Chroniques Juridiques

How to force the sharing of defence costs between insurers

In a second judgment on this issue[1],the Court of Appeal has settled it: an insured, whose defence is entirely assumed by a civil liability insurer, cannot force another insurer to assume his defence and share the cost between insurers. A Wellington Application is not the appropriate proceeding to share the defence cost between insurers. 

1. Context of the Lavoie judgment:

Former members of the “Famille Marie-Jeunesse” religious community alleged having been victims of physical, psychological and spiritual abuse within this community and at the hands of its founder Réal Lavoie (“Lavoie”). In their class action lawsuit, the presumed victims alleged facts which occurred from 1997 to 2014. Several successive insurance policies were potentially invoked. Lavoie, who was already defended by some of his insurers, filed a Wellington Application to force other insurers to assume his defence. Lavoie also demanded that the defence cost be split equally between the insurers for the past and for the future. Intact Insurance Company (“Intact”) refused.

2. The trial level judgment:

The Superior Court allowed Lavoie’s Wellington Application against Intact, even without his written Sworn Statement. The Court ruled that the obligation to defend was triggered, because according to the usual criterion, it was possible that the claim would be covered. The Court ruled that Lavoie had legal interest against Intact, as he was not prevented from seeking the contribution of another civil liability insurer.

3. The Court of Appeal:

Intact appealed the trial level judgment. The Court of Appeal quashed the judgment and dismissed the Wellington Application.

The Court of Appeal agreed with the trial judge that the Wellington Application could not be allowed only because the insured Lavoie’s Sworn Statement was not appended to it. According to the third paragraph of Article 101 C.C.P., the filing of such a sworn statement is only required when an application is made “in the course of a proceeding that is grounded on facts not supported by evidence filed in the record.” In this case, the insurance policies were filed in the Court Record.

The Court was of the opinion that the trial judge erred in reaching the conclusion that Lavoie had a legal interest to submit a Wellington Application. The Court underlined the fact that the legal interest to act [translation] “must be direct and personal and, unless there is an exception in law, cannot be founded on another party’s right of action.”[2] The purpose of this type of application is to allow an insured who is sued in civil liability to force performance in nature of the obligation of an insurer to defend its insured.[3] The purpose of this application is to prevent an insured, who is entitled to be defended, from being required to [translation] “immediately disburse the cost of the defence and then wait for a subsequent reimbursement from the insurer.[4]

The obligation to defend is however more complex when several insurers are involved. An insured who is defended by his insurer for a portion of the claim will be required to support part of the cost of defence for the remaining portion. In this specific case, he would still have a legal interest to submit a Wellington Application against the other insurers likely to cover this other portion of the cost.[5] In our case, the defence and Lavoie’s defence costs are entirely assumed by his insurers. Accordingly, Lavoie has no legal interest to force Intact to defend him in addition.

Lavoie’s insurers rather tried to force the sharing of the defence cost between the insurers by using a Wellington Application presented in Lavoie’s name. The Court of Appeal was clear: a Wellington Application is not the appropriate proceeding. Failing an agreement between the insurers, an application for a declaratory judgment or a distinct recourse would allow dividing the defence cost between the insurers.

4. What is to be learned:

  • A Wellington Application is an exceptional recourse which is personal to an insured;
  • A Wellington Application cannot be dismissed only because it is not supported by the insured’s written Sorn Statement;
  • An insured whose defence is entirely assumed by an insurer, does not have the legal interest to force another insurer to defend him and to share the defence cost with his insurers;
  • A Wellington Application is not the appropriate proceeding to share the defence cost between insurers.

[1] Compagnie d’assurance Travelers du Canada v. Gervais Dubé Inc., 2022 QCCA 1107, para. 74-77; Intact Compagnie d’assurance v. Lavoie, 2024 QCCA 427.

[2] Brunette v. Legault Joly Thiffault, s.e.n.c.r.l.,2018 SCC 55, para. 14

[3] Compagnie d’assurance Wellington v. M.E.C. technologie Inc., [1999] R.J.Q. 443, 1999 CanLII 13663 (C.A.) para. 447, 448

[4] Didier LLUELLES, Droit des assurances terrestres, 6th ed., Montreal, Thémis, 2017, No. 583, p. 399.

[5] Intact Compagnie d’assurance v. Lavoie, 2024 QCCA 427, para. 35