Counsel for the Plaintiff: C. Grant Edwards.
Counsel for the Defendant: Loreen M. Williams.

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HOOD J.:— This is an 18A application brought by the defendant for judgment by the plaintiff in terms of a settlement entered into in writing by the parties on September 1, 1987. In effect the defendant seeks judgment from the court that the settlement is binding and enforceable. The plaintiff defends the motion on the basis of undue influence, unconscionable bargain and community morality. The first defence was abandoned during argument.

I have before me the affidavit of the ICBC adjuster, John Znoj ("Znoj") who negotiated the settlement with the plaintiff, and the affidavit of Valeria Taylor, an employee of counsel for the plaintiff. Both counsel agreed that the latter affidavit should not be considered as evidence in this trial save for the portions of the transcript, of the evidence given at discovery by the plaintiff, attached to it; that in particular I should not refer to the medical/legal report attached to the affidavit since it was obtained long after the settlement date of September 1, 1987. am told that it does not contain any evidence or suggestion that as of September 1, 1987 any injuries suffered by the plaintiff in the accident were missed or overlooked. It is simply an update with regard to the injuries she suffered in the accident. Hence, I have not looked at it. I also have before me an earlier affidavit of Znoj which was filed in the action on a previous motion, and the statements made by counsel.

In addition counsel have referred me to two cases, both unreported, Cougle v. Arrow Transportation Systems Inc., a February 16, 1983 decision of the Court of Appeal and Gregory v. Gerbrandt. a March 10, 1986 decision of Meredith J.

The plaintiff was injured in a motor vehicle accident which occurred on December 15, 1986, when her vehicle was struck from behind and driven forward into the vehicle in front of her vehicle. Liability has been admitted.

The injuries alleged to have been suffered by the plaintiff are set out in paragraph 5 of the statement of claim as follows:

1. pain and injury to the back;
2. limitation of movement of the back;
3. pain and injury to the neck;
4. limitation of movement of the neck;
5. headaches;
6. rash;
7. emotional distress.

The plaintiff was taken to hospital and examined in the emergency ward by Dr. Murray Hein who found her to have suffered cervical muscle strain. X-rays were apparently negative. Dr. Hein prescribed a cervical collar and Tylenol 3 tablets, to be taken 1 every four hours, and she was allowed to go home,

She was seen by her family doctor, Dr. Hunter, three days later, on December 18, 1986. According to his report dated April 29, 1987 she told him then that she was feeling shaky and dizzy and had neck pain which had increased since the accident. On examination Dr. Hunter found "there was tenderness in the posterior strap muscles of the neck, and nystagmus could be illustrated to the right". She was put on Ansaid, which is an anti-inflammatory medication.

Dr. Hunter's associate, Dr. Kirkpatrick, saw the plaintiff on December 4, 1986. She was suffering from a rash brought on by the Ansaid. She had taken the whole of the Tylenol 3 prescribed by Dr. Hein. She complained of general malaise and of pain persisting in her neck muscles.

The plaintiff was referred for physiotherapy and her condition gradually improved. General improvement was noted on February 6, 1987.

She was seen again by Dr. Hunter on February 27, 1987, approximately 10 weeks after the accident. At that time she complained of increased pain in her left shoulder and down to the lower back, which she had been experiencing for approximately 5 days. She was found to be tender over the deltoid muscles and in the lumbar spine at the L2 and L3 levels. She was told that the pain in the lower back "was probably secondary to the pain in the cervical spine curvature" and she was again sent for physiotherapy and given a prescription for Voltaren, which is an analgesia.

The plaintiff was not seen by Dr. Hunter again at least up until April 29, 1987 which is the date of his report. According to the plaintiff's discovery evidence she had not recovered during this period but was in fact seeing her physiotherapist and had not considered it necessary to see Dr. Hunter.

According to his affidavit Znoj has been an adjuster for some 17 years, 15 of which were with ICBC. He assumed conduct of the plaintiff's file on March 5, 1987 and phoned her on March 16 with regard to the state of her injuries. If I read his notes for that date correctly they read "getting better", "physio and "leave it for a month" and "can't settle". I cannot make out the rest of the note. In fact I have some difficulty reading his notes attached to his affidavit since they have not been typed.

