W.M. v. Economical Mutual Insurance Company
Tribunal File Number: 18-010752/AABS
In the matter of an Application for Dispute Resolution pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.
Between:
W.M.
Applicant
and
Economical Mutual Insurance Company
Respondent
DECISION
ADJUDICATOR:
Robert Watt
APPEARANCES
For the Applicant:
Sven Mascarenhas
For the Respondent:
Christopher Fleury
HEARD:
In writing and in Person: September 6, 2019
OVERVIEW
1The applicant was involved in an automobile accident on May 3, 2017 and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “Schedule”). The applicant was denied certain benefits by the respondent and submitted an application to the Licence Appeal Tribunal -Automobile Accident Benefits Service (“Tribunal”).
2The parties participated in a case conference and were unable to resolve the issues in dispute.
ISSUES IN DISPUTE
3The issue(s) in dispute were identified and agreed to as follows:
(i) Is applicant barred pursuant to O. Reg. 664 from proceeding with his application because he entered into a valid settlement agreement with the respondent?
(ii) Is the insurer entitled to costs under Rule 19 of the Common Rules of Practice and Procedure?
RESULT
4The applicant is barred pursuant to O. Reg. 664 from proceeding with his application because he entered into a valid settlement agreement with the respondent .
5The respondent is not entitled to costs.
BACKGROUND
6The applicant was involved in a collision on May 3, 2017. At the time of the collision, the applicant was self-employed in the towing industry. His truck was written off after the accident, preventing him form working again in the towing industry.
7The applicant applied for and received an income replacement benefit (IRB) in the amount of $86.64 per week, until May 3, 2018. The applicant had retained a lawyer to negotiate a settlement of all of claimed medical and rehabilitation benefits and the IRB. However, he then terminated legal counsel on September 25, 2017, as he was not happy with him and permitted his mother, [P.W.], to negotiate a settlement on his behalf at the beginning of 2018.
8[P.W.] gave evidence that she had been a claims representative of Co-Operators for approximately 15 years and had the responsibilities of settling all types of personal injury claims and, as part of that, prepared settlement brief documents. In this case, she had contacted the respondent on April 3, 2018 and indicated that she was the applicant’s representative. She gave evidence that she felt that the upper limit for a full and final settlement was $40,000.00. She had proposed a full and final settlement to the respondent in the amount of $25,000.00 on April 25, 2018. The respondent counter-offered with $20,000.00 on April 27, 2018, which the applicant accepted on his mother’s recommendation. The sum of $17,000.00 represented Medical/Rehabilitation benefits while the $3,000.00 represented IRB.
9[P.W.’s] evidence was that she was aware that this was a full and final settlement of all claims made by the applicant, and that she had reviewed all settlement documents, including a release. She admitted that no steps were taken within two days of the agreement to rescind it. She admitted that she discussed the settlement with her son and did not bring up the IRB issue.
10The applicant entered into a full and final settlement for $20,000.00 of all claims with the respondent on May 3, 2018, on the recommendation of his mother. He admitted in his evidence that he signed the Release but never read it carefully. He relied on his mother’s recommendations. Once his mother took over the file, he had no talks with the respondent. The applicant ‘s position is that he thought he was settling the medical and rehabilitation claims only, on a full and final basis, and not the IRB.
11At the time of the settlement, Dr. S. Wong, on a section 44 physiatry examination, noted in his report dated May 24, 2018, that the applicant continues to suffer a substantial inability to perform the essential tasks, of his pre-collision employment.1 Dr. I. Altrows, psychologist, assessing the applicant for entitlement to ODSP, concluded that the applicant “is not capable of normal functional ability in activities of daily living, normal social activities or vocational activities.”2 The applicant also had financial problems at the time of the settlement.
12Both counsel agreed that the amount of the IRB was not an issue, nor was the applicant’s capacity to understand written settlement documents.
