Green Island Cement Co Ltd v. Cheng Ping Tsoo
Read the full judgment text of HCAJ 65/1982 on BabelCite. This HCAJ judgment.
1. The plaintiffs in the two actions before me are the owners or occupiers of Victoria Permanent Pier No. 61. The defendant in the actions was the master of the ship "Sunshine Island" when on 12th October 1981, it collided with this pier, causing, so the plaintiffs assert, substantial damage to them both. Both plaintiffs immediately commenced proceedings against the ship's owner in the course o?which on 2nd November 1981 the P. & I. Club put up security in wide terms which covered (inter alia) c
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HCAJ000065/1982
Ship collides with pier on 2nd November 1981 causing damage to plaintiffs' property. Action against master. Statement of Claim alleges damage caused by master's negligent mis-statement to ship's owners in February 1981 to obtain command. Statement of Claim a truck out. No duty owed by master to shipping world, and no sufficient causal or other connection between words and collision to give rise to duty. 0.2 r.2. No waiver without unequivocal act with full knowledge. Time summons equivocal: No sufficient knowledge. IN THE SUPREME COURT OF HONG KONG HIGH COURT _______
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_______ Coram: The Hon. Mr. Justice Hunter. Date: 16th June, 1983. ___________ JUDGMENT ___________ 1. The plaintiffs in the two actions before me are the owners or occupiers of Victoria Permanent Pier No. 61. The defendant in the actions was the master of the ship "Sunshine Island" when on 12th October 1981, it collided with this pier, causing, so the plaintiffs assert, substantial damage to them both. Both plaintiffs immediately commenced proceedings against the ship's owner in the course o?which on 2nd November 1981 the P. & I. Club put up security in wide terms which covered (inter alia) claims against the master. 2. The plaintiffs may well feel confident of their ability to establish in these proceedings that the collision was caused by the negligent navigation of the defendant as master of Sunshine Island.They are perhaps less confident of defeating the owner's potential defence of limitation, which having regard to the modest tonnage of the ship is a matter of some moment. So long as the collision took place without the owner's "actual fault or privity" the owners are entitled to limit their liability under section 503 of the Merchant Shipping Act 1894. Section 3 of the Merchant Shipping (Liability or Ship Owners and Others) Act 1958 extends this limitation defence to the vaster himself "notwithstanding his actual fault or privity in that capacity". Master is defined in section 742 of the 1894 Act as including "every person having command of any ship". So if Sunshine Island was at fault at all, this fault must prima facie have lain in the negligent navigation of the master as the person in command and subject only to the quoted proviso in section 503 both he and the owners can limit their liability. 3. Unhappily three persons died in the collision. A lengthy inquest followed. During the course of this the solicitors for the present plaintiffs investigated the defendant's qualifications. They discovered that although the defendant had held in succession two Liberian and one Panamanian Master's ticket, these were all founded upon an earlier Taiwan certificate dated 28th June 1968. This is said to have been forged, an allegation which for the present purposes, I must assume to be true. Plainly in the hope that this information might enable the present plaintiffs to out-flank the limitation defence, the writs in the present proceedings were issued on 22nd February 1982, almost as soon as the defendant's history was discovered. Both writs assert and only assert negligent navigation on 12th October 1981 as master of Sunshine Island. They assert neither fraud nor negligent mis-representation on any earlier occasion or in any different capacity. 4. Both solicitors then consulted some anouymous London counsel whom I shall call "the pleader". He must have been asked to settle a Statement of Claim based upon the new intelligence about the master to which a defence of limitation could not be raised. The prize, an unlimited claim arguably within the security was tempting: The task formidable. Given that the defendant obtained his command by reason of a ticket tainted with fraud, he was in fact until sacked in command, and more significantly in fact in command on 12th October. If his fault in that capacity caused the collision, its effective cause was his negligent navigation not his antecedent fraud. It prima facie made no difference, if his conduct in relation to his ticket was down-graded from fraud to negligence. Again such negligence would only be a causes sine qua non and not the causa causans. This was still negligent navigation. What the pleader had to try to do was to find a cause of action which altogether by-passed and owed nothing to negligent navigation. This virtually amounted to trying to rewrite the facts, and to discard the only apparent effective cause of the collision as far as Sunshine Island was concerned. The pleader would have been forgiven if he labelled his task impossible at the outset. 