FEDERAL COURT OF AUSTRALIA

 

United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC [2007] FCAFC 115

 SHIPPING –salvage – appeal from award of salvage reward – discretionary nature of award – role of appellate Court – whether primary judge erred in exercising discretion in fixing reward – whether failed to take into account degree of risk of global and of local failure – sufficiency of evidence – whether potential liability to third parties – relevance of costs and actual expenses of salvage – whether judge used actual costs and expenses as benchmark – whether value of services depends critically upon the potential losses that are avoided – whether judge took correct approach to value – encouragement of reward – proof of beneficial ownership

 

 

Navigation Act 1912 (Cth) ss 315, 316(1)

International Convention on Salvage. Opened for signature 28 April 1989 (entered into force 14 July 1996) Articles 1, 12, 13

 

Delosa v Clippers Anchorage Pty Ltd (NSWSC, 6 Nov 1978, unreported) Approved

Fisher v The ‘Oceanic Grandeur’ (1972) 127 CLR 312 Explained

Five Steel Barges (1890) 15 PD 142 Considered

Hibbs v Ross (1866) LR 1 QB 534 Distinguished

House v The King (1936) 55 CLR 499 Cited

John Gann v Jean Baptiste Navarin Brun ‘The Clarisse’ (1856) XII Moore 940 Cited

Jones v Dunkel (1958-1959) 101 CLR 298 Discussed

The ‘Amerique’ (1874) LR 6 PC 468 Considered

The Blenden Hall (1814) 1 Dodson, 414 Referred to

The Cargo ex Port Victor [1901] 1 P 243 Cited

The City of Chester (1884) 9 PD 182 Considered

The Cuba (1860) 1 Lush 14 Cited

The Emulous Case No 4480(1832) 8F.Cas. 740 Considered

The Henry Ewbank  (1833) 11 F. Cas. 1166 Cited

The Meandros [1925] 1 P 61 Cited

The Queen Elizabeth (1949) 82 Ll.L Rep 803 Discussed

The Star of Persia (1887) 6 Asp M.L.C. 220 Cited

United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC[2006] FCA 1141 Affirmed

 

C T Sutton, The Assessing of Salvage Awards:  An Enquiry into English Admiralty Practice, Stevens & Sons Limited, London, 1949, pp 1-3

EC Benedict, Benedict on Admiralty 7^th edn, 2006 rev M Bender, New York, 2006, Vol 3A, s 236

 

UNITED SALVAGE PTY LTD, GLADSTONE TUG SERVICES PTY LTD AND QUEENSLAND TUG AND SALVAGE CO PTY LIMITED v LOUIS DREYFUS ARMATEURS SNC,  LOUIS DREYFUS ARMATEURS SAS, SOCIETE ANONYME LOUIS DREYFUS ET COMPAGNIE AND OLTRAMARE SHIPPING CO S A

 

NSD 2432 OF 2006

 

 

RYAN, KIEFEL AND DOWSETT JJ

1 AUGUST 2007

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2432 OF 2006

 

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

 

BETWEEN:	UNITED SALVAGE PTY LTD First Appellant   GLADSTONE TUG SERVICES PTY LTD Second Appellant   QUEENSLAND TUG AND SALVAGE CO PTY LIMITED Third Appellant
AND:	LOUIS DREYFUS ARMATEURS SNC First Respondent   LOUIS DREYFUS ARMATEURS SAS Second Respondent   SOCIETE ANONYME LOUIS DREYFUS ET COMPAGNIE Third Respondent   OLTRAMARE SHIPPING CO S A Fourth Respondent

 

JUDGES:	RYAN, KIEFEL AND DOWSETT JJ
DATE OF ORDER:	1 august 2007
WHERE MADE:	SYDNEY

 

THE COURT ORDERS THAT:

 

1.                  the appeal be dismissed; and

2.                  the appellants pay the respondents’ costs of the appeal.

 

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2432 OF 2006

 

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

 

BETWEEN:	UNITED SALVAGE PTY LTD First Appellant   GLADSTONE TUG SERVICES PTY LTD Second Appellant   QUEENSLAND TUG AND SALVAGE CO PTY LIMITED Third Appellant
AND:	LOUIS DREYFUS ARMATEURS SNC First Respondent   LOUIS DREYFUS ARMATEURS SAS Second Respondent   SOCIETE ANONYME LOUIS DREYFUS ET COMPAGNIE Third Respondent   OLTRAMARE SHIPPING CO S A Fourth Respondent

 

JUDGES:	RYAN, KIEFEL AND DOWSETT JJ
DATE:	1 august 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE COURT:

1                     This appeal concerns the reward for salvage fixed by Tamberlin J in favour of the appellants at AUD850 000 (United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC [2006] FCA 1141).  The first appellant is an international salvage operator; the second appellant the owner of the tug the ‘Tom Tough’ and the third appellant the owner of the tugs the ‘Wistari’ and the ‘Kuttabul’.  The ‘Tom Tough’ and the ‘Wistari’ are salvage capable tugs.  The three tugs were involved in the provision of salvage services to the ship La Pampa at Gladstone Harbour, Queensland on 27 March 2002.  The appellants (‘the salvors’) contend that the reward is inadequate and results from errors as to facts and as to the criteria to be applied in assessing a reward. 

STATUTORY PROVISIONS

2                     Section 316(1) of the Navigation Act 1912 (Cth) provides that Div 3 applies whenever judicial or arbitral proceedings, relating to the provision of salvage operations, are brought in Australia, subject to subs (2) and subs (3), which are not presently relevant.  Section 315 provides that Articles 6 to 8, 12 to 19, 21 to 22, 26 and 30 of the Salvage Convention, and the common understanding concerning Articles 13 and 14 of that Convention, have the force of law in Australia.  The Convention referred to is the International Convention on Salvage opened for signature 28 April 1989 (entered into force 14 July 1996) (‘the 1989 Convention’) which appears at Sch 9 of the Act. 

3                     Article 12 provides that only salvage operations which have had a useful result give a right to reward.  There was no issue in this case that the salvors were entitled to a reward.  Article 13 provides the criteria for fixing the reward, as follows:

‘1.        The reward shall be fixed with a view to encouraging salvage operations, taking into account the following criteria without regard to the order in which they are presented below:

(a)        the salved value of the vessel and other property;

(b)        the skill and efforts of the salvors in preventing or minimizing damage to the environment;

(c)        the measure of success obtained by the salvor;

(d)        the nature and degree of the danger;

(e)        the skill and efforts of the salvors in salving the vessel, other property and life;

(f)        the time used and expenses and losses incurred by the salvors;

(g)        the risk of liability and other risks run by the salvors or their equipment;

(h)        the promptness of the services rendered;

(i)         the availability and use of vessels or other equipment intended for salvage operations;

(j)        the state of readiness and efficiency of the salvor’s equipment and the value thereof.’

BACKGROUND

4                     The La Pampa is a capesize bulk carrier.  At the time of the salvage operation she was approximately seven years old.  The parties agreed that her value then was USD20 million.  Prior to the call for assistance the vessel had been loaded with 160 927 metric tonnes of coal valued at USD5 million.  She was fully laden and carrying 2 993 metric tonnes of fuel oil, 163 metric tonnes of diesel oil and 80 tonnes of lubricating oil.  The total value of the bunkers was USD390 000. 

5                     The three tugs had assisted the La Pampa to unberth, on the morning of 27 March 2002, from the Clinton Loading Berth in Gladstone Harbour.  They had been released and had arrived back at their berths at the tug wharf when the Pilot on board the La Pampa requested the assistance of the tugs because the vessel was experiencing steering problems.  A few minutes later the main steering gear failed and the vessel swung to port, grounding on the northern side of the Auckland channel. 

6                     After the grounding, the three tugs commenced a co-ordinated salvage operation with the ‘Kuttabul’ pushing at full power on the La Pampa’s port shoulder and the ‘Tom Tough’ pushing at full power on her portside aft.  The ‘Wistari’ connected to the vessel’s starboard shoulder and towed at full power.  As a result of these combined efforts the La Pampa was re-floated shortly after 07.30 hours and was then taken under tow by all three tugs whichmanoeuvredher down the Auckland Channel and the Gatcombe Channel to the South Trees Anchorage.  It was not until 23.30 hours that the La Pampa was safely anchored 3.5 miles north-east of the Fairway Buoy and inside the Gladstone pilotage area.

