The Owners of Cargo Lately Laden on Road the Ship or Vessel "Nedlloyd Schie" v. The Owners of the Ship or Vessel "Nedlloyd Schie"

HCAJ000008/1981

Admiralty Law - Proceedings commenced in Hong Kong despite Dutch jurisdiction clause in Bill of Lading - Application for stay - Application opposed on grounds that: -

Court dealt with above matters and held that there was a defence that there was no estoppel or waiver and that plaintiffs had failed to show strong cause.

IN THE SUPREME COURT OF HONG KONG

ADMIRALTY JURISDICTION

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Admiralty Action in rem against: the ship or vessel "NEDLLOYD SCHIE"

BETWEEN

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Coram: Hon. Power, J.

Date: 16 December 1982

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JUDGMENT

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1. In this matter the owners of cargo lately laden on board the ship "Nedlloyd Schie", the plaintiffs, are suing the owners of the ship "Nedlloyd Schie", the defendants, for damages for breach of contract and/or duty in and about the loading/handling custody, care and discharge of the plaintiffs' cargo on board the defendants' vessel in the year 1980. The plaintiffs were the owners of 255 cartons containing 12,000 mortice locks shipped from Keelung, Taiwan on the defendants' ship for carriage to the port of Apapa, Nigeria. The ship "Nedlloyd Schie" was arrested in Hong Kong harbour on the 7th January 1981. On the 29th January 1981, security having been given and the ship having been released, the defendants applied by way of summons for an order that the proceedings be stayed pending determination of liability in respect of plaintiffs' claim by the Court at Rotterdam in accordance with the terms of the Bill of Lading.

2. The 255 cartons of mortice locks were shipped in a container under a Bill of Lading issued at Taipei on the 4th March 1980. This Bill of Lading contained the Following clauses:-

3. The Bill of Lading was dated 4th March 1980 and it showed the "Shipper" as "Charles Henderson (H.K.) Co., Ltd.", the "Consignee" as "To the Order of the Bank of India" and the "Notify Address" as "Gull Trading Company Ltd.". It showed also that the "Carrier" and "Ship Owner" was the Needled Lines of the Netherlands. A number of documents to which I will now refer were annexed as exhibits to the affidavits of Mr. Johnson, for the defendants and Mr. Ashby for the plaintiffs.

4. Mr. J.M.M. Johnson stated that the "Nedlloyd Schie" arrived in Apapa on or about the 30th April 1980 and that the cargo was unloaded between the 30th April 1980 and the lst May 1980 and delivered to the customs warehouse at Apapa. This information appears to have come from a Lloyd's Survey Report dated 5th June 1980 and stated to have been made on 2nd June which was exhibited to his affidavit as "JMMJ-2". A Tally Way Bill (JMMJ-9) dated the 30th April 1980 which dealt, inter alia, with the subject container and stated under the heading "REMAKS AND CONDITIONS" (sic) that the "7 landed containers" to which it referred were "Good". Clearly the maker of the document was saying that the condition of the containers when landed was good. This document was headed "Umarco (Nigeria) Limited" and purported to have been made at the port of Apapa, Quays. It appeared to have been signed both by the manager and by an"official". The time of arrival of the vessel arid the date of unloading is of considerable importance in this matter, and I will return to it again at a later time. Mr. Johnson stated that the consignees, the Gull Trading Company Limited, did not take delivery of the goods until the 30th May 1980, more than 4 weeks after they were, according to him, unloaded. The Lloyd's Survey Report (JMMJ-2) says that the vessel arrived at Apapa on the 30th April 1980 and that the goods were landed between the 30th April and the 1st May. This report goes on to say that the goods were received by customs between the 30th April and 1st May and were delivered from customs on the 30th May and that the survey took place at the consignee's warehouse in Apapa on 2nd June. It states that the delay in taking delivery was caused by customs formalities. In the body of the report it is stated that an examination of the container showed a big cut open at the left side of the container measuring 13 cm. long from the base and about 8 cm. wide and that there were traces of water ingress approximately 10 cm. from the ground levelling up to the cut open space in the container. It went on to state that the cut appeared not to be current "as the areas affected had been rusted indicating that the container had the hole for sometime". It states "It is believed that water passed through this open space at a stage where the container was stowed presumably in a peal of water" and that 3,680 of the locks were found to be heavily attacked by rust and corrosion. A Laboratory Analysis (PJA-3) was done of the wet packing material and the water was found to contain chloride and sulphate. The conclusion of the analysis was that the sample "has probably been in contact with salt water". It is to be noted that the analysis did not use the term "sea water". The stowage play. (JMMJ-3) shows that the container was stowed on deck near to the bow of the vessel. There was a degree of uncertainty as to dates which was compounded by a Way Bill (PJA-3) which appeared to be dated the 22nd May 1980 and which appeared to indicate that the "Nedlloyd Schie" had arrived on the 10th April 1980. The only copy of this Way Bill is a badly disfigured photo copy and the dates are so indistinct that I do not consider any real reliance can be placed upon it. Another document to which reference must be made is a "Container Condition Report on Board Vessel at the Time of Discharging" (pJA-3). This document is, unfortunately, undated and unsigned. It is headed "Umarco (Nigeria) Limited". It indicates that the container was not scratched, bent, cut, dented, torn or leaky. It describes the condition of the container as being "O .K.". As I have said this document is undated and unsigned, however, if, as seems likely, it was made at the time of discharge, then it must have been made on either the 30th April or the 1st May.

