CITATION: Dominion of Canada v. Ali, 2016 ONSC 4604
COURT FILE NO.: CV-14-1739-00
DATE: 2016-07-13
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
THE DOMINION OF CANADA GENERAL INSURANCE COMPANY and CHIEFTAIN INSURANCE COMPANY
Applicant
- and -
MOONIE ALI
Respondent
Anna-Marie Musson, for the Applicants
Kevin D. Toyne, for the Respondent
HEARD: February 17, 2016, at Brampton, Ontario
Price J.
Reasons For Order
NATURE OF MOTION
[1] Moonie Ali (“Ms. Ali”) elected, under the terms of her automobile insurance policy, to have disputes regarding her claim for accident benefits arising from two collisions in which she had been involved decided by an arbitrator appointed by the Financial Services Commission of Ontario (“FSCO”). On April 23, 2014, the day before the arbitrator was to resume a pre-hearing conference in the case, Ms. Ali’s insurer, The Dominion of Canada General Insurance Company (“Dominion”), applied to this court for a declaration that Ms. Ali had entered into a binding settlement with the insurer a month earlier. At the pre-hearing conference, the arbitrator stayed those proceedings pending the resolution of the insurer’s application to the court. He stated, “If the Court determines that FSCO is the proper body to deal with the settlement issue, either party may contact FSCO and a preliminary issue hearing will be set.”
[2] For the reasons that follow, I find that FSCO is the proper body to decide whether a binding settlement of Ms. Ali’s claims was reached. In summary, s. 281(1) of the Insurance Act[^1] authorizes the insured to choose the body that will make decisions regarding his or her claim. It is an undisputed fact that Ms. Ali, pursuant to s. 282 of the Act, selected the FSCO arbitrator to make the decisions in relation to her claims. Section 20(2) of the Act provides that, in those circumstances, the arbitrator has exclusive jurisdiction to exercise the powers conferred upon him or her under the Act, and to determine all questions of fact or law that arise in any proceeding before him or her. Section 282(3) of the Act provides that the arbitrator shall determine all issues in dispute, whether they are raised by the insured person or the insurer.
[3] Dominion’s application, launched a day before the pre-hearing conference before the arbitrator, has delayed the resolution of Ms. Ali’s claims by almost two years. It prevented the implementation of the Act, which is a form of consumer protection legislation, by preventing the insured’s claims from being dealt with in the most just, expeditious, and least costly manner on their merits. The costs order made will reflect this, and will indemnify Ms. Ali fully for the costs she has incurred.
BACKGROUND FACTS
a) First collision
[4] On October 21, 2009, Ms. Ali was driving her car along a highway in Mississauga when another vehicle struck her car from behind (“the first collision”). Ms. Ali, who had standard benefit coverage under her auto insurance policy at the time of the collision, submitted a claim to Dominion for accident benefits. She hired a paralegal, Rodolfo Higuera, to represent her with respect to her claim.
[5] Ms. Ali submitted a series of disability certificates (“OCF3s”) to Dominion, which indicated that she suffered soft tissue sprains and strains, whiplash, anxiety, depression, headaches, and dizziness, as a result of the collision. She submitted claims for non-earner benefits, medical benefits, housekeeping expenses, attendant care benefits, and clothing and visitation expenses.
b) Termination of benefits arising from first collision
[6] Dominion paid the following amounts to Ms. Ali in response to her claim:
$24,975 in medical benefits;
$8,591 in housekeeping expenses;
$28,740 in attendant care benefits;
$24,969 in non-earner benefits;
$598 in clothing expenses; and
$867 in visitation expenses.
[7] Additionally, Dominion paid Ms. Ali non-earner benefits, at the statutory rate of $185 per week, from April 26, 2010 (after the 26 week deductible period) to May 31, 2012, at which time it terminated the benefits based on the following reports of insurer’s examinations conducted pursuant to section 44 of the Statutory Accident Benefits Schedule, O Reg. 34/10, under the Insurance Act:
Report of Mr. Lurie, a Kinesiologist, dated April 23, 2012;
Report of Dr. West, a Psychologist, dated May 8, 2012; and
Report of Dr. Gwardjan, a physiatrist, dated May 9, 2012.[^2]
c) Mediation of claims arising from first collision
[8] Ms. Ali disputed Dominion’s denial of her claims for non-earner benefits and medical rehabilitation benefits. She did not dispute her entitlement to the remaining accident benefits, including attendant care and housekeeping benefits. She retained a lawyer, Christopher Schiffman of McLeish Orlando, to represent her in her dispute with Dominion.
[9] Mr. Schiffman submitted an Application for Mediation on Ms. Ali’s behalf to FSCO on July 22, 2011. Ms. Ali claimed entitlement to non-earner benefits in the weekly amount of $185, the cost of an orthopaedic assessment, and medical benefits for three treatment plans. The three treatment plans in dispute amounted to a total of $13,225.90.
[10] The parties attended a mediation session at FSCO on January 10, 2012, and July 11, 2012, but were unable to resolve their dispute. Mr. Schiffman represented Ms. Ali throughout the mediation. On October 19, 2012, Ms. Ali submitted an Application for Arbitration, seeking accident benefits in relation to the first collision.
