Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 25 FSCO A05-002690

BETWEEN:

SIPON RAHMAN Applicant

and

TD GENERAL INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Robert A. Kominar

Heard: January 25, 26, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Peter S. Carlisi for Mr. Rahman Anne Walker for TD General Insurance Company

Issues:

The Applicant, Sipon Rahman, was injured in a motor vehicle accident on November 15, 2002. He applied for statutory accident benefits from TD General Insurance Company ("TD General"), payable under the Schedule.¹ TD General claimed that Mr. Rahman settled all accident benefit claims arising out of this accident on a full and final basis. The parties were unable to resolve their disputes through mediation, and Mr. Rahman applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The preliminary issues are:

1. Is Mr. Rahman precluded from proceeding to arbitration because he settled all claims for statutory accident benefits arising out the motor vehicle accident which occurred on November 15, 2002 on a full and final basis?

2. If it is determined that Mr. Rahman did not settle all accident benefit claims on a full and final basis is he required to repay settlement funds to TD General before proceeding to arbitration, pursuant to section 9.1(8) of the Settlement Regulation?

Result:

1. Mr. Rahman entered into a binding full and final settlement of all accident benefit claims arising out of the accident on November 15, 2002 and as such he is precluded from mediating or arbitrating any further accident benefit claims arising out of that accident.

EVIDENCE AND ANALYSIS:

The fundamental question before me in this hearing is whether Mr. Rahman fully and finally settled his accident benefit claims with TD General in March, 2003 or whether some or all of his claims are still open. The issues surrounding settlements have been explored in earlier arbitration and judicial decisions and in my view the law is fairly well settled. However, in all cases the facts to which the law has to be applied must be carefully taken into account. Mr. Rahman raises his claims within a different factual context than the jurisprudence has so far specifically dealt with.

Mr. Rahman testified that he was born in Bangladesh where he completed a secondary education. He then became actively involved in political dissent and student protest and ultimately chose to flee to Holland in 1988 based on fear of persecution for his political views. He sought political asylum in Holland in 1991. During his years in that country Mr. Rahman worked primarily as a cook and chef. He came to Canada on a visitor's permit in 2002. His brother had already emigrated and was operating a restaurant in Toronto. Mr. Rahman's first language was Bengali, but he learned Dutch as well as basic conversational English while in Holland.

Mr. Rahman was injured in an automobile accident on November 15, 2002. He testified that at that time his English was not strong, however, it has improved significantly over the last five years. Mr. Rahman testified in English at the hearing, without the aid of an interpreter, and I find that he had no difficulty in communicating in English as of the hearing dates.

The uncontradicted evidence before me is that Mr. Rahman retained Mr. Paul Caprani, a paralegal agent as his legal representative on November 19, 2002. It is unclear whether at the time of the accident Mr. Rahman was an employee of, or some form of equity partner along with his brother in a Toronto restaurant known as the Boogi Bite. He was referred to Mr. Caprani by the restaurant's accountant.

Mr. Rahman testified that he made an initial appointment with Mr. Caprani, who asked him some basic questions about how the accident happened, gave him three or four papers to sign along with some forms to help keep track of housekeeping assistance and a paper for his doctor to fill out.

Mr. Rahman was shown a written retainer document prepared by Mr. Caprani, dated November 19, 2002. Mr. Rahman admitted that he signed this document. The relevant portions of the retainer read as follows:

I, the undersigned, do hire Caprani & Associates to act for me in connection with my claim on November 15, 2002 in the City of Toronto, in the Province of Ontario.

Without limiting my instructions, I authorize you to do all investigative work commence settlement negotiations, all mediation and arbitration proceedings and to prosecute on my behalf a court action in any court which you deem appropriate or advisable against any person, firm or corporation for the purpose of recovering any benefits, loss or damages on my behalf.

I authorize you to take all steps necessary to protect my interests.

Discuss, negotiate and execute any and all documents relating to this accident; retain specialists, if necessary, to conduct medical assessments and to assist in review of medical documentation; retain Barristers and Solicitors, as agents to assist in review and prosecution of you [sic] claim.

I confirm that no other legal representative/solicitor has been retained in connection with this matter. This retainer is your good and sufficient authority to act in this matter. By signing this retainer agreement, I authorize you to act on my behalf as described in this agreement...

Either the Law Clerk or Legal Assistant or client may terminate this agreement by giving notice in writing....

