ICBC Law

When an infant (for the purposes of civil lawsuits anyone under 19 years of age is considered an ‘infant’ in British Columbia) is injured and wants to sue for damages they can’t start a lawsuit on their own.  They must do so through an adult ‘litigation guardian‘.

For obvious reasons, it is common for a parent to fill the role of litigation guardian.  Oftentimes in infant injury claims Defendants argue not only that the child is to blame for the accident but also that the child’s parents are to blame for failing to adequately supervise their children.  If this defence is raised against a parent litigation guardian it can place them in a conflict of interest.  So what can be done in this situation?  Reasons for judgement were released demonstrating one possible outcome to such a fact pattern.

In today’s case (Gill v. Morin) the Plaintiff was “grievously hurt” when his ATV struck or was struck by a car driven by the Defendant.  He started a lawsuit against the motorist with his mother acting as litigation guardian.  The Defendant denied fault and argued that the Plaintiff’s mother was to blame for “failure to adequately supervise (her) son”.

Once placed in this conflict of interest the Plaintiff’s mom applied to the Public Guardian and Trustee (”PGT”) and asked them to take over the lawsuit.  The PGT refused to do so unless they were “insulated from any claim for costs” in the event it turned out to be a losing lawsuit.

The parties turned to the Court for a solution.  The Plaintiff asked the Court to order that the PGT act as litigation guardian.  The PGT opposed this arguing that the lawsuit should simply be put on hold until the infant becomes an adult.  The Defendant opposed the PGT’s position arguing this would result in unfair delay.

The Court ultimately sided with the PGT and held that the lawsuit should be put on hold until the infant’s 19th birthday and from there he could decide whether to carry on with the lawsuit.  Master Keighley provided the following analysis:

[32] It is indeed regrettable that this defendant, who may eventually be found to be blameless with respect to this accident, may be obliged to wait several more years for the issues of liability and perhaps quantum to be resolved, but in the absence of any specific evidence, I am not prepared to find that the defendant is prejudiced by a stay of this action until the plaintiff obtains the age of majority. The limitation for this cause of action will not begin to run against the infant plaintiff until he reaches the age of majority on February 2, 2012 and it seems to be the defendant is no more prejudiced by a stay of proceedings then he would be had the plaintiff waited until then to commence this action.

Result

[33] In the result then, Piar will be removed as litigation guardian forthwith. The third party’s application to appoint the PGT as litigation guardian is dismissed. The action will be stayed until the infant plaintiff reaches the age of majority. Should counsel be unable to resolve the issue of costs, that issue may be brought back before me.

If you are faced with a similar dilemma this case is worth reviewing in full as the Court summarizes a handful of useful precedents disposing of similar applications at paragraphs 16-30 of the reasons for judgement.

I’ve written about this topic before and below I reproduce my previous post on Injury Lawyers working both sides of the fence.  I’m doing this because  I have been approached by a number of people who recently found out that their lawyer also acts on ICBC’s behalf in other Injury Claims.  These individuals apparently were not told this when they first retained their lawyers and their displeasure in learning this after the fact is understandable.

Before reproducing my previous post, however, I’d like to share my usual advice when people are confronted with this situation.  If you hired a capable lawyer who is doing a good job for you try to work things out.  The reason being is that if you hire a second lawyer you will have to pay a second lawyer.  If the lawyer’s failure to disclose this potential conflict of interest is a deal breaker then so be it, however, if it isn’t and the lawyer is doing an otherwise decent job save yourself the extra legal fees that come with hiring a new lawyer.  While I certainly don’t condone this lack of candor (and in case you’re wondering, No I don’t act for ICBC) it is important to keep focused on the big picture which is whether your lawyer is doing a good job.

With that out of the way, here is my previous post on this issue:

You’ve been injured in an accident. You don’t feel comfortable with how things have progressed with ICBC in your settlement negotiations so you decide to hire a lawyer. You find a qualified ICBC claims lawyer and off you go. You assume, reasonably so, that the lawyer is acting for you and not ICBC, right? Not always…

I have previously blogged about ICBC lawyers and ethics obligations and I write more on this topic.

