Fantl v. ivari , 2018 ONSC 4443

COURT FILE NO.: 06-CV-306061-00CP

DATE: 20180718

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Joseph Fantl

Plaintiff

– and –

ivari

Defendant

David F. O’Connor and J. Adam Dewar for the Plaintiff

Jeff Galway and Brittany J. Shamess for the Defendant

HEARD: June 28, 2018

PERELL, J.

REASONS FOR DECISION

[1]

Introduction

In this certified national class action under the Class Proceedings Act, 1992,¹ the Defendant ivari opposes the Plaintiff Joseph Fantl’s plan to give notice to Class Members about the certification of his action as a class proceeding.

2ivari submits that Mr. Fantl’s notice plan is not robust enough to be effective to create binding issue estoppels should the class action be resolved by settlement or by summary or trial judgment. ivari proposes a more robust – and expensive – direct notice plan, which it submits that Mr. Fantl should pay for.

3ivari believes, for example, that if the action were settled, then the Order of the Ontario court approving the settlement may not be recognized by a Québec court unless there was a robust and effective notice plan.² For another example, ivari believes that if it were successful in having the action dismissed, then in accordance with the principles of conflict of laws, a Québec court may not recognize the Ontario judgment unless there was a robust and effective notice plan that was acceptable to the Québec court.

4For his part, Mr. Fantl submits that his proposed notice plan is satisfactory, but he does not oppose a more robust notice plan - if it is implemented at ivari’s expense.

5Section 17 of the Class Proceedings Act, 1992 requires that the class members be given notice that an action has been certified as a class proceeding. Section 17 states:

Notice of certification

17. (1) Notice of certification of a class proceeding shall be given by the representative party to the class members in accordance with this section.

Court may dispense with notice

(2) The court may dispense with notice if, having regard to the factors set out in subsection (3), the court considers it appropriate to do so.

Order respecting notice

(3) The court shall make an order setting out when and by what means notice shall be given under this section and in so doing shall have regard to,

(a) the cost of giving notice;

(b) the nature of the relief sought;

(c) the size of the individual claims of the class members;

(d) the number of class members;

(e) the places of residence of class members; and

(f) any other relevant matter.

Idem

(4) The court may order that notice be given,

(a) personally or by mail;

(b) by posting, advertising, publishing or leafleting;

(c) by individual notice to a sample group within the class; or

(d) by any means or combination of means that the court considers appropriate.

Idem

(5) The court may order that notice be given to different class members by different means.

Contents of notice

(6) Notice under this section shall, unless the court orders otherwise,

(a) describe the proceeding, including the names and addresses of the representative parties and the relief sought;

(b) state the manner by which and time within which class members may opt out of the proceeding;

(c) describe the possible financial consequences of the proceeding to class members;

(d) summarize any agreements between representative parties and their solicitors respecting fees and disbursements;

(e) describe any counterclaim being asserted by or against the class, including the relief sought in the counterclaim;

(f) state that the judgment, whether favourable or not, will bind all class members who do not opt out of the proceeding;

(g) describe the right of any class member to participate in the proceeding;

(h) give an address to which class members may direct inquiries about the proceeding; and

(i) give any other information the court considers appropriate.

Solicitations of contributions

(7) With leave of the court, notice under this section may include a solicitation of contributions from class members to assist in paying solicitor’s fees and disbursements

6For present purposes, it should be noted that: (a) pursuant to s. 17(2) of the Class Proceedings Act, 1992, the court has the discretion to dispense with notice, if the court considers it appropriate to do so; (b) pursuant to s. 17(4), the court has the discretion to employ a variety of means to give notice; and (c) pursuant to s. 17 (5), the court has the discretion to order that notice be given to different class members by different means.

7The fact that the legislation provides that the giving of notice in class proceedings and the manner of giving notice is discretionary recognizes the diverse nature of class actions, where the cohesiveness of the class and the class members’ needs for the benefits of a notice varies across a broad spectrum of situations.

