Angelo Lopes v. Coachman Insurance Company, 2017 ONFSCDRS 184

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 184

FSCO A16-000959

BETWEEN:

ANGELO LOPES

Applicant

and

COACHMAN INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Arbitrator Jeff Musson

Heard:

In person at ADR Chambers on March 3, 2017 and by teleconference call on April 12, 2017

Appearances:

Mr. Rishi Singh Bhasin for Mr. Angelo Lopes

Mr. Jamie Pollack for Coachman Insurance Company

Issues:

The Applicant, Mr. Angelo Lopes, was injured in an accident on June 30, 2008 and sought accident benefits from Coachman Insurance Company (“Coachman”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Lopes applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issues in this Preliminary Issue Hearing are:

1. Is the Applicant’s Settlement Disclosure Notice (“SDN”) valid?

2. In the alternative, is the Applicant time-barred from applying for mediation within 2 years of the March 9, 2009 denial date?

3. Is either party entitled to its expenses in respect of the Preliminary Issue Hearing?

Result:

1. The Applicant’s SDN is valid.

2. Since the SDN is valid, the issue of whether the Applicant is time-barred from applying for mediation is moot.

3. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

EVIDENCE AND ANALYSIS:

BACKGROUND

The following was an Agreed Statement of Facts by counsel for both the Applicant and Insurer. The Applicant was involved in a motor vehicle accident on June 30, 2008. He lost control of his vehicle and ended up rolling it over on the Gardiner Expressway. The Applicant was charged with two counts of impaired driving causing bodily harm and two counts of criminal negligence causing bodily harm as a result of this accident.

The Applicant had legal representation from the date he applied for accident benefits on July 11, 2008 up until the date he signed settlement documents on May 3, 2011.² The Applicant agreed to settle his accident benefit claim for $115,000.00. The full amount was paid by Coachman to the Applicant on May 10, 2011.³ Subsequently, the Applicant repaid the entire amount to Coachman on December 17, 2015 in order to re-open his accident benefits claim.⁴

ISSUES IN DISPUTE

The main issue to be determined is whether the SDN signed by the Applicant on May 3, 2011 is valid. Both parties submitted case law in support of their position. In the alternative, if the SDN is found to be invalid, is the Applicant time-barred from applying for mediation?

Applicant’s Position

The Applicant submits that since the SDN was signed after March 1, 2002, Director’s Delegate Blackman’s decision in Aviva and Parveen⁵ should be used to reject the May 3, 2011 SDN. He submits that Parveen is the binding authority for purposes of this Preliminary Issue Hearing. After Parveen was issued, Applicants were able to repay settlement funds to an Insurer after a SDN was signed, and in return, Applicants could re-open their accident benefit files. The Applicant is of the opinion that since the SDN is not valid, the limitation period should not have started as of March 9, 2009, the denial date.

The Applicant also relies on the case of Aviva and Tew.⁶ It is the Applicant’s position that this decision provides clarity regarding which party would bear the onus of any impacts arising from defects contained within the SDN, and that one or more defects in a SDN renders any settlement contained within it void.

The Applicant believes that the SDN he signed was flawed for a number of reasons. First, the SDN did not distinguish between Income Replacement Benefits (“IRBs”) up to the two-year mark and IRBs after the two-year mark. The Applicant received some IRBs prior to settling the case. It is his opinion that the tests for both time periods are different and the SDN should reflect this difference. In addition, the Applicant submits that no consideration was given for any possible value for IRBs beyond two years of disability. Further, the Applicant is of the opinion that due to his criminal charges later related to the accident, the SDN should have explained that per the applicable legislation, he would not qualify for IRBs, which the notice did not state.

Lastly, the Applicant submits that his SDN did not contain required language with respect to rescission. The SDN only specified that “if you do sign this notice and a release, either on the same day or different days, you have 2 business days from the date of the last document you signed to change your mind.” The Applicant puts forward the position that he didn’t receive the funds of $115,000.00 until May 10, 2011, one week post-settlement, so it was impossible for him to return the money within 48 hours.⁷

Section 9.1(3)3 of R.R.O. 1990, REGULATION 664 (“Regulation 664”)⁸ lists the mandatory requirements of the SDN to be used for settlements on or after March 1, 2002:⁹

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 a 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.

In section 9.1(4) of Regulation 664,¹⁰ it is written:

(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.

However, paragraph (7) qualifies paragraph 4 in that:

The insured person shall rescind the 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.

The alternative to rescind, which does not rely on the 2 business day time limit to change one’s mind, is contained in paragraph (5) which reads:

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).

