Commercial insurer, brokerage granted right to a jury trial in marine claim

A B.C. commercial fishing operation must face a jury in its insurance claim against Intact Insurance and the brokerage Harlock Murray Underwriting Ltd., B.C.’s Supreme Court has ruled.

The court was not convinced the claim of Arctic Pearl Fishing Ltd., which involved an overheated ship engine, was too intricate or complex to be determined by a jury.

“To the extent there may be use of unfamiliar technical terms, quantification of damages, and apportionment of causes, which the [fishing operation] relies on as a basis for its [claim], that disregards the utility of the experts and the roles they will play at trial, as well as the responsibility of counsel to both cull and present the information in a manageable way,” the B.C. Supreme Court ruled in a decision released Sept. 2, 2022.

“In fact, having reviewed the reports filed with these application materials, it seems that the experts have done an admirable job of explaining the causes and effects of the engine overheating and other issues in relatively plain language.”

The court conceded the case would be document-intensive. “That may be true if one looks at the documents listed, which include numerous invoices for repairs and work done to the vessel, both before the overheating incident, and afterwards as repairs were undertaken and, eventually, the decision made to have the engine replaced,” the court found.

But the significance of the documents could be explained by the experts, of which there were only two, one for each party, the court ruled.

As for Arctic Pearl’s claim that English was not the first language of their expert, the court indicated this wouldn’t be as much of an issue in the courtroom as it was on video. Plus, a judge would be able to clarify matters by asking pertinent questions that a jury member might ask.

The court listed other factors suggesting the case was suitable to be heard by a jury:

there were only two counsel
the trial was set for only eight days
the points of law were not entirely novel, with possibly one exception
the insurance company and the brokerage had a right to a trial by jury, which are common in similar commercial insurance cases.

The C$800,000 claim involves damages sustained by Artic Pearl’s commercial fishing vessel, the Viking Enterprise. Intact Insurance Company insured the vessel under a marine insurance policy, as underwritten by the brokerage Harlock Murray Underwriting Ltd.

The allegations made in Arctic Pearl’s claim have not been proven in court. The operation alleged the ship’s main diesel engine, along with other machinery and/or systems, suffered damage soon after Arctic Pearl purchased the vessel. The incident happened while the boat was travelling from Port Alberni, B.C., on May 12, 2018.

The damage was the result of the engine overheating, which caused a complete failure, disabling the vessel, which then had to be towed back to Port Alberni, according to the B.C. Supreme Court ruling. After various repair attempts, the vessel’s engine had to be replaced.

“The engine had undergone a complete overhaul in Mexico prior to the plaintiff’s purchase,” the court decision stated.

Artic Pearl believes its insurance policy covers:

negligence in the repairs of the engine undertaken during the overhaul in Mexico
negligence in the chief engineer’s operation of the vessel in leaving the port and starboard sea inlets open
tree bark and wood debris becoming lodged in the main engine raw sea water propeller.

But Intact denied coverage. Specifically, it argued:

the damages suffered from the overheating of the engine fall within the policy’s $125,000 deductible
to the extent there were other damages, they did not fall under the policy’s ‘named perils’
damage was caused by the plaintiff’s failure to maintain the vessel properly.

Regarding its claim the boat hadn’t been maintained properly, Intact pointed to a warranty provision in the 2017 version of its policy. It required Arctic Pearl to obtain a new Condition and Valuation Survey by an accredited marine surveyor and comply with all of the recommendations set out in that survey within 30 days.

Artic Pearl countered the policy’s warranty provision was too vague to be enforceable. Two surveys were conducted, one in June 2017, and a second in July 2017, Artic Pearl observed. One report had recommendations, the other did not. The June 2017 report referenced in the policy’s warranty did not contain recommendations, according to the fishing operation.

Feature image courtesy of iStock.com/zeynep boğoçlu