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Notice - Insurance. Pope v. Pilot Insurance Company
In Pope v. Pilot Insurance Company (Div Court, 2024) the Divisional Court considered some SABS 'settlement' notice (aka disclosure) requirements:[19] It must not be lost in the analysis; however, there is more than one possible way for a notice to adequately bring home the relevant information to the recipient. In fact, the Supreme Court of Canada found that simply parroting the exact words of the statute may not be sufficient. At para. 13 of Smith, the Court held:[13] That said, Sharpe J.A. was also properly concerned that claimants would be overwhelmed should insurers opt to simply attach a verbatim reproduction of ss. 279 to 283 of the Insurance Act to the refusal. In fact, it is questionable whether this would qualify as a valid refusal as it would surely run afoul of the consumer protection purpose of the legislation. However, we are not merely restricted to two options, both of which are at opposite ends of the spectrum of possible information. There is middle ground. [20] In my view, nothing turns on the burden of proof on this appeal. This is not a question of contested fact or the adequacy of evidence to prove a fact in issue. There are regulatory requirements and there is a notice form provided by the insurer. The form meets the requirements or it does not. The burden of proof, in this appeal at least, is a red herring.
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The Subjective Materiality of any Non-Disclosure to the Insured is not Relevant
[21] In Opoku, Spiegel J. rejected the argument, that was accepted by the Tribunal below, that the insured may bear a burden of establishing the materiality of any failure of the insurer to meet its disclosure requirements.Making the subjective materiality of non-disclosure an issue runs afoul of the Supreme Court of Canada’s bright-line test and its specific rejection of consideration of the particular circumstances of the insured. [22] At the same time, however, in Opoku, Spiegel J. allowed for the possibility that technical and immaterial deficiencies would not deprive a notice of its validity. This is consistent with the Supreme Court of Canada allowing that there is no one right way to give notice. In Opoku, Spiegel J. expressed it this way:
[130] The defendants submit that in Abdool, the court emphasized that agreements should not be rendered unenforceable for technical deficiencies or for immaterial omissions in a disclosure statement. The correctness of this general principle is undisputed. It does not, in my view, justify imposing on the insured the burden of establishing the materiality of the insurer's non-compliance with s. 9.1(2), in light of the text and purpose of the settlement regulation. However, I wish it to be understood that nothing that I have said is intended to preclude an insurer from enforcing a SABs settlement, if the insurer can establish that the defect in the written notice is merely a technical one which could not have reasonably affected the insured's decision to settle. I leave that to be decided in a case in which that issue arises. However, in this case I have found that the defect in the written notice was not merely technical or a matter of form. Rather, it was a defect that deprived Mr. Opoku of an important substantive right granted to him by the settlement regulation. [Emphasis added.]
[23] The Tribunal placed significant reliance on the Court of Appeal’s decision in Catania v. Scottish & York Insurance Co. Ltd., 2001 CanLII 24147 (ON CA). This case pre-dated the Supreme Court of Canada’s decision in Smith. At para. 21 of the Catania decision, the Court of Appeal held:[21] On the particular facts of this case, it may well be that the defendant's failure to comply with s. 9.1(2) had no bearing on the plaintiff's acceptance of the settlement offer. This, however, is not the test in a case such as this where there has not been even minimal compliance with the regulation. (It could be a factor to take into account in a case where there is some degree of compliance.) If it were the test it would, in many cases, be very difficult to apply with any degree of confidence or predictability. The test in s. 9.1(4) and (5), although its application may give rise to some unreasonable or unfair results, in some cases, has the virtue of relative ease of application. Furthermore, it is entirely within the hands of the insurance companies to see that there is compliance with s. 9.1(2). [Emphasis added] [24] The Tribunal in this case grasped on to the phrase “some degree of compliance” as if that was the applicable measure of disclosure required by the regulatory scheme. However, the quoted paragraph read as a whole makes it clear that the court rejected this measure of “some compliance” as insufficient even if a bright-line test might result in some unreasonable or unfair results in some cases. Bright lines can lack nuance to be sure. But they have their benefits especially where one side has the power to control the outcome and the other side is a more vulnerable consumer. See Navage v. Pilot Insurance Co., 2004 CanLII 15034 (ON SC), at paras. 17 to 19.
[25] As set out in Smith, the legal standard for measuring the adequacy of the insurer’s notice form was simply whether the insurer’s notice gave the insured the information required by s. 9.1 (3) of the regulation in straightforward and clear language, directed towards an unsophisticated person. It is not sufficient for the insurer to parrot the words of the regulation as that is too inaccessible. There is no one right answer. Technical and immaterial defects will not invalidate a notice.
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