Compania Continental del Peru S.A. v. Evelpis Shipping Corporation,
(The "Agia Skepi")
Queen's Bench Division (Commercial Court)
QBD (Comm)
Mar. 19, 1992
Before Mr. Justice Saville
Practice - Application to set aside - Service out of jurisdiction - Bill of lading - Damage to cargo - Cargo-owners claimed as parties to the contract of carriage, for breach of a Brandt v. Liverpool type of contract and breach of non-contractual bailment - Whether claims within R.S.C., O. 11, r. 1 - Whether service out of jurisdiction should be set aside.Bill of lading - Practice - Application to set aside - Damage to cargo - Cargo-owners claimed under bills of lading as parties to the contract, for breach of Brandt v. Liverpool type of contract and breach of non-contractual bailment - Whether claims within R.S.C., O. 11, r. 1 - Whether service out of jurisdiction should be set aside.The plaintiffs' cargo of sugar was shipped from Brazil to Peru on the defendants' vessel Agia Skepi.The plaintiffs alleged that there was short and damaged delivery and claimed damages.In their writ the plaintiffs claimed that by virtue of the Bills of Lading Act, 1855 the plaintiffs were party to the contracts contained in or evidenced by the bill of lading issued in respect of the cargo. In the alternative the plaintiff claimed that by presenting the bills of lading and taking delivery thereunder they contracted with the defendants on the terms of the bill of lading (i.e. a Brandt v. Liverpool type contract) and the plaintiffs further claimed that the defendants were bailees of the goods on the terms of the bills of lading and owed duties to the plaintiffs who owned the goods.The plaintiffs argued that since the bills of lading incorporated a charter-party which contained a London arbitration clause in terms which made the proper law of the charter and thus the bills of lading English law their claim fell within R.S.C., O. 11, r. 1(1)(d)(iii).The plaintiffs accepted that their three causes of action were in the alternative. If they were correct on the first then there could be no valid claim either that they made Brandt v. Liverpool type contracts, or that the relationship between the parties was one of non-contractual bailment on terms; and similarly the second or third cause of action could not co-exist with the others.In July 1991 Mr. Justice Webster made an order giving the plaintiffs leave under O. 11 to serve the defendants out of the jurisdiction.The defendants applied to set aside that order.Held, by Q.B. (Com. Ct.) (SAVILLE, J.), that (1) the plaintiffs satisfied the requirements of O. 11 in relation to their first cause of action i.e. a claim for breach of the bills of lading contract based on the grounds that the plaintiffs became parties to those contracts by virtue of the Bills of Lading Act, 1855 and that the defendants were in breach of those contracts (see p. 468, col. 2); (2) the claim must be shown to fall within one or more of the lettered sub-paragraphs of O. 11, r. 1(1) and the Court must also be satisfied on the material presented that the plaintiffs' claim raised serious matters which called for a trial for their proper determination; the Court had also to be satisfied that the English Court was the forum in which the case could best be tried in the interests of the parties and the ends of justice (see p. 469, col. 2); (3) the plaintiffs had properly deposed to their belief that they had a good cause of action by stating in effect that on one of the three alternative grounds available as a matter of English law they believed that they would establish the liability of the defendants for their claim; this satisfied the requirements of O. 11, r. 4(1)(b); if the claim fell within O. 11, r. 1(1)(d)(iii), England was the proper forum for determination of all the claims (see p. 469, col. 2); (4) as to the Brandt v. Liverpool claim this claim raised a serious issue which ought to be tried alongside the plaintiffs' primary claim that they were parties to the bills of lading contracts by virtue of the Bills of Lading Act, 1855; the plaintiffs had produced material to suggest that they owned the goods before the vessel arrived; they presented the bills of lading and took delivery of the goods although their bank was named as consignees and they paid for the stevedoring, taxes and dues on the cargo; the plaintiffs' claim could not be categorized as frivolous or vexatious; and since the proper laws of the bills of lading contract was English law, any Brandt v. Liverpool contracts on the terms of the bills of lading would be governed by English law, and therefore within O. 11, r. 1(1)(d)(iii) (see p. 470, col. 1); (5) the claim for damages for breach of non-contractual bailment on terms could not be categorized as a claim brought to recover damages in respect of the breach of a contract within O. 11, r. 1(1)(d)(iii); the relationship of bailment was quite distinct from the relationship of contract and could exist quite independently of contract; and to bring the case within O. 11, r. 1(1)(d)(iii) the applicant had to assert a contract not a relationship of bailment (see p. 470, col. 2); (6) on no sensible reading of O. 11, r. 1(1)(d)(iii) was the claim for bailment "brought to . . . otherwise affect" the bills of lading contracts; and the claim for breach of bailment would be set aside (see p. 470, col. 2; p. 471, col. 1).