7                     In the meantime, considerable difficulties had been encountered by one or more of the tugs as a result of unexpected movements of the La Pampa and the need to position her to accommodate changes in the ebb tide.  One such repositioning required the vessel to go through a 180 degree rotation.  Before low water at about 14.36 hours, it had been necessary for the ‘Tom Tough’ connected astern of the La Pampa to apply power continuously and for the ‘Wistari’ to push at her starboard and the ‘Kuttabul’ at her port quarter.  Despite these exertions, the La Pampa took the ground briefly in way of her portside forward at 14.30 hours.

8                     As the water rose there was further towage by the ‘Tom Tough’ and pushing by the ‘Kuttabul’ and the ‘Wistari’ and the La Pampa appeared to ground again.  What happened between 18.00 hours and when the vessel was safely anchored is recounted in these terms in the reasons below:

‘18       … The anchor could not be recovered until full power from all three tugs was applied and when the vessel finally began to move, she did so with a rush.  The tugs then immediately ceased to apply power.

19        After the vessel’s anchor was aweigh, the “Wistari” connected through the centre lead aft.  At 18.20 hours, the “Kuttabul” positioned herself at the port side aft, but later had to move up and down the port side to help control the vessel.  At this point, the vessel was veering and yawing across the channel because each time that power was applied with her main engine, her rudder went hard to port.  At all material times, the rudder appeared jammed in this position.  The “Tom Tough” shifted to the port shoulder at 18.46 hours and connected there.  At 19.37 hours, the “Tom Tough” moved to connect when the vessel was entering the Golding Cutting abeam of marker G1.  Although the tug masters were aware that the vessel had to leave the port over the forthcoming high water, difficulties in controlling the “La Pampa” kept the towing speed at about 3 knots.

20        As the yawing of the vessel became more pronounced, the “Tom Tough” parted her connection at 20.24 hours near marker S1.   The “La Pampa”then veered to starboard, and only prompt pushing action by the “Wistari” prevented grounding.  The “Tom Tough” connected to the port shoulder soon after.  At 20.50 hours, the “Kuttabul” lost her connection at the port quarter.  The Pilot accepted the Master’s advice that the “Kuttabul” would be best deployed at the starboard quarter, and the tug soon connected in this position.  The wind was now blowing in an easterly direction at a pressure of Force 4.  The sea conditions were moderate and a swell of approximately 1-1.5 metres had risen.  These conditions caused some inconvenience to the tugs working close to the vessel’s hull due to the reflection of the sea and swell from this area.  At 21.15 hours, the vessel was abeam of marker S15 and was turned to port into the Boyne Cutting.  At 21.44 hours, the vessel was abeam of marker S9 and was turned to port.  Each of these turns was made challenging due to the ebb tide which was setting the vessel to starboard in the channel, although this was offset to some extent due to the jamming of the vessel’s rudder to port.

21        At 22.16 hours, the “La Pampa” was abeam of the entrance markers S1 and S2.  At 22.32 hours, she passed the Fairway Buoy outbound.  At approximately this time, the swell increased.  The “Kuttabul” connected astern at 23.00 hours, but then parted her line when pulling into the wind.  The “Kuttabul” subsequently re-positioned at the port quarter and pushed at half ahead.  At 23.10 hours, the anchor was let go.… .’

9                     The vessel was surveyed at Brest in France after the incident.  She had suffered damage in the nature of extensive setting-in and deformation of the port double-bottom tank, web frames and stiffener and the shell plating, which had been ruptured in two places.  The damage extended over about 87 percent of the 7 300 metres of the vessel’s underside.  Repairs carried out, between 7 and 28 June 2002, consumed 63 tonnes of replacement steel and associated reinforcements. 

THE JUDGMENT APPEALED FROM

10                  After reviewing the language of the 1989 Convention, some travaux preparatoires, principally the Nielsen Report approved by the Executive Counsel of the International Maritime Organisation and the few decided cases which had adverted to the question, his Honour made the following observations:

‘53       In consideration of this issue, there are no bright lines, controlling considerations or set formulas in fixing an appropriate award for salvage services.  As outlined above, a global figure must be determined having regard to the factors in Article 13.  The weight to be assigned to each factor is dependent on the circumstances.  In one sense, the higher the monetary reward given, the greater is the incentive to undertake salvage operations.  The fact that the Court should apply a liberal and generous assessment to the fixing the reward with this aim in mind does not entitle the Court to award an unreasonable or extravagant amount.’

11                  Before his Honour proceeded to examine, separately and in order, each of the criterion enumerated in Art 13(1), he dealt with the salvors’ contention that a factor, not there listed, could be taken into account.  Part of the salvors’ case was that the amount of salvage reward should reflect the liability to third parties, to which the owners of the vessel had been exposed.  The prevention, or reduction, of that liability was to be treated as a benefit to them.  His Honour considered that Art 13, properly construed, did not import any obligation upon the Court to investigate the extent to which third party liability had been avoided.  Nevertheless, he concluded that consideration of the vessel’s exposure to liability was not excluded by the Convention.  It might be appropriate, in particular circumstances, to take it into account as enhancing a reward;  in other cases it may not be of significant weight.  In neither event did it warrant detailed investigation, consideration of detailed evidence or definitive conclusion concerning liability.  His Honour went on:

‘58       It may be said that such an approach introduces an additional element of unpredictability in fixing a reward, but it must be kept in mind that the whole exercise is not one of arithmetic precision.  It is an exercise of evaluation, judgment, and the balancing of broad considerations.  In this particular case, having regard to the circumstances to which I refer below, the prospective exposure to liability of the vessel is a matter to which I have given little weight as a general enhancing factor in fixing the reward.  I now turn to consider the specific considerations.’

12                  No issue is taken on the appeal as to his Honour’s findings as to the factors referred  to in Art 13(1)(c), (e), (g), (h), (i) and (j).  His Honour found that the salvage operation had been completely successful;  that the salvors’ skill and effort was of a high order and that they had acted promptly.  There was no dispute about the salvors’ state of readiness, nor the efficiency of their equipment.  These were factors to which his Honour gave significant weight.  His Honour took account of the fact that two of the tugs were salvage-capable and of the costs associated with the provision of such equipment, together with the fact that one of the salvors was a professional salvage operator.  His Honour did not consider that there was significant risk of loss of life or injury to the tug crews. 

13                  The salved value of the vessel was agreed by the parties to be AUD37 914 691.94.  His Honour observed that cases had warned about assigning excessive weight to the salved value of the vessel and property, referring to the decision of Stephen J in Fisher v The ‘Oceanic Grandeur’ (1972) 127 CLR 312 at 342 and to The ‘Amerique’ (1874) LR 6 PC 468, where the Privy Council stated the ‘rule’ to be that the value of the property salved must not be allowed to raise the quantum to an amount altogether out of proportion to the services actually rendered. 

14                  The salvors submitted to his Honour that it was appropriate to fix the award by reference to the value of the vessel.  They suggested the application of a percentage – 10 percent, as a minimum, and as high as 15 or 20  percent.  In the latter case the reward would exceed AUD6 million.  His Honour was referred to awards made in other cases, but his Honour discounted their usefulness.  In his Honour’s view the range and discrepancy between value and percentage in the cases demonstrated the highly fact-specific nature of each case.  Whilst a uniform percentage might provide certainty of outcome, the listing of the factors in the Article indicated an intention that may be taken into account and given such weight as the circumstances of a particular case required.  Article 13 expressly stated that the criteria are not ranked in any order of importance and there was therefore no justification for concluding that the salved value, or a percentage of it, is to be a controlling consideration, his Honour said.  It was of some importance that Art 13(3) specifically capped the reward at the salved value of the vessel and property.  The approach suggested by the salvors had the disadvantage that a proportionate equitable award may not be fixed in a particular case.  In his Honour’s view where higher awards, expressed as a percentage of the salved property, have been considered appropriate, the surrounding conditions and circumstances of the salvage operations have been relatively extreme.  Nevertheless his Honour said that he treated the agreed value of the salved property as an ‘important consideration’. 

