HANWA CO (HK) LTD v. EVERBRIGHT SHIPPING CO LTD AND OTHERS

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BETWEEN

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J U D G M E N T

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Nazareth J. (giving the judgment of the Court)

1. The "Felicity 2" sailed from Pohang in South Korea on the 25th February, 1987, and is presumed to have sunk on the following day. Lost with her was a cargo of steel bars shipped under bill of lading no PS- 1 ("the 1st Bill"). It was erroneously dated the 26th February 1987 and issued in the name of Everbright Shipping Co. Ltd., the 2nd Defendant, by Pacific Shipping Co. Ltd. and recorded, inter alia, the following particulars:

2. Shipper : SSangyong Corporation, GPO Box 409 Seoul, Korea.

3. Consignee: TO ORDER.

4. Notify party: Hanwa Co., (HK) Ltd Hong Kong.

5. Port of discharge: Shanghai, China.

6. Place of issue: Seoul, Korea.

7. Apparently in deference to the exigencies of tirade between China and South Korea, another Bill of Lading No. MS-1 also dated the 26th February 1987 (the 2nd Bill) was issued in respect of the same cargo, in identical proforma, but showing a Japanese port of loading.

8. Following the loss of the vessel, the Plaintiff sought to recover over US$l million as its loss on the cargo. The terms and conditions in the two bills were provided by proforma apparently taken from the forms of a Korean company Chun Kyung Shipping Co., the 3rd Defendant, which for that reason came to be sued although the action has since been discontinued against it.

9. The Everbright Shipping Co. Ltd. in the event proved to be somewhat shadowy and the Plaintiff ran into difficulty in attempting to serve it. Pacific Shipping Co. Ltd. when asked for information, referred Hanwa to the 4th Defendant, a firm, which they said had a representative in Hong Kong. The representative subsequently turned out to be Mr. Gwak now who 7th Defendant. It was Mr. Gwak who signed the Declaration of Loss of the Felicity 2 in the name of the 'Bright Pacific Co', as agents of the Everbright Shipping Co. Ltd. In trying to ascertain who were the owners and carriers, the Plaintiff and its agents were subject to what can only be described as a run around. The 2nd Defendant, who is the registered owner of the Felicity 2, is a Panamanian Corporation, whose directors, in particular the President and Secretary, reside in Taiwan. On enquiry by the Plaintiff's agents, the President and Secretary denied that the 2nd Defendant was the owner and claimed that the 2nd Defendant merely arranged for crewing the vessel on the 8th Defendant's instructions.

10. A search of the company registry in H.K. revealed the existence of the Ever Bright Shipping Co. Ltd. (sic) which the Plaintiff, as it turned out incorrectly, assumed to be the carrier. On 26th February 1988, the Plaintiff issued its writ against the first 3 Defendants and in respect of the 1st Defendant served it upon the Ever Bright Shipping Co. Ltd. (which service was later sec aside in December, 1988). The Plaintiff then obtained leave from Master O'Donnell to serve the writ upon the 2nd Defendant in Taiwan and the 3rd Defendant in Korea. The 3rd Defendant, as already indicated, had nothing to do with the loss and the Plaintiff discontinued its action against the 3rd Defendant on 8th December 1988.

11. On lst February 1989 the Plaintiff was given leave to add the 4th to the 9th Defendants. On 14th February 1989 Master Jones gave leave to the Plaintiff to issue and serve a concurrent writ on the 2nd Defendant by serving it out of the jurisdiction in Taiwan.

12. The 2nd Defendant applied under O. 12 r. 8 to have the leave to serve outside the jurisdiction set aside and on 3rd July, 1989, Mayo J. dismissed the application in a short judgment. The 2nd Defendant now appeals to this court against that judgment.

13. It is not disputed that the proceedings are taken in Hong Kong against the 2nd Defendant, a foreign corporation, solely by virtue of O. 11 r. 1(c) which provides that service of a writ out of the jurisdiction is permissible with the leave of the court if -

"The claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto."

O. 11 r. 4(2) provides that:

"No such leave shall be granted unless it shall be made sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction under this Order."

14. The standard of proof that the requirements of P. 11 r. 1(c) have been met is not in dispute and it is probably best described as "a good arguable case" (The Supreme Court Practice 1988 para 11/1/6). It is clear that leave cannot stand if the claims against the persons already served cannot succeed; "some chance of success at least seems to be necessary." "Tae Plaintiff must show to the satisfaction of the tour that he has a probable cause of action". The Brabo [1949] 1 A.C. 326, 336-340).