8For example, the Ontario Law Reform Commission in its Report on Class Actions stated at p. 511: “If the costs outweigh the interests of the class members – as for example, where the claims of class members are small and the effect of ordering notice would be to prevent the class action from proceeding – it should be open to the court to dispense with notice.”³

9Also relevant for present purposes are sections 20-22, which state:

Approval of notice by the court

20. A notice under section 17 […] shall be approved by the court before it is given.

Delivery of notice

21. The court may order a party to deliver, by whatever means are available to the party, the notice required to be given by another party under section 17 […], where that is more practical.

Costs of notice

22. (1) The court may make any order it considers appropriate as to the costs of any notice under section 17 […], including an order apportioning costs among parties.

Idem

(2) In making an order under subsection (1), the court may have regard to the different interests of a subclass.

[10]

Principles Governing Notice

The requirement for notice is not a mere technicality or a formality, and the Supreme Court of Canada has held that meaningful and effective notice is fundamental to the workings of the class actions regime⁴ and that any notice program must make it likely that the information will reach the intended recipients.⁵

11The wording of the notice must take account the particular context and the situation of the recipients to enable the members of the class to fully understand how the action affects their rights, which may include their rights in rival class proceedings in their home jurisdiction.⁶

12The notice must be informative, accurate, balanced, and independent. It must enable the class members to make informed decisions about their legal rights and enable them to decide on an informed basis whether to remain in or to opt out of the class litigation and thereby exercise their own litigation autonomy and make their own decisions about suing or not suing the defendant.⁷

13The court is interested in ensuring that the manner in which notice is given maximizes the likelihood that members of the class will actually receive the notice, and a direct mailing to each class member is preferable to advertising or other general forms of notice.⁸ But I repeat that the ways and means of notice are a subject to a wide discretion depending on the circumstances of the particular case.

14The normal order is that the representative plaintiff should bear the costs of that notice of certification.⁹ However, the court has a broad discretion in respect of an order as to the costs of notice, including apportioning costs among parties.¹⁰ With sufficient evidence and in an appropriate case, the court can order the costs of the notice to be shared or it can order the defendant to be wholly responsible for those costs.¹¹ The defendant may be ordered to pay for the costs of the notice of certification of the class proceedings.¹²

15In Markle v. Toronto (City),¹³ Justice Nordheimer stated:

5. In terms of the costs of notice to the class members and recognizing that this is always a matter of discretion, the normal order is that the representative plaintiff has to bear the costs of that notice. I say that is the normal order because it is the representative plaintiff that seeks certification and one of the consequences of certification is the requirement under section 17 of the Act that notice be given to the class members. […] The burden of notice therefore clearly falls on the representative plaintiff. This general rule is not without possible exceptions. For example, if a defendant admitted liability and the class proceeding was certified just to determine the relief to which the class members were entitled, then that might be a case where the defendant would be ordered to bear the cost of the notice programme. There may be other situations which would warrant a departure from the general rule. This case is not one of those exceptions, however. I would also note that the class is estimated at approximately 600 potential members. If notice were to be given by mail to each member of the class, it would not then represent a significant expense for the representative plaintiffs.

[16]

Factual Background

To determine what is the appropriate Order to make in the circumstances of the immediate case, the following circumstances are relevant:

a. On December 29, 2003, a predecessor plaintiff to Mr. Fantl commenced a proposed class action against ivari’s predecessor defendant, Transamerica Life Canada.

b. The action involved two distinct and discrete claims; namely: (1) a claim for management fee overcharges, which had a class size of approximately 307,000 Class Members; and (2) a claim with respect to the alleged underperformance of the Can-Am fund, with a subclass involving approximately 92,000 Can-Am Fund insurance policy contracts. Transamerica's Can-Am Fund was an investment vehicle offered under 53 different insurance contracts sold by Transamerica between October 1992 and March 2001.

c. In 2009, the parties settled the management fee overcharge claim, and the action was certified for settlement purposes and the settlement was approved.¹⁴ There was a settlement fund of approximately $42 million.

