LEUNG KAM HO AND OTHERS v. THE OWNERS OF THE SHIP OR VESSEL "EIRAMA" (HONG KONG FLAG)

IN THE HIGH COURT OF JUSTICE

ADMIRALTY JURISDICTION

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JUDGMENT

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1. In this action Leung Kam Ho and Lai Lai Yee suing his joint administrator of the estate of Lai Tsz Chuen, deceased, are seeking damages on behalf of the estate of the deceased under the Law Reform & Amendment (Consolidation) Ordinance (Cap. 32) and on behalf of the dependants of the deceased under the Fatal Accidents Ordinance (Cap. 22) against the owners of the ship or vessel "Eirama " (Hong Kong Flat), the Defendant.

2. The action arises out of an action that took place on the 20th August 1980 on board the said vessel when the deceased, who was serving as a sailor thereon, met his death. The writ of summons was filed on the 21st October 1983 and Johnson, Stokes & Master, the solicitors for the Defendants, filed an acknowledgment of service on the 8th March 1984. On the 6th April, the Defendants filed a notice of motion asking that the Statement of Claim be struck out as being an abuse of process of the court.

3. The ground upon which the application was made was that the writ was issued outside the time limited by the Limitation Ordinance.

4. The history of the matter, which is set out in the affidavits filed by Mr. William Lyne of Johnson, Stokes & Master, the solicitors for the Department, and Mr. Alan Harrison of the Legal Aid Department, the solicitors for the Plaintiffs, indicate that the deceased died on the 21st August 1980, not the 20th as pleaded, and that on the 24th June 1983 the Director of Legal Aid issued an in personam writ, No. 7866 of 1983. The Defendant named in that action was Intersea Investment Limited which company was said in paragraph 3 of the Statement of Claim, which was served with the writ, to be, at all material times, the owners of the motor essel "Eirama".

5. Mr. Harrison says that the Defendant company was not resident in the jurisdiction and that it did not submit to the jurisdiction and that, as it was found not possible to serve the proceedings, this action was discontinued on the 28th September 1983. It is to be noted that the relevant date for the purpose of sections 27, 28 and 30 the Limitation Ordinance is the 20th August 1983.

6. Mr. Lyne, in paragraph 4 of his affidavit, states that Intersea Investment Limited are the registered owners of the vessel and are a company registered and incorporated under the laws of Bahamas.

7. To understand the course which this matter has taken one must examine the history of the matter as revealed by the correspondence between the Director of Legal Aid, Messrs. Deacons, who acted for Intersea Investment in the Workmen's Compensation proceedings that were brought by the widow of the deceased, Madam Leung Kam Ho, and Messrs. Johnson Stokes & Master who now act for Intersea.

8. On the 2nd March 1982, Mr. Harrison for the Director wrote to Messrs. Deacons a letter entitled

"Re     :

Lai Tsz Chuen, deceased Accident on board M.V.  "Eirama" in Thailand on 20.8.80.Your Clients : Intersea Investment Ltd."

which stated : "It is my considered opinion that the Hong Kong Courts would only have jurisdiction in personam over this accident or over your clients should your clients agree to submit to the jurisdiction of the Court. Should they not so agree then we would be obliged to bring an action in rem within the Admiralty jurisdiction of the Hong Kong Courts. Before proceedings commence against your clients would you indicate whether or not they would agree to submit themselves to this (sic) jurisdiction of the Hong Kong Courts in personam over this accident and over them as employers of the deceased."

9. The Director was then, in March 1982, clearly aware of the need to bring an action in rem if Intersea refused to submit to the jurisdiction of the Court. The Director, having received no reply, sent a reminder to Deacons on the 14th April 1982 and on the 26th April 1982, a reply was received from Messrs. Deacons.  This reply is distinguished by its brevity as it says simply "We refer to your letter of the 2nd March. We have instructions, on behalf of KN Ship Services Ltd., to accept service of proceedings in personam."  It is not clear what exactly was meant by this reply. The Director had asked whether Deacons' client, Intersea, would agree to submit themselves to the jurisdiction of the Hong Kong Courts. The letter made no reference to this request but said that some other entity, KN Ship Services Ltd., whose connection with the proceedings was, I am informed by Mr. Smith who appears for the Director, unknown to the Director, would accept the service.