5. As can be seen from what is set out above both the Tally Way Hill (JMMJ-9) and the "Container Condition Report" (PJA-3) indicate that the container was undamaged at the time when it was landed.

6. I turn now to look at the first document which indicates damage to the container. It is headed "CTC Delivery Order" (PJA-3). This document bears a number of dates. The date of the document itself appears to be the 4th April. On any view of the available documentary evidence it seems that the heading of this document together with its date must have been written well before the arrival of the vessel at Apapa. It was suggested that the initial part of the document may have been made out by some person travelling on the vessel. It seems to me more likely that it was made out by a clerk of CTC, which I am told stands for "Container Terminal Company", in Apapa from documents available to him prior to the arrival of the vessel. It is not easy to understand what this document purports to be saying as to dates. It appears to indicate, inter alia, as follows:-

7. Further information from Apapa revealed that CTC had two yards, one at the Docks and one some distance away at Lilypond. There was nothing to indicate when the container was taken from the Docks to Lilypond. Because of the uncertainty surrounding the storage of the container, the solicitors for the plaintiffs made further inquiries at Apapa. These revealed (CDIG-1) that the Lilypond yard was some 4 kilometres away from the berths and was used for the storage of containers when delivery had not been promptly affected. The information said that containers could be delivered straight from the Apapa quays or could, if there was delay, be delivered from the Lilypond yard. It was not clear from this information whether there were customs areas both at the quays and at the Lilypond yard. The information went on to state that the quays were adjacent to the harbour but were about 4 kilometres from the open sea and that the Lilypond yards were 4 kilometres away From the quays. It said that the quays had not been flooded by harbour waters at any recent time and that the Lilypond yard was in hand but was sometimes susceptible to rain flooding.

8. Firstly it was submitted by Mrs. Penlington, who appeared for the plaintiffs, that the defendants had no possible defence and were merely seeking a procedural advantage by asking that the matter be stayed and litigated at Rotterdam. This matter should be dealt with when I turn finally to deal with the considerations raised by the Eleftheria⁽¹⁾ at p.237. However counsel argued it as a separate point and I think it is more convenient to dispose of it at the outset.

9. What is the proper view when it is suggested that there is no defence? One view appears to be that it should be given considerable weight (see the Nedlloyd Seine⁽²⁾ at p.643 and the reference to the Banglar Baani ⁽³⁾. A contrary view is that it is doubtful whether the merits should be canvassed at all at this stage (see the "Nedlloyd Seine⁽²⁾ at 645). However that may be, if the defendants raise facts which indicate that they, prima facie, have a good defence then the plaintiffs clearly cannot succeed on this submission.

