Pope v. Pilot Insurance Company, 2024 ONSC 2932
CITATION: Pope v. Pilot Insurance Company, 2024 ONSC 2932
DIVISIONAL COURT FILE NO.: 563/23
DATE: 20240523
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Myers, Davies, and O’Brien JJ.
BETWEEN:
CLEMENTINE POPE
Appellant
– and –
PILOT INSURANCE COMPANY and THE LICENCE APPEAL TRIBUNAL
Respondents
Allen J. Wynperle, for the Appellant
Kevin H. Griffiths, for Pilot Insurance Company
Douglas Lee and Olivia Filetti, for Licence Appeal Tribunal
HEARD at Toronto: May 15, 2024
FL MYERS J.
REASONS FOR DECISION
Background
[1] Ms. Pope appeals from the reconsideration decision by Licence Appeal Tribunal Adjudicator Tavlin Kaur dated June 5, 2023 dismissing Ms. Pope’s request for reconsideration of the original decision of the Adjudicator dated March 13, 2023.
[2] The Tribunal denied Ms. Pope’s entitlement to rescind her settlement of a claim for Statutory Accident Benefits in December 2002, concerning a motor vehicle accident that occurred in 1995. Under the settlement, Ms. Pope received medical and rehabilitation benefits of $2,500 in relation to her injuries suffered in the accident.
[3] In early 2022, Ms. Pope delivered to her insurer a treatment plan seeking payment of another $2,600 in respect of injuries that arose from the 1995 accident. The insurer denied the claim on the basis that Ms. Pope had released her entitlement to claim future benefits as part of the settlement 20 years earlier.
[4] Upon the insurer relying on the earlier settlement, Ms. Pope claimed that the settlement documents given to her by the insurer in 2002 did not provide her with the mandatory information required by the applicable regulation in force at the time. This, she claimed, entitled her to rescind the settlement under the applicable regulation.
[5] Ms. Pope then informed the insurer that she was exercising her right to rescind the settlement. In doing so, she returned to the insurer the funds it paid to her in 2002 as required under the regulatory scheme.
[6] Ms. Pope then applied to the Tribunal to dispute the insurer’s rejection of her new treatment plan.
[7] The Tribunal held that the insurer’s 2002 settlement notice met the applicable regulatory requirements and therefore Ms. Pope did not have a right to rescind the settlement after the two-day cooling-off period provided in the regulation (let alone two decades later).
[8] Ms. Pope submits that the Tribunal reversed the applicable burden of proof and misapplied the legal tests requiring the insurer’s notice form to comply strictly with the regulatory regime.
[9] For the reasons that follow, I dismiss Ms. Pope’s appeal from the Tribunal’s decision that she was not entitled to rescind the settlement and that the insurer was therefore entitled to reject her new treatment plan.
The Regulatory Scheme for SABs Settlements
[10] SABs settlements are governed by s. 9.1 of R.R.O. 1990, Reg. 664 under the Insurance Act, R.S.O. 1990, c I.8. The relevant portions of the section says:
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) The insurer shall give the insured person a written disclosure notice, signed by the insurer, with respect to the settlement.
(3) The disclosure notice shall be in a form approved by the Chief Executive Officer and shall contain the following information:
The insurer’s offer with respect to the settlement.
A description of the benefits that may be available to the insured person under the Statutory Accident Benefits Schedule.
A statement that the insured person may, 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, 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.
A description of the consequences of the settlement on the benefits described under paragraph 2 including,
i. a statement of the restrictions contained in the settlement on the insured person’s right to apply to the Licence Appeal Tribunal under subsection 280 (2) of the Act or appeal from a decision of the Licence Appeal Tribunal,
ii. a statement that the tax implications of the settlement may be different from the tax implications of the benefits described under paragraph 2 and.
iii. a statement that the insured person may not apply to the Licence Appeal Tribunal under subsection 280 (2) of the Act with respect to benefits that were the subject of a settlement or a purported settlement unless the insured person has returned the money received as consideration for the settlement.
A statement advising the insured person to consider seeking independent legal, financial and medical advice before entering into the settlement.
