Following a MVA, the Plaintiff sued the other driver, the municipalities (Durham and Clarington), the roadside lighting contractor (Langley), and the winter maintenance contractor (Miller). Zurich insured Miller and Durham was an additional insured under the Zurich policy. Dominion insured Langley and Clarington was an additional insured under the Dominion policy. Zurich and Dominion acknowledged their duty to defend Durham and Clarington, respectively, but an issue arose over the ability to retain and instruct counsel. The municipalities successfully argued that Zurich and Dominion were in a conflict of interest given that they were only liable to indemnify the municipalities to the extent of the contractors’ liability and would therefore favour the position of the contractors in the litigation. In light of the conflict, the court ordered that independent counsel be appointed by the municipalities and act at their instruction.
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