SUPERIOR COURT OF JUSTICE - ONTARIO

Angela Pickrem (formerly Angela Milbury), Plaintiff

• AND -

Belair Insurance Company Inc., Defendants

COURT FILE NO.: Court File 10-18965SR
DATE: 2012/03/01

BEFORE: BROAD J.

COUNSEL:
Arthur Camporese, for the Plaintiff
Daniel Rosenkrantz, for the Defendant

HEARD: February 27, 2012

E N D O R S E M E N T

Background

1 . In this action the Plaintiff claims entitlement to Statutory Accident Benefits in respect of injuries sustained by her in a motor vehicle collision on May 25, 2000. The Plaintiff seeks a declaration that the Full and Final Release executed by her in favour of the Defendant on January 26, 2001 did not comply with Section 9.1(2) of O.Reg 664, as amended by O. Reg. 780/93 (the “Settlement Regulation”) and that she is therefore entitled to rescind the settlement under Section 9.1(4) of the Settlement Regulation.

2 . The Plaintiff moves for partial summary judgment for a declaration that the Release does not comply with the Settlement Regulation, that the Release is rescinded and that the restriction on her right to litigate the action is void. The Defendant has brought a Cross-Motion for summary judgment on the basis that the Release is valid and binding on the Plaintiff, or in the alternative, on the basis that the action is statute-barred, and in the further alternative, for a stay of the action until the amount paid under the 2001 settlement, plus interest, has been repaid.

Issues

3 . The issues are as follows:

i. Did the Full and Final Release executed by the Plaintiff comply with the requirements of the Settlement Regulation?

ii. Is the Plaintiff entitled to rescind the settlement pursuant to the Settlement Regulation and to proceed with the action?

iii. Is the action statute-barred?

iv. Should the action be stayed pending repayment of the settlement amount?

Discussion

(a) Compliance with Notice Requirements

4 . Section 9.1(2) of the Settlement Regulation provided, at the time of the settlement, that before a settlement is entered into the insurer shall give the insured person a written notice which contains various enumerated information. The Plaintiff’s position is that the Defendant did not fully and properly provide the information referred to in paragraphs 1 and 5 of s. 9.1(2). Paragraph 1 requires the insurer to provide a description of the benefits that may be available to the insured under the Statutory Accident Benefits Schedule (SABS) and any other benefits that may be available to the insured person under a contract of automobile insurance. Paragraph 5 provides inter alia that if the settlement provides for payment of a lump sum with respect to a benefit under the SABS that is not a lump sum benefit, the insurer must provide 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. Subsection 9.1(4) of the Settlement Regulation, as it existed at the time of the settlement, provided that if the insured failed to comply with subsection (2) the insurance may rescind the settlement by written notice to the insurer.

5 . With respect to paragraph 5 of s. 9.1(2), the notice given by the Defendant to the Plaintiff, which accompanied the Full and Final Release, provided in respect of “Weekly Benefits” as follows:

“$53.11 per week, payable for life with adjustment at age 65. On the basis of a life expectancy of a further 0 years, this will provide for a commuted value of $76,471.19.”

6 . A leading case with respect to the effect of non-compliance by an insurer with the notice requirements of the Settlement Regulation is Opoku v Pal (1999) , 49 O.R. (3d) 100 (SCJ) , aff’d (2000) , 49 O.R. (3d) 97 (C.A.) . In Opoku, Spiegel, J. stated, with reference to the commuted value requirement (CVR), at paragraph 69 “the main purpose of the CVR was to require the insurer to provide the insured with relevant information to assist the insured in making a meaningful comparison between the proposed lump sum payment and the real value of the periodic benefits, or to put it colloquially, to make a comparison on an ‘apples to apples basis.’” On the basis of the finding in Opoku, it is not sufficient to simply provide a figure in isolation as a conclusion, in this case $76,471.19. Rather the insurer must go further to provide the variables which were utilized to arrive at the commuted value figure, such as the amounts and timing of the benefits that the insurer assumed would otherwise be paid if they would not be commuted, the amount by which the payments would have been increased in the future to offset inflation, the mortality and interest rate assumptions utilized in the calculations and an explanation as to how the figure was arrived at (see Opoku at paragraphs 52-53).

7 . Mr. Rosenkrantz argued on behalf of the Defendant that if there was non-compliance in this case, it was of a technical nature and did not affect the Plaintiff’s decision to accept the settlement. I find that this is not the test. Although it is acknowledged that not every non-compliance with the notice requirements will trigger a rescission right after the cooling-off period in the Settlement Regulation, the question of where, on the spectrum from non-material technical non-compliance to minimal or total non-compliance, a rescission right is triggered must be viewed in the context of the object and purpose of the notice requirement. As stated by Lederman J. in Navage v Pilot Insurance Co. , relying on the case of Smith v. Co-operators General Insurance Co. , one of the main objectives of insurance law is consumer protection, and accordingly there is an obligation on the part of an insurer to provide a description on the benefits in straight-forward and clear language directed towards an unsophisticated person.

