Heinz-Wattie Ltd v Hamburg
Sudamerikanische Dampfschiffahrtsgesellschaft

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CP 451sd96

BETWEEN
HEINZ-WATTIE LIMITED
Plaintiff

AND
HAMBURG SUDAMERIKANISCHE DAMPFSCHIFFAHRTSGESELLSCHAFT
BLUE STAR (NORTH AMERICA) LIMITED
Defendants

Hearing: 26 October 1999

Counsel: WL McIntosh and LJ Cunningham for plaintiff
TJ Broadmore for second and third defendants

Judgment: 18 November 1999

JUDGMENT OF MASTER FAIRE

Solicitors: Chapman Tripp, DX CP 24029 for plaintiff
Izard Weston, DX SP 27002, Wellington for second and third defendants

[1] The defendants apply to strike out parts of the first amended statement of claim dated 14 June 1999.

[2] The reason for the application requires a consideration of the background, the pleadings as initially issued and the current first amended statement of claim.

[3] The plaintiff was the purchaser of a large quantity of deep frozen french fries. They were imported to New Zealand from Canada at the end of 1995. They were transported from New Annan, Prince Edward Island, Canada to Feilding, New Zealand. The shipments were made by land from New Annan, Canada, to the port of Philadelphia in the United States of America. They were then loaded on board various vessels and transported by sea to the port of Wellington, New Zealand. They were then transported by road and rail from Wellington to the plaintiff's coolstore in Feilding. There were six separate shipments between September 1995 and January 1996. Five were under the second defendant's bills of lading and one was under the third defendant's bill of lading.

[4] It is alleged that the french fries were damaged. It is further alleged that the problem was attributed to problems associated with temperature control at some stage in the entire transportation.

[5] The plaintiff issued proceedings, including a statement of claim, on 10 October 1996.

[6] On 16 March 1999, Master Gambrill, whilst hearing an interlocutory application made by the plaintiff, observed that the plaintiff's statement of claim might be deficient in certain respects. In an interim judgment dated 16 March 1999 at page 3 she said:

I have discussed with Counsel for the Plaintiff the form of the pleading and it appears that Columbus Line, in terms of its carriage contract, was responsible for the fries from delivery at the factory in New Brunswick to the point of delivery in New Zealand. It may be necessary for the Plaintiff to replead to identify carriage other than from the port of loading to the port of discharge as it appears that in terms of the contract, which is a matter of evidence, the responsibility for the carrying arose at the factory gate in Canada to point of delivery in Fielding, New Zealand.

[7] The plaintiff filed its first amended statement of claim on 14 June 1999. It is alleged by the defendants that as originally framed the statement of claim referred to ocean voyages and to "damage occurring during the course of those voyages". It is now clear that the first amended statement of claim refers in addition, to damage in the course of land transport in Canada, the United States and New Zealand.

[8] The defendants' application seeks to strike out those parts of the amended statement of claim which allege the land-based part of the transportation. In doing so the defendants say that such claims are barred by virtue of specific provisions in the relevant bills of lading.

[9] The relevant provision in the second defendant's bill of lading is expressed in the following terms:

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 ...

[10] In the case of the third defendant, the relevant provision is expressed as follows:

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.

[11] The clauses in the bills, though not identical to the Hague-Visby Rules are certainly similar. Article III, Rule 6 of the Hague-Visby Rules as set out in the fifth schedule to the Maritime Transport Act 1994 state:

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.

[12] In each case, the discharge from all liability occurs after a period, unless suit is brought.

[13] The defendants submit that parts of the statement of claim dealing with land transportation are subject to the contractual discharge of liability. This is because that part is contained in a pleading filed and served outside the time specified in the bill of lading for the bringing of a suit. Mr Broadmore submitted that accordingly that those parts were frivolous and vexatious and an abuse of the process of the Court and should be struck out.

[14] Mr McIntosh submitted that the statement of claim of 10 October 1996 did include land transportation. He referred to two specific paragraphs as an illustration, namely paragraphs 20 and 24.2. I have considered both paragraphs. The language is plain. The statement of claim refers to carriage on a vessel which is named. It is clearly a ship. I reject the submission that the statement of claim of 10 October 1996 includes an allegation of damage in the course of land transportation.

