COURT OF APPEAL FOR ONTARIO

CITATION: Fehr v. Sun Life Assurance Company of Canada, 2018
    ONCA 718

DATE: 20180905

DOCKET: C61453, C61497 & C63532

Strathy C.J.O., Hourigan and Miller JJ.A.

BETWEEN

Eldon Fehr, Angela Watters, Gaetan Laurier,
Leslie Michael Lucas, James Patrick OHara,
Rebecca Jean Clark, and Lloyd Shaun Clark

Plaintiffs
(Appellants/Respondents by way of cross-appeal)

and

Sun Life Assurance Company of Canada

Defendant
(Respondent/Appellant by way of cross-appeal)

Won J. Kim, Michael C.
    Spencer, Megan B. McPhee, and Aris Gyamfi, for the appellants/respondents by
    way of cross-appeal

F. Paul Morrison, Dana M.
    Peebles, Glynnis P. Burt, Hovsep Afarian, and Jacqueline L. Cole, for the
    respondent/appellant by way of cross-appeal

Heard: January 16-18, 2018

On appeal from the order of
    Justice Paul M. Perell of the Superior Court of Justice, dated November 12,
    2015, with reasons reported at 2015 ONSC 6931, 56 C.C.L.I. (5th) 15 and
    additional reasons reported at 2016 ONSC 455; and from the order dated December
    7, 2016, with reasons reported at 2016 ONSC 7659, 62 C.C.L.I. (5th) 96; and
    from the order dated April 11, 2017, with reasons reported at 2017 ONSC 2218;
    66 C.C.L.I. (5th) 201.

Strathy C.J.O.:

A.

Overview

[1]

These
    appeals relate to a proposed $2.5 billion class action concerning more than
    230,000 life insurance policies sold by Metropolitan Life Insurance Company
    (MetLife) between 1985 and 1998.

[2]

In
    1998, MetLife sold its Canadian business to Mutual Life, which was renamed
    Clarica Life Insurance Company (Clarica). On December 31, 1992, Clarica
    amalgamated with Sun Life Assurance Company of Canada, which continued under
    the name of Sun Life and became responsible for administering MetLifes policies.

[3]

The
    plaintiffs
[1]
commenced the proposed class action in 2010, alleging misrepresentation in the
    sale of the policies and breach of contractual and other duties relating to premiums
    and fees charged to policyholders.

[4]

When
    the plaintiffs brought a motion to certify the proceeding as a class action, Sun
    Life brought a cross-motion for summary judgment, asking that their claims be
    dismissed as time-barred. The motions were heard together.

[5]

The
    certification motion was heard in two phases. At the end of the first phase, the
    motions judge found that the claims for misrepresentation, deceit, breach of
    duty of good faith, and rescission failed the common issues requirement. He
    dismissed the motion for certification of these claims.
[2]

[6]

The
    motions judge found that further evidence was required in order to determine
    whether the claims for breach of contract might be capable of certification. He
    adjourned the certification motion with respect to those common issues and
    directed that Sun Life file further evidence.

[7]

On
    Sun Lifes motion for summary judgment, the motions judge found that the plaintiffs
    misrepresentation claims were barred by the applicable limitation periods and
    that certain inchoate claims were premature. The breach of contract claims
    were barred for certain time periods, but not for others: 2015 ONSC 6931 (reasons).

[8]

After
    the release of the motions judges reasons, Sun Life brought a motion to amend
    the summary judgment order, to extend the period for which some of the breach
    of contract claims were found to be time-barred. This motion was dismissed:
    2016 ONSC 455.

[9]

The
    certification motion was continued, after the submission of further evidence by
    both sides. The motions judge dismissed the motion for certification of the
    breach of contract claims, finding there was no basis in fact for the
    plaintiffs allegations: 2016 ONSC 7659 (continued reasons).

[10]

Finally, the motions
    judge awarded Sun Life $1 million in costs of the certification and summary
    judgment motions on a partial indemnity basis: 2017 ONSC 2218.

[11]

There are three
    appeals before this court.

[12]

First, the plaintiffs
    appeal the motions judges order dismissing their motion for certification.
    They also seek leave to appeal the costs order.

[13]

Second, the plaintiffs
    appeal the order on summary judgment, insofar as it dismissed their individual claims
    for negligent misrepresentation and some of the breach of contract claims as time-barred
    or premature.

[14]

Third, Sun Life
    appeals part of the order on summary judgment and the dismissal of the motion
    to vary the motions judges order. It challenges the motions judges conclusion
    that there is a rolling limitation period for the plaintiffs breach of
    contract claims and argues that the limitation period for these claims was not
    suspended until 2013 when the plaintiffs amended their statement of claim.

[15]

For the reasons that
    follow, I would: (a) dismiss the plaintiffs appeal as it relates to the
    refusal to certify the misrepresentation common issues and some related common
    issues; (b) allow the appeal as it relates to the refusal to certify the breach
    of contract common issues; (c) allow the appeal with respect to two other
    common issues; (d) allow the plaintiffs appeal from the order granting summary
    judgment dismissing their individual claims; and (e) dismiss Sun Lifes appeal
    from the order dismissing part of its summary judgment motion and from the
    order dismissing its motion to vary.

[16]

The result is that the
    class action will be certified with respect to: (a) the breach of contract
    common issues (common issues 6, 7, and 8); (b) common issue 1, which asks
    whether Sun Life is liable for the actions of its predecessors; and (c) common
    issue 10, the fraudulent concealment common issue, as it applies to the
    limitation period applicable to the breach of contract claims. The representative
    plaintiffs are entitled to pursue their claims for misrepresentation, either
    individually or by way of joinder in individual actions, and the defendants
    will be entitled to raise the limitation period as a defence in that context.
    The application of limitation periods to the individual plaintiffs breach of
    contract claims will be determined, if necessary, after the trial of the common
    issues.

B.

Additional Facts

[17]

The following summary
    draws heavily on the exhaustive reasons of the motions judge. Additional detail
    will be provided, as necessary, in the Analysis section of these reasons.

[18]

To begin, I will
    explain the nature of the insurance policies at issue.

(1)

The insurance policies

[19]

This action involves
    four variations of universal life insurance policies sold by MetLife in
    Canada.
[3]
The four policies had different features, catering to different consumer
    preferences.

[20]

A traditional whole
    life insurance policy charges fixed premiums to fund a death benefit and an
    investment account. A universal life policy offers more choice and flexibility
    to the insured. Like a whole life policy, it has a cash accumulation feature. But
    it permits the insured to pay premiums in variable amounts on a flexible
    schedule, to take advantage of different investment options for surplus funds
    and to vary the death benefit. Premiums paid by the insured are paid into an
    accumulation fund. Cash in the accumulation fund is paid out from time to
    time to cover: the cost of the insurance (COI), that is the cost of insuring
    the death benefit; the costs of administration; and the acquisition of
    investments. Income on the investments is added to the policyholders accumulation
    fund.

[21]

Thus, in addition to
    providing life insurance, the policy serves as an investment vehicle. It has
    tax advantages, because income in the investment fund accrues on a tax-deferred
    basis. The policys cash value may enable the policyholder to borrow money from
    the policy. Alternatively, surplus funds can be used to pay future premiums
    from time to time (a so-called premium holiday) or for the remaining life of
    the policy (sometimes referred to as a vanishing premium).

[22]

But universal life
    insurance is not without risks. Because premiums are not fixed, poor investment
    returns, due to low interest rates or market declines, can cause premiums to
    increase and reduce the value of the accumulation fund. If the accumulation
    fund is depleted, the insured will have to pay increased premiums or see the
    entire policy lapse.

[23]

It is unnecessary to
    provide a detailed description of the terms of the various policies in order to
    address most of the issues on this appeal. I will discuss some of the pertinent
    provisions of the policies when I examine the motions judges analysis of the
    common issues.

[24]

These policies were fairly
    complex financial instruments. The manner in which they operated was not obvious
    from the policy language. It is not surprising, therefore, that MetLifes sales
    agents frequently used standard sales pitches and illustrations to demonstrate
    the operation of the policies to their clients.

[25]

Many of these policies
    were sold during times of high interest rates. Most projections given to
    prospective policyholders were based on those rates continuing. Everything was rosy
    when interest rates were high. Premiums were low, accumulation funds grew, and
    policyholders were happy. But when interest rates began to fall in the mid-1990s
    and into the 2000s, MetLifes profits also fell. As did the income on
    policyholders accumulation funds. Correspondingly, premiums and administration
    costs charged by MetLife and its successors went up.
[4]
Some of these increased charges
    were paid out of policyholders accumulation funds.

(2)

Policyholder complaints, remedial programs, and Indemnity Litigation

[26]

As a result of these
    developments, some policyholders complained to MetLifes successors that
    MetLifes sales agents had misrepresented the anticipated performance of their
    policies.

[27]

In response to customers
    protests, Sun Life established remedial programs to provide relief to some policyholders
    (the remedial programs).
[5]

[28]

Policyholder complaints
    also inspired Sun Life to take action against MetLife.

