Sipon Rahman v. TD General Insurance Company, 2008 ONFSCDRS 54

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2008 ONFSCDRS 54

Appeal P07-00005

Appellant

and

Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. Peter S. Carlisi for Mr. Rahman

Ms. Anne F. Walker for TD General Insurance Company

HEARING DATE:

December 19, 2007 and February 22, 2008

Written submissions were received by January 25, 2008.

Written s

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The Appeals dated March 6, 2007 and November 29, 2007 are both allowed. The Arbitrator's orders dated February 9, 2007 and November 19, 2007 are hereby revoked.
This matter is remitted to arbitration for a new determination of the legal expenses of the arbitration hearing. Otherwise, the arbitration proceeding is stayed, subject to any further or other order of an adjudicator, pending:

(a) the Appellant rescinding the Settlement Agreement dated March 19, 2003; or,

(b) the Respondent moving to have the matter dismissed, with or without legal expenses or other terms, for the Appellant’s failure to rescind the said Settlement Agreement.

Financial Services Commission of Ontario

Rahman and TD

Appeal Order P07-00005

If the parties are unable to agree on the legal expenses of this appeal proceeding, an expense hearing may be requested in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).

March 31, 2008

Lawrence Blackman Director’s Delegate

Date

I. NATURE OF THE APPEAL AND BACKGROUND

As a result of injuries sustained in a motor vehicle accident on November 15, 2002, Mr. Sipon Rahman (the “Appellant”) applied to TD General Insurance Company (the “Respondent”) for statutory accident benefits payable under the Schedule.¹

In May 2005, the Appellant applied to the Financial Services Commission of Ontario (“FSCO”) for mediation regarding his entitlement to certain benefits under the Schedule and subsequently, in November 2005, applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The Respondent submits that the Appellant settled his accident benefits claim on a full and final basis in March 2003 and was, therefore, precluded from commencing a mediation proceeding under section 280 of the Insurance Act and, hence, from subsequently accessing arbitration.

The Appellant maintains that he only entered into a partial settlement and that he is entitled to proceed to an arbitration hearing on further disputed issues of entitlement.

In his February 9, 2007 decision, Arbitrator Kominar (the “Arbitrator”) held that the Appellant had entered into a binding full and final settlement of all accident benefits claims arising out of the November 15, 2002 accident. The Arbitrator, therefore, found that the Appellant was precluded from mediating or arbitrating any further accident benefits claims arising out of that accident. The Arbitrator did not answer the further preliminary question before him as to whether the Appellant was required to repay the settlement funds to the Respondent before he could proceed to arbitration.

In a further decision, dated November 19, 2007, the Arbitrator awarded the Respondent its legal expenses of the arbitration proceeding, fixed in the amount of $5,597.93 inclusive of GST.

Mr. Rahman appeals both decisions. Most of the grounds for appeal pertain to the Arbitrator’s findings of fact. The key question of law raised by the Appellant in his Notice of Appeal is whether he was required to sign a release as part of the settlement.

The Respondent argues that the Arbitrator correctly followed a line of decisions² that the “refusal of the resiling party to sign the release cannot be relied upon as invalidating the settlement.” The Respondent further argues that the Arbitrator was correct in law in awarding legal expenses based on the Respondent’s success in the proceeding.

Most pertinent to this case is that the applicable legislation is Settlement Regulation for Settlements Made on or After March 1, 2002, from R.R.O. 1990, Reg. 664, as amended by O.Reg. 275/03. The case law relied upon by the Arbitrator pertained to settlements governed by the Settlement Regulation for Settlements Made Before March 1, 2002, from R.R.O. 1990, O.Reg. 664, as amended by O.Reg. 780/93.

The Arbitrator found that the Appellant did not personally sign a release. This is not disputed. I find that the subsection 9.1(4) of the Settlement Regulation for Settlements Made on or After March 1, 2002 requires the insured to personally sign a release prior to a settlement being binding. The Arbitrator erred in law in applying the wrong regulation to the facts of this case and on the basis of that incorrect legislation, finding there was no requirement for a signed release.

Accordingly, the Arbitrator’s February 9, 2007 decision is set aside. As the outcome of the proceeding has been reversed and success in the outcome of the proceeding was the main basis for the Arbitrator’s November 19, 2007 expense decision, the latter must also be set aside.

