This was a joint hearing of an interlocutory appeal against a decision of Hamblen J sitting in the Admiralty Court and an application for permission to appeal against a decision of the Admiralty Registrar, in three collision actions in the Admiralty Court.

The Stolt Kestrel appeal

On 10 October 2010, the vessel Stolt Kestrel was struck by the vessel Niyazi S near the Port of Liverpool, England. The Niyazi S was then owned by Sener Petrol Denizcilik Ticaret AS (Sener) (the defendant). The Niyazi S sustained structural damage to the starboard side between frames 33 and 105. Sener's P&I Club, The Standard Club, issued a letter of undertaking for the sum of USD 300,000 inclusive of interest and cost in favour of the owners of Stolt Kestrel (the claimant). The issue of jurisdiction was not addressed in the letter. On 8 and 9 October 2012, The Standard Club verbally agreed to a one-year time extension with the claimant's P&I club, Gard, and indicated a willingness to agree to an indefinite time extension.

On 9 October 2012, the claimant issued an in rem claim form in respect of the collision damage suffered. The claim form unusually provided for the actual name and address of the owners and/or bareboat charterers of the Niyazi S. However, by that time, the Niyazi S had already been sold by Sener to Delmar Petroleum Co Ltd (Delmar), renamed Favour, and traded exclusively in West Africa (ie the vessel no longer traded to English ports). On 8 October 2013, Eder J granted the claimant's application (made on 3 October 2013) for an order to extend the validity of the claim form by eight months (to 9 June 2014) and an order for permission to serve the claim form out of the jurisdiction. On 23 January 2014, Flaux J granted the claimant's application (made on 10 December 2013) for permission to amend the in rem claim form to add four sister ships (all but one owned by Sener) as defendants.

On 11 December 2013, the claimant issued an in personam claim form naming Sener and Delmar as defendants; and on 13 December 2013, the claimant issued an application for an extension of time for commencing the in personam proceedings and for permission to serve the claim form out of the jurisdiction.

On 4 March 2014, Sener issued a cross application for: (1) orders setting aside the orders extending the validity of the in rem claim form, and the permission to add the sister ships; and (2) a stay of the in personam claim on the grounds that it was time-barred.

Article 7 of the Collision Convention 1910, which time bars actions for the recovery of damages after an interval of two years from the date of the casualty, was first given domestic effect in the United Kingdom via s 8 of the Maritime Conventions Act 1911 (MCA) which was subsequently superseded by s 190 of the Merchant Shipping Act 1995 (MSA).

Section 190(3) of the MSA provides for a two-year time limit for the bringing of proceedings to enforce a claim or lien against a ship or its owners in respect of damage caused by that ship which may be extended by a court on a discretionary basis (s 190(5) MSA) or, in the absence of a reasonable opportunity to arrest the defendant ship, on a mandatory basis (s 190(6) MSA).

In the court below, Hamblen J held that the claimant was entitled to a mandatory extension of time for service of the in rem claim form pursuant to s 190(6) MSA.

Held: The appeal was dismissed.

For the applicability issue, the Court held that s 190(6) MSA applied only to in rem proceedings and this was clear from the wording of the statute.

For the time-bar issue, the Court held that the action in rem is an action against the ship itself and rejected submissions such as proceedings had been brought against Sener in time because in reality it is the same party being sued whether the claim form was in rem or in personam. The sister ship joinder did not assist the claimant’s case as well because they were, like the original in rem claim form, not proceedings against Sener. Tomlinson LJ stated that, strictly speaking, Hamblen J did not hold that 'the claim was time-barred', but instead that the in personam proceedings were brought after the period of two (or three) years from the accrual of the cause of action. There are two types of time bars discussed by the Judge. First, the usual time bar found in most English statutes of limitation and some international Conventions which bars the remedy while leaving the claim itself in existence. Second, a special kind of time bar that extinguishes the claim. The Court clarified that the time bar referred to in s 190(3) MSA is the first type and not the second type. Hence, the Court held that in the absence of acknowledgement of service, no personal liability can be established against Sener on the basis of the in rem claim form.

