Kibalian v. Wellington Insurance Co.
Indexed as: Kibalian v. Wellington Insurance Co.
52 O.R. (3d) 92
[2001] O.J. No. 239
Court File No. 344/2000
Ontario Superior Court of Justice
Divisional Court
O'Leary, Dunnet and Cosgrove JJ.
January 3, 2001
Insurance--Automobile insurance--Statutory accident benefits --Settlement--Duty of insurer to comply with disclosure requirements of s. 9.1 of Reg. 664 does not end once insured retains solicitor and commences action--R.R.O. 1990, Reg. 664, s. 9.1.
The plaintiff sued the defendant insurer for statutory accident benefits. Counsel for the plaintiff wrote to counsel for the defendant offering to settle the claim. The defendant's counsel accepted the outstanding offer. Counsel for the plaintiff subsequently took the position that there was no settlement because the defendant had not complied with the disclosure requirements of s. 9.1 of R.R.O. 1990, Reg. 664. The defendant brought a motion for judgment in accordance with the terms of the purported settlement. The motion was granted. The plaintiff appealed.
Held, the appeal should be allowed.
The insurer's duty to comply with s. 9.1 of Reg. 664 does not end once the insured retains a solicitor and commences an action or proceeding governed by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Section 9.1 applies even where arbitration or litigation has been resorted to.
APPEAL from an order of Jennings J. (2000), 46 C.P.C. (4th) 342, [2000] I.L.R. 1-3823 (S.C.J.) allowing a motion for judgment.
Cases referred to Igbokwe v. HB Group Insurance Management Ltd. (December 5, 2000), Doc. No. 00-CV-187322 (S.C.J.) Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, s. 281(1), as am. Regulations referred to R.R.O. 1990, Reg. 664 [as am. by O. Reg. 780/93 under the Insurance Act, s. 7], s. 9.1 Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 1.02(1)
Altor Shields, for appellant. Lawrence M. Foy, for respondent.
The judgment of the court was delivered by
[1] O'LEARY J. (Orally):--We take the facts of this matter from the words of the motions court judge as follows [at p. 344 C.P.C.]:
Facts
The facts are not in dispute and may be summarized as follows:
(l) The plaintiff, injured in an automobile accident, sued the defendant insurer for Statutory Accident Benefits ("SAB's") in 1996.
(2) On October 25, 1998, the plaintiff's then and current counsel wrote to the defendant's counsel offering to settle the claim on terms set out in the letter. The letter stated that the offer ". . . is a formal offer to settle pursuant to the Rules of Civil Procedure."
(3) On October 5, 1999, the defendant's counsel accepted the outstanding offer by an acceptance in writing.
(4) Not having heard from plaintiff's counsel in response to the acceptance. defendant's counsel wrote on November 11, 1999, calculating the monies due pursuant to the settlement and suggesting a figure for costs.
(5) On December 20, 1999, plaintiff's counsel wrote to the defendant's counsel advising that his client ". . . rescinds any settlement made or purportedly made . . ."
(6) Plaintiff's counsel wrote again on January 11, 2000, stating that there was no settlement because there had been no compliance with section 9.1 of Regulation 664.
Plaintiff's Position
Plaintiff's counsel does not suggest the offer was made other than pursuant to Rule 49, that it had been withdrawn prior to acceptance, or that the acceptance was not in conformity with Rule 49.07(1). It was agreed that both parties had strictly complied with the terms of Rule 49.
What counsel for the plaintiff does submit is that in this case, the subject of which was SAB's, the defendant had to send to the plaintiff the disclosure required by section 9.1(2) of the Regulation either at the time of accepting the offer or at some time thereafter, in order to conclude a binding agreement to settle. Plaintiff's counsel submits that the failure to do that means there was no valid acceptance and, therefore, no settlement.
[2] Undoubtedly, s. 9.1 of R.R.O. 1990, Reg. 664, as amended by O Reg. 780/93 under the Insurance Act is intended to protect insured persons from making improvident settlements of their claims for statutory accident benefits. That section reads as follows:
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.
(2) Before a settlement is entered into between an insurer and an insured person, the insurer shall give the insured person a written notice that contains the following:
A description of the benefits that may be available to the insured person under the Statutory Accident Benefits Schedule and any other benefits that may be available to the insured person under a contract of automobile insurance.
A description of the impact of the settlement on the benefits described under paragraph 1, including 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 as provided in sections 280 to 284 of the Act.
A statement that the insured person may rescind the settlement within two business days after the settlement is entered into by delivering a written notice to the insurer.
A statement that the tax implications of the settlement may be different from the tax implications of the benefits described under paragraph 1.
