In 1935, two ships collided in the Gulf of St Lawrence: the appellants' Empress of Britain and the respondents' Kafiristan, which required salvage assistance. Other ships approached them, including the Beaverford, also owned by the appellants, and another ship belonging to the respondents. The master of the Kafiristan requested that the master of the Beaverford take the Kafiristan in tow for about 161 km, whereupon a salvage vessel, Foundation Franklin, arrived and took over the towage to Sydney, Nova Scotia, Canada. Thereafter, the appellants and respondents signed the Lloyd's standard form of salvage agreement (LOF) in the UK. By cl 1 the contractor agreed to use its best endeavour to salve the Kafiristan and its cargo and take them into a certain location. The services were to be rendered and accepted as salvage services on the principle of 'no cure - no pay'. No fixed sum of remuneration for the services was mentioned, but the amount was to be fixed by arbitration in London. By cl 13, the parties to the arbitration and subsequent proceedings were accordingly the owners of the Beaverford and the owner of the Kafiristan and its cargo. It was agreed that if the agreement was executed after the salvage services had been rendered, its provisions were to apply mutatis mutandis. Parties accepted that, subject to one question of law, the Beaverford was entitled to a salvage award.

The Lloyd's arbitrator held that the appellants salved the Kafiristan and its cargo in accordance with the LOF. The arbitrator did not ascertain whether either or both ships were to blame for the collision. If the Empress of Britain was wholly or partly to blame, the appellants were not entitled to salvage as owners of the Beaverford. Otherwise, the appellants were entitled to claim. Irrespective of blame, the arbitrator granted a salvage award to the master and crew of the Beaverford.

The Lloyd's appeal arbitrator heard the appeal. By then, parties had agreed that Empress of Britain and Kafiristan were both to blame: 75% to 25% respectively. The award of the appeal arbitrator was in the form of a special case for the opinion of the England and Wales High Court. The question stated was whether the appellants were disentitled to a salvage award because the appellants' Empress of Britain was partly to blame. The appeal arbitrator held that, subject to the Court's opinion, the appellants were not entitled to any salvage award, but the master and crew of the Beaverford were entitled to an award.

Bucknill J upheld the award, reasoning that no one could profit by their own wrong: The Kafiristan [1937] P 63. In effect, he held that The Glengaber (1872) LR 3 A&E 534 (The Glengaber) was bad law. He dismissed the argument that the respondents had waived their right to dispute salvage by entering into the LOF. The appellants appealed.

The Court of Appeal dismissed the appeal, holding that the owners of a vessel which renders salvage service to a damaged vessel consequent upon a collision, for which another vessel belonging to the owners of the salving vessel is wholly or partly to blame, are disentitled to a salvage award: The Kafiristan [1937] P 63 (CA). The Court of Appeal did not refer to the LOF. Greer LJ dismissed the appeal due to binding authority. Slesser LJ accepted the principle that the wrongdoer was disentitled to claim salvage and held that its application was not affected by the fact that the wrongdoer was claiming salvage rendered through the instrumentality of another of its ships, which was not concerned in the actual collision. He thought The Glengaber should not be followed. Scott LJ was of the same opinion, though he thought that the decision was a hardship on the appellants and that it might be in the general interest that the rule should be altered. The appellants appealed once more.

The respondents argued that the LOF merely provided machinery, and expressly dealt with the services as salvage services, and must accordingly be governed by the principle which is said to apply to questions of salvage services. Further, the LOF was signed after all the services were over, and it provided for remuneration 'if any'. The respondents argued that this case was indistinguishable so far as the claim of the shipowners is concerned from that of a case where a ship, in whole or in part responsible for a collision, performed salvage services but was held to be not entitled to any award for salvage remuneration. The respondents cited The Minnehaha (1861) 15 Moo PC 133 and Cargo ex Capella (1867) LR 1 A&E 356 (Cargo ex Capella). Where the salving vessel, though belonging to the same owners as the vessel in whole or in part responsible for the collision, was innocent and came up after the accident, the position was the same, except that the crew of the innocent vessel were not debarred, as were the crew of the vessel which had participated in the collision, from being awarded salvage. A claim for a salvage award is maintainable only by an innocent salvor. The Glengaber is inconsistent with previous decisions which have clearly established that a wrongdoer is debarred from claiming a salvage award. The Glengaber appears never to have been followed. Salvage is purely equitable in its nature so a claimant must come with clean hands.

