QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| THE FORMER OWNERS OF THE MOTOR VESSEL "MELISSA K" NOW NAMED
|- and -
|THE FORMER OWNERS OF THE MOTOR TANKER "TOMSK" SUBSEQUENTLY NAMED "PURE ENERGY" AND NOW NAMED "THAYER"
Mr Richard Sarll (instructed by Keates Ferris) for the Defendants
Hearing date: 18th November 2015
Crown Copyright ©
Mr Justice Males :
The First Extension Agreement and the Collision Jurisdiction Agreement
"The undersigned confirm that, within 14 days of receiving a request to do so, they will instruct solicitors in England or Wales to accept service of the other party's proceedings (including any limitation proceedings) on behalf of their respective clients/principals. …"
The Second Extension Agreement
"We have recommended to our Members that they agree a mutual time extension to 28 April 2015 for issue and service of the respective claim forms and we will keep you informed of their reply ..."
"Pursuant to the Collision Jurisdiction Agreement dated 25th April 2014 and subject only to like agreement on behalf of Owners of 'Melissa K' we hereby agree to a mutual extension of time up to and including 28 April 2015 for issue and service of each ship's claim form upon the other.
Please kindly confirm agreement on behalf of Owners of 'Melissa K'."
"Thanks for this confirmation and I am pleased to confirm that the agreed time extension is now in force."
The defendants' offer to settle liability
"We are instructed by our Members, owners of Tomsk, to settle liability on the basis of Tomsk being 50% and Melissa K being 50% to blame for the collision.
The costs of determining liability are to be payable in the same proportion.
This offer will remain open for acceptance for 21 (twenty one) days following receipt of this letter. On the expiry of that period, unless the Court orders otherwise, the offer will remain open for acceptance on the same terms except that, in addition, your clients shall pay all of our Members' costs from the date of expiry until acceptance.
For the avoidance of doubt, after commencement of trial this offer can only be accepted with the permission of the Court in accordance with Civil Procedure Rules ('CPR') Part 61.4(12)(d) and/or as provided under rule 36.9(3)(d) of the CPR."
'Tomsk' has proposed liability at 50/50 and 'Melissa K' has proposed liability at 85/15 in their favour. We have reviewed the evidence and argument carefully and, for the following reasons, we believe that the Admiralty Court, London will itself decide that 50/50 is the correct apportionment.
We attach a pre-action Part 61/Part 36 offer of liability alone at 50/50 in the form prescribed by Civil Procedure Rules. ...
We are also instructed to advise you that unless this offer is accepted, no further time-extensions will be granted. If this offer is accepted before expiration of the present time-extension on 28th April 2015 then we are instructed to agree a mutual three-month time extension until 28th July 2015 during which time the parties can address the quantum of each claim.
If the offer on liability is accepted, we will seek instructions to travel to Istanbul to negotiate quantum in good faith and without delay."
Expiry of the deadline
"1. TOMSK are not obliged to present their claim at present, although I am encouraging them to do so.
2. The TOMSK Part 61/36 offer does not have an automatic expiry date. It remains in force unless withdrawn by TOMSK or by order of the Court.
3. The relevance of the 21 day period referred to in the Part 61/36 offer is that MELISSA K is potentially liable for 100% of TOMSK's liability costs from that time.
4. The Part 61/36 letter is deemed received on and takes effect from, the day the e-mail copy was sent (CPR 2.26 refers). The 21 day period therefore ended on 16 April 2015.
The Part 61/36 offer only refers to the % liability of each vessel. The quantum of both claims is still to be negotiated.
The present position is:
5. The Claim of MELISSA K becomes time-barred on 28th April 2015.
6. If MELISSA K issues and serves a claim form by that date, her claim is preserved and the claim of TOMSK can be presented as a counter-claim in that action.
7. If MELISSA K agrees to 50/50 apportionment of liability before 28th April 2015:
a. TOMSK will agree a final, mutual time extension to 28th July 2015 in which the quantum of both claims can be addressed.
b. North will seek instruction to travel to Istanbul to negotiate the quantum of both claims in good faith and without delay."
"Our Clients and their H&M are willing to settle liability on both vessels being 50% liable for the collision, but solely under the condition that a time extension is granted till 28/07/2015 and that within this period all parties need to reach a deal on quantum, failing which the 50-50 deal on liability is no longer standing/valid.
