CHAN KWAI HA v. WONG CHICK BUN t/a SANG MING SING MOTORBOAT CO

CACV 200/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 200 OF 2007

(ON APPEAL FROM HIGH COURT ADMIRALTY

ACTION NO. 85 OF 2005)

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REASONS  FOR  JUDGMENT

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Hon Ma CJHC:-

1.  On 1 February 2008, after hearing counsel’s submissions, this Court dismissed the Defendant’s appeal with costs.  (The Defendant’s own costs were to be taxed in accordance with the Legal Aid Regulations).  I agree with the reasons contained in the judgment of Reyes J for dismissing the appeal.

Hon Reyes J:-

I.       INTRODUCTION

2.  In August 1999 Ms. Chan’s barge (the Tow) sank while being towed by Mr. Wong’s vessel (the Tug).  In April 2005 Ms. Chan issued a writ against Mr. Wong claiming damages for the loss of the Tow.  The writ alleged “breach of contract on the part of [Mr. Wong] and/or negligent navigation and/or management of [the Tug]”.

3.  In his Defence, Mr. Wong contended that Ms. Chan’s claim was time-barred by reason of Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (Cap.508) section 7(1).  The provision states that, subject to any extension granted by the Court:-

“no action shall be maintainable to enforce any claim or lien against a ship or its owners in respect of any damage or loss to another vessel, its cargo or freight, or any property on board the vessel, or damages for loss of life or personal injuries suffered by any person on board the vessel, caused by the fault of the former vessel, whether such vessel is wholly or partly in fault, unless proceedings in the action are commenced within 2 years from the date when the damage, loss or injury was caused.”

4.  Waung J heard the time-bar question as a preliminary issue.  He held that there was no good reason for extending the limitation of two years imposed by the Ordinance and that Ms. Chan was thus out of time in bringing her action.

5.  Ms. Chan appealed against Waung J’s determination.  Mr. Anthony Ismail (appearing on Ms. Chan’s behalf) essentially raised one ground for saying that Waung J was wrong.  The ground was that, on its true construction, section 7(1) only applied to tortious claims.  Mr. Ismail said that, if he is right, Ms. Chan’s claim for breach of contract (arising from alleged negligence in navigation of the Tug) should therefore be allowed to proceed on the basis that the appropriate limitation period was 6 years (under the Limitation Ordinance (Cap. 347)).

6.  The ground advanced by Mr. Ismail was not argued before Waung J.  Ms. Chan did not appeal against Waung J’s refusal to extend any applicable limitation period in section 7(1).  After hearing counsel’s submissions, we dismissed the appeal with costs, reasons to be handed down in due course.

II.      BACKGROUND

7.  The purpose of the Ordinance stated in its long title is “to make provision relating to merchant shipping with a view to enabling certain Conventions to be carried into effect”.

8.  Before the Ordinance was enacted in June 1997, the UK Maritime Conventions Act 1911 extended to Hong Kong.  That Act made applicable here:-

9.  The enactment of the Ordinance localised that part of the 1911 Act promulgating the 1910 Collision Convention.  The Ordinance also made the International Convention on Salvage 1989 (the 1989 Salvage Convention) applicable in lieu of the 1910 Salvage Convention.

10.  The 1910 Collision Convention has the following general structure:-

III.     DISCUSSION

A.      Ms. Chan’s case

11.  Mr. Ismail advanced 3 arguments in support of the contention that section 7(1) solely concerns tort and has nothing to do with contract.

12.  First, Mr. Ismail submitted that the words and expressions used in section 7(1) itself are “reserved for claims in tort and not in contract”.  On a proper textual analysis, section 7(1) cannot (it is said) encompass a breach of contract.  Mr. Ismail, in particular, focused on 2 expressions.

