P & O Nedlloyd BV v Arab Metals Co & Ors

LORD JUSTICE THOMAS: This appeal raises an issue as to whether the claimant should be allowed leave to amend particulars of claim to raise new causes of action in circumstances where it is contended by the defendants that the new claims are time barred. The facts that appear from the pleadings can be briefly summarised.

On 8 March 2004, the claimant issued these proceedings against the first to third defendants. They pleaded in their particulars of claim that the defendants were in breach of the bill of lading contract. They contended that the bill of lading contract provided for carriage from Alexandria to Felixstowe and then for on-carriage by road to a final destination in the United Kingdom. They relied in particular on clause 20 of the bill of lading, which provided as follows:

“The Merchant shall take delivery of the Goods within the time provided in the Carrier’s applicable Tariff (see clause 2). If the Merchant fails to do so the Carrier shall be entitled, without notice, to unpack the Goods if packed in Containers and/or to store the Goods ashore, afloat, in the open or under cover, at the sole risk of the Merchant. Such storage shall constitute due delivery hereunder and thereupon the liability of the Carrier in respect of the Goods stored as aforesaid shall wholly cease, and the costs of such storage (if paid or payable by the Carrier or any agent or Sub-Contractor of the Carrier) shall forthwith upon demand be paid by the Merchant to the Carrier.”

The merchant was defined in the bill of lading to include any person at any time being or becoming a shipper, holder, consignee, receiver of goods, any person who owns or is entitled to possession of the goods or the bill of lading, and any person acting on behalf of any such person. At paragraph 8 of the particulars of claim, the claimants pleaded the following:

“On or about 27 May 1998 the Claimants were advised by a fax from W.M. Martin & Co (Marine) Ltd, for and on behalf of the Third Defendants and/or the Second Defendants and/or the First Defendants, that the nominated place of delivery was the premises of the Third Defendant at Craighead Works, Whistlebury Road, Hamilton, Scotland (‘the Delivery Place’).”

In the particulars of claim, the claimants allege that there had been a continual failure to take delivery in breach of the contract contained or evidenced by the bill of lading. It was also alleged there were other breaches of contract relating to the dangerous character of the goods or other similar characteristics of the goods and a failure to furnish proper particulars. The claimants claimed the loss and damages they said they had sustained, including storage and other costs and claimed declaratory relief stating that the defendants were liable to take delivery, and that the claimants were entitled to abandon the goods. They also claim specific performance of the contracts contained in the bill of lading.

The proceedings were served on all the defendants, including the first defendants in Italy. Defences were served by the second and third defendants. In the defences served by the second and third defendants on 22 July 2004, both the defendants contended that the bills of lading named Felixstowe as the port of discharge and the place of delivery of the containers. They both contended the bill of lading contained no contract for the carriage by road.

The defendants also claimed that the containers had been delivered at Felixstowe and therefore the bills of lading had in accordance with their terms, been accomplished. The second defendants contended that there had been a delivery to the third defendants. The third defendants went on to contend in their defence the following:

“Further, if (which is denied) there is any claim against the third defendants the same could only arise in relation to the on-carriage from Felixstowe. In the absence of any claim in the Particulars of Claim other than that under the Bill of Lading (which is bound to fail for the reasons set out above), the Third Defendants do not plead any further thereto, save to confirm for the avoidance of doubt that any additional claim is now time-barred.”

The second defendants had set out in their pleadings a contention to similar effect and also make clear that there was no on-carriage contained within the original bill of lading; they were not therefore responsible for any on-carriage outside the terms of that bill of lading. As regards the fax of 27 May 1998, which I have set out, it was admitted by both the second and third defendants that the fax had been sent. The second defendants denied that Martin were acting for them, and the third defendants took the position that they made no admissions as to Martin’s authority. As a result of the defence, the claimants indicated that they would seek permission to amend the particulars of claim in a number of respects. The material respects for the purposes of this application are those set out in paragraphs 8(A) and 8(B). I have already set out paragraph 8 and it is necessary to set out fully paragraphs 8(A) and 8(B). They provided as follows:

“8A. Alternatively, if the Bill of Lading evidenced a contract of carriage for carriage of the Containers from Alexandria to Felixstowe only, on 27 May 1998 the Claimants agreed with the First and/or Second and/or Third Defendants to vary the same so the place of delivery was the Delivery Place. The Claimants rely upon the matter set out in paragraph 8 herein.

“8B. Further in the alternative, if the Bill of Lading evidenced a contract of carriage for carriage of the Containers from Alexandria to Felixstowe only, pursuant to a further contract of carriage agreed on or about 27 May 1998 on exactly the same terms as those contained in the Bill of Lading, the Claimants agreed with the First and/or Second and/or Third Defendants to carry the Containers by road from Felixstowe to the Delivery Place (‘the Alternative Contract’). The Claimants rely upon the matters set out in paragraph 8 herein.”

