Before: The Lord Justice Parker

The Lord Justice Glidewell

The Lord Justice Slade
 
 

B E T W E E N

JUDGMENT
 
DATED: 16 March 1990

PARKER LJ

The appellant plaintiffs or one of them were the owners of cargo shipped on board the vessel "Choko Star" at Rosario under three bills of lading, one dated 20th May 1986 and relating to Soya Beans, the other two dated 26th May 1986 and relating to Sunseeds. I shall refer to them as "cargo owners". The vessel was owned by the third defendants, Bula Shipping Corporation.

On 27th May 1986 the vessel took the ground in the River Parana in Argentina being then laden with the cargo and bound from Rosario to Italian ports. She was stranded and her master was unable to refloat her without assistance. In order to enable her to proceed with her voyage, he sought such assistance. On 30th May 1986 he signed a Lloyds Standard Form of Salvage Agreement (LOF) engaging the first respondents Alexander Tsavliris & Sons Maritime Company, professional salvors, to whom I shall refer as "the salvors", to refloat the vessel. The second respondents are assignees of the salvors' claim against cargo owners.

It is the salvors' case that LOF was signed on 30th May pursuant to an oral agreement made on 29th May between one Faraklas, on behalf of the owners of the vessel her cargo and freight, and one Constantinides on behalf of the salvors, that the salvors should refloat the vessel on the terms of LOF if she had not already been refloated by the time that their salvage officer, a Captain Lambridis, arrived on board her.

LOF is widely used throughout the world. Its opening words are:

"IT IS HEREBY AGREED between Captain ... for and on behalf of the Owners of the '...' her cargo freight bunkers and stores and ... for and on behalf of ... (hereinafter called 'the Contractor') …"

Clause 17 provides:

"The Master or other person signing this Agreement on behalf of the property to be salved enters into this Agreement as Agent for the vessel her cargo freight bunkers and stores and the respective owners thereof and binds each (but not the one for the other or himself personally) to the due performance thereof."

The salvors were successful in their efforts to refloat the vessel, which thereafter proceeded to her destination.

In accordance with the provisions of LOF the salvors demanded and obtained security, and an arbitrator was appointed. The salvor's claim against the owners of the vessel was settled. Cargo owners contended that the master had no authority to contract on their behalf and that they were not bound by the agreement or agreements made. However they took part in the arbitration under protest. The arbitrator made an award. There was an appeal and the appeal arbitrator also made an award. Cargo owners paid the sum awarded. We do not know what it was.

Although cargo owners deny the master's authority to contract on their behalf they accept, and have throughout accepted or conceded, that, if the master had simply accepted the salvage services of the salvors, without agreeing any special terms, they, the cargo owners, would have been liable to pay their due proportion of any salvage award made under the general maritime law. There was at one time, or appeared to be, some dispute about the ambit of this concession or whether it could be withdrawn but, in the event, it was expressly stated by Mr Clarke QC on their behalf that cargo owners continued to accept, and I quote, "that the salvors would have obtained an award against cargo owners under the general maritime law in a court of competent jurisdiction". Mr Clarke submitted that a court of competent jurisdiction meant the courts of Argentina, and Mr Willmer QC for the salvors that there were, or might be, other courts of competent jurisdiction, but this dispute is of no importance and it is unnecessary for this court to resolve or pronounce upon it.

Pursuant to their contention that they were not bound, cargo owners commenced proceedings in the Admiralty Registry of the Queen's Bench Division by writ dated 3rd October 1986 claiming, inter alia, a declaration that they were not bound by the agreement of 30th May 1986. I shall refer to this action as "the first action". This was followed on 17th March 1987 by a writ, on behalf of cargo owners, claiming against the shipowners, damages on the ground that the aforesaid agreement was made by the shipowners negligently and in breach of contract.

The substance of that claim is that the master had acted unreasonably in failing to engage the assistance of local tugs or salvors and by engaging instead European salvors with no men or equipment in the Argentine and with little experience of salvage in the river Parana.

The two actions are proceeding in step with each other.

On 6th December 1988 it was ordered by Sheen J that the following issues be tried, without evidence, as preliminary issues in the first action:-

"(iv) (a) Whether, if a contract was made orally on 29th March 1986, between representatives of the First and Third Defendants, the Third Defendant had implied actual authority, and therefore ostensible authority, to contract the services of the First Defendants on behalf of the owners of the cargo on reasonable terms and

(b) Whether a contract on the terms of the LOF 1980 was a contract on reasonable terms in circumstances in which the First Defendants did not know that any better terms were available from other principal salvors.

