MARITIME LAW |
Practice |
Forestex Management Corp. v. Lloyd's Underwriters
T-1287-02
2004 FC 1303, Hargrave P.
22/9/04
18 pp.
Motion to strike out statement of claim--Vessel Texada grounded on August 4, 2000, in passage in Queen Charlotte Islands, became constructive total loss--Owners giving notice of casualty to underwriters on August 8--Underwriters subsequently denying claim as believed Texada outside trading limits--Owners, as plaintiffs, sued on hull and machinery policy in earlier action, T-1421-01--Action for both insured value of Texada, and, under policy, for costs associated with salvage services, wreck removal, pollution control--Action on policy dismissed for delay--Decision of S.C.C. in Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595 providing impetus to insureds to sue both on policy and for breach of duty of good faith, viewed as implied term under insurance contracts--Both causes of action sometimes contained in one statement of claim--Plaintiffs commenced present action, T-1287-02, bad faith action on August 9, 2002--Defendants moving to strike out bad faith action on several grounds, but only necessary to consider whether reasonable cause of action--Foundation for bad faith action--Contract of insurance contract of utmost good faith--Number of principles to which counsel referred having genesis in American law--According to American law, insured must establish breach of duty under insurance contract before cause of action against underwriter for bad faith-- S.C.C. in Whiten looked upon good faith as implied term in insurance contract--In contractual approach, two distinct causes of action, one upon policy, other upon implied term of contract contained in policy--No bad faith cause of action unless obligation under contract of insurance itself-- According to case law, there must be valid, favourably decided action on policy before ongoing bad faith claim will crystallize so that it may be pursued--Effect of dismissal for delay--No estoppel which would bar plaintiffs from re-instituting action on policy as basis upon which they might, following successful conclusion, crystallize, pursue bad faith cause of action--Federal Marine Insurance Act, 1993, containing no time limit for bringing application to determine coverage-- Two-year limitation, imported from British Columbia Limitation Act by Federal Courts Act, s. 39 appropriate--But limitation a defence, to be invoked when merits of case considered--Should not be applied on motion to strike out for want of cause of action--To dismiss for want of cause of action it must be plain, obvious, beyond doubt action cannot succeed--Grounds for striking out, other than for want of reasonable cause of action, not available because defence, as filed, not excepting, pleading usual grounds for striking out--Defendants barred from utilizing allegations of frivolous, immaterial action--Motion dismissed--Marine Insurance Act, S.C. 1993, c. 22--Limitation Act, R.S.B.C. 1996, c. 226--Federal Courts Act, R.S.C., 1985, c. 7, ss. 1 (as am. by S.C. 2002, c. 8, s. 14), 39 (as am. by S.C. 1990, c. 8, s. 10; S.C. 2002, c. 8, s. 38).