d. The notice of the certification for settlement purposes of the management fee claim was effected by: (a) 307,446 direct mail notices sent to the last known address of current and former policy holders; (b) a notice was published twice in 16 newspapers across the country; (c) internet notices were published on fundfees.ca and on transamerica.ca; and (d) an e-mail was sent by Transamerica to each of its distributors and key advisors enclosing the notice of certification and settlement, short form of notice and the summary of the proposed settlement.

e. The notice program for the certification and settlement of the management fees claim provided Can-Am investors with the contact information of Class Counsel.

f. The 2009 long form notice of settlement approval advised Class Members that opting out of the management fee settlement would be without prejudice to their right to participate in the Can-Am Fund claim and that any person opting out would remain part of the putative Can-Am Fund claim which at that time had not been certified as a class action.

g. Over 307,446 notices were sent out to Class Members and there were 4,579 opt-outs an opt-out rate of approximately 1.5%

h. With the management fee claim resolved, the parties addressed the action involving the Can-Am Fund, and by Order dated April 18, 2013, I certified the class action with respect to the Can-Am Fund.¹⁵

i. On appeal, the Divisional Court expanded the common issues for the certified class action.¹⁶

j. There are approximately 92,000 Class Members for the Can-Am Fund claim, probably less assuming that some Class Members had more than one insurance policy that invested in the Can-Am Fund.

k. ivari has compiled a list of 71,583 names of Class Members who are Class Members.

l. As of June 2018, ivari’s records indicate that there are 10,677 active Can-Am Fund policies and 2,265 active advisor relationships.

m. The Can-Am Fund has total assets of $30.5 million.

n. The majority of the 16,405 advisors that originally placed the Can-Am Fund policies are no longer active, and they were at all independent advisors; i.e. they never were employees of ivari and subject to its direction.

o. The parties agree about the content of the notice for the Can-Am Fund Class Members.

[17]

The Proposed Notice Plans

Mr. Fantl proposes the following notice plan: (a) direct mailing of the notice at ivari’s expense to Class Members who opted-out of the management fee settlement; (b) notice at ivari’s expense to its professional advisor network; (c) notice by Mr. Fantl by email or regular mail at his own expense to any Class Member who directly contacts or previously contacted Class Counsel about this class action; (d) posting the notice on Class Counsel’s website at Class Counsel’s expense; (e) posting the notice on ivari’s website at its expense; and (f) Class Counsel issuing a press release about the certification of the action and indicating that the formal Notice is available through its website.

18ivari proposes the following notice plan at the expense of Mr. Fantl: (a) direct mail notice to Class Members based on a list of Class Members provided by ivari; (b) a bad-address resolution protocol; (c) posting of the notice or a link to the notice on Class Counsel’s website; (d) posting of the notice or a link to the notice on ivari’s website; and (e) Class Counsel issuing a press release about the certification of the action and indicating that the formal Notice is available through its website.

[19]

Analysis

But for ivari’s submission, I would have found Mr. Fantl’s notice plan adequate and approved it. As noted above, one of the main purposes of the notice is to provide the Class Members with notice of their rights, most particularly, their right to opt-out. In the immediate case, this is not a particularly valuable right because it would make little common or practical sense for a Class Member to exercise the right to opt out.

20If a Class Member, for whatever reason, in the immediate case, does not want to sue ivari, then there is no reason for him or her to opt out, because he or she can simply not participate; i.e., not make a claim in the distribution of any settlement or in the distribution of a favourable judgment. Further, he or she will be indifferent if ivari is successful in having the action dismissed.

21Conversely, if a Class Member wished in the immediate case to advance a claim against ivari, it would be silly to opt-out in the immediate case, because his or her autonomous litigation would not be economically viable. The case at bar exemplifies the circumstances where a class action is the preferable procedure to achieve access to justice and a sensible person would not opt out.

22Generally speaking, in cases like the case at bar, a robust notice plan alerting Class Members of the right to opt-out is far, far less important than a robust notice plan where there is a settlement fund to be distributed.

23In the case at bar, there was a robust notice plan of the certification of the action for the settlement of the management fees claim, but even if that had not occurred but for ivari’s submission, I would have concluded that Mr. Fantl’s proposed plan was adequate. But for ivari’s submission, it would not have been in the Class Members’ interest to expend litigation resources on a right to opt out with little practical utility.

