Hong Kong Islands Shipping Co Ltd V Castle Insurance Co Ltd and Others

CACV000178/1980

Limitation of actions - claims for general average contribution and on letters of guarantee - application to join shipowner as additional plaintiff - application made more than six years after general average bonds and guarantees given but less than six years after general average adjustment - cause of action for general average contribution arises at date of general average loss or expense - claims against cargo owners out of time - judge nevertheless had discretion to join additional plaintiff - discretion should not be exercised where effect is to raise stale claim - letters of guarantee created new causes of action - on true interpretation letters of guarantee made liability of guarantors conditional upon preparation of general average statement - claims against guarantors not statute barred.

-----------------

Coram: Sir Alan Huggins, V.-P., Leonard, J.A. & Silke, J.

Date of hearing: 4th, 5th, 6th and 9th March, 1981 8th July, 1981

Date of Judgment: 8th July 1981.

Staughton, Q.C. & Mumford (Johnson, Stokes & Master) for Appellant.

W. Waung (Deacons) for Respondents.

-----------------

JUDGMENT

-----------------

Sir Alan Huggins, V.-P.:

1. Cargo owners received Bills of Lading in respect of goods shipped in the m.v. "Potoi Chau" for a voyage from the Far East to the Middle East and Bombay. Those Bills of Lading provided for general average to be adjusted in accordance with the York/Antwerp Rules 1950. A general average loss occurred and the vessel was taken to Aden for temporary repairs. The present action is against cargo owners and against the insurers of other cargo owners for general average contribution, the cargo owners' insurers being sued under Letters of Guarantee given in consideration of the delivery of the cargo without payment of cash deposits.

2. The main question which now arises is At what date did time begin to run for the purposes of the Limitation Ordinance? If it be held that the period of limitation has expired, it would be necessary to consider whether the lower court should, in the exercise of its discretion, have extended the period.

3. The action was instituted by a company which, although its name appeared on the Bills of Lading as the apparent shipowners, may have been merely manager or agent acting on behalf of the shipowner. The action was commenced within six years of the casualty. The Plaintiff sought to join as second plaintiff the company which claims to be owner of the ship, and the Registrar made an order ex parte allowing the joinder. On appeal Mr. Commissioner Mayo set aside that order on the ground that the claim of the proposed second plaintiff was out of time and that, if there were any discretion to extend the time, that discretion should not be exercised in its favour.

When does the right to claim general average contribution arise?

4. Four possible dates have been suggested as that on which time begins to run:

Of these only the last was within six years of the date of the application for joinder of the proposed second plaintiff.

5. Since time begins to run from the date when a cause of action arises, it is necessary to consider what is the nature of an action for general average contribution. This was discussed in Australian Coastal Shipping Commission v Green 1971 1 Q.B. 456, 4788:

"We so rarely have to consider the law of general average that it is as well to remind ourselves of it. It arises when a ship, laden with cargo, is in peril on the sea, such peril indeed that the whole adventure, both ship and cargo, is in danger of being lost. If the master then, for the sake of all, throws overboard some of the cargo, so as to lighten the ship, it is unjust that the owner of the goods so jettisoned should be left to bear all the loss of it himself. He is entitled to a contribution from the shipowner and the other cargo-owners in proportion to their interests: see the exposition by Lord Tenterden quoted by Cresswell J. in Hallett v Wigram (1850) 9 C.B. 580, 607-608 and Burton v English (1883) 12 Q.B.D. 218. Likewise, if the master, for the sake of all, at the height of a storm, cuts away part of the ship's tackle (as in Birkley v Presqrave (1801) 1 East 218) or cuts away a mast (as in Attwood v Sellar & Co. (1880) 5 Q.B.D. 286), or, having sprung a leak, puts into a port of refuge for repairs and spends money on them (as in Svendsen v Wallace Bros. (1885) 10 App. Cas. 404), it is unfair that the loss should fall on the shipowner alone. He is entitled to contribution from the cargo owners for the loss or expenditure to which he has been put. In all such cases the act done by the master is called a 'general average act': and the loss incurred is called a 'general average loss'."

The shipowner has the duty of suing on behalf of all the interests concerned and for that reason has a lien upon all the cargo saved: Crooks v Allan (1879) 5 Q.B.D. 38. Normally that lien cannot be exercised until the vessel is brought to a place of safety, but in theory I see no reason why it should not be exercised before that if an owner of cargo were in a position to demand the earlier release of his goods. No such problem arose here and the cargo owners signed Lloyd's Average Bonds in lieu of a cash deposit when the vessel arrived. In addition cargo underwriters signed Letters of Guarantee in various forms, although most of them were not in the form approved by the Committee of Lloyd's: see Lowndes and Rudolf on General Average and York Antwerp Rules (10th ed.) 491 (1105).

6. Unless the terms of a contract of carriage make provisions to the contrary, it seems to me that in principle the right to claim contribution must arise at the moment of a general average loss or of the incurring of liability to a general average expenditure, whichever is the first, or alternatively when the vessel arrives in a place of safety. In practice it is never likely to be material which of those two dates is taken and Mr. Waung for the Respondents was content to take the latter date for the purposes of this appeal, but for myself I can see no sufficient reason for not taking the former. It is true that the right is liable to be defeated if subsequently nothing is saved, but other rights liable to defeasance are not unknown to the law. It was submitted that because the extent of the right to contribution falls to be assessed upon the arrived values, and the assessment therefore cannot be made until the vessel reaches safety, no cause of action arises until then. That assumes that an action for general average contribution is an action for a liquidated sum, but no authority for that has been cited to us and the proposition is inconsistent with the whole doctrine of general average. Valuation is never a precise art and where several (and possibly very many) valuations are involved the resulting assessment of contribution must inevitably be inexact. One must not carry the analogy too far, but a claim to general average contribution is no more a claim for a liquidated sum than is a claim for contribution in tort. Both counsel accept General Electricity Board v Halifax Corporation 1963 A.C. 785 as laying down the ingredients of a cause of action. At p.800 Lord Reid said:

"Both parties founded on the judgment of Lord Esher M.R. in Coburn v Colledqe, and I am content for the purposes of this case to apply the test which he there states. First he quotes a definition he had given in an earlier case, 'every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court.' Then he says: 'If the plaintiff alleges the facts which, if not traversed, would prima facie entitle him to recover, then I think he makes out a cause of action'."

7. Counsel for the appellant Plaintiff has cited several cases in support of his contention that there must be an adjustment before a cause of action arises. The first is Brandeis, Goldschmidt & Co. v Economic Insurance Co. Ltd. (1922) 11 Lloyd's Rep. 42 That was a claim by cargo owners not against other interests in the adventure but against their own insurers. They had been obliged to make a general average deposit in respect of a general average loss and sought indemnity in the like sum from the insurers. That claim, of course, fell to be considered in the light of the terms of the contract of insurance, which were incorporated in the policy. The Judge reluctantly came to the conclusion that under the terms of the policy the cargo owners could not recover a general average contribution unless there had been an adjustment, even though he was satisfied that there never would in fact be such an adjustment. Mr. Staughton relies upon the reiteration in the judgment of the statement that a general average liability cannot be ascertained until there has been an adjustment of some kind. The statement itself is incontestable, but it does not follow that an action for a general average contribution cannot be commenced until there has been such an adjustment. That case does not assist the Appellant.

