Neutral Citation: 1995 ONICDRG 136

File No.: A-008560

BETWEEN:

LINDA M. GILES

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUE

The Applicant, Linda M. Giles, was injured in a motor vehicle accident on April 25, 1993. She applied for and received statutory accident benefits from the Insurer, State Farm Mutual Automobile Insurance Company ("State Farm"), payable under Ontario Regulation 672.[1]

Weekly income benefits were paid until October 31, 1993, when they were terminated. On the morning of December 2, 1993, Mrs. Giles met with representatives of State Farm to discuss her entitlement to further benefits. She also had further discussions with State Farm about her benefits, by telephone, later that day. On December 3, 1993, Mrs. Giles signed a document and State Farm gave her a cheque for $2,000.00.

On January 19, 1994, Mrs. Giles referred the matter of her continued entitlement to weekly income benefits and supplementary medical and rehabilitation benefits to mediation.

The parties were unable to resolve their dispute through mediation and Mrs. Giles applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

State Farm contends that on December 2, 1993, Mrs. Giles entered into a full and binding settlement with State Farm in which, in exchange for a lump sum payment of $2,000.00 by State Farm, Mrs. Giles released all further claims for weekly income benefits and supplementary medical and rehabilitation benefits against State Farm.

Mrs. Giles disagrees. She claims that she did not agree to accept $2,000.00 in full and final settlement of her claim to these benefits.

The preliminary issue in this hearing is:

Is Mrs. Giles precluded from referring the issues of her entitlement to weekly income benefits and supplementary medical and rehabilitation benefits to arbitration because the parties have entered into a settlement which disposes of her claims for these benefits?

Mrs. Giles also claims interest on any amounts owing, and her expenses incurred in respect of the hearing. State Farm claims an award in the amount of its assessment fee.

The parties have entered into a settlement which disposes of Mrs. Giles' claims for weekly income and supplementary medical and rehabilitation benefits resulting from the accident of April 25, 1993. Mrs. Giles is, therefore, precluded from referring these issues to arbitration.
Mrs. Giles is not entitled to her expenses incurred in respect of the hearing.
State Farm is entitled to an award in the amount of $1,000.00 to be paid by Mrs. Giles.

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on December 5 and December 6, 1994, before me, Shemin Manji, arbitrator.

Present at the Hearing:

Applicant:

Linda M. Giles

Applicant's Representative:

Gary Spector

Insurer's Representative:

Harry Brown

Barrister and Solicitor

Witnesses:

Linda M. Giles

Ian Giles

Gregory J. Boyd

Janet M. Desroches

Terence O'Brien

The proceedings were recorded by Shari Backalar and Barbara Pollard of Professional Court Reporters.

A list of exhibits and other documents on the record is attached as Schedule A. A list of authorities filed by the parties is attached as Schedule B.

Reasons for Decision:

I issued a brief decision by way of letter on February 3, 1995, with reasons to follow. These are my reasons:

(1) Background Facts and Issues:

Mrs. Giles is 37 years old. She completed grade 9 at Markham District High School in 1973 and the equivalent of grade 12 at Seneca College in 1977. (Exhibit 2)

Mrs. Giles was involved in a motor vehicle accident on April 25, 1993. She testified that she was a passenger in a motor vehicle. The driver of the vehicle hit a post when turning into a church parking lot. Ms. Giles testified that shortly after the accident she felt stiffness, pain and muscle spasms in her neck and shoulders.

Prior to the accident, Mrs. Giles worked part-time as a cashier/sales associate with Fairweather. The job required prolonged standing and walking, as well as some reaching, lifting and carrying (up to 50 lbs). (Exhibit 2, Exhibit 16) Mrs. Giles started her job with Fairweather on November 24, 1992. (Exhibit 3)

Mrs. Giles applied for and received weekly indemnity payments, in the amount of 66.66 per cent of her weekly earnings, from Confederation Life Insurance Company ("Confederation Life"), under a short-term disability plan provided through Fairweather. (Exhibit 4) She received weekly indemnity payments from Confederation Life for a period of 15 weeks from May 10, 1993. The payments were terminated on August 22, 1993. Mrs. Giles applied for long-term disability benefits under a long-term disability plan provided through Fairweather. She was denied benefits by Confederation Life, as of August 23, 1993, on the basis that she was not "...wholly and continuously disabled due to ...bodily injury and as a result ...unable to perform the essential duties of [her] normal occupation." (Exhibit 2) Mrs. Giles disputed this decision. However, on March 7, 1994, Confederation Life re-affirmed its decision to deny long-term disability benefits. (Exhibit 2)

At the time of the accident, Mrs. Giles' husband, Ian Giles, was insured by State Farm. Following the accident, Mrs. Giles also applied for and received statutory accident benefits, from State Farm, under the Schedule. Mrs. Giles was reimbursed for her expenses incurred for transportation to and from treatment. (Exhibit 10 and 11) She also received weekly income benefits. During the period May 10, 1993 to August 22, 1993, State Farm deducted the weekly payment that Mrs. Giles received from Confederation Life from 80 per cent of her gross weekly income when calculating her weekly income benefit, under section 12 of the Schedule. Mrs. Giles received weekly income benefits in the amount of $186.50 for the period August 23, 1993 to October 31, 1993, when the benefits were terminated. (Exhibit 17)

Mrs. Giles did not agree with State Farm's decision to terminate her weekly income benefits after October 31, 1993. She complained about State Farm's decision to Janet Desroches, the adjuster who handled the file for State Farm. She also complained about State Farm's decision to her insurance agent and to senior management at State Farm.

