Executive Summary: Key Legal and Evidentiary Issues

• Nordic sought to set aside a default after failing to file a defence within the required timeline.

• WK argued Nordic breached its insurance contract by denying a claim for trailer damage.

• Nordic claimed DCPD coverage was not available because Chaleur’s insurer was not a signatory.

• GTI was alleged to be negligent in arranging a policy lacking the requested coverage.

• The court found Nordic had a valid prima facie defence and a continuing intention to defend.

• Delay in filing the motion was deemed unreasonable, but not prejudicial enough to deny relief.

Factual background

On October 31, 2022, a trailer owned by WK & NN Trucking Ltd. (WK) was damaged in a collision with a loader owned by Chaleur Forest Products GP Inc. WK was insured under an automobile policy administered by Nordic Insurance Company of Canada (Nordic). On March 2, 2023, WK submitted a claim under that policy. Nordic denied the claim on March 8, 2023, stating the policy did not provide collision coverage and that Direct Compensation Property Damage (DCPD) coverage was unavailable without information from Chaleur’s insurer.

On August 24, 2023, Nordic determined Chaleur’s insurer was Lloyd’s of London, which was not a signatory to the DCPD scheme, rendering such coverage unavailable. WK contested this and filed a Notice of Action with Statement of Claim on October 30, 2023, asserting that Chaleur was 100% liable for the damage and that Nordic breached the insurance contract by failing to indemnify the loss. In the alternative, WK claimed that G.T.I. Broker Group Inc. (GTI) was negligent for selling a policy that lacked the requested coverage.

Nordic was served on November 23, 2023, but failed to file a Statement of Defence. On March 18, 2024, WK noted Nordic in default. Nordic retained legal counsel on May 29, 2024, and upon learning it had been noted in default, filed a motion on October 1, 2024, to have the default set aside.

Discussion of policy terms and clauses at issue

Nordic’s position was that DCPD coverage could not apply because Lloyd’s of London was not a DCPD signatory. This was confirmed in paragraph 10 of an affidavit by adjuster Anna Hustler, who reviewed information received from Marc-André Arseneault, an independent adjuster hired by Chaleur’s insurer. Although part of her affidavit was struck for containing opinion evidence, the remainder was admitted, including her statement that she informed WK of the DCPD unavailability on August 24, 2023.

Court’s analysis and findings

Justice Doucet applied the four-factor test under Rule 21.03(1) of the New Brunswick Rules of Court and related case law:

1. Valid prima facie defence: Nordic’s claim that DCPD was unavailable due to Chaleur’s insurer not being a signatory was accepted as a valid defence. The evidence supported this.

2. Continuing intention to defend: Nordic maintained communication and clarified its denial position as new information emerged.

3. Reasonable explanation for default: Nordic cited administrative oversight, including a misidentified agent for service, an adjuster on vacation, and an overlooked Action email upon her return. The court accepted this explanation.

4. Timeliness of motion: The four-month delay from June 3 to October 1, 2024, was deemed unreasonable, especially for an experienced insurer. However, the court found no irreparable prejudice resulted from the delay.

Outcome

Despite the unreasonable delay, the court held that Nordic’s valid prima facie defence outweighed procedural defects. The noting in default was set aside. Nordic was ordered to file its Statement of Defence and Crossclaim within 10 days of the decision, dated February 6, 2025. As a cost consequence, Nordic was ordered to pay $3,000 in total costs—$1,500 to WK and $1,500 to GTI.