Neutral Citation: 1995 ONICDRG 125
File No. A-000948
ONTARIO INSURANCE COMMISSION
BETWEEN:
ETELA DUNKOVA
Applicant
and
CANADIAN GENERAL INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Issues:
The Applicant, Etela Dunkova, was injured in a motor vehicle accident on November 1, 1990. She applied for and received statutory accident benefits from Canadian General Insurance Company ("Canadian General"), payable under Ontario Regulation 6721 (the "Schedule").
Canadian General contends that in December 1992, there was a final settlement of Ms. Dunkova's entitlement to weekly income benefits payable pursuant to section 12(1) of the Schedule.
The Applicant submits that any agreement reached in December 1992, pertained only to a lump sum advance payment of one year of benefits.
The parties were unable to resolve their dispute through mediation and the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issue in this preliminary hearing is:
- Did the parties settle Ms. Dunkova's claim for weekly income benefits?
Ms. Dunkova also claims her expenses incurred in respect of this hearing on a preliminary issue.
Result:
- The parties did not settle Ms. Dunkova's claim for weekly income benefits.
Ms. Dunkova is entitled to her expenses incurred in respect of this hearing on a preliminary issue.
Hearing:
This hearing was held in North York, Ontario, on July 4 and 12, 1995, before me, Lawrence Blackman, arbitrator.
Present at the Hearing:
Applicant:
Etela Dunkova
Applicant's
Irwin Ozier
Representative:
Barrister and Solicitor
Insurer's
William R. Middleton
Representative:
Barrister and Solicitor
The proceedings were transcribed by Ms. Karin Jenkner and Ms. Tracy Hartley of Holley & Strauch, court reporters.
Witnesses:
Johann Nishikawa, Senior Claims Analyst, Canadian General Insurance Company
Sheri Emery, former employee of Medex
Gordon Powell, former manager - Accident Benefits Section, Canadian General Insurance Company
Douglas Hurlbut, senior Ontario claims manager, Canadian General Insurance Company
Etela Dunkova, the Applicant
Pavel Dunka, the Applicant's son
Ms. Dunkova's testimony was given through interpreters of Czech and English, Ms. Marie Attard and Ms. Jarmila Waldstein.
Exhibits:
Exhibit 1
File record of Ms. J. Nishikawa, dated May 1, 1992.
Exhibit 2
File record of Ms. J. Nishikawa, dated May 26, 1992.
Exhibit 3
File record of Ms. J. Nishikawa, dated June 27, 1992 and July 3, 1992.
Exhibit 4
File record of Ms. J. Nishikawa, dated August 11 to December 3, 1992.
Exhibit 5
File record of Ms. J. Nishikawa, dated December 7 and December 8, 1992.
Exhibit 6
Cheque stub dated December 9, 1992.
Exhibit 7
File record of Ms. J. Nishikawa, dated May 18, 1993.
Exhibit 8
File record of Ms. J. Nishikawa, dated June 7 and June 10, 1993.
Exhibit 9
Authorization signed by Ms. Etela Dunkova, dated January 17, 1994.
Exhibit 10
Release signed by Ms. Etela Dunkova, dated December 11, 1992.
Authorities provided by Canadian General's legal representative:
Fahimeh Abedi and Pilot Insurance Company, June 22, 1994, OIC File No. P-002705.
Margaret Love and State Farm Mutual Automobile Insurance Company, October 13, 1993, OIC File No. A-003806.
Ben Bennett and Allstate Insurance Company of Canada, October 19, 1993, OIC File No. A-002389.
Mauricio Peixeiro and Allstate Insurance Company of Canada, March 21, 1994, OIC File No. A-005097.
Authorities provided by the Applicant's legal representative:
Squires v. Noel (1959), 1959 CanLII 714 (NL SC), 44 M.P.R. 135 (Nfld. S.C.)
Pridmore v. Calvert et a. (1975), 1975 CanLII 1091 (BC SC), 54 D.L.R. (3d) 133 (B.C.S.C.)
