YIP KAM AND ANOTHER v. ZHONGSHAN FOODSTUFFS & AQUATIC IMPORT & EXPORT GROUP CO LTD OF GUANGDONG AND ANOTHER

HCAJ 31/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 31 OF 2008

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BETWEEN

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J U D G M E N T

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I.  Introduction

1.       Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (Cap. 508) s. 7(1) provides that no action for damages for loss of life due to a maritime collision may be brought after 2 years.  But s. 7(3) gives the Court a jurisdiction to extend the 2-year limitations “to such extent and on such conditions as it thinks fit”.

2.       On 21 December 2005, just outside the Yaumatei Typhoon Shelter, Zhongshan’s cargo vessel collided with a motor launch.  As a result, the launch sank and its coxswain, Mr. Chow (aged 72) drowned. 

3.       On 11 February 2008 Madam Yip (Mr. Chow’s wife) issued a Writ against Zhongshan and Man Shun (alleged to be the cargo vessel’s manager).  By the Writ Madam Yip claims damages arising out of her husband’s death in the maritime collision.

4.       The Writ having been issued outside the 2-year limitation stipulated by the Ordinance, Zhongshan now applies to strike it out.  Madam Yip in turn asks for an extension of the 2-year time limit to enable her to pursue an action against Zhongshan.

II.  Discussion

5.       The 2-year time limit in the Ordinance arises from the international agreement embodied in Article 7 of the 1910 Brussels Convention for the Unification of Certain Rules of Law with Respect to Collisions between Vessels.

6.       “Good reason” must be shown for exercising the discretion in s. 7(3) to extend the limitation beyond the internationally agreed limit of 2 years.  What constitutes “good reason” will depend on all the circumstances of a case.  See The “KMTC HONG KONG” HCAJ No.164 of 2004, 4 August 2006 (Waung J at §8), citing The “MYRTO” (No.3) [1987] 1 AC 597.

7.       Relevant factors in assessing whether there is “good reason” for an extension might include the following:

(1)     the length of delay in issuing a Writ;

(2)     whether a defendant is to blame for any delay on the plaintiff’s part;

(3)     whether the delay is due to circumstances beyond the plaintiff’s control; and,

(4)     whether, if time is extended, there will be material unfairness, prejudice or injustice to the defendant.

See The “ALBANY” and “MARIE JOSAINE” [1983] 2 Lloyds Law Rep 195 (Sheen J).

8.       Mr. Ashok Sakhrani (appearing for Madam Yip) submits that the discretion to extend should be exercised in Madam Yip’s favour for the following reasons:

(1)     She is elderly (74 years old) and illiterate.

(2)     From December 2005 and in the course of 2006 and 2007, Madam Yip (through her son) repeatedly asked the marine police about the result of their investigations into the collision.  A “Ms. Yu” of the marine police apparently told Madam Yip “to wait for the investigation results”.

(3)     Madam Yip did not learn that the marine police had completed their investigation until October 2007.  She was informed by a letter dated 9 October 2007 from the marine police that no criminal charges had been brought due to insufficient evidence.  But she could not afford any legal fees at the time to pursue a private action.

(4)     In December 2007 Madam Yip’s son was erroneously advised by a Mr. Sammy Yip of Messrs. Y. C. Lee, Pang, Kwok & Ip during a duty lawyer session at the Wong Tai Sin District Office that the time limit was 3 years.

(5)     It was only in January 2008 when Madam Yip went with her son to the Legal Aid Department to apply for legal aid that she learned that the limitation “might be 2 years”.

(6)     Legal aid was not granted to Madam Yip until 30 January 2008.  Immediately following that grant, an in rem Writ against the cargo vessel was issued on 1 February 2008 and the present in personam Writ was issued on 11 February 2008.  Having discovered that the cargo vessel had been turned into scrap in September 2007, Madam Yip discontinued the in rem action on 8 October 2008.

9.       I sympathise with Madam Yip’s plight following the collision and the loss of her husband.  But I am not persuaded that the circumstances highlighted by Mr. Sakhrani amount to good reason justifying the extension of the 2-year limit.

10.  As Mr. Charles Sussex SC (appearing for Zhongshan) points out, awaiting the results of a marine police investigation cannot be good reason.  Madam Yip and her family may be of only limited means.  But they could have applied for legal aid much earlier than they actually did.  There is no cogent explanation why Madam Yip delayed going to Legal Aid until January 2008 (more than 2 years after the accident).

11.  Mr. Sakhrani stresses that between December 2005 and January 2008 Madam Yip did not just sit back.  Madam Yip (Mr. Sakhrani says) had to find out what happened and so pressed the marine police.  She could not (according to Mr. Sakhrani) do anything until she got more information.  But I cannot accept this explanation. 

