In Q5(a), the reference to dropping of 2 anchors out of 4 can be found in no. 48 to D1’s August 2022 FBP. The request there is how many anchors the Barge dropped and whether that number represented the total number of anchors carried on board the Barge. The request and answer have nothing to do with the pleaded particulars of negligence. I disallow the underlined words but allow Q5(a) in its original form. 56.With regard to Q5(b), §9(3) of the ASOC pleads that the 1st Defendant negligently failed to move the Barge to Hei Ling Chau Typhoon Shelter after the hoisting of standby signal no.1. Q5(b) should be allowed. 57.I have further considered Q18: “What are the key design features, specifications, equipment, facilities and operational and navigational capabilities or characteristics of the respective tugs Hoi Lian and Hai Man?” 58.There was no suggestion that the accident arose out of faulty design features or specifications of the tugs. Equipment, facilities, operational and navigational capabilities or characteristics of the tugs are matters of fact; if not, it has not been pleaded how faults in these matters had caused the accident. I therefore disallow Q18. 59.I am satisfied that the rest of the issues in the agreed list of expert issues are suitable for expert’s opinion. Therefore, subject to re‑numbering Q5 as Q5(a), adding Q5(b) and removing Q18, I grant leave to adduce expert evidence on the agreed list of expert issues. D2. Number of experts 60.The Plaintiffs suggest that should be a single joint expert. The Defendants suggest separate experts. 61.Order 38, rule 4A (5) set out the circumstances that the Court may take into account in giving expert directions. Where issues are complex or controversial, the value of the claim is high, or the evidence has a critical bearing on the issue of liability, a single joint expert is generally unsuitable: China Forestry Holdings Co Ltd v KPMG [2020] HKCFI 2615 at §24, Anthony Chan J. 62.The Plaintiffs’ case on negligence involves complex issues of liability concerning seamanship, navigation and causation. The expert’s role is not limited to a routine technical assessment, but to evaluate conflicting operational decisions and interpret nautical information in the light of competing factual accounts. The amount involved exceeds HK$100 million, subject to the limitation of liability under the Convention on Limitation of Liability for Maritime Claims 1976. I am persuaded that the circumstances of this case justify more than one expert’s opinion. I therefore give leave for each party to appoint its own expert. E. SETTING DOWN FOR TRIAL 63.As Mr Wright submits, a feature of this case is delay. The Writ was served more than a year after it was issued, despite both Defendants having registered offices in Hong Kong. The SOC was filed more than a year after issue of the Writ, despite the claim being straight forward and neither document-heavy nor factually complex. The Plaintiffs filed their Reply under compulsion of an unless order. The 2nd Defendant delayed in the exchange of witness statements. 64.After more than 7 years since commencement of this action, the Plaintiffs were still engaged in interlocutory skirmishes. The expert directions should have been sought years ago. The Plaintiffs ignored the directions, given in 2025 by Anthony Chan J (as he then was) and this Court, in endeavouring to agree on the scope of expert evidence. It was the 1st Defendant who issued the Expert Evidence Summons and drafted the expert directions. The Plaintiffs did not respond until 17 November 2025, after the deadline. 65.I therefore direct that there should not be any more interlocutory applications without showing exceptional circumstances. I give leave to set this case down within 28 days for a split trial on liability. F. CONCLUSION AND COSTS 66.I dismiss the Plaintiffs’ Joinder Summons. Costs on a nisi basis are to be paid by the Plaintiffs to the Defendants and HKR. 67.I dismiss the 1st Defendant’s Stay Summons. Costs on a nisi basis are to be paid by the 1st Defendant to the Plaintiffs, the 2nd Defendant and HKR. 68.On a nisi basis,
69.In respect of the Expert Directions Summons, I order as follows:
70.I give leave to the parties to set down the action, within 28 days, for a split trial on liability, with an estimated length of hearing of 7 days. The trial shall not be heard earlier than 9 months from the date of this order. 71.There shall be a pre-trial review not less than 2 months before the trial date. 72.Not later than 14 days before the pre-trial review, each party shall lodge and serve:
73.PTR bundles are to be lodged by the Plaintiffs with the Court no less than 14 days before the PTR. 74.There shall be liberty to apply.
Mr Clifford Smith SC, instructed by Howse Williams, for the 1st and 2nd Plaintiffs Mr Colin Wright, instructed by Wong & Lawyers, for the 1st Defendant, Third Party and Intended 3rd Defendant Mr George Lamplough of Holman Fenwick Willan for the 2nd Defendant [1] That case interpreted s.14A(10) of the UK Limitation Act, 1980, which was materially similar to s.31(7) LO. Lord Nicholls was talking about the relevant date when the plaintiff first knew enough to justify investigating the possibility that the advice of an accountant was negligent, leading to loss in investment. |
Cases cited in this judgment