Ipsofactoj.com: International Cases [2005] Part 10 Case 8 [NZCA]


COURT OF APPEAL, NEW ZEALAND

Coram

Danzas AG

- vs -

Hally Press Ltd

GLAZEBROOK J

CHISHOLM J

GENDALL J

10 JUNE 2004


Judgment

Gendall J

(delivered the judgment of the court)

  1. This is an appeal against an order of the High Court setting aside a Notice of Protest to jurisdiction filed by a Swiss corporation, the appellant ("Danzas"), in proceedings brought against it and other defendants by the first respondent ("Hally Press").

  2. In those proceedings Hally Press (and another plaintiff) claimed $948,677.23 for damage to a heavy duty printing press transported from Switzerland by Danzas and Malaysian Airline System ("MAS") (the third and fourth defendants) which machine was found on arrival in New Zealand on 19 December 1999 to be badly damaged. Loss of profits arising from such damage was also claimed.

  3. The proceedings were issued on 12 December 2001 by Hally Press in the High Court in what was framed as an "Admiralty Action In Rem and In Personam". This was because relief was also sought against an aircraft, named as first defendant, which transported the press. Danzas was named as second defendant, it having issued the air waybill for transporting the machine to New Zealand. Three causes of action were pleaded, being in contract as evidenced by the waybill, bailment, and negligence. MAS was cited as third and fourth defendants on the basis that its aircraft carried the press.

  4. It is common ground that the two year limitation period for bringing an action, pursuant to art 29(1) of the Warsaw Convention, which terms were incorporated into the waybill, expired on 21 December 2001, and that proceedings had to have been commenced before that date. Art 29(1) provides:

    The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination ....

  5. However, it later transpired that the solicitors for Hally Press and MAS agreed that the proceedings should be transferred to the general Civil jurisdiction of the High Court so as to remove the named aircraft as a defendant. Consequently, in the High Court at Auckland Nicholson J ordered on 28 February 2002:

    Pursuant to s.12 of the Admiralty Act 1973 the proceedings are transferred from the High Court in its Admiralty jurisdiction to the High Court in its general jurisdiction.

    That consent order arose because the proceedings had not been served, and the solicitor for MAS had advised Hally Press’ solicitors that he would accept service provided that proceedings against the aircraft itself were discontinued and the proceedings removed from the Admiralty jurisdiction.

  6. At that time it was not apparent to the solicitors that, in any event, the aircraft ought not to have been cited as a party to an action in rem because a claim in Admiralty was not available under s4 Admiralty Act 1973 in such circumstances.

  7. Thereafter MAS filed a statement of defence on 21 May 2002. They did not challenge jurisdiction. The proceeding went ahead in the High Court in Auckland in its general Civil jurisdiction and Danzas was served some time later in 2002. It then filed the Notice of Appearance Under Protest objecting to the jurisdiction of the Court on the grounds that:

    Insofar as the proceeding is or has purported to be a proceeding in the Admiralty jurisdiction of the court, this court has no jurisdiction in Admiralty in respect of the questions and claims to which the proceeding relates, and such proceeding is a nullity.

    Consequently the objection to jurisdiction was based on the claim that the limitation period of two years had expired on 21 December 2001 and the transfer to the Civil jurisdiction on 28 February was outside that period.

  8. Hally Press applied to set aside the Notice Protesting Jurisdiction and after a defended hearing in the High Court at Auckland it succeeded. It is that judgment which is the subject of appeal.

    THE HIGH COURT DECISION

  9. In the High Court counsel for Danzas argued that as an aircraft was not a ship for the purposes of the Admiralty Act 1973 (where a claim is made for damage to goods carried in it) proceedings should not have been commenced in Admiralty. Counsel accordingly argued that the proceedings were a nullity and as a consequence an action had not been commenced within the limitation period. The Judge rejected this argument.

  10. The Judge referred to s3(2) Admiralty Act 1973 which conferred on the Court in the exercise of its Admiralty jurisdiction "any of its other Civil jurisdiction". The Judge held that the High Court had a concurrent Civil jurisdiction when exercising Admiralty jurisdiction, which included the power to determine the claims in contract, bailment and negligence pleaded in personam against Danzas, and it followed, MAS. It had been argued in the High Court that the registrar’s conduct in issuing the Notice of Proceeding in Admiralty was without jurisdiction, he having no power to do so because the aircraft was not a ship which had carried goods the subject of the claim for damages. The Judge rejected this submission, holding that the registrar did not fulfil any adjudicative function in signing the notice of proceeding and was not evaluating whether any claim fell within the statutory provisions of s4 of the Act. The Judge concluded that the proceeding was properly within the Court’s general Civil jurisdiction, and was lawfully commenced and valid when the order transferring it to the High Court Civil jurisdiction was made on 28 February 2002.

