Web alert: Two-stage test to be applied to applications for extensions of time, for commencement of a collision claim

The recent decision in the case of CDE S.A. v Sure Wind Marine Limited EWHC 720 (SB Seaguard c/w Odyssée) has confirmed the test to be applied to applications for an extension of time pursuant to s.190(5) of the Merchant Shipping Act 1995 (MSA 1995).

S.190(3) MSA 1995 applies to maritime collision actions which are subject to English law and allows a limitation period of two years within which to bring a claim against the other vessel, subject to two statutory exceptions.

The exceptions, which are respectively described as the ‘discretionary’ and ‘mandatory’ limbs, are contained in s.190(5) and (6). S190(5) provides:

(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.

Background
On 17 April 2011 a collision occurred between the SB SEAGUARD and the ODYSEE off the coast of Ramsgate, England. Although the parties had until 17 April 2013 to bring a claim against the other, the claimant did not issue proceedings until 23 December 2013, and on 20 January 2014 thereafter made an application for an extension of time.

The claimant pleaded that their claims handler had been 'lulled into a false sense of security' by the defendant and argued that the court should apply a one-stage test under CPR 7.6(3) to determine the result of the application, specifically, whether an extension complies with the 'Overriding Objective' to act justly, as set out in CPR 1.

The defendant, however, submitted that the appropriate test was the two-stage test laid down by the Court of Appeal in The Al Tabith [1995] 2 Lloyd’s Rep 336:

1. Whether there is a justifiable good reason why the claim had not been commenced within the time limit, and
2. If the first stage is satisfied, whether there are special circumstances why the court should exercise its discretion to extend the time limit.

Judgment
The court dismissed the claimant’s application for an extension of the time limit and ordered that the claimant’s claim be dismissed.

The court held that the two-stage test correctly applied and that the claimant had failed to demonstrate that there was a 'good reason' for the court to grant an extension:

• the fact that negotiations were continuing were irrelevant in the absence of an agreement between the parties that time would be extended.
• there was no duty upon the defendant to warn or remind the claimant that the time limit was about to expire, or even that the defendant intended to rely upon it as a defence.
• one cannot be 'lulled into a false sense of security' about a situation of which one is not aware.

Furthermore, the court said that it would not have exercised its discretion to allow the application in any event, as it had not been made promptly and such failure was not trivial (Mitchell v News Group Newspapers Ltd.)

Conclusion
This case appears to have reaffirmed the two-stage test to be applied to applications for extension of time under s.190(5) MSA 1995. It serves as another example of the court’s strict approach to delay - mistake, oversight or ongoing negotiations are not 'good reasons' why there has been a failure to commence proceedings within the statutory time limit.

This article intends to provide general guidance on the issues arising as a matter of English law. It is not intended to provide legal advice in relation to any specific query. The law is also not static and if, in doubt, The Standard Club is always on hand to assist.