Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2008 ONFSCDRS 166
Appeal P08-00012
OFFICE OF THE DIRECTOR OF ARBITRATIONS
ING INSURANCE COMPANY OF CANADA
Appellant
and
DEAN JETTY
Respondent
BEFORE:
Delegate Lawrence Blackman
REPRESENTATIVES:
Mr. Chris T. Blom for ING Insurance Company of Canada
Mr. Guy A. Hurtubise for Mr. Jetty
HEARING DATE:
September 25, 2008, by telephone conference call
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The Arbitrator's order dated February 22, 2008 is confirmed and the appeal is dismissed.
If the parties are unable to agree on the legal expenses of this appeal proceeding, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).
October 10, 2008
Lawrence Blackman Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
As a result of injuries sustained in a motor vehicle accident on July 31, 2003, Mr. Dean Jetty (the “Respondent”) applied to ING Insurance Company of Canada (the “Appellant”) for statutory accident benefits available pursuant to the Schedule.1
Mediation was conducted by the Financial Services Commission of Ontario regarding the Respondent’s entitlement to income replacement benefits (“IRBs”). The July 28, 2005 Report of Mediator confirmed settlement of this issue. Concurrently, the Appellant’s counsel sent the Respondent’s counsel a release and a Settlement Disclosure Notice. These were returned on August 3, 2005, having been signed by the Respondent on July 29, 2005.
By letter dated September 7, 2005, the Respondent rescinded the settlement, stating that the Appellant had not complied with subsection 32(2) of the Schedule and the Commissioner's Guideline No. 2/96 respecting IRB entitlement and calculation.
The Respondent’s October 25, 2005 letter elaborated that the Appellant had failed to comply with the Settlement Regulation, excerpt from R.R.O. 1990 Reg. 664, as amended by O. Reg 275/03, by not informing him of his entitlement under subsection 6(5) of the Schedule to 80% of his net losses from self-employment, as enunciated in Welsh and Economical Mutual Insurance Co., (FSCO P02-00024, October 7, 2003). The Respondent’s March 3, 2006 letter stated that the Appellant’s representative had not signed the notice, contrary to subsection 9.1(2) of the Settlement Regulation.
In late August 2006, the Appellant sent a settlement cheque to the Respondent’s counsel. The cheque was returned by letter dated August 31, 2006.
A preliminary issue came before Arbitrator Killoran (the “Arbitrator”) as to whether the Respondent had indeed settled his IRB claim.
The Arbitrator’s February 22, 2008 decision held that the Respondent had not settled his IRB claim for the following reasons:
The Appellant failed to have a signature on the Settlement Disclosure Notice. This was not a technical or inconsequential error, but was required by the mandatory language of the Settlement Regulation to both formalize and finalize the settlement process.
The statement in the Settlement Disclosure Notice that the maximum IRB available to the Respondent was $400 a week was not correct. As evidenced by its accountant's reports upon which it relied, the Appellant knew that the Respondent was self-employed and was entitled to have 80% of his business losses added to his IRB. The Appellant was obliged to state this in the Settlement Disclosure Notice.
The Arbitrator held that the Settlement Regulation is a complete statutory scheme as to the requirements for a binding settlement between an insured and an insurer. The Appellant did not comply with subsections 9.1(2) and (3) of the Settlement Regulation. Therefore, subsection 9.1(5) of the Settlement Regulation allowed the Respondent to rescind the settlement after the two business days specified in subsection 9.1(4).
II. THE APPELLANT’S SUBMISSIONS
The Appellant seeks an order setting aside the Arbitrator’s decision, confirming that the Settlement Disclosure Notice was valid and awarding its legal expenses of this appeal. The Appellant submits that the Arbitrator erred in her decision in two respects.
Firstly, the Appellant submits that the Arbitrator erred in finding that its counsel’s typed name inserted on the signature page of the Settlement Disclosure Notice following the formatted words “Representative of insurer” did not comply with subsection 9.1(2) of the Settlement Regulation which required that the document be signed by the insurer.
The Appellant cites Black’s Law Dictionary, 8th ed. (WestGroup, 2004) that the words “sign” or “signature” entail “[a]ny name, mark or writing with the intention of authenticating a document.” R. v. Fox, 1958 CanLII 432 (ON CA), [1958] O.W.N. 141 held that stamped or typed signatures were sufficient upon the assumption that they had been authorized by the persons named. Regina v. Welsford, 1967 CanLII 36 (ON CA), [1967] 2 O.R. 496 held that:
There have been many cases where the courts have held that a legislative requirement for a signature did not necessarily require a signature be in the handwriting of the person signing. In particular instances, typed names, stamped names or a man’s mark have been accepted.
