Industrie Chimiche Italia Centrale v Alexander G. Tsavliris & Sons Maritime Company (ADMIRALTY, Practice)
| Jurisdiction | England & Wales |
| Judge | Mance J |
| Judgment Date | 19 July 1995 |
| Date | 19 July 1995 |
| Court | Queen's Bench Division |
Practice - Parties - Substitution - Action begun within limitation period by foreign company - Plaintiff ceasing to exist on incorporation into new company after expiry of limitation period - Whether new company to be substituted as plaintiff -
In 1986 and 1987 the first and second plaintiff cargo owners commenced actions against the defendant shipowners and salvors in respect of a salvage dispute. In 1994 the first plaintiffs, an Italian company, ceased to exist as a separate company following its merger by incorporation into C., a larger Italian company. Under Italian law C. automatically succeeded to the rights and obligations of the dissolved company. The plaintiffs sought leave under R.S.C., Ord. 15, r. 7F1 or the inherent jurisdiction of the court for C. to be permitted to take over and continue the first plaintiffs' action. The defendants applied to strike out the first plaintiffs' action on the ground that to allow C. to be named as plaintiff would be to introduce a new party and a new claim after the expiry of the limitation period, contrary to section 35 of the Limitation Act 1980.F2
On the applications: —
Held, allowing the plaintiffs' applications, that section 35 of the Limitation Act 1980 only permitted a new claim in the course of an action after the expiry of a limitation period if provided for by rules of court; that R.S.C., Ord. 15, r. 7 allowed the substitution of a party to an action by a new party to whom his interest or liability had been transferred at any stage of the proceedings and nothing prevented the operation of that rule after the expiry of a limitation period provided that the action was originally commenced within time; that, therefore, C. could be made a party in order to carry on the actions, notwithstanding that more than six years had elapsed since any cause of action accrued to the first plaintiffs, and, in the circumstances, it was appropriate to allow it to do so; and that, accordingly, the defendants' application to strike out would be dismissed (see post, pp. 778C, 782H–783A, 785F–G, 788B, E–F).
The following cases are referred to in the judgment:
Allison (Kenneth) Ltd. v. A. E. Limehouse & Co. [
Arbuthnott v. Feltrim Fagan (unreported), 30 July 1993; Court of Appeal (Civil Division) Transcript No. 1024 of 1993,
Ketteman v. Hansel Properties Ltd. [
Liff v. Peasley [
Mercer Alloys Corporation v. Rolls Royce Ltd. [
Murray v. Shuter [
Payabi v. Armstel Shipping Corporation [
Swindell v. Bulkeley (
Toprak Enerji Sanayi A.S. v. Sale Tilney Technology Plc. [
The following additional case, supplied by courtesy of counsel, was cited in argument:
Austin Rover Group Ltd. v. Crouch Butler Savage Associates [
SUMMONSES
By summonses dated 11 July 1995, the first and second plaintiffs, Industrie Chimiche Italia Centrale and Cerealfin S.A., applied for leave to substitute Cereol Italia S.r.l. (“Cereol”) as first plaintiffs in two actions relating to a salvage agreement commenced by writs issued on 3 October 1986 and 17 March 1987 against the first, second and third defendants, Alexander Tsavliris & Sons Maritime Co., Pancristo Shipping Co. S.A. and Bula Shipping Corporation. The defendants applied to strike out the actions on the ground that the first plaintiffs had ceased to exist following their incorporation into Cereol in 1994 and that to substitute Cereol in their place would introduce a new party and a new claim after the expiry of the six-year limitation period, contrary to section 35 of the Limitation Act 1980. The summonses were heard in chambers but judgment was given by Mance J. in open court.
The facts are stated in the judgment.
Steven Gee Q.C. and Vasanti Selvaratnam for the plaintiffs.
J. Franklin Willmer Q.C. and Sarah Miller for the first and second defendants.
Stephen Tomlinson Q.C. and Stephen Kenny for the third defendants.
19 July. MANCE J. read the following judgment. This judgment deals with a point of much potential significance for actions like the present, which have not been finally determined before the expiry of the relevant limitation period. The point arises in the present two actions at the last stage of preparation for a trial in October 1995 estimated to last 10 weeks. The actions raise issues of considerable complexity, into which I need not go in any detail. The claims arise from events in 1986. The actions were begun in respectively 1986 and 1987. The first and second plaintiffs' claims are alternative. They are made as alleged owners of cargo shipped on board the Choko Star in mid-1986. The Choko Star grounded in the Parana River in Argentina shortly after loading the cargo. The third defendants were her owners, who purported on behalf of ship and cargo to sign Lloyd's standard form of salvage agreement with the first defendants. The plaintiffs say that that was without their authority, and that they were not and are not bound by the salvage arbitration which the first defendants purportedly commenced in London; they say that they participated in the arbitration and paid the amount awarded (some £500,000) under protest. If and in so far as the plaintiffs are bound thereby, they claim to be indemnified by the third defendants; they say, inter alia, that the third defendants were wrong to sign Lloyd's form with a foreign salvor with no local presence or experience, when there was a local professional salvor at hand who could and would have done the job on “no cure — no pay” terms for a fixed lump sum of U.S.$200,000. There have already been three excursions in the actions to the Court of Appeal. The maximum sum in issue is about £500,000 plus, of course, many years' interest. The costs appear, unfortunately, to have become as important as the actual sums in issue, if not more so.
All three defendants now say that the claims, so far as they concern the first plaintiffs, have grounded, this time beyond salvage, on a peril to be found in English law. Both plaintiffs were part of the very substantial Continental Grain group. As happens not infrequently in corporate life, the group has undergone a degree of restructuring. The first plaintiffs are an Italian company, and Italian law like many Continental legal systems provides for the merger of one corporate body in another. In the present case the relevant restructuring occurred quite recently — with effect from 31 December 1994 — and it involved the first plaintiffs ceasing to exist as a separate company and being instead merged by incorporation into another, evidently much larger, Italian company called Cereol Italia S.r.l. (“Cereol”). The entry in the Italian companies register records against the first plaintiffs on that date the words “cessazione” and “fusione mediante incorporazione in altra societa Cereol Italia S.r.l. — Ravenna.” The merger took effect under article 2504 of the Italian Civil Code, which provides that the company resulting from the merger undertakes the rights and obligations of the dissolved company.
The evidence shows that this occurs by way of universal succession, and there is Italian Supreme Court authority that the company resulting from such a merger succeeds automatically to the former company in all its rights and obligations, whether known or unknown to it. In Italy any proceedings in the name of the first plaintiffs would as from 30 December 1994 continue automatically in the name of Cereol.
The defendants submit that the result under English procedural law is very different. According to them Cereol cannot be named as plaintiffs in lieu of the first plaintiffs, since that would be to introduce a new party and a new claim after the expiry of the six-year limitation period. The actions by the first plaintiffs must be struck out, with costs to be paid out of the security already provided and otherwise to be borne by the plaintiffs' solicitors, Messrs. Clyde & Co., personally. Further, on the basis that the actions will then be being brought only by the second plaintiffs, they pursue a claim to further security for costs against those plaintiffs. The plaintiffs not surprisingly resist the defendants' applications. They submit that the court has power, either under the Rules of the Supreme Court or under the inherent jurisdiction, to permit Cereol to take over and continue the actions brought by the first plaintiffs. They seek leave accordingly.
The point is one which has been considered in a previous reported case, Toprak Enerji Sanayi A.S. v. Sale Tilney Technology Plc. [
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