Theresa Libra, The Owners of the Ship v Ship MSC Pamela, The Owners of the Ship [2013] EWHC 2792 (Admlty)

[2013] EWHC 2792 (Admlty)Case No 2013 FOLIO 502
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 19/09/2013
Before
MR. JUSTICE TEARE
Between
THE OWNERS OF THE SHIP THERESA LIBRAClaimantsTHE OWNERS OF THE SHIP MSC PAMELADefendants
Richard Sarll (instructed by Holman Fenwick and Willan) for ClaimantsRobert Thomas QC (instructed by Ince and Co.) for DefendantsHearing Hearing date: 26 July 2012
Judgment

Mr. Justice Teare :

[1]On 6 March 2011 a collision occurred between the vessel THERESA LIBRA and the MSC PAMELA in the South China Sea.[2]On 11 March 2011 a Collision Jurisdiction Agreement was concluded between Holman Fenwick Willan (“Holmans”) acting on behalf of the owners of THERESA LIBRA and Ince and Co. (“Inces”) acting on behalf of the owners of MSC PAMELA and her demise charterers. Pursuant to that agreement the claims of each party were to be determined by the English Courts in accordance with English law and practice.[3]It would appear that thereafter, although there was little, if any, correspondence between Holmans and Inces, each firm must have investigated the circumstances of the collision and formed a view as to the faults of each vessel and the appropriate apportionment of liability for on 17 October 2012 (several months before the two year limitation period provided by section 190 of the Merchant Shipping Act 1995 expired) Holmans accepted an offer by Inces dated 25 September 2012 to settle liability for the collision on the basis that MSC PAMELA was 75% to blame for the collision and that THERESA LIBRA was 25% to blame for the collision.[4]On 25 October 2012 a formal Agreement to Settle Liability was signed. That agreement provided as follows:
“WHEREAS: A. On 6 March 2011 a collision occurred between MSC Pamela and Theresa Libra in the South China Sea (the “Collision”). B. The Parties have suffered loss and expense as a consequence of the Collision. C. The Parties wish to settle liability for the Collision in accordance with the terms of this Agreement. NOW IT IS HEREBY AGREED AS FOLLOWS: - 1. MSC Pamela was 75% to blame for the Collision and Theresa Libra was 25% to blame for the Collision. 2. MSC Pamela shall pay 75% of the costs of determining liability incurred by Theresa Libra, to be taxed if not agreed; 3. Theresa Libra shall pay 25% of the costs of determining liability incurred by the MSC Pamela, to be taxed if not agreed; 4. MSC Pamela shall pay 75% of the claim of Theresa Libra as proved or agreed, together with interest; 5. Theresa Libra shall pay 25% of the claim of MSC Pamela as proved or agreed, together with interest; 6. The claim of MSC Pamela and Theresa Libra shall, failing agreement, be referred to the Admiralty Registrar, assisted if necessary by experts, to assess the respective claims. 7. This Agreement shall be governed by English law and any dispute arising hereunder shall be submitted to the exclusive jurisdiction of the English Courts. Dated this 25 day of October 2012”
NOW IT IS HEREBY AGREED AS FOLLOWS: - Dated this 25 day of October 2012”

NOW IT IS HEREBY AGREED AS FOLLOWS: -

[5]Thereafter on 5 December 2012 Holmans, who had forwarded to Inces a schedule of their client’s claim in the sum of approximately US$ 780,000 with supporting vouchers on 13 September 2012, asked Inces for their client’s claim and vouchers. No response was received. On 21 January 2013 Holmans repeated their request and warned that if no response was received they would recommend their clients “to proceed to a reference with attendant costs”. On 28 January 2013 Holmans provided further vouchers and information to Inces (as a result, it is said, of requests made on 3 and 19 October 2012).[6]On the same date, 28 January 2013, Inces issued a Claim Form on behalf of the Owners of MSC PAMELA seeking damages for the loss caused by the collision. Their claim was, I was told, in the sum of about US $1.3m. Having regard to the agreed apportionment of liability, Inces must have anticipated that their client would be the net paying party and Holman’s clients the net receiving party.[7]The second anniversary of the collision, and hence the time limited for commencing an action for damages (absent any agreement to the contrary), expired on 6 March 2013.[8]On 11 March 2013 Holmans again requested Inces to produce their client’s claim and supporting documents. Holmans gave further details of their client’s claim. On 8 April 2013 Inces emailed Holmans saying that before they reviewed the emails dated 28 January and 11 March 2013 they requested confirmation that Holman’s clients had issued proceedings within two years from the collision.[9]On 8 April 2013 Holmans issued a claim form on behalf of the Owners of THERESA LIBRA seeking damages for the loss caused by the collision. On 16 April 2013 the claim form was served on Inces and on 17 April 2013 Inces advised Holmans that since the “writ” had been issued after the expiry of the second anniversary of the collision it was their client’s intention to raise a time bar defence in respect of the claim.