In Kidd v. The Canada Life Assurance
Company, 2013 ONSC 1868, a pension plan class action,
after a settlement of the litigation was approved, it was
discovered that the assumptions about the value of the pension
surplus for one of four subclasses, the most populous, were
incorrect. As a result, further negotiations ensued and a new
settlement was reached. However, the court refused to approve the
The parties had campaigned to secure the support of class
members for the initial settlement. During this process, the
affected subclass members had been told, without being given any
guarantee, that they would be sharing 70% of a $55 million surplus.
Once the settlement was approved (the "Approved
Settlement"), it quickly became evident that this
representation of what the subclass was to receive was premised on
incorrect predictions and assumptions. As a result, there was a
real possibility that there would be no surplus to distribute to
the affected subclass members. Further, class counsel believed that
the terms of the Approved Settlement were no longer workable.
The plaintiffs moved to enjoin the defendants from unilaterally
implementing the Approved Settlement. Instead of the motion being
argued, an amendment to the settlement was negotiated (the
"Amended Settlement"). The Amended Settlement provided
more compensation to the affected subclass than the Approved
Settlement. At the motion to approve the Amended Settlement,
numerous members of the affected subclass objected. Five subclass
members spoke and a petition signed by 90 subclass members was
presented to the court.
Justice Perell agreed with the objectors that the Amended
Settlement was unfair. He could not grant their request to approve
an alternate form of settlement as what they were proposing was
hypothetical. In reviewing a class action settlement, the court may
not revise or fix it, but can only approve or not approve the
settlement that is placed before it. If Justice Perell rejected the
Amended Settlement, then all class members, including those in
unaffected subclasses and those who did not object to the Amended
Settlement, would also be affected as there would be renewed
litigation. Justice Perell characterized the binary choice he faced
as really "a choice between two courses where neither course
is substantively, procedurally, circumstantially, or
institutionally fair to the class members".
Justice Perell rejected class counsel's framing of the issue
as a choice between the Amended Settlement, which meant that the
subclass members would get something with a chance at something
more if interest rates rebounded, and the Approved Settlement in
which the subclass members would get nothing. Justice Perell held
that it would be inconsistent with the court's responsibilities
when reviewing a settlement to approve an unfair settlement because
it is the better monetary choice of two unfair choices. As a
result, he dismissed the motion. In closing, Justice Perell
Some good may yet come of not approving the Amended Settlement.
It is open to the parties to come back with a fair settlement. But
even if they do not, it will be a good thing for others to know
that under the Class Proceedings Act, 1992, the court will not
approve an unfair settlement. If that has the effect of elevating
the standard for other settlements, then the institutional purposes
of the class proceedings legislation of achieving meaningful access
to justice will be served.
Whether Justice Perell's order will lead to "good"
remains to be seen.
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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