8. On the face of it Noreuro Traders Ltd. v E. Hardy & Co. (1923) 16 LLoyd's Rep. 319 is against the appellant, but Mr. Staughton seeks to distinguish it. What happened was this. A casualty occurred shortly before the First World War. It was not known whether there was a general average bond but no adjustment was made at the time in the place appointed. Subsequently a provisional adjustment was made in England on such evidence as was available, but this was admittedly inaccurate as the vessel had been torpedoed and sunk with all her papers. An action was brought upon the basis of this adjustment but was adjourned for a proper adjustment to be carried out in accordance with the charterparty. After the war the average bond was found and a proper adjustment was obtained, which showed that the claim should be for a smaller amount. The writ having been based upon the inaccurate, provisional adjustment it was necessary to amend the writ as well as the statement of claim. However, some payments had been made in sterling on the basis of the provisional adjustment and the question arose as to the material rate of exchange for deducting those payments. It was held that the rate of exchange at the date of the casualty should be used throughout. Rowlatt, J. said:

"Now the question has arisen as to the basis of the claim for an average contribution. It is not an action which reposes upon the average adjustment as if the average adjustment was like an architect's certificate in a builders' contract. I suppose the right was well understood before there were average adjusters, when simple operations like the cutting away of a mast, or something of that sort, or the throwing overboard of some cargo were the incidents that gave rise to these claims. It seems to me that the right as founded upon the sacrifice, upon the expenditure, is only quantified by the adjustment."

Later in his judgment the learned Judge regarded it as settled that liability must be taken to have attached at the date of arrival. It does not seem to me to matter that the case was not concerned with a statute of limitations: the following principles appear -

9. On the other hand, there are obiter dicta in The Christel Vinnen (1924) 18 Lloyd's Rep. 376 which do appear to support the view that the cause of action for general average contribution arises only when there has been an assessment. The issue, which came before the Court by consent, was whether some expenses incurred by the ship in discharging cargo and reloading that part which had not been damaged were a general average expenditure. It was held that they would have been a general average expenditure were it not for the fact that the casualty was due to the unseaworthiness of the vessel. However, the Judge observed at p.376:

"........ it must not be taken, apart from consent, that I should consider that the shipowners had any claim in general average at the time they put it forward in their counterclaim, for at that time they had not prepared any average statement or informed the cargo-owners of what the cargo-owners' proportion of the general average was, according to the view of the shipowners."

I think this must be read in context and it must not be assumed that Hill, J. was disagreeing with the views expressed by Rowlatt, J. in Noreuro Traders Ltd. v E. Hardy & Co. Clearly an action for general average contribution cannot proceed to judgment until the liability has been quantified and all that Hill, J. was saying was that he would not have proceeded to judgment on the issue of liability to contribute alone had the parties not consented to ask him so to do. In Chandris v Argo Insurance Co. Ltd. 1963 2 Lloyd's Rep. 65, 78 Megaw, L.J. appeared to attach no weight to these observations and I respectfully do the same.

10. In Tate and Lyle Ltd. v Hain Steamship Co. Ltd. (1934) 49 Lloyd's Rep. 123 (C.A.) and (1936) 55 Lloyd's Rep. 159 (House of Lords) the question was whether the shipowners had a lien for general average contribution which they were able to enforce against the plaintiffs, who were claiming repayment of a deposit under a Lloyd's General Average Bond. The plaintiffs became indorsees of Bills of Lading from Farr & Co. after the casualty. In the course of his dissenting judgment in the Court of Appeal Greer, L.J. said at p.134:

The House of Lords agreed with Greer, L.J. Lord Atkin said at p. 174:

"The result is that at the time the casualty occurred and the general average sacrifice and expenses were incurred the ship was still under the charter. In respect of the Cuban sugar the charterers appear to have been at the time the owners of the goods; and I think it clear that on principle the contribution falls due from the persons who were owners at the time of the sacrifice, though no doubt it may be passed on to subsequent assignees of the goods by appropriate contractual stipulations. The place of adjustment does not seem to have a bearing upon the question against whom the contribution has to be adjusted."

The Plaintiffs in the present case submit that this decision also is distinguishable on the ground that it was not concerned with a statute of limitation, but I think it is very much in point.

11. I come next to Morrison Steamship Co. Ltd. v Greystoke Castle 1947 A.C. 265. There a collision occurred between the Greystoke Castle and the Cheldale for which the former was held three quarters to blame and the latter one quarter. The owners of cargo in the Greystoke Castle became liable to general average contribution and they claimed against the owners of the Cheldale one quarter of that contribution. By a majority the House of Lords held that the cargo owners' liability to contribute arose from, and therefore at the time of, the casualty even though it might be divested or diminished by the subsequent chances of the voyage, as Greer, L.J. had held in the Court of Appeal in Tate and Lyle Ltd. v Hain Steamship Co. Ltd. (supra). Mr. Staughton once more emphasized that the case was not directly concerned with limitation of actions, but the principle there stated appears to me no less relevant in that context.

12. In Chandris v Argo Insurance Co. Ltd. (supra) Megaw, J. was dealing with an action brought by shipowners against their insurers more than six years after losses and of termination of adventures but less than six years after the relevant average adjustments were completed. The insurers contended that the action was statute barred. Some of the arguments there rejected by the learned Judge were identical to those which have been addressed to us. It was said on behalf of the shipowners that they had no claim against the insurers in respect of the general average losses until the adjustments were complete. As in our case the adjustments took a long time to complete. The Judge rightly pointed out that even then the adjustment was in no way conclusive. With reference to the York Antwerp Rules 1924 he said at p.78:

"It is, I think, a fair conclusion from the terms of the Rules that the parties contemplated, and provided, that an average statement should be produced. It does not, however, appear to me to be a legitimate conclusion that the parties contemplated or provided that the publication of an average statement should be a condition precedent to a cause of action arising."

Mr. Staughton submitted that the second sentence in that passage was inconsistent with Central Electricity Board v Halifaz Corporation, but I do not think it is. Although that case was based upon policies of insurance, it was directly in point. We were invited to reject the words of Megaw, J. at p.80, where he said:

"I find it difficult to see how a lien can exist (except, perhaps by some express contractual provision) unless there is, co-existing, a presently enforceable legal right to payment. There is no doubt that the shipowner's lien exists at law, as Lord Justice Greer said, as soon as the sacrifice has been made or the expenses incurred. If a lien at law, then a cause of action."

Nothing in the later cases appears to me to cast doubt on the judgment in that case, which I respectfully adopt as a valuable and entirely correct statement of the law, as Kerr, J. appears to have done in The Nimrod 1973 2 Lloyd's Rep. 91, 97:

"If I had to decide this point, I would unhesitatingly apply the reasoning of Mr. Justice Megaw in Chandris v Argo and also hold that any claim under the bond began to accrue at the time of the casualty or at the date of the bond, if later."

13. I must here refer briefly to Union of India v E.B. Aaby's Rederi A/S 1975 A.C. 797, since it is relied upon heavily by Mr. Staughton. I shall have to return to it later. At p. 816F Lord Salmon said:

"There are many differences between the liability to pay general average contribution under the common law and the liability to pay such contribution under the charterparty which incorporates the York/Antwerp Rules. At common law, e.g., no general average would be payable by the charterers if the general average expenditure had been due to a breach of the shipowners' warranty of seaworthiness. Under the York/Antwerp Rules, however, even if the expenditure had been incurred by reason of the ship's unseaworthiness, general average contribution would nevertheless be payable by the charterers unless the unseaworthiness was caused by lack of due diligence on the part of the shipowners. Indeed, in the present case, the real dispute between the parties seems to be whether or not the general average expenditure has been so caused."

The decision of the House turned initially upon the construction of the "Centrocon" arbitration clause in the charterparty, under which any claimant was required to appoint an arbitrator within twelve months of final discharge. As we shall see, however, there was later a new contract.