[29]

In the sale of
    MetLifes book of business in 1998, MetLife had agreed to indemnify the
    purchaser for market conduct claims, including policyholder claims for
    misrepresentations in the sale of insurance policies. The agreement required
    that over $1 million in market conduct claims be made or brought before the
    purchaser would qualify for indemnification.

[30]

When MetLife refused
    to acknowledge that the indemnity had been triggered, Sun Life brought an
    action in 2006 seeking a declaration that MetLife was required to indemnify it
    for market conduct claims with respect to three of the four policies at issue
    in these proceedings (the Indemnity Litigation).

[31]

MetLife brought a
    summary judgment motion, arguing that the $1 million threshold had not been
    met. In opposing the motion, Sun Life produced an expert actuarial report
    calculating the cost Sun Life would incur if all existing policies were
    administered according to the alleged misrepresentations of the MetLife sales
    agents, rather than their actual terms. Sun Life argued:

The evidence establishes that MetLife, through its agents and
    employees, engaged in and condoned a pattern and repeated practice of
    misrepresenting and failing to accurately describe to its policyholders the
    nature, provisions, financial elements and benefits of the Flexiplus, Interest
    Plus and Universal Plus policies sold by it.

[32]

MetLifes summary
    judgment motion was granted on the basis that the $1 million threshold had not
    been reached. Further, not all policyholders had been misled and the expert
    evidence did not establish a genuine issue for trial. See
Sun Life
    Assurance Company of Canada v. Metropolitan Life Insurance Company
, 2010
    ONSC 558, 69 B.L.R. (4th) 32, at paras. 29-30, 32, 34-36.

[33]

Sun Life appealed, but
    later withdrew the appeal, on terms that have not been disclosed.

[34]

However, Sun Lifes
    own evidence in the Indemnity Litigation, which echoed the complaints made by
    the plaintiffs in the proposed class action, was identified as a smoking gun by
    the plaintiffs on the certification motion. Here was the defendant in this
    action, Sun Life, complaining in another proceeding that MetLife had engaged in
    a pattern and repeated practice of misrepresentation, including some of the
    very misrepresentations that these plaintiffs complained about. The plaintiffs
    relied on the evidence in the Indemnity Litigation, not only to establish some
    basis in fact for their claims and for the common issues, but also to argue
    that Sun Life had breached its duty of good faith and fair dealing by failing
    to disclose MetLifes and its own misconduct to policyholders.

(3)

The claims

[35]

The proposed class
    action advanced a number of claims, but the following three claims are central
    in this appeal:

(a)

Misrepresentation
: The plaintiffs allege
    that they were misled by MetLife sales agents, to believe that their policies
    would provide guaranteed interest and would become self-sustaining. Some
    plaintiffs also claimed that they were told that their COI and premiums would
    not increase. One plaintiff alleged she was told her policy provided lifetime
    coverage, as opposed to coverage to age 90.

(b)

Breach of contract (COI and Administrative
    Fee increases
): The plaintiffs claim that increases in the COI were in breach
    of their contracts because the increases were not based on criteria identified
    in the insurance policies. They also claim that increases in Administrative Fees
    were not based on increases in administrative costs, but were really additional
    COI increases in disguise.

(c)

Breach of contract (maximum premium)
: Certain
    policies made reference to a minimum premium and a maximum premium. There
    was some evidence that, at some future date, Sun Life would charge a premium
    higher than the maximum premium. The plaintiffs admit that no putative class
    member has yet been charged a premium greater that the maximum premium, but seek
    a declaration interpreting this provision.

[36]

In addition, the
    plaintiffs relied on the doctrine of fraudulent concealment to answer Sun
    Lifes allegations that their claims were statute-barred.

[37]

With this background,
    I turn to the issues on these appeals.

C.

The Issues

[38]

In my view, these
    appeals raise the following issues.

(1)

Plaintiffs appeal of the certification motion

(a)
Did the motions judge
    err in failing to certify the negligent misrepresentation common issues?

(b)
Did the motions judge
    err in failing to certify the breach of contract common issues?

(c)
Did the motions judge
    err in failing to certify any other common issues?

(d)
If the answer to any of
    these questions is yes, should the proposed class action be certified?

(2)

Plaintiffs appeal and Sun Lifes cross-appeal of the summary judgment
    motion

(a)
Did the motions judge
    err in granting summary judgment with respect to the misrepresentation claims?

(b)
Did the motions judge
    err in granting summary judgment with respect to the claims for breach of
    contract?

(c)
Did the motions judge
    err in dismissing the maximum premium claim as premature?

(3)

Plaintiffs appeal of the costs award

(a)
Did the motions judge
    err in awarding Sun Life its costs of the motions in the amount of $1 million
    on a partial indemnity basis?

D.

Analysis

(1)

Plaintiffs appeal of the certification decision

(a)

The standard of review

[39]

I agree with Sun Life
    that substantial deference is owed to the motions judges application of the
    test for certification and his determination of the common issues. See
Pearson
    v. Inco Ltd.
(2005), 78 O.R. (3d) 641 (C.A.), 261 D.L.R. (4th) 629, at
    para. 43, leave to appeal refused, [2006] S.C.C.A. No. 1;
Hodge v.
    Neinstein
, 2017 ONCA 494, 136 O.R. (3d) 81, at para. 115, leave to appeal
    refused, [2017] S.C.C.A. No. 341. The courts intervention should be restricted
    to matters of general principle:
Markson v. MBNA Canada Bank
, 2007
    ONCA 334, 85 O.R. (3d) 321 (Ont. C.A.), at para. 33.

(b)

The relevant criteria for certification

[40]

The principles
    relevant to this appeal are the common issues criterion and the application of
    the some basis in fact test.

[41]

At paras. 27 to 55 of
    his reasons, the motions judge set out the principles and authorities governing
    the application of the test for certification under s. 5 of the
Class
    Proceedings Act
,
1992
, S.O. 1992, c. 6. He discussed the some
    basis in fact test at paras. 31-37, noting at paras. 35-36 that the test sets
    a low standard and it is not for the court to resolve conflicting facts or to
    opine on the strength of the plaintiffs case:

On a certification motion, evidence directed at the merits may
    be admissible if it also bears on the requirements for certification, but, in
    such cases, the issues are not decided on the basis of a balance of
    probabilities, but rather on that of the much less stringent test of
    some-basis-in-fact:
Hollick v. Toronto (City)
,  [2001 SCC 68],

at
    paras. 16-26;
Cloud v. Canada (Attorney General)
(2004), 73 O.R. (3d)
    401 (C.A.) at para. 50, leave to appeal to S.C.C. refd, [2005] S.C.C.A. No.
    50.

The some-basis-in-fact test sets a low evidentiary standard for
    plaintiffs, and a court should not resolve conflicting facts and evidence at
    the certification stage or opine on the strengths of the plaintiffs case; the
    focus at certification is whether the action can appropriately go forward as a
    class proceeding:
Pro-Sys Consultants v. Microsoft
,  [2013 SCC 57];
McCracken
    v. CNR Co.
, 2012 ONCA 445.

[42]

The motions judge set
    out the authorities on the common issues criterion at paras. 38-44 of his
    reasons, stating at para. 38 that to be a common issue, it must be a
    substantial ingredient of each Class Members claim and its resolution must be
    necessary to the resolution of each Class Members claim and noting, at para.
    44, that [a]n issue can be a common issue, even if it makes up a very limited
    aspect of the liability question and even though many individual issues remain to
    be decided after its resolution.

[43]

I turn now to the
    motions judges application of these principles to the common issues proposed
    by the plaintiffs. As noted earlier, the proposed common issues are listed in
    the Appendix to these reasons.

(c)

Did the motions judge err in failing to certify the negligent misrepresentation
    common issues?

[44]

The plaintiffs contend
    that the motions judge erred in refusing to certify the negligent misrepresentation
    common issues.

[45]

While they acknowledge
    that individual constituent elements of the cause of action, such as reasonable
    reliance by a plaintiff, will have to be decided after the common issues trial,
    they argue that determination of the misrepresentation common issues in their
    favour will establish that MetLife engaged in a pattern of misrepresentation in
    the sale of the policies. This, they say, would provide context for the proof
    of class members individual claims and would help to advance the claim of each
    class member. They say this satisfies the common issues requirement.

[46]

I do not accept this
    submission.

[47]

The key misrepresentation
    common issue was common issue 4, which asked whether MetLife engaged in a
    repeated practice of misrepresenting the nature, provisions, financial elements,
    and benefits of the policies. These misrepresentations included the use of
    misleading illustrations and marketing materials, and the failure to disclose
    the effect of lower interest rates and rising costs on class members premiums
    and accumulation funds.

[48]

The individual
    proposed representative plaintiffs testified that they had been misled by MetLifes
    agents about the features and benefits of the policies. However, each
    plaintiffs claim for misrepresentation is unique.

[49]

For the purpose of
    illustration, I will briefly describe the claims of two would-be representative
    plaintiffs, Eldon Fehr and Leslie Michael Lucas.