A statement for signature by the insured person acknowledging that he or she has read the disclosure notice and considered seeking independent legal, financial and medical advice before entering into the settlement.
(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.
(5) 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).
(6) Subsections (4) and (5) do not apply with respect to a settlement that has been approved by a court under Rule 7 of the Rules of Civil Procedure (Parties under Disability).
(7) The insured person shall rescind a 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.
(8) No person may apply to the Licence Appeal Tribunal under subsection 280 (2) of the 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.
Jurisdiction
[11] This court has jurisdiction over this appeal pursuant to s. 11(1) of the Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, Sched. G. Under s. 11 (6) of the statute, the court’s jurisdiction on appeal is limited to considering questions of law only.
Standard of Review
[12] The court reviews issues of law for correctness and without curial deference: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, at paras. 36-37.
Analysis
The Bright-Line Test
[13] The Statutory Accident Benefits scheme requires that before settling a claim, the insurer must provide information describing the available Statutory Accident Benefits as mandated in s. 9.1 (3). This ensures that the insured knows and understands the rights she is giving up on settling her claim. It is a requirement built on the consumer protection policy of the statutory scheme: Smith v. Co-operators General Insurance Co., 2002 SCC 30, at para. 11.
[14] The parties agree that if the insurer’s disclosure did not meet the requirements of the applicable regulation, then Ms. Pope is entitled to rescind the settlement.[^1]
[15] The burden to prove that the insurer’s disclosure complied with its obligations lies on the insurer. Although it is the insured who seeks to be excused from compliance with documents she executed, the notice forms were prepared and delivered by the insurer to meet its statutory and regulatory obligations. The insurer has the sole and unilateral ability and obligation to meet the mandatory requirements applicable to its notice forms. It is consistent with the consumer protection rationale for the regulatory scheme that the insurer be put to the burden to support its own disclosure documents when they are used to limit the rights of an insured person: Opoku v. Pal, 1999 19913 (ON SC) appeal dismissed, 2000 1539 (ON CA).
[16] Instead of considering whether the insurer’s notice form complied strictly with the regulatory requirements, the appellant submits that the Tribunal considered the matter contextually and then placed a burden of proof on Ms. Pope to show that any apparent insufficiencies in the form factored into her decision to sign the settlement documents and release.
[17] Ms. Pope submits that the Tribunal failed to apply an objective test to determine the adequacy of the insurer’s notice as required by the Supreme Court of Canada in Smith. That case involved the statutory requirements applicable to an insurer’s notice that it was refusing to pay benefits to a claimant. The Court held that the statute should be interpreted as imposing a bright-line test as to what is permissible and impermissible without “undue solicitude for particular circumstances that might operate against claimants in certain cases.” The insurer is required to provide information “in straightforward and clear language, directed towards an unsophisticated person”: Smith, at paras. 14 and 16.
[18] In my view, the Tribunal fell into legal error in stating that the insured bears the burden of proof to establish the adequacy of the insurer’s notice. This is contrary to the holdings in Opoku.
[19] It must not be lost in the analysis; however, there is more than one possible way for a notice to adequately bring home the relevant information to the recipient. In fact, the Supreme Court of Canada found that simply parroting the exact words of the statute may not be sufficient. At para. 13 of Smith, the Court held:
[13] That said, Sharpe J.A. was also properly concerned that claimants would be overwhelmed should insurers opt to simply attach a verbatim reproduction of ss. 279 to 283 of the Insurance Act to the refusal. In fact, it is questionable whether this would qualify as a valid refusal as it would surely run afoul of the consumer protection purpose of the legislation. However, we are not merely restricted to two options, both of which are at opposite ends of the spectrum of possible information. There is middle ground.
[20] In my view, nothing turns on the burden of proof on this appeal. This is not a question of contested fact or the adequacy of evidence to prove a fact in issue. There are regulatory requirements and there is a notice form provided by the insurer. The form meets the requirements or it does not. The burden of proof, in this appeal at least, is a red herring.
The Subjective Materiality of any Non-Disclosure to the Insured is not Relevant
[21] In Opoku, Spiegel J. rejected the argument, that was accepted by the Tribunal below, that the insured may bear a burden of establishing the materiality of any failure of the insurer to meet its disclosure requirements.
