COURT FILE NO.: 05-19039

DATE: 2012/05/31

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ALBERT HANNA

A. Rudder, for the Plaintiff

Plaintiff

- and -

ANDRZEJ POLANSKI, FRED OWNER, and AVIVA INSURANCE COMPANY of CANADA

N. DiPietro, for the Defendants

Defendants

HEARD: May 23, 2012

The Honourable Mr. Justice H. S. Arrell

JUDGMENT

Introduction:

[1] The defendants bring this motion for summary judgment under R. 20, arguing that as a result of a release signed by the plaintiff, there is no triable issue and the case should be dismissed.

[2] The plaintiff argues that a trial is necessary under the full appreciation test set out in Combined Air Mechanical Services Inc. et al v. William Flesch et al, (2011) ONCA 764.

Facts:

[3] The plaintiff was a passenger in a vehicle that came into collision with a vehicle owned and operated by the defendants, on May 11, 2004. Aviva has been released from the action.

[4] The defendants were insured by Old Republic Insurance Company. It retained Custard Insurance Adjusters to adjust the loss. Tracey Zantingh at Custard was assigned.

[5] On May 17, 2004, the plaintiff, who was not represented, provided a written statement to Ms. Zantingh. He advised that he had not yet sought any medical attention, although was to see his family doctor later that day; he had low back pain and headaches; he had missed only two days from work as a drywall taper.

[6] The clinical notes and records of the family doctor confirm a visit May 17, 2004 with a complaint of low back pain and no treatment was provided. The plaintiff was a “no show” for a follow up appointment on June 2, 2004.

[7] The adjuster had a follow up conversation with the plaintiff on June 23, 2004. He continued to complain of a sore low back but had lost no further time from work, had received no medical treatment and had not applied for statutory accident benefits. Based on this information, the adjuster believed the plaintiff had suffered minor injuries and likely would not meet the threshold then in place under the Insurance Act, which also provided for a $30,000.00 deductible. She reported to Old Republic and received instructions to offer $2,500.00 to resolve the matter.

[8] The adjuster made the offer of $2,500.00 on June 29, 2004 by telephone to the plaintiff.

[9] The adjuster swears, and her evidence remained emphatic through cross examination, that she advised the plaintiff of the definition of threshold, the $30,000 deductible, and the implications of a final release. The plaintiff denies this.

[10] The adjuster also advised the plaintiff he was entitled to seek legal advice regarding the offer.

[11] The plaintiff denies that the adjuster advised him of his right to legal advice, however, he does admit on his own evidence that he rejected the offer and advised the adjuster he was going to seek legal advice, which he subsequently did.

[12] The plaintiff swore that he called a lawyer but is now unsure of the advice he may have been given. He did, however, discuss the accident and the offer. He does swear in his affidavit, that the lawyer told him it was too early for him to be able to give advice regarding the suitability of the offer. As well the lawyer advised he had two years to sue.

[13] The plaintiff then contacted the adjuster on July 23, 2004 and offered to settle for $5,000.00. That offer was passed on to Old Republic who agreed to the amount.

[14] The plaintiff acknowledges attending the adjuster’s office on July 27, 2004 where he executed a final release after having read the document. He received his cheque two days later which he cashed and has not offered to return.

[15] The plaintiff deposes that the adjuster advised him that upon presentation of the offer that it was done as a “good gesture” for his inconvenience. He swears she further advised him his case was not worth much because he was not “dead, crippled, disabled or in a wheel chair.” He further testifies that she advised him his case was not worth more because he had no long term physical impairment issues. She denies any such comments.

[16] The plaintiff deposed that he relied on these statements of the adjuster which he now opines were misleading. He further states that he has suffered damage because he continues to have pain, is still not working to full capacity and has had to hire an assistant in his business.

[17] The plaintiff deposes that he had recently been discharged from bankruptcy, had broken up with a long term companion and was therefore emotionally and financially vulnerable at the time of signing the release. He had a grade 9 education. None of this information was told to the adjuster.

[18] The plaintiff first sought medical attention after the initial visit on May 17, 2004 on November 19, 2004 some six months post accident, at St. Mary’s hospital complaining of back pain. He admitted on discovery he had no medical treatment from the date of the accident until July 2005, some 14 months post accident.

[19] The plaintiff did apply for accident benefits on February 7, 2005 and the Disability Certificate signed by his family doctor on February 28, 2005 indicated his symptoms were low back pain which “first appeared” in November 2004 and that he was not “substantially unable to perform the essential tasks of his employment…”

[20] The plaintiff did not file tax returns for the two years prior to the accident. The year of the accident he reported gross income of $13,139.88; 2005 he reported $30,722.00; 2006 he reported $38,555.00; 2007 he reported $80,541.00.

Analysis:

[21] Rule 20 of the Rules of Civil Procedure, as amended, now states that the court shall grant summary judgment if there is “no genuine issue requiring a trial.” Combined Air Mechanical Services Inc et al v. William Flesch et al (2011) ONCA 764.

