SETTLEMENT AGREEMENT
GERALD L. GIBBS, DAVID ALAN JARVIS, MATTHEW COPE and GEOFFREY BLAIR GODDING,
in their capacity as proposed class representatives (the “Plaintiffs”),
and the Defendant, the Canada Life Assurance Company (“Canada Life”),
hereby enter into this Agreement (hereinafter defined) providing for settlement
of the proposed premium offset insurance class actions in Canada, subject to
the approval of the Ontario Superior Court of Justice, the Quebec Superior Court,
and the Supreme Court of British Columbia;
WHEREAS, a Statement of Claim proposing a class
proceeding issued on July 11, 1997 has been served on Canada Life in Ontario
by Gerald L. Gibbs and David Alan Jarvis, a Motion for Authorization of a Class
Action proposing a class proceeding issued on November 10, 1997, has been served
on Canada Life in Quebec by Matthew Cope, and a Statement of Claim proposing
a class proceeding issued on September 30, 1997 has been served on Canada Life
in British Columbia by Geoffrey Blair Godding (collectively, “the Class
Proceedings”);
WHEREAS, Plaintiffs’ counsel in Ontario,
namely the law firm of Scarfone Hawkins LLP, Plaintiff’s counsel in Quebec,
namely the law firm of Lauzon Bélanger and Plaintiff’s counsel in
British Columbia, namely the law firm of Poyner, Baxter, Poyner have conducted
settlement negotiations with Canada Life and its Ontario and Québec counsel,
namely the law firm of McCarthy Tétrault, and its British Columbia counsel,
namely the law firm of Branch MacMaster;
WHEREAS, Canada Life, notwithstanding this Agreement,
has denied and continues to deny the Plaintiffs’ claims in these actions
and in other similar actions in these and other jurisdictions, has denied and
continues to deny any wrongdoing or liability of any kind anywhere to the Plaintiffs
or the Class Members (hereinafter defined) they seek to represent and has raised
and intends to continue to raise numerous defences;
WHEREAS, Canada Life values its relations with
its Policy Owners and intends to extend benefits as set forth in this Agreement
for business and competitive reasons;
WHEREAS, based upon an analysis of the facts
and the law applicable to claims of the Class (hereinafter defined) taking into
account the extensive burdens and expense of litigation, including the risks
and uncertainties associated with the proposed certification or authorization
of class actions, protracted trials and appeals, as well as the fair and cost-effective
method of resolving with claims of the Class provided for in this Agreement,
the Plaintiffs and the Plaintiffs’ counsel have concluded that this Agreement
provides substantial benefits to the Class and is fair, reasonable, adequate
and in the best interests of the Class;
WHEREAS, Canada Life and its counsel have similarly
concluded that this Agreement is desirable in order to avoid the time, risk and
expense of defending multiple and protracted litigation, and to resolve finally
and completely the pending and potential claims in relation to the applicable
Class Policies owned by Class Members under the terms of this Agreement;
WHEREAS, the Parties intend by this Agreement
to resolve all of the claims for or relating to representations, misrepresentations
or omissions by Canada Life or their agents, directors, officers and employees,
that occurred in relation to the applicable Class Policies owned by Class Members
under the terms of this Agreement;
WHEREAS, the Parties agree that this Agreement,
the certification or authorization of these Class Actions for settlement purposes,
and any approval of the Agreement by the Courts will not constitute any admission
by Canada Life of liability or damages, or be used as evidence against any of
the said companies, or for any other purposes in any other proceeding or matter.
NOW THEREFORE, subject to the Courts’ approval
in Ontario, British Columbia and Quebec, this Agreement embodies the provisions
for the resolution of the proposed premium offset insurance class actions brought
against Canada Life in the Provinces of Ontario, British Columbia and Quebec,
and similar claims and disputes in any other provinces and territories in Canada
relating to Class Policies.
This Agreement includes Notices, Orders and related documents submitted to the
Courts for approval.
1. Definitions
“Agreement” means this agreement, including
any appendices hereto, except as modified by further written agreement among
the Parties.
“British Columbia Class” means all Class Members whose Class
Policy(ies) were applied for in British Columbia and who are not now resident
in Ontario or Quebec on the Classification Date, or who applied for the Policy(ies)
in Canada and are now resident in British Columbia on the Classification Date.
“Class” and Classes” means the Ontario, British
Columbia and Quebec classes as defined herein.
“Class Counsel” means the law firms of Lauzon Belanger; Poyner,
Baxter, Poyner; and Scarfone Hawkins LLP.
