Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2008 ONFSCDRS 147

FSCO A07-001889

BETWEEN:

ENSIEH MOUSAVI

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

Before: Arbitrator John Wilson

Heard: June 20, 2008, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mrs. Mousavi appeared on her own behalf.

Tricia Hannigan for ING Insurance Company of Canada

Issues:

The Applicant, Ensieh Mousavi, was injured in a motor vehicle accident on May 7, 2005. She applied for and received statutory accident benefits from ING Insurance Company of Canada (“ING”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mrs. Mousavi applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this hearing is:

Is Mrs. Mousavi barred from proceeding with her claim against ING by reason of a full and final settlement of her claim?

Result:

Mrs. Mousavi is barred from proceeding with her claim against ING by reason of a full and final settlement of her claim made on March 7, 2008.

EVIDENCE AND ANALYSIS:

Mrs. Mousavi represented herself at the pre-hearing of her claim against ING for accident benefits. Her claim involved a non-earner benefit, certain medical benefits, a rehabilitation benefit, an attendant care benefit and housekeeping and home maintenance.

Mrs. Mousavi claimed to be suffering from “pain and suffering and physical trauma as a result of this accident which I am a victim of.”

More specifically she complained of low confidence, depression and being “dependent on others for things I used to provide to everyone else.”

At the first pre-hearing in this matter which took place on January 23, 2008, Mrs. Mousavi reached a settlement with ING, with the assistance and support of her son. After reflection, however, Mrs. Mousavi provided written notice of her intention to resile from the settlement agreement. There is no question that the January 23 settlement was properly terminated and ING has made no attempt to enforce its terms.

A further pre-hearing was held on Friday, March 7, 2008. Once again, with the assistance of her son, Mrs. Mousavi was able to reach an agreement with ING disposing of her claims once and for all.

This time, Ms. Hannigan, counsel for the Insurer, was prepared with the appropriate documentation on hand for Mrs. Mousavi to sign. There is no dispute that Mrs. Mousavi signed the documents on the same day as the pre-hearing and entered into a settlement agreement.

Now, once again, Mrs. Mousavi wants to resile from her settlement agreement. The purpose of this hearing was to decide whether the March 7, 2008 agreement to settle this claim is binding upon Mrs. Mousavi, and may be relied upon by the Insurer to bar further action on the claim.

Settlements of accident benefits matters are subject to the specific requirements of the Settlement Regulation as well as the general common law requirements for an agreement to be enforceable.

For Settlements Made on or After March 1, 2002. Excerpt From R.R.O. 1990, Reg. 664, as Amended by O. Reg. 275/03.

(4) The insured person may rescind the settlement within two business days after the later of the day the insured person signs the disclosure notice and the day the insured person signs the release.

The purpose of the Settlement Regulation is to permit an insured to receive sufficient information from the insurer to make a meaningful comparison between a proposed settlement payment and the value of the statutory accident benefits that might otherwise be available to that person under the Statutory Accident Benefits Schedule. As Glass J. noted:

There is no confusion about the wording of the current regulations. They state that the insured person may, within two business days after the later of the day the person signs the disclosure notice and the day the insured person signs the release, rescind the settlement by delivering written notice to the office of the insurer or its representative and returning any money received for the settlement. This is set out in s. 9.1 (3) subparagraph 3 of the O. Reg. 275/03 and applies to settlements made on or after March 1, 2002. ²

In this matter, there are really two things at issue. The first is whether Mrs. Mousavi, as she claims now, resiled from the contract within the time set by the settlement regulation. The second, and perhaps alternative question, is whether the Insurer somehow waived its right to rely on the time limit set in the Settlement Regulation, thus making what may have been a technically out of time attempt to resile, valid.

ING has filed the settlement documents as part of the motion materials. On their face, they seem to be clear that Mrs. Mousavi signed away her rights to past, present and future accident benefits in return for certain compensation which ING agreed to pay.