According to his April 10, 1987 note he called the plaintiff and his note with respect thereto includes the words "was still getting physio".

According to Dr. Hunter's report Znoj wrote to him on April 14, 1987 obviously requesting a report. Znoj's letter is not in evidence. His April 14 notation refers to a medical report and to Dr. Hunter.

On April 27, 1987 Znoj again spoke to the plaintiff. She told him at that time that she was going to the United Kingdom for, 4 months leaving on the following Monday. He says "she told me that she would discuss her claim with me at the end of August when she returned." The April 27, 1987 handwritten notation includes the following "is almost O.K. -- but will keep receipts if physio needed in the U.K. Back end of August." There is no reference to her saying she would discuss her claim when she returned.

Znoj's note for August 27, 1987 appears to be "-letter to her at end of August and she should be back soon from U.K. Tops $1500". His August 31, 1987 note refers to a letter to the plaintiff and he says that this indicates a letter was sent to the plaintiff requesting that she contact his office upon her return. The letter is not in evidence.

The plaintiff attended at the ICBC claims centre on September 1, 1987 and met with Znoj. According to him they discussed and agreed on her loss of wages from her part time job at McDonalds at $81.00 and her expenses for physiotherapy treatments she received in the U.K. at $50.00. He says they then discussed Dr. Hunter's medical/legal report and that he then advised the plaintiff that ICBC would pay $2500 to settle her claim for general damages plus the wage loss and special damages referred to for a signed release of all claims. He said the plaintiff agreed to the settlement and executed the required form of release which is in evidence. However, she was not paid the settlement funds in the sum of $2631.00 at that time, probably due to computer delay.

On the same day Znoj received a telephone call from the plaintiff's father who accused him of forcing the plaintiff to settle her claims "under duress". On September 3, 1987 the plaintiff attended at the claim centre and handed to Znoj a letter dated September 2, 1987 wherein the plaintiff purports to revoke her acceptance of the settlement offer made on September 1, 1987:

• Due to the fact, I feel that my acceptance was not made with willing and voluntary mind and was made under duress.
• I further feel that this offer is unacceptable due to the fact that my injuries are nowhere near resolved and are the continuous subject of medical investigation.

Znoj says in his affidavit that he is always mindful when negotiating settlements with claimants to ensure that they understand what the settlement offer represents and that he always reviews medical information with the claimant at that time "so that they are aware of the basis upon which the settlement is made". He said he followed his usual practise when dealing with the plaintiff. He says in particular that he reviewed the settlement offer with her and "also discussed her physical condition". He did not say, nor did he note, what her condition was at that time. That, of course, was an important factor for him to ascertain in order to properly assess the value of her claims at that time.

Znoj also says that prior to the plaintiff signing the release he determined that she was 19 years of age, he told her that she had 2 years from the date of the accident within which to commence a legal action and that he also told her "that she could retain a lawyer for that purpose if she wished to do so". He also said that he considered the settlement agreed to by the plaintiff to be a fair and reasonable settlement for the injuries she sustained in the motor vehicle accident. He does not say that the settlement is in line with other settlements involving similar injuries and circumstances.

I do not accept Znoj's statement or opinion that the settlement was a fair and reasonable settlement for the injuries sustained by the plaintiff. Znoj either ignored the plaintiff's advice as to the state of her injuries after February 27, 1987, and while she was in Europe, and her physical condition at the time of their meeting, or he failed to obtain the information which was readily available from the plaintiff. I will have more to say about this in a moment.

The Plaintiff acknowledges that she discussed the settlement of her claim with Znoj on September 1, 1987 and that she knew what she was doing when she signed the release. The sole issue therefore is whether that release should be sat aside or rescinded on the basis that the bargain is unconscionable or does not meet the community standards of commercial morality.

