BRODY LTD. AND ANOTHER v. CHU KONG SHIPPING ENTERPRISES (HOLDINGS) CO. LTD. AND ANOTHER

HCCL354/96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.354 OF 1996

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D E C I S I O N

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1. This hearing is adjourned from 4th June on which date this Court was seized with an application by the 1st and 2nd Plaintiffs herein for a strike-out of the Defence of the 1st Defendant. Mr Sussex had then mounted the case on behalf of the 1st and 2nd Plaintiffs on the basis that the pleading, as it then stood, was defective and embarrassing, and that he had difficulty in isolating precisely the case he had to meet as an indorsee and/or assignee of a bill of lading.

2. The background to the matter is that the 1st Plaintiff, Brody Limited, entered into a contract of carriage with Chu Kong Shipping Enterprises (Holdings) Company Limited, the 1st Defendant, pursuant to a combined transport bill of lading which required the 1st Defendant to transport the goods in question from a port in China to Puerto Quetzal in Guatemala. What appears to have happened is that the goods were transhipped in Hong Kong and that a bill of lading was then issued to the 1st Defendant by Nippon Yusen Kaisha, the 2nd Defendant, who completed the on-carriage to Guatemala, at which port it is alleged that the goods were misdelivered by presentation of other than the proper bill of lading. Interestingly, the bill of lading which was required to be presented, notwithstanding the transhipment which had taken place in Hong Kong entrusting the goods into the care of the 2nd Defendant, was to be against the presentation of the 1st Defendant's original bill of lading.

3. At some time during the hearing on 4th June, Mr Sussex reminds me, I invited Counsel for the 1st Defendant, Mr Chua Guan Hock, to consider amending. I think it is a fair inference - Mr Sussex, this morning, has also reminded me of the constituents of the argument which he was putting forward at that time - that I was impressed with the progress that he was making in the argument. I also noted at that stage that Mr Chua would have had to amend anyway because of amendments which had been made to the Points of Claim to add Sonex Traders Limited, the 2nd Plaintiff.

4. Mr Chua accepted my invitation, and I think it is fair to say that he now has produced an amended pleading on the part of the 1st Defendant which is both cohesive and intelligible, and provides the Plaintiffs with a clear outline of the case that they have to meet. So much so that Mr Sussex this morning has abandoned any further attempt at strike-out and says, in effect, "my summons has had its effect. I now have a pleading that I can deal with. Please give me my costs."

5. Mr White, who appears this morning on behalf of the 1st Defendant - the 2nd Defendant being unrepresented - resists the costs order sought by Mr Sussex. He has a difficult task, in my judgment, in light of the sequence of events which has taken place in this case. What he effectively says, ingeniously, is that if the Court had heard in full the strike-out application, this application would have been refused.

6. It would have been refused, he argues, for two main reasons. First, because Mr Sussex accepts that the decision in terms of an indorsee's rights, as contained in the case of Leduc v. Ward, is subject to some controversy and may have been affected by legislation in the form of the Bills of Lading and Analogous Shipping Documents Ordinance. Second, he says that in any event that which has now been pleaded expressly could have been divined with reference to the original unamended pleading when taken together with the extensive particulars that were served pursuant thereto.

7. With great respect to Mr White, I do not accept this submission as well founded. There have been extensive and substantive amendments on the part of the 1st Defendant, and there is now a pleading that withstands even Mr Sussex's eagle-eyed scrutiny. In addition, other matters have been pleaded, and I have in mind in particular the express term of the bill of lading which is pleaded at paragraph 3(E) of the amendment.

8. I do not think that it is now open to the 1st Defendant, who has amended so thoroughly and extensively, to come to Court with the sort of argument now mounted by Mr White, namely that if the original application had concluded, the respondent thereto would have won. The reason is simple. The Court is unable to revisit a situation that has long since passed. Had that been the 1st Defendant's position, it was open to their able Counsel to dig its heels in and to say to the judge, "No, I want this argued on the basis of the pleading as it stands, and I will stand or fall on those arguments." But that did not happen. These extensive amendments were made, and, in my judgment, appropriately made.

9. If and insofar as this be wrong, and the approach of Mr White is even to be countenanced on a costs argument of this sort, perhaps I could put his mind at rest by saying that if I could indulge in a piece of judicial crystal-ball gazing as to what I might have done had I been asked to do it, I think there is no doubt that the points which were being made by Mr Sussex in his opening of the application were making considerable headway in the mind of the Court in terms of the embarrassing nature of the initial pleading, and I dare say - although I had not heard Mr Chua in opposition - that Mr Chua, as a highly capable Counsel, saw the way the wind was blowing and decided to take the opportunity to amend.

10. All this comes down to the fact that I can see no good reason why the Plaintiffs should not have their costs of and occasioned by the striking out application in any event, to be taxed if not agreed. For the avoidance of doubt, those costs are to include the hearing before this Court on 4th June, and also - and this is a matter of regret - the costs of today which, in my judgment, could well have been saved. I am sorry to so precipitately reject Mr White's arguments, which are obviously a matter of some reflection and consideration, but reject them I do.

[Submissions from Counsel]

11. Accordingly, my Order is in the terms following :-

1) The 1st Defendant do pay to the 1st Plaintiff the costs of and occasioned by the strike-out application issued by the 1st Plaintiff, pursuant to its summons dated 12th September 1997, in any event, to be taxed if not agreed (such costs to include the costs of the hearings on 4th June 1998 and 11th February 1999);

2) The 1st Defendant do pay the 1st and 2nd Plaintiffs in any event the costs incurred and thrown away by the amendment to the Defence of the 1st Defendant, and the costs of any consequential amendment, such costs to be taxed if not agreed.

12. I have made a two paragraph order in the terms dictated. I thank the parties for their assistance.