Please confirm, provide by Monday 27/04/2015 lunchtime Istanbul the additional time extension until 28/07/2015 and make suggestions for a meeting in Istanbul."
"We are advised that the mutually extended time-bar for commencing legal proceedings expires tomorrow and no further time extension has been agreed, hence our instructions to promptly issue."
Acceptance of the Offer
"We write to ask your intentions in respect of the claim of "Melissa K" following passing of the 28 April 2015 time bar for issue and service of claim forms.
We do not know if a claim form has been issued on behalf of "Melissa K" but whether or not, time for service of any such has now passed. Under the Collision Jurisdiction Agreement dated 25 April 2014 (attached), the parties were to appoint solicitors in England or Wales to accept service of proceedings within 14 days of receiving a request to do so. Under the current time extension (also attached), claim forms were to be issued and served by 28th April 2015. We reminded you of this in our e-mail timed 16.40 on 16th April 2015.
If 'Melissa K' did issue a claim form on or before 28th April 2015, we have no record of your request to appoint solicitors to accept service on behalf of 'Tomsk'. Since there has been no obstacle to service under the Collision Jurisdiction Agreement and within the agreed limitation period, 'Melissa K' now appears unable to satisfy the requirements of CPR 7.6(3)(b) for an extension of time for service.
We see no grounds for an application to extend time for service to be made without notice to us but if you do follow that route, please place this message and attachments before the Court and inform them that we prefer any such application to be made on notice to us.
For the avoidance of doubt, no claim form has been issued on behalf of 'Tomsk'."
"Notice of Acceptance of Part 36 offer.
This letter constitutes formal acceptance on behalf of the Melissa K interests of the Part 36 Offer served on behalf of your Member on 26 March 2015.
We propose that the parties now endeavour to agree quantum within six months of the date of this letter, i.e. by 15 August 2015, failing which the question of quantum is to be referred to the Admiralty Registrar.
We should be grateful if you would kindly acknowledge receipt of this letter."
"We write further to your e-mail of 12th May 2014 (below) and your letter of 15th May.
Service of Proceedings
Pursuant to para #B of the Collision Jurisdiction Agreement dated 25th April 2014, our Members have appointed Keates Ferris (Jonathan Kemp) (ric) to accept service of proceedings. This appointment is without prejudice to our Members' position that time for service of proceedings has passed. Any application to extend time will be opposed and we repeat our advice of 12th May that any such application on behalf of your clients should be made on notice. …
Notwithstanding that your clients' claim is time-barred by reason of failure to serve proceedings within the agreed time, we acknowledge receipt of their acceptance of our Members' pre-action Part 36/61 offer dated 26 March 2015 to agree liability for the collision at 50/50. You will appreciate that, under these circumstances, our Members are not willing to address issues of quantum."
Service of proceedings
The present applications
Has liability been effectively settled by acceptance of the Offer?
The parties' submissions
a. The Offer was an offer made under Part 36 of the Civil Procedure Rules, which constitute a self contained code pursuant to which an offer may be accepted at any time unless the offeror has served notice of withdrawal of the offer on the offeree (see CPR 36.9(2)).
b. As no notice of withdrawal had been served, the Offer therefore remained open for acceptance on 15 May 2015, the date when it was accepted, so that there was then a binding settlement of liability on the basis of 50/50 responsibility for the collision.
c. The fact that the Offer was intended to remain open for acceptance after the 28 April 2015 deadline for service of proceedings was further demonstrated by (i) the statement that it would remain open for acceptance after 21 days from receipt of the letter (i.e. after 16 April 2015), by which time it would be too late for the claimants to serve proceedings before the deadline, and (ii) the further statement that it could even be accepted after commencement of the trial with the permission of the court.
d. Any doubt as to the true construction of the Offer on this point should be resolved in such a way as to render it an effective Part 36 offer, which a time limited offer would not be (see C v D  EWCA Civ 646,  1 WLR 1962).
e. It was an implied term of the offer that, in the event of acceptance, neither party would act in a way that would make it impossible for the quantum of each party's claim to be determined by the court if agreement on quantum could not be reached.
f. Alternatively the defendants have waived any right to rely on the 28 April 2015 deadline as a result of the exchanges set out above.
a. The Second Extension Agreement provided in clear terms that any proceedings had to be both issued and served by 28 April 2015, failing which any claim would be barred.
b. This agreement was unaffected by the Offer which, on its true construction, would only remain open for acceptance after 28 April 2015 if proceedings had been issued and served before the deadline.
c. While it is possible for an offer to settle liability in a collision claim at stated percentages to be made on terms which have the effect of foregoing a defendant's right to rely on other defences such as limitation or the absence of valid service, there was nothing in the terms of the Offer here which had that effect.
d. There was no waiver of the defendants' right to rely upon the deadline.
