The first defendant owned the vessel World Harmony, which on 14 December 1960 collided with the Peter Zoranich in the Bosphorus, Türkiye. Fire from the World Harmony spread to the Peter Zoranich, which then drifted and collided with the Tarsus, which also caught fire. All three vessels were declared constructive total losses. The Tarsus was under time charter to the first plaintiff. The Tarsus was sub-chartered to the second plaintiffs on a consecutive voyage basis. At the time of the collision the Tarsus was off-hire and was to be re-delivered to the first plaintiff on 15 December 1960. The plaintiffs had operated the Tarsus on a series of cruises during 1960 and had planned a further series for 1961.

A Commission of Inquiry found that the World Harmony was 80% to blame. The owners of the three vessels agreed in 1961 that the first defendants and the owners of the Peter Zoranich were to pay the owners of the Tarsus one half of their proved claim for damages. In 1961, the plaintiffs also commenced arbitration proceedings against the owners of the Tarsus and obtained a favourable award in January 1963 that the plaintiffs were nevertheless dissatisfied with.

On 13 December 1962, the plaintiffs issued a writ in personam and claimed damages for negligent navigation against the first defendant, the second defendant (a ship management company), and the third defendant (a Greek shipowner) who had previously spoken as (or on behalf of) the owner of the World Harmony. The plaintiffs alleged that the World Harmony was sailing without a port pilot, insufficiently crewed, and not free of gas. While the plaintiffs' claim was based solely upon financial loss, there was evidence suggesting that the plaintiffs owned some chattels on the Tarsus. The plaintiffs also sued the defendants in the Southern District Court of New York, which were subsequently dismissed. Greek proceedings were still pending.

On 12 November 1963, the first plaintiffs instructed solicitors to serve the writ. The writ was amended on 18 November 1963 and was served on the second defendants on 21 November 1963. On 25 November 1963, the second defendants entered an unconditional appearance. Upon the plaintiffs' application, a registrar of the Admiralty Court renewed the writ for a further six months after its original expiry on 12 December 1963. The Registrar also granted leave to the plaintiffs to issue concurrent writs for service abroad upon the first and third defendants. Following service of the writ on the first defendants on 11 May 1964, the first defendants entered a conditional appearance on 22 June 1964. The third defendant had not been served with the writ. The first and second defendants applied to set aside the writ and to stay proceedings. The first defendants also applied to set aside renewal of the writ, service thereof, and to be no longer a party to the action.

The defendants argued that the Court had no jurisdiction to entertain an action in personam against the first defendants in that at the date of the issue of the writ none of the conditions of s 4(1) of the Administration of Justice Act 1956 (UK) (the AJA), was fulfilled. The defendants argued:

First, the first defendants had no place of business within England and Wales as required by AJA s 4(1)(a).

Second, that when one writ was issued no action arising out of the same incident was proceeding in the Court nor had any such action been heard and determined in the Court, as required by AJA s 4(1)(c).

Third, that proceedings previously brought by the plaintiffs in a foreign court had not come to an end, as required by AJA s 4(2).

Fourth, that the Registrar wrongly exercised his discretion to renew the writ against the first defendants.

Fifth, that the plaintiffs had not shown a cause of action against any of the defendants, since neither the first plaintiff as the time charterer of the Tarsus nor the second plaintiff as a sub-charterer had such a property in, or possession of, the ship as would enable them to recover damages for negligence against a wrongdoer who had sunk or damaged the Tarsus.

The defendants highlighted that the purported cause of action against them was subject to s 8 of the Maritime Conventions Act 1911 (UK) (the MCA). The defendants contended that the decision to renew the writ against the first defendants was an erroneous exercise of discretion by the Court. The defendants argued that it is unjust to deprive the first defendants of a statutory time-bar defence after almost three years' delay.

Held: Application allowed.

As to AJA s 4(1)(a), determining whether the first defendants had a place of business within England and Wales is a question of fact. The first defendants carried on business at the second defendants' London office. On the evidence, there was a close liaison between the first and second defendants, even though they were separate legal entities. The second defendants operated and controlled the World Harmony on a day-to-day basis. It is irrelevant that the second defendants might have concurrently operated ships for many other companies as well.

