Confecciones Del Atlantico v. Lamont Shipping Inc and Others

HCAJ000037/1981

Bill of Lading - foreign jurisdiction clause - action brought in Hong Kong against 1st defendant who could not rely on the clause and 2nd and 3rd defendants who could - application for stay by 2nd and 3rd defendants refused on the grounds that multiplicity of proceedings should be avoided and the action would now be time-barred in the foreign jurisdiction.

IN THE SUPREME COURT OF HONG KONG

ADMIRALTY JURISDICTION

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BETWEEN

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Coram: The Hon. Mr. Justice Fuad.

Date: 30 June 1982

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JUDGMENT

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1. I have before me an application by the 2nd and 3rd defendants in this Admiralty action in personam to stay all further proceedings. The action is concerned with the carriage of 366 cartons of jeans of which the plaintiffs are owners. The cargo was carried on the terms contained in a bill of lading dated the 29th November 1979 and issued in Hong Kong where the freight was payable. The vessel Integrity carrying the goods arrived at Barranquilla, Colombia on the 4th February 1980 when unloading began. A survey conducted by a Lloyd's agent in Barranquilla on the 17th March 1980 revealed that there had been a short delivery, probably due to pilferage, for there were no seals on the two containers in which the cartons of jeans had been loaded. Only 276 of the 366 cartons that had been shipped were found on inspection and the amount of the plaintiffs' claim in respect of the missing jeans is just over US$36,000.

2. The plaintiffs commenced their action by Writ against the 1st defendant on the 30th January 1981 and the Writ was amended and re-issued on the 8rd February 1981 to include the 2nd and 3rd defendants. An affidavit filed on behalf of the plaintiffs, sworn by a partner in the firm of solicitors representing them, explains the reasons for instituting the proceedings against the three defendants. The 1981-82 Lloyd's Register of Shipowners shows that the Integrity is owned by the 1st defendant who has an address in Piraeus, Greece. On the Pace of the bill of lading, the vessels agent - The Hong Kong Maritime Co. Ltd. - had signed on behalf of the master of the vessel. There was nothing to indicate whether the vessel had been chartered to anyone and on what terms, whether on demise charter or otherwise. And so the plaintiffs were justified in instituting proceedings against the 1st defendant. On the reverse side of the bill of lading the carrier was named as either the 2nd or the 3rd defendants, and this was where the complication lay so far as the rights of action of the plaintiffs were concerned. As at the date when the affidavit was filed the plaintiffs were not unequivocally aware as to whether the carrier included the 2nd or the 3rd defendants. The two affidavits filed by the other side scarcely cast any light on the matter, although some of the later correspondence seemed to show that the 2nd defendant was the carrier. In these circumstances, particularly in view of the apparent inconsistency between the front and reverse sides of the bill of lading, the plaintiffs were justified in instituting proceedings against all three defendants. The deponent verily believed that the plaintiffs were furthermore justified in bringing the proceedings in Hong Kong for, as previously indicated, it was by no means clear as to who the "carrier" was and without such knowledge it was difficult to see how tae jurisdiction clause in the bill of lading applied. Even the present summons did not state where the present action should have been instituted, merely stating either Venezuela or Bogota.

3. The bill of lading contains the following relevant clauses -

4. It should perhaps also be mentioned that on the face of the bill of lading appears the following: "Subject to the Hong Kong Carriage of Goods by Sea Ordinance 1964." The Carriage of Goods by Sea Ordinance (Cap. 46) was repealed by the Carriage of Goods by Sea (Hong Kong) Order 1980, S.I. 1980 No. 1508, published in Hong Kong for general information in L.N. 355 of 1980. The Order in Council extends to Hong Kong the United Kingdom Carriage of Goods by Sea Act 1971 (c.19) with certain ex- ceptions, adaptations and modifications. But the repealed Hong Kong Ordinance is declared to continue to apply to bills of lading issued before the 1st February 1981, the date upon which the Order in Council came into operation. The result of all this is that in the present case by virtue of art. III, r.6, of the applicable Hague Rules, the carrier and the ship would be discharged from all liability in respect of loss or damage unless an action had been instituted by the 4th February 1981.

5. Before concluding this account of the background of the case, it is necessary to add that on the day before the present application was due to be heard an affidavit was filed on behalf of the 2nd and 3rd defendants stating that at the material time in view of a time charter dated the 23rd October 1979 made between the 1st defendant as owner of the Integrity and the 2nd defendant as the charterer, the latter was the operator of the vessel and the carrier under the bill of lading.