[22] The purpose of the new Rule is to eliminate unnecessary trials, not to eliminate all trials. The guiding consideration is whether the summary judgment process, in the circumstances of a given case, will provide an appropriate means for effecting a fair and just resolution of the dispute before the court. Combined Air Mechanical, supra. para. 38.

[23] In order to determine whether the summary judgment process will effect a fair and just resolution I must conclude that I have a full appreciation of the evidence and issues that are required for me to make dispositive findings by way of summary judgment in the case at bar.

Combined Air Mechanical, supra.

[24] The onus is on the moving party to persuade the court that there are no factual or legal issues raised by the parties that require a trial. The court is at liberty to weigh the evidence, evaluate the credibility of a deponent and draw reasonable inferences from the evidence, if it is in the interests of justice to do so.

Combined Air Mechanical, supra.

[25] It is trite law that each party must put its best foot forward with respect to the existence or non-existence of material issues to be tried.

[26] The plaintiff argues that a trial is required to evaluate the credibility of the two witnesses, which in reality are the only witnesses. The plaintiff further argues that the plaintiff should be believed and if so the release set aside as unconscionable, signed under duress or signed as a result of negligent misstatements by the adjuster. The plaintiff in oral submissions abandoned his claim that the release was signed as a result of fraud by the adjuster.

[27] A release is of course a contract which bars any subsequent claims in exchange for valuable consideration, which is usually money. Bourdocekis v. Kanda, [2001] O.J. 3322.

[28] An overarching consideration in the enforcement of settlements is the principle of finality and any attempt to reopen matters which are the subject of a final disposition must be carefully scrutinized. Tsaoussis v. Baetz, 1998 5454 (ON CA), [1998] O.J. No. 3516 (O.C.A.)

[29] The fact that a settlement agreement may not have been a desirable one from the point of view of one party, or the fact that the party may have received poor legal advice, or the fact that the party may later change their mind cannot provide grounds for setting aside the settlement agreement, or a refusal to enforce it.

Robertson v. Walwyer Stodgell Cochrane Naumay Ltd., [1988] B.C.J. No. 485

[30] The releaser must show that the release should be set aside based on general principles of contract law. Robertson, supra.

[31] To set aside an agreement on unconscionability, the Ontario Court of Appeal has said:

“A party relying on the doctrine of unconscionability to set aside a transaction faces a high hurdle. A transaction may, in the eyes of one party, turn out to be foolhardy, burdensome, undesirable or improvident; however this is not enough to cast the mantle of unconscionability over the shoulders of the other party.”

Titus v. William F. Cooke Enterprises Inc., [2002] ONCA 573

[32] The following four elements must all be met in order to set aside a release on the basis that it is unconscionable:

1. A grossly unfair or improvident transaction; and

2. Lack of independent legal advice; and

3. Overwhelming imbalance in bargaining; and

4. Other party’s knowingly taking advantage of the party’s vulnerability

Seguin v. Chaput, [2010] O.J. No. 767

Davis v. Cooper, [2010] O.J. No. 3309

[33] The plaintiff argues he had not reached maximum medical recovery. That, however, does not by itself render such a settlement improvident.

Burkardt v. Gandum, [2004] S.J. No. 582 (C.A.)

[34] To make a determination if a settlement was improvident a court is to look at the information available at the time of the settlement, not at later events or with hindsight.

Griti v. Kingston (City), [2010] O.J. No. 4022

[35] In the case at bar the plaintiff had missed 2 days from work, had seen his doctor only once, had received no medical treatment and was not seeking or scheduled for any. His complaints appeared to be soft tissue in nature and certainly not severe based on his ongoing description. The offer was made 2 1/2 months post accident. It was not, in this court’s opinion, unreasonable for the adjuster to conclude that this was a minor injury. I conclude, that based on the information the plaintiff had provided up to the time that he made the offer of $5,000.00, that such an offer cannot be considered improvident, especially when the $30,000.00 deductible and the verbal threshold under the Insurance Act are factored in.

[36] The plaintiff clearly sought legal advice. It is somewhat incredible that he has such little memory of what the lawyer told him yet vividly remembers all conversations with the adjuster. He admits the lawyer told him it was too early to give an opinion on the value of his claim. He rejected that advice and negotiated a settlement.

[37] Settlement negotiations between a self-represented claimant and an insurance adjuster, is not prime facie evidence of an overwhelming power imbalance. Such a determination is fact specific, and should be made having regard to the claimants conduct throughout the negotiations. I am not persuaded there was any over whelming imbalance in these negotiations. The plaintiff by his own admission knew he could seek legal advice and he did. He was told by the lawyer that it was too early to give an opinion and he elected to disregard that advice and negotiate a settlement which he successfully did on his terms. He was well aware that he did not have to settle because he knew he had 2 years to sue.

[38] There is no evidence before me to suggest that the adjuster knew of the plaintiff’s alleged vulnerability.

[39] I find that the defence has persuaded me that the plaintiff has failed to meet any of the required four criteria needed to set aside a settlement on the basis of unconscionability.