10. I do not intend to canvass all of the arguments in this regard. I consider it is sufficient to say that the evidence is to my mind by no means clear. I am far From satisfied that the damage must havetaken place prior to unloading. Both the Tally Way Bi11 (JMMJ-9) and the Container Condition Report (PJA-3) state that the container was undamaged when it was unloaded. There is no indication that any damage was observed until the 30th May. Mrs. Penlington advanced a "theory" as to how the damage, might have been caused suggesting that the container might have been damaged while loading and that a heavy wave might have come over the bows of the vessel causing the salt water to enter the container. This theory is not supported by any evidence. Indeed, there is evidence to suggest that it is not tenable as the log book, according to paragraph 12 of Mr. Johnson's first affidavit, records that no sea water ever came on deck during the voyage. Having considered the affidavits I am quite satisfied that it cannot be said that the defendants do not have any defence to this action. Indeed, as the evidence stands, the plaintiffs may find some difficulty in establishing their claim.

11. The second main argument of the plaintiffs appeared to be that the defendants by their conduct: -

12. It was further submitted in this regard that, even if there was no waiver, estoppel or agreement, the situation was that a time-bar had arisen to which circumstance substantial, if not conclusive, weight should be given against the granting of a stay,

13. The submission as to (a) appeared to be grounded upon the allegation that the recovery agents appointed by the plaintiffs had been led to believe that all claims, and any act ions arising therefrom, would be dealt with in Hong Kong by the defendants' claims office in the Colony.

14. The submission as to (b) appeared to be grounded on the allegation that the solicitors for the defendants had agreed with the solicitors for the plaintiffs that Action Folio No.301 of 1981 involving the "Nedlloyd Seine"⁽²⁾, another vessel owned by the defendants, would be treated as a test case, the result of which would bind the parties to the present action as regards the jurisdictional issue.

15. As regards (a) Mr. P.J. Ashby filed an affidavit on the 29th May 1982, in which he stated that for ten years prior to April 1981 he had been employed by a London firm of recovery agents and average adjustors. He said that in the latter period of his employment (he did not specify the extent of that period ), he was in charge of the section dealing with cargo claims relating to cargo exported from the Far East and that he handled a large number of claims against Nedlloyd Lines arising from their Far East to West Africa service during that time. He said that, following the formal amalgamation of Royal Interocean Lines and Koninklijke Nedlloyd, the new Nedlloyd group decentralised its claims handling from Rotterdam and appointed regional agents to handle claims arising from discharge of cargo in specified areas. From the time of the amalgamation until the 31st December 1980 all claims which involved cargo discharged at West African port s were handled by the Durban, South Africa, office of Nedlloyd. In November, 1980 Nedlloyd announced that the claims handling procedure for the African continent was to be re-allocated and responsibility for claims arising from discharge in West African ports was to be transferred to the Hong Kong Office of Nedlloyd as from the 1st January 1981. He stated that this was the first time, in 11 years of dealing with Nedlloyd Lines, that he had found them seeking to refer proceedings to Rotterdam under a jurisdiction clause.

16. There was no dispute about these statements of fact. All the deponent was really saying was that in November 1980 the defendants set up an office in Hong Kong to which, as from 1st January 1981, claims were to be made with regard to cargo discharged at west African ports. From these facts Mr. Ashby stated that he formed the "understanding that all claims and any actions arising therefrom would be dealt with in Hong Kong by Nedlloyd (HK) Ltd.". It was submitted that, given the facts known by Mr. Ashby, any reasonable businessman would form such an understanding.

