Central Insurance Company Ltd v Seacalf Shipping Corporation (Aiolos)

JurisdictionEngland & Wales
JudgeLORD JUSTICE ACKNER,LORD JUSTICE OLIVER
Judgment Date17 February 1983
Judgment citation (vLex)[1983] EWCA Civ J0217-3
CourtCourt of Appeal (Civil Division)
Docket Number83/0076
Date17 February 1983
Central Insurance Co. Ltd.
and
Seacalf Shipping Corporation

[1983] EWCA Civ J0217-3

Before:

Lord Justice Ackner

Lord Justice Oliver

83/0076

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL

ON APPEAL FROM THE HIGH COURT OF JUSTICE

(MR JUSTICE SHEEN)

Royal Courts of Justice

MR J.N. GRUDER, instructed by Messrs Clyde & Co., appeared for the Appellants (Plaintiffs).

MR PETER IRVIN, instructed by Messrs Ince & Co., appeared for the Respondents (Defendants).

LORD JUSTICE ACKNER
1

I will ask Lord Justice Oliver to deliver the first judgment.

LORD JUSTICE OLIVER
2

This is a case in which we are asked for leave to appeal and we have decided to give leave. Before I deliver judgment I ought to ask the appellants' counsel for an under taking that the appeal will be set down to come before the court on motion.

3

Certainly, my Lords: I will give that undertaking.

LORD JUSTICE OLIVER
4

This is an application for leave to appeal from an order made on 10th December 1982 by Mr Justice Sheen in chambers in an admiralty action, whereby he dismissed the plaintiffs' appeal from an order of the admiralty registrar of 2nd December 1980 striking out the writ and statement of claim on the ground that they disclosed no reasonable cause of action and refused leave to amend.

5

Although the initial application was for leave only, we indicated that if leave were given we would proceed straightaway with the hearing of the substantive appeal, and we have in fact heard full argument on the matter which arises in this way. The plaintiffs, Central Insurance Company Limited, are, as their name suggests, insurers and are incorporated in Taiwan. In the course of their business there they effected in 1978, with 28 Taiwanese buyers, 30 policies of insurance covering quantities of soya-bean meal which had been consigned to the buyers on board the defendants' vessel, "Aiolos", and which were the subject-matter of 30 separate bills of lading. The total quantity loaded was 18,923.245 metric tons, but on discharge at destination in April 1978 the cargo was found to be 682.901 metric tons short and the plaintiffs were thus called upon to pay, and did pay to the buyers, a total of 8,127,681 Taiwanese dollars. Upon doing so, they of course became subrogated to the buyers' rights and, in addition to relying upon the ordinary insurers' rights of subrogation, they obtained from each buyer a formal document which was headed "Loss Subrogation Receipt", which acknowledged the receipt of the insurance money and contained this provision:"In consideration of this payment, we hereby relieve the above mentioned insurance company, its agents and/or representatives from any liability in regard to such loss, and abandon to the above mentioned insurance company, its agents and/or representatives all our rights title and interest in the said goods. We also undertake and agree to allow any proceedings to be taken in our name in respect of the loss or recovery of the said goods, if required, and to assist in such proceedings in any form that may be required of us."

6

The bills of lading were subject to the Hague Rules and in particular to rule 6 which is in the following terms, so far as material to the questions which have arisen in this case:"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."

7

Following the payment of the claims by the insurers, claims were pursued by loss adjusters on their behalf against the shipowners. The claims were resisted and in April 1979 Messrs Clyde & Co., the solicitors acting for the P. & I. Club to which the defendants belonged, wrote granting an extension of time under the Hague Rules to 3rd July 1979.

8

On 28th June 1979, that is to say, some five days before the extended time for instituting a suit ran out, the plaintiffs, through solicitors in London, issued a writ in rem, the only claim endorsed on which was in the following terms:"The plaintiffs' claim is for the sum of 18,923,245 New Taiwan Dollars being the amount due to the Plaintiffs from the Defendants in respect of rights of subrogation under contracts of insurance relating to goods shipped on a voyage from Brazil to Kaohsiung on the ship M.V. Aiolos and lost due to the default of the Defendants full particulars whereof have been delivered and exceed three folios." That was subsequently amended to correct certain errors in the sums claimed.

