Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 164

Appeals P12-00023 and P12-00024

OFFICE OF THE DIRECTOR OF ARBITRATIONS

AVIVA CANADA INC.

Appellant

and

SHAMIMA PARVEEN and JOSHUA FREDRIC

Respondents

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Ms. Susan Bromley and Mr. Sean Giovannetti for the Appellant, Aviva Canada Inc.

Mr. Alexander M. Voudouris for the Respondents, Ms. Shamima Parveen and Mr. Joshua Fredric

HEARING DATE:

October 2, 2012

APPEAL ORDER

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

1. The Arbitrator’s decisions of March 29 and 30, 2012 are confirmed and the Notices of Appeal herein are dismissed. Accordingly, my June 20, 2012 stay, on consent, under subsection 283(6) of the Insurance Act of the Arbitrator’s orders, is rescinded.

2. If the parties are unable to agree on the legal expenses of this appeal, amending under Rule 81, Rule 79.1 of the Dispute Resolution Practice Code (Fourth Edition, Updated – August 2011), an expense hearing shall be requested, as set out below, within sixty days of the date of this decision.

December 18, 2012

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

The Respondents, Ms. Shamima Parveen and Mr. Joshua Fredric, entered into a settlement with the Appellant, Aviva Canada Inc., regarding their entitlement to statutory accident benefits under the Schedule.¹ The issue in this appeal is whether the Respondents can rescind their settlements after the two business day cooling-off period provided in subsection 9.1(4) of the Settlement Regulation, for settlements made on or after March 1, 2002 (sections 9.1 and 9.2 of R.R.O. 664, as amended, attached as Appendix “A”).

I find that:

(a) The Settlement Disclosure Notice (“SDN”) sent by the Appellant to the Respondents did not provide the information mandated by paragraph 9.1(3)3 of the Settlement Regulation regarding rescission, either by reproducing the paragraph or by providing the information therein, following Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, in a clear and straightforward language directed towards an unsophisticated person.

(b) Rather, the SDN included incomplete and inconsistent segments requiring reference to other sources to be clearly and straightforwardly understood by an unsophisticated person. The deficiency is not simply minimal, non-material or technical.

(c) Policy reasons do not excuse, but rather highlight, the lack of compliance with paragraph 9.1(3)3 of the Settlement Regulation.

(d) Subsection 9.1(5) of the Settlement Regulation provides, in part, that the insured person may rescind the settlement after the two day cooling-off period in subsection 9.1(4) if the insurer has not complied with subsection 9.1(3) of the Settlement Regulation.

(e) There being a lack of compliance by the Appellant with paragraph 9.1(3)3 of the Settlement Regulation, that forms part of subsection 9.1(3), the Respondents are entitled to rescind their settlements.

(f) Accordingly, the Arbitrator’s orders to that effect are not errors in law. The Arbitrator’s decisions are, therefore, confirmed and the Notices of Appeal herein dismissed.

II. BACKGROUND

The Respondents were injured in a November 7, 2008 motor vehicle accident. As a result, they applied for accident benefits from the Appellant, their first-party automobile insurer. A dispute arose as to the Respondents’ entitlement to certain benefits. Mediation failed to resolve these issues. Both Respondents applied for arbitration at the Financial Services Commission of Ontario (the “Commission”).

At a May 30, 2011 arbitration pre-hearing discussion, both Respondents signed an SDN form (attached to this decision as Appendix “B”) resolving their claims with the Appellant on a full and final basis. The pre-hearing arbitrator’s May 30, 2011 letter confirmed that a settlement had been reached, but that the settlement was subject to compliance with the Settlement Regulation.

On June 1, 2011, the Appellant’s counsel faxed releases to the Respondents’ counsel for his clients’ signatures. On June 10, 2011, the Respondents’ counsel responded with an e-mail that Ms. Parveen would not execute the release provided and asked whether the settlement would still be in effect without it. The Appellant’s counsel replied that as Ms. Parveen had signed the SDN and the cooling-off period had expired, the settlement was in effect. However, signed releases were still required.

Both Respondents signed the releases on July 4, 2011. On July 5, 2011, the Respondents’ counsel sent the Appellant a couriered letter advising that his clients were rescinding the settlements pursuant to subsections 9.1(4) and (5) of the Settlement Regulation, the latter because the signed SDNs were deficient under subsection 9.1(3). Enclosed were the original executed releases and a copy of a letter to the Commission asking that the pre-hearing be rescheduled.

Subsection 9.1(5) of the Settlement Regulation permits an insured to rescind a settlement “if the insurer has not complied with subsections (2) and (3).” Subsection 9.1(2) provides that the insurer shall give the insured a written disclosure notice signed by the insurer. Under subsection 9.1(3), the disclosure notice shall be in a form approved by the Superintendent of Financial Services (the “Superintendent”) and shall contain specified information.

On July 8, 2011, the Appellant’s counsel received the Respondents’ letter rescinding the settlement. On July 13, 2011, the Appellant sent the settlement funds to the Respondents’ counsel. On July 18, 2011, the settlement funds were returned.

On November 24, 2011, the parties came before Arbitrator Alves (the “Arbitrator”) for her determination of the preliminary issue whether the Respondents had rescinded their settlements and, if not, whether they were precluded from proceeding to arbitration to determine their benefit entitlement under the Schedule. The Arbitrator’s March 29 and 30, 2012 decisions held that both Respondents had rescinded the settlements under subsection 9.1(5) of the Settlement Regulation and, accordingly, could proceed to arbitration.

The Arbitrator found that the SDNs did not convey important information required by paragraph 9.1(3)3 of the Settlement Regulation that an insured 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 SDN did tell insured persons what to do if the release was signed first and the SDN second. However, where the SDN was signed first and the release later, the SDN did not provide adequate information for an insured to know whether the two business days were to be counted after the disclosure notice was signed or after the release was signed.

The Appellant submits that the Respondents signed the SDNs on May 30, 2012 and the releases on July 4, 2011. The two day cooling-off period thus expired after July 6, 2011. Pursuant to Rule 7.3 of the Dispute Resolution Practice Code (Fourth Edition, Updated – August 2011) (the “Code”), pertaining to service by courier, the Respondents’ July 5, 2011 rescission notice is deemed to have been served on July 7, 2011. Accordingly, the rescission notice was one day late and the Respondents were not entitled to rescind their settlements.

The Appellant submits that the Arbitrator’s orders should be rescinded and substituted with orders dismissing the arbitrations, as the Arbitrator erred in law in three respects:

(1) As the SDNs did contain the required information, the Arbitrator wrongly interpreted subsections 9.1(3) and (5) of the Settlement Regulation;

(2) In the alternative, any degree of non-compliance in the SDN with paragraph 9.1(3)3 of the Settlement Regulation was simply a matter of form and was so minimal and of such a non-material, technical basis that the Respondents should not have been allowed to rescind their settlements; and,

(3) In the further alternative, there are policy reasons why the SDN should be upheld.

On May 23, 2012, pursuant Rule 30 of the Code, I combined these proceedings, being persuaded that these two appeals had issues or questions of law, fact or policy in common and that combining them would result in the most just, quickest and least expensive means of proceeding.