13Sarah McGray, an adjuster with the respondent, gave evidence on behalf of the respondent. Her evidence was that she dealt only with the applicant’s mother on the settlement and felt that the mother had a good grasp of the accident benefits issues. She indicated that there was never any discussion about the applicant’s mental capacity. She didn’t see any issue affecting any settlement, if the applicant had psychological problems, because the applicant was being guided by his mother as to settlement. Her evidence was that the settlement covered all issues including the IRB, on a full and final basis.
14The release was made up of The Full and Final release and Settlement Disclosure Notice document. The Release was the standard release document and clearly set out that it is a release for all statutory accident benefits including past, present, and future. The applicant gave evidence that he signed the Release and initialed all seven pages of the document but did not really read the Release and relied on his mother’s recommendations.
15The Offer to Settle Benefits part of the Release had only the category filled in, for all past and future medical benefits in the amount of $20,000.00. There was nothing noted being paid for an IRB. Sarah McGray gave evidence that the settlement included both the sum of $17,000.00 which represented Medical/Rehabilitation benefits, and $3,000.00, which represented IRB. This was the easiest way to set up the settlement for internal purposes.
16There was no dispute by either party that the applicant had not returned the moneys ($20,000.00) given to him by the respondent, nor did the applicant within two business days elect to rescind the agreement.
Applicant’s Position
17The applicant’s position is that he accepts the medical/rehabilitation settlement which he claims was in the amount of $20,000.00. He does not want the settlement of these issues rescinded. His position is that the IRB was not dealt with and therefore there was no meeting of the minds on this issue. The issue of the IRB is, therefore, an outstanding issue to be dealt with between the parties. The applicant’s alternate position is that the Tribunal has equitable jurisdiction to use the various protections available at common law to set aside a contract. The applicant is claiming that the Release was unconscionable because there was misunderstanding as to what the applicant thought he was signing, and therefore the Release should be set aside.
Respondent’s Position
18The respondent’s position is that the settlement was for both the medical/rehabilitation benefits and the IRB. The respondent’s position is that the applicant failed to follow the legislative procedure for setting aside the settlement and therefore can’t proceed further. The respondent also argues that the Tribunal has no equitable jurisdiction.
ANALYSIS
Was the Release a valid contract for all benefits claimed or just for the Medical/Rehabilitation benefits?
19I agree with the respondent. The evidence is clear that the parties’ intention was a full and final release of all benefits claimed. The evidence of both the applicant’s mother and Sarah McGray make clear that the Release included all benefits claimed, including the sum of $3,000.00 for the IRB. The evidence was clear that the applicant’s mother had the authority to negotiate a settlement on behalf of her son of all benefits, and that she recommended to the applicant the final settlement, which the applicant accepted.
20I therefore find that there was a meeting of the minds on all benefits claimed and that the Release met the requirement of the “meeting of the minds” for a valid contract to be created.
Was there a capacity or duress issue, to prevent the Release from being a valid contract?
21A contract may be void from the beginning (“ab initio”) if there is a capacity issue or duress issue that affected the making of a contract. Both counsel agreed that there was no capacity issue with the applicant.3
22The applicant, however, submitted two medical reports. One report was a physiatry examination by Dr. S. Wong, whose report dated May 24, 2018 opined that the applicant continued to suffer a substantial inability to perform the essential tasks of his pre-collision employment as a truck driver. The second report dated June 20, 2018 by Dr. I. Altrows, for the purposes of assessing the applicant’s entitlement to ODSP, concluded that the applicant was not capable of normal functional abilities in activities of daily living, normal social activities or vocational activities.
23Neither report addressed directly the issue of mental capacity of the applicant. A party entering a contract is entitled to rely on a general presumption of capacity unless there are reasonable grounds to believe that the person is incapable.4
24I find that there is no evidence to indicate that the applicant had a capacity problem. Even if the applicant had a capacity issue, it would not have any relevance to the validity of the Release. The mother, who was an experienced claims adjuster, did all of the negotiations in what she thought was the best interest of the applicant. The applicant relied on the recommendations of the mother, and did not even bother to read the Release.