Beach v. Eames (1976), 1976 CanLII 650 (ON HCJ), 82 D.L.R.(3d) 736
Cormier v. Henwood et a. (1979), 1979 CanLII 3227 (NB SC), 25 N.B.R.(2d) 316
Martin v. Schneider (1984), 1984 CanLII 5966 (BC SC), 6 C.C.L.I. 93 (B.C. Co. Ct.)
Evidence and Findings:
Background:
Ms. Dunkova is a 49 year old native of the former Czechoslovakia, where she completed high school. She arrived in Canada in 1984. She was widowed in 1986. Her only employment in Canada was serving beer in a bar. Ms. Dunkova testified that she neither reads nor writes English and that her spoken English is extremely limited. She conceded, however, that she always communicated with representatives of Canadian General in English.
Following her November 1, 1990 motor vehicle accident, Ms. Dunkova applied for and received weekly income benefits in the amount of $185.00 from Canadian General, which was subsequently adjusted to $185.60, in accordance with section 12 of the Schedule.
In December 1992, the claims adjuster handling Ms. Dunkova's file was Ms. Johann Nishikawa. Ms. Nishikawa testified that she has been a claims adjuster since 1978. Her practise was to make written notes summarizing conversations and meetings immediately after they occurred. She testified that by December 1992, she had spoken to Ms. Dunkova on several occasions, always in English.
At the beginning of December 1992, Canadian General was still paying Ms. Dunkova weekly income benefits. Canadian General was not contemplating terminating her benefits. Indeed, Ms. Nishikawa's file notes indicate that at that time Canadian General was taking steps to retain a caseworker to assist in Ms. Dunkova's rehabilitation.
Ms. Nishikawa testified that relations between Ms. Dunkova and Ms. Nishikawa's predecessor on the file had been rather tense, and that "communications sort of broke down". Ms. Dunkova testified, however, that Ms. Nishikawa was "always polite", and "I could manage with her".
December 8, 1992 telephone call by Ms. Dunkova to Ms. Nishikawa
Ms. Nishikawa gave oral testimony, which was supported by her written notes, that Ms. Dunkova telephoned her on December 8, 1992. Ms. Dunkova indicated to her that "instead of getting the runaround she felt our company was giving her, she would prefer to take a cash settlement at that time". Ms. Nishikawa testified that Ms. Dunkova "requested that we consider paying one year's of benefits to her"(sic).
Ms. Nishikawa stated that this request took her by surprise. She calculated that one year of benefits amounted to about $9,000.00. Her file notes indicate the precise sum of $9,651.20. Although in Ms. Nishikawa's words, "$9,000 doesn't seem much nowadays", she was not comfortable with this amount. She told Ms. Dunkova that she would discuss the matter further with her supervisor, Mr. Gordon Powell.
Ms. Dunkova testified that she herself did not have any telephone conversation in December 1992 with anyone from Canadian General about a settlement, but that her son did have such a discussion. Her evidence was equivocal about whether she had ever spoken to anyone at Canadian General by telephone.
I found Ms. Dunkova's evidence concerning the alleged discussion of December 8, 1992 self-serving, evasive and implausible.
I accept the evidence of Ms. Nishikawa, that Ms. Dunkova phoned her on December 8, 1992, seeking one year of benefits. I prefer it to the evidence of the Applicant, based on the Applicant's vagueness and evasiveness on this point.
December 8, 1992 telephone call from Mr. Dunka to Mr. Powell
Mr. Gordon Powell has been an adjuster since 1982. In December, 1992, he was claims manager at Canadian General.
Ms. Nishikawa testified that before she had an opportunity to discuss Ms. Dunkova's proposal with Mr. Powell, Ms. Dunkova's son Pavel Dunka, contacted Mr. Powell by telephone "directly after our conversation".
Mr. Powell testified that he received a telephone call from Mr. Dunka almost simultaneous to discussing with Ms. Nishikawa the possibility of resolving "the file" with a lump sum payment.