I turn now to the plaintiff's evidence as contained in the portions of the transcript of her discovery evidence before me. At the time of the settlement the plaintiff was a university student and worked part time at McDonald's. She had just turned 19. She says that Znoj called her a few days after she returned from Europe and asked her to come down to see him. When she went to his office she was not anticipating a settlement. She says she thought it would "be like the other visits where he just sort of asked me how I was doing". She says that Znoj "sort of said well, it was time to, you know, make a settlement and he just started, you know, writing down figures and stuff like that and ...; that "I wasn't thinking of settlement at this time ...."

When asked whether they discussed her neck and back as well as the physiotherapy treatments she had received in Britain she said "well actually, he sort of took control of the discussion ...."

With regard to Znoj's advice to obtain a lawyer she says:

• ... he's writing down these figures and then he said, O.K., well, you know, I understand, you know, we can settle this now or you can get a lawyer and we can drag this thing through the courts and, you know, I will ask for...you can ask for ten million dollars, the other person counter-suits, and he was going on like this. You know, it seemed to me, you know, I can sign this now or I can go on through the courts for the rest of my life.

And:

• Well, he said something to the effect, you know, that, you know, we could get lawyers, battle this out, you know, asking: "Well, I want a million dollars." "Well, I am countersuing for ten million dollars" and stuff like that. He just sort of made it sound like it would be stupid to go through all this, you know, lawyer business.

And:

• I felt like I couldn't leave that office until I told him that I ... until either I signed it or I told him that I would get a lawyer and go to court, and at that time I had no notion of what ... you know, have any lawyers or anything of the kind so ... and to me ... I don't know, it may sound stupid, but to me it sounded like the only thing I could do at the time. I didn't know. I didn't think of calling or anything.

And:

• Yeah. But the ... just the way he put it, it sounded like it was going to be a huge big deal, you know, like something like that. Like, I ... I myself didn't know much about lawyers or anything.

She said also:

• I didn't think I had a choice. It seemed like, you know, he decided that this was ... this was the meeting that we were going to decide if we were going to have a settlement or not and I didn't feel like I could leave if I didn't, you know, give an answer.

She acknowledges that there was probably some lack of communication between them. She does not think that Znoj realized that she still had back pain. She said she told him that she had physiotherapy in Britain. She does not know what he thought about her back; but she was not really thinking about it when she signed the release. At the time she had just returned from Europe, she was broke and she was thinking about registering for her university courses the next day. She said she did not know what a fair settlement was and that "I figured he knew more about it than I did".

She says that at the meeting she did read Dr. Hunter's report but that "I didn't pay as much attention to it as I probably should have". She says that the problem was that Dr. Hunter presumed that she was feeling better and functioning normally and that therefore Znoj presumed that she was feeling much better and functioning normally "when in fact I wasn't I was seeing a physiotherapist at the time". She says she did not see this until later and by this I took her to mean that she really did not read Dr. Hunter's report until after the settlement was completed.

She also said that she thought Znoj thought that she was completely better. In this regard she said "he must have or something because otherwise, you know, I don't think he would have settled right then". When it was suggested to her that she knew she was not better she said:

• Well, I knew. I knew I wasn't ... not going to get much better. I mean, you know, I told him ... I think I told him that. I can't really remember. But, like, I've ... you know, like I've said, I've had this back pain steady. I mean, the same thing for, what, 2 years and, you know, if it hasn't, you know, changed, I don't think I've just gotten used to it.

She was asked why at the time she signed the release she did not think she was going to get better. She said:

• Because ... well, because, I mean, the pain ... well then the pain had lasted, you know, since what, six months. I don't know, like I've never had it, you know, had it before. I've never had steady pain for that long. I mean, I couldn't imagine it just being gone.

She then acknowledged that knowing the pain would continue, or that at least she thought it was going to continue, she executed the release.

The plaintiff's evidence then makes it clear that she had continued to have back pain since the accident and was still experiencing it at the time the release was signed. Two questions immediately come to mind. Why did the plaintiff not make it clear to Znoj that she had experienced pain in her back since the accident and was continuing to experience it? And why did Znoj not make sufficient enquiries as to the condition of her injuries over the six month period and at the time of the meeting in question? The plaintiff did tell him that she had to have physiotherapy treatments in the United Kingdom.

