Our first case this month is a decision of the Ontario Superior Court of Justice dealing with the doctrine of unconscionability. The Court held that due to a clear inequality of bargaining power and the fact that the Adjuster used his position to achieve a strategic advantage over the Plaintiff, the Final Release signed by the Plaintiff was set aside as being void.
Our second case this month deals with a motion for an advance payment. Despite a prior overpayment to the Plaintiff, the Court awarded the Plaintiff a lump sum amount plus monthly payments until the date of trial.
Foster & Company is pleased to announce that Jason Caissie has joined our insurance defence team.
Originally from Egmont Bay, Prince Edward Island, and fluently bilingual, Jason completed his Bachelor of Arts degree with a major in history and double minor in sociology and criminology at St. Thomas University. He received his Bachelor of Laws degree in 2009 from the University of New Brunswick
Jason was admitted to the New Brunswick Bar in 2010. He is a member of the Law Society of New Brunswick, the York Sunbury Law Society and the Canadian Bar Association.
Jason is looking forward to working with you and can be reached by:
Telephone: (506) 462-4017 Fax: (506) 462-4001
Jones v. Jenkins, 2011 ONSC 1426
This case arose from a motor vehicle accident which occurred on October 21, 2005. Before any action was filed, the Plaintiff entered into settlement negotiations with the Defendant’s Adjuster. The Adjuster instructed the Plaintiff to make a proposal for settlement, which he did in the amount of $241,300.00. The Adjuster then made a counter-proposal which included general damages ($35,000 net of the $30,000.00 deductible) and future economic loss of $22,500.00; both of which were reduced by 75% contributory negligence. Prejudgement interest of $525.00, costs of $3,511.00 and disbursements of $1,000.00 were added to the proposal, bringing the total to $19,411.00. The Plaintiff accepted the settlement and signed a Release on October 10, 2006. Following the signing of the Release, the Plaintiff retained counsel and filed an action on October 19, 2007. At issue on this motion was whether the Release signed by the Plaintiff was valid.
The Court stated that the test used to determine whether a Release should be set aside was “whether or not the transaction is so unconscionable that it requires the intervention of the Court considering all of the circumstances surrounding the making of the agreement?” (Stephenson v. Hilti (Canada) Ltd. (1989), 63 DLR (4th) 573). This test incorporates three factors which must be considered: (1) is there an inequality of bargaining power arising out of ignorance, need or distress of the weaker party; (2) has the stronger party used the position of power to achieve an advantage, and (3) is the agreement reached substantially unfair to the weaker party or is it sufficiently divergent from community standards of commercial morality that it should be set aside.
After reviewing the circumstances surrounding this case, the Court identified a number of factors which led them to the conclusion that the Release was void due to unconscionability. Specifically, the Court noted that it was clear from the evidence that the Plaintiff was unsophisticated and had the impression that the Adjuster would be fair and look out for his interest. The Court also noted that the Plaintiff was unemployed and in a difficult financial situation at the time he signed the Release; he was living out of his car, using a food bank, about to have a third child and had debts of $15,000.00. Further, the Adjuster withheld an expert report outlining the severity of the Plaintiff’s injuries, which the Court stated could have formed the basis for a higher award of general damages and failed to inform the Plaintiff that the $30,000.00 deductible was not applicable to general damages in excess of $100,000.00. Most troubling for the Court, however, was that the Adjuster had reduced the proposal by 75% contributory negligence despite the lack of evidence supporting this claim.
Due to the above circumstances, the Court held that there was clearly an inequality of bargaining power between the Adjuster and the Plaintiff and that the Adjuster used his position to achieve an advantage. The agreement reached was sufficiently divergent from community standards of commercial morality to be unconscionable and therefore it was set aside.
￼ Fasquel v. Boucher, 2011 NBQB 150
This case arose out of a motor vehicle accident which occurred at an intersection in Minto on June 25, 2007. The Plaintiff had been driving south along Main Street when the Defendant proceeded to make a left hand turn, pulling out directly in front of the Plaintiff causing a collision. The Defendant claimed that he did not see the Plaintiff approaching him as he was “blinded by the sun”. As a result of the collision, the Plaintiff sustained personal injuries and was unable to return to his employment as a heavy equipment operator. The Plaintiff brought a motion seeking an advance payment pursuant to s. 265.6 of the Insurance Act and Rule 47.03(3) of the Rules of Court.
Justice Glennie reviewed the procedure to be followed on an application for advance payments as set out by the New Brunswick Court of Appeal in Smith v. Agnew,  NBJ 282. This procedure has been interpreted to include two stages: (1) a determination of whether the final judgment will more likely than not include an award for special damage of the kind targeted by the application, and (2) a determination of the quantum of any advance payment.
After reviewing the evidence with respect to the accident, the Plaintiff’s injuries, employment situation and potential losses/expenses, Justice Glennie stated he was more than 50% certain that the Defendant’s liability for special damages for past loss of income would be established at trial. The evidence adduced showed the defendant owed the Plaintiff a duty of care, that the duty was breached and, as a consequence, the Plaintiff sustained special damages in the nature of loss of income.
With respect to determining quantum, Justice Glennie held that the Plaintiff’s loss of income should be based on an annual salary of $60,000.00 for 2007 with a 2% increase per year. He further stated that the defenses advanced by the Defendant had no real or substantial possibility of success at trial and therefore would not reduce his calculation of an appropriate advance payment.
Although Justice Glennie acknowledged the Court of Appeal’s caution that the needs and resources of the Plaintiff and the means of the Defendant should only be considered in exceptional cases, in the present case the Plaintiff had already provided detailed financial information. Therefore the privacy issue which sparked the warning was not a concern. After considering all of the evidence, Justice Glennie awarded an advance payment of $10,000.00 , with future advances of $2,500.00 per month until the date of trial.
Caveat: After subtracting previous advance payments, Justice Glennie determined that the Plaintiff had actually received an overpayment of $1,912.00. During the hearing of the motion, Plaintiff’s counsel indicated that it had been deducting 25% from each advance payment to cover the Plaintiff’s legal fees, creating a shortfall. Although reference was made to Whitney v. Estate of Grant et al, 2011 NBQB 68, whereby Justice Garnett reduced the legal fees payable to Plaintiff Counsel’s in cases where there was very little risk with respect to the litigation of the case, no further comments regarding this practice were made. Leave to appeal the decision in Whitney v. Estate of Grant et al. has been granted by the Court of Appeal. We will report on the outcome in due course.