*468 The following cases were referred to in the judgment:Attock Cement Co. Ltd. v. Romanian Bank for Foreign Trade (C.A.) [1989] 1 Lloyd's Rep. 572; [1989] 1 W.L.R. 1147;BP Exploration Co. (Libya) Ltd. v. Hunt, [1976] 1 Lloyd's Rep. 471; [1976] 1 W.L.R. 788;Brandt v. Liverpool Brazil and River Plate Steam Navigation Co. Ltd., (C.A.) (1923) 17 Ll.L.Rep. 142; [1924] 1 K.B. 575;Eras EIL Action, The (C.A.) [1992] 1 Lloyd's Rep. 570;Hutton (E.F.) & Co. (London) Ltd. v. Mofarrij, (C.A.) [1989] 2 Lloyd's Rep. 348; [1989] 1 W.L.R. 488;Morris v. C. W. Martin & Sons Ltd., (C.A.) [1965] 2 Lloyd's Rep. 63; [1966] 1 Q.B. 716;Rank Film Distributors v. Lanterna Editrice Srl, June 4, 1991, Unreported.Tesam Distributors Ltd. v. Schuh Mode Team GmbH and Commerzbank A.G. (C.A.) Oct. 20, 1989, Unreported.This was an application by the defendants Evelpis Shipping Corporation, the owners of the vessel Agia Skepi to set aside part of the ex parte order made by Mr. Justice Webster granting the plaintiffs Compania Continental del Peru S.A., the owners of cargo lately laden on the vessel Agia Skepi, leave to serve the defendants out of the jurisdiction.RepresentationMr. Dominic Kendrick (instructed by Messrs Clyde & Co) for the plaintiffs; Mr. David Foxton (instructed by Messrs. Richards Butler) for the defendants.The further facts are stated in the judgment of Mr. Justice Saville.Judgment was delivered in open Court.JUDGMENTMr. Justice SAVILLE:This case concerns a claim by the plaintiffs for short and damaged delivery of a cargo of sugar shipped from Brazil to Peru on the defendants' ship Agia Skepi. In July 1991 Mr. Justice Webster made an order ex parte giving the plaintiffs leave under R.S.C. O. 11 to serve the defendants out of the jurisdiction. The defendants now seek under O. 12, r. 8 to set aside part of that order.In the writ the plaintiffs asserted a number of causes of action in support of their claim. These included allegations of breach of oral contracts and tort, but these allegations are now not pursued. What is left is what one would expect to find in a cargo claim of this nature, namely, a claim that by virtue of the Bills of Lading Act, 1855 the plaintiffs were party to the contracts contained in or evidenced by the bills of lading issued in respect of the cargo; a claim that by presenting the bills of lading and taking delivery thereunder the plaintiffs contracted with the defendants on the terms of the bills of lading (on the basis of the principles set out in Brandt v. Liverpool Brazil and River Plate Steam Navigation Co. Ltd., (1923) 17 Ll.L.Rep. 142; [1924] 1 K.B. 175); and a claim that the defendants were bailees of the goods on the terms of the bills of lading and thereby owed duties to the plaintiffs, who owned the goods.The plaintiffs contend as the basis for English jurisdiction that since the bills of lading incorporated a charter-party which contained a London arbitration clause in terms which made the proper law of the charter-party and thus the bills of lading English law, their claims fall within O. 11, r. 1(1)(d)(iii) of the Rules of the Supreme Court. This rule permits the Court to grant leave to serve the writ out of the jurisdiction if: . . . the claim is brought to enforce, rescind, dissolve, annul or otherwise affect a contract, or to recover damages or obtain other relief in respect of the breach of contract, being (in either case) a contract which . . . (iii) is by its terms, or by implication, governed by English law . . . . Under O. 11, r. 4(1) the applicant for leave has to support the application by affidavit which must, among other things, state that in the deponents belief the plaintiff has a good cause of action. Under O. 11, r. 4(2) no leave shall be granted unless it shall be made sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction.It is common ground between the parties that the plaintiffs satisfy the requirements of O. 11 in relation to the first of the causes of action to which I have referred above, namely, a claim for breach of the bills of lading contracts based on the grounds that the plaintiffs became parties to those contracts by virtue of the Bills of Lading Act, 1855, and that the defendants were in breach of those contracts. The defendants submit, however, that the plaintiffs have not shown on the evidence a good cause of action in respect of their claim for breach of Brandt v. Liverpool type contracts; and that their claim for breach of bailment on terms falls outside the provisions of O. 11, r. 1(1)(d)(iii). The reason why the plaintiffs wish to pursue all three causes *469 of action lies in the fact that the law relating to the passing of property in the context of the Bills of Lading Act, 1855 is highly technical and in order to guard against the risk of losing this their primary claim on a technicality the plaintiffs wish (to use their words) to keep as many strings to their bow as possible, i.e. to preserve their secondary causes of action in case their primary cause fails.The plaintiffs accept that their three causes of action are in the alternative; that if they are correct on the first then there can be no valid claim either that they made Brandt v. Liverpool type contracts, or that the relationship between the parties is one of non-contractual bailment on terms: and similarly the second or third causes of action cannot co-exist with the others. It is this state of affairs which leads to the first question, namely, whether in those circumstances