II. ANALYSIS

When FSCO’s predecessor, the Ontario Insurance Commission, was established in the early 1990s, a major area of dispute between parties was whether an insured person had settled his or her claims with an insurer, and if so, on what basis. Cases often involved witnesses providing conflicting testimony as to what may or may not have been agreed.

The Legislature endeavoured to remedy this situation by amending R.R.O. 1990, O. Reg. 664 by O.Reg. 780/93 and setting out pre-requisites for an insured to settle his or her entitlement to first-party accident benefits. Amongst other things, a disclosure notice was required that included a description of both the benefits available and the impact of the settlement on those benefits. The Regulation also included a “cooling off” period within which a settlement might be rescinded by the insured person.

To a significant degree, the legislative intent 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, although interpretation problems, specifically regarding (as stated in Gladstone v. Aviva Canada Inc. [2004] O.J. No. 4929) “when the cooling off period began and expired,” did haunt the initial Regulation.

The arbitration hearing herein featured precisely what one would have thought the legislature sought to avoid, namely evidence from the insured, his paralegal representative and the insurance adjuster as to their respective understandings as to what was settled.

Most of the grounds for this main appeal are not questions of law, but questions of fact. These include submissions that the Arbitrator erred in:

finding the Appellant credible, but not accepting his evidence that he did not settle all of his claims;
failing to accept the Appellant’s evidence over that of his prior paralegal representative, Mr. Paul Caprani; and,
failing to find that Mr. Caprani was not credible.

Subsection 283(1) of the Insurance Act states that a party to an arbitration may appeal the order of an arbitrator to the Director on a question of law. The Appellant submits that it is discretionary whether a question of fact may be rejected as a ground for appeal, as Rule 51.2(b) of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”) states that an appeal “may” be rejected if it does not raise a question of law.

I do not agree.

Firstly, subsection 283(1) of the Insurance Act is unambiguous. Appeals are restricted to questions of law. Any disharmony that might exist between the Insurance Act and the Code must be resolved in favour of the originating statute, namely, the Insurance Act. However, I find that there is no disharmony. Rule 51 of the Code pertains to FSCO rejecting an appeal prior to receiving a Response to Appeal. The discretion to reject an appeal at the commencement of the appeal process because it prima facie does not raise a question of law does not translate into expanding the appellate jurisdiction to cover questions of fact.

I will now turn to the grounds for appeal that merit attention.

(a) Did Mr. Rahman’s representative have authority to effect a full and final settlement?

The Appellant retained Mr. Caprani a few days after the November 15, 2002 motor vehicle accident. Mr. Caprani subsequently represented himself to the Respondent as the Appellant’s legal representative. In March 2003, Mr. Caprani was involved in settlement discussions with Mr. Al Horani, the Respondent’s adjuster. A major argument of the Appellant at the arbitration hearing was that Mr. Caprani, in any discussions regarding a full and final settlement of all rights under the Schedule, was not representing the Appellant’s intentions.

The law in this regard appears to be settled. As stated by Nordheimer J. in Birjasingh v. Coseco Insurance Co. 1999 CanLII 14888 (ON SC), [1999] O.J. No. 4546:

it is clear law that a solicitor has the authority to effect a settlement of litigation and that such a settlement will be binding on his or her client even in situations where the solicitor does not, in fact, have any instructions to effect the settlement.

And at paragraph 11:

A solicitor is an agent of his or her client . . . the solicitor is assumed to have authority to act on the client’s behalf and to effect a compromise of the client’s claims. It is further assumed that communication of a matter to the solicitor is, in effect, communication of that matter to the client. In other words, it is assumed that if something is communicated to the solicitor it will be passed on by the solicitor to the client. Does the settlement regulation change these assumptions? I do not believe that it does.

Arbitrator Allen, in Rose and CGU, (FSCO A01-000988, June 26, 2002), adopted this approach for non-lawyers, holding that “[t]he same principle applies to the relationship between a non-lawyer agent and his client.”

