in the supreme court of british columbia - Clark Wilson LLP

British Columbia Medical Association v. Aviva Insurance
Company of Canada Page 24
[70] I agree with the submission of counsel for BCMA that the business of BCMA
includes the expression of different and opposing views and promoting vigorous
debate. It is possible for Dr. Wang to succeed against the defendants without a
finding that the alleged defamation occurred outside the scope of the business of
BCMA, which include its governance and election processes.
[71] Finally, with respect to the third stage, the defamation plea is a properly
pleaded, non-derivative claim that could potentially trigger indemnity if it were to
succeed at trial. Accordingly, I conclude that Aviva is required under the terms of its
policies to provide a defence to both BCMA and the Individuals.
2011 BCSC 1399 (CanLII)
Conduct of the Defence
[72] In general, when the insurer defends against a claim it has the right to control
the defence, including the right to appoint and instruct counsel. However, the right of
the insurer to control the defence is not absolute (see Brockton (Municipality) v.
Frank Cowan Co. (2002), 57 O.R. (3d) 447 (Ont. C.A.) [Brockton]. In Brockton,
Goudge J.A., referencing the judgment in Zurich of Canada v. Renaud & Jacob,
[1996] R.J.Q. 2160 (C.A.), stated the test to be, at para. 41:
...that the potential tension which inheres in the relationship between the
insurer and the insured and which is manifested by the reservation of rights
by the insurer is not per se sufficient to require the insurer to surrender
control of the defence. It would too quickly cost the insurer the right it
contracted for. Rather, the focus must be on the mandate given by the insurer
to the counsel it appoints to conduct the defence. Do the circumstances of
the particular case create a reasonable apprehension of conflict of interest if
that counsel were to act for both the insurer and the insured in defending the
action? If the insurer puts counsel in a position of having conflicting
mandates it must surrender control of the defence to an insured who wishes
to retain its own counsel paid for by the insurer. [Emphasis added.]
[73] In Brockton, the Court noted that the fact that the insurer had reserved rights
would not in itself be sufficient to give rise to a conflict of interest. Rather, as noted at
para. 42, citing with approval the California Court of Appeal decision in Foremost
Insurance Co. v. Wilks, 253 Cal. Rptr. 596, (1988):
[I]n Foremost Insurance Co. v. Wilks, 253 Cal. Rptr. 596, (1988), the
California Court of Appeal made clear that not every case where the insurer