9

A statement of claim was served on 20th August 1979 claiming damages for breach of contracts of carriage by sea and it is important to note that the statement of claim followed precisely the specification of the cause of action adumbrated in the writ. It identified the plaintiffs as insurers, referred to the 30 policies, the shipping of the goods and the short delivery on arrival, and in paragraph 6 pleaded that the plaintiffs had suffered damage as a result of the defendants' failure to deliver. No title to sue appears on the face of the pleadings, but paragraph 5 is in these terms:"In the premises the said thirty separate consignees suffered loss and damage and the Plaintiff duly indemnified the said thirty separate consignees under the said thirty insurance contracts, in the sum of New Taiwan Dollars 8,127,681.00 and thereby the Plaintiffs became subrogated to all rights and entitlements possessed by the said thirty separate consignees against third parties including the Defendants (defendant vessel is the unit in rem)".

10

A defence was served on 5th October 1979 which put the short delivery and damage in issue and which contained the following paragraph "6. It is expressly denied that the Plaintiff has title to sue the Defendant."

11

An unexplained delay for a year ensued and then on 30th October 1980 the defendants issued a summons to strike out the writ and statement of claim. That came before the Admiralty Registrar on 2nd December 1980 and, perhaps not altogether surprisingly, it succeeded, for it is well established that an insurer has no right, in English law at any rate, to sue under his right of subrogation in his own name, but must bring his action in the name of the insured and the only fact relied on by the plaintiffs was their payment of the insured loss.

12

On 5th December 1980, however, the plaintiffs gave notice of appeal and also notified their intention of seeking leave to re-amend their writ and to amend the statement of claim. The amendments to the writ consisted of an addition of the 28 insured buyers entitled to the 30 policies as plaintiffs, and the addition of (i) a claim by the plaintiffs as assignees of the rights of the cargo owners and (ii) claims for damages in the alternative by the 28 buyers. The amendments to the statement of claim reflect these amendments and in particular paragraph 10 sought to plead the loss subrogation receipts as effective legal and equitable assignments of the buyers' rights to claim against the defendants for loss of cargo.

13

This burst of activity at the end of 1980 was, however, illusory and a period of uninterrupted peace and calm appears to have ensued for the next two years which remained unbroken until November 1982 when the plaintiffs changed their solicitors.

14

The appeal and the application to amend finally came on for hearing before the judge and on 10th December 1982 he dismissed the plaintiffs' appeal and refused their application for leave to amend. The learned judge was not asked for leave to appeal, but it is accepted that the application fell to be treated as an interlocutory one and that leave is required.

15

On behalf of the plaintiffs Mr Gruder puts his case in two ways. He accepts that the general rule is that an insurer relying upon his right of subrogation must sue in the name of his insured and therefore by inference that he needs leave to amend, although he argues that the leave required is not in fact as extensive as the leave which has been sought because, he claims, the plaintiffs were and are entitled to sue in their own names as assignees and do not strictly need to join the buyers as co-plaintiffs or as substitute plaintiffs. He submits: (1) that, on the basis of evidence put before the learned judge, he should have come to the conclusion that there was at least an arguable case for saying that the loss subrogation receipts constituted assignments under Taiwanese law of the buyers' rights to sue for damages, Taiwanese law being the law governing the contractual relationships between the buyers and the insurers; (2) that if this is right the insurers were in fact entitled to sue in their own name. Whilst he accepts that, there having been no notice to the defendants prior to the action of any assignment, the documents relied on cannot qualify as anything but equitable assignments and, whilst he also accepts, as he has to, that the general rule is that an equitable assignee must join his assignor as a party in any action, either as plaintiff or defendant, he submits that this rule is a procedural rule only, evolved to protect the defendant from the possibility of subsequent claims by the assignor and that there are exceptions where it is clear that the assignee is solely and beneficially entitled and that there is no possibility of any claim by the assignor against the debtor.

16

Since in this case the beneficial claims of the 28 buyers must all be long since extinguished as a result of rule 6 of the Hague Rules, there can be no possibility of any such claim against the defendants, so the rationale of the procedural rule does not apply and, accordingly, the instant case is one of the exceptional cases in which an...

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