There is an answer to the first question, if in fact she did not adequately explain her condition, and that is the inequality of the position of the plaintiff and Znoj and his complete domination of the conversation and of the plaintiff. I will have more to say about this in a moment. There is no answer to the second question if in fact Znoj did not make adequate enquiry as to the plaintiff's situation over the six month period as well as at the time of the meeting. He could not assess the value of her claims properly without that information and it was clearly available to him.

The leading case in this province, and elsewhere, on the doctrine of unconscionable bargain is the judgment of the Court of Appeal in Morrison v. Coast Fin. Ltd. (1965) 55 DLR (2d) 710 which is referred to and of course followed in Cougle. In Morrison Davey J.A., with whom Bull J.A. agreed, said this at page 713:

• ... a plea that a bargain is unconscionable invokes relief against an unfair advantage gained by an unconscientious use of power by a stronger party against a weaker. On such a claim the material ingredients are proof of inequality in the position of the parties arising out the ignorance, need or distress of the weaker, which left him in the power of the stronger, and proof of substantial unfairness of the bargain obtained by the stronger. On proof of these circumstances, it creates a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and reasonable....

In my opinion the principles outlined above have been convincingly met in the case at bar. The facts clearly demonstrate to me that during the discussion between the plaintiff and Znoj and at the time that the settlement agreement was signed the inexperienced 19 year old plaintiff was not on equal footing with the 17 year veteran adjuster. I cannot read the whole of the plaintiff's evidence without reaching the conclusion, and I so conclude, that the settlement resulted from an unconscious use of power by a much stronger party against a much weaker one. The discussion between the two was dominated by Znoj as was the plaintiff. She was clearly overborne by him.

She had just returned from Europe, she was broke and she was thinking in terms of registering for her courses on the following day. She was asked to come down to the claims centre. She was not thinking in terms of settlement. She did not know what a reasonable settlement would be but thought that Znoj would know. Znoj immediately took control of and dominated the discussion. It is true that she was told that she could retain a lawyer. However, as is often the case, how something is said is just as important as what is said. The manner in which the plaintiff was told that she could consult a lawyer no doubted contributed substantially to the settlement. She was left feeling that to consult counsel was such a "hugh big deal" and lengthy process that it would be "Stupid to go though". In her mind the only thing she could do was to sign the release.

I am also of the opinion that the settlement was substantially unfair. The settlement itself is evidence of the inequality of the plaintiff and Znoj. In my view no reasonable counsel given the facts known by Znoj at the time of the settlement would have recommended the settlement.

Znoj knew from Dr. Hunter's medical/legal report dated April 29, 1987 that when the doctor last saw the plaintiff on February 27, 1987 she was complaining of increased pain-in the left shoulder and down to the lower back and that a further course of physiotherapy had been recommended. He also knew that the doctor was of the opinion that at that time she was totally disabled. He knew as well that the doctor had not seen her since February 27, 1987 and that the doctor's post February 27, 1987 views or opinions i.e. "it is presumed that she is feeling much better and functioning normally" was pure speculation on his part. He knew around mid-April, some four months after the accident, prior to the plaintiff's departure for the U.K., that the plaintiff was still having problems and was anticipating that she might require physiotherapy treatments while in the U.K. Znoj also knew that while in the U.K. on vacation the plaintiff had sufficient problems with her injuries that she sought out and obtained some physiotherapy treatments.

In those circumstances Znoj should have questioned the plaintiff about her post February 27, 1987 condition of neck and back and he would have learned that she had had continuing problems and was experiencing them at the time. If he did so then clearly his assessment of $2500.00 for non-pecuniary loss was substantially unfair as of September 1, 1987. While the plaintiff did not lead evidence of other settlements involving similar injuries to establish that $2500.00 for non-pecuniary loss was disproportionate to or substantially lower than other similar settlements, I am satisfied that such is the case. It may be true that on the whole out of court settlements are lower than awards made by this court. However, I am satisfied that even when an appropriate adjustment is made for the difference between settlement and award that the value of the plaintiff's claim for non-pecuniary loss on September 1, 1987 was far in excess of $2500.00.

