A release obtained by an adjuster was not binding because prior to obtaining the release, the adjuster failed to obtain all of the relevant medical information necessary to assess the claim, and because the adjuster dissuaded the releasee from consulting with a lawyer

29. June 2004 0

Lidder v. Munro, [2004] B.C.J. No. 1379, British Columbia Supreme Court

Mr. Lidder was injured in a motor vehicle accident when he was rear-ended by Mr. Munro. The day of the accident, Mr. Lidder was seen by his general practitioner, who provided a medical report to ICBC, Mr. Munro’s insurer, indicating that he expected Mr. Lidder to make a full recovery from his injuries. Over the next several months, Mr. Lidder’s condition improved significantly, and he was discharged from a physiotherapy program with the notation that he had made a full recovery. However, after his discharge from the program, his general practitioner noted that Mr. Lidder’s recovery was not complete, that he was still symptomatic, and that his cervical spine showed signs of degenerative changes.

The adjuster assessing the claim contacted Mr. Lidder and asked him to attend at her office to see if they could resolve his claim against Mr. Munro. Mr. Lidder attended at the adjuster’s office, and brought a friend to act as an interpreter. During this meeting, the adjuster offered Mr. Lidder $3,000 for pain and suffering, plus $3,000 for wage loss. Mr. Lidder protested that the settlement was insufficient and left the meeting. Six weeks later, the adjuster phoned Mr. Lidder and asked him to attend at her office within an hour to see if they could resolve the claim. Mr. Lidder did not have time to arrange for an interpreter, so an employee of ICBC acted as an interpreter for Mr. Lidder. At this meeting, the adjuster advised Mr. Lidder that if he were to retain a lawyer, the lawyer would take up to 30% of the settlement, that it would take longer to resolve his claim, and that there would be no difference on the wage loss issue because his employer indicated that Mr. Lidder would have been laid off. The adjuster conceded that she did not know if her advice with respect to the lawyer was necessarily true. A settlement for a full and final release was made for $6,500.

Mr. Lidder’s problems worsened after he signed the release, such that six months after he had signed the release he was essentially unemployable for all but very light work. Mr. Lidder commenced an action against Mr. Munro, and challenged the release that he had signed with ICBC on the basis that it was an unconscionable agreement.

Rice J. determined that the adjuster had not obtained adequate medical information to properly assess the claim. Specifically, Rice J. noted that updated medical reports were not ordered, Mr. Lidder’s claims history was not investigated, and no enquiries were made directly to Mr. Lidder with respect to his recovery at the time that the release was obtained. Rice J. concluded that the adjuster took shortcuts in an attempt to resolve the matter quickly and economically; and that these short cuts resulted in an assessment of the claim that worked to Mr. Lidder’s disadvantage. Rice J. noted that his decision was significantly persuaded by the fact that the adjuster had induced Mr. Lidder to sign the release, with potentially false information, with respect to whether he should consult with a lawyer. Rice J. determined that these facts, coupled with the insurance company’s appetite for settlement, led to a “sacrifice of fairness to efficiency, something not likely to be thought of by the public as morally acceptable”; and struck down the release as an unconscionable agreement.

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