UNITED STATES GARMENT FACTORY LTD. AND ANOTHER v. SEA-LAND SERVICE INC. AND ANOTHER

1994, No. 528

Note

O.15, r.6 - joinder as defendant.

(1) an action, in which there has been a judgment which has been satisfied and in which time for lodging an appeal has expired, does not constitute "proceedings" as contemplated in para. (2).

(2) a person who could have been joined as a third party pursuant to O.16 has sufficient locus or interest to make an application under O.15,r.6.

 

 

1994, No. 528

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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(Published with consent of the parties)

1. This is an application by the intended intervener to be joined as defendant in the action to enable it to appeal against the judgment which has been given against the 1st and 2nd Defendants and to have the judgment set aside.

2. The action is for misdelivery of goods in Canada. The Plaintiffs claimed as shippers, owners or holders of bills of lading. I will refer to the Plaintiffs as "USGF" and "Zhuhai" respectively. Jointly, I will refer to them as the owners. The Defendants were the carriers. The intended intervener was the buyer which, together with a Canadian bank, gave a letter of indemnity to the carriers for the release of the goods without production of the bills of lading. The writ issued on 18th January 1994 and Points of Claim on 24th May. On 15th June, the owners obtained judgment against the carriers pursuant to O.14. The judgment for US$206,713.03 has been satisfied. There has beer. no appeal and the time for an appeal has expired.

3. By A7498/94 commenced on 30th July 1994, the carriers claimed against the buyer on the indemnity. An application under O.14 is pending.

4. By A7630/94 commenced on 3rd August 1994, the buyer claimed against USGF and another for breach of contract, principally on the basis that the goods were shipped late and that some at least were defective. The buyer obtained judgment in default for approximately US$867,000. In its action, the buyer obtained Mareva relief against USGF in relation to the money paid pursuant to the judgment in A528. For reasons into which I need not go that money has in fact been paid out by the owners' solicitors to Zhuhai.

5. The basis upon which the buyer would seek to set aside the judgment against the carriers, if joined, is that neither USGF nor Zhuhai had any cause of action against the carriers. Following the granting of Mareva relief in A7630, the owners' solicitors applied for discharge of that injunction. That application met with partial success on 18th August. On 19th August, the solicitors wrote to the buyer's solicitors. From their letter and accompanying documents, it emerged that Zhuhai appeared to have no claim in contract in relation to the goods in question while USGF had, before the action was commenced, assigned its rights to Zhuhai. Therefore, whatever claims the owners might have had, they were not for breach of duty or contract against the carriers. I think I need only say that there is some merit in the buyer's contention. In any event, the owners and carriers did not seek to argue the contrary in this application.

6. For the owners, Mr. Coleman advanced five reasons why the buyer should not be allowed to intervene. Mr. Stone for the carriers adopted those reasons. Three I can deal with very quickly. First, it was argued that the buyer has no locus standi in the proceedings because it was not parties to the contract or relationship between the owners and carriers. I am satisfied that there is nothing in this point. The buyer could have been added as a third party in the action by virtue of O.16 r.1(1)(c) which permits a defendant to issue a third party notice where he:

"Requires that any question or issue relating to or connected with the original subject matter of the action should be determined not only as between the plaintiff and the defendant but also as between either or both of them and a person not already a party to the action."

7. A third party cannot of course apply to be joined. The lacuna, however, appears to have been filled by O.15 r.6(2) which now provides:-

" (2) Subject to the provision of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application---"

"(b) order any of the following persons to be added as a party, namely ---

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter."

8. It is under para. (b) that the buyer's application is made. The intent of the provisions of Orders 15 and 16 which I have set out appears to be identical. That at least seems to have been accepted by the authors of the Supreme Court Practice as is to be found in their note at marginal 15/6/7. It follows, therefore, as Mr. Smith for the buyer argued, that if the buyer could have been joined as third party under O.16, it can in its own right apply to be joined as a party under O.15. I accept that argument.

