Lieutenant Sanders was born at Auckland, New Zealand, on 7 February 1883, and was 34 years old, and a Lieutenant in the Royal Naval Reserve, in command of H.M.S. Prize, when the action for which he was awarded The Victoria Cross took place.
The citation from the London Gazette dated 22 June 1917 reads:
"In recognition of his conspicuous gallantry, consummate coolness and skill in commend of His Majesty's ships in action."
On 20 November 1918, after the war, the following appeared in the London Gazette:
"Admiralty. 20 November, 1918. With reference to the announcements of the award of the Victoria Cross to Naval Officers and men for services in action with enemy submarines, the following are the accounts of the actions for which these awards were made.
Action of HMS Prize on 30 April, 1917. HMS Prize a topsail schooner of 200 tons under the command of Lieutenant William Edward Sanders RNR, sighted an enemy submarine at three miles range and approaching slowly astern.
The 'panic party' in charge of Skipper William Henry Brewer RNR (Trawler Section), immediately abandoned ship. The ship's head was put into the wind, and the gun crews concealed themselves lying face downwards on the deck. The enemy continued deliberately shelling the schooner, inflicting severe damage and wounding a number of men. For twenty minutes she continued to approach, firing as she came, but at length, apparently satisfied that no one remained on board she drew out of the schooner's quarter 70 yards away. The White Ensign was hoisted immediately, the screens dropped, and all guns opened fire. A shell struck the foremost gun of the submarine, blowing it to atoms and annihilating the crew.
Another shot demolished the conning tower, and at the same time a Lewis gun raked the survivors off the submarine's deck. She sank four minutes after the commencement of the action in clouds of smoke, the glare of an internal fire being visible through the rents in her hull. The captain of the submarine, a warrant officer and one man were picked up and brought on board the Prize, which was then herself sinking fast. Captors and prisoners however succeeded in pluging the shot holes and keeping the water under pumps. The Prize set sail for land, 120 miles distant. They were finally picked up two days later by a motor launch and towed the remaining five miles into harbour. The award of the Victoria Cross to Acting Lieutenant William Edward Sanders was announced in the London Gazette No. 30147 dated 22nd June, 1917."
He later achieved the rank of Lieutenant-Commander.
He was killed in action at sea in the Atlantic Ocean, aboard H.M.S. Prize, on 14 August 1917, and went down with the ship.
His Victoria Cross is held at the Auckland War Memorial Museum, Auckland, New Zealand.
Because he was in the Royal Navy, the ribbon of his Victoria Cross was blue, as were the ribbons of all Victoria Crosses awarded to Naval personnel prior to 1920 when the crimson ribbon was adopted for all the services.