Heinz-Wattie Ltd v Hamburg Sudamerikanische
Dampschifffahrts-gesellschaft (No 2)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CP 451/96

BETWEEN
HEINZ-WATTIE LIMITED
Plaintiff

AND
HAMBURG SUDAMERIKANISCHE DAMPSCHIFFFAHRTS-GESELLSCHAFT
Second Defendant

AND
BLUE STAR (NORTH AMERICA) LIMITED
Third Defendant

Hearing: 24 March 2000

Counsel: T J Broadmore for both defendants in support
W L McIntosh for plaintiff in opposition

Judgment: 5 April 2000

RESERVED JUDGMENT OF PATERSON J

Solicitors:
Chapman Tripp, Auckland
Izard Weston, Wellington

[1] This is an application to review a decision of Master Faire when he dismissed the defendants' application to strike out parts of an amended statement of claim.

Background

[2] The substantive claim is a cargo claim in respect of damage to six separate shipments, between September 1995 and January 1996, of deep frozen fresh fries transported from New Annan, Prince Edward Island, Canada to Feilding, New Zealand. The fries were produced from potatoes grown on Prince Edward Island, chipped, partly cooked and frozen down. While at the manufacturer's plant they were packed into 5 kg plastic bags with three bags to each carton. The cartons were then trucked from New Annan to the port of Philadelphia in the United States of America where they were loaded on various vessels and transported to Wellington, New Zealand. They were then transported by road and rail from Wellington to the Feilding cool store of the plaintiff (Watties), the purchaser of the fries.

[3] Five shipments were transported under the bills of lading of the second defendant (the Columbus line) and one under the bill of lading of the third defendant (the Blue Star line).

[4] Damages are sought by Watties on the grounds that the fries were damaged by problems associated with temperature control at some stage during transportation. The problem with the fries was that they spattered excessively when lowered into hot oil. This spattering was caused by ice crystals in the fries, such crystals allegedly resulting from temperature control problems.

[5] On 16 March 1999 at an interlocutory hearing, Master Gambrill observed that Watties' statement of claim might be deficient in certain respects. This was because the carriage contract placed on the defendants responsibility from delivery to them at the factory in New Annan to Feilding, the point of delivery to Watties in New Zealand, and the statement of claim referred to carriage from the port of loading to the point of discharge. Consequently, Watties filed an amended statement of claim in June 1999. This, in effect, alleges the damage occurred between New Annan and Feilding. As such it may have occurred during the course of land transport in Canada, the United States or New Zealand. The original statement of claim related only to what occurred from the time the cargo was received on board ship until it was delivered in Wellington.

[6] The defendants moved to strike out those parts of the amended statement of claim which referred to the land based part of the transportation on the basis that such claims are barred by virtue of specific provisions in the relevant bills of lading. Master Faire dismissed the application.

The Master's Decision

[7] Both the Columbus line and the Blue Star line included in their bills of lading provisions similar to Art III R 6 of the amended Hague Rules as they appear in the Fifth Schedule to the Maritime Transport Act 1994. The relevant portion of Article III Rule 6 of such Rules states:

"Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered. This period may, however, be extended if the parties so agree after the cause of action has arisen."

[8] The relevant provision in the Columbus bill of lading reads:

"In any event, the carrier and any participating carrier shall be discharged from all liability of whatsoever nature unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered..."

[9] The relevant provision in the Blue Star bill of lading is in the following terms:

"The carrier shall be discharged of all liability under this bill of lading unless suit is brought and notice thereof given to the carrier within 9 months after delivery of the goods or the date when the goods should have been delivered."

[10] The defendants' position before the Master was, and still is, that the amended provisions relating to the land carriage as they appear in the amended statement of claim introduce a new cause of action which is barred by the provisions of the bill of lading. Alternatively, the filing of the amended statement of claim is the bringing of a new suit outside the limitation periods referred to in the relevant bills of lading.