14. The conclusion I have reached is that at Common Law the cause of action for general average contribution arises at the time of the casualty, subject to defeasance if the vessel does not reach safety, and that nothing in the York/Antwerp Rules postpones that cause of action.

The Bonds and Guarantees

15. What I have already said indicates my view that the Lloyd's Average Bond is not to be construed so as to deprive the Appellants of any cause of action until the adjustment is complete where the form is signed by the cargo-owners or their agents, as in The Nimrod. It remains to consider the terms of the other documents.

16. The form of "Letter of Guarantee" signed by the 1st Defendant's predecessors and a number of the other insurers was in these terms:

"In consideration of your delivering the goods described below without payment of a cash deposit, we hereby guarantee the payment of General Average and/or Salvage and/or Special Charges for which the said goods are legally liable under an adjustment drawn up in accordance with the contract of affreightment."

The signature is signed in their own names and not as agent for the cargo-owners. No doubt, as Mr. Staughton contended, the parties to the letters understood that the insurers would not pay until the adjustment had been drawn up. However, the letters were given because there was an existing liability to contribute and an existing lien in respect of that liability. The wording was unhappy because of the use of the present tense at a time when, ex hypothesi, no adjustment had been drawn up. The insurers could not be called upon to pay under the Letters of Guarantee until there was a proper adjustment, but that does not affect the liability of the cargo-owners. If the cargo-owners themselves or their agents had signed a bond containing the words "are legally liable under an adjustment drawn up ......", I would have held that there was no sufficient indication of an intention to alter the position existing at Common Law: the cargo-owners were not liable under the adjustment but by virtue of the general average loss. The insurers were not liable for the general average loss save, under the policy of insurance, to the cargo-owners themselves. The Letters of Guarantee introduced an entirely new cause of action and I think there is no doubt but that both parties contemplated the drawing up of a Statement of Adjustment. Mr. Waung conceded that the documents created a primary obligation and not a secondary one, and that the points of claim correctly did not plead a demand on the cargo-owners and a default. At first sight there would seem to be no reason why the signatories should not, if they thought fit, agree that there should be a Statement of Adjustment in a particular form as a condition precedent to the insurers' liability to the shipowners, but, if the insurers chose to agree, they would have to accept the consequence that the period of limitation would run from the date of the adjustment. Mr. Waung, however, relies upon The Albisola 1936 American Maritime Cases 1740 for the proposition at p. 1746,

"Since the agreement in its essence was intended to take the place of the lien, it would seem but reasonable that the ship owner's rights under it should rise no higher than what they would be if he were asserting his lien."

The material part of the agreement there under consideration was as follows:

".......so much of the losses and expenses aforesaid as upon an adjustment of the same to be stated by Johnson & Higgins, Average Adjusters, according to the provisions of the contract of affreightment and to the laws and usages applicable, may be shown by the statement to be a charge upon said cargo, ..... shall be paid by us .....",

and the Judge continued

"This is a familiar form of average agreement, and substantially similar agreements or bonds have been before the courts many times. I do not find that the contention has ever been made that the legal operation and effect of an average agreement of this kind is anything more then to fix the measure of the obligor's liability and secure payment of the amount unless it shall afterward appear that it was not a case for general average."

He indicated what he meant by "an average agreement of this kind" when he said:

"As a result, the practice early obtained of exacting agreements of this kind from the cargo owners, sometimes in the form of a bond with surety, sometimes accompanied by a deposit, and sometimes guaranteed by the underwriters."

As I understand him, Mr. Waung submits that the Judge was not merely saying that clear words are required to displace a presumption that the parties to such an agreement do not intend to do more than "fix the measure of the obligor's liability and secure payment of the amount unless it shall afterwards appear that it was not a case for general average", but that there was a positive rule of law that however the agreement is worded it cannot give the obligor any right which he would not otherwise have had. The statement of principle set out in the first passage cited from the judgment in The Albisola must be read in its context, namely the argument that the agreement bound the cargo owner to contribute the amount shown to be due by the average statement regardless of the cause of stranding. That is what the Judge had in mind when he referred to the shipowners' rights not rising higher than what they would be if he were asserting his lien. I do not believe that the Judge purported to lay down a positive rule of law such as that contended for by the insurers here.

17. I now return to Union of India v E.B. Aaby's Rederi A/S (supra). What happened there was that the appellants, the cargo owners, sought the discharge of a general average lien upon their goods. Their High Commission in London executed a written undertaking to pay "any general average contribution which may be legally due". The question was whether that altered the liability under the charterparty, which by the time action was brought was defeated by the shipowners' failure to appoint an arbitrator within the twelve months fixed by the "Centrocon" arbitration clause. On this part of the case the House of Lords held that the undertaking created a new contract which was subject to no time limit save such as might be imposed by statute. In the circumstances the shipowners' claim was not barred. In the case at bar the question is, similarly, whether there has been a new contract which is not time barred and I would hold that there has. I find myself unable to construe the Letters of Guarantee of which p. 151 of the record is an example otherwise then as meaning "we hereby guarantee the payment of general average . . . . for which the said goods are legally liable, provided that our liability shall not arise until an adjustment shall have been drawn up in accordance with the contract of affreighment". It seems to me that the only reasonable conclusion is that the Statement of Adjustment was to be a condition precedent of the insurers' liability and that until such condition was fulfilled no cause of action against the insurers arose under the agreement.

18. I have not arrived at that conclusion without some misgivings: it is a question of construction of the Letter of Guarantee and the trend of the authorities now appears to be to throw to the winds the old rule that the intention of the parties (or, in the case of a statute, that of the Legislature) had to be gathered from the words actually used and not by guessing at the intention in the light of the surrounding circumstances, which might be contrary to what had been said - a rule which had the great benefit of certainty. The signatories to the Letters of Guarantee are insurers and one would expect them to agree to undertake no liability greater than, or different from, that of their insured. Thus the Lloyd's form of guarantee to which I have already alluded guarantees

"........ the due payment to the Shipowners of any contribution for General Average and/or Salvage and/or other Charges which may be properly chargeable against the said merchandise."

The insurers may, however, limit their liability to the amount recoverable under the relevant policy or policies of insurance. On the other hand it is not unknown for a ship's insurers to agree to pay the whole of a small loss, without contribution, to avoid disproportionate expense in collecting from cargo owners. In theory there is no reason why an insurer should not do exactly what the Indian High Commission did in Union of India v E.B. Aaby's Rederi A/S and, if he does not take the trouble to ensure that he uses a form of words which covers only the liability he means to undertake, I fail to see why the Courts should assume the task of re-writing his Letter of Guarantee for him.

19. The second form of Letter of Guarantee is exemplified at p. 164 of the record and was in these terms:

Here again I think we are driven to the conclusion that payment was to be dependent upon presentation of the Adjusters' certificate. This form of guarantee was signed by the 3rd Defendant and the 11th Defendant, and that signed by the 9th Defendant was so similar that its effect must be the same.

20. Mr. Stoughton accepted that the third form, exemplified at p. 178, might be capable of a different interpretation. It reads:

"In consideration of your delivering to ....... the undermentioned cargo ex '.......' from .......... I covered under our Policy(ies) No.(s) ..... for ........ I hereby guarantee that this ..... will pay any just claim for General Average, Special and/or other charges as may properly be found due in respect of said cargo."

Here there is no direct reference to a general average statement or certificate, but it seems to me that the words "any just claim which may properly be found due (sc. any claim for such just contribution as may properly be found due) are not synonymous with "any claim for such contribution as is justly due" (or "as may [now] be properly chargeable"). Accordingly I think any claim by the proposed plaintiff against the 5th Defendant would not be statute barred.

