Panamax Star Owners &/or Bailees of the Cargo of the Ship) v Auk (Owners of the Ship)

This is an application by the Defendant to strike out the claim on the grounds of want of prosecution and/or abuse of process

This is a collision action. On the 21^st May 1999 the “Panamax Star” struck the anchored vessel “Auk” in the Amazon River. The “Auk” had anchored with the assistance of a pilot who had informed the Master that this was the customary safe anchorage. The vessel had been anchored there for two days before the “Panamax Star” collided with her. It is alleged that the anchorage position was unsafe and that “Auk” was yawing excessively. This is denied.

The claim form was issued in May 2000 and served in May 2001. The parties then agreed to a suspension of the procedural timetable up to May 2004. Thereafter the only step taken was the filing of collision statements of case in 2005. There followed sporadic without prejudice discussions but no steps in the action were taken between 2005 and the Claimant’s application in March 2013 to list a CMC.

The Defendant contends that this extraordinarily long period of delay is an abuse of process, has caused it serious prejudice, means that a fair trial will no longer be possible and that the claim should accordingly be struck out.

The evidence at the hearing consisted of two witness statements from each of the solicitor acting for the Claimant, Mr Johnson of Davies Johnson & Co, and the solicitor acting for the Defendant, Mr Wallis of Hill Dickinson LLP, together with various exhibits.

The claim form was issued on the 19^th May 2000. It was served on the 11^th May 2001. On 14^th May 2001 the Claimant’s then solicitors, Ince & Co, informed Hill Dickinson that the claim form was only issued to protect time and that there was no great desire on the part of the Claimant to press on with the proceedings.

On 25^th May 2001 Ince wrote to the court stating that the parties were at present content to continue dealing with the matter outside the strict confines of the court procedure and that it was agreed that the procedural timetable be suspended.

On the 1^st February 2002 Ince wrote to the court stating that the parties remained content that the timetable remain suspended. On 1^st May 2002, in response to a request by the court, Ince wrote stating that the parties remained content for the timetable to remain suspended. On 30^th July 2002, following a further request by the court, Ince wrote stating that the parties remained content that the timetable remain suspended and letters to a similar effect were written on the 11^th December 2002 and on 2^nd July 2003, the latter following a further request from the court.

On 2^nd February 2004 Ince wrote to the court explaining that the parties remained content that the timetable was to remain suspended but that there had been recent developments in Brazil which might impact on the progression of the claim.

On 23^rd April 2004 there was a telephone discussion between Ince and Hill Dickinson. In that conversation, Hill Dickinson pointed out that it was now nearly five years after the collision and that the issues ought to be clear and it was unacceptable to the Defendant that the matter be kept open simply to see if an opportunity for Panamax Star to bring proceedings in the UK might arise as a result of the outcome of the maritime enquiry in Brazil.

This was a reference to the proceedings which had been taking place in Brazil. These consisted of an initial Port Captaincy Inquiry followed by Admiralty Court proceedings by the Navy Prosecutor. Judgment in the proceedings was given on 30 October 2003; the Master of “Panamax Star” was fined R$1,000 and the pilot of “Auk” was fined R$500. Appeals followed, in which the penalty payable by the Master of “Panamax Star” was reduced to R$500 and the conviction of the pilot of “Auk” was overturned. These proceedings had run their course by 2005.

On 16^th September 2004 the court noted that no steps had been taken and enquired as to the position. On the 30^th September 2004 Hill Dickinson responded to a request by Ince to agree to continue a stay by stating that the Defendant was no longer willing to do so.

On 1^st October 2004 Ince informed the court that parties no longer agreed to suspend the timetable and that the Claimant was considering the future conduct of the matter. On 8^th October 2004 Ince gave formal notice to proceed.

On 11^th February 2005 the Claimant served its collision statement of case. Thereafter Ince chased Hill Dickinson for the Defendant’s collision statement of case. Hill Dickinson’s position was that they would rather discuss the merits of the case than proceed to service of the Defendant’s collision statement of case.

On 22^nd June 2005 the court chased for an update. On 23^rd June 2005 Ince informed the court that the Defendant was expected to file its collision statement of case shortly, following which it was proposed to have a without prejudice meeting which it was hoped would lead to the settlement of liability without troubling the court.

On 29^th June 2005 the Defendant served its collision statement of case.

