Salvage Learnings from the Thor Commander

MLAANZ / Federal Court of Australia Lunchtime Lecture

Justice Stewart[1]    24 July 2019

RTF version - 279 kb Audio - 28 mb*

* Note: There is some background noise in the audio recording and a gap from 11:40 to 15:30

Introduction

1. The inspiration for this paper is the judgment of my colleague, Justice Rares, in the case of the Thor Commander delivered in the Federal Court nearly a year ago.[2] I disclose at the outset that I was lead counsel on the losing side (the vessel interests), which in part accounts for the deliberate ambiguity in the title that I have chosen for this paper.

2. Not satisfied with the correctness of aspects of the judgment, the vessel interests appealed. The appeal was due to be heard by the Full Court in February this year, but the dispute was settled shortly before the hearing. The result is that we have only the first instance judgment, and we do not know in what respects its reasoning and findings might have been altered by the Full Court.

3. As will shortly become apparent, the judgment covers a number of issues only some of which relate to salvage. I intend to focus on a particular salvage aspect of the judgment. Although it is obiter, it is an interesting point. That is whether it was necessary for the purported salvors in the case, being the owners of the Xinfa Hai, to be volunteers in order to qualify for a salvage reward, and whether in the circumstances of the case they were volunteers.

The Thor Commander

The facts

4. The relevant facts for present purposes are relatively straightforward.

5. The Thor Commander was contracted to carry a cargo of copper anodes owned by the plaintiff, Mount Isa Mines, from Puerto Angamos, Chile, to Townsville in north-east Queensland.[3]

6. On day 1 of the incident, being 11 January 2015, the vessel was in relatively close proximity to the Great Barrier Reef towards the end of her voyage when, in the mid-afternoon, her main engine failed. She was drifting slowly towards the reef as the chief engineer sought to identify the problem and fix it.[4]

7. Within an hour or so of the breakdown, the Master had notified the Australian authorities of the situation. He said that their position from the nearest reef was 17 nautical miles and they were drifting towards it at a speed of between 0.8 and 1.5 knots. Conditions were otherwise calm and there was little wind.[5]

8. By late that evening the vessel owners (MarShip) had secured a tug, the Smit Leopard, then in Gladstone, to rendezvous with the vessel and tow it to Gladstone for repairs. The Smit Leopard departed Gladstone at first light on day 2 with an estimated time of arrival early the following morning, i.e. day 3. In the meanwhile, the Thor Commander would continue to drift as no repairs had been possible.[6]

9. By this time, the Australian Maritime Safety Authority (AMSA), had assumed responsibility for the situation insofar as the Australian authorities were concerned.[7] AMSA was not satisfied that the Smit Leopard would reach the Thor Commander in time to prevent her drifting onto the reef. Thus, early on day 2, at much the same time as the Smit Leopard departed Gladstone, AMSA issued a pan pan, which is an international alert of an urgent situation.[8] It asked all vessels within 10 hours of Thor Commander's position that would be available to provide her with immediate assistance to prevent her drifting onto the reefs or to act as standby for rescue to contact the Joint Rescue Coordination Centre (JRCC). It was said that Thor Commander was at that time 16 nautical miles from the nearest reef.[9]

10. Xinfa Hai responded to the pan pan, and proceeded towards the Thor Commander.[10] Xinfa Hai was a Capesize bulk carrier of 174,766 deadweight tons with a length overall of 289 metres.[11] Thor Commander, in contrast, was 9,739 deadweight tons with a length overall of 132 metres, and she was heavily loaded.[12] Before diverting in response to the pan pan, Xinfa Hai was steaming in ballast in a south-westerly direction to Newcastle to load cargo.[13]

11. By early afternoon, still on day 2, Xinfa Hai was standing-by near the Thor Commander. There was something of a stand-off between the vessels' respective owners with regard to the conclusion of a salvage contract on the Lloyd's Open Form.[14]

12. A bit later when Thor Commander was approximately 12 nautical miles from the nearest reef, and the Smit Leopard's ETA was approximately 9:00 am the following day, i.e. day 3, AMSA gave a direction under s 11 of the Protection of the Sea (Powers of Intervention) Act 1981 (Cth). The direction required Thor Commander to accept a tow, if safe to do so, and Xinfa Hai to take Thor Commander under tow and to hold her in a safe position until relieved by the Smit Leopard.[15]

13. Pausing briefly here, the Intervention Act was introduced to give effect to the International Convention Relating to the Intervention on the High Seas in Cases of Oil Pollution Casualties of 1969. The Convention was a result of the 1967 Torrey Canyon disaster when an oil spill from that tanker off the west coast of Cornwall, England caused an unprecedented environmental disaster and signalled the need for a State to be empowered to take the necessary measures to protect itself from pollution incidents on the high seas.

14. The Australian legislative response, the Intervention Act, provides for the intervention of AMSA not only in the case of casualties on the high seas, but also in the case of casualties in Australian coastal waters or in the Australian Exclusive Economic Zone (EEZ). Section 10 deals with casualties in the Australian coastal sea or EEZ and was the relevant provision in the case of Thor Commander.

