Moonie Ali v. Dominion of Canada General Insurance Company, 2017 ONFSCDRS 41

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 41

FSCO A13-012046 and FSCO A12-006504

BETWEEN:

MOONIE ALI

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: David Snider

Heard: November 3, 2016, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: John Philpott for Ms. Ali

Talaal Bond for Dominion of Canada General Insurance Company

Issues:

The Applicant, Moonie Ali (“Ms. Ali”), was injured in a motor vehicle accident on October 21, 2009 and in a subsequent motor vehicle accident on August 9, 2012. She applied for and received statutory accident benefits from Dominion of Canada General Insurance Company (“Dominion”), payable under the Schedule.¹ Various disputes arose concerning non-earner benefits, medical benefits, housekeeping and home maintenance benefits, attendant care benefits and Interest arising out of both dates of loss. The parties were unable to resolve their disputes through mediation, and Ms. Ali applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended, on two separate occasions concerning the two different dates of loss. On March 18, 2014 the parties met for settlement negotiations. Ms. Ali was represented at this meeting by Mr. Charles Stitz of Fireman Steimetz Daya. Dominion was represented by Anna-Marie Musson of Miller Thomson LLP.

The preliminary issue is:

The preliminary issue which forms the basis for this order is the question of whether Ms. Ali and Dominion entered into a binding full and final settlement on March 18, 2014 with regard to both dates of loss and/or whether Ms. Ali successfully rescinded her acceptance of the settlement pursuant to the terms of the Settlement Regulation R.R.O. 1990, Ontario Regulation 664, as amended.

Result:

Ms. Ali did not enter into a binding full and final settlement on March 18, 2014 and the purported agreement is set aside.

EVIDENCE AND ANALYSIS:

This application for arbitration has involved a prolonged and litigious history which included an application in the Superior Court of Ontario brought by the Insurer to enforce what it considers a binding full and final settlement between the parties. Without belabouring the point, Mr. Justice Price dismissed the application and referred the matter of determining whether a binding settlement had been reached back here to FSCO. He found that the jurisdiction to make that determination was properly FSCO’s and that the application in Superior Court had been improperly brought by Dominion. That is the essence of his decision and his extensive review of the facts, his costs award against Dominion and his obiter comments with regard to the situation are not binding upon my jurisdiction determine the essential issues herein.

The issues are: 1) whether the parties entered into a binding full and final settlement pertaining to both or either dates of loss on March 18, 2014; 2) whether Ms. Ali successfully rescinded the said agreement if, indeed, it was valid on March 18, 2014; and 3) even if the agreement was binding and not properly rescinded, whether I should exercise a discretion to set aside the settlement because it is unfair and/or unjust to Ms. Ali.

The Insurer, Dominion, advances the argument that the agreement is a binding full and final settlement which I am obliged to enforce for certain technical reasons pertaining to the facts and the requirements of the Settlement Regulation R.R.O. 1990, Ontario Regulation 664, as amended, including the requirement to return settlement funds. It also relies upon the legal principle that, as a matter of course, settlements ought to be enforced.

The Applicant, Ms. Ali, advances different technical arguments concerning the requirements of the Settlement Regulation R.R.O. 1990, Ontario Regulation 664, as amended which, she submits, removed the time constraint of two business days for her to rescind the agreement. She also argues that the doctrine of non est factum should be applied for me to find that no binding agreement had been entered into by her on March 18, 2014. She also asserts, in contretemps to the principle that settlements ought to be enforced, that I have the discretion to rescind even a binding agreement if I find that it was unfair and unjust to Ms. Ali.

The documents which have been provided to me include the Settlement Disclosure Notice prepared by Dominion on March 18, 2014 and acknowledged by her signature to have been received by Ms. Ali on the same date. I note two glaring omissions on this document – firstly, it does not make any mention whatsoever of the fact that the document purports to deal with both of her MVA claims; and, secondly, the box which stands at the top of the Description of Benefits page (Page 4 of 6) which is followed by the words (in a larger font than the rest of the page content) “This policy includes optional benefits. For further details, please speak with your agent/broker.” was not “ticked”. This is a regulated form published by the Queen’s Printer for Ontario and made effective as of January 1, 2013. It is the proper form to be used for a settlement entered into on March 18, 2014 and it is unequivocal that it is mandatory for the Insurer to produce it to the Applicant, properly completed, for any and every full and final settlement to be binding pursuant to the terms of the Settlement Regulation R.R.O. 1990, Ontario Regulation 664, as amended.

The parties have agreed that between the dates of loss of the two MVAs in question herein, the benefits available to Insured persons under Schedule were changed by an amendment to the regulation and that as a result of being informed of the changes, Ms. Ali purchased optional benefits. These were included in the benefits which were available to her on the second date of loss, but not on the first. As well, it is inarguable that the nature and extent of the entire set of available benefits under the Schedule changed significantly between the two dates of loss.

Under these circumstances I find it remarkable that Dominion decided to use only one Settlement Disclosure Notice and that it would ignore the factor of the optional benefits when completing the form. Surely two separate Notices (and Releases for that matter) were called for herein. It would have been a simple matter to assign a certain percentage of the total settlement to each release in order for the paperwork to reflect the full settlement while parsing it out between the two claims. The two claims were based upon fundamentally different sets of available benefits under their respective Schedules and it was incumbent upon the Insurer to fully inform the Insured of the benefits available to her in each case.

