Nordholm I/S v. The Queen

This interesting case involved a collision between the Canadian Naval vessel "Kootenay" and the "Nordpol" on June 1, 1989, in conditions of fog. At the time of the collision the "Kootenay" was engaged in anti-submarine exercises that required her not to emit any radar or radio signals. The "Kootenay" was observed on radar by those on board the "Nordpol" but she could not be raised by radio and her movements were erratic suggesting she was a fishing vessel. The "Nordpol" therefore maintained her course and speed of 13.5 knots assuming the "Kootenay" would pass astern of the "Nordpol". Of course, the "Kootenay" did not pass astern. A close quarters situation developed and the two ships collided. The Court held that both ships were liable and apportioned liability 70% to the "Kootenay" and 30% to the "Nordpol". The "Kootenay" was held primarily responsible because she created the dangerous situation by participating in naval exercises in busy shipping lanes, in fog, without having given any notice to vessel traffic or shipping and without the use of any navigational aids such as radar. The "Nordpol" was also criticized for excessive speed, for failing to take avoiding action and for failing to appreciate the close quarters situation and risk of collision. On the issue of damages, the Court had to consider what was the appropriate date for conversion of foreign currency and what was the appropriate method of calculating loss of use for a warship. On the first issue, the Court reaffirmed that damages incurred in a foreign currency are to be converted to Canadian dollars using the prevailing rate on the date of the commission of the tort. On the second issue, the Court held that there should be damages for loss of use of the "Kootenay", calculated using the capital cost of the ship. It did not matter that the "Kootenay’s" duties were performed by other naval ships. There was still a loss to the Defendant; a loss of a "margin of safety".