[50]

Mr. Fehr claimed that
    before he purchased his Universal Plus policy (which he later replaced with a
    Flexiplus policy) in October 1990, he was told by MetLifes agent that the
    premium would be guaranteed for life and that his payments would not change.
    He claimed that the agent told him that, based on the premiums he was paying, he
    would accumulate funds that would continue to grow and would eventually reduce
    or eliminate his premiums. Alternatively, he would be able to cash out the accumulated
    funds when he retired or when the policy matured.

[51]

Mr. Fehr claimed that,
    contrary to the representations made to him by MetLifes agent, his costs of
    insurance have increased and his accumulation fund has been depleted.

[52]

Mr. Lucas purchased a Flexiplus
    policy in 1995. He claimed that the agent told him that the COI rates would
    never go up, that there would be considerable growth in the Accumulation Fund
    and that the policy would one day pay for itself. Like Mr. Fehr, he asserted
    that, contrary to the agents misrepresentations, his COI had increased and his
    accumulation fund had been depleted and was insufficient to meaningfully reduce
    or eliminate his premiums.

[53]

The record included
    affidavits of twelve former MetLife agents who deposed that MetLifes
    educational courses, manuals, and other sales materials were misleading and
    caused them to misrepresent the terms of the insurance policies they were
    selling. On the other hand, seventeen former agents deposed that they had not
    misrepresented the policies they sold.

[54]

The plaintiffs pointed to MetLifes marketing materials, which were
    used by sales agents to paint an optimistic picture, based on high interest
    rates, demonstrating a secure future of low premiums and high investment
    returns. Customers were not given the insurance policy until after they had completed
    a purchase application. While policyholders were told to read the policy, the
    plaintiffs argued that a policyholder would not have appreciated, simply from
    reading the policy, that declines in interest rates would have serious
    implications on premiums and on the growth of the accumulation fund.

[55]

As
    they did before the motions judge, the plaintiffs rely on the Indemnity
    Litigation as a basis in fact for the existence of systemic
    misrepresentations by MetLifes agents.
There was considerable
    debate before the motions judge, and in the parties written submissions to
    this court, concerning the admissibility of statements from Sun Lifes
    pleadings and factums in the Indemnity Litigation. The motions judge ruled that
    these statements were not admissions and could not be used to establish a
    common issue related to systemic misrepresentation. The motions judge went on
    to find, at paras. 298-306 of his reasons, that the misrepresentation claims
    did not satisfy the commonality requirement.

[56]

Notwithstanding the plaintiffs
    submission that consumer protection and access to justice concerns favour the
    certification of the misrepresentation common issues, it is my view that the
    judgment below should be affirmed on this issue, largely for the reasons
    articulated by the motions judge and by Rosenberg J.A. in
Williams v.
    Mutual Life Assurance Co.

of Canada
(2003),
170 O.A.C. 165
(C.A.),
    226 D.L.R. (4th) 112, leave to appeal refused, [2003] S.C.C.A. No. 283. The
    resolution of the proposed common issues based on systemic misrepresentations
    would not materially advance the claims of the class members. The class action
    would founder on the host of individual issues raised by the claims of tens of
    thousands of class members.

[57]

The motions judge
    noted, at para. 292 of his reasons, that, based on the evidence before him, the
    experiences of the representative plaintiffs were idiosyncratic rather than
    common. The alleged misrepresentations were made over the breadth of the class
    period, 13 years, by thousands of different sales agents who were not uniformly
    trained about four different policies some of which had revised standard forms
    over the course of their offering to the public.

[58]

I agree with this
    observation. The evidence of Mr. Fehr and Mr. Lucas, which I briefly summarized
    above, and the evidence of the other representative plaintiffs, demonstrates
    that a trial of each individual claim of misrepresentation would be required in
    order to fairly determine, not just whether the representations were relied
    upon, but what representations were actually made to each class member and
    whether those representations were false. This could require the evidence not
    only of each class member, but of each sales agent involved, as well as an
    examination of what marketing materials were provided to each class member and
    what he or she was told about them.

[59]

The observations of Rosenberg
    J.A. in
Williams v. Mutual Life
, at para. 47, are apt:

In this case, establishing that Prudential was negligent in any
    of the ways suggested by the appellant would not represent a substantial
    ingredient in each of the class members' claims. It would not, to use Campbell
    J.'s phrase in
Anderson
, "move the litigation forward". As
    the motions judge pointed out, since Prudential had no direct dealings with any
    of the class members at the time the policies were sold, the class members
    would still at least have to show that the agents with whom they dealt made
    representations about premium offset, that those representations constituted
    negligent misrepresentations about the premium offset feature, and that the
    prospective policyholder reasonably relied upon the representation. As was stated
    in
Rumley
at para. 29, "Inevitably such an action would
    ultimately break down into individual proceedings."

[60]

I agree with the motions
    judge that the misrepresentation claims fail for want of a common issue that
    would materially advance the case at trial. It is not enough for a common issue
    to provide context. The resolution of the common issue must advance the
    resolution of each class members claim. The proposed misrepresentation common
    issues would not do so.

[61]

For these reasons, I
    conclude that the motions judge did not err in dismissing the request for
    certification of the negligent misrepresentation common issues.

(d)

Did the motions judge err in refusing to certify the breach of contract
    common issues?

[62]

The plaintiffs say
    that the motions judge erred by failing to certify the breach of contract
    common issues, being issues 6, 7, and 8.

[63]

As a preamble to this
    topic, and because of its impact on the discoverability of the plaintiffs
    claims for the purpose of the summary judgment motion, I will make a few
    additional observations about the insurance policies at issue.

[64]

I have noted that the
    policies are relatively complex financial instruments. They are also relatively
    complex contracts. The language is technical and legalistic, and important
    terms are undefined. For example, there is no definition of minimum premium
    or maximum premium. The actual meaning of those terms is a matter of
    controversy. According to Sun Life, minimum premium does not mean the lowest
    premium that a policyholder is required to pay in order to keep the policy in
    good standing. And maximum premium does not mean the highest premium that can
    ever be charged to a policyholder. Some technical terms, such as non-rated
    classification, are undefined. Other terms, such as premium, monthly cost
    of insurance and monthly insurance charge, are confusing. Key provisions,
    such as the manner in which Sun Life could adjust the COI from time to time, are
    opaque.

[65]

The motions judge
    himself required extensive additional evidence, including expert evidence,
    before he could determine whether Sun Life had breached the policy by adjusting
    the COI based on factors not enumerated in the policy. He was unable to do so
    by simply interpreting the policy and comparing it to what Sun Life claimed it
    was entitled to do. This was a key breach of contract issue, to which I now
    turn.

Common issue 6: cost of insurance (COI)

[66]

The policies at issue
    provided that the insurer could adjust the monthly rate for the COI from time
    to time. Common issue 6 asks whether it was an express or implied term of the
    policies that the COI rate could only be adjusted based on specified factors enumerated
    in the policy, and whether Sun Life breached this term by imposing increases
    based on other factors.
[6]

The plaintiffs allege that the COI provision of the Flexiplus
    policy was breached when Sun Life notified policyholders of premium increases in
    2001, 2006, and 2015. A similar allegation was made that the COI provision in
    the Optimet policy was breached when the COI was increased in 2007, being year
    nine of the policy.

[67]

The motions judge
    addressed common issue 6 and the other breach of contract common issues in a
    similar fashion. He stated that answering them would require the court to
    interpret the express terms of the two standard form insurance policies with
    respect to the COI and Administration Fees, and to determine whether these
    terms had been breached. He described this as standard fare for a common issue
    in a class action.

[68]

In the Optimet policy,
    the COI was fixed for years one to eight and for year nine and following. That
    policy was only sold in 1998 and in the ninth year of the policy, Sun Life
    increased the COI by ten percent for the balance of the policy term. It was
    argued by the plaintiffs that the ten percent increase was a breach of the
    policy.

[69]

The relevant provisions of the Flexiplus policy, with respect to
    common issue 6, are as follows:

Monthly Insurance Charge
The deduction for
    any policy month is the sum of the following amounts, determined by us as of
    the beginning of that policy month:

·

The monthly Cost of Insurance

·

The cost for additional benefits and riders

·

An Administrative Fee that will never exceed $12 per month. This
    monthly fee will never increase by more than $1 in any 12 month period.

Cost of Insurance
The Cost of Insurance for
    any policy month is determined by multiplying the Death Benefit less the value
    of the Accumulation Fund by the monthly rate.
The monthly rate for the Cost
    of Insurance will be set by us from time to time based on the primary Insured's
    sex, issue age, underwriting class, policy year and the Specified Face Amount
    of Insurance
. The monthly rate may change, but for non-rated classification
    it will never exceed the rates shown on the Table of Maximum Monthly Cost of
    Insurance included with this policy.

In the 8
th
year there will be no monthly Cost of
    Insurance. [Emphasis added.]

[70]

The underlined words were relied on by the plaintiffs in support of
    their submission that any adjustment to the COI had to be based on the primary
    Insureds sex, issue age, underwriting class, policy year and the Specified
    Face Amount of Insurance and on no other factors.

