Court File and Parties
COURT FILE NO.: CV-10-411183-00CP
DATE: 20211220
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Eldon Fehr et al.
AND:
Sun Life Assurance Company of Canada
BEFORE: J.T. Akbarali J.
COUNSEL: Michael Spencer and David Steeves, for the plaintiffs
Paul Morrison, Glynnis Burt and Jacqueline Cole, for the Defendant
HEARD: December 15, 2021
ENDORSEMENT
Overview
[1] The plaintiffs in this class proceeding seek an order requiring the defendant to deliver a further and better affidavit of documents.
Background to the Action
[2] This action is old. In the over ten years since it was issued, a number of motions have been brought, and appeals taken. At the time of my recent appointment as case management judge, five common issues had been certified of the original 22 that had been pleaded. The defendant’s motion for summary judgment motion was scheduled for February 2022. As part of the timetable for that motion, the defendant was required to produce its affidavit of documents related to the common issues. It produced its affidavit of documents. The plaintiffs believe the affidavit of documents is deficient. On this motion, they seek a further and better affidavit of documents which they argue they require in order to respond to the summary judgment motion, and to cross-move for summary judgment. Needless to say, the impact of this latest procedural dispute between the parties will delay the summary judgment motion.
[3] The factual underpinning of the plaintiffs’ claims relates to universal life insurance policies that had been sold by Metropolitan Life Insurance Company (“MetLife”) in the 1980s and 1990s. The original claim related to four particular products: Universal Plus, Universal Flexiplus, Universal OptiMet and Interest Plus. No common issue has been certified that relates to the Interest Plus policies.
[4] Mutual Life Insurance Co. acquired the bulk of MetLife’s Canadian business in 1998, including the policies that are at issue in this litigation. Mutual Life was subsequently renamed Clarica Life Insurance Company. Clarica amalgamated with Sun Life in 2002. Since that time, Sun Life has been responsible for administering the policies to which the common issues relate.
[5] A unique feature of universal life insurance policies is that they involve payment of premiums into an accumulation fund from which monthly charges, including the monthly cost of insurance (“COI”), and administration fees, are deducted. Policyholders have the option to accumulate excess cash in the accumulation fund, from which COI and administration fees can be paid, and which allows them to generate savings on a tax-deferred basis. The plaintiffs argue that, on several occasions, the defendant adjusted the COI rate and the administration fees in the Flexiplus policies,[^1] through a process referred to repricing, but based on factors that were not permitted under the policy terms. The plaintiffs also argue that it was a term of the policies that a “Maximum Premium” amount referred to in the policies represents the highest amount of premium that a policyholder would ever be required to pay for the policy in any year in order to prevent its lapse. Finally, the plaintiffs argue that the defendant administered the policies in such a way as to conceal its (alleged) breach of contract.
[6] Not surprisingly, the defendant denies that it acted in breach of contract, denies that it concealed any breach of contract, and does not accept the plaintiffs’ interpretation of “Maximum Premium,” arguing that it is a term that relates to the tax-deferred status of the savings in the accumulation fund.
[7] The five common issues that have been certified are:
a. Was it a term of the Flexiplus policy that the COI rate may be adjusted based on specified factors? If so, is Sun Life liable for breach of contract if increases were based in whole or in part on other factors?
b. Was it a term of the Flexiplus policy that Administrative Fees may be adjusted on factors related to the cost of administering the policies? If so, is Sun Life liable for breach of contract if increases were based, in whole or in part, on other factors?
c. Was it a term of the OptiMet policies that the COI rate may be adjusted based on specified factors? If so, is Sun Life liable for breach of contract if increases were based, in whole or in part, on other factors?
d. Was it a term of the Universal Plus, Flexiplus and OptiMet policies that the “Maximum Premium” amount set out in the policies was the highest amount of premium that the policyholder would ever be required to pay for the policy in any year, in order to prevent lapse of the policy? If so, are the plaintiffs entitled to a declaration to that effect?
e. If the answer to any of questions 1, 2 or 3 is that Sun Life breached the contract of insurance, did Sun Life administer the policies in a manner, including violating section 439 of the Insurance Act, S.O. 1990, c. I.8 (prohibiting unfair and deceptive practices) such that the breach of contract was concealed?
[8] On this motion, the plaintiffs seek production under 12 additional general categories of documents in a further and better affidavit of documents. I refer to these as “general requests,” or “general categories.” The plaintiffs have also identified, from the production already made, a number of specific documents of which they seek production. I refer to these as “specific requests.”
[9] Below, I first set out the legal principles relevant to the motion, about which the parties are generally in agreement. Thereafter, I consider the general requests, after which I deal with the specific requests in chart form.
Analysis
[10] This motion is brought under rule 30.06 of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194, which provides, in part:
Where the court is satisfied by any evidence that a relevant document in a party’s possession, control or power may have been omitted from the party’s affidavit of documents … the court may
(b) order service of a further and better affidavit of documents;
[11] Documentary discovery is important to the proper and fair functioning of the civil litigation process: Falcon Lumber Limited v. 2480375 Ontario Ltd., 2020 ONCA 310, at para. 42. Parties generally make the initial decision about what documents to produce themselves: Sarta v. Mazo, 2021 ONSC 5660, at para. 5.
