



COURT OF APPEAL FOR ONTARIO

CITATION: Jeffery v. London Life Insurance Company, 2018 ONCA
    716

DATE: 20180831

DOCKET: C62958 & C64167

Doherty, Benotto and Huscroft JJ.A.

BETWEEN

James Jeffery and DAlton S. Rudd

Plaintiffs (Respondents)

and

London Life Insurance Company and
The Great-West Life Assurance Company

Defendants (Appellants)

BETWEEN

John Douglas McKittrick

Plaintiff (Respondent)

and

The Great-West Life Assurance Company and
Great-West Lifeco Inc.

Defendants (Appellants)

Crawford Smith, James Gotowiec and Shalom
    Cumbo-Steinmetz, for the appellants

Jonathan C. Lisus, Ian C. Matthews, Jonathan Foreman,
    Paul Bates, David Williams and Michela Gregory, for the respondents

J. Thomas Curry and Paul-Erik Veel, for the Law
    Foundation of Ontario

Heard: December 20-21, 2017

On appeal from the orders of Justice Johanne N.
    Morissette of the Superior Court of Justice, dated August 31, 2016, with
    reasons reported at
2016 ONSC 5506,
and July 21, 2017, with reasons reported at 2017 ONSC 4480.

Benotto J.A.:

A.

Overview

[1]

This is the third time this class action has been before this court. The
    issues this time relate to the trial judges determinations regarding class
    counsel fees and costs.

[2]

The class action arose from the Great-West Life Assurance Companys
    (Great-West Life) acquisition of London Life Insurance Company (London
    Life). As part of the acquisition, the companies used funds from their
    respective participating policy (PAR) accounts through a series of PAR
    account transactions. The plaintiff class  holders of Great-West Life and
    London Life participating policies  alleged that these transactions were not
    in compliance with the
Insurance Companies Act
, S.C. 1991, c. 47 (
ICA
)
.


[3]

The certification judge certified four common issues and a lengthy trial
    ensued. The trial judge ultimately found several breaches of the
ICA
. On
    appeal, this court upheld the trial judges findings (except in one limited
    respect) but ordered a rehearing with respect to the remedy section of the
    judgment (the first appeal).

[4]

The trial judge conducted the re-hearing as directed. On appeal from the
    re-hearing, this court ordered that $56.43 million be paid back to the PAR
    accounts (the second appeal).

[5]

The parties then returned to the trial judge on the issue of class
    counsel fees and costs. She: approved class counsel fees of $16.4 million;
    placed a first charge for the fees over the $56.43 million to be returned to
    the PAR accounts; found that the class plaintiffs were entitled to partial
    indemnity costs at $4 million; and imposed a levy in favour of the Law
    Foundation of Ontario (the Foundation) on the $56.43 million to be returned
    to the PAR accounts.

[6]

On a subsequent motion, the trial judge clarified a portion of an
    earlier judgment, holding that it meant
the companies could not
    charge or allocate any legal costs or expenses, whenever incurred, to the PAR
    accounts at any time without leave of the court and on notice.

[7]

The companies appeal from the trial judges decision on class counsel
    fees, costs and the imposition of a levy. They also appeal from her order
    clarifying her earlier judgment. The Foundation cross-appeals on the basis that
    additional disbursements should have been awarded to the respondents and
    subject to the levy.

B.

Facts

[8]

In 1997, Great-West Lifeco Inc. and its wholly owned subsidiary
    Great-West Life acquired London Insurance Group Inc., which owned London Life. As
    part of the acquisition, the companies used funds from Great-West Lifes and London
    Lifes respective PAR accounts through a series of PAR account transactions. An
    understanding of PAR accounts and the PAR account transactions is crucial to
    the issues raised in this appeal.

(1)

PAR accounts

[9]

Life insurance policies are either participating or non-participating
    policies. Participating policies are, in essence, life insurance contracts and
    investment contracts. They permit the policyholder to participate in the
    profits of the insurance company. Prior to the death of an insured, the owner of
    the policy may terminate the insurance contract and receive its cash surrender
    value, which is fixed in advance. The owner is also entitled to receive
    dividends. Participating policyholders pay significantly higher premiums than
    non-participating policyholders.

[10]

Life
    insurance companies that issue participating policies are required, pursuant to
    s. 456 of the
ICA
,
to
    maintain PAR accounts for the participating policies separately from the
    accounts maintained in respect of non-participating policies. Under ss. 457 and
    458 of the
ICA
, the income and expenses of the company are required to
    be divided between PAR accounts and shareholder accounts according to an approved
    allocation method. This is designed to ensure that the companys income and
    expenses are fairly and equitably divided between PAR accounts and shareholder
    accounts.

[11]

Section
    461(b) of the
ICA
provides that dividends to participating
    policyholders are paid out of the profits of a PAR account in accordance with
    the dividend policy established pursuant to s. 165(2)(e) of the
ICA
. The
    source of participating policy dividends is the earnings in the PAR account. Directors
    of companies with participating policyholders exercise their discretion in good
    faith to determine the quantum of dividends to be paid. Dividends are not a
    fixed amount per policy.

[12]

The
    capital in a PAR account may only be invested in accordance with the
ICA
and for the benefit of participating policyholders.

(2)

PAR account transactions

[13]

When
    Great-West Life acquired London Life, the PAR accounts of both companies
    contributed to the acquisition. The total contribution was $220 million: $180
    million from the London Life PAR accounts; and $40 million from the Great-West
    Life PAR accounts.

[14]

The
    $220 million was transferred from the respective PAR accounts to the companies
    shareholder accounts. London Lifes shareholder account then loaned Great-West
    Life the $180 million in order for Great-West Life to acquire London Life. Great-West
    Life repaid the shareholder loan with interest to London Lifes shareholder
    account within months of the transaction. However, the $180 million was not
    repaid to the PAR accounts.

[15]

The
    plan was that the contributing PAR accounts would receive a pre-paid expense
    asset (PPEA) of an equal amount over a 25-year period. As described by this
    court in the second appeal, the investment in the acquisition fund bought the
    PAR accounts the right to receive a stream of anticipated expense savings as a
    result of the merger  the equivalent of a revenue stream  over the next 25
    years. The estimated value of that stream of savings was expected to equal a
    return of the original investment, plus a 6.91% annual rate of return.