21. The fourth form, such as that at p.192 of the record, reads:

"In consideration of your delivering to the under-mentioned Consignees the goods specified below without payment of a deposit we undertake to guarantee the due payment of the General Average Contribution and/or special charges that may he properly found to be due on the said goods upon the completion of the Average Statement by the Adjusters."

This is capable of two interpretations, depending upon whether the words "upon the completion of the Average Statement by the Adjusters" are taken to qualify "the due payment" or the words "properly found to be due". However, whichever interpretation is correct - and I think that grammatically it must be the second - the production of the Average Statement is clearly intended to be a condition precedent to liability. The 8th Defendant is therefore in the same position as the 5th Defendant.

Whether the causes of action of the 1st and 2nd Plaintiffs are substantially the same

22. The next issue raised is whether, despite the fact that some of the claims by the proposed 2nd Plaintiff would be statute barred, the fact that the 2nd Plaintiff (as shipowner) is relying upon substantially the same cause of action as the 1st Plaintiff set up by his writ prevents time from running against from the date of the 1st Plaintiff's writ. Mr. Staughton based his argument upon Firestone Plantations Co. v The United States of America 1945 American Maritime Cases 746 and Kalimantan Timbers Co. v Mighty Dragon Shipping Co. S.A. 1979 Civil Appeal No. 57. The short answer to the argument is that the cause of action set up by the proposed 2nd Plaintiff is not substantially the same as that set up by the 1st Plaintiff. It was suggested that the 1st Plaintiff might be the agent of the 2nd Plaintiff, but that is not how the claim was originally framed. Even if it had been framed in that way it would have been open to the objection that an agent has no cause of action in his own right.

Discretion

23. Finally it was contended on behalf of the Plaintiff that the Commissioner did have a discretion and was wrong in declining to exercise it in favour of joining the proposed 2nd Plaintiff.

24. The power to join additional parties stems from Order 15 rule 6. However, where a party is joined under the provisions of that rule there must of necessity be further procedural consequences: the writ and pleadings will require amendment: per Widgery, L.J. in Braniff v Holland and Hannen & Cubitts (Southern) Ltd. 1969 3 All E.R. 959, 961A. Order 20 rule 5(2) permits an amendment in the discretion of the Judge even where any relevant period of limitation current at the date of issue of the writ has expired, but, says Mr. Staughton, that power is expressly limited to amendments under paragraph (3), (4) and (5) and the amendment he seeks is not within those paragraphs. I have already said that the cause of action now sought to be set up is not the same as that presently before the Court, but it arises out of substantially the same facts and it follows that I think the amendment is within paragraph (5). There would, therefore, be a discretion under paragraph (2). If that be wrong, paragraph (2) has no application. Mr. Staughton submits that paragraph (1) is not limited by the later provisions of the rule and should be given its full width. He relies upon Brickfield Properties Ltd. v Newton 1979 1 W.L.R. 862, where Sachs, L.J. at p. 875 agrees with the observations of Lord Denning, M.R. to that effect in Sterman v E.W. and W.J. Moore 1971 Q.B. 59 in preference to those of Widgery, L.J. in Braniff v Holland and Hannen & Cubitts (Southern) Ltd. (supra at p. 1541). I adopt that view and, whether this case is within paragraph (5) or not, I think the Judge had a discretion.

25. As this is not a case like Firestone Plantations Co. v The United States of America (supra), where in truth the plaintiff is setting up the same cause of action as was set up, within time, by the original plaintiff, I think one must apply the general rule, which is that a party should not be joined for the purposes of raising a stale claim: see Mabro v Eagle Star & Dominions Insurance Co. Ltd. 1932 1 K.B. 485 and Braniff v Holland and Hannen & Cubitts (Southern) Ltd. Mr. Staughton submits that Mabro v Eagle Star & Dominions Insurance Co. Ltd. is no longer good law and he suggests that all the recent cases where what I have called "the general rule" has been applied have been cases of joining defendants. He submits that different considerations apply to the joinder of a plaintiff. I see no reason why that should be so.

26. I think Mr. Commissioner Mayo was right to decline to exercise his discretion in favour of the plaintiff. I would allow the appeal to the extent of giving leave to join the 2nd plaintiff subject to the condition that its action shall be limited to claims against the 1st to 11th Defendants under the Letters of Guarantee.

27. Reliance was also placed on The Puerto Acevado (1978) 1 Lloyd's Rep. 38. In that case cargo owners who were claiming against a ship arrested the ship. Her insurers gave an undertaking to honour any claim against the shipowners. The insurers agreed to accept service and enter into appearance on behalf of the shipowners. Then a defence was filed denying liability and alleging that the vessel was under demise charter at the material time. The cargo owners sought to join the demise charterers, but the period of limitation under the Hague Rules had expired. The Court of Appeal allowed the joinder, saying that the demise charterers, who were insured by the same P. & I. Club, could raise any objection they thought fit at a later date. That, of course, was not a case under the Ordinance and is also distinguishable on the ground that the Plaintiff in the case before us was in no way misled by the Defendant in bringing the action in its own name. I do not think that case assists the Plaintiff.

Leonard, J.A.:

28. On the 25th October 1972 the M.V. Potoi Chau, which was bound from various ports in the Far East with cargo to Jeddah, Hodeidah. Aden and Bombay, encountered a cyclone and ran aground off the north east coast of the Somalia Republic. On the 30th October 1972 salvage operations commenced. These were not immediately effectual and on the 4th November 1972 the jettisoning of cargo to lighten the vessel commenced. By the 20th November 1972 a total of approximately 2,300 tons of cargo had been jettisoned. The vessel was refloated and went under her own power to Aden where she arrived on the 24th November 1972. There she underwent temporary repairs and all cargoes were discharged except for a small quantity bound for Bombay, Jeddah and Hodeidah. She then went to Bombay and between the 24th January 1973 and 10th February 1973 cargo intended for Jeddah and Hodeidah was loaded and carried on other vessels. Salvage arbitration took place and a substantial sum was awarded to the salvors by a general salvage award published on the 22nd January 1976. The appellant, Hong Kong Islands Shipping Co. Ltd. ("Islands") was the manager of the vessel. The second plaintiff in the court below, Hong Kong Atlantic Shipping Co. Ltd. ("Atlantic") was her owner. Defendants 12 to 85 were the owners of the parcels of cargo on board which eventually reached destination and they were variously insured with defendants 1 to 11, all of whom are insurance companies. For the purposes of this appeal the bills of lading issued to them may be regarded as having been in identical terms. All were on forms printed for and bearing the letterhead of Islands and were signed by ______ one or other of various shipping agents in ports in the Far East "for the master by as shipping agent" and all contained the following terms:

As I understand it when signing these bills of lading for the "master" the shipping agents did so as sub-agents for Atlantic, the owner of the vessel. I understand however that it may be contended at the trial that Islands was the principal with whom the contract of affreightment was made.

29. In order to secure release of their cargo without payment of cash deposits the 12th to 85th defendants inclusive signed average agreements with Islands agreeing to pay the proportion of general average chargeable to their respective consignments and the 1st to the 11th defendants guaranteed, in terms which I will discuss later, payment of the respective proportion of general average attaching to their respective consignments in consideration of their being released from the ship's lien without cash deposits having been paid.

30. The adjustment of general average was not completed and published by the average adjusters until 31st October 1977.

31. On the 25th September 1973, exactly six years from the date of grounding, a writ was issued in which Islands was named as sole plaintiff. On the 23rd July 1979 an application was made ex parte to the Registrar to amend the writ by adding as second plaintiff the name of Atlantic. This application was made after correspondence between the solicitors for the parties to which I do not consider it necessary to refer save to remark that it does appear that there was some confusion on the part of the defendant's solicitors as to the nature of their instructions and those defendants from whom they emanated.

