THE ALMERINDA

CACV 868/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 868 OF 2000

(ON APPEAL FROM HCAJ 222/94)

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J U D G M E N T

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Hon Rogers VP:

1. This is an appeal from the decision of Stone J, given on 30 October 2000, following a hearing which took place on 7 and 8 September 2000. There were two applications before the judge. The first was a summons to strike out the action for want of prosecution. That was dismissed.

2. The second application was a summons by the plaintiffs to amend the statement of claim. The judge gave leave to the plaintiffs to make the amendments.

3. The claim in this action relates to damaged cargo. The cargo in question was a shipment of prime quality, high tensile steel deformed bars. They were shipped from Vitoria, Brazil, to Hong Kong in May to July 1993. On arrival in Hong Kong, many of the bars were found to have been rusted or corroded. The cause of that was alleged to be the ingress of seawater. The plaintiffs aver that the defendants, as bailees, carriers for award and/or alternatively, under a contract of carriage are responsible for that damage.

4. The cargo was delivered in July 1993 and in June 1994 the plaintiffs issued a generally endorsed writ against the defendant. The material part of the endorsement read:

"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 20 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 ..."

5. This was followed, at a somewhat leisurely pace, by the statement of claim which was filed in November 1994. Paragraph 1 of the statement of claim referred to the bill of lading dated 20 May 1993. There is no dispute between the parties that this is what is now called the "Jardine" bill of lading. Paragraph 2 pleads that the plaintiffs were at all material times the owners of the cargo and consignees to whom property had passed upon and by virtue of the consignment. In paragraph 3 it is pleaded that the defendants were under a duty as bailees and/or carriers for reward and/or under the contract of carriage contained in or evidenced by the bill of lading to take reasonable care of the cargo and to deliver the same.

6. It is unnecessary to go into the vicissitudes of the action, nor the route by which the amended statement of claim came to be formulated. For present purposes, paragraph 1 of the amended statement of claim is in a similar form to the original statement of claim, save that there is included a reference to paragraphs 5A and 5B, which are new paragraphs, in relation to an explanation as to how the bill of lading came to be issued. In paragraph 2 of the amended statement of claim it is pleaded in the alternative that the plaintiffs became the owners of the cargo by reason of a contract of sale which was contained in or evidenced in a contract dated 22 June 1993.

7. The new pleading recites in paragraphs 5A and 5B the fact that originally the plaintiffs held three original bills of lading which had been issued by Asian Transport Limited (the "ATL bill of lading"). When the vessel arrived in Hong Kong on 15 July 1993, the defendants served a Notice of Readiness on the plaintiffs. We have been shown a copy of that Notice of Readiness and it states that the vessel had arrived in Hong Kong and was "in all respects ready to discharge your cargo". The notice goes on to request the plaintiffs to commence discharging immediately.

8. Paragraph 5B(3) recites that the plaintiffs were informed by Jardine Shipping that the defendants refused to accept the ATL bill of lading, but they were informed that if the ATL bills of lading were surrendered to Jardine Shipping, Jardine Shipping would issue substitute bills of lading. That was done and the cargo was discharged. Paragraph 5C of the amended statement of claim reads:

"In the premises, the defendants (by delivering the cargo to the plaintiffs as aforesaid) 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 objection taken by the defendants is that this amendment introduced a new cause of action. The cause of action is said to be termed a Brandt v. Liverpool cause of action. This is the name given to a cause of action which was held to exist in the case of Brandt v. Liverpool Steam Navigation Co Limited [1924] 1 KB 575. The essence of the decision was that a contract was to be implied from the conduct of the parties. The plaintiffs in that case were not the endorsees of the bill of lading. Hence they could not sue directly on the contract therein.

10. In the Court of Appeal, Bankes, Scrutton & Atkin LJJ held that a contract ought to be implied because the holder of the bill of lading who had some property in the goods had presented the bill of lading and accepted the goods. It seems that the payment of freight might also be an ingredient but it is unnecessary to consider that matter for the purposes of this case. It was on that basis that it was held that the plaintiffs were entitled to enforce the terms of the bill of lading.