10. It is now stated by Mr. Lyne, in paragraph 2 of his affidavit, that KN Ship Services Ltd. were, at that time, the managers of the vessel and that it was they who had employed the deceased through the crewing agency of Jardine Shipping Ltd. This was, of course, not made known to the Director at that time and, indeed, even if it had been, whether or not they would have been the appropriate party to proceed against would have depended upon the exact circumstances of  the "employment".

11. The Director appears, understandably, to have been concerned by this reply but did not, until the 6th January 1983, respond thereto.  There is no real explanation as to why it took him more than 8 months to make this reply.

12. Mr. Harrison in that letter said "I am now, at last, about to issue proceedings, but before doing so I should be obliged if you would confirm that KN Ship Services Ltd.   was the employer of all the crew and officers on board the vessel and, without admitting liability for the accident, is the proper Defendant for the present common law claim. I am anxious to save costs in this matter and would welcome clarification at this stage.  You will appreciate that it was Intersea Investment, and not KN Ship Services, against whom Workmen Compensation proceedings were taken and who paid the compensation."

13. On the 13th January 1983 Messrs. Deacons replied saying that they were taking instructions. On the 11th February 1983, Mr. Harrison wrote seeing a reply to his letter and on the 18th February 1983 Messrs. Deacons replied saying that "The reason for the delay is that the vessel is no longer managed by KN Ship Services Ltd. We are taking instructions from agents for the owners in Melbourne, Australia".

14. Mr. Harrison wrote again on the 21st March 1983 asking for a reply and then again on the 5th May 1983 saying "I am, of course, aware that the limitation period expires in August of this year, and unless I hear from you shortly I shall have no alternative but to commence proceedings. My letter of 6th January was written in the hope that costs and time might be reduced to a minimum if we could agree, at this stage, that KN Ship Services Limited was the employer of all the crew and officers on board the vessel and, therefore, the proper Defendant for the present common law claims."

15. On the 10th May 1983, Messrs. Deacons replied "We have only recently been able to locate the file in another department of this firm and we hope to be able to reply to you in detail in early course.  As the limitation period only expires in August we trust that you will not be issuing proceedings in the meantime until you have received our reply.”

16. Mr. Harrison wrote on 1st June, 1983, saying that he was going on leave and again asking for a reply. On 6th June, Messrs. Deacons replied saying that they still had no instructions.  On 23rd June, Mr. Grant who was then handling the matter for the Director, wrote to Messrs. Deacons saying that he had issued proceedings. These were the proceedings in personam naming Intersea as the Defendant.

17. Mr. Grant asked whether Messrs. Deacons had instructions to accept service of these proceedings.  On 30th June, 1983 Messrs. Deacons replied saying that they had passed Mr. Grant's letter of 23rd June 1983 and the writ to Thoresen Trading Ltd., Hopewell Centre, who, I am told, were the insurers of the vessel's owners. Mr. Grant on 6th July 1983 wrote to Thoresen Trading Ltd.  asking whether they had instructions to accept service of writ on behalf of the Defendant. At that stage Messrs. Johnson, Stokes & Master came into the matter. They wrote on 14th July 1983 saying that they had been instructed by Thoresen Trading Ltd.  to "contact you to consider the possibility of reaching an . amicable settlement of the claim". On 13th August 1983, just 7 days before the expiry of the limitation period, Messrs. Johnson, Stokes & Master wrote to the Director saying "We are now instructed to confirm that Intersea Investment Ltd., a company incorporated in Nassau, were the owners of the vessel "Eirama" at the relevant time and were the employers of the deceased seaman Lai Tsz Chuen."   They did not, however, say that they had any instructions to act for Intersea or accept service on to behalf of Intersea.

18. On 18th August, just 2 days before the expiry of the limitation period, Mr. Harrison wrote acknowledging receipt of that letter.  On 28th September 1983, a notice of discontinuance was filed in the action in personam and on 21st October 1983, the present action in rem was commenced. The present action is clearly out of time and on, 18th May 1984, the Director filed a notice of motion asking the Court to direct, under section 30 of the Limitation Ordinance, that the provisions of Section 27 and 28 of that Ordinance shall not apply to this action. I am asked to deal with that motion as well as the motion of the Defendants already referred to.

