Ultimate Lady Ltd v The Ship "Northern Challenger"

IN THE HIGH COURT OF NEW ZEALAND
IN ADMIRALTY

AUCKLAND REGISTRY
AD7/00

ADMIRALTY ACTION IN REM

BETWEEN
ULTIMATE LADY LIMITED a company incorporated under the laws of New Zealand whose registered office is at 7th Floor, Westpac Tower, 132 Albert Street, Auckland
Plaintiff

AND
THE SHIP "NORTHERN CHALLENGER"
Defendant

Hearing: 23 June 2000
Judgment: 10 August 2000
Counsel: Neil A Beadle for plaintiff to oppose
Allan Hassall QC and Mr Allen for defendant in support

JUDGMENT OF WILLIAMS J

Solicitors:
Phillips Fox, P 0 Box 160 Auckland, for plaintiff
Stephen R Anderson, DX CP21013 Auckland, for defendant
Copy for:
A L Hassall QC, DX GP20025 Hamilton

[1] On 29 February 2000 the plaintiff, Ultimate Lady Limited, issued an action in rem against the defendant, the ship "Northern Challenger", and obtained a warrant for her arrest. She was arrested the same day. The arrest warrant was supported by an affidavit describing the nature of "Ultimate Lady's" claim as follows:

THE plaintiff claims the costs of and associated with the repair to the "Ultimate Lady" arising from damage caused by the negligence of the defendant in spraying the deck and superstructure of the "Ultimate Lady" with metal filings from the grinding and cutting of safety rails from the defendant on 4 February 2000. Those costs are estimated at $100,000 ... The plaintiff claims against the defendant under Section 4(1)(d) and 5(2)(b) of the Admiralty Act 1973.

[2] On 9 June 2000 the defendant ship applied for her release from arrest on a number of procedural and other grounds. The principal bases for the application were that "Ultimate Lady" was not entitled to invoke the Admiralty jurisdiction of the Court for a variety of reasons. This judgment deals with that application.

[3] It must at once be observed that one aspect of "Northern Challenger's" application amounted, in effect, to a claim to strike out on the basis that the facts of the matter showed not merely that the claim could not be brought under the Admiralty jurisdiction but also that it was incapable of success as a matter of fact. It was held by the Court of Appeal in Baltic Shipping Co. Limited v Pegasus Lines SA [1996] 3 NZLR 641, 649-50, 654-5, that, if ownership of a vessel is in issue to be decided on a motion to set aside a writ of arrest, it must be decided on the pleadings without consideration as to whether the claim was likely to succeed as the question of arguable case is not relevant to jurisdiction. The validity or strength of a claim is relevant to applications to strike out the proceeding as frivolous or vexatious. The standard of proof is the balance of probabilities.

[4] In this case, the parties filed no fewer than 13 affidavits setting out their respective views of the cause of the claimed damage to "Ultimate Lady". It will be necessary to note certain aspects of those affidavits but there are clearly wide differences of view on a number of the factual circumstances. The Court is quite unable to resolve those differences in an application such as this. To that extent, much of the affidavit evidence was either misconceived in the sense that it should have been seen as relating to matters which the Court could not resolve on an application such as this, or premature in the sense that the evidence may be relevant to the substantive issue if the claim goes to trial.

[5] "Ultimate Lady" is a wave-piercing catamaran constructed out of exotic fibre laminate over a foam core. She was launched in 1988 and is a New Zealand registered ship and a commercial passenger vessel under the Safe Ship Management Scheme. She was berthed at a wharf in the construction yard owned by Refit New Zealand Limited at the port of Tauranga from 31 January to 5 February 2000. A Mr Jennings, the representative of the owner of "Ultimate Lady", said that prior to 4 February 2000 another vessel called the "Bizarre" slightly damaged "Ultimate Lady" whilst berthing at the wharf. A crew member threw a weighted line towards the wharf with a view to tying up but threw it too hard, hit the "Ultimate Lady" and caused a small dent which was repaired on the morning of 4 February. Mr Jennings relied on that plus the daily washing of "Ultimate Lady's" topsides to support his view that "Ultimate Lady's" paint work was in perfect condition by late in the morning of 4 February. After a refuelling trip across Tauranga Harbour "Ultimate Lady" returned to the Refit wharf between 12.30-1 p.m. on 4 February.