15                  In relation to the topic dealt with by Art 13(1)(b), the salvors’ skill and efforts in preventing damage to the environment, his Honour noted that the possible risks included the release of oil, blockage of the channel, damage to adjoining structures and, at worst, break-up of the vessel with its consequences.  His Honour however considered that the provision was not concerned with possible, remote or hypothetical damage.  It was defined in Art 1 of the 1989 Convention to mean substantial physical damage to human health, marine life or resources in coastal or inland waters or adjacent areas caused by pollution, contamination, fire, explosion or similar major incidents.  In considering the events of 27 March 2002, his Honour found that there was no major incident which seriously affected, or posed a direct threat to, the environment.  There was no notable escape of pollutants or any contamination which required measures to be taken.  The grounding of the La Pampa and consequential salvage operations might be referred to as incidents, but they were not major incidents which affected or threatened the environment in the way spoken of in the Article.  Having regard to the position in which the oil was stored, well away from where there was any prospect of rupture or failure, his Honour found that there was only a remote possibility of a failure which could have led to contamination or pollution.  His Honour said (at [80]):

‘In my view, there was virtually no real – as opposed to remote – possibility that oil or ballast water in any significant quantity could escape as a result of the grounding, and therefore I have not assigned any significant weight to this consideration.  Nor do I consider that there was any real risk of breakage of the vessel so that the environment would be adversely affected.’

16                  His Honour’s latter finding reflects the view he reached upon the salvors’ case concerning the danger that the La Pampa faced, that of global failure.  His Honour’s findings, in connexion with Art 13(1)(d), assume importance upon the appeal. 

17                  Article 13(1)(d), in his Honour’s view, is directed to assessing the danger to human life and the risk of loss, injury or damage in relation to the salved property.  His Honour did not consider that the evidence suggested that the events on the day in question presented any significant danger to life or person.  Nevertheless, the vessel itself became vulnerable to danger when its steering gear failed.  This led to its grounding and its inability to manoeuvre safely.  This presented difficulties for the salvors, his Honour acknowledged.  Any danger to the vessel and property would have been significantly greater had the tugs not come to the vessel’s assistance.  His Honour observed that, once the tugs arrived, their efforts in combination with those of the Pilot, the Master and the harbour authority contained the risk and avoided damage. 

18                  The case put forward for the salvors was that regard should also be had to the potential danger that the vessel faced had tug assistance not been available.  The dangers spoken of were of global or local failure to the vessel until it was safely removed from the point where it had grounded.  Danger was said to continue until the vessel anchored at deep sea anchorage.  His Honour accepted that, although Art 13(1)(d) would appear to be limited to a consideration of the actual danger that the vessel experienced during the operation, it was nevertheless appropriate to consider the hypothetical situation. 

19                  The ‘global failure’ spoken of at trial was not quite as catastrophic as the submissions for the salvors on the appeal at some points suggested.  It did not involve complete disintegration of the vessel.   His Honour described it as involving the possible buckling of the deck and the breaking of the two bottom skins near the middle of the ship.  The greatest prospect of it occurring, as put forward by the salvors, assumed that the La Pampa, without tugs, would have remained pinned bythe bow on the high tide, swung across the channel and hit the south bank with her stern.  If she had then remained aground, by stern and bow, she would have been subject to bending forces as she was held up on the fall of the tide.  The ‘local failure’ would have been that occasioned to the rudder, propeller and local hull failure near the stern upon contact with, and slippage upon, the bank in the event that the vessel had not been held up.

20                  His Honour observed that there was ‘considerable speculation’ as to the likelihood of the bending moment necessary to produce global damage being reached.  The salvors’ case on global failure was seen by his Honour to depend largely upon the evidence of a naval architect, Mr Squire.  The respondents had pointed out, and his Honour noted, that Mr Squire’s conclusion was that the hull had not been likely to fail due to sagging and that, although there was a risk of failure, it was a small one.  Mr Squire had given his evidence based upon three scenarios.  On only one scenario (Case 2) was the hull said to be at high risk of failure (the ‘worst case scenario’).  On the other two scenarios there was either no realistic prospect of the collapse of the hull as a whole or its probability was low.  On Mr Squire’s own evidence the worst case scenario was less likely than either of the other two. 

21                  His Honour went on to deal with the assumptions upon which the worst-case scenario was based, largely by reference to the evidence of Dr Binks, whose evidence he plainly accepted. 

‘99.      Moreover, the worst-case scenario presented by Mr Squire (Case 2) made the unsubstantiated assumption that the vessel grounds fore and aft at the very top of the tide.  As pointed out by Dr Binks, a naval architect called for the defendants, Case 2 is based on several problematic assumptions.  Firstly, this scenario assumes that there is no sinkage or slippage of the ship’s bow on the north bank or of the ship’s stern when grounded on the south bank.  Secondly, it is assumed that that the ship’s stern swings to such an extent that a length of over 40 metres (measured from the aft perpendicular) makes contact with the south bank of the channel.  He does not accept these assumptions, and considers that they are speculative.  In addition, Mr Squire points out the difference between Case 2 (high probability of failure) and Case 3 (a very low probability of hull failure) is that in Case 3, instead of the vessel going aground fore and aft at the very top of the tide, she grounds at a lower point or sinks into the sea-bed by a distance of 0.68 metres.  This is a relatively small difference.  If the distance is less than that, the degree of risk falls between Case 2 and Case 3.  Mr Squire accepted that the vessel must ground part of the way up the sides of the channel, and that whether she would drop with the tide would depend on the material and the steepness at the point of contact.  The defendants note that there is no definitive evidence as to the shape of the south bank and that the evidence concerning the material of the south bank is limited.  It was also stressed that Mr Squire acknowledged considerable uncertainty about his prediction in relation to global failure.’

22                  In the passage which follows, and upon which the salvors rely on the appeal, his Honour said:

‘100.    On the expert evidence, I am not satisfied that in the present case there was any real probability of global failure, or indeed any danger of global failure.  Dr Binks says, and I accept, that it is unlikely that the vessel would have become grounded with her bow on the north bank and her stern on the south bank because one would expect this scenario to have been prevented by the actions of the crew.  He also considered that the general blockage scenario as presented in Case 2 could arise in the event that no action was taken by the crew, but he disagreed with the assumptions made by Mr Squire to justify the view that there was a significant prospect of global failure.  There was simply not enough material to warrant the adoption of this conclusion based on these assumptions.’

23                  His Honour then turned to the issue of ‘local damage’.  The prospect of such damage, on the grounding of the vessel, depended in large part upon evidence given by the geologist, Dr Phipps, as to the hardness of the material which the rear of the vessel might strike.  His Honour considered that the evidence was of limited assistance.  There were considerable variations between the borehole samples upon which it was based.  There was considerable doubt as to the precise location where the grounding, and any impact with the bottom or sides of the channel, could have occurred.  The core samples did not allow a reliable opinion to be formed.  The size of the samples and the distances between them compounded the uncertainty.  The data was, in his Honour’s view, inadequate to make any reliable estimate as to the possible damage caused by the vessel grounding or swinging across the channel and impinging upon the southern bank.  His Honour said that any view would be ‘speculative at best’. 

24                  His Honour did not accept the evidence of Dr Phipps, that the vessel grounded on bedrock on the northern side of the channel.  That opinion was drawn from the existence of scour marks on the vessel and Dr Phipps was not qualified to interpret the cause of damage, his Honour found.  His Honour accepted the evidence of Dr Binks, based upon calculations of material within the range disclosed by the boreholes.  Only one of the boreholes showed hard material and there would not have been a significant difference in the impact to the vessel if it had struck material of a type at either end of the range.  Dr Binks had not accepted the assumptions Dr Phipps had made.  Moreover, his Honour observed, Dr Binks considered that, with action by the crew, it was most unlikely that the vessel would have struck the south bank. 

25                  In relation to the topic as a whole, his Honour said:

‘108.    My conclusion in relation to this consideration is that there was danger to the vessel of suffering further damage if the tugs had not intervened.  It is possible, but not probable, that in such circumstances the vessel could have blocked the Auckland Channel.  It is not possible to determine for what period this could have lasted.  There was also a danger that the “La Pampa” could have re-grounded and suffered further damage.  I do not consider there was a danger to life.  The vessel may have been unable to manoeuvre out of the port and may possibly have come into contact with the Boyne Wharf.  Therefore, I have given weight to these matters but I do not accept the failure scenario posed by the plaintiffs and its witnesses.  I prefer the evidence of Dr Binks to that of Mr Squire and the other witnesses where they are in conflict.’

