Thomas Fennelly PLAINTIFF And: Lloyd's Underwriters First Defendant And: Anthony & Associates Inc. Second Defendant, 2021 NLSC 160

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Fennelly v. Lloyd's Underwriters , 2021 NLSC 160 Date : December 1, 2021 Docket : 200801T4330 Between: Thomas Fennelly PLAINTIFF And: Lloyd's Underwriters First Defendant And: Anthony & Associates Inc. Second Defendant Before: Justice Donald H. Burrage Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: November 22, 2021

Summary: The Plaintiff’s claim was dismissed for want of prosecution, following a 13-year delay. The delay was inordinate and inexcusable. While the Second Defendant could establish actual prejudice, the extreme delay was such that prejudice could also be inferred for both Defendants. Appearances:

M. John Mate Appearing on behalf of the Plaintiff/Respondent Ruth E. Trask Appearing on behalf of the First Sarah A. Pinsent Defendant/Applicant Kevin F. Stamp, Q.C. Appearing on behalf of the Second Defendant/Applicant Authorities Cited: CASES CONSIDERED: Fennelly v. Lloyd’s Underwriters, 2016 NLTD(G); Penney v. Lush (1996), (NL CA), 139Nfld. & P.E.I.R. 113, 433 A.P.R. 113 (Nfld. C.A.); Allen v. Sir Alfred McAlpine & Sons Ltd., [1968] 1 All E.R. 543; Kilfoy v. Shanahan’sInvestigation and Security Limited (December 16, 2010), Grand Bank 200406T0164 (NL S.C. (T.D.)); Moir v.

Landry, (NS CA), 1991 CarswellNS 135, 104 N.S.R. (2d) 281(C.A.) RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D REASONS FOR JUDGMENT Burrage, J.: INTRODUCTION [1] This is an application by the First and Second Defendants, Lloyd’s Underwriters (“Lloyd’s”) and Anthony & Associates Inc.(“Anthony”), pursuant to Rule 40.11 of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D, to dismiss the Plaintiff’s claimfor want of prosecution. It is the second such application brought by Lloyd’s. The first resulted in a decision of McGrath, J., Fennellyv.

Lloyd’s Underwriters, 2016 NLTD(G) 1. Justice McGrath concluded that the Plaintiff’s delay to that point was both inordinate andinexcusable. However, Justice McGrath was not convinced that Lloyd’s would suffer prejudice by the delay and the application wasdismissed. A companion application brought by the Plaintiff for an Order that the proceeding be case managed under Rule 18A was alsodismissed. [2] In response to the within application the Plaintiff now seeks to place the matter on the pre-trial list pursuant to Rule 14.24. background [3] In Fennelly, Justice McGrath provided the following useful

summary of the claim and the proceedings up to that point (atparagraphs 4-12): 4. The Plaintiff claims that it is entitled to insurance proceeds arising from damages sustained by the Plaintiff's fishing vessel the"Sandy Joanne" in or about January of 2006. At the time, the vessel was the subject of a policy of Marine Insurance underwritten by theFirst Defendant. The policy insured the vessel in the amount of $500,000 Canadian against total loss (actual or constructive) caused bynamed risks. The Second Defendant had acted as an insurance broker in placing this policy of insurance. 5.

The Plaintiff made a demand for payment under the policy, resulting in the vessel being examined by two different investigatorsin 2007. The Plaintiff says that the average adjuster who inspected the vessel found that the cost of repairing the vessel exceeded$500,000 thereby triggering recovery under the policy of insurance. The First Defendant, on the other hand, states that the reportprepared as a result of its investigations found that the legitimate repair cost of the vessel was less than $500,000.

The First Defendantfurther states that the coverage under the insurance policy applied only to the risks set out in the policy and only for a total loss. As aresult it denied the Plaintiff's demand for payment, thereby giving rise to this Court proceeding. 6. Following the denial of coverage, the Plaintiff filed a Statement of Claim on October 20, 2008 alleging breach of contract and

negligent misrepresentation. Both Defendants filed separate Statements of Defence on December 1, 2008. All three parties filed Lists ofDocuments in 2009 with oral discoveries of the Plaintiff and a marine surveyor retained by the First Defendant taking place in 2010.Undertakings to provide additional information and documents were given by both the Plaintiff and First Defendant at these discoveryexaminations. 7. Additional documentation was disclosed by the Plaintiff resulting in the filing of a Supplementary List of Documents in May,2011.

