BANQUE WORMS v. THE OWNERS OF THE SHIP OR VESSEL "MAULE" (Cyprus Flag)(formerly known as "Amer Deep")

1994, No. 187
(Civil)

H E A D N O T E

When damages are available for the wrongful arrest of a ship.

IN THE COURT OF APPEAL

1994, No. 187
(Civil)

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J U D G M E N T

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Bokhary, J.A.:

Introduction

1. This appeal, which concerns the arrest of a ship, was dealt with in two parts. The first part had to do with the striking out of the writ and the setting aside of the warrant of arrest. We dealt with that part by the judgments which we delivered on February 24 this year. The second part concerns the question of an inquiry as to damages for wrongful arrest. And that is what we are dealing with now.

2. What we say now should be read together with what we said in February.

3. In outline, what had happened was this.

4. The plaintiff bank, to whom the defendant's ship the Maule, had been mortgaged by way of security for a loan to three companies including the defendant, arrested that ship.

5. Complaining that the writ disclosed no reasonable cause of action and that the arrest was therefore wrongful, the defendant took out a notice of motion seeking the striking out of the writ and the setting aside of the warrant of arrest.

6. On September 28 last year, Barnett J struck out the writ and set aside the warrant of arrest. In February, we dismissed the plaintiff's appeal against such striking out and setting aside. The plaintiff had, we held, no cause of action because, contrary to the plaintiff's argument, the mortgage did not permit it to sell the ship without accelerating the loan: something which it was entitled to do but had not done before issuing the writ.

Inquiry as to damages for wrongful arrest of the ship ordered

7. But striking out the writ and setting aside the warrant of arrest is not all that Barnett J did by his Order of September 28 last year. He also ordered an inquiry as to damages for wrongful arrest.

8. I will come in a moment to my note of what counsel agree as to how that came about. Before setting out that note, it is necessary to mention this so that the note can be understood. Mr Clifford Smith appeared on his own before the judge and as Mr Robert Ribeiro QC's junior before us for both parts of this appeal. Mr Andrew Allman-Brown appeared on his own before the judge and as Mr Michael Thomas QC's junior for the first part of this appeal.

9. That note reads:-

"1. Following judgment, Mr Clifford Smith asked for an order for an inquiry into damages. The plaintiff's recollection is that Mr Clifford Smith mentioned the possibility of mala fides. The defendant's recollection is that Mr Clifford Smith mentioned the Cathcart and said that the case before the judge was not dissimilar.

2. The judge asked Mr Allman-Brown what he had to say.

3. Mr Allman-Brown said that he wanted the whole Order stayed until 9:30 the following Friday because the plaintiff had a second writ and wanted a second arrest under that writ.

4. The parties have no clear recollection of what Mr Allman-Brown said, but he did not specifically address the issue of an inquiry as to damages, but it is clear that he was objecting to an order for such an inquiry being made.

5. The whole incident took no more than three to four minutes."

10. Undoubtedly, the judge gave the plaintiff an opportunity to be heard on the question of whether there should be an inquiry as to damages. But the defendant's initiative after the judge had given his reasons for striking out the writ and discharging the warrant of arrest must have come as something of a surprise to the plaintiff, since the defendant's notice of motion merely sought such striking out and discharge. It did not ask that the plaintiff be ordered to pay damages. Perhaps if the plaintiff's then counsel had thought a bit more quickly on his feet, he would have offered arguments in opposition to an order for an inquiry as to damages there and then or sought an adjournment. But the fact is that the plaintiff was somewhat taken by surprise. And surprise is by no means the surest path to justice.

The question

11. As I see it, we ought to ask ourselves the question whether ordering an inquiry as to damages was the only proper course open to the judge. If it was, then the surprise would not have made any practical difference, and the appeal against the order for such an inquiry should be dismissed. But if ordering the same was not the only proper course open to the judge, then I think that the appeal should be allowed to the extent of setting aside the order for an inquiry as to damages and remitting the issue of whether there should be such an inquiry to the judge for him to decide the same after going into it fully.

12. So was ordering an inquiry as to damages the only proper course open to the judge?

The test

13. The test to be applied in deciding whether or not to order an inquiry as to damages for the wrongful arrest of a ship was stated in these terms by the Privy Council in the Evangelismos (1858)12 Moo. P.C. 352 at p.359:-

"... is there or is there not, reason to say, that the action was so unwarrantedly brought, or brought with so little colour, or so little foundation, that it rather implies malice on the part of the Plaintiff, or that gross negligence which is equivalent to it?"