Mr. Rahman testified that Mr. Caprani told him that the documents he was being asked to sign were standard ones which everyone fills out in auto accident cases and that they are the same for everyone. Mr. Rahman's evidence is that although he signed the retainer agreement and a number of blank medical releases, he did not sign a document titled "Acknowledgement and Instructions" which purports to instruct Mr. Caprani not to put the third party driver on notice of a potential claim for pain and suffering and economic loss. Although this document is not relevant to his accident benefit claims, I will comment later on the significance of Mr. Rahman's evidence that he did not execute it. Mr. Rahman's evidence in chief was that he was able to read these documents at the time but that he did not really understand them very well. He stated that he trusted and relied on Mr. Caprani, primarily because he had been referred to him by his accountant.

Mr. Caprani testified that at the time of his retainer he verbally explained the accident benefit process to Mr. Rahman including the kinds of benefits he might be entitled to. He noted that he specifically told Mr. Rahman that he would not be entitled to death benefits because he had not died. I assume this was an attempt on Mr. Caprani's part to be humourous. His evidence was that Mr. Rahman had no problem communicating with him in English and that he offered to provide his client with a copy of the written retainer agreement, an offer which Mr. Rahman declined.

On November 26, 2002, Mr. Caprani sent out a letter to the TD General enclosing the following documents:

• Notice of Change of Address and Direction and Authorization
• Application fo Accident Benefits
• Activities of Normal Life
• Permission to Disclose Health Information
• Disability Certificate
• Treatment Plan

In his covering letter, Mr. Caprani advised TD General that his firm had been retained to act on behalf of Mr. Rahman with respect to his accident benefit claims. He described himself in the documents as Mr. Rahman's "legal representative."

Over the next few weeks Mr. Caprani submitted on Mr. Rahman's behalf claims for two weeks of housekeeping expenses, an employer's confirmation of income and was notified of an in-home assessment which the insurer wished to arrange. The insurer, based partly on some confusion over whether Mr. Rahman was an employee or self-employed, retained an accounting firm in January, 2003 to render an opinion on the calculation of an income replacement benefit. In the course of this process TD General requested that Mr. Rahman provide them with certain standard business and financial records. Various correspondence continued to pass between TD General's accountants and Mr. Caprani's office regarding the financial documentation being requested. Mr. Caprani also requested that the insurer pay for an in-home assessment which he had arranged. Mr. Caprani's correspondence reached the point of notifying TD General that he would initiate mediation proceedings if various benefits were not promptly paid.

Mr. Caprani's evidence at the hearing was that sometime around March, 2003 Mr. Rahman contacted him asking if his file could be settled as he was in dire need of funds. Mr. Rahman's evidence supports the plausibility of such a scenario as he testified that the restaurant was in serious financial trouble at the time due to his inability to cook and also that he had not clarified his work status with Canada Immigration. He apparently was only in Canada on a Visitor's Visa. Mr. Caprani said that he told Mr. Rahman that he would see what he could arrange.

Mr. Caprani made a telephone call to the adjuster, Al Horani, wherein he broached the possibility of settlement. Mr. Horani's evidence was that TD General's policy was never to initiate settlement talks with insured persons, but that when they were advised of an interest in settlement they would ask for details and consider proposals. Following the telephone conversation

Mr. Caprani faxed a settlement proposal to Mr. Horani on March 4, 2003. The letter to Mr. Horani begins:

Please find enclosed as per your request our proposal for a Full and Final Release on the above-noted client.

Requests were made in that proposal that TD General pay for outstanding medical care, assistive devices, housekeeping and emergency medical expenses. Because of Mr. Rahman's immigration status he had no OHIP coverage of any sort and had to pay his physician for each visit. In addition, there were various claims asserted for future medical care expenses. There are two different copies of Mr Caprani's proposal filed in evidence and there is handwriting on both of them. I accept Mr. Horani's evidence that the handwritten figures on one copy are his notes of the compromise amounts he and Mr. Caprani agreed on during a telephone conversation on March 13, 2003. I draw the inference that the notations on the copy that is found in Mr. Caprani's files reflect his notes on this conversation as well. On March 14, 2003 Mr. Horani wrote to Mr. Caprani as follows, copying the letter to Mr. Rahman at his home address:

Enclosed is a confirmation of our agreed release in the amount of $XXXX.XX²as per our telephone conversation on March 13, 2003 this includes all past and future medical and housekeeping.