[15] Accordingly, that leaves the major question. Are the amendments introduced by the statement of claim of 14 June 1999 and, in essence, alleging damage during the course of land transportation as well as ocean transportation barred by the contractual discharge of liability contained in the bills of lading to which I have made reference.

[16] The significance of first amended statement of claim and the introduction of land transport is that it shifts the point at which the plaintiff must establish that the french fries were in good order and condition from the time of loading on board the vessel in Philadelphia in the case of ocean transportation to the place of manufacture at New Annan, Prince Edward Island, Canada. Similarly, the point before which the plaintiff must establish the occurrence of the damage shifts from Wellington in the case of the ocean transportation to Feilding, New Zealand, in relation to the amended pleading. Mr Broadmore submitted the effect of all of that was that the defendants were now called by the amendment to account for the possibility of damaging occurring during land transportation whereas formerly that possibility was the plaintiff's problem. In addition, the defendants would necessarily be concerned with their potential liability under the laws of Canada, the United States and New Zealand as applicable to land carriage. He submitted that because of that scenario, the matters now pleaded give rise to one or more new causes of action. He submitted that any new cause of action was barred by the discharge of liability because in respect of that new cause of action suit has not be brought within the time specified.

[17] Counsel were in agreement that I should consider this application by considering two alternative approaches summed up by the questions:

[a] Is the amended pleading an abuse of process? or, alternatively

[b] Is the effect of the discharge of liability provision in the bill of lading such that, at the time of the filing of the first amended statement of claim, no reasonable cause of action existed in respect of the allegations dealing with the land-based portion of the transportation?

[18] Rule 187(l) permits the filing of an amended statement of claim as of right prior to setting down. The amended statement of claim may include a fresh cause of action which is not statute-barred. That limitation on the right to amend does not apply to the instant case where the limitation is contractual. Although Rule 187 does not prohibit the filing of a statement of claim introducing a fresh cause of action which may be subject to a contractual limitation bar, the question that arises is whether such a cause of action is an abuse of process for the purposes of Rule 186(c). I can see no reason in principle why, in an appropriate case, such a contractual limitation bar should not be treated as an abuse of process. The position is analogous to that which I considered in Partridge v Bellevue Nominees Ltd & Anor (High Court, Auckland, CP 335/93, 26 March 1998).

[19] Adopting the caveat expressed by the Court of Appeal in Ronex Properties Limited v John Laing Construction Limited & Ors [1982] 3 All ER 961, 966 such a basis would generally be reserved only for a very clear case. Accordingly, in my view, there is no reason why an application to strike out based on an abuse of process and in reliance on Rule 186(c) should not be considered in an appropriate case where a contractual limitation which discharges liability is alleged.

[20] Equally, a challenge may apply on the basis that there is no reasonable cause of action where the contractual provision provides that:

The effluxion of time eliminates the cause of action. Ronex Properties Limited v John Laing Construction Limited & Ors (supra) 965.

[21] That, however, must be contrasted with the position that applies under the Limitation Acts.

Limitation Acts bar the remedy and not the right, and furthermore they do not even have this effect unless and until pleaded. Even when pleaded, they are subject to various exceptions. Ronex Properties Limited v John Laing Construction Limited & Ors (supra) 965. (See, also, Aries Tanker Corporation v Total Transport Limited [1977] 1 WLR 185.)

[22] Limitation Act provisions prohibit the bringing of actions after the expiration of certain nominated periods of time. The New Zealand example is contained in s 4 of the Limitation Act 1950. That should be contrasted with the contractual position in the instant case. That provides for the discharge of liability. If liability is discharged it must follow that there is no cause of action. Accordingly, I conclude that the contractual provision in both bills of lading permits of a plea in an appropriate case that no cause of action remains because of the effluxion of time. The result calls then for an inquiry as to whether the amendment is, in essence, a new cause of action.