The appellants relied upon The Glengaber and principle, as well as the LOF, and argued that they were entitled to a salvage award. The appellants argued that the principle that one could not benefit by their own wrong was inapplicable. No difficulty as to circuity of action arose where the services were rendered not by the delinquent ship but by an innocent sister ship. Rendering of salvage services has always been encouraged and every encouragement should be provided to ships to help each other when in peril. During argument, the appellants agreed with the following comment made by Lord MacMillan:

If a damaged vessel is in great peril, and a vessel in the offing is asked to render assistance, but the master replies that, as the damage was caused by a vessel in the same ownership as his vessel, he can give no assistance, because he would be unable to recover even his expenses, that would be disastrous.

The appellants cited The Melanie [1925] AC 246 (HL) (The Melanie) 262 to show that Lord Phillimore appeared to take the view that even the colliding vessel might obtain an award for salvage services. In The Duc D'Aumale (No 2) [1904] P 60 (The Duc D'Aumale (No 2)), The Glengaber was cited and distinguished, but its principle was affirmed. Public policy favours the rendering of salvage services. Moreover, it is the ship, not the owners, which renders the service. The appellants also cited The Kenora [1921] P 90; The Hannibal (1867) LR 2 A&E 53; The Beta (1884) 5 Asp MLC 276; The Glenfruin (1885) 10 PD 103 (The Glenfruin); The Sampson and The Iola (1857) 4 Blatch (US) 28; The Clarita and The Clara (1874) 23 Wallace 1; The Chas E Soper 19 F 844 (ED NY 1883).

Held: Appeal allowed.

Lord Wright found that salvage should be awarded because of the LOF. It specifically provides for remuneration as salvors in the event of success. There is no reservation for the possibility that the Empress of Britain was in whole or in part to blame, and there is no ground for implying any such reservation. Even without the LOF, salvage would have been claimable on principle and on the authorities.

There was no such complication as might arise in the case of a colliding vessel. The duty cast by the Merchant Shipping Acts of the UK on one of the two colliding vessels to stand by and render assistance does not in itself prevent even that vessel if it renders assistance from claiming salvage: The Melanie 262. Policy favours the grant of awards for meritorious salvage to encourage salvage. If the respondents' position applied, the Beaverford might be tempted to leave the work to other salvors. Salvage services might thus be delayed, which might have serious consequences. But the maritime law of salvage is based on principles of equity. There is no reason in equity why the salved vessel should not pay for salvage merely because the salving vessel belongs to the same owners as the other colliding vessel. That fact is irrelevant so far as concerns the usefulness and meritorious character of salvage. This is not less true when the possibility of the other colliding vessel being held to blame in whole or in part is considered. That consideration ought not to affect the evaluation of the salving vessel's services. It receives due effect at a later stage in the transaction. If the other colliding vessel is solely to blame, the owner of the salved vessel, which is blameless, will bring into its account of damages the whole sum awarded to the salving vessel for salvage. It may be that in such a case a salvage award in favour of the shipowners is superfluous and need not be made, on the principle of circuity of action, but the responsibility for the collision is mostly ascertained after the salvage award is made, and in any case there may be questions of limitation of liability. Where both colliding vessels are to blame, the fixing of the salvage remuneration would seem to be a necessary step in setting off the items of damage on the one side or the other so as to ascertain the final balance of account. It is true that the owners of the other colliding vessel are in law responsible for the damages caused by the negligence of their servants including the amount of any salvage awarded to the salving vessel which they also own, but the equities are best worked out by making the salvage award without regard to the fact of common ownership, leaving the incidence of what is awarded to depend on the relative proportions of blame.

Thus, the salvage award will be borne ultimately by the Kafiristan and its cargo to the extent of 25% and by the appellants to the extent of 75%. This is more equitable than to refuse an award. The rubric that no person can profit by their own wrong is inapplicable. The claim to salvage is based on the separate fact of the Beaverford having rendered salvage services and not the negligent navigation of the Empress of Britain. The appellants are not seeking to profit by their own wrong, for which in the final account they will make the appropriate compensation by, among other things, bearing their proper share of the salvage award.