If the settlement provides for the payment of a lump sum in an amount offered by the insurer and, with respect to a benefit under the Statutory Accident Benefits Schedule that is not a lump sum benefit, the settlement contains a restriction on the insured person's right to mediate, litigate, arbitrate, appeal or apply to vary an order as provided in sections 280 to 284 of the Act, a statement of the insurer's estimate of the commuted value of the benefit and an explanation of how the insurer determined the commuted value.
A statement advising the insured person to consider seeking independent legal, financial and medical advice before entering into the settlement.
(3) A settlement may be rescinded by the insured person, within two business days after the settlement is entered into, by delivering a written notice to the insurer.
(4) If the insurer did not comply with subsection (2), the insured person may rescind the settlement after the period mentioned in subsection (3) by delivering a written notice to the insurer.
(5) A restriction on an insured person's right to mediate, litigate, arbitrate, appeal or apply to vary an order as provided in 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; and
(b) the insurer complied with subsection (2).
[3] It is argued by Wellington Insurance Company that the need for protection of the insured disappears and that in any event s. 9.1 no longer applies once the insured retains a solicitor and commences an action or proceeding governed by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[4] We do not accept that the need for such protection is lost once litigation is commenced by an insured. An insured may commence the action acting for himself, without retaining a solicitor, or he may discharge the solicitor during the litigation and continue it, acting for himself. Even if the insured retains a solicitor to commence an action and the solicitor is not discharged, it may still be important to protect the insured against an improvident settlement, that he receive from the insurance company the information required by s. 9.1.
[5] As to whether s. 9.1 no longer applies once litigation is commenced, [that] is more difficult to answer.
[6] Is it apparent from reading s. 9.1 that it is intended to apply only where an action has not been commenced? We see no words that so indicate. Rather, we see words that indicate the section applies even where arbitration or litigation has been resorted to. Subsection 9.1(2)5. provides that:
9.1(2)5. If . . . the settlement contains a restriction on the insured person's right to mediate, litigate, arbitrate, appeal or apply to vary an order as provided in sections 280 to 284 of the Act . . . [the insurer must provide] a statement of the insurer's estimate of the commuted value of the [lump sum] benefit [being offered by the insurer] and an explanation of how the insurer determined the commuted value.
[7] These words indicate specifically that s. 9.1 applies where the insured person has referred his dispute to arbitration. If s. 9.1 was no longer to apply once the insured referred his dispute to arbitration, there would have been no need to provide in s. 9.1(2)5. that "if . . . the settlement contains a restriction on the insured person's right to . . . appeal or apply to vary an order . . ." made during the arbitration process, then the insured must supply "a statement of the insurer's estimate of the commuted value of the benefit and an explanation of how the insurer determined the commuted value".
[8] If the section applies during the arbitration process, then surely it was intended to apply during the litigation process. Subsection 281 (1) of the Insurance Act provides:
281(1) Subject to subsection (2),
(a) the insured person may bring a proceeding in a court of competent jurisdiction;
(b) the insured person may refer the issues in dispute to an arbitrator under section 282;
(c) the insurer and the insured person may agree to submit any issue in dispute to any person for arbitration in accordance with the Arbitration Act, 1991.
[9] There is no reason why the insured needs protection from an improvident settlement during the arbitration process but not during the litigation process.
[10] We are aware that the Rules of Civil Procedure provide:
1.02(1) These rules apply to all civil proceedings . . . in the Superior Court of Justice.
[11] The provision in s. 9.1 of the Regulation causes some interference with the provisions in the Rules relating to settlement. But if the insurance company had complied with s. 9.1 at the time of accepting the insured's offer, the settlement would have become complete and final after two days had elapsed, unless within that two days the insured had rescinded the settlement.
[12] We agree with the words of Matlow J. [at para. 3] in the decision of Igbokwe v. HB Group Insurance Management Ltd. (December 5, 2000), Doc. No. 00-CV-187322 (Ont. S.C.J.) [unreported], that:
. . . there is nothing in the wording of section 9.1 which could reasonably lead to the conclusion that it does not equally apply to settlements made pursuant to Rule 49. The same policy considerations would be applicable to both kinds of settlements, including settlements made by claimants acting in person or by counsel. The fact that a claimant represented by counsel may be thought to require less statutory protection than one who is not is not sufficient reason to construe section 9.1 in such a way so as to deprive a represented claimant of the full protection of its provisions.
[13] We therefore allow the appeal. The order of the motions court judge is set aside. The motion by Wellington Insurance Company for judgment is dismissed. Kibalian is to have his costs below fixed at $2,000 and before us fixed at $2,000.
Appeal allowed.