Other costs we will assume responsibility for are:

7. We also agreed to cover all outstanding to date from Physiocare and Rehab in the amount of $XXXX.XX

8. We also agreed to cover the amount of $XXXX.XX for an in home assessment conducted by Trillium Assessment Centre.

Please have Mr. Rahman sign and initial each page and return all enclosed documents. We require the original documents be returned to my attention prior to releasing our payment to your office.

I note that this letter was sent to Mr. Caprani captioned "Re: Full and Final Settlement."

On March 21, 2003, Mr. Caprani faxed back to Mr. Horani correspondence stating the following:

Please find enclosed a copy of the original "Full and Final Release" duly executed by our client.

I would like to take this opportunity to thank you for your co-operation and assistance in reaching the final settlement of this claim. Be advised that we are now closing our file.

In a letter dated March 25, 2003, delivered by courier, Mr. Caprani exchanged what he described as "the original of the Full and Final Release duly executed by our client" for the settlement funds. His evidence, as well as that of Mr. Horani, was that this process of exchanging original documents for a cheque is normal practice in the industry. Once the payment was made TD General thereafter operated on the assumption that Mr. Rahman's claim was settled and ultimately it administratively closed its file and stored the records of the transaction on microfiche.

On March 28, 2003, Mr. Rahman attended with Mr. Caprani at the paralegal's bank to deal with the settlement funds. Mr. Caprani testified that, at that point in time, his bank would not allow him to deposit cheques payable to a third party directly into his trust account and so he needed Mr. Rahman to come to the bank with him and personally negotiate the cheque which TD General had made payable to Mr. Rahman. From what I understand Mr. Rahman cashed the cheque from TD General and gave the money to Mr. Caprani who deposited the funds into his account and wrote a new cheque out payable to Mr. Rahman for the net amount of the settlement after legal fees and other outstanding charges were deducted. Mr. Rahman acknowledged that this interaction at the bank happened and that he received the settlement money and cashed the cheque Mr. Caprani gave him after a five day hold which his bank put on it expired.

At this point Mr. Caprani's and Mr. Rahman's evidence become wildly divergent. Mr. Caprani's evidence is that, once he negotiated the final settlement amount with Mr. Horani, he advised Mr. Rahman of the results. His evidence was that he explicitly advised Mr. Rahman to "let go" of his claim for income replacement benefits if he wanted to settle, primarily because he had not been able to produce the documentation that the insurer's accountants had been requesting. Mr. Caprani testified that the information he received from the restaurant's accountant was that Mr. Rahman was being paid cash for his services and Mr. Caprani's professional opinion was that Mr. Rahman was not going to be able to prove to the insurer's satisfaction that he was earning what he said he was. Mr. Caprani testified that Mr. Rahman agreed with this approach and that he wanted to settle with the insurer quickly. Mr. Caprani further testified that he did not believe that Mr. Rahman was working at the time of the settlement but also that he did not appear to be or say that he was in any pain or ongoing distress either.

Mr. Caprani's evidence was that there was never any question in his mind that Mr. Rahman instructed him to settle all of his accident benefit claims on a full and final basis. He testified that all of his dealings with Mr. Horani related to settlement were based on reaching a full and final settlement of all accident benefit claims arising out of the accident. He stated that he explicitly advised Mr. Rahman that if he accepted the settlement he would be forever barred from bringing any further claims against the insurer for accident benefits. He stated that he told him about the cooling off period. As noted above, Mr. Caprani's evidence was that the reason the settlement does not allocate anything for income replacement benefits is that he had advised Mr. Rahman that he would not be able to prove that he was entitled to them.

Mr. Caprani testified that he thoroughly went through the Settlement Disclosure Notice with Mr. Rahman, explaining to him what the insurer was offering for what benefits. He stated that he also discussed whether Mr. Rahman should pursue a tort claim, telling him that if he wanted to still do this he should obtain a report from his family doctor related to his accident related impairments, and whether he met the threshold for such a claim. Mr. Caprani was rather frank in testifying that he gave Mr. Rahman this advice because he was not personally interested in financing a medical-legal report for Mr. Rahman and he knew Mr. Rahman couldn't pay for one himself. Mr. Caprani did not personally believe that Mr. Rahman could meet the threshold for a successful tort claim.

Mr. Caprani's evidence is that all of the signatures on the settlement documents purporting to be Mr. Rahman's are in fact Mr. Rahman's. He stated that he was present and saw Mr. Rahman execute the documents and initial the pages of the settlement disclosure notice. Mr. Caprani did admit that he personally signed the "Release" page of the settlement documents in a space that was intended for Mr. Rahman to sign. His evidence at the hearing was that this was just a mistake on his part. Other than this one mistaken signature, Mr. Caprani's evidence is that Mr. Rahman personally signed and initialled all of the other pages.

