Where an insurer insures both the tortfeasor for liability coverage and the victim for accident benefits, the insurer should set up a firewall so that information gathered by it regarding the accident benefits claim is not available in the tort action.

[2015] O.J. No. 2076

2015 ONSC 2286

Ontario Superior Court of Justice

F.N. Marrocco A.C.J.S.C.J., J.C. Kent and M.L. Edwards JJ.

April 24, 2015

The plaintiff insured was involved in a motor vehicle collision. The insurer insured both the plaintiff’s vehicle and the defendant's vehicle under separate automobile policies. The plaintiff brought a tort claim and applied to the insurer for statutory accident benefits. The insurer denied coverage to the plaintiff and the defendant as it concluded the accident had been staged or did not occur as alleged. The plaintiff claimed against the insurer as the statutory third party in relation to the tort claim and with respect to her accident benefits. The insurer retained the same lawyer to defend both the tort claim and the statutory accident benefits claim.

The court agreed with the Insurance Bureau of Canada's policy that where an insurer insures both the tortfeasor for liability coverage and the victim for accident benefits, the insurer should set up a firewall so that information gathered by it regarding the accident benefits claim is not available to the tort adjuster. Information regarding the plaintiff’s medical condition can only be received in the tort action through the rules of court. The court found the failure to separate the interests of the insurer on the tort and accident benefit side, by retaining the same law firm and disclosing confidential information to that law firm, resulted in a disqualifying conflict of interest. The court ordered that the law firm be removed as solicitor of record for the insurer in the proceedings.