Jingjin Shipping Co Ltd v. The Owners of the Ship or Vessel "Tian Xiang 2 Hao" (Prc Flag) and Another
Read the full judgment text of HCAJ 322/2001 on BabelCite. This HCAJ judgment was delivered on 8 October 2003.
1. The Plaintiffs apply by Notice of Motion ("the Motion") dated 3 July 2003 for Orders that:-
Cited by 6 cases · Cites 1 case
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HCAJ000322/2001 HCAJ 322/2001 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ADMIRALTY JURISDICTION ACTION NO. AJ 322 OF 2001 _____________________ Admiralty action in rem against
_________________________ Coram: Hon. Reyes J in Court Date of Hearing: 24 September 2003 Date of Judgment: 8 October 2003 _________________ J U D G M E N T _________________ 1.The Plaintiffs apply by Notice of Motion ("the Motion") dated 3 July 2003 for Orders that:-
2.By Summons dated 22 September 2003 the Plaintiffs applied to amend the Motion to include an additional ground for setting aside the Acknowledgment, namely, that the same:-
I allow the amendment. Background 3.The Plaintiffs claim indemnity or contribution for loss of or damage to a consignment of 17 containers of newsprint on 20 September 2001. At that time 10 containers fell into the sea after loading on board the ship "TIAN XIANG 2 HAO" ("the vessel"). Seven containers (and their contents) loaded on board the vessel were also found to be damaged. 4.The writ was issued on 13 November 2001 and amended on 15 November 2001. The vessel was arrested in Hong Kong on 4 December 2001. 5.The Affidavit of Philip Mo Wan Yiu leading arrest identified the vessel as the ship in connection with which the claim arose and stated Mr Mo's belief, based on a certificate of registration of ownership of the vessel, that:-
Mr Mo further deposed that:-
6.Ince filed the Acknowledgment on 13 December 2001. Against the words "State the description of the Defendant, as named in the Writ of Summons, by whom or on whose behalf the service of the Writ is being acknowledged", Ince typed the following (corresponding with the description of the 1st Defendant on the writ):-
The Acknowledgment gave Ince's Hong Kong office as the address for service. 7.In December 2001 negotiations ensued between the Plaintiffs solicitors, Messrs Holman Fenwick & Willan ("HFW"), and Ince on provision of security for release of the vessel. Ince initially conducted such negotiations on the basis that they were acting for the "owners" of the vessel, without specifically naming them. HFW continued to identify the owners as Guangzhou Salvage ("Salvage"), including in a draft letter of undertaking sent to Ince for consideration on 13 December 2001. During this period, HFW pressed for confirmation of the identity of Ince's clients. 8.On 21 December 2001 Ince responded to such inquiries as to its clients as follows:-
9.By fax dated 22 December 2001 HFW replied:-
10.On 11 January 2002 Ince faxed HFW, stating:-
By fax of the same date HFW asked Ince for a copy of an ownership registration certificate evidencing Tian Xiang Warehousing & Transportation Co. Ltd. ("Warehouse") "as the owners of the vessel at the material time". 11.On 30 January 2002 HFW filed a Statement of Claim. 12.Although no certificate of the type requested by HFW on 11 January 2002 has ever been produced, on 5 February 2002 Ince wrote to HFW:-
Enclosed with its letter, Ince sent copies of 2 Chinese agreements:-
13.The Agency Agreement provided (among other terms) as follows (in translation1):-
14.The Employment Contract (among other terms) provides as follows:-
15.By fax of 7 February 2002 HFW, following a Court hearing relating to the sale of the vessel pendente lite, stated:-
16.Ince replied on the next day:-
17.HFW answered by fax of 11 February 2002:-
18.Ince filed a Defence on behalf of the 1st Defendant on 15 February 2002. 19.On 20 February 2002 Ince replied to HFW's fax of 11 February 2002:-
20.On 6 June 2002 HFW sent the following letter to Ince:-
21.To this letter, Ince faxed a holding reply on 13 June 2002. On 26 June 2002 it replied substantively:-
Ince did not say anything about whether it had also acknowledged service on Salvage's behalf. 22.On 17 May 2003 Ince obtained an Order from Waung J that it cease to be "the Solicitors acting for the Defendant in this action". The Order describes Ince as "Solicitors acting for the Defendant, Guangzhou Tian Xiang Warehousing and Transportation Co. Ltd" and recites that notice of Ince's application had been served on Warehouse. The Order states that "the address of the Defendant for service shall be the last known address at 50 Guangjiang Road, Huangpu, Guangzhou, China". The Order was not served on HFW until 3 July 2003, after the Motion had issued. Discussion 23.There are 2 principal issues:-