Mrs. Giles was asked by senior management at State Farm to call Mr. Terence O'Brien. Mr. O'Brien is State Farm's claims superintendent, and Ms. Desroches' supervisor. Mrs. Giles telephoned Mr. O'Brien on December 1, 1993. During that telephone conversation, Mrs. Giles and Mr. O'Brien arranged to meet the next morning at the offices of State Farm, to further discuss Mrs. Giles' claim. (Exhibit 21)

On the morning of December 2, 1993, Mrs. Giles, Mr. O'Brien and Ms. Desroches met at the offices of State Farm. Mrs. Giles' aunt was also present at the meeting. Later that day, after the meeting was over, Mrs. Giles telephoned Mr. O'Brien. At the conclusion of their telephone conversation, they agreed that Mrs. Giles would again attend at the offices of State Farm the next day.

On the morning of December 3, 1993, Mrs. Giles and her husband met with Ms. Desroches.

At the meeting, Mrs. Giles signed a document and Ms. Desroches provided her with a cheque from State Farm payable to her in the amount of $2,000.00.

On January 19, 1994, Mrs. Giles referred the issues of her continued entitlement to weekly income benefits and supplementary medical and rehabilitation benefits to mediation. Mediation failed. Mrs. Giles referred the issues to arbitration.

State Farm contends that Mrs. Giles is precluded from proceeding to arbitration because on December 2, 1993, Mrs. Giles entered into a full and binding settlement with State Farm in which, in exchange for a lump sum payment of $2,000.00 by State Farm, Mrs. Giles agreed to release all further claims for weekly income benefits and supplementary medical and rehabilitation benefits against State Farm.

Mrs. Giles acknowledges that she cashed the $2,000.00 cheque which she received from Ms. Desroches on December 3, 1993. (See also Exhibit 7, Tab 9) However, she claims that she did not agree to accept $2,000.00 in full and final settlement of her claims to weekly income benefits and supplementary medical and rehabilitation benefits. She contends that any agreement that she entered into on December 2 or 3, 1993, was not a "final" agreement and, further, it was brought about by duress or by the unconscionable conduct of State Farm. Mrs. Giles contends that under the circumstances she is not precluded from proceeding to arbitration.

2) Was a binding settlement reached prior to arbitration?

An insured person may only refer a matter in dispute to an arbitrator.[2] If a binding settlement was reached in respect of the matters which Mrs. Giles wishes to refer to arbitration, she cannot proceed to arbitration.

State Farm relies on a signed document entitled "Release" dated December 3, 1993 (Exhibit 1) in support of its position that a binding settlement was reached by the parties prior to arbitration.

Exhibit 1 is a pink document. It provides as follows (the portions in bold-face are pre-printed, the portions in italics are handwritten):

Claim Number 60-1266-750

RELEASE

I, Linda Giles

hereby acknowledge settlement in the sum of - $2000.00 -- two thousand dollars

Paid by the STATE FARM AUTOMOBILE INSURANCE COMPANY

and I hereby acknowledge that said sum is full settlement and discharge of any and all amounts due to me, under the No Fault Benefit Schedule coverage of Policies issued by State Farm Insurance, as follows, 2006-261-60E Weekly Income Benefits, Supplementary Medical and Rehabilitation Benefits, Care Benefits

As a result of an automobile accident which occurred on or about the 25th day of April, year 1993 at or near 1 Lord Seaton

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 3rd day of December, 1993

Signed X

Exhibit 1 has a signature at the bottom of the page. The signature reads Linda M. Giles. There is no other signature on the document.

Mrs. Giles testified that the handwriting on Exhibit 1, including the signature, is not her handwriting. She testified that during her meeting with Ms. Desroches on December 3, 1993, she signed a document given to her by Ms. Desroches. However, the document she signed was not Exhibit 1.

Mrs. Giles described the document that she signed as follows: It was pale pink. Everything on the document was typewritten. Nothing was handwritten. It did not have the word "Release" written on top of it. It did not have a claim number written on it. It did not contain the words: "IN WITNESS WHEREOF". It did not set out the location of the accident. It did not describe her benefits. It said nothing about medical benefits.

Mrs. Giles testified that the contents of the document that she signed were very vague. It was not clear to her from the document that it was a release. All that it said was that she was accepting a lump sum payment of $2,000.00 from State Farm.

Mrs. Giles testified that she signed her name at the bottom of the document, on the right side. She dated the document on the left side of her signature. Mrs. Giles testified that Ms. Desroches witnessed her signature and also affixed her own signature on the document.