6. I will now turn to consider the grounds upon which Mr. Geoffroy Ma contends that the plaintiffs should be allowed to continue their action against the 2nd and 3rd defendants, and Mr. Sammy Lee contends that strong cause for denying a stay has not been shown and that the plaintiffs should therefore be held to their agreement. The cases make it clear that in exercising its discretion whether or not to grant a stay, the Court must take into account all the circumstances of the case - The Eleftheria [1970] P.94. One of the matters to which the Court must have particular regard is in which country the evidence is available, and the effect of that on the relevant convenience and expense e of a trial in Hong Kong or abroad. Mr. Ma recognized that in the absence of an indication as to what the defence to his prima facie very strong case will be (and he complains about that) the Court cannot know what evidence is likely to be called. One point Mr. Ma does make, however, is that all the relevant documents are in English and if the claim were to be heard in a South American court, they would all have to be translated. I must say at once that I do not think that this is a matter that is of sufficient moment to tip the scales in the plaintiffs' favour. On the material before me I cannot make a finding on the question of the relative convenience of a trial as between the Hong Kong and the foreign court. Any conclusion on this point would be no more than mere conjecture. On Mr. Ma's complaint that no defence has been disclosed, I am unable to say that in the circumstances of the case, this indicates that the defendants do not genuinely desire trial in South America but are merely seeking procedural advantages - see the judgment of Zimmern J.A. in The "Nedlloyd Seine", Civil Appeal No.86 of 1981 (not yet reported).

7. Nor does much turn on the point whether the contract is governed by the law of the foreign country, and whether it differs from our law in any material respect. Although the contract is clearly governed by Hong Kong law, the bill of lading, as we have seen, states that the South American court must apply the same law - the 1924 Hague rules. There may, of course, be differences in the rules of evidence and procedure.

8. Mr. Ma relied heavily on the Court's duty to avoid a multiplicity of proceedings. In my judgment a plaintiff cannot successfully resist a stay by pursuing a nebulous claim against a party who cannot avail himself of an exclusive jurisdiction clause. That would clearly be an abuse of process. Although Sheen J. in The "E1 Amria" [1981] 2 Lloyd's Rep. 539 refused a stay on the ground, inter alia, that the parties should not be put to the expense and inconvenience of having to conduct to separate concerned with the same damage, the facts were very different and the case is therefore of little assistance. As has been noted there was nothing on the bill of lading to indicate that the Integrity was on time charter to the 2nd or 3rd defendants. It will be a matter for the trial Court to decide whether the 1st defendant, as the shipowner, was liable under the contract of carriage. All I need say is that in my view it is arguable that the shipowner was a party to the contract and I see no reason why the plaintiffs should have sued the 1st defendant in Greece or, as has been suggested by Mr. Lee, in South America, rather than in Hong Kong. I do not think there is material before me to hold that the plaintiffs sued the 1st defendant here merely as a procedural and tactical device to avoid the exclusive jurisdiction clause in the bill of lading, and thus lay the foundation for a defence to a possible application for a stay. While I would not go so far as to say that I would have refused the stay on this ground alone, I do consider that the "multiplicity of proceedings" point is one that is distinctly in the plaintiffs' favour.

9. I now turn to the time-bar point. Any action against either the 2nd or the 3rd defendants in Caracas of in Bogota will now be time-barred. It is true that as the matter now stands the plaintiffs could continue to pursue their claim against the 1st defendant in the Hong Kong Courts but difficult issues of fact and law would be involved and it is it by no means certain that it would succeed. If a stay were to be granted and the 1st defendant was held by the Hong Kong Courts not to be a party to the contract, then the plaintiffs would be deprived of any remedy in what appears to be, on the face of it, a straight-forward action for a legitimate claim. The extent to which the time-bar factor will influence the Court in proceedings of the kind before me was recently discussed by Sheen J. in The "Blue Wave" [1982] 1 Lloyd's Rep. 151, whose decision was approved by our Court of Appeal in "The Nedlloyd Seine". This is what Sheen J. had to say, at p.156 -

" The approach of the Courts of this country to a time bar has significantly altered in recent years. If it is open to a Court to extend the time limit, the Court will look to see if the defendant has been prejudiced by the delay in commencing proceedings. Such prejudice cannot arise where a claim is brought in time, but not in the correct tribunal. There would be an injustice to a plaintiff, who has suffered a legal wrong and has started proceedings, if he is precluded altogether from pursuing his remedy. The fact that the plaintiff will have no remedy in the foreign Court seems to me to be a powerful factor against a stay. To this approach I would make 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 advisedly allowed the time limit to expire without instituting alternative proceedings. By introducing this exception I do not think that my view differs from the tentative views expressed by Sir Gordon Willmer in, The Adolf Warski [1976] 2 Lloyd's Rep. 241."

10. I accept the reasons put forward on behalf of the plaintiffs in the supporting affidavit to which I referred at the beginning of my judgment for instituting proceedings against all three defendants in Hong Kong. I cannot say that it was an irresponsible decision in the circumstances and in the state of knowledge possessed at that time by the plaintiffs' legal advisers.

11. For the reason I have given, I reach the conclusion that the plaintiffs have discharged the heavy onus cast upon them by the authorities, by showing a strong case that the contractural submission to the exclusive jurisdiction of the foreign court should be overridden. In my judgment it is both just and proper that the action should be allowed to proceed against the 2nd and 3rd defendants in our Courts. The summons for a stay is therefore dismissed.

12. In all the circumstances, I think that there should be no order as to costs and I make an Order nisi to that effect under O.42 r.5A.

Representation:

Mr. Sammy Lee, instructed by Woo, Kwan, Lee & Lo for the Applicants/2nd & 3rd Defendants.

Mr. Geoffroy Ma, instructed by Deacons for the Plaintiff.