On June 8, 2012, I wrote to the parties, in part, that:

In Liberty Mutual Insurance Company and Persofsky et al., (FSCO P00-00041, January 31, 2003), Director Draper discusses administrative tribunal independence and impartiality. Regarding these present matters, the Financial Services Commission of Ontario has posted the following on its public web site:

Please Note:

On March 30, 2012 two Decisions on a Preliminary Issue (Shamima Parveen and Aviva Canada Inc. and Joshua Fredric and Aviva Canada Inc.) were released by FSCO’s Dispute Resolution Services Branch. In the context of these decisions, it is the Superintendent’s position that the current version of the Settlement Disclosure Notice (SDN) form complies with the Regulation.

However, insurers are reminded and encouraged to ensure that applicants understand the SDN and the settlement process. There is nothing preventing insurers from providing information additional to the SDN to improve claimant communication and enhance the settlement process.

Pursuant to Rule 57 of the Code, I set a preliminary conference for June 19, 2012 to address preliminary issues, including any issue of bias. My June 20, 2012 letter confirmed that the parties were of common mind that the Superintendent’s comment on the Commission public web site regarding the arbitration decisions that are the subject of these appeals is not a Guideline, Bulletin or Directive, and that the parties did not raise any issue of institutional or other bias.

My letter also confirmed that, on consent, I had exercised my discretion under Rule 50.2 of the Code to accept these appeals from preliminary arbitration decisions. Also on consent, I exercised my discretion under subsection 283(6) of the Insurance Act to stay the Arbitrator’s March 29 and 30, 2012 orders on the term that the Appellant would hold the returned settlement funds in an interest bearing account whereby the settlement funds, plus interest, would be paid back to the Respondents should these appeals be allowed.

I will now address the three grounds of appeal.

III. GROUNDS OF APPEAL

1. Did the Arbitrator wrongly interpret subsections 9.1(3) and (5)?

Paragraph 9.1(3)3 of the Settlement Regulation sets out a specific legislative requirement of the SDN:

(3) The disclosure notice shall be in a form approved by the Superintendent and shall contain the following information:

3. 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 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.

Subsections 9.1(4) and (5) of the Settlement Regulation address an insured’s right to rescind a settlement:

(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.

(5) The insured person may rescind the settlement after the period referred to in subsection (4) if the insurer has not complied with subsections (2) and (3).

Subsections 9.1(7) and (8) of the Settlement Regulation confirm how an insured person may rescind a settlement and avoid restrictions on accessing mediation at the Commission:

(7) 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.

(8) 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 first page of the SDN, under the heading “NOTICE AND CAUTION,” states:

IF YOU DO SIGN THIS NOTICE AND A RELEASE YOU HAVE 2 BUSINESS DAYS TO CHANGE YOUR MIND.

The Appellant argues that the Arbitrator erred in looking at specific information in the SDN in isolation. The Appellant notes the following statement at the top of page three of the SDN:

THERE ARE A NUMBER OF CONSEQUENCES OF THIS SETTLEMENT IF YOU SIGN THIS NOTICE AND A RELEASE. [emphasis added]

The Appellant submits that in the total context of the SDN it is clear that a settlement requires an insured person signing both a release and an SDN. The details of when and how an insured may change his or her mind are set out on page six of the SDN, under the insured’s signature line:

IF YOU CHANGE YOUR MIND

IF YOU CHANGE YOUR MIND AFTER AGREEING TO SETTLE YOUR CLAIM BY SIGNING A RELEASE YOU MUST:

NOTIFY THE INSURER IN WRITING AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED WITHIN 2 BUSINESS DAYS AFTER YOU SIGNED THE RELEASE.

IF YOU SIGNED A RELEASE AND LATER SIGNED THIS DISCLOSURE NOTICE, YOU HAVE 2 BUSINESS DAYS FROM WHEN YOU SIGNED THE DISCLOSURE NOTICE IN WHICH TO NOTIFY THE INSURER AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED.

The Appellant argues that the Superintendent-approved SDN signed by the Respondents complies with paragraph 9.1(3)3 of the Settlement Regulation as follows:

1. The SDN informs an insured how to rescind a settlement after signing both an SDN and a release. It advises as to the two day cooling-off period and when that starts to run. In its written submissions, the Appellant argued that the scenario of the SDN and the release being signed on the same day is addressed on the first page of the SDN. When the SDN is signed first and the release on a subsequent day is addressed in the first two paragraphs below the signature line on page six of the SDN. The reverse, when the release is signed on a day before the SDN is signed, is addressed in the last paragraph of page six. In oral submissions, the Appellant argued that page six actually addresses all three scenarios.

2. The information, when considered in the context of the entire SDN, the Settlement Regulation and the legislative intent, is provided in clear and straightforward language directed towards an unsophisticated person.

3. The SDN balances the goal of allowing an insured person an opportunity for second thought with the goal of encouraging settlement by retaining its enforceability.

4. The SDN safeguards against future uncertainty.

In support, the Appellant cites Wachmenko and Primmum Insurance Co., (FSCO P05-00018, January 30, 2007). Although there were no specific submissions from the parties in that case whether the SDN complied with paragraph 9.1(3)3 of the Settlement Regulation, the Delegate did quote the arbitrator that “[o]n examination, the forms appear to be in compliance with the requirements set out in section 9 of the Settlement Regulation.”

The Appellant argues that there is no requirement that the words used by the Settlement Regulation be repeated verbatim in the SDN, nor is consumer protection always served by a verbatim recitation. Rather, when the Settlement Regulation says that the SDN shall contain a “statement,” it means that the SDN shall contain certain information. Here, the Superintendent- approved SDN has not merely provided information, it has explained that information.

Subparagraphs 9.1(3)4(i) and (ii), and paragraphs 9.1(3)5 and 6 of the Settlement Regulation, also mandate specific statements that must be included in the SDN. Subparagraph 9.1(3)4(ii) provides that the SDN shall include “a statement that the tax implications of the settlement may be different from the tax implications of the benefits described under paragraph 2.” However, more expansive information is provided at page three of the SDN:

The tax implications of the settlement may be different than the tax implications of the benefits described. In general, any investment income earned on the cash amount of the settlement may be subject to tax.

Example

If you are entitled to receive weekly income benefits, and agree to settle your claim for $20,000.00 which you then invest, any interest income you receive will likely be taxable. If you choose to receive weekly income benefits instead of a settlement, your weekly benefits will probably not be taxable.

The Appellant states that while the SDN is not clear whether any settlement funds received by an insured must be returned within two business days, any confusion in this regard is a result of the Settlement Regulation and, therefore, does not undermine the efficacy of the SDN.

The Respondents argue that the Arbitrator found that the SDN failed to convey adequate information about the right to rescind a settlement, not that it failed to repeat verbatim the wording of the Settlement Regulation. These omissions, they submit, are significant. Page one of the SDN does not advise that written notice must be delivered to the insurer within two business days or that eventually settlement funds must be repaid. The SDN refers to changing one’s mind, not rescinding an otherwise binding contract. Nowhere does the SDN state that the insured can provide notice to the insurer’s representative. An insured person would not know that the information on pages one and six of the SDN are related.