[40] The plaintiff also argues that the settlement should be set aside on the basis that the adjuster engaged in the tort of negligent misrepresentation. The Ontario Court of Appeal in Carom v. Bre-X Minerals Ltd., 2000 16886 (ONCA) listed the 5 elements of the tort as follows:

1. There must be a duty of care; and

2. There must be a representation made that was untrue, inaccurate or misleading; and

3. The representation must have been made negligently; and

4. The representation must be relied on; and

5. Damages must have been suffered as a result of that reliance.

[41] I conclude that the plaintiff is unable to show that the adjuster owed any duty of care on the facts of this case. In Warner (Ramlochan) v. Balsdon et al (2008), 2008 23713 (ON SCDC), 91 O.R. (3^rd) 124 (Div. Ct.) the court stated:

“A duty of care between a third party liability insurer and persons who have made claims against the insurer’s insured would create conflicts of interest. As an indemnity provider, a liability insurer is obligated to defend the interests of its insured and to limiting the liability of its insured. That translates into an effort by the insurer to avoid paying out on claims or minimizing the amounts paid. The insurer also owes a duty to its policy holders to minimize premiums and one way of satisfying that duty is to minimize the number of claims paid, and the amount paid on any claims (D.M. v. Alberta Lawyers Insurance Assn., [2006] A.J. No. 983, 2006 ABQB 598, per Booker J., at paras. 58 and 59). [page 131]

To place a duty of care on a liability insurer vis-à-vis the party making a claim, would require the insurer to breach the duties described above, placing the indemnity insurer in an impossible situation, which would not advance the law or the public interest (D.M. v. Alberta Lawyers Insurance Assn., supra, at para. 60).”

[42] The plaintiff argues that Spiers v. Zurich Insurance Co.,1999 15089 (0N SC) stands for the proposition that the adjuster owed a duty of care to the plaintiff. I disagree. Cavarzan J. in Spiers was dealing with a claim by an insured against his own insurance company, in other words a first party claim rather than a third party claim as in the case at bar. The case is therefore distinguishable on that basis, and does not stand for the proposition argued by plaintiff’s counsel. Regardless, I am bound by Warner, supra.

It is not necessary for me to rule on whether the plaintiff has fulfilled the remaining 4 elements of the tort of negligent misrepresentation.

[43] Finally, the plaintiff argues that he signed the release under duress. There is no evidence of duress, as that has been defined in the authorities, and I reject that argument.

Conclusion:

[44] I conclude that I have a full appreciation of the evidence and issues that is required to make dispositive findings on this summary judgment motion. A trial is not required in the interests of justice. The plaintiff’s case has no chance of success. The parties should not be put to the further expense of a trial. The defendant’s motion is granted and there will be judgment dismissing the plaintiff’s action.

[45] The parties agreed that costs should follow the cause, however, counsel for the plaintiff wanted the defendant’s costs assessed by an assessment officer if they were successful on the motion. No plausible reason was given as to why the parties would benefit from that further expense and delay. I agree with counsel for the defendants that I am in as good a position as an assessment officer to assess costs now and shall to do so.

[46] The defendants are entitled to costs as they have been completely successful on the motion and therefore have had the entire case dismissed. As such they are entitled to costs of the entire action. As defendants they are entitled to partial indemnity costs. The Court of Appeal has stated as follows:

“…This court, following the principle established by the Supreme Court, has repeatedly said that elevated costs are warranted in only two circumstances. The first involves the operation of an offer to settle under rule 49.10, where substantial indemnity costs are explicitly authorized. The second is where the losing party has engaged in behavior worthy of sanction.”

Davies v. Clarington (Municipality) 2009 ONCA 722, [2009] O.J. No. 4236 (O.C.A.) para. 28

[47] I have not been advised of any offers under Rule 49. There is no evidence before me that the losing party has engaged in behavior worthy of sanction.

[48] The defendants have filed a bill of costs for the entire action of approximately $ 28,000.00 inclusive of disbursements on a substantial indemnity basis. This is not an unreasonable amount, for substantial indemnity costs, over the 6 years that the case has been defended and includes pleadings, discoveries, cross-examinations on affidavits, as well as preparations for the above and this motion.

[49] I am mindful of the comments in Combined Air Mechanical, supra., that motions should not be brought too early before the full appreciation test can be met, however, in this case I conclude, given that as the sole issue was the validity of the settlement, that it could have been dealt with earlier and without the need for discoveries.

[50] I have also considered the principles in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291(C.A.) and find that costs to the defendants on a partial indemnity basis, fixed in the amount of $15,000.00 inclusive of disbursements and taxes, in all the circumstances, is fair and reasonable to both sides and within their respective expectations.

___________________________

ARRELL J.

Released: May 31, 2012

COURT FILE NO.: 05-19039

DATE: 2012/05/31

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ALBERT HANNA

Plaintiff

- and -

ANDRZEJ POLANSKI, FRED OWNER, and AVIVA INSURANCE COMPANY OF CANADA

Defendants

REASONS FOR JUDGMENT

Arrell, J.

Released: May 31, 2012