Regarding authority to make the mark, the Appellant submits that the law of agency allows an insurer to be made a party to a contract executed on its behalf by its legal representative. Sprague v. Larder Lake Land Co., [1939] O.J. No. 218 held that “authority to sign may be by express appointment, or it may be authority implied by law, or authority presumed from the situation of the parties.” The Report of Mediator noting counsel as the “Insurer’s Representative” and counsel’s letter confirming the Appellant’s acceptance of the settlement show a presumption that counsel had the requisite authority. This was confirmed by the Respondent signing and returning the release and the Settlement Disclosure Notice.
The Appellant submits that the Settlement Regulation gives no direction as to how the Settlement Disclosure Notice should be signed, be it by cursive writing or otherwise, nor does it prohibit an insurer from delegating this authority to its solicitor. Rather, the Settlement Disclosure Notice contemplates such delegation of authority by its use in the “Insurer’s Disclosure and Acknowledgment” section on the signature page on page six, the words “Representative of insurer.”
Regarding the description of benefits in the Settlement Disclosure Notice, the Appellant submits that the Arbitrator failed to consider that subsection 9.1(3) of the Settlement Regulation provides conflicting requirements. The Settlement Disclosure Notice must contain specified information, including a description of benefits that may be available under the Schedule. Subsection 9.1(3) of the Settlement Regulation also provides that the disclosure notice shall be in a form approved by the Superintendent.
If there is a conflict between these requirements, it is argued that the approach favouring the approved form should take precedence. The term “shall” is imperative, imposing binding requirements. The purpose of subsection 9.1(3) is consumer protection. To advance this purpose and avoid uncertainty and misunderstanding, the term “shall” should be interpreted as a mandatory directive that the insurer must deliver a Settlement Disclosure Notice in the form approved by the Superintendent.
The Appellant argues that in this case the Settlement Disclosure Notice was in a form approved and required for use by the Superintendent under the authority of subsection 121.2(1) of the Insurance Act, R.S.O. 1990, c. I.8. Any deletions or additions to the Settlement Disclosure Notice by the Appellant would have allowed the settlement to be set aside on the basis that the document was no longer in a form approved by the Superintendent.
Furthermore, paragraph 9.1(3)2 of the Settlement Regulation does not require that all of the benefits available under the Schedule be reproduced in the Settlement Disclosure Notice. Rather, it merely requires a description of the benefits that may be available. Such a standard "Description of Benefits" is included in the form approved by the Superintendent. To follow the Arbitrator’s logic, it is argued, an insured with no entitlement to IRBs could set aside a settlement on the basis that the correct maximum IRB was not provided.
It is also submitted that Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129 (which held that the use of a prescribed form did not detract from the insurer’s obligations to advise the insured of the procedure for resolving disputes) is distinguishable as there was no statutory provision in Smith which called for the use of a particular form of document.
III. THE RESPONDENT’S SUBMISSIONS
The Respondent submits that the Settlement Disclosure Notice was not signed as typing in the name of the insurer’s counsel does not comply with the Settlement Regulation.
The Settlement Disclosure Notice is not a boiler plate document. Rather, it includes a
specific acknowledgement that “the insurer has made available for review by the insured
person all of the medical information, medical records, and other information of medical nature in the insurer’s file.” Such certification requires full knowledge of the insurer’s adjusting information.
Canada v. Fredericton Housing Ltd., [1973] F.C. 196 provides that a person may authorize another to sign his or her name but “it must be shown that matter has come under the personal notice of the solicitor and had been adopted by him which was not the case when the solicitor’s name was merely lithographed.” Thirkell v. Cambi (1919) 2 K.B. 590 states that “[i]n the case of a solicitor there is no presumption of authority to sign a memorandum under the statute. The party relying upon the signature of a solicitor must prove that he was actually authorized by the defendant to sign the document.”
A lawyer is not an adjuster and their roles in first-party litigation are incompatible. The lawyer’s duty is to his or her client. The adjuster owes a duty to the insured person under the Settlement Regulation to give complete disclosure of medical documentation and to certify that the disclosure provided is complete and correct. Hence, the Insurance Act defines an adjuster, in part, as not including “a barrister or solicitor acting in the usual course of the practice of law.”