5. After much time for the thought, the pleader came up with his suggested solution. This is to be found in the identical Statements of Claim filed respectively on 2nd and 9th December 1982. Service of these was accepted by the defendant's solicitors over eight months out of tine. The solicitors corresponding requests for indulgence were less generously received. In the Pioneer action which I was invited to treat as governing, two applications for extensions of time had to be made to the Court,followed by a further and more modest extension granted by the Plaintiff's solicitors without formal application. The time for delivery of defence was thus extended to 24th February 1983. No defences were filed because on 23rd February the summonses now before me were taken out asking for these Statements of Claim to be struck out on the two grounds that they showed no reasonable causes of action, and constituted major departures from the writ. The plaintiffs' response was to sign judgment in default of defence. This produced further summonses to set aside the default judgments. 6. In these circumstances what has principally been on trial before me has been that this Statement of Claim and its relationship with the writ. I have been invited expressly to judge these documents as they stand, and have not been asked to consider any amendment. In this context four matters had been argued which I shall consider in turn, namely:-
Fraud 7. Two concessions were here made by Mr. Bernard. Rix, Q.C. for the plaintiffs. First he conceded that fraud could not properly be advanced in the Statement of Claim without amendment to the writ. Secondly he conceded that no claim in fraud maintainable by the plaintiffs was raised in the Statement of Claim, because the fraud alleged was not directed at or relied upon by the plaintiff but only by the ship's owners or managers. The contested issue surprisingly was whether the Statement of Claim purported to charge fraud at all, which Mr. David Steele Q.C. for the defendant's asserted and Mr. Rix denied. 8. To understand the point it is necessary to set out in extenso the two crucial paragraphs of the Statement of Claim which can really be said to be the raison d'etre of the whole document. They are:-
9. Mr. Steele asserts that paragraph 15 distinctly alleges fraud both to support a claim in damages and for the apparent purpose of founding the curious assertion in paragraph 16 that the master's acts were not the acts of the master. Mr. Rix retorted that fraud was not intended in paragraph 15 but he was unable to put any sensible meaning on paragraph 16. I think that Mr. Rix was plainly embarrassed by these pleas which he found himself unable to support. In my judgment these allegations of fraud are there, are misconceived and are meaningless. They go way beyond the writ. They cannot survive. Negligent navigation 10. Issue was. drawn here between counsel as to whether this plea was raised in the Statement of Claim at all: Mr. Steele arguing the negative and Mr. Rix the positive on the basis that the charge was"implicit" in the pleasing. In summary the pleading asserts:-
11. It is plain that this pleading is very confused, quite unsatisfactory, and on any view embarrassing. I do not accept Mr. Rix's concept of implicit charges in the pleading. I think that a pleader must be explicit. and be judged on that basis. This pleading does not charge negligent navigation as the cause of the collision: It is only brought in as a particular of antecedent incompetence. I further think that this was deliberate. Paragraph 15 and the distinct allegation that the representations caused the collision was, I believe, the pleader's attempt to by-pass both negligent navigation as a cause of action and limitation. He failed to appreciate that this concept would make the master an insurer and liable for any damage his ship caused, whether he was negligent or not. Mr. Rix recognised this fallacy. He accepted that the cause of action in negligent mis-representation was incomplete without subsequent negligent navigation; and that the former was at most a causes sine qua non, leaving the latter the causes causans. I have no doubt that this concession was rightly made. Two things follow. The Statement of Claim in negligence is at least defective and incomplete. Secondly it no longer serves its main intended purposes namely to bypass negligent navigation. Negligent mis-statement 12. This plea is on any view very artificial. If the Taiwanese certificate was a forgery there is really no room for the allegation that the defendant "ought to have known this". It is fraud or nothing, and fraud is admittedly not available. It would be remarkable. if negligence was more potent in this context than fraud. As to incompetence, there is no allegation properly raised that the defendant knew or ought to have known of his own incompetence, and no particulars of pre-February 1981 conduct to support it. These are serious but possibly remediable defects. 13. More fundamentally Mr. Steele attacked the pleading on two main grounds, namely:-