The Arbitrator made a clear finding of fact that the Appellant chose to retain Mr. Caprani as his legal representative in this matter. The evidentiary basis of this finding is set out in the decision, specifically a written retainer dated November 19, 2002. The decisions in neither Birjasingh nor Rose were challenged on appeal. I have no basis to question the determination that the Appellant’s representative, Mr. Caprani, had authority to effect a full and final settlement.

(b) What was settled between the parties?

In his Notice of Appeal, the Appellant submitted that the Arbitrator erred in not finding that there was a settlement between the parties of only “past and future medical and housekeeping benefits.” In his written submissions received two months later, however, the Appellant submitted, at paragraph 12(c), that there was a settlement only for the amounts received and that he was “free to make at a later time an additional claim for housekeeping and medical benefits.”

The Respondent submits that the Arbitrator “applied the appropriate legal principles in determining that a full and final settlement of the Appellant’s accident benefits claims had been concluded.” It further submits that an appellate officer has no jurisdiction to make a finding that the settlement was other than full and final.

In his February 9, 2007 decision, the Arbitrator notes, at page 15, that the Applicant argued that the negotiations between Mr. Horani and Mr. Caprani were only for “settlement of past and future medical claims and housekeeping.” The Arbitrator found that the settlement was for all accident benefit claims arising out of the November 15, 2002 accident.

The Supreme Court of Canada, in Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 S.C.R. 748, stated that “questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.” I find that the question of “what” the parties purported to settle is a question of fact.

In Lombardi and State Farm Automobile Insurance Company, (FSCO P01-00022, February 26 2003), Delegate McMahon distinguished between a finding of fact made in the complete absence of supporting evidence, and a finding of fact made with insufficient evidence. He stated that while in “the first case, the error is properly characterized as an error of law, and hence reviewable . . . [in] the second, it is no more than an error of fact, that is not reviewable.”

The Appellant has failed to persuade me that there was a complete absence of evidence supporting the Arbitrator’s finding of fact that a full and final settlement had been effected between the parties.

Subsection 9.1(3) of the Settlement Regulation for Settlements Made on or After March 1, 2002, requires that the disclosure notice shall contain, amongst other things, the insurer’s offer with respect to the settlement. The Appellant argued that in the section of the Settlement Disclosure Notice herein setting out the Respondent’s offer to settle benefits, against a lengthy list of benefit categories there are “x’s” inserted as to what has been offered, rather than the word “nil” or “zero.” The Appellant submits that this means that there was no intention to settle these benefits.

However, the Appellant failed to note that the same page of the Settlement Disclosure Notice included, under the words “OFFER TO SETTLE MEDICAL BENEFITS,” the following:

You have been offered $1,502 for all past and future medical benefits;

[emphasis added]

The same page notes, under the words “OFFER TO SETTLE BENEFITS FOR PAYMENT OF OTHER EXPENSES (specify):”

You have been offered $750 for all past and future benefits for other expenses.

[emphasis added]

The Arbitrator noted in his decision that Mr. Caprani had earlier faxed a settlement proposal to Mr. Horani on March 4, 2003. The letter began:

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

Mr. Horani, as also noted by the Arbitrator, responded by letter dated March 14, 2003 captioned “Re: Full and Final Settlement.” The letter stated that the release “includes” (rather than being limited to) “all past and future medical and housekeeping.” By letter dated March 21, 2003, Mr. Caprani faxed Mr. Horani “a copy of the original ‘Full and Final Release,’ duly executed by our client” (emphasis in the original letter). By letter dated March 25, 2003, Mr. Caprani sent Mr. Horani “the original ‘Full and Final Release’ duly executed by our client.”

This is hardly a complete absence of evidence that the parties entered into a full and final settlement of all claims arising from the November 15, 2002 motor vehicle accident. In any event, given the Appellant’s inconsistent submissions as to what he says was settled between the parties, it would be difficult to find the Appellant of one mind, let alone find that there was a meeting of minds between the parties as to some specific partial settlement of his claims for benefits under the Schedule.

(c) Was Mr. Rahman required to personally sign the Release?

The Respondent argued that the issue in this appeal is not whether a settlement was effected, but what the settlement included. The Respondent submitted that the Appellant cannot, on the one hand, say that he concluded a partial settlement of his claim for accident benefits and retain the settlement funds and, on the other hand, say that he did not enter into a settlement agreement of any kind because he did not sign the Release provided. The Respondent argued that the issue of whether the Release was required to be signed personally by the Applicant was, therefore, moot.