While the Court was referred to several cases (The Lalandia [1933] P 56, 63; Dunlop Pneumatic Tyre Co Ltd v Actien-Gesellschaft für Motor und Motorfahrzeugbau vorm Cudell & Co [1902] 1 KB 342 (CA); Saccharin Corp Ltd v Chemische Fabrik von Heyden Aktiengesellschaft [1911] 2 KB 516 (CA); Grant v Anderson & Co [1892] 1 QB 108 (CA); Okura & Co Ltd v Forsbacka Jernverks Aktiebolag [1914] 1 KB 715 (CA) 718; La Bourgogne [1899] P 1 (CA) 12; The Princesse Clémentine [1897] P 18), none of them were helpful beyond a very limited degree, as none of them were similar to the present case where there was no evidence of active running of the World Harmony elsewhere in the Western Hemisphere than here in London (ie the address of the second defendants). It is apparent that the method of operating the ships of the first defendants differed from the older established way, where a company engaged in shipping had head offices in the country of their foundation and principal activities, some with branch offices, others with agencies in other countries, if their business was sufficiently widespread to make it worthwhile. The Court should look at the facts and not the technicalities.

The Court rejected the defendants' argument on AJA s 4(1)(c). At the time of issuance of the writ, the action against the first defendants was proceeding concurrently with the action against the second defendants; both actions were instituted simultaneously on the same writ.

The Court also rejected the defendants' argument on AJA s 4(2), given that the other proceedings overseas were commenced only after the commencement of local proceedings in the UK. The Greek proceedings were instituted subsequent to those in the UK. Proceedings in the US were begun on the afternoon of 13 December 1962 in New York, while proceedings in the UK were begun at 15h35 GMT on the same day. The Court found that the proceedings in the US and the UK were neither previous or subsequent to the other, preferring not to deal with periods less than a day when considering such matters. Alternatively, if such periods had to be accounted for, the time zone difference shows that the US proceedings were instituted five hours later.

The imperative part of the MCA s 8 to extend time, which only concerns actions in rem, does not apply here. Only the discretionary part remains. There was little justification for renewal of the writ in December 1963. Extension of time is not, and should not be, granted as a matter of course even if it is applied for during the currency of the writ: Battersby v Anglo-American Oil Co Ltd [1945] 1 KB 23 (CA) 32. The writ was issued about two years after the collision: the limit of time allowed under the MCA. The application to renew the writ was not made until almost a year later. Almost three years had elapsed before any real action was taken against the first defendants. The writ was only served on the first defendants nearly three and a half years after the collision. The steps to be taken were neither complicated nor difficult, and the fact that the plaintiffs were abroad was not very material in these days of rapid and easy communication. The plaintiffs have been far too dilatory. The plaintiffs should have made much earlier efforts to serve the first defendants out of the jurisdiction. This was not a proper case for extending time under MCA s 8. Accordingly, the first defendants, though having a place of business in the UK, have been served out of time. The writ no longer runs against them.

Another important issue was whether the plaintiffs' affidavit disclosed a cause of action in law against any of the defendants. The plaintiffs must show a prima facie case in law, or else the action is not properly brought. But there was no reported case in the long history of chartering where a time charterer has recovered damages for pecuniary loss because of damage by a third party to the chartered vessel. Although the reported cases on this topic (The Zelo [1922] P 9; La Société Anonyme de Remorquage a Hélice v Bennetts [1911] 1 KB 243, 248; Chargeurs Reunis Compagnie Francaise de Navigation a Vapeur (Ceylan) v English & American Shipping Co (Merida) (1921) 9 Ll L Rep 464 (CA) 465) were all prior to Donoghue v Stevenson [1932] AC 562 (HL) (Donoghue), Donoghue and other cases following Donoghue are distinguishable on the facts and are irrelevant to the question in this case. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (HL) is also distinguishable on the facts. This Court cannot hold that a time charterer can recover in the circumstances of this case. The plaintiffs have not shown a good arguable case.

Bearing in mind the concurrent proceedings in Greece, the Court decided to stay the proceedings in the UK until the Court was satisfied that the plaintiffs have permanently discontinued their action in Greece. Furthermore, the plaintiffs' claim should be restricted to proving loss of chattels or goods on the Tarsus at the time of the collision.