COURT FILE NO.: 10-CV-411183CP
DATE: 20151112
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ELDON FEHR, ANGELA WATTERS, GAETAN LAURIER, LESLIE MICHAEL LUCAS, JAMES PATRICK O’HARA, REBECCA JEAN CLARK, and LLOYD SHAUN CLARK
Plaintiffs
– and –
SUN LIFE ASSURANCE COMPANY OF CANADA
Defendant
Won J. Kim, Michael C. Spencer, Megan B. McPhee, and Glenn Brandys for the Plaintiffs
F. Paul Morrison, Glynnis P. Burt and Carole J. Piovesan for the Defendant
Proceeding under the Class Proceedings Act, 1992
HEARD: September 28, 29, 30, October 1, 2, 5, 6, and 7, 2015
Perell, J.
CORRECTED REASONS FOR DECISION
CORRECTION NOTICE
The text of the original decision was corrected on December 18, 2015 with respect to paragraphs 3, 66, 73, 91, 95, 118, 353, 456 and 498.
A. INTRODUCTION AND OVERVIEW
[1] The Plaintiffs, Rebecca Jean Clark, Lloyd Shaun Clark, Eldon Fehr, Gaetan Laurier, Leslie Michael Lucas, James Patrick O’Hara, and Angela Watters bring a motion to have their $2.5 billion action against Sun Life Assurance Company of Canada (“Sun Life”) certified as a class action under the Class Proceedings Act, 1992, S.O. 1992.
[2] Sun Life resists certification, and it brings a cross-motion to have each of the Plaintiffs’ individual actions dismissed as statute-barred under provincial limitations statutes. Five provinces’ limitation statutes are engaged.
[3] The Plaintiffs’ proposed class action involves four universal life insurance policies. The policies were sold by Metropolitan Life Insurance Company (“MetLife”) between 1985 and 1998. The policies were all prepared in Ontario, where MetLife’s Canadian head office was located. The policies, which were sold by MetLife sales agents, were: (1) Interest Plus (1985‑1998); (2) Universal Plus (1987‑1998); (3) Flexiplus (1992‑1998); and (4) Optimet (1998). Over 230,000 policies are involved in the proposed class action, which involves misrepresentation claims about the sale of the policies by the MetLife sales agents and also breach of contract, deceit (fraudulent misrepresentation), and breach of a duty of good faith claims against Sun Life, which purchased MetLife’s book of business in 1998 and which now administers the insurance policies.
[4] The proposed Representative Plaintiffs’ claims concern alleged misrepresentations made at the time when the four types of insurance policies were sold by MetLife agents. The proposed Representative Plaintiffs’ claims also include breach of contract claims about the “Cost of Insurance” in two of the four insurance policies and a claim for a declaration about an alleged inchoate breach of contract concerning the “Maximum Premium” provision in three of the four insurance policies. There is also a claim by the Representative Plaintiffs for the rescission of releases signed by a sub-group of the proposed Class Members, which releases stand in the way of their making claims in the proposed class action. And, the Representative Plaintiffs advance a deceit (fraudulent misrepresentation) and breach of good faith and fair dealing claim both offensively as a cause of action and defensively as a counter to Sun Life’s limitation period defences.
[5] In what I will label the Omnibus Class Action, the claims of the proposed Representative Plaintiffs may be listed as follows:
THE OMNIBUS CLASS ACTION - CAUSES OF ACTION
Misrepresentation Claims:
Interest Plus lifetime‑coverage misrepresentation
Ms. Clark/Watters
Interest Plus, Universal Plus, Flexiplus, and Optimet misleading illustrations, vanishing premiums, and depletion of Accumulation Fund misrepresentation
Ms. Clark/Watters/ Laurier/Fehr Fehr/Clarks/Lucas/ O’Hara
Universal Plus, Flexiplus, and Optimet “Maximum Premium” misrepresentation
Laurier/Fehr Fehr/Clarks/Lucas/ O’Hara
Flexiplus level Cost of Insurance misrepresentation
Fehr/Clarks/Lucas
Optimet Cost of Insurance (year nine) misrepresentation
O’Hara
Interest Plus, Universal Plus, Flexiplus, Optimet pattern and repeated practice at time of sale misrepresentation
Ms. Clark/Watters/ Laurier/ Fehr Fehr/Clarks/Lucas/ O’Hara
Breach of Contract Claims:
Universal Plus Maximum Premium (1987, 1992/94, 1998 standard forms) breach of contract
Laurier/Fehr
Flexiplus Maximum Premium breach of contract
Fehr/Clarks/Lucas
Flexiplus Cost of Insurance (“COI”) breach of contract (2001, 2006, 2015 breaches)
Fehr/Clarks/Lucas
Flexiplus Administrative Fee breach of contract (2001, 2006 breaches)
Fehr/Clarks/Lucas
Optimet Maximum Premium breach of contract
O’Hara
Optimet COI breach of contract (2007)
O’Hara
Optimet COI (year nine) breach of contract
O’Hara
Deceit/Breach of Duty of Good Faith
Interest Plus, Universal Plus, Flexiplus, Optimet deceit and breach of a duty of good faith for the failing to disclose the pattern and repeated practice of misrepresentation
Ms. Clark/Watters/ Laurier/Fehr Fehr/Clarks/Lucas/ O’Hara
Rescission
Flexiplus Options Program /Releases Claims
Clarks
[6] The factual background to the proposed class actions involves not only the MetLife sales agents’ alleged misconduct but also litigation between Sun Life and MetLife arising from the agents’ misconduct. As will be seen, the Plaintiffs rely very heavily on the Sun Life v. MetLife litigation as establishing common issues for the proposed class action against Sun Life and as providing a rebuttal to Sun Life’s limitation period defence.
