Divisional Court Dismisses Plaintiffs' Premium Offset Appeals

The Ontario Divisional Court dismissed the plaintiffs’ appeal from the judgment of Mr. Justice Peter Cumming dismissing the motion for class certification in the first certification motion in a premium offset case to be argued on a contested basis in Canada.

In Kumar v. The Mutual Life Assurance Company of Canada and Prudential Assurance Company Limited, Mr. Justice Cumming in October 2000 dismissed the plaintiffs’ motion for certification on behalf of a proposed class of approximately 120,000 life insurance policy holders of the former Prudential Assurance Company Limited (now Clarica Life Insurance Company). He held that the plaintiffs’ claims did not present common issues and that, in any event, a class action was not the preferable procedure for the resolution of the plaintiffs’ claims.

A few days after the release of Kumar, Mr. Justice Lee Ferrier dismissed the plaintiffs’ motion for certification in Zicherman v. The Equitable Life Insurance Company of Canada. He relied upon Mr. Justice Cumming’s decision and held that there was no basis in Zicherman to distinguish it from the result in Kumar.

The appeals were heard together in November 2001. The court held that Mr. Justice Cumming was correct in finding that there were no common issues raised by the claims of the proposed class, and rejected the appellants’ suggestion that the common issue proposed by the plaintiffs ought to have been reformulated by Mr. Justice Cumming. The court further held that the recent decisions of the Supreme Court of Canada in Hollick v. Toronto (City) and Rumley v. British Columbia do not change the law with respect to certification of a class action. Further, the court ruled that the recent decision of the Ontario Court of Appeal in Bre-X does not stand for the proposition that allegations of negligent misrepresentation are inherently capable of class certification. The court stated that Bre-X does not address the problems of lack of commonality in negligent misrepresentation cases.

Similarly, in the plaintiffs’ appeal from Zicherman, the court found that the judgment of Mr. Justice Ferrier was in all respects correct and dismissed the appeal. Leave to appeal to the Court of Appeal is being sought.

F. Paul Morrison and Dana Peebles of McCarthy Tétrault LLP acted for the Mutual Life Assurance Company of Canada and Prudential Assurance Company, assisted by Clarica’s associate general counsel Shaun Devine. Mark Somerville, Q.C., Ross Earnshaw and Sherry Currie of Gowling Lafleur Henderson LLP acted for The Equitable Life Insurance Company of Canada. Paul Pape, Margaret Waddell and David Steinberg of Paul J. Pape in Toronto represented the appellants in both appeals.