Mr. Powell believed that he received this call in the early part of December 1992. He did not make any notation of the conversation.
Mr. Powell indicated that the son advised that his mother was tired of coming to Canadian General to pick up cheques and wanted to resolve "the entire issue".
The suggestion to Mr. Powell was that at least one year of benefits would be fair. This conversation was held in English.
Mr. Powell believed that Mr. Dunka mentioned the sum of $10,000.00. Mr. Powell, at Mr. Dunka's insistence, gave a completely arbitrary response of $6,000.00, without first speaking to Ms. Nishikawa or reviewing the file. The conversation ended on the note that Mr. Dunka would get back to Mr. Powell.
Mr. Dunka testified that he spoke to someone at Canadian General in December 1992, possibly Mr. Powell. He was 17 at that time. His intent was to arrange a lump sum advance payment for his mother rather than have her receive periodic payments. He believes that he calculated the amount to be $8,000.00. He stated that Mr. Powell was to call him back. He further testified that Mr. Powell did call him back to say that the cheque could be picked up.
Mr. Dunka gave his evidence in English and appeared to be comfortable in that language.
The evidence was consistent that Mr. Powell did not speak to Ms. Dunkova in this conversation.
Ms. Dunkova testified that her understanding from her son was that Canadian General had agreed to pay her one year of benefits at one time, which meant that she would not have to go down to Canadian General's offices to pick up her cheques.
Subsequent ("December 8, 1992") meeting
The evidence before me was very confusing as to when, or if, a subsequent meeting occurred, who was present, what was said, and most importantly, what, if anything was agreed.
Ms. Nishikawa's recollection was that Ms. Dunkova arrived unexpectedly at Canadian General's offices later the same day on December 8, 1992, and that a meeting ensued. Ms. Nishikawa does not recollect whether Mr. Dunka was present at this meeting. She stated that Mr. Powell was not present.
Mr. Powell, however, testified that he was present for part of a meeting, which he said did not take place the same day as his telephone call with Mr. Dunka, but rather a few days later. He testified that both Ms. Dunkova and her son were present at this meeting, in addition to Ms. Nishikawa.
Mr. Dunka testified that he was not at this meeting.
Ms. Dunkova, in cross-examination, denied that this meeting ever took place, although in chief, she testified that after her son's telephone call to Canadian General, she went to their office for "some explanation and help", but was told that she needed a lawyer, which she could not afford.
Ms. Nishikawa testified that Ms. Dunkova stated that Mr. Powell's "offer" was not enough for her pain and suffering. Ms. Nishikawa further testified that she "made it clear" to Ms. Dunkova that the "settlement" was "not a pain and suffering . . . settlement . . . It was purely for weekly benefits for resolving the matter of the weekly benefit of 185.60 (sic) or whatever the proper amount should be, and at the same time advising that this is not releasing her of her rights to collect under the medical and rehabilitation benefit section in the policy".
Again, Ms. Nishikawa testified that Ms. Dunkova "wanted the one-year compensation weekly benefits. Our offer was less than that amount" (sic). A figure of $8,000.00 was then discussed.
Ms. Nishikawa noted that Ms. Dunkova "was still very concerned about her condition. There seemed to be a need for money". Ms. Nishikawa's notes indicate that Ms. Dunkova told her that "her doctor says she never will work again".
Ms. Nishikawa testified that "my feeling was that we would settle it for the $8,000" (emphasis added). However, Ms. Nishikawa indicated that she first wished to rule out the possibility that Ms. Dunkova was still represented by counsel who had been noted previously on the file. Ms. Nishikawa also testified that she wished to contact the Insurance Crime Prevention Bureau (ICPB) to confirm that Ms. Dunkova was not involved in any other accident. Her notes also indicate that the issue would be discussed with Mr. Powell.
Ms. Nishikawa agreed with Mr. Ozier's statement, that things ended on the 8th of December on the basis that "It looks like we have a deal but I'll get back to you" (emphasis added).
