In January 2002 the MV Roxana Bank experienced engine problems while anchored off Mossel Bay, South Africa. The weather caused it to drag anchor and drift close to a submarine oil pipeline. The pilot onboard requested assistance from the MV Pacific Lance which was anchored nearby. The Pacific Lance towed the Roxana Bank out to sea. The appellant, Swire Pacific Offshore Services (Pte) Ltd, subsequently commenced proceedings in rem in the Cape High Court against the Roxana Bank, as first defendant, and against its cargo, as second defendant (now the respondents), in which it claimed a salvage reward totalling ZAR 1,000,000. The claim was a maritime claim under s 1(1)(k) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act).

The appellant claimed to be 'the operator' of the Pacific Lance and that its master and crew in rendering the salvage services had acted in the course and scope of their employment with the appellant or 'alternatively in terms of their duties, having been seconded by Swire Pacific Ship Management Ltd to the [appellant]'. The appellant's evidence revealed that while it had effective control over the disposition of the vessel, it was neither the owner nor the charterer of the vessel in terms of a demise charterparty; nor was it the employer of its master and crew.

The appellant was a member of a group of companies known as the Swire group, as are the companies that respectively own the Pacific Lance and employ its master and crew. The Pacific Lance was owned by another Swire subsidiary. Its master and crew were employed by a different Swire subsidiary. Although the master and crew of the Pacific Lance were employed not by the company that owns the vessel, but by Swire Pacific Ship Management Ltd, their wages were indirectly paid by the appellant. Furthermore, the master acted on the instructions of the appellant, not Swire Pacific Ship Management Ltd.

The appellant's business was the provision of marine services to the offshore industry. The appellant employed ships like the Pacific Lance for this purpose. A witness for the appellant stated that the appellant was 'the head office' of the shipping division of the group and carries on its business with the support of other companies in that division. He explained that Swire Marine Corp Ltd was established to do no more than own the Pacific Lance and other ships, and that although there was no written agreement between the appellant and Swire Marine Corp Ltd regarding the employment of the Pacific Lance, the former, with the concurrence of the latter, effectively controlled the disposition of the vessel in every respect as if it were the owner.

At the time of salvage, the Pacific Lance was under charter to Soekor E and P (Pty) Ltd (Soekor). The agreement, called a 'service agreement', was concluded between the appellant and Soekor and commenced in September 1999 (the Soekor agreement). The appellant was styled 'the owner' of the Pacific Lance. Hire was payable to the appellant as 'owner', who was to deliver the vessel at Mossel Bay Harbour on the commencement date and provide a master and crew. There were detailed provisions relating to the suspension of 'the services' by the 'owners' for the purpose of engaging in a salvage operation and for the sharing with Soekor of any salvage reward paid to the 'owners' after deducting various specified expenses. Finally, the 'owners' are obliged to procure at their own cost various insurances for the duration of the agreement.

The respondents successfully applied for absolution from the instance. The first instance Court found that the appellant did not show a prima facie case that it had standing to claim a salvage reward. The Judge below accepted or proceeded on the assumption that there was a closed category of persons entitled to recover a salvage reward. The Judge concluded that 'the master, crew, owner or demise charterer represent the categories of persons to whom a salvage reward may be due'. The Judge then considered whether there was any justification for lifting the corporate veil to enable the appellant 'to locate [itself] within the existing categories by use of a peep through the corporate structure of the Swire Group' and decided there was none. The Judge was also not prepared on the facts of the case 'to extend' the categories of persons entitled to a salvage reward to 'an operator'. He accordingly granted absolution from the instance. The appellant appealed.

The respondents conceded that the evidence, although disputed, was sufficient to establish prima facie that the services rendered by the Pacific Lance were such as to render the owners of the Roxana Bank liable for the payment of a salvage reward. The issue was whether the evidence established a relationship between the appellant and the Pacific Lance which in law would justify a salvage award being made to the appellant.

Held: Appeal allowed.

The order of the Court below is set aside. The application for absolution from the instance is dismissed.

The applicable law is English law as it existed on 1 November 1983: s 6(1) of the Act. However, by reason of s 6(2) of the Act, the application of English law is subject to the provisions of any South African law applicable to salvage. If there is a conflict between English law and the South African Wrecks and Salvage Act 94 of 1996, incorporating as it does the International Convention on Salvage 1989, the latter must prevail. There is no such conflict for the present case. The Pacific Lance is not a South African ship within the meaning of the definition of such a ship in s 1 of the Wrecks and Salvage Act.

There was no closed list of categories of persons entitled to claim a salvage reward. 'There are no rigid categories of salvor. They include any volunteer who renders services of a salvage nature': The Sava Star [1995] 2 Lloyd's Rep 134, 141 (CMI2445). Geoffrey Brice, Maritime Law of Salvage (3rd edn, Sweet & Maxwell 1999) [para 1-184] states: 'There is no arbitrary limitation upon the class of persons or bodies who are entitled to recover salvage remuneration provided, however, that the same are recognised in law as volunteers and they render salvage services.'

