Tuesday, 22 September 2015

Bringing a collision claim out of time: do you have extenuating circumstances?

September 22, 2015. 

A two-year time-limit applies for starting a claim in theEnglish court against the other yacht involved in a collision, although thecourt has a discretion to grant a time extension. The English court has clarifiedthe circumstances in which it will exercise this discretion in the recent caseof CDE SA v. Sure Wind Marine Ltd, SBSeaguard c/w Odyssée.

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 under section 190(3) of the Merchant Shipping Act 1995 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 he was shocked, as he was not aware of the time limit and he had been in regular negotiations with the defendant since March 2012. He said that the defendant had not given him 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. He also argued that 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 he was lulled into a false sense of security.

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 him 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 Admiralty Court decision

The court confirmed that a two-stage test applied to the question of whether a time extension should be granted. This test required, firstly, that the claimant 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, secondly, that it would be proper for the court to exercise its discretion in his favour. The defendant argued that the claimant did not satisfy this test.

The court 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. As this claimant was not aware of the time limit until it was too late, the court held that he could hardly claim to have been misled by the defendant about a time limit of which he 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 he had done so, he would have been advised of the two-year time-limit.

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 is 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 he thought it was necessary to first instruct Dutch lawyers with respect to a collision in English waters, nor why it took so long to instruct English lawyers.


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. 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. Although it may not be necessary for a party that will be the net payor to commence a separate collision claim in order to have the right to reduce the receiving party’s claim, it is nonetheless good practice to issue separate proceedings, particularly where the net result, often set-off, is in doubt.

Source: http://incelaw.com


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