8 . The Settlement Regulation was designed to impose a discipline on insurers to provide a full and consistent level of disclosure to permit insured persons, regardless of their individual and subjective motivations and sophistication, to compare what they are being offered as a settlement to what may be otherwise potentially available to them under the SABS. To state a figure as a conclusion, even if it is higher than the insured could ever achieve under the SABS, without providing the relevant explanation as to how the figure was arrived at, is in my view, not sufficient.

(b) Right to Rescind Settlement

9 . I find that the non-compliance of the Defendant with the requirements of paragraph 5 of section 9.1(2) of the Settlement Regulation triggered a right in the Plaintiff under subsection 9.1(4) to rescind the settlement. In light of this, it is not necessary for me to rule on whether there was non-compliance with paragraph 1 of section 9.1(2).

(c) Limitation Period

10 . Justice Lederman held in Navage , at paragraph 21 , that there is no limitation period which applies to an insured person’s right to rescind a settlement that does not comply with section 9.1(2) of the Settlement Regulation. Mr. Rosenkrantz argues that this finding did not go far enough as the Plaintiff still has to contend with the limitation period in section 281.1 of the Insurance Act, R.S.O. 1990, c. I 8 , which requires a mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 to be commenced within two years after the insurer’s refusal to pay the benefit claimed, which he says was not done in this case.

11 . The difficult question becomes when has there been a “refusal” on behalf of the Defendant to the pay the benefit in order to trigger the commencement of the limitation period. Mr. Rosenkrantz argues that the requirement of an express “refusal” is superfluous because the Defendant believed that the claims of the Plaintiff had been released.

12 . There is a principle of finality which the Court may have regard to in appropriate circumstances, and limitation periods are meant to be enforced in order to promote the finality principle. However, in order to be effective, a limitation period must have the requisite degree of certainty and not be susceptible to conflicting interpretations. In my view, a “refusal” connotes some positive action or communication on the part of the insurer. The language is not capable of including an “implied” or “deemed” refusal on the part of the insurer for the purposes of triggering the commencement of the limitation period.

13 . Mr. Camporese acknowledged in argument that the right of rescission in subsection 9.1(4) is capable of being exercised at any time without any time limit. Although this might be regarded as being potentially unfair and against any notion of finality, it is a result which is driven by the failure of the legislature to provide for a time limit for the exercise of the rescission right under subsection 9.1(4). It is not open to the Court to create a time limit where none exists in the legislation.

14 . Mr. Rosenkrantz acknowledged in argument that since a “refusal” is required in these circumstances to commence a limitation period under the former Limitations Act, R.S.O. 1990, c. L.15 , his client’s position is not advanced by reference to that Act.

15 . Mr. Rosenkrantz argues that even if there was not a “refusal” of income replacement benefits, there was a refusal of housekeeping and attendant care benefits, as set forth in the Affidavit of David Wilcox. Although Mr. Wilcox deposed at paragraphs 43 and 44 of his Affidavit that these benefits were never paid since first applied for in 2000, I do not see evidence of a clear and express refusal of any benefits. It may be that at trial there will be evidence of a refusal to pay benefits, sufficient to support a limitation defence. However, on the record before me, there is insufficient evidence of a “refusal” to make a finding that the action is statute –barred.

(d) Stay of Action Pending Repayment of Settlement Amount

16 . Subsection 9.1(7) of the current Settlement Regulation requires that, in rescinding a settlement under subsection (4) or (5), an insured person shall return “any money received by the insured person as consideration for the settlement.” If this is not done it is appropriate to stay the action until the repayment is completed (see Lindsay v Martin and York Fire and Casualty Insurance Company ).

17 . Curiously there is no mention of any requirement to pay any interest on the amount to be repaid and I do not believe that it is possible or appropriate to read such a requirement into the regulation.

18 . There is no evidence on the record before me that the Plaintiff has repaid any part of the money received by her on the settlement.

A. Disposition

19 . On the basis of the foregoing it is:

i. Declared that the Full and Final Release signed by the Plaintiff on January 26, 2001 does not comply with the requirements of Section 9.1.(2) of O.Reg. 664, as amended by O.Reg. 780/93;

ii. Declared that the settlement set out in the said Release is rescinded pursuant to Section 9.1.(5) of O.Reg 664, as amended by O.Reg. 780/93 and O.Reg 483/01, s. 1;

iii. Declared that the restriction on the Plaintiff’s right to litigate the action is void in accordance with Section 9.1.(5) of O.Reg. 664, as amended by O.Reg. 780/93;

iv. Ordered that the action is stayed pending repayment by the Plaintiff to the Defendant of the money received by the Plaintiff as consideration for the settlement represented by the said Release, in the sum of $7,500.00, pursuant to section 9.1.(7) of O.Reg. 664, as amended by O. Reg 780/93 and O. Reg. 483/01, s.1.;

v. Ordered that the balance of the Defendant’s Cross-Motion for summary judgment is dismissed; and

20 . Counsel may make brief written submissions with respect to costs of the motion within two weeks of the release of this Endorsement.

BROAD J.

Released: March 1, 2012