The insurer has a statutory duty and a general duty of utmost good faith to inform, through the Settlement Disclosure Notice, the true benefits available to the specific insured person. An insurer’s responsibilities are not co-extensive with those of the Superintendent and its actions are not defined or excused by the Superintendent’s actions. The prescribed form does not detract from an insurer’s obligation to provide correct information about the extent and value of the IRB. The burden of an incorrect form should not fall on the insured.
The Settlement Disclosure Notice erred in stating that the maximum IRB was
$400 a week and was misleading. Subsection 6(5) of the Schedule at the time of this accident had no maximum. Accordingly, the insurer’s certification at the end of the Settlement Disclosure Notice that the information in the Settlement Disclosure Notice was complete and correct was not true.
IV. ANALYSIS
I agree with the Arbitrator that the Appellant did not comply with subsection 9.1(2) of the Settlement Regulation regarding a signed Settlement Disclosure Notice, nor with paragraph 9.1(3)2 regarding a description of benefits that may be available under the Schedule. I further agree that as a result of this non-compliance, subsection 9.1(5) of the Settlement Regulation allowed the Respondent to rescind the settlement after the two business day period set out in subsection 9.l(4).
Subsection 9.1(2): a signed Settlement Disclosure Notice
I do not accept the Appellant’s submission that in this case the typed name of the insurer’s lawyer on the final, signature, page of the Settlement Disclosure Notice met the subsection 9.1(2) requirement of the Settlement Regulation that the notice be signed by the insurer.
The Ontario Court of Appeal held in Atkinson et al. v. Municipality of Toronto (1976), 1976 CanLII 43 (ON CA), 12 O.R. 401 that:
It is the personal authentication of the individual “signing” that is the essential requirement. In each case it is necessary to consider the particular statute or rule to see whether it contemplated the document being signed in any particular way.
In considering the relevant legislative scheme, I stated in Rahman and TD General Insurance Company, (FSCO P07-00005, March 31, 2008) that:
To a significant degree, the legislative intent [of the Settlement Regulation] was that the settlement documents were to speak for themselves. Rather than requiring testimony of what was understood by the various parties, one would simply look at the requisite documents. The purpose of the legislation was to avoid misunderstanding and provide safeguards for both parties. To a significant degree, the legislation was successful in reducing uncertainty and, hence, litigation …
In extraordinary circumstances, such as illiteracy or a physical handicap, extraneous evidence, as submitted by the Appellant, might be allowed to establish that a typed signature of a non-principal did authenticate a document. Such extraordinary circumstances are not argued here, leaving an unnecessarily complicating and superfluous procedural step which can create uncertainty and is to be avoided.
I agree with Catania (Litigation guardian of) v. Scottish & York Insurance Co., [1999] O.J. No. 3678, that subsection 9.1(2) should not be interpreted “in a manner that would discourage considered and well-informed settlements.” I am not persuaded that requiring a cursive signature of a principal where no special or extraordinary circumstances exist is a punctilious or overly formal approach to fulfilling the requirements of subsection 9.1(2).
The Settlement Regulation requires the Settlement Disclosure Notice to be signed by both the insurer, as mandated in subsection 9.1(2) of the Settlement Regulation, and by the insured person, as set out in paragraph 9.1(3)6 and confirmed in subsection 9.1(4).
The Appellant does not argue that the term “sign” means something different if applied to the insurer rather than the insured. Indeed, the Report of Mediator, upon which the Appellant relies as extraneous evidence of its counsel’s authority to sign, uses the same word “representative” in applying to both counsel. Further, any argument that the words “Representative of insurer” found on the signature page of the Settlement Disclosure Notice can include counsel is negated by the introductory “Notice and Caution” in the same document which states only that the form “must be completed and signed by your insurer.”
In any event, the wording on the signature page for the insurer, which is of course a corporate body, is “Representative of Insurer,” not “Legal Representative of insurer.”
Further regarding the manner of signature, it must be remembered, as stated in Smith, that “insurance law is, in many respects, geared towards protection of the consumer.” Consumer protection is not enhanced if, as a matter of routine, neither principal is required to put pen to paper, the insured confirming that he or she has received and read the Settlement Disclosure Notice and the insurer certifying that the information in the Notice is complete and correct.
