Case information

Insurance — Home insurance — Hypothecary security clause — Rider authorizing vacancy of insured immovable — Exclusion clause for vandalism — Whether hypothecary creditors have broader coverage than their debtors in absence of breach of contract — Whether exclusion of damage caused by vandalism and malicious acts that occur during vacancy is unenforceable against hypothecary creditors that benefit from hypothecary clause.

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On February 20, 2017, the respondent, Roma Capital inc., granted Guylaine Mireault a $220,000 hypothecary loan so that she could purchase an immovable. Ms. Mireault then took out an insurance policy with the applicant, Intact Insurance Company (Intact Insurance), in order to insure the immovable in question and its contents. Pursuant to the loan agreement that Ms. Mireault had signed with Roma Capital, the policy itself designated Roma Capital as the hypothecary creditor by incorporating a standard hypothecary security clause approved by the Insurance Bureau of Canada. Because she had to leave the immovable vacant in order to renovate it, Ms. Mireault informed Intact Insurance so that a rider to this effect would be incorporated into the policy. The rider in question permitted the immovable to be vacant for a maximum of one year and covered the risk of fire, subject to certain exclusions for vandalism and malicious acts. During the night of May 16, 2017, the immovable was ravaged by a fire. Intact Insurance refused to indemnify both Ms. Mireault and Roma Capital because claims adjusters mandated by it concluded that the fire was the result of an intentional and wrongful act indicating vandalism. Two court proceedings were then commenced against Intact Insurance, including by Roma Capital, which brought an action in October 2017 to obtain the insurance indemnity corresponding to the balance of its hypothecary loan. The Superior Court dismissed Roma Capital’s application, and the Court of Appeal allowed its appeal.