Consequential upon those amendments by the addition of those particular paragraphs, further amendments were made to the pleading in which the claimants sought to set out claims for damages already included, as damages for breach of the alternative contract; they sought in the alternative specific performance of that alternative contract. Particulars of that proposed amendment were sought informally from the solicitors for the claimants. They replied on 4 November in the following terms:

“(b)

The agreement was concluded with W.M. Martin & Co, who were acting on behalf of someone: the principal must have been one of the Defendants. P&O believe that it was more likely that Martin’s principal was either the Second or Third Defendants, but it may have been the First Defendants. The position will depend upon the evidence disclosed by the Defendants, in particular, the Second and Third Defendants. For the present, therefore, P&O’s case is that the contract was with the First or the Second or the Third Defendants.

“(c)

The contract was concluded orally in discussions between Carol of P&O Nedlloyd BV and Jim Borland (or someone else) from W.M. Martin & Co and/or is evidenced or contained in the fax from W.M. Martin & Co to P&O referred to in paragraph 8 of the Amended Particulars of Claim.”

Having received those particulars, the defendants refused to agree the amendment and when an application to amend was made, this was resisted on two grounds. First the claim was time barred and secondly, even if the claims were time barred, this was not a case where leave to amend should be given under CPR 17.4(2) as the claims did not arise out of the same or substantially the same facts. It was contended that it was a case, clearly, where the discretion should be exercised against leave to amend.

The application came on before Colman J. In a judgment reported as [2005] EWHC 1276 (Comm) he decided the claims were time barred. The claims did not arise out of the same or substantially the same facts, and even if the claims had arisen out the same or substantially the same facts, he would have exercised his discretion against allowing leave to amend.

The claimants appealed to this court by permission granted by Mance LJ, as he then was. At the outset of the hearing appeal, we decided that we would hear argument on the points relating to CPR 17.4(2) and the exercise of the discretion first, on the assumption that the claims were, as the judge found, time barred. If the claimants were right on these issues, which we will refer to as the second and third issues, then the issue as regards the question of whether the claims were time barred did not arise. I therefore turn to consider these issues first.

The first question that arises is: did the new claims arise out of the same or substantially the same facts as the existing claims? CPR 17.4(2) provides the court may allow an amendment the effect of which would be to add or substitute a new claim if any of the new claims arises out of the same facts or substantially the same facts as the claim in respect of which the party applying for permission had already claimed a remedy in the proceedings.

In his submissions before us, Mr Rainy QC on behalf of the claimants made it very clear that he did not seek to go outside the strict terms of his pleading. In seeking to set out the new claim, the claimants expressly stated under paragraph 8(a) and 8(b) that the claimants “rely upon the matter set out in paragraph 8 herein”. He made it clear that he was not relying on the further particulars given informally or upon the telephone or other conversations referred to in the informal particulars. He maintained that his case was advanced solely on the basis of that fax referred to in paragraph 8 and which I have set out at the outset of this judgment. It was his contention that the fax was either 1) an advice as to the place of delivery having contractual effect under the bill of lading as pleaded in the original paragraph 8, or 2) a variation of the original contract of carriage contained in the bill of lading as set out in paragraph 8(A), the first new claim, or 3) as set out in paragraph 8(B) an “alternative contract” of carriage from Felixstowe to Hamilton, if contrary to the contention the bill of lading had been accomplished by delivery at Felixstowe, the bill of lading in such circumstances being only a contract of carriage from Alexandria to Felixstowe.

His submission was, in essence, that on this basis the new claim arose out of exactly the same facts, namely the fax sent by Martin as had originally been pleaded. If it was necessary to analyse the matter further, the court should apply the principles set out in paragraph 96 of the judgment of Walker LJ, as he then was, in Smith v Henniker-Major [2002] EWCA Civ 762 where Walker LJ said:

“So in identifying a new cause of action the bare minimum of essential facts abstracted from the original pleading is to be compared with the minimum as it would be constituted under the amended pleading.”

The judge had carried out that analysis at paragraphs 40 and 41 of his judgment. It was contended by Mr Rainy that the judge had fallen into error because he had concluded that the new amended pleading made it necessary to establish:

“1.

That W.M. Martin were the agents of the first or second or third defendants authorised to vary the bill of lading contract so as to extend it to cover land carriage from Felixstowe or Hamilton on the original bill of lading terms; and

“2.

That the fax of 27 May 1998 either contained such new contract or evidenced it, an exercise which would necessarily involve reference to prior telephone discussions referred to above.”

The judge amplified that second point at paragraph 43 of his judgment, where he said:

“In reality, the Claimants will be driven to rely on matters going well beyond what appears on the face of the 27 May 1998 fax in order to make good either their case on variation or their case on the Alternative Contract, since it will be vital for them to establish by evidence that the terms of the bill of lading continued to apply notwithstanding that the fax contains no words expressly suggesting this and indeed states that the bill of lading had been surrendered to the carriers. Thus whereas, on the original case, the Claimants need deploy only the fax as an instrument of nomination of the ultimate on-carriage destination, in the new case, they have to go substantially further that and rely on evidence underlying the fax to make good its alleged contractual effect.”

It was submitted by Mr Rainy that the judge had fallen into error because the agency of Martin had already been pleaded and nothing new was being added, and secondly the claimants were not going beyond the strict terms of the fax. They were not relying on any telephone conversations. For the defendants, Mr Davey contended that it would be necessary for the court to hear evidence in relation to the fax and in relation to the agency of Martin. It would be necessary to look at the context in which the fax had been sent and to refer to and examine the conversations referred in to it.

