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City entitled to independent counsel at insurer's expense due to conflict of interest in mixed claims.
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.
Insurer ordered to produce underwriting and investigation files in coverage and bad faith dispute.
The moving party sought an order compelling the insurer and broker defendants to produce additional documents and deliver a further and better affidavit of documents in an action concerning insurance coverage and alleged breach of the duty of utmost good faith.
The dispute arose after the insurer denied coverage relating to failures of transformers in solar installations, and the plaintiff alleged the defendants conducted an inadequate investigation and acted in bad faith.
The court held that the agency agreement between the insurer and broker, the underwriting file, and the claims and investigation files were relevant to issues of coverage and bad faith and therefore producible.
The court further found that the defendants failed to properly establish claims of solicitor‑client privilege and litigation privilege and ordered more particularized privilege schedules.
The motion was granted and the defendants were ordered to produce the requested documents and communications within 30 days.