[11] In order to qualify for ongoing non-earner benefits, Ms. Ali was required to prove that she continued to suffer a complete inability to carry on a normal life as a result of the injuries she had sustained in the collision. Dominion took the position, based on the reports of the section 44 assessors, that her injuries did not satisfy this requirement. According to Dominion, Ms. Ali did not provide medical documentation to support her claim that she met the test for non-earner benefits after May 31, 2012.
d) Second collision
[12] On August 9, 2012, Ms. Ali was making a left turn when the car she was driving was struck by another vehicle (“the second collision”). Dominion sent a letter dated August 15, 2012, to Ms. Ali in which it advised her of the potential benefits available to her. It later advised her, by means of an Explanation of Benefits form (OCF 9) dated September 7, 2012, of the benefits she qualified for, including purchased optional benefits. Ms. Ali purchased the optional benefit coverage for attendant care and medical rehabilitation benefits available in relation to the second collision. She was automatically entitled to similar benefits in relation to the first collision, under the standard coverage that her policy provided at the time of that collision.
[13] Ms. Ali’s counsel, McLeish Orlando, submitted a claim on her behalf to Dominion for accident benefits in relation to the second collision, including the purchased optional benefits available to her under her OCF 9 dated September 7, 2012. Ms. Ali submitted a series of OCF3’s, indicating that she suffered cervical disc disorders, soft tissue sprains and strains, chronic post-traumatic headaches, mood and sleep disturbances, chronic pain syndrome, anxiety, depression, headaches, and dizziness, as a result of the collision. She submitted claims for medical benefits, housekeeping expenses, attendant care benefits, and non-earner benefits in relation to the second collision.
[14] Dominion paid $11,510 in medical benefits and $11,174 in non-earner benefits under Ms. Ali’s claim for the second collision. It accepted her claim for non-earner benefits in relation to the second collision, and began paying her benefits as of February 8, 2013. It paid her benefits at the rate of $185 per week up to the date of the alleged settlement on March 18, 2014.
[15] Under the policy, Ms. Ali is entitled to non-earner benefits at the rate of $185 per week, or $9,620 per year, for an additional 12 years, until she reaches age 65, provided she continues to meet the test for disability. At age 65, her benefit would decline to approximately $55.50 per week, or $2,886 per year, payable for the remaining years of her life, provided she continues to meet the test for disability.
[16] Ms. Ali submitted a claim for attendant care benefits following the second collision. Dominion accepted her claim at the policy maximum rate of $3,000 per month for non-catastrophic injuries, subject to confirmation that the expenses were incurred, as provided for in section 3(7) of the Statutory Accident Benefits Schedule (“SABS”).
e) Refusal of claims arising from second collision
[17] Ms. Ali was entitled to attendant care benefits for non-catastrophic injuries for two years, pursuant to section 20(2) of the SABS. Her maximum potential entitlement was $72,000 if she proved that she incurred the expenses in accordance with section 3(7) of the SABS. Dominion says that Ms. Ali failed to provide the necessary documentation or information confirming that she had incurred the expenses, in accordance with section 3(7) of the SABS, with the result that Dominion did not pay those benefits.
[18] Ms. Ali did not purchase optional benefits pursuant to section 28(1)(2)(ii) of the SABS, with the result that she was not entitled to housekeeping benefits.
[19] Ms. Ali retained new counsel, Charles Stitz, of Fireman Steinmetz, who submitted an Application for Mediation on her behalf to FSCO on June 24, 2013, in relation to the second collision. Ms. Ali claimed entitlement to non-earner benefits in the weekly amount of $185, attendant care benefits of $3,000 per month, housekeeping expenses in the amount of $100 per week, and medical benefits for eight treatment plans, in the total amount of $9,636.40.
f) Mediation of claims arising from second collision
[20] The parties participated in a mediation session with a mediator appointed by FSCO on September 13, 2013, in relation to the second collision, but were unable to resolve their dispute. Ms. Ali was represented by Mr. Stitz at that mediation. Mr. Stitz submitted an Application for Arbitration on Ms. Ali’s behalf on September 24, 2013, seeking the payment of benefits in relation to the second collision.
g) Appointment of Arbitrator
[21] FSCO appointed Alec Fadel as Arbitrator to arbitrate Ms. Ali’s claims.
h) The first pre-hearing conference
[22] Ms. Ali and Dominion made an appointment with Mr. Fadel for a pre-hearing conference to take place by telephone on February 10, 2014. Ms. Ali was represented by Mr. Stitz at the conference. Dominion was represented by its lawyer, Anna-Marie Musson. Ms. Ali joined the call after it had begun.
[23] Ms. Ali states that she believed that the call on February 10, 2014, was going to be a mediation, and that she would talk about whether she would receive payment of some of her expenses. She was surprised that the lawyers did not discuss her expenses on the call, and says that most of the call was in legal language she did not understand. At the conference, Arbitrator Fadel ordered the two outstanding Applications for Arbitration to be combined pursuant to Rule 30 of the Dispute Resolution Practice Code.
i) Settlement meeting
[24] Ms. Ali later received a letter from Mr. Stitz, telling her about a mediation that would take place on March 18, 2014. When she received the letter, she called Mr. Stitz’s office and asked to meet with him before the mediation so that they could discuss her expenses, and so that Ms. Ali could give him her receipts. She says that she made this request because she thought that they would be meeting with Ms. Musson to discuss getting some of those expenses paid. Mr. Stitz told her that she could meet with him at 11 a.m. on the day of the mediation.
[25] On March 18, 2014, the parties attended a settlement meeting at the offices of Fireman Steinmetz. Ms. Ali says that she did not take any of her pain medication before leaving for the meeting because she has trouble focusing, concentrating and understanding when she is on the medication. She says that she wanted to be able to understand what Mr. Stitz was saying to her at the mediation.
[26] Ms. Ali arrived at Mr. Stitz’s office late, at around 11:45 a.m. She was in a lot of pain and was crying. She told Mr. Stitz that she had brought all of her receipts and wanted to discuss them with him before the mediation began. She showed him her hand and wrist brace, and told him that she needed his help and wanted him to be stern with Ms. Musson. She says that Mr. Stitz asked her some questions about what had been paid and what had been denied. She says that he did not explain to her what would be happening at the mediation.
