BENCHMARK ELECTRONICS (THAILAND) PCL AND OTHERS v. CARGO CONTRAINER LINE LTD

CACV 593/2018

[2019] HKCA 1101

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 593 OF 2018

(ON APPEAL FROM HCAJ NO 65 OF 2016)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This is the defendant’s appeal against the decision of Anthony Chan J handed down on 9 April 2018 ([2018] 2 HKLRD 617), in which he refused to set aside the concurrent amended writ of summons and service on the defendant and to discharge the order of the master granting leave to the plaintiffs to issue the concurrent amended writ of summons and serve the same on the defendant out of the jurisdiction in the British Virgin Islands. The appeal was brought with leave granted by the Court of Appeal on 10 December 2018.

2.  The appeal concerned a short point.

3.  The plaintiffs brought this action for damages against the contract carrier under six bills of lading.  The writ was issued by them against Cargo Container Line Ltd with an address in Malta.  After the limitation period under the Hague-Visby Rules had expired, the plaintiffs obtained leave to issue a concurrent writ of summons on the defendant and serve it out of jurisdiction in Malta.

4.  The plaintiffs subsequently amended the writ of summons without leave pursuant to Order 20 rule 1 of the Rules of the High Court, correcting the address of the defendant to an address in the BVI, and obtained leave to issue a concurrent amended writ of summons and serve it on the defendant out of jurisdiction in the BVI^[1].

5.  There are two different entities with the identical name of Cargo Container Line Ltd, one was incorporated in Malta (“CCL Malta”), the other in the BVI (“CCL BVI”), with different shareholders and directors in each.  The bills of lading, which did not provide the address of the contract carrier or any information as to its whereabouts, were issued by CCL BVI, not by CCL Malta.

6.  The issue is whether by correcting the address in Malta to the address in the BVI, this constituted the substitution of a new party.  If the answer is in the affirmative, the plaintiffs’ claim has been extinguished upon the expiry of the limitation period under the Hague-Visby Rules^[2] and the application of CCL BVI to set aside the writ and to discharge the order granting leave to serve the writ out of the jurisdiction in the BVI must be granted.  The judge ruled on the issue in the negative and thereby dismissed the application of CCL BVI.

7.  It is not necessary to go into further details of the relevant background facts, which are largely set out in the decision at §§4 to 15, nor is it relevant to have regard to how the genuine mistake had come about. And as these details are not necessary for the proper understanding of the legal arguments involved, we do not propose to set them out.

The decision below

8.  The judge held that the issue – whether the entity named in the amendment was different from the existing one – is simply one of fact^[3]. The general endorsement of the writ had identified the plaintiffs’ causes of action as those against the contract carrier under the bills of lading.  Accordingly, there can be no doubt as to the party intended to be sued, namely, CCL BVI^[4]. Given that there was no ambiguity over the intended defendant, the amendment of the address stated in the writ was only to clarify its identity and did not introduce a new party in substitution of the existing one^[5].  He rejected the contention that the plaintiffs had not in the circumstances sued the correct party^[6].

9.  The judge said this at §40 of the decision:

“What the arguments boil down to is that the correctly named defendant with a wrong address happened to be a different entity. I do not believe that the law should depend on a matter of accident. If the combination of the right name with a wrong address did not disclose an existing entity, it is unlikely that this application would arise.”

The defendant’s arguments

10.  Mr Charles Sussex, SC, who appeared for the defendant on appeal^[7], took issue with the holding that the plaintiffs had intended to sue CCL BVI all along.  He contended that it is clear the plaintiffs had intended to sue CCL Malta and had in fact sued CCL Malta when it issued the writ against the entity with the address in Malta.  He pointed to the affirmation filed on the plaintiffs’ behalf in support of the original application to serve the writ outside the jurisdiction in Malta, in which the deponent described the address in Malta as the defendant’s “registered office address”^[8], stated that the defendant “is and was at all material times a company incorporated under the laws of Malta”^[9], and referred to the last annual return “filed by the Defendant with the Registry of Companies in Malta” which stated that its registered office address was in Malta^[10]. He submitted that it cannot be suggested that CCL BVI was sued in the original writ.

