An Ontario auto insurer involved in a priority dispute with another insurer should have used a different counsel in that dispute than the one used for the main accident benefits claim with the insureds, the Ontario Superior Court has ruled.
The issue came up in the case of The Personal Insurance Company v. Jia, in which the same counsel represented the insurer in both the priority dispute and in the accident benefits dispute.
The accident benefits claimants raised the issue of a conflict before the Ontario Licensing Appeal Tribunal (LAT). They argued that the insurance company’s counsel, in support of the insurer’s denial of their claim, had misused information that had been compelled from them in an examination under oath during the insurer’s priority dispute with another insurer.
The LAT ruled against the claimants, but the vice chair of the Safety, Licensing Appeals and Standards Tribunals Ontario (SLASTO) reversed the LAT’s decision on appeal. On appeal by The Personal, the Ontario Superior Court upheld SLASTO’s decision.
“[SLASTO] found that there is a conflict in counsel for the insurer acting in both the priority dispute and the benefits dispute,” the Ontario Superior Court of Justice found. “[SLASTO] found that breach of the statutory scheme was improper and prejudicial to the respondents, defeating the carefully balanced process prescribed by law.”
The claim arose out of a tragic incident on June 2, 2015, when Xiu Zhe Xu was involved in a fatal collision. Her husband, Pei Yu Jia, and her daughter, Lan Jia, sought death and funeral benefits from The Personal, which denied the benefits.
In a separate proceeding, The Personal initiated a dispute with CAA Insurance over which insurer was responsible for the respondents’ accident benefits claims.
The Personal’s counsel compelled the Jias to examinations under oath in connection with the priority dispute. The same counsel then filed transcripts of the Jias’ evidence compelled in the priority dispute on behalf of The Personal in the benefits dispute.
“[SLASTO’s] finding that [The Personal’s] lawyer was in conflict of interest acting in both the priority dispute and the liability dispute was reasonable,” the Ontario Superior Court ruled. “[SLASTO’s] finding that the [examinations under oath] obtained by the insurer in the priority dispute should not be permitted to be used in the liability dispute because they were not obtained in compliance with s.33 of the SABS Regulation was reasonable.”
Section 33 of the Ontario Statutory Accident Benefits Schedule [SABS] lays out the rules for examinations under oath, including protections for the insureds.
Even if theoretically there may not have been any inherent conflict of interest in the same lawyer representing The Personal in both the priority dispute and the accident benefits actions, how the information was used made a difference in this case, the Ontario Superior Court ruled.
“Even if we had concluded that SLASTO erred as a matter of law on whether there is an inherent conflict in the same lawyer acting for an insurer in a priority dispute and a benefits dispute arising from the same events, on the facts there was a conflict in this case,” the court ruled. “This misuse of evidence obtained in the priority dispute in the benefits dispute, contrary to the checks and balances prescribed in the statutory scheme, placed [The Personal’s] lawyer in a position where he could not continue to represent the insurer in the benefits dispute.”