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HCAJ 9/2023, HCAJ 22/2023
(Consolidated)
[2024] HKCFI 2708
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ADMIRALTY ACTION NOS. 9 AND 22 OF 2023
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BETWEEN
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TASMANIA FEEDLOT PTY. LTD. |
1st Plaintiff |
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AEON TOPVALU CO LTD |
2nd Plaintiff |
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TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD. |
3rd Plaintiff |
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and |
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TOLL GLOBAL FORWARDING (HONG KONG) LIMITED |
Defendant |
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and |
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ORIENT OVERSEAS CONTAINER LINE LIMITED |
Third Party |
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(Consolidated by Order of Master Dick Ho dated the 4th day of January 2024)
| Before: |
Hon Anthony Chan J in Chambers |
| Date of Hearing: |
2 October 2024 |
| Date of Decision: |
2 October 2024 |
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DECISION
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1. This is the hearing of the Third Party’s (“OOCL”) Summons filed on 29 February 2024 seeking to strike out (a) the Defendant’s (“Toll HK”) Writ in HCAJ 22/2023, which stands as its Third Party Notice against OOCL in this Consolidated Action; and (b) Toll HK’s Third Party Statement of Claim (“TPSOC”) against OOCL. The strike out is based on O18, r19(1)(b) and (d)[1], and the grounds were set out in para 1 of the Summons :
(1) Toll HK’s claims under OOCL’s Master Sea Waybill (“OOCL Waybill”) are contractually time-barred;
(2) Toll HK’s claims are made under the OOCL Waybill to which it was not a party, and which does not otherwise afford Toll HK locus standi to bring the claims;
(3) Toll HK’s claims are brought in bailment, under the Carriage of Goods by Sea Ordinance, Cap 462, and other bases without any locus standi.
Issue
2. In truth, there is only 1 issue in this application, namely, whether Toll HK had a contract with OOCL by which it is entitled to sue. This is the “locus” issue.
3. Mr Alder, who appeared for Toll HK, had made it clear that Toll HK is not relying on bailment. As for the time bar, there is no issue that Toll HK’s claim against OOCL was brought within time, the point is whether the claim is a valid one. Hence, it is the same locus point.
Applicable principles
4. Given that this is a strike out application, the threshold which OOCL has to meet is high. A claim is frivolous if the “litigant brings a claim knowing that there is no substance in it or that it is bound to fail, or if the claim is on its face so manifestly misconceived that it can have no prospect of success”, and a claim is vexatious if the litigant does something beyond what is necessary for the conduct of litigation with “some spite, or desire to harass the other side to the litigation, or some other improper motive”. A claim is frivolous or vexatious (O18, r19(1)(b)) is a serious finding to make: Yifung Properties Ltd v Manchester Securities Corp, unrep, HCA 1341 & 1359/2014, 19 October 2015, [12]-[14].
5. Under O18, r19(1)(d) (abuse of process), the court has the power to ensure that its process is used properly and must not be abuse. The court will prevent its machinery from being misused for a groundless action, eg, one which is time-barred or one entirely without substance. This jurisdiction is discretionary and only to be exercised in plain and obvious case: Hong Kong Civil Procedure 2024, vol 1, [18/19/9].
Background
6. The material facts can be succinctly stated. In this case, the Plaintiffs say that they are the shipper, consignee/receiver and insurer respectively of a “reefer” container containing frozen beef (“Cargo”) carried from Australia to Japan under a contract of carriage by sea evidenced by a house sea waybill issued by Toll HK to the 1st Plaintiff dated 16 June 2022 (“Toll Waybill”).
7. OOCL was (and is) a well-known Hong Kong based shipping line and was the operator of the ship which carried the Cargo. OOCL agreed to carry the Cargo under an antecedent contract of carriage by sea entered into via dealings by Toll Global Forwarding Pty Ltd (“Toll Australia”) on OOCL’s online platform. That contract was evidenced, in part, by the OOCL Waybill issued also on 16 June 2022 to Toll Australia[2].
8. In HCAJ 9/2023, the Plaintiffs claim damages against both Toll HK and OOCL in respect of the alleged total or constructive loss of the Cargo. They allege that the Cargo was sound on loading and was found damaged on arrival, giving rise to a prima facie cause of action. Further, the reefer mechanism had failed at some point, causing the Cargo to warm, and the Cargo was rendered unsaleable in Japan.
9. Toll HK in turn brought a claim for indemnity against OOCL by HCAJ 22/2023.
10. Toll HK is a member of the Toll group of companies (“Group”) operating internationally. Toll Australia operates in Australia. Toll HK is based in Hong Kong and, as part of its business, issues house sea waybills as carrier for cargoes arranged by other companies within the Group. It holds the NVOCC[3] licence for the Group.
11. In this case, the 1st Plaintiff dealt with Toll Australia in booking the carriage of the Cargo. Toll Australia in turn dealt with OOCL for the actual sea carriage. The 1st Plaintiff was provided with an OOCL container in which the Cargo was packed and the container was then returned to OOCL.
12. Toll Australia, acting on behalf of Toll Hong Kong (see further below), then issued the Toll Waybill to the 1st Plaintiff. It is uncontroversial that the 1st Plaintiff and Toll HK were therefore in a contractual relationship as shipper and carrier under the Toll Waybill.
13. It is the case of Toll HK that Toll Australia, acting as forwarder and booking party, booked the carriage of the container with OOCL, obtained the OOCL Waybill and was named as shipper on that document.
14. Mr Alder says that in this case, Toll HK, not being the actual carrier, is dependent on information from OOCL to defend the Plaintiffs’ claim. The proposition sits with common sense.