However, differences arose between counsel for the parties as to the extent of other undertakings given at discovery and themanner in which they were to be fulfilled. This resulted in exchanges of correspondence between counsel for all three parties in 2011 and2012 but no agreement was reached on certain issues including who was responsible for obtaining, paying for and copying records fromMarine Safety Transport Canada ("MSTC"). 8.

After counsel for the First Defendant was appointed as a judge in the fall of 2012, there was no communication between counseluntil the spring of 2013 when a new counsel from within the same law firm was appointed for the First Defendant. The First Defendantthen proceeded to comply with its undertakings from discovery and reinitiated communications with respect to production of the MSTCfile. There was and remains no resolution of this issue. 9. Between 2011 and 2013, counsel for the Plaintiff and First Defendant also exchanged correspondence regarding the Plaintiff'srequest to decommission the vessel.

The Sandy Joanne had been in dry dock at Harbour Grace since 2007 and was in a deterioratedcondition. 10. Specifically, in correspondence dated August 7, 2012, counsel for the First Defendant acknowledged the Plaintiff's advice that itwould be decommissioning the vessel. The First Defendant asked that, for purposes of preservation of evidence, portions of the damagedframes be retained. Identification of the fames and the portions to be preserved as well as the removal and storage protocol and procedurewas to be jointly discussed and agreed in advance between the parties' respective marine surveyors. 11.

The decommissioning of the vessel did not take place until September 2013. At that time, the First Defendant retained a marinesurveyor to witness and photograph the demolition. Unfortunately, the demolition did not go as planned as the mid-ship

section of thevessel caved in and the starboard quarter was crushed making it impossible to remove for inspection. 12. The First Defendant states that no further steps were taken by the Plaintiff to advance its claim until the filing of theseapplications. The Plaintiff's counsel acknowledges the lack of communication but states that he did travel to Montreal to meet with aproposed expert in 2014.

However, he did not communicate this to counsel for the Defendants. [4] Justice McGrath concluded her decision by encouraging the parties to get on with the claim (at paragraph 76): 76. … I would encourage all parties to work together to advance this claim through the court process to ensure that the matter is dealtwith expeditiously and cost-effectively. The Legal Test [5] Rule 40.11 provides, as follows: 40.11.

Where a plaintiff does not apply to set a proceeding down for trial, the defendant may apply to set it down for trial or apply to theCourt to dismiss the proceeding for want of prosecution, and the Court may order the proceeding to be dismissed or make an order that isjust. [6] The leading case in this jurisdiction on the application of this Rule is Penney v. Lush (1996), (NL CA),139 Nfld. & P.E.I.R. 113, 433 A.P.R. 113 (Nfld. C.A.). In writing for the Court, Gushue, J.A. quoted with approval from the EnglishCourt of Appeal case of Allen v.

Sir Alfred McAlpine & Sons Ltd., [1968] 1 All E.R. 543 (at paragraphs 10 and 12): 10. The main exception which has been taken to the order of the trial judge is with respect to his enunciation of the principles referredto above from the Martell v. McAlpine case. Counsel maintains those principles as stated are not an accurate statement of the law, whichrather is to be found in the English Court of Appeal case of Allen v. Sir Alfred McAlpine & Sons Ltd., [1968] 1 All E.R. 543.

At p. 555 ofthat case Lord Diplock made the following well-known statement: What then are the principles which the court should apply in exercising its discretion to dismiss an action for want of prosecution on adefendant's application? The application is not usually made until the period of limitation for the plaintiff's cause of action has expired. It

is then a Draconian order and will not be lightly made. It should not in any event be exercised without giving the plaintiff an opportunity to remedy his default, unless the court is satisfied either that the default has been intentional and contumelious, or that the inexcusable delay for which the plaintiff or his lawyers have been responsible has been such as to give rise to a substantial risk that a fair trial of the issues in the litigation will not be possible at the earliest date at which, as a result of the delay, the action would come to trial if it were allowed to continue.

