Nova Scotia Court to Decide if Expired Steamship Inspection Certificate Breaches Insurance Policy

Louisbourg Seafoods Limited v. Underwriters at Lloyd’s, 2023 NSSC 175(CanLII).

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By: Alexandre Doucet (Articled Clerk)

On September 7, 2019, Hurricane Dorian struck the Port of Louisburg, Nova Scotia. During the storm a fishing vessel named “Kelly & Jordan”, which was owned by Louisbourg Seafoods, broke from her mooring lines and capsized. On the date of loss, the Kelly & Jordan was insured under a Marine Hull policy. On investigation, the insurers denied coverage on the basis that the vessel’s Canadian Steamship Inspection (CSI certification) had expired, claiming that the expiration amounted to a breach of warranty. Louisburg Seafoods sued the insurers, seeking coverage for the loss.

The dispute between the parties focused on the impact of the expiration of Kelly & Jordan’s CSI certification and the vessel’s change of status from “trading” (when the initial coverage was placed) to “lay up” (when the vessel had a lapse of CSI certification).

Rule 12 of Nova Scotia’s civil procedures permits the determination of a preliminary question of law. Parties may seek its use under limited circumstances. If those circumstances are met, a judge can then separate the question of law from other issues in a proceeding provided it reduces the length of proceedings.

Firstly, a pure legal question must be identified; the rule does not authorize a determination of a question of fact or mixed fact and law, other than limited exceptions under the rule. Secondly, all facts necessary to determine that question of law must be identified. Thirdly, it must be decided whether all those facts necessary to determine the issue of pure law in the motion can be found without trial or hearing. This is called the Mahoney test.

The Mahoney test’s third factor is typically what causes issues for parties seeking to apply Rule 12. Uncontested facts are easier to use in determining a question of law because they do not require a trial to substantiate them. In this case, the question of whether CSI certification was required in the circumstances is a question of mixed fact and law. Since the question to be determined is not in itself a question of pure law, Rule 12 cannot apply which, by its own derivative, means rule 13.04 requesting a summary judgment must not apply as well.

Link: 2023 NSSC 175 (CanLII) | Louisbourg Seafoods Limited v. Underwriters at Lloyd’s | CanLII

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