Polish Steam Ship Company v Atlantic Maritime Company (Garden City, Zaglebie Dabrowski)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE EVELEIGH,LORD JUSTICE GRIFFITHS,LORD JUSTICE KERR |
| Judgment Date | 04 April 1984 |
| Judgment citation (vLex) | [1984] EWCA Civ J0404-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 04 April 1984 |
| Docket Number | 84/0141 |
[1984] EWCA Civ J0404-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE ORDER OF MR JUSTICE PARKER
Royal Courts of Justice
Lord Justice Eveleigh
Lord Justice Griffiths
and
Lord Justice Kerr
84/0141
Owners of the ship "Garden City" and all other persons claiming or being entitled to claim damages by reason of or arising out of the collision between the ship "Zaglebie Debrowskie" and the ship "Garden City" which occurred in the North Sea on the 19th March 1969.
MR GEOFFREY JAMES BRICE Q.C. and MR LLOYD LLOYD, instructed by Messrs Elborne Mitchell & Co., appeared for the Appellants (Plaintiffs).
MR RICHARD AIKENS, instructed by Messrs Waltons & Morse, appeared for the Respondents (Defendants).
On 27th April 1978 the plaintiffs commenced a limitation action in respect of liability incurred as a result of a collision on 19th March 1969 between the plaintiffs' vessel "Zaglebie Debrowskie" and the defendants' vessel "Garden City". On 28th April 1978 they paid into court the sum of £692,900.63. At that date the limitation figure by reference to the vessel's tonnage was £395,341.40. The balance of the total sum, namely £297,559.23, represented interest on the limitation figure from the date of collision to 30th April 1978 at 8.25%. At the plaintiffs' request the total amount was placed on Short Term Investment Account.
On 2nd March 1982 judgment was given in the limitation action. It was ordered:
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(1) That the plaintiffs' liability in respect of the specified claims should not exceed £395,341.40 with interest at 8.25% from 19th March to 30th April 1978, and;
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(2) That the plaintiffs having, on 28th April 1978, paid into court the aforesaid sum with the aforesaid interest, all other actions resulting from the casualty should be stayed. On 18th November 1982 the registrar ordered that the total
sum originally paid in be paid out and distributed on 1st December 1982 to the various defendants in specified proportions. No order was made with regard to the interest which had accrued on that total sum in the Short Term Investment Account. That interest had reached a figure of £534,904.76 by 30th November 1982 and continued to earn further interest. The defendants claim the whole of that interest.
The plaintiffs contended that at the date of a decree in a limitation action the defendants are entitled to the limitation sum plus simple interest to that date from the date of the collision. As at the date of decree, it is said, that total sum becomes the limitation fund, and insofar as it remains in court interest in fact earned which can he attributed to that fund, even though it be compound interest, will belong to the defendants. This amount represents the total entitlement of the defendants and the plaintiffs contend that they are entitled to all monies in court in excess thereof. They said that there was no justification for the defendants' claim to the total sum in court because interest earned on the Short Term Investment Account was compound interest and the court has no jurisdiction to award compound interest. In the present case the simple interest element of the original figure paid in has itself been earning compound interest.
Mr Justice Parker said that the award of interest is discretionary and it therefore follows that the fate of any interest earned upon interest paid into court must also be discretionary. However, he said that the question was not one of awarding interest but deciding upon the destination of interest in fact earned upon money paid into court with the clear intention of discharging the plaintiffs' maximum obligation which could have arisen had there been a decree on the date of payment in. As the payment in had the effect of discharging the plaintiffs from all further liability he said that the interest earned upon it should be treated as belonging to the defendants.
The limitation of a shipowner's liability is the creature of statute. The latest enactment, the Merchant Shipping (Liability of Shipowners and Others) Act 1958 is a consequence of the International Convention relating to the Limitation of Liability of Owners of Seagoing Ships signed at Brussels on 10th October 1957.