24The question then is does ivari’s submission change the assessment of what is the appropriate notice plan for the purposes of the immediate case?

25Assuming that ivari’s submission has merit, it creates a partial dilemma for the court. I say a partial dilemma because there is a readily available answer to the problem if the action settles. In that circumstance, as is not uncommon or impractical, the action could be recertified for settlement purposes with a very robust notice plan, a renewed right to opt out, and ivari protecting itself by making the settlement agreement conditional on a maximum of opt outs not being exceeded.

26The problem and the dilemma for the Ontario court, however, exists if there is no settlement and Mr. Fantl’s action proceeds to a judgment in Ontario. The problem is whether the notice of the right to opt out of the certified class action is adequate to underpin a judgment that would be recognized by a court outside of Ontario. It is a dilemma because, how is an Ontario court to know whether or not its judgment will be recognized by another jurisdiction?

27For example, a Québec court may decline to recognize a judgment in a class action in another jurisdiction where in the view of the Québec court, the other court did not adhere to the fundamental principles of procedure, including giving an adequate notice of the effect of the judgment on the Québec class member’s rights to participate in a class proceeding in his or her domestic courts.¹⁷

28In HSBC Bank Canada v. Hocking,¹⁸ the Québec Court of Appeal refused to enforce a class action settlement against the Québec residents who had been included as class members in another jurisdiction’s class action.

29In Meeking v. The Cash Store Inc.,¹⁹ the Manitoba Court of Appeal held that an Ontario class action judgment should be enforced in Manitoba if: (a) jurisdiction was properly assumed by the court in Ontario; (b) the principles of order and fairness were met in so far as Manitoba class members were concerned; and (c) there was no statutory provision in Manitoba or common law rule precluding enforcement of the judgment. In Meeking, the Ontario judgment, however was not enforced against Manitoba Class Members, because the notice was deficient and the Class Members would not have appreciated that the Ontario judgment affected their rights.

30In Currie v. McDonald's Restaurants of Canada Ltd.,²⁰ the Ontario Court of Appeal refused to enforce a class action judgment against Ontario residents who had not opted out of a Michigan action. Although the Court held that the Michigan court had a real and substantial connection with the class members from Ontario, it refused to enforce the class action judgment because the United States court had failed to satisfy due process and procedural fairness requirements including giving adequate notice to the Ontario residents.

31In my opinion, although it is somewhat counter-intuitive and unexpected for a defendant to seek to robustly announce that it is subject to a certified class action or for a defendant to seek to protect the litigation autonomy of class members to opt out of an action, it does make sense and it is reasonable that a defendant would seek a direct notice program in a national class action where a substantial number of class members reside outside Ontario, which is the circumstances of the case at bar.

[32]

Disposition

Thus, in my opinion, there is substance to ivari’s submission and the appropriate order to make in these circumstances is to approve the notice plan proposed by ivari and to order that the cost of this plan be shared one-third by Mr. Fantl and two-thirds by ivari.

33It is a matter of discretion whom should bear the costs of the notice program and in the case at bar, in the exercise of my discretion, it is my view that since ivari is the predominant beneficiary of a robust notice plan at this juncture, it should bear the greater proportion of the costs of the notice program.

34I wish to thank counsel for a superbly argued motion that was very helpful to me.

Perell, J.

