COURT FILE NO.: 1292/97
	DATE: 20011018

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:	)
	)
DIRECTRIGHT CARTAGE LTD.	) David Thompson and  Matthew G. Moloci
	) for the Plaintiff
	)
	)
	Plaintiff    )
	             )
-and-	)
	)
	)
LONDON LIFE INSURANCE COMPANY	) Patricia Jackson and Wendy Matheson, for
)	the Defendant London Life Insurance
) Company
	)
Defendant ) Michael S. Deverett, for a putative class
)	member, Dianna Holmes
	)
)	HEARD: September 28, 2001

CUMMING J.:

PROCEEDINGS UNDER THE CLASS PROCEEDINGS ACT, 1992

REASONS FOR DECISION

Introduction

[1] This action is a class proceeding under the Class Proceedings Act, 1992 S.O. c. 6 (“CPA”) A statement of claim was issued May 23, 1997 and amended June 27, 2001. The action relates to participating whole life policies sold by the defendant life insurance company. The action alleges that the defendant and its agents marketed sales materials, combined with verbal or written misrepresentations, with respect to a so-called “premium offset” feature in the sale of policies in the 1980’s and early 1990’s.

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[2]	The allegations relate mainly to representations made with respect to the date to which premium payments would have to be made by class members. The duration of the payment of premiums was dependent upon the dividend scale and dividends paid in respect of the policies. By the early 1990’s, with declining interest rates, insurance companies had less investment income and there was a corresponding diminution in dividends paid. Dividends declined from the levels illustrated at the point of sale with the result that policy coverages or offset dates were not achieved as allegedly represented.

[3]	The national class consists of some 890,000 persons.

[4]	The plaintiff alleges damages arising from breach of contract and negligent misrepresentation or other breach of duty. The defendant disputes the claim.

The Motions

[5]	The plaintiff moves for: (1) certification of the class proceeding; (2) approval of a settlement agreement (the “Settlement Agreement” or “Agreement”); (3) approval of class counsel fees; and (4), for a dismissal of two other class actions. The first, third and fourth motions are conditional upon the settlement being approved.

The Motion for Certification

[6]	The five criteria set forth in s.5(1) of the CPA must be met as preconditions to certification, even when a defendant consents to certification. The five requirements are met in the case at hand.

[7]	The statement of claim discloses a reasonable cause of action, alleging damages by reason of breach of contract and negligent misrepresentation or other breach of duty. There is an identifiable class in the proceeding estimated to be about 690,000, being a so-called “Ontario class” comprised of all class members (wherever they may reside) who are not members of the British Columbia and the Quebec classes covered by separate, parallel class proceedings brought in those two jurisdictions. The Settlement Agreement covers the class members throughout Canada embraced by the three actions. The courts of British Columbia and Quebec have already approved of the settlement.

[8]	The Claim raises a common issue, being:

Did the use of illustrations and/or any representations, made orally or in writing, create an obligation on the part of London Life with respect to a specified offset date, policy values or income despite the terms of the policy itself and the terms of any illustration?

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[9]	A class proceeding is clearly the preferable procedure for the resolution of the common issue given the vast number of potential claimants and the fact that it would be very onerous and expensive to bring a claim on an individual basis. A class proceeding meets the policy objectives of the CPA of facilitating access to justice and judicial efficiency.

[10]	The representative plaintiff fairly arid adequately represents the interests of the class. Paul Enright, the principal of the proposed representative plaintiff, Directright Cartage Ltd., and the corporation itself, do not have, on the common issues for the class, an interest in conflict with the interests of other class members. A plan for the resolution of this proceeding has been provided as set forth in the Settlement Agreement.

Disposition of the Motion for Certification

[11]	In my view, and I so find, this proceeding meets the threshold requirements for certification. Accordingly, if the proposed settlement is approved, an order is to issue that complies with s.8 of the CPA with respect to certification of the class proceeding.