[27] Ms. Ali says that her understanding, based on her discussions with Mr. Stitz, was that they would be discussing getting some of her expenses paid to tide her over until the arbitration took place. Before the meeting, Mr. Stitz had informed her that he would be asking for a special award at the arbitration to cover her accommodation expenses. Ms. Ali resides with her daughter, and her bedroom is on the second floor. She uses a cane and glasses. She has trouble walking up and down stairs because of her injuries, and she had slipped on the stairs and hit her head. Mr. Stitz told her that they would take the insurance company to the arbitration so that she could get some money to get her new, less dangerous, accommodation.
[28] Around noon, when Ms. Musson arrived, Mr. Stitz left the room where Mr. Ali was and went to speak with Ms. Musson. Ms. Ali thought that he was only leaving to greet Ms. Musson. However, he was gone a long time. He eventually returned and asked Ms. Ali to come see Ms. Musson. Ms. Ali was expecting Mr. Fadel to arrive also, but Mr. Stitz told her that Mr. Fadel was not coming to the meeting.
[29] When Ms. Ali entered the meeting room, she greeted Ms. Musson. She showed Ms. Musson her hand and wrist brace, and told her that she had submitted expenses for it, and for some dental work. Ms. Musson told her, according to Ms. Ali, that the insurance company does not pay for everything, but that she was there “to try to settle some of the issues” in Ms. Ali’s claims “to get [Ms. Ali] some money today”.
[30] Mr. Stitz escorted Ms. Ali back to his office, and returned to speak with Ms. Musson. He took Ms. Ali back to see Ms. Musson briefly several times, and they talked about her expenses, such as for her medications, therapy, brace, and dental work. Ms. Ali’s medications cost her approximately $1,000 per month, and she needed money for a range of therapies.
[31] Ms. Ali believed they were discussing getting her some money for those expenses, to tide her over until the arbitration took place. Mr. Stitz and Ms. Musson spoke with each other in Ms. Ali’s presence, but they used legal language that Ms. Ali says she did not understand.
[32] The meeting took much longer than Ms. Ali had expected. Her pain grew worse, and she was crying more. She told Mr. Stitz that she wanted to go home to take her medication, but he replied that it would soon be over and that she should stay, so she did.
[33] Mr. Stitz eventually returned to his office and told Ms. Ali that he was getting her $165,000 and that she could walk away with $117,000. He told her that he would take the rest of the money as part of his fee, so that she would owe him less money down the road. Ms. Ali asked him to round the amount up to $120,000 and he said he would.
[34] Mr. Stitz took Ms. Ali back in to see Ms. Musson. He went to hand Ms. Ali some documents and said that she needed to sign them to receive the money from Ms. Musson. Mr. Spitz represented Ms. Ali throughout the settlement meeting, and the release stated that she had sought legal advice.
[35] Ms. Ali says that she was having trouble focusing, owing to her pain, and that she accidentally dropped the documents on the floor. As she picked them up from the ground, she noticed the second bullet point on the first page talked about legal and medical advice. She asked Mr. Stitz what it meant. Mr. Stitz told her that the documents were standard FSCO documents and that she needed to sign them to receive her money from Ms. Musson.
[36] Ms. Ali says that she was in so much pain that all she wanted to do was to go home and take her medication. She was not told that she should read the documents before signing them. She says that she trusted Mr. Stitz, and signed the documents without reading them. She states that even if she had tried to read them at the meeting, she was in so much pain, and was crying so much, that she would have been unable to understand them.
[37] After Ms. Ali signed the documents, Mr. Stitz led her from the room. He told her that he would give her a copy of what she had signed for her records, but she was not, in fact, given a copy of the documents to take when she left. She went downstairs, and says that she cried from the pain while she waited for her ride to take her home.
[38] Dominion states that, at the meeting, the parties agreed to resolve Ms. Ali’s two claims for accident benefits on a full and final basis, for the all-inclusive sum of $165,000. At the settlement meeting, Dominion signed a Full and Final Release and a Settlement Disclosure Notice.
[39] Between the dates of the first and second collision, Dominion’s automobile insurance policy changed with the proclamation of Regulation 34/10 under the Insurance Act. At the time of the first collision, the policy had a base limit of $100,000 for non-earner benefits. At the time of the second collision, the policy had a base limit of $50,000 with an optional benefit of a further $50,000 available. It is not disputed that Ms. Ali exercised her option for this benefit, which extended her coverage under the second policy to $100,000.
[40] The Full and Final Release referred to both the first and second claim. However, the Settlement Disclosure Notice did not refer to the two claims, or differentiate between them. Dominion says that it encompassed Ms. Ali’s claims for accident benefits in relation to both the first and the second collision. However, the Settlement Disclosure Notice contains a box to be checked if there are optional benefits, and that box was not checked.
j) Aftermath of the settlement meeting
[41] Ms. Ali states that when she checked her bag the next day and did not find a copy of the documents she had signed, she telephoned Mr. Stitz and told him that she did not have a copy of the documents. Mr. Stitz said that he had better send her a copy of them in the mail. She says that the only other thing he told her was that she should call him before 5:00 p.m. the following day.
[42] Later that day, a package from Mr. Stitz arrived. Ms. Ali did not open it immediately, because she had taken her pain medication and was in too much pain and under too much stress from the mediation.