For completeness, I note that the Respondents also argue that the SDN is defective because it does not define a business day nor, at page five, under description of benefits, does it tell the insured person about optional benefits or mention the $3,500 monetary limit for goods and services for minor injuries.

The Respondents further argue that, when an insured person acknowledges having read the SDN, as required by paragraph 9.1(3)6 of the Settlement Regulation, the insured is not acknowledging having read the information regarding revocation, as that is set out below the signature line. Page six of the SDN again speaks to an insured person changing his or her mind, not rescinding the settlement. Page six, when it addresses changing one’s mind after signing a release, assumes that the SDN has already been signed. Consumer protection, they argue, does not allow assumptions.

The SDN states that an insured person must return any settlement funds within two business days after signing the release. This, the Respondents submit, is contrary both to Navage v. Pilot Insurance Co., 2004 CanLII 15034 (ON SC), and subsection 9.1(8) of the Settlement Regulation. The latter states not that the settlement funds must be returned within two business days, but that “[n]o 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.” To find otherwise, the Respondents submit, renders subsection 9.1(8) without meaning.

Regarding whether the Arbitrator erred in law in interpreting subsections 9.1(3) and (5) of the Settlement Regulation, I find as follows:

1. As did the Arbitrator, I follow Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, that there is no dispute that one of the main objectives of insurance law, particularly in the field of automobile insurance, is consumer protection.

Specifically concerning the Settlement Regulation, Nordheimer J., in Birjasingh v. Coseco Insurance Co., 1999 CanLII 14888 (ON SC), cited Mr. Stephen Owens, the M.P.P. who introduced the regulations before the Standing Committee on Finance and Economic Affairs of the Legislative Assembly of Ontario on June 3, 1993:

The regulations are designed to ensure that claimants are protected against undue pressure from insurers or service providers from claiming benefits. The regulations governing settlements will protect claimants from giving up the right to claim future benefits in exchange for a quick settlement with insurers …

These concerns remain. The Ontario Automobile Anti-Fraud Task Force, in its June 2012 Steering Committee Status Update, responding specifically to concerns regarding service providers, identified potential recommendations including a consumer engagement and education strategy. The Task Force stated:

Informed consumers are vital to fraud prevention in Ontario’s auto insurance system. Collision victims with a clear understanding of their auto insurance policy and what to expect when involved in a collision are decidedly less vulnerable to exploitation by fraudsters …

The Task Force was prepared to recommend regulatory changes including making it an unfair or deceptive act or practice to request a claimant or injured person to sign a claim form that has been left blank or incomplete.²

2. I follow, as did the Arbitrator, Opoku v. Pal (1999), 1999 CanLII 19913 (ON CTGD), 49 O.R. (3d) 100 (S.C.J.), aff’d 2000 CanLII 1539 (ON CA), that “the Settlement Regulation, and particularly s. 9.1(2)5, 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.” See now the Legislation Act, 2006, S.O. 2006, c. 21, Sch F, s. 64(1).

3. Smith determined an insurer’s obligation to inform insured persons, in “straightforward and clear language, directed towards an unsophisticated person,” of the dispute resolution process set out in sections 279 to 283 of the Insurance Act. The Appellant, itself, states that the obligation applies equally to an insurer to inform insured persons of the two day cooling-off period set out in paragraph 9.1(3)3 of the Settlement Regulation. I find that the insurer’s obligation is to inform insured persons, in straightforward and clear language directed towards an unsophisticated person, the specific information contained in paragraph 9.1(3)3 of the Settlement Regulation.

4. Smith held that a verbatim reproduction of sections 279 to 283 of the Insurance Act would overwhelm claimants. Accordingly, the Supreme Court held 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.” In this case, however, the Legislature has, in paragraph 9.1(3)3 of the Settlement Regulation, set out succinct, specific information it mandates be included in the SDN.

5. As did the Arbitrator, I further follow Smith that as insurance law is in many respects geared towards protection of the consumer, this “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.”

6. Smith held that while a notice of refusal must be in a form approved by the Commissioner of Insurance, there was no requirement the document be in a form issued by the Commissioner. The industry practice of using a form prescribed by the Commissioner was not a substitute for conformity with the Schedule.

The Appellant agrees that the SDN had to be approved, not created, by the Superintendent. I find that the use of an SDN required to be approved (under the legislation in question, not by the Commissioner, but) by the Superintendent, does not relieve the Appellant from compliance with the Settlement Regulation. I further find that the Appellant was not limited to that SDN, that it could seek the Superintendent’s approval of an amended SDN. The notice on the Commission’s website, reproduced at page four above, concurs.

7. I find, as did the Arbitrator, that compliance by an insurer with section 9.1 of the Settlement Regulation applies equally to a represented or self-represented insured: see Opoku v. Pal, as well as Igbokwe v. Price, 2005 CanLII 1044 (ON CA), which stated that “s. 9.1 was intended to apply to an insured person, whether represented or not by counsel, as part of a scheme that deals with settlements which preceded court proceedings.”

8. I agree with the Appellant that a settlement requires an insured signing both the SDN and a release. See Rahman and TD General Insurance Company, (FSCO P07-00005, March 31, 2008), and Gladstone v. Aviva Canada Inc., 2004 CanLII 45470 (ON SC).

9. As stated in Davenport and Lombard General Insurance Company of Canada, (FSCO A07-002350, November 14, 2008), the onus is on the insurer to prove that there is a settlement. I agree, as did the Arbitrator, that the focus is on the insurer’s compliance.

10. Subsection 9.1(5) of the Settlement Regulation provides that non-compliance by an insurer with subsections 9.1(2) and (3), by itself, without anything further, entitles an insured to rescind a settlement after the two day cooling-off period. As stated by Spiegel J. in Opoku, the Settlement Regulation has a public interest aspect of consumer protection. Accordingly, an insured could not “expressly or impliedly waive any or all of the requirements of the Settlement Regulation.”

Accordingly, I agree, as did the Arbitrator, that the defect in the SDN need not be the cause of the insured person’s rescission. There is no onus on the insured to put forth evidence that he or she was misled by the SDN in order to rescind a settlement under subsection 9.1(5) of the Settlement Regulation.

11. The Arbitrator rejected the argument that the words of subsection 9.1(5) of the Settlement Regulation, that an insured may rescind the settlement after the period referred to in subsection (4) if the insurer has not complied with subsections (2) and (3), mean that an insurer must fail both to give an SDN and to give an SDN that provides the requisite information.

The Arbitrator held that “the failure to comply with subsection 9.1(2) or with any of the paragraphs in subsection 9.1(3) of the Settlement Regulation may give rise to the right to rescind under ss. 9.1(5).” The Appellant specifically confirmed in its oral submissions that it does not appeal this finding.

The Arbitrator held that:

… the disclosure notice does not contain 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.” [Italics added]

I agree. The Superintendent could have cut and pasted paragraph 9.1(3)3 of the Settlement Regulation into the SDN, with the necessary grammatical changes shown in emphasis:

You may, within two business days after the later of the day you sign the disclosure notice and the day you sign the release, rescind the settlement by delivering a written notice to the office of the insurer or its representative and returning any money you received as consideration for the settlement.

