Subrogation Against A Member

of the Insured’s Household

Philippe Lelarge

 

A recent  (1999) Quebec Court of Appeal judgment in the matter of Dominion of Canada Insurance Company v. Manon Chabot has greatly restricted the subrogation rights of an Insurer against a member of the family of its Insured.

 

The Quebec Civil Code contains a provision (which was rewritten but maintained its substantive effect in Article 2474 of the New Quebec Civil Code) stating that:

Art. 2576. To the extent of the indemnities he has paid, the insurer is subrogated in the rights of the insured

against third persons who are responsible for the loss except in the case of persons who form part household of the insured.

Up to this recent judgment, this article has been interpreted to ban subrogation only against:

1. Servants or employees of theInsured working in his house;

or

2.Members of the Insured’s family living under his roof,for damages caused at his

house or elsewhere.

 

In this particular case, the Insured’s Property Insurer had indemnified its Insured for damages to a house leased to his daughter, to which she accidentally set fire while cooking.

Following the institution of  subrogation proceedings, the daughter’s Tenant’s Liability

Insurer presented a Motion for summary dismissal based on the above article. The Motion was

thrown out on the grounds that the daughter was not living with her father and the damages had

occurred outside the father’s home. As such, she was therefore not protected by article 2576.

The Judge held that if the Quebec Civil Code had intended to protect every member of the family of the Insured, it would have done so expressly, as does the French Civil Code.

The trial judge disagreed with his colleague and dismissed the action based on article 2576.

 

The matter was brought to Appeal. In a recent decision, the Court of Appeal held that the

expression “members of the Insured’s household” should receive a liberal interpretation

and that this exception was intended to prevent an Insurer from suing a person which its

Insured would not have sued personally. However the Court did say that this judgment should not be

interpreted to mean that no subrogation action could lie every time there is a family link, and that every case should be considered on its own.

 

In the present instance, the fact that the daughter was cooking for her father at the time she set fire to

the house, was considered a relevant factor. Unfortunately, it does not appear that the situation is much clearer than it was before the judgment.