(v) (a) Whether, if a contract was made in writing on 30th May 1986, between the Master of the 'CHOKO STAR' and the First Defendants' Salvage Officer, Captain Lambridis, the Master of the 'CHOKO STAR' had implied actual authority and, therefore, ostensible authority to contract the services of the First Defendants on behalf of the Owners of the cargo on reasonable terms and

(b) Whether a contract on the terms of LOF 1980 was a contract on reasonable terms in circumstances in which Captain Lambridis did not know that any better terms were available from other potential salvors."

The numbering is because it had been suggested that certain other issues also be tried as preliminary issues, but we are not concerned with them. When these issues came on for trial before Sheen J they were, in the course of argument, amended and as so amended took the following form:

"(iv) (a) Whether ship-owners have implied actual authority, and therefore ostensible authority, to make reasonable contracts with salvors on behalf of owners of cargo on reasonable terms.

(b) If so, if a contract was made orally on 29th May 1986 between representatives of the First and Third Defendants (ie salvors and ship-owners) on the terms of LOF 1980 in circumstances in which the First Defendants (salvors) did not know that any better terms were available from other potential salvors, it was a reasonable contract on reasonable terms.

(v) (a) Whether the Master of a ship was implied actual authority, to make reasonable contracts with salvors on behalf of owners of cargo on reasonable terms.

(b) If so, whether, if a contract was made in writing on 30th May 1986, between the Master of the 'CHOKO STAR' and the First Defendants' Salvage Officer, Captain Lambridis, in circumstances in which the First Defendants (salvors) did not know that any better terms were available from the other potential salvors it was a reasonable contract on reasonable terms."

I should at this point mention that Mr Clarke informed us in the course of argument that he had contended from the outset that the issues ordered to be tried were not suitable to be tried as preliminary issues but that, the judge having been against him on that point, the issues had been agreed. In a reserved judgment reported at [1989] 2 Ll.42, the judge answered the questions posed in the finally agreed preliminary issues as follows:

"(iv) (a) Yes.

(b) A contract on the terms of LOF 1980 is a contract on reasonable terms. If the first defendants (salvors) did not know that any better terms were available from other potential salvors they were entitled to rely upon the ostensible authority of the shipowners. But if better terms were in fact available to the shipowners from other potential salvors it may not have been a reasonable contract in the circumstances.

(v) (a) Yes.

(d) A contract on the terms of LOF 1980 is a contract on reasonable terms. If the salvors did not know that better terms were available from other potential salvors they were entitled to rely upon the ostensible authority of the shipowners. But if better terms were in fact available to the Master it may not have been a reasonable contract for him to make in the circumstances.

On the basis of these answers he dismissed cargo owners' action.

From that judgment cargo owners now appeal to this court.

It will be necessary later in this judgment to revert in some detail to the form of the finally agreed issues, the answers given by Sheen J to the questions thereby raised and the consequences of those answers. I shall however consider first, what, in the course of argument, emerged as the real issues between the parties.

It being at all times accepted (1) that cargo owners had given no express authority to the shipowners or master to enter into salvage contracts on reasonable terms on their behalf; (2) that he would have authority to do so in circumstances giving rise to an agency of necessity, the basic issue was whether and if so in what other circumstances the owners and master would have any such authority. This issue finally narrowed to the question whether, given a situation in which the owners or master were justified in accepting salvage services, they would have authority to bind the cargo owners by contract even if it was reasonably practicable to communicate with cargo owners and obtain their instructions before doing so and they had not so communicated.

Cargo owners contend that they would have no such authority. The respondents contend that even if there be ample time to communicate and no difficulty in doing so, indeed, even if cargo owners' representative is on board the vessel and can be asked, the shipowners and master can enter into a contract on reasonable terms without asking for directions and that the cargo owners will be bound by that contract by virtue of "implied actual authority and therefore ostensible authority". I put the last phrase in inverted commas because it is taken from issues (iv) (a) and (v) (a) before the judge. I shall return to it hereafter. I observe at this point only that it appears to me an unhappy phrase and to have inherent in it some confusion.

The starting point of cargo owners' argument is that it has been accepted law for a century or thereabouts that unless in a particular case a term giving authority is expressed or can be implied in the contract of carriage, neither shipowners nor master has authority to bind cargo owners save in circumstances which create agency of necessity.

