In a subrogation action where multiple defendants have caused the plaintiffs’ loss, courts will generally allocate a percentage of liability to each defendant. Even so, a plaintiff can collect 100 percent of its judgment from any one of the liable defendants. If one defendant is uninsured and without assets, the other responsible defendants will likely have to pay more than their allocated share of causal fault. Any defendant who has contributed to the loss is left to bear other defendants’ incapacity to pay for the judgment. This is the principle of solidary liability in civil law, which is equivalent to joint and several liability in common law.
As the Quebec Court of Appeal has just confirmed in Factory Mutual Insurance Company c. Richelieu Metal Quebec Inc., 2013 QCCA 446, the defendants’ liability insurers are also on the hook for the full amount of the judgment, even if their insured is only found liable for 1 percent.
In 1999, IKEA retained the services of an engineering firm to prepare drawings for the construction of an expansion at its distribution centre. IKEA also retained the services of a general contractor to carry out the construction work. The construction of the expansion was completed in 2000. In March 2001, part of the roof of the expansion collapsed following a heavy snowfall. IKEA’s insurer, Factory Mutual, covered most of the loss. Both Factory Mutual and IKEA then brought a claim against the engineers and the general contractor. The general contractor filed for bankruptcy; however, its insurer accepted to cover the loss. The insurer defended the general contractor throughout the proceedings.
The Superior Court held all defendants solidary liable towards Factory Mutual and IKEA. As between the defendants, the general contractor was found liable for 22 percent of the loss. At the time of the trial, damages amounted to more than $7 million with interest. The engineers could only pay $3.5 million to the plaintiffs, who then turned to their insurer for payment of its policy limits of $4 million. The insurer argued that its insured was liable for only 22 percent of the loss.
The Quebec Court of Appeal disagreed with these positions. As all of the defendants were held solidary liable, each could be compelled to pay 100 percent of the damages to the plaintiffs. In Quebec civil law, the victim of a loss can sue either the insured or its liability insurer. Liability of the insured and the insurer is solidary between the two of them, which means that the insurer has the same obligations as the insured. For this reason, the insurer could be compelled to pay for 100 percent of the loss, and not only for 22 percent.
This decision of the Quebec Court of Appeal is of significant importance. This decision clearly establishes that if there is coverage, the liability insurer has the same obligations as the insured, which among other things includes the obligation to pay a solidary debt.