Making the subjective materiality of non-disclosure an issue runs afoul of the Supreme Court of Canada’s bright-line test and its specific rejection of consideration of the particular circumstances of the insured.
[22] At the same time, however, in Opoku, Spiegel J. allowed for the possibility that technical and immaterial deficiencies would not deprive a notice of its validity. This is consistent with the Supreme Court of Canada allowing that there is no one right way to give notice. In Opoku, Spiegel J. expressed it this way:
[130] The defendants submit that in Abdool, the court emphasized 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. It does not, in my view, justify imposing on the insured the burden of establishing the materiality of the insurer's non-compliance with s. 9.1(2), in light of the text and purpose of the settlement regulation. However, I wish it to be understood that nothing that I have said is intended to preclude an insurer from enforcing a SABs settlement, if the insurer can establish that the defect in the written notice is merely a technical one which could not have reasonably affected the insured's decision to settle. I leave that to be decided in a case in which that issue arises. However, in this case I have found that the defect in the written notice was not merely technical or a matter of form. Rather, it was a defect that deprived Mr. Opoku of an important substantive right granted to him by the settlement regulation. [Emphasis added.]
[23] The Tribunal placed significant reliance on the Court of Appeal’s decision in Catania v. Scottish & York Insurance Co. Ltd., 2001 24147 (ON CA). This case pre-dated the Supreme Court of Canada’s decision in Smith. At para. 21 of the Catania decision, the Court of Appeal held:
[21] On the particular facts of this case, it may well be that the defendant's failure to comply with s. 9.1(2) had no bearing on the plaintiff's acceptance of the settlement offer. This, however, is not the test in a case such as this where there has not been even minimal compliance with the regulation. (It could be a factor to take into account in a case where there is some degree of compliance.) If it were the test it would, in many cases, be very difficult to apply with any degree of confidence or predictability. The test in s. 9.1(4) and (5), although its application may give rise to some unreasonable or unfair results, in some cases, has the virtue of relative ease of application. Furthermore, it is entirely within the hands of the insurance companies to see that there is compliance with s. 9.1(2). [Emphasis added]
[24] The Tribunal in this case grasped on to the phrase “some degree of compliance” as if that was the applicable measure of disclosure required by the regulatory scheme. However, the quoted paragraph read as a whole makes it clear that the court rejected this measure of “some compliance” as insufficient even if a bright-line test might result in some unreasonable or unfair results in some cases. Bright lines can lack nuance to be sure. But they have their benefits especially where one side has the power to control the outcome and the other side is a more vulnerable consumer. See Navage v. Pilot Insurance Co., 2004 15034 (ON SC), at paras. 17 to 19.
[25] As set out in Smith, the legal standard for measuring the adequacy of the insurer’s notice form was simply whether the insurer’s notice gave the insured the information required by s. 9.1 (3) of the regulation in straightforward and clear language, directed towards an unsophisticated person. It is not sufficient for the insurer to parrot the words of the regulation as that is too inaccessible. There is no one right answer. Technical and immaterial defects will not invalidate a notice.
[26] I now turn to the specific defects alleged in the notice form Ms. Pope signed. As further detailed below, while I find the Adjudicator applied the wrong legal test in this case, I agree with the Tribunal’s finding that the defects in the form are trivial and amount to technical non-compliance that would not result in a substantive misunderstanding.
Specific Defects Alleged
(1) Maximum Benefits
[27] Paragraph 9.1 (3)(2) of the regulation requires the insurer to describe each benefit available to the insured. In Opoku, the Court of Appeal held that this requires a statement of any monetary limits which apply to any particular benefit. It is important to note, however, that since the time that Opoku was decided, the regulation was amended to remove the requirement that the insurer provide a commuted value for benefits that are not payable as a lump sum. The effect of this change was that the notice form no longer needed to be customized precisely to the individual circumstances of each insured.
[28] Ms. Pope submits that the insurer’s form failed to properly set out the maximum medical rehabilitation benefits, income replacement, and education disability benefits available to her.
