SUPER ALLOY (HOLDINGS) CO LTD AND OTHERS v. FURUKAWA LINE AND OTHERS

cacv 323/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 323 of 2004

(on appeal from DCCJ NO. 290 of 2002)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  This was an appeal from a decision of HH Judge Chow given on 20 September 2004.  On that day the trial of an action by the plaintiff against the defendants was due to commence.  The claim was in respect of the loss of a shipment of quartz watches which had been mislaid in October 1996.  At the commencement of the hearing the plaintiff applied to re-amend the statement of claim in order to bring in a specific allegation of negligence against the 7^th defendant.  After that application had been granted, counsel for the 7^th defendant applied for an adjournment so that he could consider the 7^th defendant’s pleadings and evidence.  The Judge acceded to that application, vacated the trial dates and awarded costs against the plaintiff.  It is against that decision that this appeal has been brought.  At the conclusion of the hearing of this appeal this court dismissed the appeal with costs with reasons to be given in writing.

Background

2.  As already outlined, this action concerns a claim by the plaintiffs in respect of a cargo of quartz watches.  The cargo was to be shipped from Hong Kong to Japan.  When the container thought to contain the goods was opened in Japan it was found that there were no quartz watches.

3.  The primary claim by the plaintiff was against the 1^st and 2^nd defendants with whom they had contracted.  Those defendants are, apparently, in liquidation and hence the plaintiffs look elsewhere for compensation.  The 3^rd defendant is the owner of the ship upon which the cargo was to be transported.  The 4^th defendant was subcontracted by the 1^st or 2^nd defendants to take over their role and arrange for shipment of the cargo.  Apparently the 4^th defendant subcontracted its duties to the 5^th defendant specifically to provide haulage services.  It is alleged that the 5^th defendant sub-subcontracted the stuffing and consolidation of the cargo to the 6^th defendants.  When the claims were originally launched in 1997 there were only six defendants.

4.  As a result of the defence of the 6^th defendant, the plaintiffs then joined the 7^th, 8^th, and 9^th defendants.  The nature of the plaintiffs’ case against the 7^th defendant can be gleaned from a number of places specifically paragraphs 13 and 14 of the amended statement of claim read as follows:

“	13.	Further or alternatively, the Plaintiffs were unaware of, if, the facts, matters and allegations as set out in the 6th Defendants’ Defence from paragraph’s 10-17, which said facts and matters are true and correct the Plaintiffs claim against the 7th and/or 8th and/or 9th Defendants due to the following allegations supplied by the 6th defendants:
	14.	Facts alleged by the 6th Defendant
		(i)	The 6th Defendant alleges at paragraph 10 of its Defence that the 4th Defendant informed the 6th Defendant that the 1st batch of goods and the cargoes were to be loaded into a container belonging to Freight Container Transportation Co. (the 7th Defendant).
		(ii)	The 6th Defendant alleges at paragraph 11 of its Defence that on or around 30th October 1996, the container from Freight Container Transportation Co. (the 7th Defendant) arrived at their premises with a copy of the drayage receipt dated 30th October 1996 indicating after loading of the goods, the container would go to Sinowealth Warehouse Transportation Ltd. (the 8th Defendant) and Fortune Pioneer Development Limited (the 9th Defendant).”

5.  That is the sum total of the direct allegations naming the 7^th defendant, save for the allegation in paragraph 16 that as a sub-sub-sub-sub-sub-bailee the 7^th defendant lost and/or misappropriated and/or destroyed the cargo and/or negligently loaded or misloaded the cargo onto another container.  It can be seen, therefore, that the case against the 7^th defendant was entirely confined to a case of bailment.  It might be observed that the plaintiffs’ case against the 7^th, 8^th and 9^th defendants was, to put it neutrally, somewhat dependent upon facts emerging at trial of which the plaintiffs were hardly aware.  In their skeleton argument for use at the trial the plaintiffs simply said:

“In the case of D4 and/or D5 (since they took over primary responsibility for the carriage of the goods from D1 and D2) they should be held to be vicariously liable for D6, D7, D8 and/or D9 since the loss certainly happened at one stage involving one or any of those Defendants.”

