2017 NBCA 8, 2017 NBCA 8

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK MARJORIE GERALDINE (TRAINOR) STAIRS APPELLANT 117-15-CA MARJORIE GERALDINE (TRAINOR) STAIRS APPELANTE - and - - et - CFM CORPORATION, a body corporate, 2089451 ONTARIO LTD., a body corporate, SUNPOKE ENERGY SYSTEMS LTD., a body corporate, and ENBRIDGE GAS NEW BRUNSWICK INC., a body corporate RESPONDENTS CFM CORPORATION, personne morale, 2089451 ONTARIO LTD., personne morale, SUNPOKE ENERGY SYSTEMS LTD., personne morale, et ENBRIDGE GAZ NOUVEAU-BRUNSWICK INC., personne morale INTIMÉES Stairs v. CFM Corporation et al., 2017 NBCA 8 Stairs c.

CFM Corporation et autres, 2017 NBCA 8 CORAM: The Honourable Justice Richard The Honourable Justice Baird The Honourable Justice French CORAM : l’honorable juge Richard l’honorable juge Baird l’honorable juge French Appeal from a decision of the Court of Queen's Bench: December 4, 2015 Appel d’une décision de la Cour du Banc de la Reine : le 4 décembre 2015 History of case: Decision under appeal: Unreported Preliminary or incidental proceedings: None Historique de la cause : Décision frappée d’appel : inédite Procédures préliminaires ou accessoires : Aucune

Appeal heard: April 21, 2016 Judgment rendered: April 21, 2016 Reasons delivered: February 23, 2017 Reasons for judgment by: The Honourable Justice Richard Concurred in by: The Honourable Justice Baird The Honourable Justice French Appel entendu : le 21 avril 2016 Jugement rendu : le 21 avril 2016 Motifs déposés : le 23 février 2017 Motifs de jugement : l’honorable juge Richard Souscrivent aux motifs : l’honorable juge Baird l’honorable juge French Counsel at hearing: For the appellant: Raj Datt For the respondents, CFM Corporation and 2089451 Ontario Ltd.: No one appeared For the respondent Sunpoke Energy Systems Ltd.: Bruce D.

Grant For the respondent Enbridge Gas New Brunswick Inc.: David Duncan Young Avocats à l’audience : Pour l’appelante : Raj Datt Pour les intimées, CFM Corporation et 2089451 Ontario Ltd. : personne n’a comparu Pour l’intimée Sunpoke Energy Systems Ltd. : Bruce D. Grant Pour l’intimée Enbridge Gaz Nouveau-Brunswick Inc : David Duncan Young THE COURT The appeal is allowed with costs. The

summary judgment issued in the Court of Queen’s Bench is set aside. Enbridge is ordered to pay Marjorie Geraldine (Trainor) Stairs costs of $2,500 for the proceedings in the court of Queen’s Bench and $3,000 on appeal. LA COUR L’appel est accueilli avec dépens. Le jugement

sommaire rendu par la Cour du Banc de la Reine est annulé. Enbridge est condamnée à verser à Marjorie Geraldine (Trainor) Stairs des dépens de 2 500 $ au

titre de l’instance devant la Cour du Banc de la Reine et de 3 000 $ au

titre de l’appel.

The judgment of the Court was delivered by RICHARD J.A. I. Introduction [ 1 ] Subrogation is a common law doctrine which allows an insurer “to pursue, in the name of the insured, a claim against a third party in respect of a loss for which the insured has been indemnified under the policy”: Robichaud et al. v. Pharmacie Acadienne de Beresford Ltée et al. , 2008 NBCA 12 , 328 N.B.R. (2d) 205 , per Drapeau C.J.N.B. (para. 25).

Because subrogation is derivative in nature, such that the real party in interest is the insurer, “any subrogation rights are predicated upon the insured, the nominal plaintiff, having a legally enforceable right against the defendant” (para. 25). In other words, “[b]ecause the subrogated insurer stands in the shoes of the insured, its entitlement to recovery can be no greater than that of the insured” (para. 25).

Because of this, “a valid pre-loss release of liability by the insured in favour of the defendant will protect the latter against any related subrogation action” (para. 25 with emphasis added). [ 2 ] This case, however, involves a post-loss release of liability.

Specifically, the question is whether the settlement of a claim, and the consequential release of liability, can always be set up as a valid defence against a subrogation action arising out of the subject matter of the settled claim. [ 3 ] In the case of subrogation rights arising out of a contract of automobile insurance, the law is set out in s. 266(6) of the Insurance Act , R.S.N.B. 1973, c.

I-12: 266(6) A settlement or release given before or after an action is brought does not bar the right of the insured or the insurer, as the case may be, unless they have concurred therein. 266(6) Un règlement ou une quittance antérieurs ou postérieurs à l’institution de l’action ne font pas obstacle aux droits de l’assuré ou de l’assureur, selon le cas, à moins qu’ils n’y aient concouru. [ 4 ] However, in non-automobile insurance cases, it is the common law that governs, and, at common law, concurrence of the insurer is not a prerequisite to a valid settlement or release, which can be subsequently raised as a defence against the insurer’s subrogated rights. [ 5 ] The principal question of law in this appeal is whether the common law recognizes an exception in cases where the insurer paid its insured before any settlement or release with the tortfeasor and where the party liable had, prior to settling with the insured, notice of the insurer’s consequential right of subrogation. [ 6 ] The present case involves subrogation rights that arose when an insurer made a significant payment to its insured under a homeowner’s insurance policy.

Without the knowledge and consent of the insurer, the insured settled with an alleged tortfeasor and took a small amount of money, ostensibly for losses that were not otherwise covered by insurance, in exchange for: (1) a broadly worded general release; and (2) the discontinuance of an action by consent order which provided that the discontinuance would constitute a complete bar to subsequent proceedings regarding the subject matter of the claim.

At the time the release and the discontinuance were obtained, the alleged tortfeasor was aware the insurer had made a significant payment to its insured and that the insurer intended to exercise its right of subrogation. When the insurer brought an action in the name of its insured pursuant to its right of subrogation, the alleged tortfeasor raised the release and the discontinuance order as a defence. That party then applied for an order striking out the pleadings or, alternatively, for

summary judgment. A judge of the Court of Queen’s Bench gave effect to the defence, applied the principle of res judicata , issued

summary judgment and dismissed the claim. [ 7 ] At the close of the hearing of Ms. Stairs’ appeal against that decision, we overturned the motion judge’s ruling. These are the reasons that compelled me to join my colleagues in that outcome.

II. Factual background [ 8 ] On March 24, 2008, an explosion occurred at the home of Meredith Hashey, which caused damage to the neighbouring home of Marjorie Geraldine (Trainor) Stairs and her husband and injured Ms. Stairs. The Stairs’ home was covered by a homeowner’s policy issued by Intact Insurance (“Intact”) which eventually paid approximately $320,000 to cover the property damage. [ 9 ] In the aftermath of the explosion, the interested parties coordinated their efforts to investigate the origin and the cause of the explosion. Enbridge Gas New Brunswick Inc. (“Enbridge”) was one of those parties.

Intact joined the discussions on December 10, 2009, and advised it would be pursuing a subrogated claim for the amount paid to Ms. Stairs. [ 10 ] Email exchanges between Intact and counsel for Enbridge, on February 24, 2010, reveal that Enbridge was informed Intact: (1) had concluded its settlement with Ms.

Stairs; (2) had forwarded to a subrogation specialist the memorandum of understanding that was being considered in relation to the investigation of the explosion; (3) would be appointing legal counsel to represent its subrogated interests; (4) agreed to the storage of all the evidence at one secure and safe location; (5) was considering retaining their own forensic expert; and (6) would correspond further once their subrogation review was complete. [ 11 ] On July 16, 2010, Ms.

Stairs and her husband sued Enbridge and others, seeking “non-pecuniary general damages for nuisance, upset, mental and emotional distress, aggravation, inconvenience and personal injury” and for “special damages in amounts to be determined, for damage to the Plaintiffs’ residence and contents of the residence” (“the 2010 action”). Intact was advised an action was being pursued, but understood it to relate solely to the Stairs’ personal losses. Ms.

Stairs was specifically instructed she did not have authority to settle her property insurance claim on the basis Intact would, itself, be pursuing that claim. [ 12 ] Enbridge filed a Notice of Intent to Defend on August 12, 2010; however, almost immediately thereafter, it settled the claim with Ms. Stairs and her husband.

The settlement was for $7,500 in exchange for a release and the discontinuance of their action. [ 13 ] Intact was never informed of the settlement, nor did they consent to it, even though all parties were aware Intact had paid $320,000 to cover the property damage caused to the Stairs’ home and intended to seek recovery of its outlay. All interested parties were aware of the identity of Intact’s claims examiner. In fact, once the amount of $7,500 was agreed upon, counsel for Enbridge insisted Mr. and Ms.

Stairs keep confidential the terms of the settlement “pending execution of the settlement documents”, which were prepared by counsel for Enbridge. [ 14 ] In settlement of their claim, Mr. and Ms. Stairs signed a broadly worded release on August 31, 2010.