[23] The plaintiff's opposition to the application to strike out the parts of the statement of claim, however, is somewhat wider than simply an examination of whether a new cause of action is introduced by the amended pleading. Mr McIntosh in fact, in argument, relied on four specific grounds for the proposition that the strike out should not be ordered. They were:

[a] That the limitation clauses in the relevant bills of lading properly provide the defendants with positive contractual defences and the onus would be on the defendants to prove that defence at trial. He submitted that, by themselves, there were no proper grounds for striking out the plaintiff's first amended statement of claim;

[b] The first amended statement of claim disclosed no new cause of action;

[c] The amendments are permitted within the terms of the limitation clauses in the relevant bills of lading in that suit was brought within the time provided in the relevant bills of lading by way of a statement of claim filed on 10 October 1996;

[d] The amendments in respect of carriage within New Zealand may be brought with the leave of the Court pursuant to ss 19(4) and (5) of the Carriage of Goods Act 1979 on the grounds that:

[i] The delay in bringing the action was occasioned by a mistake of fact or by mistake of any matter of law or by any other reasonable cause; and

[ii] The defendants were not materially prejudiced in their defence or otherwise by the delay.

[24] I have already dealt with the first ground for opposing the strike out application. In my view, as a matter of principle, there is no reason why a contractual limitation bar should not be treated as either an abuse of process or as evidence that, at the time of filing, no reasonable cause of action then existed. The reasons for that conclusion are set out in paragraphs [18], [19] and [20] of this judgment. There must be added, however, the caveat that with any application to strike out, whether on the grounds of an abuse of process or on the grounds that no reasonable cause of action exists, is reserved for those cases where the position is so clearly untenable that they cannot succeed. Attorney-General v Prince and Gardiner [1998] 1 NZLR 262, 267. I add, however, the fact that such applications raise difficult questions of law and require extensive argument need not necessarily exclude the jurisdiction to strike out. Attorney-General v Prince and Gardiner (supra), 267.

[25] The result then is that the first ground advanced by Mr McIntosh by itself does not support the dismissal of the application.

[26] The next issue raised is whether the amendments constitute new causes of action. I consider this matter separately from the third ground advanced by the defendant although, in essence, as a matter of interpretation of the contract, the issue must be whether or not the amendments that have been introduced constitute a new suit and one that cannot be covered by the statement of claim filed on 10 October 1996.

[27] Looking first at the issue of whether the amendment introduces a new cause of action I have referred to the matter very briefly in paragraph [7] where I observe that, broadly speaking, the amendments changed the claim from a claim for damages arising in the course of the ocean voyage to damage arising in the course of the entire voyage which includes both the ocean voyage and land transport in Canada, the United States and New Zealand.

[28] The effect of that change is to change the time at which some inquiry as to the condition of the cargo must be made. In the statement of claim as originally filed, the critical time was when the cargo was loaded on board a ship. As a result of the amendment the critical time is the time that the cargo was received by the defendants from the plaintiff's premises. It is apparently not disputed that the land transportation was performed by subcontractors. There will be the appropriate laws of each country in which the land transportation occurred that apply. There will also be relevant subcontract documents in relation to the land transport which are relevant.

[29] Mr Broadmore emphasised that the bills of land [sic] in each case make different provisions for the purely ocean carriage from that which applied in the case of a combined ocean and land carriage. He submitted that, unlike the original straightforward claim of damage during the ocean voyage which is governed by the bill of lading and the Hague Rules, there is now a claim alleging damage occurring at an unspecified point in a multi-stage transport operation which is governed by potentially no less than four possible systems of law. The amended statement of claim introduces a claim in negligence and bailment in respect of each shipment. No challenge on that account, however, is made by the defendants.

[30] Mr McIntosh submitted that the relevant parts of the original statement of claim which:

[a] Identify the contract;

[b] State that the cargo was received by the defendants in good order and condition;

[c] State the breaches of duty owed by the defendants;

[d] Allege delivery to the plaintiff in a damaged condition

are the same as in the amended statement of claim.