[43] On March 20, 2014, Ms. Ali telephoned Mr. Stitz at 4:00 p.m. She asked him why he had asked her to call him. Mr. Stitz said that out of courtesy, he would like to contact Ms. Musson before 5:00 p.m. Ms. Ali says that she did not understand, and asked Mr. Stitz, why he wanted to contact Ms. Musson. He did not tell her why, but said he wanted Ms. Ali to say “yes” to the offer. Ms. Ali was not sure what he was talking about, because she was in pain, so she just said “okay”. Mr. Stitz told her that “okay” was not good enough, and that she needed to say “yes”. Ms. Ali kept saying “okay”, and he kept telling her to say “yes”. She finally said, “Okay, okay, okay. Yes”. She asked Mr. Stitz when the next date with the arbitrator was, and he told her that they were not going back to the arbitrator. Ms. Ali says that she was in too much pain to ask why not.
[44] Ms. Ali states that after dinner that evening, she opened the package that she had received from Mr. Stitz the previous day. She had not taken her night time pain medication yet, so she could try to focus and understand the documents. The package contained two documents: a letter dated March 19, 2015, and the Settlement Disclosure Notice and Full and Final Release.
[45] Ms. Ali says that she tried to read and understand the documents, and that while she had trouble understanding them (she says that she still has trouble understanding them without help), she saw the word “settlement” and became very anxious. She saw the word “rescind” and says that she was not familiar with that word. She looked it up in the dictionary and saw that both of her collisions were mentioned in the Full and Final Release, which she found confusing because she had understood that the meeting was only about her first accident.
[46] On the Settlement Disclosure Notice, the box for optional benefits was not checked. Ms. Ali had optional benefits at the time of her second accident. She did not understand, she says, why Mr. Stitz had not explained all of this to her at the meeting, or when they spoke on the telephone twice following the meeting. She says that Mr. Stitz never told her what was written in his letter dated March 19, 2014.
[47] Ms. Ali states that she thought she was receiving some money to tide her over until they went to arbitration, and that was why she signed the documents. She says that she did not know that the documents she was signing meant that she was settling her case. If she had known that she was settling her entire case, she says, she would not have taken all of her receipts to Mr. Stitz’s office.
[48] Ms. Ali says that if Mr. Stitz or Mr. Musson had told her that she was settling both her claims on a final basis, she would never have signed the documents. If Mr. Stitz had explained to her on the telephone what was going on, she says, she would have told him that she was not settling, and that he should reject the settlement offer.
[49] Ms. Ali states that because it was late at night and one of the bullet points said she could reject the settlement, Ms. Ali telephoned Ms. Musson and left her this voicemail:
Hello Miss Anna-Marie Musson, this is Moonie. I know it is probably you left the office already. I am under a lot of duress and mental and emotional stress and I am not thinking right. I just want to let you know that I would like to reject the offer and I am going to be calling Mr. Charles Stitz and leaving him a message and to let him know that I am rejecting the offer, so I thought I would let you know as well, so I am under a lot of mental, emotional and physical stress and duress right now and I just can’t think straight, so I am sorry. I have to turn down that offer at this time. I hope you understand. Thanks. I am going to leave Mr. Charles Stitz a message now. Thanks. Bye.
[50] Ms. Ali says that after leaving that voicemail message for Ms. Musson, she left a similar message on Mr. Stitz’s voicemail. She further states that on March 21, 2014, she telephoned Mr. Stitz, who was very angry with her when he picked up the phone. He told her that Ms. Musson was not happy that she had rejected the settlement, and that Ms. Musson would take her to court to enforce the settlement. They argued and Ms. Ali terminated Mr. Stitz’s retainer a few days later.
[51] Dominion says that after she received Ms. Ali’s voicemail, Ms. Musson telephoned Mr. Stitz, who told her that he did not have “clear instructions” to rescind the settlement. A few days later, Dominion sent the $165,000 to Mr. Stitz, who still has it in his trust account. Ms. Ali says that she expected that Mr. Stitz would follow her instructions and do whatever was necessary to rescind the alleged settlement.
[52] It is not disputed that Ms. Ali has not personally received any of the funds that Dominion sent to Mr. Stitz.
k) Resumption of pre-hearing conference and Dominion’s application
[53] Eighteen days after her argument with Mr. Stitz, Ms. Ali, representing herself, wrote a letter dated April 9, 2014, to FSCO, in which she requested a resumption of the pre-hearing conference to set aside the settlement she said she had rejected. FSCO forwarded her letter to Dominion’s counsel on April 10, 2014.
[54] On the day before the pre-hearing conference was to resume, Dominion made the present application to this court to enforce the settlement it says was reached on March 18, 2014. At the resumption of the pre-hearing conference on April 24, 2014, Arbitrator Fadel stayed proceedings on Ms. Ali’s claims pending the resolution of Dominion’s application to the court. He made an order which provided that “If the Court determines that FSCO is the proper body to deal with the settlement issue, either party may contact FSCO and a preliminary issue hearing will be set.”
l) Ms. Ali’s response to Dominion’s application
[55] On May 2, 2014, Arvin Gupta of Mathew & Gupta advised Dominion that he was retained by Ms. Ali to respond to its Application. On November 7, 2014, Brauti Thorning Zibarras LLP advised Dominion that they had been retained to represent Ms. Ali in relation to her claims for accident benefits. Brauti Thorning LLP represented Ms. Ali on February 17, 2016, at the hearing of Dominion’s Application before this court.
[56] On July 22, 2014, Ms. Ali’s physician, Jeffrey Neumann, completed an OCF-19 (Application for Determination of Catastrophic Impairment) in which he stated that Ms. Ali was catastrophically impaired. He stated that Ms. Ali had been in his care for 14 years and that she was catastrophically impaired as a result of severe chronic pain, depression, anxiety disorder, and fibromyalgia.
