T-5094-73
Dillingham Corporation Canada Ltd. (Plaintiff)
v.
The Ship Shinyu Maru (Defendant)
Trial Division, Walsh J.—Vancouver, April 23;
Ottawa, May 3, 1979.
Practice — Costs — Taxation report contested — Defend
ant contending date for currency conversion to be date of
certification of bill of costs rather than date of discontinuance
of action — Report allowed no pre-judgment interest on
amounts expended in providing bail bond, allegedly contrary
to admiralty rules — Application for order to vary taxing
officer's report — Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, s. 40 — Federal Court Rules 345, 406(1).
This is an application by defendant for an order varying the
taxing officer's report in two respects. Firstly, the taxing officer
established the date for conversion of disbursements made in
Japanese yen to Canadian funds as of the date when plaintiff
discontinued its action; defendant contends that the conversion
date should be the date of certification of the bill of costs.
Secondly, the taxing officer did not include any entitlement to
pre-judgment interest on the amounts expended in providing a
bail bond for the vessel, which, it is claimed, should have been
done pursuant to the rules of admiralty law.
Held, the application is allowed in part. Since costs are not a
fixed amount, although they are determinable, and the amount
can only be determined by their taxation, converting the
amounts expressed in Japanese yen to Canadian dollars as of
that date, it is more equitable to choose the date of certification
of the bill of costs as the appropriate conversion date. The fact
that this will prove more costly to the plaintiff is not a fact
which should be taken into consideration, as the Japanese yen
might have fallen in value in relation to the Canadian dollar in
the interval instead of increasing in value, and the decision
would have to be the same. An appropriate date for conversion
is the date on which the amount to be paid can be ascertained
and payment made. There is no precedent allowing any interest
on expenditures incurred in the course of an action which can
eventually be taxed as part of a bill of costs; it is not desirable
that this should be allowed on this type of disbursement
included in a bill of costs, however substantial it may be. A
special order concerning costs, pursuant to Rule 344(7), would
be inapplicable in this case for such an order relates primarily
to party and party costs as set out in Tariff B. It is purely
academic whether this additional claim could be made on
appeal from the decision of the taxing officer in which the
claim was not made.
Schorsch Meier GmbH v. Hennin [1975] 1 All E.R. 152,
distinguished. Miliangos v. George Frank (Textiles) Ltd
[1975] 3 All E.R. 801, distinguished. Services Europe
Atlantique Sud (SEAS) v. Stockholms Rederiaktiebolag
SVEA [ 1978] 2 All E.R. 764, distinguished. Owners of the
mv Eleftherotria v. Owners of the mv "Despina R" [1977]
3 All E.R. 874, distinguished. The Bell Telephone Co. of
Canada—Bell Canada v. The 'Mar-Tirenno" [1974] 1
F.C. 294, distinguished.
APPLICATION.
COUNSEL:
J. T. Sleeves for plaintiff.
B. S. Lee for defendant.
SOLICITORS:
Russell & DuMoulin, Vancouver, for plain
tiff.
Campney & Murphy, Vancouver, for defend
ant.
The following are the reasons for judgment
rendered in English by
WALSH J.: This is an application by defendant
for an order varying the taxing officer's report
dated March 9, 1979, in two respects.
1. The taxing officer established the date for the
conversion of the disbursements made in Japanese
yen to Canadian funds as of the date when plain
tiff discontinued its action namely November 30,
1976, whereas defendant contends that the date of
conversion should have been the date of certifica
tion of the bill of costs.
2. The taxing officer did not include any entitle
ment to pre-judgment interest on the amounts
expended in providing a bail bond for the vessel
which defendant claims should have been done
pursuant to the rules of admiralty law.
The claim for costs arose because plaintiff's
action instituted on December 12, 1973 for alleged
damage done by defendant ship to concrete cais
sons belonging to plaintiff was discontinued on
November 30, 1976. Defendant had contested the
action and had brought a counterclaim for the
expenses of providing a bail bond of $250,000 in
Canadian funds in lieu of arrest of the vessel.
Following the notice of discontinuance negotia
tions took place with a view to settling defendant's
claim for costs which proved unsuccessful. Defend
ant then decided, instead of proceeding with the
counterclaim, to tax the bill of costs.
The bond was obtained by defendant furnishing
a letter of credit in Japanese yen in Japan which
was converted to a letter of credit by the Royal
Bank of Canada in Canada. Additional bonding
charges became payable each year and there were
various charges for handling commission by the
Banks, telexes, cables and telephone charges and
so forth. Certain charges for divers and surveyors
were also paid in yen, the conversion taking place
at the time of payment. The total in yen amounted
to 2,743,000.60 yen on defendant's bill of costs
submitted for taxation. Defendant converted this
to Canadian currency at the rate in effect on
October 25, 1978, the amount being $18,381.50.