[6] Mr Jennings then went ashore on a provisioning trip returning at perhaps 3.00 p.m. "Ultimate Lady" says that she was berthed about 5 metres directly downwind and slightly aft of "Northern Challenger". Mr Jennings noticed two men on the stem top deck of "Northern Challenger" who were grinding with "sparks and dust flying off the top deck". He continued -

I was immediately concerned. My perception was that the wind was up and was blowing in the direction which would be carrying the sparks and dust on to the "Ultimate Lady".

I quickly made my way along the wharf to the "Northern Challenger" and shouted for the men to stop grinding which they did. I said "you will be covering our boat in dust, you will be ruining our paint" or something to that effect. They basically said nothing in response to that but then said "we're finished anyway".

From what I could see, the part of rail being ground off the "Northern Challenger" was supported by a number of stanchions. They were taking out part of the rail which I estimate to be 6-7 feet or so. In order to have it removed this part of the rail, they would have had to have severed at least two of the stanchions and in two places along the horizontal rail. ...

I went on board the "Ultimate Lady" to check for damage. The worst of the contamination seemed to be around the port demi-hull, foredeck and port superstructure. There were a lot of iron filings on the "Ultimate Lady" including bits in the wet paint where the repair had been carried out earlier in the day. ...

At the time, the scattering of the iron filings on the "Ultimate Lady" were consistent with them having come from the grinding on the "Northern Challenger". The reasons why I thought they were:

(a) we had the small paint repair done earlier in the day, and that area was quite badly contaminated with iron filings, so that contamination must have occurred after the paint work was done;

...

(d) I had seen sparks and dust flying off the top deck of the "Northern Challenger" only moments beforehand and the wind was blowing in the direction of the "Ultimate Lady";

(e) I knew of no other source from which the damage could have arisen; and

(f) the contamination appeared to be mainly on the port side and on the foredeck of the "Ultimate Lady", rather than on the starboard side, i.e. the port side was facing the "Northern Challenger".

We hosed down the areas that appeared to be damaged, being careful not to damage the painted area that had just been repaired. We did not notice any other damage at the time, especially on the non-skid areas on the vessel. ..."

[7] "Ultimate Lady" left Tauranga the following day for a week's fishing and when it returned rust spots were noticed "all over the boat". Mr Jennings took the view that they were from the iron filings from "Northern Challenger" which had rusted with exposure to salt water.

[8] "Ultimate Lady's" claim filed on 29 March 2000 avers that whilst workmen or crew aboard "Northern Challenger" were removing an aft top deck safety rail with a grinder, iron grinding particles and sparks were thrown on to "Ultimate Lady" affecting horizontal surfaces of both demi hulls, the non-skid area on the foredeck and port side, the superstructure, tender, coaming tops and landing platforms and to the cockpit and the margin surrounding the cockpit teak deck. Costs of repair were then estimated at between $200-227,000. "Ultimate Lady" sued in negligence for allowing the grinding of the safety rails when "Northern Challenger" should have known that the particles of sparks would be thrown on to "Ultimate Lady" and failing to take precautions to prevent that. There is a second cause of action in nuisance and a third under the rule in Rylands v Fletcher based on the same particulars.

[9] "Northern Challenger" is a steel-hulled former Japanese long-line fishing vessel some 40.43 metres in length owned by a Mr Bracken. He bought her for a favourable price on 24 May 1999 intending to re-fit her and use her for taking crayfish in Tongan waters for export. The re-fit included reconditioning of her large refrigeration unit, re-building of her rusted anchor base and replacement of some of her deck guard-rails which were unsafe through rusting. To enable that work to be done, "Northern Challenger" was sailed to Tauranga and was berthed at the Re-Fit Wharf from 18 November 1999 until her arrest. Of course, she remains there still.