11. For the purposes of this case, I am prepared to proceed upon the basis, therefore, that the cause of action which the plaintiffs have pleaded as a result of the amendment is a different cause of action from that which was pleaded in the original statement of claim. For present purposes it is unnecessary to consider whether it was comprehended within the general endorsement on the writ. The defendants aver that it was not on the grounds that it was neither a written contract nor an oral contract. It suffices for present purposes to say that even if it was comprehended within the endorsement on the writ, if the cause of action were not pleaded in the statement of claim, it would be deemed abandoned.

12. The thrust of the defendants' case on the appeal is that the cause of action now sought to be pleaded has been extinguished and ceased to exist as a result of Article III, Rule 6 of the Hague-Visby Rules. It is said that as a result the court has no jurisdiction to allow the time-barred and time-extinguished claim to be added by way of amendment. In my view this is to misconstrue the material part of the Hague-Visby Rules. Rule 6 of Article III is concerned with notice and the commencement of suit. The first two paragraphs concern notice of loss or damage. It is perhaps of some interest to observe that such notice must be given promptly. It must be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods or, if the loss or damage is not apparent, within three days. The third paragraph of Rule 6 reads:

"Subject to paragraph 6bis, 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. This period may, however, be extended if the parties so agree, after the cause of action has arisen."

13. It is clear, on a reading of Rule 6, that as Phillips J (as he then was) said in Continental Fertilizer Co Limited v. Pionier Shipping CV [1995] 1 Lloyds LR 223 at 227, the object of the Hague Rules time limit is to give shipowners immediate notice of the likelihood of a claim and to protect them from stale claims. In that case Phillips J went on to say that errors of detail in the pleaded case cannot have the effect of rendering the suit one which fails to satisfy the requirements of Article III, Rule 6.

14. When shorn of the legal trappings by which it is averred that the plaintiffs can formulate their claim, the essence of the original claim and that which the defendants aver is the new claim have the following essential features which are identical: (1) the goods are the same; (2) the voyage is the same; (3) the terms of the contract of carriage are the same and contained in the same document, namely the Jardine bill of lading; (4) the damage is the same; (5) the breach of duty is the same. As Parker LJ said in the "Kapetan Markos" [1986] 1 Lloyds LR 211 at 230 in a passage which has been quoted more than once in other cases:

"As a matter of common sense and ordinary language, it is clear that when the time limit expired, the defendants could not conceivably have said - ... suit has not been brought. We are therefore discharged from all liability."

15. He then went on to say:

"It is equally clear that if a cargo-owner sues under a bill of lading by virtue of section 1 of the Bills of Lading Act 1885, in respect of a breach of the rules resulting in total loss and after the expiry of the time limit seeks leave to amend to allege a direct contract as shipper, the shipowner could not as a matter of common sense and ordinary language say 'I have been discharged from all liability because suit was not brought within a year'. A suit for breach of contract was brought within a year. The amendment would be asserting breach of the same contract, the same rule and the same damage. Moreover, if the original claim succeeded and the amendment failed, he would be fully liable.

The most he could say is 'suit was not brought within a year for breach of the contract made in that way'. This would no doubt be true but we would not, unless compelled by authority to do so, hold that he could go on to say 'I am therefore discharged from all liability in respect of a contract made in that way'. To uphold such a contention would, as it seems to us, be a wholly artificial and unjustified way to construe an exemption provision in an international code, for it would or might make substantive discharge from liability wholly dependent upon rules of procedure in a particular country and in some cases upon accident."

16. That, it seems to me, is equally applicable in this case. The plaintiffs bring what is the same claim; the only difference being the legal route by which it is argued that the parties are bound in exactly the same way. When looked at in this light, it can be seen that to permit such an argument to succeed can, as a number of judges before in similar circumstances have said, be likened to allowing the rules as to the old forms of action to dominate from their graves.

