THE OWNERS OF CARGO LATELY LADEN ON BOARD THE SHIP OR VESSEL "ALMERINDA" v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP OR VESSEL "ALMERINDA"

FAMV No. 24 of 2001

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 24 OF 2001 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM
CACV NO. 868 OF 2000)

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DETERMINATION

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Chief Justice Li:

1. Mr Justice Ribeiro will deliver the determination of the Appeal Committee.

Mr Justice Ribeiro PJ:

2. The claim which underlies this application is brought by the owners of a cargo of steel bars carried from Brazil to Hong Kong on the defendants' vessel the "ALMERINDA". Upon discharge in Hong Kong in July 1993, the steel bars were found to have suffered rust-damage which the plaintiffs say was caused by the ingress of seawater into the vessel's cargo holds. They seek damages totalling some $1.2 million, representing the alleged difference in value between sound and damaged steel bars.

3. The facts relevant to this application have been fully set out in the judgments of Stone J (HCAJ 222/1994) and of Rogers VP, giving the decision of the Court of Appeal ([2001] 2 HKC 596). Mr Clifford Smith SC appears for the vessel's P&I Club, Interveners who have provided security for the claim. Mr John Bleach SC appears for the plaintiff cargo owners.

4. Mr Smith seeks leave to appeal to the Court of Final Appeal against the interlocutory ruling of Stone J, upheld by the Court of Appeal, granting the plaintiffs leave to amend their statement of claim.

5. The writ was issued on 18 June 1994, generally indorsed as follows :-

"The Plaintiffs' claim against the Defendants who are, or were, at all material times the owners and/or demise charterers of the ship or vessel 'ALMERINDA' is for damages for breach of a written contract contained in or evidenced by Bill of Lading No. 1 dated Hong Kong 20th May 1993 and/or oral contract dated in or about May 1993 and/or duty and/or negligence in or about the loading, handling, custody, care and discharge of the Plaintiff's cargo of prime quality high tensile steel deformed bars and the carriage thereof on board the Defendants' ship or vessel 'ALMERINDA' from Vitoria, Brazil to Hong Kong during the months of May, June and July 1993 which resulted in loss and/or damage and/or delay."

6. Three different bills of lading had apparently been issued in relation to the carriage, causing confusion in relation to the delivery and reception of the cargo in Hong Kong, as well as to the plaintiffs' perception of the nature of their claim in the action. However, as the pleadings show, it is not in dispute that the bill of lading referred to in the indorsement on the writ is the bill referred to as "the Jardine bill".

7. In the unamended statement of claim, the plaintiffs pleaded the Jardine bill, alleging that it had been signed for and on behalf of the defendant shipowners who thereby acknowledged shipment of the cargo on board their vessel. On this basis, the plaintiffs claimed that they were parties to a contract of carriage with the defendants, evidenced by the Jardine bill and that they were owed duties by the defendants as bailees or carriers for reward. The defendants filed a defence denying that the Jardine bill had been issued by them or on their behalf. To meet this defence, the plaintiffs sought to amend their pleadings and, in an intermediate draft of the amendment, sought to rely instead on one of the other bills of lading which is not mentioned in the writ.

8. The amendment now sought to be made has been re-formulated so that the claim desired to be asserted is put as follows :-

"...... the Defendants (by delivering the cargo to the Plaintiffs ......) attorned to the Plaintiffs and acknowledged that the Plaintiffs were a party to the contract for the carriage of the cargo from Vitoria, Brazil to Hong Kong contained in or evidenced by the Jardine Bill of Lading."

9. The plaintiffs therefore seek once more to found their claim on the Jardine bill, referred to in the writ. The amendment also seeks to put the plaintiffs' reliance on that bill on the basis of an implied contract upon its terms, being a contract of a nature similar to that recognized in Brandt v Liverpool Steam Navigation Co Ltd [1924] 1 KB 575. In that case, the court recognized the existence of an implied contract deduced from the conduct of the parties in relation to the delivery and acceptance of the cargo at the vessel's destination.

10. The defendants resist the amendment on the ground that the proposed Brandt claim is time-barred. Their argument may be summarised in these terms :-

(1) The plaintiffs' claim is subject to the Hague-Visby Rules, including the time-bar contained in Article III r 6 which provides that :-

"...... the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered."