As Sheen J observed ([1989] 2 Ll p 45), this contention receives support from the authors of well known text books on the law of salvage. Indeed it does and not only from the authors of books on the law of salvage. Reference may be made inter alia to Kennedy, Law of Salvage, in all five editions, particularly paragraphs 720-722 of the 5th edition; Brice, Maritime Law of Salvage paragraphs 437-439; Scrutton on Charterparties, 19th Edition, Articles 121-124; Carver, Carriage by Sea, 13th Edition paragraph 127; Bowstead on Agency, 15th Edition, pp 84 - 90 and Goff and Jones, The Law of Restitution, 3rd Edition, pp 332 - 336.

More importantly perhaps it receives support from a number of decided cases.

It is convenient to start with reference to The Onward (1873) LR 4 Adm & Ecc 38, a case in which the holders of a bottomry bond sought to enforce it against the ship, freight and cargo and in which it was held that the bond was invalid against the cargo on the ground that there was not, in the circumstances, such a prior communication with cargo owners as was required by law. At p 51 Sir Robert Phillimore said:-

"According to the law, the master is always the agent for the ship, and in special cases of necessity the agent for the cargo also.

"He is the appointed agent to the former, the involuntary agent of the latter. From these principles of jurisprudence two important consequences flow.

"First, when the circumstances permit, the master must communicate with the owner before he does any acts which seriously affect the value of the ship in the one case or of the cargo in the other.

This is a doctrine at which the English Courts have slowly but steadily arrived."

This clear distinction between the relationship between the master and the shipowner on the one hand and the master and the cargo owner on the other is of crucial importance. In the one case there can easily be grafted on to an existing agency apparent or usual authority or ostensible authority. In the other there is initially no agency. The cargo owner has merely a contract of carriage with the shipowner, which casts upon the latter certain duties which must be carried out by the master on his behalf.

I go next to The Bonaparte (1853) 8 Moore PC 460, heard in the Privy Council on appeal from the High Court of Admiralty. At p 473, Knight Bruce LJ said:

"That it is an universal rule, that the master, if in a state of distress or pressure, before hypothecating the cargo, must communicate, or even endeavour to communicate, with the owner of the cargo, has not been alleged, and is a position that could not be maintained; but it may safely both on authority and on principle, be said, that in general it is his duty to do so, or it is his duty in general to attempt to do so. If, according to the circumstances in which he is placed, it is reasonable that he should, it was rational to expect that he might obtain an answer within a time not inconvenient with reference to the circumstances of the case; it must be taken, therefore, upon authority and principle, that it is the duty of the master to do so, or at least to make the attempt.

Now, in this case, considering the distance between Sweden and England, considering the length of time that elapsed before the repairs were done, their Lordships are of opinion that, supposing the point to be open on these papers, the materials before their Lordships show that the master did not do his duty to the owners of the cargo, and was not warranted, therefore, in hypothecating it."

In Cargo ex the "Hamburg" (1863) 2 Moore (NS) 289, also an appeal to the Privy Council from the Admiralty Court, it was held that a bottomry bond could not be enforced against cargo owners because (i) the master had had a reasonable opportunity of communicating with them and of obtaining directions from them; and (ii) it was his duty to endeavour to obtain such directions.

At pp 320-21 in the judgment, Lord Kingsdown corrected the passage in the quotation from The Bonaparte which I have emphasised so as to read:-

"If according to the circumstances in which he is placed, it be reasonable that he should -- if it be rational to expect that he may -- obtain an answer within a time not inconvenient with reference to the circumstances of the case, then it must be taken upon authority and principle that it is the duty of the Master to do so, or at least to make the attempt."

He then went on:

"In the rule thus enunciated their Lordships are unable to discern any novelty, either in the principle on which it rests, or in its application to the case of the hypothecation of the cargo of a ship by the Master.

"The character of agent for the owners of the cargo is imposed upon the Master by the necessity of the case, and by that alone. In the circumstances supposed something must be done, and there is nobody present who has authority to decide what shall be done. The Master is invested by presumption of law with authority to give directions on this ground -- that the owners have no means of expressing their wishes. But when such means exist, when communication can be made to the owners, and they can give their own orders, the character of agent is not imposed upon the Master, because the necessity which creates it does not arise."

There are many other statements of a like character. I cite only the following further passages.

In Anderson Tritton & Co v. Ocean Steamship Company (1884) 10 AC 107, a case in which the ship, having paid salvors for salvage services, sought to recover from cargo owners their due proportion in general average, Lord Blackburn said at p 117:

"I think therefore that it was quite clear that there was a contract binding on the owner of the Achilles to pay this sum of £2691 18s 6d to the owners of the Shanghai; whether it was made by themselves or by their master for them is, as far as regards the binding of the owners of the Achilles, unimportant. But neither the owners of the ship nor their master have authority to bind the goods, or the owners of the goods by any contract."