26                  The remaining factor which his Honour dealt with, and one on which the salvors take issue, is that referred to in Art 13(1)(f) – the time and expenses involved in the operation and the weight to be given to it.  The respondents had stressed the importance of using the actual costs and expenses as a starting point and one against which the appropriateness of an award might be assessed.  His Honour said that the submission had some merit.  He considered, however, that the Court’s task was to evaluate all of the prescribed criteria in Art 13.  Much would depend upon the circumstances of the case.  In some cases the actual costs and expenses of the salvor may be a minor factor in light of the adverse circumstances faced and the efforts required.  In the present case, although the actual expenses were relatively small, his Honour considered that, on balance, ‘a reward very substantially above that figure should be awarded’. 

27                  In his conclusion, as to the quantum of the salvage reward, his Honour said that he took account of the aim of the 1989 Convention, of encouraging salvage operations.  He said that he had adopted a liberal view in fixing the award. 

28                  There was another issue raised before his Honour which is relevant to the appeal.  It concerned the third respondent, Societe Anonyme Louis Dreyfus et Compagnie.  The salvors contended that the evidence enabled judgment to be entered against that party, on the basis that it was beneficial owner of the La Pampa.  It was recorded as such in the Lloyd’s Register records, and had received the hire of the demise charter and the proceeds of sale of the vessel in 2003. 

29                  His Honour found that, whilst the register could not be ignored, it is an information service and its certificates cannot be regarded as conclusive.  An agreement dated 7 June 1995 showed that the third respondent had received funds because of an internal agreement within the Louis Dreyfus Group, of the nature of a cash management agreement.  The agreement provided that the third respondent would manage the group cash flow and operate as an agent for the other companies in the group.  This was of assistance to that respondent in rebutting a presumption of ownership, his Honour found.  Other documents, concerning dealings with the vessel, supported a conclusion that the third respondent did not have a beneficial ownership in the vessel, in particular documents in existence at March and April 2003.  His Honour did not enter judgment against the third respondent. 

THE APPEAL

30                  The salvors limited the large number of grounds of appeal, listed in the notice of appeal, in their written submissions.  The principal issue concerned his Honour’s findings with respect to the dangers of global and of local failure.  It was submitted that those findings also had the effect of depressing the weight given to the skill and efforts of the salvors in preventing damage to the environment and to the possible exposure of the La Pampa and her owners to third party liability. They submitted that his Honour had failed to give sufficient weight to the value of the vessel, and had used the cost of the salvage services as a starting point in determining the award.  The salvors submitted that the total award had not been fixed at such a level as would encourage the provision of salvage services.  They contended that judgment should have been entered against the third respondent as the beneficial owner of the vessel. 

31                  It is appropriate, and necessary, having regard to the matters sought to be ventilated on the appeal, to restate the nature of an award for salvage reward and the limitations upon a Court hearing an appeal from such an order. 

32                  The authorities are clear as to the nature and extent of the discretion involved in such an award.  In The City of Chester (1884) 9 PD 182 at 187 Brett MR said:

‘There is no jurisdiction known which is so much at large as the jurisdiction given to award salvage.  There is no jurisdiction known in which so many circumstances, including many beyond the circumstances of the particular case, are to be considered for the purpose of deciding the amount of salvage reward.  All these circumstances have been repeatedly enunciated by Lord Stowell, Dr. Lushington, and others;  it is useless to repeat them. It follows that there is no jurisdiction known the administration of which is more within the discretion of the judge who has to administer it … .’ 

33                  It is a matter upon which two Tribunals may rarely be expected to agree:  The Cuba (1860) 1 Lush 14 at 15;  (1860) 167 ER 8.  Benedict on Admiralty (7^th edn, 2006 rev M Bender, New York, 2006, Vol 3A s 236), refers to the statement of Story J in The Emulous Case No 4480(1832) 8F.Cas. 740:

‘… it will be found difficult in practice to lay down any rules which would furnish a just guide to limit the discretion of the court.  The court must endeavour to work its own way through every case, upon a comprehensive survey of all the circumstances.’

34                  Dr Sutton observed in The Assessing of Salvage Awards:  An Enquiry into English Admiralty Practice, Stevens & Sons Limited, London, 1949, pp 1-3, the amount of an award is based upon what the judge considers fair and reasonable to all parties, having regard to the circumstances of the particular case and the general run of practice.  It involves the mental relation of a set of physical circumstances which are translated into money.  An award, he says, is the ‘epitome of a composite picture that cannot in the ordinary way be represented in greater detail.’

35                  We do not consider that the discretionary nature of a salvage award has been altered by the enumeration, by the 1989 Convention, of the factors which are to inform the exercise of the discretion.  It specifies that it gives them no ranking.  It is left to the judge to give such weight to particular factors as the circumstances require.  It follows that this Court cannot interfere with the assessment of the reward unless it be shown that his Honour has acted upon some wrong principle or has misapprehended the facts:  House v The King (1936) 55 CLR 499 at 505;  The Star of Persia (1887) 6 Asp M.L.C. 220 at 221.  When errors of this kind are not shown, there must be a considerable difference between the view of the appellate court and the primary judge as to quantum, such that the Court can conclude that the award was manifestly wrong or unjust, before the amount will be altered:  see House v The King 55 CLR at 505;  John Gann v Jean Baptiste Navarin Brun ‘The Clarisse’ (1856) XII Moore 940 at 942;  The Cuba 1 Lush at 15; The Star of Persia 6 Asp M.L.C. at 221. 

The Risk of Global and Local Failure

36                  The focus of the salvors’ case, on appeal, is upon his Honour’s findings at [100] of his reasons, (which are set out above (at [22])), and in particular the statement by his Honour that he was not satisfied that ‘there was any real probability of global failure, or indeed any danger of global failure’ (emphasis added).  The submission is that his Honour should not have denied any prospect of danger and ought to have found that there was a risk of global failure that was not fanciful.  It is said that this was conceded by the respondents at trial and that the evidence supports such a conclusion.  It is submitted that the reason which his Honour gave for a conclusion that there was no danger, that the actions of the crew would have prevented the vessel having become grounded with her bow on the north bank and stern on the south, is not borne out by the evidence.  In the result it is submitted that his Honour has failed to give weight to the degree of risk of global failure.

37                  The salvors’ argument on appeal faces a number of difficulties.  It assumes that the respondents’ stated position, as to the degree of risk, was not understood or acted upon by his Honour.  It appears to misunderstand the risks identified as possible by his Honour.  It fails to appreciate that his Honour was speaking of a higher risk than a remote risk, when he spoke of a ‘danger’.  It elevates the consideration by his Honour of one assumption upon which the worst-case scenario for hull failure was based, to a determination of the entire issue. 

38                  The respondents’ submission to his Honour, as noted in his Honour’s reasons, was that global failure was a possibility, but so remote that it should not be given any significant weight.  This does not appear to be at odds with the position taken by the respondents during the trial and it was not suggested by the salvors that it was.  His Honour accounted for the possibility of global failure, as he did for the release of oil, blockage of the channel, damage to adjoining structures and the consequences if there had been global failure.  The prospect of damage to the environment was interrelated with the issue concerning global failure.  In the passage from his Honour’s reasons set out above (at [15]) his Honour drew a distinction between a real and a remote possibility of oil or ballast escaping as a result of the grounding.  His Honour did not consider that there was a real risk of breakage of the vessel.  In conclusion on that topic, his Honour said that the salvors had only identified a remote possibility, but had not established that there was any proximate prospect.

39                  The salvors’ case on the issue of global failure fastens upon the statement by his Honour that, not only was there no real probability of global failure, but he was not satisfied there was any danger of it.  The reason ascribed was Dr Binks’ view that the crew would have prevented the situation upon which the worst-case scenario was based, which had the vessel grounded fore and aft on the two banks and held up on a falling tide.  If the crew had avoided that occurrence, the prospect of hull failure, on Mr Squire’s worst-case scenario, did not arise. 

40                  There were differences of opinion expressed by the expert witnesses as to what was the preferable course of action to prevent the vessel swinging across the channel and grounding in the way described.  The majority of the witnesses, including Dr Binks, referred to ballasting down, either forward or aft, to reduce the movement of the vessel.  The salvors, however, rely upon the evidence of the Acting Harbour Master who said that he would not have permitted such a course.  Nevertheless, he did not suggest that no action could have been taken.  His preference would have been to drop an anchor.  No witness suggested, nor was it put to any witness, that there was no practicable course open which might have averted the grounding of the vessel across the channel in the way assumed by Mr Squire, or that it was likely that no action would have been taken.  His Honour dealt with the submission, reiterated on the appeal, that an adverse inference should be drawn because the Master and Engineer of the La Pampa were not called to give evidence. His Honour rejected it, accepting the respondents’ submission as to the sufficiency of the evidence of the other witnesses on the bridge that day.  It has not been shown how his Honour erred in that regard.