32. On the 5th January 1980 an inter partes summons was issued on behalf of the first eleven defendants (with the exception of the 7th and 10th) and on behalf of 22 of defendants 12th to 85th for an order that the second plaintiff, Atlantic be struck out as a party to the action on the grounds that at the date of the ex parte application and the order of the Registrar giving leave to amend the writ by adding Atlantic as a party the time limited for Atlantic's claim against the said defendants had expired and that the order granting such leave was therefore incorrectly made. This application was beset by misfortune arising from illnesses but was heard and determined by Mr. Commissioner Mayo, as he then was, on the 15th October 1980 whereupon he ordered that the Registrar's order should be set aside. It is against this order that this appeal is brought.

33. The guarantees entered into by the 1st to 11th defendants differed as to those to whom they were addressed and their precise terms. Thus some were addressed to shipping agents, some to the average adjusters, some to Islands, some to unnamed persons. They were in varying forms. Some read:

"In consideration of your delivering the goods described below without payment of a cash deposit, we hereby guarantee the payment of general average and/or salvage and/or special charges for which the said goods are legally liable under and adjustment drawn up in accordance with the contract of affreightment."

"this society will pay any just claim for general average special and/or other charges as may properly be found due in respect of the said cargo."

"the due payment of the general average contribution and/or special charges that may be properly found to be due on the said goods upon the completion of the average statement by the adjusters."

"the payment of any contribution to general average which may hereafter be ascertained to be due in respect of the said merchandise"

At page 207 of the Record there is exhibited a form of Lloyd's Bond and Guarantee heading in part :-

34. No consignee is identified in this document and I do not think I need concern myself with it.

35. It was contended throughout on behalf of the insurers that time ran in their favour for the purposes of limitation from the respective dates of their guarantees the last of which was given in May 1973. The average adjusters' statement was not delivered until the 31st August 1977. The writ was issued on 25th October 1978 and Atlantic was joined as second plaintiff pursuant to an order of the Registrar of the 26th July 1979. By that date unless time ran against Atlantic as from 31st August 1977 any action by Atlantic would have been barred by limitation. Mr. Staughton, Q.C. for the appellant made four basic submissions:

In support of his first proposition Mr. Staughton referred to Central Electricity Board v. Halifax Corporation⁽¹⁾. It was provided by the Electricity Act 1947 that cash held by a local authority in its capacity as an "electricity undertaker" should, on the vesting date, vest in the predecessors of the appellant. Shortly before the vesting date April 1st 1948 the respondents had transferred an accumulated sum of £34,500, derived from revenues of the electricity undertaking, to its general rate account at the bank. The appellants claimed that this fund vested in them. By section 15 of the Act it was provided that any question arising as to whether any property was held by a local authority in its capacity as an authorized undertaker should be determined by the Minister of Health. That the sum of £34,500 was so held was not determined by the minister until after 18th September 1958. The respondents refused to pay and action against them commenced on March 6th 1959 for £34,500 under the provisions of the Electricity Acts whereupon the respondents claimed the benefit of the Limitation Act.

36. At page 799 Lord Reid observed:

He went on to hold that the effect of the Minister's decision was merely to prove that the sum had belonged to appellants ever since the vesting date and that

"a cause of action can exist although one of the facts essential to the cause of action can only be proved otherwise than by evidence led in court and has not yet been proved when action is brought. If the appellants had begun an action within six years of the vesting date, and had applied to the Minister for his decision when the respondents traversed their allegation that the sum sued for had been held or used by the respondents in their capacity of electricity undertakers, proceedings in the action could, if necessary, have been stayed to await the Minister's decision. But they did not do that and, in my judgment, this action is barred by section 2(1)(d) of the Limitation Act. I would therefore dismiss this appeal."

Although this case does indicate in general terms when a cause of action accrues it does not assist us in determining the question as to when all the facts necessary for the appellant or Atlantic to prove, to entitle them to judgment, must have come into existence. Mr. Staughton also referred us to Brandeis Goldschmidt & Co. v. The Economic Insurance Co. Ltd.⁽²⁾.

37. In that case the plaintiff firm were owners of a cargo shipped in a german vessel from Australia to Antwerp which vessel owing to the war took shelter at Syracuse. While there the cargo was held covered by underwriters a fire broke out and sacrifices had to be made to save the cargo. This cargo was undamaged and the plaintiffs made good their claim to it and got delivery on making a general average deposit of 40% of its value. Normally a marine underwriter would have reimbursed the insurer the sum paid as deposit and availed himself of any rights which remained, if there were on the eventual settlement a reduction, but here no one would produce a general average statement; the war having intervened the shipowner neither knew nor cared about it. The plaintiff sought to recover its deposit from the underwriters. The policy did not exclude liability to pay general average but the institute cargo clauses formed part of the policy and Clause 4 of them said

"General average and salvage charges payable according to foreign statement or per York/Antwerp Rules if in accordance with the contract of affreightment".

There had been no foreign statement nor statement according to the York/Antwerp Rules and the underwriters contended that they did not have to pay unless and until there was.

38. Bailache, J. was of the opinion, because of section 66 of the Marine Insurance Act, that had there been a general average sacrifice the underwriter would have been immediately liable independently of any average statement but that:

"when the code deals with general average expenditure ... the underwriter is only liable for the proper proportion of the expenditure which the person making the expenditure is himself liable for and it is obvious that in that case the liability cannot be ascertained until there has been some adjustment .... and in as much as an adjustment is necessary to this ascertainment ... it seems to me I must hold that there is an express provision in the policy which prevents the assured recovering unless and until some one or other has made an adjustment either according to foreign law or according to York/Antwerp Rules an adjustment which would show precisely what is the sum payable by those underwriters."

He felt, however much he might regret that the underwriters took the point, that they were entitled to succeed.

39. Again I do not find great assistance from this case. It does not deal with limitation and it arose on most unusual circumstances. The preparation of an average statement can be a precondition to the existence of a cause of action if the parties agree that it shall but I must bear in mind, when considering if they have so agreed, that it is in no way conclusive as between the parties. A further observation I would make is that Bailache, J. has used the word "ascertained" throughout. Liability even if not ascertained in amount may have accrued.

40. That an average statement is in no way conclusive was recognised by Rowlatt, J. in Noreuro Traders Ltd. v. Hardy & Co.⁽³⁾ when he said at page 321:

"Now the question has arisen as to the basis of the claim for an average contribution. It is not an action which reposes upon the average adjustment as if the average adjustment was like an architect's certificate in a builder's contract. I suppose the right was well understood before there were average adjusters ... It seems to me that the right as founded upon the sacrifice, upon the expenditure, is only quantified by the adjustment."

He was there not concerned with any question of limitation nor with a case to which the 1950 York/Antwerp Rules applied nor with a case where underwriters had entered into a bond or guarantee but it is to be noted that he treated the right to general average as accruing at the date of the sacrifice.

41. Hill, J. advanced a contrary view in the Christel Vinnen⁽⁴⁾ when he said:

"It must not be taken, apart from consent, that I should consider that the shipowners had any claim in general average at the time they put it forward in their counter-claim, for at that time they had not prepared any average statement or informed the cargo-owners of what the cargo-owners' proportion of the general average was, according to the view of the shipowners."

What is there in the York/Antwerp Rules 1950 suggesting that an adjustment statement is a precondition for the accrual of a cause of action? They start with a "rule of interpretation" which provides that

"In the adjustment of general average the following lettered and numbered rules shall apply to the exclusion of any Law and Practice inconsistent there with. Except as provided by the numbered rules general average shall be adjusted according to the lettered rules".

