COMPUTRONICS INTERNATIONAL v. PIFF SHIPPING LTD.

IN THE COURT OF APPEAL

1996, No. 109
(Civil)

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J U D G M E N T

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Ching, J.A. (giving the judgment of the Court) :

1. This should have been a simple piece of litigation which ought to have been dealt with expeditiously. Instead it became complicated and has been the subject of enormous delays mainly because the Plaintiff has been and appears to be still unable to decide how to put its case. The events giving rise to the claim began as long ago as September, 1990. The Writ with a Statement of Claim endorsed upon it was issued on 19th July, 1991. The Statement of Claim has been amended three times, the last being upon an unspecified date after the service of a notice of intention to proceed on 3rd January, 1995. On 30th April, 1996, the case being still not ready for trial, the Defendant applied for the action to be dismissed for want of prosecution. Sears, J., acceded to that application on 22nd May, 1996, and the Plaintiff now appeals.

2. The Plaintiff's business includes the purchase of goods such as video cassette recorders and reselling them to its own customers. One of those customers was L. & S. U-Electronics, owned or controlled by a Mr. Pawlidis, in Germany. In September 1990 the Plaintiff agreed to sell a quantity of such recorders to L. & S. at a price C.I.F. Hamburg. The Plaintiff came to an agreement with the Defendant by which they were to be put into a container and sent to that port. They were so sent and arrived in Hamburg on 25th October, 1990, when they went into the control or custody of Rohde & Liesenfeld GMBH. Their fate thereafter is unclear. There is some evidence that they were disposed of to the order of the Plaintiff itself. However that may be, they appear to have been released by Rohde & Liesenfeld sometime in November of 1990 and it is the Plaintiff's case that they were released without authority. It is obvious that for the Plaintiff to succeed in the present action it must bring home to the Defendant any default on the part of Rohde & Liesenfeld. It says it can do this because the Defendant was the carrier and also because by the terms of the agreement the Defendant was responsible for the safe storage and proper release of the goods. The Defendant says that it was not the carrier but merely the agent of the carrier, that it was not under any of the alleged duties and therefore that it was not in breach of those duties. It also denies that the Plaintiff suffered any loss. It admitted that it was a freight forwarder but denied that it was a bailee for reward. Clearly the factual disputes will fall within two broad areas. The first relates to the actual terms of the agreement between the parties and the second relates to what happened to the goods after they arrived in Hamburg. Equally clearly the evidence on these broad areas will be predominately oral.

3. The Defendant's application was based on the Plaintiff's inordinate and inexcusable delay giving rise to a substantial risk that it is not possible to have a fair trial because of the serious prejudice which it has caused. The prejudice is said to exist in the fading of memories and in the inability to call evidence. The Plaintiff admits that there was a period of inordinate and inexcusable delay but argues that it was not causative of the risk or the prejudice, if any. It says further that in any event the Defendant has acquiesced in the delay. There was some dissension as to whether a further point as to striking out within the limitation period was taken in the Court below. Before us Mr. Kerr, appearing for the Plaintiff, argues that the period was one of six years. Mr. Coleman, appearing for the Defendant argues that it was one. The Judge below adverted to this matter only in passing. He mentioned that he had been told that the period was one year but came to no finding upon it. He held that there had been inordinate and inexcusable delay which caused serious prejudice to the Defendant and he held that the Defendant had not acquiesced in that delay.

4. The original Statement of Claim was based on allegations that the Defendant was a freight forwarder, whatever that may mean, and/or a bailee for reward. The contract was said to have been contained in or evidenced by a bill of lading. That document was headed "Euro Box Line". It was described as a "Combined Transport Bill of Lading" and was dated 26th September, 1990. The Plaintiff is shown as the shipper and L. & S. is the Notify Party. The vessel was the Thorkil Maersk, voyage No. V-9092, and the place of delivery was "Hamburg CY." Before us, "CY" was taken to mean "container yard". It is signed in a name that appears to read "Sandy" under the printed words "For the Carrier : For and on behalf of Piff Shipping Ltd." Below the signature appear the printed words "As agent." The Plaintiff says that this was the only bill of lading received from the Defendant before discovery. A Defence was put in on 26th September, 1991. The Plaintiff was ordered to give further and better particulars on 30th January, 1992. Before they were given, however, the Statement of Claim underwent its first amendment.

