An Ontario court has revived a denied coverage claim against Economical Mutual Insurance Company that years of litigation delay had buried.
The decision in Canafric Inc. v. Economical Mutual Insurance Company, 2026 ONSC 3492, released June 15, 2026, sets aside a registrar's order that had dismissed the underlying coverage action for delay.
Canafric Inc., operating as Mortimer's Fine Food, runs a food processing facility in Burlington, Ontario. Its claim traces to an equipment failure in October 2014 and Economical's denial of coverage under the policy it issued. Two other defendants are named: Utter-Morris Insurance Brokers Limited, an insurance brokerage, and Greg Meyer, an insurance adjuster employed by Economical.
The action was commenced in October 2015, then stalled repeatedly. The defendants brought three motions to move the matter forward and secure compliance with court orders. Associate Justice B. McAfee observed that it should not have been necessary for them to do so. The plaintiff's former lawyer was administratively suspended by the Law Society of Ontario around September 2023, and Canafric retained new counsel in mid-September 2024. On September 18, 2024, the registrar dismissed the action for delay.
To decide whether to set that dismissal aside, the court applied a contextual approach drawn from the Reid factors and Scaini v. Prochnicki - weighing the explanation for the delay, the plaintiff's intent to prosecute, how promptly it moved to set the order aside, and any prejudice to the defendants. The judge found some periods of delay unexplained, but concluded the action had progressed: affidavits of documents had been exchanged, examinations for discovery completed, and an expert retained.
The part claims professionals will want to note is the prejudice analysis. Meyer deposed that his memory had faded and that he could not recall attending his examination for discovery. The court found his discovery transcript and adjuster notes remained available to him. Neil Howard, an insurance broker with Utter-Morris, deposed that he had no independent recollection of the claim - but the court pointed to communications from him dating to 2014 and documents listed in the affidavits. On that record, the judge was "not satisfied of actual prejudice to the defendants."
The dismissal order was set aside. Mandatory mediation must take place by December 18, 2026, and the action must be set down for trial by January 15, 2027. The court ordered no costs, noting that Canafric was seeking an indulgence.
The coverage dispute itself remains unresolved. The denial of Canafric's claim has not been tested; the ruling only clears the procedural path back to a hearing on the merits, where the coverage denial can now be decided.
