Eurico S.P.A. v Leros Shipping Company and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE O'CONNOR,LORD JUSTICE LLOYD,LORD JUSTICE GLIDEWELL |
| Judgment Date | 14 January 1987 |
| Judgment citation (vLex) | [1987] EWCA Civ J0114-1 |
| Date | 14 January 1987 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 87/0005 |
[1987] EWCA Civ J0114-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Lord Justice O'connor
Lord Justice Lloyd
Lord Justice Glidewell
87/0005
and
MR D. B. JOHNSON, Q.C., and MR M. J. MOORE-BICK, Q.C.,. instructed by Messrs Middleton Potts & Co., appeared for the Appellants (Plaintiffs).
MR A. G. S. POLLOCK, Q.C., instructed by Messrs Holman Fenwick & Willan, appeared for the Respondents (Defendants).
I will ask Lord Justice Lloyd to give the first judgment.
This is an appeal from a decision of Mr Justice Bingham given on 22nd May 1984 discharging an order of Mr Justice Neill made on 5th August 1983 whereby he extended the validity of a writ for a period of three months. It is a matter of regret that this appeal has taken so long to come on. But that may have been due, at least in part, to the fact that the appeal was stood out at the request of the court in March 1986.
The appeal is by leave of the learned judge. It raises once again the old and familiar question as to the proper approach of the court on an application to renew a writ. It also raises a more novel question as to the weight to be given in that context to the so-called "gold clause" agreement. That agreement was negotiated under the auspices of the British Maritime Law Association in 1950. The original parties to the agreement were certain British shipowners and shipowners' associations, including all the main P & I Clubs on the one hand and certain British underwriters and underwriters' associations representing cargo interests on the other hand. Numerous other parties have since acceded to the agreement.
There were two main purposes to the agreement: one was to resolve the difficulty which had been created by the reference to £100 gold value in the unamended Hague Rules; the other was to provide for the extension of the time limit for bringing suit from one year to two years subject to certain conditions set out in Clause 4 of the agreement. There was a provision in the agreement that in the event of any dispute it should be referred to a sub-committee of the British Maritime Law Association or a legal arbitrator of their choice. It is the second purpose with which this case was concerned and was no doubt the reason why the judge gave leave to appeal.
The action arises out of the carriage of a cargo of 5,200 tonnes of rice from Kandla in India to Ravenna in the summer of 1981 on board the defendants' vessel, Omega Leros. The plaintiffs were receivers of the cargo. The vessel completed discharge on 1st August 1981. It was at once apparent that the cargo had been contaminated by sea water or fuel oil or both. Surveyors were duly appointed on behalf of all parties. The claim, we were told, is likely to exceed £350,000 including interest.
The plaintiffs appear to have thought that the bills of lading under which they took delivery incorporated an arbitration clause from the charterparty. Accordingly, on 21st July 1982, about a month before the one year time limit expired, they appointed Mr Donald Davies as their arbitrator. However, the following day they issued a writ to protect their position should the arbitration clause not be incorporated in the bills of lading.
Very little, if anything, then happened. Mr Lucas, the partner in Messrs Middleton Potts who had charge of the case on behalf of the plaintiffs, was under great pressure of work in the spring and early summer of 1982. As a result he allowed the twelve months to elapse without taking any steps to serve or renew the writ. It was only on 2nd August, some ten days after the writ had expired, that he realised what had happened. He then reacted promptly. He swore an affidavit on the following day explaining his error. The next day, 4th August, he swore a further affidavit in which he drew attention to the fact that the shipowners' P & I Club, The West of England Shipowners' Mutual Insurance Association (London) Limited, were a party to the gold clause agreement. So also was the leading cargo underwriter.
On 5th August the application for renewal came before Mr Justice Neill ex parte. Mr Moore-Bick, appearing for the plaintiffs, took two points. First he relied on the fact that the time limit was contractual and not statutory; secondly he relied on the gold clause agreement. The judge referred to a number of authorities, as appears from the note of his judgment included in the papers. He appears to have regarded the gold clause agreement as constituting a special or exceptional circumstance. He was persuaded to renew the writ for a further period of three months. But he recognised that the court might take a different view on the inter partes hearing.
