An Ontario appellate court has confirmed that class-action settlement rules, not older disclosure doctrine, govern how non-settling insurers learn of partial settlements reached by co-defendants.
The Court of Appeal for Ontario, in a decision released August 11, 2026, dismissed an appeal by Aviva Insurance Company of Canada, Aviva General Insurance Company and Aviva Canada Inc., collectively Aviva, over its bid to stay several lawsuits tied to pandemic business-interruption coverage sold to dentists.
The dispute traces back to Triple Guard business-interruption coverage offered by Aviva and marketed and sold to dentists by CDSPI Advisory Services Inc. Before March 13, 2020, policyholders could pay an additional premium to raise their pandemic outbreak coverage to an aggregate limit of $5,000 per day or $100,000 per year. The right to increase that coverage was allegedly cancelled on that date, with requests to exercise it refused, prompting individual lawsuits against CDSPI and, later, separate actions against Aviva. A class action against both companies followed in September 2022.
CDSPI reached a settlement with the individual plaintiffs, signed January 12, 2024, and a separate settlement with the class action representative plaintiff on June 12, 2024. Aviva received a copy of the class settlement the day it was signed, and a copy of the individual settlement on August 28, 2024.
Aviva sought a stay of all proceedings against it, arguing the settlements should have been disclosed to it immediately under the partial-settlement rule from Handley Estate v. DTE Industries Limited. A motion judge rejected that argument and approved the class settlement. On appeal, the court agreed the Handley Estate rule no longer applies, having been overturned in a separate ruling by the same court. It found, however, that the Class Proceedings Act's own approval regime addresses the same disclosure concerns, since a settlement isn't binding until a judge approves it and non-settling parties can take part in that approval hearing.
The court found Aviva had received full and timely disclosure of the class settlement and had participated fully in the approval hearing. It also found Aviva was not entitled to disclosure of the separate settlement between CDSPI and the individual plaintiffs, since Aviva was not a party to those actions, though it received that disclosure anyway well before the approval motion. As the motion judge put it, Aviva's position amounted to "a matter of basic arithmetic."
It also upheld a bar order preventing Aviva from claiming over against CDSPI, finding no real economic prejudice given that CDSPI's $10 million insurance fund would be exhausted by the individual plaintiffs' claims regardless of the class settlement's outcome. It further dismissed Aviva's challenge to a costs order requiring it to pay $50,000 to class counsel, $25,000 to the individual plaintiffs and $10,000 to CDSPI.
The appeal was dismissed in full.