Issue (1): Whether the Acknowledgment should be set aside 24.At the hearing of the Motion Mr Stokes appeared on the Plaintiff's behalf, Mr Wright on Ince's behalf. Neither Warehouse nor Salvage were represented before me. I was informed by both counsel that Warehouse knew of the hearing of the Motion, but it was unclear whether Salvage knew of this. Mr Wright told me that a Warehouse representative had gone from Hong Kong to the Mainland to discuss matters with Warehouse and Salvage officers. But Mr Wright could not say whether Salvage had been informed of the Motion in the course of any discussion. 25.As to the application to set aside the Acknowledgment, Mr Wright told me that Ince had not received instructions from Warehouse and accordingly adopted a neutral position. 26.The Court's Admiralty jurisdiction was invoked here under High Court Ordinance (Cap.4) ("HCO") s.12A(2)(g). HCO s.12A states:-
27.The claim being made under HCO s.12(2)(g), the Plaintiffs commenced an action in rem against the ship based on HCO ss.12B(4). That states:-
28.Admiralty procedure allows the parties to an action in rem to be described (rather than named) in the title to the action. Thus, plaintiffs are conventionally identified in a writ as "The owners of cargo lately laden on board the ship or vessel 'X'", while defendants are typically sued as "The owners and/or demise charterers of the ship or vessel 'X'". In the writ, the Plaintiffs identified themselves by name, but (as they were entitled to do) described the 1st Defendants as "The Owners of the Ship or Vessel 'Tian Xiang 2 Hao' (PRC Flag)". 29.The question is whether Warehouse, which claims to be the beneficial owner of the vessel, was entitled to acknowledge service of the writ as the 1st Defendant. There is no dispute that at all material times Salvage was registered in the relevant Mainland registry as owner of the vessel. 30.In The "TIAN SHENG No.8" [2000] 3 HKC 285 the Court of Final Appeal held that, absent exceptional circumstances such as fraudulent procurement of a registration, the registration of a person as owner of a ship in the port of registry was "virtually conclusive" of the ownership of the vessel "in the general run of things". Absent an allegation of fraud or possibly egregious error, the unqualified word "owner" in HCO s.12B(4)(b) should normally be understood as a reference to a ship's registered owner. See 292G - 293E, 294D-E (Litton PJ); 305G, 306C-G (Bokhary PJ). 31.It is consequently difficult to see how Warehouse, which is not the registered owner of the vessel, could be entitled to acknowledge a writ addressed to "The Owners of the Ship or Vessel 'TIAN XIANG 2 HAO' (PRC Flag)" and appear as 1st Defendant. 32.The Plaintiffs by their writ claim that Salvage, not Warehouse, would be liable as 1st Defendant. If there was any doubt whom the Plaintiffs were intending to sue as 1st Defendant, the Affidavit leading arrest makes it plain that the Plaintiffs are not suggesting any discrepancy between the registered and beneficial ownership of the vessel. Neither error nor fraud in registration is alleged by the Plaintiffs. In those circumstances, it seems to me, Warehouse cannot assert a right to acknowledge service of the writ as 1st Defendant purely because (regardless of whom the Plaintiffs claim would be liable in a personal action) Warehouse regards itself as the beneficial owner of the vessel with a right to be heard on the disposition of the same. 33.I am strengthened in this conclusion by the judgment of Zulkefli J of the Malaysian High Court in The "ABLE LIEUTENANT" [2002] 6 MLJ 433. There the vessel was arrested. The registered owner, Able Shipping, entered a conditional appearance as defendant. It applied to set aside the writ and warrant of arrest. Pan Ocean, claiming to be beneficial owner of the vessel, also put in an appearance as defendant and it too applied to set aside the writ and warrant of arrest. 34.Zulkefli J held that Pan Ocean was not entitled to acknowledge service of the writ as defendant. He reasoned as follows (at 444B - 445D):-
