T-3903-77
Mortensen & Lange and International Contract
Carriers Ltd. (Plaintiffs)
v.
Neptune International Shipping Ltd. and H. B.
Willis (1974) Inc. (Defendants)
Trial Division, Mahoney J.—Montreal, November
12; Ottawa, November 17, 1980.
Maritime law — Claims arising out of joint venture agree
ments re voyages of chartered ships — Confessions of judg
ment filed by defendants — Principal amounts claimed and
costs of action disposed of in confessions — Whether interest
payable to plaintiffs — Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, s. 22(2)(i).
Canadian General Electric Co. Ltd. v. Pickford & Black
Ltd. [1972] S.C.R. 52, applied. Nissan Automobile Co.
(Canada) Ltd. v. The "Continental Shipper" [1974] 1 F.C.
88, distinguished.
ACTION.
COUNSEL:
Trevor H. Bishop for plaintiffs.
Ian E. Harris for defendants.
SOLICITORS:
Brisset, Bishop, Davidson & Davis, Montreal,
for plaintiffs.
Cerini, Salmon, Watson, Souaid & Harris,
Montreal, for defendants.
The following are the reasons for judgment
rendered in English by
MAHONEY J.: The defendants have filed and
served and the plaintiffs have accepted confessions
of judgment disposing of the principal amounts
claimed herein and costs of the action. The parties
ask the Court to determine the amount, if any, of
interest payable to the plaintiffs and have admitted
the facts upon which that determination is to be
made.
Except as hereinafter stated, the plaintiffs'
claims arose out of joint venture agreements re
specting the voyages of certain chartered ships.
The plaintiffs, on the one hand, and the defend-
ants, on the other, agreed to share equally the
profits and bear equally the losses arising out of
those voyages. The defendant, H. B. Willis (1974)
Inc., hereinafter "Willis", was interested only in
voyages of the Pitria Sea. The other defendant,
Neptune International Shipping Ltd., hereinafter
"Neptune", was interested as well in voyages of
the Uthoern, Decimus, Imparma Progress,
Imbros, Taurus and Shipmair 4. The joint venture
agreement respecting Pitria Sea had terminated
prior to commencement of the action. The other
joint venture agreements had not then terminated
but did terminate prior to confession of judgment.
The action, dealing only with the Pitria Sea agree
ment, was commenced October 17, 1977. The
claims in respect of the other agreements were
raised in the action by amendment to the state
ment of claim filed October 20, 1980, eight days
before confession of judgment.
The amounts not attributable to the joint ven
ture agreements, after applying the agreed rates of
exchange, are $692.18, included in the original
statement of claim, and $3,828.03, included in the
amendment. Both of these amounts were included
in Neptune's confession of judgment. The judg
ments confessed, $9,871.15 by Willis and
$37,581.99 by Neptune, are the balances agreed to
be owing by them to the plaintiffs after setting off
amounts claimed by counterclaim and agreed to be
owing to them by the plaintiffs. About 86% of
Neptune's $37,581.99, or $32,320.51, pertains to
the Pitria Sea joint venture. The remaining
$5,261.48 includes the $4,520.21 not attributed to
the joint ventures.
I have no basis upon which to allocate either
amount confessed as between principal and costs.
The parties surely did not intend that the matter
be disposed of on that ground and I therefore
assume that, in confessing and accepting judgment
"inclusive of principal and court costs", the parties
essentially agreed to bear their own costs. The
assumption is supported, although not with the
clarity one might wish, by the following statement
in the admitted facts:
8. THAT, the amounts claimed by the Plaintiffs in their Amend
ed Statement of Claim have been set off against the Counter-
Claims of the Defendants, and the balance owing to the Plain
tiffs after this set off is reflected in the amounts for which the
Defendants have confessed judgement; except where otherwise
mentioned in the Agreement of Settlement signed by the
Parties on October 28, 1980.
The exception in the agreement of settlement is
not concerned with costs but with the Imbros joint
venture.
The Imbros was lost at sea in December 1975,
while subject of the joint venture. Two outstanding
matters in respect of that joint venture remain to
be resolved. They are not subject of Neptune's
confession of judgment but the agreement of set
tlement provides for their resolution. Those items
are relevant to this decision only because they are
reasons advanced by Neptune for asking the Court
to refuse to award the plaintiffs interest. A claim
against Neptune for $20,475 (U.S.) plus interest
and costs remains unresolved. Another claim
against Neptune for $2,235,000 (U.S.) was subject
of an action commenced in December 1977, and
dismissed in July 1979. Neptune incurred legal
costs of $11,412.02 (U.S.) and $2,824.92 (Can.) in
that action. It is seeking to recover those costs.
While advanced by or against Neptune, all these
claims are, or were, for the account of the joint
venture.
None of the foregoing affords Willis an excuse
for not settling its account with the plaintiffs. The
only other significant fact, relied upon by both
Willis and Neptune, is that none of the joint
venture agreements provided terms for the settling
of accounts between the parties. It is to be empha
sized that separate agreements governed the joint
ventures in respect of each ship.
Entitlement to interest before judgment must be
based in admiralty rather than common law. The
definitive Canadian authority is Canadian General
Electric Company Limited v. Pickford & Black
Limited':
The rule in the Admiralty Court is the same as that in force
in admiralty matters in England, and in my view the position is
accurately stated by Mr. Justice A. K. McLean, sitting as
President of the Exchequer Court, in the case of The Pacifico v.