15. Section 10 provides that:

[W]here oil or a noxious substance is escaping, or has escaped, from a ship in relation to which this section applies, or the Authority is satisfied that oil or a noxious substance is likely to escape from such a ship, the Authority may, subject to subsection (4), take such measures as it considers necessary to, amongst other things, prevent, or reduce the extent of, the pollution or likely pollution, by the oil or noxious substance, of any Australian waters, any part of the Australian coast or any Australian reef.

16. The issuing of directions is governed by s 11 of the Act. They can be issued to the owner of the ship, to the master of the ship, or to any salvor in possession of the ship or to any other person.

17. It will immediately be appreciated that the direction by AMSA that required the tow is centrally relevant to the question of whether the subsequent tow by Xinfa Hai had the quality of being "voluntary" within the meaning of the law of salvage.

18. Returning to the facts, conditions remained calm, and despite the substantial difference in size and manoeuvrability of the vessels, the tow was established relatively easily on the first attempt. Assistance was given by a Queensland Police vessel, the Lyle M Hoey, to run a messenger line from the Xinfa Hai to the Thor Commander which was then used to establish the 370 metre tow line. The Xinfa Hai then slowly towed the Thor Commander further away from the reef for about five hours. Thor Commander then drifted again for about six hours with the Xinfa Hai close by on standby until Smit Leopard arrived on the scene early on day 3. AMSA then released Xinfa Hai and she returned to her original course.[16]

19. In all, Xinfa Hai was taken off her course by the events involving the Thor Commander for a little over 24 hours.

20. It took another two days for Smit Leopard to tow Thor Commander to Gladstone, where she arrived early on day 5.[17]

21.The owners of Thor Commander declared general average, with the result that all those sharing in the maritime adventure, being essentially them and Mount Isa Mines, would ordinarily be liable in proportion to their respective values for the expenses of preserving the ship and cargo. Those expenses included any liability for salvage, Smit Leopard's charges and emergency repairs in Gladstone in order to complete the contractual voyage to Townsville.[18]

The respective claims

22. A number of claims arose out of these events. Independently of the proceedings, Xinfa Hai's owners claimed salvage against Thor Commander's owners and against cargo owners, Mount Isa Mines. Both those claims were independently settled at US$100,000 and US$1 million respectively. The agreed salvage values were US$7,344,290 and US$63,178,742 respectively, i.e. a ratio of nearly 1:10.[19]

23. Also independently of the proceedings, pursuant to its general average declaration and based on an adjustment done in London, Thor Commander's owners demanded a GA contribution from Mount Isa Mines of US$1,163,681. That was to be the subject of arbitration.

24. In the proceedings, Mount Isa Mines claimed against Thor Commander the US$1 million it had paid Xinfa Hai in settlement of the latter's salvage claim, an amount in respect of costs it had incurred in discharging part of the cargo in Gladstone and railing it to Townsville in order to keep its copper smelter going pending the ultimate arrival of the rest of the cargo in Townsville, and a declaration that it was not liable for the GA contribution claimed from it in arbitration.

The issues

25.The following issues arose for decision at the trial, which occupied 12 days in 2017.[20]

1. What was the contract of carriage?

26. There was an issue whether the straight bill of lading that was issued by the owners of Thor Commander or a voyage charterparty was the applicable contract of carriage.

27. If it was the charterparty, then under its terms Mount Isa Mines would have had to establish "personal want of due diligence on the part of the Owners or their Manager" or "personal act or default of the Owners or their Manager". Also, loss arising "from any other cause whatsoever, even from the neglect or default of the Master or crew or some other person employed by the Owners on board or ashore" would not be recoverable.[21]

28. If the bill of lading was the contract, then liability would be determined under the compulsorily applicable amended Hague Rules in Schedule 1A of the Carriage of Goods by Sea Act 1991 (Cth) (COGSA). That would depend on the engine failure arising from the unseaworthiness of the vessel and an absence of due diligence to make the vessel seaworthy before and at the commencement of the voyage.

29. First, it was held that, contrary to the position adopted in Davies & Dickey's Shipping Law,[22] a straight bill of lading is a sea carriage document under s 3 of the Sea-Carriage Documents Act 1996 (Qld).[23] In my view, that finding is uncontroversial – some might say it is obvious in view of the definition of "sea waybill" in the Act.

30. Next, it was held that the owners of the Thor Commander were not a party to the voyage charterparty and that the carrier under the charterparty was the owners of a different ship in the same fleet with whom the original recap fixture was made.[24] It was held that there was thereafter a substitution of vessels rather than a substitution of carriers.[25] That raises some interesting questions about the conclusion of charterparties with different owners in the same group of companies in respect of vessels under common commercial management. It is a pity that the Full Court did not get to consider them.

31.The result was that the bill of lading was the applicable contract of carriage. Liability was therefore determined through the prism of the amended Hague Rules.