Section 503 of the Merchant Shipping Act 1894 reads,
"(1) The owners of a ship, British or foreign, shall not, where all or any of the following occurrences take place without their actual fault of privity;….. be liable to damages beyond the following amounts; (that is to say,)
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(i) In respect of loss of life or personal injury, either along or together with (such loss, damage or infringement as is mentioned in paragraphs (b) and (d) of this subsection), an aggregate amount not exceeding (an amount equivalent to three thousand one hundred gold francs) for each ton of their ship's tonnage; and
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(ii) in respect of (such loss, damage or infringement as is mentioned in paragraphs (b) and (d) of this subsection), whether there be in addition loss of life or personal injury or not, an aggregate amount not exceeding (an amount equivalent to one thousand gold francs) for each ton of their ship's tonnage".
This section as set out above incorporates the amendments introduced by the Act of 1958. That Act increased the limits of liability contained in the 1894 Act from £15 to amounts equivalent to the appropriate number of gold francs. Section 1(3) of the 1958 Act reads, "The (Secretary of State for Trade) may from time to time by order made by statutory instrument specify the amounts which for the purposes of this section are to be taken as equivalent to three thousand one hundred and one thousand gold francs respectively". Subsection (4-) provides, "Where money has been paid into court (or, in Scotland, consigned in court) in respect of any liability to which a limit is set as aforesaid, the ascertainment of that limit shall not be affected by a subsequent variation of the amounts specified under subsection (3) of this section unless the amount paid or consigned was less than that limit as ascertained in accordance with the order then in force under that subsection".
The provisions of Section 1 are not expressed to be limited to proceedings in a limitation action. They would appear to cover the case where a shipowner, being sued as a defendant, claims the right to limit and pays a sum into court. There is nothing in the current legislation relating to the payment of interest, although there had been in 1813(53 Geo. Ill c. 159) "An Act to limit the responsibility of shipowners in certain cases". I will refer to that Act later. However, in my opinion, for the purpose of crystalising the amount of the statutory limit to the liability of the shipowner, the payment into court of the principal sum properly calculated will suffice even though unaccompanied by any interest. The limit to the liability set out in the statute itself is 3,100 gold francs or 11,000 gold francs depending upon the nature of the damage suffered. The new legislation clearly envisages that the court will ascertain the limit in gold francs by reference to the ship's tonnage and will then convert the number of francs into the relevant equivalents specified by the Secretary of State. Where money is paid into court the first step in ascertaining the conversion rate will be to take that prevailing at the date of payment in and convert accordingly. If the resultant figure is not more than that paid in there will be no need to look further, for the rate will have been established as that prevailing at the date of payment in. If, on the other hand, the resultant figure is greater the court will take the rate in force at the time of its decision. This seems to me to be the simple result of a straightforward reading of the statutory provisions. It should be noted that the payment in has not been made an essential step in a limitation action.
In arguments addressed to us, counsel for the defendants has invited us to treat the payment in as something quite different from payment in by a defendant in an ordinary action. I do not regard section 1(4) of the 1958 Act as being designed primarily to facilitate the ascertainment of the appropriate conversion rate. Its primary purpose seems to me to be an attempt to harmonise the new limitation basis of assessment with rules of court which permit a party to pay money into court. Without the provisions of section 1(4) a person wishing to pay into court would have no idea what sum to pay in. He would have to anticipate the prevailing rate at the date of a judgment in the future. It does of course enable a shipowner to know with certainty his ultimate liability, but this is not necessarily an unmixed blessing. If the rate goes down, as we see from the judgment of Lord Justice Kerr that it can, the owner may well regret having paid in.
Although in 1958 courts had the power to order interest in an appropriate case in an ordinary action the Rules of Court relating to payment in contained no provision for paying in interest. Although in limitation actions the court had power to award interest, we have been told that before the 1958 Act it had long ceased to be the practice to pay in in a limitation action. It was only in about 1967 that there seemed to be any point in doing so because of the fluctuations in the value of gold. In other actions, generally, money in court was not treated as belonging to the person claiming damages. He could take out the money in court, although if he delayed in doing so leave was required. He did not at the same time take out any interest which had accrued: the interest, if any, belonged to the person who had paid the money in.
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