Tribunal File Number: 17-004337/AABS and 17-004343/AABS
Case Name: 17-004337 and 17-004343 v Certas Home and Auto Insurance
In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8, in relation to statutory accident benefits.
Between:
N.K.
Applicant
and
Certas Home and Auto Insurance
Respondent
HEARING DECISION
Adjudicator
Ian Maedel
APPEARANCES:
Applicant:
N.K.
Representative for Respondent:
Christina Vittorio, Claims Advisor
Counsel for the Respondent:
Brian Pak
Language Interpreter:
Ida Pakdaman (Farsi)
Court Reporter:
Lydia Pak
Observer
Maureen Helt
Held In-Person:
February 13, 2018
OVERVIEW
1The applicant was injured in a motor vehicle accident on May 17, 2012. As a result of the accident, the applicant applied for a non-earner benefit, and also submitted treatment plans for chronic pain, physiotherapy, chiropractic treatment, and an assistive device. The respondent denied the benefit and the treatment plans. The applicant submitted an Application to the Licence Appeal Tribunal (“LAT”) on July 10, 2017 for resolution of the disputed entitlement.
2A case conference was held on September 28, 2017 and as a result, a two-day in-person hearing was set for January 16 and 17, 2018.
3On December 14, 2017, following resolution discussions between the parties, the applicant signed a Full and Final Release and a Settlement Disclosure Notice. Both documents were witnessed by a member of the applicant counsel’s staff.
4On December 19, 2017, the Tribunal received email correspondence from applicant’s counsel stating that the matters had been resolved and the applicant was withdrawing his Applications.
5On December 19, 2017, the Tribunal sent correspondence to the applicant and applicant’s counsel confirming the resolution of the matters and notifying the parties that the hearing had been cancelled.1
6In correspondence dated December 19, 2017 and received by the respondent on December 20, 2017, the applicant indicated he wished to stop the settlement process immediately for further review.2 As a result of this correspondence, the Tribunal scheduled a case conference for January 16, 2018.
7In correspondence to the Tribunal dated January 12, 2018, the applicant stated that he no longer wished his legal counsel to represent him with regard to these matters and did not wish former counsel to attend the case conference scheduled for January 16, 2018.
8At the case conference on January 16, 2018, the matter was set for an in-person hearing to determine if the applicant was statute-barred, pursuant to O. Reg. 664, from proceeding with this application and whether he had entered into a valid settlement agreement with the respondent. The respondent is also seeking costs against the applicant pursuant to Rule 19.1 of the Licence Appeal Tribunal Rules of Practice and Procedure, Version 1 (April 1, 2016) (“Rules”).
9The applicant seeks to set aside the settlement accorded on December 14, 2017. He submits that it was an improvident settlement as he was placed under duress and lacked capacity to understand and consider the settlement documents due to mental illness.
10The respondent submits that the settlement should not be rescinded as the Release and Settlement Disclosure Notice complied with statutory requirements and the two-day cooling period referred to in s. 9.1(4) of O. Reg. 664 expired on December 18, 2017. The respondent further submits that the applicant has not proven mental incapacity or duress and seeks costs against the applicant pursuant to Rule 19.1 of the Rules.
ISSUES TO BE DECIDED
11The issues were laid out in the Order of Vice Chair Trojek dated January 18, 2018:
i. Is the applicant barred pursuant to Ontario Regulation 664 from proceeding with his application because he entered into a valid settlement agreement with the respondent?
ii. Is the respondent entitled to costs under Rule 19 of the Tribunal’s former Rules?
RESULT
12The applicant is statute-barred from rescinding the settlement accorded on December 14, 2017. The settlement was valid and the applicant did not rescind the settlement within two business days, as required in s. 9.1(4) of O. Reg. 664. The applicant has not established, on a balance of probabilities, that he lacked capacity or was placed under duress at the time he signed the Release and the Settlement Disclosure Notice.
13The respondent is not entitled to costs.
ANALYSIS
Expiry of the Cooling Period
14Although initially in dispute, the applicant admitted at the hearing that he rescinded the settlement outside of the two-day cooling period.
15Section 9.1(3) of O.Reg. 664 of the Insurance Act sets out the criteria required in a settlement disclosure notice, including: clarification of the offer to settle, a description of the benefits available to the insured under the Statutory Accident Benefits Schedule (“Schedule”), a statement regarding the two-day cooling period, a description of the consequences of settlement, a statement advising the insured person to consider seeking independent legal, financial, and medical advice before entering into settlement and a statement that the insured person has read all of the above.
16Section 9.1(4) of O.Reg. 664 states that an 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.
