The claimants' fishing vessel, the Saint Jacques II, collided with the first defendant's vessel, the Gudermes. The first defendant commenced an action against the claimants to recover damage caused to its ship and the cargo carried on board the Gudermes. The second and third defendants were the cargo owners. The defendants’ claim was in the region of USD 700,000.

The claimants commenced limitation proceedings and sought a decree under the Merchant Shipping Act 1995 (UK) (the Act), to constitute a limitation fund and to limit their liability to the sum of GBP 76,000. The relevant limitation of liability regime is that of the Convention on Limitation of Liability for Maritime Claims 1976 (the LLMC 1976), which was enacted in Sch 7 of the Act.

The defendants opposed the claimants' entitlement to limit and relied on art 4 of the LLMC 1976. The defendants argued that, because the collision was caused by the personal act or omission of the claimants and was committed recklessly and with such knowledge that such loss would probably result, the claimants were not entitled to limit their liability.

The claimants applied for summary judgment against the defendants and for the defendants' defence to be struck out on the grounds that the defendants had no real prospect of defending the claim and that there was no compelling reason why the claim should be disposed of at trial.

At first instance, the Admiralty Registrar dismissed the claimants’ application. The claimants appealed.

Held: Claimants’ appeal dismissed.

For reasons of policy, the right of shipowners and certain others to limit their liability is long-established in English law and is now contained in the LLMC 1976. Three features stand out when the Convention is compared with its predecessor Convention, the International Convention relating to the Limitation of the Liability of Owners of Seagoing Ships 1957 (the LLMC 1957); the Convention provides: (i) for a higher limit of liability; (ii) that the burden of proof now rests on the party seeking to 'break' the limit; (iii) that that burden is (intentionally) a very heavy burden.

Having regard to the scheme of the Convention and the authorities to which reference has already been made, the Court noted that it was plain that the first defendants needed to surmount a formidable hurdle to succeed in resisting summary judgment, quite apart from succeeding at trial. In practical terms, in the collision context, it was likely that only truly exceptional cases will give rise to any real prospect of defeating an owner's right to limit. However, this was an exceptional case which had to go to trial for the following reasons.

First, an element of recklessness was established under art 4 of the 1976 Convention. The skipper of the claimants' fishing vessel was asleep and not at the wheelhouse in the final minutes leading to the collision. Further, the claimants' fishing vessel was involved in reckless navigation across the Dover Straits Traffic Separation Scheme. At the material time, it crossed the South West Traffic Lane on a heading against the flow of traffic and was therefore in breach of r 10 of the Convention on the International Regulations for Preventing Collision at Sea 1972 (the Collision Regulations). The vessel was essentially a 'rogue' vessel in flagrant breach of the Collision Regulations. It had also been a recurring practice for the claimants' fishing vessel to navigate in such a reckless fashion.

Second, the Court found that the claimants might have had knowledge under art 4 of the LLMC 1976 that a collision would probably result from the recklessness displayed. On the facts of the appalling navigational practice conducted under the personal direction of the claimants, coupled with the obviousness of the risk of collision, the Court found that it would be permissible and open to infer that the claimants had actual knowledge that a collision would probably result. Further, the Court decided that the element of knowledge could also be determined through the process of cross-examination at trial.

In light of the above, the Court held that the case was suitable to go to trial as there was a real prospect that the defendants could succeed in objecting to the claimants' right to limit their liability.