2007 BCCA 33 Omega Salmon Group Ltd. v. Pubnico Gemini (The)

Before:	The Honourable Madam Justice Southin
	The Honourable Madam Justice Rowles
	The Honourable Madam Justice Ryan

A. P. Mayer	Counsel for the Plaintiff below
D. F. McEwen, Q.C.	Counsel for the Defendants below
Place and Date of Hearing:	Vancouver, British Columbia
12th October, 2006
Place and Date of Judgment:	Vancouver, British Columbia
17th January, 2007

Written Reasons by:

The Honourable Madam Justice Southin

Concurred in by:

The Honourable Madam Justice Rowles

The Honourable Madam Justice Ryan

Reasons for Judgment of the Honourable Madam Justice Southin:

[1] On 12th January, 2006, Stromberg-Stein J. pronounced this judgment:

THIS COURT ORDERS that

1. The Plaintiff is awarded damages in the amount of $314,834.00.

2. The Plaintiff is awarded simple pre-judgment interest at the rate of 8.4% calculated as follows:

a. From June 15, 2001 to February 11, 2002 on $314,834;

b. From February 12, 2002 to January 12, 2006 on $189,834.

3. The Defendants shall pay to the Plaintiff the cost of this action on scale 3 forthwith after assessment thereof.

[2] Thereupon, the plaintiff below appealed, seeking an order:

1) Reversing the portion of the Judgment of the Honourable Madam Justice Stromberg-Stein in which her ladyship reduced principal amount on which admiralty interest is to be awarded to the Plaintiff, by $125,000, being the amount of insurance monies received by the Plaintiff from its underwriters, from the date upon which said insurance monies were received forward; and

2) Costs throughout.

[3] The defendants below then riposted with a cross appeal seeking an order:

... that the interest rate for pre-judgment interest be set at the prime rate prevailing during the period set out in the Order of the Supreme Court, with costs of the appeal and the cross-appeal paid by the Appellant to the Respondents.

[4] The defendants concede, rightly in my opinion, that the appellant is entitled to succeed on its appeal. That the plaintiff received partial compensation from its insurer was res inter alios acta.

[5] Thus, the remaining issue is that arising on the cross appeal.

[6] As I understand counsel, it would be in the interests of the orderly conduct and outcome of litigation arising from collisions within admiralty jurisdiction that there should be consistency in the rate of interest to be awarded a successful plaintiff.

[7] If I may say so, this is a point which Parliament ought long since have addressed. But I do not suppose there are any votes to be gained from addressing it.

[8] How this case arose was succinctly described by the learned judge in the opening paragraph of her reasons for judgment, 22 C.P.C. (6th) 86, 2006 BCSC 59:

[1] On May 18, 2001, the fish packer Pubnico Gemini collided with a fish farm owned by the plaintiff, Omega Salmon Group Ltd. (“Omega”), anchored at Doyle Island, east of Port Hardy, British Columbia. The defendant Bounty Holdings Ltd. owned the ship; the defendant Sea Haul Technologies 2000 Ltd. chartered the ship from Bounty; the defendant Gold Luck Enterprises Co. Ltd. contracted with Sea Haul to provide officers and crew; and the defendant Greg Olafson was the ship’s Master at the time of the collision.

[9] The learned judge then noted that the defendants admitted liability for the collision and said:

[2] ... Omega received $125,000 from its insurers, and now seeks judgment in the amount of $314,834 from the defendants, of which $297,000 is the cost of replacing the damaged section of the fish farm. Omega also seeks admiralty interest at 8.4 per cent compounded semi-annually, and condemnation of the Pubnico Gemini.

[3] The defendants dispute Omega’s entitlement to the full amount of $297,000 for purchase and installation of the replacement section. They submit that appropriate compensation is $175,000, with simple interest at prime rate.

[10] Thus, the only issues in dispute at the trial were mitigation of damages and the appropriate rate and type of interest.

[11] On the mitigation issue, the learned judge found against the defendants and nothing more need be said about it.

[12] On the question of the rate of interest, the learned judge said, in part:

[40] The parties agree that the Court Order Interest Act, R.S.B.C. 1996, c. 79, does not apply to maritime claims and that Omega is entitled to pre-judgment interest on damages arising from the collision at admiralty rates.

[41] Omega seeks interest at 8.4 per cent compounded semi-annually. Omega argues that there is no specific rate of admiralty interest; that interest is awarded wholly at the court’s discretion in maritime law; that the rate of interest should be determined by the evidence; and that compound interest should be awarded when the evidence shows it is necessary to fully compensate the plaintiff.

[42] The defendants agree that admiralty interest is discretionary but submit that the usual practice in this province is to award simple interest at prime or near-prime. They further argue that the insurance monies received by Omega should be considered in setting the interest rate.