On 21^st July 2005 the court asked Ince to fix a date for a CMC. Ince replied that it was not aware that the Defendant had filed its collision statement of case but that Ince did not consider a CMC to be necessary and that they would revert in three months.

On 16^th August 2005 collision statements of case were exchanged.

On 7^th November 2005 the court chased Ince for an update. On 10^th November 2005 Ince wrote to the court stating that the parties had recently filed collision statements of case, that steps were being taken to explore whether the matter could be disposed of without progressing it in court and that it was not necessary to fix a CMC.

On 28^th February 2006 Ince responded to a chasing fax from the court stating that the parties had held a without prejudice discussion and that a further meeting was scheduled.

On 4^th May 2006 the court asked for an update. On 10^th May 2006 Ince informed the court that they had formulated a draft claim which had been forwarded to the other side and that it was anticipated that a further meeting would be held.

On 11^th August 2006 Ince informed the court, in response to a request, that a meeting was recently held and that at present there was no need to trouble the court. This was the last communication with the court until the application to fix a CMC was issued on 1^st March 2013.

Between August 2006 and May 2008 there were no exchanges between the parties. In May 2008 Ince provided some experts reports in relation to the movements of “Auk” and the topography of the river.

In the following two years there were sporadic discussions and attempts to settle the case. On 2^nd June 2009 the Claimant made a part 36 offer. This was based on the Panamax Star being 90% to blame for the collision and the Auk being 10% to blame. Hill Dickinson’s response was to propose a drop hands settlement.

On 19^th May 2010 the Claimant made a further part 36 offer. This was 92.5% in the Defendant’s favour. The Defendant’s response was to repeat an offer it made in February 2010 of US$20,000 in full and final settlement. No response was received to that offer and there were no further exchanges after October 2010 until 5^th January 2012 when the Claimant’s new solicitors, Davis Johnson & Co,were instructed and requested a meeting with Hill Dickinson.

On 6^th March 2012, Davis Johnson & Co came on the record for the Claimant. On 1^st March 2013 the Claimants issued an application for a CMC. On 8^th May 2013 the Defendant’s application to strike out was issued.

The issues in the proceedings are set out in the collision statements of case. The Claimant’s case in relation to the circumstances in which the collision occurred is as follows:

The Defendant’s response as set out in their collision statement of case is as follows:

The Claimant contends that the value of its claim is about US$4.7 million. The Defendant has a counterclaim of about US$32,000.

CPR Rule 3.4 provides that:

In support of its application the Defendant relies on 3.4(b) (abuse of process), 3.4(c) (breach of a rule and delay) and/or the court’s inherent jurisdiction.

The rule alleged to be breached is CPR 1.3 pursuant to which the parties are “required to help the court to further the overriding objective”. The overriding objective includes ensuring that the case is “dealt with expeditiously” (CPR 1.1(d)). This is considered further below.

Relevant authorities include Biguzzi v Rank Leisure[1999] 1 WLR 1926; Purdy v Cambran [2000] CP Rep 67; Walsh v Misseldine CAT 29th February 2000, and Asiansky v Bayer-Rosin (a firm)[2001] EWCA Civ 1792.

In Purdy v Cambran [2000] CP Rep 67, May LJ said:

In Walsh v Misseldine CAT 29th February 2000 (Stuart-Smith and Brooke LJJ), Stuart-Smith LJ said:

In Asiansky v Bayer-Rosin (a firm)[2001] EWCA Civ 1792 Clarke LJ stated:

In summary, the authorities provide the following guidance:

There are no hard and fast rules. The court has to make a broad judgment having regard to all relevant circumstances and the justice of the case.

The relevant circumstances may include the length of, explanation for and responsibility for the delay; whether the Defendant has suffered prejudice as a result and if so how it can be compensated for, and whether the delay is such that it is no longer possible to have a fair trial.

A defendant cannot let time go by without taking action so where delay does cause prejudice to him he cannot say that it is entirely the fault of the claimant.

In considering what is the just and proportionate order to make the court should have regard to the alternative sanctions to that of striking out provided by the CPR.

To commence or to continue proceedings which you have no intention to bring to a conclusion may constitute an abuse of process; see Grovit v Doctor [1997] 1 WLR 640: Habib Bank Ltd v Jaffer (The Times on 5 April 2000).

