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Yee Sang Metal and Building Supplies Co. Ltd. v. Taiyo Maritime S.A.

Case No.CACV 122/1991
Court
Court of Appeal
Date11 Dec 1991
Judge—
Case Document
100%

CACV000122/1991

IN THE COURT OF APPEAL 1991, No. 122
(Civil)

BETWEEN

YEE SANG METAL AND BUILDING
SUPPLIES CO. LTD.		 Plaintiff
(Appellant)

AND

TAIYO MARITIME S.A. Defendant
(Respondent)

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Coram: Hon. Sir Derek Cons, V.P., Kempster & Clough, JJ.A.

Date of hearing: 11 December 1991

Date of delivery of judgment: 11 December 1991

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JUDGMENT

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Sir Derek Cons, V. P.:

1. On 27th August last year the motor vessel "Alphard" sailed from Zhangjiang in the Peoples Republic of China bound for Bangkok. She carried a cargo of steel billets consigned aboard her by the plaintiffs, Yee Sang Metal and Building Supplies Company Limited. The documents of carriage in relation thereto were a fixture note and a bill of lading.

2. The fixture note is dated 22nd August and refers to an agreement between the plaintiffs and "Taiyo Maritime S.A., Liberia as owners". It is signed at the foot "For and on behalf of owner Taiyo Maritime S.A. Liberia" by "Mass Maritime Ltd. As Agents". It is accepted that the reference to Liberia is an error for Panama. Taiyo Maritime S.A. are the defendants to these proceedings.

3. The bill of lading is dated 25th August, issued in the name of the defendants and again signed by "Mass Maritime Ltd. As Agents". There is an earlier bill of lading although dated later, signed by the master of the "Alphard", which was issued on behalf of the defendants.

4. Nothing has been heard of the "Alphard" since she left Zhangjiang. It is presumed that she has sunk with all hands. It is suggested somewhere that she ran into a typhoon shortly after sailing. In the action from which this appeal stems the plaintiffs are claiming against the defendants loss of cargo valued at US$1.6 million plus.

5. On 30th November the plaintiffs obtained ex parte from for Mortimer, J., as well as a Mareva injunction, leave to issue a concurrent writ out of the jurisdiction and to serve notice and a copy on the defendants in Panama. On 11th July Mayo, J., heard an application to discharge the order for leave to serve outside on the express ground that "the defendants were not a party to any contract with the  plaintiffs". It would appear from the order subsequently drafted and filed by those responsible that Mayo, J., was not apprised of the affidavit filed before Mortimer, J. We understand that that was not in fact the case, and Mr. Scott, has undertaken on behalf of those responsible that an amendment will be filed. We only mention the matter here to comment that it would seem that the observations of this court in Deak Perrara Far East Limited v. Mr. Leslie Deak Others, Civil Appeal No. 116 of 1990, 18th December 1990, unfortunately unreported, are not being followed.

6. The judge was given further evidence of a bareboat charter dated 29th June, granted by the defendants to Roadacre Limited, a company incorporated in Liberia, for tow years. The charter is confirmed by a telex from Lloyds of London, dated 5th November 1990. Exhibited to the judge below was a letter from Mass Maritime dated 18th April this year, to the effect that by "an unintentional clerical error" they had "inadvertently concluded" the fixture note on behalf of the defendants, and "inadvertently inserted" the defendants' name in the bill of lading instead of that of Roadacre. There was also before him an affidavit from the manager of Mass Maritime to the effect that at no time had that firm acted as agent, or in any other capacity, for the defendants and that there was no current or past relationship whatsoever between them.

7. Counsel for the plaintiffs below pointed out to the judge:

1. that there was a considerable amount of correspondence in late 1990 written by solicitors acting for the plaintiffs to Mass Maritime and the defendants, putting forward a claim based on the defendants as owners of the "Alphard", - at times raising matters which have been specifically canvassed before us today, - but that the correspondence had elicited no response;

2. that there was no satisfactory explanation given for the so-called "clerical errors"; and

3. that there was no evidence that the defendants had actually divested themselves of the ownership of the vessel by means of the charterparty to Roadacre.

The judge found that the submissions were not "really very convincing"; and being satisfied that "the reality of the situation (was) that the demise charter was entered into by the defendants and that the plaintiffs (had) failed to discharge the burden placed upon them of establishing that the plaintiffs (had) a good arguable case" set aside the leave to serve outside the jurisdiction and discharged the Mareva injunction save, presumably as the result of an undertaking, as to any insurance monies on the hull and machinery that might be received.

8. The gravamen of the appeal is that the judge failed to apply the good arguable case test, but simply decided instead, on the affidavits, what would be the essential issue if there were a trial.

9. Both counsel are content to adopt as the true test that which was set out by Staughton, L.J., in Attock Cement Co. Ltd. v. Romanian Bank for Foreign Trade [1989] 1 WLR 1147 @ 1155:

"Nevertheless I conclude that, where there is a disputed question of fact which is essential to the application of R.S.C. Ord. 11 r. 1, the judge must reach a provisional or tentative conclusion that the plaintiff is probably right upon it before he allows service to stand. The nettle must be grasped, and that is what I take to be meant by a good arguable case."

