Eamonn P. McEnaney v. CGU Insurance Company of Canada

COURT FILE NO.: CV-01-212846 and 98-CV-150279CM

DATE: 2022-12-12

ONTARIO SUPERIOR COURT OF JUSTICE

RE: EAMONN P. McENANEY, Plaintiff

-and-

CGU INSURANCE COMPANY OF CANADA, Defendant

BEFORE: FL Myers J

COUNSEL: Kevin Doan, for the plaintiff

Kevin H. Griffiths, for the defendant

READ: December 10, 2022

ENDORSEMENT

[1] In my endorsement of October 20, 2022, reported at 2022 ONSC 5956, I declined to schedule motions proposed by the plaintiff to set aside two consent orders dismissing these actions made in 2007. The orders implemented a settlement of the plaintiff’s claims against his insurer for statutory accident benefits.

[2] In my prior endorsement, I noted that the plaintiff asks to bring a very unusual and complicated set of motions.

[3] I received written submissions from counsel as to the most efficient and affordable procedure to try to unwind the Gordian knot of proposed proceedings discussed in my prior endorsement. I touch on some of the complexity below just for the purpose of explaining the directions that I make. The merits are not before me.

[4] In order to set aside the consent dismissals, the plaintiff relies on a statute that renders void (or perhaps voidable) settlements of claims for statutory accident benefits between insured parties and their insurers. Under the statute, settlements or any agreed limits on claims are void unless accompanied by prescribed disclosure by the insurers. But to rely on that section, the plaintiff first needs to avoid a line of Court of Appeal decisions that stand directly in his path.

[5] The Court of Appeal has ruled several times that the section of the statute relied upon by the plaintiff does not apply to settlements of litigation in this court.

[6] To proceed despite the Court of Appeal’s decisions, the plaintiff proposes to bring a “constitutional” challenge to the Court of Appeal decisions. He proposes to argue that the Court of Appeal’s interpretation of the statute as applying only to ADR and not to settlements of actions brought in this court violates the separation of powers between the judicial and legislative branches. He submits that the Court of Appeal was not just wrong; it was so wrong it subverted the will of the Legislature and effectively usurped the legislative role. He will ask this court to rule that the Court of Appeal’s decisions were therefore unconstitutional.

[7] I had understood Mr. Doan previously to be raising this concern as a division of powers issue. But he has now clarified for me the nature of his client’s proposed “constitutional” claim such as it is.

[8] In addition, the plaintiff submits that he is not bound by the section of the statute that requires a plaintiff who seeks to rescind a settlement due to non-disclosure by the insurer to repay the settlement funds first. He submits that he is not rescinding the settlement yet. He first asks the court to declare the settlement void and then he can rescind and repay the settlement funds if he succeeds.

[9] So, in motions to set aside consent dismissals, the plaintiff proposes to load a “constitutional” challenge to binding precedent and an interpretation of the statutory scheme to allow him to declare a settlement void without rescinding it and repaying the settlement proceeds.

[10] In my prior endorsement, I already found:

[33] Before scheduling an expensive factual inquiry, I agree with Mr. Griffiths that the issue of whether the plaintiff first needs to repay the settlement proceeds to rescind the settlement should be resolved.

[34] That begs yet another issue. What is the proper forum for these issues to be heard?

[11] Issues concerning statutory accident benefits are now heard by the License Appeal Tribunal. Stegenga v. Economical Mutual Insurance Company, 2019 ONCA 615. It is not clear that the consent dismissals even need to be set aside for the plaintiff to be able to go to the LAT to challenge the insurer’s refusal to recognize a new and further claim for statutory accident benefits. There, the insurer would rely on the 2007 settlement and the plaintiff would assert that the settlement is void.

[12] The insurer proposes the following three issues be determined first:

1. Does the Court have jurisdiction to determine whether the failure to return settlement funds precludes a dispute as to whether the plaintiff has the right to rescind the settlement?
2. If question 1 is answered in the affirmative, does the failure to return settlement funds preclude a dispute as to whether the plaintiff has the right to rescind the settlement?
3. If question 2 is answered in the negative, does the Court have jurisdiction to determine whether the plaintiff has the right to rescind the settlement?

[13] Mr. Doan disagrees. He has proposed a narrower question than before. He says that the court should first determine whether the settlement is void and only then needs to consider other issues.

[14] To simply schedule the plaintiff’s proposed motions as sought by Mr. Doan ignores the “constitutional” issue altogether and effectively frees the plaintiff from the repayment obligation before the insurer even gets a chance to advance its position. In my view, the insurer ought to be able to assert that the proceedings proposed by the plaintiff cannot even be begun until he repays the settlement proceeds. The plaintiff will have every right to make his submission that seeking to have the settlement declared void is not the same as rescinding the settlement so as to require repayment.

[15] Moreover, it may be that this all has to be heard by the LAT in any event.

[16] None of the three questions proposed by the insurer goes to the merits of the voidness argument that then raises with it the proposed “constitutional” argument.

[17] In one sense, the simplest thing to do would be to bring a motion to strike the proposed “constitutional” challenge. If that is struck, the entire matter ends. Here too, the insurer would oppose giving the plaintiff a free ride to challenge the settlements under which he has lived for two decades until he repays the settlement funds.

[18] Moreover, other process issues would arise. My inclination is that a request for a constitutional declaration will require a separate application against His Majesty rather than motions to set aside 20-year-old consent judgments. But I have not heard argument on whether the court can entertain constitutional arguments like this on a motion.

[19] The issues of (a) which forum can hear the plaintiff’s challenge; and (b) whether the plaintiff must repay the settlement funds before bringing any proceeding to undermine the settlement, should be decided first. The outcome on either one may avoid the need for any further proceedings in this court. Bifurcating proceedings can sometimes cause more expense and delay. However here, the unified proceeding sought by the plaintiff is far too fraught with procedural and substantive issues to justify scheduling one big mess of a hearing. Moreover, as noted, doing so would unfairly deprive the insurer of its entitlement to seek repayment of the settlement proceeds at the outset of the process. And doing so ignores the issue of whether the LAT is the proper forum in which to contest the settlement.

[20] The parties may proceed to Civil Practice Court to schedule a hearing on the three issues set out by the insurer above. In my view the insurer is the natural moving party. But I leave it to counsel to agree on the scheduling steps before arriving at CPC.

[21] Costs reserved to the judge who hears the motions directed above.

FL Myers J

Date: December 12, 2022