[57] There is no dispute that if Ms. Ali meets the test for catastrophic impairment, she would be entitled to benefits that far exceed the $165,000 that Dominion has paid pursuant to the alleged settlement of her claims.
ISSUES
[58] The Application requires the court to determine the following issues:
Does the Court have jurisdiction?
Was a settlement reached?
Was the settlement rescinded?
Should the settlement be enforced?
POSITIONS OF THE PARTIES
a) Does the Court have jurisdiction?
[59] Dominion submits that the exclusive jurisdiction of the FSCO arbitrator is limited to issues of entitlement to, or quantum of, specific benefits. It submits that insurers may proceed by court actions when the issue to be resolved does not concern entitlement to, or quantum of, benefits.
[60] Ms. Ali submits that the Court lacks jurisdiction to hear the application. Section 281 of the Insurance Act gives the insured the right to select her forum. Ms. Ali says that she selected a FSCO arbitrator, and the Act thereupon gives the arbitrator exclusive jurisdiction to decide whether a settlement was reached, whether Ms. Ali rescinded the alleged settlement, and whether the alleged settlement should be enforced.
b) Was a Settlement reached?
[61] Dominion submits that the parties reached a full and final settlement of Ms. Ali’s claims for accident benefits at the March 18, 2014, meeting. It relies on the following:
Dominion had no notice of any limitation of the authority of Ms. Ali’s counsel and there is no evidence that his authority was, in fact, limited.
Ms. Ali was able to read, question, and request clarification of, the settlement documents. She did not ask for more time to consider the documents.
Ms. Ali’s conduct in asking her lawyer to explain a bullet point in the documents and negotiating a larger share of the settlement amount suggests that she understood the nature of the agreement and participated actively in the negotiation.
Ms. Ali received the documents within the cooling-off period and she was capable of reading them and making decisions concerning them.
[62] Ms. Ali submits that a settlement was not reached because there was no mutual intention to create a binding settlement. She relies on the following:
She did not know that the March 18, 2014, meeting was a settlement meeting. She believed that its purpose was to address the payment of her interim medical expenses.
She was not present for most of the meeting. She did not know what she was signing, and Mr. Stitz failed to explain what the $165,000 was for.
Mr. Stitz did not tell her to read the Final Release or Disclosure Settlement Notice and she did not read them. Mr. Stitz did not adequately explain the documents. He described them as standard FSCO documents that she needed to sign in order to receive her money.
She was in such extreme pain and was so desperate to conclude the meeting that she would not have understood the documents even if she had tried to read them.
She did not understand the nature or effect of the documents she signed.
She was unaware of the alleged settlement until after the statutory cooling-off period had expired. When she did read them, she immediately notified Dominion that she rejected the settlement.
c) Did Ms. Ali rescind the settlement?
[63] Dominion submits that section 9.1 of Automobile Insurance, O. Reg. 664 (the “Settlement Regulation”) governs the settlement of accident benefit claims. Under this regulation, the insured can rescind a settlement: (1) for any reason, in writing, within two business days, or (2) at any time, if the insurer has not complied with either section 9.1(2) or (3).
[64] It is not disputed that Ms. Ali did not rescind the settlement in writing within two business days. It is also not disputed that section 9.1(2) was complied with. The issue is therefore whether section 9.1(3) was complied with.
[65] Section 9.1(3) stipulates what must be contained in a Settlement Disclosure Notice. Dominion submits that the only information required by 9.1(3) at issue is a description of the benefits that may be available to the insured person under the Statutory Accident Benefits Schedule.
[66] Dominion submits that the standard and optional benefits available to Ms. Ali were summarized on page 4 and 5 of the Settlement Disclosure Notice. It says that the Notice provided meaningful information to Ms. Ali regarding the benefits available to her, and complied with the Settlement Regulation. In the alternative, it submits that any breach was a non-material technical breach, which did not reasonably affect Ms. Ali’s decision to settle.
[67] Ms. Ali submits that section 9.1(3) of the Settlement Regulation was not complied with because the Notice failed to indicate that she was entitled to optional benefits. The box for optional benefits on the Settlement Disclosure Notice was not checked, with the result that the Notice, on its face, could be interpreted as indicating that Ms. Ali was accepting $50,000 for non-earner benefits under both policies combined, in addition to the $24,969 paid under the first policy and the $11,174 paid under the second policy before the settlement meeting. If this was so, then the settlement amount represented more than half (57.42%) of total benefits of $150,000 available (being the $100,000 base coverage under the first policy and $50,000 under the second policy). In reality, the settlement amount represented less than half (43.07%) of the total benefits available (being the $100,000 base coverage under the first policy, the $50,000 base coverage under the second policy, and the $50,000 optional coverage which Ms. Ali had purchased under the second policy).
[68] Dominion acknowledges that the box for optional benefit was not checked on the Notice, but states that the Settlement Disclosure Notice is a form that the Superintendent approved, pursuant to the regulation, and that it does not contemplate a settlement of claims under two policies, where an optional benefit is available under one but not under the other. It submits that the box on page four was left blank because the first policy did not provide optional benefit coverage. It says that if the box had been checked, Ms. Ali could have argued that the Notice was not compliant because the first policy had standard benefit coverage only. It also submits that Ms. Ali’s lawyer was aware of the optional benefit available to her under the second policy and that Ms. Ali had exercised her option to purchase it.
[69] Ms. Ali submits that Dominion could have inserted a reference to the second policy in the Notice, or could have provided two separate Settlement Disclosure Notices, one for each claim. She submits that whatever Dominion’s explanation, it cannot be disputed that the Settlement Disclosure Notice does not comply with the Act, because it fails to disclose all the benefits available, including the optional benefits that she had purchased.