Mrs. Giles acknowledged that the signature on Exhibit 1 looks like her handwriting and could not explain how the signature got there. However, she suggested that her signature may have been forged because, in her view, it can be copied very easily.

Mrs. Giles' husband, Mr. Ian Giles, confirmed Mrs. Giles' testimony that she did not sign Exhibit 1. He testified that although he did not read the contents of the document that Ms. Desroches asked Mrs. Giles to sign, he saw what the document looked like. Mr. Giles' description of the document was similar to that of Mrs. Giles except in one significant aspect. Mr. Giles testified that the document that Mrs. Giles signed was a white, not pale pink, document.

State Farm contends that the signature on Exhibit 1 is that of Mrs. Giles. State Farm offered as proof of this fact the report and testimony of Mr. Gregory J. Boyd, forensic document examiner.

Mr. Boyd is a document examiner with the Centre of Forensic Sciences in Toronto. He has been working with the Centre since April 1987. His duties as a forensic document examiner include the identification of handwriting and signatures. (Exhibit 7, Tab 7)

Mr. Boyd examined the signature on Exhibit 1 ("the questioned signature") and compared it with 27 known signatures of Mrs. Giles, to determine whether the questioned signature was a forgery. In his report dated October 12, 1994, Mr. Boyd concluded that Mrs. Giles probably wrote the questioned signature. Mr. Boyd stated that his conclusion is "...based on there being a number of significant similarities, and no fundamental differences, between the questioned and known signatures." Mr. Boyd stated that the similarities included "...such features as general line quality, baseline alignment, spacing, size proportions, connections and disconnections, and letter design and formation." (Exhibit 7, Tab 7)

At the hearing, Mr. Boyd testified that nine of the known signatures that he examined were original signatures. The rest were photocopies and facsimiles. Mr. Boyd testified that his examination was limited to some extent by the poor quality of some of the known signatures. However, he confirmed the findings in his report and also opined that it was not a realistic possibility that a writer other than Mrs. Giles could have written the questioned signature.

State Farm also relies on the testimony of Ms. Desroches in support of its contention that the signature on Exhibit 1 is that of Mrs. Giles.

Ms. Desroches testified that after Mr. O'Brien concluded his telephone conversation with Mrs. Giles on the afternoon of December 2, 1993, he advised her that Mrs. Giles would be coming to their offices the next day to pick up a cheque for $2,000.00 and to sign a full and final release. Ms. Desroches testified that Mr. O'Brien asked her to prepare the release. Ms. Desroches testified that she prepared Exhibit 1. Exhibit 1 is a standard form printed release used by State Farm at that time. Ms. Desroches testified that all of the handwriting on Exhibit 1, except for the signature, is her handwriting. Ms. Desroches testified that she filled in the blanks on the standard form release with the requisite information, in her handwriting, before Mrs. Giles came to the offices of State Farm. She testified that at the meeting on December 3, 1993, she watched Mrs. Giles sign Exhibit 1.

Ms. Desroches testified that although she witnessed Mrs. Giles signing Exhibit 1, she (Ms. Desroches) did not affix her signature on Exhibit 1.

Ms. Desroches testified that Exhibit 1 was not altered in any way after Mrs. Giles left the office. She further testified that Mrs. Giles was not asked to sign any other documents on December 3, 1993.

The evidence tendered at the hearing on behalf of Mrs. Giles conflicts with the evidence of State Farm. I must decide which evidence is more credible.

I prefer the testimony of Mr. Boyd and Ms. Desroches over that of Mrs. Giles and her husband. I found that both Mr. Boyd and Ms. Desroches provided their evidence in a forthright and candid manner. I found Mr. Boyd's expert opinion that the signature on Exhibit 1 is probably that of Mrs. Giles especially weighty and persuasive.

On the other hand, I found Mrs. Giles to be an unreliable witness. I found her testimony generally inconsistent and confusing. I found the discrepancy between Mrs. and Mr. Giles' testimony about the colour of the document that Mrs. Giles allegedly signed troubling. Mrs. and Mr. Giles, in their testimony, suggested that State Farm had forged the signature on Exhibit 1. However, no evidence was tendered by Mrs. Giles to refute Mr. Boyd's opinion or to substantiate her suggestion.

I conclude, based on my assessment of the evidence, that Mrs. Giles signed Exhibit 1.

Where a document such as Exhibit 1 is signed, it meets a prima facie assumption that an agreement exists and that the document contains its terms. A person who signs a document is ordinarily held to have manifested agreement to its contents. This is not to say that in every case a person is bound by the document he or she has signed. He or she may be relieved on the grounds of duress, unconscionability, mistake, or other vitiating factor.[3]

(a) Are there any vitiating factors in this case?