(3)

The class action

[16]

Three
    representative plaintiffs launched two actions, which proceeded in tandem, against
    London Life and Great-West Life on behalf of 1.8 million participating policy
    holders. They alleged that the PAR account transactions were not in compliance
    with the
ICA.

[17]

The
    following common issues were established and certified:

1.

Did the PAR
    account transactions constitute a breach of ss. 331(4), 456, 458, 462, or 521
    of the
ICA
?

2.

Did the
    companies directors or officers breach ss. 166(1), 166(2), 211, or 212 of the
ICA
?

3.

Were the
    companies unjustly enriched by the PAR account transactions?

4.

If the answer to
    any of the above is yes, what remedies, if any, are just and appropriate under
    ss. 215 and 1031 of the
ICA
?
[1]

Support from the Class Proceeding Fund

[18]

After
    certification but shortly before the common issues trial, the class plaintiffs
    applied for financial support from the Class Proceeding Fund (the Fund) under
    s. 59.3 of the
Law Society Act
, R.S.O. 1990, c. L.8. The Fund provided
    a total of $1,520,346.50 in funding to cover disbursements in the action.

(4)

Trial, first appeal, rehearing and second appeal

[19]

The
    matter was tried over 45 days between September 2009 and January 2010. The
    trial judge released her reasons in October 2010. She found that the PAR
    account transactions had breached the following sections of the
ICA
:

a.

Section 462, which states that only certain transfers may be made from a
    PAR account;

b.

Section 331(4), which states that an insurance companys financial
    statements must comply with generally accepted accounting principles (GAAP);

c.

Section 458, which states that certain expenses of the company may be
    debited from a PAR account given approval by a resolution of the directors and
    a written opinion of an actuary that doing so is fair and equitable to the
    participating policyholders; and

d.

Section 166(2), which requires directors, officers and employees to
    comply with the
ICA
.
[2]

[20]

London
    Life and Great-West Life appealed. This court upheld the trial judges findings
    with respect to the breaches, with one exception. It found that she erred in
    her s. 166(2) analysis, since the actions were against the companies and no
    directors, officers or employees had been sued.

[21]

However,
    the court did not agree with the remedy the trial judge crafted regarding the
    breaches. In place of the remedy ordered by the trial judge, the court
    substituted an order unwinding the PAR account transactions as of an effective
    date to be determined by the trial judge together with the amounts according
    to a specified formula.
[3]

[22]

The
    matter returned to the trial judge, who conducted the rehearing as directed.
[4]


[23]

London
    Life and Great-West Life appealed again, alleging that the trial judge erred in
    interpreting the formula developed by the court in the first appeal. Following
    the second appeal, this court ordered that the PAR account transactions be unwound
    and $56.43 million returned to the PAR accounts.
[5]

(5)

Class counsel fees, costs and the imposition of a levy

[24]

The
    parties returned to the trial judge on the issue of costs, class counsel fees
    and a levy in favour of the Foundation.
[6]

[25]

Class
    counsel sought approval of $16.4 million in fees after succeeding on the common
    issues at trial. They further sought to charge the monetary award obtained in
    the underlying action with the payment of these fees, pursuant to s. 32(3) of
    the
Class Proceedings Act, 1992
,
    S.O. 1992, c. 6 (
CPA
).
[7]

Finally,
they sought costs
    on a full indemnity basis from London Life and Great-West Life.

[26]

London
    Life and Great-West Life sought partial indemnity costs on the basis that they 
    not the class plaintiffs  had achieved substantial success in the action. The
    plaintiffs had not achieved a distributive damages award and, in unwinding the
    PAR account transactions, the PAR accounts had been deprived the benefits of
    the savings associated with the merger. As a result, the unwinding was in fact
    revenue neutral.

[27]

The
    Foundation sought a levy on the $56.43 million monetary award to repay the financial
    support the Fund provided the class plaintiffs.

[28]

The
    trial judge approved class counsels retainer agreement and the $16.4 million
    quantum of fees sought. She found that the $56.43 million judgment in favour of
    the PAR accounts was a monetary award for the benefit of the class, and
    imposed a first charge over it for class counsel fees.

[29]

The
    trial judge found that London Life and Great-West Life were not entitled to
    costs. She awarded $4 million in partial indemnity costs in favour of the class
    plaintiffs.

[30]

Finally,
    the trial judge granted the Foundations request for a levy. However, she refused
    to grant an additional $118,000 in disbursements to the class plaintiffs on the
    basis that they were largely for appeal matters that had already been the
    subject matter of costs awards.

(6)

The r. 59.06 motion

[31]

The plaintiff class subsequently moved before the trial judge
    under r. 59.06 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194.
    They sought clarification of a prohibition order contained in a judgment she
    released in 2010, after the first trial (the 2010 Prohibition Order).
    Specifically, the 2010 Prohibition Order enjoined the defendants
from debiting, expensing or otherwise deducting from the
    participating accounts any costs or expenses incurred by the defendants in the
defence
of these actions, except by leave of the court on notice to the
    class representatives.

[32]

It turned out that London Life and Great-West
    Life had already charged nearly $7 million in legal fees and disbursements to
    the PAR accounts between the commencement of the litigation and the imposition
    of the 2010 Prohibition Order. The plaintiff class submitted that the 2010
    Prohibition Order precluded this, since it applied retroactively to all costs
    and expenses related to the proceedings.

[33]

The trial judge agreed and ordered that the
    companies apply for leave to charge their legal fees, including those incurred
    before the 2010 Prohibition Order, to the PAR accounts.
[8]


C.

Issues now before the court

[34]

London
    Life and Great-West Life appeal from the trial judges order on class counsel
    fees, costs and the levy. They also appeal from her decision with respect to
    the r. 59.06 motion. The Foundation cross-appeals from her failure to order the
    additional disbursements and include them in the levy in favour of the Fund.

[35]

There
    are essentially four issues on appeal:

1.

Did the trial judge err in ordering
payment of the class counsel fee
    from, and ordering a charge over, the PAR accounts?

2.

