Fennelly v. Lloyd's Underwriters, 2021 NLSC 160, involved 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 insured Plaintiff's claim for want of prosecution. This was in fact the second such application brought by Lloyd's. The first application was ultimately unsuccessful as Justice McGrath concluded that although the Plaintiff's delay to that point was both inordinate and inexcusable, Lloyd's was not prejudiced by the delay.
Background
An application for want of prosecution addresses three questions: (1) has there been an inordinate delay? (2) if so, is the inordinate delay inexcusable? (3) are the defendants likely to be seriously prejudiced by the delay?
The insured, Thomas Fennelly (“Fennelly”) claimed entitlement to insurance proceeds arising from damages sustained to its fishing vessel in or about January of 2006. At that time the vessel was subject to a policy of insurance in the amount of $500,000.00 against total loss caused by named risks underwritten by Lloyd's and brokered by Anthony. Lloyd's denied coverage on the basis that the damage was less than $500,000.00 and Fennelly commenced a claim for damages for breach of contract and negligent misrepresentation in 2008. Lists of Documents were exchanged in 2009 and discoveries took place in 2010. Counsel for the parties exchanged correspondence on various issues between 2011 and 2013. The vessel was decommissioned and destroyed in 2013 with the consent of Lloyd's but the demolition did not go as planned and portions of the damaged vessel were not preserved. Fennelly's counsel met with a proposed expert in 2014 but never communicated this with Lloyd's or Anthony.
The 1st Application
In September 2015, Lloyd's brought the first application for want of prosecution that was unsuccessful1. Justice McGrath characterized the delay in excess of 9 years to be inordinate and found that Fennelly had no excuse for failing to take steps that could have been taken. However, Justice McGrath found that Lloyd's had not been prejudiced by the delay as it did not lose out on an ability to examine the vessel because of Fennelly's actions. The vessel had already been inspected by Lloyd's experts and they knew of its decommissioning. No prejudice arose as a result of Fennelly's delay in prosecuting its claim.
The 2nd Application
Justice Burrage noted that “precious little” occurred between the decision of Justice McGrath in January of 2016 and the hearing date of the 2nd application in November of 2021. Fennelly filed a Supplemental List of Documents in March of 2016, and a discovery of a former employee of Anthony occurred prior to November 2016. Fennelly issued interrogatories to the former employee on November 14, 2016, which were promptly replied to and forwarded, by the Plaintiff's lawyer, to Lloyd's and Anthony in January of 2017.
In January of 2017, Fennelly requested further discoveries of an unidentified representative of Lloyd's, to which Lloyd's sought clarification of the topics Fennelly wished to cover in June of 2017. No reply to that request was received. Fennelly filed a Notice of Intention to proceed in October of 2017, which was the last correspondence received by Lloyd's or Anthony until the 2nd application.
Inordinate Delay
Between forwarding the responses to interrogatories and the filing of the 2nd application, Fennelly's failure to advance the claim represented “a further 3.5 years of inactivity”. Justice Burrage concluded that the now 13-year delay was inordinate.
“[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.”
The Delay Was Inexcusable
Justice Burrage also concluded that the explanation offered by Fennelly for the delay, that he was pursuing a second unrelated claim and wished to see that to fruition first, was in essence a strategic one but hardly a justification and was deemed inexcusable.
Actual and Deemed Prejudice
Justice Burrage found that Anthony had been prejudiced. When Anthony's former employee responded to the Plaintiff's Interrogatories in November, 2016, he had no recollection of having met with Fennelly to arrange the insurance in 2005.
“[20] … 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. …”
“[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.”
As for Lloyd's, it did not allege any direct prejudice but Justice Burrage noted that “in the right circumstance prejudice need not be directly proven, but may be inferred.” Given that the delay now reached 13 years, Justice Burrage was satisfied that it was “well past the point where prejudice to Lloyd's and for that matter, Anthony, as well, can be inferred.” As a result, the action was dismissed for want of prosecution.
Key Takeaway
In the right circumstance, prejudice need not be directly proven but may be inferred given the commonsense proposition that “the longer the delay the greater the likelihood of prejudice”. How long of a delay is required before counsel should consider bringing an application for want of prosecution remains to be seen and will likely be dependent on the facts of each case, but it appears that a delay of 13 years is “well past the point” where prejudice can be inferred.
Footnote
1 Fennelly v. Lloyd's Underwriters, 2016 NTTD(G) 1
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