Ultimately, the Applicant submits that the Insurer legally has to provide the correct information within the SDN provided to the Applicant. Specifically, the SDN’s failure to include the exact wording of the mandatory requirement of section 9.1(3)3 of Regulation 664 that was in effect should make the settlement of May 3, 2011 void.

Insurer’s Position

The Insurer asserts that the SDN signed on May 3, 2011 is valid. It submits that even though the Applicant is relying on Tew,¹¹ the applicable legislation in force at the time of the SDN on May 3, 2011 was different in Tew than in this case.

As a result, the Insurer is of the opinion that the Applicant’s first argument relating to the SDN’s validity is wrong. To further its position, the Insurer comments on the Court of Appeal’s ruling in Catania v. Scottish & York,¹² where it stated that there may be variations of statements of information that will nonetheless comply with Regulation 664. Further, the Insurer submitted the case of Opoku v. Palin in support of its position.¹³ Justice Spiegel stated in Opoku that “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.”

Lastly, the Insurer submits that Parveen does not support the argument that the timing of delivery of the settlement funds affects the settlement (and most importantly the Applicant’s ability to rescind settlement) in any way. It is the position of the Insurer that the timing of delivery of the settlement funds is immaterial to the preliminary issue, and the SDN signed by the Applicant on May 3, 2011 is valid and should be enforced.

ANALYSIS

The Validity of the SDN

When looking at the SDN signed by the Applicant on May 3, 2011, it shows that $55,000.00 was agreed to for Medical Benefits, $50,000.00 for Rehabilitation Benefits, and $10,000.00 for costs. $0.00 was assigned for all other benefits, including IRBs.¹⁴ The evidence shows that the Applicant was represented by legal counsel at the time of negotiations and also when the SDN was signed. As a result, I am comfortable that the Applicant understood the ramifications of the document he was signing. He also understood that by agreeing to accept a lump sum payment of $115,000.00 that this included settling his IRB claim for a payment of $0.00. Further, he understood that by accepting this payment, he would forgo any further claims related to the June 30, 2008 accident.

One of the Applicant’s arguments at this Hearing related to distinguishing between IRBs up to the two-year mark and IRBs after the two-year mark, and that no consideration was given for any possible value for IRBs beyond the two years of disability. In my opinion, any argument related to IRB calculations and disclosure is moot because the Applicant agreed his IRB claim was worth $0.00. Regarding the Applicant’s comments about criminal charges relating to IRBs, I find there is no case law supporting his position. That provision is clearly defined in the legislation and does not have to be stated in a SDN.

I believe that the SDN follows the intent of the legislation as well as the guidance in Parveen. Further, there was no evidence submitted showing the Applicant was prevented from rescinding his settlement without having the settlement funds in hand. An Insurer requires a SDN to be signed by an Applicant first, then wait for the two-day cooling-off period to lapse prior to issuing any funds to the Applicant. Each event is mutually exclusive and independent. This was ultimately confirmed by the actions of the Applicant. He waited 4.5 years before rescinding his settlement.

CONCLUSION

I am of the opinion that the SDN is valid and its terms are to be enforced. The limitation period issue respecting mediation is moot since I have determined that the SDN is valid.

EXPENSES:

The parties made no submissions on expenses. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

June 26, 2017

Jeff Musson Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 184

FSCO A16-000959

BETWEEN:

ANGELO LOPES

Applicant

and

COACHMAN INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c. I.8, as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Ontario Regulation 664, as amended, it is ordered that:

1. The Applicant’s Settlement Disclosure Notice is valid.

2. Since the Settlement Disclosure Notice is valid, the issue of whether the Applicant is time-barred from applying for mediation is moot.

3. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

June 26, 2017

Jeff Musson Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Insurer’s Submission, Pg. 1.
3. 3Ibid., Pg. 2.
4. 4Applicant Submission, Pg. 1.
5. 5FSCO Appeal P12-00023, Aviva Canada Inc. and Shamima Parveen, December 18, 2012.
6. 6FSCO Appeal P15-00056, Aviva Canada Inc. and Cathy Tew, October 21, 2016.
7. 7Applicant Submission, Pg. 2.
8. 8R.R.O. 1990, REGULATION 664 Amended to O. Reg. 459/03 AUTOMOBILE INSURANCE.
9. 9Ibid., Pg. 3.
10. 10Ibid.
11. 11Supra, note 6.
12. 12Catania v. Scottish & York Insurance Co. Limited, (2001) 2001 CanLII 24147 (ON CA), 53 O.R. (3d) 383.
13. 13Opoku v. Palin, (ONCA 2000), 2000 CanLII 1539 (ON CA), 49 O.R. (3d) 97.
14. 14Applicant’s Submission, Tab 1, Pg. 3.