The Motion to Approve the Settlement Agreement

[12]	A settlement of a class proceeding must be approved by the court before it is binding:
s.29(2) of the CPA. The settlement must be shown to be fair, adequate and in the best interests of the class members. Dabbs v. Sun Life Assurance Company of Canada (1998), 40 O.R. (3d) 429 (Gen. Div.) at p. 439; appeal quashed 41 O.R. (3d) 97 (C.A.); leave to appeal refused 41 O.R. (3d) 97n (S.C.C.). A hearing for settlement approval is often called a “fairness” hearing.

[13)	Notice has been published of this fairness hearing, as ordered by the court pursuant to s.29(4) of the CPA. Sonie 20 class members filed written notices of objection and about 75 appeared in person at the hearing which lasted 7.5 hours.

The Benefits

[14]	The proposed settlement is in the form of what is sometimes referred to as a “mechanism-based” settlement.

[15]	The Settlement Agreement provides comprehensive benefits for all class members, with three basic types of relief: global benefits, enhanced benefits, and individual benefits. There is no cap on the total recovery of settlement benefits. Nor is there any limit upon any particular form of benefit to be awarded

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Global Benefits

[16]	With the global benefits, all class members who are owners of a current class policy will receive a dividend enhancement of 50 basis points for one year. A class member who is the owner of a current Econolife Policy will receive a reduction in the cost of the term insurance component of that policy for 5 years. (The defendant began providing this reduction as of March 31, 1997.)

Enhanced Benefits

[17]	Enhanced benefits are in addition to global benefits. Enhanced benefits are available to all owners of a current class policy for whom premium offset was a significant factor in the purchase of the policy. Enhanced benefits consist of: a dividend enhancement of 50 basis points for two years; the premium offset date for the policy under London Life’s 2001 dividend scale will generally be no more than 1.5 times the original offset period; and a further term purchase rate reduction is applicable in some circumstances.

[18]	If there is an “Affirmative Representative Report”, enhanced benefits are automatically available to a class member. An Affirmative Representative Report is a selling agent’s report following the time of sale in which it is indicated that the policy was sold on the basis of the future use of premium offset, or that premium offset was a key selling feature for the policy purchased, or that the feature of premium offset was employed in making the sale of the policy purchased, in respect of the given owner. There are reportedly some 115,000 known policyholders who fall into this category. London Life has the possession and control of the corporation’s Affirmative Representative Reports.

[19]	Alternatively, any current owner can apply for enhanced benefits by completing and filing an enhanced benefits form indicating that premium offset was a significant factor in the purchase of the current class policy. Supporting documentation must be attached which supports the class member’s claim that the future use of premium offset was a significant factor in the current class policy purchased.

The Option of the Individual Claims Review Process (“ICRP”)

[20]	The ICRP is a mechanism for resolving an individual premium offset claim (which may be combined with an income claim) or a policy value claim in a practical manner. Proof is required through supporting documentation on a balance of probabilities standard. A class member who applies for enhanced benefits may not apply for individual benefits through the ICRP in respect of the same current class policy.

[21]	If a claimant chooses the ICRP, there is a range of potential outcomes consistent with the result that could be achieved through a Court action. There can be the remedy of a premium 

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offset guarantee in appropriate circumstances. There can be a reinstated policy for a former owner, with a premium offset guarantee, without evidence of insurability. Where a class member demonstrates a premium offset guarantee, the implementation of that guarantee may provide that policy loans that have funded premiums after the guaranteed offset date do not need to be repaid. The process is designed to facilitate class members to be able to make a claim without the necessity of hiring legal counsel or an accountant.

Claims Administration Facility

[22]	London Life will establish a “Claims Administration Facility” with responsibility for administering all benefits available under the Agreement. A Claims Review Officer will classify the individual’s claim into one of five categories depending on the evidence in support of the claim. The available relief varies depending upon the classification. Any Class Member dissatisfied with the decision of a Claims Review Officer will have 30 days after receiving a “Notice of Classification” to appeal the decision to an independent adjudicator by way of written statements and documentation.

Opting-out of the Settlement

[23]	An owner who wishes to opt out of the settlement must complete and return to the Claims Administration Facility an “Owner Election Form” within 60 days of having received the Notice to owners if a current owner and, if a former owner, within 60 days of publication of the Notice to former owners.