35.Zulkefli J rejected the submission that Pan Ocean's stance was justified by 2 Singaporean authorities. However, since the judge's remarks on those 2 cases are somewhat compressed, I briefly digress to consider them in more detail. 36.In "ANDRES BONIFACIO" [1993] 3 SLR 521, POCI3 appeared as defendant to set aside the writ in rem and the warrant of arrest on the ground that it was not the person who would be liable in an action in personam. The plaintiff sought to justify arrest on the basis that the vessel was beneficially owned by PNOC. At 1st instance, the plaintiff failed to establish PNOC's beneficial ownership and Karthigesu J set aside the writ. The Court of Appeal upheld the judgment. Given the facts of "ANDRES BONIFACIO", Zulkefli J rightly concluded that the case does not support a proposition that a beneficial owner may acknowledge service as defendant. The case did not involve a claim by a beneficial owner to be entitled to acknowledge service. 37.In "TEMASEK EAGLE" [1999] 4 SLR 250, the defendant applied to set aside an arrest on the ground that the relevant vessel was beneficially owned by it and not by the party (Maritime Malaysia) whom the plaintiff was alleging would be liable in an action in personam. The evidence showed that Maritime Malaysia had sold the vessel to the defendant on 5 March 1998, prior to the vessel's arrest on 17 November 19984 The plaintiff adduced evidence that both Lloyds Register and the Labuan Ships Registry still recorded Maritime Malaysia as owner of the vessel at the time of the hearing. Choo Han Teck JC held that the defendant was the beneficial owner and dismissed the plaintiff's appeal against the setting aside of the writ and arrest by the registrar. The case appears to have concerned a change of ownership between the time when a cause of action arose and that when a claim was made. Given such change of ownership, it is open to a new owner to acknowledge service and apply to set the writ aside on the ground that the party alleged to be liable in personam has ceased to be beneficial owner at the time when the claim is made. Accordingly, as Zulkefli J held in "ABLE LIEUTENANT", "TEMASEK EAGLE" is not authority that a person who has at all material times been beneficial (but not registered) owner may acknowledge service solely on the basis of his claim to beneficial ownership. 38.The Plaintiffs here make no claim against Warehouse. That does not mean that Warehouse cannot take steps to protect its alleged beneficial ownership in the vessel. The proper course (as Zulkefli J suggests in the passage just quoted) would have been for Warehouse to apply to intervene in the action under RHC Order 75, Rule 17 as an interested party. This is not a mere matter of procedural pedantry. A defendant is entitled to appear as of right to defend against a plaintiff's claim. But, as Mr Stokes points out, the Court will not necessarily give leave for a would-be intervener to be joined as a party. The Court retains a discretion on the matter. It can, for instance, impose conditions on any joinder of the intervener, including payment of security for costs occasioned by intervention. See, for an example of the imposition of a condition as to payment of security, The "HALLA LIBERTY" HCAJ 60/1998, 28 June 2002 (Waung J)). 39.Following the passage which I have just cited, Zulkefli J enters into a detailed consideration of the procedure by which ships are arrested and writs acknowledged in actions in rem. To conclude on the 1st issue in this case, I think it is helpful to set out the learned judge's analysis (which I respectfully adopt) and then to apply that analysis to the present circumstances to see whether my conclusions make sense from a wider perspective. In the passages which I cite below it will be seen that Zulkefli J was commenting on in rem procedure under s.21(4) of the UK Supreme Court Act 1981. That section is to all intents and purposes identical with HCO s.12B(4). 40.As with the Court of Final Appeal in "TIAN SHENG", Zulkefli J's starting point is that registration of ownership is virtually conclusive of the legal and beneficial ownership of a ship. He explains the rationale for this (at 447H-I):-
41.Zulkefli J then examines different types of arrest situations (at 448G - 449E):
42.If one applies the above typology to the present case, the circumstances here constitute a "category 1" situation. In taking out the writ and warrant of arrest, the Plaintiffs were entitled to treat Salvage's registration at the time of the cause of action as evidencing compliance with HCO s.12B(4)(b) and that continued registration at the time when the writ was issued as "virtually conclusive" evidence of the ship's beneficial ownership by Salvage. 43.Ordinarily the writ, once served on the ship, would have come to Salvage's attention as registered owner. The writ certainly came to Warehouse's attention. It appears from the Defence that it is Warehouse's intention to contest the Plaintiffs' claim on the merits. If so, the proper course would have been for Warehouse to apply to intervene as an interested party. What Warehouse cannot do is to acknowledge service as 1st Defendant, when it is apparent from the circumstances (including HCO s.12B(4)(b)) that Salvage not Warehouse is the party whom the Plaintiffs allege would be liable in personam. 44.The foregoing consideration attaches significant weight on the particulars of ownership found in a relevant registry. This is because in my view such particulars play a role not just in relation to the requirement in HCO s.12B(4)(b), but also towards ascertainment and proof of the beneficial ownership required by HCO s.12B(4)(i)5. 45.I note finally on this 1st issue that Mr Stokes drew my attention to Article 8 of the PRC Maritime Code which states (in translation):-
