XCHRX THE "INCHON GLORY"

1992, No. AJ 117

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Admiralty action.in rem against:
The Ship or vessel "INCHON GLORY"

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J U D G M E N T

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1. The plaintiffs were timecharterers of the defendants' vessel under a "Linertime" Deep Sea Time Charter dated 10th April 1991.

2. On or about 28th April 1992 the vessel was bound for Hong Kong when it was in collision with another vessel. At the time of the collision, the plaintiffs had cargo consisting of 347 containers on the vessel. The vessel was towed by salvors to Hong Kong where it is likely to remain indefinitely.

On 21st May, after an exchange of correspondence by fax with the defendants' solicitors, the plaintiffs' solicitors issued a writ endorsed with a claim. The relevant portions of that claim are:

"1. Damages for breach of contract and/or duty and/or negligence by the Defendants their servants or agents in and about theloading handling stowage carriage and custody of goods the      property of or leased to the Plaintiffs (namely 222 twenty foot containers and 125 forty foot containers) laden on board the Defendants' ship "INCHON GLORY" in or about March and April 1992 for carriage from Keelung, Taiwan, Busan Korea to Hong Kong, Singapore, Penang and Port Kelang Malaysia and/or

5. A declaration that the Plaintiffs as owners or lessees of the goods aforesaid are entitled to be indemnified by the Defendants against any liability for salvage including interest and costs incurred by the Plaintiffs, and/or damages in respect of any sums attributable to the Plaintiff as owners or lessees of the goods aforesaid by way of salvage, including interest and costs, together with interest and costs incurred by the Plaintiffs in connection with the salvage claim."

3. On the following day the plaintiffs' solicitors applied for and obtained ex-parte an order providing the plaintiffs with relief in the following terms:

(i) That the defendants should permit the plaintiffs' surveyors to survey, inspect and, if necessary, photograph the plaintiffs' goods and the vessel's hold and machinery and to carry out a speed and angle of blow survey. The surveyors should  have access to a substantial number of documents which might loosely be described as the navigational records, the various log books, and cargo and ship's plans.

(ii) That the defendants should permit the plaintiffs' solicitors to take copies of any of those documents as requested by their surveyors; and any of those documents having been removed from the vessel, to confirm whether they were held by the defendants' solicitors or the defendants' surveyors and that those two parties should permit the plaintiffs' solititors to take copies.

(iii) The defendants should preserve all documentation in their possession, custody or power relevant to the  matters in question.

The defendants now apply for that order to be set aside or varied.

4. The plaintiffs' application was made pursuant to the provisions of Order 75, rule 28 and Order 29, rules 2 and 3. Order 75, rule 28 reads:

"Without prejudice to its powers under Order 29, rules 2 and 3, and order 35, rule 8, the Court may, on the application of any party, make an order for the inspection by the assessors (if the action is tried with assessors) or by any party or witness, or any ship or other property, whether real or personal, the inspection of which may be necessary or desirable for the purpose of obtaining full information or evidence in connection with any issue in the action."

5. Order 29, rule 2 relates to preservation and inspection of property the subject matter of an action or as to which any question may arise. Rule 3 relates to the taking of any sample for the purpose of obtaining full information or evidence in a cause or matter. In The Mare Del Nord (1990) 1 Lloyd's Rep. 40, Sheen J. had to deal with a similar application. He laid down what he regarded as the principal matters which a court should take into account when exercising its discretion whether or not to order that samples be taken. The judge was plainly not laying down an exhaustive list of matters. Nonetheless, the matters to which he referred provide a useful basis for dealing with applications of this nature. There was, I think, no real dispute about this. The matters which the judge regarded as important were:

1. The plaintiffs' evidence on affidvait must show a good arguable case on the merits. Particularly, the  evidence must    show that there was damage which should not be treated as de minimis.

2. The taking of a sample (or such other relief as may be granted) must be shown to be such that it may assist the judge at  trial. The longer the lapse of time between the moment when damage occurred and the moment when a sample is to be taken, the more difficult it will be to show that the order is likely to be of assistance at trial. If there is any doubt, it is in the interest of justice to preserve evidence rather than let pass an opportunity of obtaining such evidence.