The taxing officer found that the costs became
payable on November 30, 1976 the day the notice
of discontinuance was filed. He allowed the inclu
sion of the costs of bail in the taxable costs how
ever as a result of the decision of the Federal
Court of Appeal in No. A-68-76 Antares Shipping
Corporation v. The "Capricorn".'
Defendant relies on Rules 406(1) and 345 of the
Court which read respectively as follows:
Rule 406. (1) The plaintiff may, at any time before service of
the defendant's defence, or after service thereof before taking
any other proceeding in the action (other than an interlocutory
application), by filing and serving an appropriate notice in
writing, wholly discontinue his action or withdraw any particu
lar claim made by him, and thereupon he shall pay the defend
ant's costs of the action, or, if the action be not wholly
discontinued, the defendant's costs occasioned by the matter so
withdrawn. Such costs, if they cannot be agreed on, may be
taxed.
Rule 345. Where, under Rule 406, a plaintiff by notice in
writing and without leave either wholly discontinues his action
against any defendant or withdraws any particular claim made
by him therein against any defendant, the defendant may tax
his costs of the action or his costs occasioned by the matter
withdrawn, as the case may be, and, if the taxed costs are not
paid within 4 days after taxation, may enforce payment thereof
as if he had been granted judgment therefor.
contending that the costs only become payable
after taxation in the event of disagreement be
tween the parties as to the amount. Since it is not
until taxation that the amount is definitively estab
lished and that payment can be enforced, that is
the date at which conversion should be made.
' [1977] 2 F.C. 274.
Plaintiff contends that this Court should only fix
amounts payable in Canadian funds and that it is
inappropriate to consider costs in any foreign cur
rency of obtaining these funds. It is not the
number of yen which could be purchased in
Canadian dollars at any given date which is the
issue however, but rather the converse. Defendant
was forced to expend certain amounts of yen at
various dates to obtain the Canadian dollars
required to obtain and keep the bail bond in effect
until the discontinuance. Defendant now seeks
reimbursements of the same amount in yen, and
requires a judgment from the Court expressed in
Canadian dollars establishing how many Canadian
dollars will now be required to fully reimburse
defendant for the expenditures made from time to
time in Japanese yen. Plaintiff contends that costs
become due when a judgment is rendered award
ing them, or, in the case of a discontinuance as at
present, become payable to the other party forth
with upon the discontinuance, and that section 40
of the Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, provides for interest at the rate
prescribed by the Interest Act, R.S.C. 1970, c.
I-18, on a judgment from the date it was rendered,
this being the date at which the amount of the
claim and the amount to be allowed as costs is
determined or becomes determinable.
It is common ground between the parties that
the question has never been dealt with in Canadian
courts but there is some British authority arising
out of the European common market dealing with
the right of the courts to take exchange fluctua
tions into consideration. Reference was made to
the case of Schorsch Meier GmbH v. Henning in
which Lord Denning stated at pages 155-156:
Why have we in England insisted on a judgment in sterling
and nothing else? It is, I think, because of our faith in sterling.
It was a stable currency which had no equal. Things are
different now. Sterling floats in the wind. It changes like a
weathercock with every gust that blows. So do other currencies.
This change compels us to think again about our rules. I ask
myself: why do we say that an English court can only pro
nounce judgment in sterling? Lord Reid in the Havana case
thought that it was primarily procedural. I think so too. It
arises from the form in which we used to give judgment for
money. From time immemorial the courts of common law used
to give judgment in these words: `It is adjudged that the
plaintiff do recover against the defendant £X in sterling.'
2 [1975] 1 All E.R. 152.
After pointing out that the form of judgment has
now been altered he states at page 156:
It is perfectly legitimate to order the defendant to pay the
German debt in deutschmarks. He can satisfy the judgment by
paying the deutschmarks; or, if he prefers, he can satisfy it by
paying the equivalent sum in sterling, that is, the equivalent at
the time of payment. [Emphasis mine.]
In the case of Miliangos v. George Frank (Tex-
tiles) Ltd 3 Lord Wilberforce stated at page 809:
The situation as regards currency stability has substantially
changed even since 1961. Instead of the main world currencies
being fixed and fairly stable in value, subject to the risk of
periodic re- or de-valuations, many of them are now `floating'
i.e. they have no fixed exchange value even from day to day.