14. Applying that test to the facts of the case before them, their Lordships were of the view that it was not a case for damages.

15. In the Cathcart (1867) L.R. 1A. & E. 314, Dr Lushington provided his appreciation of why their Lordships were of that view in that case, saying (at p.333) that it was:-

"... because the plaintiff had acted bona fide with probable cause, and without crassa negligentia, having had reason to suspect that the defendant's vessel was one which had run his own vessel down, and got away in the night."

16. He took a different view of the case before him, concluding his judgment by continuing thus (on the same page):-

" The present case is different. The plaintiffs had full knowledge of the facts, and must be held to the legal effect of their own engagements. If they had regarded the terms of those engagements, they would have known they had no right to arrest the vessel. Add to this, the arrest of the vessel by the plaintiffs was made on the eve of commencing a profitable voyage, and after a decision of the magistrate adverse to their claim, and the plaintiffs have attempted to support the proceeding by making charges of fraud against the defendant, which they have quite failed to prove. I think this is a case for damages. I therefore order the release of this vessel, and condemn the plaintiffs in costs and damages; the amount of damages to be estimated in the usual way, by the registrar and merchants."

17. In the Strathnaver (1875)1 App. Cas. 58, the Privy Council was concerned with a shipowner's claim against the unsuccessful promoters of a salvage suit. The claim was for demurrage or damages for the detention of the ship under a warrant issued by the promoters. There was no bad faith or malicious negligence on the promoters' part. And the Privy Council held that no such claim can succeed in the absence of bad faith or malicious negligence. In so holding, their Lordships applied the principle which they had laid down in the Evangelismos (supra) summarizing (at p.67) their approach in that case thus:-

"Their Lordships came to the conclusion, though the case was certainly a very strong one, inasmuch as the wrong vessel had been seized, that in the absence of mala fides or malicious negligence, they ought not to give damages to the party arresting the vessel."

The analogy with malicious prosecution

18. The analogy between the tort of malicious prosecution and claims such as the present is well-established. Indeed, the expression "the malicious arrest of a ship by means of Admiralty process" is used by the President in the Walter D. Wallet [1893] P.202 at p.205.

19. There is therefore justification for the view expressed by Prof. D.C. Jackson in his book "Enforcement of Maritime Claims" (1985) at p.178 that it "seems that for damages to be awarded there must be some element in the arrester's conduct apart from enforcement of his claim".

20. Bearing in mind the analogy to which I have referred, I examine with interest the discussion in "Winfield and Jolowicz on Tort", 14th ed. (1994) on the element of malice in the tort of malicious prosecution. At the bottom of p.579, the learned editor offers the suggestion "that malice exists unless the predominant wish of the accuser is to vindicate the law".

21. Adapting that to the wrongful arrest of a ship, it could be said that malice exists unless the predominant wish of the plaintiff is the enforcement of his claim by a sincere use of the process of arrest. And that, I think, is what Prof. D.C. Jackson was driving at.

Coming to this ...

22. As I see it, it comes to this. If a plaintiff wrongfully arrested a ship which he knew he could not legitimately arrest, then he would be acting in bad faith. And, short of that, if he wrongfully arrested a ship without applying his mind to whether that was a legitimate course: proceeding in that cavalier fashion because he was bent on harming the shipowner or putting pressure on him to accede to a demand, then his conduct could, in my view, be described as malicious negligence. And in either case, damages for wrongful arrest would be a proper remedy to grant the shipowner against him.

23. It seems to me to be impossible to say that the only proper course open to the judge was to conclude that the plaintiff had acted in bad faith.

24. Can it be said, however, that the only proper course open to the judge was to conclude that the plaintiff had acted in the cavalier fashion which I have just described?

Legal advice

25. In answering that question, we cannot assume that the plaintiff had not sought - and proceeded under - legal advice from a competent source.

26. While I would not be prepared to go so far as to say that such advice is invariably a good answer to a claim for damages for the wrongful arrest of a ship, it seems to me that such advice must be at least a relevant factor to be taken into account in favour of anyone facing such a claim.

27. In that connection, I note that in Glinski v. McIver [1962] A.C. 726, a leading case on the tort of malicious prosecution, each member of the House of Lords expressly recognized the significance of legal advice having been taken. Here, I have in mind what was said by: Viscount Simonds at pp.774-775; Lord Radcliffe at p.756; Lord Denning at pp.758-759; and Lord Devlin at p.780. Lord Reid, we see from what Viscount Simonds said at the end of his speech at p.753, concurred in that speech.