[10] Mr Bracken spoke to a friend of his, a Mr Vette, about the work required on the anchor base and the guard-rails. Mr Vette spoke to his nephew, a Mr Fonua. The pair of them agreed to take on the work starting early in 2000 and living on the vessel whilst it was done.

[11] Each week Mr Bracken discussed the work required during the following week with Mr Fonua and agreed on the price. Mr Bracken went to Tauranga most weekends to inspect progress.

[12] Mr Fonua describes the events which give rise to the claim in the following terms:

6. On Friday 4 February 2000 I was carrying out work on the stem of the vessel on the upper deck which involved the removal of the old guard rail and replacement with a new guard rail.

7. The "Northern Challenger" at the time was berthed at the refit premises of Refit New Zealand Limited in the port of Tauranga with the "Ultimate Lady" berthed on the opposite side of the wharf slightly aft of the moored position of the "Northern Challenger".

8 . Another vessel the "Bizarre" was berthed on the same side of the wharf as the "Northern Challenger" stem to stem with the "Northern Challenger".

9. The wharf runs north and south and both the "Northern Challenger" and the "Ultimate Lady" were berthed in a northerly direction.

10. The railing system comprised the top rail in the form of a hollow pipe about two inches in diameter, beneath which were two horizontal rods about an inch in diameter.

11. The work involved cutting through the top rail and the two rods close to the uprights, which were in reasonable order, so that I would be able to release the whole section of rails and rods from the funnel end to the stern end of the rail system.

12. I commenced doing this work on the morning of 4 February 2000.

...

14. For the purposes of cutting through the railing system I used a disc grinder with a cutting blade approximately one sixteenth of an inch in width.

15. I was aware that the "Ultimate Lady" was moored quite close to the "Northern Challenger" across the other side of the wharf, but it was obvious to me that the "Ultimate Lady" was a luxury type vessel. I can remember considering the possibility that some damage might be done to the "Ultimate Lady" if the grinding particles from my cutting operation ended up on the "Ultimate Lady". But it was obvious to me that this could not happen because the wind was blowing away from the "Ultimate Lady" and not towards the "Ultimate Lady".

16. Moreover when cutting the pipe and the rods in a vertical direction the grinding particles were being discharged towards my feet and not in the direction of the "Ultimate Lady".

17. My estimate of the time involved in cutting the top rail would be about 30 seconds and the time involved in cutting the rods, even less time.

18. I had already cut one of the uprights at the stem and was about to start on the next one when a tall man wearing short trousers and a white 'T' shirt came to me from the "Ultimate Lady" and asked me to stop the cutting operation, because he said the grindings might come over on to the "Ultimate Lady". I knew there was no possibility of this happening, but I did not want any unpleasantness and so I complied with his wishes and stopped working in the vicinity of the "Ultimate Lady".

19. When the man from the "Ultimate Lady" asked me to stop the cutting operation I went around to the port side of the "Northern Challenger" at the bow end, well away from the "Ultimate Lady" and carried on doing other work there.

[13] Mr Vette and "Northern Challenger's" first officer, a Mr Fitzgerald, made affidavits supporting Mr Fonua's recollections. Mr Bracken said that the disc grinder was Mr Fonua's property and was not part of "Northern Challenger's" gear. He also said that he never saw any sign of contaminants on "Ultimate Lady" which was, he estimated, 4-5 metres distant from the guard rail. All those witnesses thought any contamination of "Ultimate Lady" arose from other sources including the fact that other construction was being carried out in the neighbourhood of the wharf and the possibility that the damage might have been caused by volcanic ash drifting from White Island.

[14] Both parties filed affidavits from various experts.

[15] For "Ultimate Lady", a Mr Hunter, a marine surveyor spoke of his finding "rust like spots and rusting metal particles" on various surfaces of "Ultimate Lady" on 16 February 2000. Further suspected rust particles were found by others on a later survey.