As Lord Woolf stated in Arbuthnot Latham Bank Ltd v Trafalgar Holdings [1988] I W.L.R. 1426 at p. 1437 :

Inordinate and inexcusable delay alone does not amount to abuse of process. However, it may do so if it involves a wholesale disregard for the rules of court with full awareness of the consequences; see Habib Bank Ltd v Jaffer at [10] per Nourse LJ.

Case management provisions for the Admiralty Court are contained in CPR PD 61, which provides:

No direction has been given under PD 61 para 2.1, and no case management directions have been given under PD 61 para 2.3.

CPR Part 61 and PD 61 contain no other provisions about the fixing of a CMC. CPR PD 58 also applies to Admiralty claims, except where it is inconsistent with CPR Part 61 or PD 61 (see PD 61 para 1.1). According to CPR PD 58 para 10.2, a claimant in a Part 7 claim must apply for a CMC within 14 days of the date when all the defendants who intend to file and serve a defence have done so. Para 10.4 provides that at a time earlier than that provided in para 10.2 any party may apply in writing to the court to fix a CMC. Para 10.5 provides that if the claimant does not make an application in accordance with para 10.2 any other party may apply for a CMC, and para 10.6 provides that the court may fix a CMC at any time on its own initiative.

The Claimant submits that in collision claims, defences are not served, so para 10.2 does not apply in terms. As such, there is no provision in the CPR or related practice directions which expressly require the claimant in a collision claim to apply for a CMC.

However, the Admiralty and Commercial Courts Guide contains guidance on case management in the Admiralty Court. At section para N8.1(ii) of the Guide it is stated that, in a collision case, the claimant should apply for a CMC within 7 days after the last collision statement of case is filed. It is stressed that this is guidance rather than a rule or practice direction.

Para N8.1(iv) provides that in a collision claim (or a limitation claim) a “mandatory case management conference will normally take place on the first available date 5 weeks after the date when the claimant is required to take steps to fix a date for the case management conference”. No mandatory CMC was ordered.

The Claimant submits that in these circumstances there was no breach of a “rule, practice direction or court order” for the purpose of CPR 3.4(2)(c).

In my judgment, it is by no means clear that Part Two of a defendant’s collision statement of case is not to be treated as a defence for the purpose of the CPR. Although the defendant has no prior sight of the claimant’s collision statement of case, Part Two is a stated case which relates to a claim made by a claimant and, if no counterclaim is made, it operates solely as a defence to that claim. Although its name has changed, its content is materially the same as that previously required in Part Two of a preliminary act under RSC Order 75 Rule 18. Order 75 Rule 18(3) provided that: “Part Two of the preliminary act shall be deemed to be the pleading of the person filing the preliminary act (in the case of the plaintiff his statement of claim and in the case of the defendant his defence and, where appropriate, his counterclaim)”. Part Two of a preliminary act was therefore expressly deemed to be a defence. Although there is no equivalent provision in CPR 61, there is no obvious reason why the change in name to collision statement of case should operate so as to change the nature of the stated case being provided by a defendant under Part Two.

It is correct that under CPR PD 58 para 10.2, a claimant in a Part 7 claim must apply for a CMC within 14 days of the date when all the defendants who intend to file and serve a defence have done so, whereas the Admiralty and Commercial Courts Guide states that that is to be done within 7 days after the last collision statement of case is filed. However, as the Claimant stresses, CPR PD 58 applies to Admiralty claims, except where it is inconsistent with CPR Part 61 or PD 61, and would prevail over any inconsistency with the Admiralty and Commercial Courts Guide.

Even if that analysis is wrong and the only requirement is that set out in the Admiralty and Commercial Courts Guide, that does not mean that there has been no breach of the rules. The Admiralty and Commercial Courts Guide make clear what is required to be done in a collision action. The claimant should apply for a CMC within 7 days of the filing of the last collision statement of case. This is something which he is required to do pursuant to his duty under CPR 1.3 to assist the court to deal with cases expeditiously so as to give effect to the overriding objective.

The Claimant further submits that CPR 1.3 is too general a rule to form a proper basis for an application to strike out. I do not agree. It all depends on the circumstances. Where the breach of the rule is as serious and stark as a failure to take steps in the action for over seven years it may well form a proper basis for a strike out.

The most relevant circumstances are as set out below.

There is no doubt that there has been extraordinary delay in this case.

The Claimant should have fixed a CMC in early July 2005. In the event it did not seek to do so until March 2013.

For a period in 2006 it may be said that there was a degree of acquiescence in this position by the court, but from August 2006 all communications with the court ceased.

