On 13 July 1987, the ship Valor was lying at berth in Lagos, Nigeria, when it was struck by the defendants' ship Seaspeed America. The Valor was owned by the first plaintiffs and on bareboat charter to the second plaintiffs. The Seaspeed America was under the care of a local pilot for whose negligence its owners were responsible. The Seaspeed America was entered with the Standard Steamship Owner's Protection and Indemnity Association (Bermuda) Ltd (the club).

On 4 August 1987, the Hong Kong office of Holman, Fenwick and Willan (Holmans) was instructed by the plaintiffs. Holmans prepared a 'new case slip' but entered an incorrect time bar of 12 July 1987 (instead of 12 July 1989). Consequently, the person dealing with the case did not receive reminders.

Holmans gave the club an estimate of the claim and asked for confirmation that the club was prepared to provide security and agree to English law and jurisdiction. On 10 August 1987, the club agreed to English jurisdiction and stated that they would cause solicitors to be appointed to accept service of any proceedings issued. The club sent to Holmans their undertaking to pay on that day. On 12 and 13 August 1987, Holmans and the club discussed liability. Holmans was prepared to undertake to produce a 'fully documented claim expeditiously' upon admission of liability. The club confirmed that Seaspeed America admitted liability. Thus, the only remaining question was the quantum which the club undertook to pay. The amount could not be determined until the repairs were carried out.

Throughout 1988, parties negotiated on quantum. On 20 December 1988, Holmans suggested that the club make an offer of settlement. But the club had no instructions to do so. The Valor entered a shipyard in Singapore. The club had their own surveyor there. The final repair account was not approved until 8 March 1989. Thereafter the owners had to consider it with other documents. Calculations had to be made by the managers. Holmans had to prepare the claim together with supporting vouchers. Holmans sent it to the club on 26 June 1989 and stated:

Our instructions are to the effect that failing very prompt agreement to the claim more formal action will be taken.

The club did not respond. According to the club's evidence, this was not out of deviousness, because the club did not have the time bar in mind. The club only became aware of the time limit when they were notified by the plaintiffs' solicitors.

On 19 July 1989, Holmans reminded the club to respond. At that time neither side appreciated that the time limit had already expired. On 21 July 1989, Holmans discovered that the time limit had expired nine days earlier. Holman's London office was contacted on a Friday. The writ was issued the following Tuesday after consultation with counsel. Holmans telephoned the club on 28 July to point out the expiry of time. By then the club had had over four weeks to respond. They did not respond. Holmans admitted that time was exhausted because of an oversight on their part but stated that they were lulled into a false sense of security by the state of negotiations.

The plaintiffs applied for an extension of time. The issue was whether the Court should exercise its discretion to extend time by 13 days under the proviso to s 8 of the Maritime Conventions Act 1911 (MCA).

Held: Application allowed.

There was good reason for extending time due to the following circumstances: (1) admission of liability; (2) parties were negotiating about quantum. The plaintiffs were not ready to send their claim to the club until 26 June 1989, because they did not receive the account for the permanent repairs until March 1989. The time limit expired while they were waiting for a reply from the club; and (3) the club's representative was not concerned with the time limit until solicitors for the plaintiffs drew his attention to that.

The club might have taken more than two weeks from 26 June 1989 to evaluate the claim. Nevertheless, as a matter of courtesy the club could have replied to ask for more time while avoiding the costs of issuing a writ.

A plaintiff with a strong case has nothing to lose by issuing a writ because it will recover the cost involved. But issuing a writ immediately after the club's admission of liability is a waste of costs, because parties were clearly negotiating on the basis that litigation would be unnecessary. The threat to take formal action was probably intended to goad the club to send an early reply. If a writ had been issued on, say, 29 June (only two weeks before the expiration of the time limit) the club would have complained of insufficient time to consider the claim. There was no reason for Holmans to think that there would be any dispute about which to litigate until the club replied. The only question would then be whether the cost of the repairs was reasonable. The club had sent their surveyor to the repair yard. Clearly it was the intention of the parties to settle this claim by agreement. But the club had failed to respond.

As to MCA s 8, after referring to Lubovsky v Snelling [1944] 1 KB 44 (CA) (Lubovsky), Lord Evershed MR in The Sauria and Trent [1957] 1 Lloyd's Rep 396 (CA) (The Sauria and Trent) 401 said:

this was simply an admission that the plaintiffs … need not concern themselves in whatever steps would otherwise be necessary to prove negligent navigation on the part of the owners of the tug. Beyond that, I cannot see that what passed in the correspondence involved any concession which would amount to a promise, an enforceable promise, to waive the right to plead the statute if the plaintiffs did not start proceedings until the statutory period had run out. … having regard to the very slow speed with which the solicitors appeared to have conducted this correspondence, that, had the summons been issued somewhat late, a week or two after the two years had expired … the Court should and would in the exercise of its discretion under the proviso to the section have extended the time accordingly.

The approach of Lord Evershed in The Sauria and Trent would be adopted. The course of the negotiations lulled the plaintiffs into failing to watch the passage of time. The defendants were unaware of the passage of time. It would be unjust if this action were not to be allowed to proceed.

The discretion under the proviso to MCA s 8 to extend the time limit of two years 'to such extent and on such conditions as it thinks fit' was not part of the Convention signed at Brussels on 23 September 1910. In art 7 of the Convention the High Contracting Parties reserved to themselves the right to provide, by legislation in their respective countries, that the said periods shall be extended in cases where it has not been possible to arrest the defendant vessel in the territorial waters of the State in which the plaintiff has his domicile or principal place of business. They did not reserve the right to provide for a general discretion.

The period of two years is agreed internationally. The Court will only extend that period if in all the circumstances of the case there is good reason for doing so: The Llandovery Castle [1920] P 119, 125 (CMI2651).

Parliament has not defined or sought to limit the circumstances in which or the extent to which the Court may extend the time limit. Parliament has left those matters to the Court and has given the Court power to impose conditions. It is not possible to define or circumscribe the scope of the expression 'good reason': Kleinwort Benson Ltd v Barbrak Ltd (The Myrto (No 3)) [1987] AC 597 (HL) 622. Whether there is or is not good reason in any particular case must depend on all the circumstances of that case. If the expression 'exceptional circumstances' conveys a large degree of stringency, then it would be preferable not to use it, as used in The Gaz Fountain [1987] 2 Lloyd's Rep 151 (CMI2678).

Subsequently, on 7 March 1990, the defendants were refused leave to appeal: Asianic International Panama SA v Transocean Ro-Ro Corp [1990] Lexis Citation 1320.