Noble Caledonia Ltd v Air Niugini Ltd

I refer to the judgement handed down on 12^th May 2017, in which I decided that service had not been effected on the Defendant. I repeat paragraph 1 thereof:

“1 The claimant Noble Caledonia ("NC") is a tour operator which operates cruises in various parts of the world. Air Niugini Ltd ("ANG") is the national airline of Papua New Guinea. This claim relates to an ANG flight from Singapore to Port Moresby, which was to carry a number of NC's clients to embark on a cruise ship at Port Moresby, but which failed to be available for take off in time for them to do so. The flight was arranged by NC through Flight Directors Scheduled Services Limited ("FDL"), which has an office near Gatwick Airport.”

I shall adopt the same acronyms, together with “PNG” for the state of Papua New Guinea.

The Particulars of Claim pleads its case in terms of a breach of contract, made between NC and ANG. As I shall come to, the Claimant is also seeking to amend the Particulars of Claim to make a claim under Article 19 of the Warsaw Convention, which is incorporated into English Law by the Carriage by Air Act 1961. There is no doubt that the Convention applied to this proposed travel by air. Both the United Kingdom and PNG are signatories. The critical question is whether the courts of the United Kingdom have jurisdiction to hear a claim relating to a carriage by air to which the Convention applied.

In the course of that judgement, I considered whether FDL's office was either a place at which ANG carried on its activities, or a place of business of ANG, so as to permit the effecting of service on FDL amounting to service on ANG within the scope of CPR 6.9. In doing so (see [48]-[57]) I considered the application of the criteria in Adams v Cape Industries plc [1990] 1 Ch 433 (CA) at pp 530-531.

I now have two applications before me:

The Practice Direction CPR 6B “Service Out of the Jurisdiction” applies. The Court may permit proceedings to be served in a claim relating to a contract if the contract:

By CPR 6.37, which deals with those cases under CPR 6.36 where permission is sought to serve a claim form out of the jurisdiction:

“(1)

An application for permission under rule 6.36 must set out –

(a)

which ground in paragraph 3.1 of Practice Direction 6B is relied on;

(b)

that the claimant believes that the claim has a reasonable prospect of success; and

(c)

the defendant’s address or, if not known, in what place the defendant is, or is likely, to be found.

(2)

Where the application is made in respect of a claim referred to in paragraph 3.1(3) of Practice Direction 6B, the application must also state the grounds on which the claimant believes that there is between the claimant and the defendant a real issue which it is reasonable for the court to try.

(3)

The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.”

The principles relating to service out of the jurisdiction under this procedure are helpfully summarised in the White Book at [6.37.15]:

“The principles upon which permission to serve outside the jurisdiction is granted are set out in r.6.36 and para.3.1 of 6BPD and r.6.37, as explained in the case law. The two most important authorities are Seaconsar Far East Ltd v Bank Markazi Jomhouri Islam Iran [1994] 1 A.C. 438; [1993] 4 All E.R. 456, HL, and Spiliada Maritime Corp v Consulex Ltd, sub nom. The Spiliada [1987] A.C. 460; [1986] 3 All E.R. 843, HL. Although the wording of r.6.36 and para.3.1 of 6BPD and r.6.37 differs from that of RSC Ord.11 rr.1(1) and 4, the principles remain the same. The basic principles under para.3.1 of Practice Direction 6B were recently restated by the Privy Council in AK Investment CJSC v Kyrgyz Mobile Tel Ltd [2011] UKPC 7; [2011] 1 C.L.C. 205 at [71], [81], and [88] as summarized by the Court of Appeal in VTB Capital Plc v Nutriek International Corp [2012] EWCA Civ 808; [2012] 2 Lloyd’s Rep. 313 at [99] as follows. First, the claimant must satisfy the court that, in relation to the foreign defendant to be served, there is a serious issue to be tried on the merits of the claim, i.e. a substantial question of fact or law or both. This means that there has to be a real, as opposed to fanciful, prospect of success on the claim. Secondly, the claimant must satisfy the court that there is a good arguable case that the claim falls within one of the classes of cases set out in para.3.1 of Practice Direction 6B. Good arguable case in this context means that the claimant has a much better argument than the foreign defendant. Further, where a question of law arises in connection with a dispute about service out of the jurisdiction and that question of law goes to the existence of jurisdiction (e.g. whether a claim falls within one of the classes set out in para.3.1) the court will normally decide the question of law, as opposed to seeing whether there is a good arguable case on that issue of law. This statement of principle was recently approved by the Supreme Court affirming the decision of the Court of Appeal on different grounds: [2013] UKSC 5; [2013] 1 W.L.R. 298 at [164].”