[70] Additionally, Ms. Ali says that she believed that the discussion on March 18, 2014, related to only one of her claims, and that there would still be an arbitration in the future. She submits that she learned only later that the amount which Dominion had offered was for the final settlement of both her claims.
[71] In these circumstances, having regard to the ambiguity of the Settlement Disclosure Notice and its non-compliance with the Act, Ms. Ali submits that she was entitled to rescind any settlement beyond the two days within which a settlement can be rescinded where there has been compliance with the Settlement Regulation. She says that she did so by leaving voicemail messages for her lawyer and for Dominion’s lawyer and by filing the responding material in this Application.
d) Should the settlement be enforced?
[72] Dominion submits that where an insured was represented throughout settlement discussions, the court may infer that she was properly informed of her rights. Dominion submits that the finality of settlements is an important principle and that the court should apply the presumption that informed settlements will be upheld.
[73] Ms. Ali submits that enforcing the settlement would be unfair to her, and asks the court to exercise its discretion to decline to enforce it. She states that Dominion will not suffer prejudice if the settlement is not enforced, as the funds advanced under the settlement remain in Mr. Stitz’s trust account. Additionally, she says that declining to enforce the settlement will not negatively impact any third parties.
[74] Ms. Ali submits that she mistakenly signed the settlement. She did not intend to settle her claim, and made efforts to rescind it shortly after the cooling- off period expired. She submits that especially if she is catastrophically impaired, the settlement is unreasonable and there is a real risk of injustice if it is enforced.
ANALYSIS AND EVIDENCE
a) Does the court have jurisdiction?
[75] Section 281(1) of the Insurance Act gives the insured person the right to select, from among three available forums, a decision-maker to determine his/her claim for statutory accident benefits: 1) the court, 2) a FSCO arbitrator, or 3) a non-FSCO arbitrator. Section 281(1) 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; or
(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. 1996, c. 21, s. 37.
Limitation
(2) No person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed and, if the issues in dispute were referred for an evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties. 1996, c. 21, s. 37.
280.1 (1) If mediation fails, the parties jointly or the mediator who conducted the mediation may, for the purpose of assisting in the resolution of the issues in dispute, refer the issues in dispute to a person appointed by the Director for an evaluation of the probable outcome of a proceeding in court or an arbitration under section 282.[^3]
[76] There is no dispute, in the present case, that in relation to each of Ms. Ali’s collisions and claims, mediation was sought, mediation failed, and the issues in dispute were not referred for an evaluation under section 282. There is also no dispute that Ms. Ali elected to have her claims determined by a FSCO arbitrator.
[77] Once the insured chooses the FSCO arbitrator as the decision-maker, the Act gives the arbitrator the exclusive jurisdiction to determine all questions of fact or law that arise in the proceeding, and the arbitrator’s decision is final and conclusive for all purposes. Section 20 of the Act provides, in that regard:
20.(2) A person referred to in subsection (1) has exclusive jurisdiction to exercise the powers conferred upon him or her under this Act and to determine all questions of fact or law that arise in any proceeding before him or her and, unless an appeal is provided under this Act, his or her decision thereon is final and conclusive for all purposes.
[78] The Insurance Act is consumer protection legislation which must be interpreted in a purposive manner to achieve the objectives of protecting an insured’s rights to statutory accident benefits.[^4] The choice of decision-maker is an integral element of the statutory regime and of the means of achieving the Act’s objectives.
[79] The Court of Appeal, in Liberty Mutual Insurance Co. v. Fernandes, in 2006, stated:
By leaving the choice of forum always with the insured, the legislature has guaranteed that the insured maintains control of the process including its timing and cost. See Baron v. Kingsway General Insurance Co., 2006 8463 (ON SC), [2006] O.J. No. 1067, 35 C.C.L.I. (4th) 180 (S.C.J.), at para. 29. Arbitration under the Act is an expeditious and much less costly process than a court action, but the court option is open to an insured. …[^5] [Emphasis added]
[80] Dominion submits that Insurers can proceed by way of court actions when the issue to be resolved does not concern entitlement or quantum of benefits. It relies, for this proposition, on the same Court of Appeal decision in Liberty Mutual. I find no support for Dominion’s proposition in the Court of Appeal’s decision. On the contrary, the Court, in the passage cited above, is unequivocal in stating that the legislature has left the choice of forum always with the insured.
[81] The Court of Appeal, in Liberty Mutual, gave a purposive interpretation to the Insurance Act. It held that by leaving the choice of forum with the insured, the Legislature guaranteed that the insured would maintain control of the process, including its timing and cost.
[82] In its earlier decision in Citadel General Assurance Co. v. Gogna, in 1992, the Court of Appeal held that “at common law an insurer has a right of action for repayment of amounts paid to a person through error or fraud”, and found that the common law right was not expressly or impliedly removed by the dispute resolution provisions of the Insurance Act. However, in Liberty Mutual, the Court limited the application of Citadel to cases involving the court’s common law jurisdiction to provide a remedy for fraud or mistake. Feldman J.A., with whom Labrosse and Moldaver JJ.A. concurred, stated:
In my view, the reasoning in Citadel must be limited to actions involving the repayment of benefits obtained through fraud or error; to extrapolate from that case that insurers also have an absolute right to bring a court proceeding to determine statutory accident benefits entitlement issues is erroneous.[^6] [Emphasis added]
[83] Dominion argues that the present case falls within the exception in Citadel because it involves the enforcement of a settlement, not an issue of entitlement or quantum. I disagree. Section 20 of the Act gives the FSCO arbitrator, if chosen by the insured, exclusive jurisdiction over all questions of fact and law. It does not limit the arbitrator’s jurisdiction to issues of entitlement or quantum.
