9050-3400 Québec Inc. v. Riverin, Girard & Associés Inc., [2004] 1 S.C.R. 301, 2004 SCC 8

9050-3400 Québec Inc. Appellant

v.

Riverin, Girard & Associés Inc. and Lloyd’s of London Respondents

Indexed as: 9050-3400 Québec Inc. v. Riverin, Girard & Associés Inc.

Neutral citation: 2004 SCC 8.

File No.: 29515.

2004: February 17.

Present: McLachlin C.J. and Iacobucci, Bastarache, Arbour, LeBel, Deschamps and Fish JJ.

on appeal from the court of appeal for quebec

Insurance — Damage insurance — Insurance policy purchased by hypothecary debtor — Subrogation clause providing that insurer was subrogated to rights of hypothecary creditor against debtor or owner against whom it claimed to be entitled to raise ground of non-warranty — Whether art. 2474 of Civil Code of Québec precludes conventional subrogation of insurer to rights of hypothecary creditor against its debtor.

Cases Cited

Applied: Caisse populaire des Deux Rives v. Société mutuelle d’assurance contre l’incendie de la Vallée du Richelieu, 1990 CanLII 91 (SCC), [1990] 2 S.C.R. 995.

Statutes and Regulations Cited

Civil Code of Québec, S.Q. 1991, c. 64, art. 2474.

APPEAL from a judgment of the Quebec Court of Appeal, 2002 CanLII 41251 (QC CA), [2002] R.J.Q. 3030, [2002] Q.J. No. 4748 (QL), setting aside a judgment of the Superior Court. Appeal dismissed.

Damien Larouche, for the appellant.

Frédéric Boily and Claude Voyer, for the respondents.

English version of the judgment of the Court delivered orally by

[1] LeBel J. — Despite the arguments put forward by counsel for the appellant, the appeal cannot succeed. In the circumstances of this case, as was held by the Quebec Court of Appeal, art. 2474 of the Civil Code of Québec, S.Q. 1991, c. 64, does not preclude the conventional subrogation of the insurer to the rights of the hypothecary creditor against its debtor, in light particularly of the principles laid down by this Court in Caisse populaire des Deux Rives v. Société mutuelle d’assurance contre l’incendie de la Vallée du Richelieu, 1990 CanLII 91 (SCC), [1990] 2 S.C.R. 995. The subrogation was obtained pursuant to a hypothecary clause that was a separate contract. The debtor could thus not be regarded as the insured within the meaning of this separate contract or, consequently, within the meaning of art. 2474 of the Civil Code of Québec. Furthermore, the appellant’s motion to cancel the hypothec as presented did not permit an adjudication of the issues relating to the insured’s claim that the insurance indemnity was payable, to the existence of an intentional fault on the part of the insured or to the right of the respondents to be reimbursed for the amounts paid to the hypothecary creditor. These issues will have to be dealt with during the trial to be held before the Quebec Superior Court. If the insurers fail in their attempt to establish the intentional fault of the appellant, then acquittance and release will have to be given with respect to all registrations entered in the land registers pertaining to the subrogation and the hypothecary debt it covered.

[2] For these reasons, the appeal is dismissed with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Larouche & Girard, Chibougamau.

Solicitors for the respondents: Bouchard, Voyer, Boily, Dolbeau-Mistassini.