There is a strong case that the agreement in question was made in the United Kingdom, when ANG agreed through FDL to provide the air transport of the passengers which NC had sought. There is also no doubt that the contract was made through an agent trading or residing within the jurisdiction (FDL). The critical issue comes when one considers the effect of the Convention.

It is the Defendant’s case that the claim being pursued by NC falls within the Convention, and may only be pursued in accordance with it. The Defendant argues that it is only PNG where jurisdiction exists to hear the claim, and that therefore this is not a claim which, if pursued in the English or Welsh courts, could succeed.

If that argument is rejected, and I consider that the claim could be served, I must still address the issue of whether it is appropriate to litigate the matter in this jurisdiction. That would lead to consideration of the issue known as “forum conveniens”.

Article 19 of the Warsaw Convention makes the carrier liable for “damage occasioned by delay in the carriage by air of passengers…..”

Article 28 is a self contained code dealing with jurisdiction, and not just with questions of service: see Rothmans of Pall Mall (Overseas) Ltd v Saudi Arabian Airlines Corporation [1981] 1 QB 368 at 385D per Roskill LJ. Although the Convention was a partial harmonisation of the rules relating to international carriage by air, it was comprehensive in respect of the issues covered. Under the Convention, carriers surrendered their freedom to limit or exclude liability in damages to passengers in exchange for the conditions and limits on claims set by the Convention. If the Convention had not provided a remedy, no remedy was otherwise available: Sidhu v British Airways PLC [1997] AC 430. In the words of Lord Hope of Craighead at 453 C – 454 D:

“Conclusion

     I believe that the answer to the question raised in the present case is to be found in the objects and structure of the Convention. The language used and the subject matter with which it deals demonstrate that what was sought to be achieved was a uniform international code, which could be applied by the courts of all the high contracting parties without reference to the rules of their own domestic law. The Convention does not purport to deal with all matters relating to contracts of international carriage by air. But in those areas with which it deals—and the liability of the carrier is one of them—the code is intended to be uniform and to be exclusive also of any resort to the rules of domestic law.

     An answer to the question which leaves claimants without a remedy is not at first sight attractive. It is tempting to give way to the argument that where there is a wrong there must be a remedy. That indeed is the foundation upon which much of our own common law has been built up. The broad principles which provide the foundation for the law of delict in Scotland and of torts in the English common law have been developed upon these lines. No system of law can attempt to compensate persons for all losses in whatever circumstances. But the assumption is that, where a breach of duty has caused loss, a remedy in damages ought to be available.

     Alongside these principles, however, there lies another great principle, which is that of freedom of contract. Any person is free, unless restrained by statute, to enter into a contract with another on the basis that his liability in damages is excluded or limited if he is in breach of contract. Exclusion and limitation clauses are a common feature of commercial contracts, and contracts of carriage are no exception. It is against that background, rather than a desire to provide remedies to enable all losses to be compensated, that the Convention must be judged. It was not designed to provide remedies against the carrier to enable all losses to be compensated. It was designed instead to define those situations in which compensation was to be available. So it set out the limits of liability and the conditions under which claims to establish that liability, if disputed, were to be made. A balance was struck, in the interests of certainty and uniformity.

     All the obvious cases in which the carrier ought to accept liability were provided for. But, as one of the French delegates to the Warsaw Convention, Mr. Ripert, observed (Minutes p. 73) when the definition of the period of carriage was being discussed, there are an infinite variety of cases not all of which can be put in the same formula. No doubt the domestic courts will try, as carefully as they may, to apply the wording of article 17 to the facts to enable the passenger to obtain a remedy under the Convention. But it is conceded in this case that no such remedy is available. The conclusion must be therefore that any remedy is excluded by the Convention, as the set of uniform rules does not provide for it. The domestic courts are not free to provide a remedy according to their own law, because to do this would be to undermine the Convention. It would lead to the setting alongside the Convention of an entirely different set of rules which would distort the operation of the whole scheme.

     The Convention is, of course, tightly drawn on these matters. This has been done in the interests of the carrier, whose exposure to these liabilities without the freedom to contract out of them was a principal consequence of the system which it laid down. Were remedies outside the Convention to become available, it would encourage litigation in other cases to restrict its application still further in the hope of obtaining a better remedy, against which the carrier would have no protection under the contract. I am in no doubt that the Convention was designed to eliminate these difficulties. I see no escape from the conclusion that, where the Convention has not provided a remedy, no remedy is available.”