The Objections	

[24]	Section 14 of the CPA provides that class members may participate in a class proceeding at any time, with leave of the court. There were some 20 persons who made objections in writing. The objectors’ written objections were filed as part of the court record. The court heard the submissions of all counsel as to the merits of the proposed settlement. After an adjournment. most of the objectors who had filed written objections indicated through class counsel that their concerns had been addressed satisfactorily in the preceding submissions by counsel. Three of the objectors chose to address the court with comments and questions. This process enabled all of the class members present to gain a better understanding of the proposed settlement and the benefits it offers.

[25]	In my view, the statements of objection received in Ontario largely raise issues that are based upon a misconception concerning the benefits available under the Agreement. Many of the objections raise issues that relate to the merits of individual claims that claimed premium offset entitlements were not met rather than relate to the merits of the Settlement Agreement as such.

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Such issues are not the proper subject matter at this fairness hearing. Rather, such issues are to be raised in the individual dispute resolution process ICRP under the settlement, or through individual actions by those who opt out of the settlement.

The “par account”

[26]	The main issue raised by the objections relates to what is referred to as the “participating account” or “par account.” Counsel for one putative class member, Dianna Holmes, made oral and written representations in this regard.

[27] Objectors have concerns as to how the costs and benefits of the proposed settlement are being accounted for, and whether the overall result is that class members are in effect paying for the settlement with monies in the corporation that otherwise would accrue to the benefit of the class members as owners of participating policies.

[28]	Section 456 of the Insurance Companies Act S.C. 1991, c. 47, as amended (“ICA”) requires that a life insurance company such as London Life maintain separate accounts in its financial records in respect of participating policies. The bookkeeping account in issue is commonly called the “par account”. Life insurance actuarial and accounting practices are understandably conservative in approach.

[29]	The par account is not a segregated fund. Nor does the par account require a physical separation of assets. Rather, it is simply an account in the corporation’s financial bookkeeping as shown on the balance sheet in the financial statements.

[30]	All the costs estimated to be $260 million, to London Life of the settlement are being accounted for in the par account. While this treatment of settlement Costs is reportedly standard with the approach in other premium offset settlements that does not in itself answer the concerns of objecting class members.

[31]	The costs of the settlement are being charged by London Life to the par account. This, in effect, reduces the amount of the existing unappropriated earned surplus in the par account. This approach reflects the matching principle inherent to generally acceptable accounting principles. That is, the expenses incurred in respect of a given business activity are to be charged against the revenues from that activity. The par account, and its surplus, reflects the revenue from premiums earned in respect of premium offset policies. The expenses (including payments to policyholders to compensate for the premiums allegedly overcharged because of unrealized expectations as to premium offset dates) associated with this activity are properly charged to the account.

[32]	The essence of the class members’ claim is that policies were sold due to the availability of a premium offset feature which was not honoured because policyholders had to pay premiums for a longer period of time than represented. This allegedly resulted in a payment of more premiums than would have been the case if the alleged promises made in respect of premiums

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offset had been honoured. As the ‘excess’ premiums would have been credited to the par account, it is logical to charge that account with the costs of the settlement.

[33]	The operation of the par account works as follows. Credits reflecting the premiums from participating policies are made to the par account. Investment income earned on assets credited to the par account is also credited to the account as determined to be fair and equitable to the participating policyholders by the written opinion of the actuary of the corporation and approved by the resolution of the directors (and not disallowed by the Superintendent of Financial Institutions on the basis it is not fair and equitable to the participating policy holders): s.457 of the ICA. An allocation of expenses charged to the par account follows the same approach: s.458. The allocation method for investment income/losses and expenses in a given year in respect of the par account is filed with the Superintendent: s.459.

[34]	Charged, or debited to the account are the policy benefits paid to participating policyholders, expenses, including taxes, of the business activity relating to participating policies and the dividends paid to participating policyholders. Reserves are set up in the account for contingent liabilities related to the company’s business activity in respect of participating policyholders.

