Fennelly's fishing vessel suffered physical damage in
January, 2006. He sought payment under a Marine Insurance policy,
issued by Lloyd's Underwriters. The policy insured the vessel
for $500,000 against total loss, whether actual or constructive.
Lloyd's denied coverage, stating that the repair costs were
less than $500,000.
In October, 2008, Fennelly commenced his action against
Lloyd's. The parties exchanged documents in 2009, and oral
discoveries occurred in 2010. Fennelly filed additional documents
in 2011. In 2011 and 2012, there were disagreements between counsel
about discovery undertakings. Lloyd's complied with the
undertakings in 2013. There was also disagreement as to which party
should obtain and produce documents from Transport Canada. Between
2011 and 2013, counsel discussed the decommissioning of the vessel,
which was in a deteriorated condition. Lloyd's asked that
portions of the vessel's damaged frames be retained, as
evidence. The vessel was decommissioned in 2013, but portions of
the vessel caved in, preventing removal for further inspection. In
2014, Fennelly met with a proposed expert, however, this was not
communicated to Lloyd's.
The application by Lloyd's to dismiss the action for want of
prosecution was heard in September, 2015. The court applied the
principles set out in Penney v. Lush,  N.J. No. 73
(CA): was there inordinate delay; was the delay inexcusable; and
was the defendant likely to be seriously prejudiced by the delay.
Delay, from the date of the loss, had previously been found to be
inordinate in the following cases: Penny v Lush (7
½ years); Dawe v. Brown,  N.J. No. 153 (TD)
(5 years); Halifax Insurance Co. v. Hunt,  N.J. No.
154 (TD) (16 years); and Kilfoy v. Shanahan's Investigation
and Security (December 16, 2010, unreported) (8 years). In the
case at hand, the court concluded that the delay of more than 9
years was inordinate.
In seeking to explain the delay, Fennelly referred to his
limited financial resources, and the disagreements between counsel
as to how to advance the matter. The court, however, noting that
any disagreements could have been dealt with by court application,
concluded that there was no valid excuse for the delay.
As is common in these applications, the key issue was whether
Lloyd's had been prejudiced by the delay. Lloyd's faced the
onus of establishing such prejudice. In the presence of inordinate
and inexcusable delay, prejudice may be assumed. Nevertheless,
"it is still incumbent upon the court to carefully consider
all the circumstances of the case" to determine whether there
would be actual prejudice. This could include the death of a
witness (Halifax Insurance v. Hunt), or the destruction of
records coupled with a lack of independent memory of the events
(Morice v. Toronto-Dominion Bank, 2014 BCSC 380).
Here, Lloyd's pointed to the vessel's hull which had
been destroyed during decommissioning, preventing further
examination. This was critical, given that the determination as to
whether there was coverage would be affected by the value of the
loss, and whether the vessel was salvageable. On the other hand,
Lloyd's had already examined the vessel, through multiple
experts. As for the damage to the vessel, this was the result of an
accident during decommissioning, not the delay itself, and the risk
of such damage was known to Lloyd's. Furthermore, Lloyd's
had received notice, in 2011, of the proposed decommissioning of
the vessel, yet the process did not take place until 2013, leaving
"ample opportunity to carry out necessary
In the end, the court concluded that any prejudice was not
caused by Fennelly's delay. In addition, the delay, while being
in excess of nine years, was not of "such length as to, in and
of itself, constitute sufficient evidence of prejudice". As a
result, the application to dismiss the action for want of
prosecution was denied.
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