    COUNSEL FOR APPELLANT'S SUBMISSIONS ON APPEAL

  11. Counsel for the appellant submitted that because the proceedings did not come within the Admiralty jurisdiction of the High Court, because carriage by an aircraft (in the context of this case) could not found such jurisdiction, then they were a nullity. As a consequence no action was validly commenced before a competent Court (that being a Court having jurisdiction) as required by art 29 before the expiration of the limitation period. As the proceeding was a nullity it therefore could not be transferred to the Court’s general Civil jurisdiction under s12 Admiralty Act 1973, and such defect could not, counsel submitted, be corrected by application of rr5 and 11 High Court Rules. Counsel submitted that even if the proceedings were not a nullity, nevertheless when they were filed and invoked the Admiralty jurisdiction of the High Court, such jurisdiction did not exist and until there was transfer of the proceedings to the Civil jurisdiction no valid action had occurred. As the Civil jurisdiction was only invoked at the time of transfer, and after the two year time limit had expired, until then there was no valid action brought.

  12. A common thread throughout counsel’s argument was that the provisions of s3(2) Admiralty Act 1973 do not have the effect of bringing the Court’s general Civil jurisdiction into matters invalidly filed or brought in Admiralty. In the present case the High Court was not exercising any jurisdiction conferred by the Admiralty Act at the time it purported to exercise its other Civil jurisdiction transferring proceedings to the High Court. In essence counsel submitted that a proceeding commenced in the one jurisdiction (Admiralty) is not at the same time necessarily an action commenced in the Court’s Civil jurisdiction.

  13. In relation to whether the proceedings were an "action", counsel relied upon many authorities arising out of the provision in the Hague Visby Rules relating to carriage of goods by sea. They relate to a discharge of liability unless a "suit" is brought within a defined period. He submitted that the minimum requirements for bringing a suit are that the correct claimant must have validly commenced proceedings before a competent Court or tribunal, against the correct defendant, seeking relief in relation to the substance of his claim. Counsel argued that the proceedings were not validly commenced because they were not commenced before a Court having jurisdiction, and were a nullity.

    COUNSEL FOR RESPONDENT

  14. Counsel supported the judgment and reasoning of the High Court arguing that Hally Press had brought an action or a valid proceeding against Danzas when it filed its proceedings on 21 December 2001. He accepted that the proceedings were incorrectly filed "In Admiralty", and in seeking to invoke Admiralty jurisdiction. But they could not amount to a nullity because the High Court was a Court of competent jurisdiction. Proceedings, although irregular, could be adjudicated upon. Whilst the claim in rem against the aircraft had to fail the proceedings in personam against the other defendants were of a nature that could also be commenced as ordinary Civil proceedings. Such proceedings in personam, incorrectly filed in the Admiralty jurisdiction, could simply be transferred to a more appropriate jurisdiction of the same Court. He referred to the English law and procedure whereby it was possible for the Court to transfer proceedings from one of its Divisions to another. He submitted that under English law there was essentially no difference between a claim in personam in Admiralty and one brought against an individual in another division of that Court. He submitted that the position in New Zealand was the same, as recorded in s3(2) Admiralty Act 1973 and r766 High Court Rules. Counsel submitted that the Court had jurisdiction to deal with the causes of action pleaded by Hally Press in the statement of claim even though the proceeding had been incorrectly filed in the Admiralty jurisdiction and that the subsequent transfer of the proceedings out of Admiralty simply regularised the earlier mistake.

  15. Counsel submitted that the commencement under the High Court Rules of the proceedings invoking Admiralty jurisdiction was effectively a failure to comply with the requirements of the Rules and should be treated as an irregularity, not a nullity, and that by the application of rr5 and 766 the Court was able to correct the procedural irregularity, so that the proceedings as originally commenced did not amount to a nullity. As a result there was not a failure to properly bring an action within the limitation period for the purposes of art 29.

    RELEVANT STATUTORY PROVISIONS AND RULES

  16. Judicature Act 1908

    2.

    Interpretation

    ‘civil proceedings’ means any proceedings in the Court, other than criminal proceedings.

    ‘Court’ means the High Court of New Zealand.

    16.

    General Jurisdiction

    The Court shall continue to have all the jurisdiction which it had on the coming into operation of this Act and all judicial jurisdiction which may be necessary to administer the laws of New Zealand.

  17. Admiralty Act 1973

    3.