This was done with other provisions of subsection 9.1(3) of the Settlement Regulation. Paragraph 9.1(3)5 provides that the SDN shall contain “[a] statement advising the insured person to consider seeking independent legal, financial and medical advice before entering into the settlement.” The SDN, under the heading “Notice and Caution” at page one, amongst other places, eliminating for reasons unknown each time the word “independent”, states:

YOU SHOULD CONSIDER SEEKING LEGAL, FINANCIAL AND MEDICAL ADVICE BEFORE YOU SIGN A RELEASE.

The Appellant was unable to advise why paragraph 9.1(3)3 of the Settlement Regulation was not simply cut and pasted or explain how the revised form made the provision clearer or more straightforward to an unsophisticated person. I asked how the SDN wording in question was consistent with the continuing concern that insureds be protected from undue pressure into quick settlements by insurers or, with greater current emphasis, by service providers. The Appellant responded that this was not the substance of this appeal and that there must be acknowledgement of all of the Legislative objectives.

In Wachmenko, neither party challenged the SDN’s conformity with the Settlement Regulation. Respectfully, the comments in Wachmenko regarding compliance are not binding as they are obiter and because the decision of one appellate officer is not binding on another. Nor are they persuasive given the lack of argument in that case on the issue now before me. The Delegate states that “[o]n appeal, Mrs. Wachmenko has not identified any deficiency in the forms.”

I am persuaded that, with the Settlement Regulation on one side and experienced counsel such as Ms. Bromley on the other explaining in clear and straightforward language the SDN in the context of the Settlement Regulation and the complete SDN, an unsophisticated person would understand that the statement on page one of the SDN regarding changing your mind meant the following, with the additions to the SDN form highlighted:

[As indicated below on page 3, for there to be a binding settlement, you must sign both this notice and a release.] IF YOU DO SIGN THIS NOTICE AND A RELEASE [either on the same day or on different days] YOU HAVE 2 BUSINESS DAYS [from the later date that you signed this notice and the release] TO CHANGE YOUR MIND [and to rescind the settlement. As set out on page six of this Notice, to rescind the settlement you must within two business days after the later that you signed the disclosure notice and the day you signed the release deliver a written notice to the office of the insurer or its representative and return any money you received as consideration for the settlement.

Again, with an insured person having beside him or her both the Settlement Regulation and experienced counsel to assist, I am persuaded that it would further be clear and straightforward to an unsophisticated person that the paragraphs regarding changing his or her mind on page six of the SDN, under the signature line, in fact meant the following, with the additions again highlighted:

[As stated on page one] IF YOU CHANGE YOUR MIND [and wish to rescind the settlement] AFTER AGREEING TO SETTLE YOUR CLAIM BY SIGNING A RELEASE [after having already signed a settlement disclosure notice], YOU MUST:

NOTIFY THE INSURER [at its office or the office of its representative by delivering a notice] IN WRITING AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED [as consideration for the settlement] WITHIN 2 BUSINESS DAYS AFTER [the day that] YOU SIGNED THE RELEASE [provided that the settlement disclosure notice was signed earlier. If you did not already sign a settlement disclosure notice, then the following paragraphs apply].

IF YOU SIGNED A RELEASE AND LATER SIGNED THIS DISCLOSURE NOTICE [and wish to change your mind and rescind the settlement], YOU HAVE 2 BUSINESS DAYS FROM WHEN YOU SIGNED THE DISCLOSURE NOTICE IN WHICH TO NOTIFY [by delivering in writing a notice to] THE INSURER [at its office or the office of its representative] AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED [as consideration for the settlement].

[If you signed the notice and a release at the same time or on the same day, you have two business days from that day to change your mind and rescind the settlement by delivering a written notice to the office of the insurer or its representative and returning any money you received as consideration for the settlement.]

It is not argued in this case that the requisite information set out in the Settlement Regulation must be provided verbatim. However, following Smith, the question in this case is whether the SDN, standing on its own, in straightforward and clear language directed towards an unsophisticated person, provided the information mandated by paragraph 9.1(3)3 of the Settlement Regulation.

The test is not whether the SDN contains, in some manner, the deemed highlights of paragraph 9.1(3)3. Nor is the test the understanding of an unsophisticated person with the Settlement Regulation on one side and counsel on the other explaining the SDN in clear and straightforward language in the context of the Settlement Regulation and the complete SDN.

I agree with Arbitrator Bayefsky in T.N. and Personal Insurance Company of Canada, (FSCO A06-000399, July 26, 2012), that “in order for the dispute resolution process to be described in a clear and straightforward manner, it must be done clearly and consistently” [emphasis in the original]. Consistency must also apply to the SDN providing the information required under paragraph 9.1(3)3 of the Settlement Regulation.

Paragraph 9.1(3)3 requires that the SDN include specific, succinct information. The SDN in question provides in incomplete and inconsistent segments information concerning the prerequisite of a signed release and signed SDN for a binding settlement, the time period for rescinding the settlement and the restricted manner in which the Settlement Regulation allows a settlement to be rescinded.

Rather than being clear and straightforward to an unsophisticated person, the information provided on page one is so extremely limited as to be, by itself, misleading. I am not persuaded it is clear and straightforward to an unsophisticated person that for any modicum of understanding of what is set out on page one, one must turn to the extreme end of the document, after the signature line, for further details. I am not persuaded that it is clear and straightforward to an unsophisticated person that on page six of the SDN, in part:

(a) The first and second paragraphs mean that the two business day cooling-off period runs from the signing of the release only if the SDN had been signed earlier.

(b) In the third paragraph, in the situation where the SDN is signed after the release, it is to be read in that the notice to the insurer must be in writing.

(c) It is to be presumed throughout that written notification to the insurer’s representative is equally acceptable as notice to the insurer.

That the SDN is not clear and straightforward in setting out the information mandated by paragraph 9.1(3)3 of the Settlement Regulation is reinforced by the confusion in this regard of the Appellant itself, a considerably more sophisticated party than the average insured person. On June 10, 2011, the Appellant wrote the Respondents that a signed SDN, without a signed release, was sufficient for a binding settlement. In oral submissions, the Appellant acknowledged that this statement was, in hindsight, incorrect.

Accordingly, I am not persuaded that the Arbitrator erred in law in finding that the SDN in question did not comply with paragraph 9.1(3)3 of the Settlement Regulation.

2. Is any degree of non-compliance in the SDN with paragraph 9.1(3)3 of the Settlement Regulation simply a matter of form and so minimal and of such a non-material, technical basis that the Respondents should not have been allowed to rescind their settlements?

The Appellant submits that the Courts, both before and after Smith, have allowed for gradations of compliance. The Appellant highlights the following of Spiegel J., in Opoku:

… agreements should not be rendered unenforceable for technical deficiencies or for immaterial omissions in a disclosure statement. The correctness of this general principle is undisputed … However, I wish it to be understood that nothing that I have said is intended to preclude an insurer from enforcing a SABs settlement, if the insurer can establish that the defect in the written notice is merely a technical one which could not have reasonably affected the insured’s decision to settle. I leave that to be decided in a case in which that issue arises.

Further, Catania v. Scottish & York Insurance Co. Ltd., 2001 CanLII 24147 (ON CA), held:

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.)