Relevant portions read as follows: KNOW ALL MEN BY THESE PRESENTS that in consideration of the sum of one dollar of lawful money of Canada and in consideration of a waiver of costs and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, AMBER STAIRS and GERALDINE STAIRS (the “Releasors”) do hereby remise, release, acquit and forever discharge ENBRIDGE GAS NEW BRUNSWICK INC., including its affiliated, predecessor and parent companies, SUNPOKE ENERGY SYSTEMS LTD. and each of their successors and assigns, directors, officers, employees and agents, WAWANESA MUTUAL INSURANCE COMPANY and each of their successors and assigns, directors, officers, employees and agents, AXA INSURANCE (CANADA) and each of their successors and assigns, directors, officers, employees and agents, and MEREDITH HASHEY including her executors, administrators, trustees and personal representatives, and each of them (the “Releasees”) of and from any and all claims, actions, causes of action, demands, damages, interest, costs, expenses and compensation of whatsoever nature and kind, whatsoever and howsoever arising, whether known or unknown (collectively the “Claims”) and which the Releasors now have or ever had and including but not limited to any Claims which the Releasors now have or ever had or at any time hereafter can, shall or may have in any way resulting or arising from or in any way connected with the facts and circumstances giving rise to an action commenced by the Releasors against the Releasees in Court File No.: F/C/205/10 , in the court of Queen’s Bench of New Brunswick, Trial Division, Judicial District of Fredericton; […]

IT IS FURTHER UNDERSTOOD AND AGREED, the Releasor ( sic ) covenants and agrees to indemnify and save harmless the Releasees from all manner of actions, causes of action, suits, proceedings, third party claims, insurance claims, duties, obligations, covenants, contracts whether implied or expressed, claims, demands, damages, loss of ( sic ) injury of any kind or nature, sums and sums of money ( sic ), grievances, executions ( sic ) and liabilities whatsoever both in law and in equity which may be brought against the Releasees by any person, firm, corporation, third party or private insurer or other entity by reason of or arising out of or in consequence of any claims for which the Releasor ( sic ) has released the Releasees under this Release. […] [ 15 ] Upon settlement, the 2010 action was discontinued.

The discontinuance was given effect by a consent order dated September 27, 2010, which reads as follows: UPON the consents of E.J. Mockler, Q.C., solicitors for the Plaintiffs, and of David Duncan Young, Bruce D. Grant and Charles J. Foster, solicitors for the Defendants, and pursuant to Rules 25.01 and 25.06 of the Rules of Court ; IT IS HEREBY ORDERED THAT: 1. The claims by the Plaintiffs as against the Defendants are discontinued on a with prejudice and without costs basis; 2.

Pursuant to Rule 25.06 of the Rules of Court , the discontinuance of this action will operate as a complete bar to any subsequent proceedings which may be brought by the Plaintiffs against the Defendants with respect to the subject matter of and the allegations of fact made in their Statement of Claim. [ 16 ] Intact did not receive any of the proceeds of the $7,500 settlement. [ 17 ] In the aftermath of the settlement, Intact remained a party to the email exchanges regarding the proposed memorandum of understanding. [ 18 ] On April 24, 2012, Ms. Stairs and Ms.

Hashey commenced an action against Enbridge and others seeking damages arising out of the March 24, 2008, explosion (“the 2012 action”). The claim advanced in the name of Ms. Stairs in that action was, in fact, a subrogated claim instituted by Intact. [ 19 ] Enbridge defended the 2012 action. In addition to denying liability, Enbridge pleaded that, with respect to the Stairs’ portion of the claim, the action was barred by the Consent Order for Discontinuance dated September 27, 2010, and that, Enbridge was released and discharged from all claims by Ms.

Stairs under the terms of the Release dated August 31, 2010. [ 20 ] By Notice of Motion, Enbridge sought an order striking out Ms. Stairs’ portion of the 2012 action on the grounds it was duplicitous and an abuse of process, or, alternatively, sought

summary judgment on the ground there was no merit to the action because it was res judicata and was barred by the terms of the order for discontinuance. None of the other defendants involved in the action took a position regarding the motion. [ 21 ] On December 4, 2015, a judge of the Court of Queen’s Bench granted

summary judgment and dismissed Ms. Stairs’ claim against Enbridge, and, in the process, awarded Enbridge all-inclusive costs of $2,500. While the judge

opined the second action was an abuse of process, she did not strike out the pleading pursuant to Rule 27.09(

c) of the Rules of Court,opting rather to dismiss the claim pursuant to Rule 22.04. [22] In reaching her decision, the motion judge accepted Enbridge’s submission the claim was barredby issue estoppel. The judge applied the preconditions adopted in Angle v. M.N.R., (SCC), [1975] 2 S.C.R. 248, [1974]S.C.J.

No. 95 (QL): (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel israised or their privies. [p. 254] [23] Since both the 2010 and the 2012 actions claimed “for negligence, nuisance and for damagessustained to the Stairs residence because of the fire of 24 March 2008”, the motion judge found this was sufficient “to confirm the firstcondition has been met”. Applying McNichol v.

Co-operators General Insurance Company, 2006 NBCA 54, 298 N.B.R. (2d) 44, thejudge held, as the 2010 action was discontinued by an order of the Court, the second condition was met. As for the third condition, thejudge noted each of the two actions featured Ms. Stairs as a plaintiff and Enbridge as a defendant. Upon concluding Ms. Stairs wasestopped from pursuing the same issue against Enbridge in the second action, the motion judge summarily dismissed Ms. Stairs’ claimagainst that defendant. III. Issues on appeal [24] Ms. Stairs appeals the motion judge’s decision.

In her written submission, she distilled into threethe several grounds of appeal listed in her Notice of Appeal. Those three grounds are described as follows: 1. The [motion] judge erred in law by holding that a release entered into by an insured bars an insurer’s subrogation claim even thoughthe tortfeasors had notice of the insurer’s claim and the insurer neither consented nor was even aware of the release; 2. The [motion] judge erred in law by providing insufficient reasons for her decision; and, 3.

The [motion] judge erred in law by concluding that this matter was an abuse of process and res judicata. [25] It is my opinion the second ground can be summarily dismissed. It is obvious from the motionjudge’s reasons, when read in the context of the hearing and the arguments, the judge concluded there was no exception to the principlethat a valid release discharges the releasee from all further liability relating to the subject matter of the claim. The judge concluded thesubject matter of the claim was “damages” arising out of the March 24, 2008 explosion.

She applied the same reasoning in defining thescope of the consent order for discontinuance, which provided the discontinuance of the 2010 action would operate as a complete bar toany subsequent proceeding brought by Mr. or Ms. Stairs “with respect to the subject matter of any allegations of fact made in theirStatement of Claim”. [26] Succinctly stated, this appeal raises the question whether the judge erred in holding that a

settlement and a release given by an insured bars a subsequent subrogated claim even though the releasee was aware of the insurer’ssubrogated rights. IV.

Analysis [27] Before turning to the legal effects of the release and the discontinuance, it seems appropriate tobriefly explain the concept of subrogation. [28] Drapeau C.J.N.B., in Robichaud et al., as noted, clearly and succinctly explains the doctrine: In the context of insurance law, subrogation allows the insurer to pursue, in the name of the insured, a claim against a third party inrespect of a loss for which the insured has been indemnified under the policy. Subrogation is derivative in nature.

Thus, even though theinsurer is the real party in interest, any subrogation rights are predicated upon the insured, the nominal plaintiff, having a legallyenforceable right against the defendant. Because the subrogated insurer stands in the shoes of the insured, its entitlement to recovery canbe no greater than that of the insured. That being so, a valid pre-loss release of liability by the insured in favour of the defendant willprotect the latter against any related subrogated action. [para. 25] [29] In Somersall v.

Friedman, 2002 SCC 59, [2002] 3 S.C.R. 109, the Supreme Court had occasionto comment upon the nature, history and purpose of the doctrine of subrogation. Binnie J., dissenting but not on this point, observed: Subrogation has deep roots in the law of insurance, reaching back, it seems, to Roman times: John Edwards & Co. v. Motor UnionInsurance Co., [1922] 2 K.B. 249, at p. 252. It is now sometimes attributed to general common law principles: Hobbs v.

Marlowe,[1978] A.C. 16 (H.L.), per Lord Diplock, at p. 39, but, more usually to doctrines of equity: Ledingham, supra, at pp. 336-37; ColonialFurniture Co. (Ottawa) Ltd. v. Saul Tanner Realty Ltd. (2001), (ON CA), 52 O.R. (3d) 539 (C.A.), at para. 19;Napier v. Hunter, [1993] A.C. 713 (H.L.). One of the leading judgments regarding its scope is that of Brett L.J. in Castellain v.