14. In my judgment both Mr. Steele's objections are well founded. On proximity I was usefully referred to the leading post Hedley Byrne authorities bearing upon negligence in words namely Ministry of Housing v. Sharp 1970 2 Q.B. 223: Dutton v. Bognor U.D.S. 1972 1 Q.B. 373; and Ross v. Caunters 1980 1 Ch. 297. For my part I do not think it is necessary to look beyond Lord Wilberforce's summary of the famous trilogy in Anns v. Merton 1978 A.C. 728 where at page 741 he said:
In relation to words spoken to the ship owners and managers the Statement of Claim alleges, and has to allege, sufficient proximity between the defendant and the shipping world to give rise to a duty to speak carefully then owed by the defendant to such shipping world. In my judgment this is an untenable proposition. "Proximity or neighbourhood" and a duty to the shipping world are virtually contradictions in terms. There is no way in which the plaintiffs could be adversely effected by the defendant's words. Only first if he got the job of master, and then secondly if he navigated a ship negligently in the immediate physical vicinity of the plaintiffs could proximity and a duty arise, and then it would be not to speak carefully but to navigate carefully. The case is wider even than that of the hydrographer from which the Courts have recoiled. These plaintiffs never knew what the defendant said: relied on what he said: or were in any way "connected" in the Ross v. Caunters sense with what he said. It is more like an attempt to sue the hydrographer on a draft map which never left his study. For these reasons alone in my judgment that this claim must fail, and it is not necessary to consider the formidable further difficulties which lie in the plaintiffs' path in a jurisdiction where Mutual Life v. Evatt 1971 A.C. 793 may have to be regarded as binding authority. 15. Further when Lord Wilberforce in Anns used the words "may be likely to cause damage" he was simply repeating an essential feature of the duty of care. It is a feature which I think has been present in every formulation since at least that of Lord Atkin in Donoghue v. Stevenson 1932 A.C. 562. The duty is imposed by law by reason of this risk of injury; a risk directly occassioned by the act or omission of the party under such duty. The risk to be guarded against is danger created by his conduct; not a danger that his conduct may enable him or another to create a further danger by a different means. Contrary to Mr. Rix's submission there is a fundamental difference between the defective ginger beer bottle in Donoghue v. Stevenson and the master's assumed incompetence in February 1981. 16. In support of this part of his argument Mr. Rix submitted the master's alleged duty of care was the same as the ship owner's. The latter he submmitted was equally under a duty, an actionable duty of care, owed to the shipping world, to employ a competent master. No authority was cited in support of this proposition which I am unable to accept. It is true that under section 503 of the 1894 Act the owner will loose his limitation defence if he is unable to show no "actual fault or privity". This is quite a different concept. This Act gives him a special statutory defence on quantum where liability is otherwise established, subject to this particular statutory limitation. This section does nothing to justify the existence of some actionable common law duty of care owed to the shipping world. I think that the protection afforded by section 503 is closely analogous to that afforded in England to the careful collecting banker under section 4 of Cheques Act 1957, who in "good faith and without negligence" collects a cheque to which his customer has no title. This section. also provides a defence to a careful banker to what would otherwise be an act of conversion. Diplock L.J. analysed the effect of the section in Marfani v. Midland Bank 1968 2 All E.R. 573 at pps. 578 - 9. Much of this analysis could apply equally to section 503, not least his insistence that a duty of care only arose in the banker when proximity existed i.e. when the particular cheque was delivered to him for collection. Likewise I think the ship owner's duty of care only arises when his vessel is proximate to the injured party and it is at that juncture that his knowledge of the master's incompetence becomes relevant to "actual fault or privity" 17. For these reasons I think that the various tests conveniently collected by Stephenson L.J. in McKay v. Essex Area Health Authority 1982 1 Q.B. 1166 at page 1176 are satisfied and this Statement of Claim discloses no reasonable cause of action and must be struck out on that basis. Equally. in my judgment it falls to be struck out as embarrassing. Waiver 18. I have already held that this Statement of Claim pleads. fraudulent and negligent mis-representation but not