11.  In further support of this submission, Mr Sussex pointed to the following statements in the decision and argued that it is clear from the language the judge stated that the writ was originally issued against CCL Malta:

“By a mistake, the Writ was issued against a company with the same name as CCL BVI but was incorporated in Malta instead of the BVI.”^[11]

“Plainly, it was a mistake that CCL Malta was sued instead of CCL BVI.”^[12]

“The mistake over the address of CCL BVI had, somewhat fortuitously, resulted in a wrong party (CCL Malta) being sued under the Writ.”^[13]

12.  Article III, rule 6 of the Hague-Visby Rules provides that the contractual carrier shall be discharged from liability in respect of cargoes “unless suit is brought within one year of their delivery or of the date when they should have been delivered”^[14] (emphasis supplied).  The minimum requirements for bringing a suit under the above provision are that the correct plaintiff commenced proceedings before a competent court against the correct defendant^[15]. The correct defendant in this instance is the legal entity that fits the description of the contractual carrier under the six bills of lading.  Mr Sussex submitted that as the plaintiffs did not sue the correct defendant when the writ was issued on the last day of the limitation period, time did not stop running under Article III, rule 6 and their claim was extinguished on the day when the writ was issued^[16].

13.  Mr Sussex further submitted that it is insufficient the statement of claim specifies that the plaintiffs intended to sue the contractual carrier.  The judge erred in attaching importance to the fact that the general endorsement of the writ had identified the plaintiffs’ causes of action as those against the contractual carrier under the bills of lading and that there can be no doubt as to the party intended to be sued, namely, CCL BVI.  It is not a matter of the plaintiffs’ intention to sue the carrier, but which legal entity was in fact sued.  It makes no difference that the plaintiffs’ error in commencing the action against CCL Malta was an accident. The situation here is the same as in these cases:

(1)   The plaintiffs in The Jay Bola intended to bring an action against the contractual carrier under the bill of lading which was an owner’s bill (under which the contractual carrier is the current owner of the vessel) but the writ was issued against the former owner of the vessel instead of the current owner when the bill of lading was issued.  It was conceded by the plaintiffs that the action started by the writ naming the former owner did not suffice to stop time running under the Hague‑Visby Rules (at 340d to e).

(2)   In Win’s Marine Trading Co v Wan Hai Line (HK) Ltd & Anr [1999] 3 HKC 701, the plaintiff mistakenly sued the agent instead of the contractual carrier who issued the bill of lading and the court refused leave to join the carrier as a defendant after the time bar had expired.

(3)   In The Leni [1999] 2 Lloyd’s Rep 48, the wrong plaintiff was named arising from confusion involving group companies.  It was held that a suit had not been brought within the meaning of the Hague-Visby Rules.

14.  Mr Sussex argued that as the plaintiffs had sued the wrong defendant (CCL Malta) by mistake, they would need to substitute the correct defendant (CCL BVI) to proceed with this action.  The change of the specified corporate entity as the defendant must involve the substitution of a party, rather than the correction of a misnomer.  The fact that the two entities in this case have the same name is immaterial.  They are nonetheless two separate legal entities, and the commencement of an action against one entity is not the same as the commencement of an action against the other.  Examples where the courts have held there was substitution of a party where there was change of the specified entity are:

(1)   In Mitchell v Harris Engineering Co Ltd [1967] 2 All ER 682, a personal injuries action was brought against a company incorporated in England when the plaintiff’s employer was a company incorporated in Northern Ireland.  In seeking to amend the writ by changing the English company to the Irish company, the plaintiff acknowledged that he was substituting a party and he invoked Order 20 rule 5(3) of the RSC^[17] (at 684H to I, 688B to C).