[12] The party seeking any further and better affidavit of documents has the burden of proving that the documents being requested exist, are relevant, and that production meets the proportionality requirements set out in rule 29.2.03: Galea v. Best Water Limited, 2019 ONSC 7213, at para. 15, Sarta, at para. 5. Rule 29.2.03 directs the court, when determining whether a party must produce a document, to consider factors including whether the time required to produce the document would be unreasonable, whether the expense associated with production would be unjustified, and whether requiring production would unduly interfere with the orderly progress of the action.
[13] “While the evidence in support of the motion cannot be based on speculation or guesswork, the level of proof required must take into account that one party has access to the documents and the moving party does not”: Galea, at para. 15, citing Apotex Inc. v. Richter Gedeon Vegyeszeti Gyar RT, 2010 ONSC 4070, at para. 119, see also Sarta, at para. 5.
[14] In a class proceeding, such as this one, relevance is based on the certified common issues, as informed by the pleadings: 1176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd., 2003 CanLII 21408 (ONSC), at para. 6. Relevance is a matter of law, not of discretion: Apotex, at para. 77. The document is relevant if it is logically connected and tends to prove or disprove a matter in issue: Sycor Technology Incorporated v. Kiaer, 2012 ONSC 5285.
[15] In a breach of contract case involving a standard form contract, like this action, “the surrounding circumstances generally play less of a role in the interpretation process, and where they are relevant, they tend not to be specific to the particular parties”: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, at para. 32. Elements of the surrounding circumstances that have a role in the interpretation process are generally not inherently fact-specific; they include the purpose of the contract, the nature of the relationship it creates, and the market or industry in which it operates: Ledcor, at paras. 30-31.
[16] The plaintiffs argue that discovery should not be downsized in the name of proportionality when the action involves weighty legal issues or where the monetary value in dispute is substantial. In support of this proposition they rely on Yim et al v. Song et al, 2016 ONSC 1707. In that case, Trimble J. held that proportionality is not an end in itself, but “is a principle which allows the court to do justice between the parties in a more streamlined way where the case merits this approach and justice can still be done.” Justice Trimble noted that cases which have limited the impact of proportionality on relevance are all cases of substantial monetary value or weighty legal issues. He did not find that proportionality has no application whenever a case engages important legal issues or carries substantial monetary value.
[17] In Yim, Trimble J. relied on the decision of Perell J. in Ontario v. Rothmans, 2011 ONSC 2504. In Rothmans, Perell J. found that an expansionary approach to proportionality is wrong. He concluded that “a parsimonious proportionality principle provides a useful tool for cases large and small”: at para. 163. Justice Perell specifically rejected the notion that “because a case is important or the claim large, there should be more procedure not less procedure,” finding that the proportionality principle would lose its utility for large cases such as class proceedings “where justice can be done by reducing not expanding the procedure”: at para. 164. I agree.
[18] Having identified the principles that guide my determination of the motion, I turn to consider the documentary production sought by the plaintiffs.
The Process of Preparation of the Affidavit of Documents
[19] The defendant’s affiant, Dean Chambers, describes in detail the process the defendant has undertaken in order to prepare its affidavit of documents. I need not repeat it here. I note simply that, in seeking additional production, the plaintiffs do not argue that the defendant’s process to date has been flawed. Rather, they argue that the production of substantial documentation does not mean that more documentation is not also required to be produced. The issue here is not one of a systemic failure to review and identify the defendant’s relevant documents, but rather turns on specific categories of documents and the parties’ differing views as to relevance.
The Plaintiffs’ General Requests
General Request #1
[20] The plaintiffs seek documents relating to the quantification and/or analysis of balance sheet entries for the Universal Plus, Flexiplus, and Optimet policies created in connection with:
a. the demutualization of MetLife;
b. any demutualization involving the policies after the demutualization of MetLife;
c. the acquisition of MetLife by Mutual Life;
d. The change from Mutual Life to Clarica;
e. The amalgamation of Clarica and SunLife.
[21] The plaintiffs argue that these documents are relevant to the first, second and fourth common issues – that is, the adjustment of the COI and administration fees in the Flexiplus policies and the meaning of “Maximum Premium.”
[22] In their factum, the plaintiffs argue that if the Flexiplus policies were acquired or valued at a discount when MetLife sold its Canadian business, that would affect the fairness of Sun Life’s approach to setting new COI rates calculated to maintain the original profit expectations of MetLife. For that reason, they seek documents concerning how the Flexiplus policy block was valued when it was acquired from MetLife. They also argue that these documents are relevant to the defendant’s actuarial justifications for the Flexiplus COI rate adjustments, and should be produced on that basis. They argue that, to the extent that the defendant relies on actuarial principles as affirmative justification for the Flexiplus COI rate and administrative fee increases, those principles are unmoored from the policies. However, in the alternative, they argue they must be able to respond to the defendant’s arguments that the actuarial principles it used in the COI and administrative fee repricings were fair.
[23] The defendant argues, first, that the request is unclear. “Balance sheet entries” is too broad a term to allow the defendant to understand what the plaintiffs seek. Moreover, MetLife did not demutualize; it was a stock company acquired by Mutual Life in 1998. Policies and contracts that were originally issued by MetLife were not included in Mutual Life’s demutualization, although some of the contracts held by the class were included. In any event, Mr. Chambers deposes that those records are not in Sun Life’s possession or control. In addition, the change from Mutual Life to Clarica was effectively a name change. It would thus have had no bearing on the balance sheet entries relating to the policies.