“Class Member” means a member of the British Columbia, Ontario
or Quebec classes as defined herein who does not opt out.
“Class Policy” or “Class Policies” means a
participating whole life insurance policy issued by Canada Life in Canada between
January 1, 1980 and December 31, 1997, inclusive, which is in force as of the
Classification Date (a “Current Class Policy”) or which has become
a Lapsed Policy between January 1, 1992 and the Classification Date (a “Lapsed
Class Policy”). Policies issued by New York Life Insurance Company, New
York Life Insurance Company of Canada or Crown Life Insurance Company are not
Class Policies.
“Classification Date” is the first day of the month in which
this Agreement is executed by Canada Life.
“Courts” shall mean the Ontario, British Columbia, and Quebec
courts that have jurisdiction over the Class Actions, namely:
In Ontario: the Superior Court of Justice and the Honourable
Mr. Justice Cumming, or his successor;
In British Columbia: the Supreme Court of British Columbia and the
Honourable Chief Justice Brenner or his successor;
In Quebec: the Quebec Superior Court and the Honourable
Mr. Justice Crête or his successor.
“Court Approval Date” means the latest of the three dates on
which the orders of each of the Superior Court of Justice in Ontario, the Supreme
Court of British Columbia and the Quebec Superior Court approving the Agreement
becomes final. For purposes of the Agreement, an order becomes final when the
time for appealing or seeking leave to appeal the order has expired without an
appeal being taken or leave to appeal being sought or, in the event an appeal
is taken or leave to appeal is sought, when such appeal or leave to appeal and
such further appeals or leave applications as may be taken have been disposed
of and the time for further appeal, if any, has expired.
“Current Class Policy” has the meaning set out in the definition
of Class Policy.
“Forecast Dividend Scale” means the Canada Life dividend scale
projected with the mortality & expense assumptions in effect on January 1,
2001 but with the future interest rate assumption that will apply if current
reinvestment rates continue into the future.
“Forecast Offset Date” means the Premium Offset Date determined
as of the Classification Date applying the forecast dividend scale.
“Former Owner” means a person who owned a Lapsed Class Policy
as of the date the policy lapsed or was surrendered.
“Independent Adjudicator” means the person or persons, approved
by the Courts for the Independent Review Process described in section 3 herein.
“Lapsed Class Policy” has the meaning set out in the definition
of Class Policy.
“Lapsed Policy” means a policy which is no longer in force as
a result of surrender or non-payment of premiums.
“Offset Delay” means the difference in years between the Forecast
Offset Date and the Original Offset Date.
“Ontario Class” means all Policy Owners and Former Owners whose
Class Policy(ies) were applied for in Canada, but in a province or territory
other than British Columbia or Quebec, and who are not now resident in British
Columbia or Quebec on the Classification Date.
“Original Offset Date” means the Premium Offset Date determined
as of the date of issue for the Class Policy, applying the then current dividend
scale.
“Policy Owner” means the named individual or entity shown as
policy owner for the Class Policy on the Classification Date, on the records
for the Class Policy as held by Canada Life.
“Premium Offset Date” means the date according to Canada Life’s
illustration software when dividends accumulated within the Class Policy to that
date together with the projected future dividends on a specified dividend scale
to be paid on the Class Policy, will be sufficient to pay all future premiums
that will fall due and owing for the Class Policy, assuming that the specified
dividend scale being applied to the Class Policy continues in effect indefinitely.
“Quebec Class” means all Class Members whose Class Policy(ies)
were applied for in Quebec and who are not now resident in Ontario or British
Columbia on the Classification Date, or who applied for the Policy(ies) in Canada
and are now resident in Quebec on the Classification Date.
“Sales Representative” means, for the purpose of this Agreement
only, a person who, being an agent or market intermediary, sold a Class Policy
as defined in this Agreement.
2. General Benefits
2.1 Current Class Policies - The following General
Benefits will be applied to all Current Class Policies at the three policy anniversaries
following December 31, 2001 and as long as the policy remains in force.
- A dividend supplement reflecting an addition of 0.25%
to the rate of interest used to calculate the dividend on the basic policy and
also on any paid-up additions at credit. This dividend supplement is to be applied
in the same manner and on the same basis as the regular dividend.
- For Current Class Policies with the Enhanced Coverage
option, and any other Current Class Policy where the applicable dividend option
at the Classification Date involves the purchase of one year term Insurance,
the applicable one year term Rate will be reduced by 10% of the rate otherwise
payable by the Policy Owner according to the Canada Life rate scale in effect
on January 1, 2001.