If you are sued for a BC car accident and are insured by ICBC they will appoint a lawyer to defend your claim.  That lawyer has 2 potentially conflicting duties, they are 

1.  To you the client

2.  To ICBC (the client that is paying the bills)

This ‘joint retainer’ is permitted by the Law Society of BC provided that the interests of YOU THE CLIENT and ICBC don’t conflict.  If there is a conflict the lawyer must withdraw form the joint representation.

The Law Society’s Ethics Committee published information recently to hep ICBC defence lawyers to “avoid allegations of bad faith and professional negligence‘.  I thought this would be useful information for members of the public as well, particularly for anyone who may be concerned about the approach that a lawyer appointed by an insurance company in the defence of a tort claim is taking.  

Below is the article in it’s entirety which I am reproducing from the Law Society’s website:

http://www.lawsociety.bc.ca/publications_forms/alert/03-02.html

Avoiding allegations of “bad faith” and professional negligence in defending third-party liability claims

A lawyer appointed by an insurer to defend a third-party liability claim has two clients: the insurer and the insured. The lawyer owes obligations to both clients and, as discussed below, the insurer owes obligations to the insured. Care must be taken by the lawyer to identify and avoid conflicts of interest between the two clients and to ensure that they are both fully protected.

The words “bad faith” might conjure up the image of an uncaring lawyer who allows an insurer to disregard the interests of an insured when handling the defence of a claim. Such an approach by a lawyer is in fact very rare - almost without exception, counsel who are appointed to defend third-party liability claims recognize their obligations to both clients and do their best to provide thorough and timely advice as well as competent service. However, with the increasing size of damage awards, situations where there is inadequate insurance are becoming more frequent.

Although allegations of bad faith and professional negligence can arise in various circumstances, the risk is greatest when the insured faces a potential claim for damages for an amount greater than the available third-party insurance policy limits. Claims against insurers and defence counsel by insureds who find themselves facing large judgments in excess of their policy limits tend to fall into two broad classes:

• failing to settle the case before trial for an amount within the policy limits, or
• failing to provide a full defence and thus minimize the extent of the excess judgment.

It is almost invariably the insurer who has the ultimate power to make decisions about settlement and conduct of the defence. However, when an insured claims that the insurer has breached its good faith obligations in this regard, the insured and in some cases even the insurer may seek to shift blame for this to defence counsel.

Staying out of hot water

The Lawyers Insurance Fund has received increasing numbers of reports in recent years relating to the defence of actions arising out of motor vehicle accidents. A review of them gives rise to a number of observations and suggestions. These may help BC lawyers avoid being drawn into bad faith litigation if there is a judgment in excess of the available insurance limits:

• Write to the insured at the outset to advise of the retainer, its scope and its limitations. Be sure that the insurer is also aware of the scope and limitations of the retainer.
  
• Once appointed to defend, do not advise either party on insurance coverage issues. Do not act on behalf of the insurer in any action relating to insurance coverage issues (including Part 7 actions). Be aware of what the coverage issues are, so that you can identify conflicts and avoid them.
  
• If there is a possibility of a claim exceeding the limits, write to the insured advising of the risk of an excess judgment and the insured’s personal exposure to execution, recommend independent legal advice, advise of the possibility of conflicts of interest and explain your limited role - the defence of the case only. Instructions from the insurer are not required to send this letter. If the insurer has already provided such notice to the insured, review it for sufficiency.
  
• Consider recommending that the insurer obtain independent legal advice on any coverage issues and its obligations to its insured. Many insurers will be well aware of the need to do so, but there may be circumstances where it is appropriate to remind the insurer that such matters are not part of your role as defence counsel.
  
• Consider recommending that the insurer pay for independent counsel for the insured where there is significant uninsured exposure and where the insured is unable or unwilling to pay for counsel.
  
• Keep the insurer and the insured or insured’s independent counsel fully informed of all material information and developments. This includes providing copies of all reports to the insured or independent counsel.
  