[24] The defendant also argues that, in any event, documents pertaining to the demutualization of any entity, and other corporate changes, do not bear on the certified common issues.
[25] I decline to make any production order with respect to this general request because I am not satisfied that the information sought is relevant to the common issues. Whatever value Mutual Life assigned to the Flexiplus block of policies (assuming it assigned value on that basis at all) has nothing to do with whether subsequent repricings of the Flexiplus COI or administration fees were done in accordance with the policy terms.
General Request #2
[26] The plaintiffs seek production of “documents relating to balance sheet entries established for the policies by MetLife, Mutual Life, Clarica and Sun Life.” The plaintiffs state that this category is relevant to the first, second and fourth common issues. It repeats its argument above regarding the relevance of this category to the defendant’s argument that its repricings were based on actuarial principles.
[27] The defendant argues that internal financial attributions or projections have nothing to do with the certified common issues. Moreover, they argue that the request for “balance sheet entries” is overly broad, and that the information does not exist in the form assumed by the plaintiffs. In particular, balance sheet entries aggregate figures relating to a range of policies and cannot be broken down by product.
[28] I decline to order production under this category. It is not relevant to the common issues. Documents relating to balance sheet entries established for the policies, even assuming they exist and can be identified, do not bear on the interpretation of the policy terms.
General Request #3
[29] The plaintiffs seek production of “documents relating to the determination and application of return on investment (ROI) values for the Flexiplus repricings.”
[30] The plaintiffs argue that the repricings of the Flexiplus policies were calculated to preserve the insurer’s original return on investment. They do not explain why the calculation of ROI is relevant to the common issues.
[31] I agree that the factors that went into the calculation of the repricings are relevant, but I do not agree that the calculation of ROI is relevant. The question is not how the defendant calculated its ROI if in fact it used ROI in repricing the products. The question is what factors it used in calculating the repricing and whether those factors were permitted under the terms of the policy.
[32] It follows that the defendants are not entitled to documents relating to the calculation of ROI values for the Flexiplus repricings, but that the question of whether ROI was applied as a factor in the repricings is relevant.
[33] The defendant’s evidence indicates that it does not calculate ROI when repricing a product, and to the extent that ROI is relevant to repricing, it has already produced the very detailed memos that go through the factors it used in the repricing process. I appreciate there appears to be some inconsistency between these statements. I understand the defendant to mean that it does not calculate ROI for the purposes of repricing a product, but presumably it has ROI calculations prepared for other purposes and, to the extent those calculations are relevant, their relevance is explained in the very detailed repricing memos.
[34] In my view, the plaintiffs have not met their burden of proof to demonstrate that there is additional relevant evidence on the question of how ROI was applied, if it was, in the repricings. Put another way, given the repricing memos that have been produced, which the plaintiffs agree are very detailed, there is no evidence of any other types of documents relevant to this issue that would make an order for further production proportionate at this time. I do not foreclose that more production may be required on this issue. However, in my view, making an order at this juncture would be premature. The application of ROI as a factor in repricings of Flexiplus policies is a topic that can be explored on cross-examinations. Further documents may be produced as a result. If further production motions are required at that time, they will presumably be based on an evidentiary record that would allow the court to determine whether, on a balance of probabilities, there are relevant documents that should be produced, and whether the request is proportionate. At the moment, the request is speculative.
General Request #4
[35] The plaintiffs seek “documents setting out and relating to cost of insurance provisions in other universal life policies, and any COI repricings of those policies.”
[36] The plaintiffs argue that contrasting the terms of other universal life policies, and the manner in which COI repricings were undertaken for other policies, may shed some light on how the COI rates were calculated for the Flexiplus policies. They point to a prior summary judgment motion in this action where Perell J. required information about the calculation of COI and Administrative fees on the Interest Plus and Universal Plus policies because they may “shed some light” on the calculation of COI rates for Flexiplus and OptiMet policies. The Interest Plus and Universal Plus policies were, of course, policies that were pleaded in the action and that related (and, in the case of the Universal Plus policies, continue to relate) to the issues raised in the class proceeding.
[37] At this juncture, I note again that the parties agree that there is no remaining issue around the calculation of COI for the OptiMet policies, because the COI was fixed in those policies. There is obviously more information available about the calculation of COI now than there was in 2015 when Perell J. sought information about the calculation of COI and administrative fees on the Interest Plus and Universal Plus policies. It appears, for example, that information about the OptiMet policies is available now that was not available at the time of the appeal of the certification decision, when the common issue about OptiMet COI repricings was certified.
[38] The issue around the calculation of the COI in the Flexiplus policies arises because the Flexiplus policies have a term that addresses permissible COI adjustments as follows:
The monthly rate for the Cost of Insurance will be set by us from time to time based on the primary insured’s sex, issue age, underwriting class, policy year, and the Specified Face Amount of Insurance. The monthly rate may change, but or a non-rated classification, it will never exceed the rates shown on the Table of Maximum Monthly Cost of Insurance included with this policy.
