The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Tonio Mallia and Mr Justice Joseph Azzopardi, on March 28, 2014, in the case ‘Peter Sammut v Sullivan Maritime Ltd’, held, among other things, that a time limit imposed by law was a period of forfeiture unless otherwise stated by law. A period of forfeiture was not subject to the rules applicable to prescription relating to its interruption and suspension.
The facts in this case were as follows.
Peter Sammut purchased two second-hand vans, a diesel engine and spare parts from the United Kingdom to sell to his customers in Malta. Sullivan Maritime Ltd as agents were engaged to transport the vans and spare parts from the UK to Malta.
It so happened that the goods never arrived in Malta and, in consequence, Sammut suffered damages including loss of income from the sale of these items. Sammut had agreed to sell the Ford Transit van to Ray Vella, the Ford Escort van to Paul Ciantar and the diesel engine to another buyer.
Faced with this situation, he proceeded to file legal proceedings, whereby he requested the court:
• to declare that Sullivan Maritime was responsible for damages;
• to liquidate the damages; and
• to condemn it to pay him damages.
Sullivan Maritime, in reply, contested the legal action. It pleaded that it did not have legal relations with Sammut and that it acted as the local agent of Atlantica SpA di Navigazione of Naples, Italy. In this respect, it asked to be freed from the proceeding.
Sullivan Maritime denied responsibility for the damages and, even if it were to be held liable, its liability, it contended, was limited under the bill of lading, which regulated the contract of the carriage.
In addition, Sullivan Maritime maintained that Sammut’s requests were time-barred by the one-year time limit imposed by The Hague Rules, article 111 (6) of the Schedule to the Act on the Carriage of Goods by Sea, chapter 140, which provides that “in any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered”.
On October 21, 2010, the First Hall of the Civil Court declared that Sammut’s legal action was time-barred.
The goods were due to arrive in Malta on November 28, 2003, but had never been loaded from the port of Salerno to Malta. This case was filed on November 30, 2004, two days after the lapse of the one-year time limit.
Sammut produced the bill of lading, the notice of arrival and a fax message sent from Sullivan Maritime dated December 10, 2003. He was offered £3,712 in compensation but declined the offer. Sullivan Maritime acted on behalf of Altantica SpA di Navigazione.
The court noted that, according to case law, the 12-month time limit was a period of forfeiture: (CA) ‘The Cargo Handling Co Ltd v Messrs John Abela Ltd’, dated July 7, 2003; the decision of the Commercial Court in ‘Dr Eddie Fenech Adami noe v Col E. Gatt’ dated November 23, 1970; and the decision of the Commercial Court in ‘Dr Philip Bianchi noe v Albert Mizzi et noe’ dated March 6, 1978.
In ‘G. Sammut v Notary E. Pellegrini Petit (App Civ)’, dated January 16, 1920, Vol. XXIV PI p.276, it was held that, when the law fixed a time limit, such term was a period of forfeiture and, on the expiry of this time limit, no legal action was possible. If the law did not state that such period was a term of prescription, this term would be a period of forfeiture. The one-year time limit was intended to free a carrier and his agent from exposure to legal action if such action was not made within 12 months.
Reference was made to Chorley & Giles – Shipping Law (8th edition “It should be noticed that the bill of lading is only evidence of the contract between shipowner and shipper, not the contract itself. Additional terms may be incorporated from the charter party, from advertisements and similar notices, or even from oral evidence that they were engaged. Moreover, terms actually contained in the bill of lading may be varied orally, and such variations are enforceable. All this, however, applied only between the immediate parties to the contract, carrier and shipper. Third parties, such as consignees or their assignees, who acquire rights by way of endorsement of the bills of lading, are entitled and required to assume that it contains within its four corners either all the terms of the contract or at any rate references to other documents where such terms may be found.”
The first court concluded that the time of limit under The Hague Rules was a period of forfeiture and that Sammut had filed this legal action after the lapse of this period.
Aggrieved by the decision of the first court, Sammut entered an appeal, calling for its revocation and for the court to accept his requests. He put forward the argument that there was an alleged agreement between the parties that the goods would be brought to Malta the following week on another ship, but still nothing arrived.
The Court of Appeal was not of the opinion that the parties entered a new agreement which had the effect of extending the time limit of one year.
According to the bill of lading, the goods had to be delivered on November 28, 2003. It was the bill of lading which established with certainty the date when the goods had to be delivered to the receiver and this was the effective date, pointed out the court, for the purpose of determining the one-year period of forfeiture.
The issues connected with commerce had to be clear and should not create any ambiguity, said the court. The date when the goods should have been delivered was the date stated on the bill of lading.
The fact that the parties hoped that the merchandise would be found did not change the date when the goods should have been delivered and any legal action still had to be taken within one year from this date
The fact that the parties hoped that the merchandise would be found did not change the date when the goods should have been delivered and any legal action still had to be taken within one year from this date.
The court said that the one-year time limit was a period of forfeiture, as this was imposed by law, within which this lawsuit had to be filed: re (CA) (Inf) ‘The Cargo Handling Co. Ltd v John Abela Ltd’ dated July 7, 2003. This period of forfeiture could not be interrupted and a lawsuit had to be filed within this period.
Admission: if a debtor admitted the debt, a creditor could invoke this new agreement, provided the new agreement was clear and unequivocal. It had to clearly result that the debtor accepted responsibility in a way that he could rely on such admission of debt even if the time limit expired.
The court did not feel that Sullivan Maritime accepted responsibility. Its offer of compensation was made on a without prejudice basis.
Sammut’s lawsuit would have been valid if it was filed within one year from when the goods should have been delivered. No interruption of this period was accepted.
The period of forfeiture was not subject to the rules of prescription, neither to those relating to interruption or suspension. It was only when an act of a debtor could be considered as creating a new right could a creditor sue after the lapse of the time limit. Such acceptance or recognition had to be clear, formal, explicit and unconditional. Re: ‘Zarb v Mira Motor Sales Ltd’ (CA) dated December 2, 2005. This did not result in the circumstances.
It was also possible for Sullivan Maritime to plead in this case that Sammut’s legal action was time-barred as well as that its liability was limited under the bill of lading. These two pleas were not contradictory. It was acceptable for Sullivan Maritime to raise the plea of limitation of liability as stipulated in the contract of carriage between both parties, without renouncing to the period of forfeiture (something which was not possible).
For these reasons, on March 28, 2014, the Court of Appeal dismissed Sammut’s appeal and confirmed the decision of the first court, in view of the fact that Sammut had filed legal proceedings after the 12-month time limit from the date when the goods should have been delivered in Malta.
Dr Karl Grech Orr is a partner at Ganado Advocates.