2. What was the cause of the main engine breakdown?

32. Justice Rares found that the Thor Commander was unseaworthy at the commencement of her voyage because the fuel injector nozzle in cylinder 5 was operating in a faulty manner, which caused the breakdown, and that her owners failed to exercise due diligence before and at the commencement of the voyage to make her seaworthy and to properly equip and supply her so as to be able to replace the faulty nozzle of cylinder 5.[26] Thus, there was a breach of the relevant provisions of the amended Hague Rules and Thor Commander was liable to Mount Isa Mines.[27]

33. Most of the judgment concerns this issue which was fact heavy and involved the competing opinions of expert marine engineers. I do not intend to go into any of it now.

3. Was Thor Commander in need of salvage?

34. The issue at trial under this heading concerned the extent to which Thor Commander was in danger of drifting onto the reef. It was accepted by the defendant that the services rendered by Xinfa Hai were rendered voluntarily and if they were undertaken to assist the Thor Commander when she was "in danger", then they were salvage services for the purpose of the Salvage Convention.

35. As will be seen, Justice Rares – in reasoning that is clearly obiter – discussed the question of voluntariness. That is the principal issue to which I will return. His Honour concluded that Thor Commander was in danger and therefore in need of salvage and that the services rendered were salvage services for which Xinfa Hai had been entitled to a reward.[28] That was essentially a factual enquiry into the degree to which the vessel was at risk of drifting onto the reef.

4. Was Mount Isa Mines' US$1 million settlement of Xinfa Hai's salvage claim reasonable?

36. Thor Commander contested liability for the amount for which Mount Isa Mines had settled the salvage claim against it on the basis that that settlement was unreasonable. Justice Rares upheld that defence, concluding that the settlement was unreasonable in particular because Mount Isa Mines failed to obtain any advice from Australian lawyers about the reasonableness of the proposed settlement before it was made and it failed to explain how it decided on the settlement sum.[29]

37. In light of that conclusion, the Court made its own assessment of an appropriate reward and concluded that a total reward for Xinfa Hai, that is including both ship and cargo, would be US$1 million. Applying the appropriate apportionment, Mount Isa Mines was accordingly awarded US$909,000, i.e. Thor Commander was liable to reimburse Mount Isa Mines that sum for what the latter had paid Xinfa Hai.[30]

38. In arriving at that figure, Justice Rares considered the various considerations listed in Article 13 of the Salvage Convention and came to an evaluative judgement. In view of the calm conditions, the relative ease of the operations and their short duration, others might have reached a different conclusion but it is hard to identify any error of principle in the approach taken. It would appear to be consistent with that of the Full Court in the only other Australian case to arrive at the sum of a reward under the Salvage Convention, namely the La Pampa in 2007.[31]

5. Is Mount Isa Mines entitled to its transhipment costs?

39. Justice Rares concluded that the actions taken by Mount Isa Mines in discharging part of the cargo in Gladstone and railing it to Townsville amounted to reasonable mitigation measures and that the expenses so incurred were claimable.[32] There is an interesting question here with regard to the proper construction of a letter of indemnity (LOI) that was required by the owners of the Thor Commander to be given by Mount Isa Mines before the partial discharge was allowed. The LOI contained an indemnity for the expenses of, and any liability arising from, the partial early discharge.

40. His Honour found that the LOI was given to cover any liability that might arise from someone claiming in respect of the discharged cargo by presenting bills of lading for it in Townsville.[33] That might be regarded by some as a curious result because the cargo was discharged in Gladstone to the named consignee against presentation of the straight bills of lading which were then spent, at least to the extent of the partial discharge. In any event, that is not an issue that I intend to go into.

6. The negative declaration in respect of GA liability

41. In view of the conclusion with regard to fault and causation, the Court declared that Mount Isa Mines was not liable to the owners of the Thor Commander in general average.[34] The issues that were considered were essentially relevant to the Court's discretion in making a declaration and need not be considered here.

The salvage issue

42. It was not in dispute whether voluntariness is a requirement to claim a salvage reward under the Salvage Convention, or on whether Xinfa Hai acted voluntarily. The issue between the parties in relation to salvage was, as his Honour identified it: "was Thor Commander in need of salvage by Xinfa Hai?"[35]

43. His Honour nevertheless discussed the voluntariness of the services rendered by Xinfa Hai as follows.

44. In the context of deciding whether Xinfa Hai rendered salvage services, the judgment states that the definition of salvage operations in s 14(1) of the Navigation Act 2012 (Cth) does not create a precondition that the salvor will be a volunteer, but that, rather, salvage operations consist of any act or activity undertaken to assist a vessel in danger in any waters. Thus, it was reasoned, the character of an act or activity that fulfils the definitional criterion, namely that it is undertaken to assist a vessel in danger in any waters, determines whether the act or activity amounts to salvage operations for the purposes of those parts of the 1989 Convention that have force of law in Australia.[36]

45. In the context of deciding whether Mount Isa Mines' settlement of the salvage claim against it was reasonable, the question of voluntariness was considered again. It was again pointed out that the statutory definition does not include voluntariness as a requirement, and it was held that whether the act is done voluntarily or under statutory or official compulsion does not change its character as being salvage.[37]