In addition to the settlement documents which the insurer sent, Mr. Caprani testified that he had Mr. Rahman sign other documents related to finalizing the claim and closing his file. These documents include an "Authorization, Direction & Written Instructions" dated March 19, 2003 in which Mr. Rahman seems to instruct Mr. Caprani to not initiate any tort claim against a third party. There is also a document with the same date styled "For All Bill 59 (Accidents after November 1, 1996)" in which Mr. Rahman instructs Mr. Caprani to settle his claim for weekly income replacement benefits, medical expenses and all other expenses arising out of this accident. The document goes on to state that Mr. Rahman was aware that any money he received from the settlement would be the net available after outstanding amounts to health providers were paid. It also speaks to the potential effect of settling an accident benefit claim on any future tort claim he may wish to commence. Finally, Mr. Caprani prepared a "Settlement Account," dated March 27, 2003 which states that a certain sum was received for a "Full and Final Release" and which breaks down for Mr. Rahman the fees and disbursements he was charged by Mr. Caprani as well as the net amount payable to him. Mr. Caprani testified he gave a copy of this account to Mr. Rahman when he gave him the cheque at the bank. According to Mr. Caprani this was the end of his interaction with Mr. Rahman and his file was closed thereafter.

Mr. Rahman's account of the settlement process is very different. He testified that he was desperate for money after the accident. He was not able to work and this caused the restaurant business to flounder. Ultimately he stated that the landlord changed the locks due to unpaid rent and the restaurant closed down. His evidence was that he was in continual pain and was upset when the physiotherapist told him to stop coming for treatment because the insurer wasn't paying any more. In addition, because of his immigration status, even visits to his family physician cost him money out of his pocket, $30.00 per visit. He stated that he was often unable to afford even over the counter medications like Tylenol for pain, and would borrow small amounts from friends when he could. Mr. Rahman agreed that he did ask Mr. Caprani to try to settle with the insurer. However, when Mr. Caprani told him about the proposed settlement which he had negotiated, Mr. Rahman says he was led to believe that the insurer was going to pay for the outstanding physiotherapy treatment he had as well as for some medication. This settlement was fine with him because Mr. Caprani told him that if he ever needed more treatment he could always come back and ask for more. In effect Mr. Rahman's evidence is that he thought Mr. Caprani was only settling something like his "claims up to date."

Mr. Rahman denies that he ever saw the settlement proposal letter which Mr. Caprani sent to Mr. Horani before the arbitration hearing and he also denies that he ever instructed Mr. Caprani to make any such offer to the insurer. He specifically remembers asking Mr. Caprani about this because his family doctor had advised him that he should get more physiotherapy and he was concerned about who was going to pay for it.

Regarding the income replacement benefit issue, Mr. Rahman recalls that Mr. Caprani told him to bring in some papers related to his work. He said he asked the business accountant to send them. He also recalls telling Mr. Caprani that he had papers proving that he was employed in Holland but that Mr. Caprani told him his accident benefit claims had nothing to do with that.

Mr. Rahman was shown the settlement documents prepared by the insurer. He admits that he initialled the first 6 of the 8 pages and that he signed on page 6 in the space where the signatory acknowledges that he had "received and read the above Settlement Disclosure Notice provided to me by an Insurer, and have considered whether or not to obtain legal, financial and medical advice." He denies ever seeing the "release" on page 7 of the settlement document which Mr. Caprani said he mistakenly signed, or signing the "Waiver Relative to a Full and Final Settlement" which is page 8 of the settlement document.

Mr. Rahman was asked by Mr. Carlisi how he knew that some of the signatures on the documents were not his. His answer was that he did not write the letter "S" in the manner of the signatures. He also observed that the "size" of the signature was wrong.

Mr. Rahman testified that he tried to go back to Mr. Caprani some time later to inquire about making more claims only to find that Mr. Caprani's office was no longer where it had been. He also stated that the telephone number he had for his representative was disconnected. Mr. Caprani's evidence was that, although he did move into a lawyer's office, he kept his old phone number active and forwarded to his new office for 6 months after closing down. I have no evidence from either party as to when Mr. Caprani actually moved or when Mr. Rahman next tried to contact him after March, 2003.

ANALYSIS

Prior to discussing the law and its application to the facts, it is necessary to make certain findings of fact.