(2)   In Insight Group Ltd & Anr v Kingston Smith (a firm) [2013] 3 All ER 518, the action was brought against a firm of chartered accountants which was a limited liability partnership but the firm had not yet become an LLP when the relevant acts were committed.  The court allowed the partnership to be substituted as the defendant under the CPR 19.5(3)^[18], which is broader than Order 20 rule 5(3).

15.  The judge had stated that there is no reason why the plaintiffs could not rely on Order 20 rule 1 of the RHC to amend the address of the named defendant^[19]. Mr Sussex submitted that he had wrongly focused on the mechanism of the amendment.  Order 20 rule 1 cannot resurrect the claims of the plaintiffs which had been extinguished by Article III, rule 6 of the Hague-Visby Rules, by substituting the correct defendant, just as this cannot occur under Order 20 rule 5(3), which has no application to the Hague-Visby Rules time limit.

Discussion

16.  On a proper reading of the judgment, the judge had not expressed the view that the wrong party had been sued.  Those parts of the judgment singled out by Mr Sussex as indicating otherwise must be read in the context of the judgment as a whole.  This is made particularly clear in the complete paragraph of §28 of the decision:

“The mistake over the address of CCL BVI had, somewhat fortuitously, resulted in a wrong party (CCL Malta) being sued under the Writ. Did the amendment of the address mean that a new party is sued in place of the wrong one? One may argue that even the amendment of a wrongly spelled name would result in substituting a non-existing party (assuming that there is no entity by the misspelled name) with a new party. Mr Luxton did not suggest that a misspelled name cannot be amended after the expiry of the limitation period. What then is the correct legal test on substitution of a new party in these circumstances?”

17.  As for the references to a company with a registered office address in Malta in the plaintiffs’ supporting affirmation in the application for leave to serve the writ out of jurisdiction in Malta, they merely reflected the mistaken belief of the deponent that the contractual carrier by the name of Cargo Container Line Ltd was incorporated in Malta.  It is clear from the affirmation that the writ was issued against the entity that issued the bills of lading and had contracted to carry the specified cargoes, and the assertion by the deponent that the plaintiffs have a good cause of action against the defendant is based on the premise that the defendant was the contracting carrier^[20]. It would be wrong to read those references in the way as suggested by Mr Sussex.  The judge rightly rejected the suggestion that the affirmation should be read in that manner^[21]. As the general endorsement of the writ had made clear that the action was brought against the contractual carrier who had issued the bills of lading particularised in the schedule annexed, we agree with the judge there could be no doubt that CCL BVI was intended to be sued in that the bills of lading were issued by it.

18.  Further, applying the test of Lloyd J in The Sardinia Sulcis and Al Tawwab [1991] 1 Lloyd’s Rep 201 at 207, as the judge had done^[22], it is plain that the plaintiffs had not intended to sue CCL Malta, as contended by Mr Sussex. The relevant extract in The Sardinia Sulcis read as follows:

“In one sense a plaintiff always intends to sue the person who is liable for the wrong which he has suffered. But the test cannot be as wide as that. Otherwise there could never be any doubt as to the person intended to be sued, and leave to amend would always be given. So there must be some narrower test. In Mitchell v Harris Engineering the identity of the person intended to be sued was the plaintiff’s employers. In Evans v Charrington it was the current landlord. In Thistle Hotels v McAlpine the identity of the person intending to sue was the proprietor of the hotel. In The Joanna Borchard it was the cargo-owner or consignee. In all these cases it was possible to identify the intending plaintiff or intended defendant by reference to a description which was more or less specific to the particular case. Thus if, in the case of an intended defendant, the plaintiff gets the right description but the wrong name, there is unlikely to be any doubt as to the identity of the person intended to be sued. But if he gets the wrong description, it will be otherwise.”

19.  As the above passage from The Sardinia Sulcis made clear, “intended” in this context is not the subjective intention of the plaintiffs but what a reasonable person would have understood by reference to the description in the writ.  Devlin LJ said this in Davies v Elsby Brothers Ltd [1961] 1 WLR 170 at 176:

“It is a general principle of English law, not merely applicable to cases of misnomer, that the intention which the framer of the document has in mind when he brings it into existence is not material. … In English law as a general principle the question is not what the writer of the document intended or meant but what a reasonable man reading the document would understand it to mean …”.