It follows in my judgement that the Convention is a complete code, which has the effect of excluding claims for remedies which are not included within it. That is for the important reasons set out by Lord Hope in that passage.

The parties were in dispute on the interpretation of Article 28. The Claimant argued that the words italicised above in Article 28 were sufficient to cover the operations conducted by ANG through FDL. The Defendant contended that they were not. Counsel informed me that there were no authorities from within this jurisdiction on the meaning of those words. Mr Audland QC argued for the Claimant that assistance was to be found in two authorities from the United States of America.

I was referred to Berner v United Airlines [1956] 3 A.D.2d 9 (N.Y.App Div 1956), a decision of the Appellate Division of the Supreme Court of New York. There the British Overseas Airways Corporation (i.e. BOAC) was appointed “General Sales Agent” for another airline called British Commonwealth Pacific Airlines Ltd, an Australian Corporation, which was in fact the Defendant, and whom I shall refer to as BCPA. Under the agreement BOAC was required to “observe and comply with all reasonable directions and instructions” given to it by BCPA “concerning all matters affecting or arising out of this agreement.” BCPA undertook obligations which, in the view of Bergan J, giving the judgement of the court, went far beyond the usual conception of mere principal and agent relationships. For example, BCPA undertook to see to it that all airline aircraft had a certificate of airworthiness, and also that the aircraft would be operated in conformity with it, and that the aircraft would be suitable for the carriage of passengers. Other terms required the provision of particular types of personnel, the maintenance of a technical log, and the setting up of other affirmative operational conditions. BOAC was required to give every assistance in its power to BCPA, including the making of statements, the production of documents as required by an investigation or inquiry, and a similar reciprocal duty applied to BCPA with regard to BOAC. The agreement also covered the promotion of BCPA’s business by BOAC. BOAC had a New York office in which it carried out the business required by its agreement with BCPA, including telephone and office listings.

The Plaintiffs were executors of the estate of a passenger killed on a BCPA flight. He had bought his ticket in New York for a return flight from San Francisco to Sydney. The claim was issued in New York. The Court considered Article 28. In its version, the words read “where the carrier has a place of business through which the contract has been made.” The Court, having referred to a judgment of Judge Cardozo in Tauza v Susquehanna Coal Co (220 NY 259,268) considered that all that was required was that “enough be done” so that the court will be able to say that the defendant “is here.” The Court described the concept as elastic. The Court described the agency created between BCPA and BOAC as being “of extraordinary breadth. It went beyond mere solicitation of business” and the Court drew attention to the ability of BOAC as agent in New York to require a large number of operational and other aspects affecting the execution of the New York contract of carriage. The Court considered that activities of that kind amounted to “doing business” in the traditional sense. Bergan J, who gave the judgement of the court, continued:

“And it seems to us finally that when (BCPA) undertook by its agent to make a contract of air carriage in New York, expressly and in terms governed by the Warsaw Convention, at a “place of business” within the jurisdiction of the New York Supreme Court and that place of business is literally one “through which the contract has been made” , it is doing business in such a way as to give jurisdiction by the service of process on the agent who this is brought with the carrier’s approval within the literal terms of the Convention. An intent to do business in New York and the implementation of the intent by activity in making the contract furnish sufficient criteria of activity here to give jurisdiction, when the Convention, the contract between carrier and agent, and the contract of carriage are seen in context.”

I was also referred to Eck v United Arab Airlines Inc [1966] Lloyds LR 485, a decision of the United States Court of Appeals (Second Circuit) of October 1965. In that case the plaintiff had bought a ticket in Oakland California at an office of SAS Airlines. Several different airlines were to be used during his journey. Part of his journey involved a flight from Jerusalem to Cairo. SAS confirmed a reservation on that leg of the journey with the Defendant (UAA) at its office in Cairo. UAA did have two offices in the USA in Los Angeles and New York City but neither was involved in the transaction. The Defendant contended that Article 28 prevented the pursuit of the claim in the New York District Court. The Court, relying in part on Berner v United Airlines, entered into a purposive construction of Article 28, and held that the agency agreement with SAS, and the presence of the other two offices, gave a place of business through which the contract was made. It must be observed that the Court not only addressed what the framers of the Convention had thought, but having noted that they had not adverted to what the court described as “the problem of avoidance illustrated by the present case” went on at 492:

“we conclude that if the framers had recognised this problem they would have wished that an airline that had a place of business in the territory of a High Contracting Party and permitted its tickets to be sold in that country be subject to suit in that country’s courts.”