[71]

The motions judge described the manner in which the COI was set in
    the Flexiplus policy in his continued reasons, at para. 17:

In the Flexiplus policy, the insurer set the COI from time to
    time within a maximum limit for years one to seven and within a maximum limit
    for year nine and the following years. There was no COI in year eight. Thus,
    there was a two-step structure for the COI in the Flexiplus policy and the COI
    could increase at any time other than year eight within the maximum rates set
    out in the table in the policy. In the Flexiplus policy, the maximum rate the
    insurer could charge the policyholder for the COI in each period was stated in
    a table, categorized by age, sex, and smoking status, entitled: "Table of
    Maximum Monthly Cost of Insurance Per Thousand of Insurance."

[72]

The plaintiffs argue that the increases implemented under the Flexiplus
    policy were not based on the specified factors (age, sex, etc.) and were
    therefore in breach of the contract.

[73]

In asserting some basis in fact for the common issue, the plaintiffs
    relied on correspondence from Clarica, Sun Lifes predecessor, to Flexiplus
    policyholders in 2001-2002 and communications from Sun Life in 2006, announcing
    an increase in the COI. In a letter from Clarica to one of the representative
    plaintiffs, Mr. Lucas, in October 2000, it was stated:

The monthly insurance charge is the sum of three different
    charges; two of them will be changing in March, 2001. I am writing now to give
    you ample time to review the changes with your agent. The monthly insurance
    charge, described on page 7 of your contract, includes:

*

a monthly administration fee -- This fee will increase by $1.00
    from $5.50 to $6.50 a month, effective March 2001;

*

the charges for any additional benefits or riders ...

*

Your monthly costs of insurance -- This is the amount we charge
    to provide your life insurance protection. The costs of insurance (the rate charged
    per $1,000 of life insurance benefit) is increasing due to interest rates that
    have declined steadily since the Universal Flexiplus product was first
    introduced. Your policy states: "the monthly rate for the Cost of
    Insurance will be set by us from time to time."
It is now necessary to
    increase the costs of insurance to better reflect current interest rates.

We guarantee your new monthly cost of insurance rate does not
    exceed the maximums shown in the Table of Maximum Monthly Cost of Insurance in
    your contract. ...

Your agent ... can provide you with your new monthly insurance
    charge and illustrate how these changes will impact the future value of your
    policy's accumulation fund. [Emphasis added.]

[74]

The underlined words were relied upon by the plaintiffs to assert a
    basis in fact for the existence of a common issue  namely, that Sun Life
    increased the monthly COI to better reflect current interest rates, a factor
    that was not mentioned in the COI provision of the policy, quoted above.

[75]

In addition, the plaintiffs referred to the evidence of Sun Lifes
    witness, Ms.
Sauvé
, who testified about the manner in
    which COI rates were periodically adjusted. The motions judge referred to her
    evidence in his continued reasons, at para. 24, as follows:

In her testimony for Sun Life, Ms. Sauvé, the Director of
    Customer Relations for the Individual Business Unit, said that the factors
    listed in the letter explaining the increase in the COI were consistent with
    the policy terms. In her affidavit, she explained that COI rates were affected
    by: (a) current mortality experience relative to what was assumed when the
    rates were initially set; (b) incurred expenses relative to what was assumed
    when the rates were initially set; (c) actual investment earnings compared to
    the interest rates assumed when the rates were initially set; and (d) policy
    lapse rates compared to the lapse rate assumed when the rates were set. She
    deposed that a periodic assessment is done of the actual experience using the
    risk factors in the policy, such as sex, issue age, underwriting class,
etc
.,
    compared to the assumed experience that formed the foundation for the pricing
    when the policy was issued. She said that when there is a significant deviation
    from the actual experience as compared to the assumed experience, a price
    increase or decrease is made.

[76]

To summarize, the letter from Sun Life to Mr. Lucas indicated that the
    COI had been adjusted (i.e., increased) to better reflect current interest
    rates. Ms. Sauv
é
s evidence was that the COI had been
    adjusted to reflect changes in assumptions made by Sun Life, when the COI was
    originally determined, concerning such matters as Sun Lifes actual expenses
    and actual investment earnings.

[77]

In my view, the evidence of Ms.
Sauvé
and
    the letter from Sun Life provided some basis in fact for common issue 6. There
    was some basis in fact that the COI adjustment had been calculated on a common
    basis for all class members who owned Flexiplus policies.
[7]
And there was
    some basis in fact to establish that the adjustment was calculated, for all
    policyholders, in a manner that was inconsistent with the express terms of the
    policy. To use the motions judges language, there was some basis in fact to
    establish a common issue that would have been standard fare for a breach of
    contract common issue: the interpretation of a provision of a standard form
    contract that was common to all class members and the determination of whether
    the adjustment of the COI, on a basis common to all class members, was in
    breach of the contract. The determination of whether a breach of contract had actually
    occurred was not an issue for the certification judge.

[78]

However, instead of certifying the proposed common issue, the motions
    judge concluded that he could not determine how the increase in the COI had
    been calculated.
He said there was no evidence before him to enable him
    to determine whether there was a basis in fact for the allegation that Sun
    Life had breached the contracts.
He stated, at para. 106 of
    his reasons, [i]t may or may not be the case that the increase of the COI
    because of declining interest rates was based on the primary insureds sex,
    issue age, underwriting class, policy year, and the specified face amount of
    insurance.

[79]

He
    adjourned the certification motion with respect to these common issues and
    ordered Sun Life to deliver affidavit evidence explaining how the COI and
    Administrative Fees were calculated. The plaintiffs were entitled to file
    responding evidence. He ordered that, after any necessary cross-examinations,
    the matter could be brought before him for continuation of the certification
    motion.

[80]

This duly occurred. Sun Life served two affidavits from one of its
    Vice Presidents, who was responsible for pricing and re-pricing individual life
    insurance products. The plaintiffs filed two affidavits from an expert
    consulting actuary. Both affiants were cross-examined. The certification hearing
    resumed, more than a year later.

[81]

The motions judge accepted the evidence of Sun Lifes witness concerning
    the way in which the company adjusted the COI. It was based on two types of
    factors: (a) policy factors, such as the insureds sex, age, underwriting
    class, policy year, and face amount of insurance  in other words, the factors
    listed in the COI provision of the policy; and (b) experience variables, such
    as anticipated future mortality rates, anticipated policy lapse rates, expenses,
    and investment earnings. These experience variables were not set out in the COI
    provision of the policy. The policy factors were used to divide insured
    individuals into cohorts against which the experience variables were applied
    for the purpose of adjusting the COI applicable to each cohort. The plaintiffs
    expert generally agreed that this methodology was applied in practice. He was
    not satisfied, however, that the Flexiplus policy language was adequate to
    allow for such adjustments, although he acknowledged that this was a legal
    issue.

[82]

To put it simply, the evidence disclosed that Sun Life adjusted the COI
    from time to time based, among other things, on its actual experience in
    comparison to the assumptions it had made when the rates were set. This would
    ensure that, no matter what happened to investment returns, Sun Life could meet
    its obligations to its policyholders while sustaining the level of earnings it
    anticipated when it launched the product. The plaintiffs proposed common issue
    asked whether Sun Life was entitled to adjust the COI in this way.

[83]

After reviewing the evidence, the motions judge concluded, at para.
    52 of the continued reasons, that there was no evidence  no basis in fact
proving the alleged breach of contract

(emphasis
    added). He stated, at para. 49, that the re-pricing of the insurance was done
    in accord with insurance industry actuarial practice.

[84]

He concluded, at para 55:

In the case at bar, the truth of the matter is that the
    Plaintiffs plead what the contract means; i.e., they plead what promises were
    made by Sun Life, and they allege how those promises were breached; visualize,
    they plead in paragraph 60 of the Statement of Claim that Sun Life "used
    factors different from the permissible factors in calculating and imposing cost
    of insurance rate increases on the Policies, which was a breach of
    contract." As it turns out (much like what happened with the Plaintiffs'
    maximum premiums breach of contract), there is no basis in fact for this allegation.
    The evidence is that in both setting and re-setting the COI, Sun Life set the
    price based on the primary insured's sex, issue age, underwriting class, policy
    year and the specified face amount of insurance, and it did so in the way that
    was in accord with insurance industry practice. There is no basis in fact for
    the breach of contract as pleaded by the Plaintiffs.

[85]

The question for the motions judge was whether there was some basis
    in fact for the existence of common issues of fact and law concerning the
    interpretation of the policy and the manner in which Sun Life adjusted the COI
    for all affected policyholders.

[86]

In
    my view, it is entirely reasonable for a certification motion judge to expect the
    parties to produce evidence relevant to whether there is some basis in fact
    that the issue is common across the class. However,
by
    requiring the parties to file additional evidence and analyzing that evidence
    to assess whether or not Sun Life had
actually
breached the contract, the motions judge went beyond determining
    whether there was some basis in fact for the common issue. Rather, he
decided
the proposed common issue by
    interpreting the contract and making a finding that there was no breach. This,
    respectfully, was an error in principle. This determination was a task for the judge
    at the common issues trial, not the judge dealing with certification.