28. All things considered, I think that it would be going too far to say that the only proper course open to the judge was to conclude the plaintiff had arrested the ship in the cavalier fashion which I have identified as constituting malicious negligence.

Result

29. In my judgment, this part of the appeal should be allowed. I would allow it to set aside the order for an inquiry as to damages and to remit the issue of whether there should be such an inquiry to the judge for him to decide it afresh after going into it fully.

30. As to the costs below - bearing in mind that the striking out of the writ and the setting aside of the warrant of arrest were upheld and that only three to four minutes were spent before the judge on the question of an inquiry as to damages - I would make an order nisi that the order as to costs made below be left undisturbed. As to the costs of this appeal (by which I mean the whole of this appeal comprising of what we dealt with in February and what we deal with now) I would - bearing in mind that the plaintiff has lost on the striking out and the setting aside, that its success on the question of an inquiry as to damages is limited to having the question re-opened and that the judge's error was contributed to by the omissions of its counsel - order that it i.e. the plaintiff pay the defendant 75% of the defendant's costs of the appeal.

Litton, V.-P.:

31. I agree with the judgment which has just been given.

Nazareth, V.-P.:

32. I also agree that the appeal must be allowed and the issue whether there should be an inquiry as to damages remitted to the judge to decide it afresh. Given that conclusion, I do not consider it necessary or indeed appropriate to shortly say more than the following.

33. The test to be applied in ordering an inquiry into damages for the wrongful arrest of a ship, it is not in dispute, is that propounded by the Privy Council in The Evangelismos (1858) 12 Moore P.C. 352 at p 359:-

"Undoubtedly there may be cases in which there is either mala fides, or that crassa negligentia, which implies malice, which would justify a Court of Admiralty giving damages, as in an action brought at Common law damages may be obtained. In the Court of Admiralty the proceedings are, however, more convenient, because in the action in which the main question is disposed of, damages may be awarded.

The real question in this case, following the principles laid down with regard to actions of this description, comes to this: is there or is there not, reason to say, that the action was so unwarrantably brought, or brought with so little colour, or so little foundation, that it rather implies malice on the part of the Plaintiff, or that gross negligence which is equivalent to it?"

34. That test was followed by the Privy Council in The Strathnaver (1875) 1 AC 58 at 67, where it was referred in the following way:-

"Their Lordships came to the conclusion, though the case was certainly a very strong one, inasmuch as the wrong vessel had been seized, that in the absence of proof of mala fides or malicious negligence, they ought not to give damages against the parties arresting the ship. It appears to their Lordships that the general principles of law are correctly laid down in that judgment, and it is their intention to adhere to them."

35. There was in the present appeal, as I understood the position, no evidence or serious question of mala fides on the part of the appellant. The award of damages implicit in the direction for an inquiry as to damages could only be sustained upon a finding of malicious negligence or, to use the language of the Admiralty cases, crassa negligentia, from which the law implies malice. What precisely those expressions mean and how they are to be applied to particular circumstances can, I dare say, be matters of some difficulty. However that may be, they are embodied in the test that binds this Court but fortuitously in the present circumstances present no great difficulty. I therefore do not find it necessary to analyse or refine the test or the meaning of those expressions. I say that the test presents no great difficulty in this appeal because the submissions came to focus upon the question whether the appellant had sought and proceeded in accordance with competent legal advice in arresting the vessel. An answer in the affirmative, while not necessarily a defence to mala fides, would make difficult a finding that the appellant was guilty of malicious negligence; see the approach of the House of Lords in Glinski v McIver [1962] AC 726, particularly that of Viscount Simonds at 745. Although that was a case of malicious prosecution, as my Lord has pointed out, the analogy between such a tort and claims of the present sort is well established. But, before the judge, that question seems neither to have been raised or addressed. Furthermore, it is plain that Mr Clifford Smith's oral application for an inquiry as to damages (which it is not disputed he was entitled to make) took counsel for the appellant by surprise.

36. I return then to the question whether there is or there is not, reason to say, that the action was so unwarrantably brought, or brought with so little colour or so little foundation, that it rather implies that gross negligence which is equivalent to malice. Clearly before us it cannot be answered; the matter should therefore go back to the judge to be answered.

37. As to costs, I also agree with Bokhary JA.

38. The appeal is accordingly allowed, the defendant's application for an order for an inquiry as to damages is remitted to the judge to be decided by him afresh, and there will be an order nisi that the defendant is to have 75% of its costs of the appeal.