17. Mr. Ashby went on to say that he had discussed the matter with Mr. Roger Houghton, his principal, and that Mr. Houghton told him that he had been informed by Nedlloyd Lines that he should place claims with the Hong Kong office of Nedlloyd Lines for negotiation and settlement. He said that he believed that Mr. Houghton's understanding was "that the request by Nedlloyd Lines that claims be placed and processed in Hong Kong was on the basis that they were going to handle the whole claim in Hong Kong". Again it was submitted that Mr. Houghton was reasonable in coming to such a belief. It is to be noted that neither Mr. Ashby nor Mr. Houghton suggested that Nedlloyd Lines ever informed them that actions arising from claims would be dealt with in Hong Kong. In both cases they say they formed the"understanding"that this would be so because they were told to make claims to the office in Hong Kong. As I have indicated Mrs. Penlington suggested that this was a reasonable understanding for a businessman to form. I am not able to agree with that suggestion. It is my view that, being told to make a claim at a particular place, would convey no more to a reasonable businessman than that he should put in his claim at that place. If such claims were admitted and processed by that office, then he would be entitled to form the belief that it was the opposite party's intention that uncontested claims should be dealt with by the office in that place. If, the claims being rejected, the claimant commenced an action and the office accepted service of the proceedings and entered a defence, it would be reasonable to assume that it was the intention of the opposite party not only that claims should be processed in the office but also that actions arising from those claims should be dealt with by that office. It is to be noted that neither Mr. Ashby nor Mr. Houghton state that the defendant company had ever waived the jurisdiction clause and defended actions arising out of claims in Hong Kong. Indeed, it was made clear by a further affidavit of Mr. J.M.M. Johnson, filed on the 12th June 1982, not only that this had never occurred, but that the first time an action was taken i.e. in the case of the "Nedlloyd Seine" the defendants had immediately applied for a stay pleading the jurisdiction clause. Mr. Johnson said that a Miss Wai of the Hong Kong claims office of the defendant, which is known as "Nedlloyd Lines" and situated at North Point, informed him that "Since the transfer of the claims office from Durban to Bong Kong as stated above, the first instance where an action was commenced in respect of claims against Nedlloyd vessels in the Courts of Hong Kong against the defendants, was High Court Admiralty Jurisdiction Folio 301 of 1980, involving the "Nedlloyd Seine". After the arrest of the "Nedlloyd Seine", the defendants took out a summons asking for a stay and this first came on for hearing on the 3rd February 1981. T do not have the date upon which this summons was filed, however, it was clearly some short time prior to 29th January 1981 the date on which the summons in the present matter was filed. It seems quite clear that the defendants never consented to any actions being brought against them in Hong Kong. I find it difficult, indeed almost impossible, to understand why Mr. Ashby and Mr. Houghton would have come to the "understandings which they say they had. I am left with the impression that their "understandings" rested, in large part, upon what can only be described as "wishful thinking" on the part of the recovery agents. I am satisfied that the defendants have never by their conduct towards the recovery agents waived their right to have the matter litigated at Rotterdam. I need hardly add that by the end of January they must have realized that they had misunderstood the situation. As at that time, it must have been quite clear to all persons connected with these matters that the defendants intended, where actions were brought against them in cases where the Bills of Lading contained Dutch jurisdiction clauses, to apply, if they saw fit to do so, for a stay.

18. As regards (b), it is necessary to set out, in full, paragraph 5 of the affidavit of Mr. A. P. Robertson, a partner in the plaintiffs solicitors, which was filed on the 29th May 1982. This paragraph read as follows:-

"5.    In about February or March 1981, I spoke on the telephone to Mr. Andrew Biggs of Messrs. Richards Butler who had the conduct on behalf of Nedlloyd Lines of the various actions started by my firm. In this telephone conversation, I suggested that from the point of view of costs, it would be sensible to treat the action involving the 'Nedlloyd Seine' being Action Folio 301 of 1981 as a test case, in other words that it should be regarded as a precedent for the other cases being handled at that time by our respective firms. It depended on the outcome of the 'Nedlloyd Seine', but I understood the other actions would go forward with no reliance on the jurisdiction point if the plaintiffs in Folio No.301 of 1981 were successful. I further understood Mr. Biggs to agree to this suggestion. In a subsequent telephone conversation in about November 1981, this was mentioned again to Mr. Biggs as being the basis on which renewal of a number of writs against Nedlloyd Lines had been reached. No comment or objection was made at that time. It was my understanding, therefore, that to save costs, no action would be taken on either side until the outcome of the 'Nedlloyd Seine' application for stay for known (sic)".