Should those authorities guide this Court in its interpretation of Article 28 and its application to the facts before it? I remind myself of the point taken in Sidhu v British Airways about the Warsaw Convention being a code. It is also a code which is embodied in statute. One of the effects of having a statutory code is that one must be wary of introducing private law concepts which have not been included. As pointed out by Lord Scarman, albeit in the different context of the Planning Code, in Pioneer Aggregates Ltd v Sec of State for the Envt [1985] AC 132 at 141, but in terms of language and concept a passage to the same effect as Lord Hope’s judgment in Sidhu:

“Where the code is silent or ambiguous, resort to the principles of the private law (especially property and contract law) may be necessary so that the courts may resolve difficulties by application of common law or equitable principles. But such cases will be exceptional. And, if the statute law covers the situation, it will be an impermissible exercise of the judicial function to go beyond the statutory provision by applying such principles merely because they may appear to achieve a fairer solution to the problem being considered. As ever in the field of statute law it is the duty of the courts to give effect to the intention of Parliament as evinced by the statute, or statutory code, considered as a whole.”

So far as Berner v United Airlines is concerned, the intricacies of the relationship between BOAC and BCPA were such that the approach of the Court is compatible with the words of Article 28. It is of some persuasive assistance. But I do not find myself able to adopt the approach of the Court in Eck v United Arab Airlines, where, as the judgment makes plain, the Court engaged in an exercise in interpretation with the aim of overcoming what it saw as “a problem of avoidance.” The approach to interpretation, which requires the court not just to consider what the framers of the Convention intended, but what they would have thought had they been confronted by the current facts, which were never considered by them, is one which I find quite unpersuasive. It is the type of attempt to avoid the effects of a statutory code criticised in Sidhu and Pioneer Aggregates. Further than that, I do not understand how it could be said that the contract had been made through UAA’s place of business, when it was made through SAS in Oakland.

I therefore return to the words of Article 28 in the context of the current litigation. I do so in the context also that the words in Article 28 as they appear in the Carriage by Air Act 1961 require “an establishment by which the contract has been made.” Mr Audland contends that I am not required to interpret those words with the same meaning as “a place at which ANG carried on its activities, or a place of business of ANG” – i.e. the test in CPR 6.9 which I addressed in the first judgement. I am unable to accept that submission. On the basis of the findings which I made in the first judgement, I am unable to regard the activities of Ms Joyce and others at FDL as being “an establishment” in the sense used in the Article. Were I to do so, it seems to me that it would deprive carriers of the protection given them by the Convention in return for their giving up the freedom of contract, as noted by Lord Hope in Sidhu, supra.

The effect of Article 28 is therefore, and unequivocally so, that the state with jurisdiction over the claim is PNG. The tickets were issued by ANG through the agency of FDL, so no question can arise of (for example) Singapore being an appropriate venue.

Given those conclusions, it must be the case that the claim by NC is likely to fail, if pursued in the United Kingdom, given the effect of both Rothmans of Pall Mall and Sidhu. If NC cannot bring its case within Article 19 (delay) then, as the flights were subject to the Convention, it cannot bring a claim for breach of contract. That would offend the principles set out by Lord Hope in Sidhu, and be contrary to what was decided in Rothmans.

I therefore refuse permission to serve the claim out of the jurisdiction. I also refuse permission for the amendment to be made.

I add a postscript. I noted in my first judgement at [56] the anomaly that if ANG had installed one of its employees in an ANG leased office at Gatwick, with no authority to offer altered prices or terms and conditions, then that would pass the place of business test under CPR 6.9. It would probably pass the test under Article 28 as well.

I also heard submissions about the most appropriate forum to hear the litigation. Mr Audland argued that it was London, because the contract was made here, and he would call passengers to describe the effects of the delays. Mr Allen argued in favour of Singapore, where those seeking to restore the aircraft to airworthiness and making decisions about the flight are located. Ironically neither party argued in favour of litigating this matter in PNG. I make no findings about the forum conveniens issue given my conclusions about Article 28.

It would be more comfortable if one could reach another conclusion. An airline wishing to drum up business in the United Kingdom has failed to provide flights at the promised times, or for some time thereafter. NC, the tour operator, has compensated its clients, but has been unable to get recompense from the carrier, whose legal arguments have now directed the claims to Port Moresby. One suspects that that is contrary to the commercial interests of ANG in attracting more custom, but that is a matter for their commercial judgement.