17The applicant does not dispute the form or substance of the Full and Final Release and the Settlement Disclosure Notice, nor that he signed both documents on December 14, 2017. His signature was witnessed by a member of his lawyer’s staff on December 14, 2017. The requisite cooling period then expired within two business days, on December 18, 2017.
18In correspondence dated December 19, 2017, the applicant indicated he wished to stop the settlement immediately. According to the facsimile date stamp, this correspondence was not received by the respondent until December 20, 2017 at 5:52 am.3
19The applicant admitted under cross-examination that the correspondence he sent dated December 19, 2017 and received December 20, 2017, was the first he sent to anyone regarding rescission of the settlement. He further admitted that he did not contact his former legal counsel between December 15 and December 19, 2017 in regard to the settlement. The applicant specifically acknowledged that he repudiated the settlement outside the two-day cooling period, due to his depression and anxiety issues.
20Given that the applicant has made the admission that he repudiated the settlement outside of the statutory two business day period specified in section 9.1(4) of O.Reg. 664, the only question that remains is whether he lacked capacity at the time or was under duress, as alleged by the applicant.
Mental Incapacity
21The applicant has failed to establish on a balance of probabilities that he lacked the mental capacity to enter into the settlement on December 14, 2017 or the immediate days thereafter.
22The Substitute Decisions Act, 1992 (“SDA”) sets out the test for capacity with regard to property. Section 6 states:
A person is incapable of managing property if the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.4
23Section 2(1) of the SDA sets out a general presumption of capacity, which may be relied upon by a third party unless there are reasonable grounds to believe that the person is incapable. The burden of proving incapacity lies upon the person who alleges they were mentally incapacitated. In this matter, the applicant must establish on a balance of probabilities that he was mentally incapacitated.
24The Financial Services Commission of Ontario (“FSCO”) dealt with a similar fact situation in Wachmenko v. Primmum Insurance Co. where the applicant reached an agreement to settle accident benefits on a full and final basis arising out of a motor vehicle accident.5 As part of the settlement, she executed settlement documents. She subsequently complained of the insurer’s conduct and implied she was pressured into an improvident settlement. At paragraph 42 of the decision, Arbitrator Wilson quoted Mr. Justice Quinn of the Ontario Court (General Division) in Re Koch:
Compelling evidence is required to override the presumption of capacity found in s. 2(2) of the SDA (Substitute Decisions Act) and s. 4(1) of the HCCA (Health Care Consent Act). The nature and degree of the alleged incapacity must be demonstrated to be sufficient to warrant depriving the appellant of her right to live as she chooses. Notwithstanding the presence of some degree of impairment, the question to be asked is whether the appellant has retained sufficient capacity to satisfy these statutes.6
25Arbitrator Wilson noted that the applicant’s awareness of the consequences of the settlement, stating “if anything, Ms. Wachmenko’s comments on the fairness of the settlement and its shortcomings display a critical awareness of the consequences of the settlement in question”. Arbitrator Wilson then concluded that the applicant may have suffered a brain injury and be handicapped with ongoing problems, but found no compelling evidence of incapacity to allow her to vitiate the settlement agreement.
26Here, the applicant was aware of the potential settlement and had engaged in the settlement process, providing instructions to legal counsel prior to the December 14, 2017 date. Under cross-examination, the applicant admitted that he had attended his lawyer’s office that day with the intention of preparing for a hearing and on that date he understood that he could still proceed to a hearing if no settlement was reached.
27The applicant also has an acute understanding of the quantum of settlement, believing it to be unfair. During his viva voce evidence he repeatedly cited the quantum of settlement and how it was not enough to settle the three applications at issue, even attempting to rely on a sworn affidavit by his wife and son which provided a clear breakdown of the quantum of costs for treatment. These circumstances demonstrate a critical awareness of the consequences of the settlement in question, relating to the applicant’s mental capacity and ability to instruct counsel at the time of settlement.
28The applicant relies on a number of medical documents to establish his incapacity at the time of settlement on December 14, 2017, including the following exhibits from the hearing:
Correspondence dated February 7, 2018 by Dr. M. Noori stating that he suffers from chronic depression, anxiety, stress with low mood, poor focus and concentration.
Treatment and Assessment Plan (OCF-18) by Dr. Noori dated February 26, 2017 which identify barriers to recovery which include chronic pain, depression, anxiety and prior motor vehicle accident history.
Treatment and Assessment Plan (OCF-18) by Dr. Antowan dated April 12, 2016 which stated that his depression “got worse after the accident”.7
Treatment and Assessment Plan (OCF-18) by Lynn Lightfoot, Psychologist, dated May 12, 2016, which stated that the applicant suffered from severe depressive episode without psychotic symptoms, phobic anxiety disorders and persistent somatoform pain disorder.