Did the trial judge err by ordering the levy in favour of the Foundation
    or by refusing to award the respondents the additional disbursements?

3.

Did the trial judge err in awarding costs to the respondents?

4.

Did the trial judge err by assuming jurisdiction to hear the r. 59.06
    motion and then interpreting the 2010 Prohibition Order retroactively?

D.

Analysis

(1)

Did the trial judge err in ordering payment of the class counsel fee from,
    and ordering a charge over, the PAR accounts?

[36]

The
    appellants do not take issue with the trial judges approval of class counsels
    fees. However, they argue that there was no basis in the
ICA
,
CPA
,
    or the law of contract to charge the PAR accounts with payment of those fees.

[37]

The
    appellants submit that the trial judge erred in ordering class counsels contingency
    fees to be paid from the PAR accounts and then placing a charge on the PAR
    accounts. They say this because: (i) the order effectively binds the appellants
    to the retainer agreement to which they were not party; (ii) the award made in
    this action is not a monetary award for the purposes of s. 32(3) of the
CPA
;
    and (iii) even if the award is a monetary award, the charge contemplated by
    s. 32(3) of the
CPA
can only attach to an award payable to class
    counsels clients.

[38]

I
    will address each of these arguments in turn. First, I do not agree that, as
    alleged by the appellants, the trial judges order binds them to another
    entitys contract and thereby effectively breaches the doctrine of privity of
    contract. The trial judge was clear that class counsels fees were payable from
    the PAR accounts by virtue of s. 32(3) of the
CPA
, not by virtue of
    the retainer agreement itself. At paras. 71 and 79-80 of the Costs Reasons she
    explained:

The monetary relief achieved on behalf of the class in this
    case is a monetary award for the purposes of s. 32(3) of the
CPA
and
    it is also an aggregate assessment of monetary relief for the purposes of the
CPA
.



For these reasons, the fee request of class counsel is approved
    under s. 32(2) of the
CPA
. As a result, an imposition of a first
    charge for class counsel fees over the monetary award of $56.43 million in the
    sum of $16.4 million is granted.

Class counsel has made an alternative claim for fees by virtue
    of section 1031 of the
ICA
. Given that I have found a charge under s.
    32(3) of the
CPA
, I need not deal with that submission.

[39]

On
    my reading of her reasons, the trial judge ordered the appellants to pay the
    amount subject to the charge as a corollary to the charge itself. Given the
    statutory basis upon which the trial judge ordered a first charge on the PAR
    accounts, the appellants first argument cannot succeed. To the extent that the
CPA
secures a contractual debt against the appellants assets, the
    Legislature is free to interfere with the common law doctrine of privity of
    contract.

[40]

I
    turn to the appellants submission with respect to the definition of monetary
    award. Section 32(3) of the
CPA
provides:

Amounts owing under an enforceable agreement are a
    first charge on any settlement funds
or monetary award
. [Emphasis
    added].

[41]

There
    is no dispute that the agreements between class counsel and the representative
    plaintiffs constitute enforceable agreements pursuant to that section. The
    only question is whether the order in this action constitutes a monetary
    award.

[42]

The
    appellants submit that the trial judgment does not qualify as a monetary
    award because it did not order the transfer of money directly to the class
    plaintiffs. In their view, the purpose of s. 32(3) is one of administrative
    convenience: it supports a class action regime where collecting legal fees from
    a disparate class is difficult. As a result, it only permits a charge to attach
    to monetary awards
made payable to class members
,

such that
    counsel can secure their existing debts against assets belonging to the class.
    They argue that this section does not, and ought not be interpreted to
    transform retainer agreements into obligations enforceable against third parties.
    Here, although the class members have an interest in the PAR accounts, they
    have no right to the funds. In the appellants view, the order by the court
    amounted to nothing more than an order directing the appellants to re-arrange their
    books.

[43]

I
    do not accept this submission for three reasons. First, the words payable to
    are absent from s. 32(3) of the
CPA
. Instead, the section refers to any
     monetary award. The plain wording of the section does not support the
    appellants contention.

[44]

Second,
    s. 32(3) of the
CPA
should be interpreted generously, with a view to
    the overarching purposes of the
CPA
. The most fundamental of these is
    encouraging access to justice. The appellants proposed limitation on s. 32(3)
    has the potential to discourage meritorious class actions seeking remedies
    other than a distributive damages award, or to encourage class counsel to frame
    class actions in terms of distributive damages awards even when other remedies
    may be more beneficial to the class. As the trial judge noted at paras. 68-69
    of the Costs Reasons, in the report which gave rise to the
CPA
, the
    Law Reform Commission recommended using the term monetary award rather than
    damages, recognizing that there were various forms of relief that could be
    beneficial to class members in a class proceeding.

[45]

Third,
    in
Hislop v. Canada
,
2009
    ONCA 354, 95 O.R. (3d) 81, this court considered the meaning of monetary
    award under s. 32(3) of the
CPA
. At paras. 41-44, Watt J.A. said:

The term monetary award in s. 32(3) of the CPA
    is not defined anywhere in the statute or elsewhere in any statute incorporated
    by reference or of general application. It follows that the term, more broadly,
    the words of the subsection, must be read in their entire context and in their
    grammatical and ordinary sense harmoniously with the scheme of the Act, its
    object and the intention of a legislature:
Bell ExpressVu v. Rex
, [2002] 2 S.C.R. 559, at para. 26.

The CPA is a procedural statute, one adopted by
    the legislature to ensure that the courts had a procedural tool sufficiently
    refined to allow them to deal efficiently, and on a principled rather than an
ad
    hoc
basis, with increasingly complicated modern litigation:
Hollick
    v. Toronto (City)
, [2001] 3 S.C.R. 158, at para. 14;
Ontario
    New Home Warranty Program v. Chevron Chemical Co.
(1999), 46
    O.R. (3d) 130, (S.C.), at para. 50.

Despite its procedural nature, the CPA is to be
    construed generously:
Hollick
, at para. 14. The
    phrase generous construction is not, however, a licence to run amok and to
    confer on statutory language a meaning that it does not reasonably bear, but
    neither can it sponsor a triumph of form over substance.