    Exercise of admiralty jurisdiction

    (1)

    The admiralty jurisdiction conferred by this Act-

    (a)

    May be exercised by the High Court in rem and in personam; and

    (b)

    May be exercised by a District Court in personam

    where the debt, demand, or damage or the value of the chattels claimed is not more than the amount specified in section 29 of the District Courts Act 1947; and it is hereby declared that a District Court shall not, for the purposes of this Act, have jurisdiction in rem.

    (2)

    In exercising the jurisdiction conferred by this Act, the Court may exercise at the same time any of its other civil jurisdiction, whether statutory or otherwise, and all powers incidental thereto.

    (3)

    Nothing in this Act shall derogate from any common law or equitable jurisdiction of the High Court or the District Courts.

  18. High Court Rules (Part 14) - Proceedings in Admiralty

    766

    Application of other rules and practice of Court

    The provisions of other Parts of these rules, and the general practice of the Court, apply where this Part applies except so far as they are modified by or inconsistent with the Act or this Part.

    769

    Types of action and issue of notice of proceeding

    (1)

    Actions may be in personam or in rem, or both in personam and in rem.

    (2)

    An action must be commenced by a notice of proceeding –

    (a)

    Issued out of any office of the Court; and

    (b)

    Endorsed, before being issued, with a concise statement of –

    (i)

    The nature of the claim; and

    (ii)

    The relief or remedy required; and

    (iii)

    The amount claimed (if any).

    (3)

    The concise statement referred to in subclause (2) is not a statement of claim within the meaning of these rules.

    (4)

    An action in any case is to be treated as having commenced when a notice of proceeding complying with subclause (2) is filed in that case.

  19. High Court Rules

    5

    Non-compliance with rules

    (1)

    Where, in beginning or purporting to begin any proceeding or at any stage in the course of or in connection with any proceeding there has, by reason of any thing done or left undone, been a failure to comply with the requirements of these rules, whether in respect of time, place, manner, form, or content or in any other respect, the failure –

    (a)

    Shall be treated as an irregularity; and

    (b)

    Shall not nullify –

    (i)

    The proceeding; or

    (ii)

    Any step taken in the proceeding; or

    (iii)

    Any document, judgment, or order in the proceeding.

    (2)

    Subject to subclauses (3) and (4), the Court may, on the ground that there has been such a failure as is mentioned in subclause (1), and on such terms as to costs or otherwise as it thinks just,-

    (a)

    Set aside, either wholly or in part,-

    (i)

    The proceeding in which the failure occurred; or

    (ii)

    Any step taken in the proceeding in which the failure occurred; or

    (iii)

    Any document, judgment, or order in the proceeding in which the failure occurred; or

    (b)

    Exercise its powers under these rules to allow such amendments (if any) to be made and to make such order (if any) dealing with the proceeding generally as it thinks fit.

    (3)

    The Court shall not wholly set aside any proceeding or the originating process by which the proceeding was begun on the ground that the proceeding was required by these rules to be begun by an originating process other than the one employed.

    (4)

    The Court shall not set aside any proceeding or any step taken in a proceeding or any document, judgment, or order in any proceeding on the ground of a failure to which subclause (1) applies on the application of any party unless the application is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.

    11.

    Power to amend defects and errors

    (1)

    The Court may, either before, at, or after the trial of any proceeding, amend any defects and errors in the pleadings or procedure in the proceeding, whether or not there is anything in writing to amend, and whether or not the defect or error is that of the party (if any) applying to amend.

    (2)

    The Court may, at any stage of a proceeding, make, either of its own motion or on the application of any party to the proceedings, such amendments to any pleading or the procedure in the proceeding as are necessary for determining the real controversy between the parties.

    DISCUSSION

  20. The critical question is whether the proceedings brought on 12 December 2001 were a nullity or otherwise invalid in their entirety so that the later transfer into the Civil jurisdiction of the High Court, by order of Nicholson J on 28 February 2002, represented the actual commencement of the action. If so then the action was brought outside the two year limitation period provided in art 29. If, however, the proceedings commenced on 12 December 2001, purportedly in the Admiralty jurisdiction of the High Court, constituted an action validly brought in terms of art 29 then, despite the claim in rem against the aircraft being outside the Court’s jurisdiction, the claims in personam against the individual defendants nevertheless remained valid actions, even if purportedly filed in the Admiralty jurisdiction.

  21. We accept that an "action" can be regarded as the same thing as a "suit" as that word has been defined for the purposes of the Hague Visby Rules. We were referred to a number of authorities in this regard. A suit or action exists, and is not a nullity, if

    1. the action is brought within the requisite time provided by art 29;

    2. it is brought in or before a competent Court;

    3. it is brought by a proper claimant;

    4. it is brought against correct defendants.