[87]

As McLachlin C.J. observed in
Hollick v. Metropolitan
    Toronto (Municipality)
,
2001 SCC 68, [2001] 3 S.C.R. 158,
    at para. 16, [t]he question at the certification stage is not whether the
    claim is likely to succeed, but whether the suit is appropriately prosecuted as
    a class action. This point was re-iterated by Rothstein J. in
Pro-Sys
    Consultants Ltd. v. Microsoft Corp.
, 2013 SCC 57, [2013]
    3 S.C.R. 477, at para. 99. He noted, at para. 100, that
Hollick

requires that the court ask,
not
whether there is a basis in fact for the claim itself, but whether
    there is
some
basis
    in fact which establishes each of the certification requirements
.

[88]

Moreover, it is not clear that the motions judge was entitled as a
    matter of law to rely on industry practice to support Sun Lifes position on
    the adjustment of the COI, when that practice was not specifically identified
    in the contract. While industry practice or custom may be impliedly incorporated
    into a contract between two parties who operate in the same industry  for
    example, a contract between two insurance companies  it is not at all clear
    that, as between an insurer and policyholder, the policyholder can be said to
    contract with reference to a custom of an industry in which he or she is simply
    a consumer.

[89]

This point was made by the Alberta Court of Appeal in
885704
    Alberta Ltd. v. Oxford Properties Group Inc.
, 2005 ABCA 274, 371 A.R. 178,
    at para. 43:

An interpretation of a contract is a search for intent of the
    parties to that particular contract. While standard terms of a trade may be
    found to have the intended meaning of the parties to the contract, that can
    only be true where both parties are members of the same trade. Industry
    practice that might identify one party's intention is not sufficient. It must
    be of such a nature that a trial judge can comfortably conclude that both
    parties would have known of that practice and therefore have intended that
    meaning. Here, we are concerned that the trial judge relied too heavily on
    expert opinions and standards of an industry without determining whether Met
    Centre was part of the industry and could be said to have known those industry
    terms.

[90]

In my view, it was for the common issues trial judge, and not the
    certification judge, to determine whether the insurance contract, properly
    interpreted, permitted Sun Life to adjust the COI based on experience
    variables, such as changed interest rates and investment returns. And it will
    ultimately be for the common issues trial judge to ascertain the role, if any,
    of industry practice in the determination of that question.

[91]

For these reasons, it is my view that the motions judge erred in
    failing to certify common issue 6.

Common issue 7: Administrative Fees

[92]

Common
    issue 7 asked a question similar to common issue 6: whether Sun Life breached
    the contract by adjusting Administrative Fees based on factors unrelated to the
    costs of administering the policies.
[8]

The motions judge also considered this common issue to be
    standard fare for a class action.

[93]

In the second phase of the certification motion, the motions judge
    declined to certify common issue 7. He found that, while the insurance
    contracts demonstrated a lack of transparency, the Administrative Fee, like
    the COI, was set in accordance with industry practices and no unfairness was
    perpetrated on the policyholders: continued reasons, at para. 59.

[94]

In my view, as with common issue 6, the motions judge went too far.
    There was an appropriate common issue of contractual interpretation concerning
    the meaning of Administrative Fee (a term that was not defined in the
    policies) and the basis on which the insurer was entitled to adjust that fee. The
    Administrative Fee was adjusted in a manner that was common to all class
    members who owned the Flexiplus policy. There was some evidence that Sun Life
    had used adjustments in the Administrative Fee to avoid making additional
    increases to the COI. This was sufficient to satisfy the some basis in fact
    test for common issue 7.

[95]

For the reasons I have stated in relation to the COI issue, it will
    be for the common issues trial judge to determine what role, if any, industry practice
    will play in determining this common issue.

[96]

Common issue 7 ought to have been certified by the motions judge.

Common issue 8: maximum premium

[97]

Common issue 8 asked
    whether it was an express or implied term of the Universal Plus, Flexiplus, and
    Optimet policies that the maximum premium identified in the policies was the
    highest premium the policyholder would be required to pay in a policy year and,
    if so, whether Sun Life breached this term
by charging a class
    member a premium in excess of the amount of the maximum premium.
[9]

[98]

Each of these policies had a Policy Specifications page attached,
    with a chart showing a projected premium and a maximum premium. As I have
    noted, the term maximum premium was not defined.

[99]

It was acknowledged by the representative plaintiffs that neither
    they, nor any other class member that they were aware of, had been charged more
    than the maximum premium at the time of the motions for certification and
    summary judgment. But they argued that they were entitled to a declaration
    interpreting the maximum premium provision of the policies, in spite of the
    fact that there was no evidence of a breach to date.

[100]

As
    with common issues 6 and 7, the motions judge concluded that common issue 8 was
    capable of being a suitable common issue, provided the plaintiffs met the some
    basis in fact threshold.
He noted that at an earlier stage of
    this proceeding, in
Kang v. Sun Life Assurance Co. of Canada
, 2013 ONCA 118, 303 O.A.C. 64, this court had observed that the
    term maximum premium was ambiguous and that the pleading should not have been
    struck. Laskin J.A. stated, at para. 42:

I do not think that the express terms of the Universal Plus
    policy are as clear as the motion judge considered them to be. The term "
Maximum Premium" is not defined
    anywhere in the policy. The words "
Maximum Premium" appear at the top of a chart on pages 3
    and 3T of the policy, with corresponding rates for various forms of coverage.
    There is no express provision that Sun Life can charge a policyholder more than
    the "
Maximum Premium".
    One available and reasonable inference is that the very term "
Maximum Premium" means that the
    corresponding rates are the most a policyholder will have to pay. At the very
    least, the meaning of the term is ambiguous. Thus, in my view, the claim ought
    to stand.

[101]

However,
    the motions judge concluded that there was no basis in fact for the existence
    of a breach of contract and no basis in fact for proposed common issue 8,
    because there was no evidence that any of the representative plaintiffs, or any
    class member for that matter, had been charged a premium greater than the
    stated maximum premium.
He concluded, at para. 319 of his
    reasons:

Thus, there is no basis-in-fact for questions based on an alleged
    breach of the Maximum Premium provisions of the insurance policies. This
    some-basis-in-fact deficiency cannot be cured by adjourning the certification
    motion for further evidence. Put simply, the proposed common issues based on an
    alleged breach of the Maximum Premium provisions of the insurance contracts are
    not certifiable.

[102]

The motions judge also dismissed the maximum premium claims of the
    representative plaintiffs on summary judgment, not because they were
    time-barred, but because the claims, which he described as inchoate, were
    premature.

[103]

In support of the existence of some basis in fact for the proposed
    common issue, the plaintiffs had pointed to evidence that some class members
    would eventually be charged more than the stated maximum premium. Kevin
    Morrissey, a Vice President of Sun Life, had deposed in the course of the
    Indemnity Litigation that the year 2030 is the median point at which Universal
    Plus policyholders are likely be required to pay an amount in excess of the
    Maximum Premium set out in their policy specifications pages.

[104]

In my view, there is some basis in fact for the existence of a
    common issue concerning the meaning of the term maximum premium in the three
    contracts. There is an existing dispute about the meaning of an arguably
    ambiguous term. Although Sun Lifes interpretation of maximum premium is not entirely
    clear, it appears that it was the highest premium that a policyholder would be
    able to pay in order to be eligible for tax-exempt treatment in the
    accumulation fund. On the plaintiffs interpretation, maximum premium means
    the highest premium that they will ever have to pay. As this court noted in
Kang
, that is one available and reasonable interpretation. Moreover, Sun
    Life has not disavowed the assertion that, at some time, some policyholders
    will be charged a premium that is greater than the stated maximum premium.

[105]

This is the type of case in which a declaration would be appropriate,
    to define the rights of the contracting parties so they can govern themselves
    accordingly and avoid future disputes. In
LeBar v. Canada
,

[1989] 1 F.C. 603,
    90 N.R. 5, the Federal Court of Appeal described the nature of declaratory
    relief, at p. 610:

A declaration differs from other judicial orders in that it
    declares what the law is without pronouncing any sanction against the
    defendant, but the issue which is determined by a declaration clearly becomes
res
    judicata
between the parties and the judgment a binding precedent.

[106]

Similarly, in
Harrison v. Antonopoulos
(2002),
62 O.R. (3d) 463, 46 C.C.L.I. (3d) 89 (S.C.), Lang J. (as she then
    was) described the purpose of declaratory relief in commercial matters, at
    para. 27:

Declaratory relief, being only a declaration of parties'
    rights, is mainly sought in commercial matters to help parties define their
    rights, and as a means to settle matters amicably where reasonable people would
    otherwise disagree on their mutual obligations and wish to resolve the matter
    in order to avoid future disputes. In other words, a cause of action need not
    be extant at the time a party requests declaratory relief. Because declaratory
    relief is in essence a request for an advance ruling, courts have discretion to
    refuse such relief. This is the type of relief contemplated by s. 108(2) of the
CJA
- a declaration of parties' rights with no coercive effect or
    remedial entitlement.