This is true of sterling. This means that, instead of a situation
in which changes of relative value occurred between the
'breach-date' and the date of judgment or payment being the
exception, so that a rule which did not provide for this case
could be generally fair, this situation is now the rule. So the
search for a formula to deal with it becomes urgent in the
interest of justice.
and again at page 810:
If an award in a foreign currency case can be readily enforced,
after conversion into a sterling sum, and since an award is
enforceable as a judgment, it should follow that a judgment in
a foreign currency can be similarly enforced, after conversion
into a sterling sum.... But if I am faced with the alternative of
forcing commercial circles to fall in with a legal doctrine which
has nothing but precedent to commend it or altering the
doctrine so as to confirm with what commercial experience has
worked out, I know where my choice lies. The law should be
responsive as well as, at times, enunciatory, and good doctrine
can seldom be divorced from sound practice.
Counsel for plaintiff points out that the Milian-
gos case dealt with an action for a sum of money
due under a contract, as did the case of Services
Europe Atlantique Sud (SEAS) v. Stockholms
Rederiaktiebolag SVEA, 4 in which Lord Denning
again held at page 771:
The general principle to be derived from the case is, there
fore, that, when the plaintiff is entitled to damages calculated
by the expenditure of money or loss of hire or wages, then,
whether the claim is for breach of contract or for tort, the
award or judgment should be given for the plaintiff in the
currency which most truly expresses his loss and interest should
run from the date of the expenditure or the loss of hire or wages
to the date of the award or judgment.
In a tort case, that of the Owners of the my
[1975] 3 All E.R. 801.
° [1978] 2 All E.R. 764.
Eleftherotria v. Owners of the my "Despina R" 5
the judgment states at page 897:
We were asked to take into account the unfairness to the rest
of those who live in England and suffer the effects of inflation
if plaintiffs who suffer loss and damage in foreign currencies
are favoured by English courts with special protection against
inflation. That may seem unfair; but it is fair compensation to
the injured plaintiff for the wrong which he has suffered. That
according to Lord Wilberforce must be the object of the court's
decision on what amount of damages to award him.
All of these cases dealt with conversion however
of a judgment awarding damages for tort or
breach of contract. We are not dealing here with
the situation in which defendant would be placed
respecting conversion date had defendant con
tinued with the cross-demand. I am not called
upon to decide whether the judgment would then
have expressed in Canadian dollars the total of
sums expended in Japanese yen at various times
during the proceedings in connection with the bail
bond and other matters, nor whether interest to
date of judgment could have been claimed in the
proceedings on the cross-demand which defendant
now claims in its subsidiary argument. It would
appear however that whatever sums were awarded
as a result of such cross-demand would be estab
lished at the date of judgment, and if the judgment
were expressed in terms of Canadian dollars as it
most probably should be, the conversion would be
calculated as of that date and interest at the legal
rate would only run from that date. The defendant
has chosen to merely tax the costs, which is evi
dently a simpler and more logical procedure, but
the question arises as to whether it has the same
effect.
It appears to me that since costs are not a fixed
amount, although they are determinable, and the
amount can only be determined by taxation of
same, converting the amounts expressed in Japa-
nese yen to Canadian dollars as of that date, it is
more equitable to choose the date of certification
of the bill of costs as the appropriate conversion
date. The fact that this will prove more costly to
plaintiff is not a fact which should be taken into
consideration, as the Japanese yen might have
fallen in value in relation to the Canadian dollar in
the interval instead of increasing in value, and the
decision would have to be the same. An appropri
ate date for conversion appears to me to be the
5 [1977] 3 All E.R. 874.
date on which the amount to be paid can be
ascertained and payment made.
On the question of interest defendant attempts
to equate the allowance of interest on the amounts
disbursed from time to time in connection with the
bail bond to the allowance of interest on damages
awarded in Admiralty Court from the date of
expenditure at commercial rates rather than the
legal rate.
Reference was made to the case of The Bell
Telephone Company of Canada—Bell Canada v.
The `Mar-Tirenno" 6 .
In the trial judgment Addy J. stated at page
311:
It is clear that this Court, under its admiralty jurisdiction,
has the right to award interest as an integral part of the
damages suffered by the plaintiff regardless of whether the
damages arose ex contractu or ex delicto.
The Admiralty Courts, in the exercise of their jurisdiction,
proceeded upon different principles from that on which the
common law authorities were founded; the principle in this
instance being a civil law one, to the effect that, when payment
is not made, interest is due to the obligee ex mora of the
obligor. Refer Canadian General Electric Co. Ltd. v. Pickford
& Black Ltd. ((1971) 20 D.L.R. (3rd) 432 at page 436);
Canadian Brine Limited v. The Scott Misener ([1962] Ex.C.R.