41                  There was evidence to support Dr Binks’ opinion, which his Honour accepted, that action could have, and was likely to have, been taken to avoid the situation upon which the worst-case scenario was based.  Even so, it does not seem to us that his Honour meant that there was no risk at all of that situation arising when he said there was no ‘danger’ of global failure.  Earlier parts of his reasons, to which reference has been made, show that he always accepted that there was a remote, but not a real, risk.  Such an assessment must have allowed for action taken by the crew failing.

42                  In any event, his Honour’s conclusion in this regard, that the situation upon which the whole of the worst case scenario was premised, had not been likely to arise, was but one aspect of his Honour’s rejection of Mr Squire’s prediction.  The salvors’ submission ignores the fact that his Honour immediately went on to accept that the scenario (‘the general blockage scenario as presented in Case 2’) could have arisen if no action at all had been taken by the crew.  It remained true that Dr Binks did not accept the assumptions made by Mr Squire to justify a view that there was a significant prospect of global failure.  The assumptions to which his Honour refers are those noted by him in par [99] (at [21] above) by reference to Dr Binks’ evidence:  that Mr Squire’s worst case scenario allowed for no sinkage or slippage of stern or bow in the event of grounding;  and as to the extent of the swing of the vessel and therefore the extent of its contact with the south bank.  In the former case if the vessel had grounded at a lower point or had sunk a short distance, Mr Squire’s assessment of risk would be substantially reduced.  A slippage or depression of just 0.68 m made a significant difference to the risk of global failure.  In any event, Mr Squire’s own evidence was, to an extent, at odds with this.  Dr Binks’ view that the scenario was speculative was reinforced by Mr Squire’s acknowledgment in this regard and by the lack of evidence about the shape of the south bank and the composition of its material. 

43                  His Honour’s findings as to the material of the south bank, in connexion with global failure, were relevant to the issue of local failure.  The salvors submit that his Honour was in error in rejecting the evidence of Dr Phipps as to the risk that the vessel might strike bedrock or matter sufficiently hard as to cause local damage and possibly contribute to global damage.  It was not, however, shown how error is to be discerned in his Honour’s treatment of the topic.  His Honour clearly understood the evidence presented by Dr Phipps, but was influenced to the view that it was replete with uncertainty, by the critical analysis provided by Dr Binks.  Such evidence as there was concerning soil type suggested to Dr Binks that the vessel would have cut into it the sides of the channel rather than their impinging heavily upon the rear of the vessel.  The evidence of the witnesses Nation, Keegan and Hancox, which was referred to in submissions on the appeal, was relevant to issues of costs of towage or removal in the event of such damage.  Only the evidence of Mr Nation touched upon the prospect of such damage but his Honour was not obliged to rely upon it, given the evidence of Dr Binks. 

44                  The other matters raised by the salvors in their submissions concern alleged ‘understatement’ by his Honour of certain matters.  They include the continuing dangers to the vessel while she proceeded down the channel to anchorage;  the potential for damage to be occasioned to a wharf or other structure;  the danger which existed when the tow lines broke;  the risk of port blockage and whether the ship had come close to contacting the bottom of the channel.  In no respect is it shown that his Honour was in error.  With respect to the lastmentioned matter, his Honour considered the salvors’ submission, that an adverse inference should be drawn because of the respondents’ failure to produce course recorder and depth sounder records from the vessel.  His Honour did not consider that to affect the weight to be given to other evidence, particularly given relevant concessions made by the respondents.  His Honour plainly had regard to the other matters of alleged ‘understatement’, considered the risk they posed and assigned particular weight to some of them.  As the submission implies, the salvors’ complaint is not one of erroneous disregard of certain risks but that more weight could have been ascribed to them had his Honour taken a different view of the facts.

The Risk of Damage to the Environment

45                  The risk of damage to the environment was premised upon the salvors’ success on the issue of global failure.  Moreover, his Honour found that the positions in which the fuel and oil had been stored were distant from those areas where there could have been any prospect of failure.  Underscoring any environmental sensitivity of the Curtis Coast Area does not assist in the identification of some further error.  This ground also fails.

Potential Liability to Third Parties

46                  The claims that the salvors refer to, as those which ought to have been taken into account in this regard, are those which arise by reference to the vessel: 

(a)        blocking the port; 

(b)        polluting the environment;  and

(c)        losing, or being delayed in delivery of, its cargo. 

47                  His Honour, however, assigned little weight to this factor.  His Honour expressly acknowledged the potential risk of the first two occurrences.  It followed from his findings of fact that the risk that such liabilities might arise was remote.  There is nothing to suggest his Honour was unaware of the third, when he observed that the salvage operation had occurred in a relatively short time-frame.  The salvors have not established that any error attended these findings. 

The Relevance of Costs and Expenses of Salvage

48                  The salvors referred this Court to the statements of Story J in The Henry Ewbank  (1833) 11 F. Cas. 1166 at 1170, that salvage is not a ‘mere question of compensation for labour and services’.  It has a source in deeper policy.  It should be treated as a ‘mixed question of public policy and private right, equally important to all commercial nations, and equally encouraged by all …’.  So much may be accepted.  The point sought to be made by the salvors is that his Honour used the actual costs and expenses incurred by the salvors as a starting point.  It is then to be inferred that his Honour has limited the reward and not taken account of policy considerations, which require a more liberal approach to the amount of salvage.  It may be seen that the question of encouragement of salvage is bound up with the policy issues referred to by the salvors. 

49                  Article 1(f) requires a judge assessing salvage reward to take the time used, and expenses and losses incurred, by the salvors into account.  The salvors must therefore be understood to say that his Honour gave that factor too much weight or proceeded to quantify the reward by reference to it. 

50                  The salvors’ actual costs and expenses were of the order of AUD35 000.  To that sum, and notwithstanding the respondents’ submissions, his Honour took into account an amount of AUD102 389 for tug hire as representing the time spent by the salvors and associated expenses.  The respondents put to his Honour that the costs and expenses could be used as a starting point, against which the appropriateness of an award might be assessed.  His Honour said that ‘the submission has some merit’.  His Honour, however, went on to say that the task of the Court was to consider and evaluate all the criteria of Art 13.  The weight to be given to actual expenses will vary according to the circumstances of the case.  His Honour concluded:

‘… although the actual expenses in this case were relatively small, I consider that on balance, a reward very substantially above that figure should be awarded.’

51                  No error can be discerned in his Honour’s approach.  Contrary to the salvors’ submission, his Honour determined not to use their actual costs and expenses as a benchmark.  This ground also involves a misunderstanding of his Honour’s reasons. 

The Value of the Salved Fund

52                  There is no doubt as to the importance of the value of the salved vessel and property.  It is to be viewed as more than a fund from which an award may be met.  So much is recognised in the case upon which the salvors rely:  The Queen Elizabeth (1949) 82 Ll.L Rep 803, where Willmer J said, at 821:

‘...  where one has ...  a practical certainty of continuing damage and continuing expense, coupled with a possibility, even if it is not more than a bare possibility, of a much more serious loss, one has to give some real effect to the very high value of the salved property.  By that I mean that one must give some effect to it, beyond saying to oneself merely that this is a case in which the value of the salved property at least provides a sufficient and abundant fund out of which to reward the salvors.

 

I am not saying that you can measure salvage awards as sums in arithmetical proportion in relation to the salved property when you have values of the magnitude that you have in this case, but equally it would not, I think, be right to say that, where you have a value of this size, the addition of a few millions or the subtraction of a few millions would make no difference whatsoever.  So long as even an outside chance of anything in the nature of total loss remains, then I think that the increase of value must involve some, although possibly not great, increase in the salved award over and above what might have been awarded had the value been much smaller.’

