CL-2021-000431 - [2025] EWHC 1940 (Comm)

The Claimant issued proceedings against the Defendants by a Claim Form dated 16th July 2021. By that Claim Form: “The Claimant claims a declaration that it is not liable to the Defendants (or any of them) in relation to the damaged cargo.” The reference to “damaged cargo” relates back to the preceding averment in the Claim Form: “On discharge at Aliaga, Turkey, the cargo carried under Bills 1-3, 4-6 and 7-8 was found to be damaged as a result of self-heating.”

There was then an agreed stay of proceedings between 20th September 2021 and 8th July 2022: see the Consent Order made by Foxton J dated 30th September 2021.

The Claimant served Particulars of Claim on 11th August 2022. Its case is that the deterioration of the Cargo was caused by inherent quality or vice (within Article IV rule 2(m) of the Hague Rules) and/or an act or omission of the shipper, his agent or representative (within Article IV rule 2(i) of the Hague Rules) and/or without the actual fault or privity of the Claimant and without the actual fault or neglect of the Claimant’s agents or servants (within Article IV rule 2(q) of the Hague Rules) and/or that it is not in breach of or liable under the contracts of carriage.

In response, the Defendants served a Defence and Counterclaim on 6th October 2022. It is accepted by the Claimant that the original Counterclaim as served was brought within time for the purposes of Article III Rule 6 of the Hague Rules, by reason of the stay of proceedings.

In its original form the Counterclaim pleaded breach of contract and / or duty in the following terms.

By paragraph 69, the Defendants allege:

“In breach of duty and/or in breach of the Contracts of Carriage, the Claimant failed to deliver the Cargo to the Defendants in good order and condition. […] In the premises it is common ground between the parties that the Cargo was not discharged in the same apparent good order and condition as that in which it was loaded. In the premises the burden of proof is on the Claimant as bailee.”

By paragraph 71, it is alleged:

“[….] the loss and damage to the Cargo was caused by the negligence of the Claimant, their servants or agents and/or their failure properly and carefully to load, handle, stow, carry, keep, care for and/or discharge the Cargo in breach of the Contracts of Carriage and/or Article III, rule 1 and/or Article III rule 2 of the Hague Rules” (with particulars following which advance the case that the cargo damage was caused by the Claimant’s systematic failure to properly ventilate the cargo and/or leakages in the hatch covers).

The original Counterclaim claimed damages on behalf of each of the Defendants on the basis of the diminution in value of those parcels of Cargo which were delivered to them and the difference between the sound arrived value of the Cargo and its ‘as delivered’ damaged value.

Subsequently, the Defendants, and more particularly the Second Defendant, applied for permission to add a new allegation and a new claim for damages based on that allegation, relating to the discarding by the Claimants of portions of the Cargo at Ukraine. The parties have referred to this claim for the purposes of the Claimant’s applications as “the Shortage Claim” by way of shorthand. I shall do the same.

It is worth noting that the Defendants had previously sought consent from the Claimant to make the Shortage Claim amendments but the Claimant refused to consent on the basis that it alleged that such claims were time-barred pursuant to Article III rule 6 Hague Rules. Consequently, an application for permission to amend was made by the Second Defendant (and the Third Defendant in respect of amended claim figures which are immaterial for present purposes) on 25th April 2024.

The amendment for which permission was applied for was in the following terms as to the facts relied upon (see para. 71(6) and (7) of the Amended Defence and Counterclaim):

“(6)

Further, the Claimants, its servants or agents, removed a layer of damaged Cargo in Cargo Hold No. 1 from the upper part of the stowage in each hatchway while the Vessel was at Pivdennyi Roadstead and discarded it.

(7)

Further, the Claimants, its servants or agents, removed damaged Cargo from Hold Nos, 2 and/or 3 and/or 4 and/or 5 and discarded it prior to the Vessel’s arrival at Aliaga.”

The new claim for damages founded on the new allegations sought to be added by amendment was in the following terms (see para. 85A):

“Further, by reason of the Claimants, their servants or agents, removal and discarding of damaged cargo (as set out above at paragraphs 71 (6) & (7)) there was a short delivery of 317.14 MT, being the difference between the 9,000 MT under the bill of lading and the 8,682.860 MT delivered. In accordance with the arrived market value of the Second Defendant’s Cargo set out at paragraph 82 above, the Second Defendant has incurred a loss of USD 198,212.50 in respect of the removal of Cargo by the Claimants, their servants or agents, which had been damaged in breach of (among other things) Article III rule 2 of the Hague Rules.”

It was agreed between the parties that the application for permission to amend would be disposed of at the Case Management Conference (“the CMC”), fixed to be heard on 10th May 2024 and concerned with the making of directions to trial.

The CMC was heard by Jacobs J. I have been provided with two transcripts of what took place at the CMC and in particular how the Defendants’ application to amend in respect of the Shortage Claim was dealt with by the parties and by the Court. The Claimant was represented by Mr Andrew Pearson and the Defendants were represented by Ms Ruth Hosking.

It is significant to note that the application to amend was opened fully by Ms Hosking on the assumed basis that the Claimant’s objection to the amendment on the basis of time bar was being maintained. There was then, what can only be referred to as, a volte face by the Claimant. Having refused to consent on the basis that the Shortage Claim was time barred under Article III Rule 6 of the Hague Rules and therefore having obliged the Defendants to apply for permission to amend, the Claimant then withdrew from that position and reserved their time bar argument to the full trial of the action. The position urged on the Court was that it should not ‘grasp the nettle’ on the time bar issue at the amendment stage, that the amendment could be made (with suitable reservations of the position) and could then be dealt with at the full trial.