In ordinary speech, monetary means of or
    pertaining to money, said otherwise, pecuniary. In similar discourse, award
    refers to a payment or penalty imposed by judicial authority. A monetary award
    is a payment of money imposed by judicial authority.

[46]

This
    court clearly considered the return of the $56.43 million to the PAR accounts
    as a payment of money, imposed by judicial authority, for the benefit of the
    class members. At para. 211 of the First Appeal Reasons the court ordered:

d)       That the
monetary relief
provided for in paras. 28 and 29 be varied to provide for the payment into the
    PAR accounts of the sum of $220 million, plus foregone investment income to the
    effective date,
less
an amount agreed to by the parties or to be
    determined by the trial judge in accordance with the formula set out in para.
    200 above.

e)       That the
monies
returned
    to the PAR accounts be dealt with in the ordinary course in accordance with the
    dividend policies of Great-West Life and London Life.

f)       That the
monies
returned
    not include the tax gross up of $63 million ordered by the trial judge.
    [Italics in original, underlining added.]

[47]

The
    appellants submit that Watt J.A.s words in
Hislop
are
obiter
since the court resolved the appeal without resort to the definition of the
    phrase. While true, the courts direction aligns both with a generous
    interpretation of the words in s. 32(3) and  as set out above  the nature of
    the award made at trial in this case. I see no reason to ignore the guidance it
    provides.

[48]

The
    appellants also submit that
Hislop
is distinguishable because there
    the class was enriched by the class proceeding, albeit indirectly. In that
    case, the trial judge had declared certain provisions of the
Modernization
    of Benefits and Obligations Act,
S.C. 2000, c. 12, which denied class
    members their CPP survivors pensions, unconstitutional. As a result, each class
    member would receive the survivors pensions denied to them. I do not agree with
    this distinction. The payments made here increased the surplus in the PAR
    accounts available for distribution to the class by way of dividends, bonuses
    or other benefits. The fact that the appellants later disallowed the PAR
    accounts from participating in the savings associated with the merger, such
    that the PAR accounts remained in a revenue neutral state does not affect the
    nature of the order, standing alone. The award benefitted the class and is not
    distinguishable from
Hislop
on that basis.

[49]

In
    sum, the order below involved a payment of money and benefitted the class. It
    is a monetary award and the trial judge did not err.

[50]

Finally,
    I turn to consider whether a charge under s. 32(3) of the
CPA
may
    properly be attached to the $56.43 million ordered returned to the PAR
    accounts.

[51]

The
    appellants submit that even if the order in this case was a monetary award, the
    trial judge erred in ordering a charge on the PAR accounts. They submit that a charge
    under the
CPA
, like a lien under the
Solicitors Act
, R.S.O. 1990, c. S.15

or at
    common law, can only attach to property owned by a debtor  in this case, the
    class. The class has no right to the funds in the PAR accounts and has no right
    to demand that the funds allocated to the PAR accounts be paid out. While
    policyholders have a contractual right to be paid dividends, they have no
    ownership right to any of the assets in the PAR accounts. None of the allocated
    amounts have been paid out to the class as dividends and they may never be.
    This court, on the first appeal, ordered that no monies were to be paid to
    individual class members. Further, many members of the class are no longer
    policyholders and have no connection to the appellants.

[52]

Again,
    I disagree. The issue is whether there was a monetary award over which the
    trial judge could impose the statutory first charge for the fee.

[53]

The
    plain language of the
CPA
does not support the argument that the class
    must have an ownership interest in property before the first charge is put
    against it. The trial judge reasonably found that there was a payment of money.
    In the First Appeal Reasons, this court referred to the remedy as an amount to
    be paid to the PAR accounts. The trial judge also reasonably found that the
    monetary award benefitted class members. For a monetary award to benefit a
    class, it is not necessary for class members to secure cash directly in their
    pockets. The PAR accounts are a fund available for the benefit of the class
    members if and when the directors declare a dividend.

[54]

Even
    if a requirement is read into the
CPA
that class members have some
    right to the funds to ground a first charge, the plaintiff class members do
    have a right in this case. They were awarded the right to have the $56.43
    million repaid to the PAR accounts. This right would not have been possible but
    for the work of class counsel. Further, the PAR accounts are not money that the
    appellants can use however they see fit. The
ICA
imposes restrictions.
    As participating policy holders, the class members have the right to expect
    fair and equitable treatment and full compliance with the provisions of the
ICA
.
    The class sought judicial recourse in furtherance of this right and achieved
    their objective.

(2)

Did the trial judge err by ordering the levy in favour of the Foundation
    and refusing to award the respondents additional disbursements?

[55]

The
    appellants argue that the trial judge erred in imposing a levy in favour of the
    Fund. They submit that the Foundation has no entitlement to a levy from them. In
    a manner similar to their first ground of appeal, they argue that the levy
    cannot attach to their property and must be paid by the respondents.

[56]

The
    Foundation argues by cross-appeal that the trial judge erred in not ordering
    that the appellants pay additional disbursements to the respondents. They
    submit that the effect of her order is that the class members disbursements
    are paid from the PAR accounts, which contain the class members own funds,
    rather than by the appellants. They argue that this outcome is not supported in
    law or equity.

[57]

Pursuant
    to ss. 10(2) and (3) of Ontario Regulation 771/92: Class Proceedings, passed
    under the
Law Society Act
,
a levy is payable in favour of the Fund when a monetary award is made in favour
    of one or more persons in a class that includes a plaintiff who received
    financial support from the Fund. Section 59.5(5) of the
Law Society Act
states that [a] levy  against a  monetary award is a charge on the  award.

[58]

The
    trial judge awarded the Fund a levy totalling of $4,430,000. She declined to
    grant further disbursements of $118,000, which she found were largely for
    appeal matters that had already been the subject of costs awards.

[59]

Here,
    the trial judges conclusion that a levy was chargeable in favour of the Fund
    is supported by the text of the Regulation, the legislative context and the
    purpose of the Regulation and the Fund.