46. His Honour nevertheless gave consideration to whether the salvage was voluntary with reference to the position at common law. Citing The Beaverford and The Sarpen,[38] his Honour concluded that since the legal obligation on Xinfa Hai to assist Thor Commander arising from the AMSA Direction was an obligation owed to AMSA and not personally to the owners of Thor Commander, the services were voluntary.[39]

47. As will be seen, I consider that conclusion to be uncontroversial.

Voluntariness at common law

48. On 19 October 1898, a fire broke out on board the steamship Buteshire which was at the time moored to a wharf known as Dalgety's Wharf at Millers Point. An alarm was rung and received at the headquarters of the Metropolitan Fire Brigade. The superintendent and his eight men went to Dalgety's Wharf and ascertained that the Buteshire was indeed on fire. The superintendent went on board and asked the master of the ship if the assistance of the fire brigade was wanted, to which the master replied, "Yes, as much help as I can get". The superintendent then said, "I shall require a guarantee for all expenses incurred by the brigade." The master replied, "Yes, I have already told your officer that we will pay all expenses." After a very long time, and with considerable difficulty, the fire brigade and the crew onboard the Buteshire managed to succeed in extinguishing the fire.

49. After the fire, the owners of the Buteshire alleged that it was the duty of the Fire Brigade to extinguish the fire and that, under the circumstances, the Fire Brigade was not entitled to salvage.

50. Justice Owen, sitting in the NSW Vice-Admiralty Court in Fire Brigade Board v Elderslie Steamship Co,[40] accepted that voluntariness was a requirement for a salvage reward and that the Metropolitan Fire Brigade was a public body whose duty was to extinguish fire without fee or reward within the city of Sydney. The respondents argued that the ship being moored to Dalgety's Wharf, must be considered as part of the wharf and as such, there might be danger of the fire spreading to the wharf and adjacent buildings that the Fire Brigade was under statutory obligation to protect. However, his Honour held that:

… a ship moored to a wharf is as much afloat on the waters of Port Jackson as if she were anchored in mid channel, and cannot be held to be within the boundaries of the city of Sydney, which extend only to the high water mark on the foreshore.[41]

51. The salvage was therefore held to be voluntary and the plaintiffs were entitled to a salvage reward for extinguishing the fire.

52. Justice Owen defined salvage as follows:

A salvor is defined to be one who, as a volunteer, assists a ship in distress, but the services rendered must be such as the salvor was not bound to render under any pre-existing obligation…[42]

53. His Honour then went on to cite with approval Lord Stowell's often quoted description of a salvor in The Neptune:

A person who, without any particular relation to a ship in distress, proffers useful service, and gives it as a volunteer adventurer, without any pre-existing covenant that connected him with the duty of employing himself for the preservation of that ship. [43]

54. As these statements indicate, it has always been the position that an essential element for a successful salvage claim at common law is that the salvor be a volunteer in that the salvor must not be under any existing contractual or other obligation to render the salvage services.[44]

55. More recently, the judgment of the NSW Court of Appeal in 1982 in The Ship "Texaco Southampton"[45]concerned whether the crew of a tug could claim for salvage in circumstances where the owners of the tug could not claim for salvage because the tug had been contracted to do the tow and the work that was done did not go beyond the terms of the contract. That issue was decided against the crew. In the course of reasoning Glass JA (with Samuels and Mahoney JJ agreeing) set out a series of "propositions" which he regarded to be "a coherent body of doctrine" including that towage services that are provided to a vessel in danger do not qualify for description as salvage services "unless additionally it appears that they were rendered by volunteers".[46]

56. It is by now well established that acting upon the orders of a third party does not deprive salvors of the necessary element of voluntariness. That proposition was most clearly established by the Court of Appeal of England and Wales in 1916 in The Sarpen – one of the cases cited by Justice Rares.[47] Although the salving vessel, The Simla, had been requisitioned by the Admiralty and had been directed by the naval officer in command to proceed to the assistance of The Sarpen, that did not mean that the services rendered by the owners, master and crew of The Simla were not voluntary:

… the services were rendered voluntarily as between the salvors and salved, which is all that is material; the Simla owed no duty towards the Sarpen.[48]

The test of voluntariness is only applicable as between the salvors and the salved, and if the services be voluntary in relation to the salved, i.e. not rendered by reason of any obligation towards him, it is quite immaterial that the salvor has been ordered by someone who has control of his movements to render them.[49]

57. The point is illustrated by a decision in the 1970 United States District Court for the Southern District of New York decision, The National Defender.[50] The salving vessel, Mesologi, was chartered to come alongside the vessel in distress and transship the cargo of grain. The entire crew of the Mesologi claimed salvage. A defence was raised that they were acting merely under the orders of their owners and therefore lacked the requisite voluntariness. The following was held:

Voluntariness of the services rendered is a further prerequisite to a salvage award. Defendants have stressed that the plaintiffs performed their tasks under the orders of their master and these were within the ordinary scope of their employment under their shipping articles and Greek law. This does not deprive the services herein of a voluntary character, that is, services rendered without a pre-existing obligation to perform the same.… It cannot be disputed that when the Defender went aground on June 3, 1963, the members of the crew of the Mesologi owed no duty, contractual or otherwise, to the stranded vessel. That agreements were entered into thereafter does not affect their status as volunteers.[51]

58. The proposition that if the duty is owed to a third party and not to the salved vessel then the salvage is still voluntary might be seen to be contradicted by a judgment of Justice Ryan in the Federal Court of Australia in 1991 in The Margaret Philippa.[52] That case held that where two ships belonging to different owners are entered in the same mutual insurance association subject to terms by which they are bound to the association to render assistance to each other, no salvage can be claimed when they do render such assistance because such assistance is not given voluntarily. Justice Ryan held that the rules of the association imposed an obligation on the insured owner to the company to render assistance to any other ship entered in the company which may require assistance.[53] The effect of that obligation was to make a claim for salvage unavailable because of the absence of voluntariness.

59. Justice Ryan cited Clan Steam Trawling Co v Aberdeen Steam Trawling and Fishing Co in 1908 in the Court of Session as authority. [54] However, in that case the reasoning made clear that the rules of the mutual association applied between the members. That is to say, the members owed the obligation one to each other and not only to the company. Lord Justice Clerk held as follows:

Here, in this case, the insurance conditions were that the vessels mutually insured gave, as part of the consideration for the insurance, an obligation to render assistance to vessels mutually insured with them. It may be taken to be quite certain that this obligation was as much a part of the premium of insurance as the money paid by the insurer. Each insured bargained for the assistance of the others, and undertook to render assistance to the others, when any two vessels came to be the one in the position of being a vessel in distress, and the other a vessel able to render assistance. It was a perfectly intelligible and efficient contract for benefit, which the one had a right to claim and the other had contracted to give.[55]

60. Lord Ardwall's reasoning was to similar effect:

It is obvious from the above contract of insurance taken along with the articles and rules, which are declared to be incorporated therewith, that it was established a mutuality of obligation between all the members of the insurance company – all the members had an interest in keeping down claims for loss, because the fewer of these the smaller would be the contribution periodically demanded from the various members, and while each member was bound by the rules to give assistance to ships of other members of the company, he was on his part entitled to receive assistance from them, and if a ship belonging to any member of the company failed to give assistance to any other ship insured in the company which was broken down or in distress it is, I think, clear, first, that the owners of the former ship would be guilty of a breach of contract, in consequence of which their own policy would be invalid, and they might, in addition be subjected to an action for damages.[56]

61. The reasoning in Clan Steam Trawling thus demonstrates that the mutual insurance contract was construed as providing obligations between the ships, not only to the insurance association. The finding in that case is accordingly consistent with the principle that for there to be no voluntariness the obligation must be owed to the salved vessel and not to a third party. This point seems to have been overlooked in The Margaret Philippa. There, the analysis of the contract showed that the obligation was owed to the company and there was no reasoning – other than to quote from Clan Steam Trawling at length – to say that it was owed to members inter se. The Margaret Philippa is therefore doubtful authority against the proposition.

62. In England it has long been the law that compliance with the statutory obligation to render assistance at sea does not prevent the assistance being voluntary for the purpose of a salvage reward. I have already mentioned the decision of The Beavorford. It followed the Owners of SS Melanie v Owners of SS San Onofre where Lord Phillimore held that "the duty cast by the Merchant Shipping Acts upon one of the two colliding vessels to standby and render assistance, does not prevent that vessel if she renders assistance from claiming salvage".[57]

63. Further, the common law duty to give assistance to other ships in distress does not deprive a party acting in accordance with that duty from a salvage reward. In The Waterloo in 1820, Sir William Scott (later Lord Stowell) held that "it is the duty of all ships to give succour to others in distress; none but a freeboot would withhold it; but that does not discharge from liability to payment where assistance is substantially given".[58]

64. The result of the above analysis is that if a claim was brought for a salvage reward under the common law against the Thor Commander, it would have been the case that unless the Xinfa Hai owed a legal duty to the Thor Commander that went beyond the duty generally owed by ships to one another to assist in times of crisis, it would not be deprived of a salvage reward on the grounds of want of voluntariness. That is why voluntariness was not an issue in the case.

Voluntariness under the Salvage Convention

65. Although Australia initially inherited the English common law of salvage, the regime is now found in The International Convention on Salvage 1989. The Salvage Convention was given the force of law in Australia in 1995 by amendments to the Navigation Act 1912 (Cth).[59]The Navigation Act 1912 was repealed by the Navigation Act 2012 (Cth), but the Salvage Convention continued to enjoy the force of law, being carried over from one Act to the next. Section 240 of the Navigation Act 2012 provides that there is no common law claim for salvage independent of the Salvage Convention where the latter applies.

66. Section 241(1) of the Navigation Act 2012 provides that regulations may make provision in relation to the giving of effect to the Salvage Convention.