At first sight then the one would expect the rules to apply primarily to questions of quantification of rights and liabilities rather than to their accrual - to provide an agreed basis on which the average adjuster is to work. Rule A defines a general average act. Rule B reads:

"General average sacrifices and expenses shall be borne by the different contributing interests on the basis hereinafter provided." (emphasis added)

Again this rule suggests that what the compilers of the rules are concerned with is the giving of guidance to the adjuster as to his method of procedure in quantifying liabilities.

42. The most one can say about the rules as I read them is that they envisage that an adjustment shall be made in accordance with their provisions by an average adjuster. It would appear from the account of their history and development as given in Chapter 10 of Lowndes & Rudolf's work on The Law of General Average and the York/Antwerp Rules that, although the original purpose of the meetings held at Glasgow 1860, York 1864 and Antwerp 1877 was to obtain international agreement on such questions as what exact losses must be regarded as general average, and how such losses should be calculated and borne, by mutual legislation in the countries concerned, it was realized by 1873 that

"the most effectual mode of procedure will be by a general agreement on the part of shipowners, merchants and underwriters to insert in bills of lading and charterparties the words 'general average, if any, payable according to York and Antwerp Rules' and in policies of insurance to add to the foreign general average clause the words 'or York and Antwerp Rules' so that the clause will run thus 'general average payable as per foreign adjustment (or custom) or York and Antwerp Rules, if so made up'."

As a result of this 1878 resolution the intention to proceed by mutual legislation in the countries concerned was dropped. In the various meetings which followed it was realized that while the object - to secure uniformity of practice - remained that object could best be attained by inserting in bills of lading, charterparties and insurance policies words or paragraphs incorporating rules commonly current at their date. The York/Antwerp Rules would therefore apply only if the parties to such agreements agreed that they should and the phrases incorporating them must therefore be construed as must any other contractual terms. While assistance can be had from decisions in other jurisdictions as to their effect it is against the background of our general law of contract that their effect in any particular case is to be considered.

43. Since the rules themselves do not provide either that an adjustment made by a professional average adjuster shall be final or that an adjustment shall be a precondition to payment and since they are silent as to limitation there is considerable difficulty in concluding that it follows from their incorporation that no cause of action to recover a general average contribution arises until an (admittedly inconclusive) adjustment statement has been completed. Mr. Staughton has argued most attractively that it is impractical commercially to suggest that action should be brought before the statement has been prepared because no party who has incurred expense will know whether he will eventually be found to be a creditor or a debtor. If a claimant does start an action, he suggests, he will be unable to particularise and may be struck out. Thirdly and perhaps most importantly, he suggests that some of the expenses which the adjuster must take into account may not be incurred or ascertained until some date much later than the date of the casualty. For example, the amount of a salvage award, the costs in obtaining it and the costs of the adjustment cannot be known until the statement is prepared. In the instant case the costs of the adjustment itself came to some US $115,017.73. All these matters seem to me to go to the question when should the action be brought on rather than to the question when does the cause of action accrue.

44. In Tate & Lyle Ltd. v. Hain Steamship Co. Ltd.⁽⁵⁾ Greer, L.J. posed himself the following questions of law relating to general average contributions:

"Does contribution become due from the merchant who is the owner of the cargo at the time the sacrifice has been made, or the expenses incurred, subject to the condition that the goods shall afterwards arrive at the port of discharge or is the only obligation imposed by law an obligation on the merchant, who is the owner of the goods under the bills of lading at the time the vessel reaches its port of discharge (2) Has the ship a lien on the cargo to secure the due contribution of the owner . . . which attaches to the goods at the time of the general average sacrifices ... or is the lien only one which becomes available at the port of discharge as against the then holder of the bill of lading."

He concludes that

"both the lien and the liability come into existence as soon as the sacrifice has been made or the expenses have been incurred but that the liability and the lien are subject to be defeated by the non-arrival of the cargo at the port of destination."

This is to say that the cause of action accrues as soon as the sacrifice has been made. Greer, L.J. was in the minority in the Court of Appeal but his conclusion on this point of law was affirmed in the House of Lords⁽⁶⁾ where Alkin, L.J. said at page 174:

"I think it clear that on principle the contribution falls due at the time of the sacrifice though no doubt it may be passed on to subsequent assignees by appropriate contractual stipulations. The place of adjustment does not seem to have a bearing upon the question against whom the contribution has to be adjusted."

This case appears to me to establish that a cause of action in respect of general average accrues at the time of the sacrifice but that is not to say that its accrual may not be postponed by agreement. Questions as to the effect of the York/Antwerp Rules did not arise in this case nor did any question of limitation arise. So that it is only of assistance as a starting point. The question as to the effect of the York/Antwerp Rules on limitation remains but the case does establish that subject to any effect incorporation of the rules may have the cause of action accrues at the time of sacrifice.

45. The question as to the effect on limitation of importing the York/Antwerp Rules 1924 into insurance policies by use of the clause reading:

"General average and salvage to be adjusted according to . . . York/Antwerp 1924"

arose for consideration in five actions dealt with together which may be cited under the name Chandris v. Argo Insurance Co. Ltd. and Others⁽⁷⁾. In that case Megaw, J. although accepting:

"that there are cases in which it has not been reasonably possible to complete the adjustment within 6 years"

and that

"an insurer is not disposed to make payment unless and until a professional average adjustment has been made and presented to him."

held that the parties

"contemplated, and provided, that an average statement should be produced but that they did not contemplate or provide that its publication should be a conditon precedent to a cause of action arising" (I would comment that the later holding is not surprising since an adjustment statement is not binding between the parties) "and that in the absence of express provision liability arose when a sacrifice was made or expenditure incurred."

In Union of India v. E.B. Aaby's Rederi A/S⁽⁸⁾ the appellants chartered the respondents vessel Evje under a charterparty providing that the vessel had a lien for general average which was payable according to the York/Antwerp Rules 1950 and to be settled in London. It incorporated the "Centrocon" arbitration clause to deal with all disputes from time to time arising out of the contract and further provided that

"any claim must be made in writing within twelve (12) months of final discharge and where this provision is not complied with the claim shall be deemed to be waived and absolutely barred."

In February 1966 the vessel incurred general average expenditure and to avoid exercise of the lien the respondents obtained from the appellants High Commission in London an undertaking to pay "any general average contribution which may be legally due". The adjustment was completed on 24th February 1967 whereupon on the 30th March 1967 the respondents applied for payment of contribution. A dispute as to the seaworthiness of the vessel ensued and in April 1971 the appellants contended that the claim was barred by the failure to appoint an arbitrator within 12 months. It was there held that a fresh contract came into existence upon the acceptance of the undertaking and that fresh contract varied the charterparty in that the respondents' claim was subject to no time limit save such as might be imposed by statute. It is clear however that had it not been for the fresh contract the claim would have been barred since the respondents' arbitrator was not appointed within 12 months of discharge. The Chandris case was cited in argument but not mentioned in the judgment.

46. In The Nimrod⁽⁹⁾ Kerr, J. remarked obiter:

"I agree that it (the general average bond) founds a separate cause of action in the sense that it creates an obligation separate from that which is created by the general average act itself and the liability to contribute at common law. But ... the effect of the wording of the general average bond is not to postpone the accrual of the cause of action to the publication of the general average adjustment. If I had to decide this point I would unhesitatingly apply the reasoning of Megal, J. in Chandris v. Argo and also hold that any claim under the bond began to at the time of the casualty or at the date of the bond if later."