[60]

Section
    10(2) of the Regulation sets out the circumstances where a levy is payable in
    favour of the Fund. I have already agreed with the trial judge that the relief
    is a monetary award made in favour of the Plaintiff Class in my reasons
    above. Words in similar statutory regimes should be given consistent
    interpretations. I will not repeat my analysis. I have interpreted the phrase
    monetary award in the context of the
CPA
as a payment of money
    imposed by judicial authority. The same definition should be given to
    monetary award in the Regulation.

[61]

Here
    again, the appellants argue that the PAR account transactions were
    revenue-neutral with respect to the PAR accounts. They argue that the cash used
    to fund the merger was replaced by the PPEA, which turned out to be an accurate
    reflection of the amount the PAR accounts saved by way of the merger; when the
    respondents succeeded at trial, the PPEA (and the ability of the PAR accounts
    to share in the savings associated with the merger) were extinguished, and
    replaced by cash. They submit that  given its revenue neutral nature  the
    reversal of this transaction cannot be considered to be in favour of the
    class.

[62]

This
    argument turns on how the orders reversing the PAR account transactions ought
    to be construed. Those orders required the appellants to cancel the PPEA in the
    PAR accounts and re-pay $56.43 million. This effectively represented the
    original cash withdrawal minus the actual savings received by the PAR accounts
    by December 31, 2011. What the orders did
not
do is direct the
    appellants to alter the allocation of savings going forward so as to deprive
    the PAR accounts of the benefits (savings) associated with the merger.

[63]

While
    this alteration to the allocation mechanism was ultimately made, it was not
    ordered by the court. And viewing the order isolated from this subsequent
    business decision, the order was undoubtedly in favour of the class. It
    increased the amount of money in the PAR accounts available for distribution to
    the class by way of dividends.

[64]

The
    ordinary meaning of the phrase in favour of means to the advantage of. This
    does not require that specific amounts be paid directly to class members.

[65]

The
    appellants also argue that not all class members continued to be participating
    policyholders at the time the order was made. How then can that order be said
    to be in their favour? In my view, class action proceedings often result in a
    settlement fund or monetary award that is payable to a circumscribed group
    within the class as a whole. The fact that an award benefits some, but not all
    members of the class does not remove that award from the ambit of s. 10 of the
    Regulation. Indeed, s. 10(3) contemplates such an award, where it states: 10
    per cent of the amount of the award  to which
one or more persons in a
    class
is entitled (emphasis added).

[66]

The
    appellants are incorrect in arguing that only plaintiffs can be required to pay
    the levy. First, given that the levy is in fact a charge, my earlier analysis
    on charges under the
CPA
is equally applicable to this issue. Second,
    the plain language of the Regulation contemplates payment of the levy from
    either plaintiffs or defendants depending on what is appropriate in the
    circumstances. The appellants interpretation would require additional language
    to be read into the Regulation, as follows: A levy is payable
by the plaintiff(s)
in favour of the Fund 
    An interpretation which requires the insertion of extra wording should not be
    accepted where there is another acceptable interpretation which does not
    require additional wording.

[67]

This
    interpretation best serves the purposes of s.10, one of which is to ensure that
    the Foundation gets compensated for the risk it undertakes in funding class
    actions. The wording of s. 10(2) indicates that the monetary award may not
    necessarily be physically received in the hands of a class member when the levy
    is determined and payable, such as where a monetary award is ordered payable
    into a trust or pension plan.

[68]

Finally,
    as cross-appellant, the Foundation argues that the trial judge ought to have
    ordered the defendants to pay additional disbursements incurred by the
    plaintiffs. It says the trial judge provided no reasons for her decision to
    decline to order the appellant companies to pay the disbursements. I do not
    agree. The trial judge specifically addressed the issue and concluded that the
    disbursements in issue were related to a prior appeal and the costs of that
    appeal had already been awarded.

[69]

In
    any event, I also agree with the respondents by cross-appeal that the Foundation
    does not have standing to argue that the class ought to have received further
    disbursements, given that the class did not appeal this aspect of the trial
    judges order.

[70]

I
    would dismiss the appeal and the cross-appeal with respect to the levy.

(3)

Did the trial judge err in her costs award in favour of the respondents?

[71]

The
    appellants seek leave to appeal the trial judges costs award. They claim that
    she erred in two respects.

[72]

First,
    they submit she judge erred by ordering partial indemnity costs in favour of
    the respondents. They note that the relief the class members claimed  over $2
    billion in damages and extensive changes to the governance of the companies  was
    rejected. Instead, the respondents obtained the limited relief of an internal
    transfer of funds from one account to another. They argue that the respondents
    should not have been awarded their costs of the action.

[73]

Second,
    the appellants submit that the trial judge erred by assessing the costs of the
    rehearing at nil. However, during oral submissions the appellants clarified
    that they do not ask for those costs now.

[74]

Costs
    awarded by a judge at first instance attract considerable deference on appeal.
    A reviewing court will only interfere where there has been an error in
    principle or if the costs award is plainly wrong:
Hamilton v. Open Window
    Bakery Ltd.
, 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.

[75]

The
    reason for this standard is well-recognized: the judge at first instance has
    lived with the case, understands its subtleties and is best placed to determine
    the parties entitlement to costs. As this court explained in
McNaughton
    Automotive Ltd. v. Co-operators General Insurance Co
., 2008 ONCA 597, 95
    O.R. (3d) 365, at para. 27:

I am also mindful that a costs award is a discretionary order
    and that the judge of first instance is in the best position to determine the
    entitlement, scale and quantum of any such award. In this case, the motions
    judge, a trial judge of great experience, has lived with these cases for more
    than six years. He knows and understands all the subtleties of the cases. I
    must grant him considerable deference unless I conclude that there are
    obviously strong grounds of appeal.

[76]

In
    my view, this passage aptly applies to the trial judge in this case. She was
    involved in the matter for many years. She presided over the common issues
    trial and the rehearing. She was in the best position to make a determination
    as to success in the action.

[77]

The
    trial judge was principled in the exercise of her discretion. She determined
    that the respondents were successful in challenging the PAR account
    transactions, whereas the appellants were unsuccessful on the majority of the
    core factual battles. Moreover she recognized, under s. 31(1) of the
CPA
,
[9]
that the case raised a series of novel questions and was the first to consider
    and apply the
ICA
and its compliance remedy. Finally, she found that
    the case had a public interest component since it afforded an efficient means
    to obtain collective redress on the legality of a transaction in a federally
    regulated company.