In The Troilus [1951] AC 820, a case in which the issue was whether certain services were salvage services, Lord Porter observed at p 833 and 834 :-

"The master or owner or manager of the vessel alleged to have been salved cannot, of course, bind the cargo owners to pay salvage where the services rendered are not salvage services, any more than he can bind him to pay the amount which he has promised to the vessel which is said to have salved his ship ...

If a vessel is in danger as defined by Dr Lushington in The Charlotte, and salvage services are offered, the master must make up his mind whether to accept them or not. In so doing he must, of course, act like a prudent master but considerable latitude ought to be allowed him, more particularly in a case such as the present, where the ship is carrying a general cargo and it is therefore a difficult task involving much delay to communicate with the various owners. He is responsible for ship and cargo and the danger of failing to accept salvage services or of dispensing with them at too early a period is well illustrated by the case of The Germania."

In China Pacific SA v. Food Corporation of India [1982] AC 939, Lord Diplock at p 958 considered and distinguished between those cases, such as the present, where the question is whether the circumstances are such as to create direct contractual relationships between the cargo owner and the salvors, and those cases where the master, in pursuance of his duties, incurs expenses in the preservation of the cargo and carrying them safely to their destination under the contract of carriage and seeks to recover those expenses from the cargo owners. He said:

"The legal nature of the relationship between the master and the owner of the cargo aboard the vessel in signing the agreement on the latter's behalf is often though not invariably an agency of necessity. It arises only when salvage services by a third party are necessary for the preservation of the cargo. Whether one person is entitled to act as agent of necessity for another person is relevant to the question whether circumstances exist which in law have the effect of conferring on him authority to create contractual rights and obligations between that other person and a third party that are directly enforceable by each against the other. It would, I think, be an aid to clarity of legal thinking if the use of the expression 'agent of necessity' were confined to contexts in which this was the question to be determined and not extended, as it often is, to cases where the only relevant question is whether a person who without obtaining instructions from the owner of goods incurs expense in taking steps that are reasonably necessary for their preservation is in law entitled to recover from the owner of the goods the reasonable expenses incurred by him taking those steps. Its use in this wider sense may, I think, have led to some confusion in the instant case, since where reimbursement is the only relevant question all of those conditions that must be fulfilled in order to entitle one person to act on behalf of another in creating direct contractual relationships between that other person and a third party may not necessarily apply.

In the instant case it is not disputed that when the Lloyd's open form was signed on January 22, 1975, the circumstances that existed at that time were such as entitled the master to enter into the agreement on the cargo owner's behalf as its agent of necessity."

This clearly recognises that where it is sought to make the cargo owners directly liable to the salvors in contract the conditions required to constitute an agency of necessity must be fulfilled, but that where the shipowner is seeking to recover from the cargo owners expenses incurred in pursuance of the contract of carriage the position may be different.

Later in his judgment he reverts to the matter again (p 961). Before citing the relevant passage I should point out that in that case the salvors had become bailees of the cargo and made storage contracts with depositaries. They sought to recover against the cargo owner the expenses incurred by them under such contracts. Lord Diplock said:

"... the Court of Appeal ... was of the opinion that in order to entitle the salvors to reimbursement of the expenses incurred by them in storing the salvaged wheat at Manila up to April 24, 1975, they would have to show not only that, looked at objectively, the measures that they took were necessary to preserve it from rapid deterioration, but, in addition, that it was impossible for them to communicate with the cargo owner to obtain from him such instruction (if any) as he might want to give. Mr Lords, it may be that this would have been so if the question in the instant case had been whether the depositaries could have sued the cargo owner directly for their contractual storage charges on the ground that the cargo owner was party as principal to the contracts of storage made on its behalf by the salvors as its agents of necessity for English law is economical in recognising situations that give rise to agency of necessity. In my view, inability to communicate with the owner of the goods is not a condition precedent to the bailee's own right to reimbursement of his expenses. The bailor's failure to give any instructions when apprised of the situation is sufficient."

Against this, Mr Willmer referred us to dicta in other cases. In my view, however, such dicta do not weaken what, on behalf of the cargo owners, is rightly asserted to have been accepted law as stated in the text books and confirmed in the passages which I have cited.