In Pickrem v. Belair Insurance Company Inc. [2012] O.J. No. 948, Broad J. held that:

Although it is acknowledged that not every non-compliance with the notice requirements will trigger a rescission right after the cooling-off period in the Settlement Regulation, the question of where, on the spectrum from non-material technical non-compliance to minimal or total non-compliance, a rescission right is triggered must be viewed in the context of the object and purpose of the notice requirement.

The Appellant submits that the imposition of bright-line boundaries in Smith does not mean that insurers are to be held to a standard of perfection. As the SDN must be approved by the Superintendent, a tribunal should be reluctant, as stated in obiter in ING Insurance Company of Canada v. Jetty, 2010 ONSC 1091 (Can LII), to find the form lacking unless the error or omission goes to the heart of the information to be provided. Jetty, it is argued, clearly rejected a punctilious and overly formal approach to the requirements of the Settlement Regulation being met.

The Appellant argues that if the SDN did not comply at all with the Settlement Regulation or if the omission in the SDN went to the heart of the Settlement Regulation, the settlement could be rescinded without proof that the insured person was misled. However, if it is found that the Superintendent-approved SDN was not technically compliant with the Settlement Regulation, rescission should only be allowed where any omitted relevant information or misinformation misled the insured person.

The Appellant submits that it cannot be said that the SDN failed to provide any meaningful information regarding rescission. Rather, the SDN advised the Respondents that they could change their mind, how they could change their mind and the applicable cooling-off period depending on when the SDN and the release were signed.

The Appellant argues that the most important objective, the heart of the Settlement Regulation, is to inform insureds as to the benefits to which they may be entitled and to compare those benefits with the insurer’s offer. Lack of compliance with this objective is the major reason settlements are set aside. The Appellant submits that requiring that page six of the SDN set out, under each alternative timing scenarios, that notice of rescission must be in writing, is simply being bogged down in minutia falling at the technical end of the continuum, a matter of form that had no material impact on the Respondents’ decision whether to enter into the settlement or to rescind it.

Here, the Appellant argues, neither Respondent adduced any evidence they were confused by the wording of the SDN or that they did not understand the cooling-off period. Nor was there any evidence the Respondents were confused by the Appellant’s June 10, 2011 letter stating that as the SDN had been signed, the cooling-off period had expired and the settlement was in effect.

However, I note that in Opoku, in stating that agreements should not be rendered unenforceable for technical or immaterial omissions, Spiegel J. also said that:

It does not, in my view, justify imposing on the insured the burden of establishing the materiality of the insurer's non-compliance with s. 9.1(2), in light of the text and purpose of the settlement regulation.

Regarding whether the lack of compliance had any bearing on the insured person’s acceptance of the offer, the Court of Appeal stated in Catania:

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).

This seems to foreshadow the Supreme Court’s statement a year later, in Smith, that “bright-lines” are required to be set between the permissible and the impermissible.

The question in this case is not whether the information provided induced the Respondents to agree to the settlement. As stated above, on page 12, at point #9, the onus is on the insurer to prove that there has been a settlement. The focus is on the insurer’s compliance. Again, the question in issue is whether the SDN informed insured persons, in a straightforward and clear language directed towards an unsophisticated person, of the information in paragraph 9.1(3)3 of the Settlement Regulation that the Legislature mandated be provided. Non-compliance by the insurer by itself, without anything more, as set out in subsection 9.1(5), allows the insured person to rescind the settlement.

In this case, the Appellant submits that these settlements are binding because the Respondents’ letter of rescission, although picked up by courier from their counsel’s office within the requisite period, was deemed to have been delivered one day late. Although it may be argued that this is punctilious and overly attentive to formality, subsection 9.1(4) of the Settlement Regulation sets “bright-line boundaries between the permissible and the impermissible without undue solicitude for particular circumstances that might operate against claimants in certain cases.”

Likewise, it may be argued that an insurer is being punctilious if it refuses to accept a timely notice of rescission left solely on an adjuster’s voice message machine, or a timely written notice of rescission sent solely to the Commission. It is unclear how an insurer may, simultaneously, rely on a strict enforcement of a time period while being given indulgence and leeway in the communication of mandated information concerning that time period to their first-party insureds.

In any event, Justice Spiegel, in Opoku, stated:

However, in this case I have found that the defect in the written notice was not merely technical or a matter of form. Rather, it was a defect that deprived Mr. Opoku of an important substantive right granted to him by the settlement regulation.

I am not persuaded that the defects in the SDN are merely technical, non-material, or simply a matter of form. Rather, they are cumulative defects depriving insured persons of their important substantive right to information mandated by paragraph 9.1(3)3 of the Settlement Regulation to be provided in a clear and straightforward manner directed to an unsophisticated person.

This information includes the right to rescind from what otherwise is a binding settlement, the restricted time period for rescission recognizing that different events may trigger the time period and the restricted manner in which such rescission may be provided. Communicating such information in incomplete and inconsistent segments does not meet that important, substantive right. Accordingly, I am not persuaded that the Arbitrator erred in law in this regard.

3. Are there policy reasons why the SDN should be upheld?

Rahman and TD General, referencing Navage, held that in addition to providing insured persons personally with information in straightforward and clear language directed towards an unsophisticated person, the Settlement Regulation also seeks to:

(i) 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,

(ii) Protect both parties against uncertainty and possible future litigation.

The Appellant submits that the wording in the present Superintendent issued and approved SDN form has been in place since October 1, 2003.

The Appellant cites Wachmenko that:

The requirement that the insured person must deliver written notice of rescission to the insurer within two business days of signing the settlement documents is not a technical rule meant to frustrate an insured person who is having second thoughts. The cooling off period is a remedial measure introduced in 1994 in recognition of the inequality of bargaining power between insured persons and insurers. Arbitrators had previously found themselves without power to relieve the situation of an insured person, often unrepresented, who changed her mind about a settlement after having time to think about it or talk to friends, family or advisors … At the same time, the settlement regulation gives neither party an open-ended right to change their mind because that would remove much of the incentive to reach a settlement. For both insured persons and insurance companies, finality - putting an end to a dispute - is one of the main reasons for entering into a settlement. The regulation’s rules for rescinding a settlement reflect the legislature's objective of balancing the need to allow for second thoughts, and the need to encourage settlements by ensuring their enforceability.

Upholding the Arbitrator’s decision, the Appellant argues, will cause uncertainty and lack of finality in the insurance industry. Any settlement entered into since the inception of the SDN could be rescinded as long as the settlement money is returned, regardless of whether the failure to provide any information resulted in any confusion or had any impact on an insured’s decision to enter into the settlement or later resile. This does not accord with the legislative objective of finality, or with balancing finality with an insured’s right to reconsider their settlement.

The Appellant submits that the Arbitrator erred in failing to consider these objectives; that she has given an open-ended right to rescind settlements in a manner clearly not contemplated by the Legislature for alleged non-compliance that is arguably very low on the spectrum of gradations. Accordingly, the Arbitrator’s decisions should be rescinded, the arbitrations dismissed and an order issued that the settlements entered into are binding on all parties.

