2021 QCCA 1214, 2021 QCCA 1214

Ehouzou c. Manufacturers Life Insurance Company 2021 QCCA 1214 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-028397-198 (500-06-000874-178) DATE: July 23, 2021 CORAM: THE HONOURABLE MARK SCHRAGER, J.A. GENEVIÈVE COTNAM, J.A. LUCIE FOURNIER, J.A. PATRICK EHOUZOU CARMEN HODONOU APPELLANTS – Plaintiffs v. Manufacturers Life Insurance Company Manulife Financial Company Benesure Canada INC. Broker Support Centre INC. Credit Security Insurance Agency INC.

DH Corporation (Finastra TM) RESPONDENTS – Defendants JUDGMENT [ 1 ] This is an appeal from a judgment rendered on May 9, 2019 by the Superior Court, District of Montreal (the Honourable Madam Justice Chantal Tremblay), dismissing Appellant’s application for the authorization to institute a class action against the Respondents. [1] CONTEXT [ 2 ] On July 11, 2017, the Appellants filed an application for authorization to institute a class action (the “ Quebec Action ”) against the Respondents.

They seek to represent class members across Canada who were targeted as potential clients for a mortgage protection plan known under the name of Mortgage Protection Plan (“ MPP ”). [ 3 ] They allege that MPP was sold through Benesure Canada Inc. (“ Benesure ”), which operated a fraudulent and unlicensed insurance business selling group creditor insurance products for mortgages throughout Canada.

In reality, the insurance policy was issued by Manufacturers Life insurance Company (“ Manulife ”) [ 4 ] Their targeted clients were individuals having applied for mortgage or home financing through a mortgage broker in Canada. Such broker used a digital platform called D+H Expert, which is owned by Respondent DH Corporation (FINASTRA TM) (“ D+H ”). This platform allowed the broker to exchange relevant information with different financial institutions, appraisers and insurance brokers.

According to the Appellants, the mortgage broker entered the client’s confidential information (the “ Confidential Information ”) in the system and Benesure could access it for the purpose of offering the MPP product. If the client did not follow-up on that initial offer, a reminder (the “ Safety Catch Letter ”) was sent on behalf of the mortgage broker insisting on the importance of purchasing mortgage insurance and offering the MMP product. [ 5 ] The proposed class, as presented to the judge, is composed: a. of all individuals residing in Canada: i.

Whose PERSONAL INFORMATION was accessed by BENESURE GROUP and/or MANULIFE via FILOGIX; ii. Who have purchase the PRODUCTS; or iii. Who have received the PRODUCTS WAIVER; or iv. Who have received the SAFETY CATH [sic] LETTER;

b. Excluded from this above-described class (hereafter the “Class”) are employees, officers and directors of the Respondents, or any entity affiliated with Respondents, as well as their legal representatives, heirs, successors ans assigns; [2] [ 6 ] Prior to the hearing, Justice Tremblay authorized the Respondents to enter certain affidavits from representatives of Manulife and D+H.

THE JUDGMENT [ 7 ] After remarking that the Appellants had not suggested a time period for the proposed class, Justice Tremblay decided that the class would cover a period starting on July 2, 2014, the date on which the Appellants applied for a mortgage through their broker, and ending on the date of the judgment on the application for authorization. [ 8 ] She also concluded that, although the Appellants were seeking a national class, the class would be limited to Quebec residents.

Quebec courts have jurisdiction over a class with an extra-territorial component only when the facts fall under one of the situations provided for in

article 3148 C.C.Q. This was not the case and, furthermore, the Appellants did not establish that the law and applicable legal concepts were similar throughout the country. [ 9 ] Therefore, she determined that the class would be as follows: (

a) All individuals residing in Quebec during the period of July 2, 2014 and May 9, 2019 who have purchased or were offered by a mortgage broker or a lender the products known as Mortgage Protection Plan or Credit Security Plan and whose personal information was accessed by Defendants without their consent. (

b) Excluded from this above-described class are the employees, officers and directors of the Defendants, or any entity affiliated with Defendants as well as their legal representatives, heirs, successors and assigns. [ 10 ] The judge then analyzed the conditions that must be met in order for a court to authorize a class action under