(i) Mistake

Mrs. Giles testified that when she signed a document and received the cheque for $2,000.00 on December 3, 1993, she was under the impression that the document and the payment were not in respect of final settlement. She did not understand that signing the document or cashing the cheque could prevent her from proceeding to mediation and arbitration. Mrs. Giles testified that she was under the impression that she was only settling the issue of her entitlement to weekly income benefits up to that time (December 3, 1993). The last thing she wanted to do when she went to sign the document was to waive her rights. She knew that her disability was long lasting.

Mrs. Giles testified that following her discussions with Mr. O'Brien on December 2, 1993, she did not feel "quite right" about accepting State Farm's offer and, on the morning of December 3, 1993, before attending at the offices of State Farm, she called the Ontario Insurance Commission ("the OIC"), to determine if there was anything she could do. She informed the OIC that there was nothing in the automobile policy about "buy-out". Mrs. Giles testified that she was advised by the OIC that even if the insurer "bought her out" she was not precluded from proceeding to mediation and arbitration.

I do not accept Mrs. Giles' testimony that when she signed Exhibit 1 she was under the impression that the document and the payment were not in respect of final settlement. Her testimony was not consistent on this issue.

Mrs. Giles acknowledged in her testimony that it was clear from her discussions with Mr. O'Brien on December 2, 1993, that he felt that she was not entitled to further weekly income benefits, and was not interested in an open-ended arrangement with Mrs. Giles for benefits. Mrs. Giles testified that he suggested payment by way of a "lump sum" and "(h)e kept saying he wanted to close the file and forget that Linda Giles ever existed."

Mrs. Giles also acknowledged that if the intention of the parties had been to bring her weekly income benefits up to date, as she claims, all that State Farm would have been required to pay her was $928.00 (October 31 - December 3, 1993: $185.60 x 5 weeks). She could not explain how the sum of $2,000.00 was arrived at.

Mrs. Giles also acknowledged that Exhibit 1 is clear. It states that, as of December 3, 1993, she was extinguishing her right to future weekly income benefits, supplementary medical and rehabilitation benefits and care benefits as a result of the accident.

Statements made by Mrs. Giles after December 3, 1993 indicate that on December 2 and 3, 1993 she understood that she was giving up her claim for future benefits under the Schedule.

On January 19, 1994, Mrs. Giles filed an Application for Appointment of a Mediator with the OIC. (Exhibit 13) In the Application for Appointment of a Mediator, Mrs. Giles indicated that she wished to dispute State Farm's assessment of her entitlement to weekly income benefits and supplementary medical and rehabilitation benefits. She provided the following reasons for the application:

Originally approved for benefits. Have had numerous disputes with insurance about entitlement. Felt I had no alternative but to buy out as supervisor (Terry O'Brien) repeatedly "informed" me that my claim would be delayed and he felt I was not entitled to further benefits. When I asked him specifically what was needed to satisfy him, he said he just wanted to close the file. Final lump sum payment was received on December 3, 1993 of two thousand dollars.

Mrs. Giles' Application for Mediation suggests to me that on December 3, 1993, she understood that the issue of her entitlement to weekly income benefits and supplementary medical and rehabilitation benefits had been finally settled.

Mrs. Giles' testimony that when she signed Exhibit 1, she was under the impression that the document and the payment were not in respect of final settlement was contradicted by the testimony of Ms. Desroches and Mr. O'Brien.

Both Ms. Desroches and Mr. O'Brien testified that on December 2, 1993, the intent of both parties was to resolve Mrs. Giles' claim for statutory accident benefits in one final payment. They testified that Mrs. Giles and her aunt were told that the purpose of meeting was to close Mrs. Giles' file. Ms. Desroches and Mr. O'Brien testified that they were also told that it was State Farm's position that Mrs. Giles was not entitled to further benefits (beyond October 31, 1993), but that State Farm would compromise in exchange for a full and final release.

Both Ms. Desroches and Mr. O'Brien testified that during the meeting on December 2, 1993, Mrs. Giles threw out some figures as to what she was prepared to settle for. She started off by saying that she wanted $25,000.00. Later, she suggested $10,000.00. Then she said that she should have at least six months of benefits (approx. $5,000.00 for weekly income benefits and $900 for supplementary medical and rehabilitation benefits). Mr. O'Brien initially suggested 4.5 weeks plus additional monies for supplementary medical and rehabilitation benefits ($800-900). Later he suggested six to eight weeks of weekly income benefits plus additional monies for supplementary medical and rehabilitation benefits ($1,600-1,800). Ms. Desroches and Mr. O'Brien testified that Mrs. Giles kept indicating that she was concerned about future disability if she signed a release. Ms. Desroches and Mr. O'Brien testified that they suggested that she could apply for mediation instead but Mrs. Giles said that she wanted to resolve the matter if possible. Ms. Desroches and Mr. O'Brien testified that no agreement was reached at the meeting on the morning of December 2, 1993. Mr. O'Brien suggested to Mrs. Giles that she go home and think about the figures. Mr. O'Brien testified that Mrs. Giles' aunt liked this suggestion.

Mr. O'Brien testified that later that day Mrs. Giles called. She informed him that she had spoken to her husband. She said she wanted $3,000.00. Mr. O'Brien reiterated that the best State Farm could do was $1,800.00. He agreed to round off at $2,000.00, all inclusive, in exchange for a release, and Mrs. Giles accepted the offer.