Preston(1883), 11 Q.B.D. 380 (C.A.), whose words (at pp. 388-89) were approved and applied by Idington J. of this Court in GuardianAssurance, supra, at p. 571: Now it seems to me that in order to carry out the fundamental rule of insurance law, this doctrine of subrogation must be carried to theextent which I am now about to endeavour to express, namely, that as between the underwriter and the assured the underwriter is entitledto the advantage of every right of the assured, whether such right consists in contract, fulfilled or unfulfilled, or in remedy for tortcapable of being insisted on or already insisted on, or in any other right, whether by way of condition or otherwise, legal or equitable,which can be, or has been exercised or has accrued, and whether such right could or could not be enforced by the insurer in the name ofthe assured by the exercise or acquiring of which right or condition the loss against which the assured is insured, can be, or has beendiminished. [Emphasis in original.] Brett L.J., in the original, added the following: That seems to me to put this doctrine of subrogation in the largest possible form, and if in that form, large as it is, it is short of fulfillingthat which is the fundamental condition, I must have omitted to state something which ought to have been stated.

But it will be observedthat I use the words “of every right of the assured.” I think that the rule does require that limit. The passage quoted by Idington J. was more recently cited with approval by the House of Lords in Napier, supra, in the leading opinionof Lord Templeman at p. 734. [paras. 108-109] [30] In the majority reasons in Somersall, Iacobucci J. sets out the purpose of the doctrine:

[…] it is important to keep in mind the underlying objectives of the doctrine of subrogation which are to ensure (

i) that the insured receives no more and no less than a full indemnity, and (ii) that the loss falls on the person who is legally responsible for causing it: see Birds’ Modern Insurance Law (5th ed. 2001), at pp. 289-90; R. H. Jerry, Understanding Insurance Law (2nd ed. 1996), at p. 602. The doctrine of subrogation operates to ensure that the insured received only a just indemnity and does not profit from the insurance: see Castellain v. Preston (1883), 11 Q.B.D. 380 (C.A.), at pp. 386-87 ; A.F.G. Insurances Ltd. v. City of Brighton (1972), 126 C.L.R. 655 (H.C. Aus.) ; C.

Brown, Insurance Law in Canada (loose-leaf), at p. 13-1; E. R. H. Ivamy, General Principles of Insurance Law (6th ed. 1993), at p. 494; MacGillivray on Insurance Law (9th ed. 1997), at p. 531. […] [para. 50] [ 31 ] It bears noting that none of the general principles of subrogation are in issue in the present case. There is no dispute that Intact was subrogated to all rights of recovery Mr. and Ms. Stairs may have had against Enbridge the moment Intact made a payment under their homeowner policy. That point of agreement stems from s. 131(1) of the Insurance Act , contained in

Part IV dealing with Fire Insurance, which provides as follows: 131(1) The insurer, upon making any payment or assuming liability therefor under a contract of fire insurance, shall be subrogated to all rights of recovery of the insured against any person, and may bring action in the name of the insured to enforce such rights. 131(1) L’assureur, après avoir effectué tout paiement ou assumé l’engagement de payer en vertu d’un contrat d’assurance-incendie, est subrogé dans tous les droits de recouvrement que possède l’assuré contre des tiers et peut intenter une action au nom de l’assuré pour faire valoir ces droits. [ 32 ] The parties agree that, in exercising its subrogated rights, Intact would usually not be in any better position than its insured.

Thus, if, for example, a limitation period had expired, that defence could be raised with equal force. More specifically, the parties do not dispute that a settlement and a release by an insured would generally bar a subsequent subrogated action for damages arising out of the same subject matter.

The only issue raised in this appeal is whether the common law recognizes an exception regarding the effect of a settlement and a release in cases where the alleged liable party had prior notice of the insurer’s right of subrogation. [ 33 ] In my respectful view, the common law recognizes such an exception. [ 34 ] Craig Brown, in Insurance Law in Canada , loose-leaf (consulted January 2017), (Toronto: Thomson Reuters, 2016) observes that, in the case of automobile insurance, statutory provisions such as s. 266(6) of the Insurance Act , protect the insurer where an insured settles a claim and/or releases a tortfeasor in all instances where the insurer has not concurred in the settlement .

He notes: […] This

interpretation [that the right of subrogation cannot be destroyed by a release by the insured] represents a change from the common-law position which holds that if the third party did not have notice of the insurer’s subrogated claim at the time the release is executed , s/he is entitled to rely on the release as a defence against the insurer. [p. 13-16] [Emphasis added] [ 35 ] This

interpretation is similarly adopted in the United States.

Couch on Insurance , 3d ed. (database updated December 2015) discusses the “effect” of a settlement where the third party has knowledge of the insurer’s subrogation rights in these terms: A settlement between an injured party and a tortfeasor does not destroy the subrogation claim of the injured party’s insurer if prior to the release the tortfeasor has knowledge of those rights, or if the tortfeasor’s insurer has knowledge of those rights, and the insurer does not consent. [224:113] [ 36 ] The observations of these authors are bolstered by jurisprudence in support of their respective opinions.

What emerges is the principle that an insurer’s right of subrogation is not necessarily extinguished by a settlement with, or a release obtained from, an insured when the party settling the insured’s claim has knowledge of the insurer’s acquired right of subrogation.

[ 37 ] The result might be different in England. MacGillivray & Parkington on Insurance Law , 6th ed. (London: Sweet & Maxwell, 1975) concluded that where a third party has notice of the insurer’s subrogated claim at the time a release is executed by an insured, the release is inoperative as against the insurer. They explain as follows: As far as third parties are concerned, the insurer and the insured are a single entity and any unconditional settlement or abandonment of a claim by the insured will prima facie bind the insurers.

But, as between the insurer and the insured, the insured is bound not to prejudice the position of the insurer. Different questions will arise depending on whether the insurer has paid for the loss. […] If the insured makes a release or settlement against the insurer’s interests, after he has been indemnified for his loss, he will be liable either to hand back the insurance payments, or to compensate the insurer in damages.

Once the insurer has paid, he has an equity in the insured’s rights against third parties and a release of those rights will be inoperative as against the insurer if the party liable had notice of the insurer’s right of subrogation.

If the party liable has no notice and gives good consideration for the release, he has a good defence to any claim of the insurer, whose only right of recourse is against the insured. [p. 789-790] [Emphasis Added] [ 38 ] However, in the next edition, MacGillivray & Parkington on Insurance Law , 7th ed. (London: Sweet & Maxwell, 1981), and in subsequent editions, the authors appear to retract from the above conclusion and explain that the proposition “is too wide” because it is based on obiter and proceeds “on the assumption that, upon payment of the insurance moneys, the insurers had received an equitable assignment of the assured’s right of action with the knowledge of the third party” whereas, “[s]ubrogation does not operate […] as an assignment of the assured’s rights to the insurers”.

According to those authors, the obiter is found in Haigh v. Lawford (1964), 114 N.L.J. 208 (Salisbury County Court). They suggest that decision should rather “rest on the court’s

interpretation of the receipt alleged to constitute a total release, namely, that in the context in which it was signed by the assured it was not capable of being read as relating to his insured loss” (see p. 492 at para. 1175). [ 39 ] Oddly enough, Bulger J. in Haigh had himself relied on yet an earlier edition of MacGillivray on Insurance Law , 5th ed. (London: Sweet & Maxwell, 1961) for the proposition that, “once insurers had paid out their assured and given notice of such payment to the wrongdoer, their right to recover against the latter by action in the assured’s name could not be defeated by any compromise subsequently made by the assured with the wrongdoer” (p. 208).

His conclusion was based on a case from New South Wales and two American cases. [ 40 ] It appears the current state of the law in Australia reflects the opinions expressed in the earlier editions of MacGillivray on Insurance . The Australian Digest , 3d ed., summarizes the principle applied in Morganite Ceramic Fires Pty Ltd v. Sola Basic Australia Ltd. (1987), 11 N.S.W.L.R. 189, 4 A.N.Z.

Insurance Cases 74, 910, in the following terms: […] where a tortfeasor […] settles with an insured […] the right of subrogation of the insurer will not be defeated by a general release given by the insured if, at the time of the release, such tortfeasor […] is aware that payments have been made by the insurer to the insured and of the right of the subrogated insurer, especially where, as in the present case, the consideration for the general release appears to relate to a particular aspect of the dispute between the parties and is grossly disproportionate to the amount paid by the insurer. [p. 44-23] [ 41 ] Only two Canadian cases on point have been brought to our attention and they reach diametrically opposed results.

There is at least one additional case where the principle is recognized: Ware Chemical of Canada Ltd. v. Cosmos Chemical Ltd. et al. , [1973] O.J. No. 2013 (H.C.) (QL) . In that case, Fraser J., relying on the 5th edition of MacGillivray on Insurance Law , states “if a third party has notice that the insurer has been subrogated to the claim of the insured, a release given by the latter thereafter is ineffective” (para. 47). [ 42 ] The first of the two more recent cases the parties have identified, Busgos v. Khamis , [1990] O.J. No. 179 (Dist. Ct.) (QL) , is similar to the case at bar.