[78]

There
    is no basis to disturb the trial judges conclusion that the litigation was a
    success. Success is defined in s. 33(2) of the
CPA
as including
    judgment on common issues in favour of some or all class members. It is defined
    in the representative plaintiffs retainer agreements as [a] judgment or
    settlement that  benefits some or all of the class members. Such a judgment
    was obtained. The respondent class gained much: confirmation of the illegality
    of the appellants conduct, the unwinding of the PAR account transactions and
    the return of $56.43 million to the PAR accounts.

[79]

There
    is no basis to conclude that the trial judge, who presided over this case for
    many years, was plainly wrong in ordering partial indemnity costs in favour of
    the respondents.

(4)

Did the trial judge err by assuming jurisdiction to hear the r. 59.06
    motion and then interpreting the 2010 Prohibition Order retroactively?

Jurisdiction to
    hear the motion

[80]

The
    appellants submit that the trial judge was
functus officio
and had no
    jurisdiction to hear the motion. They submit that once a final decision has
    been issued and entered, the judgment cannot be reopened with two exceptions:
    where there has been a slip in drawing it up; and where there was an error in
    expressing the manifest intention of the court as reflected in the reasons. They
    argue that neither circumstance exists here.

[81]

The
    appellants further submit that r. 59.06 does not provide an independent source
    of jurisdiction. They argue that the purpose of r. 59.06 is to ensure that a
    formal order or judgment accurately sets out the intention of the court that
    pronounced it. That, they say, is the scope of the inquiry.

[82]

The
    respondents disagree. They submit that r. 59.06(2)(c) gave the trial judge
    jurisdiction to hear the motion and make the order under appeal. They submit
    that the doctrine of
functus officio
yields to the independent source
    of jurisdiction provided by r. 59.06(2)(c).

[83]

Rule
    59.06(2)(c) provides:

(2) A party who seeks to,

(a) have an order set aside or varied on the ground of fraud
    or of facts arising or discovered after it was made;

(b) suspend the operation of an order;

(c)
carry an order into operation
; or

(d) obtain other relief than that originally awarded,

may make a motion in the proceeding for the relief claimed.
    [Emphasis added.]

[84]

This
    rule clearly states that a judge can give directions or make an order to carry
    an order into operation. In my view, this is precisely what the trial judge
    did; her 2017 order clarifies the 2010 Prohibition Order to carry it into
    operation.

[85]

The 2010 Prohibition Order  at para. 33 of the trial
    judges October 2010 judgment  provided as follows:

THIS COURT ORDERS AND DECLARES that the defendants shall be
    enjoined from debiting, expensing or otherwise deducting from the participating
    accounts any costs or expenses incurred by the defendants in defence of these
    actions or any other amounts except those arising in the ordinary course of
    business, except by leave of the court on notice to the class representative.

[86]

At
    the r. 59.06 motion, the trial judge was called upon to determine whether,
    according to this prohibition, the appellants were enjoined from charging fees
    to the PAR accounts irrespective of when they occurred, or whether the
    prohibition only commenced on the date of the judgment. She was entitled to do
    so through the prism of r. 59.06(2)(c) and clarify the prohibition to carry it
    into operation. She ultimately confirmed that the 2010 Prohibition Order was
    meant to capture any costs or expenses relating to these legal proceedings, not
    only to those costs incurred after her judgment in 2010. This fell within the
    jurisdiction provided under r. 59.06(2)(c).

[87]

Consequently,
    she was not
functus officio
. As this court affirmed in
D.G. v.
    A.F.
, 2015 ONCA 290, 333 O.A.C. 5, at para. 24, citing
Doucet-Boudreau
    v. Nova Scotia (Minister of Education)
, 2003 SCC 62, [2003] 3 S.C.R. 3:

[T]he
functus officio
doctrine yields to the rules of civil procedure insofar as they allow
    courts to vary or add to their orders so as to carry them into operation or
    even to provide other or further relief than originally granted.

Retroactive application

[88]

The
    appellants further argue that even if the trial judge had jurisdiction, she
    erred in interpreting the 2010 Prohibition Order to have retroactive
    application. They make various submissions in support of this position,
    including that the ordinary meaning of the prohibition is forward looking; it
    was reasonable for the PAR accounts to fund a portion of the legal costs in the
    same way that it is reasonable for the PAR accounts to be allocated the costs
    of defending an ordinary action related to a participating policy; certain
    paragraphs of the judgment provided dates by which the defendants were required
    to take a particular action, but the prohibition specified no date and contained
    no language providing that it should take effect before the date on which it
    was made; and the prohibition is clearly an injunction, which is future
    looking.

[89]

I
    would not accept any of these submissions. In my view, it was up to the trial
    judge to interpret her order to carry it into operation.

[90]

In
    the
r. 59.06 reasons, t
he trial judge was clear that
    she did not know the appellants had been allocating 50% of their legal costs to
    the PAR accounts throughout the action. At para. 25, she stated:

The trial proceeded without a whisper of evidence that the
    defendants had decided to allocate 50% of defence legal costs to the Par
    accounts. Both sides acknowledged that no disclosure was made of the allocation
    throughout the litigation.

[91]

The
    trial judge clarified that the aim of the 2010 Prohibition Order was to prevent
    the appellants from allocating legal costs and expenses to the very accounts
    they were accused of mismanaging and were at the heart of the litigation. She
    explained that to hold that the prohibition only has a prospective application
    (permitting the appellants to allocate $6,858,466.88 in legal fees and expenses
    to the PAR accounts) would ignore the prohibitions subject matter and render
    it virtually moot. She stated, at para. 23:

To hold that the judgment only has prospective
    application would ignore the subject matter of the prohibition order and render
    it virtually moot, or at least would substantially undermine its effect. 
    The vast majority of the defendants costs and expenses, 80% of the total costs
    to date, were incurred before the date of the judgment.