negligent navigation. It, therefore, infringes 0.18 r. 15(2) and is liable to be struck out on that account unless this irregularity has been waived by the defendant. This depends upon whether in the words of 0.2 r.2 the. present applications were "made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity". The first part of this presents no problem. Having regard to the time taken to settle this Statement of Claim;. the convoluted drafting; and the importance and unusual nature of the problem; it is impossible to say that a reasonable time had expired before 24th February 1983. A more interesting and important question arises under the second part. 19. Although the rule speaks of "any fresh step", on authority it seems to me impossible to construe these words literally. Both this rule and the similar but not identical provision. in section 4 of the (English) Arbitration Act 1950 have been held to be examples of the law of election with the inevitable emphasis on "an unequivocal act done with knowledge of the material circumstances", in the words of Lord Donning in Eagle Star v. Yuval 1978 1 LLR 357 at page 351, a section 4 case. But not every step is unequivocal: and the same step can be equivocal for some purposes and an unequivocal for others. The service of a defence is a step. But if the defence takes objection to the irregularity there is no waiver because "manifestly there was no intention to waive the irregularity and none was evinced" (my emphasis) per Sachs L.J. in Brickfield properties v. Newton 1971 1 W.L.R. 862 at p. 371. To the same effect is Cave J's text in Rein v. Stein 1892 66 L.T. 469 p. 471 namely "in order to establish a waiver you must show that the party has taken some steps which' is only necessary or only useful if the objection had been actually waived or has never been entertained". Where as here the irregularity is internal in the conduct of the proceeding a request for time in my judgment is prima facie equivocal, evinces no intention to waive, and need not necessarily be construed as a waiver. It says only-please give me more time to consider my position in the action in relation to this Statement of Claim. It sufficiently recognises the legitimacy of the litigation to be fatal under section 4 of the Arbitration Act, Ford's Hotel v. Bartlett 1896 A.C. 1. But it no more manifests an acceptance of the manner in which the litigation has been conducted then a qualified defence. For these reasons I do not regard the defendant's' time summonses as acts of waiver. I reach this conclusion without regret. An application by letter or telephone is not a step. I should be reluctant, to reach a conclusion which might force solicitors, for supposed tactical advantage, to refuse informal applications to compel the opposing party to apply to the Court. 20. Further and by contrast Mr. Steele urged me to put a literal construction on the phrase "aware of the irregularity". This he submitted means knowledge of the irregularity not knowledge of the facts which might give rise to it. He relied by way of analogy on the reasoning in the "Eurysthenes" 1976 2 LLR 171. It was not sufficient for the party to Dave read the writ and the Statement of Claim: he must know that the latter is irregular by reference to the former or perhaps demonstrate total indifference to the comparison. This submission is in line with the classic election formulation of "full knowledge" and I accept it. The matter is one of degree. In a glaring case the two tests coincide. Thus any form of writ will demonstrate an intention to litigate rather than to arbitrate. But where as here the issue of irregularity is contested, the point is complex and the documentation is obscure, it does not seem to me right to attribute actual knowledge to a party, in anticipation o?a Court's determination, on the basis of counsel's opinion, however distinguished, with which the Court ultimately agrees. 21. In my judgment therefore the defendant did not waive the irregularities in these Statements of Claim , and the defendant's applications succeed in both actions on both grounds. The Statements of Claim must be struck out as irregular and as showing no reasonable cause of action. 22. It inevitably follows that the default judgments cannot stand and must be scat aside. It is immaterial whether this conclusion is reached ex debito justistiae or by the exercise of a discretion. From my part I would be minded to regard as irregular a judgment obtained on a'Statement of Claim which on two counts did not comply with the Rules. 23. I shall hear counsel upon any necessary further directions, and in particular whether I should now dismiss the actions or give the plaintiffs a further opportunity of serving fresh Statements of Claim.
Representation: Mr. Bernard Rix, Q.C., Mr. William Stone (Messrs. Ince & Co.) for Plaintiffs in A.J. 65/82. Mr. Bernard Rix, Q.C., Mr. William Stone (Messrs. Holman, Fenwick & Willan) for Plaintiffs in A1359/82. Mr. David Steele, Q.C., Mr. Anthony Dicks (Messrs. Johnson, Stokes & Master) for Defendant in both actions. |