[84] In any event, the issue of whether a settlement was reached which precludes the insured from further entitlement is an issue of entitlement. The question of whether a settlement was reached, or was rescinded, and whether the settlement is binding on the parties is a question of fact and law upon which the determination of Ms. Ali’s entitlement to benefits under the Act may depend. To permit the insured to apply to the court for this determination would substantially erode the insured’s control over the form of decision-making in her case. This result would be inconsistent with the objectives of the legislation.
[85] The determination in Liberty Mutual as to whether the insured had suffered a catastrophic injury was similarly one upon which the insured’s entitlement to benefits depended. The Court of Appeal did not permit the insurer to apply to the court for the determination of this issue, which the Act gave to a CAT DAC, subject to the decision of the arbitrator. Feldman J.A. stated, in this regard:
I conclude that although there is historical arbitral and judicial case law that suggests that an insurer may have the right to commence a court proceeding to determine statutory accident benefits entitlement issues, when that case law is read in its proper context, it is apparent that it evolved without consideration of the entire legislative scheme provided in s. 281. As discussed above, once the entire scheme is considered, it is clear that insurers are not left without a remedy to ensure that statutory accident benefits entitlement issues are adjudicated following a CAT DAC. There is therefore no need to read into the legislation a court remedy for insurers that is not provided by the legislation.[^7] [Emphasis added]
[86] Dominion asserts that in Wu Estate v. Zurich, in 2006, the trustee of an insured’s estate applied to the court to enforce an accident benefits settlement,[^8] and in Co-operators General Insurance Co. v. Tagaoussi, in 2002, the insurer applied to the court to enforce the terms of an accident benefits settlement, and that the Court of Appeal did not consider the court’s jurisdiction to be an issue in either case.[^9]
[87] Wu Estate v. Zurich is distinguishable on two grounds. The first is that the insured, who was cognitively impaired and represented by her mother as her litigation guardian, commenced an action claiming tort damages against the tortfeasor, and claiming statutory accident benefits against Zurich pursuant to the Insurance Act. She therefore brought herself under the provisions of s. 280(1)(a) of the Act, which states that “The insured person may bring a proceeding in a court of competent jurisdiction.”
[88] Second, the parties had entered into a settlement of the insured’s Accident Benefits that was explicitly “subject to necessary court approval”. The court stated:
The requirement for court approval of settlements made on behalf of parties under disability is derived from the court’s parens patriae jurisdiction. The parens patriae jurisdiction is of ancient origin and is ‘founded on necessity, namely the need to act for the protection of those who cannot care for themselves….to be exercised in the ‘best interest’ of the protected person…for his or her ‘benefit’ or ‘welfare’: Eve, Re, 1986 36 (SCC), [1986] 2 S.C.R. 388 (S.C.C.) at para. 73.[^10]
[89] The court noted that the requirement for court approval of settlements involving parties under disability is codified in Ontario in Rule 7.08(1):
No settlement of a claim made by or against a person under disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge.[^11]
[90] In Co-operators General Insurance Co. v. Tagaoussi, the Court of Appeal upheld the decision of this court granting an application by an insurer to enforce a settlement. Dominion submits that Mr. Tagaoussi made a claim for Accident Benefits, some of which were denied. Co-operators took the position that the parties had settled the claim and applied to the court to enforce the settlement.
[91] I have carefully reviewed the decisions of both this court and the Court of Appeal in Co-operators v. Tagaoussi. I find no evidence in either decision that Mr. Tagaoussi ever elected to have his claims determined by an arbitrator. If he elected to have his claim determined by the court, as was his right, or had not elected to have his claim determined by an arbitrator, the insurer properly applied to the court for a declaration that a settlement had been reached which the court should enforce. This would explain why jurisdiction was not raised as an issue, either in this court or in the Court of Appeal.
[92] For these reasons, I find that the decisions in Wu Estate v. Zurich and Co-operators v. Tagaoussi do not support the proposition for which Dominion relies on them.
[93] In cases where the insured has elected to have disputes related to their accident benefits resolved by an arbitrator, the arbitrator has commonly determined the enforceability of settlements that are alleged to have been made in relation to the claims. The authorities which the Insurer itself relied upon afford the following examples:
Jetty v. ING Insurance Co. of Canada, 2010 ONSC 1091 (Div. Ct.): The parties settled a claim for accident benefits. The FSCO arbitrator allowed the settlement to be rescinded, as the settlement notice signature was typed by counsel and the notice did not contain a proper description of benefit entitlements. The Insurer’s appeal was dismissed by the Director’s Delegate, and the Insurer’s application for judicial review was dismissed by the Divisional Court.
Aviva Canada Inc. v. Parveen, 2012 CarswellOnt 16980 (FSCO): The Director’s Delegate dismissed an appeal from the FSCO arbitrator’s decision holding that the insured was entitled to rescind a settlement reached after the two day cooling-off period on the ground that the Insurer had not complied with paragraph 9.1(3)3 of the Settlement Regulation.
Rahman v. TD General Insurance Co., 2008 ONFSCDRS 54, 2008 CarswellOnt 2010, [2008] O.F.S.C.D. No. 50, 61 C.C.L.I. (4th) 306 (FSCO): The Director’s Delegate allowed an appeal by the Insured from the FSCO arbitrator’s decision holding that a final and binding settlement had been reached. The Delegate held that the insured had not personally signed the release, as required by the Settlement Regulation, with the result that the settlement was not binding.