[29] The notice provided to Ms. Pope said:
Maximum Supplementary Medical and Rehabilitation Benefits
There is a lifetime maximum limit of $1,000,000 for supplementary medical and rehabilitation benefits combined. This limit is indexed yearly. The maximum benefit will depend on the year of the accident.
[30] Ms. Pope says that the insurer failed to deal with HST or to add-in the annual indexing. The notice form told Ms. Pope that her benefits would be indexed. But it did not set out the amount of indexation that Ms. Pope says would have brought her lifetime maximum benefit to approximately $1,040,000.
[31] In addition, Ms. Pope’s counsel submits that the $1 million maximum should have also been expressed in a different sentence from the fact that the benefit remains available for the insured’s full lifetime.
[32] Education and income replacement benefits are described as a percentage of pre-accident income, which makes each readily calculable, but the maximum available for education and income replacement are not included. If someone is settling and, on the formula provided, has a claim below the maximum available benefit, the form provides the claimant with accurate information about their entitlement. If, on the other hand, someone is settling and would, on the formula provided, have a claim that exceeds the maximum, he or she cannot be prejudiced by the maximum not being stated. That is, they might think they were entitled to more than the amount to which they are entitled. There is no risk that they will be misled into thinking they are giving up a claim that is worth more than they understand.
[33] For these issues, the Adjudicator held:
[28] As noted in Smith, it is an insurer's obligation to provide information to an insured in straight-forward and clear language directed towards an unsophisticated person. I find that the descriptions were straight-forward and written in a clear manner. In Opoku, the Court found that the purpose of section 9.1 is to provide a claimant with adequate information prior to the commencement of an action, in order to avoid a quick and uninformed decision as to the benefits the claimant is entitled to receive from the insurer. I agree with the Court and find that the [notice form] provided the applicant with adequate information.
(2) The Explanation of Rescission Rights
[34] Ms. Pope submits that the Tribunal erred in law in failing to follow the decision of the Financial Services Commission of Ontario (“FSCO”) in Aviva Canada Inc. v. Parveen, FSCO P-12-00023 and P12-00024. In that case, an arbitrator, and then FSCO on appeal, held that a near identical form used by the insurer did not comply with the regulatory requirements especially as they related to providing notice of the two-day cooling-off period.
[35] The Tribunal distinguished Parveen on the basis that in that case the settlement and release documents were signed on different days. This created complexity to the determination of the cooling-off period which mattered on the facts of that case. Those facts were not in issue in this case.
[36] The appellant submits that the Adjudicator ought to have followed Parveen as a matter of horizontal stare decisis. That doctrine applies to courts of law. The LAT is not technically bound by decisions of FSCO under the prior regulatory regime. Having said that, however, as discussed in Vavilov, it is appropriate for the court to point out to the tribunal the desirability for the law to evolve and to be applied in a consistent manner.
[37] On page 1 of the notice, the form provides:
IF YOU DO SIGN THIS NOTICE AND A RELEASE YOU HAVE TWO BUSINESS DAYS TO CHANGE YOUR MIND.
[38] On page 4 of the notice, the form says:
IF YOU CHANGE YOUR MIND AFTER AGREEING TO SETTLE YOUR CLAIM BY SIGNING A RELEASE, YOU MUST:
NOTIFY THE INSURER IN WRITING AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED WITHIN 2 BUSINESS DAYS AFTER YOU SIGNED THE RELEASE.
IF YOU SIGNED A RELEASE AND LATER SIGNED THE DISCLOSURE NOTICE, YOU HAVE 2 BUSINESS DAYS FROM WHEN YOU SIGNED THE DISCLOSURE NOTICE IN WHICH TO NOTIFY THE INSURER AND RETURN ANY SETTLEMENT FUNDS YOU RECEIVED.
[39] The notice does not go on to specify that if the insured signs the disclosure notice and then signs a release later, the two-business day period runs from the later date as provided in s. 9.1 (3)(3). But the second paragraph on page 4 says that the period starts on the signing of the release. The final paragraph is only needed to say what happens if the release is signed before the disclosure notice is signed. If the release is signed later, the second paragraph covers the situation already.
(3) Identification of the Insurer and its Representative
[40] Ms. Pope’s counsel submits that the form is not signed by the insurer and does not say that notice of rescission can be given to the insurer or its representative as provided in s. 9.1 (2) and 9.1 (3)(3) of the regulation.
