Scottish Court of Session Decisions

On 13th June 1907 the “Clan Grant,” owned by the Clan Steam Trawling Company, Limited, rendered assistance to the “Strathclyde,” owned by the Aberdeen Steam Trawling and Fishing Company, Limited, ashore and in distress near Duncansby Head.

In October 1907 the Clan Steam Trawling Company, Limited, and the members of the

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crew of the “Clan Grant” brought an action against the Aberdeen Steam Trawling and Fishing Company, Limited, in which they sued for “£500 sterling, or such other sum, more or less, as may be found in the course of the process to follow hereon to be the aggregate amount of salvage payable in respect of the salvage services” specified in the condescendence.

The defenders admitted their liability as regarded the members of the crew of the “Clan Grant,” but denied it as regarded the owners, founding on the terms of their policy of insurance.

The “Clan Grant” and the “Strathclyde” were both insured with the Aberdeen Mutual Steamship and Trawlers' Insurance Company. The policies of insurance of the company contained the following clauses:—“And it is agreed that this writing or policy of insurance shall be of as much force and effect as the surest writing or policy of insurance heretofore made in Lombard Street or in the Royal Exchange or elsewhere in London, and is and shall be upon the principle that while the contracts of insurance are contracts with the company, the premiums, or contributions of the nature of premiums, payable in respect of the insurances are to be calculated according to the losses by way of mutual incurance. … And it is mutually agreed between the assured and the assurers that the articles of association of the assurers' company and the rules of the company shall be deemed part hereof, and be binding upon the assured and assurers as fully and effectually to all intents and purposes as if such articles were inserted in this policy, and in any breach thereof will invalidate the same.”

The articles of association of the insurance company contained the following provisions:—“3. Every person who insures on behalf of himself or any other person any ship, or share or shares of a ship, in pursuance of the regulations hereinafter contained shall, as from the date of the commencement of such insurance, be deemed to have become a member of the company. … 9. The classes into which the members are divided, and the rights and obligations of the members of each class, shall be further defined by rules, and every member shall be deemed to accept and agree to be bound by the rules for the time being in force relating to the class of which he is a member.…”

The rules contained the following provisions:—“2. The company will insure steamships … upon the principle that while the contracts of insurance are to be contracts with the company, the premiums or payments in the nature of premiums (hereinafter called ‘contributions’) payable in respect of the insurances are to be calculated according to the losses upon the same basis as if the assured were mutual insurers, an entrance fee and contributions towards the current expenses of the company being payable, and allowances being made in respect of each insurance according to the articles and rules for the time being of the company. … 25. The company shall contribute towards any charges or expenses properly paid or incurred by any member for assistance rendered to any ship insured in the company such proportion of the total amount of such charges and expenses as the sum insured bears to the value of the ship as declared in the policy. 30. Ships insured in this company shall give assistance to any steamer broken down or in distress which is insured either in this company or in the Total Loss Mutual Steamship Insurance Company (Sunderland), or the United Kingdom Steam Tug and Trawler Insurance and Indemnity Association (Shields), or any other association with which an agreement is or may be entered into. … 32. The funds required for the payment of claims shall be raised by contributions from all the members in the following manner, viz.—All claims for total loss, damage done, and general average, and for particular average, shall be assessed on the capital at risk in each class respectively on the dates of such claims arising. The members of each class shall contribute only to the insurance claims of vessels insured in that class.”

The following excerpt is taken from the rules of the Total Loss Mutual Steamship Insurance Company:—“92. Steamers insured in this Association bind themselves to give assistance to any vessel broken down or in distress insured in this Association or in the Associations of the United Kingdom Steam Tug and Trawlers Insurance and Indemnity Association (North Shields), Tyne Steam Tug Towing Mutual (Shields), Percy Mutual (Newcastle), Forth and North Sea Steamboat Mutual (Leith), it having been arranged that the vessels in these Associations shall be bound to like conditions, and that the compensation for services rendered be decided and determined by the committees of the Association or Associations in which the vessels were insured.”

The following pleas were stated, inter alia:—For the pursuers—“(1) The pursuers having salved the defenders' ship, they are entitled to salvage from the defenders. (3) The conditions of the policies of insurance and rules of said insurance company libelled not excluding claims for remuneration for salvage services, the defenders' plea in bar of the pursuers' right to claim salvage should be repelled.”

For the defenders—“(1) The pursuers, the Clan Steam Trawling Company, Limited, being under pre-existing obligation to render the services in question to the ‘Strathclyde,’ are not entitled to salvage, and the defenders are entitled to absolvitor quoad the claims of these pursuers, with expenses.”

