Terms and conditions of indemnification
8. (1) Every right of a protected entity to be indemnified under subsection 32 (1) or (2) of the Act and every obligation of an indemnifier to indemnify under either of those subsections is subject to the terms and conditions set out in subsections (2) to (11). O. Reg. 273/10, s. 8 (1). (2) Each protected entity that receives a notice of a claim, whether actual or threatened, shall forthwith deliver it to the indemnifier of the protected entity. O. Reg. 273/10, s. 8 (2). (3) Upon the written request of the indemnifier, each protected entity shall provide to the indemnifier copies of all documents and any other information relating to the claim that are in the possession or under the control of the protected entity. O. Reg. 273/10, s. 8 (3). (4) Each protected entity shall take all reasonable steps necessary to secure and preserve its rights in respect of the claim and, if the protected entity has a right to commence a proceeding against another person, whether for damages or indemnification or otherwise, in respect of a matter for which the protected entity claims indemnification from an indemnifier, the protected entity shall assign that right to the indemnifier and subrogate the indemnifier to that right to the extent of the amounts paid by the indemnifier or for which the indemnifier is liable under the indemnification. O. Reg. 273/10, s. 8 (4). (5) Each protected entity shall not voluntarily assume any liability in respect of a claim or any proceeding relating to a claim or settle or compromise the claim or proceeding without obtaining the prior written consent of the indemnifier. O. Reg. 273/10, s. 8 (5). (6) The indemnifier shall have the right to participate in the negotiation, settlement or defence of the claim and any proceedings relating to it or appeal of it, including the determination of the defences to raise and the grounds upon which to seek or oppose an appeal, but the indemnifier may not settle any action commenced against a protected entity without the written consent of the protected entity. O. Reg. 273/10, s. 8 (6). (7) If the indemnifier elects to participate in the negotiation, settlement or defence of the claim and any proceedings relating to it or appeal of it, each protected entity shall cooperate fully with the indemnifier in that connection and shall agree to be represented by legal counsel chosen by the indemnifier, unless, in the opinion of the counsel, there would arise a conflict of interest preventing the counsel from representing the protected entity. O. Reg. 273/10, s. 8 (7). (8) If the legal counsel chosen by the indemnifier is of the opinion that a conflict of interest prevents the counsel from representing the protected entity, the protected entity shall be entitled, subject to the prior written approval of the indemnifier, to retain legal counsel of the protected entity’s choice. O. Reg. 273/10, s. 8 (8). (9) The indemnifier may withhold its approval in relation to any legal counsel proposed by the protected entity if the counsel cannot be retained on terms, including fees, that are consistent with the established policies of the indemnifier for retaining legal counsel. O. Reg. 273/10, s. 8 (9). (10) Subject to subsection (11), the fees and expenses of the protected entity’s legal counsel incurred in representing the protected entity shall be costs to which the indemnification extends. O. Reg. 273/10, s. 8 (10). (11) If the indemnifier withholds its approval under subsection (9) solely because the fees of the proposed legal counsel exceed the fees that are consistent with the established policies of the indemnifier for retaining legal counsel, the protected entity may retain the counsel but the right of the protected entity to be indemnified for the counsel’s fees shall be limited to the amount that would be payable by the indemnifier under its established policies for retaining legal counsel. O. Reg. 273/10, s. 8 (11). (12) If the indemnifier is not also a party to a claim, the protected entity shall consent to any order or leave for which the indemnifier may apply to be added as a party or to be allowed to make representations on its own behalf without being a party. O. Reg. 273/10, s. 8 (12). (13) The amount of indemnification that a protected entity is entitled to receive from the indemnifier shall be reduced by all amounts that the entity has received or is entitled to receive from any other source as a recovery or reimbursement of any of its claims. O. Reg. 273/10, s. 8 (13).