It is for the defendant to satisfy the court that one or other of these two conditions is fulfilled. Disobedience to a peremptory order of the court would be sufficient to satisfy the first condition. Whether the second alternative condition is satisfied will depend on the circumstances of the particular case; but the length of the delay may of itself suffice to satisfy this condition if the relevant issues would depend on the recollection of witnesses of events which happened long ago. 12. The comments of Salmon, L.J. in the same case are also instructive.

He stated at p. 561: A defendant may apply to have an action dismissed for want of prosecution either (

a) because of the plaintiff's failure to comply with the Rules of the Supreme Court or (

b) under the court's inherent jurisdiction. In my view it matters not whether the application comes under limb (

a) or (b), the same principles apply. They are as follows: In order for such an application to succeed, the defendant must show: (

i) that there has been inordinate delay. It would be highly undesirable and indeed impossible to attempt to lay down a tariff so many years or more on one side of the line and a lesser period on the other. What is or is not inordinate delay must depend on the facts of each particular case. These vary infinitely from case to case, but it should not be too difficult to recognize inordinate delay when it occurs. (ii) that this inordinate delay is inexcusable.

As a rule, until a credible excuse is made out, the natural inference would be that it is inexcusable. (iii) that the defendants are likely to be seriously prejudiced by the delay. This may be prejudice at the trial of issues between themselves and the plaintiff, or between each other, or between themselves and the third parties. In addition to any inference that may properly be drawn from the delay itself, prejudice can sometimes be directly proved.

As a rule, the longer the delay, the greater the likelihood of serious prejudice at the trial. [ 7 ] There are thus three questions to be addressed on this application:

(1) Has there been an inordinate delay?

(2) If so, is the inordinate delay inexcusable?

(3) Are Lloyd’s and/or Anthony likely to be seriously prejudiced by the delay? Has There Been an Inordinate Delay? [ 8 ] So what has happened following Justice McGrath’s ruling in January 2016? Precious little, it seems. [ 9 ] Two outstanding litigation steps were identified by Justice McGrath in her decision: (1) the receipt and delivery of the Transport Canada file to all parties and (2) the discovery of Mr. Don Rowe, a former employee of Anthony.

Both of these steps were resolved by November 2016. [ 10 ] On 10 November 2016, counsel for Lloyd’s sent a copy of the Transport Canada file to Anthony and the Plaintiff. [ 11 ] On 14 November 2016 the Plaintiff issued five interrogatories to Mr. Rowe in Nova Scotia. Mr. Rowe promptly replied on 29 November 2016. Plaintiff’s counsel forwarded this reply to Lloyd’s and Anthony in January 2017. I observe that the Plaintiff was aware of Mr.

Rowe’s whereabouts at the time of argument before Justice McGrath on 18 September 2015, at the latest, yet did not deliver the interrogatories to him until over a year later. [ 12 ] In addition, on 4 March 2016 the Plaintiff filed a Supplemental List of Documents. [ 13 ] In January 2017, a full year following Justice McGrath’s decision, the Plaintiff requested further discoveries of unidentified representatives from Lloyd’s.

As is the standard practice with the discovery of a corporate representative, counsel for Lloyd’s sought clarification of the topics the Plaintiff wished to cover, so that the appropriate representative could be identified. This was in June 2017. No reply was received to this request. [ 14 ] Finally, the Plaintiff filed a Notice of Intention to proceed in October 2017. This was the last correspondence received by Lloyd’s or Anthony until the within application.

No Certificate of Readiness was circulated amongst counsel. [ 15 ] Between forwarding the Response to the Interrogatories in January 2017 and filing the within application in May 2020, the Plaintiff’s failure to advance the claim represents a further 3.5 years of inactivity. [ 16 ] The Plaintiff was guilty of causing an inordinate and inexcusable delay in September 2015, following 9 and one half years of relative inactivity. In light of this finding, one would have thought the Plaintiff would be more than expeditious in advancing the claim. Quite remarkably, the precise opposite was the case.

I thus have no difficulty in concluding that the now 13-year delay is inordinate. Is the Inordinate Delay Inexcusable?