[16] A Mr Pennington, owner of the marine paint firm which carried out the original painting of "Ultimate Lady" was instructed on 18 February 2000. His inspection led him to the view that "Ultimate Lady" appeared to have had the misfortune of being downwind of airborne metal particles" in a concentration which close inspection suggested "were well over 100 particles per square inch over 95% of superstructure and decks and 100% of the demi-hulls". He said "damage was consistent with the airborne particles that are disbursed while grinding or cutting steel". He gave evidence as to the difficulties and cost involved in repairing the damage and repainting the vessel.

[17] A Mr McElhinney, a private investigator, was instructed by Mr Bracken on 13 March 2000. He inspected "Northern Challenger" and "Bizarre", ascertained the wind directions and speeds as recorded at Tauranga Airport on 4 February, spoke to Mr Fonua and made some inquiries as to the likelihood of sparks from a grinder being used on board "Northern Challenger" reaching "Ultimate Lady". He concluded that:

... it would have been quite impossible for the particles would travel outboard over a distance of approximately 20-25 feet to the nearest point of the "Ultimate Lady" and then proceed in a southerly direction to cover the "Ultimate Lady" to the extent claimed.

[18] A Dr Powell of Forensic and Industrial Science Limited was instructed to act for "Northern Challenger" on 23 March. He prepared a lengthy report following examination of "Ultimate Lady" on 30 March 2000 and analysing the paint and extraneous particulate matter found on that occasion. He concluded that the chemical composition of the particles was consistent both with being angle grinder debris and being ferrous alloy particles but that the material collected around the instrument tower was inconsistent with being created by angle grinding and was probably volcanic ash.

[19] Dr Powell watched a demonstration of the angle grinder on "Northern Challenger" and assessed the direction of the travel of debris in accordance with the wind data, concluding that it was "unlikely that contaminants could during daylight hours of 4 February 2000 have been transferred by wind from the top afterdeck of the "Northern Challenger" so as to cover "Ultimate Lady". After considering other possible sources of the material found on the "Ultimate Lady" including from other ships and the wharf, Dr Powell concluded that the likelihood that angle grinder debris was carried from "Northern Challenger" on to "Ultimate Lady" on 4 February varied between "very small" and "extremely small".

[20] Mr Hunter was critical of Dr Powell's conclusions having regard to his view of the relative positions of the two vessels, wind direction, the timing of the grinding and other possible causes of damage. Dr Powell filed a late response. As mentioned, the Court cannot resolve those matters on affidavit evidence alone.

[21] The first submission on behalf of "Northern Challenge" was to the effect that the warrant of arrest should be set aside and the proceedings struck out on the basis that "Ultimate Lady's" claim under the notice of proceeding and statement of claim did not entitle the plaintiff to invoke the Admiralty jurisdiction because the circumstances in which the claim arose did not come within the Admiralty Act 1973, ss.4(1)(d) and 5(2)(b). The former confers Admiralty jurisdiction on this Court in respect of "any claim for damage done by a ship" and the latter reads:

In questions and claims specified in paragraphs (d) to (r) ... of subsection (1) of section 4 of this Act arising in connection with a ship where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the jurisdiction of the High Court may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against -

...

(i) That ship if, at the time when the action is brought, it is beneficially owned as respects all the shares therein by, or is on charter by demise to, that person.

[22] "Ultimate Lady's" response was that not only was she entitled to rely on s.4(1)(d) and s.5(2)(b) but was also entitled to invoke and had in fact pleaded s.4(1)(e) in her statement of claim. Section 4(1)(e) confers Admiralty jurisdiction on the Court in respect of "any claim for damage received by a ship".

[23] Whilst, as earlier noted, the notice of proceeding and supporting affidavit both referred only to ss.4(1)(d) and (5)(2)(b), "Ultimate Lady's" statement of claim plainly also includes s.4(1)(e). There does not appear to be anything to prevent amendment of the pleadings in that fashion. Indeed, while r.769(2) requires a notice of proceeding to include a "concise statement of the nature of the claim", r.769(3) makes it clear that such a statement is not a statement of claim and r.774(2)(a) requires a plaintiff in Admiralty to file a full and explicit statement of claim in Admiralty proceedings unless given leave to the contrary. There is nothing in Part 14 of the High Court Rules to suggest other than that the usual rules as to pleadings and amendment apply in Admiralty cases at least once the r.774 position has been reached. Precedent, though decided before the promulgation of Part 14 of the High Court Rules, supports that view (Baltic Shipping (supra) at 650-651).