State Farm's and Mrs. Giles' conduct subsequent to December 3, 1993 indicates that when they entered into the settlement agreement, both parties understood that Mrs. Giles was giving up her claim to future benefits.

Both Ms. Desroches and Mr. O'Brien testified that Mrs. Giles' file (manual and on computer) was closed shortly after the release was signed and the cheque issued to Mrs. Giles on December 3, 1993. Ms. Desroches testified that Mrs. Giles' file was closed on December 7, 1993. She testified that State Farm's policy is to close a file only if no further payments are to be made. Ms. Desroches and Mr. O'Brien both testified that State Farm received no applications for additional statutory accident benefits or inquiries from Mrs. Giles concerning her benefits after December 3, 1993. Ms. Desroches testified that she received a call from the Whiplash & Headache Clinic in late February 1994 advising her that Mrs. Giles wished to attend at the Clinic for treatment. Ms. Desroches testified that she informed the Clinic that Mrs. Giles had signed a release and State Farm would not be paying for any treatments.

Based on my assessment of Mrs. Giles' overall credibility, the discrepancies in Mrs. Giles' testimony on this issue, a review of Exhibit 1, the testimony of Ms. Desroches and Mr. O'Brien, which I found to be forthright and consistent, and the conduct of Mrs. Giles and State Farm after December 3, 1993, I conclude that, on December 2 and 3, 1993, State Farm and Mrs. Giles intended to fully settle Mrs. Giles' claims for weekly income benefits and supplementary medical and rehabilitation benefits. Both Mrs. Giles and State Farm understood that she was giving up her claim for future benefits under the Schedule or the automobile policy. I find that when she signed the release on December 3, 1993, Mrs. Giles and State Farm understood that the matter was finally settled and she was being paid a lump sum in lieu of receiving further benefits. Mrs. Giles is therefore not entitled to relief from the settlement evidenced by Exhibit 1 on the ground of mistake.

(ii) Duress

Mrs. Giles claims that State Farm intimidated her into settling. She testified that at the meeting on December 2, 1993, Mr. O'Brien did most of the talking. She stated that whenever she said something during the meeting, Mr. O'Brien got angry. Mrs. Giles testified that Mr. O'Brien was so intimidating that she felt that she had no choice but to settle for $2,000.00 because that was all that State Farm was prepared to pay.

Mrs. Giles also claims that Mr. O'Brien forced her to settle by threatening adverse consequences if she did not. Mrs. Giles testified that he advised her that if the matter did not settle, State Farm would be requesting that she attend for an independent medical examination.

I do not accept Mrs. Giles' testimony that she was intimidated or coerced by State Farm and felt that she had no choice but to settle the matter for $2,000.00. Her testimony was not consistent on this issue.

Mrs. Giles acknowledged that she was not asked by State Farm to sign the release at the meeting on December 2, 1993, and she had the time to think about State Farm's offer after the meeting and to consult with her family members and any other advisors.

Mrs. Giles acknowledged that Mr. O'Brien informed her of her right to proceed to mediation if the matter did not settle, but Mrs. Giles testified that she did not feel that mediation was a viable option because Mr. O'Brien said that it would be a waste of time.

Mrs. Giles' testimony that she was intimidated by Mr. O'Brien and felt that she had no choice but to settle the matter for $2,000.00 was contradicted by the testimony of Ms. Desroches and Mr. O'Brien.

Both Ms. Desroches and Mr. O'Brien testified that Mr. O'Brien was cordial and calm during the meeting on December 2, 1993 and that he tried to resolve the dispute amicably. They testified that at the end of the meeting, Mrs. Giles thanked them both for meeting with her. Mr. O'Brien testified that at the end of their telephone conversation in the afternoon on December 2, 1993, Mrs. Giles once again thanked him for taking the time to meet and speak with her.

Ms. Desroches and Mr. O'Brien testified that Mrs. Giles was an active participant at the meeting on December 2, 1993. They testified that, during the meeting, Mr. O'Brien explained to Mrs. Giles that she had a right to mediate her claim. Mr. O'Brien testified that he explained to her that mediation would provide a forum to discuss the dispute but that the mediator would have no authority to impose a settlement.

Ms. Desroches and Mr. O'Brien acknowledged that during the meeting on December 2, 1993, Mr. O'Brien informed Mrs. Giles that if the matter proceeded to mediation, State Farm would likely require her to attend for an independent medical examination.

I do not find that Mr. O'Brien's statement that if the matter proceeded to mediation, State Farm would likely require Mrs. Giles to attend for an independent medical examination constitutes a threat of adverse consequences. When State Farm last requested that Mrs. Giles attend for an examination by a qualified medical practitioner of its choice in July 1993, the doctor's assessment ( Dr. Perry S. Tepperman) supported Mrs. Giles' position. (Exhibit 19) Further, in advising Mrs. Giles that State Farm would likely require her to attend for an examination by a qualified medical practitioner of its choice, State Farm was merely informing her of its rights under the Schedule.