[11] Before the Master, Watties submitted that portions of the original statement of claim did refer to the land carriage portion. This submission was rejected by the Master and was not in issue on the review application. Counsel for Watties acknowledge that before the Master the submissions on behalf of Watties followed the sequence of the submissions on behalf of the defendants and dealt firstly with whether or not there was a new cause of action, and secondly, whether or not there was a new suit. Watties' position was that the answer to both of these issues was in the negative.

[12] A submission made on behalf of the appellants was that the Master did not delve sufficiently deeply into the implications of the bills of lading in the light of the facts. With respect, I do not accept this submission. The Master appreciated and recorded in his judgment the significance of the land carriage pleadings as they appear in the amended statement of claim. The pleadings mean that Watties must now establish that the fresh fries were in good order and condition when possession of them was taken by the defendants at New Annan in Canada. Further, they must now establish that the fries were in damaged condition when they arrived at Feilding and not when they arrived in Wellington. Both factual and statutory issues relating to land transportation in Canada, the United States and New Zealand are applicable to the land carriage sector and this was recognised and acknowledged by the Master.

[13] In accordance with counsels' agreement the Master considered the application by considering two alternative approaches:

(a) Is the amended pleading an abuse of process? or

(b) Is the effect of the discharge of liability provision in the bills of lading such that, at the time of the filing of the first amended statement of claim in June 1999, no reasonable cause of action existed in respect of the allegations dealing with the land based portion of the transportation?

[14] The Master noted that r 187 of the High Court Rules allows a plaintiff to file an amended statement of claim which is not statute barred. While this provision does not apply to a contractual limitation bar, as is alleged in this case, he saw no reason in principle why, in an appropriate case, the filing of an amended statement of claim which infringed a contractual limitation bar, should not be treated as an abuse of process. In a very clear case, the Court could strike out a further cause of action if it is an abuse of process because it infringes a contractual limitation bar. Alternatively, the relevant provisions in the bills of lading, if they applied, unlike statutory provisions, discharged the defendants from liability rather than barring the remedy. Thus, if the contractual limitations applied, the amended pleadings could be struck out on the basis that there is no reasonable cause of action disclosed. After considering the authorities, Master Faire noted that the amendments included in the amended statement of claim relied upon the same contract and the same cause of action, namely, breach of that contract. He accepted that the place where the damage was alleged to have occurred had been expanded but in his view, the amendment did not introduce a completely new matrix of fact or a completely new legal foundation for the claim that is now made. Consequently, he was not prepared to strike out the proceedings either as an abuse of process or as disclosing no cause of action because of the contractual time bar.

[15] Although it was strictly unnecessary for Master Faire to consider the further issue raised, namely, that the amendments are in any case permitted because a suit was brought within the time limit referred to in the relevant bills of lading, he did go on to address this point. After reviewing the relevant authorities, he noted that the parties, the terms, the duties, the breach, the loss and the damage have remained the same between the original and the amended pleading. The only extension was the place where the damage occurred. He concluded on this basis that the original statement of claim was sufficient to defeat the contractual bar raised in the bill of lading. The suit had been brought within time and liability had therefore not been discharged. For this reason, he would have also found for Watties on this second issue. 

Grounds for Review

[16] The Columbus line and the Blue Star line seek to review the Master's decision on the ground that he was plainly wrong when he held that the amendments did not constitute a fresh cause of action, and, alternatively, that suit had been commenced in time. Basically, the same two issues which the Master resolved against the defendants are at issue on this review.

[17] Mr McIntosh on behalf of Watties, submitted that the matter had been put the wrong way round to the Master. This was because "cause of action" is not a term used at any point in the contractual clauses in the bill of lading or in the relevant case law which considers the meaning of "suit" as used in Art III r 6 of the amended Hague Rules. Thus, cases dealing with "cause of action" and what constitutes a fresh cause of action are simply irrelevant. They only become relevant if "suit" is synonymous with "cause of action" and it was Watties' position that this is not the case. In my view, the starting point is the meaning of "suit is brought" as that term appears in the relevant clauses in the bills of lading.

Was Suit Brought In Time? 