2.2 Lapsed Class Policies - A Former Owner may apply
for a new individual life insurance policy of any type currently offered by Canada
Life with a total face amount not more than the death benefit of the Lapsed Class
Policy. There will be a discount of 50% applied to the first year’s premium.
In the case of Universal Life policies, this will be based on the minimum premium.
Standard Canada Life underwriting and issue requirements must be met. The new
policy will be based on the insured’s current attained age, Canada Life’s
current premiums, and all Canada Life standard terms. This benefit will not apply
if the Class Policy has been replaced by another Canada Life policy.
3. Independent Review Process
3.1 Class Members who allege misrepresentation by the
Sales Representative which was relied on in the purchase or sale of a Class Policy
will be entitled to have their claims reviewed and assessed in an Independent
Review Process (“IRP”), subject to the following conditions:
a. Class Members who elect to have their claim reviewed
in the IRP will waive the right to opt out of this settlement.
b. Class Members who were, at the time of the purchase of the Class Policy, licensed
life insurance agents or brokers, their spouses, and their children of whatever
age, corporations controlled by licensed life insurance agents or brokers, are
not eligible to apply for IRP benefits.
c. Class Members who have exercised contractual rights or made changes to a Class
Policy as set out in Appendix A which adversely affect the Forecast Offset Date
must restore the policy to the position it would have been in if the change had
not taken place. The cost of restoring each policy must be paid by the Class
Member before any benefit is received under the IRP.
d. Class Members who have previously submitted a claim or complaint to Canada
Life and who did not receive a remedy of the Original Offset Date are eligible
for IRP benefits only upon waiving any benefits awarded previously and restoring
the policy to the position it would have been in if the remedy had not been awarded.
In addition to paying the cost of restoring each policy, such Class Members will
also be required to pay an administrative fee of $200.00 per policy to Canada
Life, before any benefit is received under the IRP.
e. Former Owners will be entitled to receive IRP benefits only where:
(i) the Former Owner establishes that the policy lapsed
or surrendered as a direct consequence of reliance by the Former Owner on a Misrepresentation
of a Sales Representative as defined in Appendix B; and
(ii) The Former Owner restores the policy in accordance
with the standard requirements of Canada Life and at the expense of the Former
Owner.
f. Former Owners who participate in the IRP after restoring
a Class Policy will not be eligible for any benefit, award or payment of any
kind by Canada Life except as specifically provided in the terms of the policy
or as awarded in the IRP.
3.2 Claims submitted by Class Members will be assessed
by the Independent Adjudicator according to the procedures, criteria, standards
and relief set out in Appendix “B”.
3.3 A Class Member who has submitted a claim in the IRP but is not satisfied
with the assessment and relief awarded by the Independent Adjudicator may appeal
to the Courts or the Courts’ designate solely on the question of whether
the decision of the Independent Adjudicator is patently unreasonable. The Rules
of the Court shall apply to any appeals.
3.4 Class Members will be responsible for the cost of any legal representation
which they choose to obtain or any other costs they may incur in relation to
their individual claim, other than consultation with Class Counsel in submitting
claims to the Independent Adjudicator.
4.0 Court Approval
4.1 The terms of the Agreement are subject to and conditional
upon a final judgment or Court approval in Ontario, British Columbia and Quebec.
Unless so approved by all three Courts, the Agreement is of no force and effect.
4.2 On the Court Approval Date, the Agreement will be binding on all Class Members
except those Class Members who opt out as provided in this Agreement.
4.3 In consideration of the entitlement to the General Benefits under this Agreement
or the right to pursue a claims review and appeal in the Independent Review Process
under this Agreement, Class Members shall, on their own behalf and on behalf
of their heirs, administrators, successors and assigns be deemed to have forever
released and discharged The Canada Life Assurance Company, Canada Life Financial
Corporation, their respective predecessors, representatives, parent companies,
subsidiaries and affiliates, along with the officers, directors, employees, shareholders,
agents, Sales Representatives, successors and assigns of all such entities, from
any and all claims, causes of action, actions, manner of actions, and costs,
arising out of or connected directly or indirectly with any allegations in any
of the Class Proceedings, including but not limited to claims for or relating
to representations, misrepresentations or omissions by Canada Life or its agents,
directors, officers and employees, that occurred in relation to the applicable
Class Policies owned by Class Members under the terms of this Agreement.
4.4 Notwithstanding the provisions of section 4.3, a Class Member who is awarded
benefits under the Independent Review Process and who makes an assignment of
rights against a Sales Representative to Canada Life will not be deemed to have
released and discharged any claim which may be asserted by Canada Life as part
of the assignment of rights.