Both cases feature the following: • an action for damages caused by a fire to the plaintiff’s premises due to the defendant’s negligence;

• payment made by the plaintiff’s insurer; • the defendant’s solicitor’s knowledge of the payment and of the insurer’s subrogated rights; • settlement of the plaintiff’s personal claim; • a general release that discharged the defendant and barred any further claim or proceedings; • a legislative scheme identical to New Brunswick, that is the equivalent to our Insurance Act ’s s. 131 giving subrogated rights upon making a payment, and a legislative requirement, virtually identical to ours, requiring, only in automobile insurance cases, concurrence of the insurer before a settlement or release can bar its rights; • an action by the insurer in the name of its insured pursuant to its right of subrogation; and, • the release was pleaded as a full defence to the action. [ 43 ] In Busgos , Scott D.C.J. reviews the same arguments as those made in the present case.

He notes the argument that the law in England might have been misinterpreted and that, as stated in the more recent editions of MacGillivray on Insurance Law , specifically the 8th ed., the principle earlier derived from Haigh v. Lawford “is too wide”.

He also considers the fact that, while subrogation is statutorily recognized for cases arising out of fire insurance policies, there is nevertheless no statutory equivalent in fire cases to the requirement that the insurer must have concurred in the settlement or release before it can be bound by it, as is the case for subrogation rights arising out of an automobile insurance policy. [ 44 ] Nevertheless, Scott D.C.J. adopts the proposition that “if a third party has notice that the insurer has been subrogated to the claim of the insured a release given by the latter thereafter is ineffective as against the insurer” and, in support, he relies on the following statement of Church Ch.

J. in The Connecticut Fire Insurance Company v. The Erie Railway Company , [1878] 73 N.Y. 399: If the wrong-doer pays the assured after payment by the insurer, with knowledge of the facts, it is regarded as a fraud upon the insurer, and he will not be protected from liability to the latter. [p. 402] [ 45 ] Admittedly, the reasons in Busgos are not elaborate, but it is abundantly clear that Scott D.C.J. favours the American jurisprudence. [ 46 ] Until now, Busgos has only been considered in one other case: B.H. Shopping Centre Ltd. v. Marrazzo , [1993] A.J. No. 781 (Q.B.) (QL) .

In that case, a shopping centre contracted to repair a roof. The work was completed; however, rain water leaked and damaged the property. As a result, the shopping centre sued the contractors, who then counterclaimed for the balance owing for their work. As the action was progressing, the adjusters for the insurers of the shopping centre informed the contractors the insurer had paid the shopping centre’s claim under an insurance policy and that they would be looking to the contractors for repayment of $45,000. The shopping centre’s claim was subsequently settled for $6,500 and the action was discontinued.

Later, a fresh action was commenced against the contractors; this one was in exercise of the insurer’s right of subrogation. The contractors argued the shopping centre no longer had any cause of action against them because they had settled and discontinued the first action and they claimed the insurer was bound by that settlement. [ 47 ] Perras J. refused to follow Busgos and concluded that, since there was “no longer any cause of action in existence between B.H. Shopping Centre Limited and the [contractors], […] there is no subrogated claim at law capable of being enforced” (para. 18).

In his view, “the notice given to the defendants does not preserve a subrogated right to pursue the defendants” and should instead “have been given to the insured to alert him not to settle or dispose of any action until the insurers were satisfied that such was proper” (para. 15). The reasons given for not following Busgos were grounded largely on the basis of proof of fraud. Perras J. notes: Counsel for the respondent relied on Busgos v. Khamis et al. (1990), 48 C.C.L.I. 233 , from the Ontario District Court.

The Busgos decision, as I understand it, relies on an American case for the proposition that notice by the insurer to the third party will override any release given by the insured to the third party. The American case speaks about fraud upon the insurer - if a wrong doer pays the insured knowing that the insured has been paid by the insurer. In my view, that is not the law in this jurisdiction and I do not find that proposition very appealing, that is to say, that fraud would be assumed upon payment being made knowing the insurer had also paid.

It is well settled that the insured is responsible to the insurer for any excess monies collected and, indeed, holds the same in trust for the insurer. [para. 17]

[ 48 ] With respect, I do not share Perras J.’s reluctance to follow American jurisprudence in these circumstances. Evidently, nor did the Alberta Legislature. Following the decision in B.H. Shopping Centre , the Alberta Insurance Act was amended to specifically provide that, in all insurance cases, “[a] settlement or release given before or after an action is brought does not bar the rights of the insured or the insurer unless they have concurred in the settlement or release”: Insurance Act , R.S.A. 2000, c.

I-3, s. 546(6). [ 49 ] There are numerous American cases where a tortfeasor has not been allowed to take advantage of a release obtained from the insured on the basis the tortfeasor knew of an insurer’s right of subrogation: see Couch on Insurance at 224:113. Allstate Insurance Company v. Kieron Mazzola and First Fidelity L.S. Group, Inc. , 175 F 3d 255 (2d Cir. 1999), 1999 U.S. App. LEXIS 8187 provides an excellent example where the principle was applied.

Couch on Insurance notes there have been occasions where an action in exercise of the insurer’s right of subrogation was barred even though the tortfeasor knew of the insurer’s right at the time settlement was reached with the insured; however, the author notes that “these occasions are few, and the modern trend is clearly in the opposite direction”, adding that “with the Illinois reversal of prior decisions adhering to this minority position, there is little authority for the minority view indeed” (224:113). [ 50 ] In Allstate , the insurer paid certain medical benefits on behalf of its insured following an automobile accident.

When Allstate sought to recover its outlay, the defendants obtained

summary judgment based on a settlement of the insured’s personal claim that included a general release of claims. The United States District Court for the Southern District of New York held the release operated to bar Allstate’s right to recover from the defendants since a “subrogee holds no more rights than those possessed by the subrogor”.

Reversing this decision, Burns D.J., writing for the United States Court of Appeals for the Second Circuit, begins by reviewing the doctrine of subrogation in terms that will be familiar to Canadian jurists: Subrogation is the right one party has against a third party following payment, in whole or in part, of a legal obligation that ought to have been met by the third party. […] The doctrine of equitable subrogation allows insurers to “stand in the shoes” of their insured to seek indemnification by pursuing any claims that the insured may have had against third parties legally responsible for the loss. […] The doctrine of subrogation, which is based upon principles of equity […] has a dual objective as stated by New York courts: It seeks, first, to prevent the insured from recovering twice for one harm, as it might if it could recover from both the insurer and from a third person who caused the harm, and second, to require the party who has caused the damage to reimburse the insurer for the payment the insurer has made. [ 51 ] As to the effect of a release on the insurer’s subrogation rights, I quote at length the reasoning of the Court of Appeals for the Second Circuit (omitting the citations): As a general matter, a subrogation claim by an insurer “depends upon the claim of the insured and is subject to whatever defences the tortfeasor has against the insured”. […] “When an insured settles with or releases a third party from liability for a loss that the third party has caused, the insurer’s subrogation rights against such party may be destroyed.” […] Applying this principle, the district court reasoned that when the Halls executed the release with the defendants, they waived Allstate’s subrogation rights as well. […] However, the court failed to recognize a well-established exception to this rule.

An insurer’s right of subrogation attaches, by operation of law, upon its payment of an insured’s loss. […] At that time, the insurer becomes subrogated in a corresponding amount to the insured’s right of action against any other person responsible for the loss. Allstate made $133,637.22 worth of medical payments on behalf of Kevin Hall prior to the date the Halls executed the release with Mazzola and First Fidelity. Thus, Allstate’s right of subrogation had accrued before the release was executed, and there existed no defence to the prosecution of an action against the defendants at that time.

Where a third party tortfeasor obtains a release from an insured with knowledge that the latter has already been indemnified by the insurer or with information that, reasonably pursued, should give him knowledge of the existence of the insurer’s subrogation rights, such release does not bar the insurer’s right of subrogation. […] “The authorities are in agreement that a release given to a tort-feasor who has knowledge of the insurer’s rights will not preclude the insurer from enforcing its right of subrogation against the wrongdoer.” […].

Otherwise, a release would operate as a fraud upon the insurer. […] This standard applies easily to this case.

If Mazzola and First Fidelity effected a settlement and a release of liability from the Halls without consent from Allstate, and with actual or constructive knowledge that Allstate had already paid benefits to the Halls and thus obtained subrogation rights, the release does not preclude Allstate’s right of subrogation against the defendants. [ 52 ] In my respectful view, Bulger J. in Haigh , Scott D.C.J. in Busgos and the American jurisprudence as illustrated by Burns D.J. in Allstate are correct and the principle of law is as set out in Couch on Insurance , above. It bears repeating:

A settlement between an injured party and a tortfeasor does not destroy the subrogation claim of the injured party’s insurer if prior to the release the tortfeasor has knowledge of those rights […] [224:113] [ 53 ] This precise exception to the general rule is justified by reference to the policy reasons behind the concept of subrogation as stated in Somersall : (1) the insured receives no more and no less than a full indemnity; and (2) the loss falls on the person who is legally responsible for causing it. The exception ensures that these objectives are attained. Without the exception, an insured, such as Ms.

Stairs in the present case, having released the tortfeasor from further liability in violation of her obligations to her insurer, would be liable to reimburse the insurance proceeds to the insurer, thus, in the end, receiving far less than full indemnity.

