The Indian Endurance (No 2); Republic of India and Another v India Steamship Company Ltd

JurisdictionEngland & Wales
JudgeLORD JUSTICE STAUGHTON
Judgment Date23 April 1996
Judgment citation (vLex)[1996] EWCA Civ J0423-4
CourtCourt of Appeal (Civil Division)
Date23 April 1996
Docket NumberQBADF 94/1479/B

[1996] EWCA Civ J0423-4

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

MR JUSTICE CLARKE

Royal Courts of Justice

Strand

London WC2

Before:

Lord Justice Staughton

Lord Justice Simon Brown

Lord Justice Auld

QBADF 94/1479/B

Between:
The Owners of the Cargo Lately Laden on Board
The Indian Grace
Plaintiffs
and
The Owners of the Ship Indian Endurance
Defendants

MR K ROKISON and MR J GRUDER (Instructed by Clyde & Co EC3) appeared on behalf of the Plaintiffs.

MR T CHARLTON QC and MR A ROXBURGH (Instructed by Messrs Ince & Co EC3R) appeared on behalf of the Defendants.

1

2

(As Approved)

3

Tuesday, 23rd April, 1996

4

JUDGMENT OF THE COURT

LORD JUSTICE STAUGHTON
5

On 26th June 1987 a part cargo of munitions was loaded on board the vessel INDIAN GRACE at Uddevala in Sweden for carriage to Cochin in India. The plaintiffs in this action are the Republic of India—that is not in dispute. They were or became the owners of the munitions and the holders of the bills of lading. But there is to some extent a dispute as to who are the defendants. The INDIAN GRACE (and likewise the INDIAN ENDURANCE) was at all material times owned by India Steamship Company Ltd. We will call the parties the Government and the Owners.

6

On 1st July 1987, in the course of the voyage, a fire was discovered in the hold which contained the munitions. It was put out with water. But the water affected another part cargo, of wood pulp stowed under the munitions. The vessel put into Cherbourg and stayed there for a month. Then she continued on the voyage, and reached Cochin early in September. The cargo was discharged by 4th September. At some stage a small part of the munitions cargo had been thrown overboard—51 artillery shells and ten charges. But the case for the Government is that the whole of their cargo was damaged and worthless; or at any rate damaged to the extent of half its value.

7

The casualty has given rise to legal proceedings in three different places:

(i) On 8th August 1988 the Owners started an action against Oriental Insurance Co Ltd in Calcutta for general average contribution. Oriental were the cargo insurers who had given an average guarantee at the port of discharge. No doubt the claim was in respect of expenses and loss in connection with the fire and the call at Cherbourg, to the extent that the York Antwerp Rules allow. At some stage Oriental answered that the cargo might turn out to have no contributory value.

(ii) On 1st September 1988 the Government started an action in the Subordinate Judge's court at Cochin against the Owners. The claim was in respect of the cargo shortage only, and was for RS 1,89,508.67. That action was begun within the one-year time limit in the Hague Rules.

(iii) On 25th August 1989 a writ in rem was issued in England on behalf of the Government against the INDIAN GRACE and 15 other vessels in the same ownership. The principal claim was for loss of or damage to the cargo. In amount it came to Sw K 27,104,984. At the date of the writ that was about 360 times the size of the claim referred to at (ii) above, and equivalent to £2.6 million. This claim too was in time, as the Government had obtained an extension pursuant to the Gold Clause Agreement.

8

We are not concerned with action no. (i), about general average contribution, except to note the suggestion that the cargo had no contributory value. Action no. (ii) came to trial; and on 16th December 1989 judgment was given for the Government for the full amount claimed. Action no. (iii) took a step forward on 4th May 1990, when the writ was served at Middlesborough on the INDIAN ENDURANCE, a sister ship of the INDIAN GRACE. There was no arrest of the vessel, but the Owners entered an appearance and their protection and indemnity association gave an undertaking to the Government and their insurers to pay any damages awarded.

9

There was then an application to strike out action no. (iii) based (after amendment) on section 34 of the Civil Jurisdiction and Judgments Act 1982, which provides as follows:

No proceedings may be brought by a person in England and Wales or Northern Ireland on a cause of action in respect of which a judgment has been given in his favour between the same parties, or their privies, in a court in another part of the United Kingdom or in a court of an overseas country, unless that judgment is not enforceable or entitled to recognition in England or, as the case may be, in Northern Ireland.