[10]On 3 May 2013 Holmans issued an application notice in which they sought an order that the claim was not time barred and, in the alternative, an order that the time for the bringing of proceedings be extended. Holmans also sought permission to add the demise charterers of MSC PAMELA as defendants to the claim form in addition to the owners of that vessel.[11]The Owners of MSC PAMELA accept that even if the claim of the Owners of THERESA LIBRA is held to be time barred the Owners of THERESA LIBRA would be entitled to raise their claim by way of equitable set-off and, given the agreed apportionment of liability for the collision and the amounts of the two claims, this will – or is likely to - extinguish any recovery the Owners of MSC PAMELA might otherwise make. They have therefore undertaken, in the event that the claim of the Owners of THERESA LIBRA is time-barred, not to pursue their own claim. Whether the claim of the Owners of THERESA LIBRA is time barred.[12]The form of the Agreement signed by Holmans and Inces does not appear to have been a form approved by the Admiralty Solicitors Group but it is a form used by Inces on a regular basis and appears to be derived from the Agreement of Settlement of Liability in Steel and Parsons on Forms and Precedents at paragraph 270.[13]Mr. Sarll, on behalf of the Owners of THERESA LIBRA, submitted that the true construction of the Agreement to Settle Liability, that is, the meaning which it would reasonably be expected to bear, was that each party was precluded from saying that proceedings to claim damages for the loss caused by the collision had to be commenced within two years of the collision. In essence, the argument advanced was that the obligation entered into by each party that it “shall pay” the agreed percentage of the other side’s claim was inconsistent with either party being able to claim that it did not have to pay the agreed percentage of the other side’s claim in the event that proceedings by that party were not commenced within two years of the date of the collision.[14]Mr. Thomas QC, on behalf of the Owners of MSC PAMELA, submitted that that was not the true construction of the Agreement. Regard had to be had to the background known to both parties, namely, that claims for damages arising out of a collision between ships had to be commenced within two years of the collision. If the quantum of the parties’ claims could not be agreed proceedings would have to be issued in the Admiralty Court to enable the Admiralty Registrar to assess those claims, as the Agreement contemplated. Mr. Thomas relied upon the fact that Paul Apostolis, the solicitor in Holmans dealing with this matter, gave evidence that in his experience it was usual for settlement agreements to contain a term extending indefinitely the time for commencing proceedings subject to a right to terminate the extension by giving notice in writing. Mr. Apostolis mistakenly believed that the agreement in this case contained such a term. Mr. Thomas said that it was to be inferred from that evidence that Mr. Apostolis would have commenced proceedings within time had he not made that mistake. Further, the construction suggested by the Owners of THERESA LIBRA would have the effect that proceedings could be commenced many years later.[15]The Agreement was to settle “liability”. In the context of claims arising out of a collision between ships that would be understood by the parties as an agreement to settle the extent to which each party was to blame for the collision.[16]The Agreement settled liability 75/25 in favour of the Owners of THERESA LIBRA. It also settled the incidence of the costs of determining liability in the same proportions. In the absence of agreement the quantum of the respective claims was to be determined by the Admiralty Registrar and the quantum of each party’s costs of determining liability was to be “taxed”. Each party promised that it “shall pay” the agreed percentage of the other’s claim as proved or agreed and the agreed percentage of the other’s costs as taxed or agreed. Thus provision was made in the Agreement for liability, quantum and costs, effectively all claims arising out of the collision between THERESA LIBRA and MSC PAMELA. An option to refuse to pay on the grounds that proceedings had not been commenced within two years of the collision would appear to be inconsistent with the Agreement.[17]The argument to the contrary is that the Agreement expressly provides that in the event that quantum is not agreed there must be a reference to the Admiralty Registrar. Such a reference requires the issue of proceedings and all practitioners in this field know, or ought to know, that proceedings to enforce a claim against a ship or her owners in respect of damage caused by the fault of that ship to another ship must be brought within two years of the date when the damage was caused. Such practitioners would know that if such proceedings are not brought within the period of two years the claim is time-barred, subject to an extension of time being granted pursuant to section 190(5) of the Merchant Shipping Act 1995. In that context the express obligation that each party “shall pay” the agreed percentage of the other’s claim would be known to such practitioners as being dependent upon proceedings having been commenced within time.