Canadian Motor Sales Corporation Limited
(Plaintiff)
v.
The ship Madonna and Liberty Maritime Corp.
and Yamashita-Shinnihon Steamship Company
Limited (Defendants)
Trial Division, Collier J.—Vancouver, Decem-
ber 9, 1971; Ottawa, January 10, 1972.
Practice—Maritime law—Damage to cargo—Writ of sum
mons, endorsement on—Reference to wrong bill of lading—
Motion to amend—Whether new cause of action—Limita-
tion of time—Hague Rules—Discretion of court—Federal
Court Rule 424.
A writ of summons was issued on November 27, 1970,
endorsed with a claim for damages to 363 Toyota automo
biles carried aboard the Madonna on a voyage from Japan
to Vancouver covered by bills of lading dated September 7,
1970. In December 1971, which was more than one year
after the cargo had been discharged at Vancouver, plaintiff
applied for leave to amend the endorsement on the writ to
refer to a shipment of 330 Toyotas covered by bills of
lading dated October 25, 1970. The Hague Rules impose a
one year limitation for commencing action.
Held, the proposed amendment did not substitute a new
cause of action and should be allowed. However, even if the
amendment did substitute a new cause of action the Court
should allow the amendment under Federal Court Rule 424
which confers a wide discretionary power to allow an
amendment in the interest of justice even after a statutory
limitation period has intervened.
Chatsworth Investments Ltd. v. Cussins (Contractors)
Ltd. [1969] 1 All E.R. 143; Braniff v. Holland &
Hannen and Cubitts (Southern) Ltd. [1969] 3 All E.R.
959; Sterman v. E. W. & W. J. Moore [1970] 1 Q.B.
596; Brickfield Properties Ltd. v. Newton [1971] 1
W.L.R. 862, applied.
MOTION.
David F. McEwen for plaintiff.
John L Bird for defendants.
COLLIER J.—The plaintiff by motion asks
leave to amend the writ of summons in this
case. The writ was issued on November 27,
1970, pursuant to the rules of the Exchequer
Court. The endorsement was as follows:
The Plaintiff claims against the motor ship "MADONNA"
and LIBERTY MARITIME CORP. and YAMASHITA-
SHINNIHON STEAMSHIP CO., LTD., as agents, owners,
and/or charterers of the above named motor ship "MA-
DONNA" for damages for breach of contract in and about
the carriage by sea from the Port of Nagoya, Japan to
Vancouver, British Columbia of 363 Units "TOYOTA"
Automobiles pursuant to Bill of Lading Numbers INV-1
and NV-1 both dated on or about the 7th day of September,
1970, at Nagoya, Japan, or alternatively for damages for
negligence and/or breach of duty in or about the carriage of
goods by sea and/or while the goods were in the care,
custody charge or control of the Defendants and each of
them.
As can be seen, reference is made in the writ
to certain bills of lading dated September 7,
1970, covering 363 Toyota automobiles. In fact,
the plaintiff's action was intended to cover a
different shipment of Toyota automobiles, 330
in number, covered by bills of lading dated
October 25, 1970, the bills of lading being
somewhat similarly numbered to those covering
the September voyage.
In respect of both voyages the units were
consigned to the plaintiff and were carried by
the same vessel, the Madonna. The charterer in
each case was the same, Yamashita-Shinnihon
Steamship Co. Ltd.
The plaintiff seeks to make the necessary
changes in the endorsement on the writ to refer
to the bills of lading covering the October
voyage, and to change the number of automo
biles from 363 to 330.
The defendant charterer opposes the motion
on the grounds that the effect of the proposed
amendments is to substitute in the writ a new
cause of action based on new or different facts,
and the amendments ought not to be granted
because the one year limitation period under the
Hague Rules has intervened. (The cargo was
discharged in Vancouver, B.C. about November
11, 1970 and this motion was launched on
December 3, 1971 shortly after the plaintiff or
its solicitors discovered the error.)
In my opinion, the plaintiff is not setting up
or substituting a new cause of action.