    Counsel contended that valid action had to be subsisting at the time of expiry of the limitation period and no such valid action existed at the time the Admiralty jurisdiction was invoked.

  22. The proceedings filed in the High Court at Auckland are intituled "In Admiralty" and "Admiralty Action In Rem and In Personam". The notice of proceeding that was issued was the required notice for proceedings in Admiralty. In this case Hally Press’ solicitors went further and filed a detailed statement of claim setting out the three causes of action (breach of contract, bailment, negligence) against the defendants. Further, a notice to defendant to be served overseas (because Danzas and the fourth defendant were residing outside New Zealand) was annexed to the notice of proceeding. That notice is the standard notice required by the High Court Rules (rr219, 221 and 121(4)) and, as required, Form 9 of the Third Schedule was used in this case.

  23. Beyond doubt the reference to "Court" in the Admiralty Act 1973 relates to the High Court (for actions in rem and in personam) and to the District Court for actions only in personam. In terms of the Judicature Act 1908 "Court" means the High Court of New Zealand. That Court is not divided into divisions (unlike the District Court which, for example, has its own separate Family Court). The jurisdiction of the High Court is that contained in s16 Judicature Act 1908 and apart from its inherent jurisdiction the court has the statutory jurisdiction granted to it by several statutes as well as its wardship, inherent jurisdiction, and equitable jurisdiction.

  24. The High Court’s jurisdiction to determine claims for damages arises out of its Civil jurisdiction. All proceedings, other than Criminal, are "Civil". Proceedings in Admiralty are Civil. Although there are separate divisions of the English High Court, it is apparent that there is no distinction between a claim brought in Admiralty in the English High Court and one brought against a defendant in another Division of that Court. Transfer between Divisions is permitted. It is abundantly clear that in England the High Court has concurrent Civil and Admiralty jurisdiction. For example the Court of Appeal in "The Cheapside" [1904] P 339 was dealing with a counterclaim in personam, to an action in rem brought in Admiralty. In delivering the judgment of the Court of Appeal Collins MR said (at p343):

    That counter-claim undoubtedly is an action in personam and not an action in rem, and accordingly the plaintiffs say, ‘This is an attempt to join by way of counter-claim an action in personam with an action in rem, and the Court of Admiralty has no jurisdiction to entertain such an act in personam’. However, this point has been raised before, and it has been decided that the judge of the Court of Admiralty does not cease to be a judge of the High Court because he is judge of the Court of Admiralty, and although as judge of the Court of Admiralty he may have no jurisdiction in such a case as this in personam, as judge of the High Court he has, and whether or not he can blend those two jurisdictions is a matter for his discretion ....

  25. Counsel argued that the position in England however was different because s5(5) Supreme Court Act 1981 (UK) specifically provides that the jurisdiction of the English High Court belongs to all Divisions alike and that there is no statutory equivalent in New Zealand. That may well be simply because the High Court of New Zealand does not comprise of, or sit in, Divisions. The correct position is that an Admiralty claim in personam is essentially no different to a civil claim, and from its inception is able to be commenced in a commercial Court or in the Queen’s Bench Division. See Admiralty Jurisdiction and Practice (3rd ed) Meeson (2003) chapters 2 and 3.

  26. In J E Dennis Ltd v "The Steel Mariner" (HC ROT AD1/95 1 August 1997 Paterson J) that approach was followed where a proposed action against an individual second defendant, based upon misrepresentation, was permitted to be joined despite not being within "Admiralty" jurisdiction. His Honour said (at p4):

    .... the proposed action based on misrepresentation is clearly not within the Admiralty jurisdiction and that it is doubtful that the action to enforce the settlement agreement is within the provisions of the Admiralty jurisdiction. However, a Judge sitting in an Admiralty matter is still a Judge of the High Court and if the justice of the case demands that two causes of action, one based on the Admiralty jurisdiction and one on the High Court jurisdiction, be heard together, then I see no reason why this cannot be done. Section 3(2) of the Act provides that in exercising the jurisdiction conferred by the Act, the Court may exercise at the same time any of its other civil jurisdiction, whether statutory or otherwise and all powers incidental thereto. Further, r4 of the High Court Rules provides that the rules shall be so construed as to secure the just, speedy, and inexpensive determination of any proceeding. Rule 4 has application because of r4 of the Admiralty Rules 1975. This Court therefore does not have power in my view, to give leave to join .... a defendant and to allow causes of action which are not strictly Admiralty actions to be included in a statement of claim. Those causes of action will be in personam actions and not in rem actions.