[39] This language differs from the language used in the other policies in evidence. For example, the Universal Plus and Interest Plus policies make reference to “other charges” or “expense charges” in addition to the factors enumerated in the Flexiplus policies. The plaintiffs argue that the COI rate adjustment in the Flexiplus policies may be based on factors related to mortality risk, but not on economic or corporate factors; it argues that the defendant impermissibly used other or expense charges (economic or corporate factors) to justify the Flexiplus COI rate increases.
[40] The plaintiffs argue that the 2012 repricing methodology and assumptions report produced by the defendant discusses repricing in the context of about a dozen adjustable policy types being administered by the defendant, including the adjustable policies that were originally written by MetLife. They argue that “much may be gleaned from comparing how [the defendant] has dealt with similar COI adjustment provisions in the various policies it administers.” It makes specific reference to a policy originally written by Allstate, known as the Allstate VIAPP policy because it is identified as having a level COI structure like Flexiplus.
[41] The defendant argues that each life insurance policy is unique, and policy wording is specific to each policy type. COI provisions in other policies that are not included in the action, and repricings of those other policies, do not bear on the common issues.
[42] The defendant also raises proportionality concerns with this request. It argues that if it had to collect all iterations of all universal life policies, it would take 1-2 months. Moreover, the request for documents “relating to” COI provisions is broad.
[43] In my view, there is relevance to the plaintiffs’ request. If the defendant took into account factors it identified as “other charges” or “expense charges” when repricing other universal life policies that it also took into account in repricing Flexiplus policies, that evidence could support the plaintiffs’ theory that the defendant used impermissible factors to reprice the Flexiplus policies.
[44] However, I have concerns about the breadth of the request, and the burden on the defendant of complying with it. I am particularly concerned, given the age of this action, with delaying its progression by requiring production that will be very time-consuming.
[45] At this stage, I conclude that some production should be ordered, but its scope should be narrowed to address the proportionality concerns with the breadth of the current request. I order the defendant to produce the following:
a. The COI terms of any universal life insurance policies it administers that were originally written by MetLife;
b. Any COI repricing memos that exist for the policies identified in (a) above.
[46] In my view, the COI terms originally written by other insurance companies, even if administered by the defendant, is not, at least at this stage, a proportionate enquiry. Rather, universal life insurance policies administered by MetLife are most likely to have terms or language that might shed light on the terms or language of the Flexiplus policy. Determining how those terms were structured and interpreted is likely to shed light on the defendant’s approach to the COI repricings of the Flexiplus policies.
[47] I dismiss the balance of the request under this category without prejudice to the plaintiffs’ ability to seek further discovery or production on this topic based on additional evidence that may be gleaned in cross-examinations or through the additional production ordered.
[48] Although I deal with the specific document requests below, I note here that I do not order the production of the Allstate VIAPP policy or its related documents because the evidence indicates it does not have a level COI structured like the Flexiplus policies, and it was originally written by another company. I am not persuaded as to its relevance.
General Requests #5 and #6
[49] I deal with these two categories together because they are related. In them, the plaintiffs seek:
a. Documents relating to the numbers of policy terminations (by policy type by year) and reasons for termination (death of insured, lapse, maturity);
b. Documents relating to analyses of circumstances and reasons for lapse of policies, including timing and quantification.
[50] The plaintiffs argue that these documents relate to the defendant’s administration of the policies for policyholders approaching the Maximum Premium, either as a tax shelter limit or as a premium protection for policyholders in “death-spiral” situations (where the policy will lapse if they do not contribute more than the Maximum Premium, due to the COI and administrative fee increases depleting the accumulation fund.)
[51] Mr. Chalmers deposes that the defendant does not collect or maintain granular data about the motivations or reasons behind the termination or lapse of policies. The defendant would have to reach out to former policyholders to try to create the data the plaintiffs seek. Moreover, policies lapse for many reasons. The defendant argues that policy terminations of other policy types, policy terminations before the first COI repricing, and policy terminations for reasons unrelated to the common issues – of which there are many possibilities – are not relevant.
[52] I decline to order production under these categories for two reasons. First, I am not satisfied that the reasons or circumstances of policy lapses are relevant to the contractual interpretation of Maximum Premium. The interpretation of the term does not require an analysis of why policies that included the term lapsed. The most that might (but might not) be gleaned from such an analysis is some evidence of some policyholders’ subjective expectations around the meaning of “Maximum Premium.” That evidence is not helpful to a court undertaking an analysis of the interpretation of the term, especially given that the policy is a standard form contract.
[53] Second, I am not satisfied on the evidence that the documents exist. Moreover, there is nothing proportionate about requiring the defendant to invest resources to create evidence about a matter that is not relevant to the common issues.
General Request #7
[54] The plaintiffs seek “documents regarding the administration of the policies by [the defendant] and its predecessors, including (but not limited to) handling of complaints, emails, policyholder interactions, and internal memoranda concerning Flexiplus COI and/or administrative fee increases and/or Maximum Premium excesses.” They rely on the same argument they make in respect of categories #5 and #6, described above.
[55] The request is exceedingly broad, and seems to capture all interactions with individual policyholders. Mr. Chambers indicates that to locate documents that are responsive to this request would require the defendant to go through each client folder and review all correspondence on a policy-by-policy basis.
