The LANKA MUDITHA (Owners of Cargo) v. The LANKA MUDITHA (Owners of Ship)

H E A D N O T E

Naturally, the courts strive to enable all parties to ventilate all viable issues of relevance and materiality at the trial. That results in a liberal policy, subject to costs, where pre-trial amendments are concerned. But undue delay is injustice. And the dislodging of the courts' diaries adversely affects court users generally. So the approach is different where amendments are sought at or shortly before trial. In such instances, amendments which would cause the trial dates to be vacated or at least put them at risk may well have to be disallowed even though they would have been allowed if they had been sought sooner or if they would necessitate no more than a short adjournment.

IN THE COURT OF APPEAL

1993, Nos. 66 and 76
(Civil)

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J U D G M E N T

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Bokhary, J.A.:

1. This is the judgment of the Court.

2. The case out of which these interlocutory appeals by the defendants arise concerns three lots of bulk coffee shipped on board the "Lanka Muditha" at two Indian ports as long ago as September 1986. Those three lots consist of 725 bags shipped at New Mangalore on the 27th, 405 bags shipped at Cochin on the 30th and another 545 bags shipped at that port on that day.

3. Two Indian concerns, Kothari Oil Products Company and the Central Bank of India are the plaintiffs. They sue as owners of cargo lately laden on the Lanka Muditha. Kothari is the exporter of the coffee. The Central Bank of India sue as endorsees of the bills of lading relied upon by the plaintiffs. The owners of the Lanka Muditha, a Sri Lankan company named Ceylon Shipping Corporation, are the defendants in personam. They are named in the writ in rem as the owners of the "Lanka Athula", since it was that other ship of theirs for which the plaintiffs obtained an order of arrest in Hong Kong. Ultimately, the arrest was not effected because security was put up by the P&I club concerned.

4. Shortly stated, the plaintiffs' case runs thus. The cargo was shipped under a contract of carriage whereby the defendants undertook for reward to carry the same from New Mangalore and Cochin to Houston in the United States. That contract was contained in or evidenced by three bills of lading. As to such cargo, the plaintiffs were the owners and/or persons interested and/or shippers. And as to such bills of lading, the plaintiffs were endorsees and/or holders. It was the defendants' duty under the contract of carriage to deliver the cargo at Houston. In breach of that duty, the defendants mis-delivered the same at another American port, Savannah. They did so without surrender of the bills of lading. Van Ekris & Stoett Inc., an American company named as "notify party" in the bills of lading, obtained delivery on a bank guarantee. The defendants therefore converted the coffee. The plaintiffs received no payment for such coffee, having rejected what Van Ekris tendered as insufficient, and are entitled to US$254,796.30 as the "sound arrived value" of the same from the defendants.

5. Now, there is no doubt that for each of these three lots of coffee, there is a bill of lading, issued on United States Lines Inc. forms, for carriage from the Indian ports of loading to Houston. Those are the bills of lading relied upon by plaintiffs.

6. The defendants' case, also shortly stated, runs thus. They were not party to any of those bills of lading. None of those bills of lading was entered into or signed by or with their authority. They did not undertake to carry the coffee to Houston. All they did was to provide, as agent or subcontractor of United States Lines, a feeder service from Indian ports to Singapore where the cargo was transferred from their ships to United States Lines ships for onward carriage to American ports. They issued their own bills of lading to United States Lines for carriage from Indian ports to Singapore. United States Lines issued through bills of lading to the shippers. The bills of lading relied upon by the plaintiffs are such through bills of lading. Possession of the cargo at the material time was in United States Lines, not the defendants. Other defences are also raised; and the plaintiffs' title to sue is challenged.

7. The through bills of lading were signed on behalf of the master by a concern named United States Lines Agency; and the defendants rely on discovered documents as showing that that was done with authority.

8. Van Ekris & Stoett, it may be mentioned, has been brought in as third parties. It may also be mentioned that it would appear that United States Lines are now defunct and that Kothari's finances have also been called into question.