article 575 C.C.P. [ 11 ] She concluded that the Appellants had established that the claims of the members of the class raised identical, similar or related issues of law or fact and that the Appellants were in a position to properly represent the class members. [ 12 ] However, she did not consider that the facts alleged appeared to justify the conclusions sought or even the existence of a group. [ 13 ] The Appellants raised six causes of action in their proceeding: (1) breach of privacy rights, as the Respondents accessed Confidential Information through the D+H platform, (2) the unlicensed conduct of insurance business, (3) the presentation to consumers of a form inducing them to purchase the MPP product, (4) the sending of the Safety Catch Letter, (5) the submission of some consumers to health assessments which led to offering them insurance products at excessive rates and (6) the failure to inform consumers of the existence of a settlement agreement reached with the British Columbia Superintendent of Financial Institutions regarding potential infringements of the applicable laws respecting the distribution of insurance products in that province. [ 14 ] Justice Tremblay considered that the Appellants had failed to establish the necessary facts to support those causes of action and therefore dismissed the application for authorization.

APPLICATION FOR PERMISSION TO PRESENT INDISPENSABLE NEW EVIDENCE [ 15 ] The Quebec Action is one of many applications filed in Canada seeking to have a class action authorized against the Respondents. [ 16 ] On February 20, 2013 an application to authorize a class action was filed in British Columbia in order to sue the Respondents on behalf of British Columbia members (the “ British Columbia Action ”).

This application was dismissed on March 30, 2016 by Justice Truscott. [3] That decision was appealed. [ 17 ] On February 27, 2013, another application to authorize a class action was filed, this time in Ontario (the “ Ontario Action ”). The class included all Canadian residents except for members living in British Columbia or Quebec. [ 18 ] On September 9, 2013, a first application to authorize a class action was filed in Quebec on behalf of all Canadian residents. It was withdrawn in 2015. The Quebec Action was then filed on July 12, 2017.

A similar claim was filed in Ontario, on July 13, 2017, by the attorneys acting in the Quebec Action. [ 19 ] Another claim was filed in Saskatchewan in March 2015. [ 20 ] In October 2018, a settlement was reached in the British Columbia Action and in the first Ontario Action (the “ Settlement” ). This agreement concerned the members across Canada with the exception of Quebec and was subject to authorization by the Courts of British Columbia and Ontario.

It must be noted that a first settlement had previously been reached in 2017 in the British Columbia Action but the Respondents apparently reneged upon it when the Quebec Action was filed. [ 21 ] The hearing of the Quebec Action took place on November 15 and 16, 2018. The Appellants argue that, during the hearing, Justice Tremblay inquired about the situation in the other Canadian cases, but the Respondents withheld information and failed to inform the judge of the Settlement.

[ 22 ] This being said, while the Quebec Action was under advisement, Justice Tremblay was informed of the Settlement by the attorney representing Manulife.

The application for approval of the Settlement and the Settlement itself were attached to the letter. [ 23 ] This led to multiple exchanges of correspondence with Justice Tremblay, in which the Appellants argued that the Respondents had lied to the Court by withholding the existence of the Settlement, that this was an attempt to defeat the national authorization sought before the Quebec Court and that the Settlement contained an admission by the Respondents of the class, of the time period, of the existence of the Safety Catch Letter and of parts of the alleged illegal scheme.

They requested a hearing regarding this new development. [ 24 ] Justice Tremblay did not follow up on this request although it appears from the judgment that she was clearly aware of the Settlement and of Justice Grauer’s decision [4] to dismiss the application for certification and Settlement approval in the British Columbia Action.

Justice Grauer considered that he could not approve the contemplated Settlement, as the certification had already been denied in the Truscott Decision, and this decision has not been overturned on appeal. [ 25 ] The Appellants now seek to file the factums that were prepared for the purpose of appealing the Grauer Decision, the affidavits filed in support of the Settlement, the letters sent by the parties to Justice Tremblay, and the letter written by their attorney to the attorney representing the claimants in the British Columbia Action. [ 26 ] In order to succeed on their application for permission to present new indispensable evidence under

article 380 C.C.P., the Appellants must establish, which they failed to do, that (1) the evidence is new, meaning that it was not available or could not have been discovered, despite the due diligence of the party, at the time of trial, (2) it is indispensable, (3) exceptional circumstances warrant the filing of this new evidence and (4) the ends of justice will be served. [5] [ 27 ] In this instance, although most documents are posterior to the hearing, it appears that Justice Tremblay was fully aware of the Settlement, of the Grauer Decision and of the arguments submitted by the parties in letters that were sent to her while the case was under advisement.

