A rescue in the Atlantic and a $400K legal fight over a sunken schooner
Nova Scotia's Rick Welsford is suing insurer Lloyd's Underwriters over its refusal to pay up
It's almost a year to the day that Rick Welsford and his crew desperately shot off emergency flares into the night sky as the engine room of the schooner Sorca took on water and the boat began to sink in the Atlantic Ocean.
But the Nova Scotia captain's rescue at sea has recently given way to a legal headache, one that finds Welsford locked in a court battle with an insurer over its refusal to pay out $400,000 for the lost vessel.
"I am being patient and losing a little bit of patience," Welsford said Friday. "But that's mostly the pressure of having to go through the process."
Before water began leaking into the 20-metre schooner around May 27, 2017, Welsford and his crew of three had been sailing from Lunenburg, N.S., to Bermuda to take part in Rendez-Vous Tall Ships celebrations.
Little did he know when they were plucked from the Sorca by a passing cargo ship that the location of their rescue, about 287 kilometres southeast of Halifax, would become the centre of a Federal Court case.
Welsford subsequently made a $400,000 insurance claim for the Sorca, but to this day Lloyd's Underwriters has refused to pay up. Through his company Think Sail Inc., he has sued Lloyd's Underwriters, a case that now involves a second insurance company and hundreds of pages of documents.
How far is too far?
A key element of the dispute is the location of the sinking itself, and whether the insurance policy limited the Sorca to just 160 kilometres off the coast of Atlantic Canada.
In its statement of defence, Lloyd's Underwriters claims it does impose a limit and the Sorca was required to remain in "Canadian East Coast-Atlantic" waters. Heading to Bermuda, along with a previous voyage to the Caribbean, violated that, and the company claims it was never told of the trips.
Welsford disputes that. He said he was in Atlantic Canadian waters at the time of the sinking, and stated in writing to his insurance broker his intention of sailing to the Caribbean.
He is now also suing the broker, Arthur J. Gallagher Canada Ltd., saying it had an obligation to warn him if he was about to violate his insurance policy and to pass on his plans to Lloyd's Underwriters.
Welsford said he remains optimistic he will get his money.
"I'm confident in the system, meaning the insurance system," he said. "I'm confident that when all the written evidence is on the table that it will get resolved."
The black and white of insurance
Halifax lawyer William Moreira, an expert in maritime law who is not involved in the case, said it's fairly common for ships to be restricted on where they can go, based on things like size, age and condition inspections.
Part of the concern is safety, he said, because the farther from shore a boat goes, the longer it could take for help to arrive if there's a problem.
"Marine insurance policies are typically very strictly applied, according to what's written in them in black and white," he said. "That this kind of a problem should end up in court is not unusual."
Court battles aside, Welsford said the sinking of the Sorca has been on his mind this week as the one-year anniversary approaches.
He said he's grateful to the Canadian military's Joint Rescue Co-ordination Centre in Halifax, which dispatched a Cormorant helicopter to pick up Welsford and his crew from the cargo ship that rescued them.
It remains a mystery, Welsford said, why the schooner began taking on water, as it had been recently "surveyed" and his investigations on board before it sank revealed nothing.
"We're grateful that it all worked out," he said. "The schooner's a material thing, and it can be replaced. We're just very lucky that nobody got hurt."
The Halifax lawyer for Lloyd's Underwriters, Matthew Williams, declined to comment on the case.
The lawyer representing Gallagher also refused comment. Gallagher has not yet filed a statement of defence, and none of the allegations has been proven in court.