Réseua de Transport D'électricité v Costain Limited & Anor

A clear and final judicial order is res judicata and must be given its ordinary meaning. It cannot be reinterpreted by reference to arguments or reasoning so as to contradict the relief granted.

A limitation claim under the Limitation Convention is an independent substantive claim, distinct from the underlying liability claim and from ordinary time-bar limitation. It may therefore be subject to cause of action estoppel.

An alternative basis for limitation under Article 1(4) can ordinarily be raised in limitation proceedings before the liability trial. A party that could and should have raised it earlier, and failed to follow the Aldi guidelines, may be barred by Henderson v Henderson abuse of process.

The proceedings arose from damage allegedly caused to undersea electricity cables by the dragging anchor of the Stema Barge II in the English Channel in November 2016. Stema UK supplied rock armour for railway works and later sought to rely on Article 1(4) of the Limitation Convention.

In earlier limitation proceedings, Stema UK relied on Article 1(2). The Court of Appeal declared that Stema UK was not entitled to limit its liability under section 185 of the Merchant Shipping Act 1995. Stema UK later sought to advance an Article 1(4) case in the consolidated liability proceedings.

RTE and NR/C applied to strike out that plea, relying on the finality of the Court of Appeal’s order, cause of action estoppel, issue estoppel and Henderson v Henderson abuse of process. The central issue was whether Stema UK was barred from advancing the alternative limitation case.

The application succeeded. Stema UK was not permitted to advance its Article 1(4) limitation case, and the relevant pleading paragraphs were struck out.

1. The Court of Appeal’s order was clear and unambiguous. It declared that Stema UK was not entitled to limit its liability in respect of the cable damage under section 185 of the Merchant Shipping Act 1995 or the Limitation Convention, and was not entitled to a general limitation decree. The order was res judicata. The reference in the Court of Appeal’s judgment to withdrawal of the Article 1(4) argument did not qualify the order. The order could not be construed as meaning the opposite of what it said.

2. A limitation claim is not merely procedural. Although it limits enforcement against a limitation fund, it is an independent substantive claim capable of being brought by separate proceedings. It is distinct from the underlying liability cause of action and from a time-bar defence. Cause of action estoppel was therefore available and applied. Stema UK had claimed a declaration under section 185 and had been declared not entitled to limit at all.

3. Issue estoppel did not need to be determined because cause of action estoppel was established.

4. The Henderson v Henderson test requires more than showing that a point could have been raised earlier. The point must also have been one which should have been raised, assessed in all the circumstances. The Aldi guidelines require a party in complex, ongoing litigation to draw connected potential claims or issues to the court’s attention. Breach creates a high risk of abuse, but does not automatically establish abuse.

5. Article 1(4) could have been raised in the limitation proceedings. Limitation proceedings may be commenced and decided before liability proceedings, and a conditional or issue-defining declaration could have been made without resolving every causative question. The factual evidence substantially overlapped with the Article 1(2) case, and the potential Article 1(4) issues were apparent from the existing Danish, French and English proceedings.

6. It was also appropriate that the point should have been raised earlier. Splitting the alternative bases for limitation undermined finality, wasted court and party resources, and frustrated the case-management purpose of the limitation proceedings. Although the case was not one of classic oppression or harassment, the failure to raise the point and follow the Aldi guidelines constituted abuse of process.

The judgment described earlier limitation proceedings:

• High Court (Admiralty Division): Teare J held that Stema UK was the operator of the barge and could limit its liability under Article 1(2), [2020] EWHC 1294 (Admlty).
• Court of Appeal: reversed that decision and declared that Stema UK was not entitled to limit its liability, [2021] EWCA Civ 1880.
• Supreme Court: refused permission to appeal in September 2022.
• High Court (Admiralty Division): in the present proceedings, Mrs Justice Cockerill struck out Stema UK’s Article 1(4) limitation plea.