Insights

Introduction

In ‘Sandy Yacht Marina Limited v. Bastiment M/Y Leymour’ decided by the First Hall of the Civil Court (the “Court”) on 27^th March 2025, the Court held that defining whether services qualify as ‘salvage’ is a key consideration to make when determining the payment of salvage services.

Facts of the Case

On April 27^th 2018, the Malta-flagged M/Y Leymour (the “Vessel”) was moored in the Sandy Yacht Marina when suddenly, the Vessel started slowly sinking due to it taking on water. Immediately after noticing the sinking Vessel, employees of Sandy Yacht Marina Limited (the “Plaintiff”) started aiding the Vessel to halt further damage being done and to prevent it from becoming completely submerged. The cause of the Vessel’s partial sinking was determined by the Court under separate proceedings in the names of ‘Barra Scuba Limited v. Marine Services Limited et’ whereby the defendant failed to provide maintenance services of industry standards. Following the completion of the services by the Plaintiff, an invoice for €11,800 was issued to Barra Scuba Limited (the “Defendant”) as the registered owners of the Vessel.

The Defendant did not agree with the facts as presented by the Plaintiff and with the amount being invoiced to them. The Plaintiff held that the Defendant did not effect the payment despite multiple efforts made by the former. The Defendant did not agree with the amount invoiced as they argued that most of the assistance and services were carried out by their own representatives and employees.

Proceedings before the Court

Through their application, the Plaintiff held that their claim fell under Article 742B(j) and (k)(ii) of the Civil Code (Chapter 12 of the Laws of Malta). These sub-articles allowed the Plaintiff to file an in rem claim directly against Vessel since they respectively relate to “any claim in the nature of salvage operations […]” and “any claim for measures taken to prevent, minimize or remove such damage; and for such compensation of such damage”. The debt due to the Plaintiff was also secured by a special privilege as held under Article 50(d) of the Merchant Shipping Act (Chapter 234 of the Laws of Malta) which concerns “wages and expenses for assistance, recovery of salvage, and for pilotage”.

According to the Court, the determination of whether the services carried out by the Plaintiff classified as salvage or not, was the main issue and was the key to resolving this dispute. In reaching its conclusion, the Court looked at multiple definitions of salvage since one is not explicitly provided by the Merchant Shipping Act.

Defining Salvage

The Court first analysed the definition of salvage as provided in Black’s Law Dictionary, where the following three main factors are identified:

• The rescue of imperiled property;
• The property saved or remaining after a fire or other loss, sometimes retained by an insurance company that has compensated the owner for the loss; and
• Compensation allowed to a person who, having no duty to do so, helps save a ship or its cargo (also known as a ‘salvage award’).

The Court then looked at salvage as defined by Lord Justice Kennedy in that it is deemed to be “a service which saves or helps to save a recognised subject of salvage when in danger, if the rendering of such service is voluntary in the sense of being solely attributable neither to pre-existing contractual or official duty owed to the owner of self-property nor to the interest of self-preservation”.

In order to ensure a comprehensive understanding of the concept of salvage, it referred to the International Salvage Convention of 1989 which defines a salvage operation as “any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever”.

Following the review of the multiple definitions of salvage, the Court was of the opinion that salvage is determined by the performance of an impromptu and involuntary act from a third party who is not the owner of the vessel in danger. In determining the characteristics which define salvage, the Court referred to the cases of ‘Marine Services Ltd v. Captain Morgan Leisure Ltd u l-Vapur Charlotte Louise’ and ‘Pawlu Buttigieg v. Dr. Tania Sciberras Camilleri noe’ which established the following characteristics which are essential to understanding the concept of salvage:

1. The service must be rendered to a legally recognised subject of salvage;
2. The service must be voluntary;
3. The subject of salvage must be in danger; and
4. The service must be successful.

Considerations of the Court

The Court thoroughly examined the pricing structure applied by the Plaintiff in charging the Defendant for the salvage services rendered. After careful consideration, the Court determined that the price was calculated in strict accordance with the applicable legal framework governing salvage operations. In particular, the Court took into account the market value of the Vessel, recognizing that the compensation for salvage services must reflect the worth of the property saved as well as the efforts and risks undertaken by the Plaintiff in its role as the salvor. This assessment led the Court to conclude that the Plaintiff’s pricing was fair, reasonable and compliant with the relevant laws and industry standards.

Consequently, the Defendant’s plea alleging that the price requested by the Plaintiff was illicit, dishonest or otherwise unjustified was rejected by the Court. The Court found no evidence to support claims of overcharging and emphasized that the Plaintiff’s charges were transparent and legally sound.

In delivering its judgment, the Court went further to dismiss all other pleas raised by the Defendant, thereby affirming the Plaintiff’s position in full. The Court declared the Defendant to be indebted to the Plaintiff for the salvage services provided. Accordingly, the Court ordered the Defendant to pay the outstanding invoice amounting to €11,800, as originally invoiced by the Plaintiff. This ruling underscored the Defendant’s obligation to honour the payment in full, thereby concluding the dispute in favour of the Plaintiff and reinforcing the principle that salvage compensation must be respected when properly calculated and justified under the law.

Conclusion

The Court’s process in reaching its decision places a spotlight on the importance of the classification of services when an outstanding debt is due, particularly when an act of salvage was successfully performed.

Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in ‘The Malta Independent’ on 07/05/2025.