19. Section 27 of the Limitation Ordinance (Cap. 347), in so far as it is relevant to the present application, provides that in any action for damages for negligence, if the person injured dies before the expiration of three years, the period as respects the cause of action surviving for the benefit of the estate of the deceased shall be 3 years from the date of death. In the present case the period for the enforement by action of the surviving cause of action was 3 years from 21st August 1980. Section 30, under which the Plaintiffs make their application, says that, if it appears to the court that it would be equitable to allow an action to proceed, having regard to the degree to which the provisions of Section 27 prejudice the plaintiff, the court may direct that those provisions shall not apply to the action. Subsection (3) goes on to set out that the court shall have regard to all the circumstances of the case and to detail the particular circumstances to which the court must look.

20. The primary submission of Mr. Pirie, for the Defendants, was that the action in rem failed in limine because they had already been issued a writ in the action before the expiration of the limitation period.

21. He referred firstly to Walkley v. Precision Forgings (1979) 1 W.L.R. 606. In this action it was held that once a plaintiff had started an action within the primary limitation period, it was only in the most exceptional circumstances that he would be able to bring himself within Section 2D (our Section 30) in respect of a second action brought to enforce the same cause of action; and that, accordingly, since the plaintiff had previously started an action for the same cause of action within the primary limit   action period prescribed by Section 2A (our Section 27), he could not bring himself within Section 2D (our Section 30) at all and that any application by him under that section would fail in limine and that any prejudice caused to the plaintiff by the discontinuance of the first action was his own act.

22. Mr. Pirie argued that the Plaintiffs in our case had started their first action within the primary limitation period and that they would have to show exceptional circumstances to bring themselves within S.30 in respect of their second action. There is no need to deal with special circumstances as Mr. Smith, for the Plaintiffs, did not seek to argue that there were any such circumstances on the present case.

23. Mr. Pirie referred to Viscount Dilhorne at 614 where he said :-

"In my opinion this appeal should be allowed for it cannot be said that it was the provisions of section 2A (that is to say, the imposition of the three year period after which an action such as this cannot be proceeded with without the directions of the court) which prejudiced the respondent when within that period he brought an action for damages for the same personal injuries and in respect of the same cause of action as in his second action.  He was prejudiced by his delay in proceeding with the first action and by his discontinuance of that action, not by the provisions of section 2A".

He also referred to the judgment of Lord Diplock at

617 where he said after referring to Birkett v. James (1978) A.C. 297: -

"This reasoning has no application in a personal injuries action to any period after the primary limitation period has expired.  The plaintiff no longer has an indefeasible right to bring a second action for the same cause of action. If his existing action is dismissed, he must bring himself within section 2D in order to avail himself of the discretionary limitation period to enable him to proceed with a second action; and for reasons to which I shall come shortly, it is only in most exceptional circumstances that a plaintiff whose action has been dismissed would be able to do so."

24. Mr. Pirie submitted that, for the purpose of his argument, it was not material that the writ in personam had not been served and Mr. Smith, took no issue with him on this score.

25. Mr. Pirie argued that in the present case, the cause of action was the same in the action in personam and the action in rem. He submitted that, the only difference between the actions was that the action in rem allowed the seizure of the ship, they were, in fact, the same action. This being so he contended that, for the purposes of Section 27, the Court must hold that there was no difference between a writ in personam and a writ in rem.

26. His further and secondary submission was that, even if there was a difference, as regards s.27, between a writ in personam and a writ in rem, the Defendants, by entering the appearance to the writ in rem, had to use his word, "converted"' it into a writ in personam. He seemed to be suggesting that this "conversion" in some way linked the later writ with the earlier one and that once the appearance had been entered the Court must proceed upon the basis that 2 writs had been issued in the same action. Does the "conversion" "which occurs when an appearance is entered have any such effect? What is issued is a writ in rem and what commences is an action in rem. This writ is, at the time of its issue, quite different from a writ in personam. It is true, as was stated in The August 8 (1983) 2 W.L.R. 419 at 424, that :-

"By the law of England, once a defendant in an Admiralty action in rem has entered an appearance in such action, he has submitted himself personally to the jurisdiction of the English Admiralty Court, and the result of that is that, from then on, the .action continues against him not only as an action in rem but also as an action in personam : The Gemma (1899) P.285, 292 per A.L. Smith L.J."

