QUEENS BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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LINEA NAVIERA PARAMACONI S.A. | Claimants | |
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ABNORMAL LOAD ENGINEERING LIMITED | Defendants |
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Mr Nigel Jacobs (instructed by Messrs Clyde & Co for the Defendants)
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Crown Copyright ©
Mr Justice Tomlinson:
Article III Rule 6
Unless notice of loss or damage and the general nature of such loss or damage be given in writing, to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to the delivery thereof under the contract of carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.
The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.
In the case of any actual or apprehended loss or damage the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods.
"She [Miss Dias] submitted that the loss or damage claimed by her clients did not arise out of or relate to loss or damage to the goods. It was not suggested that the goods themselves had been in any way lost or damaged or otherwise affected at all by any breach of the charter-party by the owners; nor was it even suggested that any delay in the carriage of the goods themselves had given rise to the claim. It related exclusively to the shipping documents and not to the goods themselves.
For the owners Mr Nolan submitted that the claim did relate to the goods since the bills of lading clearly did so. In my view, however, Miss Dias is correct on this point. The fact that bills of lading the subject matter of the claim can be said to relate to the goods does not mean to my mind that the claim relates, or at least sufficiently relates, to the goods. There is simply no loss or damage to or of or in connection with the goods, to use the phrase employed by Mr Justice Pearson in Goulandris v Goldman."
A little later Saville J went on to say:-
"... I find it impossible to see how it can be said that the parties must have intended that the time limit in question should apply to claims such as those asserted by the charterers in the present case. The words of s. 3(6) apply a time limit by reference to when "the goods" were or should have been delivered. It so happens in the present case that goods were loaded on the vessel and subsequently discharged. However, if, as I hold to be the case, the loss or damage claimed from the owners cannot be described as relating to those goods, it is difficult to see how those goods can be described as "the goods" for the purpose of s. 3(6). Why should those goods be "the goods" if the loss or damage is not connected with them? If, for example, the charterers had made a claim unconnected with any goods arising out of the ballast voyage or over an incident before any goods had been loaded at all, it could hardly be suggested that a time bar should, or indeed could, be applied, for there would be nothing upon which s. 3(6) could operate. That to my mind is also the position in the present case once it is established that the loss or damage claimed is not loss or damage to or of or connected with the goods that happen to be on board or about to be put on board.
It seems to me, therefore, that as a matter of construction, that is to say as a matter of trying to ascertain the intentions of the parties from the words they have chosen to use, they can only have intended the time limit to apply to claims for loss or damage relating to the goods carried or perhaps to be carried. Only in such cases can the time limit be applied, for only in those cases can "the goods" be identified."
"It is therefore the proximity of connection between the claim and a given cargo which is of paramount importance in determining whether the time bar applies to that cargo."
I think that the last word in this passage should almost certainly read "claim".
On that basis I respectfully agree with Colman J that this is the critical question.
After citation of further authority Colman J concluded:-
"If the effect of incorporation of the rules by general words is to enable the shipowner to rely on the protection of art. IV to the extent enunciated in Adamastos and The Satya Kailash, then there can, in my judgment, be no reason in principle why the protection provided to the shipowner by art. III, r.6 should not apply to an equally broad spectrum of claims, provided always that it is possible to identify a date when goods sufficiently relevant to the claim were delivered or should have been delivered. To restrict claims covered by the art. III, r.6 protection to those based on a factual foundation which would involve a breach by the owners of their obligations as carriers under the rules in the context of a bill of lading contract would be inconsistent with the reasoning in those two cases. Thus liability "in respect of goods" (the words of art. III, r.6) is not to be construed in the context of a periodic time charter as meaning a liability arising from facts which would found a claim by a cargo-owner under the Hague or Hague-Visby Rules in the context of a bill of lading contract but rather as meaning a liability based on facts involving a particular cargo or intended cargo and, in the absence of physical loss or damage, sufficiently closely involving that cargo for it to be said that the financial loss sustained was referable to what was done with that cargo or was directly associated with it.