[ 17 ] The explanation for the delay offered by the Plaintiff’s counsel was in essence a strategic one. The Plaintiff was at the time pursuing a second, unrelated claim, which was older than the present one, and wished to see that to fruition first. This explanation, which is hardly justification for the delay in this case, was not shared with either of the Defendants until the within application to strike. The delay was inexcusable.

Have the Defendants Been Prejudiced? [ 18 ] In the Statement of Claim the Plaintiff alleges (at paragraph 13): 3. [The Second Defendant] … through Don Rowe represented that the coverage under the Policy was appropriate and that it would insure the Vessel adequately for Fennelly’s purposes. Rowe further represented that Fennelly would be entitled to recover under the Policy if costs to repair the damage to the Vessel caused by an insured risk was greater than $500,000.

These representations were, in fact, misrepresentations. [ 19 ] Don Rowe was the representative for Anthony at the time and, as such, his interaction with the Plaintiff is central to its defence. Hence the reason Mr. Rowe was asked the following Interrogatories by the Plaintiff on 14 November 2016. Mr. Rowe’s response is added in bold: 1. Do you recall meeting with Thomas Fennelly in 2005 to arrange insurance on his fishing vessel the M/V Sandy Joanne? As to the first interrogatory, I say – No, I do not recall a meeting. 2. Did you take any notes at the time, and if so, do you still have those notes?

As to the second interrogatory, I say – If there was a meeting and notes were taken, they would be in the broker’s file. I do not have any notes. 3. If you recall meeting with Thomas Fennelly in 2005, please explain and state in detail what you recall about your discussions and advice regarding the following topics: a. The valuation of M/V Sandy Joanne; b. Any benefit or need for a new valuation for the M/V Sandy Joanne other than the 2003 condition and valuation performed by Tri-Nav? c. The impact of the declared value in the application given the insurance obtained required a constructive total loss. d.

The impact of the declared value given that the vessel was already of a significant age and constructed primarily of wood? e. The nature and limitations of the policy. As to the third interrogatory, I do not remember. 4. If you do not recall what was said specifically to Thomas Fennelly in 2005 with respect to the above topics, did you have a general practice that you can recall with respect to advising clients on these topics? If so, what was that general practice?

As to the fourth interrogatory, I say – As far as I can recall, the general procedure was as follows: - Ike would be contacted by a prospective client concerning a request for an insurance quotation.

- The prospective client would be required to complete an application. - We would forward the completed application to the underwriter for a quote. - When the quotation was received from the underwriters we would include details of the coverage, insured value, deductibles and premiums which we would present to the prospective client. - If the terms were accepted the coverage would be bound with underwriters and a Cover Note issued to the client. 5.

If you state that a general practice was followed with respect to the above-noted topics, what other clients or associates could confirm that you commonly followed this general practice? As to the fifth interrogatory, I say – Three of my associates at the time were Blair Leonard, Sylvia Peddle and Valerie O’Connell. [ 20 ] Mr. Rowe is no longer employed by Anthony and in November of 2016 found that he has no recollection of meeting with the Plaintiff in 2005. We don’t know what Mr. Rowe might have recalled had he been questioned earlier, but it is fair to say that memories do not improve with the passage of time.

Indeed, in urging the Court to place this matter on the pre-trial list, Plaintiff’s counsel acknowledged that his client’s memory “is not getting any better.” [ 21 ] I conclude that Mr. Rowe’s loss of what memory he may have had of the meeting with the Plaintiff represents direct prejudice to Anthony. [ 22 ] What then of a prejudice to Lloyd’s? No direct prejudice is alleged, but is this an appropriate circumstance where prejudice may nevertheless be inferred by the passage of time? [ 23 ] In answering this question, the facts in Penney are instructive.

The Defendants first brought their application to strike almost four years after issuance of the Statement of Claim. However, the application was withdrawn after the Plaintiffs “undertook unreservedly” to proceed with prosecution of the claim without further delay (at paragraph 18). Having been given a “second chance” they failed to do so, however, prompting Gushue, J.A. to observe that this was a “significant feature” of the matter which made the case “unlike all the other authorities relied upon” (at paragraph 18). Gushue, J.A. writes (at paragraphs 18-19): 18.