9. Both appeals are from interlocutory orders made by Barnett J. The order appealed against in the first appeal is one dated April 8, 1993, whereby the learned judge dismissed the defendants' application by summons dated April 2, 1993, for, as the summons puts it, "a further and better list of documents". Some indication of what is intended to be achieved by that summons is given in the two affidavits filed in support; and the learned judge in his ruling referred to the application as one for "specific discovery which relates to title to sue". At the time when the application was heard, April 8, 1993, the case was only eleven days away from the day on which the trial before the learned judge was set to commence, the writ having been issued back in 1987.

10. The order appealed against in the second appeal is one made on April 21, 1993. The trial should have commenced two days earlier but was overtaken by procedural applications. These are described by the learned judge in his ruling thus:

"First, an application by the Plaintiffs to amend what they call their points of claim, particularly para. 2. The Plaintiffs contended that as the amendment is one that no more than states a recognized state of affairs, the trial could then proceed. The second application was by the Defendants substantially to amend their defence, and if granted would necessitate an adjournment. The third application was also by the Defendants for the trial to be adjourned anyway, because a witness is unable to leave Sri Lanka to come to Hong Kong to give evidence; and because my recent decision, in which I dismissed an application by the Defendants for discovery, is under appeal."

What the learned judge ordered on April 21, 1993, may conveniently be taken from the Amended Notice of Appeal in the second appeal:

"1. The Plaintiffs do have leave to amend their Points of Claim in the form of the draft amendments as appended to the Plaintiffs' Summons filed on the 17th day of April 1993;

2. The Defendants do have leave to amend their Defence in the form of the draft amendments as appended to the Defendants' Summons filed on the 17th day of April 1993 save that the amendment by adding paragraph 4A and 6B to the Defence be dismissed;

3. Paragraph 2 of the Defendants' Summons filed on the 17th day of April 1993 seeking adjournment of the trial of this Action be dismissed;"

11. On the following day, April 22, 1993, the learned judge awarded the costs of the argument on April 19 and 20, 1993, to the plaintiffs in any event.

12. As far as those matters are concerned, what the defendants seek on appeal may also be conveniently be taken from that Amended Notice of Appeal:

"(1) The Defendant be granted leave to amend its Defence in terms of paragraphs 4A and 6B of the draft Amended Defence appended to the Defendant's Summons dated the 2nd day of April 1993.

(1A)That the Plaintiffs only be granted leave to amend their Points of Claim in the form sought upon terms that:

(i) the Plaintiffs pay to the Defendant the costs of the action to date and any costs thrown away by reason of the amendment; and

(ii) the Defendant be granted consequential leave to amend/re-amend its Defence.

(2) Consequential and further directions be made as to trial, discovery and inspection of documents as well as expert evidence as to Indian law arising from such amendments as are granted.

(3) The costs of this appeal and below be to the Defendant."

The amendment to the Points of Claim which the learned judge allowed was, in his view, merely to plead what appeared on the bills of lading anyway i.e. that Kothari was the shipper.

13. The plea which the defendants sought to introduce by paragraph 4A of the draft Amended Defence was summarised by the learned judge as "a new plea that according to Indian Law the Bank did not have legal capacity to acquire title, or that any contract giving the Bank such rights is unenforceable". The plea which the defendants sought to introduce by paragraph 6A of that draft Amended Defence was summarised by the learned judge as one of "illegality in that the contracts to sell and of carriage were designed to avoid various statutory provisions of Indian law and amounted to smuggling".

14. The argument that the plaintiffs should only have been given leave to amend on the terms that they pay the costs of the action to date and thrown away by the amendment and that the defendants have consequential leave to amend or re-amend their pleadings can be disposed of as shortly as this. No amendment which the defendants have shown any interest in effecting can accurately be said to be consequential upon the plaintiffs' amendments, which the learned judge rightly described as "no more than a formal one, not requiring amendment of the defence or related discovery".

