On August 13th, 2009, the Court of Appeal rendered its decision in the case Gagnon v. Sinotte, which opposed a teacher who had sued the parents of one of her students for certain statements made, which, allegedly defamed her.

The defendants had filed a counter suit against the teacher for general and punitive damages. This counter suit was based upon statements made by the school board employing the teacher, during a press conference held in order to defend the teacher.

The teacher informed its liability insurers of the counter suit filed against her, and the insurers hired a law firm, different from the one hired by the teacher to defend her as a defendant into the counter suit.

The defendants in the main action filed a motion to dismiss the appearance of the new law firm based on the principle that a party to a lawsuit can only be represented by one attorney. Only one law firm could represent the teacher, as plaintiff and defendant in the counter suit.

The Superior Court rendered judgment in favor of the defendants, stating that the principle to the effect that a party can only be represented by one attorney applied in this case. The Superior Court held that there was only one dispute between the parties. Both the main action and the counter suit were claims for defamation and damages to reputation.

The Court of Appeal was of the opinion that there was no identity between the two actions. Indeed, the teacher was suing the defendants for the actions and declarations uttered in public which had damaged her reputation whereas the defendants were counter suing the teacher for statements made by the teacher’s employer, the school board. As such, the counter suit could easily have constituted a separate dispute.

The Court of Appeal stated that one must not confuse identity of action with connection. Connection between two actions does not necessarily mean there is identity.

The dispute raised in the counter suit was a distinct matter and as such the liability insurer had the right to appoint its own attorney to represent the interests of its insured in the counter suit, without being bound by the choice made by the insured in the main action.

The Court of appeal also relied on the case law which recognizes the rights of both insured and insurer to be represented by different attorneys, when the amount of the action exceeds the limits set in the insurance policy. The Court of Appeal stated that the contractual relationship between the insurer and the insured, which is recognized by the law (for example, the obligation to defend the insured, pursuant to Article 2503 of the Civil Code of Quebec), constitutes an undeniable exception to the rule whereby a party can only have one attorney, where an action raises issues which are within the exclusive interest of either the insured or the insurer.

Finally, concerning the practical aspect of the dual representation of an insured, the Court of Appeal stated that it will be up to the trial judge to establish the conduct of the attorneys so as to permit each party to assert its rights while avoiding duplication.