[43] The parties’ differing positions on interest lead to the following results, based on an interest rate of 8.4 per cent calculated from August 30, 2001 to June 30, 2005 on the principal sum of $314,834 and rounded to the nearest dollar: simple interest: $101,377; semi-annual compounding: $116,833; monthly compounding: $119,114.

[44] At all material times Omega carried standing debt with Farm Credit Canada in excess of the claimed damages, and paid interest to service that debt at rates at or exceeding 8.4 per cent. Keith Bullough, Omega’s CFO at the time of the collision, testified that if Omega had not had to spend $314,834 on repairs it would have either grown more fish or paid down debt.

[13] Evidence before the learned judge showed that prime varied from 6.5% at the date of the collision to as low as 3.75% during part of the period to the date of trial, and was 4.25% at the commencement of the trial.

[14] The learned judge first addressed the question of whether interest should be compound or simple, and held the latter. But in the course of so doing, she set out some of the relevant British Columbia cases:

[50] The British Columbia courts have most often awarded simple interest at prime or near-prime: MacMillan Bloedel Ltd. v. Youell (1993), 79 B.C.L.R. (2d) 326, 23 C.C.L.I. (2d) 18 (C.A.), leave to appeal to S.C.C. refused (1994), 91 B.C.L.R. (2d) xxxvi, [1993] S.C.C.A. No. 532 (QL); Tilbury Cement Ltd. v. Seaspan International Ltd. (1991), 47 C.P.C. (2d) 292, [1991] B.C.J. No. 273 (QL) (S.C.); Voest-Alpine Canada Corp. v. Pan Ocean Shipping Co. (1991), 60 B.C.L.R. (2d) 50, 50 C.P.C. (2d) 308 (S.C.), aff’d (1993), 79 B.C.L.R. (2d) 388, 18 C.P.C. (3d) 328 (C.A.); Nelson Marketing International Inc. v. Royal & Sun Alliance Insurance Co. of Canada (2005), 27 C.C.L.I. (4th) 57, 2005 BCSC 772; Meeker Log & Timber Ltd. v. Sea Imp VII (The) (1996), 1 B.C.L.R. (3d) 320, [1994] B.C.J. No. 3006 (QL) (S.C.), aff’d (1996), 21 B.C.L.R. (3d) 101, [1996] B.C.J. No. 1411 (QL) (C.A.), leave to appeal to S.C.C. refused, [1996] S.C.C.A. No. 396 (QL).

[15] She concluded:

[54] Omega has only offered evidence as to its standing debt before the collision. It has provided no evidence that it was forced to borrow money, or that its borrowing costs increased, after and as a result of the collision. Its submissions about what it would have done with money not tied up in debt are speculative. I therefore decline to award compound interest, but accept Omega’s rate of 8.4 per cent as appropriate.

[16] Thus, the learned judge rejected the submission of the defendants that prime was appropriate and settled on a rate of interest personal to the plaintiff, i.e. fixed with reference to what the plaintiff's own creditworthiness obliged it to pay to its own lender. The learned judge did not explain why she considered she was warranted in doing what judges sitting in this Province in maritime collision cases have not generally done.

[17] In this Court, counsel for the cross-appellant puts the issue for the Court thus:

18. The Court must decide whether the Learned Trial Judge was correct in considering the actual costs of borrowing of the Appellant as the appropriate rate of interest on the portion of the claim for which they did not receive payment by their insurer. If a plaintiff has poor credit and pays a high rate of interest on its borrowing, should that rate be the appropriate rate for pre-judgment interest? The Respondents will submit that the actual cost of borrowing is irrelevant and the Court should award interest at a rate that the Appellant could have obtained on safe investments if the funds had been paid at the date the loss was suffered. That rate will be prime rate or less.

[18] It has, from time to time, been said that the award of interest in admiralty is discretionary. But all discretion must be exercised on the relevant principles. As I have said, the simple issue here is whether the personal financial circumstances of a successful plaintiff in an action arising from a collision at sea are properly taken into account. If "yes", then the learned judge's answer cannot be said to be in error; if "no", then the defendants are entitled to succeed.

[19] Whether those personal circumstances are properly taken into account is simply a matter of the practice in the courts of British Columbia, in which I include decisions from the days when a British Columbia judge sat as a local judge in admiralty. [For those interested in such matters, the local judge in admiralty derived his jurisdiction from 1890 onward from the Colonial Courts of Admiralty Act, 53 & 54 Vict., c. 27, and, so far as relevant, from antecedent statutes on the same subject matter.]

[20] British Columbia is a jurisdiction in which, before the introduction of shore-based systems of control of shipping in our confined waters, there were many collisions at sea. For some 40 years, the Province had only one local judge in admiralty, the Honourable Archer Martin, who, having reached the age of 75, chose to retire in 1940. He was, reputedly, a very difficult man, but everything he wrote is worth reading. Of special note is his judgment in The "Leonor" (1916), 3 P. Cas. 91, [1917] 3 W.W.R. 861. He was a stickler for strict practice.