(2) The only suit brought within the relevant year was one founded on the Jardine bill with the plaintiffs asserting rights of suit derived from the Bills of Lading Ordinance then in force.

(3) The Brandt claim now sought to be asserted involves an entirely different cause of action, not encompassed by the indorsement on the writ. This is clear from the relevant contract being there described as a "written" contract. Therefore, no Brandt claim was brought in time.

(4) Where a claim is out of time, it is not merely subject to a procedural bar, the carrier is discharged from all liability by Art III r 6: Aries Tanker Corporation v Total Transport Ltd [1977] 1 WLR 185.

(5) If, contrary to the plaintiffs' argument, a Brandt claim was comprehended within the language of the writ's indorsement, it was not included in the statement of claim served thereafter and so is deemed to have been abandoned. The claim is now time-barred and cannot be resurrected.

11. The courts below rejected this analysis. Stone J held that the Brandt claim was encompassed by the wording of the indorsement so that "suit had been brought" in respect of that claim. He also rejected the contention that it had been abandoned, pointing to certain particulars served as sufficiently raising a Brandt argument, giving the pleadings the robust treatment normally adopted by the Commercial Court. His Lordship therefore granted leave.

12. The Court of Appeal did not interfere with Stone J's ruling that the indorsement was sufficiently broad to encompass a Brandt contract claim. Rogers VP took the view that even if it was comprehended within the indorsement, that cause of action would be deemed abandoned, not having been pleaded in the statement of claim. He was therefore concerned with whether the court should permit an amendment to re-instate it.

13. Relying principally on The "Kapetan Markos" [1986] 1 Lloyd's Rep 211 and Anglo Irish Beef Processors International v Federated Stevedores Geelong & Ors [1997] 1 Lloyd's Rep 207, decisions of the English and Victorian Courts of Appeal respectively, Rogers VP held that the focus of Art III r 6 was the bringing of suit so as to give shipowners notice of a claim aimed at establishing liability under the Hague-Visby Rules in respect of loss of or damage to goods carried by them. Once "suit" could properly be said to have been brought between the correct parties in a competent tribunal, time stopped running and the shipowners could not thereafter claim to be discharged from liability under the rule.

14. Art III r 6 did not operate to impose a time-bar against subsequent amendments to add further grounds of liability, whether in the shape of new causes of action or alternative factual bases for establishing a cause of action already raised as part of the suit timeously brought. This approach, the Court of Appeal held, was in line with the decisions of the English and Victorian appellate courts, consistency with decisions in other jurisdictions being important when construing the Rules, including Art III r 6, since they are rules applied globally pursuant to an international treaty.

15. Mr Smith seeks leave to appeal on the grounds that the Court of Appeal's decision raises three questions of great general and public importance, formulated as follows :-

"(1) Whether the effect of Article III Rule 6 of the Hague-Visby Rules is to discharge the carrier from all liability in respect of a cause of action not previously pleaded when the application to amend so as to plead the new cause of action is made after the expiry of the one year period referred to in the said rule.

(2) Whether the decision of the Court of Appeal of Victoria in Anglo-Irish Beef Processors International v. Federated Stevedores Geelong & Others [1997] 1 Lloyd's Law Reports 207 is good law in so far as it decides that Article III Rule 6 of the Hague-Visby Rules does not extinguish the carrier's liability for damage to goods caused by breaches of a contract for the carriage of those goods by sea when no action relating to the contract is brought within the one year period but suit is commenced against the carrier within that time for the purpose of establishing tortious liability on the part of the carrier for damage to the same goods.

(3) Whether the decision of the Court of Appeal in 'The Kapetan Markos' [1986] 1 Lloyd's Law Reports 211 decides, and/or whether it is good law, that once suit has been brought against the carrier within the one year period prescribed by Article III Rule 6 of the Hague-Visby Rules alleging liability for damage to goods the effect of bringing suit as aforesaid is that the carrier will not be able to contend that he has been discharged of liability in respect of the goods arising from a different cause of action that was not pleaded or sought to be pleaded by way of amendment within the said one year period."

16. Questions (2) and (3) are not aptly drawn. It is not appropriate to ask the Court to decide whether judgments delivered by foreign courts, in this case, the Victorian Court of Appeal and the English Court of Appeal, are "good law". In any event questions (2) and (3) add nothing to the more broadly worded question (1). We therefore focus solely on question (1).

