Hodder Tugboat Co. Ltd. v. JJM Construction Ltd. et al.

This case involved damage to two barges that were under charter. Following the incidents giving rise to the damage an action was commenced in the name of the owner and the charterer against Texada and Pacific. This action was essentially a subrogated action brought by the underwriters of the barges. Subsequently a second action was commenced by the owner against the charterer as well as Texada and Pacific. Texada and Pacific then brought this motion to strike the second action on the grounds that it was frivolous and vexatious. The motions Judge declined to completely strike the second action as there were aspects of the second action, including uninsured losses, which were not included in the first. Instead the Judge ordered that the actions be restructured such that the owner was the plaintiff in one action and the charterer the plaintiff in the other. Additionally, the Judge ordered that the actions be specially managed and heard together. During the course of his reasons the motions Judge also had to consider whether the underwriter or the insured had the right to control the subrogated action. The Judge held that even though the underwriter may have paid the full amount under the policy the insured retains the right to control the proceeding until it is fully indemnified. A subrogation receipt did not alter the common law on this point. The underwriters were subsequently granted status to appeal the order (2009 FCA 209) and launched an appeal. The appeal was dismissed with the Court merely saying that the order was a response to unusual circumstances, did not offend any principal of law or procedural fairness and was not prejudicial to any party.