[35]	As of December, 2000, the assets reflected in the par account totaled about $11.1 billion. The unappropriated earned surplus was about $897 million. The ICA places stringent limits and controls upon transfers of earnings and unappropriated earned surplus from the par account: s.461.

[36]	The surplus in the par account reflects more than a century of life insurance business carried on by London Life. The surplus remains in the par account to ensure the payment of benefits over the continuing life of the corporation. That is, the surplus is there to protect future generations of policyholders, not just current policyholders.

[37]	Section 464 of the ICA permits the directors (subject to considering a report of the actuary and complying with certain regulations) to declare and for the company to pay a dividend, bonus or other benefit from profits to participating policyholders in accordance with its dividend or bonus policy established pursuant to section 165(2)(e). Section 165(2)(e) requires the board of directors to establish its policy for determining the dividends and bonuses to be paid to the participating policyholders before issuing participating policies London Life’s dividend policy provides for the distribution of a portion of the corporation’s yearly earnings credited to the par account as dividends (not by bonus or other benefit) to participating policyholders. In accordance with s. 461(1)(a) and (b) of the ICA, the dividend from “profits” means the profits of the participating account “for the financial year.”

[38]	Section 461 allows the corporation to make a payment annually to its shareholders from the par account according to a formula, provided that any such payment:

would not, in the opinion of the actuary of the company, materially affect the company’s ability to continue to comply with its dividend or bonus

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policy or to maintain the levels or rates of dividends or bonuses paid to the company’s participating policyholders

[39]	The ICA permits a charge or debit to be made by London Life against the par account to the credit of the shareholders’ account of not more than 2.7% of distributable earnings in any year.

[40]	Participating policyholders are not entitled to the benefit of the funds credited to the par account other than as provided in their policy contracts. Under the policies, London Life is obliged to pay stipulated death benefits and to pay dividends in accordance with its dividend policy. Thus, the class members have no claim to a distribution of the unappropriated earned surplus in the par account.

[41]	The actuarial evidence is that the settlement will not jeopardize the obligations of London Life to the par account policyholders through the par account being charged with a reserve for the costs of the settlement. That is, there is sufficient surplus such as to provide adequate protection that the obligations under the policy contracts wi1l be met. In any event, if the par account was somehow to be depleted such that actuarial expectations were tremendously upset (say by a single catastrophe that caused the deaths of a great many policyholders or that caused a great loss in the company’s assets) London Life would remain obligated to honour policies. The participating policyholders are not limited to having their claims honoured from the assets reflected in the par account. The contractual obligations to participating policyholders have priority over the shareholders with respect to a claim upon the corporation’s assets generally.

[42]	The ICA does not provide that the surplus in the par account can be paid out to the shareholders during the life of the company.

[43]	It is a purely imaginary hypothetical to speak of winding-up of a solvent Canadian life insurance company. I discuss this briefly only to indicate that if it were done, there is not any provision in the corporate charter, or in any federal statute, to give the participating policy holders of London Life claim upon the corporation’s assets other than what is required to meet the corporation’s obligations under the contractual provisions of the policies and under the corporation’s dividend policy.

[44] Article 6 of London Life’s corporate charter provides for the rights attaching to the common shares upon a dissolution.

6.	(c) Rights upon Dissolution

Subject to the prior rights of the holders of the First Preferred Shares, the Second Preferred Shares and any other shares ranking senior to the Common Shares with respect to priority in the distribution of assets, the holders of Common Shares shall be entitled rd receive the remaining, property and assets of the Company in the event of the liquidation, dissolution or winding-up of the Company whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs provided that

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such remaining property and assets shall be paid or distributed equally share for
share to the holders of Common Shares at the time outstanding without preference
or priority. [emphasis added]

In the event of any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, the claims of policyholders, including the claims of participating policyholders to the portion of any remaining profits distinguished as having been derived from participating policies in which participating policyholders would be entitled to share if such profits had been set apart for distribution as dividends by the directors, have priority over the claims of preferred shareholders.