[18]In so far as Mr. Apostolis believed that in the absence of a term extending time indefinitely proceedings had to be issued within two years I do not take that belief into account because it is his subjective belief and is not relevant when construing the Agreement. Mr. Floyd, who dealt with the matter at Inces, probably thought that proceedings had to be issued within two years notwithstanding the making of the Agreement because he did in fact issue proceedings on behalf of his clients on 28 January 2013, more than a month before the two year time limit expired. But I leave that out of account also for the same reason.[19]The Agreement is not stated to be subject to a condition that a party can only enforce its provisions if it issues proceedings within the two year period. That might suggest that it is not subject to any such condition. But it may be said in response that there is no need for such a condition to be expressed because such a condition is provided by section 190 of the Merchant Shipping Act 1995.[20]I have considered whether a claim form could be issued in respect of a cause of action arising out of the Agreement rather than in respect of a cause of action in tort based upon the negligence of the shipowner in question. Such a claim form could be issued notwithstanding that the recoverable damages had not been identified at the date of issue of the claim form, for the damages could be ordered to be assessed by the Registrar. However, the proceedings commenced by the claim form would still be “proceedings to enforce a claim against a ship or her owners in respect of damage or loss caused by the fault of that ship to another ship” and therefore they would be required to be brought within a period of two years from the date of the collision rather than within the normal six year period for claims in contract. This is indeed apparent from the claim form issued by the Owners of THERESA LIBRA which was amended to read “the Claimants claim pursuant to a settlement agreement dated 25 October 2012 for loss and damage suffered by them arising out of the collision ….which was caused by ….the negligence of the Defendants, their servants or agents.”[21]Having considered the respective submissions my conclusion on this question of construction is that the obligation assumed by each party that it “shall pay” the agreed percentage of the other’s claim is inconsistent with an option not to pay in the event that it proves to be the case that the other has not issued a claim form within two years of the date of the collision. It follows that each party is precluded by agreement from relying upon the time bar provided by section 190 of the Merchant Shipping Act. In my judgment any such reliance would be inconsistent with the express obligation accepted by each party that it “shall pay” the agreed percentage of the other’s claim. I of course accept that the Agreement must be construed against the background of the statutory two-year time bar but in my judgment the obligation accepted by each party on 25 October 2012 that it “shall pay” the agreed percentage of the other’s loss precludes each party from saying that it need not pay in the event that, on 6 March 2013, some four to five months after the date of the Agreement, it proves to be the case that the other has not issued a claim form by that date. The Agreement settled liability and provided a means by which, in the absence of agreement, the quantum of each party’s claim and costs could be assessed. I do not consider that an option not to pay in the event that it could be shown some four to five months later that the other party had not issued a claim form within two years of the collision can be implied into the Agreement for such an option would be inconsistent with the obligation that each party “shall pay” the agreed percentage of the other party’s claim. The Merchant Shipping Act 1995 provides for a two year time bar but a shipowner may waive his right to rely upon that time bar and, in my judgment, the shipowners in this case did so on 25 October 2012 when each agreed that it “shall pay” the agreed percentage of the other’s claim. The Agreement provided for the court, in the absence of agreement, to quantify the respective claims and costs which would necessarily entail the commencement of proceedings. But I do not consider that that circumstance enables a party to rely upon the fact that proceedings have not been commenced more than two years from the date of the collision as a defence to the other’s claim in circumstances where, four to five months before the expiry of such time limit, they had agreed that they “shall pay” the agreed percentage of the other’s claim and that the claims “shall, failing agreement, be referred to the Admiralty Registrar”.