[18] Before considering the legal principles which apply, it is relevant to note the differences between the two statements of claim and the additional matters which were introduced by the amended statement of claim. These may be summarised as follows:

(a) The original statement of claim alleged receipt of the cargo on board the vessel in good order and condition for carriage to and delivery at Wellington. In the amended statement of claim the allegation is that the carriage was from New Annan, Canada, to Feilding, New Zealand;

 (b) Consequently, the allegation as now framed is that the damage arising from the defendants' breaches of duty occurred somewhere between New Annan and Feilding rather than on the named vessels. 

[19] The Columbus line and the Blue Star line say that the consequences of the amended pleadings are:

(a) Watties will be required to establish the condition of the cargo at the time it was handed to the defendants' sub-contractors at New Annan rather than at the time it was loaded on board the vessel;

(b) Watties will need to establish that the damage was caused by the time the cargo arrived at Feilding rather than by the time it arrived by vessel in Wellington;

(c) Land transport, stevedoring and storage, both in North America and New Zealand, were performed not by the Columbus line or the Blue Star line but by their respective sub-contractors. Thus, factual inquiries will need to be made in respect of the land transport legs which were not required under the original pleadings;

(d) The laws of Canada, the United States of America and New Zealand all have application in respect of various portions of the land transport sectors. These statutory provisions were not relevant as originally pleaded;

(e) The contracts between the Columbus line and the Blue Star line on the one hand, and their sub-contractors on the other hand, are also relevant in respect of the land transport sectors.

[20] The submission made on behalf of the Columbus line and the Blue Star line was that the consequences of the amended pleading not only means that the defendants have to face a new cause of action but also means that the defendants now face a new suit. They now need to address factual, contractual and statutory provisions which were not put in issue by the original pleading.

[21] Before considering the applicable principles on the meaning of "suit is brought" as used in the contract, it is necessary to address one factual matter raised on behalf of the defendants. It is that depending on how certain sections of the bills are completed, the bills of lading may either become contracts for the carriage of goods by sea or contracts for through transportation which includes both land and sea carriage. In the Columbus line bill of lading, the contract becomes a through transportation contract if the place of receipt or place of delivery as noted in the bill of lading is an inland port. If neither place is an inland port, then the bill of lading is, in effect, a carriage by sea contract. Similar considerations apply to the Blue Star line bill of lading. It was submitted on behalf of the defendants that the amendment to the statement of claim pleads an entirely different contract. This was said to be because a through transportation contract is now pleaded, rather than a sea carriage contract as formerly. With respect, I do not agree with this submission. In respect of each shipment there was only one contract, namely, a bill of lading which was a through transportation contract. The original statement of claim relied upon this contract in respect of the sea sector. The amended pleading still relies upon the same contract, the same duty, the same breach of duty, and the same damage or loss to Watties. The only difference is that it is now alleged that the breach of duty may have arisen during a different part of the carriage of goods and this may have the consequences already referred to in paragraph 19.

[22] Mr McIntosh for Watties, referred to the recent Court of Appeal of Victoria decision in Anglo Irish Beef Processors International v Federated Stevedores Geelong & Ors [1971] 1 Lloyds Rep 207 for a summary of the case law dealing with the phrase "suit is brought." In that case, Philips JA reviewed both Australian and English decisions on the meaning of the term "suit is brought." Neither the facts in Anglo Irish Beef Processors nor in other cases reviewed were on all fours with the present case and it is possible to distinguish the decision on several grounds. However, the obiter comments in it are of assistance. At p 222 of the judgment Philips JA said:

"It is enough in my opinion that the proceeding was commenced by the appellant against the respondent within the relevant one-year period; that the appellant's claim was to enforce the liability of the respondent "in respect of loss or damage" to the goods while on board ship; and that it is now alleged that at the time of the damage those goods were subject to a contract for their carriage by sea which was covered by a bill of lading, that that contract was one to which the appellant and the respondent were parties, and that the respondent was the "carrier" within the meaning of the Hague Rules. If the facts now alleged are ultimately established so that the Hague Rules do apply, it seems to me irrelevant whether those facts were pleaded in the first instance by the plaintiff, raised by the defendant in answer or, in a case like the present, raised by the plaintiff by way of amendment. In any of these cases the defendant cannot properly complain that "suit" within the meaning of art III, r6 was not brought in time, when the proceeding was in truth commenced within the one year period allowed."