If the settlement documents were insufficient or did not meet the requirements set out by the regulation, then the time limit to resile from the agreement would not have begun to run.

Mrs. Mousavi, however, does not allege specifically that the settlement documents themselves are non-compliant with the Settlement Regulation and, on examination, the documents appear on their face to meet the legislative requirements as set out in the Settlement Regulation.

Rather, Mrs. Mousavi appears to rely on her notice to resile being timely or, in the alternative, within the time frame that ING either specifically or impliedly allowed.

In this case, there seems to be no question that the legislative “cooling off period” would commence with the delivery and execution of the settlement documents, namely immediately following the pre-hearing on March 7, 2008.

March 7, 2008 was a Friday. Consequently, since the “cooling-off” provision refers to “business days”, neither Saturday nor Sunday count as part of the “cooling-off period.”

According to the affidavit of Roxanne Hector, filed by the Insurer, counsel for ING received an e-mail from Mrs. Mousavi at 2:01 p.m. on March 11, 2008, in which she requested “an extension of the cooling off period for an additional 48 hours to consult with her lawyer.”

In a March 12, 2008 letter from Ms. Hannigan to myself, but copied to Mrs. Mousavi, counsel for ING, Ms. Hannigan noted the e-mail request but stated:

It is the Insurer’s position that the 48 hour cooling off period following execution of the Settlement Disclosure Notice and Release and approval of the Order dismissing the arbitration had passed prior to receiving Mrs. Mousavi’s correspondence dated March 11, 2008.

To review the timing of this matter again, the documents were signed on Friday, March 7, 2008. Two full business days following the signature of the documents would bring us to the close of business on Tuesday, March 11, 2008.

In her letter dated March 12, 2008, Ms. Hannigan is obviously making an erroneous assumption that the weekend should be figured into the calculation of the cooling off period, since she states that the 48 hour cooling off period had already expired prior to the e-mail.

Such a calculation ignores the specific wording of the section which refers to “two business days after the later of the day the insured person signs the disclosure notice and the day the insured person signs the release” since the use of the wording “two business days after” implies that the time would only begin to run, commencing the beginning of the business day which followed the signing of the settlement documents – in this case Monday morning.

The use of the term “business day” in itself is open to some confusion. The term is not defined in the Regulation, or in the Insurance Act. Indeed, much of the jurisprudence on the issue appears to imply that only Sundays and holidays are exempt from the definition of business days.

At one time it was clear that Saturday was a business day like all others. In rural Ontario towns Saturday was often market day, and everywhere in Canada there was Saturday mail delivery. As Houlden J.A. observed, the definition of “business day” in a legal context reflected the realities of that time past:

To accede to the submission of the plaintiffs would require a finding on my part that “business day” means a business day of the lessees or, at least, a day upon which there is a mail delivery to his business premises. I can find nothing in the wording of the lease to support such a finding nor is there anything in the evidence to suggest that the lessor was aware that Saturday was not a business day of the plaintiffs nor that there was no mail delivery to the plaintiffs’ place of business ³

The new Legislation Act, 2006⁴, however, appears to suggest that the modern weekend should be taken into consideration when defining a business day:

Days on which offices close

89 (2) Time limits for registering or filing documents or for doing anything else that expire on a day when the place for doing so is not open during its regular hours of business are extended to include the next day the place is open during its regular hours of business. 2006, c. 21, Sched. F, s. 89 (2).

Times have changed since Arnup J.A. presided at the Court of Appeal. Unlike retail shopping, “business” is now clearly a Monday to Friday activity. The use of the phrase “business days” should be modified accordingly. Given that the regulation contemplates an insured serving notice on the insurer, it would hardly make sense for a notice served on a closed office to be considered as effective service. It only makes practical sense that the provisions of section 89(2) of the Legislation Act would prevail over the older view that Saturday is a business day like all others.