In addition, the party legally liable for causing the loss would escape liability. [ 54 ] By limiting the exception to cases where the tortfeasor has knowledge of the insurer’s right of subrogation, the common law exception does not go as far as the statutory protection afforded in motor vehicle insurance cases where concurrence of the insurer would be required (s. 266(6)).

Nevertheless, the exception, as stated, ensures that a tortfeasor, who knows an insurer has acquired a right of subrogation, cannot take unfair advantage of an insured by obtaining from him or her a full release. [ 55 ] I note that American jurisprudence often refers to either actual knowledge or constructive knowledge. Whether either type of knowledge is sufficient to trigger the exception is a question that does not arise in this case as Enbridge had actual knowledge of both Intact’s payment and that Intact would be pursuing its right of subrogation.

This said, it is difficult to see how, in this case, knowledge would not be imputed to Enbridge from the fact it knew the Stairs’ home had been destroyed by the explosion through no fault of their own and that the settlement of $7,500 could not possibly have compensated them for this loss. [ 56 ] In this particular case, but for a common law exception, Enbridge, if it were ultimately found responsible for the explosion, would be discharged of further liability notwithstanding that, at the time it obtained a general release in consideration of $7,500, Enbridge knew: (1) the explosion totally destroyed the Stairs’ home;

(2) Mr. and Ms. Stairs were totally innocent parties;

(3) Intact paid $320,000 to repair or replace the home;

(4) Intact was participating in the coordination of efforts to investigate the claim;

(5) Intact intended to pursue recovery pursuant to its right of subrogation; and (6) the $7,500 paid to Mr. and Ms. Stairs in settlement of the 2010 action could not possibly include the loss of their home. [ 57 ] Surely in circumstances like these, common sense must prevail. Without the common law exception, Enbridge would be able to escape liability (assuming it is found liable) by having: (1) rushed to immediately settle the 2010 action; (2) required Mr. and Ms.

Stairs to keep the terms of the settlement confidential pending execution of the settlement documents, ostensibly so that Intact would not get wind of the settlement until it was concluded; (3) required from Mr. and Ms.

Stairs a broadly worded general release, which Enbridge drafted, despite Enbridge’s knowledge of Intact’s impending subrogation claim; and (4) without making full disclosure to the Court, obtained a consent order for discontinuance of the 2010 action containing provisions that could impair Intact’s exercise of its right of subrogation. [ 58 ] In my respectful view, the motion judge was wrong not to recognize the exception explained above and to apply it to the matter before her.

Had she done so, she would have found the release generated in settlement of the 2010 action did not operate as a bar to the 2012 action. [ 59 ] This leaves for discussion the effect of the consent order for discontinuance. In fact, it is on the basis of res judicata that the motion judge anchored her conclusion the 2012 action was without merit. Enbridge argued that application of the res judicata principle entitled it to obtain either

summary judgment or an order striking out the claim. [ 60 ] The New Brunswick Rules of Court provide that a plaintiff can discontinue his or her action against one or more defendants at any time before the close of pleadings, or otherwise with leave of the court or with the written consent of all parties. Rule 25.06(1) provides that “[t]he discontinuance of an action in whole or in part shall not be a defence to a subsequent action, unless so provided by the order giving leave to discontinue or by the consent filed”. [ 61 ] In the present case, Mr. and Ms.

Stairs were entitled to discontinue the 2010 action without leave of the court and without the consent of the defendants because, at the time of the discontinuance, the pleadings were not closed. There was no need for a court order; however, the effect of a discontinuance without a court order would not have provided anyone with

a defence to a subsequent action: see McNichol at para. 27. As a result, Enbridge insisted on obtaining a consent order for discontinuanceeven though such was not necessary. The consent order, which Enbridge prepared, made it a complete bar for Mr. or Ms. Stairs to bringany subsequent proceedings “with respect to the subject matter of and the allegations of fact made in their Statement of Claim”.

Theseterms are certainly broad enough to bar the 2012 action pursuant to the doctrine of res judicata. [62] Enbridge submits since this Court’s decision in McNichol, it has become the practice to seek anorder of discontinuance even in cases where an action can be discontinued as of right. In McNichol, Drapeau C.J.N.B., for the Court,explained as follows: An unqualified notice of discontinuance, with or without leave of the court, is simply the author’s expression of the withdrawal orabandonment of the whole, or part, of his or her claim, counterclaim or defence.

The discontinuance of a claim may have the effect of resjudicata only where it is provided for in a court order that correlatively deprives the plaintiff, in explicit and competent terms, of theright to bring a fresh action. [para. 27] [63] While it is true that a discontinuance with leave may have the effect of res judicata, it remainsso that the consent order signed in the present case was not a judicial determination of the merits of the case. It was nothing more than“an agreement elevated to an order on consent” and, as Abella J. explains for the Court in Rick v.

Brandsema, 2009 SCC 10, [2009] 1S.C.R. 295, such an order “may be set aside on the same grounds as the agreement giving rise to the judgment” (para. 64). DrapeauC.J.N.B. recently considered this very reasoning in Dugas v. Gaudet et al., 2016 NBCA 19, [2016] N.B.J. No. 182 (QL), leave to appealrefused [2016] S.C.C.A. No. 387 (QL). In Dugas, it was not necessary for our Court to rule on the question. Nevertheless, DrapeauC.J.N.B. recognized a trial judge’s power to set aside a judgment obtained on consent.

He notes: Ultimately, the trial judge found [TRANSLATION] “justice [...] requires” setting aside the Consent Judgment and declaring it void abinitio. Given the finding that the underlying settlement was the product of the appellant’s dishonest misrepresentation in respect of afundamental term, I would have been inclined to confirm the trial judge’s nullification of the Consent Judgment ab initio, had it beennecessary. […] [para. 124] [64] That an agreement evidenced by a consent order can be set aside is also made clear in Gray v.R. (2004), (NB CA), 284 N.B.R. (2d) 31, [2004] N.B.J.

No. 492 (QL), per Robertson J.A. at para. 13. [65] Thus, a consent order similar to the one executed in this case, may not always be a bar tosubsequent proceedings if it can be set aside on proper grounds. Here, the agreement is reflected in the release, which, for the reasonsgiven above, is not a bar preventing Intact from exercising its right of subrogation. Thus, since Mr. and Ms.

Stairs could not legally agreeto bar Intact’s claim pursuant to its right of subrogation, it follows that the consent order that purports to give effect to this unenforceableagreement should have been set aside rather than enforced. [66] In my view, the motion judge erred in not setting aside the consent order for discontinuancespecifically because it gave effect to an agreement that was unenforceable. The consent order was obtained without the issuing judgehaving the benefit of full disclosure. The defending parties were aware that Intact paid Mr. and Ms.

Stairs a large sum under an insurancecontract, and, that Intact intended to pursue its right of subrogation. Had this been disclosed to the issuing judge, it is unlikely the judgewould have issued a consent order that would have the effect of barring Intact from pursuing its right of subrogation.

To have done sowould be contrary to the interests of justice. [67] At the very least, the motion judge should have refused to give effect to the plea of res judicatain the exercise of her “discretionary power to reject the application of res judicata in, admittedly, exceptional circumstances”: CUPE,Local 1188 and LeBlanc v. Town of Sackville, 2007 NBCA 18, 313 N.B.R. (2d) 147, per Drapeau C.J.N.B. for the Court at para. 33. [68] In Danyluk v.

Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, Binnie J.,writing for the Court, recognized as a correct statement of the law the conclusion of Finch J.A. (later C.J.B.C.) in British Columbia(Minister of Forests) v. Bugbusters Pest Management Inc., (BC CA), [1998] B.C.J. No. 1043 (C.A.) (QL) that“although the three requirements for issue estoppel must be satisfied before it can apply, the fact that they may be satisfied does notautomatically give rise to its application. […] The doctrine of issue estoppel is designed as an implement of justice, and a protectionagainst injustice.

It inevitably calls upon the exercise of a judicial discretion to achieve fairness according to the circumstances of eachcase” (para. 63).

[ 69 ] In Danyluk , Binnie J. found “it was an error of principle not to address the factors for and against the exercise of the discretion which the court clearly possessed” (para. 66). The same applies in the present case. [ 70 ] For the reasons outlined above, I am of the view that if the motion judge had put her mind to the discretionary power she clearly possessed she would have concluded that the dictates of justice and fairness inescapably led to the conclusion that this action should not be barred on application of the res judicata doctrine. V. Disposition [ 71 ] It is for these reasons I joined my colleagues in allowing the appeal and setting aside the motion judge’s

summary dismissal of Ms. Stairs’ claim. To conclude the matter, I would order Enbridge to pay costs to Ms. Stairs in the amounts of $2,500 for the proceedings in the Court of Queen’s Bench and $3,000 for those in this Court. Version française de la décision de la Cour rendue par LE JUGE RICHARD I. Introduction [1] La subrogation est une doctrine de common law qui permet à l’assureur, « au nom de l’assuré, de poursuivre une tierce

partie afin d’obtenir le recouvrement d’une perte dont l’assuré a été indemnisé en vertu de la police » : Robichaud et al. c. Pharmacie Acadienne de Beresford Ltée et autre , 2008 NBCA 12 , 328 R.N.-B. (2 e ) 205 , le juge Drapeau, juge en chef du Nouveau-Brunswick (par. 25). Parce que la subrogation est dérivative, à telle enseigne que la

partie réellement intéressée est l’assureur, « il n’existe un droit de subrogation que si l’assuré, le demandeur nominal, a un droit qu’il peut légalement faire valoir contre le défendeur » (par. 25). Autrement dit, « [é]tant donné que l’assureur subrogé se substitue à l’assuré, son droit à un recouvrement ne peut être supérieur à celui de l’assuré » (par. 25).