[22]That is the meaning which, in my judgment, the Agreement would reasonably be expected to have. I accept that on the evidence it appears that neither Mr. Apostolis nor Mr. Floyd appears to have understood the Agreement in this way. But Lord Hoffman explained in AG of Belize v BelizeTelecom [2009] 1 WLR 1988 at paragraph 16 that the meaning which a contract may convey to the reasonable person is not necessarily or always what the authors or parties to the contract would have intended.[23]In the event proceedings were commenced just over a month after the expiry of two years from the date of the collision. It is therefore unnecessary to decide whether the Owners of THERESA LIBRA would have been free to delay the commencement of proceedings indefinitely or whether the six year limitation period otherwise applicable to claims in contract would apply.[24]I was referred to several authorities in which arose a similar question of construction to the one which I must resolve. But none concerned an agreement on the same terms as the Agreement. I shall however refer to them since they were discussed in argument.[25]The first case to which reference as made was Lubovsky v Snelling [1944] 1 KB 44. That case involved a road accident in December 1940. Section 3 of the Fatal Accidents Act 1846 provided for a one year time limit for the commencement of proceedings. In August 1941 there was a meeting between the claimants’ solicitors and the defendant’s insurers. The latter admitted liability but said that a writ would have to be issued because damages would have to be fixed and apportioned by the court. A writ was issued in November 1941 but was defective and a further writ was issued in February 1942. The defendant said the claim was time-barred. The Court of Appeal held that there was an agreement not to rely upon the time-bar. Scott LJ said at p.46:
“The plain meaning of the agreement …..was that liability in damages ……..was once and for all definitely accepted by both the defendant and his insurers, and both of them were thereafter precluded from putting forward any defence whatever which would impeach that liability.”
[26]Mackinnon LJ and Goddard LJ agreed. The latter said the case was indistinguishable from an earlier case, Wright v John Bagnall and Sons Limited [1900] 2 QB 240, where there had been an agreement to pay compensation with each party reserving the right to have quantum determined by the court. In such a case the defendant was debarred from raising a time-bar defence.[27]The next case to which reference was made, The Sauria and the Trent [1957] 1 Lloyd’s Reports 396, concerned a collision between a moored vessel and a passing tug and tow in January 1953. In November 1954 the defendants admitted liability but denied the alleged or any damage. In January 1955 the defendants’ solicitors indicated that they would advise their clients to agree to refer the quantum of the claim to arbitration before Junior Counsel. It does not appear that such arbitration took place for in January 1957 proceedings were commenced. The defendants said that the action was time-barred because proceedings had not been issued within two years of the collision pursuant to section 8 of the Maritime Conventions Act 1911, the predecessor of section 190 of the Merchant Shipping Act 1995. Proceedings had been issued two years after that time limit had expired. It was held that the claim was time-barred and that there were no grounds for extending time. Lord Evershed MR distinguished Lubovsky v Snelling on the grounds that in that case it was agreed that proceedings in court were to be commenced whereas in the case before him what was being discussed was a proposal not to litigate but to arbitrate. Lord Evershed accepted that this was a “narrow” distinction but said at p.400 that he had “the greatest difficulty in seeing how you can formulate an agreement which will have the effect (in such a case as the present) of binding the defendants contractually not to raise the plea of Section 8 of the Act of 1911 in any action the plaintiffs may choose to bring for finding that the damage suffered apparently was done by the barge Trent, however long after the cause of action they may elect to start those proceedings.”[28]Morris LJ agreed. He said at p. 403 that there was no express agreement not to plead section 8 and no such agreement could be implied. He explained the decision in Lubovsky v Snelling by saying that in that case it was an implied term of the agreement between the parties that neither party would take any step which would make it impossible to have the question of quantum settled by the court.[29]Finally, there was The Seaspeed America [1990] 1 Lloyd’s Reports 150, another case in which a vessel lying at her berth was struck by a passing vessel. The collision occurred in July 1987. The claimant’s solicitors wrongly noted the expiry date of the limitation period as 12.07.87 instead of 12.07.89. In August 1987 the defendants admitted liability. The damaged vessel entered a repair yard for repairs in December 1988 and a final repair account was not approved until March 1989. In June 1989 the claim was sent to the defendant’s P&I Club with supporting vouchers. On 21 July 1989 the claimant’s solicitors reviewed the file and appreciated that the two year time limit had expired. A writ was issued on 28 July 1989. Sheen J. extended the time for commencing proceedings but, although he referred to Lubovsky v Snelling and The Sauria and The Trent, he did not consider whether there had been any agreement not to take the time bar point.