19. Mr. Robertson went on to say that in reliance "on these representations" no protecting writ was issued in Holland. I must say that I find it difficult to understand what representations Mr. Robertson is talking about. Putting aside his"understandings"all that his affidavit says was agreed was that the action involving the "Nedlloyd Seine" would be treated as a "test ease". Saying that the matter will be a "test case", dues not, to my mind, indicate, unless there be specific further agreement, that the parties have agreed to be bound by the result thereof. Indeed, it is difficult to see how any firm agreement of that nature could be reached unless it was clear that the material facts in each case were identical. If they were not then the decision in the "test case" would not be capable of resolving the matter in issue in the other cases. As It turned out the facts in the "Nedlloyd Seine" were so different from those in the present case that it was not capable of binding the parties in the other actions.

20. In the Nedlloyd Seine ⁽²⁾, the application for stay was made after the plaintiffs were already out of time in the Dutch jurisdiction. Mr. Justice Cons, who gave the judgment with which Mr, Justice Leonard agreed, was not prepared to grant a stay because the plaintiffs had acted on advice given in good faith in commencing their action in Hong Kong and the application for stay, by reason of which the plaintiffs must be taken to have known that the jurisdiction clause was being relied on, was only made after the plaintiffs were time-barred in Rotterdam. This was clearly not so in the present case. The jurisdictional issue was raised and a stay was sought several months before time expired in Rotterdam. At that stage the plaintiffs must be taken to have been put on notice to protect their position. It was then no longer really material whether or not they had acted on advice given in good faith when commencing their action in Hong Kong. The decision in the "Nedlloyd Seine" clearly could not, by reason of its facts, govern the present dispute.

21. It is difficult to know why Mr. Robertson, even if he believed that there was some agreement as to a test case, would not have taken out protecting writs. The first and most obvious reason why he should have done so was because the test case might have gone against him. Secondly he should have done so because the test case might, as indeed did occur, turn out, because of its "peculiar circumstances" (see Cons. J. A. at 644), to be not capable of resolving the issues between the parties.

22. The recollection of Mr. Biggs is quite different from that of Mr. Robertson. It is set out in his affidavit of the 12th June 1982 as follows:-

23. During the course of the hearing before me it was suggested that Mr. Biggs was being less than frank in this affidavit and that the affidavit did not represent the true position. Indeed Mrs. Penlington suggested that paragraph 14, above, was "a totally dishonest statement". Mr. Ma, for the defendants, later announced that this suggestion had been made without instructions and was withdrawn. Let me make it clear that I have no hesitation in accepting Mr. Biggs' affidavit. It is detailed and convincing and, where it contradicts what is stated in the affidavit of Mr. Robertson, it is, in my view, to be accepted in preference thereto.

24. In the outcome I am satisfied not only that no estoppel arose against the defendants but also, accepting the evidence of Mr. Biggs, that there was no basis for Mr. Robertson to conclude that a binding agreement, that the parties would be bound by the outcome of the "Nedlloyd Seine" in other cases involving a stay, had been concluded between himself and Mr. Biggs.

25. I will deal with the submission as to the weight to be given to the existence of a time bar when dealing with (e)(iii) of the "Eleftheria" considerations below.

26. It is settled law that plaintiffs must show strong cause in favour of the Court refusing to grant a stay, All of the circum-stances of the case must be taken into account, however the particular matters that fall for consideration, as set out in the Eleftheria⁽¹⁾, at 237, are:

27. As to (a) Mrs. Penlington submitted that if the Master and Members of the Crew had to be called, they could as conveniently come to Hong Kong as to Rotterdam. On the other hand it would clearly be less expensive and more convenient for the witnesses from Nigeria to go to Rotterdam than to come to Hong Kong and Rotterdam would probably be not more convenient for them than would be Hong Kong. It would clearly be more convenient and less expensive to bring any witnesses who might have to be called as to the condition of the container at the time of loading in Taiwan to Hong Kong rather than to take them to Rotterdam. It was suggested that as regards Dutch witnesses, it would clearly be preferably that they give evidence in Rotterdam in their own language. However, against this it was pointed out that such evidence could readily be translated if it was required to be given in Hong Kong. It was submitted that all documentary evidence was in English and that this would make it more convenient to have the matter heard in Hong Kong as there would be no need for translation of the documents into Dutch such as would exist if the matter was heard in Amsterdam. In cases such as this it is always difficult to make exact assessments as regards convenience and expense because the nature and extent of the oral evidence is rarely known at the stage when an application for stay is being heard. Indeed, in the outcome, many of the matters in issue may be decided by documentary evidence alone. However, it does seem to me likely that, if this case come to trial, it will not be able to be resolved without evidence from witnesses who reside in Nigeria. Having considered all of the above matters I cannot say that the plaintiffs have shown strong cause in this regard.