[45]	My reading of the second and East paragraph of the “Rights upon Dissolution” provisions is that it relates only to such dividend as the participating policyholders would be entitled to in accordance with the corporation’s dividend policy (established pursuant to s. 165(2)(e) of the ICA) with respect to a distribution of the profit in the current year ie. the year of winding-up and dissolution. This provision is necessary because a dissolution should not prejudice the policyholders in respect of their inchoate claim to dividends in respect of the current year’s profit. This provision in the corporate charter mirrors the obligation of the corporation to its participating policyholders seen in s.461(c) of the ICA. Once the dividend for a current year is declared and distributed, the rights of the policyholders have been met. (No evidence has been brought forward to suggest that the participating policies provide for any contractual right to a portion of the unappropriated earned surplus of the par account upon a dissolution.)

[46] A major premise underlying the submissions of counsel for the objecting class member, Dianna Holmes, is that the ICA prevents any claim upon the unappropriated earned surplus in the par account by shareholders, even on a liquidation or dissolution. Hence, he implies that such surplus inherently accrues for the benefit of participating policyholders. I disagree.

[47]	Under Parts I and III of the Winding Up and Restructuring Act R.S.C. 1985, c. W- 11 (“WU&RA”) a life insurance company can be wound-up by a special resolution of the shareholders upon the appropriate application to the court; ss. 9, 10(b) and 11(c). The court can appoint a liquidator who will manage the liquidation, subject to oversight by the court ss 23(1) and 39. There is a statutory scheme for the priority of claims (s. 161(1)) and other provisions to ensure that continuing policy obligations are met (s.162(1)). Ultimately there can be a distribution of any remaining surplus to shareholders after all existing and contingent liabilities have been met. (s.95). The rights of the participating policyholders would be protected in the event of a dissolution by virtue of the provisions of the corporate charter and the WU&RA. The claims of policyholders have priority over claims of shareholders in a liquidation or winding-up.

[48]	As seen from the above, Participating Policyholders of London Life continue to have the protections extended by the ICA, (in particular ss.165(2)(e) and 456 to 464), the WU&RA, (in particular s.l61), and London Life’s charter, in particular article 6(c), and the contractual provisions in their policies.

[49]	In addition article 6.1 of the Settlement Agreement provides:

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6.1. London Life shall administer this settlement diligently and in good faith according to the terms of this Agreement. London Life undertakes that it will not attempt to recapture the costs of this Agreement or the benefits provided hereunder through future reductions in the dividend scale applicable to Class Policies.

[50]	This is an enforceable obligation pursuant to the contractual undertakings of London Life upon the court’s approval of the Settlement Agreement.

[51]	Finally, policyholders should have the comfort that necessarily follows from the practical reality of any life insurer wanting to live up to its undertakings to its policyholders through the settlement of a dispute. Those policyholders are the source of its continuing revenue and profit.

[52]	Thus, in my view the costs and benefits of the proposed settlement are being properly arid fairly accounted for by London Life. Class members are not paying for the settlement with monies in the corporation that would otherwise accrue to the benefit of the class members as owners of participating policies.

Conclusion with respect to Settlement Agreement

[53]	Factors to take into account in determining whether or not a settlement is fair, adequate and in the best interests of the class include the likelihood of success, the risk, delay and expense through pursuing the litigation; the investigation and evidence; the presence of arms-length bargaining and the absence of collusion; the experience of class counsel and his/her recommendation, the opinion of independent experts, the settlement terms and conditions and the number of objectors and the nature of the objections. H. Newberg, A. Conte, Newberg on Class actions, 3rd ed. (Colorado: Shepard’s/ McGraw-Hill Inc.) at ss. 11.41 and 11.43; Parsons v. Canadian Red Cross Society (1999), 40 C.P.C. (4th) 151 (S.C.J.).

[54]	The class counsel in the case at hand is experienced in class proceedings. It is apparent from the evidence and submissions at the fairness hearing that the class members have been well-represented.