[92]

While
    the trial judge might have worded the 2010 Prohibition Order slightly
    differently had she known that the appellants had been charging legal costs and
    expenses to the PAR accounts all along, this does not detract from the fact
    that a retroactive interpretation better accords with the intention of the
    prohibition. Further, the trial judges interpretation is consistent with her
    trial order, the impetus of which was to restore the PAR accounts to the
    position they would have been in had the PAR account transactions never
    occurred.

[93]

I
    see no basis to interfere with the trial judges interpretation.

E.

CONCLUSION

[94]

For
    these reasons, I conclude that:

·

The order that the appellants return $56.43 million to the PAR
    accounts is a monetary award and the trial judge did not err in ordering a
    charge over the PAR accounts.

·

The trial judge did not err in ordering a levy in favour of the
    Fund, nor did she err by not including additional disbursements.

·

The trial judge did not err in her determination of costs.

·

The trial judge had jurisdiction to hear the r. 59.06(2) motion
    and did not err in interpreting the 2010 Prohibition Order to have retroactive
    effect.

F.

DISPOSITION

[95]

I
    would grant London Life and Great-West Life leave to appeal the trial judges
    costs award but I would dismiss both of their appeals in their entirety. I
    would also dismiss the Foundations cross-appeal.

[96]

I
    would order costs to the respondents in the agreed upon amount of $50,000
    inclusive of disbursements and HST.

M.L. Benotto J.A.

I agree Doherty J.A.


Huscroft
    J.A. (Dissenting):

[97]

This
    case presents a straightforward question: Are class counsel entitled to be paid
    their contingency fee from the appellants PAR accounts?

[98]

My
    colleague concludes that they are so entitled. With respect, I cannot agree for
    two reasons.

[99]

First,
    the plain wording of s. 32(3) of the
CPA
does not support this
    interpretation. The
CPA
permits charges only on money awarded to a
    class (or settlement funds, not relevant here), and no money has been awarded
    to the class in this case. Although class counsel succeeded in establishing
    regulatory breaches of the
ICA
that this courts order has remedied,
    that is the end of the matter. The class has not received  and is not entitled
    to receive  any money as a result of the litigation.

[100]

Second, the
    class plaintiffs have neither a legal nor a beneficial interest in the PAR
    accounts that entitles them to any monies within those accounts. Class counsel
    can have no greater entitlement to monies in the PAR accounts than the class.
    In my view, there is no basis to impose a statutory charge over third-party
    property. Even assuming that this promotes the purpose of the
CPA
,
    sanctioning a statutory charge over third-party property in this case could
    have unintended consequences outside of the class action context.

[101]

The result is
    unfortunate for class counsel, who have engaged in complex litigation over the
    better part of a decade, but they are not entitled to payment for this reason,
    still less to payment from the appellants PAR accounts.

[102]

I would allow
    the appeal on issues 1 and 2 and would dismiss the cross-appeal. I agree with
    my colleagues decision on issues 3 and 4 and would dismiss the appeal on these
    issues.

(1)

Did the trial judge err in ordering payment of the class counsel fee
    from, and ordering a charge over, the PAR accounts?

[103]

The answer to
    this question depends upon the interpretation of s. 32(3) of the
CPA
,
    and in particular the concept of a monetary award under that section. In my
    view, this courts order requiring the respondents to return $56.43 million to
    the PAR accounts is not a monetary award and no charge under s. 32(3) may
    attach to it.

[104]

My colleague
    proffers three reasons in support of her conclusion that the order requiring
    the respondents to return $56.43 million to the PAR accounts is a monetary
    award. First, she argues that on a plain reading of s. 32(3), there is no
    requirement that a monetary award be payable to the class in order for a
    charge to attach. Second, a generous interpretation of s. 32(3) is required in
    order to promote the overarching purpose of the
CPA
, encouraging
    access to justice. Third, she cites this courts decision in
Hislop
for the proposition that a monetary award is simply a payment of money imposed
    by judicial authority, and holds that the return of the monies to the PAR
    accounts benefitted the class members.

[105]

I address each
    of these arguments in turn.

The plain reading of s. 32(3)

[106]

In my view, a
    plain reading of the section supports the appellants position rather than the
    respondents. The absence of the words payable to from s. 32(3) is
    irrelevant: it is implicit in the concept of an award that it must be
awarded
.
    No money has been awarded in this case. On the contrary, the trial judges
    decision to award damages to the class was overturned by this court in the
    first appeal.

[107]

The second
    appeal resulted in an order unwinding the PAR account transactions and
    requiring the return of monies to the PAR accounts. This courts order does not
    require a payment to the class. Instead, it requires the return of monies to
    the PAR accounts  essentially a transfer between the appellants own accounts.
    In no sense can this accounting exercise be understood as an award of monies to
    the class.

[108]

I appreciate
    that the order requiring the return of the monies to the PAR accounts might
    enure to the benefit of the class members: some of the funds may, in the
    future, be distributed to class members in the form of dividends. But this
    benefit is speculative; the distribution of dividends is a matter of the
    appellants discretion.

[109]

Plainly, class
    members have no entitlement to monies in the PAR accounts, nor can they force
    the payment of dividends from those funds. The PAR accounts are not monies held
    by the appellants on their behalf  for example, in trust. The class has
    neither a legal nor an equitable interest in the PAR accounts. The funds
    representing the PAR accounts remain the property of the appellant insurance
    companies until and unless company directors declare dividends payable to the
    policyholders.

[110]

Class counsel
    can have no greater entitlement to the PAR accounts than the class. In the
    absence of an entitlement, my colleagues interpretation of s. 32(3) imposes a
    statutory charge over third-party property.

A generous interpretation of s. 32(3)

[111]

I agree with my
    colleague that the promotion of access to justice is a fundamental purpose of
    the
CPA
. But a statement of purpose at a high level of generality
    cannot alter the plain meaning of the terms of the statute.

[112]

The term
    monetary award was chosen rather than damages because there are various
    forms of monetary relief that may benefit class members  for example,
    compensatory damages, punitive damages, and restitution. But all of these forms
    of relief have in common the idea that they are awarded to and received by the
    class. Regardless of the nature of the monetary relief the court orders, in
    order to constitute a monetary award it must be relief that is awarded to the
    plaintiff class.