5. Notice of Approval
5.1 Canada Life will send a copy of the Court ordered
Notice of Certification and Approval of Settlement Agreement (Notice of Approval),
a Class Member Election Form and an explanatory booklet prepared by Canada Life
in consultation with Class Counsel, by mail to the last known address of the
Policy Owner or if there is more than one owner of a Class Policy to the last
known address as shown on the records of Canada Life within seventy-five (75)
days of the Court Approval Date.
5.2 For the purposes of this Agreement, a Class Member will be deemed to have
received their Notice of Approval five (5) days after the date on which their
Notice of Approval is sent by ordinary mail to the Class Member’s last known
address as shown on the records of Canada Life.
6. Opting Out
6.1 A Class Member who wishes to be excluded from this
Agreement must complete the Opting Out section on the Class Member Election Form
and return the Form to Canada Life within forty-five (45) days of the Class Member
receiving their Notice of Approval.
6.2 Any Class Member who opts out of this settlement
will not be entitled to any of the benefits or relief set out in this Agreement.
7. Fraud
In addition to any other remedy available at law or equity to Canada Life or
its agents, should any Class Member swear to or affirm a false affidavit or knowingly
submit false evidence in support of any claim pursuant to the Agreement, such
Class Member will be disentitled to any benefits under this Agreement.
8. Effect of The Agreement not being Approved by
the Courts
If the Agreement is not approved as set out in Section 4:
(a) the Agreement will be null and void and will have no force or effect, and
no party to the Agreement will be bound by any of its terms, except for the terms
of this Section and the terms of Section 1 as are applicable;
(b) the Agreement, and all of its provisions, and all negotiations, statements
and proceedings relating to it shall be without prejudice to the rights of Canada
Life, the British Columbia Class, the Ontario Class, the Quebec Class and Class
Counsel, all of whom will be restored to their respective positions existing
immediately before the Agreement was entered into;
(c) the Agreement, the fact of its negotiation and execution, the authorization/certification
of the British Columbia, Ontario, and/or Quebec Class and any approval of the
Agreement by any Court shall not constitute any admission by Canada Life or Canada
Life Financial Corporation or be used as evidence against the said companies
and/or their respective predecessors, representatives, parent companies, subsidiaries
and affiliates, along with the officers, directors, employees, shareholders,
agents, successors and assigns of all such entities for any purposes or in any
other proceedings; and
(d) to the extent they have not already been publicly disclosed, the existence
and terms of this Agreement, the fact and terms of its negotiation and execution
or the fact of any settlement will remain confidential, except to the extent
to which such must be disclosed to legal advisors, actuaries and accountants
to the extent necessary to receive professional advice, and then only if such
persons are expressly made aware of this confidentiality provision and agree
to be bound hereby, notwithstanding being obligated by law or professional ethical
standards to maintain the confidentiality of such information.
9. Final Judgment/Order
9.1 Canada Life and Class Counsel on behalf of the British
Columbia Class, Ontario Class and Quebec Class will jointly submit proposed final
judgments or orders approving the Agreement. The proposed final judgments or
orders will each provide that subject to the terms of the Agreement, the judgment
or order grants a full and final release and discharge in favour of Canada Life
and Canada Life Financial Corporation, their respective predecessors, representatives,
parent companies, subsidiaries and affiliates, along with the officers, directors,
employees, shareholders, agents, Sales Representatives, successors and assigns
of all such entities, or any other person who might be responsible in fact or
in law, for any and all claims or causes of action arising from any allegations
in any of the Class Proceedings including but not limited to any representations,
misrepresentations or omissions by any of the above-mentioned persons that occurred
in relation to the applicable Class Policies owned by Class Members under the
terms of this Agreement. The full and final release and discharge will also incorporate
the wording of Section 4.4.
9.2 Canada Life and Class Counsel agree not to issue, enter or execute final
judgments or orders until such time as the Agreement is approved by all the Courts
before which the Class Proceedings were commenced.
10. Termination Clause
Within 15 days of the last day a Class Member may opt
out of this Agreement pursuant to Section 6.1 herein, Canada Life may unilaterally
terminate the Agreement by giving written notice to Class Counsel if, pursuant
to Section 6.1 herein, more than three and one half percent (3.5%) of Class Members
who are owners of Current Class Policies as at the Classification Date have,
at the time of such notice of termination of this Agreement, opted out of this
Agreement pursuant to Section 6.1. If such notice of termination of the Agreement
is delivered, the provisions of Section 8 of this Agreement will apply as if
this Agreement had not been approved in accordance with Section 4.
