The recent LAT decision of Victor Galdames vs. Western Assurance Company, 2020 ONLAT 18-005817 is important when considering the capacity of whether an individual has capacity to enter into a full and final settlement of an accident benefits claim.
The Applicant was in an accident that occurred on November 11, 2014. Upon his discharge from the hospital, he was diagnosed with a closed head injury, subarachnoid hemorrhage, and several fractures throughout his body.
The applicant applied for accident benefits on November 24, 2014. On April 3, 2016, he signed a full and final release in settlement of his accidents benefits claim.
Subsequently, on June 30, 2016, the Applicant underwent a capacity assessment which concluded that he was incapable of signing the settlement documentation or instructing counsel. This information was forwarded to Western, with the Applicant requesting that his settlement be set aside. Western did not consent to set the settlement aside.
In going through the arguments, Adjudicator John noted that the Applicant’s medical history both leading to, and during the settlement process, did not override the legal presumption of capacity.
Extensive medical records from a wide variety of medical professionals following the accident found no neurological defects which would compromise the Applicant’s mental capacity. The Applicant was able to demonstrate average GED levels in areas of aptitude, nonverbal intelligence, and problem solving when tested. The Applicant signed the release documents with the benefit of the advice of counsel.
Taken together, Adjudicator John found that the Applicant had sufficient capacity to enter into the settlement agreement. His injuries were primarily orthopaedic rather than cognitive in nature. In the intervening year and half between the commencement of the accident benefits claim and the date upon which the settlement documentation was executed, no less than 5 medical professionals were involved in the Applicant’s care – yet none had raised issues of capacity.
Adjudicator John acknowledged that while the Applicant did sustain genuine physical injuries in addition to depression and anxiety, he had failed to demonstrate how these injuries affected him on the day of settlement or during the 2-day cooling off period.
Adjudicator John concluded that the Applicant’s symptoms were manageable with occupational therapy and did not impact his ability to understand the implications of signing the settlement contract. Adjudicator John found that neither the Applicant nor his original counsel had raised the issue of capacity at the signing of the agreement or during the following 2-day cooling off period. It was not until three and a half months later and new counsel had been appointed for Applicant that any issue regarding capacity arose.
There is a presumption of capacity that exists which must be ousted by evidence to the contrary. The realities of capacity must match the evidence. This decision demonstrates that one capacity assessment done after the time of settlement, versus various expert reports and corroborating medical records which are more contemporaneous to the time of the settlement, are not enough to invalidate a settlement. Such capacity concerns should be raised earlier rather than later if wishing to set aside a settlement on those grounds.