Executive Summary: Key Legal and Evidentiary Issues

• Class certification was granted for settlement purposes against CDSPI under the Class Proceedings Act, 1992.

• The dispute centered on denied pandemic-related insurance upgrades under Aviva’s TripleGuard policies sold through CDSPI.

• CDSPI settled by agreeing to cooperate and provide evidence, but offered no financial compensation due to exhausted insurance limits.

• Aviva contested the settlement, alleging late disclosure and procedural unfairness, and sought a stay of proceedings.

• The court held that disclosure rules under Handley Estate do not apply to class actions due to statutory protections under the CPA.

• Settlement was deemed fair and reasonable; Aviva's motion for a stay was dismissed.

Background and procedural context

This case arose from disputes over business interruption insurance coverage sold to Canadian dentists by CDSPI Advisory Services Inc. and issued by Aviva Insurance companies. The plaintiffs alleged that CDSPI and Aviva failed to notify policyholders about the option to increase pandemic-related coverage under the “TripleGuard” insurance policy before that option was withdrawn on March 13, 2020.

A class action was initiated by Dr. Judy McCartney on behalf of over 5,000 dentists. In parallel, about 800 dentists had already filed individual lawsuits against CDSPI based on the same issues. These individual actions were procedurally more advanced and had reached the stage of discovery and preparation for summary judgment by the time the class action began.

The settlement and certification motion

CDSPI disclosed to class counsel that it had limited financial resources and had already allocated its entire $10 million insurance coverage toward settling the individual actions. As a result, CDSPI negotiated a separate agreement with the class action plaintiff to provide documentary cooperation and testimony in exchange for a full release from liability. This settlement included no financial compensation for the broader class.

The class action plaintiff moved to certify the action against CDSPI solely for the purpose of settlement. Aviva opposed both the certification and the approval of the CDSPI settlement, arguing that it had not been informed in a timely manner and that the settlement unfairly changed the litigation dynamics by turning CDSPI into an ally of the plaintiffs.

The court’s analysis and findings

The court held that all five certification criteria under the Class Proceedings Act were met. The causes of action in negligence and breach of contract were plausible, the class definition was clear, common issues could be resolved on a class-wide basis, a class proceeding was the preferable procedure, and the representative plaintiff was appropriate.

Justice Morgan rejected Aviva’s argument that the plaintiff violated disclosure obligations. He clarified that class action settlements are not enforceable until approved by the court under the CPA, and thus there was no breach of the disclosure rules under Handley Estate. Furthermore, Aviva had been kept informed of settlement discussions and had full opportunity to participate in the approval hearing.

The court also found that the settlement with CDSPI was in the best interests of the class. Although only the plaintiffs in the individual actions received financial compensation from CDSPI, the court emphasized that those plaintiffs had moved faster and secured settlement before the class action began. The cooperation agreement was deemed a fair compromise given CDSPI’s lack of further insurance funds.

Outcome

The motion to certify the class action against CDSPI for settlement purposes was granted, and the proposed settlement was approved. The court dismissed Aviva’s motion to stay the proceedings, finding no prejudice or violation of procedural rights. Aviva now remains the sole defendant in the ongoing class action.