Insurers Prevented From Using Subrogation And Assignment Rights To Recover Against Own Insureds

In Realtrium Holdings Pickering Inc. v Simpson,¹ the Ontario Superior Court of Justice ("ONSC") considered whether an underwriter of a statutorily mandated insurance program was entitled to recover from its own insured for amounts it paid to third-party claimants. This recent decision clarifies the boundaries insurers' subrogation and assignment rights.

Realtrium arises from a fraudulent real estate scheme that resulted in brokerage clients losing their deposits. The Court held that the insurer was not permitted to exercise its subrogation and assignment rights to recover payments from its own insured for losses that the policy was intended to cover.

Background

Wynn Realty Corporation ("Wynn") was a licensed real estate brokerage owned by Wayne Simpson, the broker of record. Wynn also employed Mr. Simpson's wife, Courtney Simpson (the "Simpsons"). The Real Estate Council of Ontario ("RECO") requires all Ontario brokerages to maintain policies