Settlement Disclosure Notices – Are They Necessary In Litigation

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Explore:  Disclosure Settlement

For many years, the leading case on the need for Settlement Disclosure Notices after litigation was commenced was the Court of Appeal's decision in Igbokwe v. HB Group Insurance Management Ltd. ([2001] O.J. No. 3018).

The Court of Appeal concluded that the Settlement Regulation was never intended to impact Rule 49. Once an action had been commenced, the relationship between the Claimant and the Insurer became adversarial. Offers to settle litigation fell under Rule 49 which was a complete code. The Court of Appeal held that the Settlement Regulation was not designed to accord special rights or impose obligations on claimants and insurers in settling their court proceedings. Essentially, the Court of Appeal’s findings made it unnecessary for Insurers to have a Settlement Disclosure Notice executed where an action had been commenced.

The recent Divisional Court decision in Amyotte v. Wawanesa Mutual Insurance Co.([2013] O.J. No. 3321) has called this practice into question. In this case, the claim was for housekeeping benefits, bad faith, aggravated, punitive and exemplary damages. The Offer to Settle provided for payment "in full and final settlement of all accident benefits claims of the Plaintiff and all claims against the Defendant in the within action." As well, the Offer provided for payment of the Plaintiff's partial indemnity costs.

The Divisional Court held that the Defendant's offer contemplated that, in return for the Defendant's payment to her, she would be required to give up her claim to accident benefits, both past and future. The Statement of Claim, however, was only for past housekeeping benefits. The Court held that an Offer to Settle could only qualify as a Rule 49 offer if it would "settle any one or more of the claims in the proceedings". The Court found that the Defendant's offer contemplated the settlement of much more than that. The Divisional Court concluded that it could not, therefore, be a Rule 49 offer.

As a result of the Divisional Court’s decision, insurers should ensure that Plaintiffs execute Settlement Disclosure Notices where settlements include any benefits other than those listed in the Plaintiff’s Claim.

Topics:  Disclosure, Settlement

Published In: Civil Procedure Updates, General Business Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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