For the discretion issue, the Court held that the Judge below was correct to apply the two-stage approach. The Court stated that, while the discretion to extend time conferred by s 190(5) MSA was expressed in unfettered terms, it was to be exercised on the basis of the same two-stage approach as applied to applications under the Civil Procedure Rules, CPR r 7.6(3). The two-stage test is as follows. First, the court must consider whether there is a good reason for an extension of time. Secondly, if there is a good reason, the court must consider whether it is appropriate to exercise its discretion in favour of extending or refusing to extend time. The power to extend time under s 190(5) MSA could only be exercised if the claimant was able to show good reason for not issuing the in personam claim form in time. Normally, the court could only proceed to stage two when the claimant succeeds in establishing a good reason at stage one. This was a discretionary exercise involving value judgments including, where appropriate, the balance of hardship. While good reason had to be shown, it was normally impossible to extend time without first showing good reason. There was a degree of overlap between each stage, and a judge addressing the inquiry at stage one was entitled and bound to take into account any matters which appeared to be relevant to the issues of good reason and satisfactory explanation, notwithstanding that the same matters would also be relevant to the exercise of the discretion at stage two.

For the alternative service issue, Tomlinson LJ rejected the proposition that the Judge below erred in law in holding that he had no power to order alternative service of the in rem claim form upon Sener to take effect prospectively in the event it could later be established that Niyazi S or one of her sister ships called within the jurisdiction because it ignores the proviso to para 3.6(7) of Practice Direction 61 (PD 61) which requires that the vessel be in the jurisdiction before an order for substituted or alternative service can be made. Even if it is impractical to serve the in rem claim form on the ship physically, Tomlinson LJ stated that para 3.6(7) of PD 61 is of utility whenever a defendant vessel is within territorial waters.

The Odyssée appeal

On the evening of 17 April 2011, the SB Seaguard, a 26 m support craft owned and operated by Sure Wind Marine Limited (an English company), collided with the Odyssée, a catamaran yacht said to have been purchased in 2007 by Mr Nobili (a Belgian citizen), but owned by the claimant company, CDE SA, while it was still moored at the visitor's berth of Ramsgate Harbour, and sustained substantial damage.

At all material times, The SB Seaguard was insured by Shipowners' P&I Club, while the Odyssée was insured by ESA Euroship Allianz.

Discussions were entered into between the parties to resolve the matter. The arrangement seemed to be that after completing the repairs, a 'final statement' with supporting invoices will be submitted and thereafter the SB Seaguard's Club would settle the claim. In addition, the Shipowners' P&I Club apparently encouraged the CDE SA and ESA Euroship Allianz not to instruct solicitors.

However, as the repairs to the Odyssée were complicated, they were only completed in late March 2013 and cost EUR 275,000. The two year time limit for bringing a claim against the SB Seaguard expired on 17 April 2013, which neither party appeared to have taken notice of. When Mr de Ruyter submitted the final claim statement to the Shipowners’ P&I Club in September 2013, Mr Cooke responded on 21 October 2013 that claim has already been time barred. An in personam claim form was issued on 23 December 2013. On 20 January 2014, an application was made for an extension of time in accordance with section 190(5) of the MSA.

The questions before the Admiralty Registrar in the Court below were as follows:

First, when considering an application to extend time for the commencement of proceedings under s 190 MSA, is the test applicable the two-stage test as applied and accepted in recent cases or a single-stage test based solely upon the overriding objective and the requirement to do justice, and whether or not it is necessary to show good reason? The Registrar concluded that the two-stage test is the applicable test.

Second, whether there was a good reason for the claim form not having been issued within the limitation period set out in s 190 MSA? The Registrar concluded that the claimant had failed to demonstrate that there was a 'good reason' for failing to commence proceedings in time.

Third, assuming that the single stage approach is the correct approach, are the circumstances in this case such that it would be proper to allow an extension of time? The Registrar concluded that it would not be proper because there was a lack of satisfactory reason for the failure to commence proceedings in good time.

Held: The appeal was dismissed.

The Court of Appeal considered the submissions and found that there was no real prospect for interfering with the Registrar's assessment.