Il s’ensuit que « si l’assuré dégage le défendeur de sa responsabilité de façon valide avant que le sinistre ne se produise , ce dernier sera alors protégé contre toute action subrogée connexe » (par. 25, c’est moi qui souligne). [2] En l’espèce, toutefois, l’exonération de responsabilité a eu lieu après le sinistre.

Plus précisément, la question consiste à savoir si le règlement d’une réclamation ou d’une demande et l’exonération de responsabilité qui s’ensuit peuvent toujours constituer un moyen de défense valable à une action par subrogation découlant de l’objet même de la réclamation ou de la demande qui a été réglée. [3] S’agissant des droits de subrogation découlant d’un contrat d’assurance automobile, la règle de droit applicable est énoncée au par. 266(6) de la

Loi sur les assurances , L.R.N.-B. 1973, ch.

I-12 : 266(6) A settlement or release given before or after an action is brought does not bar the right of the insured or the insurer, as the case may be, unless they have concurred therein. 266(6) Un règlement ou une quittance antérieurs ou postérieurs à l’institution de l’action ne font pas obstacle aux droits de l’assuré ou de l’assureur, selon le cas, à moins qu’ils n’y aient concouru. [4] Toutefois, dans les instances ressortissant à une assurance autre que l’assurance automobile, c’est la common law qui s’applique et en common law, le consentement de l’assureur n’est pas une condition préalable à un règlement ou une quittance valables, lesquels peuvent subséquemment être invoqués comme moyen de défense à l’encontre des droits de

subrogation de l’assureur. [5] La principale question de droit à trancher dans le présent appel est celle de savoir si la common law reconnaît l’existence d’une exception dans les cas où l’assureur a indemnisé son assuré avant la passation d’un règlement ou d’une renonciation avec l’auteur du délit et lorsque la

partie responsable avait, avant de conclure un règlement avec l’assuré, été informée de l’existence du droit de subrogation de l’assureur qui en résultait. [6] Il s’agit, en l’espèce, de droits de subrogation qui ont pris naissance lorsqu’un assureur a payé une somme considérable à ses assurés en application d’une police d’assurance des propriétaires occupants.

À l’insu de l’assureur et sans son consentement, les assurés ont passé un règlement amiable avec la présumée auteure d’un délit et ont accepté une petite somme d’argent, en apparence pour des pertes qui n’étaient pas couvertes par l’assurance, en échange : (1) d’une renonciation généralement formulée; et (2) du désistement d’une action constaté dans une ordonnance par consentement disposant que le désistement ferait absolument obstacle à toute instance subséquente concernant l’objet de la réclamation.

Au moment où le désistement et la renonciation ont été obtenus, la présumée auteure du délit savait que l’assureur avait versé une somme considérable à ses assurés et que l’assureur avait l’intention d’exercer son droit de subrogation. Lorsque l’assureur a intenté une action au nom de ses assurés conformément à son droit de subrogation, la présumée auteure du délit a invoqué la renonciation et l’ordonnance de désistement comme moyen de défense. Cette

partie a ensuite déposé une demande en vue d’obtenir une ordonnance portant radiation des plaidoiries ou, subsidiairement, un jugement

sommaire. Une juge de la Cour du Banc de la Reine a fait droit à ce moyen de défense, a appliqué le principe de la chose jugée, a rendu un jugement

sommaire et a rejeté la demande. [7] À la fin de l’audition de l’appel que M me Stairs a interjeté de cette décision, nous avons infirmé la décision de la juge saisie de la motion. Voici les motifs qui m’ont amené, ainsi que mes collègues, à cette conclusion. II. Contexte factuel [8] Le 24 mars 2008, une explosion s’est produite au domicile de Meredith Hashey; cette explosion a causé des dommages à la maison voisine, qui appartenait à Marjorie Geraldine (Trainor) Stairs et à son mari, et a causé des blessures à M me Stairs.

La maison des Stairs était protégée par une police d’assurance des propriétaires occupants établie par Intact Compagnie d’assurance (« Intact »), laquelle a, au final, versé environ 320 000 $ en paiement des dommages matériels. [9] Dans la foulée de l’explosion, les parties intéressées ont coordonné leurs efforts en vue d’enquêter sur l’origine et la cause de l’explosion. Enbridge Gaz Nouveau-Brunswick Inc. (« Enbridge ») était une de ces parties.

Intact s’est jointe aux discussions le 10 décembre 2009 et a précisé qu’elle introduirait une demande par subrogation en recouvrement de la somme payée à M me Stairs. [10] Les courriels que se sont échangés Intact et l’avocat d’Enbridge le 24 février 2010 révèlent qu’Enbridge a été informée qu’Intact: (1) avait conclu un règlement avec M me Stairs; (2) avait fait parvenir à un spécialiste de la subrogation le protocole d’entente qui était envisagé relativement à l’enquête sur l’explosion; (3) allait désigner un conseiller juridique afin qu’il représente ses droits de subrogation; (4) avait consenti à ce que tous les éléments de preuve soient entreposés dans un même endroit sûr; (5) envisageait de retenir les services de son propre expert judiciaire; et (6) communiquerait de nouveau avec Enbridge lorsque l’examen de la question de la subrogation serait terminé. [11] Le 16 juillet 2010, M me Stairs et son mari ont poursuivi Enbridge et d’autres parties en vue de recouvrer [TRADUCTION] « des dommages-intérêts généraux non pécuniaires pour nuisance, perturbation, souffrance morale et trouble émotif, aggravation, inconvénient et lésions corporelles » et [TRADUCTION] « des dommages-intérêts particuliers, dont le montant n’a pas encore été déterminé, pour dommages à la maison des demandeurs ainsi qu’à son contenu » (l’« action intentée en 2010 » ).

Intact a été informée qu’une action avait été intentée, mais elle a cru comprendre que cette action ne se rapportait qu’aux pertes personnelles subies par les Stairs. Il a été expressément signifié à M me Stairs qu’elle n’était pas autorisée à régler sa demande d’indemnité relative aux biens pour le motif qu’Intact introduirait elle-même la demande. [12] Enbridge a déposé un avis d’intention de présenter une défense le 12 août 2010, mais presque tout de suite après, elle a réglé la réclamation avec M me Stairs et son mari.

Le règlement s’élevait à 7 500 $ et il est intervenu en échange d’une renonciation et du désistement de leur action.

[13] Intact n’a jamais été informée de l’existence de ce règlement, et elle n’y a pas non plus consenti, malgré le fait que toutes les parties savaient qu’Intact avait payé 320 000 $ au

titre des dommages matériels causés à la maison des Stairs et avait l’intention de chercher à recouvrer le montant qu’elle avait versé. Toutes les parties intéressées connaissaient l’identité du rédacteur-sinistres d’Intact.

En fait, après que les parties ont convenu du montant de 7 500 $, l’avocat d’Enbridge a pressé M. et M me Stairs de ne divulguer à quiconque les conditions du règlement [TRADUCTION] « jusqu’à la signature des documents constatant ce règlement », lesquels documents ont été préparés par l’avocat d’Enbridge. [14] Dans le cadre du règlement de leur réclamation, M. et M me Stairs ont signé, le 31 août 2010, une renonciation dont le libellé était général.