[24] The authorities show that for a claim to come within the ambit of "damage received by a ship", it is immaterial that the damage may have been caused by an object other than another ship (The Zeta [1893] AC 469, The Upcerne [1912] P 160). In those circumstances, as the review of the affidavits filed in this matter shows, there must at least be an arguable case that "Ultimate Lady" has a claim against "Northern Challenger " under s.4(1)(e) for damage done to her.

[25] As far as the claim under s.5(2)(b) is concerned, while the evidence suggests that Mr Fonua may have been an independent contractor, the critical question is whether Mr Bracken as the admitted beneficial owner of all the shares in "Northern Challenger" could, at law, be liable in personam for Mr Fonua's actions. In that regard, the extent of Mr Bracken's direction or control over Mr Fonua's actions may prove crucial. Although it is possible that, ultimately, the relationship between Messrs Bracken and Fonua is held to be the normal relationship between parties to an independent contract for services, at this stage, given his description of visits to the ship and direction of Mr Fonua, the possibility that Mr Bracken may be liable in personam cannot be entirely discounted. No ground has accordingly been made out by "Northern Challenger" to dismiss this proceeding for incorrect reliance by "Ultimate Lady" on s.5(2)(b).

[26] In the light of those findings, it is unnecessary to consider in any detail whether "Ultimate Lady" can claim under s.4(1)(d). Most texts on Admiralty or maritime law include lists of cases which have held whether damage was or was not "done by a ship" (e.g. Neeson Admiralty Jurisdiction in Practice [sic], 2nd ed 2000 paras 2-056 and 057, p.38-9; Davies & Dickey Shipping Law, 2nd ed 1995 p.107-8, Gault Marsden on Collisions at Sea, 12th ed 1998, para 2-24 p.27 8 1(1), Hals Laws 4th ed, para 319, p.394). Those authorities demonstrate that physical contact is not a necessary element of founding jurisdiction for "damage done by a ship". It extends to damage caused by part of a ship and includes both direct and consequential damage as well as damage to property. In The Eschersheim & The Jade, [1976] Ll. LR 1, the "Erkewit" and "Dortmund" collided. A salvage tug, "Rotesand" went to "Erkewit's" aid, took her in tow and beached her where she became a total loss. Her cargo was also lost and caused marine pollution. On the question as to whether these circumstances amounted to "damage done by a ship", the House of Lords held (at 8).

"... The figurative phrase "damage done by a ship" is a term of art in maritime law whose meaning is well settled by authority (The Vera Cruz (No. 2) (1884) 9 P.D. 96; Currie v. McKnight [1897] A.C. 97.) To fall within the phrase not only must the damage be the direct result or natural consequence of something done by those engaged in the navigation of the ship but the ship itself must be the actual instrument by which the damage was done. The commonest case is that of collision, which is specifically mentioned in the Convention: but physical contact between the ship and whatever object sustains the damage is not essential - a ship may negligently cause a wash by which some other vessel or some property on shore is damaged.

In the instant case the act of casting off the Erkowit in such a way as to beach her upon an exposed shore was something done by those engaged in the navigation of the Rotesand, as a result of which the Erkowit and her cargo were left exposed to the risk of being damaged by wind and wave if the weather worsened before she could be removed to a more sheltered position.

I do not understand it to be claimed that the actual beaching caused any physical damage to ship or cargo, but for the purposes of this appeal it must be assumed that the chain of causation is unbroken between the beaching of the Erkowit and her subsequent breaking-up by wind and wave. Had the damage been caused by the beaching, there could in my view have been no question but that the Rotesand could properly be regarded as the actual instrument by which that damage was done. Although for my part I find this a borderline case, I do not think that the intervening failure of the appellants to take steps to avert the risk of damage, which forms the subject of the alternative grounds of negligence, prevents the Rotesand from remaining the actual instrument by which the damage subsequent to the beaching was done."

