Canada: Tips For Early Identification Of Subrogation And Potentially Liable Parties


In order to determine whether or not subrogation is a viable option with respect to any loss, it is first necessary to consider the cause of the loss, followed closely by who is responsible for the loss.

In the instance of a fire caused entirely by the negligence of the Insured, there is no wrong-doer or tortfeasor to sue. For instance, where the Insured knocks over a candle that he or she lit or where the Insured leaves a pot of oil on a stove unattended causing a fire. The circumstances change if the Insured knocks over a candle that he or she did not light and did not know was lit or if the Insured leaves a pot of oil on a stove when all of the elements are in the off position. The question then becomes: How did the fire start and who is liable for the resulting fire damage?

Initial Investigation

When a loss occurs and there is an indication that it might have been caused by a product failure or the negligence of someone other than the Insured, it is best to obtain a report with respect to its cause as quickly as possible. Having an expert perform an examination shortly following a loss will make it more likely that the expert will have access to evidence necessary for the purposes of analyzing the cause of the loss. Moreover, the expert's report will be instructive in determining the identities of parties who should be included in the claim.

This is especially critical in losses such as fires, where the entirety of the evidence as to the cause of the loss can be easily disturbed, and must necessarily be destroyed in order to repair the damage.

In many cases, destructive testing will be required as part of the investigation, and that should only be done after all known parties are invited to participate in the testing. If this cannot be arranged immediately, you will have to rely on the initial opinion of the expert to guide your decision making. The importance of identifying all potentially liable parties when contemplating subrogation cannot be overstated. In Ontario, the basic limitation period in which to start a claim is two years from the day on which the claim was discovered.1 & 2

It is therefore imperative that all potentially liable parties are identified as quickly as possible following a loss and well in advance of two years from the date on which the loss occurred. Early identification of potentially liable parties also increases the prospect of early settlement discussions in a matter and potential resolution, as well as assisting in identifying evidence that should be preserved in order to prove the claim.


In cases of fire that start following the work of a contractor or subcontractor, where it appears that the fire began as a result of that work or during that work, it is important to identify the party with whom the Insured contracted for the work and the party whose negligence caused the fire. With respect to the work of the party with whom the Insured contracted, the claim against the contractor may be pleaded in contract, in that the contract was breached, and in negligence. With respect to the work of any party who caused the fire, a claim for negligence may be made.

It is essential that the party with whom the Insured contracted is included as a Defendant in the claim. That party arguably had a duty to carry out the work competently and lawfully and to contract with competent subcontractors or employ competent agents, servants and/or employees in execution of the work.

Although pursuing the contractor alone is generally sufficient, it is often advisable to include the subcontractor. First of all, the Defendant contractor has no obligation to start a third party action against the subcontractor. Where the Defendant decides to do so, the process can be a lengthy one and will usually delay progress in the main action.

If the Defendant contractor cannot be found or does not have insurance, it may be impossible, in the former instance, or difficult, in the latter, to recover any amount for damages from the contractor.

Finally, by including the subcontractor in the claim, it is more likely that the parties will be able to obtain all relevant documents pertaining to the action. It also provides the Insured with an opportunity to examine the subcontractor for discovery which may assist in proving the claim against one or both of the tortfeasors.

Where there are several subcontractors involved in a project during which a fire is caused, it is generally prudent to include all of them in the claim for the reasons above.


In cases of flooding or water damage, there are several parties who may be liable for the damages caused, depending on the source of the water escape. For example, where a flexible connector is involved, the parties who may bear some responsibility include the manufacturer of the connector, the plumbing contractor who installed it, the plumbing contractor who repaired or serviced it subsequent to its installation and the home builder who sold the property to the insured in the first place.

In all product failures, a claim may be asserted directly as against the person who sold the defective item to the Insured3 but it remains prudent to investigate the entire supply chain, and name all parties through whom the product passed. The manufacturer of the product has an obvious level of exposure to the claim, but vendors in the supply chain may also have exposure if they did or should have conducted tests of the defective product, or if they were in a position to have warned users of the product.

Failure to Prevent/Mitigate

The avenue to subrogation is obvious where a party may have been directly responsible for causing the loss, but there remain other avenues of subrogation that can be pursued. In the case of defective workmanship, consideration should be given to any parties who had an obligation to inspect such workmanship. This can include architects or engineers, construction managers, municipal inspectors, administrative authorities, etc. Although these parties often had no part in directly causing the loss, they may have been in a position to discover the defective workmanship which ultimately caused the failure, and can be held liable for this.

Likewise, after a loss has occurred, a number of parties are responsible for mitigating the loss, such as emergency and security personnel, and those responsible for automatic mitigation systems such as sprinklers. In the event that the immediate response to the loss is not as effective as expected, there may be available avenues to pursue these parties for failure to properly respond to the loss. While actions as against emergency services such as fire departments can be difficult to succeed in, actions as against security companies, and parties responsible for the design and construction of fire suppression systems can be very lucrative.

Unfortunately, this class of subrogation target will often not be held liable for the full extent of the loss, as they ultimately did not cause it. However, when more direct targets are not available, or have insufficient insurance coverage, pursuing these targets can greatly increase the recovery potential.


The initial investigation following a loss is crucial. Obtaining a statement from the Insured and anyone else who is aware of the circumstances giving rise to the loss at the outset will ensure that the evidence is preserved over time as memories fade. Physical evidence should also be identified and preserved immediately. Consideration should be given to whether or not an expert's report is necessary in order to determine what caused the loss, the identities of potentially liable parties and, inevitably, assisting in proving the claim if the matter proceeds to litigation.


1. Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

2. Generally speaking, the date of loss should be treated as the date on which the claim was discovered for the purposes of setting a limitation period. However, each case must be considered on its facts.

3. Sale of Goods Act, R.S.O. 1990, c. S-1.

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

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.