The statutory scheme herein does not presume that counsel have binding authority to sign
the settlement documentation. Rather, Practice Note 3 of the Dispute Resolution Practice Code, (Fourth Edition, Updated – October 2003) (the “Code”) states that:
A lawyer or an employee representing an insurance company must have the authority to change the company’s position based on the evidence presented by the insured at a mediation, neutral evaluation or arbitration. In the case where the insurer’s representative has limited authority to enter into an agreement or settlement, an officer of the company with the requisite authority must attend or be available by telephone for the duration of the proceeding. [emphasis in the original]
In Mazin and Personal Insurance Company of Canada et al., (FSCO P07-00028, September 8, 2008), regarding the importance of the personal involvement in the pre-hearing process of the principals themselves and the importance of binding authority (again referencing, amongst other provisions, Practice Note 3), I stated that:
Binding authority means that the person participating does not have to contact anyone else to obtain instructions to respond to any reasonably foreseeable pre-hearing event or item of discussion. If a party decides that binding authority shall be held only by a company president or by a board of governors, the Commission expects, as highlighted by Rule 9.3 of the Code, their direct involvement in the pre-hearing discussion, subject to reasonable extenuating and extraordinary circumstances.
Further, the Settlement Disclosure Notice advises the insured that:
YOU HAVE THE RIGHT TO SEE ANY MEDICAL INFORMATION RELATING TO YOUR CLAIM IN YOUR INSURER’S FILE AND TO OBTAIN A COPY AT THE INSURER’S EXPENSE.
The “Insurer’s Disclosure and Acknowledgement” on the signature page states that:
The insurer acknowledges that it has made available for review by the insured person or the insured person’s representative all medical reports, medical records and other information of a medical nature in the insurer’s file relating to the insured person.
The question of whether privilege is waived if the Settlement Disclosure Notice is signed by the insurer itself is not before me. In this case, however, where the insurer’s legal counsel has taken on two concurrent roles, one as litigator and the second as certifying representative of the insurer, it is unclear why the said certification by counsel would implicitly exclude privileged documentation in the counsel’s file or on what basis privilege would somehow trump the disclosure mandated by the Superintendent.
Furthermore, it is not clear how one can presume that counsel is speaking for the insurer that the latter has made available for review by the insured all medical documentation relating to the insured person. To have to, potentially routinely, determine whether counsel had the requisite authority to sign adds unnecessary issues which may lead to otherwise avoidable litigation, where those affixing their signatures can be required to become witnesses as to, amongst other things, their authority, what they personally reviewed and what they personally produced or disclosed.
However, the commentary under Rule 4.02 of the Rules of Professional Conduct issued by the Law Society of Upper Canada, adopted by Convocation on June 22, 2000 and as amended, states that:
A lawyer should not express personal opinions or beliefs or assert as a fact anything that is properly subject to legal proof, cross-examination, or challenge. The lawyer should not in effect appear as an unsworn witness or put the lawyer's own credibility in issue …
Accordingly, I am not persuaded that signing authority by counsel was implied by law. To allow such authority by express appointment by a party (other than in perhaps extraordinary circumstances) or to be presumed from the situation of the parties, in my view is contrary to the statutory framework and intent and would undermine the legislative intent that a binding settlement requires the personal involvement of both the insured and the insurer themselves.
Subsection 9.1(3): a description of benefits that may be available
Subsection 9.1(3) of the Settlement Regulation states that the disclosure notice “shall be in a form approved by the Superintendent and shall contain the following information” [emphasis added]. The provision does not use the word “or.” Rather, the same word “shall” modifies both requirements.
I find the following comments in Smith applicable, although they pertained to a different issue:
There is nothing in the provision that requires the documents to be in a form
issued by the Commissioner. Section 94 simply indicates that whatever form the insurer uses, it must be approved by the Commissioner … The use by the insurer of the prescribed form does not detract from its obligations under s. 71… There is no indication that insurers are legally prevented from adding to the prescribed form so that it is in conformity with the legal requirements.
There is nothing in the Settlement Disclosure Notice that prohibits an insurer from providing additional, accurate information describing benefits which may be available in order in order to comply with subsection 9.1(3) of the Settlement Regulation. Rather, the Settlement Disclosure Notice itself, under “DESCRIPTION OF BENEFITS” states that:
… YOUR INSURANCE COMPANY IS OBLIGATED TO GIVE YOU INFORMATION ABOUT THE BENEFITS AVAILABLE.