67. Regulation 17 of the Navigation Regulations 2013 identifies the provisions of the Salvage Convention that have the force of law in Australia.[60]

68. Article 1 of the Convention, which includes the definition of "salvage operation", does not apply in Australia. However, that definition was included in the Navigation Act 1912 when the Convention was given the force of law,[61] and a definition in slightly different but for present purposes materially the same terms was included in the Navigation Act 2012.[62] As observed by Justice Rares, that definition does not include voluntariness as an element.[63] It is however worth observing that the definition of "salvage" in s 294 of the Navigation Act 1912 before it was amended in 1995 to enact the Salvage Convention also did not include voluntariness as a requirement.

69. Article 5 of the Salvage Convention also does not apply in Australia. It deals with salvage operations by or under the control of public authorities – which are the bodies most commonly affected by the requirement of voluntariness at common law as illustrated by The Buteshire. Article 5(1) preserves the governance of such operations by national law or other international convention. Article 5(2) states an exception, which is that salvors carrying out such salvage operations can still avail themselves of the rights and remedies provided for in the Salvage Convention. Article 5(3) makes it clear that the rights and remedies of public authorities under a duty to perform salvage operations shall be determined by the law of the State where the authority is situated.

70. Article 17 provides that where services are rendered under a contract entered into before the danger arose, no payment is due under the provisions of the Convention unless those services exceed what can reasonably be considered as due performance of the contract.

71. In summary, at the time of the Thor Commander incident, a claim for a salvage reward in Australia was governed by the Salvage Conventionand as already mentioned, given the terms of s 240 of the Navigation Act,there is no common law claim for salvage independent of the Salvage Convention where the latter applies.

72. Under the Salvage Convention, a right to a reward only arises if there has been a "salvage operation".[64] A "salvage operation" means any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever.

73. Casting our minds back to the position taken by Justice Rares in the Thor Commander, it will be remembered that his Honour found that there was nothing in the Navigation Act or the articles of the Salvage Convention to qualify the character of "salvage operations" as being only voluntary.[65]

74. However, one could just as easily have reasoned that since there is nothing in the Articles of the Salvage Convention which indicates that voluntariness is no longer a requirement of salvage operations, it remains a requirement. This conclusion is supported by the long-standing principles of common law which I have just discussed.

75. As set out by Allsop J (as the Chief Justice then was) for the Full Court in El Greco (Australia) Pty Ltd and Another v Mediterranean Shipping Co SA,[66] it is well-established that subject to any contrary intention revealed by the domestic statute making an international instrument part of domestic law, the ascertainment of the meaning of, and obligations within, an international instrument that is made part of the domestic law is to be ascertained by giving primacy to the text of the international instrument, but also by considering the context, objects and purposes of the instrument.[67]

76. Also, the manner of interpreting the international instrument is one which is more liberal than that ordinarily adopted by a court construing exclusively domestic legislation; it is undertaken in a manner unconstrained by technical local rules or precedent, but on broad principles of general acceptation.[68] The need for a broad or liberal construction is reinforced by the matters which can be taken into account under Arts 31 and 32 of the Vienna Convention on the Law of Treaties 1969, done at Vienna on 23 May 1969 (the Vienna Convention) in accordance with which Australian courts interpret treaties.[69]

77. The relevant historical context to the Salvage Convention is recorded in the report of the Comité Maritime International (CMI) to the International Maritime Organisation (IMO) that was approved by the General Assembly of the CMI at its International Conference held in Montréal in May 1981.[70] The report notes that in March 1978 the Amoco Caditz carrying approximately 220,000 tons of crude oil was wrecked on the coast of France and caused the hitherto largest oil pollution accident. That accident gave rise to the perceived need to consider reform of the international law of salvage, and in particular to explore whether new rules should be prepared in order to cover casualties which may cause a threat of pollution, thereby creating a direct and primary interest of the coastal State in the salvage operations.

78. The historical context to the Salvage Convention is dealt with at some length by Lord Mustill in the 1997 case The Nagasaki Spirit.[71] There is nothing in that context to suggest that the qualification for a salvage reward with regard to voluntariness required to be revisited.

79. Indeed, the CMI Working Group which prepared the first draft of what became the Salvage Convention stated in its report to the CMI General Assembly that I have already mentioned that it "recognised the desirability of preserving as much as possible of the principles of the existing law of salvage". It was stated that "the main objective has been to prepare a set of rules that, on the one hand, would encourage adequate provisions of salvage services and the efficient carrying out of salvage operations and, on the other hand, would be capable of wide international implementation".[72] Moreover, the President of the CMI, and renowned expert in this field, the late Professor Francesco Berlingieri, explained that the concept of "salvage operations" was not greatly modified in the new draft.[73]

80. The travaux preparatoires to the Convention make it quite clear that the existing rules with regard to voluntariness were intended to remain, save to the extent that national law imposes a different position with regard to public authorities. That was provided for in Article 5, which, you will recall, was not adopted by Australia.

81. For example, the CMI report to the IMO states, with regard to the definition of "salvage operations", that "it is generally felt to be an important element of salvage that it must be voluntary, but this term may be ambiguous and, therefore, it has not been included in the definition itself".[74] In relation to Article 17, the report states that the rule in that Article "forms part of the important principle under which a salvage service must be voluntary to give a right to the remedies of the Convention".