17. The Kapetan Markos case also concerned the question of an amendment made after the one-year time limit in Article III, Rule 6 had expired. At page 228 the Court of Appeal made clear that the points of claim prior to the re-amendment did not cover a claim in tort and it was that which the plaintiffs proposed to include in their amended claim. From page 232 of the report it is clear that a similar argument was being advanced in that case, as in the present. It was said that suit had not been brought because, in that case, it was only by way of amendment that a claim was first brought in respect of a collateral contract and the charter-party and the salvage damage under bailment.

18. On the same page Parker LJ, giving the judgment of the court, analysed the meaning of Article III of the Hague Rules. He pointed out that there was first an unqualified obligation on the carrier to exercise due diligence to make the ship seaworthy and, secondly, an obligation subject to Article IV, properly and carefully to load, handle, stow, carry, keep, care for, and discharge the goods carried. There was also an obligation to issue to the shipper, on demand, a bill of lading and a provision that the bill of lading shall be prima facie evidence of receipt.

19. The Court of Appeal then went on to consider Rule 6 and they said:

"One then comes to rule 6. 'Discharged from all liability' must mean 'discharged from all liability under the rules'. 'Unless suit is brought' must therefore mean 'unless suit to establish liability under the rules is brought'. 'In respect of loss or damage' must mean 'in respect of loss and damage to goods carried under a contract of carriage by sea'.

If, therefore, a shipowner wishes to rely on the rule 6 discharge from liability, he must establish first that the goods were carried under a contract of carriage by sea, next that suit to establish liability under the rules in respect of loss of or damage to the goods carried under the contract has not been brought within a year."

20. It was in that context that the Court of Appeal went on, in the next page, to say:

"The question therefore arises whether the defendants can establish that, by reason only of the fact that the points of claim did not ascribe the claim to salvage moneys to breach of bailment, they are discharged from all tortious liability on the grounds that suit was not brought within the one-year period allowed. In our judgment the answer is plainly in the negative. We shall assume, but without deciding, that the making of a claim for the salvaged moneys in tort constitutes the raising of an additional cause of action, but in our judgment to hold that on that ground the defendants are discharged from liability would be either to allow the old forms of action to rule as from their graves (as to which see per Diplock LJ in Letang v. Cooper [1964] 2 Lloyd's Rep 339; [1965] 1 QB 232 at 342 and 242-243 and Lord Denning, MR, in In Re Vandervell's Trusts [1974] 1 Ch 269 at 321) or to adopt a construction of an international provision which creates a substantive discharge of liability dependent on the incidence of procedural rules in one particular country. Neither is acceptable. The tortious claim is not barred.

21. In respect of the contractual claim, the Court of Appeal pointed out that the writ was generally wide enough to cover any contractual claim and that the original points of claim did not particularise how the contract was made. It is true that the Court of Appeal said that had the plaintiffs been asked for particulars, which they were not, of the facts and matters relied upon as entitling them to sue under the bill of lading, they could have set up, without going outside their pleading, all the matters now sought to be relied on and perhaps others. But the judgment went on to say:

"In these circumstances the defendants cannot, in our judgment, possibly rely successfully on Article III, Rule 6. From first to last the plaintiffs have set up carriage by sea under a contract of carriage by sea under a bill of lading incorporating the Hague Rules, breach of such rules and resulting damage. To hold suit was not brought within a year in respect of breaches of such rules would, in our judgment, be an abuse of language. It plainly was."

22. Mr Smith, on behalf of the defendants, argues that on the basis of the passage to which I have referred, the Court of Appeal specifically in relation to the contract claim relied upon the vagueness of the original pleadings which could have comprehended the claim sought to be raised. Whereas that is true, there are a number of points which can be made in respect of it. If the new claim was comprehended within the original claim there would, perhaps, be no need to plead it. Furthermore, in relation to the tort claim, the Court of Appeal pointed out that the original tort claim related to a claim for shortage and not a claim in respect of the salvage moneys. The claim for shortage had been abandoned. Hence, it was necessary under the English rules of pleadings to secure an amendment in order to raise the claim in respect of salvage.