[107]

The declaration sought here is consistent with that contemplated in
Harrison
. Declaratory relief should be available to the class. It is in the
    interests of both Sun Life and its affected policyholders to know whether the
    stated maximum premium can be exceeded.

[108]

In summary, I conclude that the motions judge erred in failing to
    certify common issue 8.

[109]

For the foregoing reasons, I would allow the appeal from the
    certification decision with respect to the breach of contract common issues 6,
    7, and 8.

(e)

Did the motions judge err in refusing to certify
    any of the other common issues?

[110]

Having concluded that the class proceeding should have been
    certified with respect to the breach of contract common issues, it is my view
    that several additional common issues should have been certified.

[111]

I will review all the proposed common issues in order.

[112]

Common issue 1, which asks whether Sun Life is liable for the
    actions of its predecessors, should be certified. The motions judge did not
    consider it necessary to address this issue because he did not certify either
    the misrepresentation or the breach of contract common issues. As I would
    certify the latter, common issue 1 becomes relevant. The first two COI
    increases occurred while the policies were being administered by Clarica. The resolution
    of common issue 1 would determine whether Sun Life is liable in the event that
    those COI increases were in breach of contract. It would also determine whether
    the plaintiffs are entitled to rely on the actions of MetLife and Clarica in
    response to Sun Lifes limitations defences, discussed below.

[113]

Common issue 2 asks whether Sun Life is estopped by positions it
    took in the Indemnity Litigation. As this issue relates primarily to the
    proposed misrepresentation common issues, the motions judge properly declined
    to certify it.

[114]

Common issues 3, 4, and 5 are the misrepresentation common issues. I
    would dismiss the appeal in respect of those issues for the reasons set out
    above.

[115]

Common issues 6, 7, and 8 are the breach of contract common issues.
    For the reasons above, I would allow the appeal with respect to these issues, which,
    in my view, should have been certified.

[116]

Common issues 9 and 10 relate to claims that Sun Life owed policyholders
    a duty of good faith and that the policies were administered in a deceitful and
    fraudulent manner. As set out in the plaintiffs factum, both issues contend
    that Sun Life was required to tell its policyholders about the pattern and
    repeated practice of sales misrepresentations.

[117]

Specifically, common issue 9 asks whether Sun Life owed class
    members a duty of good faith and fair dealing, and whether such a duty was
    breached. As with the misrepresentation claims and as found by the motions
    judge, this turns on individual issues and is not suitable for certification.

[118]

Common issue 10 asked:

Did Sun Life administer the policies in a deceitful
    and fraudulent manner, including by engaging in fraudulent concealment, or in a
    manner that violated section 439 of the
Insurance Act
(prohibiting unfair and deceptive practices)?

[119]

To the extent that this issue relates to a claim for damages, as with
    the claims for misrepresentation and breach of duty of good faith described
    above, and as found by the motions judge, it breaks down into individual issues
    and is not suitable for certification.

[120]

However, as the motions judge noted in his reasons, at paras. 493-494,
    the allegations of breach of the duty of good faith, deceit, and fraud were
    asserted in two ways: as causes of action against Sun Life and as a bar to Sun
    Lifes limitation period defences, based on the doctrine of fraudulent
    concealment.

[121]

As I will explain shortly, it is my view that the trial judge erred
    in granting Sun Lifes motion for summary judgment on the limitations issues. Having
    concluded that the action should be certified with respect to the breach of
    contract common issues, it is my view that the fraudulent concealment aspect of
    common issue 10 is pertinent to Sun Lifes limitation period defences, which
    may be raised as individual issues after a common issues trial. While the
    motions judge accepted that the parties were in a relationship of utmost good
    faith, he found that there was nothing in Sun Lifes administration of the
    policies that concealed the plaintiffs causes of action such that the doctrine
    of unconscionability or fraudulent concealment was engaged. He focused on whether
    Sun Lifes failure to inform the plaintiffs of a potential claim, specifically
    of the information disclosed in the Indemnity Litigation, could constitute
    concealment, finding, at para. 415 of his reasons, that Sun Life made no
    statement to mislead the Plaintiffs.

[122]

However, the motions judge failed to consider whether other communications
    by Sun Life to the plaintiffs might have had the effect of concealing their
    claims. This is particularly relevant to the claims that I would certify,
    namely those based on the increases in COI rates and Administrative Fees. While
    the motions judge determined there was no breach of contract, he did not
    consider whether Sun Lifes communications to the plaintiffs representing that
    it had an entitlement to make these adjustments had potentially delayed their
    discovery of a breach of contract claim, if one did exist.

[123]

In its Fresh as Amended Statement of Defence, Sun Life pleaded that
    as a result of letters and statements delivered to the plaintiffs, they knew or
    ought to have known of the facts that gave rise to the claims.

[124]

In response to this pleading, the plaintiffs pleaded in their Reply
    to the Fresh as Amended Statement of Defence that:

the insurers letters and statements
    misrepresented and fraudulently concealed the policy terms concerning
    adjustments in cost of insurance rates and administrative fees, which also
    constituted fraud and deceit and breach of the duties of good faith and fair
    dealing by Sun Life in administering the policies.

[125]

The letters and statements referred to in this paragraph included
    letters from Clarica and Sun Life to policyholders in 2000 and 2006 advising
    them of increases in their COI rates, and annual policyholder statements and
    other standard form documents sent to the proposed representative plaintiffs. Some
    of these notices included language to the effect that the plaintiffs policies
    allowed the insurer to adjust the COI from time to time, without including
    the remainder of the wording of the policies, which the plaintiffs argue
    qualified that statement.

[126]

In my view, there is some basis in fact for the assertion that Sun
    Life concealed or misrepresented to affected policyholders the manner in which
    the COI was adjusted and misrepresented its entitlement to do so. This would be
    a relevant determination to a limitation period defence and could be
    substantially or partially resolved within the common issues trial.

[127]

The proposed common issue 10 would thus apply, not as a stand-alone
    cause of action, but only as it relates to the limitation period defence, and
    would focus entirely on the communications and conduct of Sun Life and its
    predecessors on a policy-wide or cohort-wide basis, as opposed to the conduct
    of Sun Life or its agents in relation to individual class members.

[128]

Resolution of this issue could impact on whether, and to what
    extent, Sun Life is entitled to raise any limitation period defences to these
    breach of contract claims. For example, in
Halloran v. Sargeant
(2002), 217 D.L.R. (4th) 327, 163 O.A.C. 138 (C.A.), this court upheld
    a finding by the majority of the Divisional Court that the doctrine of
    fraudulent concealment applied to negate a limitations defence where an
    employer had misrepresented an employees legislative entitlements upon his
    dismissal. Given the special relationship between the parties, and that the
    employer was in a position to ascertain the state of the law and to provide
    accurate information to the employee, this court found it unconscionable for
    the company to invoke the limitation period  when it was responsible for  [the
    plaintiffs] delay in filing the claim: at para. 33.

[129]

Resolution of this issue, following the other breach of contract
    common issues, would also result in findings of fact and law that could have a bearing
    upon and could be applied commonly to all class members affected by the COI
    increases. The fact that individual issues may still remain is not a bar to
    certification.

[130]

Common issue 11 asks whether the releases signed by some class
    members are subject to rescission. I agree with the motions judge that this
    turns on individual issues and is not suitable for certification.

[131]

Common issues 12, 13, 14, and 15 deal with damages. I see no point
    in addressing these issues at this time. If the plaintiffs are unsuccessful on
    the breach of contract common issues, the damages issues will be irrelevant. If
    the plaintiffs succeed on the breach of contract issues, the common issues
    trial judge or the case management judge may give further directions on the determination
    of both individual and common issues with respect to damages.

(f)

Should the
proposed
class action be certified?

[132]

I conclude that the class action should be certified with respect to
    common issues 1, 6, 7, 8, and 10. It is accepted that the policyholders
    affected by those common issues have a cause of action in breach of contract. A
    suitable class can be defined, with sub-classes, if necessary, grouped by
    policy and time period. The resulting proceeding will meet the preferable
    procedure criterion. Representative plaintiffs who do not share these common
    issues can be removed from the class proceeding.

[133]

I note in this regard that at para. 340 of his reasons on
    certification, the motions judge observed that a representative plaintiff must
    have a viable claim in order to represent the class and that if the proposed
    representative plaintiffs claims are statute-barred, then he or she cannot be
    a representative plaintiff.

[134]

In
Stone v. Wellington County Board of Education
(1999),
    120 O.A.C. 296, 29 C.P.C. (4th) 320 (C.A.), leave to appeal refused, [1999]
    S.C.C.A. No. 336, this court observed, at para. 10, that [w]here a
    representative plaintiff, for reasons personal to that plaintiff, is
definitively
shown as having no claim
    because of the expiry of a limitation period, he or she cannot be said to be a
    member of the proposed class (emphasis added).

