Advance loans
Health Care Costs Recovery Act
Allegations of "bad faith" and negligence in personal injury defence

Advance loans

The following is a summary of Advance loans: A risk to the plaintiffs bar, reported through E-Brief, July 2012.

The Lawyers Insurance Fund has seen a dramatic increase in claims reported by the plaintiffs bar relating to ‘advance loans’. These are loans given to your plaintiff clients in anticipation of a settlement or judgment relating to a personal injury or other tort claim. Although the typical loan is small, the amount owing by the time the litigation resolves may be much more because of high interest rates and fees.

This lending practice may provide some financial relief to your plaintiff clients. However, it puts you at significant risk if the loan is outstanding. If you are actually involved in your client’s loan application, you face additional risks.

Protect yourself by taking these steps (read more):

  • Create and use systems to ensure you comply with any assignments or undertakings
  • Pay particular attention to assignments if you transfer or inherit a file
  • Be cautious about undertakings
  • Do your own review and follow-up
  • Don’t give an unqualified opinion
  • Either advise your client on any loan application, or confirm you are not

Health Care Costs Recovery Act

The following was published as New legislation impacts personal injury lawsuits, Notice to the Profession, April 2009.

Lawyers should be aware of the Health Care Costs Recovery Act and Regulation, which came into force on April 1, 2009.

The Act applies to personal injury and wrongful death actions except those that arise from motor vehicle accidents where ICBC insures the defendants. Some provisions of the Act apply to actions started before April 1, 2009. The Act may also apply to settlements where litigation has not been commenced.

The Act creates obligations on a plaintiff to claim in the action past and future "health care services" as defined in the Act. There are requirements to give notice to the provincial government of such actions and to obtain the consent of the government to the settlement of such actions. There are other obligations created by the Act that affect plaintiffs, and some that affect defendants and insurers of defendants.

The Health Care Costs Recovery Act and associated regulations are available online at

Allegations of "bad faith" and negligence in personal injury defence

The following is a summary of Avoiding allegations of "bad faith" and professional negligence in defending third-party liability claims, Alert! October 2003.

A lawyer appointed by an insurer to defend a third-party liability claim has two clients: the insurer and the insured. The lawyer owes obligations to both clients, and the insurer owes obligations to the insured. Care must be taken by the lawyer to identify and avoid conflicts of interest between the two clients and to ensure that they are both fully protected.

Although allegations of bad faith and professional negligence can arise in various circumstances, the risk is greatest when the insured faces a potential claim for damages for an amount greater than the available third-party insurance policy limits. Claims against insurers and defence counsel by insureds who find themselves facing large judgments in excess of their policy limits tend to fall into two broad classes: failing to settle the case before trial for an amount within the policy limits; or failing to provide a full defence and thus minimize the extent of the excess judgment.

Read more for:

  • observations and suggestions that may help you avoid being drawn into bad faith litigation if there is a judgment in excess of the available insurance limits.
  • a review of two leading cases in BC respecting ‘bad faith’ claims against insurers offers guidance on the insurer’s duty to the insured where the insured faces an excess exposure.