20.  Who the plaintiffs had intended to sue, as understood in the above sense, is relevant to the consideration of the two types of amendment and which type of amendment the present case would come under.  The two types of amendment were first mentioned by Brandon LJ in Liff v Peasley [1980] 1 WLR 781 at 803 in his discussion of the “relation back” theory^[23]:

“There is no reason to quarrel with the general proposition that an amendment of a writ or pleading relates back to the original date of the document amended … This seems to me to be an entirely sensible proposition so long as the amendment concerned does not involve the addition of a new party, either as plaintiff or defendant, but involves only the modification, by addition, deletion or substitution, of pleas or averments made between existing parties in respect of a cause or causes of action already raised. Where, however, the amendment concerned involves the addition of a new party or the raising of a new cause of action, it appears to me to be unrealistic and contrary to the common sense of the matter to treat it as relating back in the same way.”

21.  In The Joanna Borchard [1988] 2 Lloyd’s Rep 274 at 280 to 281, Hirst J founded on the above as his alternative reasoning^[24] and held that the amendment of the plaintiff’s name in the writ (by adding “(1975)” before the word “Ltd”, and changing the place of incorporation from the Netherlands to Israel; no entity by the name and description as originally stated in fact existed) fell squarely within the first type of amendments described and did not involve the addition or substitution of a new party.

22.  Hobhouse J referred to the alternative reasoning of Hirst J in The Jay Bola at 348j to 349g and expressed the view that the application of Order 20 rule 5 would not have had to be considered in The Joanna Borchard, as the action should have been treated as brought by the correct party and no question of the joinder of another party would have risen.

23.  Phillips J referred to the above two cases in The Anna L [1994] 2 Lloyd’s Rep 379 at 387 to 390 and summarised the two types of amendments in this way^[25]:

“As Mr Justice Hobhouse pointed out in The Jay Bola there are two types of ‘amendment to correct the name of a party’. The amendment may effectively substitute one party for another in the action or it may merely clarify by (for instance) correction of spelling, initials, title or corporate status the name that the plaintiff had intended to plead from the outset. In the latter case the amendment will clarify the name of an existing party, O 15, r 5 will be no bar to the amendment and there will be no need for the plaintiff to rely on O 20, r 5.”

24.  In Signet Group Plc v Hammerson UK Properties Ltd, unreported, English Court of Appeal (Civil Division), 9 December 1997, Lord Woolf MR, who gave the judgment of the court, referred to all the cases mentioned above and emphasised at page 9 that “there was always power without Order 20 rule 5(3) to correct a misnomer even if the limitation period had expired”, and what Order 20 rule 5(3) did was “to allow the correction of a name even if that had the effect of substituting a new party”.

25.  Coming back to the question whether the amendment of the defendant’s address from Malta to the BVI is correcting a misnomer or substituting a new party, Mr Clifford Smith, SC, who appeared for the plaintiffs throughout, referred the court to the test propounded by Devlin LJ in Davies v Elsby Brothers Ltd at 176.  This was the test devised before Order 20 rule 5 of the RSC was introduced in England, to assist the court in deciding if the proposed amendment involved a mere misnomer, which can be corrected without the addition of a party, so that the entity sued remained the same.  It is as follows:

“How would a reasonable person receiving the document take it? If, in all the circumstances of the case and looking at the document as a whole, he would say to himself: ‘Of course it must mean me, but they have got my name wrong,’ then there is a case of mere misnomer. If, on the other hand, he would say: ‘I cannot tell from the document itself whether they mean me or not and I shall have to make inquiries,’ then it seems to me that one is getting beyond the realm of misnomer.”

26.  Mr Sussex submitted that the above test, which would entail a free-standing ability outside Order 20 rule 5 to correct misnomers or slips even though the limitation period has expired, is inapplicable, as this test has been “subsumed” by Order 20 rule 5(3) and is no longer good law.  This is contrary to Lord Woolf’s statement in Signet Group Plc and we do not accept it.