[135]

Here, the motions judge found that some of the representative
    plaintiffs breach of contract claims were not time-barred, a finding that the
    respondents dispute. The fact that some claims may potentially be time-barred
    does not prevent the plaintiffs from representing the class. In
Amyotrophic
    Lateral Sclerosis Society of Essex County v. Windsor (City)
, 2015 ONCA
    572, 387 D.L.R. (4th) 603, this court approved representative plaintiffs who
    had some claims that were timely and some that were presumptively time-barred.

[136]

As I explain below, the limitations issue should not have been
    resolved on summary judgment. In the particular circumstances of this case, the
    fact that some of the breach of contract claims of some of the representative
    plaintiffs may be wholly or partially time-barred, should not preclude them
    from representing the class. It has not been definitely shown that all the
    breach of contract claims of every representative plaintiff are time-barred.
    There is a reasonable likelihood they are not.

[137]

I would direct that the proceeding be remitted to the Superior Court
    of Justice for certification in accordance with these reasons and for such
    further directions as may be necessary.

[138]

I turn to the appeal and cross-appeal of the order on summary
    judgment.

(2)

Plaintiffs appeal of summary judgment

(a)

Overview

[139]

The proposed representative plaintiffs appeal the summary judgment
    order dismissing their misrepresentation claims and some of their breach of
    contract claims as time-barred.

[140]

The context is important.

Although the motions judge dismissed the certification motion, the
    seven putative representative plaintiffs were entitled to pursue their individual
    causes of action for misrepresentation, unless they were time-barred, as he
    found they were. They were also entitled to pursue their individual causes of
    action for breach of contract, which he found were only partially time-barred.
    Finally, they were entitled to pursue individual claims for deceit and breach
    of duty of good faith, which the motions judge found were not time-barred.

[141]

As I would affirm the motions judges decision not to certify the
    misrepresentation claims, the issue remains whether those individual claims
    should have been dismissed as time-barred on summary judgment. And, as I would
    allow the appeal in relation to some of the breach of contract common issues,
    the issue also remains whether the individual plaintiffs claims for breach of
    contract are wholly or partially outside the limitation period.

[142]

For the reasons
    that follow, I conclude that the motions judge erred in principle in granting
    summary judgment with respect to both the misrepresentation and breach of
    contract claims, as he failed to give consideration to important individual and
    contextual factors in his analysis of the limitation period issue.

(b)

The standard of review

[143]

Absent a palpable and overriding error in his
    assessment of the evidence, or an error of law, the exercise of the motions
    judges powers to grant summary judgment is entitled to deference. The palpable
    and overriding error standard typically applies to the question of whether a
    limitation period has expired. See:
Crombie Property Holdings
    Limited v. McColl-Frontenac Inc.
, 2017 ONCA 16, 406 D.L.R.
    (4th) 252, at para. 31, leave to appeal refused, [2017] S.C.C.A. No. 85.

(c)

The
Limitations Act, 2002

[144]

Section 4 of the
Limitations Act, 2002
, S.O. 2002, c. 24, Sch. B. states that, unless
    the Act otherwise provides, there is a two-year limitation period commencing from
    the day on which the claim was discovered.

[145]

Section 5 of the
    Act provides that:

(1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim
    first knew,

(i) that the injury,
    loss or damage had occurred,

(ii) that the injury,
    loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or
    omission was that of the person against whom the claim is made, and

(iv) that, having
    regard to the nature of the injury, loss or damage, a proceeding would be an
    appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the
    abilities and in the circumstances of the person with the claim first ought to
    have known of the matters referred to in clause (a).

(d)

The motions judges reasons

[146]

The motions judge set out the relevant law at paras. 383-390 of his
    reasons, which I condense, drawing liberally from his language and without
    reference to the authorities, as follows:

(a)

There is a statutory presumption, in s.
    5(2) of the
Limitations Act, 2002
, that unless the
    contrary is proven a claimant is presumed to have known the elements of his or
    her claim on the day the events of the claim occurred.

(b)

The plaintiff may
    attempt to rebut that presumption by tendering evidence that he or she both
    subjectively and objectively did not discover the claim until some later date.

(c)

Section 5(1) of the Act
    defines discovery in relation to "the day on which a reasonable person
    with the abilities and in the circumstances of the person with the claim first
    ought to have known of the matters referred to in clause (a)." The matters
    referred to in clause (a) include (i) the identity of the wrongdoer, (ii) his
    or her wrongdoing, and (iii) knowledge that litigation would be an appropriate
    means to seek a remedy for the wrongdoing.

(d)

The limitation period
    runs from when the prospective plaintiff has, or ought to have, knowledge of a
    potential claim and the question is whether the prospective plaintiff knows
    enough facts to base a cause of action against the defendant. If so, then the
    claim has been discovered, and the limitation period begins to run.

(e)

Thus, when a limitation
    period defence is raised, the onus is on the plaintiff to show that their claim
    is not statute-barred and that he or she behaved as a reasonable person would
    have in the same or similar circumstances using reasonable diligence in
    discovering the material facts.

(f)

The
    circumstance that a potential claimant may not appreciate the legal
    significance of the facts does not postpone the commencement of the limitation
    period if he or she knows or ought to know the existence of the material facts,
    which is to say the constituent elements of his or her cause of action. Error
    or ignorance of the law or legal consequences of the facts does not postpone
    the running of the limitation period.

[147]

It has not been suggested that the motions judge erred in his
    statement of these principles.

[148]

As the motions judge noted, the misrepresentations alleged by the
    plaintiffs varied, but they were made by MetLife sales agents around the time
    the policies were sold. All the plaintiffs subsequently received a copy of the
    policy. The policies contained standard exculpatory language about the limited
    authority of the sales agents. From time to time the plaintiffs also received
    notices to pay increased premiums and other information about the status of
    their insurance.

[149]

The motions judge stated, at para. 391 of his reasons, that the
    issue to be determined on summary judgment of the misrepresentation claims was
    when each of the plaintiffs discovered, or ought to have discovered, that what
    they had been told by a MetLife sales agent was untrue. He noted, at para. 386,
    that discovery is a fact-based analysis that depends on the particular cause of
    action and the subjective or objective knowledge of the material facts of the
    cause of action: referring to this courts decision in
Lawless v.
    Anderson
, 2011 ONCA 102, 276 O.A.C. 75, at paras. 22-23.

[150]

In view of what the motions judge described as an ample evidentiary
    record, he ignored the presumption in s. 5(2) of the
Limitations Act,
    2002
that the day on which a reasonable person ought
    first to have known of his or her claim is the day the act or omission occurred
     that is, the day on which the representation was made. On the facts of this
    case, when the representations were made before class members even received
    their policies, it could not possibly be said that the presumption applied.

[151]

In determining when each plaintiff knew or ought to have known that
    a misrepresentation had been made, the motions judge applied what he described
    as venerable law, that once an insurance policy is delivered to an insured, he
    or she is taken to have read the policy and accepted its terms. He referred in
    particular to
The Provident Savings Life Assurance Society of New
    York v. Mowat
(1902), 32 S.C.R. 147.

[152]

He qualified this principle by stating, at para. 398 of his reasons,
    that delivery of the policy would not start the running of the limitation
    period unless a reading of the policy or some other record or information
    disclosed to the insured would have disclosed a contradiction between the
    representation and the policy terms. He said that in this case a reading of the
    policies would have disclosed some or all of the plaintiffs misrepresentation
    claims, but not the breach of contract claims.

[153]

Applying
    these principles, the motions judge found that each individual plaintiffs
    claim for misrepresentation was time-barred. Each knew or ought to have known
    either that the terms of the policy were inconsistent with what was allegedly
    represented upon receiving their policy, or that the policy was not performing
    in the manner allegedly represented upon receiving further policy illustrations
    or other communications from the insurer over the following years.

[154]

To illustrate the motions judges reasoning, I will use two
    examples, quoting from his reasons.

[155]

First, in the case of the representative plaintiff Ms. Clark, the motions
    judge found, at paras. 438-442 of his reasons:

Ms. Clark received her Interest Plus policy in 1988. Had she
    read the policy, she would have appreciated that its terms were inconsistent
    with what had been represented to her. Nova Scotia's six-year limitation period
    began to run and it expired in October 1994.

In the alternative, Ms. Clark actually knew by 1999 that her
    Interest Plus policy was not performing in the manner represented to her. Under
    this alternative, the limitation period would have expired in 2005 long before
    she was added as a Plaintiff in 2013.

Ms. Clark received her Flexiplus policy in October 1994. Had
    she read the policy, she would have appreciated that its terms were
    inconsistent with what had been represented to her. British Columbia's two-year
    limitation period began to run and it expired in October 1996.

In the alternative, Ms. Clark knew or ought to have known that
    her Flexiplus policy was not performing in the manner represented to her when
    in December 2000 and again in September 2006, she received a letter explaining
    the terms of the Flexiplus policy and advising that her monthly insurance
    charge was increasing. Under this alternative, her misrepresentation claims
    with respect to the Flexiplus policy became statute-barred in 2002 or 2008 before
    she was added as a Plaintiff in 2013.

In the further alternative, Ms. Clark's Annual Policyholder
    Statements in October 2007 revealed that the Flexiplus policy was not
    performing as represented. A limitation period would begin to run to expire in
    October 2009 well before Ms. Clark was added as a Plaintiff in 2013.