[30]Any submission that the parties in the present case have agreed not to rely upon the time-bar defence provided by section 190 of the Merchant Shipping Act 1995 must depend upon the true construction of the agreement made between the parties. Accordingly none of the previous cases to which I have referred can determine the true construction of the Agreement in the present case. But in my judgment, and for the reasons I have endeavoured to explain, the true construction of the obligation that each party “shall pay” the agreed percentage of the other’s claim as agreed or determined by the court is that each party agreed not to rely upon the two year time bar as a reason for not paying the other’s claim. My approach to the construction of the Agreement is similar to the approach of the Court of Appeal in Lubovsky v Snelling as explained by Morris LJ in The Sauria and The Trent. In circumstances where the parties had agreed that they “shall pay” the agreed percentage of the other’s claim and that the claims “shall, failing agreement, be referred to the Admiralty Registrar” it was the true construction of the Agreement that neither party would take any step which would make it impossible to have the quantum of the claims determined by the Registrar.

Extension of time

[31]The Owners of THERESA LIBRA do not need an extension of time in the light of my construction of the Agreement but in case I am wrong as to the true construction of the Agreement I ought also to consider whether the Owners have made out a case for an extension of time. The jurisdiction to extend time is provided by section 190 (5) of the Merchant Shipping Act 1995. The court may “extend the period allowed for bringing proceedings to such extent and on such conditions as it thinks fit.” As in The Pearl of Jebel Ali [2009] 2 Lloyd’s Reports 484 (see paragraphs 35-38) and in MIOM 1 Limited v Sea Echo ENE [2012] 1 Lloyd’s Reports 140 (see paragraphs 53-63) it is common ground that, although the discretion to extend time is expressed in unfettered terms, a two-stage test must be applied. This follows from the decision of the Court of Appeal in The Al Tabith [1995] 2 Lloyd’s Reports 336 at p.342. I have noted the views expressed by the learned editors of Admiralty Jurisdiction and Practice 4th.ed. at paragraphs 5.41-5.44 that the two-stage approach of the Court of Appeal in The Al Tabith is inconsistent with what is said to be the one-stage approach of the Court of Appeal in The Igman, an unreported decision dated 23 May 1993 which was not cited to the Court of Appeal in The Al Tabith. However, although reference was made to The Igman in the present case I was not invited to follow the approach of the Court of Appeal in The Igman or to depart from the approach of the Court of Appeal in the later decision of The Al Tabith.[32]In deciding whether to extend time the first stage is to determine whether good reason for an extension of time has been made out. If so, the second stage is to determine whether, in the exercise of the court’s discretion, the time for commencing proceedings should be extended. Although Lord Brandon said in The Myrto [1987] AC 597 that what amounts to a good reason cannot be defined or circumscribed and must depend upon all the circumstances of the case the Court of Appeal in The Al Tabith said that if proceedings were not commenced in time merely because of a mistake that would not amount to a good reason. Thus Hirst LJ said that the claimant seeking an extension of time must demonstrate that his failure to commence proceedings within time was not merely due to his own mistake (see p.342, emphasis added). Rose LJ said that mistakes on the part of the claimant as to when the limitation expired are the sort of fault or carelessness which is unlikely to give rise to a good reason. A defendant ought not to be deprived of a limitation defence merely because of the carelessness of those representing the claimant (see p. 343, emphasis added.). Russell LJ said that the claimant must overcome the first hurdle of demonstrating some legally excusable lapse responsible for the delay. Mere forgetfulness is not capable of being regarded as legally excusable (see p.343, emphasis added).[33]It is clear in the present case that Mr. Apostolis was mistaken in believing that the Agreement contained an express provision which extended time indefinitely, subject to the extension being brought to an end by the giving of notice in writing. He accepts that he was mistaken. Although he referred to a number of matters, including a heavy work load and the need to leave the country to visit a close relative who was undergoing medical treatment, his mistake was careless. Had he read the Agreement he would have seen that it did not contain any such express term.