Firstly, the Appellant’s submissions regarding the consequences of upholding the Arbitrator’s decisions are speculative. I was not referred to any evidence provided at arbitration in this regard, that might include the consequences of the Supreme Court of Canada, in Smith, essentially setting aside the limitation period. I was not referred to any evidence received at arbitration as to the arguably adverse consequences of the Court of Appeal in Opoku, upholding Spiegel J. Nor was I advised of any evidence that Opoku was largely irrelevant, that it pertained simply to one specific case, rather than an industry practice, of not providing a statement, where applicable, of the estimate of the commuted value of a benefit and an explanation of how the insurer determined the commuted value.

Secondly, in Opoku, Spiegel J. held that:

In my view, there is no strong public interest in encouraging settlements which restrict the injured person’s right to access the dispute resolution process for the purpose of establishing entitlements to the payment of periodic benefits. I think that s. 279(2) and s. 9.1(5) of the settlement regulation demonstrate an intention on the part of the legislature to permit such restrictions only under the limited circumstances described in the settlement regulation.

Spiegel J. was of the view that if a lump sum settlement payment was fair and reasonable in adequately reflecting the insured’s future needs and the insurer’s exposure in funding those needs, it was questionable whether the insurer would suffer any adverse economic consequences if the settlement were rescinded. The insurer would retain the settlement funds. The insured would retain his or her entitlement to benefits under the Schedule.

Conversely, if the lump sum payment was inadequate to fund the insured’s future needs resulting from the accident, there would be a serious adverse impact not only on the insured’s finances, but also on his or her physical well-being, and potentially on the health care and social service resources of the community. In such circumstances, the public interest would not be served by placing an additional burden upon an insured who sought to rescind such a settlement on the basis that the insurer failed to comply with legislated disclosure statements.

I find that the same considerations apply in this case.

Again, subsection 9.1(8) of the Settlement Regulation provides that “[n]o 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.”

I find that the purpose of this provision is that even where there is not a settlement as a result of the insurer’s lack of compliance, the insured person must still return the settlement funds as a prerequisite to accessing mediation. This prerequisite is a significant impediment to setting aside a settlement and denies insured persons an open-ended right to change their mind.

Further, any uncertainty in the industry resulting from this decision was not created by insured persons. Rather, it was created by an industry relying on a form that did not comply with the Settlement Regulation. As stated by Spiegel J. in Opoku:

The contra proferentem rule does not apply to legislative interpretation, but as Morden J.A. observed in July v. Neal (1986), 1986 CanLII 149 (ON CA), 57 O.R. (2d) 129, 32 D.L.R. (4th) 463 (C.A.), the insurance industry is consulted and does have input with respect to legislation affecting the industry, whereas the individual insured has none. The settlement regulation is part of the no-fault insurance scheme in that it extends protection to insured persons who are contemplating a settlement of their claim for SABs in return for a lump sum payment. In construing such legislation, where there are two possible interpretations of the circumstances under which the protection is to be extended, the one more favourable to the insured person should govern. This was the principle of interpretation applied by the Court of Appeal in July v. Neal in construing a regulation concerning coverage in a policy of automobile insurance. In my view, the same principle applies to the interpretation of the settlement regulation.

Further, as stated in Sullivan and Driedger on the Construction of Statutes, Fourth Edition (Markham Ontario, Butterworths, Canada Ltd. 2002), at page 399, it “is presumed that the legislature does not intend to abolish, limit or otherwise interfere with the right of subjects. Legislation designed to curtail the rights that may be enjoyed by citizens or residents is strictly construed.” The text cites the Ontario Court of Appeal in Martin v. Listowel Hospital (1992), O.R. (3d) 65, leave to appeal to S.C.C. refused Oct. 21, 1993, that “the presumption against interfering with rights applies to the right to bring an action or an appeal.”

As stated, this is remedial legislation. It has a major objective of consumer protection. Paragraph 9.1(3)3 sets out the Legislative mandate that insured persons be provided in the SDN with specific, succinct information. The Supreme Court states that such information must be in clear and straightforward language directed towards an unsophisticated person. As stated in Opoku, as noted above, “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.”

I am not persuaded that because the SDN arguably does a better job explaining available benefits than providing information about rescission, that information about rescission need not be in clear and straightforward language directed towards unsophisticated persons. I am not persuaded that there is a hierarchy of importance amongst the paragraphs of subsection 9.1(3) of the Settlement Regulation such that properly explaining available benefits validates greater flexibility in determining insurer non-compliance with paragraph 9.1(3)3.

The Schedule allows for certain basic, important categories of benefits as a result of an insured sustaining an impairment as a result of an accident. It allows for medical treatment and rehabilitation as may be reasonable and necessary, within overall monetary and time limits. It pays restricted amounts to compensate for short-time and for longer-term loss of income. It pays restricted amounts to have someone attend an insured following an accident as is reasonable and necessary. It pays restricted amounts for additional expenses for someone to attend to an insured’s housekeeping and home maintenance needs, as are reasonable and necessary as a result of the accident.

As stated above, starting at page nine, the concerns regarding consumer protection and having informed consumers less vulnerable to exploitation remain fresh and ever more urgent. I am persuaded that finality, in the context of the objectives of the Settlement Regulation, means a considered and properly informed finality.

I am not persuaded that the Appellant was in compliance in providing the information mandated by the Legislature in paragraph 9.1(3)3. Accordingly, I am not persuaded that the Arbitrator erred in law in her decisions. Therefore, pursuant to subsection 283(5) of the Insurance Act, the Arbitrator’s March 29 and 30, 2012 decisions are confirmed and the Notices of Appeal herein are dismissed.

Accordingly, my June 20, 2012 stay, on consent, under subsection 283(6) of the Insurance Act of the Arbitrator’s orders, is rescinded.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of these appeals, amending under Rule 81 (in light of the upcoming seasonal holidays), Rule 79 of the Code, an expense hearing shall be requested within sixty days of the date of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as submissions on entitlement to and/or the quantum of such legal expenses, as are in dispute.

December 18, 2012

Lawrence Blackman Director’s Delegate

Date

APPENDIX A

Settlements — Statutory Accident Benefits

9.1 (1) In this section,

“settlement” means an agreement between an insurer and an insured person 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. O. Reg. 780/93, s. 7.

(2) The insurer shall give the insured person a written disclosure notice, signed by the insurer, with respect to the settlement. O. Reg. 483/01, s. 1.

(3) The disclosure notice shall be in a form approved by the Superintendent and shall contain the following information:

1. The insurer’s offer with respect to the settlement.

2. A description of the benefits that may be available to the insured person under the Statutory Accident Benefits Schedule.

3. 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 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.

4. A description of the consequences of the settlement on the benefits described under paragraph 2 including,

i. a statement of the restrictions contained in the settlement on the insured person’s right to mediate, litigate, arbitrate, appeal or apply to vary an order under sections 280 to 284 of the Act, and

ii. a statement that the tax implications of the settlement may be different from the tax implications of the benefits described under paragraph 2.

5. A statement advising the insured person to consider seeking independent legal, financial and medical advice before entering into the settlement.

6. A statement for signature by the insured person acknowledging that he or she has read the disclosure notice and considered seeking independent legal, financial and medical advice before entering into the settlement. O. Reg. 483/01, s. 1.

(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. O. Reg. 483/01, s. 1.