3. Shipowners must be protected from unnecessary interference with the running of heir ships. Provided, however, a   shipowner is fully protected against any damage which he may suffer, the type of relief being afforded to a plaintiff may be no more burdensome than discovery which can put a shipowner to a great deal of trouble and inconvenience. Both processes help a court to ascertain the true facts and to reach a fair and correct

4. A plaintiff should be required to give an undertaking in damages.,

5. If satisfied that the plaintiff has a good arguable case and that the evidence obtained may assist at trial, the court should take account of undertakings given by the plaintiff and balance the inconvenience which might be caused to the shipowner and others against the possible benefit to the plaintiff.

Mr. Fok, for the defendants, complained that the plaintiffs gave no undertaking when the order was obtained. In my view that is a justified complaint. For the purpose of this application, however, I do not think it is of importance.

6. Before the plaintiffs applied for the order, there was, as I said, an exchange of orrespondence between the solicitors. The thrust of the exchange was that the defendants' solicitors asked the plaintiffs to identify what they wanted to inspect and why, while the plaintiffs.' solicitors indicated they wished to inspect the vessel and navigation documents in order to ascertain the reason for the collision, and to inspect the vessel's further documents in order to be in a position to contest any claim by other cargo interests against the plaintiffs as carriers should any allegations of unseaworthiness be made. Finally, on 21st May, the defendants' solicitors faxed the plaintiffs' solicitors in the following terms:

"Once again we confirm that, in principle, our clients have no objection to your surveyor attending on board the vessel. We merely await final confirmation from our clients and we shall then order our surveyor to liaise fully with your nominated surveyor to arrange a mutually convenient time to attend on bbard the vessel.

We note your concern to attend on board the vessel as a matter of some urgency. We would, however, stress that the "INCHON GLORY" will not be departing Hong Kong waters for some time.

If we receive contrary information, therefore rendering the attendance of your surveyor on board the vessel urgent, we will of course let you know."

7. The following day, the plaintiffs made their application. That last fax was not brought to the attention of the deputy judge who heard the application. Quite plainly it should have been. It is true that in an earlier fax dated 14th May, the plaintiffs' solicitors had said:

"We note that in principle Owners are prepared to permit Dongnama's Surveyor access to the vessel."

Nonetheless, I consider the latest fax containing, as it did, a statement of the defendants' up-to-date position, was a matter that the judge would have considered when deciding whether or not the plaintiffs were entitled to urgent ex-parte relief. I do not, however, regard the non-disclosure, material though it was, to have been so serious as to disentitle the plaintiffs from keeping the relief which they obtained if, on the material before me, it can be justified.

8. The plaintiffs' application was supported by an affidavit by their solicitor Mr. Rostron. After deposing to the fact of the plaintiffs' goods being on the vessel, he continued:

"The vessel was involved in a collision with M.V. "EUROPA", on 28th April 1992, whereby the bow of Defendants' vessel struck the starboard side of the "EUROPA". As a result of this collision the vessel and it is believed parts of its cargo including some of the goods the property of the Plaintiffs sustained damage, and the vessel was towed by salvors back to Hong Kong. The vessel currently remains in Hong Kong waters.

6. As a result of these facts and matters, the Plaintiffs herein have commenced the instant proceedings claiming the relief set out in the writ, essentially in respect of the damage sustained by the goods, and the Plaintiffs' exposure as owners or lessees of the goods to contributions to salvage and general average. In my respectful submission it is plain from the facts outlined above that the Plaintiffs have a good arguable case on the merits. The relief sought by this application is the usual order for inspection of the vessel and some of her documentation, for the taking of copies of such documentation, and for its preservation. It is my understanding that some of the documents may already have been removed from the ship and are now located in the offices of the Defendants' solicitors Messrs Richards Butler alternatively the offices of the Defendants' surveyors Messrs. Carmichael and Clarke. For that reason I also ask that the Orders sought in paragrpah 3 herein be  extended to enable the Plaintiffs to obtain copies of documents removed from the ship and presently held by Richards Butler and/or Carmichael and Clarke in their offices by ordering Richards Butler and Carmichael and Clarke to provide and/or permit the Plaintiffs to take copies of the documents sought in paragraph 3(i) above forthwith.

7. I respecfully submit that this relief is appropriate in this case. The inspection of the vessel following  a collision is of course most usefully done as soon as possible after the incident as possible, for it is at that stage that a surveyor can best gather and evaluate the evidence which will ultimately be presented to the Court. As time passes it is inevitable that the condition of the vessel will change, and there is the very real possibility that the vessels' documentation will be dispersed or lost. The vessel and her documentation is currently and easily available for inspection in the manner envisaged  by the summons; there will be no difficulty or inconvenience caused to the Defendants - as far as I am aware there is no prospect of the vessel sailing for any reason in the near future, and indeed the Defendants are considering declaring her a CTL.

