Salvage/ Assisting Another
General
Where a person is in custody of an asset, such as a trustee or liquidator, he generally has a right of indemnity in respect of necessary expenditure incurred by reason of his obligations in respect of the property. He will be entitled to indemnity out of the assets concerned.
Recovery by way of restitution may be available in some cases where a person spends money or assists another in circumstances of necessity. The general principle is that a person who assists another, even in circumstances of necessity, has no legal right of recovery. However, in a number of narrowly defined circumstances, restitution may be available.
An agency of necessity may arise where a person in possession of his principal’s goods is obliged to take immediate action. In circumstances where he cannot obtain specific authority, his actions taken by reason of urgent necessity, do not constitute are deemed authorised. Moreover, he may be entitled to recover and charge for what he does. The prior relationship of the parties is the rationale for the liability.
The principle may apply in some cases, where there is no relationship between the parties. This may arise where a person intervenes out of necessity, to save another’s property. Where a person holds another’s goods and takes steps to save them from damage, he may be able to charge that person for the cost of steps taken in the case of an emergency.
Existing Relationship / Agency
In some cases, there may be a prior relationship, which justifies intervention in cases of necessity. In other cases, however, recovery is allowed on the basis of public policy considerations.
A long-standing example which developed at common law is that of the maritime lien. Other examples include agents of necessity, burial of the dead and certain cases of persons in possession of the goods of another.
Where an agent is in possession of his principal’s goods and conduct of his affairs in circumstances where he cannot obtain instructions, he may take steps in an emergency to save principal’s goods or interests from jeopardy. Where, for example, a carrier is carrying the goods of his principal, he may take steps in an emergency to safeguard them irrespective of the terms of a contract.
In the context of agency, there is a pre-existing relationship and implied obligation to take care of the other’s good. A sufficient relationship of agency exists in the case of carriers, commercial agents and others in like situations.
Agency of Necessity
Case law has expanded the scope of “agency of necessity” to encompass cases where there is no prior relationship between the parties. Accordingly, where a person incurs expenditure in rescuing another person’s property from damage, agency of necessity may apply allowing him to recover the costs and expenses incurred in the circumstances of necessity.
The principle applies where a person has custody of another’s goods as bailee. Bailment creates an obligation to take care of the goods, at least where there is a bailment for reward, which will usually involve a commercial relationship.
Accordingly, steps taken to preserve the goods without specific instruction are likely to give rise to a right of restitution for the cost and expenses incurred. The principle is not dependent on agency. There is no necessity for a prior pre-existing relationship, although this may be so in many cases.
Fiduciary Indemnity
Trustees and fiduciaries are entitled to reimbursement in respect of expenses incurred by them in the administration of a trust or pursuant to their fiduciary duties. This applies irrespective of whether they have a right of remuneration under the trust instrument. In the absence of a right of remuneration in the instrument, none would arise under default equity principles.
There are several instances where a fiduciary is entitled to an indemnity in respect of expenses incurred on behalf of beneficiaries and in the context of the trust. The principle also applies in an emergency that necessitates intervention. The courts have an inherent jurisdiction to allow remuneration and reimbursements of trustee expenses incurred.
Director’s, liquidators, and receivers have control of the assets of the company or charged assets respectively. They have a right to reimbursement of in respect of expenses incurred. In case of a receivership, then will generally be a right of remuneration in the relevant instrument.
The liquidator’s rights arise by a statute. Directors, as such, do not have a right to remuneration, but reimbursement of expenditure incurred and remuneration are commonly allowed by the company’s constitution.
Maritime Salvage
The right of maritime salvage is very well established at common law. Where the ship and cargo are saved, the salvor has a claim against the owners. The claim may not exceed the value of the cargo saved. again
It is restated by statute, by the Merchant Shipping (Salvage and Wreck) Act, 1993. It arises where a ship or its cargo appear on reasonable grounds to be in danger and is saved by the efforts voluntarily undertaken of third parties, who have no duty whether as employees or otherwise in that regard.
Members of the crew are not entitled to salvage as they have a prior duty to save and rescue the ship and its cargo. Owners of other ships or masters would have no duty, notwithstanding that they are obliged under sanction of criminal offence under the merchant shipping legislation to assist.
The saving of life does not carry any right of salvage at common law. However, the legislation provides a statutory right in respect of expenses incurred in saving lives, out of any property or the proceeds of the property also recovered and saved.
Lien / Proprietary Claim
The rights of maritime salvage attach to property saved or in respect of which a contribution has been made towards its rescue. Where both ship and cargo are saved, there is a claim against both ship-owner and cargo owner.
There may be a claim against the shipowner’s right to freight in relation to the cargo and where passengers are rescued, in relation to monies due from passengers. Salvage is limited to that actually rescued. If there is no recovery, there is no right of salvage.
The principle of salvage appears to have a wider application in Ireland than elsewhere, on the basis of some late nineteenth-century case law. Under the doctrine of salvage, any person with an interest in property, who incurs expenses necessary for its preservation, to the advantage of all persons with interests in it, obtains a lien over it for the expenses thereby incurred.
Various Cases of Necessary Assistance I
The recent Civil Liability Act allows for a “good Samaritan type” defence. The Act provides relief from liability for voluntary interventions in circumstances of an emergency.
The rendering of a medical assistance to those in need does not appear to create a right of restitution. There are no cases in Ireland on the point. And it appears that the recovery is permitted in the United States on similar circumstances, provided there is no evidence of intention to act gratuitously.
Where necessaries are supplied to a minor or to a person who lacks mental capacity, the cost may be recovered against that person, under the common law principles relating to necessaries. The Sale of Goods Act, which codifies the common law principles, provides that a person who lacks mental capacity is obliged to pay for necessary goods delivered to him.
Various Cases of Necessary Assistance II
A similar principle applies to minors. He is obliged to pay for necessities. Necessary will generally include things provided in emergency situations.
Where a person or entity is obliged to perform a statutory or public duty on behalf of another, this may create a restitutionary right to recover for the person who has incurred the expense. Where lessees have complied with obligations imposed by statute on landlords, they have been held entitled to recover the cost incurred from the landlord.
It has been held that where bodies of deceased persons have been buried, where it is more properly the responsibility of others, the expenditure is recoverable against the estate. The principle has also been applied where a body responsible for the repair of the highway, failed to comply with them and where another entity undertook expenditure in order to prevent the highway remaining dangerous. In some such cases, the statutory schemes allows recovery.