Released: July 19, 2018

COURT FILE NO.: 06-CV-306061CP

DATE: 20180719

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Joseph Fantl

Plaintiff

– and –

ivari

Defendant

Footnotes

1. 1S.O. 1992, c.6.
2. 2Meeking v. Cash Store Inc., 2013 MBCA 81; Sauer v. Canada (Attorney General), 2010 ONSC 4399; Lépine v. Société Canadienne des postes, 2009 SCC 16; Parsons v. McDonald’s Restaurants of Canada Ltd. (2005), 2005 CanLII 3360 (ON CA), 74 O.R. (3d) 321 (C.A.), aff’g (2004), 2004 CanLII 19279 (ON SC), 70 O.R. (3d) 53 (S.C.J.).
3. 3Ontario Law Reform Commission, Report on Class Actions, (Toronto: Ministry of the Attorney General, 1982)/
4. 4Lépine v. Société Canadienne des postes, 2009 SCC 16 at para 42.
5. 5Lépine v. Société Canadienne des postes, 2009 SCC 16 at para 43.
6. 6Lépine v. Société Canadienne des postes, 2009 SCC 16.
7. 7Silver v. IMAX, 2012 ONSC 1047 at para 94; Walls v. Bayer Inc., 2007 MBQB 131, [2007] M.J. No. 203 at paras. 27-28 (Q.B.); McNaughton Automotive Ltd. v. Co-operators General Insurance Co., [2003] O.J. No. 6040 at para. 4 (S.C.J.); 1176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd. (2002), 2002 CanLII 6199 (ON SC), 62 O.R. (3d) 535 at para. 76 (S.C.J.), leave to appeal granted, 2003 CanLII 36393 (ON SCDC), 64 O.R. (3d) 42 (S.C.J.), aff’d (2004), 2004 CanLII 16620 (ON SCDC), 70 O.R. (3d) 182 (Div. Ct.); Mangan v. Inco Ltd. (1998), 1998 CanLII 14671 (ON SC), 38 O.R. (3d) 703 (Gen. Div.).
8. 8Markle v. Toronto (City), [2004] O.J. No. 3024 at para. 6 (S.C.J.).
9. 9Quinte v. Eastwood Mall Inc., 2014 ONSC 249; Walls v. Bayer Inc., 2007 MBQB 131, [2007] M.J. No. 203 at para. 51 (Q.B.); Markle v. Toronto (City), [2004] O.J. No. 3024 at para. 5 (S.C.J.).
10. 10Wilson v. Servier Canada Inc. (2000), 2000 CanLII 22407 (ON SC), 50 O.R. (3d) 219 at para. 142 (S.C.J.), leave to appeal ref’d (2000), 2000 CanLII 29052 (ON SC), 52 O.R. (3d) 20 (S.C.J.), leave to appeal to S.C.C. ref’d [2001] S.C.C.A. No. 88
11. 11Walls v. Bayer Inc., 2007 MBQB 131, [2007] M.J. No. 203 at para 51 (Q.B.).
12. 12Boulanger v. Johnson & Johnson Corp., [2007] O.J. No. 2766 (S.C.J.); Farkas v. Sunnybrook and Women's College Health Sciences Centre, [2004] O.J. No. 5134 (S.C.J.); Wilson v. Servier Canada Inc. (2000), 2000 CanLII 22407 (ON SC), 50 O.R. (3d) 219 (S.C.J.) at para. 142, leave to appeal ref’d (2000), 2000 CanLII 29052 (ON SC), 52 O.R. (3d) 20 (S.C.J.), leave to appeal to S.C.C. ref’d [2001] S.C.C.A. No. 88; Joncas v. Spruce Falls Power & Paper Co., [1999] O.J. No. 2359 (Gen. Div.).
13. 13[2004] O.J. No. 3024 at para. 5.
14. 14Fantl v. Transamerica Life Canada, [2009] O.J. No. 3366 (S.C.J.).
15. 15Fantl v. Transamerica Life Canada, 13 ONSC 2298.
16. 16Fantl v. Transamerica Life Canada, 2015 ONSC 1367 (Div. Ct.), aff’d 2016 ONCA 63, leave to appeal to the S.C.C. ref’d [2016] S.C.C.A. No. 448.
17. 17Lépine v. Société Canadienne des postes, 2009 SCC 16
18. 182008 QCCA 800.
19. 192013 MBCA 81, affg. 2012 MBQB 58.
20. 20(2005) 2005 CanLII 3360 (ON CA), 74 O.R. (3d) 321 (C.A.), aff’g (2004), 2004 CanLII 19279 (ON SC), 70 O.R. (3d) 53 (S.C.J.).