We do not accept Mr Davey’s submission. It was made clear before us by Mr Rainy for the claimants that their case stood or fell by evidence as to the authority of Martin, a matter already pleaded, and secondly, the fax. They were not relying on any conversations at all. They had not pleaded any and would not be seeking to rely on any. In view of the very clear way in which Mr Rainy has put the claimants’ case before this court, the ground upon which the learned judge decided this point of claim in my view cannot stand; in the light of the judge’s judgment, the case cannot have been presented in the same way to him nor were the concessions made before as made to the judge It may be that the claimants might at some stage during trial be driven, in the judge’s words, to rely upon the evidence of the underlying facts to make good the fax’s alleged contractual effect, but Mr Rainy has made clear before us that he expressly disavows any such reliance. They were seeking to deploy no more than the original facts and, as I have said, the case must stand or fall at trial on that.

There is, therefore, in my view, given the way Mr Rainy has put the case before this court, no new fact in relation to the variation of the contract or the new alternative contract as pleaded in paragraphs 8(A) or 8 (B) of the proposed amendments. It may well be that, as Mr Davey suggested, the defendants may consider relying on further facts, such as what was said in the telephone conversations, but the fact that the defendants may seek to rely upon further facts does not affect the way the claim is made on the facts on which it is made.

As to the authority of Martin to send the fax, that has been pleaded. The claimants are not seeking to go beyond the facts and not seeking to raise any new facts relating to the authority of Martin to send it. For those reasons, therefore, it seems on the way in which the case has been put before us so clearly by Mr Rainy that the amendments arise out of the very facts already pleaded, and in my judgment I consider that they plainly therefore fall within CPR 34.4(2).

I turn therefore, to consider the issue of the discretion. The judge decided that had he exercised the discretion, he would have exercised it against granting leave to amend. He expressed his reasoning at paragraph 46 of the judgment. He said in these terms:

“There is no reason why the Claimants should not have pleaded the new claims at any time within the Limitation Period. Having delayed commencement of proceedings until nearly six years after the termination of the carriage it was essential that they should deploy the whole factual basis on which their claims were to be based before the end of the Limitation Period. They have put forward no explanation for their failure to do so. The argument raised in the defence that the contract of carriage came to an end upon discharge of the vessel at Felixstowe and surrender of the bills of lading presents itself to me as so glaringly obvious that the Claimants ought to have anticipated it at the outset and advanced their alternative cases on variation and the Alternative Contract at the time when they served their original particulars of claim. Although it is argued that it is not shown that it would be any more difficult for the defendants to conduct their defence if these new claims were now introduced than it would have been if they had been raised in the original pleading or at latest by the end of the Limitation Period, I am firmly of the view that the overriding objective required that in the interests of justice it would not be appropriate to expose the defendants even to the relatively small risk that, in view of the additional delay in advancing these new claims, after such a long initial delay in starting the proceedings, it would be more difficult for them to be defended. That risk is clearly to be inferred from the effect of the passage of yet further time on the quality of the evidence of the necessary witnesses.”

I approach the issue of the exercise of the discretion on the following factual basis, which arose from the earlier part of this judgment: 1) no new facts were relied upon by the claimant; 2) there was no evidence of express prejudice put forward by the defendants. They only pointed to that type of prejudice which would ordinarily follow from a claim being investigated a few months later than would have been the case had the claimants put forward the alternative claims within the limitation period, which for these purposes I must assume to have expired in May 2004; 3) no reasons were advanced by the claimants which explain why the new case has not been pleaded originally.

I approach the exercise of the discretion on this factual basis; this was not a case where there was any real prejudice put forward. It is not therefore a case where the court has to balance the prejudice to the defendant against the reasons why the claimant had not advanced the alternative cases earlier. As it is not such a case, to refuse to exercise the discretion in favour of the claimants would be to penalise the claimants for not putting their case at the outset on every alternative basis that might have been available on those facts. However obvious it might appear now that it could have been put on those alternative bases, it is well known in the experience of many that, even if late in the day it may be seen how obvious things were, it is not always obvious to the person at the time; it would not be right to adopt an approach to this case which would in effect penalise the pleader.

I do not consider therefore that the approach is correct in principle, as it both penalises the claimant and allows the defendant to escape from a claim which arises on exactly the same facts, where all the claimant has failed to do is to characterise every alternative basis upon which the claim might be put. I therefore consider afresh the exercise of the discretion and approach it on the basis I have set out above. On that basis, it seems to me clear and inevitable that a court should exercise the discretion to allow the amendment.

For these reasons, therefore, I consider that, on the assumption that the claims are time barred, they arise out of the same facts as originally pleaded and the court should exercise its discretion to allow the amendments. In the circumstances, therefore, the issues on limitation so carefully and clearly considered by the learned judge do not arise. We have heard no argument on the issues and I express no view upon them.

LORD JUSTICE CARNWATH: I agree.

LORD JUSTICE TUCKEY: I also agree.