In Anglo Irish Beef Processors the contract of carriage relied upon by the plaintiff was governed by the Hague Rules and was therefore subject in particular to Art III r6 of the amended Hague Rules. In the present case, the defendants rely upon contractual limitations similar to Art III r6. Where a provision in the contract relating to the ocean sector is more onerous than the relevant Hague Rule, the Hague Rule will apply. In this case, the Hague Rules can only apply to the ocean sectors and the carriers have protected themselves for the land sector by the inclusions of the provisions referred to in paragraphs 8 and 9 above. The limitation provisions are therefore the express contractual provisions in respect of the land portion and those provisions also apply in respect of the ocean sectors, if not inconsistent with, or repugnant to the Hague Rules. I do not see any reason why the source of the provision, whether it be in contract or in the Hague Rules, alters the interpretation of the meaning of "suit is brought." If the above statement by Philips JA is a correct statement of the law, then a suit was brought in this case when the original pleadings were filed. The reference to "the goods while on board ship" is not sufficient to distinguish the principle. In that case the carriage of goods was by sea and the Hague Rules therefore applied. In the present case the contractual provisions rather than the Hague Rules apply subject to the modification and repugnancy principle referred to above. Thus, if Philips JA has correctly stated the law and by analogy, the same principles apply to the land sectors of the journey, the statement would be applicable to the present case if words similar to "while subject to the contract of carriage pursuant to the bill of lading" are substituted for "while on board ship."

[23] Philips JA adopted as the correct approach a tentative conclusion in Cooke & Others in Voyage Charters (1993) at p 739 where it was said:

"It is therefore submitted that the minimum requirements for the bringing of suit for the purposes of Article III rule 6 are that the correct plaintiff must have validly commenced proceedings before a competent Court against the correct defendants and (possibly) that those proceedings are not brought in breach of any agreement as to the choice of forum and that those proceedings remain valid and effective at the time when the carrier seeks to rely on Rule 6."

[24] When adopting the "minimum requirements" approach, Philips JA noted that this approach did not suggest any fine analysis of the pleadings needed to be undertaken.

[25] Another authority relied upon by Watties and cited with approval by Master Faire was The "Kapetan Markos" [1986] 1 Lloyd's Rep. 211. At p 221, Leggatt J said:

"What is required is the initiation of proceedings by a claimant in respect of breach of the relevant duties under the Hague Rules. That occurred here. The reformulated claims differ from the original only in what Mr Phillips called "the mechanism giving rise to the contractual nexus": the parties, terms, duties, breaches, loss and damage remain the same. I therefore hold that on a true construction of art III, r 6, in relation to the claims which are the subject of the amendment sought, "suit" has been brought within the period of 12 months allowed."

[26] It is not intended to deal extensively with other authorities cited on behalf of Watties which support the "minimum requirements" test. In both Anglo Irish Beef and The "Kapetan Markos" the plaintiffs were allowed to plead new causes of action based on different legal causes of action. Mr Broadmore sought to distinguish those cases on the basis that the original causes of action all relied upon breaches under the Hague Rules and that the amendments allowed did not alter the factual allegations. While this is a distinction, it does not, in my view, undermine the basic principle if the minimum requirements are merely that the correct plaintiff must have validly commenced proceedings before a competent Court against the correct defendants and those proceedings are not brought in breach of any agreement as to the choice of forum and remain valid and effective. In the present case in the words of Leggatt J "the parties, terms, duties, breaches, loss and damage remain the same." Thus if the minimum requirements test applies, a new suit has not been brought by Watties.