The Lord Ordinary ( Salvesen) on 7th January 1908 pronounced the following interlocutor:—“Repels the first plea-in-law for the defenders, and allows to the parties a proof of their respective averments, and to the pursuers a conjunct probation.”

Opinion,—“The pursuers in this action are the owners, officers, and crew of the steam trawler ‘Clan Grant’; and they seek to recover a sum of £500 in respect of salvage services rendered to the defenders' vessel ‘Strathclyde.’ It is not disputed

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that the facts averred disclose a relevant case for compensation as for salvage services; and the defenders on record state that they are willing to pay reasonable compensation to the officers and crew of the ‘Clan Grant.’ They plead, however, that the owners' claim is excluded because they were under a pre-existing obligation to render the services in question to the ‘Strathclyde’; and it was this matter alone which was the subject of discussion in the procedure roll.

The pre-existing obligation in question is derived from the rules of the Aberdeen Mutual Steamship and Trawlers Insurance Company, with which company both the ‘Clan Grant’ and the ‘Strathclyde’ were insured.” … [ His Lordship quoted articles 3 and 9 of the articles of association and article 30 of the rules.] … “Appealing to this rule, the defenders say that the owners of the ‘Clan Grant’ were under a general obligation to render salvage services to any vessel in distress insured in the same company; and that the claim for salvage services as distinguished from a claim for actual loss incurred in rendering the services is accordingly barred.

The authority relied on in support of this proposition was a decision of Lord Stowell in the case of the ‘ Zephyr,’ 2 Hagg. 43; and undoubtedly if the rubric is to be read as laying down an absolute rule on the subject apart from the special circumstances in which the question arose it supports the defenders' contention. In that case two vessels had agreed to sail as consorts, and to render to each other mutual assistance. In the course of the voyage one of the vessels rendered certain services to the other by standing by for several days; but these services were held in fact, as I read the decision, not to be such as would found a salvage claim. This was obviously a sufficient ground for dismissing the action. But the learned Judge prefaced his judgment with some observations in which he indicated that the claim would, in any event, have been barred by the mutual agreement to which I have referred. The case, however, was a very special one, and does not in my opinion support the general proposition that where the owners of two vessels have agreed to give assistance to each other if broken down or in distress no claim for remuneration as for salvage can ever arise. In the case of the ‘Zephyr’ it must be held to have been implied in the agreement that such services as were actually rendered were to be mutually given by the vessels concerned without remuneration; and it is material to a proper understanding of the case that the Court held that the services which were the subject of the action were not salvage services at all.

The defenders also referred to the case of ‘ Harriot’ 1 W. Robb 439; the ‘ Marie Jane,’ 14 Ju. 857; and the ‘Sappho,’ L.R., 3 P.C. 690. In the last of these cases it was decided that when salvage services are performed by one ship to another belonging to the same owners the master and crew of the salving ship are entitled to salvage remuneration although no claim will lie at the instance of the owners. The decision therefore does not touch the present case; and it does not appear to me that the observations made by Lord Justice Mellish in delivering the judgment of the Court have any bearing upon the question at issue here. Nor does there appear to me to be any analogy between the case of seamen who render services connected with the saving of their own ship and the case of shipowners who are not otherwise connected than that both their vessels are insured in the same company rendering services to each other's vessels. In my opinion, therefore, there is no law to the effect that a pre-existing obligation constituted by an agreement between two shipowners to render salvage services to each other's ship operates in all cases as a bar to a claim for compensation. Such an agreement really does not add very much to the moral obligation which every ship is under to give assistance where possible to another ship that is in distress.

I do not affirm that shipowners may not by agreement bar themselves from any claim for salvage remuneration in respect of services rendered to each other's property. Such an agreement might conceivably be objected to as being contrary to public policy. But assuming its validity I think it must be clear from the agreement that the rendering of assistance to a vessel in distress shall not found a claim for remuneration. The right to obtain salvage remuneration is one very much favoured in the law, and therefore cannot be excluded unless by express words or by very clear implication from the language used. Rule 30 contains no express exclusion of such a claim, and it does not appear to me that there is any implication at all that it should be excluded. If the question had arisen with a vessel belonging to The Total Loss Mutual Steamship Insurance Company of Sunderland, I find, from the rules of that association (Rule 92), that compensation would have been claimable, although the amount would require to be fixed by the committees of the associations in which the vessels were insured, and not by the ordinary tribunals of the country. The defenders here say that they are willing to pay the owners of the ‘Clan Grant’ any outlay they have incurred or any damage they have sustained in connection with the services rendered, and that it has been the practice of the insurance company to meet such claims. If their argument, however, is good for anything, I think they must maintain that even such a claim is barred by Rule 30. It is possible to read into Rule 30 an implication that no compensation shall be allowed for assistance given in terms of that rule, but I cannot understand on what principle compensation should be limited to those cases where loss or outlay has been incurred in rendering services. A similar question was mooted, although not decided, in the case of the ‘ Margery’ P.D., 1902, p. 157, but it was not necessary to arrive at any decision on the point now at issue because the