The main thrust of the respondents' argument was, in reality, based on the contention that it follows from the judgment of Brandon J in The Unique Mariner [1978] 1 Lloyds Rep 438, that the master has implied actual authority in a salvage situation, to bind cargo owners to a salvage contract on reasonable terms and that even if as between cargo owners and master it was not reasonable to make a particular contract without reference or attempted reference to the salvor, could still enforce the contract unless aware of the circumstances making the particular contract unreasonable. In that case the ship was in ballast and there was no question of cargo interests arising. The master of the vessel which had run aground cabled the ship's managers that he required assistance and received in reply a message that a tug was being sent from Singapore. Shortly thereafter a tug, Salvaliant, appeared and her captain went aboard Unique Mariner. He offered to salve her and produced an LOF agreement. The master, mistakenly believing that Salvaliant was the tug he was expecting, signed the agreement. He afterwards repudiated it. The plaintiffs, the owners of Unique Mariner contended that the agreement was not binding on them on a number of grounds, one of which was want of authority in the master.

On this issue Brandon J said at p 449:

"The principles of law applicable to this issue can, I think, be stated in three propositions as follows. First, the relevant authority of a master, for the purpose of deciding whether his owners are bound, as against a third party, by an act which he has purported to do on their behalf, is his ostensible, rather than his actual, authority. Secondly, the ostensible authority of a master is the same as his implied actual authority, unless the latter has been restricted by express instructions from his owners or their representatives, and the third party concerned is, or should be taken to be, aware of such restriction. Thirdly, the implied actual authority of a master, unless restricted by such instructions lawfully given, extends to doing whatever is incidental to, or necessary for, the successful prosecution of the voyage and the safety and preservation of the ship."

The principles there set out may well be correct when the matter under consideration is, as it was in that case, the authority of an admitted agent of the shipowner to bind his principal. In the instant case, however, we are concerned with the question whether the master, or shipowners, neither of whom is the agent of the cargo owners, can bind them by a contract for salvage services purporting to be made on their behalf otherwise than in circumstances giving rise to an agency of necessity.

At this point I revert to the judgment of Lord Kingsdown in The Hamburg where, at 8 Moore PC p 322, he said:

"It is clear that the rule as to communication must be either that, in no case and under no circumstances is it incumbent on the Master to communicate with the owners of the cargo; or that, in some cases, and under some circumstances, it is incumbent on him so to do: either the universal negative or the particular affirmative proposition must hold, and both cannot be true, although one must be. But it has not been contended, and cannot reasonably be argued, that the first proposition is true. Where the cargo belongs to a single individual, known to the Master, the ship in a port in the same country, or near to it, in which that owner is resident, the means of communication sure and speedy, the probable delay inconsiderable, the cargo not of a perishable kind, the money to be borrowed so large as to be sure to bring it within the operation of the Bond, it could not be contended that the Master could properly hypothecate it for the repairs of the vessel without first communicating with the owner. Equally clear it is that, where all these circumstances were reversed, no such duty would be incumbent on him. But if the first proposition be false, and the latter true, what is in effect the practical conclusion, but that the question, whether a Master must communicate or not, is one which can only be decided by the circumstances in each particular case? And this, which certainly seems consistent with the principle on which, as we have already observed, the Maritime law makes the Master, under certain circumstances an agent for the owner in respect of the cargo, their Lordships believe to have been recognised by Lord Stowell in the case of The Gratitudine [3 Rob C 240]."

This and other passages, to some of which reference has already been made, refer directly to cases such as sale, hypothecation, jettison, or bottomry and it is submitted for the salvors that the position is different where the steps taken are, as in salvage cases, for the preservation of the property of the cargo owner. I accept that there is a difference, but it cannot in my judgment affect the principle so clearly stated in the passages cited earlier in this judgment.

Unless, therefore, it is possible in a particular case to imply a term into the contract of carriage that, in circumstances falling short of those constituting the master an agent of necessity, the master is authorised to contract on behalf of cargo owners, the question of the master's or shipowners' authority must depend on all the circumstances of the case. There can be no preliminary question which could suggested that such a term could be implied in the contracts of carriage here in question. I have no hesitation in rejecting such suggestion. I can see no basis upon which any such term could be implied. That no such term is necessary to give business efficacy to the contract appears to me self-evident from the fact that, for expenses incurred in the preservation of the cargo, the ship-owner can in appropriate circumstances recover reimbursement from the cargo owner. Any claim on this ground must therefore fail. If the matter is considered on the basis of the "innocent bystander" test, the position is no different. Suppose for example that, in the instant case, there were two cargo-owners with whom the master could reasonably have communicated, and that both, if approached, could have informed the master of local experienced salvors who could perform the salvage operation on particularly favourable terms. It appears to me that if an innocent bystander had asked cargo owners what was to happen in such circumstances neither would have said "of course the master need not enquire of us; we will be bound by any salvage contract he makes, provided only that it is in itself on reasonable terms". Furthermore, it was argued with force, on behalf of the respondents, that if a salvor cannot rely on a contract purportedly signed on behalf of cargo owners and must first enquire whether communication has been made, or attempted to be made, with them it would place salvors in an impossible position, would make them reluctant to provide services and might even endanger the vessel.