15. That leaves what the defendants tardily sought by way of "title to sue" discovery and "illegality" amendments. It may be mentioned that the defendants had shown themselves interested in the issue of illegality as long ago as 1988. For the purpose of the argument before the learned judge and before us, the plaintiffs did not challenge the relevance of those documents. Nor was it suggested that the illegality defences are incontestably bad, although it was contended by Mr Smith for the plaintiffs that the one which the proposed paragraph 6B would introduce is weak.

16. However, the difficulty in their way which the defendants' arguments never really got to grips with, let alone surmounted, is that the circumstances were such that the learned judge was left, after balancing all competing factors, with a discretion to do what he did.

17. Had the learned judge acceded to the defendants' application for discovery or to their application to amend to plead the illegality defences or either of those defences, the trial before him would have had to be adjourned to fresh dates as a result. He was entitled to dismiss those applications in order to keep the trial on course and to avoid further delay in a case which had already taken an exceptionally long time to get to trial. As things turned out, fresh dates had to be fixed anyway. That was because the defendants' failed applications took up so much time that the trial proper, which only got underway after those applications had been disposed of, had not got very far when the learned judge's other commitments forced an adjournment.

18. The trial is due to resume on September 1, 1993, with five days, including that one, reserved. Should advantage be taken of the time available to give the defendants some or all of what they seek?

19. At one stage, Mr Allman-Brown for the defendants said that an order for "title to sue" discovery would cause the September trial dates to go off. Later, he suggested that it might be possible for him to devise a time-table for serving a list and inspection which would avoid the loss of those dates. But, in the result, he never got round to putting forward any such time-table in the course of the hearing. After the hearing, he wrote to our clerks (with the consent of the other side of course) enclosing a draft order in the first appeal which he had omitted to hand up during the hearing. What is sought by that draft is an order that:

"1) The Plaintiffs do within 14 days serve a further and better list of :

All correspondence and documentation passing between the Plaintiffs and between the Plaintiffs (or either of them) and :

(a) First Fidelity Bank

(b) The State Trading Corporation of India

(c) United States Lines Agency

(d) Teejay Shipping Company

(e) Messrs. Van Ekris and Stoett

(f) The Reserve Bank of India

in relation to the sale, financing and shipment of goods loaded on board the "LANKA MUDITHA" under U.S. Lines' bills of lading Nos. IMMG 7180876-P, IMCCN 9791596-P and IMCCN 9791585-P together with any records kept in relation hereto.

2) There be inspection within 7 days thereafter."

As Mr Allman-Brown's covering letter acknowledges, those suggested time periods were not put forward in the course of the argument. So Mr Smith has not had any opportunity to comment on those periods; and we cannot say if they are sufficient or, if they are not, to what extent they are not.

20. Nobody has suggested that allowing the amendment embodied in the proposed paragraph 6B would not cause the September dates to come off.

21. At one stage, it appeared possible to allow the amendment embodied in the proposed paragraph 4A and still keep the September dates. But, as we have seen, the Amended Notice of Appeal in the second appeal seeks "consequential and further directions as to trial, discovery and inspection of documents as well as expert evidence as to Indian law arising from such amendments as are granted". And no specific directions have been laid before us for our consideration. Any amendment would therefore put the September dates at risk.

22. Naturally, the courts strive to enable all parties to ventilate all viable issues of relevance and materiality at the trial. That results in a liberal policy, subject to costs, where pre-trial amendments are concerned. But undue delay is injustice. And the dislodging of the courts' diaries adversely affects court users generally. So the approach is different where amendments are sought at or shortly before trial. In such instances, amendments which would cause the trial dates to be vacated or at least put them at risk may well have to be disallowed even though they would have been allowed if they had been sought sooner or if they would necessitate no more than a short adjournment.

23. The learned judge acted within the scope of his discretion. What he did was warranted when he did it. The situation may be said to have changed since then in that an adjournment became necessary anyway. But acceding to any of the defendants' wishes would jeopardize the September dates. So, where it matters, nothing has really changed after all.

24. We dismiss these appeals and make in each an order nisi for costs in favour of the plaintiffs.