Dervisholli v. Cervenak, (2015) 333 O.A.C. 367 (DC)

• Judge: Marrocco, A.C.J.S.C., Kent and Edwards, JJ.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: Tuesday February 24, 2015
• Jurisdiction: Ontario
• Citations: (2015), 333 O.A.C. 367 (DC);2015 ONSC 2286

Dervisholli v. Cervenak (2015), 333 O.A.C. 367 (DC)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. MY.032

Mirjeta Dervisholli, Fatmir Dervisholli, Fatlum Dervisholli, Flamur Dervisholli and Leonora Dervisholli by their Litigation Guardian Hamide Dervisholli, the said Hamide Dervisholli (plaintiffs/respondents) v. Roman Cervenak (defendant/respondent) and State Farm Mutual Automobile Insurance Company added by Order pursuant to Section 258(14) of the Insurance Act R.S.O. 1990, c.I.8 as amended (statutory third party/appellant)

(DC-12-427; 2015 ONSC 2286)

Indexed As: Dervisholli v. Cervenak

Court of Ontario

Superior Court of Justice

Divisional Court

Marrocco, A.C.J.S.C., Kent and Edwards, JJ.

April 24, 2015.

Summary:

Dervisholli and Cervenak were involved in a motor vehicle collision. They were each insured by the same automobile insurer. Dervisholli applied for statutory accident benefits under her own policy. She and her five children also sued Cervenak. The insurer took the position that Dervisholli and Cervenak had staged the accident and denied coverage to both under their respective policies. An order was issued adding the insurer as a statutory third party to permit it to defend Dervisholli's action against Cervenak, without admitting coverage under the policy for Cervenak. The insurer retained the law firm of Reisler Franklin to represent it with respect to Dervisholli's claim for accident benefits and for the purpose of defending Dervisholli's claim against Cervenak. Separate lawyers from the firm represented the insurer in each matter. The insurer, in its capacity as the statutory third party, filed an affidavit of documents in which it listed documents obtained in relation to Dervisholli's claim for accident benefits as well as transcripts from the examinations under oath of not only Dervisholli, but other claimants from the same accident including passengers who had been in Cervenak's vehicle. There was no evidence that the other claimants consented to the release of the information from their accident benefits file. Dervisholli moved to have Reisler Franklin removed as solicitors for the insurer.

The Ontario Superior Court, in a decision reported at [2012] O.T.C. Uned. 7137, allowed the motion. The insurer appealed.

The Ontario Divisional Court dismissed the appeal.

Barristers and Solicitors - Topic 787

Duty to court - Disqualification of counsel - When available (incl. grounds) - Dervisholli and Cervenak were involved in a motor vehicle collision - They were each insured by the same automobile insurer - Dervisholli applied for statutory accident benefits under her own policy and sued Cervenak - The insurer took the position that Dervisholli and Cervenak had staged the accident and denied coverage under both policies - The insurer was added as a statutory third party to permit it to defend Dervisholli's action against Cervenak without admitting coverage under Cervenak's policy - The insurer retained the law firm of Reisler Franklin to represent it with respect to Dervisholli's claim for accident benefits and to defend Dervisholli's claim against Cervenak - The insurer, in its capacity as the statutory third party, filed an affidavit of documents in which it listed documents obtained in relation to Dervisholli's claim for accident benefits as well as transcripts from the examinations under oath of not only Dervisholli, but other claimants from the same accident including passengers who had been in Cervenak's vehicle - The Ontario Divisional Court affirmed a decision removing Reisler Franklin as solicitors for the insurer - Without Dervisholli's consent to, or a court order, the transmission of information in Dervisholli's accident benefit file to Reisler Franklin, the insurer allowed an unauthorized intrusion into Dervisholli's privacy interests which was contrary to the insurer's good faith obligation of utmost trust and fair dealing - This placed Reisler Franklin in an irreconcilable position of conflict - See paragraphs 37 to 62.

Barristers and Solicitors - Topic 1604

Relationship with client - Conflict of interest or duties - Acting for both sides - [See Barristers and Solicitors - Topic 787].

Barristers and Solicitors - Topic 1619

Relationship with client - Conflict of interest or duties - Situations resulting in a conflict - [See Barristers and Solicitors - Topic 787].

Insurance - Topic 730

Insurers - Duties - Duty of good faith - [See Barristers and Solicitors - Topic 787].

Insurance - Topic 737

Insurers - Duties - Duty of confidentiality - The Ontario Divisional Court, clarified the duties of an insurer which had the dual responsibility to provide both third party liability tort coverage as well as pay statutory accident benefits to a plaintiff - The court stated that "Whether or not an insurer is named as a defendant, or has itself added as a statutory third party where that insurer also has the contractual obligation to pay statutory accident benefits, such a situation triggers privacy concerns on the part of the claimant seeking payment of statutory accident benefits. In this situation, if it was not already made clear by the Bulletin [issued by The Insurance Bureau of Canada], the insurer with those dual responsibilities has an obligation to set up a firewall that prevents, without the consent of the insured/plaintiff, any dialogue or any transfer of the plaintiff/claimant's confidential accident benefit file to the tort adjuster." - See paragraph 56.

Cases Noticed:

Ernst & Young Inc. v. Chartis Insurance Co. of Canada et al., [2012] O.T.C. Uned. 5020; 2012 ONSC 5020, refd to. [para. 15].

Klingbeil et al. v. Worthington Trucking Inc. et al. (1999), 120 O.A.C. 159 (Div. Ct.), refd to. [para. 16].

Stratton v. Senger, [1996] O.J. No. 4774 (Gen. Div.), refd to. [para. 17].

MacDonald Estate v. Martin and Rossmere Holdings (1970) Ltd., [1990] 3 S.C.R. 1235; 121 N.R. 1; 70 Man.R.(2d) 241, refd to. [para. 28].

Beasley et al. v. Barrand, [2010] O.T.C. Uned. 2095 (Sup. Ct.), refd to. [para. 37].

Jones v. Tsige (2012), 287 O.A.C. 56 (C.A.), refd to. [para. 41].

Anand v. Belanger et al., [2010] O.T.C. Uned. 2345; 2010 ONSC 2345, refd to. [para. 47].

De Sousa v. Aviva Insurance Co. of Canada, [2013] O.T.C. Uned. 185; 2013 ONSC 185, refd to. [para. 49].

Song v. Hong, [2008] O.T.C. Uned. 533 (Sup. Ct.), refd to. [para. 50].

Counsel:

Sabrina Singh, for the plaintiffs/respondents;

Jonathan J. Barr and Benjamin J. Flanagan, for the statutory third party/appellant.

This appeal was heard at Hamilton, Ontario, on February 24, 2015, by Marrocco, A.C.J.S.C., Kent and Edwards, JJ., of the Ontario Divisional Court. Edwards, J.,  released the following decision for the court on April 24, 2015.