12.  Whatever one’s educational background, it would have been apparent from the outset that something wrong had happened.  A large cargo vessel should not normally have run into a small motor launch.  There was nothing preventing Madam Yip from consulting the Legal Aid Department at an early stage, pressing them to look into the matter, and asking them to bring proceedings on her behalf.  That is precisely what Madam Yip did when the police investigation decided that there was insufficient evidence to prosecute.  Inexplicably, she waited many years before doing so.

13.  Madam Yip may have been misled by bad advice from Mr. Sammy Yip to the effect that the limitation was 3 years.  The advice was unfortunate.  But the law is clear that:-

“Mistakes on the part of those representing the plaintiffs as to when the limitation period is expired is the sort of fault or carelessness which is unlikely to give rise to good reason....

The defendants are prima facie entitled to the limitation defence which has accrued to them and ought not ... to be deprived of it merely because of the carelessness of those representing the plaintiffs.”

See The “AL TABITH” [1995] 2 Lloyds Rep 336 (Rose LJ at 343).

14.  The Writ was issued about a month and half after the 2-year limitation expired.  I do not think that I can treat such period of delay as negligible. 

15.  Insofar as blame is concerned, prior to the issue of the Writ, Zhongshan had no contact or communication with Madam Yip or her son.  Therefore, it cannot be said that Zhongshan contributed to or caused the delay in issuing the Writ.

16.  Nor do I see any basis for saying that Madam Yip was prevented by circumstances beyond her control from consulting Legal Aid at a much earlier stage.

17.  Zhongshan suggests that it will be prejudiced if time is extended.  As at November 2008, 3 potential witnesses had left Zhongshan’s employment.  Those are Lam Tong Cheung (the master of the cargo vessel), Au Yu Chow (the quartermaster) and Wan Chung Tin (a crew member).  Zhongshan says that it has lost contact with these 3 persons.

18.  Mr. Sakhrani submits that Zhongshan’s suggestions of prejudice “run hollow”.  Mr. Sakhrani suggests that, if need be, the statements which the marine police took of the 3 crew members can stand as evidence.  Mr. Sakhrani notes the conclusion in a Marine Department investigation report that the quartermaster (who may have been under the influence of alcohol at the time) failed to give way and keep a proper look out.

19.  But it seems to me that, in the absence of the 3 witnesses, Zhongshan may well suffer prejudice.  At any rate, I cannot rule out such possibility.  If the investigation report is right, Zhongshan would undoubtedly find itself in a difficult position at trial.  At the very least, Zhongshan would have to rebut the allegations in the report by tendering the 3 witnesses for cross-examination.  Unless it did so, it may find itself being held liable on documents and hearsay evidence.

20.  Mr. Sakhrani argues that Zhongshan should only have itself to blame for difficulties in locating the 3 witnesses. 

21.  The Writ has in fact never been served on Zhongshan.  Instead Zhongshan recently filed an Acknowledgment of Service on its own accord. 

22.  Ancillary New York proceedings (to obtain security in connection with Madam Yip’s claims here) were commenced in New York in mid-November 2008.  Zhongshan says that is the first time it had any inkling about Madam Yip’s claim. 

23.  But Mr. Sakhrani contends that Zhongshan ought to have known about the present proceedings since about 23 August 2008.  This is because Madam Yip’ solicitors wrote at that time to Zhongshan in the Mainland inviting it to identify a process agent in Hong Kong to accept service. 

24.  Zhongshan did not reply.  But it ought (Mr. Sakhrani reasons) to have realised from the letter that it should maintain contact with the 3 witnesses in the event of Madam Yip’s claim coming to trial.

25.  I do not think that a short English letter, received out of the blue from Hong Kong solicitors, some 8 months after the 2-year limitation had expired, would alert Zhongshan to everything which Mr. Sakhrani suggests that the letter ought to have.  In all the circumstances, Zhongshan might reasonably have decided to wait and see whether anything materialised in connection with the proceedings foreshadowed in the letter.

26.  I cannot conclude that Zhongshan has only itself to blame in losing touch with the 3 witnesses.

III.  Conclusion

27.  For the foregoing reasons, I am unable to exercise my discretion to extend the 2-year time limit.  The Writ will be struck out and the actions against the Defendants dismissed.

28.  There will be an Order Nisi that the Plaintiffs pay the Defendants’ costs of the applications to strike out and to extend time.  There will be a further Order Nisi that the Plaintiffs pay the Defendants’ costs of the action.  All costs are to be taxed, if not agreed.  The Plaintiffs being legally-aided, the Plaintiffs’ own costs are to be taxed in accordance with the relevant Legal Aid regulations.