[56] I decline to order production with respect to this category for two reasons. First, as with requests #5 and #6, I am unconvinced that interactions with individual policyholders would do anything other than – maybe – provide some information about some individual policyholders’ subjective expectations about the operation of the policy, some of which might bear on the terms at issue in this litigation. In my view, this evidence is not relevant to the interpretation of the contractual provisions at issue.
[57] Second, requiring the defendant to obtain this information is not proportionate. It would take an inordinate amount of time and unduly delay the orderly progress of this action.
General Request #8
[58] The plaintiffs seek “documents and internal communications relating to whether and how many policies are projected to exceed the “Maximum Premium” amounts set in the policy contracts, and if so, when and in what amounts.”
[59] The plaintiffs argue this category is relevant for the same reasons they seek production of requests #5, #6, and #7.
[60] If the plaintiffs’ theory about the meaning of “Maximum Premium” is correct, the failure of the policies to sustain themselves through the premium structure is not relevant to what the structure was. It is arguably relevant to whether the structure was a good structure or a bad structure, depending on the eventual interpretation of the term, but it is not relevant to the interpretive exercise – that is, the certified common issues.
[61] However, if the defendant acted internally in a manner that accords with the plaintiffs’ interpretation of the term “Maximum Premium,” that is arguably relevant to the question of its reasonable expectations.
[62] The plaintiffs note that, in indemnity litigation against MetLife, Sun Life calculated the median dates when a premium payment in excess of the Maximum Premium would be required to save the policy from lapse. This evidence provides some basis for concluding that the defendant may have documents that shed light on how it dealt with policyholders premium requirements in “death spiral” cases, and perhaps in situations where policyholders were approaching the maximum tax shelter limits.
[63] Mr. Chamber’s evidence is that the defendant does not use the “Maximum Premium” amounts in the policy contracts when administering the tax-exempt limit testing of these policies. However, he does not address the analysis of “Maximum Premium” in “death spiral” situations.
[64] I also note that the defendant makes no proportionality argument related to this category of requested production. I thus assume that it is able to respond to this request without any undue burden.
[65] Accordingly, I order that the documents under general request #8 be produced.
General Request #9
[66] The plaintiffs seek “documents and reports (including, but not limited to, any in force management committee reports/memos and appointed actuary annual reports) that show actual to expected results for each major assumption or overall for each policy, including for assumptions relating to: lapses, funding levels of the accounts, asset yields; assets in force to support the block; expenses; and original target ROI and targeted ROI after each pricing change.”
[67] The plaintiffs argue these documents relate to the defendant’s argument that it relied on actuarial “fairness” principles when repricing Flexiplus COI rates.
[68] The defendant argues that this request is broad and unclear, or not information that it has. Specifically, it denies having information about original target ROI and targeted ROI after each pricing change.
[69] I have difficulty understanding the alleged relevance of these documents. These documents and reports would relate, at best, to an analysis of whether the defendant conducted the repricings appropriately, assuming it was entitled to use all the factors it used. I see no relevance to the question of contractual interpretation which will eventually be before the court, which relates to whether it was entitled to use the factors it used.
[70] I decline to order production of documents under general request #9.
General Request #10
[71] The plaintiffs seek production of “internal emails and communications relating to the 2001, 2006, 2015 and 2020 Flexiplus repricings.” They relate this request to common issue 5, which deals with the plaintiffs’ allegations that the defendant concealed its use of impermissible factors when repricing the Flexiplus policies, and drafted its communications with policyholders in such a way as to deliberately obscure the policy language that limited the factors that it could consider in a repricing.
[72] The defendant argues that the issues about which communication occurs for a repricing are myriad and include many things beyond the scope of common issue 5, including, for example, programming updates to administrative systems, legal and compliance oversite, and project management artifacts. It argues that the result of the repricing process is the repricing report, which contains all the assumptions and issues taken into consideration in repricing the policy, and which have been produced. In order to produce what the plaintiffs seek under general category #10, the defendant would have to review a huge volume of communications, the vast majority of which would be irrelevant to the common issues that have been certified. It would require the defendant to access the email accounts of hundreds of individuals, and would take weeks to identify the range of custodians involved before data could begin to be captured.
[73] I agree with the defendant that the plaintiffs’ request is too broad to be proportionate. However, the question about the content of the communication to policyholders is relevant to common issue 5 and should be produced. Producing only those internal communications that dealt with the content of the communication to policyholders should not require as broad a review of documents as the defendant has described. In my view, it is proportionate that the defendant produce internal communications regarding the content of communication to the policyholders about the repricings.
General Request #11
[74] The plaintiffs seek “documents concerning participation in the Flexiplus Options program, including number of policyholders, dates, and amounts involved.”
[75] The evidence in the record indicates that the Flexiplus Options Program was offered to policyholders who believed a sales representative had misrepresented aspects of the policy. The plaintiffs’ claim originally included claims of misrepresentation, in relation to which no common issues were certified.
[76] The plaintiffs argue this category of documents is relevant because it concerns the defendant’s administration of the policies for policyholders approaching the Maximum Premium.
[77] I disagree that this is relevant. It relates to the uncertified misrepresentation claims, not the certified claim regarding the interpretation of “Maximum Premium.” I decline to grant production under this category.