5. The amended Statement of Claim was dated 19th February, 1992, but not filed until March, 1992. It deleted the allegations that the Defendant was a freight forwarder and/or a bailee for reward and instead alleged that the Defendant was a shipping company and/or a carrier for reward. It then alleged for the first time that the contract between the parties was partly in writing and partly oral. Insofar as it was in writing it continued to allege that it was contained in or evidenced by the Euro Box bill of lading and added an undated shipping order given by the Defendant to the Plaintiff. Insofar as it was oral it was alleged to have been made between Christina Wong of the Plaintiff and an unidentified representative of the Defendant. Paragraph 4 pleaded that,

"The following were, inter alia, express terms of the contract :-

a. the Defendant would deliver the said goods to the order of the Plaintiff;

b. one of the three original copies of the Bill of Lading, duly endorsed must be surrendered in exchange for the said goods;

c. freight in the amount of US$1,470.00 would be paid by the Plaintiff to the Defendant."

It is not apparent whether these terms are alleged to have been contained in the written or oral parts of the agreement or both. It is apparent that the bill of lading referred to was the Euro Box bill of lading for it was the only one pleaded and on its own case the Plaintiff knew of no other at that stage. The further and better particulars of the original Statement of Claim were then given on 20th February, 1992. In the main these particulars were given by reference to paragraphs in the amended Statement of Claim for which leave to amend had not yet been obtained and which had not yet been served. Of note was a request couched in odd terms as follows,

Give full particulars of all facts and matter relied upon in support of the allegation that the Defendant was in breach of duty as carrier and therefore that the Defendant was carrier under the Bill of Lading."

The answer was,

"Not applicable by virtue of the Amended Statement of Claim."

If the answer means anything at all it must mean that, contrary to the express allegation by way of amendment, the Defendant was not the carrier. An amended Defence was put in on 29th April, 1992, and a Reply on 3rd June, 1992. Then further and better particulars of the amended Statement of Claim were given on 26th October, 1992, which alleged that the Defendant had agreed to ship or carry the goods from Hong Kong to Hamburg. On an unknown day in October, 1992, the Statement of Claim was re-amended. The Plaintiff had made discovery on 1st April, 1992. On 3rd March, 1993, the Defendant made discovery.

6. The Defendant's discovery included two further bills of lading. The first was on a form of the Defendant and was described as a "Through Bill of Lading." It showed the shipper to be China National Light Industries I/E Corp." The consignee was "To order of Rohde & Liesenfeld GMBH & Co." who were also identified under "Notify Address." The vessel was the Thorkil Maersk. The port of loading was Shanghai and the port of discharge was Hamburg. It was signed by the Defendant and it was undated. It bore the number PFTBL-1489. The second was a Maersk Line bill of lading described as a "Combined Transport Bill of Lading." The shipper was the Defendant. The consignee was "To order of the holder of the orig Piff Shipping Ltd under Thru B/L No. PFTBL-1489." The vessel was the Thorkil Maersk and the place of delivery was Hamburg. This bill of lading was sent by the Defendant to Rohde & Liesenfeld but not to the Plaintiff. After the Defendant's discovery nothing happened until the Plaintiff served its notice of intention to proceed on 3rd January, 1995. It is the period between 3rd March, 1993, and the date of that notice which is conceded by the Plaintiff to be the period of inordinate and inexcusable delay.