[31] In Chilcott v Goss [1995] 1 NZLR 263 the Court of Appeal at page 273 gave guidance as to when a fresh cause of action is introduced by an amended pleading and said:

In essence, 'cause of action' means the act on the part of the defendant which gives the plaintiff the cause of complaint (Smith v Wilkins and Davies Construction Co Ltd [1958] NZLR 958, 961). The test of whether an amended pleading raises a 'fresh' cause of action for the purposes of the rules as to amendment is well settled. In Smith v Wilkins and Davies Construction Co Ltd at p 962 McCarthy J put the matter in this way:

'The issue is, I think, put as clearly as anywhere in the words of Lord Wright MR in Marshall v London Passenger Transport Board [1936] 3 All ER 83, as being whether the new pleading involves 'a new departure, a new head of claim, or a new cause of action' (ibid, 87). In other words, is it something essentially different from that which was pleaded earlier? Such a change in character may be brought about, in my view, by alterations in matters in law or of fact, or both. Alterations of fact could possibly be so vital and important as by themselves to set up a new head of claim. On the other hand, more often alterations of fact do not affect the essence of the case brought against the defendant ... In each case it must, I consider, be a question of degree."

That test was adopted by this Court in Gabites v Australasian T&G Mutual Life Assurance Society Ltd [1968] NZLR 1145, 1151 where North P also cited with approval the following passage from the judgment of Sholl J in Harris v Raggatt [ 1965] VR 779, 785:

"If we say that the law is that the plaintiff cannot be allowed, after the period of limitations has run, to set up a new cause of action, we use the term in a special sense as meaning a 'new case' varying so substantially from what has previously been set up that it would involve investigation of matters of fact or questions of law, or both, different from what have already been raised and of which no fair warning has been given, so that it would be unfair and unjust to the defendant to put him in peril of a judgment founded on the new matter. Certainly, if there is set up a 'new case' on the facts, upon which is based a new claim upon a new and different legal basis - a new cause of action in that sense - leave will ordinarily be refused."

It is then a matter of comparing the allegations in the new pleadings with what has previously been alleged, recognising that questions of degree are involved.

[32] I propose to briefly review the facts of a number of the leading cases that were submitted to me by counsel in argument. At the end of the day, however, they simply illustrate the legal test for a fresh cause of action which was enunciated in Chilcott v Goss (supra) to which I have made reference.

[33] In Smith v Wilkins and Davies Construction Company Limited [1958] NZLR 958 an amendment was allowed. The plaintiff sought an amendment setting out a different version of how the accident had occurred. Previously he had submitted that he had climbed up the legs of profiles to the position from where he fell. In the amended pleading he alleged that he was lifted there by holding onto the hook or the wires of the crane. Clearly the claim was still founded on a duty to take proper care for the safety of the employee. Even though there had been a substantial alteration in the facts the amendment was allowed.

[34] In Gabites v Australasian T&G Mutual Life Assurance Society Limited [1968] NZLR 1145 the plaintiff, in the amended pleading, changed the area where the accident occurred from the foyer of the building to a passageway adjacent to it. The Court was satisfied that the amendment did not involve any substantial alteration to the allegations made and allowed the amendment.

[35] In Bryan v Phillips New Zealand Ltd [ 1995] 1 NZLR 632, the Court had to consider a claim in negligence where the amended pleading altered the basis of the plaintiff's loss from the fear of future injury to an allegation of actual injury. The amendment was allowed.

[36] In Chilcott v Goss [1995] 1 NZLR 263 an amendment was allowed where the pleadings had previously alleged an advance of moneys under an implied promise to repay and also a claim for money had and received to a claim of simple contract and failure to repay.

[37] Other examples where amendments have been allowed are:

[a] "The Katcher 1" [1968] 1 Lloyd's Rep 232, and

[b] "The Kapetan Markos" [1986] 1 Lloyd's Rep 211.

[38] Mr Broadmore referred to the following cases where either the amendment was not allowed or some concern was indicated as to whether an amendment should be allowed:

[a] In Hall v Meyrick [1957] 2 All ER 722 the parties had consulted a solicitor for the purpose of preparation of wills. They later married. In the first pleading an allegation of joint retainer was made. After the limitation period had expired an allegation of separate retainers was made. The Court declined the amendment on the basis that a new cause of action arose. The new cause of action, of course, was an entirely different contract from that which was originally pleaded.