[34]It was suggested that, objectively considered, he had acted as a prudent solicitor would have done. Such a solicitor, it is said, would have consulted the White Book and learnt (from Vol.2 para.2D-262) that the Court of Appeal had held in The Sauria and The Trent that “an informal admission of liability amounted to a contractual undertaking not to plead the defence of limitation of action.” He would therefore not have seen any need to commence proceedings before 5 March 2013. The note in the White Book is in error but that would not be apparent, it was said, to a prudent solicitor.[35]I accept that the note in the White Book appears to be in error. However, I do not consider that this is of any relevance in the present case because Mr. Apostolis did not consult the White Book. In any event I am unable to accept that a prudent solicitor would rely upon the note without reading the decision in The Sauria and the Trent to check that the facts of the case were comparable with his case. Had he done so he would have appreciated that the note in the White book was in error.[36]It is necessary to consider the circumstances in which Mr. Apostolis made his mistake. In October 2012 the parties had settled the question of liability. The parties must have envisaged that thereafter they would seek to agree both quantum and costs. That is what Mr. Apostolis sought to do.[37]On 5 December 2012 Holmans, who had earlier provided their client’s claim and vouchers, asked Inces for their client’s claim and vouchers. No response was received. On 21 January 2013 Holmans repeated their request and warned that if no response was received they would recommend their clients “to proceed to a reference with attendant costs”. On 28 January 2013 Holmans provided further vouchers and information to Inces (as a result, it is said, of requests made on 3 and 19 October 2012) and on 11 March 2013 Holmans again requested Inces to produce their client’s claim and supporting documents. Holmans gave further details of their client’s claim.[38]Thus, when the two year time-limit expired on 6 March 2013, Holmans were still awaiting Inces’ claim and vouchers and their responses to the claim and vouchers provided by Holmans to Inces. Holmans had acted, it seems to me, in accordance with the Agreement. The parties were both supposed to be considering the quantum of the respective claims. In those circumstances I do not consider that it can be said that Holmans failed to issue a claim form by 5 March 2013 merely because of Mr. Apostolis’ mistake. There was an additional factor, namely, the Agreement of October 2012 with which Mr. Apostolis was seeking to comply between October 2012 and March 2013. In my judgment the making of that Agreement in October 2012 and Mr. Apostolis’ compliance with it thereafter is a good reason for extending time. The parties had settled liability for the collision some four to five months before the two year time limit for commencing proceedings had expired. There was no longer any need to commence proceedings for the purpose of establishing liability for the collision. Following the Agreement the parties would expect to consider and, if possible, agree quantum and costs. It was therefore appropriate for Mr. Apostolis to ensure that Inces had the requisite details of his client’s claim together with the vouchers in support and to press Inces to produce their client’s claim and the vouchers in support. Whilst the existence of negotiations as to liability has often been said not to be a good reason for not extending time it seems to me that where liability has been settled the negotiations which then ensue over quantum and costs may well be a good reason for extending time where they can be seen to be the working out of the settlement agreement without any unreasonable delay. Those are the facts of this case and I consider that they amount to a good reason for extending time. This type of factor was considered by Sheen J. to be a good reason in The Seaspeed America at p.154.[39]The second stage of the enquiry is whether, there being good reason to extend time, it is appropriate to extend time in the exercise of the court’s discretion. It seems to me that it would be appropriate to extend time. First, the required extension of time is modest, a little more than a month. Second, an extension of time will cause no hardship to the Owners of MSC PAMELA. It has not been suggested that the delay in commencing proceedings has made it more difficult to investigate the claim of the Owners of THERESA LIBRA or to prove the claim of the Owners of MSC PAMELA than it would have been had the claim form been issued on or before 5 March 2013. Third, the application notice seeking an extension of time was issued reasonably promptly on 3 May 2013.[40]In my judgment it would be unjust and unfair, notwithstanding Mr. Apostolis’ mistake, if the Owners of THERESA LIBRA, having settled liability well within the two year limitation period, having secured the agreement of the Owners of MSC PAMELA to pay 75% of their damages and having promptly sought to exchange claims and supporting vouchers with a view to agreeing quantum, should now be unable to enforce the obligation to pay assumed by the Owners of MSC PAMELA. I would therefore have extended time for the commencement of proceedings.