While Ms. Hannigan was mistaken when she stated that the “cooling off” period had passed prior to receiving Mrs. Mousavi’s correspondence dated March 11, 2008, I do not find that Ms. Hannigan’s error as to the duration of the cooling off period in any way prejudiced Mrs. Mousavi. The letter from ING containing the erroneous reference to the time limit was not sent until the actual time limit had already expired. As such it could not have prejudiced Mrs. Mousavi’s attempt to resile from the contract, since by the time of the transmission of the letter, no further repudiation could take place.

Nor do I accept that there is any concrete evidence that ING through its actions waived its right to rely on the statutory time limit or led Mrs. Mousavi to believe that it would grant the requested extension to the cooling off period. In the absence of any reply to her request, Mrs. Mousavi had no reason to believe that she would be granted any indugence.

If Mrs. Mousavi’s March 11, 2008 letter requesting an extension of time to obtain advice from her lawyer constituted an effective and unequivocal renunciation of the settlement, then coming at 2:00 p.m. on Tuesday it would have been effective in terminating any settlement.

I do not accept, however, that Mrs. Mousavi’s March 11 letter constituted a clear repudiation of the settlement agreement.

A contract has been said to be repudiated when one party acts in a way that demonstrates an intent to no longer be bound by the contract. The House of Lords in Spettabile summarized the law as follows:

A repudiation has been defined in different terms- by LORD SELBORNE as an absolute refusal to perform a contract; by LORD ESHER as a total refusal to perform it; by BOWEN, L.J., in Johnstone v. Milling (4) as a declaration of an intention not to carry out a contract when the time arrives, and by LORD HALDANE in Bradley v. H. Newsum, Sons & Co., Ltd.(5) as an intention to treat the obligation as altogether at an end. They all come to the same thing, and they all amount at any rate to this, that it must be shown that the party to the contract made quite plain his own intention not to perform the contract.⁵

While Mrs. Mousavi’s letter demonstrated that she had reservations about her settlement of her accident benefit claim, the pith and substance of the letter is a simple request for more time to consult with a lawyer about the settlement. Mrs. Mousavi in no way made it plain that she had a firm intention to cancel the agreement or to otherwise withdraw from her agreement. The letter also makes it clear that Mrs. Mousavi recognized that there was an impending time limit, and that she needed ING’s approval if she was to have more time to decide.

Although I accept that Mrs. Mousavi ultimately changed her mind about the settlement, I cannot accept, even having heard Mrs. Mousavi’s testimony on the issue, that the complete change of heart came before the expiry of the cooling off period nor that Mrs. Mousavi intended to communicate an irrevocable repudiation of the settlement agreement in her letter of March 11, 2008.

It is important to consider that, once the formalities of the delivery of the required notices and the signature of the settlement documents have been completed, there is a firm settlement, subject to the escape clause contained in the Settlement Regulation. The contract is voidable at the instance of the insured for the period set out in the Regulation, but, in the absence of clear repudiation, is valid and enforceable. In the absence of timely positive action to void the settlement, Mrs. Mousavi is bound by the settlement agreement and I so find.

A further complication in this matter is Mrs. Mousavi’s status as an unrepresented litigant. It is beyond question that Mrs. Mousavi does not have the skills, the substantive or the procedural knowledge of a competent lawyer. It was, however, Mrs Mousavi’s personal choice to proceed to the pre-hearings, the settlement process, and the hearing of this motion without legal representation. There is no question as well that her choice to be unrepresented during the pre-hearing and the hearing process could put herself at a significant disadvantage to the Insurer, who was represented by competent counsel.

McDonald J. made the following comments about legal proceedings involving unrepresented litigants:

The adversarial system in its purest form and the advantage which accrues to a legally represented litigant who is opposing an unrepresented litigant are modified by the supervening Principle that trials must not only be fair, they must appear to be fair to reasonable and informed observers of the trial process. Trial fairness requires ensuring that an unrepresented person is not denied a trial on the merits by her lack of knowledge of either the trial process or procedural and substantive law, or by the stress of appearing in court, or by a combination of those factors.⁶

In this matter, it was clear that Mrs. Mousavi was aware of the nature of the cooling off period, and the consequences of resiling from any agreement within that period. Indeed, she had already availed herself of the right to repudiate just such a settlement in January of 2008. As well, her letter requesting more time for consideration from ING demonstrates a sensitivity to an impending deadline. I accept that Mrs. Mousavi had a good, generalized awareness of the time limit to repudiate a settlement, and the mechanism to do so.