Les parties pertinentes de cette renonciation sont ainsi rédigées : [TRADUCTION] SACHEZ PAR LES PRÉSENTES que, en contrepartie de la somme de un dollar en monnaie légale du Canada et d’une renonciation aux dépens et en retour d’autres contreparties à

titre onéreux, qu’ils reconnaissent avoir reçues et dont ils confirment la suffisance, AMBER STAIRS et GERALDINE STAIRS (les « renonciateurs ») dégagent et libèrent pour toujours ENBRIDGE GAZ NOUVEAU- BRUNSWICK INC., y compris ses compagnies affiliées, ses prédécesseures et sa compagnie mère, SUNPOKE ENERGY SYSTEMS LTD. et chacun de ses successeurs et ayants droit, administrateurs, dirigeants, employés et mandataires, WAWANESA MUTUAL INSURANCE COMPANY et chacun de ses successeurs et ayants droit, administrateurs, dirigeants, employés et mandataires, AXA INSURANCE (CANADA) et chacun de ses successeurs et ayants droit, administrateurs, dirigeants, employés et mandataires, ainsi que MEREDITH HASHEY y compris ses exécuteurs testamentaires, administrateurs successoraux, fiduciaires et représentants personnels, et chacun d’eux (les « renonciataires ») de toute forme de réclamation, d’action, de cause d’action, de demande ou de mise en demeure, de dommages-intérêts, d’intérêts, de frais et d’indemnisation, de quelque nature ou quelque genre que ce soit, connus ou inconnus (collectivement appelés les « réclamations ») passés, actuels, futurs ou éventuels, ayant un rapport quelconque avec les faits et circonstances qui ont donné lieu à une action intentée par les renonciateurs contre les renonciataires dans l’instance n o F/C/205/10 , devant la Cour du Banc de la Reine du Nouveau-Brunswick, Division de première instance, circonscription judiciaire de Fredericton; […] IL EST EN OUTRE ENTENDU ET CONVENU que les renonciateurs s’engagent à garantir les renonciataires contre toute forme d’action, de cause d’action, de poursuite, de procédure, de mise en cause, de demande d’indemnisation, d’obligation, de covenant, de contrat, tacite ou explicite, de réclamation, de demande ou de mise en demeure, de dommages-intérêts, de perte ou de préjudice de quelque nature ou quelque genre que ce soit, de sommes et de sommes d’argent, de griefs, d’exécutions et d’obligations tant en common law qu’en equity susceptibles d’être intentés ou invoqués contre les renonciataires par une personne, une firme ou une entreprise, une société, un tiers, un assureur privé ou une autre entité en raison ou par suite d’une réclamation au

titre de laquelle les renonciateurs ont signé la présente renonciation en faveur des renonciataires. […] [15] Par suite du règlement, il y a eu désistement de l’action intentée en 2010. Une ordonnance par consentement datée du 27 septembre 2010 a constaté le désistement. Cette ordonnance est ainsi rédigée : [TRADUCTION] AVEC le consentement de E.J. Mockler, c.r., avocat des demandeurs, et de David Duncan Young, Bruce D. Grant et Charles J. Foster, avocats des défenderesses, et conformément aux règles 25.01 et 25.06 des Règles de procédure ; L’ORDONNANCE SUIVANTE EST PAR LES PRÉSENTES RENDUE : 1.

Les demandeurs se désistent de leurs prétentions contre les défenderesses de façon définitive et sans dépens; 2. Conformément à la règle 25.06 des Règles de procédure , le désistement de la présente action fait absolument obstacle à toute action ultérieure susceptible d’être introduite par les demandeurs contre les défenderesses relativement à l’objet de leur demande et reposant sur les faits allégués dans l’exposé de leur demande. [16] Intact n’a reçu aucune

partie du produit du règlement de 7 500 $. [17] Une fois le règlement intervenu, Intact est restée

partie à l’échange de courriels relatifs au protocole d’entente proposé.

[18] Le 24 avril 2012, Mme Stairs et Mme Hashey ont intenté contre Enbridge et d’autres parties uneaction dans laquelle elles sollicitaient des dommages-intérêts par suite de l’explosion du 24 mars 2008 (l’« action intentée en 2012 »). La réclamation formulée dans cette action au nom de Mme Stairs était en fait une demande par subrogation introduite par Intact. [19] Enbridge a présenté une défense dans l’action intentée en 2012. En plus de nier sa responsabilité, Enbridge a fait valoir qu’en ce qui concernait la

partie de la demande se rapportant à Mme Stairs, l’action était irrecevable du fait de l’ordonnance par consentement datée du 27 septembre 2010 constatant le désistement et que Mme Stairs avait dégagé et libéréEnbridge de toute forme de réclamation aux termes de la renonciation datée du 31 août 2010. [20] Par voie d’avis de motion, Enbridge a sollicité une ordonnance radiant la

partie de l’action intentée en 2012 se rapportant à Mme Stairs pour le motif qu’elle était redondante et constituait un abus de procédure ou, à titresubsidiaire, un jugement

sommaire pour le motif que l’action était sans fondement parce qu’elle était chose jugée et était irrecevable dufait de l’ordonnance de désistement. Aucune des autres défenderesses qui étaient parties à l’action ne se sont prononcées sur la motion. [21] Le 4 décembre 2015, une juge de la Cour du Banc de la Reine a rendu un jugement

sommaire et a rejeté la demande de Mme Stairs contre Enbridge et, dans la même foulée, a accordé à Enbridge des dépens de 2 500 $, tous fraiscompris. Bien que la juge se soit dite d’avis que la deuxième action constituait un abus de procédure, elle n’a pas radié la plaidoirieconformément à la règle 27.09c) des Règles de procédure, choisissant plutôt de rejeter la demande conformément à la règle 22.04. [22] Pour en arriver à sa décision, la juge saisie de la motion a souscrit à la prétention d’Enbridgeselon laquelle la demande était irrecevable parce qu’il y avait préclusion pour même question en litige.

La juge a appliqué les conditions fondamentales adoptées dans l’arrêt Angle c.

M.R.N., (SCC), [1975] 2 R.C.S. 248, [1974] A.C.S. no 95 (QL), etexigeant : (1) que la même question ait été décidée; (2) que la décision judiciaire invoquée comme créant la fin de non-recevoir [la préclusion] soit finale; (3) que les parties dans la décision judiciaire invoquée, ou leurs ayants droit, soient les mêmes que les parties engagées dans l’affaire oùla fin de non-recevoir [la préclusion] est soulevée, ou leurs ayants droit. [p. 254] [23] Puisque tant dans l’action intentée en 2010 que dans celle intentée en 2012, il s’agissait d’unedemande pour [TRADUCTION] « négligence et nuisance et pour les dommages causés à la maison des Stairs par suite de l’incendie du24 mars 2008 », la juge saisie de la motion a conclu que cela était suffisant [TRADUCTION] « pour confirmer que la première condition est remplie ».

La juge a appliqué l’arrêt McNichol c. Compagnie d’Assurance Générale Co-operators, 2006 NBCA 54, 298 R.N.-B. (2e)44, et elle a conclu que puisque le désistement de l’action intentée en 2010 avait été constaté par une ordonnance judiciaire, la deuxième condition était remplie. En ce qui concerne la troisième condition, la juge a souligné que dans chacune des deux actions, Mme Stairs était demanderesse et Enbridge, défenderesse. En concluant que Mme Stairs ne pouvait, pour cause de préclusion, faire instruire les mêmesprétentions à l’endroit d’Enbridge dans la deuxième action, la juge saisie de la motion a rejeté

sommairement la demande intentée par Mme Stairs contre cette défenderesse. III. Questions en litige en appel [24] Mme Stairs interjette appel de la décision de la juge saisie de la motion. Dans son mémoire, ellea ramené à trois les nombreux moyens d’appel énumérés dans son avis d’appel. Ces trois moyens sont ainsi énoncés : [TRADUCTION]

1. La juge [saisie de la motion] a commis une erreur de droit en concluant que la renonciation passée par une assurée fait obstacle à lademande en subrogation d’un assureur malgré le fait que les auteures du délit avaient été informées de la demande de l’assureur et que cedernier n’avait pas consenti à la renonciation et n’était même pas au courant de son existence; 2. La juge [saisie de la motion] a commis une erreur de droit en ne motivant pas suffisamment sa décision; 3. La juge [saisie de la motion] a commis une erreur de droit en concluant que l’instance constituait un abus de procédure et étaitchose jugée. [25] J’estime que le deuxième moyen peut être rejeté

sommairement. Il ressort, à l’évidence, desmotifs de la juge saisie de la motion, lorsqu’on les examine dans le contexte de l’audience et de l’argumentation présentée, que la juge aconclu qu’il n’existait aucune exception au principe voulant qu’une renonciation valable dégage le renonciataire de toute responsabilitéadditionnelle en ce qui concerne l’objet de la demande. La juge a conclu que la demande avait comme objet les [TRADUCTION]« dommages » découlant de l’explosion du 24 mars 2008.

Elle a suivi le même raisonnement pour définir la portée de l’ordonnance parconsentement qui a constaté le désistement, laquelle disposait que le désistement de l’action intentée en 2010 ferait absolument obstacle à toute action ultérieure susceptible d’être introduite par M. ou Mme Stairs [TRADUCTION] « relativement à l’objet de leur demande etreposant sur les faits allégués dans l’exposé de leur demande ». [26] Pour dire les choses de façon succincte, le présent appel soulève la question de savoir si la jugea commis une erreur en concluant qu’un règlement et une renonciation consentis par un assuré font obstacle à une demande parsubrogation subséquente malgré le fait que la renonciataire était au courant des droits de subrogation de l’assureur.