8. There has been an application substantially identical to this one in respect of a claim made by other cargo interests, represented by Messrs clyde and Co. For the Courts' convenience, the Writ and Order made in that case are at pages 1-5 of "JESR-1". The only difference between that application and this one is that the Plaintiffs herein are the timecharterers of the vessel, so it is conceiveable that there may in due course be claims made by one or other of the parties pursuant to the Charterparty (a copy of which is at pages 6-26 of "JESR-1") though at present that is not the position.

9.There have been several requests made to owners' solicitors to obtain access to the vessel without receiving an unconditional response that the Plaintiffs' surveyor is to be permitted access to "Inchon Glory" as set out herein alternatively that the documentation requested will be supplied."

9. For the purpose of the defendant's application to set aside the order, Mr. Rostron swore a further affidavit, the thrust of which is twofold. First, he deposed that on 7th May, Godfrey J. made an order at the instance of other cargo interests providing for preservation of documents within the Hong Kong jurisdiction. He said he is now informed by the owners' surveyor that no documents are left on the ship and that those which are not in the possession of the defendants' solicitors have been taken by the owners' representative back to Greece.

I observe that Godfrey J. did not make an order for preservation within Hong Kong. The order was simply that the defendants should preserve the documents. Until it is shown that the defendants have failed to preserve those documents for use at trial if necessary, there is no apparent breach of that order.

10. Second, Mr. Rostron said that the owners have still not secured the salvors' claims for US$500,000. As the value of the vessel as scrap is only about US$800,000, he believes that the owners will simply abandon the vessel and take no further part in any proceedings. Thus, if the plaintiffs should be sued by cargo interests for an amount equal to their salvage contribution, there will be a grave risk that there will be no one whom the plaintiffs can compel to provide documentation which was on board the vessel by way of discovery.

11. Mr. Fok submitted that the plaintiffs' application to the deputy judge was essentially founded in its claim in contract. He said that the contract was not identified in the endorsement of claim, but is plainly the charterparty. That charterparty provides, inter alia, for responsibility as between the parties, for the owners to make available a variety of documents to the charterers, and for arbitration in London. Even if the relief sought could be shown to assist in the determination of the issues which would be relevant under the charterparty, Mr. Fok.said that it is now plain that the relief sought is for a completely different purpose. The plaintiffs' conduct therefore amounts to an abuse of the process of this court. Mr. Graham, who appeared for the plaintiffs, after some argument as to whether the plaintiffs' contractual claim arose under bills of lading or the charterparty, eventually abandoned for the purpose of this application any reliance by the plaintiffs on contract. He said, however, that the endorsement of claim contains a cargo claim based on the defendants' duties as bailiff or in negligence generally, and a further claim for an indemnity in respect of salvage. He pointed out that these were live matters before the deputy judge and that there was reference to them in Mr. Rostron's affidavit. He added that the documents which are being sought relate to the navigation of the vessel, which are plainly relevant to how the collision occurred, and to the loading and construction of the vessel which would be relevant to her seaworthiness.

12. I reject any suggestion that the plaintiffs have abused the process of the' court by switching their role from that of charterer to that of simple cargo owner. In my view, both roles were plainly before the deputy judge, so that he could consider the implications arising from each. As far as the cargo claim is concerned, Mr. Fok argued that the plaintiff has not shown a good arguable case. He pointed out that Mr. Rostron has simply deposed:

"It is believed parts of its cargo including some of the goods the property of the plaintiffs sustained damage...."

He added that, on a without prejudice basis, the defendants permitted an inspection of the vessel on 25th May, yet the plaintiffs have led no positive evidence of any damage having occurred.

13. With this submission I agree. The plaintiffs' evidence falls far short of what is required. It does not even establish damage de minimis let alone material damage which might afford the basis of a claim. Accordingly, I need say nothing further in relation to this part of the claim other than that, accepting that inspection of the cargo is plainly relevant and that inspection of the vessel itself for the purpose of ascertaining the cause of collision might be relevant, and that the surveyor might properly call for the navigational documents to assist him in relation to the collision, I can see no relevance in or justification for the other categories of documents which the plaintiffs were seeking.