Having considered the evidence before me as to the signatures on the settlement documents and Mr. Caprani's internal "file closing" documents, I find that Mr. Rahman has not satisfied me that the signatures on the contested documents are not his. From the point of view of someone who is admittedly not an expert in handwriting analysis, all of the signatures purporting to be Mr. Rahman's look very similar to me. Either the contested signatures are Mr. Rahman's or someone at Mr. Caprani's office forged them. Mr. Rahman could have presented expert evidence to prove that the signatures were not all his. Mr. Caprani testified that the signatures are all Mr. Rahman's.

Given that Mr. Rahman admits signing and initialling "some" of the documents, including the statutorily required Settlement Disclosure Notice, I find it difficult to understand what motive Mr. Caprani would have had for withholding the last two pages of the settlement document from Mr. Rahman. Mr. Caprani's evidence was that he was always trying to achieve a full and final settlement of all accident benefit claims with Mr. Horani, and all of the documentation in Mr. Caprani's file supports that this is what he was negotiating. It may have been sloppy for Mr. Caprani to have mistakenly signed the release, but I do not find that it materially affected Mr. Rahman's understanding of what he was signing.

Even if I am wrong about the authenticity of the signatures, based on my other conclusions, I find that nothing much turns, in this particular arbitration, on whether they were Mr. Rahman's or not. If in fact Mr. Rahman did not sign all of these documents then that may raise a very serious issue between him and Mr. Caprani. However the quality of the legal representation Mr. Caprani provided to Mr. Rahman is not the real focus of the inquiry here. If Mr. Caprani's representation and advice was problematic, Mr. Rahman may need to consider exploring recourse against him directly.

I find, having considered all of the evidence, that Mr. Caprani and Mr. Horani, at all material times, were operating under the common assumption that they were negotiating a full and final settlement of all of Mr. Rahman's accident benefit claims.

Mr. Carlisi argued that the Settlement Disclosure Notice is defective in that Mr. Horani used "X's" for every benefit that the insurer was not offering to pay Mr. Rahman anything. The insurer's offer only included a discrete dollar amount for past and future medical benefits as well as for past and future other expenses. The insurer further noted that they agreed to pay for outstanding physiotherapy treatment as well as for an in-home assessment. Mr. Carlisi's view is that the insertion of "X's" rather than writing the numeral "0" or the word "nil" reflects that the Mr. Horani and Mr. Caprani were not intending to address settlement of those specific benefits. Mr. Horani and Mr. Caprani both testified that they understood the "X's" to mean that nothing was being offered by the insurer for those benefits in the context of the final settlement of all claims.

I find the evidence of Mr. Horani and Mr. Caprani plausible on this point. Mr. Rahman did not testify that Mr. Caprani told him that the "X's" on the Settlement Disclosure Notice meant that those benefit categories were still open for future discussion. In fact, I find it likely that such an interpretation only arose after Mr. Rahman took his case to Mr. Carlisi. Whether or not best practice would be for insurers to use "0" or "nil" in a Settlement Disclosure Notice to reflect that they are not offering to pay anything for a specific benefit, I find that Mr. Rahman could not reasonably have believed that those claims remained open for future discussion. All of the other contemporaneous documentation reflects a common intention of the parties to resolve all accident benefit claims. I have no reason to believe that Mr. Horani intended the "X's" to reflect that the claims were to remain open. In fact I would find that extremely implausible. As I will discuss below, it is the consensus ad idem between Mr. Caprani and Mr. Horani that is relevant here. If Mr. Rahman held some other belief about what was happening then that is an issue to be resolved between himself and Mr. Caprani.

Mr. Carlisi further argued that Mr. Horani's letter to Mr. Caprani, dated March 14, 2003 is best interpreted as confirming that the parties were only discussing settlement of past and future medical claims and housekeeping. In Mr. Carlisi's view the most that TD General can argue is that they were settling those two benefits on a full and final basis and leaving the rest of the file open, specifically income replacement benefits. His basis for this argument was that Mr. Horani's correspondence stated that the settlement "includes all past and future medical and housekeeping," the inference being that there are benefits which the settlement does not "include." Although this is a perhaps a plausible interpretation of the letter in the abstract, I find that it is much more plausible to read "includes" as referring to the discrete benefits for which the insurer was offering to pay something. I find that this is to be the most reasonable interpretation when one takes into account the other settlement documentation, the correspondence between Mr. Caprani and Mr. Horani leading up to the settlement, and the evidence these two individuals gave at the hearing as to what their intentions were at the time.