Ogbuke v. Kingsway General Insurance Co., 2007 CarswellOnt 8426 (FSCO): The FSCO arbitrator held that the issues in the arbitration were the subject of a binding settlement reached by the parties.
Persaud v. State Farm Mutual Automobile Insurance Co., 2007 CarswellOnt 8420 (FSCO): The FSCO arbitrator held that the insured was precluded from proceeding to arbitration on the issues because he had settled his claims with the insurer on a full and final basis.
Wachmenko v. Primmum Insurance Co., 2007 CarswellOnt 604 (FSCO): The Director’s Delegate dismissed an appeal by the Insured from the decision of the FSCO arbitrator, who found that the settlement agreement the parties had signed was valid and enforceable, as the Regulations were properly followed and no defect existed in the forms used, and the Insured had not rescinded the agreement within the two day cooling-off period.
[94] For the foregoing reasons, I find that FSCO is the proper body to determine whether a binding settlement was reached in the present case, and if so, whether it was rescinded, and if not rescinded, whether it should be enforced.
[95] As I have previously noted, the dispute resolution mechanisms provided by the Insurance Act were amended in April 2016. Arbitrations of new accident benefits claims are no longer handled by FSCO, but by the Licence and Appeal Tribunal. FSCO arbitrations that have already commenced under the Act shall continue by virtue of O. Reg. 664. Since pre-hearing conferences were held in the present case, where Arbitrator Fadel made an order consolidating Ms. Ali’s claims arising from the two collisions, and provisionally staying the arbitration until Dominion’s application to the court was resolved, I find that the arbitration has commenced. As a result, this dispute should be determined by FSCO rather than by the Licence and Appeal Tribunal.
b) Costs
[96] If Dominion had permitted the settlement issue to be determined by FSCO, that issue, and Ms. Ali’s claims, could have been dealt with two years ago. It was unfair and unreasonable of Dominion to block the arbitrator’s determination, on the eve of the pre-hearing conference, by applying to the court.
[97] As a result of Dominion’s actions, Ms. Ali was forced to incur substantial costs that the Insurance Act, by empowering an insured to choose to have her claims determined by an arbitrator, was designed to avoid. In these circumstances, Dominion should be required to indemnify Ms. Ali fully for her costs of responding to the application.
[98] Ms. Ali’s actual costs in responding to the application were $21,596.70, according to the Costs Outline which she tendered at the hearing. I find that the time Ms. Ali’s lawyers say they spent was reasonable, having regard to the complexity of the facts and the issues involved.
[99] The time Ms. Ali’s lawyers spent cannot readily be compared to the time spent by Dominion’s lawyers, as Dominion’s lawyers have allocated their time to different categories of tasks in their Bill of Costs than Ms. Ali’s lawyers did in their Costs Outline. However, where the lawyers for each of the parties used the same categories (for example, the preparation for and attendance at cross-examination), the time spent by them was the same (13 hours in each case).
[100] The total amount of the actual costs incurred by Ms. Ali ($21,596.70) is approximately half the amount of the actual costs ($40,649.67) that Dominion incurred. On this basis, the costs claimed by Ms. Ali are very modest. I find the costs claimed by Ms. Ali to be reasonable and fix her costs in the amount claimed.
CONCLUSION AND ORDER
[101] For the foregoing reasons, it is ordered that:
Dominion’s application is dismissed.
Dominion shall forthwith pay Ms. Ali’s costs, which I fix at $21,596.70, inclusive of fees, HST, and disbursements.
Price J.
Released: July 13, 2016
CITATION: Dominion of Canada v. Ali, 2016 ONSC 4604
COURT FILE NO.: CV-14-1739-00
DATE: 2016-07-13
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
THE DOMINION OF CANADA GENERAL INSURANCE COMPANY and CHIEFTAIN INSURANCE COMPANY
Applicant
- and –
MOONIE ALI
Respondent
REASONS FOR ORDER
Price J.
Released: July 13, 2016
[^1]: I note at the outset that the dispute resolution mechanisms which are central to this application were dramatically altered on April 1, 2016, when the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, S.O. 2014, c. 9, came into force. That Act amended the Insurance Act, R.S.O. 1990, c. I-8, in part, by transferring responsibility for the resolution of accident benefits disputes from FSCO to the Licence Appeal Tribunal. However, a FSCO arbitration that was commenced but not completed before April 2016 is continued after that date: see R.R.O. 1990, Reg. 664, s. 21. For that reason, my discussion of the Insurance Act relates to its pre-April 2016 form.
[^2]: Statutory Accident Benefits Schedule, O Reg. 34/10 pursuant to the Insurance Act
[^3]: Insurance Act, R.S.O. 1990, c. 1.8.
[^4]: Smith v. Co-operators General Insurance Co., 2000 4138 (Ont. C.A.), at para. 9, rev’d on other grounds 2002 SCC 30, and Mcnaughton Automotive Ltd. v. Co-Operators General Insurance Co., 2001 21203 (Ont. C.A.), at para. 20.
[^5]: Liberty Mutual Insurance Co. v. Fernandes (2006), 2006 30212 (ON CA), 82 O.R. (3d) 524 (C.A.), at para. 15.
[^6]: Liberty Mutual, at para. 24.
[^7]: Liberty Mutual, at para. 28
[^8]: Wu Estate v. Zurich, 2006 16344 (ON CA), [2006] O.J. No. 1939 (C.A.).
[^9]: Co-operators General Insurance Co. v. Tagoussi, 2000 CarswellOnt 5011, [2000] O.J. No. 5059, (Ferguson J.), aff’d [2002] O.J. No. 403 (C.A.).
[^10]: Wu Estate, at para. 10.
[^11]: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, s. 7.08.