The City of Markham brought an application seeking a declaration that AIG had a duty to defend it in an underlying personal injury action, and that the City was entitled to appoint independent counsel at AIG's expense due to a conflict of interest.
AIG conceded the duty to defend but disputed the right to independent counsel, pre-tender costs, and argued Lloyd's should share defence costs.
The court found a reasonable apprehension of conflict of interest, entitling the City to independent counsel.
The court denied pre-tender costs based on policy wording and held AIG responsible for all defence costs, including uncovered claims, subject to a right of reimbursement from Lloyd's.
