An Ontario tribunal denied Pembridge Insurance's bid to recover $34,000 in settlement funds, finding the insurer had met its accident benefits obligations.
The dispute began with a routine settlement that unraveled over where a cheque was sent.
The insured was injured in an automobile accident on December 19, 2022, and claimed statutory accident benefits from Pembridge under Ontario's Statutory Accident Benefits Schedule. On July 30, 2024, he agreed to settle the claim on a full and final basis for $34,000, all-inclusive, signing both a Settlement Disclosure Notice and a Full and Final Release.
Days later, on August 4, 2024, Pembridge issued the $34,000 by cheque payable directly to the insured. He negotiated it on August 12, 2024.
The problem, in the insurer's view, was direction. Pembridge argued the money should have gone to Grillo Law Professional Corporation, in trust - the insured's legal representative - under a direction in the Full and Final Release. Paying the insured directly, it said, was an error.
Pembridge moved to recover the funds. On October 16, 2024, it sent a registered demand letter relying on section 52 of the Schedule, which it said makes an insured liable to repay amounts paid in error. It also issued a second $34,000 cheque, this one payable to Grillo Law in trust, backed by an undertaking that the firm would hold the insured's portion until the original sum was repaid.
Vice-Chair Robert Maich was not persuaded. He drew a line between the two documents the parties signed. The Settlement Disclosure Notice was executed under the Schedule and sat within the Tribunal's jurisdiction. The Full and Final Release did not.
Reviewing the Settlement Disclosure Notice, Maich found it made no reference to Grillo Law or any direction to pay the firm in trust. The direction Pembridge relied on appeared only in the Full and Final Release, a document he found was not made under the Schedule and fell outside the Tribunal's jurisdiction.
That distinction decided the case. Maich found Pembridge had fulfilled its obligation under the Schedule by paying the insured as provided in the Settlement Disclosure Notice. Whether the funds should have gone to Grillo Law instead was, he wrote, a "contractual solicitor/client issue" between the insured and the firm, not a matter for the Tribunal.
He pressed the point on jurisdiction. Once the Settlement Disclosure Notice was served on the Tribunal, he found, its jurisdiction became functus, and later disputes between the parties fell outside its reach. The Tribunal has no power to enforce agreements made outside the Schedule, he added, and the Schedule is consumer protection legislation that cannot be read against its purpose.
The result: Pembridge is not entitled to repayment of the $34,000, or to interest. The respondent, who was self-represented and not present, made no submissions.
For claims professionals, the decision turns on a practical point - which document carries a payment direction, and whether that document falls under the Schedule, can decide whether a settlement overpayment is recoverable at the Tribunal at all.