 

53                  The salvors submit that this statement makes plain that the value of the services performed depends critically upon the potential losses that are avoided.  They submit that his Honour was misled by the statement by Stephen J in The ‘Oceanic Grandeur’ 127 CLRat 342 to the effect:

‘… I may say that when such high values are in question, the precise value appears to me to be of little significance and a value higher by even half a million would not, in the present case, have any very material effect upon salvage reward. …’

54                  The salvors read this statement as implying that the value of the vessel is not of much importance.  They suggest that the error in such an approach may stem from the fact that the decision pre-dated the 1989 Convention, but then many cases did. 

55                  The statement by Stephen J must be read in context.  His Honour had been dealing with a conflict of evidence in that case as to salved value.  On either view it was a substantial value.  The reference to the ‘precise’ value not being of significance should be understood in that light.  His Honour was not saying that a very high value was of no importance. 

56                  His Honour, the primary judge, took as the correct approach to value that stated by the Privy Council in The ‘Amerique’ (1874) LR 6 PC at 475:

‘… The rule seems to be that though the value of the property salved is to be considered in the estimate of the remuneration, it must not be allowed to raise the quantum to an amount altogether out of proportion to the services actually rendered.’

57                  Their Lordships considered this to be consistent with what was said by Lord Stowell in The Blenden Hall (1814) 1 Dodson, 414 at 421:

‘In fixing a proportion of the value the Court is in the habit of giving a smaller proportion where the property is large, and a higher proportion where the value is small, and for this obvious reason, that in property of small value a small proportion would not  hold out a sufficient consideration;  whereas in cases of considerable value a smaller proportion would afford no inadequate compensation.’

58                  This would appear to us to accord with what his Honour the primary Judge described as a proportionate equitable award.  On the other hand, Benedict on Admiralty, s 240, refers to the ‘insidiousness’ of the fixed percentage method being that after it has been established, a tendency arises to apply the same percentage to salvage cases of varying degrees of merit. 

59                  The passage from The Queen Elizabeth, relied upon by the salvors, does not lend support to a contention that the value of the services rendered must bear some close relationship to the value of the salved property.  His Lordship was referring to a circumstance of imminent danger of total loss which continued for some time.  The efforts necessarily expended in such a case would justify reference to the value of what was saved from what could very well have been total loss.  The salvors’ following submission appears to accept this.  It is submitted that there was a real risk of total loss in the present case, by reference to the prospect of global failure.   His Honour the primary Judge found to the contrary of that proposition and no basis is shown for disturbing those findings.

60                  In our view his Honour was correct, in the circumstances of this case, to reject the submission that the salved value of AUD38 million should have been used as a benchmark and the award have been fixed at a percentage of at least 10 percent of that value.  His Honour reviewed a number of cases and a table of comparative awards, annexed to the judgment of Sheppard J in Delosa v Clippers Anchorage Pty Ltd (NSWSC, 6 Nov 1978, unreported).  His Honour correctly deduced that the cases disclose significant differences in what was involved in the surrounding circumstances of the various salvage operations.  The range and discrepancy between the value-percentage awards demonstrated the highly fact-specific nature of each case.  We observe that Sheppard J in Delosa said at 9 that ‘One has to bear very much in mind what it was the plaintiffs actually did, how long it took them … and the circumstances under which they carried it out.’

61                  His Honour took account that the salved value was substantial and treated it as an important consideration, as clearly it was. We have no doubt that his Honour had that value in his mind when he determined the amount of the reward.  No doubt if the salvage operations had been more lengthy and complex, and had avoided higher risks to the vessel and property, to the environment or had exposed the salvors themselves to greater danger, his Honour would have determined a higher amount.  The salvors have not been able to show that the circumstances were other than his Honour found them to be or that too little or too much weight was given to a factor in those circumstances.  In most cases, for the reasons earlier referred to, it is inherently difficult to demonstrate an error of the latter kind by the primary judge.  

Encouragement of Reward

62                  It has long been a principle of public policy, in connexion with an award for salvage reward, that it:

‘… encourage others to use the utmost exertion and the utmost promptness in saving such property and lives. …To suit this intention, the award must be made, wherever possible, on a much more liberal basis than would be a price decided by economic negotiation. …’

63                  (Sutton at p 4).  It finds expression in Art 13(1).  His Honour was clearly cognisant of the importance of this principle.  He said that he had applied a liberal approach in fixing the reward.  There is nothing to suggest to the contrary.

Beneficial ownership

64                  The remaining point for resolution is the salvors’ claim that the primary Judge ought to have entered judgment against the third respondent.  They pleaded that the first respondent was, as at 27 March 2002, the owner of the vessel La Pampa.  The respondents admitted that fact.  The salvors alleged that the second respondent ‘is the successor in title to and assumed the rights and liabilities of the [first appellant] and/or the [third appellant]’.  It is a little difficult to understand that allegation.  In any event, the respondents denied the allegation, asserting that the second respondent was, in fact, the same entity as the first respondent having changed its name on 11 December 2002.  That change of name was said to be attendant upon a change in its corporate status.  The primary Judge gave judgment against the first and second respondents, without apparently resolving this dispute.  We infer that in the course of the trial the matter was treated as of little practical importance.  In any event, the judgments against the first and second respondents are not subject to appeal.

65                  The salvors alleged that the third respondent was the ‘beneficial owner’ of La Pampa.  The respondents denied this but admitted that the second respondent was a subsidiary of the third respondent.  Finally, the salvors alleged that the fourth respondent was the demise charterer of La Pampa.  The respondents admitted that allegation.

66                  Implicit in the salvors’ claim against the third respondent is the assertion that a beneficial owner (presumably meaning the beneficiary under a trust) may be sued for salvage reward.  There appears to have been no challenge to this assumption in the course of the trial.  It is consistent with the authorities.  In Five Steel Barges (1890) 15 PD 142 at 146, it was said that:

‘But on this point I am of opinion that the right to sue in personam is not confined to the case of the defendant, being the actual legal owner of the property saved.  I think it exists in cases where the defendant has an interest in the property saved, which interest has been saved by the fact that the property is brought into a position of security.  The jurisdiction which the Court exercises in salvage case is of peculiarly equitable character.  The right to salvage may arise out of an actual contract; but it does not necessarily do so.  It is a legal liability arising out of the fact that property has been saved, that the owner of the property who has had the benefit of it shall make remuneration to those who have conferred the benefit upon him, notwithstanding that he has not entered into any contract on the subject.  I think that proposition equally applies to the man who has had a benefit arising out of the saving of the property.’

See also The Cargo ex Port Victor [1901] 1 P 243 at 256-258 and The Meandros [1925] 1 P 61 at 68. 

67                  At an early stage of the proceedings there was some uncertainty concerning ownership of the vessel.  The solicitors for the salvors wrote to the solicitors for the respondents, seeking to clarify the relationship of the fourth respondent to the ship.  At one stage, the respondents’ solicitors suggested that it was the registered owner of the vessel as at 27 March 2002.  They then suggested that it was both registered owner and demise charterer of the vessel, her stores and other appurtenances (but not her bunkers, cargo or freight).  Subsequently, they said that the fourth respondent was the demise charterer of the vessel from the first respondent, which company was the owner.  In those circumstances, it is understandable that the salvors should have been concerned to identify the appropriate respondents.  However the salvors could only succeed against the third respondent by proving their pleaded case.  That case differed from the cases against the other respondents in that it involved proof of the alleged beneficial interest. 

68                  There was little evidence concerning the relationship between the third respondent and the vessel.  Such evidence was documentary, and the makers of the documents were not called.  There was therefore no relevant cross-examination.  The salvors point to two matters as allegedly demonstrating the beneficial interest of the third respondent in the vessel.  The first is that it was shown in the Lloyd’s Register - Fairplay as beneficial owner at the relevant time.  This appears from a letter ‘To Whom It May Concern’ asserting that:

‘According to our records the following details refer to the above mentioned vessel on the dates 27^th & 28^th March 2002. 

Registered owner:- Oltramare Shipping Co SA, Panama. c/o Louis Dreyfus Armateurs SNC .

Manager:- Louis Dreyfus Armateurs SNC, 87 Avenue de la Grande-Armee, F-75782 Paris, CEDEX 16, France.  Telephone …

Beneficial owner:-  Societe Anonyme Louis Dreyfus et Compagnie, details as manager.

Please be advised that our records do not show to whom the vessel was chartered on the dates above.’