[41] The forms ends with acknowledgement by the insurer and the insured. The insurer’s acknowledgement is certified by its representative whose name is typed into the form. So too is the name of the insurer’s Ombudsman Liaison Officer. Telephone numbers for both were also provided. The insurer’s acknowledgement is not dated. But the insured’s acknowledgement immediately below it is dated. It is only that date that matters for the rescission right.
(4) Independent Legal Advice
[42] Ms. Pope’s counsel submits that the form is void because it encourages Ms. Pope to obtain “legal advice” rather than “independent legal advice” as set out in s. 9.1 (3)(5) of the regulations. This leaves open the question of which option better serves the understanding of an unsophisticated person.
Outcome - Findings of Mixed Fact and Law
[43] The right of appeal in this case is limited to questions of law. As discussed above, I found that the Tribunal applied the wrong burden and, of more significance, the wrong legal test. That undermines the Tribunal’s findings about whether this form, on its facts, met the applicable legal standard.
[44] The usual result in such a case would be for the court to send the matter back to the Tribunal to apply the proper test as delineated by the court.
[45] However, in para. 33 above, I have already quoted para. 28 of the Tribunal’s reasons. Despite legal errors in part of the decision, the Tribunal applied the correct test generally. The final paragraph of the Tribunal’s decision says:
[36] I find that the [notice] is not defective. The deficiencies are technical and there has been some compliance with the requirements set out in section 9.1. I do not find these to be defects to be singularly or cumulatively sufficient to set aside the settlement. In my view, the applicant has not been deprived of important information in relation to the settlement.
[46] In other words, despite using the “some compliance” language, the Tribunal still found that any deficiencies were technical and Ms. Pope was not deprived of important information in relation to the settlement.
[47] Subsection 134 (6) of the Courts of Justice Act limits the remedial authority of a court to which an appeal is taken as follows:
(6) A court to which an appeal is taken shall not direct a new trial unless some substantial wrong or miscarriage of justice has occurred.
[48] In my view, applying the proper test from Smith does not change the outcome. I agree with the Tribunal that any defects in the notice form are technical drafting points that did not deprive Ms. Pope of important information to which she was entitled. I make this finding myself although I am buoyed in my view by the findings of the Tribunal in paras. 28 and 36.
[49] While floodgates arguments are generally not terribly persuasive, this is an issue of concern in this case. The forms used in Ms. Pope’s case were approved by the regulator and were in use for a very long time – perhaps 20 years - until around ten years ago according to counsel for Pilot. The effect of the relief sought by the applicant is potentially to reopen every SABs settlement made with these forms. Everyone who feels undercompensated decades later would be entitled to reopen their settlements. Of course, no one will seek to set aside a settlement if they believe they received more in a settlement than they would be able to prove if the settlement is rescinded. So a very one-sided run on insurers could be unleashed.
[50] If that was the result of a determination that the insurers had failed to provide fair, complete, adequate notice as required by the law, then so be it. But the complaints about the form are largely trivial. Where there is non-compliance, it is technical and without substantive content. I agree with the Tribunal that no one reading the notice form was deprived of important information about a settlement.
[51] The appeal is dismissed.
[52] Counsel agreed that costs of $5,000 all-inclusive would be payable by the unsuccessful party. Therefore the appellant shall pay costs to the respondent of $5,000.
Myers J.
Davies J.
O’Brien J.
Released: May 23, 2024
CITATION: Pope v. Pilot Insurance Company, 2024 ONSC 2932
DIVISIONAL COURT FILE NO.: 563/23
DATE: 20240523
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Myers, Davies, and O’Brien JJ.
BETWEEN:
CLEMENTINE POPE
Appellant
– and –
PILOT INSURANCE COMPANY and THE LICENCE APPEAL TRIBUNAL
Respondents
REASONS FOR DECISION
FL Myers J.
Released: May 23, 2024
[^1]: There was no discussion of timing of an insured’s exercise of her right to rescind or the applicability of doctrines such as laches in this case. I make no finding on the point and proceed as the parties structured their respective submissions.