The Consumer Protection Act, 2002, consumers have the right to cancel a contract if the contract includes a “cooling-off” period. The Insurance Act provides similar protection for claimants under an automobile insurance policy who have reached an agreement to settle their accident benefits claims with their insurer.
Section 9.1(4) of Ontario Regulation 664: Automobile Insurance under the Insurance Act, R.S.O. 1990, c. I.8 offers the following “cooling-off” period:
The insured person may rescind the settlement within 2 business days after the later of the day the insured person signs the disclosure notice and the day the insured person signs the release.
This section of the Regulation has not been the subject of many disputes, but it is important, and important to bear in mind in the context of arbitrations, where there might be a tendency to forget that it still applies. There is one fairly recent decision from the Superior Court interpreting and applying the section in the context of a settlement reached at arbitration: Co-operators General Insurance Company v Doobay, 2017 ONSC 5804 (“Doobay”).
In Doobay, the applicant was involved in a motor vehicle collision in 2009 and received various accident benefits in the first few years after the accident. A dispute later arose concerning the applicant’s entitlement to certain benefits, and an application for arbitration was filed. Shortly after the arbitration got underway the parties reached a settlement of the applicant’s claims, but only in connection with the specific benefits in dispute. The settlement offer was communicated as a Rule 49 offer (even though it was in the context of an arbitration and not in the Superior Court). The offer was then accepted, and a release was executed by the applicant. The release included reference to the cooling offer period under section 9.1(4). Later on the day of the settlement the applicant’s counsel wrote to his counterpart and purported to rescind the settlement agreement, in reliance on Section 9.1(4).
The insurer, Co-operators, brought a motion in the Superior Court for a judgment to enforce the terms of the settlement reached at arbitration. The defendant, the applicant, relied on Section 9.1(4) of the Regulation, which had been incorporated into the settlement documents. It appears that a standard Settlement Disclosure Notice was not included in the settlement documentation signed on the day of the settlement. In any event, the motion was argued on the basis that, because the settlement was concluded in the midst of an adversarial proceeding, and where the parties were represented by counsel, the cooling off period should not apply. Instead, the Co-operators argued that it should be treated, in effect, as an accepted Rule 49 offer under the Rules of Civil Procedure. The court disagreed, and dismissed the motion, mainly on the basis that the cooling off period was incorporated into the terms of the settlement by reference.
In the end, the decision in Doobay is an important reminder that the two-day cooling off period prescribed in the Regulations is important, and certainly will apply to settlements reached during the course of an arbitration. That would seem to be clear in any case where the settlement disclosure notice (SDN) is completed and signed on the day the settlement is reached. But in cases where a settlement is concluded and confirmed via email, and where the SDN will follow a few days later, counsel need to be careful. In particular, based on Doobay, in such cases it will be prudent to clarify and confirm that the cooling off period applies, as well the point in time when the clock starts to tick.