The respondents argued that if the principle that no person can profit by their own wrong excludes a claim for salvage where the salving vessel is the colliding vessel, as was held in the Cargo ex Capella, and other cases, the same principle should apply where the salving and the negligently colliding vessel belong to the same owner, because the wrong is committed by the person who salves, acting in either case through servants. Assuming that the principle there is established, Lord Wright was doubtful of the logic or equity of it, but did not consider it necessary to express any final opinion about it. This was because Lord Wright did not think that it applied logically to, or is properly to be extended to, the case where the salving vessel is innocent of and wholly unconcerned in the collision. In salvage cases like these, the vessels concerned should be treated as separate entities. Common ownership of the salving and wrongdoing ships, and the consequences of the rule of vicarious liability, should be disregarded at this stage. If the rule laid down in Cargo ex Capella is at all sound, it is excluded where the ship which is the instrument of the salvage is a different ship from that which is the instrument of the negligent collision. Lord Wright rejected the respondents' argument that such a view would be contrary to the practice observed in these matters and acted upon in the present case by the experienced arbitrators who decided the matter in accordance with the practice. The practice of those experienced in maritime law, if it really exists, cannot change the law, any more than the practice of average adjusters: Svensden v Wallace (1884) 13 QBD 69 (CA) 85. Authority supports the appellants' contention: The Glengaber 535. The Glengaber is good law and involved a different principle (and is to be distinguished) from Cargo ex Capella: The Duc d'Aumale (No 2) 73. In Cargo ex Capella there was no question of an independent salving vessel of the same ownership as the wrongdoing vessel.

The Duc d'Aumale (No 2) also refers to The Glenfruin and suggests that the view taken in The Glenfruin differs from that of The Glengaber. But the ground on which the Judge in The Glenfruin refused salvage was to avoid circuity of action. The principle that salvage is not recoverable where the salving vessel is to blame for the collision is not based on avoiding circuity of action. The Glenfruin is not inconsistent with The Glengaber, nor are the analogous cases of towage contracts, where the common owner of the wrongdoing tug and of the salving tug would generally be liable to repay in damages the full amount of any salvage award if made in its favour and paid to itself for the services of the innocent salvor.

It is only when the salving vessel is to blame for the collision that it seems that not only the members of the crew actually in fault, but the whole crew, however meritorious their services, are debarred. Although Lord Wright doubted about the equity or policy of so sweeping a rule, Lord Wright did not find it necessary to consider it. Meanwhile, theft by salvors is a special case: The Clan Sutherland [1918] P 332.

Lords Thankerton, MacMillan, and Atkin agreed with Lord Wright. Although the parties did not dispute the award in favour of the master and crew, Lord Atkin highlighted that the LOF does not make the master or crew parties to the submission or give any jurisdiction to the arbitrator to include any sum for them in the award. It may be convenient that their claim should be considered by the arbitrator, but, unless there is a separate submission, any such award is not binding upon anyone. It may be worthwhile to consider whether the LOF should be amended.

Lord Maugham agreed with Lord Atkin and Lord Wright, and referred to the widely-signed 1910 Collision and Salvage Conventions. Article 8 of the Salvage Convention 1910 states:

The Court may reduce or deny remuneration, or may award a reduced remuneration, if it appears that the salvors have by their fault rendered the salvage or assistance necessary or have been guilty of theft, fraudulent concealment or other acts of fraud.

The proceedings prior to the signature of these Conventions do not suggest that the fault of a ship leading or contributing to a collision by itself deprived the owners of the ship of a right to remuneration for salvage services. Steps were taken to pass domestic legislation carrying into effect the Convention agreements, but the Maritime Conventions Act 1911 (UK), by some mischance, omitted to contain anything dealing with art 8 of the Salvage Convention 1910. Other signatory States of the Conventions have passed the necessary legislation to give effect to the Conventions, including art 8. It is desirable, as the Conventions themselves show, that rules on these topics should be uniform. This omission should be remedied. Had the Act contained art 8, this litigation or the greater part of it would have been unnecessary, because the circumstances do not suggest a reason for depriving the owners of the Beaverford of a salvage award.   

Lord Atkin hoped that Lord Maugham's suggestion would be considered by the authorities.