Whether or not the Appellant can resile from the agreement and keep the settlement funds may be the subject of a further arbitration hearing, as set out below.

However, the Notice of Appeal included submissions that the Arbitrator erred both in finding that the entire accident benefits claim was settled as well as finding that an insured person was not required to sign a release in order to settle his claim. Both aspects of the appeal will be addressed.

The parties agree that the Appellant did not sign the release; rather, Mr. Caprani did. The Arbitrator states in his February 9, 2007 decision, that:

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.

The Arbitrator later stated in his decision that:

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.

The Respondent argued that it was immaterial who signed the full and final release, providing that person has the authority to do so. The Respondent submitted that Mr. Caprani had full authority to enter into the settlement agreement, the retainer agreement giving him authority to discuss, negotiate and execute any and all documents relating to this accident.

The Appellant submitted that as the legislation is consumer protection, the release must be signed by the insured. He further argued that Mr. Caprani’s retainer did not authorize him to sign the settlement documentation on behalf of his client, and if it did, it would be contrary to the requirements of the Regulation, which is unambiguous that the insured person must sign.

Subsection 9.1(4) of the Settlement Regulation for Settlements Made on or After March 1, 2002, states that 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. I find that “insured person” means the “insured person” personally.

In this regard, I rely on the decision in Gladstone, which dealt with an alleged complete settlement that took place in 2003. Glass J. stated that:

I interpret the new [Settlement] Regulations to mean that there is no cooling off when using s. 9.1(3) subpararagraph 3 of the Regulations if the documents are not signed by the insured person. It does not matter that the person is represented by counsel. This is a formatted process by which an insured and an insurer can reach a settlement without confusion and still leave the insured person the opportunity to a change of mind if done within two business days of signing the documents set out in the regulation.

The Respondent submits that Gladstone (which it, most professionally, brought to my attention in further submissions) is not applicable because it is distinguishable on the facts and dealt with different legal issues. I find that the above statement is not particular to the fact situation in Gladstone, but is of general import.

I also rely on the decision in Navage v. Pilot Insurance Co., 2004 CanLII 15034 (ON SC), [2004] O.J. No. 1098, wherein Lederman J. stated that:

¶ 12 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.

¶ 13 In Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] S.C.J. No. 34, the Supreme Court of Canada stated that it was an insurer's obligation to provide information to an insured in straight-forward and clear language directed towards an unsophisticated person. The Court indicated that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance. Accordingly, adapting the principles in Smith v. Co-operators to the case at bar, there is an obligation on the part of Pilot to provide a description of the benefits in straight-forward and clear language directed towards an unsophisticated person.

As the purpose of the Settlement Regulations is:

(1) to have insured persons personally provided with information in straight-forward and clear language directed towards unsophisticated persons (as evidenced, specifically, in the recommendation to seek legal advice which is contained in the introductory “Notice and Caution” in the form approved by the Superintendent of Financial Services);

(2) ensure that insured persons, themselves, receive sufficient information to make a meaningful comparison between a proposed settlement and the value of the benefits otherwise available; and,

(3) protect both parties against uncertainty and possible future litigation,

such goals would be defeated if insured persons did not personally have to review and sign the settlement documentation, including the release. I find this to be the clear, unambiguous intent and meaning of the Settlement Regulation for Settlements Made on or After March 1, 2002.

(d) Was a Signed Release a Pre-Requisite to a Binding Settlement?

At the initial December 19, 2007 appeal hearing, I noted that the Arbitrator and the parties were addressing subsection 9.1(3) of the Settlement Regulation for Settlements Made Before March 1, 2002, which provided that:

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.

However, subsection 9.1(4) of the Settlement Regulation for Settlements Made on or After March 1, 2002 provides that:

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.

Paragraph 9.1(2)(3) of the Settlement Regulation for Settlements Made Before March 1, 2002 provides that the insurer’s written notice shall include a “statement that the insured person may rescind the settlement within two business days after the settlement is entered into by delivering a written notice to the insurer.” Paragraph 9.1(3)(3) of the Settlement Regulation for Settlements Made on or After March 1, 2002, however, provides that written disclosure must include a statement that “the insured person may, 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,” rescind the settlement.

