The plaintiff brought an action against the defendant for damage to a yacht which was shipped on board the defendant's vessel, the Cosco Tianjin. The defendant made an application to obtain security for costs against the plaintiff. The plaintiff argued that it had an overwhelming case on the merits and that the Court should not grant security for costs against the plaintiff.

The defendant argued that it had a good arguable case based on the following four issues:

1. The bill of lading relied upon by the plaintiff in its claim in contract was a bill of lading issued by Global Cargo Logistics Inc (GCL bill) and not the defendant's bill of lading (Cosco bill).
2. While the plaintiff sought to advance a claim in tort, it failed to establish that it was the owner or person entitled to immediate possession of the yacht at the time of the damage.
3. The plaintiff's claim was time-barred under the GCL bill which provided for a 9-month limitation period.
4. The defendant's position was strengthened by the existence of exclusion of liability clauses and limitation of liability clauses in the contract of carriage.

Held: The defendant's application was successful. Security for costs ordered against the plaintiff.

The Court disagreed that the plaintiff had an overwhelming case on the merits. Points 2 and 4 raised by the defendant were not entirely unarguable.

With regard to point 1, the Court was not shown a copy of the Cosco bill and this argument did not assist the court in making a finding one way or another.

Turning to point 2, the Court was of the view that the plaintiff's case was not cast-iron because the plaintiff did not produce any documents in support of its claim, despite the defendant's request.

In relation to point 3, the Court disagreed with the defendant that a 9-month limitation period applied. Although the GCL bill was issued in China, which is not a party to the Hague-Visby Rules, it contained an express provision stating that Hong Kong law, which incorporates the Hague-Visby Rules, was to apply. According to art 3.8 and 3.6 of the Hague-Visby Rules, any attempt to circumvent the Hague-Visby Rules is null and void, and a one-year limitation period applies. The 9-month limitation period was accordingly null and void.

Finally, on point 4, for the purpose of limitation of liability under the contract of carriage, there was a dispute as to whether the customary freight unit applicable to the contract of carriage was the gross weight of the yacht (23,000 kg) or the unit of goods shipped (1 unit). This was a matter of law and construction. The parties had not shown the Court any authoritative definitions in this regard. There was also a dispute on the quantum of damages as there was no contemporaneous record of proof of the alleged damage together with a breakdown of the value of each damage. The defendant was therefore entitled to challenge the plaintiff's claim with this argument.

As the plaintiff's case was not cast-iron and the defendant had arguable defences, security for costs was ordered against the plaintiff.