69                  At the foot of the letter is a disclaimer as follows:

‘The information received to assign an IMO Number has been obtained from sources believed to be reliable, but Lloyd’s Register – Fairplay Ltd. is unable to guarantee the accuracy of all details.  Neither Lloyd’s Register – Fairplay Ltd. nor any of its officers, employees or agents shall be responsible or liable in negligence or otherwise howsoever in respect of any inaccuracy contained herein or omission herefrom.  The records of merchant ships registered in some countries are incomplete due to lack of official information.  Lloyd’s Register – Fairplay Ltd. does not accept liability for any inaccuracies.’

70                  It is, in our view, curious that the salvors should have gone to trial on this issue, relying heavily on such a letter, and without evidence as to the nature or status of the register or of the basis of its compilation.  At least, we were referred to no such evidence.  Tamberlin J accepted that the register was capable of being evidence of ownership.  The decision in Hibbs v Ross (1866) LR 1 QB 534 at 543 suggests that a statutory register may have that effect, but the case concerned a statute containing a relevant evidentiary provision.  As we understand it, the Lloyd’s Register – Fairplay is not of that kind.  It is rather an information service.  The absence of any explanation as to the source of the information and the disclaimer of any liability for inaccuracy are also hardly reassuring.  His Honour considered that such evidence was not decisive. 

71                  The salvors also point to documentary evidence which suggests that moneys payable by the fourth respondent in connection with the charter of the vessel and the proceeds of its sale at some time after March 2002 were paid to the third respondent.  The respondents point to other documents as evidencing and explaining the relationship of the various respondents to the La Pampa. 

72                  There is a standard bare boat charter between the first respondent as owner and the fourth respondent as charterer, dated 11 April 2001.  Payment thereunder was to be made to a New York bank to account of the third respondent. 

73                  There is also is a ‘Supplemental Agreement’ made on 5 June 2001, the parties being the first respondent and various banks and financial institutions.  It recites that the first respondent had borrowed money to assist in financing the purchase of the vessel.  This suggests that it was acquired beneficially by the first respondent.  However it is possible that the borrowing was on behalf of a trust of which the third respondent was beneficiary, assuming that such an arrangement is possible pursuant to relevant domestic law.  The agreement also recites that the first respondent had entered into a bare boat charter dated 11 April 2001 with the fourth respondent, and that the fourth respondent had chartered the vessel back to the first respondent on time charter for a period of two years from 20 April 2001. 

74                  By a ‘general assignment’ dated 5 June 2001 the first respondent assigned to Credit Agricole Indosuez its rights under the bare boat charter, the time charter and a management contract.  The assignment was by way of security for repayment of funds advanced.  In para 5.3 the first respondent warranted that it was the sole legal and beneficial owner of all rights and interests which each of the assigned contracts created in its favour, and that no third party had any security interest or any other right, interest or claim over, or in relation to, those contracts.  Although the representation did not deal with ownership of the vessel, it might be construed as being consistent only with the first respondent being beneficially entitled to operate the vessel.  

75                  On 12 March 2003 the fourth respondent (as to 1 percent) and the second respondent (as to 99 percent) agreed to sell the vessel to Maystar Shipping Company Limited of Limassol, Cyprus for USD 23 320 000.  The purchase price was payable to the sellers’ nominated bank.  As we have observed, the money was in fact paid to the third respondent.  There is a Bill of Sale, dated 8 April 2003 or thereabouts, by which a 1 percent interest in the vessel was transferred by the second respondent to the fourth respondent for  USD 233 200, apparently for the purposes of the subsequent sale to Maystar.  In that Bill of Sale the second respondent covenants to transfer the title, ‘free from all encumbrances … mortgages, taxes, maritime liens, or any other debts whatsoever’.  In a document headed ‘Protocol of Delivery and Acceptance’ there is also a warranty that the vessel was, ‘free from all encumbrances, maritime liens, claims and any other debts whatsoever …’. 

76                  The disposal of the vessel was authorized at meetings of the boards of the fourth respondent and the second respondent held in Paris on 11 April 2003.  Those present at the fourth respondent’s meeting were Pierre Gehanne and Alain Le Guillard, together with Antoine Person.  The board resolved that the proceeds of sale be remitted to ‘Louis Dreyfus, majority sellers, account with CAI Bank …’.  The reference to Louis Dreyfus as ‘majority sellers’ appears to be to Armateurs SAS.  The second respondent’s meeting was held at the same address and in the presence of the same persons, plus Mr Louis Dreyfus.  It was agreed that the company’s 99 percent interest in the ship be assigned to Maystar.  The company also resolved to appoint certain persons to act on its behalf in connection with the sale and accordingly executed a power of attorney.  It directed payment to a New York account in the name of the third respondent.  The power of attorney was dated 14 April 2003. 

77                  There is another power of attorney, apparently dated 11 April 2003, in favour of some of the same appointees.  It authorizes them to act on behalf of the second respondent at the meeting of the fourth respondent held on 11 April 2003, the second respondent being the ultimate owner of all shares in the fourth respondent. 

78                  There are also insurance documents for the periods 2001-2002.  They indicate that the owner of the vessel was the first respondent with no mention of any interest vested in the third respondent. 

79                  Two other documents are of some significance for present purposes.  The first is described as ‘Excerpt From the Minutes of the General Meeting of Partners 30 June 1995’.  The meeting is said to have been a meeting of ‘The partners of Consortium Europeen de Transports Maritimes ‘Cetramar’’.  That organization is described as ‘a Société en Nom Collectif partnership with a registered office at 87 avenue de la Grande Armée, 75016 Paris’.  The meeting was attended by Mr Jean Louis Dreyfus, representing Louis Dreyfus & Cie and Mr Bernard Laferrière, representing Simgar SA.  Mr Thierry Brouder was appointed Secretary.  It is not clear whether he was present.  The meeting accepted the contribution of assets and liabilities ‘constituting the shipping division’ of the third respondent at a net value of 25 604 343 French francs.  In return that company was to receive 80 000 new shares in the ‘partnership’ with a par value of 100 French francs each.  The balance of the value of the contributed assets was to be treated as a share premium.  The ‘partners’ agreed to amend the articles of association accordingly so that the issued capital was to comprise 100 000 shares with a par value of 100 French francs each.  The minutes record that as a result, the shares in the ‘partnership’ were held as follows:

·                    Louis Dreyfus & Cie                                         99,980

·                    Société Anonyme Simgar                                         20

80                  Thus it may reasonably be inferred that the third respondent was substantially in control of the ‘partnership’, even assuming that Simgar’s interest was other than nominal.  Finally it was resolved that the name of the ‘company’ be changed to ‘Louis Dreyfus Armateurs SNC’.

81                  Notwithstanding the language of partnership used at various points in these minutes, it is relatively clear that the meeting was a meeting of the company which was eventually to become the first respondent .  The minutes also demonstrate the correctness of the admission made by the respondents that Amrateurs SNC/SAS was effectively a subsidiary of the third respondent.  They indicate that the latter company had transferred its shipping division to the first respondent in exchange for shares in that company, suggesting that the relationship between the two companies was, at least at that time, to be that of parent and subsidiary rather than trustee and beneficiary.

82                  There are two other relevant documents.  The first is a Cash Management Agreement dated 7 June 1995 said to be entered into for one year, automatically renewable each year unless terminated by one of the parties.  The parties are Louis Dreyfus & Cie, Gevalpar SA and ‘SA Louis Dreyfus & Cie, Simgar S.A. a ‘société en nom collectif’ (general partnership) - Consortium Europeen de Transports Maritimes - ‘Cetramar’’.  This description suggests that the corporation which subsequently became the first respondent was previously known as ‘S.A. Louis Dreyfus & Cie, Simgar S.A.’ and that it was effectively carrying on business as ‘Consortium Europeen de Transports Maritimes - ‘Cetramar’ ’.  The agreement recites that all parties are controlled directly or indirectly by the third respondent, that they constitute a group and that they have decided to carry out cash-flow operations amongst themselves.  They agree to place their financial operations under the direction of the group’s cash-flow department administered by the management company, that is the third respondent.  That company is authorized to manage the cash-flows of all companies in accordance with the agreement and in the best mutual interests of the parties by:

‘- making all payments and collections on behalf of the subsidiaries,

- granting advances to the subsidiaries and receiving advances from them.’

83                  The agreement also provides that:

‘The Management Company, acting in its capacity as agent for the purposes of this agreement, acts for and on behalf of its subsidiaries and cannot be considered to have a personal commitment towards third parties.’