14. I turn then to the claim for an indemnity in relation to salvage claims. I am prepared to accept that the plaintiffs have a good arguable case. It is true that Mr. Rostron's second affidvait is not entirely clear as to the amount of such claims. Mr. Graham, however, told me (and Mr. Fok did not object) that the plaintiffs themselves have had to put up security in the sum of US$lm against salvage claims' in relation to cargo to enable handling of their own cargo to commence. It is clear therefore that the salvors' claim will be substantially in excess of the scrap value of the vessel. Claims by other cargo owners against the plaintiffs are therefore a very real possibility. The cause of the collision will be a material matter to be canvassed. Evidence and documents relating to that issue will be important.

15. Mr. Fok's real complaint, I think, is that the plaintiffs have jumped the gun, that none of the relief sought was so'urgent that it needed an ex-parte application and that, at least in relation to the documents, advance discovery is being sought when there is no reason why discovery should not be made in the usual course of the proceedings. He said that there is nothing on the material before me to suggest that the documents are either at risk or that they should be discovered, produced and inspected at this stage.'

16. In my view, there was certainly nothing in Mr. Rostron's 1st affidavit to suggest any urgency. The position now, however, is that the documents have apparently been removed from the vessel, some being held by the defendants' solicitors, and others presumably by the defendants themsleves in Greece. Mr. Graham pointed to the obvious difficulties in relation to the documents which have left Hong Kong and said that, because of the risk that the defendants will simply walk away from the vessel, there is the added risk that they will discharge their solicitors, ask for any documents in the solicitor's possession and will be bound to be given them. He said that the position here can be distinguished from that in Yousif v. Salama and another (1980) 1 WLR 1540. Yousif involved the granting of an Anton Piller Order in relation to document. Donaldson L.J., who in fact dissented, drew attention to the distinction between an entitlement to receive discovery during the course of proceedings and the power to "take" discovery conferred by an Anton Piller Order. Mr. Graham said that the plaintiffs have not sought to take discovery, simply to preserve the documents whereever they may be, coupled with the taking of copies so that even if the originals disappear the copies will still be available.

17. Mr. Graham also pointed out that inspection of the vessel will not involve unnecessary interference with the running thereof,because it is immobilized in Hong Kong. In relation to an inspection of the vessel and of documents and taking copies thereof, he said it is better to preserve that evidence rather than let pass the opportunity of obtaining it. He said it is clearly in the interest of justice to do so.

18. I can see no reason why the plaintiffs should not have applied for, and been granted, an order permitting ' their surveyor access to the vessel for the purpose of inspecting any part thereof and considering what I have termed the navigation documents, namely, current deck and engine bell books, course recorder, course record paper covering the collision and one hour before, telegraph locker, working chart, radar equipment and radar plotting sheets in use prior to the collision and current radar log. In so far as the surveyor considers other documents necessary to his task, the plaintiffs would be at liberty to apply for such further documentation. To that extent, therefore, I vary and allow paragraph 1 of the order.

19. There was, on the material before the deputy judge, no justification for paragraphs 2 and 3 of his order. There was nothing to suggest that the documentation was shortly to be disposed of to the detriment of any proceedings between the parties. The position now has been somewhat clarified. Some documents are apparently in Hong Kong in the possession of the defendants' solicitors. There is no suggestion that they would, in any way, wrongly dispose of those documents. What is feared is that those documents may legitimately follow other documents into the hands of the owners in Greece. That, I suppose, is a possibility, but I do not accept that those documents will somehow become unavailable, particularly when the defendants are already under an order of this court to preserve those documents. To suggest otherwise is to imply that this court's orders are worthless.

20. I have not overlooked Mr. Graham's argument that it would be in the interest of justice to preserve the documents by copying at this stage. Justice, however, as Mr. Fok said, is not an isolated concept. It is a factor which must be applied within the existing framework of the rules, practice and procedure. I remain unpersuaded that there is any justification for the plaintiffs obtaining wide-sweeping discovery at this early stage of the proceedings. Accordingly, I discharge paragraphs 2 and 3 of the order.

21. As I have said, there was no urgency about this matter. The application could, and should, properly have been made inter-partes. Accordingly, I make an order nisi that the defendants have the costs occasioned by the making of the ex-parte order including, but not limited to, the hearings before Mayo and Stock JJ.

The defendants have succeeded on what is perhaps the more substantial part of their application. In the circumstances, I make an order nisi that the costs on this application be the defendants' costs in the cause.