7. On 22nd March, 1995, the Plaintiff issued a summons seeking to amend its Statement of Claim for a third time, for specific discovery and for an order that witness statements should be exchanged. An order was made on 30th March, 1995, ordering specific discovery and inspection, that witness statements were to be exchanged within three months and allowing the re-re-amendment. The amended pleading was filed on an unspecified date thereafter. It reinstated the allegation that the Defendant was a freight forwarder and a bailee for reward and alleged that the Defendant was to arrange for the goods to be warehoused in Hamburg after discharge from the vessel and pending delivery to the consignee "against production of bills of lading in respect of such goods." It introduced a number of new sub-paragraphs tracing the movement of the goods up to their shipment and included reference to all three bills of lading. It is not apparent why the Piff and the Maersk Line bills of lading were pleaded. The allegation that the written part of the contract between the Plaintiff and the Defendant was contained in the Euro Box bill of lading remained. No re-amended Defence or amended Reply has been filed.

8. On 20th March, 1996, the Plaintiff issued yet another summons for specific discovery and inspection and for another 28 days within which the witness statements were to be exchanged. On 28th March, 1996, orders were made giving the additional time sought for the exchange of witness statements and for discovery and inspection which was, however, not to take place until seven days after a summons to dismiss for want of prosecution issued by the Defendant on 27th March, 1996. That summons was itself dismissed for want of supporting evidence on 23rd April, 1996. It was the Defendant's further summons for the same relief issued on 30th April, 1996, upon which Sears, J., dismissed the action. It was apparently in the Plaintiff's evidence resisting that application in which it was first revealed that the unidentified representative of the Defendant with whom Christina Wong had come to the oral part of the agreement was a Mr. Kenneth Chan. It was also in that evidence that documentary evidence surfaced for the first time that the goods may have been disposed of to the order of the Plaintiff.

9. The Defendant's evidence in relation to the events in Hong Kong is that at the relevant time the members of its sales/operation staff included Ms. Sandy Chan, Miss Irene Chan, Mr. Chan Chi Wing and Mr. Kenneth Chan. Presumably Ms. Sandy Chan was the signatory of the Euro Box bill of lading but neither she nor Miss Irene Chan have any recollection of the alleged telephone conversation with Christina Wong or any other involvement in the shipment. Mr. Chan Chi Wing left the Defendant in May, 1992, on bad terms and efforts to locate him have been unsuccessful. Mr. Kenneth Chan was summarily dismissed by the Defendant in February, 1993, and it is believed by the Defendant that neither man would now assist. So far as the availability of evidence from Hamburg is concerned, the Defendant contacted Rohde & Liesenfeld in 1991. It was told by a Mr. Peter Scharrel that the goods had been in the hands of L. & S. who had delivered them to a party connected with the Plaintiff in Poland, this upon the instructions of the Plaintiff. When the re-re-amended Statement of Claim was filed, the Defendant's solicitors again contacted Rohde & Liesenfeld who indicated that they would attempt to retrieve relevant documents. No further information was in fact received. In January, 1996, presumably after the Plaintiff had written to the Defendant a letter dated the eighth of that month seeking exchange of witness statements, the Defendant again contacted Rohde & Liesenfeld on a number of occasions. Rohde & Liesenfeld made it clear that attempts to retrieve the files were fruitless, they were unable to supply any further information and did not wish to be contacted about the matter again. Attempts to contact L. & S. have been to no avail. There was no evidence as to the whereabouts of Mr. Pawlidis. It appears that L. & S. may have ceased business in late 1991.

