Neutral Citation: 1997 ONICDRG 147
OIC A96-000047
ONTARIO INSURANCE COMMISSION
BETWEEN:
VENETTA T. JEFFERS
Applicant
and
THE PERSONAL INSURANCE COMPANY OF CANADA
Insurer
DECISION ON A PRELIMINARY ISSUE
Issues:
The Applicant, Venetta T. Jeffers, was injured in a motor vehicle accident on February 19, 1993. She applied for and received weekly benefits and various supplementary and rehabilitation benefits from The Personal Insurance Company of Canada ("Personal"), payable under Ontario Regulation 672.1 Personal terminated benefits. The parties were unable to resolve their disputes through mediation, and Ms. Jeffers applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The matter was scheduled to proceed to an arbitration hearing on May 5, 1997. After appearing before the hearing arbitrator to deal with a few preliminary matters, the parties
engaged in settlement discussions which culminated in an agreement whereby the Insurer agreed to pay Ms. Jeffers the sum of $3,500 in exchange for a "full and final release." Ms. Jeffers now wishes to rescind that agreement and to proceed with an arbitration hearing.
The sole issue in this hearing is:
- Is the agreement reached by the parties on May 5, 1997 binding upon Ms. Jeffers, such that she is precluded from seeking further benefits from the Insurer, with relation to claims arising from a motor vehicle accident on February 19, 1993?
Result:
- The agreement reached by the parties on May 5, 1997, is binding upon Ms. Jeffers, and she is thereby precluded from seeking further benefits from the Insurer, with relation to claims arising from a motor vehicle accident on February 19, 1993.
Hearing:
The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on July 22, and 23, 1997.
Present at the Hearing:
Applicant:
Venetta T. Jeffers
Personal's Representative:
Wayne Edwards Barrister and Solicitor
Personal's Officer:
Maria Pagliaro
Arbitrator:
Stewart M. McMahon
Witnesses:
Ms. Venetta Jeffers
Mr. Denny Jeffers
Mr. Michael Browne
Ms. Maria Pagliaro
Mr. Peter Kazden
Exhibits:
The exhibits are set out in Appendix "A" to these reasons.
The Pertinent Law
At common law once one party has accepted the other party's offer, the agreement is binding, and absent unusual circumstances, neither party can resile from the contract. Unfortunately, agreements reached in the heat of the moment do not always stand up to the harsh light of the next day. Sometimes those agreements are reached without a full appreciation of their consequences; sometimes they are made without a proper understanding of the underlying facts; and sometimes they are reached because one party has significantly greater skill or experience. To help ameliorate these and other factors, Regulation 664 of 1990 (hereinafter called the Settlement Regulation) was passed. There are two principal components to the Settlement Regulation. First, it requires the insurer to prepare a disclosure statement designed to explain to the insured the nature of the agreement and its implications. Second, the Regulation provides for a cooling-off period within which the insured may rescind the agreement, simply by notifying the insurer in writing.
The counterbalance to these rights afforded to the insured is that the Settlement Regulation affords a degree of certainty to the insurer. If it provides the proper disclosure, and the insured does not rescind the agreement within two business days, the insurer can close its file with some certainty that the insured will not be able to reopen it.
The words of the section affording the insured an opportunity to rescind the agreement are important, and I set them out below:
(3) A settlement may be rescinded by the insured person, within two business days after the settlement is entered into by delivering a written notice to the insurer.
The two key elements of the section are (1) the length of the cooling-off period, namely, two business days, and (2) that the rescission notice must be delivered to the insurer in writing.
Evidence and Findings
Before embarking on a review of the evidence surrounding the agreement of May 5, 1997, it is important to note that Ms. Jeffers entered into an agreement with the Insurer in April of 1995, almost two years before the events now in question. Back in 1995, she agreed with the Insurer to accept the sum of $15,000 in exchange for a "full and final release."
Ms. Jeffers testified that after striking the agreement, and signing the release, she returned home and discussed the matter with her family. She concluded that because of uncertainty about her future, the sum offered was insufficient. That same night she prepared a letter which she sent to the Insurer by fax, rescinding the agreement. She followed up with a confirming letter the next day and returned the settlement funds.
Ms. Jeffers also acknowledged on cross-examination that she appreciated that the sum was offered in exchange for a full and final release of all claims for statutory accident benefits arising out of the accident. She stated it was a final release and "after that my file would be closed."
I find, based upon these facts and others that I shall refer to later, that when two years later, in May 1997, Ms. Jeffers entered into the agreement with the Insurer, she was well aware that if she wished to rescind it she needed only to write to the Insurer within two business days of the agreement, and to return the settlement funds. I also find that at the time she entered into the agreement in 1997 that she was well aware of the consequences of agreeing to a lump sum payment in exchange for a full and final release.
The Settlement Negotiations
The circumstances surrounding the negotiation of the agreement are less important than the events of the days following, and despite the fact that I heard lengthy evidence concerning the events on May 5, 1997, I set them out only briefly.
The Applicant, who was unrepresented, was accompanied by her son Michael, and her ex-husband. The Insurer was represented by Mr. Peter Kazden. He was accompanied by Ms. Maria Pagliaro, the claims adjuster responsible for the Applicant's file. The parties met very briefly with an arbitrator (hereinafter referred to as the settlement arbitrator), who had offered her services in the event the parties wished assistance with settlement discussions. Thereafter, the parties appeared briefly in front of the hearing arbitrator. Certain procedural matters were discussed and, ultimately, the parties reached an agreement on the amount of the outstanding weekly income benefit. The other matters outstanding were: the Applicant's demand for further supplementary medical and rehabilitation benefits