In his February 2, 2015 decision in Mallory v. Werkmann Estate, Strathy
C.J.O. removed counsel for an insured when one of the grounds of
appeal in the notice of appeal was contrary to the interests of the
insured, suggesting counsel's loyalty lay with the insurance
company that had retained him. That insurance company's motion
for leave to intervene was also dismissed because it was not clear
how it would be affected by the judgment and, to the extent that it
might be, it was partially the architect of its own misfortune. The
decision is a cautionary tale about never forgetting one's duty
of loyalty to one's client. It also emphasizes the importance
of a third party not "waiting to see" whether it will be
affected by a case and only then attempting to intervene at a late
Removal of Counsel
Strathy C.J.O. found that "removing counsel for the
appellant [was] necessary to protect the administration of justice
and avoid the appearance of impropriety" (para. 28). Even
though this is a high standard, he wrote:
 It was not in the
appellant's interest to include the issue of his own insurance
coverage as a ground of appeal. The inclusion of ground 8 gives
rise to a clear conflict between the interests of the appellant on
the one hand and the interests of his insurer on the other. The
same is true of ground 7.
 The inclusion of these grounds
gives rise to the inescapable conclusion that defence counsel was
acting on the instruction of the insurer to advance a ground of
appeal contrary to the interests of the insured.
 In the circumstances, it would
bring the administration of justice into disrepute to permit
[counsel] to continue to act as counsel for the appellant. The
motion to remove that firm is granted.
Motion to Intervene
Strathy C.J.O. also denied the insurance company's
intervention motion. It was unclear how the insurance company would
be affected by the decision but, in any event, it had had ample
time to put forward its position in the litigation prior to the
appeal but had chosen not to do so:
 [...] RSA seeks to intervene as
an added party under rule 13.01(1)(b), on the basis that it may be
adversely affected by a judgment in the proceeding.
 RSA's real complaint is that
it will be affected by the trial judge's finding that the
appellant had insurance coverage. However, RSA has not established
how it will be adversely affected by a finding of fact in a
proceeding to which it was not a party. Although the judgment had
still not been taken out when the parties appeared before me, I am
not satisfied that RSA will be adversely affected by the judgment
in the proceeding. Therefore, it has not met the test for
 Second, even if the finding
could adversely affect RSA's interests, RSA is partly to blame
for the situation it finds itself in.
 At the opening of trial, the
trial judge attempted to clarify the scope of issues that would be
 I have read the transcript of
the ensuing discussion that occurred with counsel. The trial judge
specifically raised the issue of coverage. When defence counsel,
who was appointed and paid by RSA, responded that RSA had not made
a decision on coverage, the trial judge raised the prospect of a
conflict of interest. [...]
 It took no steps prior to the
judgment being released to clarify these points [important to it]
and bears some responsibility for the resulting confusion. It could
have added itself as a statutory third party pursuant to s. 258(14)
of the Insurance Act, but chose not to.
 Moreover, after the trial, RSA
failed to pursue the invitation to contact the trial co-ordinator
to arrange an appointment before the trial judge. Counsel submits
this was not done because RSA had no standing and would not have
been permitted to make submissions on the point. This was not a
foregone conclusion. The judgment had not been taken out at that
time, the judge was not functus, and if there was any
issue concerning the court's order or any alleged error in the
reasons, it should have been brought directly to the attention of
the trial judge.
 RSA is not in a position to now
complain on appeal about the confusion surrounding coverage.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
A recent decision of the Ontario Court
of Appeal, D'Onofrio v. Advantage
Car & Truck Rentals Ltd., 2017 ONCA 5,
asks whether a party who takes "no
position" on a summary judgment
motion is later bound by the motion
judge's findings in the ongoing
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).