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24 November 2010
In Ladd v Carr(1) the High Court confirmed that the statutory two-year limitation period for claims arising out of vessel collisions applies whenever the proceeding is one in which the High Court has admiralty jurisdiction. The limitation applies whether the plaintiff chooses to bring the claim in the High Court or in the District Court, provided that the High Court would have jurisdiction under the Admiralty Act 1973. The court also noted that the six-year limitation period under the Limitation Act 1950 is explicitly excluded for claims within the admiralty jurisdiction which are enforceable in rem. On January 1 2011 the new Limitation Act 2010 will come into force. The new act does not contain an exclusion for claims enforceable in rem and the six-year time limit will apply to such claims unless a more specific limitation applies. The specific limitation for collision claims will still apply.
The High Court has jurisdiction over admiralty claims in rem and in personam under the Admiralty Act. The District Court has no jurisdiction in rem but has jurisdiction in personam for claims of up to NZ$200,000 that fall within the admiralty jurisdiction conferred by the act.
Many causes of action in New Zealand have limitation periods specified under the Limitation Act 1950. For example, unless otherwise provided, actions founded on simple contract or on tort cannot be brought more than six years after the cause of action accrued. If another enactment contains a different limitation period, it will override the general limitation periods set out in the Limitation Act. Under Section 97 of the Maritime Transport Act 1994, no action can be brought to enforce a claim against a ship or its owners if the action concerns damage or loss to another ship that was caused wholly or partly by the fault of the defendant ship (ie, collisions between vessels) unless proceedings are commenced within two years.
In Ladd v Carr(2) Mr Ladd sought to bring a claim against Mr and Mrs Carr in relation to a collision between their respective motor launches on December 30 2002. Ladd brought the claim in the District Court. Ladd claimed that, because of the Carrs' negligence, their boats collided at a bay in Kawau Island, about 45 kilometres north of Auckland. The Carrs disputed the allegation of negligence and said that the collision occurred because of a mechanical failure.
The Carrs also sought to strike out Ladd's claim on the basis that it was time barred because it was brought outside the two-year time limit specified under Section 97 of the Maritime Transport Act. The Carrs were successful on this point and the district judge of the District Court struck out the claim.
Ladd appealed the District Court decision to the High Court on the basis that the judge of the District Court had erred in finding that Section 97 applied. Section 97 is found in Part 8 of the Maritime Transport Act. Before both courts, Ladd argued that the two-year limit did not apply, as Part 8 of the act did not apply to this case.
Part 8 applies to proceedings by virtue of Section 92, which relevantly reads: "This Part of this Act applies to every ship... in any circumstances in which the High Court had jurisdiction under section 4 of the Admiralty Act 1973". Mr Carr argued that, as the claim was brought in the District Court, not the High Court, Part 8 did not apply by virtue of Section 92.
On appeal, Justice Winkelmann rejected Ladd's argument. She summarised Ladd's argument as attempting to give effect to Section 92 as if it read: "This Part applies to every ship... in any circumstances in which the High Court has jurisdiction and is exercising jurisdiction under section 3 of the Admiralty Act" (original emphasis).
The judge agreed with the District Court finding that the interpretation of Sections 92 and 97 proposed by Ladd was inconsistent with the ordinary meaning of the text of the relevant sections, and with their purpose. It would be unjust if in personam claims commenced in the High Court were subject to the two-year limitation period, but those commenced in the District Court were not. If the intention had been to limit the application of Part 8 to proceedings in the High Court, that could have been clearly stated.
The judge also found, in any case, that the six-year limitation contained in Section 4(1) of the Limitation Act 1950 on which Ladd was relying, is expressly inapplicable to any cause of action within the admiralty jurisdiction of the High Court which is enforceable in rem (Section 4(8)). Proceedings in which an in rem claim could be enforced are excluded, as well as proceedings in which such a claim is being enforced. Ladd's claim could have been enforceable in rem, if it had been commenced in time, and therefore the six-year limitation period under Section 4(1) would not have applied.
Accordingly, Ladd's appeal failed. The High Court also upheld the District Court ruling that dismissed Ladd's application for an extension of time to bring the claim.
This case is a useful reminder of the limitation periods which apply to causes of action that fall within the admiralty jurisdiction of the High Court and are enforceable in rem. Claimants must be aware that the usual six-year limitation which applies to simple contract and tort claims does not apply to such causes of action. It also highlights that the general limitation periods contained in the Limitation Act 1950 do not apply when a specific period of limitation is prescribed in another enactment.
At present, there is no general statutory limitation period for causes of action that fall within the admiralty jurisdiction of the High Court which are enforceable in rem. The equitable doctrine of laches applies and specific time limits apply to certain admiralty claims by statute or contract - for example, in collision cases or where the Hague-Visby Rules apply. However, from January 1 2011 the new Limitation Act will be in force and will apply to claims based on acts or omissions occurring after December 31 2010.
The new act applies a six-year limitation period to all money claims and no longer includes a general exception for causes of action falling within the admiralty jurisdiction of the High Court which are enforceable in rem. On the High Court's reasoning, the outcome of the appeal in Ladd v Carr would not have been different if the collision had occurred after December 31 2010, as the shorter time limit of two years for claims in relation to collisions will remain under Section 97 of the Maritime Transport Act and will prevail over the general money claims limitation period in the new Limitation Act. However, from January 1 2011 the six-year time limit will apply to claims which are based on acts or omissions occurring after December 31 2010 and which fall within the admiralty jurisdiction of the High Court, unless otherwise excepted in another enactment or by contract.
For further information on this topic please contact Chris Browne or Kerryn Sparrow at Wilson Harle by telephone (+64 9 915 5700), fax (+64 9 915 5701) or email (email@example.com or firstname.lastname@example.org).
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