Mr. Staughton seeks to persuade us not to accept Chandris v. Argo and The Nimrod as authoritative for six reasons. He suggests firstly that the reasoning of Megaw, J. does not apply to a claim by shipowner against cargo but only to a claim by a shipowner against his insurers. Clearly Kerr, J. regarded it as applying equally to a claim against cargo and I must confess that I cannot see why there should be a distinction when one has to decide when the cause of action accrued.

47. Secondly, he suggests that Megaw, J. was in error in failing truely to apply the test adumbrated in Central Electricity Generating Board v. Halifax. Megaw, J. may perhaps be regarded as arguing in a circular fashion when he says at page 73

"There is, then, a cause of action if those facts exist which it is essential for a plaintiff to plead in order to prevent his statement of claim from being susceptible of being struck out as not showing a cause of action."

but this must be read in context. It follows three comments which he makes on a quotation from Lord Guest, the comments being that a cause of action does not depend upon the knowledge of the plaintiff, secondly that the facts must exist and thirdly that existence of a cause of action does not depend on the ability to prove the facts. Read in the context of these comments the sentence is no more than reiteration of Lord Guest's test.

48. Thirdly, he suggests that the decision cannot be applied here if one considers the wording of the Lloyd's average bond (quoted in appendix 3 to the 10th Edition of Lowndes & Rudolf) which enables payment to be made to the shipowner from monies to be deposited in joint names "from time to time pending the preparation of the usual statement". This he suggests is a powerful indication that there was to be an adjustment. This form was used in a number of instances in this case (although not in all). In none of the bonds however is it unequivocally stated that the preparation and publication of an adjustment statement is to be a condition precedent to payment or to the accrual of liability. I cannot regard the wording of the bonds as fixing the date of the accrual of a cause of action.

49. Fourthly, he argues, Kerr J. refers to the Evje at first instance and did not have the advantage of having before him the decision of that case in the House of Lords as it was not then decided which he suggests is powerful authority for concluding that a cause of action did not accrue until the publication of the adjustment. This case as I have pointed out turns on the undertaking given by the representative of the Government of India. Both Chandris v. Argo Insurance Co Ltd. and The Nimrod were quoted by the successful respondent in argument in the House of Lords. No suggestion was made that they were incorrectly decided.

50. Fifthly, he points out that Kerr, J. was expressing only a tentative view obiter. Kerr, J.'s choice of the word "unhesitatingly" makes me question the use of the "tentative" although it is clear that what he said was obiter.

51. Sixthly, he points to the guarantees as distinct from the bonds and suggests that on the wording of these there must be an adjustment before liability arises. There is much force in this for there is a distinction to be drawn between the bonds given in exchange for the release of a lien against a cargo owner and the "guarantee" of an insurance company - a stranger to the contract of affreightment, I shall consider this point when dealing with Mr. Staughton's second basic submission for I would hold that on the first basic submission he made to us Mr. Staughton fails.

52. As to the second which was to the effect that by the express or implied terms of bonds and guarantees used in this case an adjustment had to be produced and no cause of action arose until that was done, I am persuaded that Kerr, J. was correct in holding in The Nimrod that the reasoning of Megaw, J. in Chandris v. Argo Insurance Co. Ltd. applied equally to a claim for general average made by one party to the adventure against another as it did to a claim by a cargo owner against his insurer. In both cases therefore time began to run when sacrifices were made or expenditure incurred. Does the same reasoning apply to the case where the shipowner claims against an insurance company who enters into a contract with the shipowner on the shipowner releasing the cargo owner's lien?

53. In the Albisola⁽¹⁰⁾ the stranding resulting in the sacrifice was caused by negligence which in the absence of the Jason Clause was found fatal but it appeared that in order to obtain delivery a cargo owner had signed an agreement that

"so much of the losses and expenses aforesaid as, upon an adjustment of the same to be stated by Johnson & Higgins average adjusters according to the provisions of the contract of affreightment and to the laws and usages applicable, may be shown by the statement to be a charge on the cargo ... shall be paid by us."

Kirkpatrick, J. observed:

"This is a familiar form of average agreement and substantially similar agreements or bonds have been before the courts many times. I do not find that the contention has ever been made that the legal operation and effect of an average agreement of this kind is anything more than to fix the measure of the obligor's liability and secure payment of the amount unless it shall afterwards appear that it was not a case for general average"

and later

"Since the agreement in its essence was intended to take the place of the lien, it would seem but reasonable that the shipowner's rights under it should rise no higher than what they would be if he were asserting his lien."

This must, of course, be read in the light of the fact that negligence operated to defeat the claim. Again on the authority of The Logan⁽¹¹⁾ Lowndes & Rudolf 10th Edition observe at para. 470

"The courts of the United States have held that the cause of action accrues at the termination of the adventure, though the alternative which they had to consider was the publication of an adjustment, and not the date of a sacrifice or expenditure."

In The Logan however the goods were released without securing a guarantee - the essence of the decision was to the effect that adjustment has no binding force being neither an account stated nor an award, that the right to contribution accrued and became enforceable upon the arrival of the ship at the port of destination and the delivery of the cargo. It was held further

"that the amount of the required contribution may then be unliquidated is no obstacle, for in proper sequence liquidation comes after accrual, and can be made in the suit or action wherein the right is presented for liquidation."

54. In our case it is immaterial whether the right accrues at the port of destination or at the time of sacrifice or expenditure subject to its being defeated by non-arrival of the ship at the port of destination. The better view seems to me to be that it accrues at the time of sacrifice or expenditure. The statutory period had, on either view, elapsed. I would not be prepared to construe the York/Antwerp Rules or the bonds as fixing the date of publication of the adjustment as the date from which the statute should run but I must look to the wording of the guarantees to see if they like the undertaking given by the representative of the Government of India in the Evje case constituted a fresh contract which would cause time to run not from the date of the sacrifice but from the date of publication of the adjustment. I turn then to their wording in the light of the fact that prior to their being entered into, no relationship existed between the insurance companies concerned and the plaintiffs.

55. Those in form 1. These appear at pages 151, 152, 153, 154, 155, 156, 157, 160, 161, 176, 187, 191, 195, 196, 197, 200 and 201. They are variously addressed the majority to Messrs. Stevens Elmslie the adjusters, some simply to Messrs, one to Islands and two to Paclloyd (presumably shipping agents) many are undated. While they are clearly intended to create legal responsibility they are informal. At the time they were entered into their signatories clearly understood that no adjustment had been drawn up so that the use in them of the present tense is inexplicable. The goods were not liable under an adjustment. To give this form any sense in the circumstances under which it was drawn up it is necessary to regard it as reading

"In consideration of your delivering the goods described below without receiving a cash deposit we hereby guarantee the payment of such general average and/or salvage and/or special charges as may be found to be due in respect of the goods under an adjustment to be drawn up in accordance with the contract of affreightment"

or in some such words. Clearly in many cases the signatories anticipated that the adjustment would be drawn up by Stevens Elmslie and that when it was then and then only would liability arise.

56. Those in Form 2. These are to be seen at pages 178, 179, 180, 181, 182 and 183 of the record and without exception are addressed to Stevens Elmslie. It seems clear that those who signed undertakings in this form were reserving the right to question the adjustment to be made by that firm; the use of the words "just" and "properly" so indicate. Before their liability to pay could arise however the charges had to be "found to be due". They could only "be found to be due" after an adjustment had been made, and if necessary challenged and corrected. I do not think there can be any doubt but that those who signed this form and addressed it to the adjusters anticipated that their liability would not arise until those adjusters had completed their work.

57. Form 3 (at page 192) is addressed to Islands. Again we find a reservation of the right to question the adjustment but payment is clearly not to be made before the adjustment is completed.