[21] In many of his judgments, one finds words to this effect: "There will be the usual reference to the registrar with merchants to assess the damage." See Fred Olsen and Co. v. The "Princess Adelaide" (1929), 41 B.C.R. 274 at 281; The King v. The Despatch (1916), 22 B.C.R. 496 at 502; SS. Charmer v. SS. Bermuda (1910), 15 B.C.R. 506 at 510; and Bank Shipping Co. v. The "City of Seattle" (1903), 10 B.C.R. 513 at 518. In none that I have read does he make mention of interest. He did not have to because he was following the practice of the Probate, Divorce and Admiralty Division in London, a practice which had come down to it from the Court of Admiralty. In collision cases, the judge did not normally assess the damages. The question of damages was referred to the registrar and merchants.

[22] I think it reasonable to infer that the practice followed here was the same as that in England, which is described in Halsbury's Laws of England, 2d ed., vol. 1 (London: Butterworth, 1931) at 158:

270. As soon as possible after the hearing of the reference has been concluded the Registrar makes his report to the Court, stating his decision on the questions referred to him; and where the report is as to damages, it shows in a schedule in parallel columns the items claimed, and those allowed, and from what period interest at 4 per cent. until payment, allowed as part of the damages proceeded for, will run.

[Emphasis added.]

[23] That practice was explained In The Joannis Vatis (No. 2), [1922] P. 213, by Sir Henry Duke, the President, at 223:

Here two special matters are to be considered. In this jurisdiction a rule exists with regard to interest upon damages which is well established and proper to be taken into account. The registrar and merchants include in their computation of damage by collision interest upon the items of claim from the time of accrual of the damage until the date of the assessment. The practice was discussed and confirmed in The Kong Magnus [[1891] P. 223], and is in conformity with what was said long since by Lord Stowell in The Dundee [(1827) 2 Hagg. Adm. 137, 143]. The sum so calculated is given not as interest on a debt but as part of the damages. During recent years interest as damages has been reckoned in this way at 5 per cent....

[24] In The Kong Magnus, upon the assessment, the registrar had awarded interest at four per cent from 1st May, 1878, the date of the collision in the North Sea between the Kong Magnus, a Norwegian vessel, and a British brigantine, the Mizpah, owned by the plaintiffs. The plaintiffs did not sue until 1889. Much of the report is addressed to why the action was not brought more promptly. The owners of the Kong Magnus, asserting interest ought not to be awarded from the date of the collision because of the delay of the plaintiffs, argued, in part, at 232-33:

... the defendants contend that the practice, in Admiralty, as to the allowance of interest, is discretionary, and that, in the particular circumstances of this case, it will not be allowed. Dr. Lushington, in The Amalia [5 N.R. 164], states that "interest was given for this reason, namely, that the loss was not paid at the proper time," that is, "from the time when the loss ought to have been paid for"; but "ought" implies a duty, and there could be no duty in this case to pay that which for nearly twelve years was never claimed, and in respect of which no steps were taken to fix the defendants with any liability; so that the defendants have never failed in the performance of any duty cast upon them which would render them liable for interest. There is no previous case in which the action has not been brought within, at the most, three or four years; but in this case for twelve years the company has been paying dividends in ignorance of the existence of any such debt as this, and it would be inequitable to add interest to the damages now for the first time ascertained to be due.

[25] The argument was rejected, but, in 1927, in The "St. Charles", 138 L.T. 456 at 459, the Court of Appeal held that the registrar might disallow interest if there had been undue delay in prosecuting the claim.

[26] There is no suggestion in Halsbury or in the two judgments to which I have referred, that the rate of interest was other than conventional, by which I mean that it did not depend upon circumstances peculiar to the successful plaintiff.

[27] In many of the authorities cited to us from Canadian courts, the rate has been set at prime. See, e.g. Algoma Central Railway v. The "Cielo Bianco", [1987] 2 F.C. 592 (F.C.A.).

[28] The practice of awarding a conventional rate of interest obviates any judicial investigation into financial circumstances peculiar to the plaintiff, and therefore leads to efficiency in litigation.

[29] I would therefore allow the appeal and fix the rate of interest at prime from the date of the collision to the date of judgment below. If counsel are unable to agree on the calculation of that interest, its calculation will be referred to the registrar of the court below.

[30] The defendants are entitled to the costs of the cross appeal on scale 2. The defendants having conceded the plaintiff's appeal, it is allowed with costs on scale 1.

“The Honourable Madam Justice Southin”

I agree:

“The Honourable Madam Justice Rowles”

I agree:

“The Honourable Madam Justice Ryan”

Citation:	Omega Salmon Group Ltd. v. Pubnico Gemini (The),
	2007 BCCA 33