NEW ZEALAND MARITIME LAW

Hally Press Ltd v Danzas AG

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY

CP78-SD02
CIV2090/02

BETWEEN HALLY PRESS LTD
First Plaintiff

AND GALLUS FERD REUSCH AG
Second Plaintiff

AND DANZAS AG
First Defendant

AND MALAYSIAN AIRLINE SYSTEM BERHAD LTD
Second Defendant

AND MALAYSIAN AIRLINE SYSTEM BERHAD LTD
Third Defendant

Hearing: 10 and 11 June 2003

Appearances: Patricia Courtney and Tracy Stewart for Plaintiff
Geoff Mercer for Defendant

Judgment: 15 July 2003

JUDGMENT OF HARRISON J

SOLICITORS

McElroys (Auckland) for Plaintiff
Graham & Co (Auckland) for First Defendant
Michael B Wigley (Wellington) for Second and Third Defendants

Introduction

[1] In December 1999 the plaintiff ("Hally") bought a heavy duty printing press from Switzerland. The first defendant, Danzas AG ("Danzas"), and the second and third defendants (compositely "Malaysian Airlines System" or "MAS") arranged to fly the press to Auckland. On arrival it was found to be badly damaged.

[2] In December 2001 Hally issued a proceeding in the admiralty jurisdiction of this Court claiming repair costs from either Danzas or MAS. A few months later Hally transferred the proceeding to the Court's general jurisdiction. Danzas had not then but has since been served. In late 2002 it gave notice of protest to jurisdiction on the grounds that, first, the Court had no jurisdiction in admiralty and, accordingly, the proceeding was a nullity and, second, Hally's right to damages in the civil jurisdiction was time barred because it was commenced after expiry of the contractual limitation period. In April 2003 MAS filed an application, since withdrawn, for an order striking out Hally's claim on the same grounds.

[3] Hally has applied to set aside Danzas' notice. Its fate will be determined by the merits of Danzas' protest. Before embarking on that exercise I shall outline the background in a little more detail.

Background

[4] On 12 December 2001 Hally issued its proceeding in admiralty in this Court. It filed a notice of proceeding and statement of claim. Both were intituled "In Admiralty" and as "Admiralty Action In Rem and In Personam". Hally's notice of proceeding complied with RR769, 770 and 771 which are within Part 14, High Court Rules applying to proceedings in admiralty. It was in a different form from that required under R120 when commencing a proceeding in the Court's general civil jurisdiction. In particular, the notice was endorsed, as required, with a concise statement of the nature of Hally's claim, the relief or the remedy required, and the amount claimed. R769(3) expressly provides that this "concise statement" does not constitute "... a statement of claim within the meaning of these rules".

[5] Nevertheless, Hally also filed a statement of claim with its notice of proceeding which complied in all material respects with RR106 et seq. It alleged that on or about 13 December 1999 Danzas and MAS issued separate waybills at St Gallen, Switzerland, for the contract of carriage of the printing press to Auckland; pursuant to those waybills Danzas and MAS accepted the cargo for carriage in good order and condition; the carriers loaded it on board two successive flights; but on arrival in Auckland on 19 December 1999 the press was found to have sustained substantial impact damage to a value of $948,677.23.

[6] Hally's originating statement of claim pleaded causes of action in contract, bailment and negligence. It is common ground that the contracts of carriage are subject to the Warsaw Convention. The waybills expressly incorporated its terms. The material provisions are as follows:

(a) Article 11(1):

The air waybill is prima facie evidence of the conclusion of the contract of carriage of the cargo and of the conditions of carriage.

(b) Article 18(1):

The carrier is liable for damage sustained in the event of destruction or loss of, or damage to any ... cargo, if the occurrence which caused the damage to the cargo so sustained took place during carriage by air.

(c) Article 29(1):

The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination.