15. Turning then to the 2nd Defendant's appeal, this is founded upon the contention that the Plaintiff has failed to satisfy the requirements of O. 11 r. 1(c) in that the material before the court demonstrates that there is no viable case against the Defendants served in Hong Kong, and that therefore, there is no basis upon which to found the court's jurisdiction in Hong Kong against the 2nd Defendant. the Defendants served in Hong Kong form 2 groups. First the 4th and 7th Defendants, who are sued as carriers, the latter being a partner of the former. And second, the 8th and 9th Defendants who are sued as beneficial owners. As to the 4th and 7th Defendants, the 2nd Defendant contends that the action against them is bound to fail as it is extinguished or time-barred by Clause 23 of the terms and conditions of the Bills of Lading. The material part of Clause 23 is in the following terms:

"No sure, whether founded cither by contact of carriage or by tort, shall be maintained unless instituted within one year after the day on which he vessel arrived or should have arrived at the port of discharge, notwithstanding any provision of law of any country or state to the contrary."

Also of relevance is Clause 29:

"The contract evidenced by this Bill of Lading shall be construed and governed by Korean Law."

16. The Plaintiff's response is first, that the institution of the action against the first 3 Defendants on 26th February 1988 defeats the time bar despite the striking out and discontinuance of the action in respect of the first 3 Defendants; second, that on the material before the court it has a good arguable case of estoppel against the 4th and 7th Defendants relying on the time bar; and third, that the court has a discretion to permit the action against the 2nd Defendant to proceed in the context of its power to allow additional parties to be joined under O. 15 r. 6.

17. As to the case against the 8th and 9th Defendants, the 2nd Defendant contends that there is no cause of action disclosed asserted against them. The Plaintiff's response is that its casa against the 8th and 9th Defendants cannot be said to be bound to fail as there are facts that are disputed and must be investigated, and that there is evidence that these Defendants were owners or had some responsibility as managers of the vessel.

18. Some submissions were also made by Mr. Robert Ribeiro for the 2nd Defendant on a time-bar arising from the Hague-Visby Rules which he contended applied by operation of law to the 2nd Bill of Lading. in tine event Mr. Michael Thomas Q.C. for the Plaintiff did not seek to rely upon the 2nd Bill of Lading.

19. Turning to the matters that have to be considered, it is convenient to begin with the estoppel raised by the Plaintiff. The representation relied upon is that the First Bill of Lading was issued by he Everbright Shipping Co. Ltd. Such a representation is manifestly contained in that Bill. From a telex sent by the Pacific Shipping Co. Ltd., which issued the Bill it appears that the Pacific Shipping Co. Ltd. was acting on the instructions and on behalf of the 4th and the 7th Defendants. There is no reason why he should not be believed. On the contrary it has not been challenged by any contradictory evidence, it rings true, and is consistent with the 4th and 7th Defendants' self proclaimed links with the Everbright Shipping Co. Ltd. and the relevant voyage charter of the Felicity 2 by the 4th Defendant to a Korean company. There seems no good reason why that evidence should be rejected out of hand, indeed, why it should not be accepted. The evidence presented points plainly to the representation in the First Bill of Lading having caused the Plaintiff to pursue Everbright Shipping Co. Ltd. and thereby to delay in some degree the steps it ultimately took against the pith and 7th Defendants. That is in no way negated by the delay that must also have resulted from the Plaintiffs' solicitors' own abortive pursuit of the Ever Bright Shipping Co. Ltd. The 4th and 7th Defendants having caused the misrepresentation that led the Plaintiff to pursue the Everbright Shipping Co. Ltd., it would be unfair to allow the 2nd Defendant in presenting the 8th and 7th Defend its case, to succeed on the time bar, a fortiori since the 7th Defendant in response to the Plaintiff's enquiries pointed it away from the 2nd Defendant to the 8th and 9th Defendants.

20. It was not seriously contended that the Plaintiff did not have a good arguable case in tort against the shipowner; the contrary would in any case seem to follow from the circumstances including the unexplained rapidity with which the vessel sank on leaving the port of Pohang. That the 2nd Defendant is a necessary and proper party to the claim brought against the 9th and 7th Defendant in terms of O. 11 (c) seems to be obvious on the facts already detailed. It follows that the Plaintiff has met the requirements of that provision to the requisite standard of a good arguable case, and that the appeal must be dismissed. it is unnecessary to deal with the other grounds raised and we do not propose to do so, particularly as some of them are likely to be pursued at the trial of this action.

21. The 2nd Defendant's appeal is therefore dismissed for the reasons we have given and we make an order nisi that the Plaintiff is to have its costs of the appeal.