6.  It was in those circumstances that shortly before the trial the plaintiffs gave notice that they intended to apply to re-re-amend their statement of claim to allege negligence against the 7^th defendant, albeit the pleading of the particulars of negligence was somewhat vague and generalised.  The first and third particulars were that the 7^th defendant had failed to take all reasonable steps to ensure that the cargo could not be stolen or lost and failed to exercise proper supervision over the container whilst it was in its custody care and control.  Such particulars obviously take the matter no further. 

7.  The other particular was that the 7^th defendant had failed to monitor the loading of the cargo properly to ensure that the cargo was in fact loaded into the container by the 6^th defendant and/or take the necessary precautions to prevent the cargo from being stolen or lost whilst the container was at the 8^th or 9^th defendant’s premises.  Those allegations of course raised new matters, particularly as to whether it was the 7^th defendant’s duty to undertake those matters.

8.  When the case opened, the judge made clear that he would deal first with the plaintiffs’ application to re-amend the statement of claim and then deal with any consequential matters, be they applications for adjournment or anything else.  It should be mentioned at this stage that the 7^th defendant had, in a letter prior to the hearing, made clear that if there were an amendment along the lines sought by the plaintiffs it would seek an adjournment of the hearing in order to protect its position.  When counsel for the plaintiffs commenced his application for the amendment he indicated that it might be appropriate for the court to hear the 7^th defendant.  At that stage the judge pointed out that there would be a danger that, if the amendment were allowed, the case may have to be adjourned.  The plaintiffs’ counsel was reported as saying: “If they make such an application, then we will oppose it in due course because they should have shown this by way of evidence in any event at the very outset.”

9.  The application then proceeded, the judge heard from the defendants and in his reply speech the plaintiffs’ counsel then said that if there were to be an adjournment he would abandon the amendments.  The judge said that he was not prepared to hear the two applications together and that he would decide on whether there should be an amendment first and only after that hear any application for an adjournment.

10.  In my view the judge was entitled to hear the applications in the order in which he chose.  That was primarily a matter of case management and this court is very reluctant to deal with matters of case management.  In some cases a court may well consider that if an amendment is granted it is inevitable that there will be an adjournment and would put the party to its election as to whether to proceed with the application for amendment or not.  The judge did not take that course in this instance but instead the plaintiffs were warned adequately as to the possibility that there might be an adjournment.  That had been done by the 7^th defendant and it had also been done by the court. 

11.  In my view the plaintiffs’ attempt to bolster the case against the 7^th defendant almost inevitably caused the 7^th defendant to have to amend its pleadings and file further evidence.  Since it was done at the commencement of the trial an adjournment was almost certainly inevitable.  The notes in the Hong Kong Civil Procedure 2004 at 20/8/11-12 make it clear that if an amendment is allowed at trial an opportunity should be given to counsel to consider it and adduce evidence and that it is the duty of counsel, if necessary, to apply for an adjournment for that purpose.  The notes go on to make it clear that a party seeking such an amendment will generally be ordered to pay not only the costs of the amendment but also the costs thrown away by the adjournment.

12.  It suffices to observe that not only was this an appeal in respect of a case management decision but it would seem that the only possible benefit that the plaintiffs could have obtained by a successful appeal would be another order as to costs other than that they should pay the costs of the adjournment.  Whilst, as already observed, the court might have taken a different approach, it was open to the court not to do so.  It might have been better if the parties had been permitted to make their submissions without quite so many interjections from the court.  Nevertheless, those interjections were made in the course of submissions by counsel, and therefore, did not interrupt or disrupt the evidence.  Nor, in my view, did they lead to any error being made.

Hon Le Pichon JA:

13.  I agree.