In essence the plaintiff's causes of action
against the defendants are twofold as set forth
in the endorsement: damages for breach of a
contract of carriage, and alternatively damages
for negligence in the carriage of goods. In my
view if the plaintiff had endorsed the writ in the
form it did, leaving out the details of the bills of
lading, it would have been, in law, a sufficient
endorsement. The plaintiff chose to elaborate
with particulars which unfortunately were
erroneous. If the plaintiff had used the wide
endorsement referred to, and then in its state
ment of claim more particularly described the
bills of lading and cargo relating to the claim for
breach of contract of carriage, I have no doubt
an amendment to the statement of claim would
be granted on proper terms, and no successful
argument could be raised that the amendments
could not go because of the intervention of the
limitation period for commencing action. (See,
for example, in respect to allegedly defective
endorsements in common law cases: Hill v.
Luton Corporation [1951] 1 All E.R. 1028
(Devlin, J.) Gerard v. Frketich (1964) 45,D.L.R.
155 (B.C.S.C.) Nelson (City) & Owens v. Maglio
(1964) 47 W.W.R. 505 (B.C.C.A.).)
I would therefore allow the proposed
amendments.
Counsel for the plaintiff relied on Rule 424 of
the Rules of this Court and contended it was
just and proper in the circumstances of this
case that leave to amend be granted, even
though a limitation period were involved. In the
event I should be wrong in regard to my conclu
sions expressed above, I shall deal with this
submission. Rules 424 and 427 are as follows:
Rule 424. Where an application to the Court for leave to
make an amendment mentioned in Rules 425, 426 or 427
is made after any relevant period of limitation current at the
date of commencement of the action has expired, the Court
may, nevertheless, grant such leave in the circumstances
mentioned in that Rule if it seems just to do so.
Rule 427. An amendment may be allowed under Rule 424
notwithstanding that the effect of the amendment will be to
add or substitute a new cause of action if the new cause of
action arises out of the same facts or substantially the same
facts as a cause of action in respect of which relief has
already been claimed in the action by the party applying for
leave to make the amendment.
Mr. Bird, for the defendant charterer, con
tends the effect of the proposed amendments is
to add or substitute a new cause of action (not
arising out of the same or substantially the same
facts as originally set forth in the writ) after the
limitation period has run.
There is one additional fact. When the Octo-
ber shipment of cars arrived in Vancouver in
early November 1970 the plaintiff's solicitors
threatened to arrest the Madonna. Mr. Bird's
office gave a letter of undertaking dated
November 18, 1970 as follows:
Dear Sirs: Re: M/S "MADONNA"—Damage to Toyota
Cars—Discharged Vancouver, B.C., November 11, 1970—
Your File: 70-8615—Our File No. 6608/12
In consideration of your refraining from taking steps to
arrest the above named vessel in connection with your
client's claims for damage to automobiles, we hereby
undertake to pay the full amount of any Judgment (includ-
ing interest and costs) which may be awarded in favour of
your client in respect of the said claims by the British
Columbia Admiralty District of the Exchequer Court of
Canada or any appeal therefrom, up to but not exceeding
(Can.) $25,000.00, to post bail in that amount if and when
called upon to do so and to enter an Appearance in
answer to the Writ of Summons which may be issued in
respect of the said claim.
We further undertake not to raise any objection to juris
diction despite the fact that the said vessel was not in the
British Columbia Admiralty District at the time of the
commencement of your proceedings.
This undertaking is given solely by way of security on
behalf of Yamashita-Shinnihon Steamship Co. Ltd. in
order to avoid a threatened or apprehended arrest of the
above vessel and is not to be construed as waiving or
prejudicing any existing defences whatsoever.
Yours very truly,
OWEN, BIRD & McDONALD
Per: "John I. Bird"
JIB:dm
As can be seen from the heading of the letter,
there is no doubt the parties were referring to
the October-November voyage and the alleged
damage to that shipment.