Or, as it was put in "The Rama"[1996] 2 Ll. RP 281, 293:

"...The cases show that to be 'damage done by a ship' and thus to qualify as giving rise to a maritime lien three criteria must be satisfied: 1. The damage must be caused by something done by those engaged in the navigation or management of the ship in a physical sense; 2. The ship must be the actual or noxious instrument by which the damage is done; and 3. The damage must be sustained by a person or property external to the ship."

[27] In that it refers to the working of ship's equipment, the decision in The Nagrint v The Ship Regis, formerly The ship Rodney (1939) 61 CLR 688, 700, may be seen as a possible gloss on those principles. Dixon J observed, after reviewing a number of authorities bearing on the question as to whether an injured passenger could sue for negligent navigation, that:

"... when the injury arises from some defect in the condition of the ship considered as premises or as a structure upon which the person injured is standing, walking or moving, the ship is treated as no more than a potential danger of a passive kind, a danger to the user, whose use is the active cause of the injury. But where the injury is the result of the management or navigation of the ship as a moving object or of the working of the gear or of some other operation, then the damage is to be regarded as done by the ship as an active agent or as the 'noxious instrument'."

(See also Fournier v. The Ship "Margaret Z" [1999] 3 NZLR 111, 125.)

[28] At the substantive hearing, it may turn out to be the case that Mr Fonua's actions on the "Northern Challenger" are held not to have been actions done by someone engaged in the navigation or management of the ship in a physical sense or that "Northern Challenger" was not the actual or noxious instrument by which the damage is done or that his use of the grinder is not to be regarded as part of the working of "Northern Challenger's" gear. However, all that needs to be shown is an arguable case and at this stage the contrary possibility cannot be discounted. "Ultimate Lady" is accordingly entitled to plead s.4(1)(d).

[29] In all those circumstances, "Northern Challenger's" claim for an order setting aside the proceedings as not being within the Admiralty jurisdiction is not made out.

[30] It is convenient next to consider "Northern Challenger's" application to determine the amount and form of security which she is required to give in order to secure release from arrest.

[31] In that regard, the Court has earlier recounted the repair estimate appearing in the statement of claim. Following the hearing, "Ultimate Lady" filed an amended statement of claim increasing the amount of the repairs but, as that was not the subject of submissions, the Court puts it to one side. In the event of disagreement on this topic, leave is reserved to apply further.

[32] Although it has been the subject of challenge from time to time, the right of summary arrest of ships pursuant to a proceeding in rem has long been recognised as the major distinguishing factor of the Admiralty jurisdiction. It is not initially dependent on showing an arguable claim. It is available ex parte. The procedure requires no undertaking as to damages. The dramatic effect which arrest can have on third parties is unregarded. The fact that the claim might ultimately fail is not taken into account in considering arrest. Damages may only be awarded if the arrest is shown to have been effected in bad faith or maliciously, of which there is currently no evidence here. (These points are made in most texts but see e.g. Jackson Enforcement of Marine Claims [sic], 2nd ed 1996, p.311.) It has long been held that an arrested ship may only be released on the provision of sufficient security to cover the amount of the claim plus interest and costs on the basis of the plaintiff's reasonably arguable best case ("The Moscanthy" [1971] 1 Ll.LR 37, 44). Any inability of the defendant to meet such is not a reason for not ordering security (Greenmar Navigation Ltd v Owners of The Ship "Bazias 3" and "Bazias 4 ", The "Bazias 3 and "Bazias 4" [1993] 1 Ll.L.R 101, 105). Mr Bracken's affidavit indicates that "Northern Challenger's" arrest is causing him financial privation and he would have difficulty providing security in the sums claimed as repairs.

[33] Although the estimates of repair are criticised by "Northern Challenger's" experts, they are supported by those who originally painted "Ultimate Lady" and have assessed the cost of repairing the damage which she claims to have suffered.

[34] In those circumstances, as the authorities indicate, the appropriate course is for the Court to order that "Northern Challenger" may be released from arrest upon providing security in the sum of $250,000 in a form to be consented to by the plaintiff or approved by the Registrar.

