Yes. Preamble of section C states that rule 18 does not apply at a starting mark surrounded by navigable water from the time the boats are approaching it to start until they have passed it. Therefore, only rule 16 restricts Blue's luffing of the red boat. Blue may luff to head to wind and close the gap left for Red provided Blue leaves Red enough room to keep clear - which she does! Before Red reached the RC boat, Blue had changed course such that she would leave no room for a boat to pass between him and the RC boat. Red had to realize and expect this, and had to react (by luffing up on the wrong side of the RC boat, for instance) before sailing himself into the impossible situation she ended up in. Now Red will force Blue to give room to avoid the collision, and in doing so, Red will foul Blue.