Malteser Hilfsdienst Hospital an Hai v. Shun Cheong Steam Navigation Co Ltd

HCA001038/1972

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 1038 OF 1972

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Coram: Cons, J.

Date of Judgment: 24th July 1973

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JUDGMENT

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1. Some time in 1970 a cargo of 130 packages was shipped from Bremen on board the "Borussia" intended for delivery to the plaintiff hospital in Danang. In Hong Kong it was trans-shipped to the "Virginia", a vessel owned and operated by the defendants' shipping company. It reached Danang on the 11th October. The plaintiffs allege that part of the cargo was lost or damaged on arrival.

2. The carriage from Hong Kong to Danang was subject to Article III Rule 6(3) of the Carriage of Goods by Sea under the Bills of Lading Rules which provides:

"In any event 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."

3. The evidence of Mr. Ives, a solicitor with Messrs. Peter Mo & Company, who was eventually handling the claim on behalf of the insurers of this particular cargo, was that claims of this nature are seldom processed within the period of one year, and that it is therefore common practice for that period to be extended by consent. This was done in the present instance and a second extension of the period expired on the 11th April, 1972. Shortly before that date, to be precise on the 23rd March, Mr. Ives had written to the defendant company asking for a further extension. At this stage all the necessary claim documents had been forwarded to the defendant company who, in its turn, had passed them on to the local agents of their Protection and Indemnity Club; but the company had given no indication whether they were prepared to accept or reject liability. Mr. Ives received no answer to this letter, nor to two other similar letters sent earlier in the month with regard to another similar claim. As time was getting dangerously short, he telephoned Mr. Chan of the defendant company. Mr. Chan, who gave evidence for the defence, was somewhat vague as to his exact position in the company, but it is clear that he is the person having charge of the day-to-day running of the company's business and is the person with whom an outsider would normally deal.

4. There was some conflict of evidence as to what exactly was said during the three conversations that were held over the telephone. Generally I prefer the evidence of Mr. Ives, and find that when the question of an extension or the need otherwise to issue a writ was raised, the answer of Mr. Chan each time was to the effect that the matter had been referred to his Club and there was no need to worry as an extension was always granted in these matters. Mr. Ives very frankly conceded that Mr. Chan did not actually commit himself to the granting of an extension, but his attitude was one of friendliness and accommodation and Mr. Ives, taking the view that unqualified persons dealing with solicitors usually tend to be over cautious, firmly believed that an extension would be forthcoming. In fact it was not. The time limit had passed by 17 days before the writ was issued. I am now asked to rule as a preliminary issue that the cause of action is thereby discharged.

5. The plaintiff seeks to overcome its difficulties by relying on what is commonly known as the doctrine of promissory estoppel. Counsel for the plaintiff deliberately refrained from giving any particular name to it himself, but he relies upon cases usually referred to under that head, namely, Hughes v. The Metropolitan Rail Company⁽¹⁾ and Birmingham District Land Company v. The London & Northwestern Railway Company⁽²⁾. He puts these forward respectively as authorities for the propositions: firstly, that

"if parties who have entered into definite and distinct terms involving certain legal result - certain penalties or legal forfeiture - afterwards by their own acts or with their own consent, enter upon a course of negotiation which has the effect of leaving one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable, having regard to the dealings which have thus taken place between the parties".

And, secondly,

"if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe that such rights will either not be enforced or will be kept in suspense or abeyance for some particular time, those persons will not be allowed by force of equity to enforce the rights until such time has elapsed, without at all events placing the parties in the same position as they were before".

Put more simply, the plaintiff says that it would be inequitable to allow the defendant company to succeed upon this point, either because the company has entered into negotiations upon the matter, or because Mr. Chan persuaded Mr. Ives not to issue the writ.

6. Let me take the second aspect first and say simply that as I interpret the evidence, it was not Mr. Chan who persuaded himself. Mr. Ives to hold his hand, it was Mr. Ives who persuaded himself. Mr. Chan did not grant an extension nor did his words imply that he necessarily would. He intended to await advice on the matter before acting, even although he expected the advice to be favourable to the plaintiffs. Mr. Ives knew that Mr. Chan had referred the matter to his Club, but he believed Mr. Chan to be speaking over cautiously and, as it were, read between the lines of Mr. Chan to put upon his words a gloss that they did not bear upon their face. I cannot think that equity would demand that the Court hold a man to a promise which he had deliberately and carefully refrained from making.

7. Upon the first aspect I have found it much more difficult to decide. The position, as it was shortly before the time expired, was that the plaintiffs had submitted the usual documents to the defendants, that is, it had done all that would normally be expected from it at that stage. The defendants would, at some time after perusal, either accept or reject the claim in full or take some middle course. In effect, they were then saying, "We are thinking about it". It is easy to have sympathy with the plaintiff in this position. The ball is firmly in the defendant's court. Time passes not because of the plaintiffs' inactivity, but because the defendants are making up their mind how to play that ball. The consequences therefore should not fall upon the plaintiffs. This is a view which has perhaps commended itself elsewhere, although I have been unable to find a copy of the case referred to in the footnote to page 202 of Tetely on Marine Cargo Claims. But eventually I have come to the conclusion that the English authorities do not go that far. The nearest authority is the passage I have quoted earlier from the Hughes case. That passage however should not be isolated from the rest of the judgment which sets out the facts on which it is founded. When these are looked at it will be seen that the question of time was specifically mentioned in the negotiations. The tenant expressly declared that he would defer commencing the repairs until he had an answer, and the landlord was taken to have agreed to deal with the tenant on that footing. In other words, the landlord gave something that could be described as a promise. And thus it would seem that there is no real distinction between the two avenues of approach put forward by counsel for the plaintiff. The true test is whether anything was actively and deliberately done to dissuade the other party from acting, a test confirmed by Denning, L.J. in the High Trees House Case⁽³⁾ when he referred to cases in which a promise is made intending to create legal relations and upon which the party promising knew that the other party would rely. As I have said, I do not think that a comment "not to worry, extensions are always granted in these matters" to a person who knows that the party speaking has referred the matter elsewhere, falls within that category.

8. I should add in deference to the arguments of counsel that had my conclusion been otherwise, I would have applied the principle to this case, even though it concerns a statutory provision. I appreciate that the relevant judgments mention "contractual rights" whereas the present "right" is one that arises by statute. But it is a right within the control of the defendant company in the sense that the company can waive it if it wishes and I see no reason why the principle should not apply to it in the same way that it does to a right that derives purely from contracts.

9. For these reasons I would decide the preliminary issue in favour of the defendants, that is to say, that by virtue of the Rule in question the company is under no liability to the plaintiffs in respect of the particular loss alleged in this case.

Court: Order?

Mr. Mills-Owens: Order 33 Rule 7.

Court: Would you like to say anything on that Mr. Woo

Mr. Woo: No, my Lord.

Court: I make then a further Order that the action is therefore dismissed with costs.

Representation:

Mr. N.H. Woo (Peter Mo & Co.) for Plaintiff

Mr Hills-Owens (J.S.M) for Defendant

(1) (1877) 2 App. Cas. 439

(2) (1888) 40 Ch. D. 268.

(3) [1947] K.B. 130