Insured died before signing settlement agreement — so is it enforceable?

FOCUS ON INSURANCE - Death was between late December mediation and signing disclosure in January

Insured died before signing settlement agreement — so is it enforceable?
Sandra Train

What happens when an insurer and accident victim reach a settlement — but the insured dies before they can sign the dotted line? 

That’s the conundrum, or “novel fact situation,” currently before Ontario courts. 

“This is definitely brand-new territory,” says Sandra Train, an associate lawyer at Howie Sacks & Henry, who represented the victim’s estate.

“You don't see a lot of groundbreaking cases in insurance because it's been litigated [so much]. So, it was interesting that there was nothing on this area.”

After a dispute stemming from a 2015 car accident, the late Gerald Riggs participated in a Dec. 17, 2018 mediation. A settlement was reached, with instructions sent to participants on Dec. 19, dictating that the tort insurer would pay the all-inclusive sum of $300,000 and that Intact would pay an all-inclusive sum of $350,000 – plus payment of attendant care, incurred treatment plans, physio, and the rehab support worker’s invoices –until January 31, 2019.

Between Dec. 19, 2018 and Jan. 2, 2019, Riggs’ lawyer and the lawyer from Intact corresponded about a forthcoming settlement disclosure notice and how the $350,000 would be allocated. The documents were sent Jan. 8 — but unfortunately, Riggs died unexpectedly on Jan. 3.

Riggs’ wife and estate trustee signed the forms and returned them to Intact, but the settlement has not been paid by Intact “because of the lack of personal signature by Mr. Riggs on the settlement documents,” wrote Superior Court Justice Robert Reid. 

The matter of the signature’s enforcement, Estate of Riggs v. Intact, was the subject of a Dec. 27, 2019 costs order and Nov. 27 decision. But it’s the Licence Appeal Tribunal that actually has jurisdiction over the matter, Reid decided. 

Although Reid ruled that the court did not have jurisdiction to decide the matter of Riggs’ signature enforcement, Reid waded into the debate nonetheless. (He did so in the case the obiter dictum comment “becomes relevant at a later stage of these proceedings.”)

“[B]ut for my conclusion that the court does not have jurisdiction to determine the issue, I would have found the settlement between Gerald Riggs and Intact to be binding and enforceable,” wrote Reid.

Reid wrote that the parties had agreed on all the needed settlement terms and there was a “mutual intention to create a legally binding relationship.” 

“Although Mr. Riggs’ imminent death was not contemplated at the time the settlement was reached, his life expectancy obviously would have been one of the contingencies considered when the quantum of the settlement was established,” wrote Reid.

Reid also pointed to Intact’s previous requirement that the tort settlement occur as a condition of resolving the accident benefits claim. 

“It seems unjust that Intact received the benefit it sought through the tort settlement and then not have to pay its share of the global resolution, and equally unfair if Mr. Riggs receives no value from Intact for having compromised his tort claim,” said Reid.

Reid also noted that compared to the prompt response of the tort insurer, Intact’s documents were delayed.

“Although Intact submits that the Regulations provide that the insured person must execute the SDN personally, I do not find that to be the case. At most, there is a presumption that the insured person will sign,” Reid concluded. 

“It is not uncommon for a recipient of SABs to be either under the age of majority, or suffering a physical or mental disability. . . .If Intact is correct in its position, there would be no possibility for such a person to conclude a settlement.” 

Train says that while the issue does deal with accident benefits, the real issue at hand is the enforceability of a contract — a topic not well-suited to filing with the LAT. If the case proceeds in the LAT, there is a risk the tribunal would rule only on any small outstanding benefits, while leaving the settlement money off the table.

“We said the executor is allowed to sign — that's exactly what an executor’s duty is,” she says. “If you are brain injured, you can't sign your own settlement documents. Or if you're five years old, you can't sign your own settlement documents. And that's basically what the judge saying.”

Matthew Lefave, a lawyer at Beard Winter LLP who represented Intact, declined to comment on the decision, which may be appealed.

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