441) and the authorities stated therein at pages 450 to 452.
and again at page 312:
... interest in these cases is not awarded to the plaintiff as
punitive damages against the defendant but as part and parcel
of that portion for which the defendant is responsible of the
initial damage suffered by the harmed party and it constitutes a
full application of the principle of restitutio in integrum. See
The Kong Magnus ([1891] P. 223 at page 236); The Joannis
Vatis (No. 2) ([1922] P. 213 at page 223); and The North-
umbria ((1869) L.R. 3 A. & E. 6 at pages 10 and 14).
At page 313 he refers to the statement of Lord
Denning M.R. approved by Jackett P. as he then
was in the case of Canadian General Electric Co.
v. The "Lake Bosomtwe" 7 :
(a) When a profit earning ship was sunk in a collision, the
Court of Admiralty awarded interest on the value of the ship
... from the date of the loss to the date of the trial,
(b) When a ship was not sunk, but only damaged, the Court of
Admiralty awarded interest on the cost of repairs, but only
from the time that the repair bill was actually paid, because
6 [1974] 1 F.C. 294, affirmed in appeal [1976] 1 F. C. 539.
7 [1970] Ex.C.R. 552 at p. 558.
that was the date from which the plaintiff had been out of
pocket, and
(c) Where there was loss of life in a collision, the Court of
Admiralty allowed interest only from the date of a registrar's
report.
Further support for the allowance of interest is
found in the judgment of Lord Denning in the
Services Europe Atlantique Sud v. Stockholms
case (supra) in a statement at page 769:
We have today to consider a familiar kind of damage,
namely expense incurred by a plaintiff in consequence of the
defendant's breach of contract or his tort. In English law, both
in tort and in contract, a plaintiff is often entitled to be
compensated for his actual expenditure on repairs, or his actual
loss of wages or of hire. In such cases when dealing in sterling,
the award in his favour gives him the very sums he has
expended together with interest from the date of payment or of
loss, up to the date of the judgment. [Emphasis mine.]
While it is true that expenditures for a bail bond
are similar to expenditures for repairs to a vessel in
that in both cases the party making the expendi
ture has to await judgment before he can recover
in absence of an agreement or settlement, it must
again be emphasized that we are not here dealing
with defendant's claim as set out in its counter
claim but with taxation of a bill of costs since the
jurisprudence has now held that costs incurred in
connection with a bail bond can be included as an
expense item. Many expenditures are incurred in
the course of an action which can eventually be
taxed as part of a bill of costs, but there is as far as
I am aware no precedent allowing any interest on
them from the time of expenditure to the date of
taxation, and I do not believe that it is desirable
that this should be allowed on this one type of
disbursement included in a bill of costs, however
substantial it may be.
While provision is made under Rule 344(7) for
the Court at the time of a return of a motion for
judgment, to make a special order concerning costs
this would be inapplicable in the present case.
Such an order relates primarily to party and party
costs as set out in Tariff B.
Section 2(2)(b) of Tariff B states:
2. (2) ...
(b) such other disbursements may be allowed as were
essential for the conduct of the action.
and its was on this basis that the expense of giving
bail was included in the taxable costs in the
Antares case (supra).
It appears to be a substantial further step how
ever to allow interest on these expenses on taxation
when no interest is allowed on any other expense
items appearing in a taxation of a bill of costs.
Moreover as has frequently been pointed out
costs are not intended to provide full and complete
compensation to the party to whom they are
awarded.
It was further argued that no claim for interest
was made before the taxing officer when the bill of
costs was submitted for taxation, and this cannot
be done now since the present proceeding is an
appeal from his taxation. While Rule 344 provides
that the costs of and incidental to all proceedings
shall be in the discretion of the Court and the
Court may award a fixed or lump sum in lieu of
taxed costs, bills of costs as such are not taxed by
the Court.
As I have concluded, as indicated, that interest
should not be allowed on these disbursements in
any event, it is purely academic whether this addi
tional claim could be made on appeal from the
decision of the taxing officer in which the claim
was not made.
This portion of defendant's claim will therefore
be dismissed. As defendant has succeeded in the
main part of its motion however, and a new and
important issue was raised defendant is entitled to
costs on the motion.
ORDER
The taxing officer's report of March 9, 1979 is
varied so as to set the date for conversion of the
disbursements in Japanese yen to Canadian funds
as of the date of the said report rather than the
date of the notice of discontinuance on November
30, 1976. Pre-judgment interest on the disburse
ments of the defendant from the date of said
disbursements to the date of judgment is not
allowed. Costs of the motion to revise the taxing
officer's report are allowed to defendant.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.