OSHAWA
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Raymond Chauvette, Plaintiff
and
Madonna Massey and Gore Mutual Insurance Company, Defendants
BEFORE: The Honourable Madam Justice M.E. Vallee
COUNSEL:
Sandor Csanyi, for the Plaintiff
Brett D. Kodak, for the Defendants
HEARD: June 7, 2013
ENDORSEMENT
1This is a motion brought by the defendants to enforce a settlement agreement regarding payment of accident benefits.
Background
2The plaintiff was involved in a motor vehicle accident on July 2, 2009. There was a dispute regarding his entitlement to accident benefits. An application for mediation, dated April 25, 2011, was filed with the Financial Services Commission of Ontario (FSCO). Counsel began settlement negotiations in June, 2012. Prior to the mediation’s being scheduled, the plaintiff issued a statement of claim on June 21, 2011. The statement of defence was filed on October 13, 2011. The FSCO mediation was scheduled for July 5, 2012. It was adjourned to July 9, 2012 at 5:00 pm as negotiations were continuing. In the afternoon of July 9, 2012, before the mediation occurred, a settlement was reached in the amount of $33,250. The mediator was advised of the settlement and issued a report dated July 9, 2012 confirming the settlement.
3On July 10, 2012, the defendants wrote to the plaintiff and enclosed the documents required to be signed to effect the settlement. The plaintiff requested that a settlement disclosure notice be sent for signature. The defendants replied that it was not necessary because the file was in litigation as opposed to arbitration. Subsequently, the defendants decided they wanted the plaintiff to sign a settlement disclosure notice and sent one to the plaintiff. The notice is required to contain a statement that the insured person may rescind the settlement within two days after signing the notice or the release, whichever is later, by delivering a written notice to the insurer’s representative.
4On July 11, 2012, the plaintiff wrote to the defendants and stated that he was unable to effect the settlement as there were inconsistencies between the plaintiff’s information and the benefits that had been paid. The plaintiff requested a full copy of his accident benefits file. This was provided by the defendants. The defendants wrote three letters to the plaintiff, dated July 12, 2012, August 14, 2012 and September 14, 2012, requesting the signed settlement documents. The plaintiff did not respond.
5The plaintiff retained new counsel on September 28, 2012 who wrote to the defendants to advise of this. The defendants sent five letters to the plaintiff, dated November 6, 2012, November 26, 2012, December 7, 2012, February 1, 2013 and February 15, 2013, to inquire about the settlement documents. The plaintiff did not respond to those letters. The defendants then brought this motion.
Issue
6Was the settlement agreement reached during mediation such that Regulation 664, 9.1(1)(5) of the Insurance Act, Automobile Insurance R.R.O. 1990 applies? This section allows a claimant a two day “cooling off” period in which he or she may rescind acceptance of the settlement offer. Was the settlement reached during litigation such that the regulation does not apply?
Analysis
7The defendants argue that the settlement was reached during the litigation process and not during mediation, as it was not reached as a result of the FSCO mediation. Settlement negotiations began prior to mediation. Therefore, the Regulation does not apply and the two day cooling off period is not available to the plaintiff. The settlement that was reached on July 9, 2012 is binding on the plaintiff and ought to be enforced.
8The plaintiff argues that mediation has several phases. It had been initiated and a date was set. This was adjourned to allow the parties further time to negotiate. The settlement was reached on the afternoon of the same day that the mediation was scheduled to occur. Accordingly, settlement was reached during the mediation process. The plaintiff points out several inconsistencies in the defendants’ position. The Insurance Act requires parties to mediate before issuing a claim. The mediation process had been initiated; however, the parties had not attended a mediation session before the claim was issued. Both counsel agreed that the claim was issued before mediation because a significant backlog existed. In paragraph 9 of the statement of defence, the defendants plead that the benefits have not been mediated; therefore, the claim is a nullity. After the settlement was reached, the defendants required the plaintiff to sign a settlement disclosure notice. This document is not required in the litigation process. The plaintiff argues that the defendants’ requiring the notice to be signed indicates that the defendants considered that the settlement occurred during the mediation process. Accordingly, the two day cooling off process applies. The plaintiff provided notice appropriately during the two day period that it was rescinding acceptance of the settlement offer and should not be bound by it.
9The plaintiff relies on Phillips v. CGU Insurance (2004) 2004 7056 (ON SC), 72 O.R. (3d) 447, a decision of the Ontario Superior Court of Justice. A settlement was reached. Both parties were represented and were in litigation. The defendants provided the concluding documents and a settlement disclosure notice which contained the two day cooling off period. The court concluded that if the defendants had not provided the notice, there would be an enforceable settlement. It was not needed as the parties were in litigation and represented. Nevertheless, because the defendants provided the notice and elected to proceed under the section 9.1 regime, it was “stuck with it” and the two day cooling off period applied.
10The defendants rely on Igbokwe v. HB Group Insurance Management Ltd. (2001), 2001 3804 (ON CA), 55 O.R. (3rd) 313 (C.A.) (leave to appeal to the Supreme Court of Canada dismissed, [2001]S.C.C.A. No. 470). In this matter, the plaintiff made an offer to settle which included an amount for costs on a partial indemnity basis. The defendant accepted the offer and wanted the costs to be assessed. The plaintiff took the position that the settlement was not binding because the defendant had not sent a settlement disclosure notice. The judge hearing the motion agreed. The Court of Appeal disagreed. It considered the purpose of section 9.1 and commented that the notice was designed to protect self-represented parties and provide them with adequate information before the commencement of an action. It was never designed to give special rights or impose obligations on parties settling court proceedings.
11The plaintiff argues that Igbokwe can be distinguished from this matter. In the matter at hand, the defendants sent the notice and requested that the plaintiff sign it. In Igbokwe, the plaintiff argued that the notice should have been sent.
Decision
12The most important factor to consider is the purpose of section 9.1 and the settlement disclosure notice. As the Court of Appeal stated in Igbokwe, the notice is designed to protect self-represented parties, not parties who have counsel. A party who has counsel, such as the plaintiff in this matter, does not require a two day cooling off period in which he or she can rescind acceptance of an offer. The plaintiff accepted the offer on the advice of counsel. Although the defendants sent the notice along with the settlement documents, it was not necessary. While the court in Phillips determined that once the notice was sent, the defendant was “stuck with it,” the Court of Appeal’s reasoning in Igbokwe prevails. Accordingly, the defendants’ motion is allowed.
Costs
13Although the defendants are the successful party, no costs shall be awarded to them. They were the author of their own misfortune in sending the notice which was unnecessary. Had they not sent the notice, the motion likely would not have been required.
Justice M.E. Vallee
Released: June 18, 2013