27. While it may be true that the action after entry of appearance continues against the Defendants as an action in personam, this does not change the character of the writ at the time of its institution. At that time it was an writ in rem. I am satisfied that, if a writ in rem is so different from a writ in personam in the same matter that it can be said that it does not institute the same action, in accordance with the meaning of that term as it is used in Section 27, then, for the purposes of the Limitation Ordinance, it is of no significance that an earlier action in personam was issued. The "conversion" which occurs when an appearance is entered does not, I am satisfied, have the effect contended for by Mr. Pirie and I will not therefor refer further to this secondary submission of Mr. Pirie.

28. Mr. Smith, when he came to address, also referred to Walkley's case and particularly to the words of Lord Wilberforce at 609, where he said : -

"My Lords, as a matter of principle I have very great difficulty in understanding how in this case or indeed in any case that I can imagine where an action has been started within the normal limitation period, section 2D can be invoked at all. The section opens with the words :- (1)     If it appears to the court that it would be equitable to allow an action to proceed having regard to the degree to which - (a) the provisions of section 2A or 2B of this Act prejudice the plaintiff .......' "The provisions of section 2A are those which require an action for personal injuries to be brought within three years. So subsection (1)(a) must be contemplating a casein which, because the three years have expired without an action being brought, section 2A applies to the prejudice of the plaintiff.  But if the plaintiff has brought his action within the three years, how has he been prejudiced by section 2A?  This I fail to understand. If this argument is sound, the respondent's case fails in limine. He brought his first action within the normal limitation period, and if he has suffered any prejudice, it is by his own inaction and not by the operation of the Act. However, since the Court of Appeal did not decide the case on this argument, or, it seems, consider it, and since the provision is a new one, understanding of which may have to come with time, I will consider the appeal on the assumption that these initial words may apply to the case".

29. Our Section 30, which I have cited above, opens with exactly the same words as section 2D. The Court must look to see whether it would be equitable to allow an action to proceed having regard to the degree to which the provisions of section 20 prejudice the plaintiff. Mr. Smith argued that it could not be said in the present case that the plaintiffs, as re-gards their action in rem, suffered prejudice by their own inaction and not by the operation of the Act. He submitted that the action in rem was an entirely different action from the action in personam and that, only if he sought to resurrect the action in personam, could the principles enunciatied in Walkley's case be urged against him for then it could be said that the plaintiff in that action had suffered prejudice by the operation of the Act. For these reasons he submitted that Walkley's case had no application to the action in rem.

30. Section 27(1) states that it applies to any "actio" for damages. The question for me to decide is whether there is any difference, as regards Section 27, between an action in personam and an action in rem. What I must ask is whether they are the same action. When answering this question help can be obtained from the words of Viscount Dilhorne in Walkley's case, at 614, where he set out that the material considerations were that the respondent "brought an action for damages for the same personal injuries and in respect of the same cause of action as in his second action". If the action in person and the action in rem are the same action, then the argument of Mr. Smith must fail.

31. The first and most obvious consideration is whether the 2 actions are between the same parties. In most actions this is clearly apparent; indeed, it is so obvious that this must be so, that Viscount Dilhorne did not consider it warranted mention.  However when one is dealing with an action in personam and an action in rem, one must look carefully at the identities of the parties.  The action in personam in the present case was, of course, against Intersea Investment Ltd. and the action in rem was against "the owners of the ship or vessel "Eirama". It is however clear from the facts set out above that, at the time of commencement of both actions, Intersea was "the owners of the ship or vessel "Eirama" and that the use of that phrase was only another was of describing Intersea. The action in rem would not, of course, be well founded unless Intersea, the party originally liable in personam, was still the beneficial owner of the ship at the time of the commencement of the action in rem. I am satisfied that the Plaintiffs and the Defendants were the same in each action.

32. There are two matters to which the Court must look, following the indications given by Viscount Dilhorne. Firstly whether the action is for damages for the same personal injuries. This clearly is so in our case. The personal injuries, it is true, resulted in death, but it is an action for damages for the same personal injuries. Secondly whether it is an action brought in respect of the same cause of action. Again it seems to me clear that it is an action brought in respect of the same cause of action in each case. The difference between the action in personam and the action in rem is that under the action in rem, the vessel named can be arrested and held under arrest as security for the damages claimed. It is this right to arrest the vessel that distinguishes the action in rem from the action in personam. The actions are in essence the same action and, indeed, if the Defendant sought to defend and entered an appearance then the action in rem would become an action in personam as well as an action in rem. There would, however, be no change either of parties or of cause of action.  All that would happen would be that the Defendant, who had not been served with the writ, would, by his own action by entering in appearance, submit himself to the jurisdiction.