84                  Current accounts were to be opened ‘between the parties’ to ‘record under good value the transfers made between the parties …’.  Interest was to be calculated on deposits and advances and credited or debited accordingly.  The interest rates were to ‘mirror the terms which the Management Company could have obtained from its banks for the same type of financing’. 

85                  Clause 5 provides:

‘… The parties hereto do not intend to create any form of joint and several liability between themselves.  Consequently, no term of this agreement may be construed to mean that one of the parties is granting a guarantee or security of any kind to the other.’

86                  This agreement suggests support for the proposition that the third respondent received moneys pursuant to the charter with the fourth respondent and the proceeds of sale of the vessel in its capacity as group banker.  The salvors submit that there was no evidence that the agreement remained in force in 2002.  As we have pointed out, it was to be renewed automatically each year.  The time lapse between 1995 and 2002 does not suggest that such an arrangement had probably lapsed.  We know that in 2002 and thereafter, the third respondent received funds otherwise payable to the first respondent and the fourth respondent.  It is more likely that those funds were received pursuant to the cash management agreement than that they were received pursuant to some trust arrangement of which there is simply no evidence other than by inference based upon the entry in the Lloyd’s Register – Fairplay.

87                  The salvors submit that the inference as to beneficial ownership, drawn from the Register and evidence as to the payment of moneys, was so strong that it called for a more substantial response from the respondents than that which they gave.  They submit, correctly, that the relationships between the third respondent, each of the other companies in the group and the vessel are matters within the knowledge of the respondents, in particular the third respondent. 

88                  The primary Judge was obliged to assess all of the evidence bearing on the subject and to draw such inferences as were, on the balance of probabilities, available.  In so doing his Honour had to take account of all of the evidence in the case.  Whilst there may have been some unsatisfactory aspects to the evidence upon which the third respondent now relies, the salvors’ own evidence on this subject was not beyond criticism.  As the primary Judge pointed out, the Lloyd’s Register - Fairplay is an information service, not a system of registration of title.  The inferences which could comfortably be drawn from its content would depend very much upon its sources.  As far as we are aware, that matter was not canvassed at the trial.  Association of the name ‘Lloyd’s’ with anything in this area of the law bespeaks a degree of credibility.  However, in the absence of evidence as to the way in which the so-called register is compiled, it is understandable that his Honour may have been reluctant to place great weight upon it. 

89                  For present purposes the only demonstrable basis for relying upon such evidence as against the respondents would have been the inference that the information was provided by, or on behalf of, one or other of them.  There is no evidence of this.  Even if there were, it would be necessary to consider another factor.  The evidence demonstrates that the various respondents are, in effect, French or French-controlled.  Assuming that the respondents provided the relevant information to Lloyd’s Register – Fairplay, it does not follow that they necessarily used the description ‘beneficial owner’ in the way in which an English common or chancery lawyer might use it.  The expression did not occur in a contract where it could be said to have an objective meaning.  Further, we have demonstrated that the legal owner of the vessel, the first respondent, was effectively a wholly owned subsidiary of the third respondent, or at least such was alleged and admitted.  Although a lawyer in the Anglo-Australian tradition would not speak of a parent company as being the beneficial owner of the assets of a subsidiary, such a description, from a lay point of view, would not be entirely inaccurate.  When one takes into account the fact that these companies and those controlling them appear to have been French, one might not readily infer that the description of the third respondent as beneficial owner was a proper basis for inferring beneficial ownership as that term is understood in Anglo-Australian law.

90                  In the circumstances we do not consider that the inference of beneficial ownership was to be so readily drawn as the salvors submit.  The salvors’ evidence was, at best, little more than equivocal.  When seen in the light of the other evidence, it was less than persuasive.

91                  The salvors sought to bolster their case by reliance upon the decision of the High Court in Jones v Dunkel (1958-1959) 101 CLR 298.  That case involved a claim for damages for personal injuries arising out of a motor vehicle accident.  At first instance, it was a jury trial.  The appeal points were whether an inference of negligence was available and whether the jury was properly instructed.  On appeal the majority considered that the inference was open that the defendant’s vehicle was, at the time of the collision, on the wrong side of the road.  Kitto J said at 308:

‘Whether that inference ought to be drawn was, of course, a question for the jury.  But they should not have been sent away to consider that question without proper guidance as to the relevance of the defendants’ failure to put [the driver] into the witness-box.  On that question a juryman actually asked the trial judge to supplement his summing up, and counsel for the plaintiff submitted that if there was evidence to go to the jury they were entitled to take into consideration (meaning, obviously, on the question whether they should infer negligence) that “there was one person who could have told them the facts and they have no answer from that person”.  In my opinion, the direction which the judge proceeded to give was insufficient, and because of its incompleteness, was incorrect.  His Honour told the jury that the fact that [the driver] had not gone into the box left them in this position, that they could accept the facts given by the plaintiff as proved, and that the question for them then was whether they thought that from the proved facts an inference of negligence ought to be drawn.  It was right enough to point out, in effect, that the evidence given might be the more readily accepted because it had been left uncontradicted, and that the omission to call [the driver] as a witness could not properly be treated as supplying any gap which the evidence adduced for the plaintiff left untouched.  But what should have been added, and not being added was in the circumstances as good as denied, was that in any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence.  The jury should at least have been told that it would be proper for them to conclude that if [the driver] had gone into the witness-box his evidence would not have assisted the defendant by throwing doubt on the correctness of the inference which, as I have explained, I consider was open on the plaintiff’s evidence.  In my opinion what his Honour said on the point amounted to a misdirection.’

92                  The decision in Jones v Dunkel is regularly cited in Australian courts excising civil jurisdiction.  It is inconceivable that the experienced primary Judge would not have been aware of it and of the concepts which underlie it.  It any event, we note from the salvors’ outline of submissions dated 4 April 2006 that the case was cited.  Although his Honour may not have referred to it in his reasons, there is no reason to believe that his conclusions were uninformed by its wisdom.  In Jones v Dunkel the appeal was successful because the jury had been misdirected as to the appropriate way in which to deal with the evidence and, in particular, as to the significance of the absence of a material witness.  There can be no suggestion that in reaching his decision the primary Judge did not consider that case and take into account the absence of any further evidence from the respondents.  As we have observed, the salvors’ submission really relies upon the assertion of great strength in their own evidence.  Once that assertion is dismissed, and the weakness of the salvors’ case is identified, his Honour’s conclusion is more easily understood. 

93                  We should make one other observation concerning the application of the rule in Jones v Dunkel to the present case.  Whilst it is frequently cited by practitioners in civil cases, it is not a rule of law.  It is rather a pragmatic approach to the analysis of evidence and the application of the rules as to burden of proof.  The rule is deeply rooted in the traditions of our legal system which is adversarial in nature and, until recently, almost always conducted on the basis of oral evidence.  Even now the tradition of orality remains strong.  It may be that there are cases in which inferences of the kind invited in Jones v Dunkel cannot be so readily drawn.  Where the party against whom such an inference is to be drawn belongs to a different society with a different system of law, it may not be appropriate to draw it.  The potential inconvenience and cost of bringing a witness from France, or even of the less than ideal mechanism of video-conferencing, is also a factor to be taken into account in determining the extent to which the approach identified in Jones v Dunkel will, in a particular case, strengthen any available inference.

94                  Finally, we point out that the salvors were not at the mercy of the respondents in seeking to establish beneficial ownership in the third respondent.  They could have interrogated as to the matter.

95                  We consider that the evidence concerning the relationship between the third respondent and the vessel was at best equivocal.  His Honour correctly concluded that the case against that company was not established on the balance of probabilities.

CONCLUSION

96                  There is no merit in the appeal.  No error has been identified in the exercise of his Honour’s discretion in fixing the reward.  We add that, taking into account what was involved in the salvage operation, the degree of difficulty and the risks, it is not obvious that the award is insufficient.  The appeal should be dismissed with costs. 

I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Ryan, Kiefel and Dowsett.

Associate:

Dated:         1 August 2007

Counsel for the Appellant:	Mr A W Street SC with him Mr N J Owens
Solicitor for the Appellant:	Norton White
Counsel for the Respondent:	Mr J E Sexton SC with him Mr G K J Rich
Solicitor for the Respondent:	Thynne & Macartney
Date of Hearing:	1 May 2007, 2 May 2007
Date of Judgment:	1 August 2007