IV. Analyse [27] Avant d’examiner les conséquences juridiques de la renonciation et du désistement, il sembleindiqué d’expliquer brièvement la notion de subrogation. [28] Dans l’arrêt Robichaud et al., comme nous l’avons souligné, le juge en chef Drapeau a expliquécette doctrine de façon claire et succincte : Dans le contexte du droit des assurances, la subrogation permet à l’assureur, au nom de l’assuré, de poursuivre une tierce

partie afind’obtenir le recouvrement d’une perte dont l’assuré a été indemnisé en vertu de la police. La subrogation est dérivative. Par conséquent,même si l’assureur est la

partie réellement intéressée, il n’existe un droit de subrogation que si l’assuré, le demandeur nominal, a un droitqu’il peut légalement faire valoir contre le défendeur. Étant donné que l’assureur subrogé se substitue à l’assuré, son droit à unrecouvrement ne peut être supérieur à celui de l’assuré. Cela étant, si l’assuré dégage le défendeur de sa responsabilité de façon valideavant que le sinistre ne se produise, ce dernier sera alors protégé contre toute action subrogée connexe. [par. 25] [29] Dans l’arrêt Somersall c.

Friedman, 2002 CSC 59, [2002] 3 R.C.S. 109, la Cour suprême a eul’occasion de commenter la nature, l’historique et l’objet de la doctrine de la subrogation. Le juge Binnie, dissident mais pas sur cepoint, a fait les observations suivantes : La subrogation a une origine très ancienne dans le droit des assurances, remontant, semble-t-il, au droit romain : John Edwards & Co. c.Motor Union Insurance Co., [1922] 2 K.B. 249, p. 252. On la rattache maintenant parfois aux principes généraux de la common law :Hobbs c.

Marlowe, [1978] A.C. 16 (H.L.), lord Diplock, p. 39, mais plus souvent aux doctrines de l’equity : Ledingham, précité, p. 336-337; Colonial Furniture Co. (Ottawa) Ltd. c. Saul Tanner Realty Ltd. (2001), (ON CA), 52 O.R. (3d) 539 (C.A.),par. 19; Napier c. Hunter, [1993] A.C. 713 (H.L.). L’un des jugements de principe concernant sa portée a été rendu par le lord juge Brettdans Castellain c.

Preston (1883), 11 Q.B.D. 380 (C.A.), dont les propos (aux p. 388-389) ont été approuvés et appliqués par le jugeIdington de notre Cour dans Guardian Assurance, précité, p. 571 : [TRADUCTION] Or il me semble que, pour respecter la règle fondamentale du droit des assurances, cette doctrine de la subrogation doitêtre étendue dans la mesure que je vais maintenant essayer de préciser, savoir que, entre l’assureur et l’assuré, l’assureur a le droit detirer parti de chaque droit de l’assuré, qu’il réside dans un contrat, exécuté ou non, ou dans un recours délictuel susceptible d’être exercé

ou déjà exercé, ou dans tout autre droit, par le jeu d’une condition ou autrement, en common law ou en equity, et qui peut être ou a été exercé ou qui a été acquis, et que ce droit puisse ou non être exercé par l’assureur au nom de l’assuré lorsque l’exercice ou l’acquisition de ce droit ou de cette condition peut réduire ou a effectivement réduit la perte contre laquelle l’assuré est protégé. [C’est le juge Binnie qui souligne.] Le lord juge Brett ajoute, dans l’original : [TRADUCTION] Voilà qui, à mon sens, constitue la formulation la plus large possible de cette doctrine de la subrogation et si, aussi largement exprimée, elle ne remplit pas la condition fondamentale, j’ai dû omettre quelque chose qui aurait dû s’y trouver.

Mais l’on observera que j’ai employé les mots « chaque droit de l’assuré ». Je pense que la règle commande cette limite.

Le passage cité par le juge Idington a été repris et approuvé plus récemment par la Chambre des lords dans Napier , précité, dans le jugement de principe de lord Templeman, à la p. 734. [par. 108 et 109] [30] Dans les motifs de la majorité dans l’arrêt Somersall , le juge Iacobucci énonce le but de cette doctrine : [I]l importe de garder à l’esprit les objectifs sur lesquels repose la théorie de la subrogation et qui consistent à garantir (

i) que l’assuré ne recevra ni plus ni moins qu’une indemnisation complète et (ii) que c’est la personne qui est juridiquement responsable de la perte qui la supportera : voir Birds’ Modern Insurance Law (5 e éd. 2001), p. 289-290; R. H. Jerry, Understanding Insurance Law (2 e éd. 1996), p. 602. Le principe de la subrogation entre en jeu pour garantir que l’assuré ne reçoive rien de plus qu’une indemnité juste et ne tire aucun avantage de l’assurance : voir Castellain c. Preston (1883), 11 Q.B.D. 380 (C.A.), p. 386-387 ; A.F.G. Insurances Ltd. c. City of Brighton (1972), 126 C.L.R. 655 (H.C. Aus.) ; C.

Brown, Insurance Law in Canada (feuilles mobiles), p. 13-1; E. R. H. Ivamy, General Principles of Insurance Law (6 e éd. 1993), p. 494; MacGillivray on Insurance Law (9 e éd. 1997), p. 531. [par. 50] [31] Il est à remarquer qu’aucun des principes généraux de la subrogation n’est en litige en l’espèce. Nul ne conteste le fait qu’Intact a été subrogée dans tous les droits de recouvrement que M. et M me Stairs ont pu posséder contre Enbridge dès le moment où Intact leur a versé un paiement en application de leur police propriétaires occupants. Ce point d’entente découle du par. 131(1) de la

Loi sur les assurances , que l’on trouve dans la

Partie IV, laquelle traite de l’assurance-incendie, et qui est ainsi rédigé : 131(1) The insurer, upon making any payment or assuming liability therefor under a contract of fire insurance, shall be subrogated to all rights of recovery of the insured against any person, and may bring action in the name of the insured to enforce such rights. 131(1) L’assureur, après avoir effectué tout paiement ou assumé l’engagement de payer en vertu d’un contrat d’assurance-incendie, est subrogé dans tous les droits de recouvrement que possède l’assuré contre des tiers et peut intenter une action au nom de l’assuré pour faire valoir ces droits. [32] Les parties s’entendent pour reconnaître que dans l’exercice de ses droits de subrogation, Intact ne se trouverait habituellement pas dans une meilleure position que ses assurés.

Ainsi, par exemple, si un délai de prescription était venu à expiration, ce moyen de défense pourrait être tout autant invoqué. Plus précisément, les parties ne contestent pas le fait qu’un règlement et une renonciation passés par un assuré ont généralement pour effet de faire obstacle à une action par subrogation ultérieure en dommages-intérêts découlant du même objet. La seule question soulevée dans le présent appel est celle de savoir si la common law reconnaît une exception en ce qui concerne l’incidence d’un règlement et d’une renonciation dans les instances où la

partie qui est présumée responsable avait auparavant été informée de l’existence du droit de subrogation de l’assureur. [33] Je suis respectueusement d’avis que la common law reconnaît une exception de cette nature. [34] Dans l’ouvrage intitulé Insurance Law in Canada , feuillets mobiles (Toronto : Thomson Reuters, 2016) (ouvrage consulté en janvier 2017), Craig Brown fait observer que, pour ce qui concerne l’assurance automobile, des dispositions législatives comme le par. 266(6) de la

Loi sur les assurances protègent l’assureur lorsqu’un assuré règle une réclamation ou dégage l’auteur du délit de toute responsabilité dans toutes les instances où l’assureur n’avait pas consenti au règlement . Il souligne ceci :

[TRADUCTION] […] Cette interprétation [savoir qu’une renonciation de la part de l’assuré ne peut anéantir le droit de subrogation] constitue un changement par rapport à la position en vigueur en common law voulant que si le tiers n’avait pas été informé de l’existence de la demande par subrogation de l’assureur au moment de la signature de la renonciation , le tiers est en droit, pour sa défense, d’opposer la renonciation à l’assureur. [p. 13-16] [C’est moi qui souligne.] [35] Cette interprétation a aussi été adoptée aux États-Unis.

Dans l’ouvrage intitulé Couch on Insurance , 3 e éd. (base de données mise à jour en décembre 2015), on dit ce qui suit à propos de [TRADUCTION] l’« incidence » d’un règlement lorsque le tiers connaissait l’existence des droits de subrogation de l’assureur : [TRADUCTION] Un règlement intervenu entre une

partie lésée et l’auteur d’un délit n’anéantit pas la demande par subrogation de l’assureur de la

partie lésée si, avant la signature de la renonciation, l’auteur du délit connaissait l’existence des droits de subrogation, ou si l’assureur de l’auteur du délit connaissait l’existence de ces droits, et que l’assureur n’a pas donné son consentement. [p. 224:113] [36] Les observations de ces auteurs sont étayées par des décisions judiciaires qui appuient leurs opinions respectives. Le principe qui s’en dégage est que le droit de subrogation d’un assureur n’est pas nécessairement éteint du fait d’un règlement intervenu avec un assuré ou d’une renonciation obtenue d’un assuré lorsque la

partie qui règle la réclamation de l’assuré connaît l’existence du droit de subrogation acquis par l’assureur. [37] Il se pourrait que le résultat soit différent en Angleterre. Dans leur ouvrage intitulé MacGillivray & Parkington on Insurance Law , 6 e éd. (Londres : Sweet & Maxwell, 1975), les auteurs ont conclu que lorsqu’un tiers a connaissance de l’existence de l

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