Her Majesty the Queen in Right of Ontario (HMQ), as an additional insured under an AIG policy, applied for an order entitling it to appoint independent counsel at AIG's expense for two underlying actions and for reimbursement of pre-tender legal and administrative expenses.
AIG acknowledged its duty to defend but asserted its right to select counsel and denied pre-tender costs.
The court dismissed HMQ's application, finding that AIG's "split file" protocol adequately addressed any "party-based" conflict of interest and that HMQ failed to establish a "coverage-based" conflict.
The court also held that pre-tender defence costs were not recoverable due to voluntary payment wording in the policy.