Chronic Pain Assessment by Lori Ann Blessing, Psychologist, and Dan Bosy, Registered Physiotherapist, dated November 11, 2016, which indicated the applicant had been in three previous motor vehicle collisions between March 2009 and January 2011 and was suffering from chronic myofascial pain, major depressive disorder, and adjustment disorder with anxiety. They recommended an interdisciplinary pain rehabilitation program.
29Notably, none of the medical documentation put into evidence speaks to the applicant’s incapacity on the date the settlement documents were signed, nor during the requisite cooling period. The most recent medical documents were from Dr. Noori, the first being nearly 10 months prior to the settlement and the second, although from February 2018, does not directly address the potential mental incapacity at the time of settlement.
30The applicant has the burden of establishing mental incapacity on a balance of probabilities. Although it is clear that the applicant suffers from depression, stress and anxiety, he has failed to demonstrate how these ailments incapacitated him on the date of settlement and the immediate days thereafter. The testimony at the hearing speaks to an applicant who is aware of the settlement and hearing process, not one incapacitated by mental illness. The medical evidence proffered was not persuasive and the applicant has not established he was mentally incapacitated when he entered into the settlement on December 14, 2017 or even at any time during the cooling off period which expired on December 18, 2017.
Duress
31The applicant has the burden of establishing on a balance of probabilities that he was under duress at the time of the settlement. He has not met that evidentiary burden.
32Black’s law dictionary defines “duress” broadly as a threat of harm made to compel a person to do something against his or her will or judgment, especially a wrongful threat made by one person to compel a manifestation of seeming assent by another person to a transaction without real volition. Duress practically destroys a person’s free agency, causing non-volitional conduct because of the wrongful external pressure.8
33The applicant repeated under oath that he felt pressured to enter into the settlement agreement on December 14, 2017. He said that he was not given an opportunity to review the settlement documents when he attended the offices of his legal counsel on that date. He does admit that he signed the settlement documents at his lawyer’s office and he had the opportunity to ask counsel questions.
34Under cross-examination he admitted that the pressure he felt was only to sign the settlement documents within a certain time before the respondent’s counsel went on vacation. He states he was not physically forced or threatened into signing the settlement documents.
35The applicant had access to counsel and independent legal advice at the time he signed or initialled each page of the settlement documents. He also had the intervening period prior to December 18, 2018 to reconsider the settlement and contact his lawyer or respondent counsel. He chose to do neither until December 20, 2017, after the expiration of the cooling period. He now maintains that if he had more time to think about the implications of settlement, he would not have signed the settlement documents.
36The applicant has presented no evidence of duress at the time the settlement documents were signed or immediately thereafter that would potentially vitiate this agreement. While he may have felt pressure to sign the document, this pressure is common for parties entering into binding agreements, and the 48 hour cooling period is meant to cure any potential power-imbalance between parties by affording them time to change their mind. The applicant has not demonstrated on a balance of probabilities that he was subject to threats, intimidation or any other pressure that may otherwise constitute duress.
37Any claims regarding the adequacy of the applicant’s former counsel or the lack of genuine intention of former counsel to act in the applicant’s best interest are beyond the scope of this hearing and outside of the jurisdiction of this Tribunal. These are claims best left to another forum or adjudicative body.
Costs
38The respondent is not entitled to costs pursuant to Rule 19.1. The test laid out in Rule 19.1 is a high bar and only awarded when a party has acted unreasonably, frivolously, vexatiously, or in bad faith. The applicant was self-represented at the hearing and simply wanted his case to be heard. The respondent has not established that there has been bad faith or otherwise any conduct by the applicant that would attract a cost award. The respondent’s application for costs is dismissed.
ORDER
39For the reasons outlined above, the Tribunal orders that:
i. The applicant is statute-barred from rescinding the settlement accorded on December 14, 2017. The settlement was valid and the applicant did not rescind the settlement within two business days as required in s. 9.1(4) of O. Reg. 664. The applicant has not established on a balance of probabilities, that he lacked capacity or was under duress at the time he signed the Release and the Settlement Disclosure Notice.
ii. The respondent is not entitled to costs.
iii. The Application is dismissed.
Released: March 29, 2018
Ian Maedel, Adjudicator
Footnotes
- Respondent’s Written Submissions, Tab 3.
- Respondent’s Written Submissions, Tab 4.
- Respondent’s Written Submissions, Tab 4.
- S.O. 1992, Chapter 30
- [2005] O.F.S.C.D. No. 75.
- Ibid at para. 42.
- Exhibit 6, page 3.
- Black’s Law Dictionary, Tenth Ed. Pg. 614.