Court File and Parties

[Indexed as: Kumar v. Mutual Life Assurance Co. of Canada]

Shedev Kumar and Rosel Williams, Plaintiffs/Appellants and The Mutual Life Assurance Company of Canada, and Prudential Assurance Company Limited, Defendants/Respondents

George Zicherman, Plaintiff/Appellant and The Equitable Life Insurance Company of Canada, Defendant/Respondent

Ontario Divisional Court McRae, Then, Day JJ. Heard: November 13-15, 2001 Judgment: December 14, 2001 Docket: 38/01, 37/01

Counsel: Paul J. Pape, for Appellant F. Paul Morrison, Dana Peebles, for Defendants, The Mutual Life Assurance Company of Canada and Prudential Assurance Company Limited Marc J. Somerville, Q. C., Ross F. Earnshaw, for Respondent

Endorsement

APPEALS by plaintiffs from judgments dismissing motions to certify actions as class proceedings.

McRae J.:

These two appeals were heard together. Although the parties are different and there are minor differences in the facts, the principal issues are recognized by all parties as being the same. Both are appeals from refusals by Motions judges to certify as class action claims originating from the sale of "premium offset", sometimes referred to as "vanishing premium" life insurance policies. Kumar v. The Mutual Life Assurance Company of Canada, and Prudential Assurance Company Limited ("Kumar") was heard by Cumming J in the first instance. In a careful and thorough judgment, he refused certification. The motion before Cumming J. proposed that the class be defined as All owners of Class Policies purchased from Prudential. Class Policies being defined as

Any participating whole life policy issued by Prudential between January 1, 1980 and December 31, 1995 which is in force as of August 13, 1998 (or "Current Class Policy") or which has become a Lapsed Policy between January 1, 1990 and August 13, 1998 (a "Lapsed Class Policy") except those policies in respect of which the owners have released Prudential from claims related to premium offset or to the sale of the policies.

The common issue presented to Cumming J. was Did the use of illustrations and/or any representations, in writing or verbally create an obligation on the part of Prudential with respect to a specified off- set date despite the terms of the policy and the terms of any illustration?

After careful review, he concluded that "see. 5(1)(c) of the Class Proceedings Act ("CPA") requires that there be common issues of fact or law as a prerequisite of certification". He further concluded that "negligent misrepresentation is a cause of action that is very problematic in seeking certification of a common issue for class members". He then analysed the five elements to be proven to establish liability for negligent misrepresentation found in Queen v. Cognos Inc., [1993] 1 S.C.R. 87 (S.C.C.), at p. 110 and concluded that the claims of the would-be class members do not raise common issues so that the criterion of s. 5(1)(c) of the CPA has not been met.

He also considered the Alternate Dispute Resolution Program ("ADRP") which had been set up by Prudential's successor, Clarica, in his decision to refuse certification.

The appellant argued before us that the judge at first instance should have determined what common issues flowed from the pleadings and that he should have framed common issues broadly in terms such as "was there an organized and systematic marketing of premium off-set policies by the insurance company which was misleading"?

We are of the view that this appeal must be approached as an appeal from the judgment of Cumming J. on the issues as presented to him and as resolved by him. To now argue that the common issue was his responsibility to formulate in language proposed for the first time by appellate counsel is inappropriate. Even if the common issue was reformulated as the appellant suggests, there is no evidence of common complaint with respect to this issue. Indeed, Kumar, the purported representative plaintiff was not misled by the common issue which is now proposed by the appellant's counsel.

In any event, the broadly-defined common issue suggested relies on the same factual basis as that originally promulgated by the plaintiff.

In assessing the suitability of certification in this case, Cumming J. correctly conceived that if the allegation discloses a cause of action, he must not examine the facts with a view to assessing the strength of the allegation. He did, however, recognize that his responsibility required that he look to the allegation to determine if there was an identifiable class and common issues which would merit certification. He concluded, correctly in our view, that there were not.

The issue is not with respect to the use of illustrations or the systematic marketing of "premium offset" policies by the insurance companies, but rather, some individual complaints by some clients about the sales approaches of some agents. Many tens of thousands of policies were sold by hundreds of agents, but a relatively small number of purchasers complained about representations allegedly made to them by agents at the time of sale. These transactions do not present common issues but, rather, individual representations.