[55]	The settlement is the subject of a favourable fairness opinion by an expert actuary, David Huff, who has provided two affidavits in support of the motion to approve the settlement. Mr. Huff is a consulting actuary from Austin, Texas. He has extensive professional experience of some 30 years in respect of life insurance products. He has participated in major life insurance class action settlement negotiations and is familiar with the many class action settlements in the United States and Canada relating to the premium offset issue Mr. Huff testified in the fairness hearing In his opinion, the Agreement addresses the problems alleged by class members in their action, provides substantial and real economic value, is fair and compares favourably with other class action settlements.

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[56] The settlement compares favourably with prior court-approved settlements in other
premium offset class actions. See for example Dabbs v. Sun Life (1998), 40 O.R. (3d) 429 (Gen.
Div) at 439e, McKrow v.  Manufacturers Life, [1998] O.J. No 4692 (Gen Div) at para. 12,
Gibbs v Canada Life, Court File 1712/97, April 4, 2001 (S.C.J.) at para. 15 and McRae v.
Mutual of Omaha, Court File No 24257/96 July 14, 2000 (S.C.J.)

[57] The settlement has already been approved by the courts of British Columbia and Quebec in respect of the parallel actions in those provinces. McNeil v. London Life, Court File No. 500-06-000022-968, September 11, 2001 (Que. S.C); Walcott v. London Life, Court File No. C972721. September 5,2001 (B.C.S.C.).

[58] The settlement provides various benefits, including global no-proof benefits. There is also an individual dispute resolution mechanism with remedies comparable to those a policyholder would receive if an individual claim was pursued through the courts.

[59]	A notice of court approval of the settlement will be given to all class members at London Life’s expense. An explanatory document regarding the settlement will be included in the mailing to each class member with an in-force policy. The explanatory document will also be included as part of the “Lapsed and Surrendered Benefits Package” available to all former owners. There will be a toll-free bilingual information line to provide information to individual class members with respect to the Agreement. Class counsel will provide representation, assistance and advice to class members in relation to the implementation of the Agreement at no cost to class members.

Disposition of the Motion for Approval of the Settlement Agreement

[60]	In my view, and I so find, the proposed settlements fair, adequate, reasonable and in the best interests of the class members. Accordingly, approval is given to the settlement provided by the Agreement.

The Motion for the approval of Class Counsel’s legal fees

[61]	Sections 32 and 33 of the CPA deal with class counsel fees and disbursements. Court approval of fees and disbursements is required. The standard to be met is that of reasonableness. Article 14 of the Agreement provides for a payment in the total amount of $7.5 million from the defendant to the law firms in the three provinces who make up the collective class counsel.

[62]	Where a settlement involves a global common fund of money for a plaintiff class the preferable course of action is that any monies paid by a defendant towards the plaintiff’s costs be included in the common fund accruing to the benefit of class members. See for example Delgrosso v. Paul [2001] O.J. No.1616 (S.C.J.). This approaches helps to ensure that class

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counsel is acting at arms-length from the counsel for the defendant. It also helps to ensure that an arms-length approach to negotiations toward settlement is seen to be the case.

[63]	This approach is problematic where there is a. mechanism-type settlement, as in the case at hand, rather than a global cash settlement. In such instance, the defendant may agree to pay the costs to the class in respect of class counsel. This scenario is potentially fraught with difficulties. Not only must collusion be avoided but the appearance of collusion must be avoided.

[64]	In the situation at hand, there is affidavit evidence that all of the terms to the settlement were negotiated with finality and only then was the question of legal costs addressed. All of the counsel involved have reputations for integrity of the highest order. I have no doubt that the affidavit evidence accurately reflects the true situation.

[65]	As well, the principal individual behind the corporate representative plaintiff has filed an affidavit recommending approval of the settlement. He has also sworn that he will not receive any benefits directly or indirectly from the settlement other than those benefits he may receive under the Agreement as a claimant policyholder.

[66]	This brings us to the question of reasonableness. The $7.5 million is inclusive of all taxes (other than income taxes) and disbursements. Disbursements to date total about $350,000. Disbursements to date together with G.S.T. upon fees will total about $1 million.

[67]	Some 1200 hours of para-legal time has been incurred to date. At $75.00/ hour this amounts to a total fee of $90.000.