Accordingly, the approach which in my judgment, is established by the authorities which I have considered is that where there is incorporation by general words into a time charter of legislation enacting the Hague Rules or Hague-Visby Rules, the shipowners will be entitled to rely on the protection of the time bar against claims for breach of any of the terms of the charter, even if not co-extensive with obligations under the rules, provided that (i) those claims assert (a) a liability involving physical loss of or damage to goods or (b) a liability for financial loss sustained in relation to goods and (ii) the goods in question were either shipped or were intended to be shipped pursuant to the charter. In order to operate the time bar provision in the case of goods intended to be shipped it is clearly necessary for a particular voyage or voyages to have been in the contemplation of both parties at the time when the breach preventing shipment on that voyage occurred. In the absence of such a qualification there would be great uncertainty in the commencement of the one year time period. For this reason a claim in respect of cargo intended to be shipped on a voyage which had not been the subject of charterers' instructions at the time when the facts giving rise to the loss occurred would normally be too uncertain to be subject to application of the time bar."
It will be appreciated from Colman J's reference to liability "in respect of goods" as being the words of Article III Rule 6 that he was in fact concerned with the application of the Hague Visby Rules. However as he makes clear in the second of the two paragraphs cited above he intended his remarks to be of application in relation to both codes and indeed in an earlier passage in his judgment he observed that there is no material distinction between the meaning or effect of the two time bar provisions. I do not have to consider that point.
"The two issues of principle are:
(1) Do the words "loss or damage" refer only to physical loss of or damage to the goods, or do they extend to loss or damage related to goods?
(2) If the latter, does the time limit operate where the goods to which the loss or damage relates have never been loaded on the vessel?
The answer to the first question affects the entire claim since, if the plaintiffs are right, none of the claim is time barred, seeing that none of the loss or damage claimed was in relation to direct physical damage to the goods.
On the other hand the answer to the second question only affects a small part of the claim, which concerns cargo destined for loading on the vessel, but allegedly diverted to another vessel due to the delay in the start of loading."
I infer therefore that the loss and expense arising out of the delay caused by the necessity to clean the tanks before loading could start consisted, largely if not totally, of the cost of shipping the intended goods on an alternative vessel. At all events it was accepted, or at any rate not disputed, that the loss, whatever it was, related to or was sustained in respect of the relevant goods. The question for decision was whether the time bar operated in circumstances where those goods were not in fact carried pursuant to the contract of carriage. The first and main point in the case was, as set out above, whether the words "loss or damage" refer only to physical loss of or damage to goods, or whether they extend to loss and damage related to goods. Saville J at first instance resolved those two questions as follows:-
"In the present case that time limit would have expired some time in April or May 1990. The question here is whether the claims that I have described in general terms are claims for loss or damage within the meaning of section 3(6) of the Carriage of Goods by Sea Act. In my view on the authorities they are. They are claims that relate to the goods in the sense described by Mr Justice Pearson (as he then was) in Goulandris v Goldman [1958] 1 QB 74. It is the case in the present instance that two items of the first head of claim relate to loss and expense in respect of goods which in the event were sent on another vessel, but it seems to me that this does not matter since they were clearly (and, indeed, the claim depends on this) goods which were at the time of the alleged breach intended to be carried on this vessel."
The Court of Appeal agreed with Saville J. Hirst LJ addressed the second question at page 444 as follows:-
"Question 2
This question falls within a very narrow compass.
Mr Broadbent submits that the loss or damage must be related to goods actually loaded on the vessel, otherwise there is no terminus a quo from which the time limit can operate. He submits that the sub-section even on its wider construction contemplates that the time-limit will run from two alternative points, namely the time when the goods were delivered, which pre-supposes they have been shipped on the vessel, or the time when they ought to have been delivered, which again pre-supposes that they have been loaded, since under the charter-party the only delivery obligation is to deliver cargo which has been loaded.
I disagree with this approach. Part II cl. 1 of the charter-party provides under the heading "WARRANTY-VOYAGE-CARGO" that:
... the vessel shall with all convenient despatch proceed as ordered to the loading port... and... shall load... a full and complete cargo... and being so loaded shall forthwith proceed... direct to the discharging port... and deliver said cargo.