I am not satisfied based on Mrs. Giles' own testimony and the testimony of Ms. Desroches and Mr. O'Brien that Mrs. Giles was coerced by State Farm into settling the matter and that she did not enter into the settlement on her own will and volition. On the contrary, the evidence before me shows that she was aware that she had a choice. Mrs. Giles was faced with a difficult decision. She thought that she should receive more than $2,000.00. She had to decide whether to accept less money or face the time, effort and uncertainty of mediation, arbitration or court proceedings. I acknowledge that the need to make this kind of decision creates pressure, but the pressure to make a difficult decision is different from coercion. I find therefore that she is not entitled to relief from the settlement evidenced by Exhibit 1 on the ground of duress.

(iii) Inequality of bargaining power

Mrs. Giles submits that she was entitled to benefits well beyond October 31, 1993 but State Farm knowingly took advantage of her. Mrs. Giles submitted that there was inequality in the bargaining power of the parties at the meeting on December 2, 1993. She was dealing with a person (Mr. O'Brien) who was very experienced. Mr. O'Brien had been involved in many settlements and understood the Schedule. On the other hand, Mrs. Giles testified that she was particularly vulnerable at the time of the meeting. She was in dire financial need and near bankruptcy at the time. She has three children. Prior to October 31, 1993, the only money that she had to live on was the money she received from State Farm, and child support. The money from State Farm ceased on October 31, 1993. She felt forced to settle on State Farm's terms because otherwise she would have no income. Further, the document she signed was not explained to her and she was not told that she could obtain legal advice before signing it.

Mrs. Giles appears to be seeking relief from the settlement based on the principle of inequality of bargaining power. This principle is described by G.H.L. Fridman, Q.C. in The Law of Contract In Canada, (supra note 3), at page 329, as follows:

The principle of inequality of barganing [sic] power ...requires that the bargain that was made was somehow unfair, that advantage was being taken, knowingly, of a gullible, ignorant, or particularly vulnerable or susceptible party, that there was some dire need on the part of the victim which rendered him incapable of making a sound decision, that his emotional state was such that he could not appreciate and weigh the advantages and disadvantages of the contract, and that he was not allowed or encouraged to seek independent advice.

I do not find that the principle of inequality of bargaining power applies in this case.

First of all, Mrs. Giles has not shown that the settlement was unfair or that State Farm took advantage of her.

State Farm had evidence to support its position that Mrs. Giles was not entitled to benefits after October 31, 1993. Mrs. Giles was initially assessed by the Canadian Back Institute on September 15, 1993 and she was seen by the Canadian Back Institute for five treatment days from September 27 to October 1, 1993. In its Discharge Report of October 18, 1993, the Canadian Back Institute recommended that Mrs. Giles return to work with no physical restrictions. It also recommended no further therapy. (Exhibit 8) Mrs. Giles herself was reporting that her treating physicians, including her orthopaedic surgeon, Dr. Morris Charendoff, were recommending that she try to return to her part-time work as part of her rehabilitation. Lastly, surveillance conducted on Mrs. Giles on November 20, 1993 while she was attending a hockey game where her son was playing, showed, among other things, Mrs. Giles standing for extended periods of time with a good range of mobility of her neck and head. (Exhibit 7, Tab 6)

The evidence tendered at the hearing regarding Mrs. Giles' disability indicates that there was a real risk that, if Mrs. Giles proceeded to arbitration or court, she could lose, i.e., that she would not be held entitled to more benefits after October 1993.

Secondly, although Mrs. Giles does not have higher education, she did not strike me as gullible or ignorant. On the contrary, she impressed me as being intelligent, assertive and well informed.

Thirdly, given that I have found Mrs. Giles to be an unreliable witness, I am not prepared to find, based only on her testimony, that on December 2 and 3, 1993 there was extreme financial pressure on her to conclude an agreement with State Farm. There was evidence that she had not received payments from State Farm since October 31, 1993. However, no other evidence was adduced of her financial situation or that her alleged state of bankruptcy was brought about by State Farm.

Finally, the evidence indicates that Mrs. Giles was given an opportunity to seek independent advice before entering into the settlement agreement. She had a cooling-off period, following the meeting on the morning of December 2, 1993. During the cooling-off period she had an opportunity to think about State Farm's offer. She had an opportunity to consult with her family, which she acknowledged that she did. She also had an opportunity to consult a lawyer if she so wished.

Mrs. Giles acknowledged that on October 15, 1993 she talked to a personal injury lawyer regarding the accident. In her examination-in-chief, Mrs. Giles testified that she consulted the lawyer to determine whether she could pursue any action against the person who was with her in the motor vehicle at the time of the accident. In cross-examination, Mrs. Giles first testified that she did not recollect what she discussed with her lawyer, but they did not discuss any of her problems relating to the first party benefits. Later, in cross-examination, Mrs. Giles acknowledged that during her meeting with Mr. O'Brien and Ms. Desroches on December 2, 1993, when discussing the merits of her claim for weekly income benefits, she informed them of the lawyer's advice that, in determining the extent of her disability, her treating physicians' reports were "primary".