The construction of the words "owner" and "beneficial owner" in HCO s.12B(4) (a Hong Kong statute) must be matters of Hong Kong law. I therefore attach little (if any) weight to Article 8 for the purposes of construing the HCO. Nonetheless, it is worth observing that, given Article 8, as between a 3rd party interested in cargo carried on board a ship and a defendant sued as shipowner, Mainland law seems to treats registration as conclusive of the ship's ownership. 46.For the reasons discussed above, in my judgment Warehouse was wrong in law to file the Acknowledgment. 47.In the premises, I am satisfied that I can set aside the Acknowledgment for lack of compliance with the requirements stipulated in RHC Order 12, Rule 3. A consequence of such setting aside is that the Defence (which was filed on the basis of the Acknowledgment being valid) cannot stand and ought likewise to be set aside. 48.It is unnecessary for me to deal with the Plaintiffs' alternative case that, in any event, the Acknowledgment should be set aside because, since from the time when Ince ceased to act for it, Warehouse no longer had a Hong Kong address for service. See RHC Order 12, Rule 3(2)(a). I merely state that, had this been the sole ground for the Plaintiffs application, I would have been reluctant to set aside the Acknowledgment without first affording Warehouse a chance to make good the omission to provide a Hong Kong address. It seems to me that a failure to give a Hong Kong address is not such an incurable objection to the Acknowledgment as to merit an immediate setting aside. Issue (2): Whether Ince should pay the Plaintiffs' wasted costs 49.Mr Stokes submitted that, by filing the Acknowledgment in the form in which it was filed, Ince & Co. purported to be acting, and to have instructions to defend the action, on Salvage's behalf. Ince having wrongly represented that it had Salvage's authority to file the Acknowledgment, Mr Stokes relied on cases such as Yonge v. Toynbee [1910 1 KB 215 (CA) and The "NEPTUNE" [1919] P 17, at 21 (Note (1)) (Hill J) for his conclusion that Ince should bear the Plaintiffs' wasted costs from the invalid Acknowledgment. An agent is deemed to represent that he has authority to act on his principal's behalf. If that representation turns out to be untrue, the agent (Mr Stokes said) must be strictly liable for loss to a 3rd party occasioned by the breach of his implied warranty as to authority. 50.In the alternative, Mr Stokes suggested that Ince should also be liable to compensate the Plaintiffs under RHC Order 62, Rule 8. That provides as follows:-
51.It is useful at this stage to refer to Hong Kong Civil procedure 2002 Note 62/8/2 (p. 870) as to the type of misconduct by a solicitor which may trigger a sanction under Order 62, Rule 8:-
52.Mr Stokes candidly said that it was not his case that Ince was guilty of serious misconduct. Instead, he submitted that Order 62, Rule 8 came into play because of Ince's "cavalier attitude" in failing to take basic steps to verify that it was properly instructed to file the Acknowledgment. Mr Stokes argued that a solicitor should ensure (for example) that its authority came from the relevant defendant. Here the "stark question" of Ince's authority to act and Warehouse's locus to file the Acknowledgment was "a live issue for a lengthy period of time" with HFW pressing for clarification of Ince's client. Ince did not (Mr Stokes suggested) take any real steps to deal with HFW's concerns. Such "cavalier attitude" merited being made liable for costs under Order 62, Rule 8 on a common fund basis. Preliminary matters 53.Ince had initially applied to be joined to the present proceedings as an Intervener. I understand that such application was taken out when it was unclear whether or not Ince would have a chance to be heard within the Motion before an Order along the lines sought by the Plaintiffs might be made against it. Mr Stokes having no objection to Ince addressing the Court in the course of the hearing of the Motion, Mr Wright thought it was unnecessary to pursue the application to intervene. 54.But Mr Wright took 2 preliminary objections to Mr Stokes' claim against Ince. 55.First, Mr Wright submitted that, insofar as the Plaintiffs were seeking to impose liability on Ince for breach of a warranty of authority, the Plaintiffs should have started a separate action and could not proceed in the present Admiralty action. 