Mr. Carlisi also argued that a letter in Mr. Caprani's file addressed to Mr. Horani, dated January 22, 2003 supports his view that the March 2003 negotiations were not for a full and final settlement of all of Mr. Rahman's accident benefit claims. This letter is an earlier offer to settle Mr. Rahman's claims prepared by Mr. Caprani, again on a full and final basis. It is unclear from the evidence whether this offer was ever actually sent to Mr. Horani, or if it was whether it was ever responded to by TD General. There is no contemporaneous log note in the insurer's file indicating that it was received or dealt with by the adjuster, whereas the settlement discussions in March 2003 are mentioned in the log notes. This first offer includes a proposal that TD General pay Mr. Rahman for past and future income replacement benefits in addition to the other benefits asked for in March. In Mr. Carlisi's view the existence of this letter is evidence that Mr. Caprani was asserting an income replacement benefit claim on Mr. Rahman's behalf, and so when the offer in March, 2003 did not propose anything for this benefit one should infer that the settlement was not intended to be a full and final for all accident benefits.

On this point I accept as plausible Mr. Caprani's evidence that he formed the personal opinion, whether well informed or not, that Mr. Rahman would not be able to prove that he was entitled to income replacement benefits based on his inability to provide documentary support for the claim. Mr. Caprani testified that he did speak to Mr. Rahman's accountant about the matter before reaching this conclusion. Apparently these two people knew each other in some way before Mr. Rahman came along and I find this fact supports an inference that Mr. Caprani would likely have asked the accountant what was going on in Mr. Rahman's case. I also note that this letter was prepared by Mr. Caprani roughly two months after the accident, a time at which he may well have still believed that there was a provable claim for income replacement benefits, or at least that the insurer might consider paying the relatively modest amounts he was requesting in order to close the file. This letter was also written prior to the time that TD General chose to get an accounting firm involved in investigating the income replacement benefits issue.

The last important findings of fact I wish to make relate to the relationship between Mr. Rahman and Mr. Caprani. I found Mr. Rahman to be a generally credible witness. I believe that he had limited but functional ability to understand and read English at the time of his motor vehicle accident and that his command of the language is much better now than it was then. I also accept that Mr. Rahman trusted Mr. Caprani to take care of all of his accident benefit claims, based on the referral he received from his accountant and his nonexistent experience of the legal system in Ontario. I also accept that Mr. Rahman now believes that he did not receive what he should have from his insurer after this accident. He explicitly testified that other people have told him that lots of people get more money after their auto accidents than he did. People in Mr. Rahman's position clearly do need to be able to rely on guidance from their legal representatives. I have, having considered all of the evidence, lingering questions about the quality of the advice and representation Mr. Rahman received by Mr. Caprani and I understand why Mr. Carlisi encouraged him to look into the matter further.

Mr. Caprani, on the other hand, testified in a rather surly and self important fashion. He appeared to be dismissive of Mr. Rahman's concerns and directly accused him of being a liar with regard to the issue of the signatures. As noted above, my role here is not to adjudicate on any claims between Mr. Rahman and Mr. Caprani. However, if the signatures are not all authentic then that fact may have implications for assessing the quality of the legal representation Mr. Rahman received. I do believe Mr. Rahman when he stated that Mr. Caprani told him that the documents he was signing were standard ones and were the same for everyone. From reviewing Mr. Caprani's file I don't see any evidence that he put much effort into Mr. Rahman's claims. This may be because he didn't actually do very much, or possibly because he didn't meaningfully note the work he did do. In either case I think it is quite likely that Mr. Caprani viewed this as a small claim which could be settled quickly once Mr. Rahman expressed a desire to do so. The letter of January 22, 2003 indicates that, at least in Mr. Caprani's mind, this file was not likely going to be open for any significant length of time. However, whether this approach was in Mr. Rahman's best interests or not, it clearly further supports TD General's position that the settlement negotiated here was always intended to be of all accident benefit claims on a full and final basis.

I accept that the law on this matter has been well articulated and I rely specifically on the decision of Arbitrator Bayefsky in Aboufarah and Allstate Insurance Company of Canada, (FSCO A02-001176, September 30, 2003), which was subsequently confirmed on appeal by the Director's Delegate (FSCO P03-00038, May 5, 2005) in coming to my conclusions.