[7] Further, the factual background involves the procedural history of the proposed class action itself, which history has had a potent role to play in determining the nature of the claims that are being advanced, which have developed and changed as the litigation progressed over the five years it has taken to get to a certification hearing.
[8] Further still, a similar misrepresentation case against an insurance company, Williams v. Mutual Life Assurance Co. of Canada, 2000 22704 (ON SC), [2000] O.J. No. 3821 (S.C.J.), aff’d. 2001 62770 (ON SCDC), [2001] O.J. No. 4952 (Div. Ct.), aff’d. sub nom Kumar v. Mutual Life Assurance Co., 2003 48334 (ON CA), [2003] O.J. No. 1160 (C.A.), leave to appeal ref’d. [2003] S.C.C.A. No. 283, also has a very important role to play in shaping the proposed class action.
[9] Sun Life resists certification and argues that each and every of the certification criterion have not been satisfied. It brings a cross-motion for a summary judgment against the individual Plaintiffs to have their claims dismissed as statute-barred. If successful, the summary judgment motion would also disqualify the Plaintiffs as Representative Plaintiffs.
[10] For the reasons that follow, I conclude that the Flexiplus and the Optimet Cost of Insurance (“COI”) breach of contract claim and the Flexiplus Administrative Fee breach of contract claim may be certifiable and these claims would not be statute-barred. I adjourn the certification motion for more evidence about these causes of action.
[11] I, however, dismiss the balance of the motion for certification. The Williams case is not distinguishable, and the Omnibus Class Action fails the test of the certification criterion save for the cause of action criterion.
[12] The proper law of the contract is Ontario and its Limitations Act, 2002, S.O. 2002, c. 24, Sch. B governs the breach of contract claims. On Sun Life’s summary judgment motion, I grant summary judgment with respect to the misrepresentation claims. I dismiss these claims because they are statute-barred. The limitation periods of the provinces where the misrepresentations were made govern the misrepresentation claims, and the running of those limitation periods expired long ago. The Plaintiffs’ counterarguments that it would be unconscionable for Sun Life to invoke a limitation period defence or that Sun Life committed fraudulent concealment, deceit, or breached a duty of good faith are untenable for the simple reason that the limitation periods for the misrepresentation claims expired before Sun Life purchased MetLife’s book of business. The counterarguments also fail on their merits.
[13] Further, the Plaintiffs’ argument based on 407 ETR Concession Co. v. Day, 2014 ONSC 6409, which argument is that where an individual claim by a plaintiff would be impracticable to litigate, the running of a limitation period is postponed until a class action presents itself to the plaintiff, is also untenable.
[14] I dismiss Sun Life’s summary judgment motion with respect to: (a) the COI and Administrative Fee breach of contract claims for the Flexiplus and Optimet policies; (b) the deceit (fraudulent misrepresentation) and breach of good faith claims for all of the policies; and (c) the claims of rescission of the releases. These claims are not absolutely statute‑barred although the COI claims are temporally shortened to exclude the years for which the claims would be untimely.
[15] On the summary judgment motion, I dismiss the Maximum Premium breach of contract claims for the Universal Plus, Flexiplus, and Optimet policies but not based on the expiry of the limitation period. These inchoate claims, which depend upon the interpretation of the insurance policies, should be dismissed because they are premature. The Plaintiffs admit that no policyholder has ever been charged more than the Maximum Premium. In other words, treating the summary judgment motion as a motion for judgment under rule 37.13(2), I dismiss the Maximum Premium breach of contract claims because there is no evidence that - however interpreted - the Maximum Premium terms of the respective contracts have been breached. The Plaintiffs cannot avoid the dismissal of the Maximum Premium claims based on a request for a declaration about the interpretation of the insurance contracts.
[16] In the manner described below, I adjourn the motion for the certification of the COI and Administrative Fee breach of contract claims for the purposes of receiving evidence from both the Plaintiffs and Sun Life on how the rates for the COI were set by Sun Life. This information is required to determine whether the COI and Administrative Fee breach of contract claims are certifiable as a class action.
(Decision continues exactly as reproduced above through paragraph [501] and the concluding signature lines.)
Perell, J.
Released: November 12, 2015
COURT FILE NO.: 10-CV-411183CP
DATE: 20151112
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ELDON FEHR, ANGELA WATTERS, GAETAN LAURIER, LESLIE MICHAEL LUCAS, JAMES PATRICK O’HARA, REBECCA JEAN CLARK, and LLOYD SHAUN CLARK
Plaintiffs
‑ and ‑
SUN LIFE ASSURANCE COMPANY OF CANADA
Defendant
CORRECTED REASONS FOR DECISION
Perell, J.
Released: November 12, 2015