Thereafter, there were occasional discussions between the parties and sporadic settlement negotiations, but they do not begin to excuse the long delay in taking any steps in the court proceedings. Further there were periods when nothing was being done at all, such as between August 2006 and May 2008, or where very little was being done, such as between October 2008 and May 2009, and June 2009 to February 2010. There was complete inactivity between October 2010 and January 2012. Further, it is a striking fact that when Davis Johnson & Co came on the record there was then a delay of a further year before the application for a CMC was issued.

I find that the delay in this case is inordinate and inexcusable and that the primary responsibility for this rests with the Claimant. Whilst it is correct that under the CPR there is a duty on Defendants to assist the court in the furtherance of the overriding objective, primary responsibility in progressing proceedings, and specifically fixing a CMC, rests with the Claimant. Nor is the Claimant relieved of that responsibility by reason of the fact that the court may of its own motion fix a CMC. Indeed, the fact that after numerous chasers the court stopped seeking further updates made it all the more important for the Claimant to take the initiative.

The overall culpable delay in this case is approximately seven years. Furthermore, that delay occurred in relation to proceedings that had already gone long beyond the allowable limitation period of two years for collision activity. As is well recognised, the later proceedings are left, the greater the responsibility to pursue those proceedings expeditiously.

If the action had proceeded expeditiously following the exchange of collision statements of case a trial should have been possible by the end of 2006. In the event the earliest possible trial would be the middle of 2014.

That delay is the result of a breach of the rules. The Claimant was obliged to fix a CMC pursuant to PD 58 para. 10.2. Alternatively, it was obliged to do so in the light of the guidance set out in the Admiralty and Commercial Courts Guide and its duty to assist the court to deal with cases expeditiously in accordance with the overriding objective. The Claimant’s then solicitors were well aware of the duty to fix a CMC, as borne out by their correspondence with the court. The breach of the rules in this case is egregious.

In summary, there was a persistent and serious breach of the rules. The length of the delay is extraordinarily long. There is no proper explanation for it. Primary responsibility for the delay rests with the Claimant.

It is the Defendant’s case that the issues to be tried are issues which will depend to a significant extent on the oral evidence, and in particular the evidence of the Masters of the two vessels. The pilots on both vessels are deceased, but both Masters are still available to give evidence.

The Defendant’s Master is now aged 66 and retired in 1999. Of particular importance will be evidence as to the heading of the “Auk” at the material time and the extent of any yaw. It is the evidence of the Master of the “Auk” that the vessels heading was 285° (upriver) and the yaw was no more than 20°. It is alleged by “Panamax Star” that the vessels heading was in a northerly direction (across the river) and that the yaw was up to 70°. Other issues upon which the oral factual evidence will be important include the ballast condition of the “Auk”, the position of the single anchor, the length of chain, movements of the “Auk”, the appearance of “Auk” to “Panamax Star”, observations by “Panamax Star” and the navigation of “Panamax Star” including possible alternative courses.

It appears that there is a significant dispute as to what was happening on board the “Panamax Star” at the material time. The statement evidence of the pilots is to the effect that the Master had dismissed them and taken over navigation of the vessel, although pilotage is compulsory. The Master has given one statement in which he said the pilots remained in charge of the vessel at all material times and a later statement in which he says there came a stage when he took over the navigation and instigated the manoeuvre whereby the “Panamax Star” sought to pass the “Auk” starboard to starboard rather than port to port.

The Claimant down plays the significance of the oral evidence and stresses the fact that a number of statements were obtained relatively contemporaneously. They include the following:

Master’s statement dated 8 August 99 (stamped 25 October 2001)

Statement of the Master, Capt Martinez, undated (faxed 15 June 1999)

Affidavit of Master of “Panamax Star” dated 17 June 2003 (sworn 27 June 2003 and 8 July 2003)

Deposition from Mr Nina (“Panamax Star”) 10 December1999

Deposition from Second Office Fernandez (“Panamax Star”)

Depositions from Pilot Da Silva (“Panamax Star”) on 28 September 1999 and 4 July 2000

Depositions from Pilot Filho (“Panama Star”) on 6 October 1999 and 4 July 2000

Deposition from Pilot Rebelo (“Auk”) dated 28 Depositions from AB Duterte (“Auk”)

September 1999 and further deposition dated 14 January 2003

Deposition from Port Captain Bueno dated 21 December 1999

Deposition by Georgios Lergos (Master of “Auk”) undated (faxed 15 June 1999)

The Claimant places particular reliance on the fact that there were four statements which were taken within a month of the incident. However, those statements are in fairly short form (as indeed they all are) and involve various contradictions.