27.  Mr Sussex laid much emphasis on the fact that there is in existence a separate legal entity by the same name incorporated in Malta, hence CCL Malta was sued as it was the entity named in the writ with the address in Malta.  We are of the view that just because there are two entities in existence to which the writ could refer, an amendment to correct the error does not necessarily mean the substitution of a party rather than correcting a misnomer.  In applying the test of Devlin LJ in J Robertson & Co Ltd v Ferguson Transformers Pty Ltd (1970) 44 ALJR 441, Walsh J said at 443:

“It has been held, in my opinion correctly, that a misdescription of a corporate body is capable of being regarded as a mere misnomer and of being corrected by amendment in the same way as the misnomer of a natural person … It must be acknowledged, however, that when, as in the present case, there were two companies in existence to which the writ could refer, it is more difficult to regard the name of one of them, set out in the writ, as being a misnomer, than it would be if there were no other entity in existence than the one to which the writ was intended to refer. The importance of this consideration has been recognized in the cases but in my opinion it has not been laid down that it is decisive. In Beardmore Motors Ltd v Birch Bros (Properties) Ltd [1959] Ch 298 at 304, Harman J based his decision not solely on the fact that there were two existing companies but also on the state of mind of the applicants who, he said, were not under any misapprehension. Again in Davies v Elsby Bros Ltd [1961] 1 WLR 170 at p 176, Devlin LJ treated the existence of another entity to which the description in the writ might refer as a factor which must operate in the mind of the recipient of a document. He did not refer to it as a conclusive fact. …”

28.  So notwithstanding there were two entities in existence, the courts could come to different conclusions in applying the test in Davies v Elsby Brothers Ltd.  Walsh J had explained the reasons why in Beardmore Motors Ltd Harman J could not hold that the amendment of “Birch Bros Ltd” to “Birch Bros (Properties) Ltd” was correcting a misnomer.  In J Robertson & Co Ltd, having taken into account the reasonable knowledge of the common resident agent who acted for both companies and what he would have learned from the document served on him, Walsh J came to the conclusion that the error was a misnomer as the resident agent (or any other officer with any knowledge of the affairs of the companies) would have known that the document was not meant for the company that was named by mistake.

29.  Applying the test in Davies v Elsby Bros Ltd, we agree with the judge that this is clearly a case of a misnomer and not the substitution of a party.  The endorsement of claim pleaded a claim for damages for the breach of the contracts of carriage evidenced by the bills of lading set out in Schedule A annexed thereto.  It is not in dispute that the bills of lading were issued by CCL BVI.  Looking at the writ as a whole, had CCL BVI been served with the writ before the amendment was made to the address, it could not reasonably say “I cannot tell from the document itself whether they mean me or not and I shall have to make inquiries”.  The only reasonable reaction from CCL BVI must be: “Of course it must mean me, but they have got my address wrong”.

30.  We do not agree with Mr Sussex that the situation here is the same as in the cases he mentioned.  Further, as pointed out by Mr Smith, it was conceded in Mitchell v Harris Engineering Co Ltd (at 684H to I) and The Jay Bola (at 349g and 350j) that the amendment involved the substitution of a new party. No doubt, after the introduction of Order 20 rule 5(3) in the RSC in 1964, which was enacted to alleviate inter alia the injustice apparent from the distinction between correcting a misnomer and substitution of a new party, litigants have found it unnecessary in most situations to endeavour to satisfy the test in Davies v Elsby Brothers Ltd.

31.  It follows that the suit was brought within the time permitted by the Hague-Visby Rules, as extended by agreement of the parties.  The incorrect statement in the writ as to the defendant’s address is an irregularity which does not nullify the proceedings and is insufficient to warrant the setting aside of the writ (The Anna L at 383).

32.  For the above reasons, we dismiss this appeal.  It is not in dispute that costs should follow the event.  We therefore order CCL BVI to pay the plaintiffs’ costs of this appeal.