82. As I have indicated, Article 17 as ultimately adopted makes it clear that when a service is rendered under an existing contract "no payment is due under the provisions of the Convention unless the services are rendered exceed what can be reasonably considered as due performance of a contract entered into before the danger arose".

83. What comparative international case law there is also does not support the conclusion in the Thor Commander that voluntariness is not a requirement of salvage under the Convention. In 2011, the South African Supreme Court of Appeal – at that time the highest court of appeal on non-constitutional issues – in The Cleopatra Dream adopted the contrary view. [75] In that case, the Cleopatra Dream encountered a catastrophic failure on its way out of the Port of Saldanha on South Africa's west coast. The plaintiff, the National Port Authority, dispatched two tugs to tow her to safety within the port. The plaintiff was the only public authority which could legally operate tugs in the port by virtue of the South African Transport Services Act 1989. Following a successful salvage operation, the Port Authority arrested the Cleopatra Dream and claimed a salvage reward. The defendant vessel argued that the plaintiff had no right to claim a salvage reward since the rescue services were conducted by the plaintiff according to its statutory or common law duty and were not voluntary. The plaintiff denied such argument and averred that it was entitled to the salvage reward by virtue of Articles 5 and 17 of the Salvage Convention.

84. It will be recalled that Article 5 of the Salvage Convention deals with salvage operations by or under the control of public authorities. The Supreme Court of Appeal held that "the [Salvage] Convention evidences no intention to exclude voluntariness in respect of salvage operations performed by a public authority acting under a duty".[76] The Court thoroughly analysed Arts 5 and 17 of the Salvage Conventionand held that the correct interpretation of Art 17 is that a salvor only qualifies for a salvage reward if its salvage performance exceeds the degree or breadth of its statutory or contractual obligations. The Court held thatvoluntariness is an essential element of a salvor's right to recover a salvage reward and therefore, Art 5 does not recognise the entitlement of a public authority acting under statutory duty to a salvage reward. This is an issue for domestic law.[77]

85. In a 2004, the South African Supreme Court of Appeal, in The Roxana Bank,[78]explicitly stated that although a "salvor" is not defined in the Convention, it includes at least "any volunteer who renders services of a salvage nature",[79] for there is no closed list of persons entitled to claim reward.

86. In another South African decision from 2001, The Mbashi,[80] Levinsohn J, in considering the plaintiff's entitlement to a salvage reward under the 1989 Salvage Convention said the following:

Counsel however submitted that an essential ingredient of the salvor's right to claim salvage is that the service which he renders must be a voluntary one. This principle is entrenched in the common law of salvage both in England and South Africa. It seems to me that on a proper interpretation of the Convention nothing that is stated therein derogates from the aforesaid requirement.[81]

Conclusion

87. The requirement that a salvor must be a volunteer is justified on the basis that the reward of generous salvage payments has long been recognised as a proper way of promoting the rescue of endangered maritime property and preventing catastrophic environmental disasters.

88. The rationale for preventing salvage rewards for a person or authority under a pre-existing duty to render assistance, whether the duty arises from a contract or otherwise, is that a person under such a duty should not be encouraged to fail properly to comply with their duty and, by doing so, cause, or contribute to, the danger necessitating salvage.[82]

89. Those considerations apply equally in the context of the Salvage Convention. In the circumstances, the statements in the judgment in the Thor Commander with regard to voluntariness under the Salvage Convention should not be taken as the last word on the subject in Australia.


[1] I gratefully acknowledge the assistance of my associate, Phoebe Bates, in the preparation of this paper.

[2] Mount Isa Mines Ltd v The Ship "Thor Commander" [2018] FCA 1326; 263 FCR 181; 365 ALR 519; [2019] 1 Lloyd's Rep 167 (hereafter footnoted as "Thor Commander").

[3] Thor Commander at [2].

[4] Thor Commander at [1], [7] and [279].

[5] Thor Commander at [280]-[282].

[6] Thor Commander at [7] and [297].

[7] Thor Commander at [286].

[8] Thor Commander at[8].

[9] Thor Commander at [294].

[10] Thor Commander at[298]-[299].

[11] Thor Commander at [8].

[12] Thor Commander at [23].

[13] Thor Commander at [302].

[14] Thor Commander at [302]-[304].

[15] Thor Commander at [309].

[16] Thor Commander at [317]-[319].

[17] Thor Commander at [320].

[18] Thor Commander at [485].

[19] Thor Commander at [2] and [432]-[433].

[20] Thor Commander at [12].

[21] Thor Commander at [51].

[22] Davies M, Dickey A, Shipping Law (4th ed, Lawbook Co, 2016).

[23] Thor Commander at [113].

[24] Thor Commander at [89].

[25] Thor Commander at [92].

[26] Thor Commander at [262] and [266].

[27] Thor Commander at [267].

[28] Thor Commander at [338].

[29] Thor Commander at [430].

