Absence of Subrogation in Matters of Divided Co-Ownership Insurance: Potential Impacts on a Third Party

This paper was written under a partnership with the Montreal Association of Insurance Women.

In 2018, the legislature incorporated new provisions into the Civil Code of Quebec to regulate insurance in matters of divided co-ownerships. One of these is article 1075.1 CCQ, which now prevents the insurer from being subrogated into the rights of the following persons against such person:[1]

1. The syndicate;
2. A co-owner;
3. A person who is a member of a co-owner’s household; or
4. A person in respect of whom the syndicate is required to enter into an insurance contract to cover the person’s liability.

Few judgments have been rendered regarding this provision since its coming into force. However, the Court of Quebec recently applied the rule in Desjardins assurances générales inc. c. Développements Bruxelles inc., 2021 QCCQ 13246, a judgment rendered last December.

Water damage occurred in a condo building. The insurers of the syndicate and of some co-owners indemnified their insureds and in turn sued the contractor who built the building, claiming that it is responsible for the blockage of a plumbing connection that occurred less than five years after the construction. The contractor alleges that a co-owner had caused the blockage by using a prohibited food waste grinder and asks for the forced intervention of that co-owner. She objects, raising the prohibition of subrogation provided by article 1075.1 CCQ.

The Court observes that the intention behind this provision is to avoid legal proceedings involving persons living in the same building and sharing common interests. This constitutes an exception to the general rule which provides that an insurer is legally subrogated against the author of the damage, up to the indemnity paid.

This exception is limited to the persons mentioned in article 1075.1 CCQ. However, here, the contractor wants to compel the co-owner to respond as a defendant to the main claim, not to a subrogated claim. In doing so, the contractor attempts to do indirectly what the plaintiffs cannot do directly, as insurers. The legislature chose to break the legal relation between the plaintiffs and the co-owner, notwithstanding her potential liability. Since a forced intervention is equivalent to adding a new defendant to the main claim, it is barred by article 1075.1 CCQ. The contractor has no more rights than the main plaintiffs in this context.

Considering that this provision is still recent, it is likely that other cases will be brought before the courts in the coming years. Even though third parties are not directly concerned under the rule, this decision reminds us that they cannot ignore it and that they must take it into consideration in the management of their legal cases.

[1] Except in the case of bodily or moral injury or if the injury is due to an intentional or gross fault.