If Mrs. Mousavi had actually intended to resile from her settlement by means of her letter to counsel for ING on March 11, 2008, it is possible that some legal assistance in draughting that letter might have made her intention more apparent.

As stated earlier however, I do not accept that Mrs. Mousavi’s letter was intended as a repudiation letter. It is more likely than not that the letter, even if draughted by counsel, would have had the same meaning, since the evidence is that, at that point, extra time was all that Mrs. Mousavi wanted. She was not yet prepared to forego the settlement and proceed to arbitration.

As challenging as Mrs. Mousavi’s task was in representing her own interests without the benefit of legal counsel, the outcome would have been the same with or without counsel. On Tuesday March 11, 2008, Mrs. Mousavi correctly expressed her wishes. Counsel would have done the same since such would have been Mrs. Mousavi’s instructions. The absolute change of mind, and the recusal came later – after the cooling off period had expired – too late to change the outcome.

Nor would any further intervention by the tribunal have made a significant difference to the outcome either. Mrs. Mousavi was referred to the governing legislation. She was urged to contact a lawyer. She was given time to consult with her adult son on this matter. Every effort was taken to ensure that no one was pressured into making improvident decisions. An adjudicator can and should do no more since to do so would compromise the position of neutrality necessary to the position. As Thorson J.A. observed:

Clearly it cannot and does not extend to his providing to the accused at each stage of his trial the kind of advice that counsel could be expected to provide if the accused were represented by counsel. If it did, the trial judge would quickly find himself in the impossible position of being both advocate and impartial arbiter at one and the same time.⁷

All the procedural indulgence that might be given to an unrepresented applicant cannot change the fact that the same substantive law must be applied, whether a party is represented or not.

Mrs. Mousavi has also implicitly raised the issue of whether the settlement was either improvident or inconscionable and should not be enforced for that reason. Her initial correspondence mentioned that in light of her “future health welfare” she needed an extension to the settlement deadline.

An inconscionable settlement has been said to be one that “is sufficiently divergent from community standards of commercial reality that it should be rescinded.”⁸ In this matter, the amount of Mrs. Mousavi’s settlement is not insubstantial, and indeed may well be better than she might receive if this arbitration went to a hearing on its merits. There was no direct evidence provided as to inconscionability, and the settlement itself does not suggest that the Insurer in any way abused its power to force a settlement that was divergent from community standards. I find that there is no evidence that this matter should be set aside as an inconscionable settlement.

Settlements raise many challenges for the parties who enter into them. Barring a total capitulation by one side or another, settlements represent serious compromise of both parties’ positions. Settlements require that one challenge expectations of what ought to be the outcome of a matter, with the crude arithmetic of trade-off and compromise, leavened by a brutally realistic sense of the possible. It is rare that someone emerges from settlement discussions without some sense of disappointment. In Mrs. Mousavi’s case, however, the disappointment clearly turned into disenchantment with the process and ultimately, a decision to repudiate the settlement. That decision, however, came too late to be effective.

While Mrs. Mousavi, in good faith, may have felt a strong need to set aside what she perceived as an improvident and unfair settlement, I have now found that she had no legal grounds for so doing. It goes without saying, however, that Mrs. Mousavi remains entitled to the funds that formed part of the settlement reached between her and her insurer. If the proceeds of the settlement have not been paid to date, ING shall do so forthwith.

EXPENSES:

If the parties are unable to agree on the issue of expenses, I may be spoken to on that issue.

September 11, 2008

John Wilson

Arbitrator

Date