Although the facts in Aboufarah differ somewhat from those in this case the arbitrator dealt with the salient issue of the ostensible authority of an agent to bind his principle.³ Notwithstanding whether one accepts Mr. Rahman's version of events or Mr. Caprani's, it is unequivocally clear that, at all relevant times, Mr. Caprani was representing to TD General that Mr. Rahman wished to negotiate a full and final settlement of all his accident benefit claims. As Mr. Carlisi acknowledged in response to a question which I posed to him, Mr. Horani was not in possession of any information which would have reasonably caused him to question whether Mr. Rahman agreed with the terms of the settlement, or that he had not personally signed the Waiver. Mr. Caprani advised the insurer in writing on two separate occasions that his client had accepted the terms of settlement and that he had executed the documents. Mr. Horani received the original documents back, and as I noted above, there is no glaring evidence that would cause a non-expert to question whether the signature on page 6 was that of the same person who signed page 8 of the settlement documents. Mr. Rahman did admit signing page 6.

Mr. Rahman chose to retain Mr. Caprani to be his legal representative in this matter, whether he regrets that decision now or not, and he has to live with the consequences of that choice.⁴ He signed a written retainer agreement to memorialize the relationship, and it expressly authorizes Mr. Caprani to negotiate a settlement. After being retained Mr. Caprani represented himself to TD General as Mr. Rahman's agent. That agency relationship was never terminated prior to the settlement being entered into, nor was TD General ever advised that there were any limitations on Mr. Caprani's authority. I appreciate that Mr. Rahman may not have fully understood all of the implications of his retaining Mr. Caprani, or the differences between lawyers and paralegals, but that is a matter to be resolved between the two of them in some other forum. The reality is that Mr. Caprani had not only ostensible, but actual authority to settle this claim with TD General and TD General was fully entitled to rely on that authority in its dealings with Mr. Caprani. Even Mr. Carlisi conceded that it would be impossible to conduct most legal business if people had to make ongoing inquiries into the nature and quality of the relationship between a legal representative and his or her client. Without having any specific evidence to the contrary, TD General was acting reasonably and responsibly in relying on what Mr. Caprani was telling them.

Mr. Carlisi also argued that Mr. Caprani's "mistake" in signing the release page of the settlement documents means that no settlement was entered into. His view is that without a properly executed release the matter is not resolved. I disagree.

The Settlement Regulation⁵ requires that the insurer provide the insured person with a "written disclosure notice" whenever an agreement is reached between the parties that finally disposes of a claim or dispute in respect of the insured person's entitlement to one or more benefits under the Statutory Accident Benefits Schedule. I find that the insurer complied with the requirements of section 9.1 of the Settlement Regulation regarding the form of the Notice. The regulation does not speak directly to any requirement that an insured person sign a release in order to settle a claim. What the prescribed form of the Settlement Disclosure Notice does say on the first page, under the heading NOTICE AND CAUTION is that "Your insurer will probably also give you a Release to sign." (emphasis added)

In this case it is clear that TD General requested that Mr. Rahman acknowledge receiving and reading the Settlement Disclosure Notice and also that he sign a Release and a Waiver. I believe that I can take notice of the fact that it is normal industry practice for insurers to request Releases when files are being closed. It is also the case that most insurers choose not to release settlement funds until they receive all of the original documentation back, executed as expected by the insured person. In this regard insurers typically request, as did Mr. Horani in this case, that each page of the Settlement Disclosure Notice be initialled by the insured person. However there is no actual statutory requirement that this be done. It is requested primarily out of an abundance of caution.

Notwithstanding normal industry practice, there is no legal requirement that an insured person sign a Release to settle a claim. The prescribed form of the Settlement Disclosure Notice specifically says that it is "probable" that the insurer will request one, but that does not make it mandatory. For what it is worth, the Release, in this case as in most others, is designed primarily to protect the insurer and is merely an extra document which can be relied on by an insurer in defence of any attempt to make further claims in the matter. The Release is in fact extra and optional "insurance" for the insurer.

If a Release was an actual requirement for a settlement, common sense would suggest that the insured person should personally sign it and not his representative. Whether or not a Release signed by Mr. Caprani has any legal value in this case I make no comment on. The important point is that Mr. Horani either did not notice the mistake or he did not think it was important enough to bother with. In fact TD General elected to settle this file without receiving a release signed by Mr. Rahman. Analogously to the issues between Mr. Rahman and Mr. Caprani, this decision is really an internal matter between Mr. Horani and TD General. Certainly if one hypothetically imagines a supervisor at TD General thinking the settlement amount was too generous, it is hard to believe that any adjudicator would allow the insurer to set the settlement aside based on an after the fact realization that they "should have" obtained a release before paying the settlement funds. TD General was within its rights to request a Release and it also had the right to waive that request if it so chose.

