Omega Salmon Group Ltd. v. The “Pubnico Gemini”

In Collisions and Ships on (Updated )

The Plaintiff was the owner of a fish farm that was damaged when the “Pubnico Gemini” collided with it. Liability for the collision was admitted and the only issues were in relation to damages. Specifically, the Defendants argued that: (i) the damages should be based on the cost to repair the damaged fish pens rather than the cost of replacement; (ii) the amount paid by the Plaintiff to expedite the delivery of the replacement section was excessive; and (iii) the Plaintiff failed to mitigate by not repairing and re-using the damaged section in another of its fish farms. The trial Judge decided all issues against the Defendants holding first that the damaged section was not a stand-alone fish pen but a component of a larger array and, in the normal course, such a single component would never be ordered or manufactured. Moreover, no expert evidence was led by the Defendants as to the cost of repairs and what evidence there was indicated the cost of repairs could exceed the cost of replacement. On the issue of whether the Plaintiff paid an excessive amount to replace the pen the trial Judge held that the pen system was a high end system and that the manufacturing had to be expedited to minimize production losses. The trial Judge considered the amount paid by the Plaintiff was not unreasonable given the urgent delivery requirements. On the final issue, the trial Judge noted that the Defendants had not offered any proof that the damaged section could be re-used or sold for salvage and held that the Defendants’ arguments were mere conjecture. The trial Judge then turned to the question of interest and, after reviewing the various authorities on the point, declined to award compound interest and declined to award interest on damages for which the Plaintiff had been reimbursed by its insurer. The trial Judge did, however, award interest at a rate higher than prime based on evidence that the Plaintiff actually paid such higher rates. Not surprisingly, the Plaintiff appealed the failure to award interest on sums received from its insurer and the Court of Appeal had little difficulty in overturning this aspect of the decision. That the Plaintiff had received compensation from its insurer was said to be res inter alios acta, or more simply, not relevant. The Defendant also successfully appealed the trial Judge’s decision to award interest at rate higher than prime. The Court of Appeal reviewed the older authorities on interest and noted that the rate of interest awarded did not depend on the financial circumstances of the claimant. The Court therefore held that a conventional rate such as the prime rate was the appropriate rate.