25There is no evidence that there was any duress put on the applicant to sign. He signed on the recommendation of his mother.
Equitable Jurisdiction of the Tribunal
26It is clear law that the powers of any tribunal are determined by the provisions of the statute that created the tribunal.5 When all of the Acts that affect the Licence Appeal Tribunal (LAT) are reviewed, those Acts being the Licence Appeal Tribunal Act S.O.1999 C 12 Schedule G, the Statutory Powers Procedure Act RSO 1990 cS.22, the Judicial Review Procedure Act, R.S.O. 1990 C 11 and the Common Rules of Practice and Procedure October 2, 2017, it is clear that these Acts and Rules do not give LAT any equitable jurisdiction. This means that any equitable remedies like recession of a contract are not available to LAT, unless we can find them in some other legislation given to LAT.
27Even if the Tribunal had equitable jurisdiction to set aside an agreement as unconscionable, the applicant would have had to prove that the agreement was unconscionable because; it was grossly unfair; that he did not have proper legal or other advise; that there was an overwhelming imbalance of power because of some disability that the applicant had; and that the applicant was taken advantage of.6 The evidence shows that the applicant turned over the negotiations of the settlement of his claim to his mother, who had 15 years experience as a claims adjuster in the accident benefits field. The mother’s evidence was that the best result to obtain in this settlement was $40,00.00. She offered to settle at $25,000.00 and the settlement was finalized at $20,000.00. Any Tribunal or court would find that there was nothing unconscionable with the process, or the end result of the settlement, that would have satisfied the court’s criteria for setting aside the agreement.
Other Legislation-Regulation 664 of the Insurance Act
28There is a settlement Regulation that does relate to the settlement of accident benefits claims, being Reg. 664 R.S.O. 1990. (Regulation) This Regulation provides a framework for agreements that finally dispose of a claim or a dispute in respect of a person’s entitlement to Statutory Accident Benefits (SABS). Section 9.1(4) of the regulation states that an insured is permitted to rescind a settlement within two business days after the insured person signs the Final Release and Settlement Disclosure Notice. The “cooling off period” allows for second thoughts by an insured. The actual Settlement Disclosure Notice document, pursuant to regulation 664, makes it clear that the person signing it has two business days to change their minds, and by written letter, give notice to the office of the insurer that the agreement is being rescinded.i
29Section 9(8) of the Regulation prevents any person from applying to the Licence Appeal Tribunal under section 280(2) of the Insurance 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.
30It is not disputed by the applicant that he did not rescind the Release by giving notice to the office of the insurer in writing. It is not disputed by the applicant that he did not return the moneys paid to him in the amount of $20,000.00.
31I find therefore that the applicant has not met the requirements of the Regulation as to notice and return of the moneys.
COSTS
32Rule 19 of the Common Rules of Practice and Procedure permit a tribunal to grant costs against a party, where a party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith. The respondent has asked for costs against the applicant, because the applicant has made an application for an order to rescind the agreement with the respondent. The respondent has not established on a balance of probabilities the applicant has acted in bad faith or otherwise any conduct by the applicant that would attract a costs award. The respondent’s application for costs is dismissed.
Released: December 17, 2019
Robert Watt
Adjudicator
Footnotes
- Applicant’s Brief of Documents Tab 6
- Ibid tab9
- N.K. and Certas Home and Auto Insurance Tribunal file 17-004337/AABS and 17-004343/AABS adjudicator Maedel
- Wachmenko and Primmum (FASO Appeal PO5-00018 director’s delegate Makepeace July 19 2006
- ATCO Gas & Pipelines v Alberta, 2006 SCC p51/Y.D.v.Aviva Insurance Canada 2017 CanLII 84463 (ONLAT) para 15
- Titus v. William Cooke Enterprises Inc. 2007 ONCA par 38
- [Footnote missing in original document]