The Claimant also says that this is a case in which much will depend on the expert evidence and a modelling of the extent to which the vessel could or would have been swinging at the material time. As the Defendant points out however, the value of any model is dependent on the reliability of the factual information upon which it is based. To take just one example, in this case a key factor will be the depth of water in the river at the place at which the vessel was anchored. It is the pilot’s statement evidence that that depth was about 45 metres. It will apparently be the contention of the Claimant’s expert that it was about 85 metres.

Whether and, if so, how and to what extent the “Auk” was swinging is also in dispute. Further, as the Defendant points out, the Claimant’s collision statement of case makes no allegation that the vessel was swinging at the material time, but rather alleges that it was heading in a northerly direction and therefore had already swung.

Any trial in this matter it not likely to take place until the middle of 2014 at the earliest, which will be over fifteen years after the events in question. I accept the Defendant’s case that there a number of important issues in this case which will depend on the oral evidence. It will be very difficult for satisfactory oral evidence to be adduced or for effective cross-examination to be carried out of oral witnesses so long after the event. There can be no question that the witnesses’ memories will have been greatly affected by the further period of seven years which will have elapsed as a result of the culpable delay in this case. In those circumstances I accept that this is a case in which the Defendants can show that serious prejudice has, or will be caused as a result of the delay that has occurred.

As is well established, and is not in dispute, in a case which depends on the oral evidence of witnesses, with every year that passes their recollections become more uncertain, and the court may readily infer that memories and reliability of witnesses has further deteriorated in a period of culpable delay - see Benoit v. London Borough of Hackney (unreported), 11 February 1991 (CA). Further, it is not necessary for the court to decide when it was that the witnesses remembered less about events – see Roebuck v. Mungovin [1994] 2 A.C. 224.

Whilst it is correct that the pilots died before 2007 and therefore before any trial that may have taken place at that time, the fact that they are no longer available makes the oral evidence of the remaining witnesses all the more critical, particularly, but not solely, that of the Masters of the vessels.

For similar reasons, I also accept the Defendant’s case that the delay in this case is now so long that it will not be possible to have a fair trial of the action. This is a case in which, for reasons already given, the oral evidence will be very important. It is a case where satisfactory oral evidence cannot now be given. It is inevitable that there would be all sorts of questions which would arise at the trial which it would be very difficult for the factual witnesses now to answer or to deal with satisfactorily, if at all. That is unfair to the parties and the witnesses. The seven years of culpable delay is a major reason for this wholly unsatisfactory state of affairs. There is a real danger that any trial would turn into a trial of reconstruction based on expert evidence and arguable facts, whereas it should be a trial based on factual witness evidence and actual facts.

I have concluded that this is a case in which the claim and counter claim should be struck out. This is a case of extraordinary and culpable delay. It is a case where that delay has caused serious prejudice to the Defendant. I acknowledge and take into account its share of responsibility for such delay, but primary responsibility rests with the Claimant. It is also a case where I have concluded that given the nature of the issues, the importance of oral evidence and the passage of time, it will no longer be possible to have a fair and proper trial of the issues. I have considered whether there is any other sanction which is appropriate short of striking out the claims, but have concluded that there is not. Having had regard to the relevant circumstances I have concluded that the justice of the case requires that the claims be struck out. I should add that even if I had found that the passage of time had seriously impaired the fairness of any trial rather than making it impossible, I would still have reached the same overall conclusion having regard to all the other relevant circumstances.

It was the Claimants’ evidence that (according to the Manager of the Legal & Claims Department of the Claimants' agents), they “at all times” intended to progress the claim by negotiation if possible, but if not, then by these proceedings. It was the Defendant’s case, however, that this is inconsistent with what in fact took place. For very many years the claim was not progressed at all, either by negotiation (the discussions were going nowhere) or in court and that the court can and should find that there was for many years no intention to progress the matter and that leaving the claim dormant was an abuse of the process.

In the light of my conclusion that the delay in this case means that the claims should be struck out, it is not necessary to rule on this part of the Defendant’s application.

For the reasons outlined above I have concluded that both claim and counterclaim should be struck out.