[68]	Based upon the known experience in another premium offset case, class counsel estimates that the costs for para-legals in the case at hand to deal with policyholders during the implementation of the settlement throughout Canada will amount to about $2,366,038.

[69]	On a time basis, class counsel collectively have spent some 5,400 hours. At an average hourly rate of $350.00/ hour time-based fees would total $1,890,000. Section 33 of the CPA allows for a retainer agreement to provide that counsel may move before the court to have a multiplier applied to the base fee determined by the total hours worked. With hypothetically a multiplier of say 3, class counsel would be entitled to fees of about $5,670,000.

[70]	The retainer agreements in place provide for a payment to counsel, contingent upon success, of 20% of the recovery in the case of Quebec and 25% in the case of each of Ontario and British Columbia. As a percentage of recovery, a $6.5 million fee ($7.5 million less G.S.T. and disbursements) represents approximately 2.7% of the total estimated recovery of $240 million by the class members. The agreement in place between the three class counsel firms provides that Ontario counsel shall receive 48% of the overall payment by London Life

[71]	The Costs payment to class counsel is staggered. Within 10 days after the court approval date London Life shall pay $1.5 million and deposit the remaining $6 million into an interest bearing trust account.

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[72]	After the period provided in article 9.1 of the Agreement has expired (and the parties agree this shall not be less than eight months, and is now estimated to be late June, 2002), subject to the further approval of the court, the sum of $5 million may be paid to class counsel from the trust account. As a precondition to the motion to approve this payment, class counsel shall file a report setting forth the progress and relevant data with respect to the implementation of the settlement, including, for example: whether the provisions of the Agreement are being implemented appropriately and expeditiously, the status of the Individual Claims Review Process, and such relevant data as the number of class members who have filed claims, the nature of and quantification of the benefits being received as a result of the claims, the number of class members pursuing claims through the ICRP, and any problems in the implementation of the Agreement.

[73]	The balance of the monies in the trust account including accrued interest will be paid to class counsel upon motion with court approval 90 days after the notice given under article 14.1.2 (b) of the Agreement. It is estimated that the final payment will be about September, 2002.

[74]	As a precondition to the third payment, class counsel will report in the same fashion as set forth in respect of the second payment. All reports of class counsel will be placed on the web site of class counsel and be available for review in the same places as other documentation is available.

[75]	In my view, counsel fees and disbursements in the total amount of $7 5 million is reasonable. The total estimated value of the settlement some $260 million, inclusive of $20 million for legal costs and administration. Given the time spent to date by class counsel, the estimated future time required of counsel for implementation, the disbursements incurred, the risk in undertaking the action. and the favourable terms of the settlement achieved, the amount of $7.5 million is reasonable and fair. As I have stated above, there will be ongoing reporting by class counsel and approval of the second and third payments is subject to the discretion of the court after measuring the performance of class counsel and of the settlement itself in its implementation, as against the Agreement’s terms and the reasonable expectations thereby created.

Disposition of Motion for the Approval of Class Counsel’s legal fees

[76]	For the reasons given, class counsel’s legal fees and expenses are approved, to be paid in accordance with article 14 of the Agreement.

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Motion to dismiss class actions #97-CV-131992 commenced at Toronto and # 140/98 commenced at Peterborough

[77]	Given the approval of the settlement, class counsel moves on consent to dismiss the above two class actions in so far as they are brought pursuant to the CPA. Counsel may speak to me as to the disposition of costs.

Disposition of Motion to Dismiss

[78]	The two actions are to be dismissed in so far as they constitute class proceedings. The two actions shall continue as individual actions; however, if the named proposed representative plaintiff, John Maguire, in those actions does not opt out of the class action at hand (ie. the Directright Cartage Ltd. class action) within the stipulated period, then the two continuing individual actions brought by Mr. Maguire are discontinued as individual actions.

Released:	October l8, 2001

COURT FILE NO.: 1292/97
DATE: 20011018

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

    DIRECTRIGHT CARTAGE LTD.

Plaintiff

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     LONDON LIFE INSURANCE COMPANY

Defendant

REASONS FOR JUDGMENT

Cumming J.

Released:	October 18, 2001