56.Second, Mr Wright submitted that, insofar as the Plaintiffs were seeking to impose liability under RHC Order 62, Rule 8, although such application could be made within the present Admiralty action, it was incumbent on the Plaintiffs to formulate the charge being made with particularity. It was not enough for the Motion, for example, to complain that "Messrs Ince & Co. in filing the said acknowledgment, acted without authority from the owners of the ship or vessel 'Tian Xiang 2 Hao'". Since (Mr Wright argued) Order 62, Rule 8 could only be exercised in cases in which there was a serious dereliction of duty by a solicitor, the rules of natural justice and fairness required that Ince should be clearly told what it had done wrong and what was being claimed in consequence thereof. 57.During the hearing, I held against Mr Wright on both preliminary objections. 58.In relation to his 1st point, there are ample examples (such as in Yonge v. Toynbee and The "NEPTUNE") of the Court summarily dealing with the question of solicitors' liability for breach of a collateral warranty as to authority, within the action in which the solicitors had purported to act, without the party applying for an order having to commence a separate action. 59.Mr Wright cited The "SARDINIA SULCIS" and "AL TAWWAB" [1991] 1 Lloyds Rep 201 as an instance where the defendants started fresh proceedings against solicitors for breach of warranty of authority in acting for non-existent clients. But the fact that the parties in one case started different proceedings for reasons unexplained in the report, does not mean that a person can only sue solicitors for breach of warranty of authority by way of a separate action. 60.To the contrary, Mr Stokes pointed to Form 19 of the section entitled "Acknowledgment of Service" in Atkin's Court Forms (2nd ed., 1994 issue), vol.6, in support of his contention that there was no need to initiate a new action. Form 19 gives sample wording for a summons or motion seeking to make solicitors liable for costs thrown away as a result of their entering an acknowledgment of service without a defendant's proper authority. From the text of Form 19 (on which the present Motion was based) it is apparent that Atkins believes that separate proceedings are not necessary and the summons or motion can be brought within the existing action between the plaintiff and defendant. 61.The Court has a degree of flexibility in how it handles applications for costs orders against solicitors of an opposing party for acting in breach of their warranty of authority. The following dictum of Sir Thomas Bingham MR in Ridehalgh v. Horsefield [1994] Ch 205 (CA) (at 238G - 239A) on the English court's jurisdiction to make wasted costs orders seem to me to be applicable in principle to the situation here:-
62.In relation to Mr Wright's 2nd point, I considered that the Plaintiffs' complaint against Ince was sufficiently clear from the Motion and Mr Mo's 4th Affidavit sworn in support. That affidavit exhibited the correspondence between the parties which I summarised above. Further, the last paragraph of the affidavit stated:-
63.I asked Mr Wright whether, if I held against him on his preliminary issues, he wished to have an adjournment on the ground that he would not be prepared straightaway to deal with the substantive issues raised by Mr Stokes. Mr Wright replied that his instructions were not to seek an adjournment, but to proceed with submissions on the substance of the Motion. That was indeed the position implicit in Mr Wright's skeleton which deals in depth with the breach of warranty and Order 62, Rule 8 issues raised by the Plaintiffs. Accordingly, after I held against Mr Wright on his 2 preliminary objections, no adjournment having been sought by Ince, I proceeded to hear Ince's substantive submissions. Substantive matters 64.Mr Wright submitted (and I agree with him) that, to make out a case for Ince's liability for breach of warranty, the Plaintiffs have to establish the following elements:-
Sub-issue (1): Representation 65.Mr Wright argued that Ince never represented that it was acting on Salvage's behalf. In my view, Mr Wright is correct on this crucial point. 66.By filing the Acknowledgment, it seems to me that all Ince was doing was purporting to act for "the Owners of the Ship or Vessel 'Tian Xiang 2 Hao' (PRC Flag)". Ince took the view that Warehouse, which regarded itself as the vessel's beneficial owner, was entitled as beneficial owner to acknowledge service as of right as "owner". In the 1st part of this judgment, I have held that Warehouse was wrong in law to take this view. But the mere filing of the Acknowledgment on the basis of a wrong belief that Warehouse (as alleged beneficial owner) was entitled to appear as 1st Defendant, cannot amount to a representation that the Acknowledgment was filed by Ince on Salvage's behalf. 