Whilst I readily acknowledge that it might be preferable to have a rule giving the master a wide authority, such as appears in Article 6 of the International Convention on Salvage 1989, such rule is not at present part of English law. Moreover, the arguments advanced have in my judgment less force than at first sight appears when it is realised that in very many salvage situations the urgency of the situation will preclude situations will preclude the master or shipowner, even in modern conditions, from communicating or attempting to communicate with cargo owners. He may not know who are the cargo owners. It may be clear that if he does not contract on the terms offered he will further endanger the vessel and cargo. In such cases he would in my view be able to establish agency of necessity.

I revert now to the agreed issues, the answers to them and the consequences of them.

I do not regard issues (iv) (a) and (v) (a), as framed, as having been suitable for preliminary trial. In the first place, although implied actual authority and ostensible authority can be co-extensive they are not, as the issues appear to envisage, necessarily so. Secondly, they are framed without regard to the particular contracts of carriage. Thirdly, it appears to me that they are based on the incorrect assumption that the master and owners are necessarily clothed with authority as an agent by virtue of the contract of carriage when, in law, the contract of carriage does no more than render the shipowner (and possibly, but doubtfully, the master) bailees. This casts on both duties which may result, as I have pointed out, in expenses incurred being reimbursable, but it would be against all authority to hold that the contract makes either an agent for any purpose. This being so the foundation for any usual or apparent authority does not exist.

As to questions (iv) (b) and (v) (b), they embody certain questions of fact namely (i) was the LOF contract a contract on reasonable terms; (ii) was it a reasonable contract; (iii) were any better terms available from other potential salvors; (iv) if so, did the salvors know that this was the case? There was no agreement as to any of those facts and as it seems to me only the first could possibly have been decided without evidence. These issues were therefore unsuitable for preliminary trial.

All else apart, however, it appears to me clear that the answers given by Sheen J to issues (iv) (b) and (v) (b) did not justify the dismissal of cargo owners' action. He held that a contract on LOF terms was a contract on reasonable terms, but left open the questions whether better terms were available and if so whether the salvors knew. He also held that if better terms were available the contract may not have been reasonable in the circumstances.

This being so I cannot see that judgment could possibly have been given against the cargo owners.

I would allow the appeal, hold that in the circumstances of the contracts of carriage here in question the cargo owners will only be bound by the salvage contract if it can be established that there was a true agency of necessity, and set aside the judgment against the cargo owners.

I find it unnecessary and undesirable to try to formulate any answers to issues (iv) (a) and (v) (a). It is clear that they cannot be answered in the affirmative and that is sufficient for present purposes. Issues (iv) (b) and (v) (b) do not in those circumstances arise.

I have had the advantage of reading in draft the judgments delivered by Slade LJ and Parker LJ with which I agree. There is nothing I can usefully add.

I have had the advantage of reading the judgment of Parker LJ in draft. I gratefully adopt his summary of the facts and the issues on this appeal. For the reasons given by him, with which I am in full agreement, I am of the opinion that this appeal must be allowed. I add something of my own primarily with reference to the concept of "implied actual authority", which I think gave rise to some confusion in the course of argument on this appeal, and to the decision of Brandon J in The Unique Mariner [1978] 1 Lloyds Rep 438.

It has been common ground both in the court below (see [1989] 2 Lloyds Rep 47), and in this court that

(A) in a contract of carriage of goods by sea (unless the implication of such a term would be contrary to the express provisions of the contract) the law will imply a term conferring on the shipowners and master authority to enter into salvage contracts on behalf of cargo owners when the circumstances give rise to an agency of necessity;

(B) the criteria of an agency of necessity will be satisfied if in all the circumstances

(1) it is necessary to take salvage assistance, and

(2) it is not reasonably practicable to communicate with the cargo owners or to obtain their instructions; and

(3) the master of shipowners act bona fide in the interests of the cargo; and

(4) it is reasonable for the master or shipowner to enter into the particular contract.

