The plaintiffs owned the vessel Popi. The defendants owned the vessel Gniezno. Both vessels collided in the South Kattegat on 7 March 1963. On 2 May 1963 both parties exchanged guarantees to provide security for their respective claims. Both guarantees were given by the West of England Steam Ship Owners' Protection & Indemnity Association Ltd. The guarantee in respect of the plaintiffs' claim was limited to GBP 15,000 (excluding interest and costs), while the other guarantee in respect of the defendants' claim was limited to GBP 45,000 (excluding interest and costs). Following a request for a three months' extension of the two-year time limit under the Maritime Conventions Act 1911 (UK) (the MCA), the plaintiffs granted an extension on 22 February 1965 on condition that the insurers of the Gniezno agreed English jurisdiction.

On 26 February 1965, the plaintiffs issued a writ in rem against the Gniezno (the Popi action). The plaintiffs also issued a second writ against the defendants' sister ships. Having the smaller claim, the plaintiffs took no steps to serve either writ. Between February and September 1965, negotiations took place. On 4 October 1965, the plaintiffs agreed for a further extension of time to 7 November 1965. On 3 November 1965, the defendants issued a writ in rem against the Popi (the Gniezno action), which was brought on behalf of cargo-owners as well as shipowners. On 26 October 1966, the defendants asked the plaintiffs to accept service of the writ in the Gniezno action. The plaintiffs refused. The writ in the Gniezno action was renewed until 2 May 1967. On 29 December 1966, the defendants' solicitors entered an appearance in the Popi action even though the writ in that action had not been served. On the same day the defendants filed and served a notice of counterclaim. The plaintiffs desired to discontinue their action but only if the defendants cannot proceed with their counterclaim. Both parties applied to the Court in the Popi action.

The plaintiffs applied to set aside the defendants' purported appearance, any purported service of the writ, and the defendants' notice of counterclaim. First, they argued that the defendants' appearance was invalid because it was made voluntarily to an expired writ. Second, they argued that the notice of counterclaim was an ineffective proceeding not authorised by the Rules of Court. They contended that a counterclaim could not be commenced by filing or serving a notice of counterclaim but only by a proceeding directed or recognised by the Rules of Court. They argued that the only way in which a defendant could gain the status of a counterclaimant was by serving a defence and counterclaim on the plaintiff at the proper time. Even if there were certain exceptional cases under the Rules of Court where it was possible for a defendant to gain the status of a counterclaimant at some earlier stage of an action, it was not possible for the defendant to do so by filing or serving a notice of counterclaim; that was a proceeding neither directed nor recognised by the Rules of Court and was, therefore, a nullity. The plaintiffs relied on the Supreme Court of Judicature (Consolidation) Act 1925 (UK) s 39 and the Rules of Court O 15 rr 2 and 3. The plaintiffs also argued that the claim to which the Notice of Counterclaim related was not maintainable by reason of the time-bar under s 8 of the MCA.

Meanwhile, the defendants applied for an extension of time under s 8 of the MCA to permit them to pursue their counterclaim. The defendants argued that they were entitled to proceed with a counterclaim even if the plaintiffs discontinued. They contended that service of a notice of counterclaim was in accordance with a long-standing practice in collision cases in the Admiralty Court and should be accepted as a valid proceeding conferring on a defendant the status of counterclaimant.

Held: Notice of counterclaim set aside.

The Court refused to set aside the defendants' appearance.

On the time-bar point, the MCA s 8 provides for a two-year period for claims of the kind made in this action and the Court may extend that period for good cause in certain cases and must extend it in other cases. The Court accepted the concession that 'action' in MCA s 8 includes a proceeding by counterclaim. There is no provision in the MCA, comparable with section 28 of the Limitation Act 1939 (UK), whereby for limitation purposes the date of a counterclaim is taken as the date of the writ. The time for either side to claim or counterclaim in respect of the collision originally expired on 6 March 1965. There was an agreed extension, so far as the defendants were concerned, to 7 November 1965. The position, therefore, is that any action begun or counterclaim raised by the defendants after that date, ie 7 November 1965, is prima facie out of time under the statute, and can only be maintained if the Court grants an extension of time. It follows that, if the present action were to proceed to the stage where a defence and counterclaim were delivered, that counterclaim would be out of time; but the writ in the Gniezno action was issued within the period of two years as extended by agreement, and that, therefore, if that action was proceeded with, the claim in it would not be out of time. The writ in that action is still in force, having been renewed.

Given that there was no counterclaim, it was unnecessary to determine the question of extension. The Court made no order on either the plaintiffs' application for an order that a counterclaim was not maintainable or the defendants' application for an extension of time. Nevertheless, this was an interlocutory decision and parties could still apply to the Court should the situation change. The Court also noted that the defendants were considering steps to proceed with the Gniezno action by amending that writ (which was issued in time and still valid for service) to make it a writ in personam. Given that the defendants had open to them the possibility at least of proceeding with an action which is in time, there was no need to give them leave to proceed with a counterclaim in this action.