the case, to the extent that it rests on the second or third cause of action, is a proper one for service out of the jurisdiction within the meaning of O. 11, r. 4(2).There is a plethora of authority, much of which would seem not to be wholly reconcilable, on whether a particular case is a proper one for service out of the jurisdiction. What is certain, however, is that the plaintiff must show that the claim falls within the letter and the spirit of the relevant lettered sub-paragraph or paragraphs of O. 11, r. 1(1). This must be so, for if the Court grants leave, then subject to any right of appeal against that grant, there will be (whatever the outcome of the case) no further opportunity to challenge here the jurisdiction of the Court.As well as this there are cases which have also required the plaintiffs to show, as it is put in some of them, "a good arguable claim on the merits" and also that England is the forum in which the case can be most suitably tried in the interests of all parties and the ends of justice.As to a good arguable claim on the merits it would follow, if this test were to be applied to each of the causes of action separately, that the plaintiffs would necessarily fail on the second and third of those put forward in this case. Their primary case is that they were parties to the bills of lading contracts by virtue of the Bills of Lading Act, 1855. As I have said, it is accepted that the other causes of action are alternatives; they would not exist (and thus could hardly be described as good arguable claims on the merits) if the first cause of action is good, which the plaintiffs say it is. Put another way, it could be said that the plaintiffs in the present case cannot depose that they have three good causes of action, but only one out of three, of which they primarily contend for the first.In my view, however, this approach is calculated to lead to absurdity, as indeed was pointed out by Lord Justice Mustill in the Eras EIL Action, [1992] 1 Lloyd's Rep. 570. If the plaintiffs' second and third causes of action are to be struck out because their primary case is inconsistent with them, then the result would be that even if those causes of action fell within the letter and spirit of O. 11, r. 1(1) and obviously should (as a matter of commonsense and justice) be considered together with the first cause of action in an English Court, nevertheless the law dictated (for no discernible good reason) that this could not be done. I should record at this point that Mr. Foxton, on behalf of the defendants, did not seek to advance or support this approach: I have dealt with it in order to make clear my approach to the question of leave under O. 11 in a case such as the present.In my judgment the correct approach lies in not attempting to over-analyse the requirements of O. 11, as indeed Lord Justice Mustill also observed in the case cited. Clearly the claim must be shown to fall within one or more of the lettered sub-paragraphs of O. 11, r. 1(1). Clearly the Court must also be satisfied on the material presented that the plaintiffs' claim raises serious matters which call for a trial for their proper determination, for the Court should not put foreigners to the expense of coming here to defend frivolous or vexatious claims: c.f. the decision of the Court of Appeal in Tesam Distributors Ltd. v. Schuh Mode Team G.M.B.H., Oct. 20, 1989 unreported. Clearly the Court must also be satisfied that the English Court is the forum in which the case can best be tried in the interests of the parties and the ends of justice. But to my mind, as I observed in Rank Film Distributors v. Lanterna Editrice S.R.L., June 4, 1991 unreported, to adopt a test of "good arguable case" which requires and involves in effect trying out the case on affidavits in order to decide whether or not to try the case again here on proper evidence does not seem to me (for the reasons stated in that judgment) to be calculated to advance the cause or quality of justice.In the present case it seems to me that the plaintiffs have properly deposed to their belief that they have a good cause of action, by stating, in effect, that on one of three alternative grounds available as a matter of English law they believe that they will establish the liability of the defendants for their claims. To my mind this satisfies the requirements of O. 11, r. 4(1)(b). I am equally satisfied that if the *470 claims fall within O. 11, r. 1(1)(d)(iii) then England is the proper forum for determination of all the claims - indeed the defendants did not dispute that this was so. There remains therefore the question whether the claim based on Brandt v. Liverpool contracts, or the claim based on non-contractual bailment of terms, falls within O. 11, r. 1(1)(d)(iii) and raises serious issues calling for a trial.As to the Brandt v. Liverpool claim, Mr. Foxton's submission was that the material relied upon by the plaintiffs fell short of what English law requires in order to hold that a contract on the terms of the bills of lading came into existence at the time the goods were delivered to the plaintiffs. In essence, Mr. Foxton's submission was that there was nothing in the dealings between the plaintiffs and the defendants to indicate that by conduct or otherwise the parties had struck a bargain to take delivery of the goods on the terms of the bills of lading, since everything the parties did was wholly