Simply put, changing the wording of the common issue does not change the result correctly arrived at by Cumming J.

George Zicherman v. The Equitable Life Insurance Company of Canada ("Zicherman") is an appeal from Ferrier J.'s refusal to certify a claim also relating to "premium offset" insurance. Zicherman was decided after Kumar and the judgment relies in large measure on Cumming J.'s decision.

The class and common issue before Ferrier J. was nearly identical to that presented to Cumming J. It sought to define the proposed class as all owners of Class Policies purchased from Equitable Life. Class policies being defined as:

any participating whole life policy issued by Equitable Life between January 1, 1980 and December 31, 1995 which is in force as of August 31, 1998 (a "Current Class Policy") or which has become a Lapsed Policy between January 1, 1990 and August 13, 1998 (a "Lapsed Class Policy") except those policies in respect of which the owners have released Equitable Life from claims relating to premium offset or to the sale of the policies.

The common issues were presented as Did the use of illustrations and/or representations, in writing or verbally, create an obligation on the part of Equitable Life with respect to the specified offset date despite the terms of the policy and the terms of any illustration?

Again it was argued before us that the motions judge erred in failing to frame new common issues defined in broad terms, and that he should have reviewed the pleadings to determine if they raised any common issues. We disagree. This is an appeal from the decision of Ferrier J. based on the motion that was before him and nothing more.

In any event, the appeal must fail. No matter how the alleged common issues are framed, there is no basis for certification as a class action.

Ferrier J. found correctly that "There is no evidence that any one other than Mr. Zicherman has raised a cause of action. There is no evidence of anyone other than Mr. Zicherman being willing to engage the courts or assert a cause of action". Nothing in the record before him could be said to establish a class.

He reviewed the factual differences between the case before him and in Kumar. He decided that they did not support a different result and that the claims of the class members do not raise common issues. Again, there is no evidence that Zicherman, the purported representative plaintiff was misled by a systematic marketing scheme which is now said to define the common issue.

The recently released decision of the Supreme Court of Canada in Hollick v. Metropolitan Toronto (Municipality), 2001 SCC 68 (S.C.C.) ("Hollick") and Rumley v. British Columbia, 2001 SCC 69 (S.C.C.) ("Rumley") do not, in our view, fundamentally change the law with respect to certification of a class action. In Hollick, there were a substantial number of persons complaining about pollution emanating from a land fill site. This constituted a readily identifiable class yet the court refused certification as the appellant has not shown that a class action is the preferable means of resolving the claims here.

In Rumley, the motions judge, the Court of Appeal and the Supreme Court all found there, was an identifiable class. While the motions judge found that there was no common issue and refused certification, the Court of Appeal and the Supreme Court agreed that the case be certified. The present cases are distinguishable as there are no common issues vis-à-vis the insurance companies.

The recent decision of this court in Rosedale Motors Inc. v. Petro-Canada Inc., (unreported Divisional Court, October 22, 2001), is also distinguishable. There was an identifiable class of plaintiffs who had purchased a Certiguard franchise from Petro-Canada and there was sufficient commonality to authorize certification.

The Court of Appeal in Carom v. Bre-X Minerals Ltd., [2000] O.J. No. 4014 (Ont. C.A.) ("Bre-X") allowed, in part, an appeal from the Divisional Court which upheld the decision of Winkler J. by certifying a class action based on the allegation of negligent misrepresentation along with the other causes of action. It is argued from this that allegations of negligent misrepresentation are inherently capable of class certification. We disagree. Bre-X, rather, stands for the proposition that where there is certification for a number of common issues, judicial expediency is best served if all issues are canvassed in the same action. It does not speak to the problems of lack of commonality in negligent misrepresentation cases.

In both of these cases, the claims are intrinsically individualistic. There is no common issue in either case that would decide any aspect of either negligent misrepresentation claim.

Additional issues now proposed would not move the litigation forward in a legally meaningful way. The motions judges were correct. There is no basis for certification in either case. The appeals are dismissed.

Costs to the respondents, The Mutual Life Assurance Company of Canada and Prudential Assurance Company Limited, fixed at $10,000 in total. Costs to the Respondent, The Equitable Life Insurance Company of Canada, fixed at $10,000. The cross-appeals are dismissed. We see no reason to interfere with the discretionary decisions of the motions judges to refuse costs in either case.

Appeals dismissed.