The obligation to load is thus the other side of the same coin as the obligation to deliver.
Where, as is alleged here, goods destined for the vessel were not loaded due to the delay, it seems to me that any resulting loss or damage is manifestly "in relation to goods", seeing that, adopting Mr Justice Devlin's test in the Adamastos case, it arises in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods. Moreover, there is no difficulty in determining the terminus a quo of the time limit, since it will begin to run from the date from which the goods ought to have been delivered, assuming the loading obligation had been fulfilled.
For these reasons in my judgment the answer to Question 2 is that at least in the circumstances of this case, the time limit does operate even though the goods to which the relevant lose or damage relates have never been loaded on the vessel. It follows that I would dismiss this appeal."
Was there a Contractual Extension of the Time Limit?
On 23 May 2000 Messrs Clyde & Co wrote to Messrs Jackson Parton as follows:-
"It is nearly 11 months since the voyage in question took place and this means that our clients have to consider their position in relation to any 12 month time limit which might apply to a claim against your clients in relation to the damage to the cranes. We do not accept that our clients would be bound by such a 12 month time limit, but nevertheless we need to ensure that our clients' position is protected.
Techint have commenced proceedings in Italy against Aprile and our clients claiming damages in excess of US $8,500,000 in respect of the damage to the cranes. The Italian proceedings were issued and served shortly before you issued your clients' action in London. This puts our clients in some difficulty in that they are now having to defend two related actions brought by separate claimants in two jurisdictions, both of which are parties to the Brussels Convention. We are therefore reviewing the jurisdiction position.
One particular problem faced by our clients is whether to claim an indemnity from your clients for any sums they may have to pay Techint and/or Aprile. You will have appreciated from the correspondence between the parties since the incident and from the matters pleaded in our clients' Defence that our clients have not alleged that damage to the cranes was caused by fault on the part of your clients. Indeed, it remains our clients' position that the party at fault was Techint. For their part, Techint themselves do not allege any specific fault on the part of your clients or the vessel, but there remains a risk (albeit small) that evidence comes to light which suggests that your clients do in fact have liability for the damage to the cranes. In that event our clients would want to claim an indemnity from your client for any liability our clients had to Techint and/or Aprile.
Whether or not a 12 month time bar would apply in such circumstances, our clients clearly cannot take the risk of facing a time bar defence in the event that they find themselves having to pursue a claim or an indemnity against your clients. One answer would be for our clients to file a counterclaim now in action 2000 Folio No 246, but that would seem to be a waste of time and costs on both sides since there is no current need to claim such an indemnity and it is unlikely that the need to do so will ever arise.
We suggest that the better approach would be for your clients to grant our clients an extension of any applicable time bar up to and including 27th June 2001, and, further, to agree that in the unlikely event that such a claim for an indemnity becomes necessary, our clients may introduce a counterclaim into action 2000 Folio No 246 or commence a separate High Court action against your clients, whichever would be the more appropriate at the time having regard to the state of action 2000 Folio No. 246.
We trust you will agree that this represents the most sensible way of dealing with this particular issue and we look forward to receiving confirmation of your clients' agreement to it shortly.
In the event that this proposal is agreed, we suggest that it should also be mentioned to the Court at the Case-Management Conference so that the Court is aware of the position when giving directions for the future conduct of the action."
On 8 June 2000 Messrs Clyde & Co sent a chaser referring to their fax of 23 May "requesting an extension of any applicable 12 month time limit."
On 9 June 2000 Messrs Jackson Parton responded "We are instructed not to give the time extension you have requested."
On the same day, 9 June, Messrs Clyde & Co pursued their request in these terms:-
"We note that your clients are not prepared to grant our clients a 12 month extension of time in respect of a possible claim against your clients. Since it is unlikely on the evidence currently available that our clients would ever have to pursue such a claim against your clients, we are surprised that your clients should in effect require our clients to take formal steps to protect their position, which will involve both parties in additional costs.