(5) The insured person may rescind the settlement after the period referred to in subsection (4) if the insurer has not complied with subsections (2) and (3). O. Reg. 483/01, s. 1.

(6) Subsections (4) and (5) do not apply with respect to a settlement that has been approved by a court under Rule 7 of the Rules of Civil Procedure (Parties under Disability). O. Reg. 483/01, s. 1.

(7) 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. O. Reg. 483/01, s. 1.

(8) 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. O. Reg. 483/01, s. 1.

(9) If the insured person returns money to the insurer under subsection (7) or (8) and a dispute arises between the insurer and the insured person with respect to the validity of the purported settlement or the right of the insured person to rescind the settlement, the insurer shall hold the money in trust until the matter is determined, at which time the amount and any income on the amount,

(a) shall be paid to the insured, if it is determined or agreed that there was a valid settlement that was not rescinded; and

(b) shall be returned to the insurer, if it is determined or agreed that there was no settlement, or that the settlement was invalid or was rescinded. O. Reg. 483/01, s. 1.

(10) A restriction on an insured person’s right to mediate, litigate, arbitrate, appeal or apply to vary an order under sections 280 to 284 of the Act is not void under subsection 279 (2) of the Act if,

(a) the restriction is contained in a settlement;

(b) the settlement is entered into on or after the first anniversary of the day of the accident that gave rise to the claim; and

(c) the insurer complied with subsections (2) and (3). O. Reg. 483/01, s. 1; O. Reg. 275/03, s. 3 (1).

(11) Despite clause (10) (b), a restriction contained in a settlement entered into before the first anniversary of the day of the accident that gave rise to the claim is not void under subsection 279 (2) of the Act if, in respect of the claim,

(a) the insured person brought a proceeding in a court ;of competent jurisdiction under clause 281 (1) (a) of the Act and examinations for discovery have commenced;

(b) the insured person referred the issues in dispute to an arbitrator under clause 281 (1) (b) of the Act and a pre-hearing conference has been completed; or

(c) the insurer and the insured agreed under clause 281 (1) (c) of the Act to submit the issues in dispute for arbitration in accordance with the Arbitration Act, 1991 and an arbitration agreement under that Act has been entered into. O. Reg. 275/03, s. 3 (2).

(12) Clause (10) (b) and subsection (11) apply to claims that have not settled before October 1, 2003, unless a disclosure notice under subsection (2) in respect of the settlement or purported settlement was given to the insured person before that date. O. Reg. 275/03, s. 3 (2).

9.2 (1) Subsections 9.1 (2) to (8) apply only with respect to settlements made on or after March 1, 2002. O. Reg. 483/01, s. 2.

(2) Subsections 9.1 (2) to (5), as they read on February 28, 2002, continue to apply with respect to settlements for which written notice under subsection 9.1 (2) was given before March 1, 2002. O. Reg. sixty days after the date on which the application for the appointment of a mediator is filed. R.R.O. 1990, Reg. 664, s. 10.

APPENDIX B SETTLEMENT DISCLOSURE

NOTICE

Final Settlement

of a Statutory Accident Benefits Claim

(For accidents on or after November 1, 1996)

NOTICE AND CAUTION

Your insurer is required to give you this SETTLEMENT DISCLOSURE NOTICE if you have both agreed on a cash settlement that will permanently end your entitlement to one or more accident benefits. This SETTLEMENT DISCLOSURE NOTICE must be completed and signed by your insurer. Your insurer will probably also give you a Release to sign.

• YOU CANNOT ENTER INTO A CASH SETTLEMENT WITHIN A YEAR FROM

THE DATE OF THE ACCIDENT, WITH SOME EXCEPTIONS.

• YOU SHOULD CONSIDER SEEKING LEGAL, FINANCIAL AND MEDICAL ADVICE BEFORE YOU SIGN A RELEASE.

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

• IF YOU CHOOSE NOT TO SIGN, YOUR BENEFITS WILL NOT BE AFFECTED OR REDUCED.

• IF YOU DO SIGN THIS NOTICE AND A RELEASE YOU HAVE 2 BUSINESS DAYS TO CHANGE YOUR MIND.

• YOU HAVE THE RIGHT TO SEEK ANY MEDICAL INFORMATION RELATING TO YOUR CLAIM IN YOUR INSURER’S FILE AND TO OBTAIN A COPY AT THE INSURER’S EXPENSE. IF YOU WANT TO SEE THIS INFORMATION, ASK

YOUR INSURER FOR A COPY.

PLEASE READ THIS ENTIRE DOCUMENT CAREFULLY

*You may enter into a cash settlement within a year from the date of the accident if within the same period you brought a lawsuit and commenced discovery; or you referred the dispute to an arbitrator at the Financial Services Commission of Ontario and completed a pre-hearing conference; or you and your insurer agreed to a private arbitration and entered into an arbitration agreement.

Effective (2010-09-01) SDN

FSCO (1222E) Page 1 of 6

INSURER’S OFFER TO SETTLE BENEFITS

OFFER TO SETTLE INCOME REPLACEMENT BENEFITS

You have been offered $ for all past and future income replacement benefits.

OFFER TO SETTLE NON-EARNER BENEFITS

You have been offered $ for all past and future non-earner benefits.

OFFER TO SETTLE CAREGIVER BENEFITS

You have been offered $ for all past and future caregiver benefits.

OFFER TO SETTLE MEDICAL BENEFITS

You have been offered $ for all past and future medical benefits.

OFFER TO SETTLE REHABILITATION BENEFITS

You have been offered $ for all past and future rehabilitation benefits.

OFFER TO SETTLE ATTENDANT CARE BENEFITS

You have been offered $ for all past and future attendant care benefits.

OFFER TO SETTLE DEATH AND FUNERAL BENEFITS

You have been offered $ for all past and future death benefits and funeral benefits.

OFFER TO SETTLE BENEFITS FOR PAYMENT OF OTHER EXPENSES (specify)

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

OFFER TO SETTLE ANY OTHER ITEMS (specify)

You have been offered $ for other items.

TOTAL OFFER $

Provide any other details:

This offer includes all expenses incurred for goods and services as previously approved.

‰This offer does not include all expenses incurred for goods and services as previously approved.

Effective (2010-09-01) SDN-198

FSCO (1222E) Page 2 of 6

WHAT DOES IT MEAN IF YOU SETTLE YOUR CLAIM?

THERE ARE A NUMBER OF CONSEQUENCES OF THIS SETTLEMENT IF YOU SIGN THIS NOTICE AND A RELEASE:

• You are finally and permanently settling your claim for the benefits specified. You are forever giving up the right to claim such benefits in the future, even if your medical problems get worse.

• You are permanently giving up your right under the Insurance Act to mediate, litigate, arbitrate, appeal, apply to vary, or to proceed to judicial review by a court, concerning the benefits which are the subject of the settlement.

• The tax implications of the settlement may be different than the tax implications of the benefits described. In general, any investment income earned on the cash amount of the settlement may be subject to tax.

Example

If you are entitled to receive weekly income benefits, and agree to settle your claim for $20,000.00 which you then invest, any interest income you receive will likely be taxable. If you choose to receive weekly income benefits instead of a settlement, your weekly benefits will probably not be taxable.