It is common knowledge that such neck and back injuries are often slow to heal. The plaintiff had experienced continuing problems since the accident and was experiencing them on September 1, 1987 some nine months after the accident. While I do not have before me a September 1, 1987 up to date medical/ legal report, and one probably should have been obtained, and I do not know the prognosis at that date, there is an abundance of reported decisions wherein plaintiffs suffering from similar injuries for nine months plus had been awarded sums substantially in excess of $2500.00 for non-pecuniary loss. I have concluded therefore that the plaintiff has established the substantial unfairness of the bargain.

If Znoj did not in fact ascertain the post February 27, 1987 condition of the plaintiff's neck and back, and the fact that she was still experiencing problems at the time of their meeting, notwithstanding his knowledge that the plaintiff had received physiotherapy treatments while on holidays, is Znoj in a better position? I think not. It is true that I must look at circumstances that were known to Znoj on the date of the settlement. See Cougle. However, In addition to the circumstances which "were known" I would add circumstances which the adjuster "should clearly have known".

Information as to the condition of the plaintiff's neck and back since the accident and, in particular, as of September 1, 1987 was clearly available to Znoj. He simply had to make enquiries of the plaintiff. Surely such information was vital to his assessment, particularly if he was going to assure the plaintiff that his assessment was fair and reasonable and wished to maintain that it was in this court. In my view if he did not obtain that information the situation is the same, that is his assessment should be viewed in light of that information. I should add also here that I would very much doubt that an adjuster with Znoj's experience would not ascertain the post February 27, 1987 condition of the plaintiff's neck and back and her condition as of September 1, 1987 before making his final assessment.

If I am wrong and if it was not necessary for Znoj to obtain this information before making his final assessment and the settlement then my opinion remains the same. The circumstances then known to him were that two months after the accident the plaintiff was experiencing increased pain in her shoulder and low back, was totally disabled as of February 27, 1987 and was about to commence a second series of physiotherapy treatments. According to his notes he knew on March 5, 1987 that she had recently had a relapse, by April 10, that she was still receiving physiotherapy and this was shortly before she left for the U.K. He knew also that while in the U.K. she had further physio. Hence, if this is the only information which is to be considered as known to Znoj at the time of the settlement, I remain of the opinion that the plaintiff has established the substantial unfairness of the bargain and that if the defendant is to succeed it must be established on his behalf that the bargain was fair, just and reasonable.

Finally I turn to the single question test propounded by Lambert J.A. in Harry v. Kreutziger (1978) 9 BCLR 166 and referred to again by his Lordship in Cougle viz is the transaction, seen as a whole, sufficiently divergent from community standards of commercial morality that it should be rescinded. Counsel for the plaintiff argued as if divergence from community standards of commercial morality was a separate principle upon which the court may move to rescind a concluded bargain. However, it seems to me that Lambert J.A. was advancing the standard or test as perhaps a more efficient process of reasoning in reaching a decision. In any event given the circumstances known to Znoj at the time that the release was signed, and I include therein circumstances or information which was important to his assessment and which was clearly available to him, I am of the opinion that the concluded bargain was such a marked departure from community standards of commercial morality that the settlement should be rescinded.

I turn now to the final issue which is whether the defendant can establish that the bargain was fair, just and reasonable. Counsel for the defendant argued that I should accept Znoj's statement that on September 1, 1987 he considered the settlement to be a fair and reasonable settlement for the injuries sustained by the plaintiff and find that his honest belief of the reasonableness of the settlement established that the settlement was not unfair. She cites Gregory for this proposition.

I find it difficult to accept the proposition that when an adjuster's settlement is challenged as being unconscionable his opinion that it was reasonable should be determinative of the issue. In my view such evidence at its highest level would only be some evidence to be considered and would generally bear little weight. It is not the adjuster's opinion as to his assessment which is important. It is the circumstances known to him, and which reasonably ought to have been known by him, which is important. Once these facts have been found then the court must consider the question of whether or not the bargain was fair. The court can compare the settlement to other ICBC settlements where the injuries and other circumstances were similar to those in the case at bar. The adjuster may give his opinion that the settlement concluded by him was in line with the comparable settlements and his evidence in that regard would have to be considered.