67.In fact, as is evident from the cases discussed in the 1st part of this judgment, it occasionally happens that alleged beneficial owners (such as Pan Ocean) purport to acknowledge service as defendants as of right, in order to apply to set aside writs and warrants of arrest. Such defendants may be struck out on the basis that they are not defendants as of right and, to the extent that they claim a beneficial interest, should have applied to intervene instead. The point is that the filing of an acknowledgement by a purported beneficial owner is simply set aside as a wrong legal step taken, not because it amounts to a false representation that the person acknowledging service is a registered owner. 68.In his skeleton, Mr Stokes submits (at §4):-
It is the 1st sentence with which I have difficulty. It does not appear to me to be logical to equate Warehouse's acknowledgment of service with a representation that Ince was acting for Salvage. If anything, the facts show the contrary. Pressed by HFW to state for whom it was acting, Ince (right up to time when it filed notice to cease to act) never claimed to be acting for anyone other than Warehouse. Warehouse and Ince may have been wrong as a matter of law to acknowledge service as 1st Defendant on the strength of Warehouse's alleged beneficial ownership. However, parties take invalid procedural steps all the time in the course of litigation. I do not think that I can infer, from the fact that a party A lacking attribute X wrongly takes a procedural step which is only open to a person having attribute X, a representation that A is a person with attribute X. There are myriad reasons why A might have thought that he was entitled to take the procedural step in question, including that A misunderstood or failed to appreciate that as a matter of law only people with attribute X can take the relevant procedural step. 69.Mr Wright suggested that it was significant that, at the time of filing the Acknowledgment, Ince had not seen the affidavit leading the arrest of the vessel. But the affidavit simply shows whom the Plaintiffs thought that they were suing. It has no bearing on the question whether or not Ince warranted that it was acting for Salvage by filing the Acknowledgment. The fact is that long after it was aware that, in referring to the owners of the vessel, the Plaintiffs were claiming against Salvage, Ince maintained that Warehouse was entitled to acknowledge service. Whether or not it had seen the affidavit leading arrest and realised, before filing the Acknowledgment, that the Plaintiffs were targeting Salvage as 1st Defendant, Ince's position would not have changed. That position was made plain in Ince's fax of 26 June 2002 when Ince said that it did "not agree that only registered owners of the vessel can file an Acknowledgment of Service in an in rem proceeding". It was Ince's view that Warehouse as "the true owner of the vessel ... therefore have a right to defend your clients' claim". 70.There is no dispute between the Plaintiffs and Ince that Ince was instructed by Warehouse. Ince's view of Warehouse's entitlement to acknowledge service may have been wrong. I have so found it to be. But Ince's conduct in line with that mistaken view could not amount to a misrepresentation that it was acting for Salvage. 71.The present case is distinguishable from Yonge v. Toynbee and The "NEPTUNE". In Yonge solicitors purported to act for X who became of unsound mind shortly after engaging such solicitors. X having become of unsound mind, the solicitors' mandate to act for X ceased and the solicitors were liable for loss resulting from their claiming to act for X after their mandate had ceased. In "NEPTUNE" solicitors purported to act for shipowners from whom they in fact had no authority to act. The solicitors were responsible for costs incurred as a result of their unauthorised actions. Here Ince only ever purported to act for Warehouse in its correspondence with HFW. Warehouse indisputably instructed Ince. Where Warehouse and Ince went wrong was to become involved in the action by the filing of the Acknowledgment, rather than by intervening. Sub-issue (2): Falsity of representation 72.Strictly, this issue doe not arise, since I have found that there was no representation. 73.Nonetheless, there is one curious factor which I should deal with. Mr Wright submitted that in any event the reality was that, in addition to acting for Warehouse, Ince was also acting for Salvage. There was (Mr Wright said) a chain of instruction from Salvage to Warehouse as evidenced by a letter dated 19 September 2003 from Warehouse to Grand Dragon Navigation Agency Co. Ltd, Warehouse's Hong Kong general agent. That letter states (in translation):-