It is clear from the transcripts that course of action was approved of by Jacobs J., who considered it undesirable to decide an important point under the Hague Rules with the obvious possibility of the point being appealed to the Court of Appeal. The objective inference to be drawn from the Claimant’s proposed course was that the time bar issue and the Defendants’ case that the Shortage Claim was not time barred was properly arguable for amendment purposes and should go forward for trial.

The Order dated 5th June 2024 made by Jacobs J. following the CMC granted the Defendants permission to amend in the terms which I have summarised above: see para. 1 of the Order. This was “on the basis that: (i) any time-bar defence that the Claimant had at the date of the CMC is preserved and/or not affected by permission to amend being granted; and (ii) in respect of any time-bar defence the Claimant may have, the Second and Third Defendants' position as at the date of the CMC is not improved by permission to amend being granted.” (This reflected an issue canvassed before the Judge by Counsel as to the relevance to Article III Rule 6 of the doctrine of ‘relation back’.) Consequential orders providing for responsive amendments by the Claimant to the Shortage Claim and responsive amendments by the Defendants if necessary were also made (para. 2 to 4). The usual costs order on an amendment was also made (para. 5).

Disclosure was ordered as part of the general scope of CMC directions; this was ordered to include documents relating to the discarding of cargo (see Issue 8 in the Disclosure Review Document: “Was cargo discarded by the Claimants, its servants or agents?”).

Importantly, as part of the CMC Order, Jacobs J. then made full directions down to trial of the action, including the now included Shortage Claim and the discarding issue, with the trial to be listed for 10 days (including 2 days reading time). Subsequently the trial date was fixed by the Court for 11th March 2026.

The allegations of discarding and the Shortage Claim were first pleaded to by the Claimant in its Amended Reply and Defence to Counterclaim dated 2nd July 2024 which was verified by a Statement of Truth. Para. 83A contained a denial and an averment was made at para. 92C that there was no short delivery whether as alleged (i.e. discarded) or at all.

It is submitted on behalf of the Defendants that, from the documents disclosed by the Claimant in response to Disclosure Issue 8, it was shown and became clear that that there had been a deliberate removal and discarding of cargo, as shown, inter alia, by emails from the Master to the Claimant; documents evidencing the payment of crew bonuses for “cargo cleaning”; maintenance schedules and other reports which were disclosed by the Claimant as part of Extended Disclosure.

Following this disclosure, the Claimant served a Re-Amended Reply to Defence to Counterclaim on 18th September 2024 in which it now admitted to discarding a quantity of Cargo overboard: see the quotation from para. 83.A of that pleading which I have cited above.

As seen there, the Claimant admitted and averred that it had found damage to the Cargo as early as 16 April 2021, which was connected with the intentional discarding of cargo as some sort of common practice way of dealing with surface condensation damage.

That plea in September 2024 was responded to by the Defendants’ amendments to the Re-Amended Reply to Defence to Counterclaim dated 7th November 2024.

For present purposes, the important paragraph is para. 36A. After various responses to the Claimant’s case in answer to the Shortage Claim, the Defendants then pleaded as follows:

“(7)

Further. pursuant to Article III r6 of the Hague Rules, the Claimant was obliged to give all reasonable facilities to the owners of the Cargo, including the Second Defendant, to inspect and tally the goods.

(8)

Further and in any event. it will be a matter of expert evidence in due course but at this stage the Defendants say that on discovering the damage on and/or after 16 April 2021 the Claimants should:

(a)

Have informed the owners of the cargo, including the Second Defendant.

[…]

(9)

Further or alternatively, in issuing the switch bills of lading in early May 2021. The Claimant impliedly represented that it did not know of any facts or matters impacting on the apparent good order and condition of the Cargo and/or that it had not acted in breach of its duties under the bills of lading. Further or alternatively, it was under a duty to speak as to its knowledge of the state of the Cargo.

(10)

Further or alternatively, the Claimant was under a duty in tort to clause or not issue a bill of lading which was known to contain inaccurate information as to, among other things, the quantity and condition of the cargo. For the avoidance of doubt that duty arose because the Claimant knew that the shippers. receivers and others would rely on the bills of lading to purchase and make payment for the cargo.

(11)

In light of its discovery of cargo damage on /or after 16 April and thereafter, the said representations were false (as the Claimant knew) and/or it knowingly breached its duty to speak. In the premises, the Claimant is liable in deceit to the Defendants who relied upon the said implied representations and/or the Claimant's duty to speak.

(12)

Further or alternatively, if (contrary to the Defendants' primary case) each or any of the representations was not made fraudulently, the Defendants will rely upon the provisions of s.2 of the Misrepresentation Act 1967 as entitling them to the relief claimed.”

Following that amendment (which for convenience, the parties have referred to as the making of “the Misrepresentation Claims”, a shorthand term which I shall also adopt, although it will be necessary to distinguish later in this judgment between various elements in the different bases pleaded underlying “the Misrepresentation Claims”), the Claimant issued an Application Notice dated 6th March 2025 seeking the strike out and summary judgment applications now in issue.

Subsequently the Claimant served a Rejoinder to the Re-Amendments contained in the Re-Amended Reply to Defence to Counterclaim (“the Rejoinder”) on 25th March 2025. In that Rejoinder, the Claimant responded in full to the allegations made by the Defendants both as to the Shortage Claim and the Misrepresentation Claims, albeit reserving its right to strike out the amendments on the various grounds covered in the Application Notice.

The Defendants responded to the Rejoinder in equally full terms in a Surrejoinder dated 9th April 2025.