Although 'salvor' is not defined in the Salvage Convention 1989, the above approach is clearly consistent with its terms: Francis D Rose, Kennedy and Rose: Law of Salvage (6th edn, Sweet & Maxwell 2002) (Kennedy and Rose) para 444. The present case, however, is concerned not with a situation where the salvor personally rendered the salvage services, but with a situation where a ship was the means by which those services were rendered. The question that arises was whether in such circumstances a person other than the owner or demise charterer can become entitled to a salvage reward.

The owner of a salving vessel is entitled to a salvage reward due in respect of the services rendered by the vessel. This is so even if the vessel is subject to a time charter. It is the owner who has the power to control the disposition of the ship and whose property or interests are placed at risk. But the element of risk, if a requirement in the past, is no longer one; it is relevant only to the quantum of the claim. See Kennedy and Rose paras 454 - 458.

Where the salving vessel is subject to a charter amounting to a demise, it is the charterer who is entitled to the reward. Such a charterer, it is said, becomes pro hac vice the owner for the duration of the charter. In Elliot Steam Tug Co Ltd v Commissioners for executing Office of Lord High Admiral of United Kingdom [1921] 1 AC 137 (HL), the court accepted that the demise charterer was so entitled, but without an in-depth analysis and seemingly on no more than the assumption of a rule that it is the demise charterer who acquires the right to the salvage reward. Kennedy and Rose para 473 contend that what really underlies the entitlement of the demise charterer to the reward is the power that it has to direct the salving vessel to render the services and to bear the risk of loss of the salving vessel:

Demise charterparties are commonly regarded as putting the charterer in the position of the owner for the duration of the charterparty, so that he automatically assumes both the liabilities and rights of the owner. In fact, of course, there is merely a transfer of possession and what really provides the charterer with the right to salvage is the power given to him (additionally to the rights he would normally have under the employment and indemnity clause in a time charterparty) to order the ship to provide salvage services and to bear the risk of any loss to the vessel - for which he must indemnify the owner - during salvage. He has the right to decide on the employment of the ship, so he is able to contribute its services, and it is he who bears the risk.

Kennedy and Rose stated at para 474:

It is for those reasons, and not simply because he acquires the appearance of ownership, that the demise charterer can claim salvage. The owner foregoes the services of and risk to the vessel during the demise and can be said to contribute nothing to salvage.

The Court endorses the analysis by Kennedy and Rose. The question was whether there was any reason why some person other than the owner or demise charterer who similarly has the power to provide the services of a salving vessel and who will bear the loss of the vessel (or possibly other financial loss) should not be entitled to a salvage reward. No reason was given. Accordingly, such a person is entitled to a salvage reward.

On the appellant's evidence, the appellant had the power to control the disposition of the vessel in every respect. Although the employment contracts of the master and crew were concluded with Swire Pacific Ship Management Ltd, the inference is that the appellant was pro hac vice their employer. The appellant instructed the master, who turned to the appellant when instructions were sought. The appellant effectively exercised day to day control over the vessel. Moreover, the appellant had entered into the Soekor agreement in its own name as 'owner, charterer or lessee' of the Pacific Lance.

The respondent argued that the inference arising from the evidence was that the appellant was no more than an agent and that it had entered into the Soekor agreement as agent for, and on behalf of, an undisclosed principal, Swire Pacific Ship Management Ltd. But such an inference is not only inconsistent with the Soekor agreement, it is also not in accord with the direct evidence of the appellant's witness; nor was it put to him in cross-examination.

A more likely inference from the evidence is that there existed, at the least, a tacit agreement between the owner and the appellant to the effect that the latter was to possess and exercise full control over the disposition of the Pacific Lance.

As far as the element of risk is concerned, it is apparent even from the terms of the Soekor agreement that the appellant would suffer financial loss through a failure to perform in the event of the vessel's loss or damage during salvage operations. But apart from that, the appellant's possession of the vessel of another gives rise, in the absence of evidence to the contrary, to the natural inference that the appellant will ultimately be obliged to return the vessel to the owner or indemnify the owner for its loss. Some support for this is to be found in the appellant's undertaking in the Soekor agreement to procure, among others, hull and machinery insurance to the full value of the vessel.

To survive absolution, the appellant was obliged, as far as inferences are concerned, to show no more than that the inference on which it relied was one which was reasonable: Gordon Lloyd Page & Associates v Rivera 2001 (1) SA 88 (SCA) at 92H-I. The appellant succeeded in the circumstances in establishing prima facie that it bore the risk of the loss of the vessel. It follows that on these facts the relationship between the appellant and Pacific Lance was such as to entitle the appellant at law to a salvage reward in respect of the services rendered by the vessel.