Before me, Mr Wright hinted (unsupported by any affidavit evidence) that, although Salvage had actually been instructing Ince, it was not prepared to risk incurring liability in the action by providing Ince with a letter expressly admitting this fact. That was because (according to Mr Wright) by Clause 8(5) of the Agency Agreement the responsibility for matters and disputes leading to the arrest of the vessel had been accepted by Warehouse. Salvage did not see why it should be troubled over something which was outside its sphere of contractual responsibility. 74.Now assume (Mr Wright posits) that there was a representation that Ince was acting for Salvage. In light of the letter from Warehouse, the Court (Mr Wright suggests) must take that representation to have been true. 75.As evidence of Salvage's involvement in the giving of instructions to Ince, the letter of 19 September 2003 is of little value. Mr Stokes was rightly scathing about the evidential weight of the letter. It is difficult for me to accord any significance to the declarations by an agent (Warehouse) as to its authority to transmit instructions from a principal (Salvage). There is only Warehouse's word for it, when what is required is evidence from Salvage itself. 76.What is of more concern is the question whether the letter from Warehouse on Salvage's involvement has any affect on my analysis of Sub-issue (1) on representation. Does the letter mean that, contrary to what I have said above in connection with events prior to Ince's ceasing to act, Ince was in fact representing that it was acting for Salvage? In my view, the letter does not affect the analysis. The letter did not come into being until long after the Motion was issued. Its contents could not have affected the minds of the Plaintiffs and HFW, so as somehow to lead them at any relevant time to believe that Ince was acting on behalf of Salvage. Objectively evaluated, Ince's conduct prior to the taking out of the Motion can only amount to a representation that Ince was acting for Warehouse and no one else. It is against such conduct of Ince, immediately prior to the taking out of the Motion, that the Plaintiffs' entitlement to costs against Ince falls to be assessed. Sub-issue (3): Reliance 77.Mr Wright says that there could have been no reliance. I agree. There having been no representation, there could not have been reliance. 78.In any event, once the Plaintiffs had been unequivocally told on 11 January 2002 that Ince was acting for Warehouse and given Ince's refusal to confirm despite repeated requests that it was acting on Salvage's behalf, a number of courses of action were open to the Plaintiffs. Among other courses, they could allow the matter to proceed to trial or apply to strike out the Acknowledgment as wrong. That the Plaintiffs chose, whether out of caution or other reason, not to apply forthwith to strike out the Acknowledgment but to press Ince for clarification about its clients, cannot amount to conduct by the Plaintiffs or HFW in reliance on a representation that Ince was somehow instructed on Salvage's behalf. Ince had not said that it was acting for Salvage. 79.By the same token, that the Plaintiffs chose to enter into lengthy correspondence with Ince on the sale and valuation of the vessel, cannot be said to have been action in reliance on a representation that Ince was acting for Salvage. As far as the Plaintiffs knew, Ince was not acting for Salvage. Ince was refusing to say that it was acting for Salvage. It was the Plaintiffs' choice to deal with Ince in those circumstances. Sub-issue (4): Loss 80.There having been neither representation nor reliance, it follows that there could have been no consequential loss. 81.I therefore find that there was no actionable breach by Ince of a collateral warranty as to its authority to act. Order 62, Rule 8 82.I do not think that the sanction in Order 62, Rule 8 is called for here. 83.Ince may have given wrong legal advice to Warehouse which led to Warehouse instructing Ince to file the Acknowledgment. It is a commonplace in litigation for parties to give advice to clients which the Court ultimately finds to have been wrong. The fact that a party has taken a wrong legal stand is not of itself indicative of negligence on the part of a legal advisor, much less does it amount to serious dereliction of duty by a solicitor. 84.The nature of contentious litigation is that one party takes a stance which the Court finds to be right, while the other party takes a stance which is held to be wrong. Costs incurred by a plaintiff as a result of actions taken on the basis of a wrong stance by a defendant on wrong advice given by a defendant's legal advisors may be awarded to the plaintiff as against the defendant at the end of the day. But the giving of wrong advice to a losing defendant does not, without more, entitle a plaintiff to recover costs directly against the defendant's solicitors for giving such bad advice. 85.I note, in relation to Mr Stokes' submission of a "cavalier attitude" on Ince's part, that I am in any event disinclined to apply Order 62, Rule 8 on such ground. "Cavalier attitude", although a colourful expression, is nebulous as a legal concept. It is hard to know what (if anything) it means, much less pin it down against any specific conduct. I therefore decline to make any finding that Ince acted "cavalierly". Conclusion 86.I make the following Orders:-
