Paddlewheel Riverboats Ltd. is suing the purchaser of the Paddlewheel Princess and an insurance broker, after the iconic — and uninsured — Manitoba riverboat was destroyed by fire last May.
Paddlewheel says in a statement of claim it sold the riverboat to Red One Investments Ltd. in June 2016 for $195,000. There were to be equal payments of $36,250 made over four years, and $50,000 to be paid on closing July 1, 2019. The arrangement was outlined in a promissory note and a mortgage indenture, according to court documents.
The statement of claim alleges the indenture provided Red One would insure the vessel against loss or fire, and pay all premiums and money necessary for that purpose.
Red One defaulted on payment of the insurance premiums, the lawsuit documents say. Paddlewheel Riverboats says it wasn’t notified of the lapse, and the insurance policy for the Paddlewheel Princess was cancelled.
In the insurance policy taken out with Arthur J. Gallagher (Canada) Group by Red One and its president, Philip Rowan, Red One was named as the insured, but no loss payee was named. Paddlewheel says it demanded Red One add it as a loss payee under the policy.
In a statement of claim filed March 7 in Court of Queen’s Bench, Paddlewheel says it wrote to the insurance broker in January 2017 about its security interest in the vessel, and instructed it to endorse Paddlewheel Riverboats Ltd. as a loss payee.
When Arthur J. Gallagher Group didn’t respond, Paddlewheel says it sent a second letter on April 24, 2017. Again, the company did not respond, Paddlewheel says in its statement of claim.
Sometime around midnight May 9, 2017, the riverboat — which once carried passengers on the local waterways, but had been sitting in a slough in Selkirk since 2013 — was destroyed by fire.
Built in 1966, the 90-foot-long Princess was a sister vessel to the Paddlewheel Queen, which was on the Red River a year earlier.
Roughly a week after the blaze, the RCMP said four teenage boys — three 17-year-olds from Lockport, Selkirk and the RM of St. Clements, and a 15-year-old from Selkirk — faced arson-related charges connected to the incident.
Paddlewheel says in its statement of claim it was unable to contact Red One or its company president regarding the loss. When it contacted the insurance broker, Paddlewheel says it discovered the policy had been cancelled prior to the fire occurred because Red One had failed to pay the premiums.
With no insurance coverage, Paddlewheel says it is left with just a burned-out hulk of a vessel.
Paddlewheel says the insurance broker knew it had a security interest in the vessel, and knew or ought to have known that without adequate insurance, Paddlewheel was at risk. The statement of claim says Arthur J. Gallagher Group owed a duty of care to respond to Paddlewheel’s letters, and take the necessary steps to add it as a loss payee to the policy. If it was unwilling or unable to do so, it should have advised Paddlewheel of any such decision, the lawsuit says.
The court documents also say Red One never made any of its payments on the vessel or its insurance, and Paddlewheel is demanding the investment firm and its president pay the balance owing. Paddlewheel is also seeking damages, estimated at $150,000.
No statement of defence has been filed, and the allegations have not been proven in court.
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