The Arbitrator’s February 9, 2007 decision relied on the decision in Aboufarah and Allstate Insurance Company of Canada, (FSCO A02-00038, September 30, 2003), upheld on appeal (P03-00038, May 5, 2005), in finding that a settlement was not contingent on the insured person signing the release. However, as stated by Delegate Evans who heard the appeal in Aboufarah, that case involved “the rules governing settlements reached before March 1, 2002.” The parties in the case before me entered into a settlement in March 2003.

The Respondent also relied on the decision in Nguyen and Wawanesa Mutual Insurance Company (FSCO A01-001593, February 19, 2003), upheld on appeal (P03-00009, January 26, 2004), wherein Arbitrator Killoran held that “a signed release was not a prerequisite” to an agreement being concluded. That decision, however, as stated by Director Draper who heard the appeal, involved “the rules governing settlements before March 1, 2002.”

The Respondent also relied on the arbitration decision in Rose, wherein Arbitrator Allen noted that the Court in Birjasingh held that “there was nothing in the Settlement Regulation that requires the written notice to be signed or otherwise acknowledged by the insured.” The Court thus held that “[t]he refusal of the resiling party to sign the release cannot be relied upon as invalidating the settlement.” In Rose, Arbitrator Allen held that the cooling-off period ran from the date notice was received from the insurer. Rose, however, pertained to a settlement in April 2001, while in Birjasingh, the settlement took place at the end of 1998.

I allowed the parties an opportunity to provide further written and oral submissions regarding the change in legislation.

The Respondent submitted that the issue as to when the two-day cooling-off period expired was never raised by the Appellant, nor was it an issue at arbitration. Rule 56.3 of the Code states that:

Unless the Director orders otherwise, an appeal will only include issues that were the subject of the arbitration proceeding or dealt with in the arbitration order being appealed.

The significance of the release not being signed by the Appellant was a central issue at the arbitration hearing. Accordingly, it is appropriate that the wording of the applicable Settlement Regulation for Settlements Made on or After March 1, 2002 be considered in this appeal.

The Respondent further submitted that the change in wording of the Regulation did not affect the continued applicability of the aforementioned decisions which held that a release need not be signed by the insured to effect settlement. The Respondent argued that the cooling off period runs from the signing of the release only if a release was signed. The Respondent submitted that the Arbitrator was correct when he stated that:

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 Respondent argued that as the signing of the Release was to its benefit, it was free to waive the signing of the Release, as nowhere does the Settlement Regulation for Settlements Made on or After March 1, 2002 require a release to be signed, and that the use of the discretionary word “may” in paragraph 9.1(3)(3) makes signing the Release optional.

I disagree. The word “may” pertains to the insured person’s discretion to rescind the settlement, not to the pre-requisites for a binding settlement.

Subsection 9.1(3) of the Settlement Regulation for Settlements Made on or After March 1, 2002 states that the disclosure notice “shall be in a form approved by the Superintendent.” The “Notice and Caution” in the form includes the statement that:

IF YOU SIGN THIS SETTLEMENT DISCLOSURE NOTICE AND A RELEASE, YOU WILL BE GIVING UP RIGHTS YOU MAY HAVE NOW OR IN THE FUTURE, EVEN IF YOUR CONDITION CHANGES.

The Notice and Caution does not contemplate a binding settlement upon signing only the Settlement Disclosure Notice. Further, at page six of the Settlement Disclosure Notice, the reader is advised that “if you change your mind,” rescinding must take place within two business after “you signed the release,” or if “you” signed a release and later signed the “disclosure notice,” you must rescind within two days from when “you signed” the Settlement Disclosure Notice. There is no provision for not signing the Release.

Subsection 9.1(4) of the Settlement Regulation for Settlements Made on or After March 1, 2002 is clear and unambiguous. An insured person may rescind the settlement within two business days after the later of the day the insured person (unlike the earlier Regulation) signs the disclosure notice and the day that the insured person signs the release. The Appellant has not signed the Release. Thus, the cooling-off period has never begun to run, even though the Arbitrator found that the Appellant had signed the disclosure notice (unlike the facts in Gladstone). Accordingly, the Appellant is still free to rescind the settlement agreement. Therefore, respectfully, I find that the Arbitrator erred in law in finding that the Appellant had entered into a binding settlement.