At that time, the plaintiffs were not only given such second chance, but undertook unreservedly to proceed without further delay with the prosecution of the case. It is that fact and the subsequent further inaction of the plaintiffs, i.e., up to September of 1994 when the second application to strike was taken out, that is the significant feature of this matter. That makes it unlike all the other authorities relied upon. I feel quite secure that even Lord Diplock would not have classified the order of the Chambers judge dismissing the matter here as Draconian, given the circumstances.

The plaintiffs were extended the courtesy by the defendants of the abandonment of their initial application to strike and the plaintiffs took advantage of the courtesy by ignoring their own undertaking to expeditiously proceed with the matter, but simply did nothing until once more brought before the court by the solicitor for the respondent. Indeed, had the Court been involved in the first application, the inaction of the plaintiffs would certainly be regarded as disdainful, if not contemptuous. At that stage seven and one-half years had elapsed since the accident occurred.

Further, while I do not view it as necessarily relevant to the outcome of this matter, there is evidence of prejudice caused the respondents by the delay. The respondents now reside for most of the year in Alberta. 19.

It will therefore be seen that the principal issue in this matter is not the demonstration of prejudice to the defendants, but rather the apparently contemptuous, or at least indifferent, attitude of counsel for the plaintiffs following on the defendants' indulgence to him in February 1993 and his expressed committment to proceed expeditiously with the matter. [ 24 ] While there was some evidence of prejudice to the Respondents, as they now resided elsewhere, this was not the ratio of the decision. [ 25 ] The “indulgence” granted in Penney came not from the Court but the Respondents, although Gushue, J.A. observed that it is “not common” that an application to strike is successful on the first attempt (at paragraph 16) and it is unlikely a Court would have struck the claim in the first instance (at paragraph 17). [ 26 ] The within application is the second brought by Lloyd’s, as the indulgence granted in the first instance was that of the Court.

While it is true that the Plaintiff did not provide an express undertaking to proceed expeditiously, such would reasonably have been the Court’s expectation, having concluded that the delay up to that point was already “inordinate and inexcusable.”

[27] I observe as well, that Justice Gushue in Penney quoted with approval the following comments of Salmon, L.J. from Allen (atparagraph 12): 12…. In addition to an inference that may be properly drawn from the delay itself, prejudice can sometimes be directly proved. As arule, the longer the delay, the greater the likelihood of serious prejudice at trial. [28] I derive from this statement that in the right circumstance prejudice need not be directly proven, but may be inferred. We thenhave the common sense proposition that the longer the delay the greater the likelihood of prejudice. [29] In Kilfoy v.

Shanahan’s Investigation and Security Limited (December 16, 2010), Grand Bank 200406T0164 (NL S.C. (T.D.))Handrigan, J. dismissed the Plaintiff’s claim for want of prosecution following an inordinate and inexcusable delay of more than eightyears. On the question of prejudice, Handrigan, J. stated (at page 16): … And I agree with, as well with Ms. Reid’s submission that there has to be a point, and we’ve reached it and perhaps passed it quitesome time ago in this case, where prejudice should be inferred simply because of that—the passage of time.

I think it would be puttingthe Defendants in a very difficult position to require them to defend this claim in those circumstances. [30] In a similar vein, in Moir v. Landry, (NS CA), 1991 CarswellNS 135, 104 N.S.R. (2d) 281 (C.A.) the NovaScotia Court of Appeal accepted the proposition that in cases of extremely lengthy delay, prejudice to the Defendant can be presumed (atpages 4-5).

In that case, however, the delay of three years was not such as to give rise to a presumption of prejudice arising from thedelay itself. [31] In the within matter Justice McGrath found that the delay to September 2015 of nine and a half years was inordinate (Fennelly,at paragraph 23). With the addition of three and a half years since then, we are now facing a delay of some 13 years.

I am satisfied thatwe are now well past the point where prejudice to Lloyd’s and for that matter, Anthony, as well, can be inferred. disposition [32] For the foregoing reasons the applications of the First and Second Defendant are granted and the Plaintiff’s action is dismissedfor want of prosecution, pursuant to Rule 40.11. The Plaintiff’s request to place the matter on the pre-trial list is therefore moot. [33] As the successful parties, the First and Second Defendants are entitled to their costs against the Plaintiff pursuant to Column 3of Rule 55. _____________________________ Donald H. Burrage Justice