Ms. Nishikawa's written notes do not indicate that she accepted the figure of $8,000.00 which she testified was put forward by Ms. Dunkova.
Ms. Nishikawa subsequently did contact the ICPB, which did not have a record of the Applicant. She did not succeed in speaking with the lawyer noted on the file.
Mr. Powell testified in chief that Ms. Dunkova and her son wanted to resolve settlement of the "entire" claim. However, he later clarified that even though Canadian General intended to close this file, it might have paid possible minor outstanding bills.
Mr. Powell testified that he had no further dealings with the Dunkova file after he left the meeting. In cross-examination however, he stated that he subsequently spoke to Ms. Nishikawa who advised that there was a "done deal".
Ms. Nishikawa testified that she had no subsequent meetings or conversations with the Applicant or her son. Although she requisitioned a cheque for $8,000.00, she never confirmed with Ms. Dunkova that "'there was a deal". She however, did "'feel comfortable with the fact that, when she (Ms. Dunkova) picked that Release up, or the cheque up for $8,000, that she knew that it was for the weekly benefits and it was for a final payment for that section of the claim".
December 11, 1992 attendance at Canadian General
Ms. Dunkova testified that "someone", possibly Mr. Powell, called her son, telling him to come to the offices of Canadian General to pick up a cheque. She attended and was given a cheque for $8,000.00, which she thought was for accident benefits for one year.
It was her evidence, that while she was on the elevator and about to leave the premises of Canadian General, "some gentleman" placed in front of her, for her signature, a document, which was covered by another piece of paper. Only a signature line on the document was showing. Ms. Dunkova testified that she did not read the document. She testified that she can neither read nor write English. This evidence was not seriously challenged in cross-examination. She stated that she signed the document without knowing what she had signed. It was her evidence that she was often asked to sign documents at the offices of Canadian General.
Mr. Hurlbut has been in claims adjusting since 1969. In 1992, he was senior Ontario claims manager for Canadian General.
Mr. Hurlbut testified that his first dealing with the Dunkova "settlement" was on December 11, 1992 when he was told by reception at Canadian General that the "Dunkovas" (emphasis added) were coming to the company office to pick up a cheque which was on the file.
Mr. Dunka testified that he did not think that he accompanied his mother to pick up this cheque.
Mr. Hurlbut was not familiar with the discussions that had preceded. However, as neither Ms. Nishikawa nor Mr. Powell were in their offices, Mr. Hurlbut decided to deal with the matter.
Mr. Hurlbut located and reviewed the file. He scripted a release, which was left with a cheque for $8,000.00, at the reception area.
Mr. Hurlbut testified that it was his understanding based on the notes to file that the "settlement" was only for disability benefits, and not for supplementary medical or rehabilitation benefits.
The release drafted by Mr. Hurlbut, however, as he candidly admitted, does not reflect what "the actual settlement was".
The release signed by Ms. Dunkova is reproduced below. The handwritten insertions of Mr. Hurlbut are underlined.
FINAL RELEASE
IN CONSIDERATION of the payment of the sum of eight thousand dollars ($8000.00) which is directed by the undersigned to be paid as follows:
ETELA DUNKOVA
$ 8000.00
THE UNDERSIGNED do hereby for themselves, their heirs, executors, administrators, successors and assigns release and forever discharge CANADIAN GENERAL INSURANCE GROUP
from any and all action, causes of action, claims and demands for upon or by reason of any damage, loss or injury, to person and property which heretofore has been or hereafter may be sustained in consequence of motor vehicle accident on or about the 1 day of NOVEMBER, 1990.
AND FOR THE SAID CONSIDERATION it is further agreed not to make claim or take proceedings against any other person or corporation who might claim contribution or indemnity under the provisions of any statute or otherwise.