10. The first complaint against the judgment of Sears, J., is that he did not have regard to the specific period in which there had been inordinate and inexcusable delay and whether that delay had caused any prejudice. It is true that he appears to have taken into account the overall period that had elapsed between the accrual of the cause of action and the application to dismiss. Mr. Kerr submits, rightly, that the Defendant must show prejudice arising from the period of inordinate and inexcusable delay. He points out that there is no evidence that Ms. Sandy Chan, Miss Irene Chan or Mr. Chan Chi Wing had had anything to do with the shipment or that they had ever had any recollection of it or, if they did, that their memories had faded in the period in which he concedes that there was inordinate and inexcusable delay, namely between 3rd March, 1993, and 3rd January, 1995. One has considerable sympathy with the way the Judge approached the matter. Enough has been said of the manner in which the claim has been pleaded and how it has changed from time to time to appreciate the extreme difficulty in which the Defendant was placed in understanding the claim and therefore in marshalling its evidence. Memories do fade with time, especially when the witnesses or potential witnesses have been dealing with run of the mill everyday transactions. In addition it is at least difficult and artificial to enquire what a witness would have remembered before or after the relevant period of delay. See per Lord Browne-Wilkinson in Roebuck v. Mungovin (1994) 2 AC 225 at 234. We are, however, relieved from deciding upon these matters by a fortunate if ironic turn of events which has now occurred.

11. The Plaintiff itself has located Mr. Kenneth Chan. It appears to have contacted him for the first time in May of this year but it was unable to obtain a statement from him in time for the hearing before Sears, J. They now have an affirmation from him which the Plaintiff asked us to receive in evidence under the principles set out in Ladd v. Marshall (1954) 1 WLR 1489. We received it de bene esse and now, having considered it carefully, have no doubt but that it should be admitted. He now works for a shipping agency and, the shipping world being as it is in Hong Kong, it might be expected that the Defendant would have been able to locate him but the Defendant did not do so. It was not unreasonable that the Plaintiff should not have contacted him, he having been an employee of the Defendant. He now remembers some of his conversation with Christina Wong and fills in the rest of his affirmation with details of the way in which he regularly conducted his duties as such an employee. That evidence can be acted upon, see Chatterton v. Gerson (1981) 1 QB 432. His evidence would certainly have a most important influence in the litigation. In some parts it is ambiguous for he speaks, for instance, of the Defendant acting as an agent without, on many of those occasions, saying exactly what responsibilities the Defendant had. Insofar as storage or safe keeping in Hamburg, however, he is specific. In describing the Defendant's business he says, in paragraph 4,

"In addition if clients required the goods to be stored at the destination port, the Defendant would arrange on client's behalf for the goods to be stored at the destination port usually by agents of the Defendants' (emphasis supplied).

This evidence goes to the root of the claim that the Defendant was liable for the safe keeping of the goods and would appear to be contrary to the Plaintiff's claim. However that may be, the person dealing with the shipment on behalf of the Defendant has now been found and has given not only a statement but has reduced his evidence to the form of an affirmation. This evidence was not before the Judge below. If it had been it is unlikely that he would have found sufficient prejudice to the Defendant by reason of the delay whichever period he took.

12. That is really sufficient to dispose of this appeal. For the sake of completeness, however, we deal with the two other arguments that were raised. The first was that the Defendant had acquiesced in the delay by their conduct as from March, 1995. In particular the Plaintiff had taken the following steps :-

(1) Summons for specific discovery, leave to re-re-amend the Statement of Claim and for exchange of witness statements, 22nd March, 1995, resulting in an order dated 30th March, 1995.

(2) Re-re-amended Statement of Claim.

(3) Summons for specific discovery and witness statements, 20th March, 1996, resulting in an order dated 28th March, 1996.

The Plaintiff points out that at none of these stages did the Defendant apply to dismiss and by its stance induced the Plaintiff to incur costs in the belief that the matter was to go to trial. We have been told, as was the Judge below, that the Plaintiff expended some $70,000 including fees to counsel for drafting witness statements in accordance with the order of 30th March, 1995. The Judge disposed of this argument by saying,

"In my judgment, there has not been acquiescence. Here the defendant was entitled, in the circumstances of this particular case, to really find out what on earth was going to happen and what happened was what occurred before, namely, nothing. Although I accept that in January or thereabouts, at an application, they gave some indication that witness statements would be prepared, in my judgment, that does not amount to acquiescence. Even if this was acquiescence, I would exercise my discretion against the plaintiff having regard to all the circumstances of the case, the delay which has occurred and the prejudice. I have considered all other relevant factors which I would have done in the exercise of my discretion and I would strike out the action."

