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Legal Perspective - Court Examines A Number of Issues in Computing Salvage Award

August 23, 2018

It’s always nice to hear those stories where someone’s boat is saved because an alert passerby on shore observed that something about the boat didn’t look quite right as it sat at its mooring. That was more or less what happened when a jogger noticed a 100-foot Broward taking on water while docked on a Florida canal behind its owner’s house. Unfortunately, the vessel’s owner was out of town. So the jogger called the police, who then called a marine salvage company.
The salvage company soon arrived at the scene and implemented a number of measures to save the vessel. When salvage personnel discovered several feet of water in the bow and about 18” to 20” of water in the midship engine room, they deployed three high-capacity, 18,000 gallon-per-hour Briggs & Stratton pumps to commence dewatering. The experienced salvage captain determined that the water was coming from a failed fitting on an air conditioning raw water pump. He stopped the leak by placing a rag over the hole and wrapping it in tape.
Shortly afterwards, two of the company’s tugboats arrived on the scene. As dewatering continued, the tugs towed the Broward to a boatyard. These types of salvage operations are generally governed by certain rules under maritime law. They arise in the face of (1.) a marine peril, (2.) a voluntary act by a salvor (the one who comes to the rescue), and (3.) a successful outcome, with the vessel and cargo being saved. The concept is one of the oldest aspects of maritime law. It has evolved over time to include various additional elements, one being the prevention of environmental damage as a measure of success.
The roots of salvage law can be traced back to days when sail-driven freighters crisscrossed the Mediterranean carrying grains and oils in primitive containers. The fundamental idea is that someone coming to the aid of a stricken vessel on the high seas deserves a reward. Before the advent of strong steel hulls and reliable diesels, the sea posed a greater peril to mariners. A change in course and voyage plans on the part of a salvor could be costly in terms of cargo spoilage and other losses. It only seemed fair that the expense of such a gesture should come from the vessel benefiting from it.
Over time, this “incentivization” of coming to the aid of another came to be formulated as a percentage of the value of the vessel and cargo saved. While the very term “marine salvage” could bring to mind ocean-going tugs off the Cape of Good Hope capable of handling 5,000-ton freighters as if they were sacks of feathers, the concept is also well-recognized in the realm of recreational boating.
As such, the commercial salvage company here would be entitled to a percentage of the saved motor yacht. Now the big questions were (1.) how much is that 100-foot Broward worth, and (2.) what percentage of it will be awarded to the salvage company?
The court examined the matter in considerable detail. The salvor’s expert presented a figure of approximately $982,200 for the Broward before the sinking. The defendant’s expert presented a lower figure of approximately $552,625. The court looked at the technical aspects of the case, weighing the defendant’s expert’s testimony that prior to the salvage effort, water was entering at a rate of about 4.25 gallons per minute. It was asserted that the vessel would have remained afloat for about twenty-seven hours, experiencing positive stability during this time. The court noted that the bow-down trim minimized the odds of damage to shafts, struts, propellers, and rudders.
As for the value of the Broward, the methodology applied by the court was based on deducting the repair cost of $238,291.62 from the pre-casualty fair market value of $695,816, resulting in a figure of $457,524.38. This gives us a dollar figure for the Broward. Now we have to figure out the percentage to be awarded to the salvage company. The court characterized the operation as low-order salvage, awarding the company a 5% award plus 1% uplift for being a professional salvor. This resulted in a salvage award (not including interest), of $27,451.46.

Ref:  Port Everglades Launch Service, Inc., d/b/a Cape Ann Towing & Salvage v. M/Y “Situations,” its engines, tender, tackle, et al; Case No. 10-60571-CIV-COHN, United States District Court for the Southern District of Florida
 

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