Rules 424 and 427 of this Court were taken
from the English Rule, Order 20, Rule 5. The
English Rule, which first appeared in its present
form in 1965, has been the subject of debate in
the Court of Appeal in the following cases:
Chatsworth Investments, Ltd. v. Cussins
(Contractors), Ltd. [1969] 1 All E.R. 143;
Braniff v. Holland & Hannen and Cubitts
(Southern), Ltd. and Another [1969] 3 All
E.R. 959; Sterman v. E. W. & W. J. Moore
[1970] 1 Q.B. 596; and Brickfield Proper
ties Ltd. v. Newton [1971] 1 W.L.R. 862.
In the Chatsworth case Lord Denning said at
p. 144,
There used at one time to be a rule of practice (which was
laid down by Lord Esher, M.R., in Weldon v. Neal) that
amendments should not be allowed if they would prejudice
the rights of the opposite party as existing at the date of the
amendment. In particular, they should not be allowed so as
to permit a plaintiff to set up a cause of action which would
otherwise be barred by the Statute of Limitations.
And at page 145,
Alternatively, counsel for the plaintiffs submitted that the
court has power under the new Rules of the Supreme Court
to permit an amendment, even though it does deprive the
defendants of a defence under the Statute of Limitations. In
this I think he is right. R.S.C., Ord. 20, r. 5(1) states that the
court can allow any amendment "as may be just and in such
manner ... as (the court) may direct". The courts in former
times fettered themselves by the rule of practice in Weldon
v. Neal which was applied rigidly and strictly. Any amend
ment was disallowed if it would deprive the defendant of a
defence of the Statute of Limitations. But that rule of
practice was found to work injustice in many cases. The
new R.S.C., Ord. 20, r.5 (2), (3), (4) and (5), has specifically
overruled a series of cases which worked injustice. Since
the new rule, I think we should discard the strict rule of
practice in Weldon v. Neal. The courts should allow an
amendment whenever it is just so to do, even though it may
deprive the defendant of a defence under the Statute of
Limitations. The present case is a good instance. It is
obviously just to allow the amendment. All the trouble
stems from the action of the defendants themselves in
taking the selfsame name as the original contracting party.
Anyone would be deceived by it. The defendants' own
solicitors were deceived. They did not discover the truth
until the last moment just before they put in the defence.
The defendants should not be allowed to take advantage of
a confusion which they produced themselves.
In any case, R.S.C., Ord. 20, r. 5 (5) provides that an
amendment may be allowed:
... if the new cause of action arises out of the same
facts or substantially the same facts as a cause of
action in respect of which relief has already been
claimed ...
Here relief was claimed on the original contract by Cussins
(Contractors), Ltd. (No. 1), and the failure of that company
to use due care in their work. The new cause of action
arises out of the same facts, plus the novation. That may
well be covered by R.S.C., Ord. 20, r.5(5), but I prefer to
allow the amendment on the wider ground I have stated.
In the Braniff case the Court of Appeal dif
ferently constituted, did not follow the above
dictum of Lord Denning in the Chatsworth
case.
In the Sterman case Lord Denning disagreed
with what was said in the Braniff case and
reiterated his view that Order 20, Rule 5 of the
English Rules (equivalent to our Rules 424 to
427) should be given the wide interpretation he
gave it in the Chatsworth decision.
In the Brickfield case Sachs L.J. said at p.
871,
In so far as the Rules of the Supreme Court deal with
practice and procedure they can, for the purpose of this
case, conveniently be described as falling within two
categories. The first is mandatory, and lays down that
something must be done in a particular way or prohibits it
being done at all. The second is permissive and enables the
Court to develop its own practice. In cases falling within the
second category it is undoubtedly open to the courts at any
time to modify or alter their practice. The object of the
rules and of practice alike is to achieve justice as between
litigants—a subject on which experience may teach the
courts of one generation to take what they may regard as a
wider or more liberal view than that of their predecessors.
