On June 23, 2011, the Quebec Court of Appeal1 ruled
on the scope of Article 2397 of the Civil Code of
Québec (CCQ), which states that "the contract of
reinsurance has effect only between the insurer and the
The Boiler Inspection and Insurance Company of Canada (Boiler)
was claiming $8,508,613 from the defendants – i.e. the
amount it paid to American Home as reimbursement for the indemnity
that American Home had paid to its insured, Domtar. In support of
its action, Boiler pleaded that it was acting under the terms of
its reinsurance contract, and that, further to the payment that it
had made, it was legally and contractually subrogated to the rights
of American Home, which was itself subrogated to the rights of the
The Court confirmed that Boiler was the reinsurer, and that no
legal relationship existed between Boiler and Domtar. It added that
there cannot be any subrogation by operation of law between a
reinsurer and the insured. The legal subrogation specified in
Article 2474 CCQ only operates in favour of the insurer, who then
becomes subrogated to the rights of its insured against the party
responsible for the loss. Article 2474 CCQ does not deal with
subrogation in favour of a reinsurer.
Boiler also argued that it benefited from conventional
subrogation. The court dismissed this argument because no deed of
assignment had been provided to the defendants in accordance with
Article 1641 CCQ. The deed of assignment would have had to have
been sent to the defendants for it to be opposable to them.
Boiler's argument, from reading the judgment, was that it
was agreed with Domtar and American Home that the insurance
coverage, in this case for equipment breakdown, would be insured
specifically by Boiler. Boiler contended that American Home was
acting as nominee. This is probably why Boiler instituted the
action as if it were Domtar's insurer. The court concluded,
instead, that the insurance and reinsurance contracts were clear
and contained no reference to a nominee agreement or a stipulation
for another. This argument was of no help to Boiler, whose action
was dismissed due to the absence of a legal relationship.
This decision is significant because it is one of the few
rulings by the Quebec Court of Appeal that deals with the scope of
a reinsurance contract.
1 2011 QCCA 1194.
Norton Rose OR LLP
Norton Rose OR LLP is a member of Norton Rose Group, a leading
international legal practice offering a full business law service
to many of the world's pre-eminent financial institutions and
corporations from offices in Europe, Asia Pacific, Canada, Africa
and the Middle East.
The Group's lawyers share industry knowledge and sector
expertise across borders to support clients anywhere in the world.
The Group is strong in financial institutions; energy;
infrastructure, mining and commodities; transport; technology and
innovation; and pharmaceuticals and life sciences.
Norton Rose Group has more than 2600 lawyers operating from 39
offices in Abu Dhabi, Amsterdam, Athens, Bahrain, Bangkok, Beijing,
Brisbane, Brussels, Calgary, Canberra, Cape Town, Dubai, Durban,
Frankfurt, Hamburg, Hong Kong, Johannesburg, London, Melbourne,
Milan, Montréal, Moscow, Munich, Ottawa, Paris, Perth,
Piraeus, Prague, Québec, Rome, Shanghai, Singapore, Sydney,
Tokyo, Toronto and Warsaw; and from associate offices in Dar es
Salaam, Ho Chi Minh City and Jakarta.
Norton Rose Group comprises Norton Rose LLP, Norton Rose
Australia, Norton Rose OR LLP, Norton Rose South Africa
(incorporated as Deneys Reitz Inc), and their respective
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under B.C.'s former and current Limitation Act, the limitation period for a Plaintiff's claim can be extended on the basis of a Defendant having acknowledged in writing some liability for the cause of action.
Automobile drivers, like fine wine, tend to get better with age. Older drivers can draw on a wealth of experience from their years on the road to assist them when faced by a variety of dangerous conditions.
The insurance industry will be interested in Ledcor Construction Ltd v. Northbridge Indemnity Insurance Co because of principles the Supreme Court of Canada applied to the "faulty workmanship" exclusion in a Builders' Risk policy.
For the first time in BC, a Court has decided that an insured is entitled to special costs, rather than the lower tariff costs, solely because they were successful in a coverage action against their insurer.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).