11. Effect of Agreement and Final Judgment or Order
Nothing in this Agreement or any Final Judgment or Order
will be considered to affect the validity of any Current Class Policies, or the
terms and conditions of any Class Policies whether Current, Lapsed or Surrendered,
which terms and conditions remain in full force and effect.
In no event shall this Settlement Agreement, any of its provisions or any negotiations,
statements or proceedings relating to it in any way, including but not limited
to the Final Judgment and Order, be used as or deemed to be evidence or an admission
or concession of any kind by Canada Life or Canada Life Financial in any action
or other proceeding, except in any proceeding to enforce this Settlement Agreement.
12. Allocation of the Costs of the Agreement
Canada Life will act in good faith in overseeing and
implementing this agreement. General Benefits, IRP Benefits, expenses and legal
fees relating to this settlement will be paid from funds outside the participating
account of Canada Life and hence those amounts will not be included in determining
the amount available for distribution as regular policy dividends.
13. Administration of the Agreement
13.1 Canada Life will administer the settlement diligently
and in good faith in accordance with the terms of this Agreement.
13.2 Following the approval of this Agreement, Class Counsel will monitor the
implementation of this Agreement through the receipt and review of statistical
claim data, receipt of IRP decisions and physical auditing of the bilingual telephone
information line.
13.3 If in the opinion of Class Counsel, settlement administration is not being
performed in a manner consistent with the substance and intent of the Agreement,
and Canada Life has not remedied the alleged problem after having been given
reasonable notice of it, Class Counsel may bring a motion to the Court for directions.
14. Legal Fees and Disbursements
In addition to the benefits granted under this Agreement,
Canada Life agrees to pay the reasonable fees and disbursements of Class Counsel
in connection with this Agreement, as mutually agreed or determined by the Courts.
15. Tax Liabilities
Canada Life will not be responsible for any tax liabilities
accruing to any Class Member, including any tax arising from the implementation
of IRP benefits or any General Benefits provided as a result of this Agreement.
16. Bilingual Telephone Information Line
Canada Life will establish a bilingual (English and
French) telephone information line to provide information, but not advice, to
Class Members regarding this Agreement and the Independent Review Process.
17. Determination of Residence
The residence of, and policies owned by, Class Members
for all purposes under this Agreement will be as shown on Canada Life’s
records on the Classification Date, unless and until written evidence to the
contrary is provided to Canada Life by the Class Member which evidence must be
provided no later than thirty (30) days after the Class Member receives or is
deemed to have received the Notice of Approval.
18. Appendices to the Agreement
The Parties have reviewed and approved the form and
content of Appendices “A” to “C” and all Schedules attached
thereto.
19. French Version
19.1 The parties have expressly requested that this Agreement and any related
Appendices or documents be drafted in the English language.
19.2 Les parties ont expressément convenu que la présente entente
ainsi que tous documents ou annexes s’y rattachant soient rédigés
en anglais.
19.3 This Agreement, in terms identical to the English version, will be translated
into French after the time it is executed in English.
20. Interpretation
In the event of a conflict between the provisions of
this Agreement and any of the Appendices or documents thereto, the terms of this
Agreement will prevail. Matters of interpretation of this Agreement shall be
determined by the Courts.
21. Governing Law
This Agreement shall be interpreted in accordance with
the law of the Province of the Class to which the Class Member belongs.
22. Continuing Jurisdiction of Courts
The Courts shall retain exclusive and continuing jurisdiction
over the class action claims and the Class Members, of their respective Classes.
23. Change of Name/Successor Companies
The Parties agree that this Agreement shall apply to
successor companies of Canada Life and any reference in this Agreement and any
Appendices attached to this Agreement will be amended to reflect such successor
company or companies.
24. Counterparts
This Agreement may be executed in any number of counterparts.
Each executed counterpart of each such agreement shall be deemed to be an original.
All executed counterparts taken together shall constitute one agreement.
DATED at TORONTO, , 2001
McCARTHY TÉTRAULT
as counsel in Ontario to
The Canada Life Assurance Company
SCARFONE, HAWKINS
as counsel in Ontario to
Gerald L. Gibbs and David Alan Jarvis
DATED at VANCOUVER, , 2001
POYNER, BAXTER, POYNER
as counsel in British Columbia to
Geoffrey Blair Godding
BRANCH, MacMASTER
as counsel in British Columbia to
The Canada Life Assurance Company
DATED at MONTREAL, , 2001
LAUZON, BELANGER
as counsel in Quebec to
Matthew Cope
McCARTHY TÉTRAULT
as counsel in Quebec to
The Canada Life Assurance Company
