Defendant’s application to sever a bad faith claim from a client for breach of contract. Application granted.
Nayyar v. Manufacturers Life Insurance Co.  B. C. J. No. 2200, October 7, 2010, British Columbia Supreme Court, P. W. Walker J. (in Chambers)
This was an application by the defendant insurer to sever the plaintiff’s bad faith claim from her claim for breach of contract. The plaintiff alleged that her insurer ha breached her contract for disability insurance by failing to pay her benefits. She also alleged a breach of fiduciary duty and negligence.
The court concluded that severance was appropriate in the circumstances of the case and that the bad faith claim should be tried at a later date if the plaintiff was successful with her breach of contract claim. That had been permitted in similar cases in the past.
The primary factor that is to be taken into consideration in an application to sever is whether there is a risk of disclosure of solicitor-client communications. The question of severance involves the weighing of the prejudice to each party. The prejudice the plaintiff asserted related to the delay and the cost of having a second trial. The court founded that such prejudice was insufficient to outweigh the prejudice that could be faced by a party that faced disclosure of solicitor-client privilege.
This case was digested by Kim Lee and edited by David W. Pilley of Harper Grey LLP.
Originally posted at Canadian Insurance Law Blog.