General Request #12
[78] The plaintiffs seek “documents concerning the development of letters to Flexiplus policyholders concerning the 2020 Flexiplus repricing.”
[79] Mr. Chambers deposes that the only relevant documents the defendant has not produced under this category are documents over which the defendant asserts a claim of privilege. The defendant has agreed to deliver a detailed Schedule B to its affidavit of documents. In view of this evidence, the request for further production is premature.
Specific Requests
[80] The plaintiffs make a number of requests for specific documents. I address these below in chart form.
English Documents
| Produced Document Number | Document Description | Documents Referenced in the Exhibit but Not Produced | Order |
|---|---|---|---|
| SUN0000712 | 2006 Principles for Adjustable Product printout |
|
Production not required; redactions relate to contract and marketing manual language for policies not at issue in this litigation. To the extent any policy language is relevant, it has been ordered produced under general request #4 above |
| SUN0000719 | Non Participating Adjustable Life Products – Repricing Methodology and Assumptions Report – Final (September 28, 2012) |
|
Production not required. These policies do not have COI provisions, and to the extent there is relevant documentation, it has been ordered produced under general request #4 above. Production required as a result of my determination under general request #4 above. |
| SUN0000722 And SUN0000773 |
Flexiplus 2014 Repricing Review Report 2006 Re-Pricing Report - Flexiplus |
|
What follows relates to requests for production from two documents, both of which are older repricing reports and which are referenced, one after the other, in the far left column. Production of the appendices request is not required at this stage, except as described below. Two of the identified appendices are AXIS actuarial models that are highly proprietary. At this stage, their relevance is not established so as to warrant their production. They appear to relate to how the defendant took into account factors when repricing, as opposed to whether it was entitled to take into account the factors it did. Moreover, Mr. Chambers’ affidavit identifies practical issues with production of this information. At this point, at least, it is not proportionate to produce the models. Many of the remaining appendices are excel spreadsheets with granular data which again, relate to how the defendant considered factors in repricing, not whether it was entitled to consider those factors. Moreover, the data links in the excel spreadsheets are likely to be broken and would require significant effort to prepare. Production of these reports is not proportionate. There are two reports identified for which production is sought, one of which is a collection of agendas and minutes. The defendant has agreed to produce the 2014 agendas and minutes that specifically address Flexiplus. In my view, the defendant is offering to produce the relevant agendas and minutes; there is no need to go further. The other report is described as an actuarial report which sets out a detailed best estimate of margins for adverse deviations assumptions to be used in the pricing analysis. This report does not relate to the common issues and need not be produced. |
| SUN0000733 | MetLife Re-Pricing Recommendation Report: Flexiplus |
|
Production is not required. The evidence indicates that the 1997 model is likely not available, and if it were, the software required to access it may no longer exist, and the defendant has no licence for it. I am not satisfied the evidence exists, and even if it does, obtaining it is not proportionate. The repricing report includes a brief overview of prior “RIC approvals.” RIC appears to refer to Retail Insurance Council. Neither party provided any context as to what RIC is. The document that refers to prior RIC approvals does not assist me in understanding what they are. The evidence indicates that RIC meetings were not consistently minuted in the 1998-1999 time period, and that the approvals were not located during the defendant’s documentary collection process. Even assuming the documents are relevant, which is difficult to do without a proper explanation as to what they are, or why they would be relevant, I am not satisfied that they exist. In these circumstances, I decline to order production. |
| SUN0000744 | Independent Fairness Opinion of Towers Watson |
|
The defendant has agreed to produce the Canada Business Group Operating Guidelines, but resists production of the documents relating to the policies issued in Bermuda and the United States. I agree that the documents related to the Bermudian and American policies is not relevant to the certified common issues. I accept that the defendant’s position on the production of these two documents is reasonable and proportionate. The defendant’s evidence indicates that the September 2014 document referred to is the Flexiplus 2014 repricing review report which has already been produced. No order is thus required with respect to that document. The evidence indicates that the May 2014 report relates only to one-way adjustable products, including some originally written by MetLife. My order with respect to general request #4 addresses the production of this document. |
| SUN0000745 | Universal Optimet - 1998 Pricing Memo |
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MTEF means “Maximum Tax Exempt Fund,” and is thus a concept that may be relevant to the Maximum Premium. The defendant’s evidence indicates that the memo written by Mr. di Meo appends a table of rated MTEF actuarial factors for OptiMet. The factors are not qualitative considerations, but refer to a quantitative, actuarially derived figure. The table is thus a list of numbers. I accept that this table does not bear on the interpretation of “Maximum Premium” and thus is not relevant to common issue 4. |
| SUN0000851 | printout from "Universal Life insurance - no longer sold" internal webpage printout from "Contract changes to MetLife Universal OptiMet when selecting the new investment options", printout from "Contract changes to MetLife Universal Plus when selecting the new investment options", printout from "Contract changes to MetLife Universal Flexiplus when selecting the new investment options", printout from "Enhanced Annual Statements for Universal Life policies - frequently asked questions" |
These requests relate to pages from an internal webpage for SunLife advisors about universal life insurance products, including OptiMet, Universal Plus and Flexiplus. In particular, they relate to enhanced annual policyholder statements, and contract changes when selecting new investment options. Production is not required for two reasons. First, the topics covered by the pages are not relevant to the certified common issues, which do not relate to the selection of new investment options or enhanced annual policyholder statements. Second, the evidence indicates that these webpages may not have been preserved, and determining what, if anything, exists, would take 2-3 weeks. Obtaining this information would not be proportionate, and would unduly delay the orderly progression of the action. |