17. It would appear from Mr Smith's submissions that the substance of the argument actually sought to be made involves two propositions :-

(1) That the claim based on a Brandt contract sought to be added by amendment after expiry of the Art III r 6 twelve-month period is a claim based on a new and different cause of action from the causes of action relied on in the indorsement on the writ; and,

(2) That amending the statement of claim to add such a new cause of action is impermissible since Art III r 6 has discharged the shipowner from liability in respect of all causes of action not comprehended within the suit which was brought in time.

18. Mr Smith seeks to argue, if leave to appeal is given, that the decision of the English Court of Appeal in The "Kapetan Markos" was relatively narrow, the court there being only prepared to allow the amendments because the language of the indorsement on the relevant writ was sufficiently wide to encompass the proposed amendments. He submitted that that case should not be read as permitting the addition out of time of new causes of action which could not be said to be already covered by the indorsement. He wishes also to argue that the decision of the Victorian Court of Appeal, which goes further and does allow amendments to add entirely fresh causes of action not mentioned in the writ, should not be followed. Whether new causes of action can be tacked on to the claim originally brought after expiry of the 12 month period is said to be a question of great general and public importance.

19. Mr Smith also indicated that, if leave is given, he would have to deal with a number of other authorities with a possible bearing on the issue referred to above. These include The "Nordglimt" [1988] QB 183, The "Jay Bola" [1992] 1 QB 907, The "Leni" [1992] 2 Lloyd's Rep 48, The "Pionier" [1995] 1 Lloyd's Rep 223 and Western Digital v British Airways [2000] 2 Lloyd's Rep 142.

20. In our view, Stone J was clearly right in holding that fairly read, the indorsement on the writ in the present case is of a sufficient width to encompass a claim for breach a contract constituted along Brandt lines as well as a claim based on contractual rights acquired by operation of the Bills of Lading Ordinance. The suit brought by issue of the writ, in so far as it was based on contract, was for a contract on the terms of the Jardine bill. This remains true under the amendment. While the statement of claim originally alleged a misconceived mechanism for the formation of this contract, the amendment seeks to put this right. We say nothing about whether the attempt succeeds on the facts. We do not, however, consider that the word "written" in the description of the contract in question excludes the possibility of a contract on the terms of the Jardine bill constituted on a Brandt basis. It is perfectly capable of being understood as a somewhat clumsy reference to the written terms of the contract found in the bill of lading than to any particular mode by which the contract on such written terms was formed.

21. Accordingly, even taking The "Kapetan Markos" at its narrowest and on Mr Smith's own submissions (which we do not necessarily accept), the amendment to plead a Brandt contract should be permitted. This would dispose of any appeal so that only academic arguments would remain in relation to such interesting questions as those relating to the scope of The "Kapetan Markos", whether the Victorian view is consistent with it and whether, for Art III r 6 purposes, a competently brought suit alleging one cause of action suffices to stop time running and to stop the rule from taking effect to discharge other possible forms of liability, not previously mentioned in the writ, which the plaintiff may later seek to add by way of amendment. We accordingly prefer at the moment to say nothing further about those issues.

22. We appreciate that while the Court of Appeal did not interfere with Stone J's holding that the proposed amendment was covered by the language of the indorsement, it went on to treat the claim as deemed to have been abandoned. This deeming rule is purely a domestic procedural rule of the HKSAR. It does not affect the fact that, for Art III r 6 purposes, suit was brought in relation to the relevant contractual cause of action in time, eliminating further consideration of the time-bar. Whether a claim deemed abandoned may be re-instated depends on principles of procedural fairness. The Court of Appeal's order was to allow the amendment to re-instate the claim, an order which was, in the circumstances, wholly justified as a matter of procedural considerations and a course not barred by any applicable time-bar.

23. We would accordingly dismiss this application. Finally, we would add that in such circumstances, we do not consider it open to the defendants to re-litigate the time-bar at trial. Stone J's ruling as to the inclusion of the claim within the indorsement stands and on that basis, the time-bar does not operate.

Chief Justice Li:

24. Costs will follow the event and will be paid by the applicants to the respondents.