[7] Hally's statement of claim cited "the aircraft registered as N524MC" as first defendant presumably to obtain a right in rem against the aircraft itself. On 4 February 2002 MAS's solicitor agreed to accept service upon condition that Hally transferred the proceeding out of admiralty into the general civil jurisdiction within 30 days and removed the aircraft as a defendant. On 12 February 2002 McElroys, Hally's solicitors, filed a notice of discontinuance against the aircraft together with a first amended statement of claim in identical form to its predecessor except that the intitulling deleted any reference to the admiralty jurisdiction or to the aircraft as a party. On the same date McElroys requested the Registrar to transfer the proceeding out of admiralty.

[8] On 28 February 2002 Nicholson J made an order pursuant to s 12 Admiralty Act 1973 transferring the proceeding from the Court's admiralty jurisdiction to its general one. On 21 May 2002 MAS filed a statement of defence but did not challenge jurisdiction. Apparently Hally experienced difficulty in serving Danzas. On 19 December 2002 it filed a notice of appearance under protest. On 15 May 2003 Hally applied to set the notice aside.

Protest to Jurisdiction

[9] Mr Geoffrey Mercer appeared for Danzas. He is experienced and expert in admiralty litigation. In essence he submitted that the Registrar had no jurisdiction to issue this proceeding on 12 December 2001 because it was not then within the Court's admiralty jurisdiction. He relied on the prescription contained in s 4(1) Admiralty Act of the extent of the Court's admiralty jurisdiction to 15 specified questions or claims. Materially for the purposes of Mr Mercer's argument the jurisdiction extends to these two claims identified in s 4(1):

(g) ... for loss of or damage to goods carried in a ship:

(h) ... arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship.

[10] Not surprisingly, Mr Mercer submitted that an aircraft was not a ship for these two statutory purposes. S2 defines a ship as including "... any description of vessel used in navigation". He also emphasised the distinction between a "ship" and an "aircraft" drawn in s 4(1)(j) & (k) and s 4(4). Those provisions use the two words disjunctively, clearly denoting that one does not fall within the definition of another. Ms Tracy Stewart for Hally conceded that the company should not have commenced its proceeding in admiralty. She accepted that the aircraft was not a ship within the statutory meaning.

[11] Mr Mercer submitted that, as the Admiralty Act did not apply to Hally's claim, the Registrar had no jurisdiction to issue the proceeding on 12 December 2001. Accordingly, it was a nullity. For the same reason it was not then an "action" within the meaning of Article 29(1). This defect was fatal and was not cured by the consent order made later by Nicholson J on 28 February 2002 transferring the proceeding to the Court's general civil jurisdiction. Mr Mercer concluded with this submission:

The purpose of Article 29 is to allow carriers certainty regarding potential liability... On 21 December 2001 Danzas was entitled to know whether a valid proceeding had been brought or not. It patently had not, and Danzas was entitled to conclude its liability, if any, had been extinguished.

[12] In effect, Mr Mercer argued, this fundamental defect rendered the proceeding time-barred. The two year limitation period prescribed in Article 29(1) for bringing an ëaction' expired on 21 December 2001. On that date there was no valid action or suit against Danzas. At the earliest it was validly commenced when transferred on 28 February 2002. Accordingly, Mr Mercer submitted, the proceeding discloses no reasonable cause of action and should be struck out.

[13] In support of his argument Mr Mercer cited no less than 24 authorities, many of them admiralty cases in the English jurisdiction. With respect, I found few were of material assistance. In my judgment the issue is capable of determination by reference to the codified provisions of the Admiralty Act and the High Court Rules.

Decision

[14] The question posed, in terms of Mr Mercer's submission, is whether on 21 December 2001, the date of expiry of the two year limitation period provided by Article 29(1), Hally had brought an action or, as he describes it, "a valid proceeding" against Danzas. Mr Mercer's argument of invalidity was pinned to s 4(1)(g) or (h). In essence, he submitted that the Registrar had no power to issue a proceeding in admiralty because the aircraft was not a ship which had carried goods the subject of Hally's claim for damages. In my judgment Mr Mercer's argument must fail for two reasons.

