Ontario Court of Appeal Affirms Partial Settlement in Business Interruption Insurance Class Action

• Aviva's appeal of a partial settlement in a business interruption insurance class action was dismissed by the Ontario Court of Appeal.
• The court upheld the motion judge's decision, which approved the settlement and denied Aviva's stay motions.
• The case highlights the importance of timely disclosure in class action settlements and the need for insurers to be transparent about their policies and procedures.
• The Ontario Court of Appeal awarded costs of $50,000 to class counsel on behalf of the class.

The court's ruling is significant not only for the parties involved but also for the broader insurance industry in Canada.

The Ontario Court of Appeal's recent decision in McCartney v. CDSPI Advisory Services Inc. has significant implications for business interruption insurance policies in Canada. At the heart of the case is a complex web of insurance policies offered by Aviva, one of Canada's largest insurance companies. The policies, known as Triple Guard, were marketed to dentists and dental corporations by CDSPI Advisory Services Inc., an insurance broker. However, a key feature of these policies was cancelled in March 2020, leaving policyholders with limited pandemic outbreak coverage.

The cancellation of the pandemic coverage provision was allegedly done without notice or consent from policyholders, leading to a class action lawsuit against Aviva and CDSPI. The plaintiffs claimed that they were entitled to increase their pandemic coverage limits under the policies, but were denied this right by CDSPI. This denial led to significant financial losses for many dentists and dental corporations.

The case has been ongoing since 2022, with multiple settlements and court decisions along the way. In June 2024, a partial settlement was reached between CDSPI and the representative plaintiff in the class action lawsuit. However, Aviva opposed this settlement, arguing that it should be rejected by the court.

The Ontario Court of Appeal's recent decision has upheld the partial settlement, dismissing Aviva's appeal. The court's ruling is significant not only for the parties involved but also for the broader insurance industry in Canada.

The Ontario Court of Appeal's decision was influenced by the province's Class Proceedings Act, 1992 (CPA). Section 27.1(1) and (3) of the CPA requires that any proposed settlement in a class action be approved by the court. In this case, CDSPI and the representative plaintiff sought approval for their partial settlement from the Ontario Superior Court of Justice.

However, Aviva opposed the settlement, arguing that it should not have been disclosed to the plaintiffs without immediate notice. This argument was based on the rule in Handley Estate v. DTE Industries Limited, 2018 ONCA 324, which previously required immediate disclosure of partial settlement agreements. However, the motion judge determined that this rule did not apply to class proceedings, given the CPA's own disclosure regime.

The appeal court upheld the motion judge's decision, dismissing Aviva's appeal and upholding the partial settlement. The court's ruling highlights the importance of timely disclosure in class action settlements.

The Ontario Court of Appeal's decision has significant implications for business interruption insurance policies in Canada. The case highlights the importance of timely disclosure in class action settlements and the need for insurers to be transparent about their policies and procedures.

For lawyers advising clients on business interruption insurance, this decision is a reminder that partial settlements can be approved by the court, even if they are not disclosed immediately. However, it also underscores the importance of carefully reviewing insurance policies and seeking advice from experienced counsel before making any decisions.

The case also has broader implications for the insurance industry in Canada, highlighting the need for greater transparency and accountability in the way that insurers handle claims and settlements.

Lawyers advising clients on business interruption insurance should be aware of the Ontario Court of Appeal's affirmation of a partial settlement in this class action, which may set a precedent for similar cases and highlight the importance of timely disclosure of partial settlements.

Source: Original reporting via [Source]