The Saskatchewan Court of Appeal overturned the decision of the Queen’s Bench setting aside a settlement of a damage claim for personal injuries sustained in a minor car accident. The Court held that the trial judge erred in concluding that the Insurer ("SGI") misused its position of power in an unconscionable manner where the Plaintiff had suggested the settlement, the amount was set objectively using an SGI formula, and the Plaintiff declined to discuss the proposed settlement with her mother or anyone else.
The Plaintiff was involved in a minor automobile accident on November 22, 1994. She had previously been injured in a MVA March 1993 and had settled that claim for $6,500. The Plaintiff was 21 years old and had a Grade 12 education. On two separate occasions, the Plaintiff called the adjuster for SGI and attempted to settle her 1994 MVA claim. On both occasions, the adjuster had suggested that settlement was premature. The Plaintiff suffered another motor vehicle accident in June 1995. Ultimately, the Plaintiff met with the adjuster and agreed to settle the 1994 MVA claim for $4,500. The Plaintiff signed a Release relieving SGI of further liability. The Plaintiff received and spent the money. About six months later, the Plaintiff sued SGI seeking to set aside the settlement on the ground that it was an unconscionable transaction. At trial, the judge found that the adjuster had effectively, if unintentionally, misled the Plaintiff to believe that it was necessary to settle the 1994 claim in order to obtain benefits in relation to the 1995 claim and set aside the settlement.
The Court of Appeal reviewed the principles which govern the issue of unconscionability as set out in Dolter v. Media House Productions Inc. (2002), 227 Sask.R. 153:
- Significant inequality in bargaining position exists between the parties based on factors such as the relative knowledge and education of the parties, the financial needs of the weaker party, or other circumstances;
- The stronger party has used its position of power in an unconscionable manner to achieve a material advantage over the weaker party; and
- The bargain arrived at has given the one party a grossly unfair advantage over the other, or is otherwise sufficiently divergent from community standards of commercial morality to warrant it being set aside.
In this case, the Court of Appeal noted that the Plaintiff was relatively experienced in these matters, having settled a previous claim the year prior. The Plaintiff herself had suggested settlement twice and the settlement amount agreed at was set objectively using a SGI formula. The adjuster had specifically asked the Plaintiff if she wanted to discuss the proposed settlement with her parent or anyone else and the Plaintiff declined. Taking all of these factors into account, the Court of Appeal was of the view that the trial judge erred in concluding that SGI misused its position of power in an unconscionable manner to achieve the material advantage.
In the result, the judgment below was set aside and the action was dismissed.