[30] Thor Commander at [456].

[31] United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2007) 163 FCR 183; 240 ALR 630; [2007] FCAFC 115. The judgment at first instance of Tamberlin J in United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151; [2006] FCA 1141 was confirmed. The applicable principles are our most usefully set out in the first instance judgment.

[32] Thor Commander at [467].

[33] Thor Commander at [483]

[34] Thor Commander at [503]

[35] Thor Commander at [12].

[36] Thor Commander at [274].

[37] Thor Commander at [348].

[38] The Beaverford (Owners) v Kafiristan (Owners) [1938] AC 136 at 147; The Sarpen [1916] P 306 at 315.

[39] Thor Commander at [349]-[351].

[40] (1899) 15 WN (NSW) 320.

[41] Ibid at 322.

[42] Ibid at 321.

[43] (1824) 166 ER 81 at 85.

[44] Michael White, Australian Maritime Law (3rd ed, The Federation Press, 2014), [11.6.1].

[45] The Ship "Texaco Southampton" v Burley and Others [1982] 2 NSWLR 336.

[46] Ibid at 340A-B.

[47] [1916] P 306.

[48] Ibid at 315 per Swinfen Eady LJ.

[49] Ibid at 315 per Pickford LJ.

[50] [1970] 1 Lloyd's Rep 40 (US District Court, Southern District of NY).

[51] Ibid at 45.

[52] Owners, Charterer, Master and Crew of The Ship Margaret Philippa v The Ship mv Santo Rocco Do Bagnara (1991) 101 ALR 491 (FCA).

[53] Ibid at 498.8.

[54] [1908] SC 651.

[55] Ibid at 656.

[56] Ibid at 661.

[57] [1925] AC 246 (HL) at 262.

[58] (1820) 2 Dods 433 at 436; 165 ER 1537 at 1538-9.

[59] Transport Legislation Amendment Act 1995 (Cth).

[60] Articles 6 to 8, 12 to 19, 21 to 23, 26 and 30.

[61] Navigation Act 1912 (Cth), s 294(1).

[62] Navigation Act 2012 (Cth), s 14.

[63] Thor Commander at [348].

[64] Article 12(1).

[65] Thor Commander at [274] and [348].

[66] [2004] FCAFC 202; 140 FCR 296 at [142]-[144].

[67] Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at 230 (per Brennan CJ, agreeing with McHugh J), at 240 (per Dawson J), at 251-256 (per McHugh J), at 277 (per Gummow J, also agreeing with McHugh J); and Morrison v Peacock (2002) 210 CLR 274 at [16] (per Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ).

[68] Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328 at 350; James Buchanan & Co Ltd v Babco Forwarding & Shipping Ltd [1978] AC 141 at 152; Fothergill v Monarch Airlines Ltd [1981] AC 251 at, 281-282, 285, 293; Morris v KLM Royal Dutch Airlines [2002] 2 AC 628 at [78]; Shipping Corp of India Ltd v Gamlen Chemical Co (Australasia) Pty Ltd (1980) 147 CLR 142 at 159; Chan v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379 at 412-413; Applicant A at 255; Great China Metal Industries Co Ltd v Malaysian International Shipping Corp, Berhad (1998) 196 CLR 161 at [19]-[24]; and Morrison v Peacock at [16].

[69] Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 265; Commonwealth v Tasmania (Tasmanian Dam Case) (1983) 158 CLR 1 at 93, 177; and Applicant A at 251-252, 255 and 277.

[70] Comité Maritime International, The Traveaux Préparatoires of the Convention on Salvage 1989 (CMI, 2013), pp 33-36. The report is also reproduced in Francis D Rose Kennedy & Rose: Law of Salvage (9th ed., Sweet & Maxwell, 2017), Appendix C-05.

[71] Semco Salvage & Marine Pte Ltd v Lancer Navigation [1997] UKHL 2; [1997] 2 AC 455 at 459.

[72] Comité Maritime International above fn 70, p 28.

[73] Comité Maritime International above fn 70, p 46.

[74] Comité Maritime International above fn 70, p 45.

[75] Transnet Ltd t/a National Ports Authority v The MV Cleopatra Dream and Another [2011] ZASCA 12; [2011] 3 All SA 279 (SCA); 2011 (5) SA 613 (SCA).

[76] Ibid at [67] per Heher JA, Brand, Lewis, Malan and Seriti JJA concurring.

[77] Ibid at [64]-[65].

[78] Swire Pacific Offshore Services (Pte) Ltd v MV 'Roxana Bank' [2004] ZASCA 75; [2005] 1 All SA 10 (SCA) at [10].

[79] Citing The Sava Star [1995] 2 Lloyds Rep 134 (Adm Ct) per Clarke J at 141.

[80] The MV Mbashi; Transnet Ltd v MV Mbashi 2002 (3) SA 217 (D); [2002] 2 Lloyd's Rep 602.

[81] Ibid at 224B-C; 605 2nd column.

[82] Francis D Rose Kennedy & Rose: Law of Salvage (9th ed., Sweet & Maxwell, 2017) at [8-010].


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