That is the approach I take to have been adopted by this court in Shailain Hirachand Jhaveri v. Rajendra Jhanveri and Others, Civil Appeal No. 9 of 1990, 1st May 1990, also unreported, and to be appropriate in the present instance.

10. In the same judgment Staughton, L.J., referred to the observation of Lord Radcliffe in Vitkovice Horni v. Korner [1951] AC 869 @883 that a judge was "expected to exercise some more critical function than that of simply accepting" the plaintiffs' statement on affidavit, to which I would add, or that of the defendants. I have no doubt that the judge below did exercise that extra critical  function, but unfortunately he has not condescended to detail.

11. The relevant factors, as I see them, and which must have been present to his mind, are:

1. bills of lading, as negotiable instruments, have great importance in trade and parties to them, and indeed strangers as well, can expect to rely on them at their face value;

2. it is a surprising coincidence that two separate bills of lading, one prepared in Hong Kong and the other apparently in China, should contain the same clerical error of mis-naming the true carrier as the defendants;

3. there is a further coincidence that the fixture note, which was a document specifically drawn up for the occasion, should contain a similar error;

4. the anxiety engendered by the coincidences is aggravated by the lack of any explanation as to how the name of the defendants came to be used when, on the evidence put forward, there was no connection whatsoever between them and those responsible for making the documents. The suggestion of Mr. Scott, in an able submission on behalf of the defendants, that it resulted from the notices required by the charterparty to be set up in the master's cabin, does not appeal to me;

5. the anxieties are certainly not lessened by the fact that a director of Mass Maritime, having no relationship with the defendants, should be able to correct, when the question was raised in correspondence, errors as to the defendants' place of incorporation;

6. there is no satisfactory explanation on oath to explain the failure of the defendants to reply to the letter of 2nd November which threatened action against them for breach of the contract of carriage.

On the other hand the judge would have appreciated that if the document for carriage reflected the true position the protestation of Mr. Lee, the manager of Mass Maritime, in his affidavit of 11th July, albeit at one stage qualified by "as far as I am aware", would be deliberately untrue The judge would also have taken notice that the suspicion, which at first glance would naturally cloud the letter of Mass Maritime of 18th April and the undated letter of Roadacre, both exhibited to the second affidavit of Mr. Coogan, would be to some extent cleared by an appreciation that those letters would in themselves leave the two companies open to action, a situation which has apparently occurred.

12. The position of a judge who in circumstances such as these has to come to take what is indeed only a provisional or tentative conclusion is nonetheless not an enviable one; and it is a conclusion, as I would respectfully agree with Staughton, L.J., with which this court would naturally be slow to interfere. But having regard to the factors that I have just outlined, I would, for my part, respectfully say that the judge was nevertheless plainly wrong. In the circumstances as they appear at the moment, - and I put it that way for these matters may well be re-opened at the trial, - the plaintiffs have shown a case sufficiently strong to bring it within the qualifying conditions of Ord. 11.

13. I would therefore allow the appeal, and would hear Mr. Ma as to exactly what order he would like this court to make, bearing in mind that the Mareva injunction has now been discharged for some four months, albeit there is the provision as to the insurance monies.

Kempster, J. A.:

14. On 9th October 1990 solicitors acting for the plaintiffs wrote to Mass Maritime Ltd. explaining that by reason of the fixture note and bill of lading to which my Lord, the Vice President, has already referred, they had a claim for damages against the defendants. Copies of the documents in question were enclosed. In the last paragraph of the letter inquiry was made as to whether Taiyo was the owner of the vessel at the material time and if not, who was the owner. Questions were also raised as to whether the vessel was demise chartered at that time and as to whether the proper description of the defendants was Taiyo Maritime S.A. Panama or Liberia. According to the affirmation of Mr. Lam, made on 30th November 1990, the response was only, and I emphasize the word "only", that Miss Eva Yu of the plaintiff company was informed by Mr. Leung, a director of Mass Maritime, over the telephone on 10th November that the word "Liberia" was a typographical error. It was on the information of Mr. Leung that Mr. Lee, the manager of Mass Maritime, went on oath to say finally "I can confirm that at no stage has Mass Maritime had actual express, usual or apparent authority to enter into any agreements on behalf of Taiyo". That affidavit was made on 9th July 1991. In those circumstances it seems to me that the question of the agency of Mass Maritime is presently very much in issue. For that reason, in addition to those already outlined by my Lord with which I agree in their entirety, I too would allow this appeal and hear Mr. Ma in relation to the relief sought.

Clough, J.A.:

15. I agree that this appeal should be allowed for the reasons given by my Lord Cons. I also respectfully adopt the additional reason which has just been given by my Lord Kempster.

(Sir Derek Cons) (M.E.I. Kempster) (P.G. Clough)
Vice President Justice of Appeal Justice of appeal

Representation:

Geoffrey T. L. Ma (M/s. Ince & Co.) for plaintiff/appellant

John Scott (M/s. Richards Butler) for defendant/respondent