The options open to our clients would appear to be,
(i) to commence a Part 20 claim against your clients;
(ii) to commence a separate action against your clients;
(iii) to apply to the Italian court that your clients be joined as third parties to that action.
Before we discuss the position in detail with our clients and Counsel, we are willing to consider any comments or preferences your clients may have. However, since we are shortly approaching the first anniversary of the voyage, we must ask for those comments no later than 16th June.
Alternatively, if you would prefer to review the position in the context of the forthcoming Case-Management Conference, one option would be for your clients to grant our clients an extension of any applicable time limit until, say 42 days after the date of the Case-Management Conference.
We look forward to hearing from you."
Messrs Jackson Parton responded on 16 June in these terms:-
"We refer to your fax of 9 June. Our clients are willing to grant a time extension to allow your clients to apply at the forthcoming Case Management Conference for leave to commence a part 20 claim, while reserving all rights regarding costs. Whilst any such application will be vigorously opposed, in the event that it is successful we shall expect the Part 20 claim form to be served within seven days; since your application will doubtless be accompanied by a draft of this, we do not consider that this should present any difficulties.
Please confirm your acceptance of this proposal by return. We should also be grateful for news regarding the further information requested.
Best regards."
After a telephone call on 19 June which evidently adds nothing to the correspondence Messrs Clyde & Co responded with what they considered to be the appropriate formula:-
"Thank you for your fax of 16th June.
As discussed on the telephone this morning, we believe the appropriate formula for the suggested time extension should be that your clients grant our clients an extension of any applicable 12 month time limit, such extension to expire 7 days after the date on which the Court makes an order on the Case-Management Conference on your clients' action. This will enable our clients to take alternative action in the event that the Court refuses our clients leave to commence a Part 20 claim.
Please confirm by return that this is agreed."
On 21 June Messrs Jackson Parton replied as follows:-
"We refer to our telephone conversation and your fax, both of yesterday's date. Whilst we are willing to confirm that our extension of time for your application to seek leave to commence a Part 20 claim extends also to the commencement of separate indemnity proceedings (i.e. options (i) and (ii) of your fax of 9 June), in the event of such leave being denied by the Court it would be an absurd outcome for you then to circumvent that Judgment by commencing identical proceedings by an alternative route.
For this reason we must put you on notice that at the same time as the hearing of the application for Part 20 leave we shall seek indications from the Court as to the view it would take of the subsequent commencement of separate proceedings in the event of the failure of the Part 20 application. Assuming that the Court shares our view, if Part 20 leave is withheld and you then commence separate indemnity proceedings, we shall seek to have such proceedings struck out as an abuse of process, seeking indemnity costs and potentially a wasted costs order.
We consider that the most economical way to proceed would be for you now to select which of the routes you wish to follow, undertaking not to seek "two bites of the cherry" by commencing alternative proceedings on the same subject matter. This is obviously a decision for you to take, although we must make it clear that this correspondence will be put before the Court if necessary.
We look forward to hearing from you in this connection"
On 23 June 2000 Messrs Clyde & Co faxed Messrs Jackson Parton in these terms:-
"We thank you for your fax of 21st June confirming that the extension of time granted by your clients covers not just the commencement of a Part 20 claim but also separate indemnity proceedings. You refer to options (i) and (ii) of our fax of 9th June, but you do not refer to option (iii). Please would you clarify your clients' position on option (iii).
We note what you say about the possibility of our clients commencing separate legal proceedings if the application to commence a Part 20 claim is refused. That is a matter which can be considered by the court at the Case-Management Conference."
The correspondence ends with Messrs Jackson Parton's fax to Messrs Clyde & Co of the same day, 23 June 2000 which reads:-
"Thank you for your fax of this morning. As regards option (iii) (the joinder of our clients in the Italian proceedings as third parties), our current view is that the Italian Court would be obliged to decline jurisdiction in respect of any claim against our clients on the basis of Article 22 of the 1968 and Lugano Conventions. However, we are obviously not Italian lawyers; if you were to provide with an Italian legal opinion convincing us that option (iii) is a real possibility, we would be happy to take instructions regarding a time extension in that connection."