There is, of course, a great difference between a position where the Plaintiff after the delay continues to do nothing and one where he does and the Defendant responds. In the first case the Defendant is entitled to wait to see whether the Plaintiff will continue to delay until the statutory period of limitation has passed. In those circumstances the Defendant may, in the words of the Judge, be entitled to find out (by waiting) what was going to happen. However, when the Plaintiff takes active steps to which the Defendant responds different considerations arise. Roebuck v. Mungovin (supra) is authority that the Court retains an overall discretion as to whether or not to strike out and exercises that discretion on the basis of what, in all the circumstances, is necessary to achieve an equitable result. The Judge adopted a wrong approach insofar as he appears to have considered that the Defendant was entitled to respond to the steps taken by the Plaintiff to see what was going to happen. We find that there was acquiescence.

13. The final argument was based upon Birkett v. James (1978) AC 297. It was argued by the Plaintiff that the statutory period of limitation was one of six years within which the Court generally should not dismiss an action for want of prosecution because the Plaintiff would simply be entitled to issue another writ. If that were to happen, of course, all that a dismissal would achieve would be an even greater period of delay and further expenditure of costs. The principle is not really challenged by the Defendant but it argues that the period of limitation was one year under the Hague-Visby rules. It has already been noted that the Judge mentioned the point without coming to any decision upon it. Under paragraph 6 of Article III of these Rules the period is one year and the question is whether or not the goods, in Hamburg and in the possession or control of Rohde & Liesenfeld, were still within the contract of carriage. Our attention was drawn to the decision of another division of this Court in Wily Products Co., Ltd. v. Hecny Shipping, Ltd. (1995) 3 HKC 47 per Liu, J.A. The other two members of the Court proceeded on the basis that there was no relevant limitation period which could assist the Defendant. Liu, J.A., however, held that "carriage of goods" as defined in paragraph 1(e) of Article I of the Rules should not be strictly construed. That article defines "carriage of goods" as covering

"the period from the time when the goods are loaded on to the time when they are discharged from the ship."

Article II then provides that

"Subject to the provisions of Article VI, under every contract of carriage of goods by sea the carrier, in relation to the loading, handling, storage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities, and entitled to the rights and immunities hereinafter set forth."

Liu, J.A., relied upon a decision in the Australian case of The Zhi Jiang Kou (1991) 1 Lloyd's Rep. 493 wherein it was observed that the words "custody and care" are apt to include events after discharge and until delivery. We are not at all convinced that that is correct. There is, in our view, a strong argument that the goods were not under a "contract of carriage" at the time of any misdelivery. Our attention has been drawn to the decision in Barclays Bank PLC v. Miller (1990) 1 WLR 343 where the Court of Appeal in England held that where it is open to doubt and serious argument whether a new writ would be statute barred the interests of justice might be best served by dismissing the action leaving it to the Plaintiff to issue fresh proceedings if it thought fit to do so. With no disrespect to that very powerful Court the decision may well have been right on the facts of that case where it was admitted both that there had been inordinate and inexcusable delay and that there had been resulting prejudice. In the present case we have found that there is no longer such prejudice. In all of the circumstances we cannot find either way what the period of limitation was and we would not have dismissed this appeal on the basis that it was one year.

14. Our conclusion therefore is that this appeal is to succeed and we quash the order of Sears, J. of 22nd May, 1996. We will hear the parties as to costs both here and below.

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15. Having now heard arguments as to costs we do not disturb the order made in that regard in the Court below and we make no order as to the costs of this appeal.