



COURT 
    OF APPEAL FOR BRITISH COLUMBIA




Citation:


Omega 
          Salmon Group Ltd. v.
Pubnico Gemini (The),







2007 
          BCCA 33



Date: 20070117





Docket: CA033744

Between:

Omega 
    Salmon Group Ltd.

Appellant/
Respondent on Cross Appeal

(
Plaintiff
)

And

The 
    Owners and All Others Interested in
The Ship "Pubnico Gemini" and "Pubnico Gemini",
Bounty Holdings Ltd., Gold Luck Enterprises Co. Ltd.,
Sea Haul Technologies 2000 Ltd. and Greg Olafson

Respondents/
Appellants on Cross Appeal

(
Defendants
)










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 ships 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 Omegas 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 courts 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, Omegas 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.), affd (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.), affd (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 
    Omegas 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