28. As to (b) it is clear from clause 33 of the Bill of Lading that the law of the Netherlands applies to the transaction. However, as it has not been suggested that the law of the Netherlands is any different from Hong bong law, I must take it that the laws of both countries are the same and that there would be no real difficulty in the application of the law if the proceedings were brought in Hong Kong.

29. As to (c) it was submitted that the defendants have a connection with Hong Kong as they have a claims office here. This is true. However, the head office of the defendants is in Holland and they are clearly anxious that the litigation should take place in that country with which they, incontestably, have a much stronger connection. The plaintiffs, Gull Trading Company, are an Nigerian company who I am told, have subrogated their rights to the African Insurance Company which, it seems, although there was no precise information on this point, is another Nigerian company. It does not appear that the plaintiffs or the party to whom they have subrogated their rights have any real connection with Hong Kong.

30. As to (d) it was suggested that the defendants did not genuinely desire a trial in Holland, but were simply seeking a precedural advantage as the action is presently time-barred in Holland. I am not at all satisfied that this is so.  The defendants at the very outset, well before the time bar came into operation, indicated that they were seeking to rely upon the jurisdiction clause. I accept that the defendants, who are a substantial Dutch shipping company, genuinely desire that litigation against them be pursued in their home country.

31. As to (e) there was no argument addressed to me as to either (i), (ii) or (iv). However, as to (iii) it was suggested that the plaintiffs would be faced with a time bar not applicable in Hong Kong. Mr. Ma does not suggest otherwise. Mrs. Penlington suggested that this was a factor of substantial, if not conclusive, weight against the granting of a stay.

32. In this regard the statement by Mr. Justice Sheen in the Blue Wave(4), at 156, is very much in point. The learned judge there said:

"The fact that the plaintiff will have no remedy in the foreign court seems to me to be a powerful factor against to stay. To this approach I will male an exception if on the facts it was clear that the plaintiff had acted unreasonably and that his conduct showed that without good reason he deliberately and advisably allowed the time limit to expire without instituting alternative proceedings.

33. I have already made it clear that this is not a "Nedlloyd Seine" situation where the Court was concerned with whether a plaintiff, who was time-barred by the time the stay was sought, had acted on advice given in good faith in commencing his action in a jurisdiction other than that stipulated in the Bill of Lading. In the present case we are no not concerned with whether the plaintiff acted on advice given in good faith in commencing his action, about which, anyway, there is, in my view, some doubt, as I have already indicated, but with whether the plaintiff acted reasonably after having been given notice that the jurisdiction clause was being relied upon, in failing, while he still had time, to take protecting action in the stipulated jurisdiction.

34. As I have already indicated I am satisfied that there was no basis for Mr. Robertson to conclude that a binding agreement had been arrived at. Accepting that Mr. Robertson did so conclude, I am satisfied that, in the circumstances, he was not reasonable in so doing and that he was not acting reasonably when he took no action to issue protecting writs in Amsterdam.

35. I am satisfied that in the present case the plaintiffs did, through their legal advisers, act unreasonably both in assuming the existence of an agreement, which never, in fact, came into being, and in failing to issue protecting writs and that they did, by their conduct, without good reason, deliberately and advisably allow the time limit to expire.

36. Having regard to all of the circumstances of the case, I am satisfied that the plaintiffs have not shown strong cause against the granting of a stay and I will, therefore, order that the proceedings in Hong Kong be stayed.

37. The plaintiffs are to pay the defendants costs to be taxed.

(1)    (1969) 1 L.L.R.

(2)    (1981) H.K.L .R. 641.

(3)    (1981) Lloyd's Maritime Law Newsletter No.3)

(4)    (1982) 1 L.L.R. 151

Representation:

Mr. G. Ma (Richards Butler) for appellant /defendants.

Mrs. Penlington (Robertson, Double & Boase) for respondent /plaintiffs.