13.  One expression is the word “fault”.  Here Mr. Ismail relied on an obiter dictum of Scott and Asquith LJJ in The TOWERFIELD [1949] P 10 (at 46):-

“That convention was the Collisions Convention, brought into law by the Maritime Conventions Act 1911, and it was primarily art. 5 of that convention which called for the alteration of the law as then defined by s.633 of the Merchant Shipping Act, 1894. The convention was published by His Majesty’s Government as a White Paper in Cmd. 5558 (1911).  It was made law in the United Kingdom by the Maritime Conventions Act, 1911.  Article 5 read as follows: ‘The liability imposed by the preceding articles attaches in cases where the collision is caused by the fault of a pilot, even when the pilot is carried by compulsion of law.’  The object of that convention, signed at a Diplomatic Conference convened by the Belgian Government at Brussels in order to consider a draft convention previously framed by the Comité Maritime International was to unify certain rules of the municipal laws of all nations relating to collisions between ships, or to damage caused (without collision) by one ship to another ship and her cargo.  It was concerned only with what English common law calls ‘tort’ and English Admiralty law calls ‘fault,’ and what continental law, based on the Code Napoléon, calls by the French word ‘faute’.  That convention had nothing whatsoever to do with contract.”

14.  The other expression is found in the words “unless proceedings in the action are commenced within 2 years from the date when the damage, loss or injury was caused.”  These words (Mr. Ismail submitted) cannot refer to a breach of contract because a cause of action for breach of contract arises when a breach is committed.  In contrast, an action in the tort of negligence arises when loss or damage is actually incurred.

15.  Second, Mr. Ismail invited this Court to construe section 7(1) in light of sections 3(4), 3(5) and 5(2) of the Ordinance.

16.  Section 3 concerns the apportionment of liability for collision damaged caused by “the fault of 2 or more vessels”.  In such case, liability for loss is to be assessed “in proportion to the degree in which each vessel was in fault”. 

17.  But the section provides:-

18.  Section 5 concerns contribution.  Where a collision “owing to the fault of [a] vessel and of any other vessel” results in loss of life or personal injury and an owner pays more than his proportionate share of damages, then such owner may seek contribution from the owners of the other vessels at fault. 

19.  But the section provides:-

“(2)   No amount may be recovered by way of contribution under subsection (1) that could not have been recovered by reason of any statutory or contractual limitation of, or exemption from, liability, or for any other reason.”

20.  Mr. Ismail observed that the provisos to sections 3 and 5 just mentioned preserve contractual rights and liabilities.  The sections are consistent (Mr. Ismail said) with the proposition that section 7(1) does not affect contractual rights.

21.  Third, given its historical background, Mr. Ismail submitted that the Ordinance should be interpreted in the context of the 1910 Collision Convention which it brings into effect.

22.  In particular, referring again to Scott and Asquith LJJ in TheTOWERFIELD, Mr. Ismail suggested that section 7(1) should be read in light of the premise that the 1910 Collision Convention “has always been concerned with the law of torts and has nothing whatsoever to do with contact”.  The two year limitation in section 7(1) should be construed (Mr. Ismail said) as only applying to claims in tort and not to claims for breach of contract.

23.  In support of the contention that the 1910 Collision Convention only applies to tortious claims, Mr. Ismail especially relied on Article 10 of that Convention.  The wording of Article 10 (Mr. Ismail said) makes it plain that the 1910 Collision Convention (and so any legislation based on it) does not affect a shipowner’s liability in contract.

B.      Assessment of Ms. Chan’s case

24.  I am not persuaded by Mr. Ismail’s arguments.

25.  First, the starting point must be a reading of section 7 in the context of the Ordinance itself.  As far as such an exercise is concerned, it seems to me that the meaning and ambit of section 7(1) is clear.  I find nothing in the section or the Ordinance indicating that either is to be construed as applying only to tort and not to contract.

26.  I do not obtain help from the expressions which Mr. Ismail highlighted within section 7(1).

27.  The word “fault” does not by itself normally connote a tortious (as opposed to a contractual) wrong.  In Admiralty law, one often refers to the “fault” of a vessel without distinguishing whether such “fault” constitutes a tort or breach of contract.  “Fault” simply means “blameworthiness”.

28.  In The NORWHALE [1975] 1 QB 589, for example, Brandon J (at 597C) observed that the expressions “by the fault of two or more vessel” in section 1(1) and “by the fault of the former vessel” in section 8 of the 1911 Act were “entirely general, and are wide enough to include, in their ordinary and natural meaning, not only faults of navigation but other faults as well”. Brandon J was rightly concerned not with the legal classification of a “fault” as a breach of contract or tort, but with whether some act or omission could be described as a “fault”.

29.  The obiter dictum cited by Mr. Ismail from TheTOWERFIELD is surprising in the way that it unqualifiedly equates “fault” in an Admiralty context generally and in the Convention specifically to tort alone.