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owners of the salving vessel were not parties to the suit but were content with the award of compensation which the committee of the Sunderland Association had made in their favour. Without, therefore, expressing any opinion as to the validity of a bargain between the members of a mutual assurance company that their vessels should mutually render assistance on the footing of not being remunerated for their services, however meritorious, I reach the conclusion that the present claim is not barred, because there is nothing in the agreement to exclude the right of the salvor to receive the remuneration for his services which the law gives him. I shall therefore repel the first plea-in-law for the defenders and allow parties a proof of their respective averments.”

The defenders reclaimed, and argued—Services rendered by one vessel to another in distress were only salvage services if rendered voluntarily—“ The Neptune,” 1824, 1 Hag. Adm. Rep. 227, Lord Stowell at 236; “ The Zephyr,” 1827, 2 Hag. Adm. Rep. 43; “ The Calypso,” 1828, 2 Hag. Adm. Rep., Sir Christopher Robinson at 217; “ The Solway Prince” [1896] P 120, see especially Sir F. H. Jeune at 127; “ The Sappho” 1871, L.R., 3 P.C.A. 690; “ The Harriot,” 1842, 1 W. Robinson Adm. Reps. 439; Abbott's Law of Merchant Ships and Seamen, 14th edition, p. 965; Kennedy on the Law of Civil Salvage, pp. 2, 71, 84, 97; Maclachlan's Law of Merchant Shipping, 4th edition, pp. 642, 643; Bell's Principles, sec. 444. Here the services were not voluntary but contractual and rendered in respect of the obligation contained in the contract of insurance. Accordingly they were not salvage services, and therefore could not form the basis for a claim of salvage remuneration in a salvage action. Any remuneration to which those rendering them might be entitled must be looked for in the contract, and could only be sued for in an action under the contract. The contract, however, provided no remuneration, but in its place, inter alia, the valuable consideration that every other co-insurer was bound if occasion arose to render like services. Their contention was supported by the law which had been applied in tug and towage cases, where the rule was that the tug could only claim salvage remuneration for services clearly outwith the scope of the contract under which it was employed— Akerblom v. Price, Potter, Walker & Company, 7 QBD 129. It was absurd to say that there was anything in this view repugnant to public policy, for the appellant did not dispute the right of the captain and crew (who were under no contractual obligation) to salvage remuneration. The “ Margery” [1902] P 157, on which the respondents relied, only dealt with the right of the master and crew to salvage, which was not disputed, and in the “ Waterloo,” 1820, Dodson's Admiralty Reports, vol. ii. 433, also relied on by them, there was nothing which controverted the general principle laid down in the authorities already cited.

Argued for the respondents—Salvage might be defined as the “compensation paid for the saving of a ship or her apparel or cargo”—Abbott, 14th edition 962. The respondents had saved the ship and now claimed compensation. Such compensation was highly favoured by law, and if excluded must be excluded by the clearest and most indubitable language—The “ Waterloo,” cit. sup. Was the language here clear? Quite the reverse. The appellants' whole case rested on reading into sec. 30 the words “without remuneration.” If intended, these words could readily have been inserted, but that some remuneration was contemplated, or at anyrate that it was not excluded, was clear from a reference to the rules of the Total Loss Mutual Steamship Insurance Company, which referred in distinct terms to “compensation” for services. The obligation contemplated in all the definitions cited by the appellants was a contractual obligation to perform services without remuneration. The respondents' contentions were supported by the “ Margery,” cit. sup. The only classes of case in which remuneration could be excluded were ( a) where the ships were engaged upon a common enterprise—the “ Swan,” 1839, Rob. Adm. Cases 68, Dr Lushington at p. 70; “ The Zephyr,” cit. sup.; “ The Sappho,” cit. sup., per Mellish, L.J., 693; “ The Harriot,” cit. sup.—or ( b) where the salvor stood in some particular relation of duty to the vessel salved (as to crew see Lord Stowell in “ Neptune,” cit. sup.; as to tug and pilot, Akerblom v. Price, Potter, Walker & Company, cit. sup.). It would be against public policy to uphold the view maintained by the reclaimers.

At advising—