[b] In "The Kefalonia Wind" [1986] 1 Lloyd's Rep 273 an amendment had been allowed out of time which extended the claim to claims for damage to parcels loaded at ports other than that originally pleaded. At page 283 the Court said that:

The defendants could have resisted (the amendment) or sought its disallowance and they would in the ordinary course have been successful.

As it happened, the defendants allowed the amendment to form part of the plaintiffs pleaded case with the result that the Court found that the amendment related back to the date of the writ and that it was accordingly within the limitation period.

[39] When I consider the authorities and the specific pleadings, I note in particular that the amendments disclose an extension of the same contract. It is the same contract. The cause of action is breach of contract. Certainly, the place where the damage is alleged to have occurred has been expanded. In my view, the amendment does not introduce a completely new matrix of fact or a completely new legal foundation for the claim that is now made.

[40] I reach the conclusion, therefore, that the amendments do not constitute a new cause of action which would justify the application of the time bar and, in turn, the striking out of the proceeding either as an abuse of process or as disclosing no cause of action because of the time bar.

[41] Having reached that conclusion it is strictly unnecessary to consider the further issue raised and that is that the amendments are, nevertheless, permitted because a suit was brought within the time limit provided in the relevant bills of lading when the statement of claim of 10 October 1996 was filed. In Anglo Irish Beef Processors International v Federated Stevedores Geelong and Others [1997] 1 Lloyd's Rep 207 the Court examined Article III, Rule 6 of the Hague-Visby Rules and, in particular, the words "unless suit is brought within one year". In that case proceedings had been commenced within the one-year period but they alleged negligence against various defendants, including the ship owner. After the expiry of the one-year period, the plaintiff sought to amend to allege a breach of the bill of lading contract by the ship owner. The Court held that the suit had been brought within the time specified although contracts had not been alleged in the original pleading. This was because the owner of the goods by the original proceeding had brought a suit to enforce the carrier's alleged liability for damage to those goods within the time specified.

[42] In this case, there is no doubt that suit was brought within one year. The proceeding was commenced by a statement of claim dated 10 October 1996. The two defendants were named in respect of those proceedings. The proceedings allege that the damage occurred whilst the goods were in the defendants' care. The particular shipments were identified. In Anglo Irish Beef Processors International v Federated Stevedores Geelong and Others (supra) at 221 the Court approved the statement of the minimum requirement for the bringing of a suit sufficient to satisfy Article HI, Rule 6 of the Hague-Visby Rules. It requires that the correct plaintiff must have validly commenced proceedings, before a competent court, against the correct defendant, and that those proceedings are not brought in breach of any agreement as to the choice of forum, and that the proceedings remain valid and effective at the time when the carrier seeks to rely upon Rule 6.

[43] In "The Kapetan Markos" (supra) at 221 Justice Leggatt 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.

[44] In the instant case, the parties, the terms, the duties, the breach, the loss and the damage have remained the same between the original and the amendment pleading. Certainly the place where the damage occurred has been extended. I am of the view that the original statement of claim is sufficient to defeat the contractual bar raised in the bill of lading. The result then is that there is no basis for the striking out of this proceeding either on the grounds that it is an abuse of process or that it discloses no reasonable cause of action. Liability has not been discharged because suit has been brought.

[45] My understanding is that counsel for the defendants did not require me to separately consider the fourth point raised by counsel for the plaintiff, namely that the amendments in respect of carriage within New Zealand may be brought with leave of the Court pursuant to ss 19(4) and (5) of the Carriage of Goods Act 1979. Had I found that the amendments to which objection is taken otherwise should have been struck out, that proportion of the statement of claim dealing with the New Zealand land carriage might have been saved in any event by an appropriate application for leave to the Court. As it is, it is not necessary to conclude that matter.

[46] For the reasons set out, I dismiss the defendants' application to strike out parts of the amended statement of claim.

Costs

[47] The plaintiff has been successful and is entitled to costs which I fix at $1,500 together with disbursements as fixed by the Registrar. Such costs shall be paid by the defendants.