These elements are already part of the file and were all considered in her judgment. Thus, they do not, per se, constitute new evidence. [ 28 ] The Appellants’ argument that the Respondents did not divulge the Settlement in due time does not change the facts of the case or the judgment rendered. As such the information is not indispensable nor is it susceptible to have a substantial impact on the appeal. [ 29 ] As for the factums filed before the British Columbia Court of Appeal concerning the Grauer Decision, they are not relevant to this appeal.

They contain no factual admission and simply state that Justice Grauer should have certified the British Columbia action for purposes of the Settlement and should have approved the Settlement. The Respondents agree with these conclusions. [ 30 ] Finally, the Appellants wish to file an affidavit from a student at their counsel’s firm, dated October 2019, which was included in support of an application to adduce new evidence before the British Columbia Court of Appeal.

This additional evidence was not filed in support of the application to authorize the class action in Quebec and is not relevant to the matter at hand. [ 31 ] The fact that a Settlement was reached in the British Columbia Action bears no incidence on the Quebec Action, as we will discuss below. The simple fact of consenting to the certification of a class action for the purpose of having a settlement authorized does not constitute an admission leading to the conclusion that the Quebec Action should be certified. The application to adduce new evidence will be dismissed.

ISSUES IN DISPUTE ON APPEAL [ 32 ] Before the Court, the Appellants essentially raise four issues that we can summarize as follows: (

a) The Settlement is dispositive evidence that the Quebec Action is not frivolous and must be authorized; (

b) The judge should have concluded that the breach of privacy claim seeking punitive damages presented an arguable cause of action; (

c) The judge should have concluded that the proposed class made it difficult to apply the rules for mandate or for consolidation of proceedings regarding the claim for punitive damages for breach of privacy; (

d) The judge committed an error when she limited the class to residents of the Province of Quebec only. THE ANALYSIS: (

a) The Settlement is dispositive evidence that the Quebec Action is not frivolous and must be authorized [ 33 ] The Appellants argue that the Settlement must be considered as dispositive evidence in Quebec regarding: (1) the definition and national scope of the class, (

b) the class period, (

c) the preferability criteria, which is similar to article 575 (3) C.C.P. and (

d) common issues. [ 34 ] In their brief, the Appellants argue that the judge was misled by the Respondents regarding the status of the British Columbia Action. They failed to inform her that a Settlement had been reached. Furthermore, the trial judge denied them the right to make additional observations regarding this Settlement which, according to the Appellants, contained important admissions. [ 35 ] This ground of appeal must be dismissed. It appears from the judgment [6] that Justice Tremblay was aware of the terms of the

Settlement. Although she was not informed of its existence at the time of the hearing, as it was not yet public knowledge, she received a copy of the Settlement while the case was under advisement.

The Appellants’ counsel sent numerous letters in which he expressed his view concerning the impact of the Settlement and of its content. [ 36 ] The fact that a Settlement, which specifically excludes Quebec residents, was reached and that the class was certified by the British Columbia Supreme Court, for such purpose, does not imply that the authorization should be granted in Quebec. [ 37 ] The certification for purpose of a settlement, consented to without admission, in another province is merely a fact to be considered by the Court, but it cannot constitute an admission regarding the scope of the class, the period to be considered or the existence of common issues to be decided, particularly, as in the instant case, where the legal and factual circumstances in Quebec are different.

