On 25 February 1965, shortly after loading cargo at Mena al Ahamad, the Tojo Maru collided with the Fina Italia. On 28 February 1965, the owners of the Tojo Maru engaged NV Bureau Wijsmuller (the respondent) to provide salvage services on terms of the Standard Form of Salvage Agreement approved and published by the Committee of Lloyd's on a 'no cure - no pay' basis.

The respondents employed two motor tugs (the Groningen and the Jacob van Heemskerck) and sent two salvage inspectors and a chief diver from the Netherlands who arrived on 2 March 1965. By 20 March 1965, the cargo had been discharged but the salvage operation was not yet complete. On 11 April 1965, the chief diver (against orders received) fired a bolt from a Cox Bolt Gun through the shell plating of the Tojo Maru in attempt to bolt a patch. This caused an explosion and a fire broke out on the Tojo Maru. The damage amounted to GBP 331,767.

In arbitration, the arbitrator found that the 'proper remuneration' for the respondent’s salvage services was GBP 125,000, and allowed the owners’ counterclaim of GBP 331,767, but held that the respondent was entitled to limit liability under s 503 of the Merchant Shipping Act 1894 based upon the tonnage of the salvage tug Jacob van Heemskerck. In holding that the counterclaim could be set off against the claim for remuneration, and that the right to limit applied to the outstanding balance, the arbitrator awarded the owners GBP 10,725.11.

On the special case stated by the arbitrator, Willmer LJ held that the salvors were not entitled to limit their liability on the counterclaim. On appeal by the respondent, the Court of Appeal, in allowing the appeal, held that on the basis that the salvors had done more good than harm, the negligence of the diver diminished the salvage award but, because of the special policy of the law to encourage salvors, it did not make them liable to a counterclaim for damages.

The owners appealed.

Held: Appeal allowed.

The maritime law of England has a long history. An examination of the authorities leads to the conclusion that there is no rule that a successful salvor cannot be liable in damages to the owner for the result of any negligence on its part.

Section 503 of the Merchant Shipping Act 1894 provides limitation of common law liability. This provision must have been based on the public policy that there should be no unnecessary discouragement of the operation of smaller vessels by companies of limited financial resources by subjecting them to the risk of crippling damages if a large vessel should sustain extensive damage by due to the negligent navigation of one of their vessels by the crew.

The respondent relies on s 2(1) of the Merchant Shipping (Liability of Shipowners and Others) Act 1958 which provides:

The owners of a ship, British or foreign, shall not … (d) where any loss or damage is caused to any property (other than any property mentioned in paragraph (b) of this subsection) or any rights are infringed through the act or omission of any person (whether on board the ship or not) in the navigation or management of the ship, or in the loading, carriage or discharge of its cargo or in the embarkation, carriage of disembarkation of its passengers, or through any other act or omission of any person on board the ship; be liable in damages beyond the following amounts …

The respondent contends that the negligent acts of their diver which caused the explosion took place in the 'management' of their tug, or alternatively, that these acts took place 'on board' the tug. If some part of its equipment (fixed or movable), is being used for the conduct of the ship's affairs or in the running of the ship, that part is being used in the management of the ship. But the purpose of the gun was for salvage, and it was not being used in the management or running of the tug.

The firing of the gun which caused the explosion did not take place on the tug. There was no communication between the diver and the tug. If the diver was 'on board' any vessel, it was on the Tojo Maru. There was a duty not to put the Tojo Maru in peril. The negligence began when that vessel was put in peril, and that was after the diver had left the tug. Therefore the respondent cannot limit its liability under s 503(1)(d) of the Merchant Shipping Act 1894, as amended by s 2(1) of the Merchant Shipping (Liability of Shipowners and Others) Act 1958.