Hancock Shipping Company Ltd v Kawasaki Heavy Industries Ltd (Casper Trader)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STAUGHTON,SIR MICHAEL KERR |
| Judgment Date | 25 June 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J0625-2 |
| Docket Number | 91/0625 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 June 1991 |
[1991] EWCA Civ J0625-2
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
(MR JUSTICE WEBSTER)
Royal Courts of Justice,
Lord Justice Staughton
Sir Michael Kerr
91/0625
1989 Folio 2237
MR ANTHONY CLARKE Q.C. and MR. L. PERSEY (instructed by Messrs. Ince & Co. appeared on behalf of the Appellants.
MR BERNARD EDER Q.C. and MR J.SMOUHA (instructed by Messrs. Watson Farley & Williams) appeared on behalf of the Respondents.
The plaintiffs, Hancock Shipping Company Ltd., were in 1984 the owners of a ship called CASPER TRADER. I shall call them the owners. In March and April of that year they contracted for repairs and modifications to be carried out by the defendants, who had in fact built the vessel in 1971, and whom I shall call the builders.
The vessel was at the builders' yard in Japan from 5th to 15th May 1984; besides drydocking, there were modifications to the main engine and fuel oil system. Soon afterwards, on 24th May, there was a fire at sea in the engine room, and an explosion. Three men died, and the vessel became a constructive total loss. The owners say that their financial loss in consequence amounts to $6 million or thereabouts.
Nearly three years later, on 22nd April 1987, the owners issued a writ against the builders. The endorsement read:
"The plaintiffs claim damages (together with interest and costs) for loss suffered by them in consequence of breach or breaches of a written or oral contract and/or breach of duty and/or negligence in and about the performance by the defendants of modifications and/ or alterations to the main engine of the plaintiffs' vessel 'Casper Trader'".
Points of Claim were served on 23rd October 1987. It was pleaded that the contract incorporated some general conditions of the owners' agents, Marathon International Petroleum (G.B.) Limited. These included a clause 1.14:
"Contractor will be responsible for any damages, judgments, expenses and liabilities including, but not limited to, fire damage, sustained by the vessel or the owner or the vessel's managers or agents, which is caused in whole or in part by the work carried out hereunder by the contractor or its sub-contractors. Contractor shall defend and indemnify the vessel, the owner, the vessel's managers and agents from and against any and all liability, costs and damages to the vessel, the owner, the vessel's managers and agents including but not limited to court costs and attorney's fees, arising out of, or in connection with the performance of this Agreement by contractor or its sub-contractors. This Agreement shall cease to have effect upon owner's acceptance of re-delivery of the vessel except for any latent defects in the vessel caused by the contractor's performance hereunder. As to said latent defects, that owner shall have six months after redelivery to discover any latent defects by contractor's performance hereunder".
The pleading went on to allege a fire caused by the work carried out by the builders, and a latent defect caused by the builders' performance of the contract. In the prayer the owners claimed:
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(1) a declaration that they were entitled to an indemnity;
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(2) an indemnity (whatever that may have meant), and
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(3) damages.
By their Points of Defence served on 22nd December 1987 (as later amended) the builders denied that the general conditions were part of the contract for engine modifications.
There matters rested for a while. It will be noticed that there was nothing in the Points of Claim about negligence or breach of a duty of care, or about breach of contract, unless that followed from the plea that the builders were obliged to indemnify the owners and (by implication) had not done so. Other causes of action which would have been within the general endorsement of the writ were, in accordance with established authority, deemed to have been abandoned—subject, of course, to any amendment that might later be allowed.
On 1st June 1990 the owners' advisers decided, in the light of an expert report which they had received, that the Points of Claim should be amended. Before any application was made for that purpose, the builders' solicitors wrote enquiring about the prayer for "damages" in the Points of Claim, and observing that there was no allegation of breach of duty, contractual or otherwise, or negligence. The owners' solicitors telephoned on the next day to say that they "…would be amending to plead such a claim". A summons for leave to amend was issued on 24th October 1990 (with an estimate of ten minutes); and a few days later the builders' solicitors said that they could see no problem in agreeing the application to amend. Indeed, their check-list under the summons for directions (part of the Commercial Court procedure) included as an issue: "whether the defendants were negligent in carrying out the modification works".
That, as will shortly appear, must have been based on the assumption that the proposed amendments would be allowed. However, on 1st November 1990, they told the owners' solicitors that the proposed amendments would be opposed on the ground that they were time-barred.
So the summons came on for hearing, initially on 2nd November and thereafter upon a number of adjournments. Not all the amendments were opposed. But there was objection to paragraphs 3B, 9A and (in part) paragraph 10. These alleged:
(i) a contractual obligation to exercise reasonable skill and care, and that the works would be fit for the purpose for which they were intended; and
(ii) breach of that duty and/or negligence.
Eventually Webster J. on 26th March 1991 disallowed the amendments which were opposed. The owners sought leave to appeal, which we have granted.
It is common ground that the amendments would introduce new causes of action, which would have been time-barred if raised in a new action on the date when the application was made. The six-year time limit expired in May 1990. Nevertheless, leave can be given to make the amendments under Order 20 rule 5(2) and (5) if two conditions are satisfied, viz:
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(1) if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action, and
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(2) if the Court thinks it just to grant leave to make the amendment.
The Judge held that the first condition was satisfied; that conclusion is challenged in the Respondents' Notice. He held that the second condition was not, and that the owners challenge by way of appeal.
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(i) The first condition
In Steamship Mutual Underwriting Association Ltd. & Anor v. Trollope & Colls (City) Ltd. & Ors. (1986) 33 BLR 77 at p. May L.J. evidently approved the test that there must be a sufficient overlap between the facts supporting the existing claim and those supporting the new claim. Manifestly they do not have to be exactly the same. No more precise test has been provided by the Rule Committee, and in my judgment it would not be right for the courts to devise one. Sufficient overlap is little more than a paraphrase for the requirement that the facts must be substantially the same.
Here I think that there plainly was sufficient overlap. Common to both the existing claim and the new claim are the allegations that the fire was caused by work carried out by the builders, and that the damages are as set out in the pleading. What are new are the allegations:
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(i) that the builders owed a duty to use reasonable skill and care;
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(ii) that they failed to do so;
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(iii) that by an implied term of the contract the modification work was to be reasonably fit for the purpose for which it was intended, and
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(iv) that it was not reasonably fit for that purpose.
It is to may mind plain that point (ii) is the most important in that it raises new issues of fact. Points (i) and (iii) would appear to turn largely, if not wholly, on law, and perhaps the construction of documents. Point (iv) may well travel somewhat further than the existing issues on the facts, but not to the same extent as point (ii).
As I have said, I am satisfied that there is sufficient overlap. The precise degree to which new matter is introduced is, I think, also relevant in considering whether the second condition is satisfied.
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(ii) The second condition
The relevant provisions of Order 20 rule 5 are these:
"(1) Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.
"(2)Where an application to the Court for leave to make the amendment mentioned in paragraph (3), ( 4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.
"(5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment".
Sub-rule (1) is the successor to Order 28 rule 1 which read:
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