A finding that Mr. Rahman entered into a binding full and final settlement of all his accident benefit claims does not completely end the matter. The insured person does have the statutory right to rescind any settlement within two business days after the latter of signing the disclosure notice or a release. In this particular case there is no need to deeply analyse "when" the settlement occurred. I find that Mr. Rahman executed the Settlement Disclosure Notice on March 19, 2003 and also that he never executed a Release. This means that Mr. Rahman had two business days after March 19, 2003 to notify TD General in writing that he wished to rescind the settlement if that was his choice. The uncontradicted evidence before me was that he never personally provided such written notice to TD General. Mr. Caprani testified that he never provided any such recission notice, nor was he asked to by his client. Mr. Rahman did not contact TD General again until after he retained Mr. Carlisi sometime in 2005.

I again agree with the approach adopted by Arbitrator Bayefsky in Aboufarah where he discusses the implications of an insured person's not signing a Release. The purpose of the "cooling off period" is to allow an insured person to make an informed, unpressured, decision before finally settling accident benefit claims. It is an inherent aspect of the consumer protection framework of accident benefit law enunciated by the Supreme Court of Canada in Smith v. Co-operators.⁶ As Arbitrator Bayefsky notes, a requirement that a Release be signed before the cooling off period starts does nothing in fact to further protect people from entering to settlements which they may not understand or agree with. It is the Settlement Disclosure Notice which provides the requisite information to an insured person needed to make an informed decision and it is the only document that is formally required for a final settlement of an accident benefit claim. In this case Mr. Rahman admits that he read and signed the Settlement Disclosure Notice portion of the settlement documents and also that he initialled all of the pages that constitute it as requested. I have also made a finding that Mr. Rahman has not persuaded me that he did not actually sign the Waiver or the other documents Mr. Caprani had prepared for him. Mr. Rahman may well have signed only because he trusted Mr. Caprani, but the end result is that he did sign. He did not take any steps that would have alerted TD General that his personal intention was not to settle all of his claims on a final basis. In my view, if Mr. Rahman wanted to resile from the agreement negotiated between Mr. Caprani and Mr. Horani he would have had to have done so no later than two business days after he read and signed the Settlement Disclosure Notice. Advising the insurer late in 2005, after Mr. Carlisi was retained, that he wanted to reopen his claim was unquestionably much too late.

In conclusion, I find that Mr. Rahman entered into a binding full and final settlement with TD General of all accident benefit claims arising out of his accident on November 15, 2002. As result Mr. Rahman is precluded from further mediating or arbitrating any accident benefit claims arising out of this accident.

EXPENSES:

The parties did not make submissions on expenses. In the event that they are not able to resolve the issue between themselves an expense hearing may be arranged as provided for in the Dispute Resolution Practice Code (Fourth Edition, Updated October 2003).

February 9, 2007

Robert A. Kominar Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 25 FSCO A05-002690

BETWEEN:

SIPON RAHMAN Applicant

and

TD GENERAL INSURANCE COMPANY Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Rahman entered into a binding full and final settlement with TD General of all accident benefit claims arising out of his accident on November 15, 2002. As result Mr. Rahman is precluded from further mediating or arbitrating any accident benefit claims arising out of this accident.

2. If the parties cannot resolve the issue of expenses between themselves an expense hearing may be requested pursuant to the provision of the Dispute Resolution Practice Code (Fourth Edition, Updated October 2003).

February 9, 2007

Robert A. Kominar Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2I have replaced the exact amount of the settlement offered with "X's" to maintain the privacy of agreement.
3. 3The arbitrator relies on the authority of the Ontario Court of Appeal in Scherer v. Paletta [1996] 2.O.R. 524 for the proposition that implicit in the authority to conduct litigation is a legal representative's ability to compromise and reach settlement unless a limitation on such authority is communicated to the other side.
4. 4I note that the relationship between Mr. Rahman and Mr. Caprani occurred at a time prior to the Financial Service Commission of Ontario's decision to regulate paralegals who represent people in accident benefit claims. Thus there was no formal Code of Conduct in place at the time, nor any explicit requirement for Errors and Omissions Insurance. Since that time concern about the quality of paralegal services have prompted the Ontario government to impose regulation of all paralegal activity in Ontario through the Law Society of Upper Canada.
5. 5Ontario Regulation 403/96, as amended
6. 6Smith v. Co-operators General Insurance Co, 2002 SCC 30, [2002] 2 S.C.R. 129