I am guided in my opinion by the decision of Director’s Delegate Lawrence Blackman in Aviva Canada Inc. and Parveen (FSCO P12-00023 and P12-00024, December 18, 2012). Excerpts from that decision include:

In paragraph 34 he states:

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

As did the Arbitrator, I follow Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129 (S.C.C.), that there is no dispute that one of the main objectives of insurance law, particularly in the field of automobile insurance, is consumer protection.
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 with undue solicitude for particular circumstances that might operate against claimants in certain cases.
As stated in Davenport and Lombard General Insurance Co. 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 in on the insurer’s compliance.
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 recission. 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 s.9.1(5) of the Settlement Regulation.

In paragraph 66 he states:

Rahman v. TD Ggeneral Insurance Co., referencing Navage, held that in addition to providing insured persons personally with information in straightforward and clear language directed toward 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.

In paragraph 83 he states:

As stated above, starting at page 9, 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, remains a considered and properly informed finality.

The consumer protection focus of the Schedule and the Settlement Regulation, together with the “brightline” requirement imposed upon the Insurer by case law to clearly inform the Applicant of the nature and sufficient detail of the terms of her settlement, is a burden borne solely by the Insurer. Ms. Ali does not have to prove that she was not sufficiently informed. The Insurer must prove that she was properly, completely and unambiguously informed of the full range of benefits to which she was signing away her rights.

I find that it was not just unfortunate that this Settlement Disclosure Notice had the defects outlined above – I find that it is fatal to the entire purported full and final settlement(s). Furthermore, the Release signed by Ms. Ali after being given the defective Settlement Disclosure Notice was tainted by the failure of the Insurer to comply with its regulated requirements for full disclosure. This makes the agreement dated March 18, 2014 void ab initio.

Even if the agreement was not completely void, the irregularities apparent on the face of the disclosure document would, at the least, trigger the rescission time extension provisions set out in section 9.1 of the Settlement Regulation R.R.O. 1990, Ontario Regulation 664, as amended. Ms. Ali, pursuant to subsection 9.1(5) of the regulation, is given an unlimited amount of time to rescind the agreement due to Dominion’s non-compliance with subsections 9.1(2) and (3) pertaining to the technical requirements for full disclosure. Therefore, she could, and did, rescind the agreement in writing repeatedly after the two-business day cooling off period and would be released from it in any event at this point. Accordingly, I conclude that both the initial failure of the agreement as void and her ability to rescind the agreement in any event have been found in her favour.

This conclusion makes it unnecessary for me to examine the merits of the Applicant’s non est factum argument and the Insurer’s submission that agreements should be enforced as a matter of course. There appear to have been problems between Ms. Ali and her then counsel, but they are not necessary for her to prove in this case because the agreement he advised her to sign was void. Equally, a void agreement cannot be enforced, neither as a matter of course nor otherwise, so the Insurer’s submissions on this point have nowhere to go.

This still leaves the fact that the settlement funds paid to Ms. Ali’s former counsel in trust remain in that firm’s trust account to this day, to the best of my knowledge. Does this in some way block Ms. Ali from succeeding with this setting aside of the purported full and final agreement? I find that it does not create any impediment to my jurisdiction to set the purported agreement aside. I have viewed the letters and cheques issued by Dominion to the former counsel’s firm in trust and note that they were sent to that firm no earlier than March 25, 2014, a full week after the settlement discussion and 5 days after both the Insured’s counsel and the Insurer’s counsel had been informed by Ms. Ali, albeit by telephone message, that she was rejecting the agreement. Under these circumstances, and in light of the clear breakdown of the solicitor-client relationship between Ms. Ali and her then-counsel, it was at least imprudent of the insurer to deliver the funds to that firm in trust. Arguably, it was also an aggressive attempt by the Insurer to enforce the purported full and final settlement. Ms. Ali, who was effectively unrepresented in that interim period, would not at the time have been aware that the funds had been delivered.

I find that at no time did the funds paid to Ms. Ali’s former counsel in trust in this matter come into the care and control of Ms. Ali. She clearly did not instruct that firm to release the funds to her (after costs and fees, of course) and, as she had repudiated not only the agreement but also her instructions (such as they were) to that firm, they perhaps should have returned the funds to the Insurer pending resolution of these issues. The fact that they simply held them in trust in the interim is not suggestive of anything improper and in fact it seems almost inevitable that the funds would effectively remain “frozen”, either by that firm or by the Insurer if they had been returned, while the Superior Court application and this preliminary issue hearing ran their course.

Accordingly, I find that the non-return of the funds to date cannot be used by the Insurer to force Ms. Ali out of her protection(s) under the Settlement Regulation R.R.O. 1990, Ontario Regulation 664, as amended after the purported agreement became the subject of dispute. Beyond this, considering that I have found the agreement to have been void ab initio, there would not appear to be any argument to be made by the Insurer under the Settlement Regulation in any event, as Ms. Ali does not have to rely upon those provisions to be relieved of the imposition of the purported settlement upon her.

The final result of all of the above is that I find in favour of the applicant herein on this preliminary issue and set aside the purported full and final settlement signed by these parties on March 18, 2014.

EXPENSES:

I leave the discretion to award Ms. Ali her expenses incurred in this preliminary issue hearing to the hearing Arbitrator who deals with the matter in full.

February 6, 2017

David Snider Arbitrator

Date