Universal Sales Ltd. et al. v. Edinburgh Assurance Co. et al., (2012) 420 F.T.R. 29 (FC)

• Jurisdiction: Federal Jurisdiction (Canada)
• Judge: Harrington, J.
• Citation: (2012), 420 F.T.R. 29 (FC),2012 FC 1192
• Court: Federal Court (Canada)
• Date: 27 September 2012

Universal Sales v. Edinburgh Assurance Co. (2012), 420 F.T.R. 29 (FC)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2012] F.T.R. TBEd. OC.013

Universal Sales, Limited, Atlantic Towing Limited, J.D. Irving, Limited, Irving Oil Company, Limited and Irving Oil Limited (plaintiffs) v. Edinburgh Assurance Co. Ltd., Orion Insurance Co. Ltd., British Law Insurance Co. Ltd., English & American Ins. Co. Ltd., Economic Insurance Co. Ltd., Andrew Weir Ins. Co. Ltd., Insurance Co. of North America, London & Edinburgh General Ins. Co. Ltd., Ocean Marine Ins. Co. Ltd., Royal Exchange Assurance, Sun Insurance Office Ltd., Sphere Insurance Co. Ltd., Drake Insurance Co. Ltd., Eagle Star Insurance Co. Ltd. and Stephen Roy Merritt, as Representative of Underwriters Subscribing to Lloyd's Policy No. 614/B94656-A/1582 (defendants)

(T-1148-01; 2012 FC 1192; 2012 CF 1192)

Indexed As: Universal Sales Ltd. et al. v. Edinburgh Assurance Co. et al.

Federal Court

Harrington, J.

October 12, 2012.

Summary:

The marine insurance in issue was excess third party liability cover, split between various syndicates and companies. The plaintiffs sought indemnity from the defendant underwriters for sums paid to the Canadian government in settlement of an action for the cost of refloating the tank-barge Irving Whale, for the cost of defending that action, and for sue and labour expenses. The claim was for in excess of $11 million. It took 11 years to get to trial.

The Federal Court, in a decision reported at (2012), 408 F.T.R. 29, granted judgment against the defendants, severally, but not jointly, in the amount of $4,946,001.86. On consent, interest and costs were left to be dealt with later. The plaintiffs moved with respect thereto, and the defendants replied. Both led evidence.

The Federal Court's judgment was that: (1) prejudgment interest was to be calculated at the simple rate of 5 percent per annum from July 12, 2001, until April 25, 2012; (2) post-judgment interest was to be calculated at the simple rate of 4.5 percent per annum; (3) taxable fees were fixed at $85,000 all inclusive; and (4) failing agreement, claimed disbursements were to be taxed.

Courts - Topic 4069

Federal Court of Canada - Jurisdiction - Federal Court - Practice - Costs - The plaintiffs obtained judgment for $4,946,001.86 - The claim was for in excess of $11 million - With respect to costs, the defendants submitted that the plaintiffs were only partially successful, as they recovered nothing on their sue and labour claim - The plaintiffs submitted that they should be entitled to costs on a partial indemnity basis - Both sides made offers which were withdrawn before trial - The plaintiffs recovered more than the defendants' last offer - The Federal Court stated that "[w]hile the case did have its complexities, in itself that is insufficient to oust the Federal Court's Tariff ... There was no reprehensible conduct on the part of the defendants which would justify chastising them in any way" - The general principle was that costs followed the event, and that absent an abuse of process, a successful party should be entitled to costs - The plaintiffs succeeded on the prime issues - On the basis of comity, the court found that the plaintiffs' $4.5 million settlement offer was open for some six years (withdrawn eight days before trial), and should have a bearing on costs - Several difficult issues were in play - Fees under Column III, the default column, would be just under $60,000, while under Column V they would be just over $100,000 - Second counsel fees were appropriate - "The Court has a penchant to award lump-sum costs where practicable." - Also taking into account the offer which was made, the court fixed the fee portion of the taxable costs at $85,000 all inclusive - See paragraphs 24 to 33.

Courts - Topic 4212

Federal Court of Canada - Jurisdiction - Particular matters - Interest as damage (prejudgment interest) - [See Interest - Topic 5002 ].