An insurer may decide to waive having an insured person sign a release as part of a settlement agreement. Why an insurer would do this, being left exposed to further claims by the clear wording of the legislation, is uncertain.

(e) Legal Expenses of the Arbitration Proceeding

In his November 19, 2007 expense decision, the Arbitrator determined that the Respondent was entitled to 60% of its legal expenses. He assessed the expenses owing at $5,597.93. The Arbitrator based his expense decision largely on the Respondent’s success at arbitration. He reduced the Respondent’s expenses by 40% “to reflect [his] belief that [the Appellant and his counsel] were in good faith exploring whether the settlement here was binding” and the Appellant’s right to have his concerns heard by a neutral third party.

Given the Appellant’s success on appeal, the expense decision at arbitration cannot stand.

(f) What is the proper disposition of this matter?

I have found that the Arbitrator erred in law in failing to apply the correct legal test to the facts of this case and that, as a result, the Arbitrator, while not incorrect that there was full and final settlement, was incorrect in finding that the settlement was binding, notwithstanding that the Appellant did not sign the release provided. As the Arbitrator’s expense decision largely turned on the outcome of the arbitration hearing, a new expense hearing of the arbitration proceeding should be held.

On the first day of the appeal hearing, there being no objection from the Respondent, I stayed the Arbitrator’s November 19, 2007 expense order. There is no reason why a further hearing on the legal expenses of arbitration to date should now be delayed. Accordingly, the stay is lifted, the expense order set aside and the issue of the quantum of and entitlement to the legal expenses of the arbitration proceeding remitted to arbitration for a new determination.

Regarding the Appellant proceeding in arbitration on the statutory accident benefits in dispute, there is a different concern.

While I have found that under subsection 9.1(4) of the Settlement Regulation for Settlements Made on or After March 1, 2002, the time limit for rescinding the March 2003 settlement has never commenced, there was no argument before me that the Appellant has, in any manner, rescinded the settlement. The Appellant cannot, on the one hand, maintain the settlement, and on the other hand, concurrently proceed through arbitration seeking additional benefits.

Subsection 9.1(7) of the Settlement Regulation for Settlements Made on or After March 1, 2002, provides that:

The insured person shall rescind a settlement under subsection (4) or (5) by delivering a written notice to the office of the insurer or its representative and returning any money received by the insured person as consideration for the settlement.

Subsection 9.1(8) states that:

No person may commence a mediation proceeding under section 280 of the Act with respect to benefits that were the subject of a settlement or a purported settlement unless the person has returned the money received as consideration for the settlement.

The Appellant concedes that he has not returned the settlement monies. The Arbitrator did not address in his decisions the question whether the Appellant was required to repay the settlement funds to the Respondent before proceeding to arbitration. This question, therefore, remains outstanding at arbitration.

There is no time limit on this Appellant deciding whether he wishes to rescind the full and final settlement. FSCO, however, cannot wait indefinitely for the Appellant to make a decision. Hence, I find that the appropriate resolution is to presently, other than regarding the question of legal expenses, stay the arbitration proceeding, subject to any further or other order of an arbitration or appeal adjudicator, pending:

(a) the Appellant rescinding the Settlement Agreement dated March 19, 2003; or,

(b) the Respondent moving to have the matter dismissed, with or without legal expenses or other terms, for the Appellant’s failure to rescind the said Settlement Agreement.

III. LEGAL EXPENSES OF THE APPEAL

Having determined the substantive issues in dispute, I refer the parties to the provisions of Rule 79 of the Code if the parties are unable to agree on the legal expenses of this appeal.

March 31, 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.
Birjasingh v. Coseco Insurance Co., 1999 CanLII 14888 (ON SC), [1999] O.J. No. 4546, Rose and CGU Insurance Company of Canada, (FSCO A01-000988 June 26, 2002), Nguyen and Wawanesa Mutual Insurance Company, (FSCO A01-001593, February 19, 2003), upheld on appeal (P03-00009, January 26, 2004) and Aboufarah and Allstate Insurance Company of Canada, (FSCO A02-00038, September 30, 2003), upheld on appeal (P03-00038, May 5, 2005).