On the present appeal the dispute has primarily centred round the question whether the law will imply a term in a contract of carriage conferring on the shipowner and master authority to enter into salvage contracts, binding the cargo owners even though the circumstances do not give rise to an agency of necessity. The cargo owners submit that the answer to this question is No. The salvors submit that the answer is Yes. Supporting the decision of the judge, they say in effect that under the general law the shipowners and the master have implied authority to bind the cargo owners to a salvage contract provided only that they act reasonably in making the contract, and it is a contract on reasonable terms.

The master of a ship is the servant of the shipowners and in general will be their agent for the purposes for which he is employed: (Halsbury's Laws of England (4th Edition) Vol 43, paragraph 190). The implied actual authority of an agent extends to all subordinate acts which are necessary or ordinarily incidental to the exercise of his express authority: (ibid Vol 1, paragraph 736).

I would assume that this was the source of the master's authority which Brandon J had in mind in The Unique Mariner (supra) in stating (at p 449) the third of this three general propositions in the following passage:

"First, the relevant authority of a master, for the purpose of deciding whether his owners are bound, as against a third party, by an act which he has purported to do on their behalf, is his ostensible, rather than his actual, authority. Secondly, the ostensible authority of a master is the same as his implied actual authority, unless the latter has been restricted by express instructions from his owners or their representatives, and the third party concerned is, or should be taken to be, aware of such restriction. Thirdly, the implied actual authority of a master, unless restricted by such instructions lawfully given, extends to doing whatever is incidental to, or necessary for, the successful prosecution of the voyage and the safety and preservation of the ship.

All these propositions, however, were stated in the context of a case which concerned the extent of the authority of the master to create contractual rights and obligations between the shipowners and the salvors. The existence of the principal-agent relationship between shipowners and master was never in doubt; the dispute related solely to the extent of the agent's actual and ostensible authority to act on behalf of his principals. (Ostensible authority, rather than actual authority, was ultimately the more relevant for the purpose of deciding whether the owners were bound, since it might be wider than actual authority, and indeed was so on the facts of that case).

These three propositions do not, in my judgment, greatly assist the resolution of the issues before this court, which concern the actual and ostensible authority of the shipowner or the master to bind the cargo owners to a contract with salvors. Until an emergency arises, such as to give rise to an agency of necessity, there is no question of the shipowner or master being an agent for the cargo owners. Accordingly, it is not possible to spell out authority for either of them to bind the cargo owners to a salvage contract, as merely incidental to his pre-existing general authority as an agent. The crucial distinction between the relationship of shipowner and master and the relationship of cargo owners and master was succinctly drawn by Sir Robert Phillimore in The Onward (1874) LR 4 Ad & Ecc 38 at p 51:

"According to the law, the master is always the agent for the ship and in special cases of necessity the agent for the cargo also. He is the appointed agent to the former, the involuntary agent of the latter."

In the present case the learned judge said (at p 46):

"If he [the master] has implied actual authority to engage salvors on reasonable terms on behalf of the shipowners, he must also have implied actual authority to enter into the same reasonable contract on behalf of cargo."

With all respect, I think this statement involved a non sequitur. Merely because the authority conferred by shipowners on their agent, the master, is deemed to extend to engaging salvors on reasonable terms on behalf of the shipowners, it does not follow that the master has the like implied authority to bind cargo owners to salvage contracts, in the absence of circumstances giving rise to an agency of necessity.

In my judgment, if the master or shipowner is to have such implied authority to bind cargo owners, the authority has to be derived by implication from the contract of carriage. And indeed, the learned judge recognised that this was so. He said (at p 46): "That authority is necessarily implied into the contract of carriage". He said (at p 47): "... his implied authority arises out of the contract of carriage and is not given by necessity". With all respect, however, I can find no convincing justification either in his judgment or in the salvors' argument on this appeal for making any such implication in the contracts of carriage in the present case.

In some cases a contract (particularly a commercial contract) may be subject to implied terms which are imported by the custom of the business in respect of which, or the place where, the contract is made. In the present case, however, it has been submitted that there is any relevant custom by virtue of which the contract of carriage would operate to confer on the master or shipowners the authority which is alleged.