The benefits provided under the Statutory Accident Benefits Schedule are complex and extensive. A short description of these benefits is provided below. [emphasis in the original]
This wording would seem to presume necessary and accurate information being added by the insurer to the settlement documentation where important or clarifying information is missing in the “short description” provided. Indeed, in a prior section of the Settlement Disclosure Notice, entitled “INSURER’S OFFER TO SETTLE BENEFITS,” a blank space is specifically provided under the heading “Provide any other details.”
The Supreme Court in Smith stated in reference to an insurer’s denial of benefits, that:
… it is not the role of this Court to set out the specific content of
insurance refusal forms. This task is better left to the legislature. However, it is appropriate for this Court to interpret in general terms what the legislature intended the insurer to convey under s. 71. In my opinion, the insurer is required under s. 71 to inform the person of the dispute resolution process contained in ss. 279 to 283 of the Insurance Act in straight forward and clear language, directed towards an unsophisticated person. At a minimum, this should include a description of the most important points of the process.
In Opoku v. Pal, 1999 CanLII 19913 (ON CTGD), [1999] O.J. No. 1777, Spiegel J., held that the Settlement Regulation:
... is clearly remedial in nature. Its object is to provide information to insured persons considering a settlement proposal, which will assist them in making a considered, and well-informed settlement decision. I am required to give such legislation a fair, large and liberal construction and interpretation as will best insure the attainment of the object of the legislation.
On appeal, in Opoku v. Pal (2000) 2000 CanLII 1539 (ON CA), 49 O.R. (3d) 97, the Ontario Court of Appeal, following Arbitrator Vanderbent in King and Wawanesa Mutual Insurance Company, (FSCO A96-000601, January 31, 2000) held that:
In our view, a description of the benefits available requires a statement of any monetary limits which apply to any particular benefit.
Subsection 6(5) of the Schedule, as confirmed in Welsh, sets a possible higher maximum weekly IRB than $400 for a self-employed person. The Appellant agrees that this is the state of the law. This was not set out in the Appellant’s Settlement Disclosure Notice.
The Court of Appeal in Catania v. Scottish & York Insurance Co., 2001 CanLII 24147 (ON CA), [2001] O.J. No. 651, accepted “that there may be gradations in the statements of information that will comply with the requirements of s. 9.1(2).” Providing incorrect information, as in this case, is not, in my view, compliance.
Whether or not this Respondent was misled in this case by the absence of reference to subsection 6(5) and, hence, the provision by the Appellant of incorrect information, is, in my view, immaterial. As stated in Smith:
… insurance law is, in many respects, geared towards protection of the consumer. This approach obliges the courts to impose bright-line boundaries between the permissible and the impermissible without undue solicitude for particular circumstances that might operate against claimants in certain cases.
Further, as stated by the Court of Appeal in Catania,
On the particular facts of this case, it may well be that the defendant’s failure to comply with s. 9.1(2) had no bearing on the plaintiff’s acceptance of the settlement offer. This, however, is not the test in a case such as this where there has not been even minimal compliance with the regulation. (It could be a factor to take into account in a case where there is some degree of compliance.) If it were the test it would, in many cases, be very difficult to apply with any degree of confidence or predictability. The test in s. 9.1(4) and (5), although its application may give rise to some unreasonable or unfair results, in some cases, has the virtue of relative ease of application. Furthermore, it is entirely within the hands of the insurance companies to see that there is compliance with s. 9.1(2).
I am not persuaded that the Arbitrator erred in finding that the Appellant did not comply with paragraph 9.1(3)2 of the Settlement Regulation regarding providing a “description of benefits that may be available to the insured person.” I do not agree that the use of the word “may” provides some measure of dispensation to an insurer in providing correct information in the Settlement Disclosure Notice.
Accordingly, I am not persuaded that the Arbitrator erred in finding that there was no binding settlement in this case. Subsection 9.1(5) of the Settlement Regulation, therefore, allowed the Respondent to rescind the settlement after the two business day period set out in subsection 9.l(4).
V. EXPENSES
If the parties are unable to agree on the legal expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Code. I wish to note, however, the very helpful written and oral submissions of counsel in this appeal proceeding.
October 10, 2008
Lawrence Blackman Director’s Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.