9. Next, Mr. Coleman argued that the buyer has no legal as opposed to commercial interest in the proceedings. He relied upon In re I.G. Farbenindustrie A.G. Agreement (1944) 1 Ch. 41. Undoubtedly that case laid down that proposition of law which has not been doubted. The facts of that case are, however, wholly dissimilar from the facts of the present case. Mr. Coleman also said that the buyer cannot rely upon the leading case involving joinder of parties, namely, Gurtner v. Circuit & another (1968) 2 Q.B. 587. He said that the Motor Insurers Bureau was allowed to be joined because directly or indirectly the judgment given would be enforced against it. That case was decided before para. (b)(ii) was added to O.15 r.6. Further, it seems to me in the words of Lord Denning M.R. on p. 595 of that case, that "when two parties are in dispute in an action at law, and the determination of that dispute will directly affect a third person in his legal rights or in his pocket, in that he will be bound to foot the bill, then the Court in its discretion may allow him to be added as a party on such terms as it thinks fit", encapsulate accurately the position which obtains here.

10. Third, Mr. Coleman argued that the buyer has been guilty of reprobation and approbation. The basis of this argument is that it has taken advantage of the judgment against the carriers in favour of the owners by seeking and obtaining Mareva relief against the fruits of that judgment. On the other hand, it now seeks to have that judgment set aside. I am afraid that, quite simply, I fail to see how this amounts to the legal proposition for which Mr. Coleman and Mr. Stone contend.

11. Mr. Coleman's principal argument was that there are now no "proceedings" as that word is used in O.15 r.6(2)(b) in which an application can be made or to which the buyer can be added as a party. He pointed out that judgment has been obtained and satisfied, that there has been no appeal, and that the time for lodging an appeal had expired before the buyer made its application. He said that the proceedings are dead and cannot be revived.

12. Mr. Coleman drew my attention to Astro Exito Navegacion S.A. v. Southland Enterprise Co. Ltd. & Another (No. 2) (1982) 1 Q.B. 1248. There was a dispute between sellers and buyer. A letter of credit was confirmed by a bank in London. In interlocutory proceedings, the buyer were ordered to take certain steps. The buyer appealed against the order but, separate arbitration proceedings having been successful against them, they lost interest in the appeal and applied to withdraw. The bank which had been affected by the order made application to be joined as defendant to enable it to pursue the appeal. Its application was granted. It was argued that leave to intervene pre-supposed that there was a process proceeding. In accepting that proposition, Ackner L.J. said at p.1257:-

"If this Court were to allow (the bank) to enter these proceedings as they are now constituted there would clearly be an intervention in a process which is proceeding. The fact that thereafter this Court might accede to the buyer application to withdraw does not in my view defeat the operation of O.15 r.6(2)(b)(ii)."

13. Mr. Smith said that that case does not help the owners and carriers. He said that it does not deal with the position which obtains in this case. He argued that it is always open to the Court to grant leave to appeal out of time in an appropriate case. He said that, until 19th August, the buyer had no idea that it was open to it to attack the judgment on its merits. Once that knowledge had come to its attention, it acted with all speed to make its application. In those circumstances, the Court has jurisdiction to add a party, notwithstanding the time for an appeal against a final judgment has expired, and the Court should exercise its discretion in favour of the buyer.

14. Mr. Smith's argument is an attractive one. I feel, however, that it must be rejected. Whatever merits the buyer may have on its side, the fact is that the action between the owners and carriers has been finally resolved and is no longer in existence. I agree with Mr. Coleman that there are no proceedings to which this application can relate. The action is dead. It is not capable of resurrection. It is trite that there must be an end to litigation. It is not right that parties, between whom all issues have been resolved, should be vexed by a third party who seeks to reopen their action. However inconvenient it may be, I am satisfied that such a third party must seek such remedies or relief as may be available to him by another means. Happily, those means are available because in the action between the carriers and buyer on the indemnity the buyer will be taking the points which have been canvassed before me.

15. In the circumstances, the application must fail.

16. There was one other point argued by Mr. Coleman. He said that it is important to avoid a multiplicity of proceedings. He said that intervention in this action would achieve the opposite. He pointed out that the buyer is already party to two actions and has pleaded the issues which it wishes to raise. Further, the buyer already has judgment against USGF for a sum far in excess of the indemnity claimed against it.

17. Even if I had found for the buyer on the principal point, I would not have exercised my discretion in its favour. A dead action would have been revived. It would, I suppose, have been possible to order it to be consolidated with the action between the carriers and buyer or to be heard at the same time. Necessarily, however, the owners, who rightly or wrongly now plainly wish to have nothing further to do with the matter, would have to be brought back into the picture. Procedural difficulties might arise. In contrast, if this action is left in its grave, the buyer will in the action brought against it by the carriers be able to seek to impugn the judgment obtained by the owners against the carriers.

18. The application is accordingly dismissed. I make an order nisi that the buyer is to pay the costs of the owners and carriers.