87.I make the following Orders Nisi:-
88.I make 2 comments on the Order Nisi. 89.First, although the setting aside of the Defence seems to me to be an inevitable corollary of setting aside the Acknowledgment, it may not have been apparent to Warehouse (which is now not legally represented in Hong Kong) from the Motion (which does not expressly refer to the setting aside of the Defence) that the Court might make such an Order at the end of the Motion. I therefore give Warehouse an opportunity, during the interim before the Order Nisi becomes absolute, to apply for the Order Nisi as to the setting aside of the Defence to be varied. I would request the Plaintiffs and Ince to take steps to draw my judgment to Warehouse's attention. 90.Second, in relation to the payment of Ince's costs by the Plaintiffs, I assume that the relevant event is the hearing of the Motion of 3 July 2003. The Motion having been fully dealt with, the event has transpired and Ince may directly proceed to tax its costs if not agreed. It is for this reason that I have not included the words "in any event" at the end of the 3rd limb of the Order Nisi. 91.Finally, I record that at the end of the hearing before me, Mr Wright asked that, if I were minded to find against Ince on the relief claimed by the Plaintiffs, I should give Ince a further chance to adduce evidence from Salvage that Ince had been instructed by Salvage. My conclusion in this judgment makes it unnecessary for me to deal with Mr Wright's request. For completeness, I state that, had I concluded that Ince was liable to the Plaintiffs on the material before me at the hearing, I would not have acceded to Mr Wright's request.
Representation: Mr David Stokes, instructed by Messrs Holman, Fenwick & Willan for the Plaintiffs. The 1st and 2nd Defendants, absent. Mr Colin Wright, instructed by Messrs Ince & Co. on its own behalf. 1 HFW and Ince provided similar (but not identical) free translations of the Agency Agreement for the hearing before me. For the purpose of exposition, I have followed Ince's translation, but with the correction made by Mr. Mo of HFW in his 5th Affidavit dated 23rd September 2002. The differences between the 2 translations do not have any material bearing on my conclusions. 2 See in the case of Hong Kong RHC, Appendix B, Form No.1. 3 There was conflicting evidence as to whether POCI was the registered owner of the ship at the time of the claim. Lloyds Register suggested that POCI was the owner, while a certificate from the Philippine Coast Guard (the registration authority for merchant vessels in the Philippines) identified PNOC as owners. On this the Court of Appeal said (at 524): "Upon discovery, this discrepancy ought to have been investigated [by the plaintiff] in order to ascertain the true beneficial ownership." 4 The reasoning in "TEMASEK EAGLE" is somewhat obscure, as the judge appears to have treated the date of the vessel's arrest as equivalent to the time "when the cause of the action arose". See further Singapore High Court (Admiralty Jurisdiction) Act (Cap.123) s.4(4). 5 See also Haji-Ioannou v. Frangos [1999] 2 Lloyds Law Rep 337 (CA), at 353 (2nd col.), where Lord Bingham CJ observed : "[I]t has now for a long time been accepted law that ownership of a ship for the purposes of the [1952 Arrest] Convention and for the purposes of the Admiralty jurisdiction of the High Court means legal ownership, except in those provisions where the word is qualified by the adjective 'beneficial': see The I Congreso del Partido ... [1978] 1 QB 500 at p.541, and The Evpo Agnic [1983] 2 Lloyds Rep 411, at pp.414-415. In the latter case Lord Donaldson MR observed that the Convention clearly looked to ownership and registered ownership as one and the same. Even if the legal property in the shares of a one-ship company is held by A and the equitable property by B, he said that that distinction does not affect the ownership of the ship or the shares in the ship." | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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