Superior Court approves legal fees of over $63m, settlement is biggest of its kind in Canada
In a national class action against Sun Life Assurance Company of Canada, the Ontario Superior Court approved a settlement of $213.5 million, legal fees of over $63 million, disbursements exceeding $2 million, and honoraria of $25,000 per representative plaintiff.
According to Kim Spencer McPhee Barristers P.C., counsel for the class members, this is the biggest reported settlement in a life insurance policy dispute in Canada and is expected to benefit tens of thousands of eligible current and former policyholders across the country.
The plaintiffs in Fehr v. Sun Life Assurance Company of Canada, 2026 ONSC 5338, initiated a dispute in 2010 in connection with a set of insurance policies sold by defendant Sun Life’s predecessor from 1987 to mid-1998.
The plaintiffs alleged that Sun Life breached the terms of:
The court certified the action as a class proceeding on behalf of the policies’ past and present universal life insurance policyholders across Canada.
The parties litigated the class action for 17 years. Sun Life denied the allegations and asserted that it administered the policies in line with the terms and industry standards.
The parties successfully negotiated a settlement for $213.5 million. Sun Life did not admit liability. The plaintiffs moved for the approval of the proposed settlement.
Under the structured settlement, $142.5 million in cash benefits would compensate former and current policyholders who faced COI charges and administrative fees, or who paid premiums on policies bought before 1992 that charged above the specified maximum premium.
Under the proposed settlement, the remaining $71 million represented the value to policyholders by funding a permanent cap on present policyholders’ COI rates and administrative fees.
Given the litigation risks involved and the result reached, class counsel submitted that this proceeding belonged to a sui generis category of settlements.
Moreover, class counsel sought compensation according to the 30 percent contingency fee set forth in the retainer agreements with the plaintiffs.
The Ontario Superior Court of Justice approved the settlement, the distribution protocol, and the appointments of the notice administrator and claims administrator.
The court characterized the $213.5 million settlement as fair, reasonable, appropriate, and in the interests of the class and the public.
“It is the product of arms’ length negotiations between experienced equals in class proceedings,” wrote Justice Janet Leiper for the court.
In reaching its conclusion, the court applied the relevant factors to the settlement terms, the evidence, the litigation history, and the risks of future ongoing litigation.
The Superior Court approved class counsel’s request for the approval of legal fees of $63,337,472.66 and disbursements of $2,375,091.14, plus the applicable taxes.
Upon applying the factors in Smith Estate v National Money Mart, 2011 ONCA 233, the court described the requested fees as fair and reasonable, as well as proportionate to the recovery for class members.
“The unique history of the litigation, the groundbreaking legal theory, the litigation hurdles and the personal risk borne by class counsel for well over a decade, with the cross-check of a multiplier of 2.2, all support a finding that the fees sought are reasonable and fair,” Justice Leiper said.
Lastly, the Superior Court approved the honoraria for the representative plaintiffs. The court described the quantum requested as deserved and sufficiently modest, given the proceeding’s size and scale and the settlement’s context.
In a motor vehicle accident case, the court issued a Sept. 11 ruling summarily dismissing the injured plaintiff’s claim against an insurer upon determining that he had failed to establish, on a balance of probabilities, that an unidentified vehicle had been involved in the accident.
Following a serious motor vehicle collision that killed three and injured two others, the court made an Aug. 31 decision agreeing with an automobile insurer that its insured should have notified it about performance modifications aimed at making his sports car faster.
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