23. Perhaps similar points could be made in respect to the pleadings in the present case, because, despite the emphasis on the word "written" in relation to contract in the endorsement of claim on the writ, when read literally, it is difficult to comprehend how a written contract can be evidenced by a bill of lading as opposed to be contained in it. Furthermore, paragraph 2 of the original statement of claim might be read disjunctively as an allegation simply that the plaintiffs were the owners of a cargo, and paragraph 3 simply that the defendants were under a duty -- under a contract of carriage evidenced by the bill of lading, leaving it open for later allegations as to exactly how that contractual obligations arose. Indeed, our attention was drawn to the further and better particulars which were provided in December 1995. These were in answer to a request for particulars under paragraph 1 of the statement of claim. They related to the facts and matters which were relevant to establish the binding effect of the terms of the bill of lading upon the defendants. In that respect the plaintiffs had answered that they would rely upon the fact that, upon presentation of a bill of lading by the plaintiffs, the cargo was delivered to the plaintiffs at the discharge wharf.

24. Our attention was drawn to a decision of the Court of Appeal of Victoria in Anglo Irish Beef Processors International v. Federated Stevedores Geelong & Ors [1997] 1 Lloyds LR 207. The decision was in respect of an application to amend a statement of claim. The action had originally been framed in negligence and breach of statutory duty of the defendant. The claim was in relation to damage which had occurred to a cargo of meat which had been shipped from Geelong to Aqaba. The plaintiffs wished to amend the statement of claim by adding a plea based on contract. The Court of Appeal made considerable reference to the decision in the Kapetan case and had no hesitation in affirming that such an amendment was permissible. The decision might be summarised by reference to the judgment of Charles JA, with whom the other judges agreed, where he said at page 222:

"In short, the mere absence from the pleading, as yet, of any reference to a contract of carriage between the appellant and the respondent for the carriage of goods by sea should not be permitted to obscure ( or in some way to qualify or to abrogate) the fact that in this instance the proceeding by the appellant against the respondent to enforce the latter's alleged liability for damage to those goods, while on board ship, was brought within one year described in Article III, Rule 6. That being so, should the bringing of the proceeding within one year be relevant, the respondent cannot establish that it was discharged from 'all liability' for want of 'suit brought' within time. If it could, the result would appear to me to be altogether artificial, especially in the particular circumstances of this case where the appellant seeks only to add a further ground of the liability for the loss and damage for which it is already suing the respondent and the amendments are in no way inconsistent with what is already alleged."

25. Mr Smith on behalf of the defendants acknowledged that if the decision in the Anglo Irish case was good law, then his arguments could not prevail. In my view the reasoning in the Anglo Irish case follows that in the Kapetan Markos and for the reasons which I have given, it too supports the conclusion to which I have come. It might also be said, as Mr Reyes said on behalf of the plaintiffs, that in relation to the Hague-Visby Rules which are applicable on a global basis, it is desirable that there is international consistency in their interpretation.

26. Finally, it should be mentioned that Mr Smith raised, very much as a side argument, a point on paragraph 5C of the amended statement of claim, that delivery of cargo does not constitute attorning. This point in itself might seem highly technical but for the purposes of considering pleadings at an interlocutory stage seems to me to be doomed to failure. The delivery was said to be "as aforesaid". The words "as aforesaid" would also relate to the Notice of Readiness to which I have previously referred. Clearly, at this stage, the plea of attornment is arguable if only on the basis that the Notice of Readiness constituted an attornment. It must, therefore, be allowed to proceed to trial.

27. In my view this appeal should be dismissed with an order nisi as to costs in favour of the plaintiffs/respondents.

Hon. Woo JA:

28. I entirely agree. I also agree that the appeal should be dismissed with costs.