NANJING IRON & STEEL GROUP INTERNATIONAL TRADE CO. LTD. AND OTHERS v. STX PAN OCEAN CO. LTD. AND ANOTHER

HCAJ 177/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 177 OF 2006

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BETWEEN

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J U D G M E N T

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I. INTRODUCTION

1.  I have to determine whether there has been inordinate delay by the Plaintiffs and (if so) whether their claim should be struck out.

II. BACKGROUND

2.  The claim here relates to a carriage of wire rods by sea from Nanjing to Liverpool in November 2004. It is alleged that the goods arrived at Liverpool rust-damaged and crushed as a result of a lack of proper care in the course of stowage or carriage. The plaintiff owners of the cargo accordingly brought this action against the defendant shipowners. The claim is worth about US$24,000.

3.  By agreement among the parties, the applicable limitation period was extended to November 2006. Within that extended period, a generally-endorsed Writ was issued in August 2006 and a sister ship of the vessel carrying the goods was arrested at around the same time. The defendants provided security for the release of the arrested ship.

4.  Nothing then happened in the proceedings until December 2008 when by fax the plaintiffs’ solicitors requested the defendants’ solicitors to consent to an extension of time for the filing of a Statement of Claim. The fax did not include any draft Statement of Claim.

5.  On 25 March 2009 the plaintiffs’ solicitors filed a Notice of Intention to Proceed.

6.  On 14 May 2009 the plaintiffs’ solicitors applied to file a Statement of Claim out of time. The Summons did not include a draft of the proposed Statement of Claim.

7.  On 25 May 2009 the defendants’ solicitors applied to strike out the claim for want of prosecution.

8.  By agreement among the parties, the plaintiffs were allowed to file a Statement of Claim without prejudice to the defendants’ contention that there had been inordinate delay. The thinking was that the filing of a Statement of Claim would at least allow everyone (including the Court) to know precisely what the plaintiffs were seeking.

9.  A Statement of Claim was filed on 23 June 2009.

III. DISCUSSION

10.  There has unquestionably been inordinate delay on the part of the plaintiffs.

11.  In shipping cases, because of the application of the Hague or Hague-Visby Rules, the normal period of limitation (as here) is one year. That is to enable a defendant to know what is being claimed against it as soon as possible, to make all necessary investigations, and to collect material evidence at the earliest possible opportunity. Otherwise, the volume of sea-related trade being enormous, the evidentiary trail in relation to a particular shipment will grow cold and it will be extremely difficult to determine just what happened in relation to any particular consignment.

12.  The limitation period was extended by the agreement of the parties to November 2006. But that did not absolve the plaintiffs from getting on with their case as soon as possible after service of their Writ in August 2006. The rationale for the usual one year limitation would continue to apply. This is especially so where the plaintiffs have invoked Admiralty procedures to obtain security from the defendants in relation to the present claim. Unfortunately, contrary to that obligation the plaintiffs did not advance the proceedings for over 2 years.

13.  Under the present CJR regime, that would seem to me to be sufficient cause to strike out the claim. In the absence of some compelling reason, it is contrary to the underlying objective in Order 1A, Rule 1(b) (“to ensure that a case is dealt with as expeditiously as is reasonably practicable”) for a party to allow an action to languish for 2 years once the same has been commenced. I am unable to see any compelling reason in this case. There simply is no excuse for such a long delay.

14.  It is suggested that the new CJR rules should not apply here, because the action was commenced long before CJR came into effect. But I disagree with that suggestion. The Court is bound to apply the rules as they are when a case is heard before it. There is no transitional provision in the rules mandating the Court to ignore the rules (including the underlying objectives) as they now are. It seems to me that the plaintiffs have only themselves to blame if they have delayed progressing their case to an extent that the applicable procedural rules have changed in the interval.

15.  But even under the old principles, it seems to me that this claim would be struck out.

16.  First, it is an abuse of procedure to warehouse a case, that is to say, for a party to initiate proceedings and then do nothing about it while dealing with other matters. The plaintiffs explain that, because the amount of claim was relatively modest, they tried to settle the claim by negotiation. That does not seem to me to be a good excuse. By all means, one can negotiate a settlement or even engage in mediation to arrive at some resolution. But that cannot be at the expense of not doing anything in the Court proceedings for over 2 years. At some point, sooner rather than later, one has to say that enough is enough and get on with an action. Here the plaintiffs’ excuse of negotiation is an especially difficult one to maintain because from early on and thereafter repeatedly the defendants indicated that they were not interested in any proposed settlement.

17.  Second, it is said that the defendants will not suffer prejudice. I am unable to accept that. Over 2 years (or more if one takes the time needed to get this matter to trial) memories are bound to dim. That is a substantial prejudice which can be assumed simply because of the passage of time.

18.  The defendants, for example, might wish to adduce oral evidence on the way in which the relevant cargoes or cargoes of a similar nature to those here were stowed on board a vessel during the relevant period. The more speedily this action was progressed, the earlier the defendants could have taken steps to investigate such issues among crew members. If crew members have left the defendants’ employment, the easier it would be to trace the same for pertinent statements.

19.  It is argued that, because of the minimal amount involved, the trial is likely to be (and always likely to have been) one on documents alone. Thus, it is contended that crew members were unlikely to have been called to give evidence in any event. That may or may not be the case. The point is that, because of the inordinate delay, the defendants are deprived of the opportunity of fairly considering whether the amounts involved here merit the calling of live evidence.

20.  Now, in view of the passage of time, they may have little option but to proceed on paper alone if there is going to be a trial.

21.  Third, it is said that the defendants have only themselves to blame for not taking statements or making appropriate surveys. The Writ (it is pointed out) was issued in 2006 and there was pre-Writ correspondence from which the nature of the claim would have been apparent.

22.  I do not think that such reasoning is fair. The defendants were entitled to see how precisely the claim by the plaintiffs was going to be put. In the absence of even a Statement of Claim, it is difficult to see why the defendants were supposed to guess or infer from correspondence just what case they were supposed to meet. That Statement of Claim did not materialise until June 2009.

IV. CONCLUSION

23.  For the above reasons, whether one proceeds under the present rules or the former ones, I do not believe that allowing the action to proceed would lead to the just resolution of this dispute in accordance with the substantive rights of the parties. The plaintiffs’ claim is accordingly struck out.