Undisclosed principal
15. Mr Chan, who appeared for OOCL, submitted that the only gateway for Toll HK to succeed in its third party contractual claim is to establish that it was an undisclosed principal to the OOCL Waybill. Hence, this strike out turns solely on the issue whether Toll Australia was acting as an agent for an undisclosed principal (Toll HK) in relation to the OOCL Waybill.
16. The principles on undisclosed principal can be found in the judgment of the Privy Council in the case of Siu Yin-kwan v Eastern Insurance Co Ltd [1994] 1 HKLR 77 at 83 :
“(1) An undisclosed principal may sue and be sued on a contract made by an agent on his behalf, acting within the scope of his actual authority.
(2) In entering into the contract, the agent must intend to act on the principal’s behalf.
(3) The agent of an undisclosed principal may also sue and be sued on the contract.
(4) Any defence which the third party may have against the agent is available against his principal.
(5) The terms of the contract may, expressly or by implication, exclude the principal’s right to sue, and his liability to be sued. The contract itself, or the circumstances surrounding the contract, may show that the agent is the true and only principal.”
17. In my view, the issue of Toll HK being the principal contracting party had been adequately pleaded in paras 8 and 10 of the TPSOC :
“8. [Toll HK] via its local agent in Australia, [Toll Australia], sub-contracted the carriage of the Container and/or the Cargo to OOCL.
…
10. At all material times, [Toll HK], as principal contracting party, was the person entitled to sue in respect of the Container and/or Cargo and/or a party to the [OOCL Waybill] and/or the party entitled to demand delivery of the Container and/or Cargo under the [OOCL Waybill] and/or the lawful holder of the [OOCL Waybill].”
18. In paras 3(5) and (8)(a) of Toll HK’s Third Party Reply and Defence to Counterclaim, it was pleaded that (a) in the online booking with OOCL, Toll Australia’s name was entered as both “Shipper” and “Forwarder” and (b) in the subsequent “Forwarding Instruction” sent by Toll Australia to OOCL online, Toll Australia was referred to as the “Forwarder”.
19. In respect of OOCL’s complaint of inadequacy of Toll HK’s evidence on undisclosed principal, I am unable to agree. Putting aside whether such complaint has a place in a strike out application, the evidence in support of an undisclosed principal may be inferred. The Toll Waybill was issued in Australia by Toll Australia “on behalf of the Carrier” – Toll HK. The indisputable factual matrix of this case demonstrates that Toll Australia was not acting as the carrier. Vis-à-vis the Plaintiffs, Toll HK was the carrier, and one of its sister companies, Toll Australia, was acting as its agent in dealing with the actual carrier – OOCL.
20. These facts are in any case evident on the face of the Toll Waybill. Further, they had been sufficiently set out in the affirmation of Chow Hin Chung filed on behalf of Toll HK on 30 April 2024, [17]-[21].
21. I do not believe that the criticism that Toll HK had adduced no evidence that the Toll Waybill was issued by Toll Australia is a good point. It is quite clear from the evidence that there was no other entity in Australia who would have done that. See also the said affirmation, [19].
22. The above arrangement goes a long way to show that Toll Australia was acting as the agent of Toll HK in entering into a contract with OOCL.
23. Whether OOCL knew about the existence of undisclosed principal is irrelevant. Mr Chan did not dispute that Toll HK, as principal, is entitled to sue in its own name without joining its agent.
24. I agree with Mr Alder that if there is any factual dispute, it is a matter for trial.
25. Finally, on the amendment of the TPSOC, Mr Alder had invited OOCL to consent to the proposed amendment. However, it is quite clear from the Third Party Reply and Defence to Counterclaim that it is inconsistent with the plea that the contract of carriage between OOCL and Toll HK was contained in the OOCL Waybill, as opposed to in part so contained. It is trite that the court should not strike out a claim which can be amended. It is a relatively minor imperfection, and would not affect the outcome of this application.
Disposition
26. In the premises, I am unable to see any sound basis for striking out Toll HK’s claim against OOCL. The Summons must be dismissed.
27. As for costs, the parties agreed that costs should follow the event. However, Mr Alder had asked for costs on indemnity basis for the reasons that (a) OOCL had been warned by Toll HK that this application is ill-conceived; and (b) this application was designed to derail the third party proceedings. I am not satisfied that the conduct point has been made out. I bear in mind the “imperfection” of the TPSOC. Considered in the round, I decline to make an indemnity costs order. I make an order that the costs of the Summons be to Toll HK.
28. After the hearing, Toll HK’s solicitors wrote to the court seeking gross sum assessment of the costs of this application as well as the costs of OOCL’s amendment application which was dealt with on 26 September 2024. It is unfortunate that these matters were not earlier raised. I reserve my decision on the same pending OOCL’s response, which should be lodged and served by 9:30am on 7 October 2024. The matters will be dealt with on paper.
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( Anthony Chan ) |
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Judge of the Court of First Instance |
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High Court |
Mr Edward Alder, instructed by Kennedys, for the Defendant
Mr Chan Pat Lun, instructed by Stephenson Harwood, for the Third Party
[1] The Summons also referred to O18, r19(1)(a), O14A and the inherent jurisdiction of the court. They did not feature in OOCL’s submissions. Further, the inherent jurisdiction of the court does not in this case adds to the arguments.
[2] The existence plea of Toll HK is that the contract of carriage was “contained and/or evidenced” in/by the OOCL Waybill. There is a proposed amendment by Mr Alder to insert “(in part)” before that plea.
[3] Non vessel owning contractual carrier.
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