33. Mr. Pirie also argued that, given the intention of the Limitation Ordinance, it would be clearly wrong if any distinction was drawn between an action in personam and an action in rem. While I consider that there is some force in this argument I have not relied upon it.

34. I am satisfied that where an action has the same parties, is for damages for the same injury and is brought in respect of the same cause of action then it must, for the purposes of section 27, be regarded as the same action and it is s of no significance as regards the limitation period that it was first brought as an action in personam and later brought as an action in rem. I am, therefore, satisfied that I the present case is on all fours with the position in Walkley's . case.  As it has not been suggested that there are any exceptional circumstances the application brought by the Plaintiff under section 30 must fail in limine.

35. I reach this conclusion with some misgivings and express the hope that it will be tested in another Court.  In case it should be, I turn to consider what my decision would have been had it been proper for me to apply section 30.

36. Mr. Smith, when he came to ask the Court to exercise its discretion, pointed out that the delay between the expiry of the limitation period, i.e. the 21st August 1983 and the issue of the writ in rem, i.e. the 21st October 1983, had been only two months. He did not seek to rely upon any of the other circumstances detailed in sub-section (3) of section 30. However, he asked the Court, having regard to all of the circumstances of the case, to bear in mind that the Defendants had, through their solicitors, contributed to the delay by their lack of forthright and responsive replies to the queries from the Director of Legal Aid.

37. While conceding that the Plaintiffs would have a reasonable prospect of success against the Director of Legal Aid, he pointed out, relying upon Thompson v. Brown Construction (Ebbw Vale) Ltd. and others (1981) 2 All E.R. 296, that although this was a highly relevant factor to be put in the balance, it must, as that case indicated, be to some extent offset by the prejudice that the plaintiff would suffer by having to bring a fresh action against his own solicitors. He relied upon that case as establishing that the existence of a potential claim against the solicitors was only one of the circumstances to be considered by the Court when called upon to exercise its discretion. He pointed out further that, in the present case, given that the negligence of the Director lay in failing to pursue an action in rem, the Plaintiffs would not be able to recover any damages unless they were able to show that the vessel would, at some time, have been able to have been arrested in that action and that the Plaintiffs faced no such difficulty, as the action presently stood, as the Defendants had entered an appearance thereto. He submitted that this was "an imponderable" to which the Court should give some weight when considering the exercise its discretion.

38. It seems to me that the Court must, when considering the exercise of its discretion, bear in mind the desirability that actions be litigated between the actual parties thereto. It must recognize that there is often considerable difficulty in arriving at a satisfactory decision when an action is not properly and fully by the actual parties thereto.

39. Mr. Smith finally asked the Court to take into account that it had been within the knowledge of the Defendants throughout that an action was being brought against them.   He submitted that they, from a time well within the limitation period, had been put in the position where they knew they should be preparing themselves to meet a claim arising out of the death of the deceased.

40. Mr. Pirie suggested that it was not a case where the Court should exercise its discretion. He said that the Plaintiffs had issued a perfectly good writ in time, that they could have entered a concurrent claim in rem at any time within the limitation period and that they were perfectly aware, as the correspondence showed, are of their right so to do. He submitted that this was a straight forward case of negligence on the part of the Plaintiff's solicitors and that the Court, in such circumstances, should be very slow to exercise its discretion.

41. I am satisfied, given the speed with which the writ was issued after the expiry of the limitation period, the fact that the Defendants were well aware prior to the expiration of the limitation period that the action was being brought against them and, although this is a minor factor, that they themselves were guilty of some degree of delay during the running of the limitation period, that this would have been an appropriate case in which to exercise my discretion in favour of the Plaintiffs.

42. For the reasons set out above I do not, however, consider that I have any discretion to exercise in the present circumstances and the Statement of Claim is, therefore, struck out. Summons of the Plaintiffs is dismissed. The Plaintiffs are ordered to pay the Defendant's costs of both summonses to be taxed. The Plaintiffs' costs are to be taxed in accordance with the Legal Aid Regulations.