On May 14 2008, the Honourable Brian Riordan, of the Superior Court, rendered judgement on an interlocutory motion for the substitution of attorneys with respect to an action in damages against a firm of land surveyors1.
At the outset, the action was solely based on the alleged professional fault of the insured, land surveyor, and his insurers had mandated a firm to ensure his defence. The action was amended to add the insurers as defendants, not in respect of the application of article 2501 C.C.Q.2, but to allege specific faults with respect to them, in that they allegedly caused damages to the petitioners by refusing to promptly indemnify them while the responsibility of their insured was clear, and by their refusal to collaborate in negotiations after the discovery of the fault of the insured. The petitioners sought a solidary condemnation of the insured and the insurers.
The requested order to pay $460,000 was in excess of the insurance coverage limit. The insured was therefore facing the risk of having to personally pay part of the claim.
The insured presented a motion so that another law firm be substituted for the one mandated by its insurers in order for them to make separate pleadings for the insurers. The main argument resided in the fact that there existed, since the amendments, a situation of conflict of interests, because the trial judge would have the task to separate the liability between the insured and the insurers, as stipulated in article 469 of the Code of civil procedure.
The Court agreed with the insured that there was a conflict of interest. The same lawyer cannot represent both the insurer and the insured when the insurer is sued solidarily for a personal fault, "especially, as it is the case here, when the total amount claimed for surpasses the insurance policy limit". [Our translation]
The Court based itself on article 3.06.08 of the Code of Ethics of Advocates, which enunciates that the lawyer must avoid placing himself in a position of conflict of interest. The Court also questioned itself to know how the defence lawyer could plead the division of liability between its clients while being fair in respect to both of them.
Furthermore, because of the categorical refusal of the insured to consent to the double mandate, the sole appearance of conflict required that the Court intervene. And according to the Court, the appearance was evident.
It is important to note that the Court specified that there was a problem because the amount claimed by the petitioners surpassed the insurance coverage limit. In fact, the Court noted that "if the amount requested did not surpass the insurance coverage limit, the fact of adding the insurers as solidary defendants would not have any impact. From this perspective, the insured would not have to pay anything personally, even if part of the insurer’s liability was transferred to him". [Our translation]
The Court therefore declared the law firm mandated by the insurers not suitable to act as the attorneys of the insured, replaced it by another law firm to act as their attorneys and declared that the insurers had to assume the reasonable expenses for the insured’s defence.