explicable on the basis that they were respectively performing their obligations under other contracts. Accordingly Mr. Foxton submitted that on the test propounded in Attock Cement Co. Ltd. v. Romanian Bank for Foreign Trade, [1989] 1 Lloyd's Rep. 572; [1989] 1 W.L.R. 1147 the plaintiffs failed to show that they were "probably right"; that being that Court's definition of a "good arguable case".For reasons already stated I do not consider that the Attock test is appropriate in the present circumstances. In my judgment this claim does raise a serious issue which ought to be tried alongside the plaintiffs' primary claim that they were parties to the bills of lading contracts by virtue of the Bills of Lading Act, 1855. The law on what is required to create a Brandt v. Liverpool type contract is far from clear - and since the plaintiffs have produced material to suggest that they owned the goods before the ship arrived; that they presented the bills of lading and took delivery of the goods although it was their bank and not they who were named as consignees; and that they paid for the stevedoring and taxes and dues on the cargo, it seems to me that this claim cannot be categorized as frivolous or vexatious. On the contrary, it seems to me to be a proper and serious alternative to the plaintiffs' primary claim. Finally, since the proper law of the bills of lading contracts is English law, it seems to me that any Brandt v. Liverpool type contracts on the terms of the bills of lading would be governed by English law, thus bringing the case within O. 11, r. 1(1)(d)(iii).I was not persuaded that the claim for damages for breach of a non-contractual bailment on terms can be categorised as a claim brought to recover damages in respect of the breach of a contract within the meaning of O. 11, r. 1(1)(d)(iii). The relationship of bailment is quite distinct from the relationship of contract and can exist quite independently of contract - indeed the former predates the latter in our law - c.f. Morris v. C. W. Martin & Sons Ltd., [1965] 2 Lloyd's Rep. 63 at p. 73; [1966] 1 Q.B. 716 at p. 731. To my mind O. 11, r. 1(1)(d) is quite clear in this regard - in order to bring the case within its provisions the applicant must assert a contract, not a relationship of bailment or indeed any other relationship.Faced with this difficulty, the principal ground advanced by Mr. Kendrick (Counsel for the plaintiffs) for asserting that a claim for breach of non-contractual bailment fell within this sub-paragraph, was that such a claim affected the bills of lading contracts, which were governed by English law. He pointed out that the phrase "otherwise affect a contract" in the rule is very wide (see BP Exploration Co. (Libya) Ltd. v. Hunt, [1976] 1 Lloyd's Rep. 471 at p. 476; [1976] 1 W.L.R. 788 at p. 795) and that if the claim in bailment succeeded then the rights or obligations existing under the bills of lading contracts would be affected.I am not persuaded by this argument, since it seems to me that on no sensible reading of O. 11, r. 1(1)(d) is the claim for breach of bailment "brought to . . . otherwise affect" the bills of lading contracts. It is perhaps possible (depending on the factual and legal situation with regard to the bills of lading) that rights or obligations under those bills of lading contracts will be affected as a consequence, but that is not the test laid down by the sub-rule under discussion. In my view E.F. Hutton & Co. (London) Ltd. v. Mofarrij, [1989] 2 Lloyd's Rep. 348; [1989] 1 W.L.R. 488, upon which Mr. Kendrick relied, is readily distinguishable, for there the non-English obligations sued upon directly and not merely consequentially affected the English contract between the parties and the claim could properly be said to be brought to affect that English law contract. Here the effect (if any) would be consequential and not direct nor (ex hypothesi) would the plaintiffs be party to the bills of lading contracts, which makes it even more difficult for the claim to be described as one brought to affect those contracts.It is clearly unsatisfactory that the bailment claim cannot be pursued alongside the other claims: and for reasons already stated had that claim come within the words of O. 11, r. 1(1)(d) I would have allowed it to be pur-*471 sued. It is indeed tempting to avoid this unsatisfactory state of affairs by concluding that if a plaintiff's primary claim falls within the wording of O. 11, r. 1(1) then alternative, secondary claims should be allowed to be joined, even if standing alone those secondary alternatives did not come within the wording. However, this could result in the plaintiff eventually succeeding on a claim which did by then stand on its own, and which alone would not have come within the wording of the rule. This, to my mind, means that such a conclusion would offend the letter and spirit of O. 11, r. 1(1) as it is presently drafted. To cite Lord Justice Mustill in The Eras EIL Action for the third time, however obviously justified the claim, however obviously sensible it may be to have it tried in England the Court must not grant leave unless the case falls within the lettered paragraphs. Accordingly, in my judgment, the claim forbreach of bailment must be set aside.(c) Lloyds of London Press Limited [1992] 2 Lloyd's Rep. 467END OF DOCUMENT
viernes, 21 de noviembre de 2008
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