While a comparison to other ICBC settlements may be preferable it is not the only means by which this court can test the fairness of a settlement in all cases. The experience of the court can be called upon particularly where the plaintiff has not called evidence of other iCBC settlements, where the injuries and circumstances were similar, to show that her settlement was disproportionate to or well below those settlements. Such a task may be difficult or almost impossible for a plaintiff to perform. That information, of course, would be readily available to ICBC. In any event, in the case at bar, neither party led evidence of comparable settlements.

In Gregory after the settlement the plaintiff suffered complications caused by the accident. Those complications were not foreseen by the plaintiff or by ICBC at the time of the settlement. As I read the case there was really no dispute as to the fairness of the settlement given the state of knowledge of the adjuster, as well as that of the plaintiff, at the time of the settlement. Here we are concerned with the circumstances known by the adjuster at the time of the settlement and perhaps with circumstances which he clearly should have known, and the two cases are not the same.

I do not read Gregory as holding that the opinion of the adjuster as to the fairness of his very settlement being questioned must be determinative. Nor do I read it as saying that the only way the court can decide whether or not a settlement is fair is by comparing it to comparable ICBC settlements put in evidence. The observations made by Meredith J. were clearly made on the basis of the facts before him and, I am sure, were not meant to be of general application.

It will follow from what I have said that in my view the defendant has not met the onus of proof upon him, as laid down in Morrison, that the settlement was fair, just and reasonable.

Finally I wish to make some observations about Znoj and the real defendant in the action, ICBC. The defendant, Szep, of course, has played no role in the matters giving rise to these proceedings.

The court is never unmindful of the fact that its decisions affect the lives and reputations of persons and corporations. Generally this cannot be helped. When a person or corporation steps, or is brought, into the litigation ring they are bound by the final results which become public knowledge. The concern I address here arises from the fact that once the inequality in the position of the parties, and the substantial unfairness of the bargain, has been established, and I have found it to be so, then a presumption of fraud on the part of Znoj and ICBC arises.

Znoj was not cross-examined on his affidavit and his only evidence before me is that contained in his affidavits. Both counsel assured me in argument that there was no question of credibility between him and the plaintiff, that if anything there were only minor conflicts in the evidence. This proved to be fairly accurate and any apparent inconsistencies appear to be more due to lack of evidence on a particular point than anything else.

The pleadings do not really set out the issues raised and argued on the motion and, in particular, unconscionable bargain and community morality. Fraud on the part of Znoj (and therefore ICBC) was neither pleaded nor argued by counsel for the plaintiff. Fraud per se was not an issue on the pleadings and in the 18A trial. In fact it is not necessary to find fraud in order to find that a transaction should be set aside because of the fact that it is in law unconscionable or against community standards of commercial morality.

It is true that in law a presumption of fraud is created when the plaintiff establishes that the bargain is unconscionable. However, the fraud referred to does not mean acts of deceit on the part of Znoj and on the evidence I have not found that Znoj, and therefore ICBC, deliberately set out to defraud the plaintiff. The fraud presumed means an unconscientious use by him of the power or domination which arose out of the circumstances and which he had over the plaintiff. It is fraud which had to be presumed by the curt in ancient times for reasons which probably no longer exist at the present time.

In serving his employer, ICBC, Znoj's duties or interests were not those of the plaintiff. He is and was in the business of settling claims and closing files as quickly as he reasonably can. He is not there to give money away but to settle claims for what they are worth and what they are worth would depend on many factors including what a plaintiff will accept. He can and no doubt does discharge his duties to his employer to the best of his abilities. However, his over exuberance in settling the plaintiff's claims, in the manner outlined above, is neither appropriate nor excusable in law. The plaintiff was no match for, and was overborne by, him. His peers in his commercial community would say this is not fair, this does not meet our standards.

The defendant's motion is dismissed with costs to the plaintiff in any event of the cause.

HOOD J.