[35] Finally, there are some procedural matters raised by "Northern Challenger" which require consideration.

[36] The first is a precautionary application for extension of time for applying to set aside the notice of proceeding and warrant of arrest.

[37] Rule 773(7) requires a defendant who wishes to apply to set aside a notice of proceeding to do so before entering an appearance in the action (or within 10 days of entering a conditional appearance).

[38] Mr Bracken filed an unconditional appearance in this proceeding on 9 March 2000 but his application to set aside was not filed until 9 June 2000. There may be no necessity to enlarge the time for application since Mr Bracken has submitted to the jurisdiction but, even if such is required, r.766 applies the other parts of the High Court Rules and the general practice of the Court to Admiralty proceedings. No prejudice is argued as having occurred to "Ultimate Lady" and, assuming that an extension of time is required, the time for filing the application to set aside the notice of proceeding is extended to the date of its actual filing.

[39] The last matter is that "Northern Challenger" has indicated through counsel that she wishes to issue a counterclaim against. "Ultimate Lady" for damages suffered as a consequence of what the defendant asserts was her wrongful arrest. Counsel submit that it may be doubtful whether such can be done in Admiralty as Part 14 of the High Court Rules contains no express provision for the filing of a counterclaim in such proceedings.

[40] That may be correct in the sense that there is no rule in Part 14 expressly empowering defendants to issue a counterclaim but, as noted, r.766 applies the practice of the Court under the balance of the High Court Rules to Admiralty proceedings unless inconsistent with Part 14 and r.774 requires actions to be heard with pleadings. Further r 790(5) expressly refers to a "counterclaim in an action in rem" which clearly suggests that the ordinary rules relating to counterclaims may apply in Admiralty proceedings. There is also a longstanding practice in the United Kingdom for a counterclaim to be brought in Admiralty proceedings, particularly following collision (Marsden op. cit para 18-19 p. 580) and although in M. V. Popi (owners) v S S Gniezno (owners), "The Gniezno" [1968] P 418 it was held, in the circumstances of that case, that the counterclaim did not lie, Brandon J, in a, with respect, comprehensive review of the English authorities, held (at 442) in reliance on The Saxicava [1924] P 131 a "counterclaim can in general only be raised by delivery of a defence and counterclaim". It was not raised by the mere filing of a notice of counterclaim". That decision was, however, reached as a result of the detailed consideration of the United Kingdom High Court Rules and Admiralty practice. Those rules do not appear to contain anything directly comparable with r 790(5). The Court accordingly tentatively concludes that the counterclaim procedure in our High Court Rules does apply to Admiralty proceedings and directs "Northern Challenger" to issue its counterclaim within 28 days of the date of delivery of this judgment with "Ultimate Lady" to file and serve any defence within 30 days of service. Leave is reserved to "Ultimate Lady" to challenge the jurisdiction to issue a counterclaim in Admiralty proceedings further if it considers it appropriate so to do.

[41] The Registrar is to fix a date for a directions conference as soon as practicable after the delivery of this judgment so that any other necessary timetable orders can be considered. That conference may be convened prior to the completion of timetable orders just made relating to the counterclaim.

[42] The costs of the hearing are reserved.

[43] The Court's formal orders are accordingly:

[a] The defendant's claim for an order setting aside the proceedings as not being within the Court's Admiralty jurisdiction is not made out and is dismissed.

[b] The "Northern Challenger" may be released from arrest upon providing security in the sum of $250,000 in a form to be consented to by the plaintiff or approved by the Registrar with leave reserved to apply further in the event of disagreement.

[c] The time allowed to the defendant for filing her application to set aside notice of proceeding is extended to the date of its actual filing.

[d] That any counterclaim the defendant wishes to bring is to be filed and served within 28 days of the date of delivery of this judgment with any defence to be filed and served within 30 days of the date of service of the counterclaim with leave reserved as per para [40].

[e] The Registrar is directed to fix a date for a directions conference as soon as practicable which may be earlier than the completion of the timetable relating to the counterclaim and defence.

Costs reserved.