On the same day, Messrs Middleton Potts telexed the Club inviting them to extend the time for commencing proceedings under the gold clause agreement. It took the Club a very long time to reply. The matter appears to have been over looked altogether for a time; thereafter they are said to have had difficulty in obtaining instructions from their member. Eventually, on 6th January 1984, the Club wrote explaining the position to the defendants and recommending that the defendants agree to extend the time limit if they should take the view that the plaintiffs had complied with the conditions set out in clause 4 of the gold clause agreement. However, the defendants having received that advice, declined to grant an extension.
Meanwhile, on 17th August 1983 the plaintiffs issued a concurrent writ for service out of the jurisdiction pursuant to leave granted by Mr Justice Popplewell. On 2nd September that writ was served on the defendants in Greece, and in due course Messrs Holman Fenwick and Willan acknowledged service on their behalf.
The defendants' application to discharge the order renewing the writ came before Mr Justice Bingham on 22nd May 1984. like Mr Justice Neill, he referred to a number of earlier authorities. He stated the principle to be derived from those authorities as follows:
"From that I derive the principle that the normal rule is that no renewal will be allowed where the effect would be to deprive the Defendant of an accrued statutory Defence or a Defence under the Hague Rules. Nonetheless there is a discretion in the Court to depart from that though the onus is on the Applicant to show a good and sufficient reason. It seems to me on reading the authorities that it is normally only possible to satisfy that test if there is some good reason why the Writ has not or could not have been served in time."
Mr Justice Bingham then refers to the three matters which were relied on by Mr Johnson as constituting good reason why the discretion should be exercised in the plaintiffs' favour. These were: first, the fact that there had been some doubt whether the arbitration clause was incorporated in the bills of lading (the plaintiffs had already appointed their arbitrator and only issued the writ out of caution); secondly, the time bar was contractual and not statutory; and thirdly, the existence of the gold clause agreement.
The judge held that the first two of those matters were factors to be taken into account but not factors of any great weight. He was more concerned by the third matter. In the event he declined to exercise his discretion in favour of the plaintiffs. It might have been different, he said, if the plaintiffs had assumed that the gold clause agreement applied and so let the time go by, but that was not the case: the gold clause agreement only occurred to Mr Lucas, as he very frankly accepted, after the time had already expired. It therefore played no part in his failure to serve the writ in time.
There is now an appeal to this court. Mr Johnson has two prongs to his attack. First he submits that the judge applied the wrong principle; secondly he relies on the three matters he relied on below together with various other matters. As to the attack on principle, Mr Johnson is in some difficulty at the outset. In paragraph 1 of his notice of appeal the error committed by the learned judge is said to have been in looking for some "exceptional circumstances" to justify the renewal. What he ought to have done was to ask himself (I quote from paragraph 3 of the notice of appeal): "whether in the light of all the circumstances there existed good and sufficient reason for the Court in the exercise of its discretion to give leave to the Plaintiffs to renew the Writ". That is, as I read the judge's judgment, precisely the test which he applied. I can discover only one reference to exceptional circumstances throughout his judgment, and that is only a passing reference.
In his argument before us Mr Johnson refined his submissions. He relied heavily on the decision of this court in Jones v Jones (1970) 2 Q.B. 576, and in particular on two passages from the judgments of Lord Justice Sachs and Lord Justice Karminski to which I shall come in a moment.
Jones v Jones was an action for damages for personal injuries arising out of a traffic accident. The plaintiff sued two defendants: the driver of the car in which he was a passenger and the driver of the other car. The plaintiff's solicitor reasonably, but erroneously, believed that if he served the writ on one of the two defendants in time, as he did, that would serve to keep the writ alive against the other defendant. The court held that that was good cause to extend the writ but would not be good cause in any future case.
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