    Of course that was a case where Admiralty jurisdiction already existed and the in personam Civil claim was simply an addition to it.

  27. In this case the appellant argues that because there was no jurisdiction to entertain Admiralty actions in rem or personam there could be no concurrent jurisdiction, whether Civil or otherwise. But that ignores the real point which is that in exercising its jurisdiction in personam, the Court is exercising its Civil jurisdiction in relation to the three causes of action against the individual defendants. The Court still acts as the High Court of New Zealand. The proceedings are still filed in that Court. The Judge is acting as a Judge of the High Court, not as a Judge of the Court of Admiralty.

  28. Counsel for the appellant argued that there must first be a proper "exercising [of] the jurisdiction conferred by" s3(2) Admiralty Act 1973 before the Court may exercise any other Civil jurisdiction. We reject that submission. If proceedings filed in the High Court erroneously seek to invoke the Admiralty jurisdiction in respect of one defendant, a High Court Judge may still exercise his or her powers to determine that notwithstanding that an action in rem does not lie, an action in personam may still proceed. In determining that question, which is effectively whether the claim falls within the admiralty jurisdiction described in s4 of the Act, the Court is exercising a jurisdiction conferred by the Act. When construed against the established position in England, from which New Zealand Admiralty law and procedure emanated, s3(2) makes it is quite clear that in this case the Court’s "other Civil jurisdiction" confers power to consider the claims in contract, bailment, and negligence. The Court is exercising the Civil jurisdiction of the Court (within r3 High Court Rules) in terms of s2 Judicature Act 1908.

  29. Whilst Part 14 of the High Court Rules govern Admiralty practice and procedure, r766 empowers the Court to use r5 and r11 to regularise a procedure which was an irregularity only, and not an act beyond the High Court Court’s overall jurisdiction.

  30. If there had to be an exercise of "valid Admiralty jurisdiction" under s3(2) of the Admiralty Act before the Court could exercise its Civil powers, the Court could never correct the erroneous filing of an otherwise valid Civil proceeding in the "wrong" Court. That is not the position. So long as the proceeding has been filed in the correct Court, then even if the proceeding purports to invoke a jurisdiction not available to a claimant, the fact that it invokes other Civil jurisdictions will be sufficient to enable the Court to act under s3(2), in the exercise of its general Civil jurisdiction.

  31. An illustration of the transfer of proceedings filed in the Admiralty Division of the High Court of England to the King’s Bench Division because the Admiralty Division had no jurisdiction to determine the proceedings is provided by "The Sheaf Brook" [1926] P61. Whilst the statutory provision permitted the Judge of that Division to retain the proceedings in that Division, where the Admiralty Court did not in fact have any jurisdiction over the claim of the kind filed before it, so as to prevent a plaintiff pursuing such an action in the Admiralty Division, transfer to the King’s Bench Division in the Judge’s discretion was proper and permitted. The present position in England is that of jurisdiction given to the High Court under the Supreme Court Act 1981 belongs to all Divisions alike (s5(5)).

  32. There is one High Court without separate Divisions in New Zealand. The High Court Rules incorporate the Rules of Procedure in Admiralty proceedings under the Admiralty Act. A proper reading and application of the High Court Rules dictates that the same position exists in New Zealand as in England.

  33. We are satisfied the proceedings filed on 12 December 2001 constituted the commencement of a valid action in the High Court. While there was an irregularity of procedure there was no nullity. The proceedings were filed within the time limit under art 29 and s12 of the Act.

    CONCLUSION

  34. The Judge in the High Court was correct. The appellant’s argument is technical and designed to avoid dealing with proceedings on the merits. It was properly rejected. The Notice of Protest to Jurisdiction was properly set aside. The appeal is dismissed and the respondents are entitled to costs which we fix in the sum of $5,000, together with counsel’s reasonable travel and accommodation disbursements.


Cases

"The Cheapside" [1904] P 339

J E Dennis Ltd v "The Steel Mariner" (HC ROT AD1/95 1 August 1997

"The Sheaf Brook" [1926] P61

Legislations

Warsaw Convention: Art.29

Admiralty Act 1973: s.3, s.4, s.12

High Court Rules: rule 5, rule 11, rule 766, rule 769

Judicature Act 1908: s.2, s.16

Authors and other references

Admiralty Jurisdiction and Practice (3rd ed) Meeson (2003)

Representations

G J Mercer for Appellant (instructed by Graham & Co, Auckland)

P R Rzepecky for Respondents (instructed by McElroys, Auckland)


all rights reserved