IT IS UNDERSTOOD AND AGREED that the said payment is not deemed to be an admission of liability on the part of CANADIAN GENERAL INSURANCE GROUP
AND it is hereby declared that the terms of this settlement are fully understood; that the amount stated herein is the sole consideration of this release and that the said sum is accepted voluntarily for the purpose of making a full and final compromise, adjustment and settlement of all claims for injuries, losses and damages resulting or to result from the said accident.
WITNESS
hand and seal this 11 day of DECEMBER, 1992
in the presence of:
READ BEFORE SIGNING
"Etela Dunkova" SEAL
Witness
Witness
Mr. Powell testified that it was his practice to sit down with claimants and go through the release with them, make sure they understood it, watch them sign, and witness their signature.
Mr. Hurlbut similarly indicated that usually when a final release was to be signed, he would go through it with the claimant, make sure that everything was clearly understood, and witness the claimant's signature.
In this case, however, Mr. Hurlbut testified that he never saw or spoke to Ms. Dunkova or her son. He thus did not explain the release to Ms. Dunkova, nor did he witness Ms. Dunkova's signature. In fact, no evidence was given by the Insurer as to who presented the release to Ms. Dunkova, whether anyone explained to her the significance of what she was signing, and whether anyone witnessed her signature. The release itself does not have a witness' signature, or a seal affixed.
The Applicant admitted that she signed the release.
I heard no evidence to indicate that Ms. Dunkova received a copy of the release. Neither was there evidence that any explanatory letter or note accompanied the cheque given to Ms. Dunkova, or was subsequently provided to her.
The file copy of the cheque stub indicates that the sum of $8,000.00 is for disability benefits. The stub does not indicate that the cheque was being given in exchange for a release or as part of a final settlement.
Subsequent Events
Despite Ms. Nishikawa's oral evidence that the "settlement" was only for weekly income benefits, and not for medical benefits, a notation appears in her file, at the end of the December 8, 1992 entry, that the file was closed.
Ms. Nishikawa's next involvement in the file was on May 18, 1993, when she received a telephone call from a caseworker, indicating that Ms. Dunkova had returned from a spa in Europe, and needed medical attention.
Mr. Dunka testified that shortly after his mother picked up the cheque for $8,000.00, they went to Europe. Ms. Dunkova stayed in Europe, attending a spa, for approximately two or three months.
On June 10, 1993, Sheri Emery of Medex called Ms. Nishikawa, advising that Ms. Dunkova was claiming further accident benefits. Ms. Nishikawa called Ms. Dunkova, advising that Ms. Dunkova had signed a release.
Ms. Dunkova subsequently applied for mediation in or about the month of June 1993, claiming weekly income benefits.
Conclusion
The Insurer submitted into evidence a signed release which I find unambiguous. It encompasses "any and all action, causes of action, claims and demands ... which heretofore has been or hereafter may be sustained" and further states that it is a "settlement of all claims for injuries, losses and damages resulting or to result form the said accident".
The effect of this "release" is fundamentally different not merely from what Ms. Dunkova and Mr. Dunka testified was their intention, but also from what Ms. Nishikawa and Mr. Hurlbut testified was the Insurer's intention.
Where a written agreement is obtained by mistake or other vitiating factor, the contract is not valid. I rely on Professor G.H.L. Fridman's The Law of Contract, third edition, Carswell Thomson Professional Publishing, 1994, at page 457 and also on the decision of Arbitrator Palmer in Mehmet Tuzin and Allstate Insurance Company of Canada, May 28, 1992, OIC File No. A-000596, in this regard.
I find that in this case the written release of December 11, 1992, does not reflect the true intention of either of the parties and therefore it is not valid.
Counsel for the Insurer argued that if there was any problem with the release, which was not admitted, the parties still came to "a meeting of the minds" at the meeting on December 8, 1992.
The Insurer's evidence was that the Applicant made an offer of $8,000.00. Professor Fridman states at page 45 of his text noted above, that for there to be a binding agreement, "the response of the offeree must be a clear indication that the offer has been accepted. It must be unconditional, clear and absolute". I find that there was no such acceptance by the Insurer at this meeting. Ms. Nishikawa's evidence was that there was a good prospect of resolution, but that first she had to make a few inquiries and discuss the matter with Mr. Powell.