Part 61 and Part 36
"It is unnecessary to consider CPR 36 because Part 61 is the rule which deals with offers in Admiralty collision actions."
Construction of the Offer
"In the present case, therefore, it is not of utility to consider the meaning of the offer paragraph in isolation from the context in which the offer was made. Whatever else may be in dispute, there is no dispute that the offer was intended to comply with Part 36. It was expressly stated to be an 'Offer to Settle under CPR Part 36' that was 'intended to have the consequences set out in Part 36….' Of course, that does not mean that it did in fact comply with Part 36 and therefore must, come what may, somehow be shoehorned into the confines of its four corners: a stated bid to attain a particular goal does not also mean that the goal has been attained. The answer to the critical question still turns on how the reasonable man would read the offer. The relevance, however, of the claimant's expressed intention to make its offer a Part 36 offer is that, if there are any ambiguities in it raising a question as to whether the offer does or does not comply with the requirements of Part 36, the reasonable man will interpret it in a way that is so compliant. That is because, objectively assessed, that is what the offeror can be taken to have intended. That is also in line with the principle of construction to which Rix LJ referred in paragraph ."
"We are also instructed to advise you that unless this offer is accepted, no further time-extensions will be granted. If this offer is accepted before expiration of the present time-extension on 28th April 2015 then we are instructed to agree a mutual, three-month time extension until 28th July 2015 during which time the parties can address the quantum of each claim.
If the offer on liability is accepted, we will seek instructions to travel to Istanbul to negotiate quantum in good faith and without delay."
Extension of time under section 190 of the Merchant Shipping Act 1995
A mandatory extension under section 190(6)
"Any such court, if satisfied that there has not been during any period allowed for bringing proceedings any reasonable opportunity of arresting the defendant ship within—
(a) the jurisdiction of the court, or
(b) the territorial sea of the country to which the plaintiff's ship belongs or in which the plaintiff resides or has his principal place of business,
shall extend the period allowed for bringing proceedings to an extent sufficient to give a reasonable opportunity of so arresting the ship."
(1) This rule applies if, in a claim in rem, security has been given to—
a. obtain the release of property under arrest; or
b. prevent the arrest of property.
(2) The court may order that the—
a. amount of security be reduced and may stay the claim until the order is complied with; or
b. claimant may arrest or re-arrest the property proceeded against to obtain further security.
A discretionary extension under section 190(5)
"Any court having jurisdiction in such proceedings may, in accordance with rules of court, extend the period allowed for bringing proceedings to such extent and on such conditions as it thinks fit."
No rules of court have been made pursuant to section 190(5).
Error of procedure
"Where there has been an error of procedure such as a failure to comply with a rule or practice direction—
(a) the error does not invalidate any step in the proceedings unless the court so orders; and
(b) the court may make an order to remedy the error."
"The general words of r.3.10 cannot extend to enable the court to do what r7.6(3) specifically forbids, nor to extend time when the specific provision of the rules which enables extensions of time specifically does not extend to making this extension of time. What Mr Vinos in substance needs is an extension of time – calling it an error does not change its substance. … The first question for this court is not whether Mr Vinos should have a discretionary extension of time, but whether there is power under the CPR to extend the period for service of a claim form if the application is made after the period has run out and the conditions of r7.6(3) do not apply."
a. The claimants' application for an order confirming that liability for the collision has been settled is dismissed.
b. So too are the claimants' applications for an extension of time and for the remedying of an error of procedure.
c. There will be a declaration that the claim form has not been validly served and that the court has no jurisdiction to try this claim.
d. The defendants' application for the striking out of the claim and/or for summary judgment does not arise.