30.  The dictum cannot be right.

31.  Thus, for instance, Article 4 of the Convention gives a right of contribution.  However, the last sentence of Article 4 posits that the right to contribution is subject to “the meaning and effect of any contract ... which limits the liability of the owners of a vessel towards persons on board”.

32.  If the dictum were correct, then there would be no need for Article 4 to add the qualification found in its last sentence.

33.  If (as the dictum asserts) the Convention does not concern breaches of contract, it would not be necessary to qualify the right of contribution in Article 4.  That right would simply not be applicable in a breach of contract case and there would be no need to mention in the Convention that contribution was subject to any contrary agreement in a contract between an owner and passenger.

34.  Mr. Charles Sussex SC (appearing for Mr. Wong) further noted that s.8 of the 1911 Act (upon which section 7(1) of the Ordinance was based) provided as follows:-

“No action shall be maintainable to enforce any claim or lien against a vessel or her owners in respect of any damage or loss to another vessel, her cargo or freight, or any property on board her, or damages for loss of life or personal injuries suffered by any person on board her, caused by the fault of the former vessel, whether such vessel be wholly or partly in fault, or in respect of any salvage services, unless proceedings therein are commenced within two years from the date when the damage or loss or injury was caused or the salvage services were rendered...”

35.  Section 8 of the 1911 Act must be referring to “any claim” in contract or tort since salvage services are typically provided pursuant to salvage contracts (such as Lloyds Open Form agreements). 

36.  Any relevant claim (whether or not for salvage) must be in relation to “any damage or loss to another vessel … caused by the fault of [a] vessel, whether such ... be wholly or partly in fault”.  Since the legal classification of the fault (whether breach of contract or tort) could not be material to a salvage claim, it would be odd if a qualification that the “fault” should be tortious is to be read into section 8 for claims other than salvage.

37.  If fault under section 8 of the 1911 Act did not refer only to tortious wrong, it could not suddenly have become so constrained in section 7(1) of the Ordinance.

38.  It is true that (in contrast to section 8 of the 1911 Act) section 7(1) of the Ordinance does not contain a reference to salvage claims.  But that is merely because salvage claims are now governed by the 1989 Salvage Convention, contained in Schedule 1 of the Ordinance.  Otherwise it was not envisaged that section 7(1) would alter the treatment under Hong Kong law of collision cases.

39.  I add that the reasoning of Scott and Asquith LJJ was doubted at House of Lords level in The TOWERFIELD [1951] AC 112 (for instance, at 134 (Lord Porter), 145 (Lord Normand) and 155 (Lord Morton)).

40.  As for Mr. Ismail’s distinction between the accrual of a cause of action in contract and tort, the Legislature (as Mr. Sussex observed) is entitled to impose whatever limitation it deems appropriate. 

41.  There is nothing odd about this.  The Carriage of Goods by Sea Ordinance (Cap.462), for instance, enacts the Hague-Visby Rules.  The latter impose by Article III, Rule 6 a one year limitation on actions (whether in contract, tort or bailment) in relation to the carriage of goods.  The limitation runs from the date when goods are delivered or ought to have been delivered, regardless of when damage or loss is actually caused.

42.  The 1910 Collision Convention imposes its two year limitation from the date of a “casualty”.  Section 7(1) mirrors this by reckoning time from “the date when the damage, loss or injury was caused”.

43.  Second, I think that Mr. Ismail draws the wrong inference from the provisos in sections 3(4), 3(5) and 5(2).  Those sections expressly provide that the rights to apportionment or contribution under the Ordinance are subject to any contrary contractual agreements.

44.  In relation to time-bar, the Ordinance takes a different approach.  It provides in section 7(3) that the two year limit may be extended, but only for good reason.

45.  Thus, in contrast to sections 3 and 5 where the Ordinance actually provides for contractual arrangements to trump the rights of apportionment or contribution, the Ordinance deliberately qualifies the possibility of contracts overriding the two year time bar.  Whether the two year limit is or is not trumped by a contract, is left to the Court’s discretion under section 7(3).  Under the Ordinance, the Court may only extend the time bar if the existence of a contract constitutes a good reason for so doing.

46.  Third, assume (without necessarily accepting) that I can look at the 1911 Collision Convention as an aid in the construction of what I believe to be the already clear words of section 7(1).  Even then, Mr. Ismail’s argument finds no support.

