On 4 September 1936, the auxiliary motor yacht Snowbird collided with the tug Fairplay XIV in German waters. After the collision, negotiations regarding limitation occurred in Germany.

On 23 August 1938, the owner of the Snowbird, Mr EG Keiner, issued a writ and arrested the Fairplay XIV in England. The defendants, the owners of the Fairplay XIV, entered an appearance on 31 August 1938.

A motion was brought by the defendants for leave to prosecute a counterclaim. The defendants asked that the plaintiff’s action be stayed pending the deposit of security.

The plaintiff claimed that the defendants were out of time under the Maritime Conventions Act 1911 (UK) (the Act). The defendants denied this, arguing that the plaintiff had caused the delay by not arresting the Fairplay XIV until the term had nearly expired. In the alternative, the defendants asked the Court to exercise its discretion and give them special leave to enter their counterclaim. The plaintiff claimed, among other things, that as there had been negotiations in Germany, the defendants could have brought an action there. The defendants pointed out that, as a result of the collision, the Snowbird sank but was salved in circumstances that made it a constructive total loss. Therefore, there was at no material time a res against which the defendants could take action.

Held: Motion succeeded.

The defendants argued that s 8 of the Act (based on art 7 of the Collision Convention 1910) does not apply to a defendant who wishes to counterclaim by virtue of the terms of s 34 of the Admiralty Court Act 1861 (Imp) (the 1861 Act). Section 34 provided:

The High Court of Admiralty may, on the Application of the Defendant in any Cause of Damage, and on his instituting a Cross Cause for the Damage sustained by him in respect of the same Collision, direct that the Principal Cause and the Cross Cause be heard at the same Time and upon the same Evidence; and if in the Principal Cause the Ship of the Defendant has been arrested or Security given by him to answer Judgment, and in the Cross Cause the Ship of the Plaintiff cannot be arrested, and Security has not been given to answer Judgment therein, the Court may, if it think fit, suspend the Proceedings in the Principal Cause, until Security has been given to answer Judgment in the Cross Cause.

The second part of s 34 of the 1861 Act was subject to the condition precedent in the first part that the defendant had instituted a cross-cause for the damage sustained by it. Section 8 of the Act was applicable to this case, notwithstanding the wording of s 34 of the 1861 Act. In other words, the defendants, as soon as they were attacked, ought to have done one of two things. They ought to have taken out a cross-writ before 4 September 1838, which would have put it in time; or, if time had permitted, have put in a counterclaim. The defendants could not counterclaim by 4 September 1938 because the plaintiff’s statement of claim had not then been delivered, but they could take out a cross-writ.

Therefore, the defendants, notwithstanding entering an appearance within the two years, had to come to the Court under the proviso of the section and ask for an extension of time. The defendants were content not to prosecute their claim until the offensive was taken against them. The offensive was not taken until 11 days before the two years had expired. Unless the plaintiff could arrest the ship, it would have been barred by the section as far as its own action was concerned. But s 34 of the 1861 Act was obviously intended to effect some sort of reciprocity between claims and counterclaims in respect of a collision. Having regard to the fact that both parties were discussing the situation with reference to possible claims in the German courts soon after the collision, there really was no hardship to the plaintiff, who did not pursue his claim in Germany, in being confronted with the counterclaim to his claim, now that he intends to pursue it in England. When the matter comes to be tried, all the witnesses will be relevant on both the claim and counterclaim.

The defendants made out a very strong prima facie case for an extension of time, and the plaintiff's response was that he had obtained a statutory right to protection that should not be interfered with. If the defendants were seeking to attack the plaintiff without being provoked to do so by the plaintiff, that would have been a strong argument. But it is rather ridiculous that having brought his claim here within the time limit, the plaintiff should be able to stand upon a statutory right to protect himself from a counterclaim which, in substance, may be an answer to the claim that he is putting forward.

In the circumstances of this case, a greater hardship would be caused by debarring the defendants from putting forward their counterclaim than can possibly be caused to the plaintiff by allowing the counterclaim to proceed. It would be a manifest injustice if the plaintiff were allowed to proceed as if there were no counterclaim, when, on the same material, and without any increase of expense that was worth considering, the matter could be tried out with both sides’ case before the Court, and that, whatever is the result, it will be arrived at fairly and equitably between the two. The interest of justice demanded that this counterclaim should be allowed to go forward.

The defendants, who could have taken the necessary step of issuing a writ within two years, must pay the costs of the motion.