Winslow Marine Railway and Shipbuilding Company ([1925]
2 D.L.R. 162 at 167, [1925] Ex. C.R. 32) where he said:
1 [1972] S.C.R. 52 at pp. 56 ff.
The principle adopted by the Admiralty Court in its
equitable jurisdiction, as stated by Sir Robert Phillimore in
The Northumbria (1869), 3 A. & E. 5, and as founded upon
the civil law, is that interest was always due to the obligee
when payment was delayed by the obligor, and that, whether
the obligation arose ex contractu or ex delicto. It seems that
the view adopted by the Admiralty Court has been, that the
person liable in debt or damages, having kept the sum which
ought to have been paid to the claimant, ought to be held to
have received it for the person to which the principal is
payable. Damages and interest under the civil law is the loss
which a person has sustained, or the gain he has missed. And
the reasons are many and obvious I think, that a different
principle should prevail, in cases of this kind, from that
obtaining in ordinary mercantile transactions.
I think that in the exercise of the equitable jurisdiction of
this Court, and in view of the fact that the Admiralty Court
has always proceeded upon other and different principles
from that on which the common law principles appear to be
founded, that the plaintiff is in this case entitled to the claim
of interest as allowed by the Court below, in its formal order
for judgment.
It is thus well settled that there is a clear distinction between
the rule in force in the common law courts and that in force in
admiralty with respect to allowing a claim for interest as an
integral part of the damages awarded.
While most of the authorities relied on by the
defendants opposing the plaintiffs' claim to entitle
ment to interest dealt with the common law rather
than admiralty, it was not directly argued that
admiralty law did not govern the joint ventures.
Paragraph 22(2)(i) of the Federal Court Act,'
would appear to encompass such agreements and
to place a claim for a remedy in respect thereof
within the purview of Canadian maritime law. In
any case, given the jurisdictional implications, I
cannot conceive that the defendants would not
have advanced such a proposition explicitly, rather
than confess judgment in this Court, if they seri
ously considered it valid.
That said, the $692.18 and $3,828.03 items are
not clearly established as founded in admiralty.
The second is also included in a balance on which
interest before judgment might run for only eight
days. There is simply no other date established
from which it might be awarded. De minimis non
curat lex. I will consider an award of interest only
2 R.S.C. 1970 (2nd Supp.), c. 10.
22. (2) ...
(i) any claim arising out of any agreement relating ... to
the use or hire of a ship whether by charter party or
otherwise;
in respect of the $9,871.15 confessed by Willis and
the $32,320.51 confessed by Neptune vis-Ã -vis the
Pitria Sea joint venture and that only from the
date the action was commenced.
The defendants rely on Nissan Automobile Co.
(Canada) Ltd. v. The "Continental Shipper" 3 as
authority for the proposition that the Court ought
not exercise its jurisdiction to award interest in
this case. There, it was held [at page 89]:
In this case, in the exercise of my discretion, I did not feel
that interest ought to be awarded from the date of institution of
the action nor from the date upon which the expenditures
which were the subject-matter of the action were made. The
question at issue in the action, I was advised, had never been
resolved by a Canadian Court and the defendants, therefore,
had denied liability on what they considered to be reasonable
grounds which ultimately, in light of my decision, proved to be
wrong. However, in view of the prior lack of jurisprudence I did
not think that they should be penalized by requiring them to
pay interest on the judgment.
The refusal to award interest there appears to have
been based on the complete novelty of the issues
and not simply on the defendant's belief that it had
a good defence or counterclaim.
It can hardly be denied that the $2,235,000
(U.S.) claim in respect of Imbros, while outstand
ing, was a good business reason for Neptune to
hang on to any of the plaintiffs' money it had. A
good business reason and a novel issue are not to
be equated. Likewise, other uncertainties about the
Imbros or any of the other joint ventures were not
a valid reason for refusing to settle the accounts of
the Pitria Sea joint venture. The fact that none of
the joint venture agreements, and the Pitria Sea
agreement in particular, made provision for the
mechanics of settling accounts is no excuse for an
unreasonable delay on the part of either party.
3 [1974] 1 F.C. 88.
I therefore conclude that the Court ought to
exercise its discretion to award interest to the
plaintiffs against Willis, on the principal amount
of $9,871.15, and against Neptune, on the princi
pal amount of $32,320.51. That interest will run
from the date of commencement of the action to
the date of filing of the confessions of judgment.
As to the rate of interest, it is agreed that,
between those dates, October 17, 1977, and Octo-
ber 28, 1980, commercial lending rates ranged
between 8.25% and 17.50% per annum. It was at
the low for 144 of those 1,106 days and at the high
for only 15 days. At times, the rate was changed
more often than weekly. The weighted average of
the commercial lending rate that prevailed during
the period is almost 11.77%. When the evidence
permits calculation of the plaintiffs' cost of money
for the period in issue, I see no basis in law or
reason for arbitrarily awarding substantially less. I
will allow 11.75% per annum.
Judgment, dated as of October 28, 1980, will
issue in accordance with these reasons and the
confessions of judgment. The time for appeal will,
of course, run from the date of entry of judgment.
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.