Not infrequently also the court will be willing to imply a term in a contract if there arises from its language and the circumstances in which it was entered into an inference that the parties must have intended the term in question, either so as to give business efficacy to the contract, or so as to give effect to the obvious but unexpressed intention of the parties. On this basis, I would find no difficulty in implying a term in the contracts of carriage in the present case to the effect that the master or shipowner would have authority to bind cargo owners to a salvage contract as agent of necessity in circumstances where criteria (1), (2), (3) and (4) above were satisfied. However, in agreement with Parker LJ, I could see no justification for implying a term giving him such authority in other circumstances, either as being necessary to give business efficacy to the contract or as representing the unexpressed intention of the parties.

There is another category of implication. Sometimes, the court in implying a term in a contract, is "laying down a general rule that in all contracts of a certain type -- sale of goods, master and servant, landlord and tenant and so on -- some provision is to be implied unless the parties have expressly excluded it": Liverpool City Council v. Irwin [1977] AC 239, at pp 257-258 per Lord Cross of Chelsea. This type of implication, it will be observed, does not depend either on the requirements of business efficacy or the actual or presumed intentions of the parties but on more general considerations: (see Chitty on Contracts (26th Edition) Vol 1, paragraph 903). On analysis, I think that this has to be and is, the type of implication which the salvors are inviting the court to make in the present case.

It is, I think, common ground that there is no English authority which directly supports the implication of a term in a contract of carriage giving shipowner or master the power to bind cargo-owners to a salvage contract save as agent of necessity. Even in the absence of contrary authority, I think that the court should be very slow to introduce a new general category of implied term into contracts of carriage, not dependent on the requirements of business efficacy or the actual or presumed intentions of the parties; it would not suffice that the court might think it reasonable to do so.

However, the decided cases cited to us, supported by eminent text-book writers, in my judgment preclude our taking this course. Parker LJ has referred to a number of these authorities. I do not think it would be helpful to prolong this judgment by further references, but would merely make one comment. The learned judge prefaced a reference to a number of the authorities by saying (at p 47):

"In considering these cases it is important to bear in mind the fundamental difference between, on the one hand, a master dealing with cargo in a manner adverse to the proprietorial interest of its owner, as for example by sale, hypothecation or jettison, and, on the other hand, a master taking steps to preserve or salvage the cargo, which is his duty by virtue of the contract of carriage and as a bailee."

I take this point. Nevertheless, the tenor of all the English cases cited to us seems to me to be that the law will not import into a contract of carriage an implied term giving the shipowner or master power to bind the cargo-owners to any contracts with third parties (whether salvage contracts or otherwise) save as agent of necessity.

It may be that English law would be improved by the addition of a rule giving a master wide authority such as appears in Article 6 of the International Convention on Salvage 1989. Mr Willmer has forcefully drawn to our attention a number of practical difficulties which he says would result from the absence of such a rule. In my judgment, however, it would not be right for this court to purport to introduce a rule of this kind into English law on this appeal by a process of judicial legislation.

In my opinion, the form of issues (iv) (a) and (v) (a) presented for decision of the court is wholly unsatisfactory. They do not define what kind of "implied actual authority" is envisaged. On the face of them, the issues are expressed in much too wide and general terms to be capable of satisfactory answer. Furthermore, on the face of them, the phrase "and therefore ostensible authority" involves a non sequitur. "Actual authority and apparent authority are quite independent of one another. Generally they co-exist and coincide, but either may exist without the other and their respective scopes may be different": Freeman & Lockyer v. Buckhurst Park Properties (Magnal) Ltd [1964] 2 QB 480 at p 502 per Diplock LJ.

I think that the only way to make sense of issues (iv) (a) and (v) (a) would have been to construe them as raising the question whether, in all contracts of carriage by sea, the law will, by implication (unless parties have expressly agreed to the contrary), import a term giving the shipowners or master (as the case may be) implied authority to make reasonable contracts with salvors on behalf of cargo owners on reasonable terms, even where the circumstances do not give rise to an agency of necessity. Construing issues (iv) (a) and (v) (a) in this sense, I would with little hesitation have answered them in the negative. However, I agree with Parker LJ that it is unnecessary and undesirable to try to formulate answers to these two inadequately formulated issues. In any further litigation the judgment of this court should, I hope, constitute sufficient guidance as to the issues of law which have been canvassed on this appeal.

In the circumstances, issues (iv) (b) and (v) (b) do not arise, though I agree with Parker LJ that they too were in any case unsuitable for preliminary trial. I also agree with him that, on any footing, the answers given by the learned judge to issues (iv) (b) and (v) (b) did not justify dismissal of the cargo-owners' action.

I would accordingly allow this appeal, and set aside the order of Sheen J made against the cargo-owners.