47.  There is nothing in Article 7 to suggest that the “actions for the recovery of damages” mentioned in the Article are confined to tortious actions.  On the contrary, the words are general.  They indicate that all actions for recovery of damages in collision cases are barred after an interval of two years from a casualty.

48.  It is true that Articles 3 and 4 refer to liability where vessels are at “fault”.  But there is nothing to suggest that the word “fault” should be read as meaning only “tortious fault”.  One can be at “fault” by failing to navigate a vessel properly in breach of a contractual obligation owed (say) to a passenger on the vessel.  Nothing in the text of the Convention indicates that one must read “fault” in Articles 3 or 4 as somehow excluding such “fault” of negligent navigation in breach of contract.

49.  I have already commented on the last sentence of Article 4 and why to my mind, if anything, it militates against Mr. Ismail’s submissions.

50.  Article 10 is of no assistance either.  All Article 10 does is to preserve whatever contractual liabilities or limitations relevant parties may have agreed among themselves.  According to Article 10, any such agreement among relevant parties may override the provisions of the Convention.

51.  But then reading the whole of Article 10 into the Ordinance would be of no use to Ms. Chan.  This is because there never was any contract between Ms. Chan and Mr. Wong to extend the two year time bar in Article 7 of the 1910 Collision Convention or section 7(1) of the Ordinance.

52.  Rather belatedly, Mr Ismail advanced an argument that the present case was caught by Article 10 on the basis that it was an implied term of the contract that the parties would be subject to all applicable legislation (notably the Limitation Ordinance).  This analysis is incorrect.  Parties to a contract are subject to legislation not by reason of any implied term but by reason of the natural consequence of applicable legislation: see Secretary for Justice v Lau Kwok Fai [2005] 8 C HKCFAR 304, 323G (para. 43).

53.  In any event, suppose (contrary to what I have concluded above) that Mr. Ismail was right about the wide effect of Article 10.  There is still a difficulty.  The fact is that Article 10 was not enacted in the Ordinance to such wide extent.  Article 10 has no precise equivalent in the Ordinance.

54.  The 1910 Collision Convention is only part of Hong Kong law to the extent that it is enacted by statute.  Even where the Court construes an Ordinance in light of a Convention, it must be the text of the Ordinance that ultimately governs, not that of the Convention.  This is because the Legislature may not have enacted a convention in its entirety.  A statute may modify the terms of a convention.  However wide Article 10 may be, the Court can only enforce that part of it which has been brought into effect by the Ordinance.

IV.     CONCLUSION

55.  For the foregoing reasons, Ms. Chan’s action was out of time.  The appeal was accordingly dismissed with costs to Mr. Wong.  The Court further directed that Ms. Chan’s costs were to be taxed in accordance with Legal Aid Regulations.

Hon Stone J:-

56.  I respectfully agree with the Reasons for Judgment advanced by Reyes J.

57.  I confess that I struggled to find a point in this appeal which was sustainable.

58.  There is nothing within section 7(1) of the Merchant Shipping (Collision Damage Liability and Salvage) Ordinance, Cap 508, to suggest that it has no application to a claim for the consequences to one vessel arising from the faulty navigation of another, even if (as alleged in this case) there existed an oral towage contract between the owners of the two vessels concerned.

59.  The short point, it seems to me, is that in the maritime context canvassed by section 7(1) of this Ordinance the word ‘fault’ simply alludes to the causative nature of the act or omission complained of, and whether such fault is susceptible to legal characterisation as a tortious act and/or as breach of an implied contractual term strikes me as nothing to the point.

60.  Reduced to its essentials, the proposition implicit within Mr Ismail’s argument appeared to be that if a case of maritime fault is expressed (as indeed the Statement of Claim in this case so avers) in terms both of a tortious and a contractual cause of action, then such alternative plea of contractual breach suffices to remove the case from the ambit of section 7(1), and hence that the two year limitation provision therein is no longer applicable to the claim as thus advanced.

61.  With respect, I am unable to agree.

62.  In my judgment the submission of Mr Sussex SC that “fault means blameworthiness…[and] is not a term of art synonymous with ‘tort’ in Admiralty law” represents a neat and correct statement of the position, and notwithstanding Mr Ismail’s strenuous efforts to convince the court otherwise, I regret to say that in my view his argument did not succeed in getting off the ground.