[27] In "The Leni" [1992] 2 Lloyd's Rep 48 at p 53, Judge Diamond QC summarised the objectives which Article III Rule 6 seeks to achieve. These include speeding up of the settlement of claims and providing carriers with some protection against stale and unverifiable claims, international uniformity in relation to prescription periods to prevent carriers from relying on very short limitation periods and the protection of carriers if certain steps are not taken within the prescribed time. Those steps are the giving of prompt notice of loss or damage and bringing suit within one year of delivery. Phillips J in Continental Fertiliser Co. Ltd v Pionier Shipping CV (the Pionier) [1995] 1 Lloyd's Rep 223 at 227 stated the object in the following terms:

"The object of the Hague Rules time limit is to protect shipowners from stale claims. Provided that a suit is brought by the party entitled to sue before a competent Court which alleges that the shipowner is liable for breach of duty owed in relation to the cargo carried it seems to me that the suit will suffice to satisfy the requirements of the Hague Rules. Errors of detail in the pleaded case - at least if only in the nature of the error which has led to the present dispute - cannot have the effect of rendering the suit one which fails to satisfy the requirements of art. III r.6."

It would be illogical and unnecessary to suggest that the object of the contractual limitation as it applies to the land section is different from the object of Article III rule 6 as it applies to the ocean section.

[28] None of these purposes is undermined if the amendment is allowed in this case. While it may be argued that the claim in respect of the land sector is unverifiable, this, in my view, is placing a too restrictive and technical interpretation on the rule and the purpose for it. It is, in effect, an attempt by technicalities to avoid liability, a practice which did not find favour with Leggatt J in The "Kapetan Markos. " In this case, the defendants were advised in a timely manner of the allegations of cargo damage during transit. It would have been obvious to them that the damage, if substantiated, occurred between New Annan and Feilding. Mr Broadmore submitted that although discovery may show that all documents from New Annan to Feilding have been discovered, there is a difference between discovering relevant documents and investigating the factual background which would be necessary to defend a claim. However, at all times, the cargo was in possession of one of the defendants or sub-contractors of the relevant defendant. The defendants have it within their power to make those inquiries. I accept that there may be a greater burden on the defendants in defending the present claims. There are factual, contractual and statutory matters which were not covered in the original statement of claim. However, the law on the basis of the authorities cited does not, in my view, preclude Watties, once it has brought suit in the correct manner, from amending its pleadings in the manner in which it has done in this case.

[29] For reasons similar to those adopted by Master Faire, I am of the view that suit was brought in this case in accordance with the contractual provisions in the bills of lading when the original proceedings were issued. The amended statement of claim has not altered the parties, the terms, the duties, the breach or the loss and the damage. It has alleged that the breach and the damage may have occurred on a different sector of the carriage but, in my view, this does not amount to bringing a new suit.

New Cause of Action

[30] In my view, a finding that the suit has been brought precludes the necessity of considering whether the amended statement of claim instituted a new cause of action. It is noted however that there is no contractual provision or High Court Rule which in this case prevents Watties from amending the causes of action provided that those amendments are part of the suit already brought.

The Blue Star Contract

[31] There is one point which was not directly put in issue before Master Faire which, in my view, may be relevant to the claim against the Blue Star line. The contractual limitation clause in the Blue Star line bill of lading is a nine month provision. Under the provisions of the Hague Rules, the nine month limitation cannot be effective in respect of the ocean voyage, because it is inconsistent with and repugnant to Article III Rule 6. This is common ground between the parties. The suit in this case was brought after the nine month period but before the one year period. There may be an argument that if the damage occurred during a land sector, any liability in respect of that damage was discharged at the end of the nine month period. If this is so, the Blue Star line may well have a defence to Watties' claim unless Watties can establish that the damage occurred between the time the fries were placed on board the vessel in Philadelphia and the time they were discharged from the vessel in Wellington. This matter was raised with counsel during the hearing but was not addressed fully by them. If the Blue Star line does have a defence on this basis, it will be free to present that defence at the hearing, provided it ispleaded. 

Result

[32] The application to review Master Faire's decision is dismissed.

Costs

[33] Watties is entitled to costs and if the parties are unable to agree, they may file memoranda. My provisional view is that the review hearing falls within Category 2 Band B of the relevant High Court Rules.