Courts - Topic 4213

Federal Court of Canada - Jurisdiction - Particular matters - Interest as damages - Rate of interest - In their original statement of claim, the plaintiffs claimed pre-judgment interest in accordance with Canadian maritime law - Judgment was granted for the plaintiffs - They now asked for interest at the annual rate of 5 percent in accordance with the Interest Act, sect. 3 - The Federal Court stated that "[t]he premise behind previous decisions of this Court to grant interest at a commercial rate, such as the bank prime lending rate, or one or two percent above, was that the commercial rate was considerably higher than the legal rate and what we are really doing is assessing damages" - In this case, the court awarded interest at the legal rate of 5 percent, as commercial rates (bank prime lending rates) had been low - See paragraphs 10 to 17.

Courts - Topic 4213

Federal Court of Canada - Jurisdiction - Particular matters - Interest as damages - Rate of interest - In this admiralty case, an issue was whether interest should be compounded semi-annually - The Federal Court stated that "[a]lthough it is convenient in giving reasons to separate the rate of interest from the issue of whether or not it should be compounded, in reality they are related. The underlying rationale is to make the plaintiffs whole. This Court has often awarded compound interest without providing a full set of reasons. A reason sometimes given is that a plaintiff has already been deprived of full recovery because of limitation provisions ... In this case however the insurance cover limit of $5,000,000.00 was contractually agreed and no doubt was reflected in the premium. I accept that the Court in its discretion, judicially exercised, may grant compound interest. ... However, in my opinion, evidence must be led to show that compound interest is necessary in order for the plaintiffs to be fairly compensated" - In the result, the court awarded simple, not compound, interest, as no evidence had been led to justify compounding - Indeed, the plaintiffs' borrowing rate had been less than the legal rate of 5 percent - See paragraphs 18 to 22.

Courts - Topic 4214

Federal Court of Canada - Jurisdiction - Particular matters - Post-judgment interest - Judgment in this admiralty case was granted to the plaintiffs against the defendants, severally, in the amount of $4,946,001.86 - With respect to interest, an issue was whether post-judgment interest should be calculated at the same rate as pre-judgment interest - Given that the current bank prime rate was 3 percent, and the plaintiffs' current borrowing rate was 4.5 percent,"and given that post-judgment interest runs on both the principal and pre-judgment interest", the Federal Court considered an annual rate of 4.5 percent to be fair and reasonable - See paragraph 23.

Interest - Topic 807

Equity - General - Delay - Effect of - The plaintiffs sought indemnity from the defendant underwriters for sums paid to the Canadian government in settlement of an action for the cost of refloating the tank-barge Irving Whale and her cargo of Bunker C fuel oil, for the cost of defending that action, and for sue and labouring expenses allegedly incurred on the underwriters' behalf - Judgment was granted in favour of the plaintiffs - The matter had taken 11 years to get to trial - With respect to interest, an issue was whether the plaintiffs should be deprived of some of the interest they might otherwise have been awarded, since there was always a burden on a plaintiff to move a case along - Evidence was led by the plaintiff - The Federal Court was satisfied that the delays were no more caused by the plaintiffs, than by the defendants - There had been a change of solicitors by the defendants; both sides needed a great deal of time to collect documents as the Irving Whale had sunk in 1970; and there were serious issues with respect to discovery of documents and privilege - There were appeals, and the matter was under case management - There was general cooperation between counsel - The court concluded that the circumstances were not such that the plaintiffs should be deprived of the interest which they would otherwise be awarded - See paragraphs 5 to 7.

Interest - Topic 5002

Interest as damages (prejudgment interest) - General principles - Jurisdiction - In this maritime case, the Federal Court stated that "[t]he parties are well aware that in admiralty the trial judge enjoys wide discretion, and that interest in a function of damages. Indeed, while section 36 of the Federal Courts Act deals with pre-judgment interest, subsection 7 provides that the section does not apply if relief is sought under Canadian maritime law, as is the case here. ... [P]re-judgment interest in maritime cases is actually as aspect of damages, is at the Court's discretion, and if properly pleaded runs from the date the debt is due, not from the institution of the action." - In this case, a particularized claim was presented to the defendant underwriters on November 10, 2000 - Some of the relevant events went back some 30 years - Documents were missing, and many aspects of the case had to be investigated - In the circumstances, the court considered the proper starting date to be the date the defendants were served with the statement of claim, which was July 12, 2001 - See paragraphs 8 and 9.