• As with any case, conduct an investigation and assessment of liability and quantum and be alive to the need to revisit these issues with the emergence of additional information. If expert evidence may be helpful, seek instructions to obtain it. If there may be contributory negligence, seek instructions to develop the evidence to prove it.
  
• Be aware of and advise the insurer and the insured or independent counsel of all possible sources of recovery, including other insurance and third-party claims. It may be appropriate to advise independent counsel or the plaintiff’s lawyer that other possible sources of recovery could be pursued.
  
• Insurers are becoming increasingly concerned to limit defence costs. As an outgrowth of that concern, counsel are often put on a “short leash.” Be vigilant to ensure that the duties owed to the insured are not compromised by paying too much attention to the insurer’s concern with the “bottom line.” Most often these matters are capable of being resolved through a frank and open dialogue with the insurer. In those rare cases when a disagreement remains between counsel and the insurer on what is required to provide a full defence, advise the insurer and the insured or independent counsel of those concerns.
  
• Avoid making any admissions without the informed consent of the insured.
  
• With respect to settlement negotiations, advise both the insurer and the insured, or the insured’s independent counsel, of all offers made by other parties. Provide recommendations on all offers received and on offers that could be made on behalf of the insured. Address settlement at all stages of the litigation, even the early stages if it is apparent that the claim is likely to exceed the limits. When offers are extant, follow up to obtain instructions promptly.
  
• Be alive to the possibility of conflicts at all times. When acting for more than one defendant, consider whether there are any conflicts between them.
  
• Record your advice, instructions and steps taken in writing.

Most cases settle shortly before trial, a time when you will be preoccupied with preparation for trial. By addressing the issues outlined above well in advance, you will help ensure that the insurer and the insured are better prepared to address their relationship with respect to coverage and settlement issues should these arise immediately before trial.

The insurer’s duty to the insured

The leading two cases in BC respecting “bad faith” claims against insurers are Fredriksonv. Insurance Corporation of British Columbia (1990) 44 BCLR (2d) 303 (SC) and Shea v. Manitoba Public Insurance Corp. (1991) 55 BCLR (2d) 15 (SC). Both decisions arise out of motor vehicle accident claims, although most of the principles will likely apply in the handling of other liability cases. Defence counsel should be familiar with each case. As noted, when insurers breach their duties of good faith, defence counsel may be drawn into ensuing bad faith litigation for alleged failure to prevent this from happening.

In Shea, Finch, J. (as he then was) recognized the legitimate interest of an insurer to try to effect a saving on the policy limits if there exists a reasonable prospect of settling the claim for less than the limits (as was the case in Fredrikson). However, the insurer has no legitimate interest in trying to settle a claim for less than the policy limits when it is clear (as it was in Shea) that the claim will exceed the available coverage.

The obligations of an insurer to its insured, where the insured faces an excess exposure, were summarized by Finch J. in Shea, as follows:

I would summarize my view of the law touching on the insurer’s duty to its insureds in the circumstances of this case as follows:

1. The relationship between insurer and insured is a commercial one, in which the parties have their own rights and obligations;

2. Within the commercial relationship, special duties may arise over and above the universal duty of honesty, which do not reach the fiduciary standard of selflessness and loyalty;

3. The exclusive discretionary power to settle liability claims given by statute to the insurer in this case, places the insured at the mercy of the insurer.

4. The insureds’ position of vulnerability imposes on the insurer the duties:

a) of good faith and fair dealing;

b) to give at least as much consideration to the insureds’ interests as it does to its own interests; and

c) to disclose with reasonable promptitude to the insured all material information touching upon the insureds’ position in the litigation and in the settlement negotiations;

5. The fact that the insured is at the mercy of the insurer for the purposes of settlement negotiations gives rise to a justified expectation in the insured that the insurer will not act contrary to the interests of the insured or will at least fully advise the insured of its intention to do so;

6. While the commercial nature of the relationship permits an insurer to assert or defend interests which are opposed to, or are inconsistent with, the interests of its insured, the duty to deal fairly and in good faith requires the insurer to advise the insured that conflicting interests exist and of the nature and extent of the conflict;

