Chan Kwai Ha v. Wong Chick Bun (HK CofA)

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DMC/SandT/08/09
Chan Kwai Ha v Wong Chick Bun
Hong Kong Court of Appeal: Ma, CJHC, Stone and Reyes, JJ: CA (2008) CACV 200/2007: 27 February 2008
Mr Anthony Ismail, instructed by Messrs Ho and Ip, for the plaintiff/appellant
Mr Charles Sussex SC, instructed by Messrs Holman, Fenwick & Willan, for the defendant/respondent
COLLISION BETWEEN TUG AND TOW: WHETHER CLAIM BY TOW OUT OF TIME UNDER MERCHANT SHIPPING (COLLISION DAMAGE LIABILITY AND SALVAGE) ORDINANCE 1997: COLLISION CONVENTION 1910: WHETHER TIME LIMIT IN CONVENTION AND ORDINANCE APPLIED TO CONTRACTUAL CLAIMS: MEANING OF ‘FAULT’: WHETHER APPROPRIATE TO EXERCISE COURT’S DISCRETION TO EXTEND TIME LIMIT

Summary
In this judgment, the Court of Appeal, affirming the judgment at first instance, held that the two-year limitation period provided by the Collision Damage and Salvage Ordinance of 1997 applied to all actions for recovery of damages in collision cases, whether the claim was based in tort or in contract. Unless there were very good reasons (which did not exist in the present case) the court would not use its discretion to extend time

DMC Category Rating: Confirmed

This case note has been contributed by Mary Thomson, a lawyer with the firm of Kennedys in Hong Kong

Facts 
This was a collision case. In August 1999 Ms. Chan's barge (the Tow) sank while being towed by Mr. Wong's vessel (the Tug). In April 2005 Ms. Chan issued a writ against Mr. Wong claiming damages for the loss of the Tow. The writ alleged "breach of contract on the part of [Mr. Wong] and/or negligent navigation and/or management of [the Tug]".

In Mr Wong's defence, he contended that Ms Chan's claim was time-barred by reason of the  Hong Kong Merchant Shipping (Collision Damage Liability and Salvage) Ordinance section 7(1), which states, subject to any extension granted by the Court: -

"no action shall be maintainable to enforce any claim or lien against a ship or its owners in respect of any damage or loss to another vessel, its cargo or freight, or any property on board the vessel, or damages for loss of life or personal injuries suffered by any person on board the vessel, caused by the fault of the former vessel, whether such vessel is wholly or partly in fault, unless proceedings in the action are commenced within 2 years from the date when the damage, loss or injury was caused."

The judgment at first instance held that there was no good reason for extending the limitation period of two years imposed by the Ordinance and that Ms. Chan was thus out of time in bringing her action.

Ms Chan appealed against this, claiming that section 7 applied to tortious claims only and that her claim was for breach of contract. Therefore, section 7 did not apply to a breach of contract. For reasons set out below, Ms. Chan's action was out of time. The appeal was accordingly dismissed with costs to Mr. Wong.

Judgment 
1. There was nothing in either the section or the Ordinance to indicate that it is to be construed as applying only to tort and not to contract. The words are general. They indicate that all actions for recovery of damages in collision cases are barred after an interval of two years from a casualty. There is nothing to suggest that it has no application to a claim for the consequences to one vessel arising from the faulty navigation of another, even if (as alleged in this case) there existed an oral towage contract between the owners of the two vessels concerned.

2. Section 7(1) mirrors the 1910 Collision Convention that imposes its two year limitation from the date of a "casualty" by reckoning time from "the date when the damage, loss or injury was caused".

3. In relation to extensions of time, section 7(3) provides that the two year limit may be extended, but only for good reason.

4. The Ordinance deliberately qualifies the possibility of contracts overriding the two year time bar. Whether the two year limit is or is not trumped by a contract, is left to the Court's discretion under section 7(3). Under the Ordinance, the Court may only extend the time bar if the existence of a contract constitutes a good reason for so doing. There never was any contract between Ms. Chan and Mr. Wong to extend the two year time bar in Article 7 of the 1910 Collision Convention or section 7(1) of the Ordinance.

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