At around 02h00 on 25 February 1987, the fishing vessel Sea Star (the claimant salvor) found the tug Gordon Gill (the defendant salved ship) adrift with no-one onboard. Arctic Offshore Ltd, a Canadian company, owned the salved ship. The Sea Star's master contacted the Coast Guard, which advised that the Gordon Gill had been lost for several months. The Coast Guard asked the Sea Star about their intention. The master decided to tow the Gordon Gill to safety. The crew faced severe weather conditions, including icing and heavy wind. From 03h00 to 10h15, the Sea Star towed the Gordon Gill into Beaver Inlet, a sheltered bay with no major towns or harbours, to get out of the wind and fabricate a better tow line. The Sea Star's crew should have acted faster because of the risk of a gale. They decided to tow the Gordon Gill to Dutch Harbor on the north side of Unalaska Island. The tow line broke frequently during the towage, and the crew members took a great risk, leaping back and forth from one vessel to another. The ships arrived in Dutch Harbor at 22h00 on 25 February. The next day, an earthquake occurred. The Sea Star’s crew took action to secure the Gordon Gill. On 1 March, the Sea Star left Dutch Harbor to resume fishing.

The Gordon Gill was rescued from a great peril with considerable risk to the salvor. The salvor’s actions to save the ship were efficient. The Gordon Gill would not have been saved if the Sea Star had not engaged in the salvage.

Held: The salvor was entitled to USD 224,265, consisting of about one-third of the ship's value and expenses of USD 50,931.72.

The Gordon Gill argued that the salvage expenses covered only the towage of the ship to the sheltered bay, Beaver Inlet. The Court did not accept this, and found that Beaver Inlet was not a safe harbour to leave the Gordon Gill. Therefore, the salvage covered at least the towage to Dutch Harbor.

Next, the Court emphasised that some of the fishing interruptions were caused not only by the salvage but also by the earthquake on 26 February. For calculating the net lost fishing profits, the Court used the figure applicable to the period from 6 September 1986-14 December 1987, rather than the springtime average preferred by the defendant, because their conditions were more similar. Considering the time lost due to the earthquake, out of about four and a half days of salvage operation, the Court took three days as expenses in the form of lost fishing profit. The loss of the fishing pots, which occurred because of the earthquake, was also part of the salvor’s expenses, because if the salvage was not in place, the salvor most likely would have picked them up. The expenses also included the repair needed for the winch, loss of fishing income, fuel for repeated trips to Dutch Harbour, layover in Dutch Harbour, and winch parts and labour. The total expenses were USD 50,931.72.

The Court calculated the salvage reward based on the value of the property salved. The Gordon Gill was an unusual vessel built for a special purpose, and was commercially but not physically obsolete. It was built for oil and gas exploration at a cost of approximately CAD 2,200,000. Arctic Offshore had negotiated a charter rate on a multi-year contract and was paid about $2,200,000 [it is not clear from the judgment whether the currency was CAD or USD, but from the context of the para most likely CAD] to build the ship at the Hay River, about $1,000,000 more than it would have cost to build the vessel in Vancouver. The severe drop in the oil price in the 1980s destroyed opportunities for Arctic Offshore to charter the Gordon Gill out at high rates. The last season the ship was fully occupied was 1984. In 1986, it was decided to move the ship from the Beaufort Sea to the east coast of Canada to find a port where the ship could operate profitably. The tow began on 7 October 1986. During this voyage, the ship was lost. On 22 October 1986, Arctic Offshore discovered that the Gordon Gill was no longer in tow.

The Court found that the Gordon Gill’s value was at least USD 300,000 as is where is, and approximately USD 750,00 in a commercially reasonable manner. The Court also found that the approximate tow cost to the port where the ship could be sold commercially reasonably was USD 80,000. USD 150,000 of repair costs should have also been deducted from the ship’s value. Therefore, it was concluded that the ship’s value was USD 520,000.

The Court stated that the salvage reward was governed by the Salvage Convention 1910. Both the United States and Canada were signatories. The Convention applied where any of the vessels involved in a salvage operation belonged to a signatory country and not all persons interested were from the country where the case was being tried. The elements of a salvage claim were: 1) a maritime peril from which the ship could not have been rescued without the salvor’s assistance; 2) a voluntary act of salvage by the salvor; and 3) the salvor’s act was successful in saving at least a part of the property at risk  (US Dominator Inc v Factory Ship Robert E Resoff 768 F 2d 1099, 1104 (9th Cir 1985), citing G Gilmore and C Black, The Law of Admiralty (2nd edn 1975) at 534-535).

The Court mentioned that the following factors were to be considered: 1) the measure of success obtained; the efforts and deserts of the salvor; the danger run by the salved vessel; the danger run by the salvor and the salving vessel; the time expended by the salving vessel; the expenses incurred and losses suffered by the salving vessel; the risks run by the salvor and the value of the property subjected to such risk; and 2) the value of the property salved (US Dominator 768 F 2d at 1105 (9th Cir 1985), quoting The Blackwall 77 U S (10 Wall) 1, 13-14, 19 L Ed 870 (1869)).

The Court concluded that the Gordon Gill's peril was great, the salvage was entirely voluntary, and the salvage was entirely successful. The Sea Star’s risk was great. The value of the Gordon Gill was USD 520,000. The Sea Star's expenses were USD 50,931.72. The salvor was entitled to the reward in the amount of approximately one-third of the salved ship’s value and the expenses. The combined sum was USD 224,265, which should have been distributed between the salving vessel and the crew according to their arrangement.