10

It was said that the judgment of the Subordinate Judge's court in Cochin brought that section into operation, and prevented the Government from proceeding with their Admiralty action in England.

11

That argument succeeded before Sheen J., and on appeal before Glidewell, McCowan and Leggatt L.JJ. However the House of Lords on 18th February 1993 remitted the case to the Admiralty Court to consider whether there was an estoppel or waiver which prevented the Owners from relying on section 34; they also remitted a new point that had been raised, as to whether an Admiralty action in rem involved the same parties and the same cause of action as an action in personam.

12

On 24th June 1993 in the Admiralty Court it was ordered that there be a trial of preliminary issues (for the action had still not progressed beyond that point) as follows:

(1) Whether the Defendants waived reliance upon or are estopped or are otherwise precluded from relying upon Section 34 of the Civil Jurisdiction and Judgments Act 1982. [In the event, it was also argued that the Owners were estopped from relying on Henderson v. Henderson.]

(2) Whether the fact that the action brought by the Plaintiffs in the Courts of Cochin was an "in personam" action whereas the present action was commenced as an "in rem" action has the effect that the cause of action in the present proceedings was not a cause of action in respect of which a Judgment has been given in the Plaintiffs' favour in proceedings between the same parties for the purpose of Section 34 of the Civil Jurisdiction and Judgments Act 1982.

(3) Whether the Plaintiffs' claim is barred by reason of the principle of res judicata set out by Wigram V.C. in the case of Henderson v. Henderson 3 Hare 100.

13

Those issues came before Clarke J. He answered all three in favour of the Government: (i) the Owners were estopped from relying on section 34 and on Henderson v. Henderson; (ii) the parties to an action in personam were not the same as the parties to an action in rem (although the cause of action was the same); and (iii) the Government's claim was not barred by the principle in Henderson v. Henderson. The Owners now appeal. The critical path from their point of view is this: in order to succeed on the appeal they must show on issue (i) that there is no estoppel, and also that the judge was wrong on either issue (ii) or issue (iii). Per contra, the Government must succeed either on issue (i) or on both of issues (ii) and (iii), to retain their judgment.

14

Further facts

15

After discharge was completed at Cochin in September 1987 there is a long history until the present application to strike out was launched on 16th August 1990. The story was set out with care by the judge over 28 pages of his judgment, and we hope that we may be forgiven if we abbreviate it to some extent.

16

The seeds of the present problem were sown, so it would seem, within two or three months of discharge. On 18th November 1987 Lieut. Commander Nagarajan of the Government's Embarkation Headquarters in Madras gave notice of a claim in a letter to the Owners' agents at Madras. The letter said that the cargo had been received in damaged condition, but a footnote referred to "deficient items". Three weeks later Mr Malhotra, an Under Secretary at the Ministry of Defence in New Delhi wrote to the Owners

… the cargo shipped under the above mentioned B/Ls has been received in damaged condition and the entire items are unserviceable and have been treated as total loss to the Government. Accordingly we call upon you to pay immediately a sum of RS 13.62 Cr. being the c.i.f. value of the entire consignment …

17

Those two letters, written by different officials from different offices, were the ancestors of the proceedings in Cochin and in England respectively.

18

On 3rd February 1988 Cdr. Nagarajan, having obtain the figures for a shortage claim, wrote again to the Owners' agents in Cochin enclosing a survey report and asking for settlement in the sum of Rs 1,89,508.67. The Owners replied in a letter dated 29th February and headed "Without Prejudice" —

… we would advise that the Government of India, Ministry of Defence have already lodged with us … a claim in the sum of Rs 13.62 crores for alleged total loss of entire consignments covered by Bs/L nos. 0633–2 and 0633–3 … As Government of India have already filed with us a consolidated claim … and as we will therefore deal this matter with them as and when they revert, we suggest that you get in touch with them directly.

19

Cdr. Nagarajan, described by the judge as a most conscientious officer, reacted appropriately. He asked the Ministry of Defence in New Delhi for advice as to what he should do. Receiving no reply, he sent a reminder on five occasions.

20

On 9th June 1988 Oriental Insurance Co. Ltd. wrote to the Owners, saying that they were interested in the Government's claim as insurers, and asking for an extension of time under the Gold Clause Agreement. This request was repeated on behalf of Oriental by Mr Medhekar, a claims adjuster, on 17th June 1988; he enclosed a claim bill for Rs 13.62 crores. On 21st June he asked the Owners to notify the damage sustained in that amount to the general average...

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