(1) Admiralty Jurisdiction

[15] First, Mr Mercer erred in construing s 4(1) as both prescribing and proscribing the Court's admiralty jurisdiction. He ignored s 3(2) which materially provides:

In exercising the jurisdiction conferred by this Act, the Court may exercise at the same time any of its other civil jurisdiction, whether statutory or otherwise, and all powers incidental thereto.

[Emphasis added]

[16] The meaning of this provision is plain. When exercising its admiralty jurisdiction, the Court has a concurrent civil jurisdiction. S3(2) has no statutory counterpart in England or Australia. However, the English common law has long recognised this concurrent jurisdiction (The Cheapside (1904) AC 339). In JE Dennis Ltd v "The Steel Mariner" (AD1/95, Rotorua Registry, 11 August 1997) Paterson J held at p4 that s 3(2) empowers a Judge to hear two causes of action based separately in the admiralty and civil jurisdictions.

[17] The provisions of s 4(1) are not a proscriptive or exclusive code. The Court's "other civil jurisdiction" vested by s 3(2) includes its power to determine Hally's claims in contract, bailment and negligence pleaded in personam against Danzas. R3 High Court Rules defines a proceeding as:

Any application to the Court for the exercise of the civil jurisdiction of the Court other than an interlocutory application.

[Emphasis added]

[18] When filing its statement of claim on 12 December 2001 Hally had applied to the Court to exercise its civil jurisdiction. Part 14 High Court Rules governs admiralty practice. Significantly, though, R766 states that:

The provisions of other Parts of these rules, and the general practice of the Court, apply where this Part applies except so far as they are modified by or inconsistent with the Act or this Part.

[19] Accordingly, on 21 December 2001 this Court had jurisdiction to try Hally's claim and enter judgment in accordance with Part 5, High Court Rules governing the disposal of proceedings. In particular, s 3(2) empowered it to determine Hally's claim for damage to the cargo on all causes of action, and to enter judgment for a sum of money. For these reasons I am satisfied that, in terms of Article 29(1), Hally brought a valid action against Danzas on 12 December 2001, within two years of the date of damage to its press.

(2) Registrar's Jurisdiction

[20] Second, or alternatively, Mr Mercer erred in misconstruing the concept of jurisdiction. Mr Mercer's argument centred on the Registrar's conduct. His powers are administrative, to be performed in accordance with the law. In this context his authority is limited to the power to issue a notice of proceeding, providing that it complies with the relevant statutory and regulatory requirements.

[21] S9 Admiralty Act describes the Registrar's functions and powers in this way:

(1) Every Registrar of the High Court shall have and exercise the functions and powers of the Admiralty Registrar and Marshal for the purpose of this Act and any rules made hereunder.

(2) The Registrar shall execute, by himself or by his appointed officers or agents, all instruments issued from the Court which are addressed to him, and shall make returns thereof.

[22] Mr Mercer did not suggest that the Registrar acted outside his functions and powers in issuing Hally's notice of proceeding pursuant to the authority vested by s 9(2). The notice was in the form required by R769. In particular, it was endorsed with a concise statement of the nature of the claim, the relief and remedy required, and the amount claimed. It gave appropriate directions to the defendants for entering an appearance.

[23] In my judgment Mr Mercer's argument that the Registrar had no jurisdiction to issue the proceeding because the Court would not have had jurisdiction to determine the claim in admiralty under s 4(1)(g) or (h) is a non-sequitur. It confuses discrete fields of jurisdiction. The Registrar did not fulfil an adjudicative function when signing the notice of proceeding. He was not empowered at any stage to evaluate whether or not the claim fell within s 4(1)(g) or (h) or its prospects of success. Only the Judge would have jurisdiction to determine those questions at trial. However, as the proceeding is now within the Court's general civil jurisdiction, neither he nor she will ever be called upon for that purpose.

[24] It must follow that the proceeding was lawfully commenced and was valid when Nicholson J made an order on 28 February 2002 transferring it to the general civil jurisdiction.

[25] Accordingly, I grant Hally's application to set aside Danzas' notice of appearance under protest to jurisdiction dated 19 December 2002. Hally is also entitled to costs to be fixed according to category 2B.