Practice - Topic 7241

Costs - Party and party costs - Offers to settle - General - [See Courts - Topic 4069 ].

Cases Noticed:

Santa Marina Shipping Co. S.A. v. Madeg Holdings Inc. (1986), 6 F.T.R. 269; 1 A.C.W.S.(3d) 302, refd to. [para. 5].

Kuehne + Nagel Ltd. v. Agrimax Ltd. (2010), 382 F.T.R. 47; 2010 FC 1303, refd to. [para. 8].

Mount Royal/Walsh Inc. v. Ship Jensen Star et al. (1988), 17 F.T.R. 289; 9 A.C.W.S.(3d) 61, varied [1990] 1 F.C. 199; 99 N.R. 42 (F.C.A.), leave to appeal denied (1989), 105 N.R. 160 (S.C.C.), refd to. [para. 15].

Société Telus Communications et al. v. Peracomo Inc. et al. (2011), 389 F.T.R. 196; 2011 FC 494, affd. (2012), 433 N.R. 152; 2012 FCA 199, refd to. [para. 17].

Canastrand Industries Ltd. v. Ship Lara S. et al., [1993] 2 F.C. 553; 60 F.T.R. 1, additional reasons at (1993), 66 F.T.R. 62 (T.D.), affd. (1994), 176 N.R. 31 (F.C.A.), refd to. [para. 20].

Alcan Aluminium Ltd. et al. v. Unican International S.A. et al. (1996), 113 F.T.R. 81; 64 A.C.W.S.(3d) 11 (T.D.), refd to. [para. 20].

Elders Grain Co. et al. v. Ship Ralph Misener et al., [2004] F.T.R. Uned. 748; 134 A.C.W.S.(3d) 320; 2004 FC 1285, refd to. [para. 20].

Bank of America Canada v. Mutual Trust Co. et al., [2002] 2 S.C.R. 601; 287 N.R. 171; 159 O.A.C. 1; 2002 SCC 43, dist. [para. 21].

Canadian Pacific Forest Products Ltd. v. Termar Navigation (1998), 146 F.T.R. 72; 78 A.C.W.S.(3d) 674 (T.D.), refd to. [para. 24].

Liquilassie Shipping Ltd. v. M.V. Nipigon Bay, Her Owners and Charterers; Ship Nipigon Bay, [1975] 2 Lloyd's Rep. 279 (F.C.T.D.), refd to. [para. 26].

Sanofi-Aventis Canada Inc. et al. v. Apotex Inc., [2009] F.T.R. Uned. 806; 2009 FC 1138, refd to. [para. 26].

Barzelex Inc. v. M.V. Ebn Al Waleed et al., [1999] F.T.R. Uned. 930; 94 A.C.W.S.(3d) 434 (T.D.), refd to. [para. 27].

MK Plastics Corp. v. Plasticair Inc., [2007] F.T.R. Uned. 960; 161 A.C.W.S.(3d) 31; 2007 FC 1029, refd to. [para. 29].

Statutes Noticed:

Federal Courts Rules, rule 420 [para. 28].

Authors and Works Noticed:

Halsbury's Laws of Canada (1st Ed. 2008), Civil Procedure II, p. 763 [para. 29].

Counsel:

John MacDonald and Mary Paterson, for the plaintiffs;

Peter Cullen and Matthew Liben, for the defendants.

Solicitors of Record:

Osler, Hoskin & Harcourt LLP, Toronto, Ontario, for the plaintiffs;

Stikeman Elliott LLP, Montreal, Quebec, for the defendants.

This assessment of interest and costs was heard on September 27, 2012, at Ottawa, Ontario, before Harrington, J., of the Federal Court, who delivered the following reasons for judgment and judgment, dated October 12, 2012, at Vancouver, British Columbia.