Merex Inc. v. Stoney Island Fisheries Ltd. et al., 2014 NSSC 67

• Judge: Murphy, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: Tuesday July 30, 2013
• Jurisdiction: Nova Scotia
• Citations: 2014 NSSC 67;(2014), 341 N.S.R.(2d) 216 (SC)

Merex Inc. v. Stoney Island Fisheries (2014), 341 N.S.R.(2d) 216 (SC);

    1081 A.P.R. 216

MLB headnote and full text

Temp. Cite: [2014] N.S.R.(2d) TBEd. FE.053

Merex Incorporated (plaintiff) v. Stoney Island Fisheries Limited (defendant) and Lloyd's Underwriters, Members of Lloyd's London, England, subscribing to Policy No. M083250 (second defendant)

(Hfx Nos. 327021, 349120; 2014 NSSC 67)

Indexed As: Merex Inc. v. Stoney Island Fisheries Ltd. et al.

Nova Scotia Supreme Court

Murphy, J.

February 21, 2014.

Summary:

The defendant's fish storage facility suffered three fires. Fish owned by the plaintiff, stored in the facility, was lost. Lloyd's insured the defendant's facility. In two actions, the plaintiff sued the defendant in negligence for the lost fish. The plaintiff added Lloyd's as a defendant. The plaintiff applied under rule 12 for a determination of a question of law: whether the plaintiff's fish was covered under the Lloyd's policy on the basis that the plaintiff was an unnamed beneficiary under the policy with a direct right of action against Lloyd's. Lloyd's and the defendant both sought summary judgment dismissing the action.

The Nova Scotia Supreme Court granted summary judgment dismissing the action against Lloyd's. The plaintiff was not an unnamed beneficiary under the Lloyd's policy. The plaintiff had no direct right of action against Lloyd's. Recovery under the Lloyd's policy first required that the plaintiff obtain judgment against the defendant and that it remain unsatisfied. The defendant's application for summary judgment was dismissed.

Bailment - Topic 2220

Liability of bailee - Bailment for benefit of bailor and bailee - Evidence and burden of proof on bailee - The defendant stored the plaintiff's fish in its facility - There were three fires, which destroyed the fish - The plaintiff brought a negligence action for damages against the defendant - The defendant sought summary judgment dismissing the action on the ground that the plaintiff failed to point to any act or omission that breached the defendant's duty to take reasonable care of the fish - The Nova Scotia Supreme Court denied summary judgment - The claim involved goods damaged during bailment for hire - The defendant (bailee) could not obtain summary judgment solely on the basis that the plaintiff failed to provide evidence raising a genuine issue in connection with the storage of the fish - The court stated that "as a bailee for reward, [the defendant] has a duty to exercise care and diligence. It also has the burden to establish the existence of a lawful excuse for refusal or failure to deliver the goods, and to prove that destruction while in its possession was not caused by its neglect, misconduct or default" - The defendant, having possession of the fish, had an obligation to put its "best foot forward" by showing how it looked after the plaintiff's fish - See paragraphs 8 to 9.

Contracts - Topic 9001

Rights and liabilities of strangers to contract - Privity of contract - Exceptions - The Nova Scotia Supreme Court stated that "for a third party to claim rights under a contract to which it is not a party, it must be shown that: (a) the parties to the contract intended to extend the benefit to the third party seeking to rely on the contractual provisions; and (b) the activities performed by the third party seeking to rely on the contractual provision must be the very activities contemplated as coming within the scope of the contract in general, or the provision in particular, as determined by reference to the intentions of the parties" - See paragraph 35.

Insurance - Topic 1006

The insurance contract - General - Unnamed insureds - The defendant stored the plaintiff's fish in its facility - There were three fires, which destroyed the fish - The plaintiff brought a negligence action for damages against the defendant - The plaintiff added the defendant's insurer (Lloyd's) as a defendant, arguing that it had a direct right of action against Lloyd's as an unnamed beneficiary under the Lloyd's policy - The Nova Scotia Supreme Court granted Lloyd's summary judgment dismissing the action as against it - The plaintiff was not an unnamed beneficiary under the Lloyd's policy - On the unambiguous wording of the policy, absent the defendant assuming responsibility to arrange insurance for the plaintiff's fish, it was not insured - Alternatively, if the policy was ambiguous, there was no evidence that the defendant and Lloyd's negotiated, discussed or intended in any way to extend coverage to a third party (the plaintiff) - The plaintiff had no direct right of action against Lloyd's - Recovery under the Lloyd's policy first required that the plaintiff obtain judgment against the defendant and that it remain unsatisfied - See paragraphs 10 to 50.

Insurance - Topic 1852

The insurance contract - Interpretation of contract - Intent of the parties - [See Insurance - Topic 1006].

Cases Noticed:

British Motor Corp. of Canada Ltd. v. Ross E. Judge Auto Transport Ltd., [1966] N.S.J. No. 11, refd to. [para. 8].

Smith v. Stevenson, [1942] O.R. 79 (C.A.), refd to. [para. 21].

Westwood Electric and Appliance Service Ltd. v. Manitoba Public Insurance Corp. (1983), 20 Man.R.(2d) 188 (C.A.), refd to. [para. 21].

Vanderhoof Hotel (1972) Ltd. v. Non Marine Underwriters at Lloyd's, [1983] B.C.J. No. 1658 (C.A.), refd to. [para. 21].

Longley v. Mitchell Fur Co. (1983), 45 N.B.R.(2d) 78; 118 A.P.R. 78 (C.A.), refd to. [para. 23].

Canadian Pacific Forest Products Ltd. v. New Hampshire Insurance Co., [2004] Q.J. No. 6624 (C.A.), refd to. [para. 26].

Ramco (UK) Ltd. v. International Insurance Co. of Hanover Ltd., [2003] EWHC 2360 (Q.B.), affd. [2004] EWCA Civ 675 (C.A.), refd to. [para. 26].

Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108; 245 N.R. 88; 127 B.C.A.C. 287; 207 W.A.C. 287, refd to. [para. 35].

Keefer v. Phoenix Insurance Co. of Hartford (1901), 31 S.C.R. 144, refd to. [para. 40].

Hepburn v. A. Tomlinson (Hauliers) Ltd., [1966] 2 W.L.R. 453 (H.L.), refd to. [para. 41].

National Trust Co. v. Allan, [1999] 11 W.W.R. 368; 141 Man.R.(2d) 94 (Q.B.), refd to. [para. 42].

Statutes Noticed:

Insurance Act, R.S.N.S. 1989, c. 231, sect. 28(1) [para. 48].

Authors and Works Noticed:

Brown, Craig, Insurance Law in Canada (8th Ed. 2013), p. 4.4 [para. 40].

Counsel:

Frank Metcalf, Q.C., and Eric Machum, for the plaintiff;

Andrew Nickerson, Q.C., for the defendant, Stoney Island;

Michael S. Ryan, Q.C., and Richard Norman, for the defendant Lloyd's.

These summary judgment applications were heard on July 30, 2013, at Halifax, N.S., before Murphy, J., of the Nova Scotia Supreme Court, who delivered the following judgment orally on February 21, 2014, and in writing on February 24, 2014.