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| SUN0001056 | Email from Martin Fortier on July 22, 1999 describing criteria to use for Flexiplus repricing |
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Not required to be produced; the evidence indicates the document was produced as collected, and was likely a note to self, not a sent email. |
| SUN0001057 | email from Martin Fortier on July 26, 1999 to Vanessa Butola requesting analysis on Flexiplus |
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The defendant argues that the spreadsheet requested was predictive and quantitative in nature, as opposed to an analysis of the contractual terms of the Flexiplus policy. In addition, Mr. Chambers deposes that if the spreadsheet exists, it may have been created in Lotus123, and if so, the defendant would need to invest IT resources to try to convert the document into a form which can be accessed in modern software. The spreadsheet referred to in Mr. Fortier’s email appears to be relevant. For example, he seeks information about at which duration cumulative maximum premiums are insufficient to cover cumulative COIs. He goes on to state that SunLife “will want to make sure that policyholders will be able to keep their policies in force by paying current maximum premiums until we change the maximum premiums…” I am satisfied the spreadsheet is relevant to the common issues. With respect to the proportionality, at this juncture the defendant has raised concerns which may become relevant, but it has not yet determined that they are. The spreadsheet may be in Lotus123. It may not be. It may be difficult to access without expending significant resources. Or it may be easy to access. In my view, the defendant must make an effort to determine whether the spreadsheet exists. If it exists, but there are issues with its production on which the parties cannot agree, they may arrange a case conference with me and I will determine the issue summarily. |
| SUN0001107 | 2006 Business Case (Flexiplus Repricing) |
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The evidence indicates this document is a dataset which provides a summary, by age band, of average current deductions, new deductions, and dollar value and percentage increases in deductions. The defendant argues it does not inform the basis for the recommended changes, and in any event, to the extent that the adjustment by age of persons insured under the Flexiplus policies is relevant, the information is contained in the repricing documents already produced. I agree with the defendant that the quantitative impact of the COI repricing by age band is not relevant to the common issues. Production of this document is not required. |
| SUN0001337 | Metropolitan Universal Flexiplus 2020 Pricing Review Report |
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This document is the most recent repricing report. Thus, the production of documents referred to in the report does not raise the same compatibility and practical issues as earlier repricing reports. However, this document includes a proprietary AXIS model, which is described in the evidence as an actuarial tool, or set of electronic equations, that permitted the company to calculate the new COI rates. In my view, this is not relevant, as it relates to how factors were used in the repricings, not what factors were used or whether they were permissible under the terms of the policy. Moreover, because of its proprietary nature, it is not proportionate for the defendant to produce it, because it would cause the defendant undue prejudice (see r. 29.2.03(c), Rules of Civil Procedure). To the extent the other requested documents are excel spreadsheets, my analysis in the context of the earlier repricing memos applies; the granular data is not relevant to the common issues. With respect to the reports that are identified herein, Mr. Chambers describes them as reports that inform the defendant’s actuarial assumptions. I agree that these are not relevant to the certified common issues. Again, the issue is not whether the defendant correctly applied the factors it applied in the repricing, but whether it was entitled to apply the factors it applied. |
| SUN0000478 | Flexiplus Options Program Presentation |
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The evidence indicates that this mailing list relates to the Flexiplus Options Program, which was not certified as a common issue. The document is not relevant to the certified common issues; production is not required. Production is not required; based on the evidence of Mr. Chambers, I am satisfied that the evidence does not exist. The evidence indicates that the Request Centre was a facility available to advisors for general questions and answers or certain administrative requests. At this point, the defendant has not yet determined whether any records related to the Flexiplus Options program have been retained. The design of the system results in the removal of requests which have been concluded (in some instances). Mr. Chambers deposes that it would take several months of work and a significant investment of resources to identify any records about requests made to the Request Centre relating to the Flexiplus policies. No common issue was certified relating to the Flexiplus Options Program. In my view, the documents sought through this request are not relevant to the certified common issues; moreover, the effort required to produce these documents is not proportionate and would unduly interfere with the orderly progress of the action. |
French Documents
| Document Number | Document Description | Other Potentially Relevant Documents Referenced in the Exhibit but Not Produced | Order |
|---|---|---|---|
| SUN0000871 | Internal communication to agents indicating letters will be available in September 2000 for individuals impacted by an increase in administrative fees and COI |
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The underlying document is a communication to agents advising that the COI and administrative cost of the Flexiplus policies would be rising in March 2001, and providing some guidance on how to contact policyholder clients to advise them of the changes. The document makes reference to the individuals whose communications are sought as people who had been heavily involved in reviewing letters to clients. Agents were invited to contact them with any suggestions or comments. These documents need not be produced because (i) discussions between agents are not relevant to the objective interpretation of the policy; (ii) I am not satisfied, in any event, that these documents are in the possession, power or control of the defendants. |