The trial judge took into account the situation in other provinces but proceeded, as she should have, to identify the class and examine the criteria of

article 575 C.C.P. in light of the proceedings and the evidence before her. (

b) The judge should have concluded that the breach of privacy claim seeking punitive damages presented an arguable cause of action. [ 38 ] Essentially, the trial judge found that the Appellants had failed to establish a personal cause of action regarding the breach of privacy claim. In order to reach this conclusion she correctly summarized the legal principles that applied to the analysis of the requirements of

article 575 C.C.P. [7] [ 39 ] She was fully aware that her role as the authorization judge was to act as a filter and to refuse authorization if the proposed class action has no chance of success because it does not meet the evidentiary threshold to satisfy the requirements of

article 575 C.C.P. [ 40 ] Although the applicant only has a burden of demonstration at this stage, he must allege the facts that are relevant to his case and file the supporting evidence. [8] [ 41 ] The judge will consider the allegations on their face, unless they are contradicted by other facts, are otherwise deemed untruthful or are too vague. [9] Furthermore, the judge will not consider allegations that are mere speculation or reflect an opinion. [10] [ 42 ] The Court has a limited power to intervene in such matters, as it must show deference to the decision of the authorization judge.

Such intervention will be warranted only if the judge erred in law or if her assessment of the requirements of

article 575 C.C.P. is clearly wrong. [11] [ 43 ] For the following reasons, we find that the appeal should be dismissed as the Appellants did not convince us that the authorization judge committed an error in finding that they did not show any personal cause of action. [ 44 ] The mere fact that the Appellants are seeking compensation on behalf of the class for punitive damages resulting from a breach of privacy does not modify the applicable principles.

Even if a claim for punitive damages may very well stand on its own in the absence of compensatory damages, the burden still lies on the applicant to prove that the conditions for authorization are met. [ 45 ] The Appellants must, among other requirements, show that they have a personal cause of action against the Respondents, [12] The Appellants argue, citing Vivendi , [13] even as they in fact were paraphrasing Sibiga , [14] that they do not have to establish a direct cause of action against the Respondents. This

interpretation is clearly incorrect, as this case simply establishes the principle that the applicant does not need to prove that he has a personal case against all defendants that are in a similar situation, but he still has to establish a personal case against at least one of them. [ 46 ] Justice Tremblay concluded that the Appellants failed to disclose a personal cause of action and that the evidence contradicted their argument that they did not consent to sharing their Confidential Information.

According to the facts alleged in the application for authorization, the Appellants applied for a mortgage through a mortgage broker. The application, which was not filed in support of the authorization, was processed through the D+H platform. The MPP products were allegedly offered to the Appellants. It is not clear if their mortgage broker simply asked if they were interested in obtaining more information on mortgage protection or if they were contacted through an insurance broker.

It is unclear if their Confidential Information was actually disclosed to a third party and there are no allegations concerning the issue of consent, leaving the judge to speculate on the existence or the scope of the consent. [ 47 ] However, the evidence produced by the Respondents is to the effect that the Respondents took reasonable steps in order to ensure that clients consented to the disclosure of the information for referrals to third parties. [ 48 ] As to the other causes of action alleged in the application for authorization, the Appellants showed no personal cause of action.

They never purchased the MPP product nor did they ever receive a Safety Catch Letter, and the MPP product in Quebec was sold through a licenced insurance broker, unlike the apparent situation in other provinces.

Furthermore, as they did not purchase the MPP product, they cannot be entitled to any compensation for alleged non-compliance with laws and regulations governing the sale of insurance, excessive rates or the non-disclosure of the agreement reached with the British Columbia Superintendent of Financial Institutions. [ 49 ] The judge did not commit any error warranting the intervention of the Court when she decided to dismiss the application for authorization.

FOR THESE REASONS, THE COURT: [ 50 ] DISMISSES the application for permission to present indispensable new evidence with legal costs; [ 51 ] DISMISSES the appeal, with legal costs.

MARK SCHRAGER, J.A. GENEVIÈVE COTNAM, J.A. LUCIE FOURNIER, J.A. Mtre Claude Lévesque Mtre Alex Villemure LÉVESQUE JURISCONSULTE For the Appellants Mtre Alexandre Fallon Mtre François Laurin-Pratte OSLER, HOSKIN & HARCOURT For the Respondents Mtre Guillaume Boudreau-Simard Mtre Rémi Leprévost STIKEMAN ELLIOTT For DH Corporation (FINASTRA TM) Date of hearing: June 1, 2021