CDE SA v. Sure Wind Marine Ltd (SB Seaguard c/w Odyssée) [2015] EWHC 720

A two-year time-limit applies for collision claims under English law, although the Court has a discretion to extend time. In this recent decision, the Admiralty Court reaffirmed the test for deciding whether to grant a time extension and clarified the circumstances in which the Court will exercise its discretion.

The background facts

The Defendant’s vessel, SB Seaguard, collided with the Claimant’s yacht, Odyssée, on 17 April 2011. The date of expiry of the two year time-limit for commencing proceedings was therefore 17 April 2013. The Claimant issued proceedings on 23 December 2013 and made an application to extend time on 20 January 2014.

The Defendant had first stated on 21 October 2013 that it would argue a time bar defence. The Claimant’s case was that it was shocked, as it was not aware of the existence of the time limit and that it had been in regular negotiations with the Defendant since March 2012. The Claimant said that the Defendant had not given it any reason for thinking that a time bar defence would be relied on and had also continued these negotiations beyond the expiry of the time limit. Furthermore, it argued, the Defendant had discouraged the Claimant from instructing solicitors on three occasions in March, September and October 2012. Although the Defendant had never shown an actual willingness to extend time, therefore, the Claimant argued that it was lulled into a false sense of security by the Defendant’s conduct.

The Claimant had delayed in applying to extend time after 21 October 2013 apparently because the matter had to be referred to German insurers, who told it to take advice from Dutch lawyers. The Dutch lawyers had to consider the file and then instruct English solicitors. The English solicitors then contacted the Defendant, who refused to waive the time bar point.

The Defendant contended that the two-stage test developed in earlier cases should apply to the question of whether a time extension should be granted. This test required, first, that the Claimant had to satisfy the Court that there was a good reason why the claim had not been commenced within the time limit and, if there was a good reason, second, that it would be proper for the Court to exercise its discretion. The Defendant argued that the Claimant did not satisfy this test.

The Claimant’s position was that the test to apply when deciding whether to extend time was simply whether the Court would be acting justly in the circumstances. The Claimant argued that the two-stage test had been superseded by the introduction of the Civil Procedure Rules, which set out the circumstances in which a time extension will be granted.

The Admiralty Court decision

The Court held that the two-stage test still applied, as the Civil Procedure Rules only set out the test for seeking an extension of time for serving a claim form on a defendant when the claim form has been issued by the Court within the time limit. The two-stage test applied where no claim form had been issued at all within the time limit, as was the case here.

It was also held that there was no good reason why the claim had not been commenced within the time limit: the fact that the Claimant was not aware of the time limit did not constitute a good reason. The Defendant was not under a duty to warn the Claimant before the time bar date of the intention to take a time bar defence, since a defendant does not have a duty to assist a claimant in bringing a claim against him. As this Claimant was not aware of the time limit until it was too late, the Court held that it could hardly claim to have been misled by the Defendant about a time limit of which it was unaware. Although the Defendant had discouraged the Claimant from instructing solicitors, the time limit had been months away at that particular time.

The Court found that the Claimant could, and should, have taken legal advice at an earlier stage. If it had done, it would have been advised of the two year time-limit. It followed that the Claimant was at fault in failing to take advice at a sensible stage and this contributed to the failure to commence proceedings in good time. 

It was therefore unnecessary to consider whether the Court should exercise its discretion to allow the application. The Court noted, however, the very significant delay between 21 October 2013, when the Defendant raised the limitation defence, and 22 January 2014, when the Claimant brought its application. The Court found that this delay was outside what can be regarded as generally acceptable unless there are strong grounds for excusing the delay. The Claimant had not acted with the degree of urgency required.  There was no satisfactory explanation as to why it thought it necessary to first instruct Dutch lawyers with respect to a collision in English waters, nor why it took so long to instruct English lawyers.

Comment

Collision claimants should be mindful of the two-year time-limit for issuing a collision claim in the Admiralty Court and ensure that solicitors are instructed in good time.  Claimants who wish to agree an extension of time with their opponents should seek to obtain this agreement in good time before the limit and ensure that the agreement is clear and unequivocal. That said, claimants who fail to commence admiralty proceedings within two years of the date that the damage or loss was caused should instruct solicitors to apply for an extension of time as soon as possible.

In contrast, a party that will be the net payor may sit and wait for the other party to sue, as the decision in the Khedive confirms that it is not necessary to commence a separate collision claim in order to have the right to reduce the receiving party's claim. The paying party would need merely to defend himself as opposed to commencing proceedings.  Nonetheless, it is always good practice to commence a collision claim in good time.