I accept Mr. O'Brien and Ms. Desroches' testimony that the reason why they did not suggest that Mrs. Giles consult a lawyer before concluding the settlement agreement was because she had given them the impression that she already had consulted a lawyer and understood her rights.

(iv) Conclusion:

Settlement is usually a result of both sides moderating their original positions. This is precisely what happened here. State Farm agreed to pay additional benefits that it did not believe were owing in exchange for a full and final release. Mrs. Giles agreed to accept less than what she would have liked. I find nothing in the circumstances of this case which vitiates the agreement Mrs. Giles entered into with State Farm. Mrs. Giles is therefore precluded from proceeding to arbitration.

Disposition of other claims:

(a) Monies owed to the Whiplash & Headache Clinic:

In response to Mrs. Giles' claim for expenses for supplies and services provided to her by the Whiplash & Headache Clinic, from February 22, 1994 to April 19, 1994, State Farm takes the position that Mrs. Giles has no standing to make such a claim in these proceedings. In the alternative, State Farm contends that part of the services provided by the Whiplash & Headache Clinic were "insured services" and should be billed to the Ontario Health Insurance Plan ("OHIP"). State Farm also contends that part of the services provided by the Whiplash & Headache Clinic were covered under group insurance plans provided to Mrs. Giles through Fairweather or her husband's employer. Therefore, State Farm is not required to pay for these expenses.

The supplies and services provided by the Whiplash & Headache Clinic to Mrs. Giles were provided after December 1993. (Exhibit 7, Tab 2) I have found that in December 1993, State Farm and Mrs. Giles entered into a settlement which disposed of her future claim to supplementary medical and rehabilitation benefits. Accordingly, I need not address State Farm's argument as to whether Mrs. Giles has any standing to make such a claim, or whether the services provided are "insured services" and should be billed to OHIP, or are covered under any group insurance plan.

(b) Mrs. Giles' claim for expenses:

Mrs. Giles seeks her expenses in respect of this hearing. State Farm submits that it would be inappropriate to award expenses to Mrs. Giles because the hearing on the preliminary issue was unnecessary.

An arbitrator's authority to make an award for expenses in favour of an applicant is found under section 282(11) of the Act. Arbitrators have generally exercised their discretion to award applicants their expenses, regardless of outcome. However, expenses have been denied where it has been determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.

In this case, it is clear to me that Mrs. Giles has used the arbitration process to revive claims which were settled. Mrs. Giles commenced an arbitration after she had signed a full and final release for weekly income benefits and supplementary medical and rehabilitation benefits. She made serious allegations against State Farm, including the allegation that the signature on Exhibit 1 had been forged. State Farm was put to the expense of responding to Mrs. Giles' unsubstantiated allegations. I find that Mrs. Giles commenced an arbitration which was frivolous and an abuse of process. Accordingly, I am exercising my discretion not to award expenses to Mrs. Giles in respect of this hearing.

(c) State Farm's claim for an award to be paid by Mrs. Giles:

State Farm seeks an award against Mrs. Giles, under section 282(11.2) of the Act. Section 282(11.2) provides as follows:

If an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration under section 14.

The amount that was assessed against State Farm in respect of this arbitration was $1,000.00, under section 14 of the Act and Ontario Regulation 220/91.

For the reasons I have given for not awarding Mrs. Giles her expenses in respect of this hearing, I find it appropriate in the circumstances of this case to exercise my discretion to award State Farm $1,000.00 to be paid by Mrs. Giles.

Order:

The parties have entered into a settlement which disposes of Mrs. Giles' claims for weekly income and supplementary medical and rehabilitation benefits resulting from the accident of April 25, 1993. Mrs. Giles is, therefore, precluded from referring these issues to arbitration.
The Applicant is not entitled to her expenses incurred in respect to the arbitration.
State Farm is entitled to an award in the amount of $1,000.00 to be paid by Mrs. Giles.

September 28, 1995

Shemin Manji

Arbitrator

Date

SCHEDULE A - THE RECORD

Exhibits:

Exhibit 1

Document entitled "Release" allegedly signed by Mrs. Giles on December 3, 1993

Exhibit 2

Copy of file of Confederation Life Insurance Company

Exhibit 3

OMPP Employer's Confirmation of Income form dated May 3, 1965(?) of Fairweather

Exhibit 4

Confederation Life Insurance Plan Document (Contract holder: Dylex Limited)

Exhibit 5

Copy of a cheque dated October 28, 1993, in the amount of $371.20, payable to Linda Giles from State Farm

Exhibit 6

Copy of a cheque dated October 21, 1993, in the amount of $1, 164.76, payable to Linda Giles from State Farm

Exhibit 7

Document Brief of the Insurer

Tab 1

Copy of amended letter dated June 24, 1994 from Arbitrator Nancy Makepeace, confirming pre-hearing discussions held on June 16, 1993

