China Ocean Shipping Co Shanghai (Cosco Shanghai) v. Seacon Shipping Ltd and Others
Read the full judgment text of HCAJ 52/1998 on BabelCite. This HCAJ judgment was delivered on 6 January 1999.
1. This is an application by the 2 nd and 3 rd Defendants to strike out paragraph 13(2) and 16 to 20 of the Substituted Statement of Claim ("SOC") and also the Action on the usual Order 18 rule 19 grounds. At the end of the hearing, I gave leave to the Plaintiff to amend the SOC but otherwise I dismiss the Summons of the Defendants and I indicated I will hand down my Reasons later which I now do.
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HCAJ000052/1998
IN THE HIGH COURT OF THE HONG KONG SAR COURT OF FIRST INSTANCE ADMIRALTY JURISDICTION -----------------
----------------- Coram: The Hon. Mr. Justice Waung in Chambers Date of Hearing: 4 January 1999 Date of Handing Down of Reasons for Judgment: 6 January 1999 --------------------------------------------------- REASONS FOR JUDGMENT --------------------------------------------------- 1. This is an application by the 2nd and 3rd Defendants to strike out paragraph 13(2) and 16 to 20 of the Substituted Statement of Claim ("SOC") and also the Action on the usual Order 18 rule 19 grounds. At the end of the hearing, I gave leave to the Plaintiff to amend the SOC but otherwise I dismiss the Summons of the Defendants and I indicated I will hand down my Reasons later which I now do. 2. The Plaintiff ("Cosco") is the well known shipowner. One of its ships, Yue Yang ("Vessel") was chartered with some 3 sub-charters down the line. A cargo of rice ("Cargo") was carried on the Vessel from Kakinada, India to Bangladesh. The Cargo was caused by the Defendants to be delivered to Jonaky Traders which was the notify party under what is called a second bill of lading ("2nd BL") issued by the 1st Defendant ("Seacon") to the shipper Orchard Ltd., the 1st Defendant ("Orchard"). Seacon and Orchard are related companies and the 3rd Defendant was the beneficial owner and controller of Seacon and Orchard which were also associated with a company by the name of Viking Associates Ltd. ("Viking"). After the release by Cosco of the said Cargo, claim was made for the delivery of the same Cargo by Doon Valley Rice Ltd. ("Doon Valley"), the holder and shipper of what is called the 1st Bill of Lading ("1st BL") issued by Viking with notify party being Orchard. Doon Valley caused the arrest of a Cosco ship and the claim of Doon Valley against Cosco is now proceeding in the Bangladesh Court. What happened was that Doon Valley sold the Cargo to Orchard which in turn sold it to Jonaky Traders but whereas Orchard was paid for its sale to Jonaky Traders, Orchard did not pay Doon Valley and therefore Cosco found itself the subject of a claim of misdelivery of the Cargo under the 1st BL. 3. The SOC which is the third pleading attempt of the Plaintiff alleges in paragraph 16, 17 and 18 deceit, conspiracy and wrongful interference of the 1st BL contract. The complaint of Cosco against the Defendants is that with knowledge of the issue of the 1st BL, the issue of the 2nd BL and the obtaining of the Cargo under the 2nd BL by the Defendants were wrongful against the Plaintiff and thereby causing it loss. As the hearing progresses, it becomes clear that the real complaint of the Defendants to the SOC is not so much as to the adequacy of the pleas in paragraph 16, 17 and 18 but to the foundation of those three paragraphs contained in the allegation in paragraph 14 that the delivery of the Cargo to Jonaky Traders was against the 2nd BL. 4. What prompted the strike out application of the Defendants is the Further and Better Particulars under Paragraph 14 given by Cosco dated 12th November 1998 ("FBP") in which the Plaintiff pleaded that:-
The picture therefore presented by the FBP is that there was presentation of the 2nd BL to the Master on 5th April 1996 and then there was the delivery of the Cargo by the Plaintiff to Jonaky Traders. This led to Defendants' Solicitors writing on the 12th of November to the Plaintiff's Solicitors asking for the original of the 2nd BL which the Plaintiff was presented with on the 5th of April 1996 as pleaded in the FBP. The fax answer which came back from Healey & Baillie on 13th November 1998 ("13th November Fax") was that the Plaintiff does not hold the original 2nd BL and that Seacon, Orchard or their agent Viking should have the original BL because Viking as agent for the disponent owner collected all the original BL. It is to be readily appreciated that the 13th November Fax clearly contradicted the FBP and put into considerably doubt as to the true position of the Plaintiff of delivery of Cargo against presentation of the 2nd BL. There was some further correspondence, leading to the Defendants issuing the present Summons supported by an Affidavit of Mr. Kemp answered by an Affidavit of Mr. Binnersley. In paragraph 5 of Binnersley's Affidavit there was a description of what happened and the usual practice. It said that the "discharge arrangements were all made by the agents at the various ports of call. The agent or consignee at the discharge port never produced the original bills of lading to the Master before the commencement of discharge." Then at paragraph 7, the Affidavit said the master at Chittagong left the arrangement for discharge to the Charterer's agent there and Viking was such agent, Viking also holding itself as agent of the owners. It can be readily seen again that the Affidavit of Cosco seemed to contradict the FBP. 5. These apparent contradiction caused the Defendants to pursue the strike out application and I can well understand why the Defendants wished to pursue the application having such contradictions on their hands. It was only when Mr. Coleman stood up at the hearing that it became clear that the Plaintiff is disowning its FBP and is relying on the Binnersley Affidavit and the 13th November Fax. The case of the Plaintiff is that paragraph 14 needs to be further clarified but that basically it remains the case of the Plaintiff that the Cargo was released pursuant to the 2nd BL. Mr. Coleman called in support not only what had been set out on Affidavit (which is of course more credit worthy than what had been pleaded in the FBP which can be amended or abandoned) but what is in the very document of the 2nd BL itself. The copy of the 2nd BL exhibited at page 35 of the Bundle shows two important notations, namely "D/O No. 0001 dtd 8/4/86" and "Cancelled". The first notation suggested that there was an issue of a Delivery Order No. 0001 dated 8th of April 1996 which was connected with the 2nd BL and with a delivery of the Cargo under the 2nd BL. The second notation suggested that the 2nd BL was cancelled in exchange for the Delivery Order which is of course the standard practice in shipping. The combination of these two notations on the 2nd BL together with the undisputed fact that the Cargo was delivered to Jonaky Traders at about that time in April 1996 give rise to at least a reasonable inference that the Cargo was released against the 2nd BL. Who exactly had the original 2nd BL and what happened to it is something to be explored further in the pleadings and other interlocutory applications and/or at the Trial but I have no doubt that once Mr. Coleman has disowned the FBP then this is not a situation where it would be right for the Court to resort to the ultimate sanction of strikeout of the SOC or of the Action. 6. In the circumstances I therefore accept the submission of Mr. Coleman that the FBP of the SOC should be withdrawn and leave be given to the Plaintiff to make its position clear by the appropriate amendments in 28 days. In the particular circumstances, however the Plaintiff must bear the full consequences of its own actions and accordingly I order that the Defendants are to have the costs of the Summons to be taxed and paid forthwith.
Representation: Mr. Malcolm Kemp of Messrs Stephenson Harwood & Lo for the 2nd and 3rd Defendants. Mr. Russell Coleman instructed by Messrs Healy & Baillie for the Plaintiff |