58. Form 4 (at pages 164 to 170 inclusive and page 202) is addressed to shipping agents either in Singapore or Hodeidah. It is perhaps less clear in that it does not refer explicitly to the making of an adjustment and the phrase used is "hereafter be ascertained to be due". However, it is clear that immediate liability to pay is not envisaged. Since Mr. Waung has not contended that only a secondary liability is imposed on his clients time must run in their favour from the date of ascertainment and not from any earlier date.

59. I would therefore hold that the liability of Defendants 1 to 11 arose at the earliest when the adjustment was published and in the case of Forms 2 and 3 after a reasonable time thereafter, within which they might wish to question the adjustment, had passed.

60. Mr. Staughton seeks to support his third proposition that Atlantic is entitled to intervene in the proceedings, as Islands undisclosed principal, even if at the date of joinder its claim was statute-barred firstly by reference to Firestone Plantations Co. v. United States of America⁽¹²⁾ a case in which the facts are somewhat scantily reported. From the report we know only that Firestone Plantations Co. filled its "libel" alleging that it was the owner of cargo damaged during a voyage within time and that after the period of limitation had expired Firestone Tire & Rubber Co. filed a petition for leave to intervene alleging that it had purchased the cargo and become its owner during the voyage and prior to arrival of the vessel at New York. We are not told what interest Plantations had in the cargo, from whom Tire & Rubber had purchased it, nor what was the relationship between Plantations and Tire & Rubber. The respondent objected to the intervention on the ground that Tire & Rubber was seeking to substitute itself for Plantations when it was too late for Tire & Rubber itself to sue. Tire & Rubber was permitted to intervene on the basis that Plantations had a right to sue in that a consignor might sue for the consignee and the consignee's interest entitled it to participate. "The running of the statute of limitations was stopped by the filing of the libel and therefore did not run against the motion or petition to intervene". I must confess that I do not understand this sentence but take it that the word "time" should be inserted after the word "therefore". I do not see how this case can be extended to cover the relationship of principal and agent.

61. In the Kalimantan case it would appear that an order of court had been made on 5th October 1978 giving leave to amend the writ by the addition of a second plaintiff Cosmos. The writ should have been amended within 14 days (0.20 r.9) but the plaintiffs failed to avail themselves of the order within time. On 24th December 1979 they applied for an enlargement of the time and the return date was 7th February 1979. [The casualty occurred on 5th February 1978. Time under the Hague rules ran from "the date when the goods should have been delivered"] The matter could not be dealt with on 7th February 1979 as contrary to the applicant's expectations it was opposed and eventually it was fixed for 3rd April by which date more than one year must have elapsed from the date when the goods should have been delivered. Kalimantan sued as owners of cargo insured with the insurance company and had sold the cargo to Cosmos. Both signed letters of subrogation in favour of the insurers. Hence the order of 5th October 1978. Firestone Plantations Co. v. The United States of America was commented on in that case and explained on the basis if a party in whom the original right of action was vested brought his action within one year, it would be no answer to a claim by the person who had come to stand in his shoes that that person had not commenced proceedings until the year had elapsed. The court concluded that "time stopped running under the rules when suit was brought by Kalimantan, in the same capacity i.e. as owner". The court went on to hold, citing the Puerto Acevedo⁽¹³⁾ that it had a discretion to add a party and distinguished the case before it from Mabro v. Eagle, Star and British Dominions Insurance Co. Ltd.⁽¹⁴⁾ on the basis that the application for extension of time was made within the limitation period.

62. Mr. Staughton argues, if I understand him correctly, that the instant action was started in time by Islands and Atlantic is entitled to intervene as undisclosed principal even if at the date of joinder Atlantic would have been time barred. I do not think this valid for it cannot be said that Islands brought the action "in the same capacity" as Atlantic would do as was said in the Kalimantan Case.

63. I turn then to Mr. Staughton's final proposition that a discretion exists to join a party even if that means depriving a defendant of a time bar under the statute of limitations.

64. The Kalimantan Case decided that a discretion exists to add a party where the one year limitation period under the Hague rules had passed. Does the same discretion exist and if it does should it be exercised in favour of a party seeking to be joined where the period prescribed is under the statute of limitations? 0.15 r.6(2)(b)(ii) confers a discretion to add a party but Mabro v. Eagle, Star & British Dominions Insurance Co. Ltd. and Braniff v. Holland & Hannen & Cubitts (Southern) Ltd.⁽¹⁵⁾ suggest that it is not possible for the court to disregard the statute and that the discretion conferred by the rule will not be exercised where its exercise would involve depriving a defendant of a vested right. Mr. Staughton points out that a discretion to allow a plaintiff to amend his writ is conferred by 0.20 r.5(1). Rule 5(2) reads as follows:

It is peculiarly worded in that it is not exclusive. It does not say as it might have done:

"The court shall not grant an application for leave to made the amendment if it is made after any relevant period of limitation current at the date of issue of the writ has expired unless it is one of the amendments mentioned in paragraph (3), (4) or (5). If it is one of the amendments mentioned in paragraph (3), (4) or (5) the court may grant such leave in the circumstances mentioned in that paragraph."

Mr. Staughton points out that he does not apply under paragraph (3), (4) or (5) although his application is similar to (3). He seeks to add a party rather than to correct its name and his application is not defeated by rule 5(2).

65. I would agree that a discretion exists but its extent appears on the authorities to be rigorously circumscribed. It does not extend so as to permit an amendment by which one who does not sue in the same capacity as the original plaintiff may be added as a co-plaintiff if to add him would be to defeat the statute.

66. In any event the trial judge has refused to exercise his discretion in favour of the appellant and I am far from being persuaded that he was wrong. Automatically to do so might encourage the prolongation of cases in which parties claiming general average were concerned. There are good practical reasons why such cases should be heard speedily because as time passes it becomes progressively more difficult for carge owners to establish such defences as unseaworthiness. The discretion of the original judge is not lightly to be interfered with by this court.

67. I would allow this appeal insofar as the defendants 1 to 11 are concerned but would not allow any amendment effecting the remaining defendants.

68. I would grant liberty to apply as to costs if the order as to these is not agreed between the parties.

Silke, J.:

69. I have had the benefit of reading in draft the judgment of My Lord the Vice President.

70. I too would hold that that which I might term the general cause of action arises at the time of the casualty. I, with respect, share his misgivings as to the construction of the Letters of Guarantee in the light of the trend of modern authorities but it seems to me to be the only reasonable conclusion that can be come to in respect of those that lie for consideration here.

71. The matter having been dealt with in so full a manner in his judgment and being, with deference, in agreement with the conclusions reached therein and the reasoning therefore I do not think there to be anything that I can usefully add.

72. In the event I would allow the appeal and restore the order of the Registrar joining Hong Kong Atlantic Shipping Co. Ltd. as second plaintiff, but only in respect of its claims as against the 1st to the 11th defendants.

8th July 1981.

Representation:

Staughton, Q.C. & Mumford (Johnson, Stokes & Master) for Appellant.

W. Waung (Deacons) for Respondents.

(1) (1963) A.C. 785

(2) (1922) 11 Ll. L.R. 42

(3) (1923) 16 Ll. L.R. 319

(4) 18 Ll. L.R. 376

(5) (1934) 49 Ll. L.R. 123

(6) (1936) 55 Ll. L. Rep. 159

(7) (1963) 2 Ll. L. Rep. 65

(8) (1975) A.C. 797

(9) (1973) 2 Ll. L. Rep. 91

(10) (1936) A.M.C. 1740

(11) (1936) A.M.C. 993

(12) (1945) A.M.C. 746

(13) (1978) 1 Ll. L.R. 38

(14) (1932) 1 K.B. 485

(15) (1969) 1 W.L.R. 1533