7. The insurer’s statutory obligation to defend its insured imposes on the insurer, where conflicting interests arise, a duty to instruct counsel to treat the interests of the insured equally with its own; and where one counsel cannot adequately represent both conflicting interests, an obligation to instruct separate counsel to act solely for the insureds, at the insurer’s own cost;

8. The insurer’s duty to defend includes the obligation to defend on the issue of damages, and to attempt to minimize by all lawful means the amount of any judgment awarded against the insured. In this case, that would include arguing that court order interest and no fault benefits are payable in addition to the policy limits, where such an argument is available in law; and

9. Defence preparations and settlement negotiations must take place in a timely way and, where last minute negotiations are required, advance planning must be made to ensure that the insureds’ interests are given equal protection with those of the insurer.

*  *  *

If an insurer complies with these guidelines, there is little likelihood that a claim will be advanced against the insurer for bad faith or against counsel for professional negligence.

You’ve been injured in an accident. You don’t feel comfortable with how things have progressed with ICBC in your settlement negotiations so you decide to hire a lawyer. You find a qualified ICBC claims lawyer and off you go. You assume, reasobly so, that the lawyer is acting for you and not ICBC, right? Not always…

Lawyers typically have many clients. Many ICBC claims lawyers work both sides of the fence, that is, they represent injured people in advancing ICBC claims on some files and on other files they represent ICBC in defending against ICBC injury claims. Other lawyers restrict their practice to one side or the other.

Many people see lawyers working both sides of the fence as an inherent conflict of interest. They want their lawyer to represent injured people only, not insurance companies. Others like the idea that their lawyer also represents ICBC sometimes because perhaps such a lawyer has better insight into the defence tactics used by ICBC.

The problem, and the reason why I write this post, is that sometimes the potential conflict of interest is much worse than simply having a lawyer who works both sides of the fence. It is a problem of a lack of informed consent.

ICBC has contracted with many law-firms in BC for services in the defence of motor vehicle accident claims. ICBC requires some of these firms to sign an agreement called the Strategic Alliance Agreement (SAA).

Under the SAA, law firms whose lawyers are retained to act for ICBC are not permitted, when representing a plaintiff on another file, to sue ICBC for bad faith or to seek punative, aggravated or exemplary damages against ICBC.

Specifically, the SAA states that “ICBC may impose penatlies against the firm…..(where) the firm, or any member of the legal team, in the performance of the legal services, fails to act in the best interests of ICBC or ICBC’s insureds…”

Also, that “members of the legal firms team will not directly or inderectly: commence or participate in claims or actions, or counsel or assist others in bringing claims or actions against ICBC which include allegations of bad faith, or claims for punitive, aggravated or exemplary damages.”

What a conflict of interest!

The Law Society of BC (the institution that governs lawyers in BC) has held that it is ok for a lawyer who represents ICBC and who is bound by the terms of the SAA to also act against ICBC in another claim. HOWEVER, clients need to be advised about this potential conflict of interest. Sepcifcially, “A lawyer (bound by the SAA) may properly act against ICBC for clients whose cases fall outside of the restrictions. However, a lawyer acting in these circumstances MUST ADVISE THESE CLIENTS OF THE LAWYER’S RELATIONSHIP WITH ICBC AND THE IMLICATIONS OF THE RESTRICTIONS THE LAWYER IS UNDER.

It is all about informed consent. There is nothing wrong in hiring a lawyer to represent you who has signed the SAA but you are entitled to know about these restrictions. If you know about these restricitons you may not want to hire such a lawyer and instead retain an icbc claims lawyer who is not bound by any contractual restrictions with ICBC. Ask your lawyer if he signed the SAA, you may be surprised by the answer.

If your lawyer signed the SAA and did not tell you this up front, you were deprived of an opprotunity to make an informed decision. If this occurred you may want to ask yourself why your lawyer kept this information from you…?

Do you need to speak with an ICBC Claims Lawyer?  Contact Erik Magraken for a free consulation.