Tab 2

Copies of invoices from Whiplash & Headache Clinic - February to April 1994

Tab 3

Invoice Analysis

Tab 4

Copy of letter dated November 25, 1994 from the Ministry of Health, Health Insurance & Related Programs, concerning invoices received from the Whiplash and Headache Clinic

Tab 5 a)

Copy of letter dated March 22, 1994 from the Whiplash & Headache Clinic to Spector & Partners

Copy of Mediation & Arbitration Authorization dated February 28, 1994 to the Whiplash & Headache Clinic Inc. from Linda M. Giles

Tab 6

Copies of Profile Investigation Inc. reports

Tab 7 a)

Copy of Report of Gregory J. Boyd, Forensic Document Examiner dated October 12, 1994

Curriculum vitae of Gregory John Boyd

Chart comparing questioned signature with known signatures of Linda Giles

Tab 8 a)

Copy of letter dated August 17, 1994 from David & David, Personal Injury Lawyers

Copy of letter dated December 2, 1994 from David & David, Personal Injury Lawyers

Tab 9 a)

Copy of document entitled "Release" allegedly signed by Mrs. Giles on December 3, 1993

Copy of cancelled cheque, dated December 2, 1993, in the amount of $2,000.00 payable to Linda Giles from State Farm

Exhibit 8

Copy of the Discharge Report dated October 18, 1993 of the Canadian Back Institute

Exhibit 9

Copy of Report dated November 30, 1993 of Dr. Morris D. Charendoff

Exhibit 10

Copy of OMPP Application for Additional Accident Benefits dated June 28, 1993, of Linda Giles- Transportation expenses - June 3, 1993 to June 22, 1993

Exhibit 11

Copy of Application for Additional Accident Benefits dated May 6, 1993 of Linda Giles - Transportation expenses - April 28, 1993 - May 5, 1993

Exhibit 12

Copy of a cheque dated December 2, 1993, in the amount of $2000.00, payable to Linda Giles from State Farm

Exhibit 13

Copy of OMPP Application for Appointment of a Mediator dated January 19, 1994 of Linda Giles

Exhibit 14

Copy of Report dated January 7, 1994 of Dr. Bobby E. Esbin

Exhibit 15

Transparency comparing questioned signature against known signatures

Exhibit 16

a) Fairweather Job Description

b) Letter dated September 6, 1994 from Fairweather: hours worked by Linda Giles in the four weeks preceding the accident

Exhibit 17

a) Copy of OMPP Assessment of Claim by Insurer dated October 18, 1993 of State Farm

b) Overpayment calculation

Exhibit 18

Copy of OMPP Assessment of Claim by Insurer dated October 28, 1993 of State Farm

Exhibit 19

Copy of a Report dated July 15, 1993 of Dr. Perry S. Tepperman

Exhibit 20

Copy of notes dated November 24 and 25, 1993 of Terence O'Brien

Exhibit 21

a) Copy of telephone message on December 1, 1993 to Terence O'Brien from Linda Giles

b) Copy of notes dated December 1, 1993 of Terence O'Brien

Exhibit 22

Copy of notes dated December 2, 1993 of Terence O'Brien

SCHEDULE B

Authorities submitted by State Farm:

OIC cases:

Rosie Buch and Pilot Insurance Company, November 7, 1994, OIC File No. A-005546

Mauricio Peixeiro and Allstate Insurance Company of Canada, March 21, 1994, OIC File No. A-005097

Margaret Love and State Farm Mutual Automobile Insurance Company, October 13, 1993, OIC File No.. A-003806

Fahimeh Abedi and Pilot Insurance Company, June 22, 1994, OIC File No. P-002705 (Appeal decision)

Mehmet Tuzin and Allstate Insurance Company of Canada, May 28, 1992, OIC File No. A-000596

John Adusei and Royal Insurance Company of Canada, March 3, 1994, OIC File No. A-004404

Court cases:

Di Guilo v. Boland et al. (1958), 1958 CanLII 92 (ON CA), 13 D.L.R. (2d) 510 (Ont.C.A.)

Continental Bank v. Arthur Andersen & Co. (1987), 1987 CanLII 4148 (ON HCJ), 59 O.R. (2d) 774

Statutes:

Conveyancing and Law of Property Act, R.S.O. 1990, c.C.34, sections 1 and 53

Independent Health Facilities Act, R.S.O. 1990, c.I.3, sections 1, 3 and 36

Health Care Accessibility Act, R.S.O. 1990, c.H.3, sections 1, 2 and 3

Text:

Elmer A. Driedger, Construction of Statutes, 2nd Edition, Butterworths Toronto 1983, page 227

1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule — Accidents Before January 1, 1994. In this decision, the term "Schedule' will be used to refer to Regulation 672.

2See subsections 280(1) and 281(1)

3G.H.L. Fridman Q.C. in The Law of Contract in Canada, 3rd ed. (1994), at page 457.

Linda M. Giles v. State Farm Mutual Automobile Insurance Company, 1995 ONICDRG 136

Case Summary