Hislop

[113]

The order that
    the appellants return monies to the PAR accounts is a victory for the class,
    but nothing follows from this. It is important to emphasize that the class
    members have no entitlement to receive all or any part of the PAR funds. The
    victory that has been achieved  an order requiring statutory compliance with
    the
ICA
 leaves no money in hands of the class, now or in the future.
    Any benefit that may flow to the policyholders in the future is speculative.
    That distinguishes this case from
Hislop
, because in
Hislop
success in establishing the unconstitutionality of the legislation  achieving
    constitutional compliance  resulted in an entitlement of individual class
    members to receive a monetary award by establishing eligibility under the
    Canada Pension Plan.

[114]

In the absence
    of a monetary award, there is nothing to which class counsels contingency fee
    arrangement can attach. But this was a risk class counsel chose to bear in
    taking on the litigation. It must be remembered that the primary goal of class
    counsel was to obtain damages for the class, from which they would have claimed
    significant fees. As this court stated in the first appeal, at paras. 151-2:

Here, in spite of the
    protestations of the respondents to the contrary, the gravamen of the relief
    sought by [the class] is the type of relief normally associated with an
    oppression remedy claim. They want to be fully compensated, individually, for
    the wrong they say was done to them as a result of the PAR accounts being
    debited the $220 million in exchange for reputed savings; in substance, they
    want the money back as if it were theirs plus a return on investment (and this
    is what the trial judge gave them). In short, they want  and were granted 
    the relief contemplated by an oppression remedy action.

The problem is that an oppression remedy claim is not available
    to them under the
ICA
.

[115]

Thus, although the
    class succeeded in establishing breaches of the
ICA
, this court
    overturned the trial judges award of damages to the class.

[116]

This courts
    order unwinding the PAR transactions was a victory for the class: regulatory
    compliance was achieved. But success of this nature does not entitle class
    counsel to realize on its contingency fee from the funds transferred between
    the appellants accounts. Whatever else might be said about this courts order,
    it is not a monetary award to the class.

Can the contingency fee be paid pursuant to s. 1031 of the
ICA
?

[117]

The respondents
    suggest that s. 1031 of the
ICA
provides an alternative means of securing
    payment of class counsels contingency fees by imposing a charge over the PAR
    accounts. For the reasons set out above with respect to s. 32(3) of the
CPA
,
    I am not persuaded that it is either possible or appropriate to exercise the
    courts discretion under insurance legislation in this manner to impose a
    charge over third-party property.

(2)

Did the trial judge err by ordering the levy in favour of the Foundation
    or by refusing to award the respondents the additional disbursements?

[118]

I agree with my
    colleague that words in similar statutory regimes should be given consistent
    interpretations and that, therefore, the analysis of the phrase monetary
    award in the
CPA
context applies to the Regulation. It follows from
    what I have said with respect to the
CPA
that the Foundation is not
    entitled to a levy. There is no monetary award that can be levied.

[119]

My colleague
    focuses on the words in favour of in s. 10(2) of the Regulation, which
    establishes the levy, as additional support for the conclusion that the
    Regulation does not require that specific amounts be paid directly to class
    members.

[120]

However, the
    words of the Regulation must be read as a whole. Interpretation of the phrase
    monetary award is also informed by the wording of s. 10(3), which provides
    that the levy is composed of 10 per cent of the amount of the award to which
    one or more persons in the class is entitled. In other words, the Regulation
    presumes the payment of money to class members. In this way, the Regulation is
    consistent with my interpretation of the
CPA
, which affords class
    members no entitlement to the PAR accounts, or to any dividend benefit.

[121]

In short, as
    with class counsel, the Foundation has no entitlement to be compensated for
    having taken on a risk in funding the litigation.

[122]

I agree with my
    colleagues analysis on the cross-appeal and would not disturb the trial
    judges decision.

SUMMARY

[123]

In summary, I
    conclude:

1.

The order
    requiring the appellants to return $56.43 million to the PAR accounts is not a
    monetary award, and the trial judge erred in ordering a charge over the PAR
    accounts in favour of class counsel.

2.

The trial judge
    erred in ordering a levy in favour of the Foundation.

3.

The trial judge
    did not err in her determination of costs.

4.

The trial judge
    had jurisdiction to hear the r. 59.06 motion and did not err in interpreting
    the 2010 Prohibition Order to have retroactive effect.

CONCLUSION

[124]

I would allow
    the appeal on issues 1 and 2, and dismiss the cross-appeal. I would dismiss the
    appeal on issues 3 and 4.

[125]

I would order
    costs to the appellants in the amount of $50,000, inclusive of taxes and
    disbursements.

Grant
    Huscroft J.A.

Released: August 31, 2018





[1]

Jeffery v. London Life Insurance Co
. (2008), 89 O.R. (3d) 686 (S.C.) (Certification Reasons).



[2]

Jeffery and Rudd v. London Life Insurance et al.
, 2010 ONSC 4938, 74 B.L.R. (4th) 83 (Trial Reasons).



[3]

Jeffery v. London Life Insurance Company
, 2011 ONCA 683, 284 O.A.C. 260 (First Appeal Reasons), leave to
    appeal refused [2012] S.C.C.A. No. 1.



[4]

Jeffery and Rudd v. London Life Insurance et al.
, 2013 ONSC 347 (Rehearing Reasons).



[5]

Jeffery v. London Life Insurance Company
, 2014 ONCA 87, 317 O.A.C. 31, leave to appeal refused [2014] S.C.C.A.
    No. 112 (Second Appeal Reasons).



[6]

Jeffery v. London Life Insurance
, 2016 ONSC 5506 (Costs Reasons).



[7]

As discussed in greater detail below, s. 32(3) states:
    Amounts owing under an enforceable agreement are a first charge on any
    settlement funds or monetary award.



[8]

Jeffery v. London Life Insurance Company
, 2017 ONSC 4480 (R. 59.06 Reasons).



[9]
Section 31(1) of the
CPA
states:  In exercising its discretion with
    respect to costs under subsection 131(1) of the [
Courts of Justice Act
,
    R.S.O. 1990, c. C.43], the court may consider whether the class proceeding was
    a test case, raised a novel point of law or involved a matter of public
    interest.