Although the Applicant subsequently accepted a cheque for $8,000.00 and signed a release, I am not satisfied that there was a meeting of the minds between Ms. Dunkova and Canadian General about the nature of the $8,000.00 payment.
Although I have some significant misgivings about Ms. Dunkova's credibility, I cannot reject the entirety of her evidence, particularly her understanding of the $8,000.00 payment. Although he was a partisan witness, I found the testimony of Ms. Dunkova's son credible that the sum represented to him an advance payment of $8,000.00. I bear in mind that based on their background, education, and age, that Ms. Dunkova and her son are not individuals with a sophisticated knowledge of insurance matters.
However the Insurer's witnesses are sophisticated in this regard, which caused me increased concern as a result of various aspects of the Insurer's evidence.
Ms. Nishikawa, whom I found to be a credible witness, testified that this was a settlement solely of weekly income benefits.
Mr. Powell, whom I found equally credible, was of the very different view that this was a settlement of all claims save and except for a few outstanding medical expenses.
I also note with concern that an experienced adjuster such as Mr. Hurlbut had the Applicant sign a release for all claims, when he testified under oath that this was not his understanding of what was being settled. I also note that the file was marked closed following the December 8, 1992 entry by Ms. Nishikawa, even though she understood that benefits other than weekly income benefits were to continue.
Ms. Nishikawa acknowledged that the amount of money being discussed was not large, yet she noted that Ms. Dunkova asserted that the doctors considered her to be disabled for life.
There was no evidence that anyone sat down on December 11, 1992, with Ms. Dunkova, an unsophisticated and unrepresented Insured, to explain the release to her and make sure that she understood it.
The cheque stub does not indicate that the cheque is in return for a final release.
A copy of the release was not given to Ms. Dunkova.
No letter or explanation in layman's terms accompanied or followed the cheque.
I also find that the events following the December 1992 discussions support Ms. Dunkova's perception of the facts. If Ms. Dunkova's understanding was that she was receiving an advance of one year's benefits, then she had no need to contact the Insurer between December 1992 and June 1993 for weekly income benefits. When the significance of the release was drawn to her attention, she immediately applied for mediation.
I agree with Arbitrator's Sampliner's comments in Raj Aggarwal and Allstate Insurance Company, June 17, 1993, OIC File No. A-002621, appeal decision June 30, 1994, that "where an insurer is seeking to permanently exclude the insured's right to further benefits, it should take steps to obtain a release or other agreement which clearly and specifically sets forth the bargain struck".
As a result of the factors set out above, I find that there was not a meeting of the minds of the parties. Therefore, I find that there was not a settlement of weekly income benefits between the Applicant and Canadian General.
As I have made a finding that the parties were not ad idem, I need not deal with the issue of unconscionability raised by the Applicant.
Repayment
As there was never a meeting of minds of the parties, the "settlement" of December 1992 is vitiated by mistake. Consequently, it does not bind either of the parties. Hence the sum of $8,000.00 paid by Canadian General to the Applicant is recoverable, subject to the Applicant satisfying me that she is entitled to weekly income benefits subsequent to December 11, 1992.
An arbitration hearing has been scheduled on this issue. I therefore leave the final decision of whether Canadian General is entitled to a repayment, to the hearing on the main issue of entitlement.
Expenses
I find no reason in this matter to depart from the usual order that the Applicant is entitled to her expenses of this preliminary hearing, in accordance with the Regulations.
I therefore exercise my discretion and award Ms. Dunkova the expenses of this hearing . The parties may speak to me if there is any dispute about costs.
Order:
Ms. Dunkova may proceed to an arbitration hearing on her claim for weekly income benefits.
Ms. Dunkova is entitled to her expenses incurred in respect of this preliminary hearing.
September 11, 1995
Lawrence Blackman Arbitrator
Date