YOU ARE ADVISED TO CONSIDER SEEKING LEGAL, FINANCIAL AND MEDICAL ADVICE BEFORE ENTERING INTO ANY SETTLEMENT. IT IS ESPECIALLY IMPORTANT TO SEEK ADVICE IF YOUR IMPAIRMENT IS “CATASTROPHIC”.*

*What is a “catastrophic impairment”?

The exact definition of “catastrophic impairment” depends on the date of your accident. “catastrophic impairment” includes: paraplegia or quadriplegia, certain amputation or other impairments causing total and permanent loss of use of one or more arm(s) or leg(s), total loss of vision, certain brain injuries, significant or extreme mental and behavioural disorders, and certain other combinations of impairments that result in 55% or more impairment of the whole person. A determination must be made by medical experts.

If you feel your injuries may be catastrophic, you should contact your medical and legal advisors. If your impairment is catastrophic, the amount of benefits available to you changes significantly (see “Description of Benefits”).

DESCRIPTION OF BENEFITS

‰ This policy includes optional benefits. For further details, please speak with your agent/broker.

THE DETAILS OF THE BENEFITS AND YOUR RIGHTS AND RESPONSIBILITIES ARE IN THE STATUTORY ACCIDENT BENEFITS SCHEDULE OF THE INSURANCE ACT (ONTARIO). YOUR INSURER 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.

Income Replacement Benefit

This benefit compensates for lost income if you are unable to perform the essential tasks of the job you did

before the accident. For accidents that occur before September 1, 2010, the benefit is 80% of your net income before the accident. If you were self-employed, 80% of your weekly loss from self-employment that you incur as a result of the accident will also be added.

For accidents on or after September 1, 2010, the benefit is 70% of your gross income before the accident. If you were self-employed, 70%of your weekly loss from self-employment that you incur as a result of the accident will also be added.

The maximum benefit is $400 per week. If you have purchased optional income replacement benefits this

amount will be increased.

Non-Earner Benefit

This benefit compensates you if you are completely unable to carry on a normal life, and do not qualify for an

Income Replacement Benefit or Caregiver Benefit. The benefit is $185 per week, but may be $320 per week if you were a student or recent graduate. The benefit begins twenty-six weeks after you become completely unable to carry on a normal life.

Caregiver Benefits

This benefit compensates you for expenses incurred if you cannot continue as the main caregiver for a

person in your household such as child under age 16 or other person who needs care. If your accident occurred before September 1, 2010, the benefit pays expenses up to $250 per week, but if you provide care for more than one person, the limit is increased by $50 for each additional person. If your accident occurred on or after September 1, 2010, this benefit is available only if you have suffered catastrophic injuries as a result of your accident or if you have purchased optional caregiver benefits.

Medical Benefit

This benefit pays for medical expenses incurred as a result of your injuries. These are expenses that are not

covered by any other medical plan, such as the Ontario Health Plan, or any medical plans at the workplace.

Rehabilitation Benefit

This benefit pays for some rehabilitation expenses incurred as a result of your injuries. These are expenses

that are not covered by any other plan.

Attendant Care Benefit

This benefit compensates for the expense of an aide or attendant or services provided by a long-term care facility.

DESCRIPTION OF BENEFITS (continued)

Medical, Rehabilitation and Attendant Care Benefits

For accidents that occur before September 1, 2010, the maximum amount paid for medical and rehabilitation expenses combined is $100,000, with a 10 year time limit, and $72,000 for attendant care benefits with a two year time limit. If your impairment is catastrophic, the maximum amount is $1,000,000 for medical and rehabilitation expenses, and $1,000,000 for attendant care expenses, with no time limits. For accidents that occur on or after September 1, 2010, the maximum amount paid for medical and rehabilitation expenses combined for non-catastrophic claims is $50,000, with a 10 year time limit, and $36,000 for attendant care benefits with a two year time limit. If your impairment is catastrophic, the maximum amount is $1,000,000 for medical, rehabilitation expenses and $1,000,000 for attendant care expenses, with no time limits.

If you have purchased optional benefits these amounts may be increased.

Case Manager Services

This benefit compensates for expenses for services provided by a case manager in catastrophic injury claims or, for accidents that occurred on or after October 1, 2003,if you have purchased the optional medical, rehabilitation and attendant care benefit.

Payment of Other Expenses

This benefit pays for some other expenses such as the expenses of family members in visiting you during treatment or recovery. It also pays for some housekeeping and home maintenance expenses; the repair or replacement of items lost or damaged in the accident such as clothing, prescription eyewear, dentures, hearing aids, prostheses and medical or dental devices; and lost educational expenses. For accidents that occur on or after September 1, 2010, this benefit is only available for catastrophic injury claims or if you have purchased the optional benefit

Death Benefits

This benefit pays family members of a person killed in an automobile accident. $25,000 is paid to a surviving spouse, $10,000 to each surviving dependant, and a total of $10,000 to a person in respect of whom the deceased was a dependant. If you have purchased optional benefits this amount may be increased.

Funeral Expenses

This benefit pays up to $6,000 to cover funeral expenses. If you have purchased optional benefits this amount may be increased.

Optional Benefits

Optional benefits increase the amount of standard benefits or provide benefits that may not otherwise be payable. They must be purchased before the accident. For accidents that occur before September 1, 2010, the optional benefits are: increased Income Replacement; increased Caregiver and Dependent care benefits; increased Medical, Rehabilitation and Attendant Care; increased Death and Funeral benefits, and an Indexation Benefit.

For accidents that occur on or after September 1, 2010, the optional benefits are: increased Income Replacement; Caregiver, Housekeeping and Home Maintenance benefits for non-catastrophic claims; increased Medical and Rehabilitation benefits; increased Attendant Care; increased Medical, Rehabilitation and Attendant Care benefit; increased Death and Funeral benefits, a Dependant Care benefit and an Indexation Benefit. You should consult your insurer and your advisors to determine if you are covered by Optional Benefits.

INSURER’S DISCLOSURE AND ACKNOWLEDGMENT

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.

I certify the information provided in this Notice is complete and correct.

Signature of Insurer or Authorized Representative of Insurer Date

Representative of Insurer Telephone number (print name)

Name of Insurer’s Complaint Officer*

Telephone number

• If you have a complaint about your claim, you may contact your insurer’s Complaint Officer who will review and attempt to resolve it with you.

INSURED’S ACKNOWLEDGMENT

I acknowledge that I have 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.

Signature of Insured Date

IF YOU CHANGE YOUR MIND

IF YOU CHANGE YOUR MIND AFTER AGREEING TO SETTLE YOUR CLAIM BY SIGNING A RELEASE, YOU MUST:

NOTIFY THE INSURER IN WRITING AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED WITHIN 2 BUSINESS DAYS AFTER YOU SIGNED THE RELEASE

IF YOU SIGNED A RELEASE AND LATER SIGNED THIS DISCLOSURE NOTICE, YOU HAVE 2 BUSINESS DAYS FROM WHEN YOU SIGNED THE DISCLOSURE NOTICE IN WHICH TO NOTIFY THE INSURER AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED.

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Confirmed as a recommendation at page 76 of the Steering Committee’s November 2012 Final Report.