| SUN0000875 | Guide de l’Universelle flexiplus a l’intention de l’agent (i.e. points of contact for further questions regarding changes to the Flexiplus policies) |
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The underlying document is a French language guide for advisors regarding Flexiplus from 2000. It suggests advisors contact one of the identified individuals for more information about Flexiplus. The request for correspondence regarding policyholder concerns is not relevant to the certified common issues, which do not focus on individual policyholder concerns, but on class-wide questions about the interpretation of the policy terms. The request for all notes and records of these individuals regarding changes to the Flexiplus product is, in my view, overbroad, and of questionable relevance. Records about questions from, and responses to, agents about Flexiplus would cover any number of topics. The evidence indicates that it would take 1-2 months to recreate the email drives and obtain paper files and review records to obtain potentially responsive documents. In my view, given the questionable relevance of the request, it is not proportionate to require it to be answered. While I accept that these individuals may have possessed some documents relevant to the common issues given their role in Flexiplus in 2000, the extent of the search undertaken to date by the defendant, and the additional production ordered, should capture those records, except for the correspondence I have referred to herein, which is of questionable relevance. Prodution is not required. |
| SUN00001306 | Revision des tariffs Flexiplus Webinaire d’information May-juin 2015 / Advisor-FCMgr- Trainer Webinar – May-June 2015 – French – v4 – with FR notes.pptx |
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Production is not required; I am satisfied that the evidence does not exist, or, to the extent it does, it is not proportionate to identify it. |
Costs
[81] At the motion, the parties agreed that they would upload their costs outlines and I would determine costs after I wrote my reasons on the merits without taking further submissions. I have followed this process.
[82] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.
[83] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court exercises its discretion taking into account the factors enumerated in r. 57.01 of the Rules of Civil Procedure, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: Boucher v. Public Accountants’ Council for the Province of Ontario, 2004 CanLII 14579 (Ont. C.A.), 71 O.R. (3d) 291, at paras. 4 and 38. A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4.
[84] In this case, the plaintiffs claim costs of $52,220.59, all inclusive, on a partial indemnity scale, if successful. The defendants argue that their costs of the motion, on a partial indemnity scale, all inclusive, are $214,169.68. They seek $100,000 if successful.
[85] I am of the view that there is divided success on this motion. If one were to look only at the number of production requests that I ordered, it would appear that the defendant is more successful. However, I have doubts about assessing success on this motion having regard to a quantitative analysis of the documents ordered produced, and it is not possible at this juncture to assess success on the basis of a qualitative analysis of what I have ordered produced; those documents have not been produced yet.
[86] I am dismayed that the parties were not able to narrow the documentary requests. Some discussion between the parties about what was truly important, and what was truly accessible, should have resulted in – at least – a narrowing of the issues. Moreover, the money and time spent on this production motion is troubling in an action that is already over ten years old.
[87] In my view, it is most appropriate to award costs of this motion in the cause. In assessing quantum, I note:
a. The issues raised in the class proceeding are complex, and much is at stake for both sides;
b. The parties prepared lengthy material, and senior counsel were involved in the motion;
c. Both parties employed a number of timekeepers in the preparation of the motion;
d. Some of the costs incurred should have been avoided by reasonable discussion and compromise between the partis;
e. Neither party behaved in a manner deserving of sanction through costs;
f. The parties would reasonably have expected each other’s costs to be significant. The actual costs of the defendant may have been outside the reasonable expectation of the plaintiffs, but this is mitigated somewhat by the reduction in the amount claimed by the defendant;
g. The court must also consider what is fair and reasonable for a day long production motion, rather than being beholden to the parties’ actual costs when determining quantum.
[88] Having regard to these factors, I award costs of $50,000, all inclusive, for this motion, in the cause.
Process Going Forward
[89] This motion was my substantive introduction to this ancient claim. I have a better idea now why it is over ten years old and we are still discussing production.
[90] The parties require a timetable to advance this action efficiently and expeditiously to the intended summary judgment motion. I direct them to confer to determine a timetable that takes into account the time the defendant will require to make the additional production. They may arrange a case conference with me to approve the timetable and, if necessary, settle any differences that exist. Given the age of this action, I expect the parties to agree on an aggressive timetable.
[91] In discussing the process to be employed, I suggest the parties consider ways they can efficiently deal with disagreements about relevance. The court is facing a massive backlog that has arisen due to the pandemic. The deployment of court resources, including judicial resources, must take into account the needs of all the litigants that attend before the court, not just what the litigants in an individual case - even a high-value, important case - want in terms of court time. Rule. 1.04 of the Rules of Civil Procedure requires the Rules to be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. Rule 1.4(1.1) requires the court to make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding. In my view, the proportionality inquiry does not require only a consideration of the nature of the underlying litigation, but also of the nature of the step before the court.
[92] Going forward, I will be considering the parties’ requests for court time in that context, and, as is currently being undertaken on other teams of this court, may choose to employ summary processes to determine routine procedural matters, where appropriate.
J.T. Akbarali J.
Date: December 20, 2021
[^1]: There is also a common issue related to the adjustment of COI in the OptiMet policies, but in argument, the parties agreed that the OptiMet policies provide for fixed and guaranteed COI.