And at p. 872,
Whilst certain general points made in the helpfully
analytical judgment of Megaw J. in Heaven's case [1965] 2
Q.B. 355 have been approved in this court, this does not
apply to all of them. If it was there intended to convey that
the courts were not in process of liberalising, in so far as
they have a discretion, their view as to what constituted the
justice of the case as between the parties in both categories,
I would respectfully not agree—particularly as regards the
defective writ category now under consideration. Since
Pontin v. Wood [1962] 1 Q.B. 594 there has been a progres
sive development towards a broader approach which has
been encouraged by the amendments of the Rules of the
Supreme Court embodied in R.S.C. Ord. 20, r. 5; these
amendments, it is obvious—as both leading counsel
agreed—were designed to break down the rigid practice
which, through undue adherence to Weldon v. Neal [1887]
19 Q.B.D. 394, had too often produced injustice.
And again at p. 874,
Braniff's case [1969] 1 W.L.R. 1533 was, however, one in
which a proposed new defendant was never served within
the appropriate time with a writ making a claim against him,
and it thus falls into a different category. Thus, as regards
the present case, the dictum of Widgery L.J. on the interpre
tation of Ord. 25, r. 5, cannot, strictly, stand in the way of
the direct decision in Sterman's case [1970] 1 Q.B. 596,
whilst on the question of general approach I respectfully
prefer that of Lord Denning M.R. for the reasons which I
have already given.
It is, however, appropriate to say that, even if I did not
consider that we were bound by the decision in Sterman's
case, I would myself have come to the conclusion, despite
the manifest difficulties produced by the wording of the
introductory phrase in Ord. 20, r.5(1), that nothing in sub-
rules (2) to (5) inclusive cuts down the wide powers given
by the general words of sub-rule (1), and, in particular, that
nothing in Ord. 20, r. 5, operates to cut down the powers
which the court had under the old rules.
And at 876,
Ord. 20, r. 5(1): "Subject to .... the following provisions of
this rule" were, despite their unhappy wording, intended to
convey some such meaning as "taking into account the
following provisions of this rule". Technically—it would, of
course, have been better to use some phrase making it clear
that sub-rules (2), (3), (4) and (5) of Ord. 20, r. 5, were
intended to operate without prejudice to the generality of
sub-rule (1), for that was what was meant. Fortunately,
however, in the interests of justice, and materially, neither
at the end of sub-rule (2) nor at the end of sub-rules (3), (4)
and (5) are to be found the words "and not otherwise." So
these sub-rules do not produce the mandatory results which
the defendant seeks to establish. The way was left open for
Ord. 25, r. 5, as a whole to be interpreted in accordance
with the above-mentioned views of Lord Denning M.R. and
Salmon L. J. in Sterman v. E. W. & W. J. Moore [1970] 1
Q.B. 596, 604, 605. It is for these reasons that—whilst fully
appreciating the factors which can lead others to a different
conclusion—there is nothing, in my judgment, to prevent
the court in this case having and exercising jurisdiction
under R.S.C., Ord. 20, r. 5(1) as well as under sub-rule (5)
of that rule. I would only add that, in the interests of clarity
and of avoiding yet further, itigation as to its ambit, it is to
be hoped that the Rules Cdmmittee will as soon as practi
cable suitably amend Ord. 20, r. 5.
I respectfully adopt the views of Lord Den-
ning and Sachs L.J. that under Rule 424 there is
a wide discretionary power to allow an amend
ment, in the interests of justice, even after a
statutory limitation period has intervened. In
this case the plaintiff's solicitors were furnished
with the wrong bills of lading, and in my view
the error was understandable. There were two
voyages, a short period apart, covering the
same kind of automobiles, consigned to the
same plaintiff, carried by the same vessel,
under charter by the same defendant.
The letter of undertaking refers particularly
to the October voyage. The defendant charterer
knew a claim was being advanced and obvious
ly knew which shipment was referred to. I
cannot see that the defendant will suffer any
prejudice if the amendments are allowed. I
think it in the interests of justice to do so.
The plaintiff will therefore have leave to
amend the writ of summons as requested, the
amendment to be made within two weeks of
this date.
The costs of this motion will be to the
defendant charterer, in any event of the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.