Addition of the Demise Charterer

[41]The Claimants, the Owners of THERESA LIBRA, seek permission pursuant to CPR 19.2 to add the demise charterers of MSC PAMELA as a second defendant. It appears that the Claimants, when issuing the claim form on 8 April 2013, omitted to add the demise charterers as a second defendant notwithstanding that the Collision Jurisdiction Agreement was signed by Ince and Co. on behalf of both the owners and demise charterers of MSC PAMELA and contained a warranty that at the time of the collision the vessel was demise chartered to MSC Mediterranean Shipping Company SA. Since the person liable in personam for the collision may therefore be the demise charterers rather than the owners the Claimants wish to add the demise charterers as second defendants.[42]The application is opposed on the grounds that the application is made after the end of a period of limitation and that the conditions which must be established before the court may add a party in those circumstances are not satisfied; see CPR 19.5.[43]CPR 19.2, which gives the court jurisdiction to add a new party so that the court can resolve all the matters in dispute in the proceedings, does not apply where the case falls within CPR 19.5. CPR 19.5 applies where an application is made to add a party “after the end of a period of limitation.” Mr. Sarll submitted that if the Jurisdiction Agreement precludes the owners and demise charterers of MSC PAMELA from relying upon the two year limitation period then the application has not been made “after the end of a limitation period.” Mr. Thomas submits that the application plainly has been made after the end of the limitation period. That period expired on 6 March 2013 and the application was made on 3 May 2013.[44]I have held that the effect of the Settlement Agreement is to preclude the parties to that agreement from relying upon the two year limitation period provided by section 190 of the Merchant Shipping Act 1995. The demise charterers were party to the Settlement Agreement; the “parties” to it were defined as including the demise charterers. That being so the demise charterers of MSC PAMELA are precluded from asserting that the application to add them as parties to the claim form has been made “after the end of a period of limitation.”[45]It follows, in my judgment, that the governing rule is CPR 19.2. It is to be noted that the application is only necessary because of a further error by Holmans. However, I consider that it is fair and just to add the demise charterers as a new party so that the court can resolve all the matters in dispute in the proceedings. The demise charterers were party to the Settlement Agreement; the “parties” to it were defined as including the demise charterers. Thus the demise charterers had promised that they “shall pay” 75% of the claim of THERESA LIBRA. In those circumstances there is no hardship or prejudice to the demise charterers in granting permission to add them as a party. If they are not added a fresh action could be issued against the demise charterers who could not, by reason of the Settlement Agreement, assert that they did not have to pay 75% of the claim of THERESA LIBRA in circumstances where a claim form had not been issued within 2 years of the collision.[46]If my construction of the Settlement Agreement is in error then, for the reasons I have given, it would be an appropriate case in which to extend the period of limitation for the commencement of proceedings against not only the owners but also the demise charterers of the MSC PAMELA. Proceedings against the owners were commenced on 8 April 2013 and an application to add the demise charterers was not made until 3 May 2013. However, I do not consider that the delay between 8 April and 3 May, over 3 weeks but less than 4 weeks, was such as to justify refusing to extend time against the demise charterers. The application to add the demise charterers as a party was, it seems to me, made reasonably promptly after the error of not having joined them as parties must have been appreciated.[47]If time were so extended the question would arise whether the demise charterers can show that the application is within CPR 19.5. If one takes account of the extension of time they cannot do so. It would be, in my judgment, irrational not to take account of the extension of time when deciding whether the case falls within CPR 19.5 since such extension is permitted pursuant to section 190 of the Merchant Shipping Act 1995, the very section on which the demise charterers would have to rely in order to say that the application was made “after the end of period of limitation”. Thus the governing rule would again be CPR 19.2 and it would be fair and just to allow the demise charterers to be added as a defendant.[48]I therefore grant permission to add the demise charterers as a party pursuant to CPR 19.2. In those circumstances it is unnecessary to consider whether, had the application fallen within CPR 19.5, the conditions in that rule for an extension of time would have been satisfied. I will merely say that it does not appear that the conditions in CPR 19.5(3) could be satisfied. Indeed, no positive case that they could be satisfied was advanced.

Cited in 2 later judgments