[156]

In the case of Mr. Fehr, he found at paras. 450-453:

Mr. Fehr received his Universal Plus in November 1990 and his
    Flexiplus policy in March 1995. Upon the receipt of the policies, he could or
    should have known that their terms were inconsistent with what had been
    represented to him. Saskatchewan's six-year limitation period began to run, and
    it expired in November 1996 for the Universal Plus policy and March 2001 for
    the Flexiplus policy.

In the alternative, Mr. Fehr was advised in December 2000 and
    in October 2006 that his COI was increasing. When he paid a premium higher than
    his initial premium, he knew or ought to have known that his policy was not
    performing as represented to him. The then-applicable six-year limitation
    period in Saskatchewan would begin to run and expire in December 2006.

In the further alternative, Mr. Fehr made amendments to his
    policy in March 1996 and again in March 2003. Each policy amendment was a fresh
    occasion for Mr. Fehr to review his policy. Mr. Fehr knew or ought to have
    known that the policy was not as represented to him. The then-applicable
    six-year limitation period would begin to run and expire at the latest in March
    2009.

In my opinion, a trial is not necessary to determine that Mr.
    Fehr's misrepresentation claims are statute-barred.

[157]

To summarize, the motions judge found that the misrepresentation
    claims of all representative plaintiffs were time-barred because: (a) by virtue
    of
Provident Savings
, he or she was taken to
    have read the policy and accepted its terms; (b) on reading the policy, he or
    she would have appreciated that the terms were inconsistent with the alleged
    misrepresentations; and (c) further or in the alternative, as a result of
    subsequent events and communications from Sun Life, he or she would have
    realized that the policy was not performing as represented.

[158]

The motions judge did not enter into an analysis of the specific
    representations, communications, and context related to each of the plaintiffs
    claims in determining whether their individual claims were time-barred.

[159]

The motions judge rejected the submission that the doctrine of
    unconscionability or fraudulent concealment prevented Sun Life from relying on
    the limitation period defence. He also rejected the argument, based on
407
    ETR Concession Co. v. Day
, 2016 ONCA 709, 133 O.R. (3d)
    762, leave to appeal refused, [2016] S.C.C.A. No. 509, that the limitation
    period was postponed until such time as the plaintiffs were able to prosecute their
    claims on a class action basis.

[160]

As regards the plaintiffs claims for breach of contract, the
    motions judge found that the proper law governing the contracts was Ontario law
    and therefore the
Limitations Act, 2002
applied. He found the
plaintiffs with Flexiplus policies knew or ought to have known that
    they had a claim for breach of contract against Sun Life in 2001, when Sun Life
    implemented an increase in the COI, and again in 2006, when a second increase
    was implemented. Mr. O'Hara, the plaintiff with an Optimet policy, knew or
    ought to have known that he had a breach of contract claim in 2007 (the ninth
    year of the policy) when Sun Life increased his COI by ten percent.

[161]

With respect to the Flexiplus policy, he found that any breach of
    contract claims were statute-barred for the years 2001-2008, but not for the
    subsequent years. With respect to the Optimet policy, he found that any breach
    of contract claims were statute-barred for 2007 and 2008, but not for the
    subsequent years.

[162]

He found, at para. 479 of his reasons, that each monthly charge of
    an unlawful COI rate would constitute a discrete breach of an ongoing contract,
    with each repetition of the overcharge triggering the running of the limitation
    period. In other words, he found that a rolling limitation period applied to
    the breach of contract claims, such that breaches alleged within two years
    prior to the commencement of the action would not be statute-barred.

[163]

Finally, he found that the plaintiffs claims for good faith and
    rescission were not statute-barred and the maximum premium breach of contract
    claims were not statute-barred but were premature.

(e)

The parties submissions

[164]

The plaintiffs contend that the motions judge erred in relying on
Provident
    Savings
.
This reliance led him to apply a
    presumption about discoverability, when he instead should have determined when
    the plaintiffs had actual knowledge of their claims and when a person with the
    abilities and in the circumstances of the plaintiffs first ought to have known
    of the claims.

[165]

The
    plaintiffs also assert, with respect to the breach of contract claims, that the
    notices sent to the policyholders were not sufficient to enable them to
    discover a breach of contract. A reasonable person in the plaintiffs position,
    reading the notices, would have believed the insurer was entitled to make
    adjustments to the COI.

[166]

Sun
    Life, for its part, says that
Provident Savings
is good law and that,
    in any event, the plaintiffs received information during the life of their
    policies that contradicted the misrepresentations they now rely upon.
    Communications to policyholders clearly stated that the COI was being adjusted
    based on factors that the plaintiffs could have seen, by reading their
    policies, were not among the factors identified in the policies.

[167]

I
    turn first to summary judgment on the misrepresentation claims.

(f)

Did the motions judge err in granting summary
    judgment with respect to the misrepresentation claims?

[168]

While the motions judge identified alternative grounds on which to
    dismiss the plaintiffs misrepresentation claims as time-barred, he made errors
    in principle that, in my view, vitiate his decision. As a result, summary
    judgment should be set aside and the individual plaintiffs should be free to
    pursue their misrepresentation claims, if they choose. Sun Life will be
    entitled to raise limitation period defences applicable to each plaintiff in
    the course of that litigation.

[169]

The motions judge correctly observed that discoverability is a
    fact-based inquiry. It takes into account what a reasonable person with the
    abilities and in the circumstances of the person with the claim ought to have
    known about the matters described in s. 5(1)(a) of the
Limitations
    Act, 2002
. He cited this courts decision in
Lawless
    v. Anderson
, above, at paras. 22-23, which states:

The principle of discoverability provides that "a cause of
    action arises for the purposes of a limitation period when the material facts
    on which it is based have been discovered, or ought to have been discovered, by
    the plaintiff by the exercise of reasonable diligence. This principle conforms
    with the generally accepted definition of the term 'cause of action' - the fact
    or facts which give a person a right to judicial redress or relief against
    another":
Aguonie v. Galion Solid Waste Material Inc.
(1998), 38
    O.R. (3d) 161 (C.A.), at p. 170.

Determining whether a person has discovered a claim is a
    fact-based analysis. The question to be posed is whether the prospective
    plaintiff knows enough facts on which to base an allegation of negligence
    against the defendant. If the plaintiff does, then the claim has been
    "discovered", and the limitation begins to run: see
Soper v.
    Southcott
(1998), 39 O.R. (3d) 737 (C.A.) and
McSween v. Louis
(2000),
    132 O.A.C. 304 (C.A.).

[170]

In dismissing
    the motion for certification of the misrepresentation claim, the motions judge
    pointed to the idiosyncratic nature of the plaintiffs claims, which made them
    unsuitable for resolution as common issues. He stated, at para. 292 of his
    reasons, that the pre-contractual dealings between the plaintiffs and MetLifes
    agents were not uniform:

As demonstrated by the stories of each of the proposed
    Representative Plaintiffs, their experiences in purchasing insurance policies
    were not common or uniform experiences.
All the stories of the sales of the
    insurance policies are idiosyncratic
both from the perspective of the
    putative Representative Plaintiffs and from the perspective of the MetLife
    sales agents who sold the insurance policies. And some proposed Representative
    Plaintiffs dealt with more than one idiosyncratic sales agent who made
    different alleged misrepresentations. There are six alleged misrepresentations
    and
how these misrepresentations were actually expressed and heard by the
    policyholders is multifarious
. The alleged misrepresentations were made
    over the breadth of the class period, 13 years, by thousands of different sales
    agents who were not uniformly trained about four different policies some of
    which had revised standard forms over the course of their offering to the
    public. [Emphasis added.]

[171]

The motions
    judge found that the post-contractual dealings between the plaintiffs and Sun
    Life were also idiosyncratic, at para. 293:

Further, the proposed Representative Plaintiffs' subsequent
    dealings with Sun Life, from which dealings the deceit (fraudulent
    misrepresentation), breach of duty of good faith, and rescission claims are
    derived, are idiosyncratic, and these causes of action do not show commonality.

[172]

Finally, he
    noted in the same paragraph that the facts pertaining to Sun Lifes limitation
    period defences were not common but rather emerge from the personal histories
    of each Plaintiff and each putative Class Member.

[173]

However, when it
    came to assessing the limitation period defences applicable to the individual
    plaintiffs, the motions judge did not engage in a detailed examination of these
    idiosyncrasies. In particular, he did not consider the impact of each
    plaintiffs circumstances and experiences on the critical issue of when each
    plaintiff discovered his or her claim or knew or ought to have known of the
    requisite facts grounding their claim. He failed to engage in an individualized
    and contextual analysis, and, instead, applied a broad presumption as to when
    they ought to have known of certain alleged misrepresentations.

[174]

An
    individualized and contextual analysis was necessary in this case for the very
    reason that misrepresentation claims are not generally amenable to class
    actions: people receive, process, and act upon written and verbal statements in
    different ways. Their behaviour varies depending upon a variety of factors,
    including their own particular circumstances, what specific representations and
    information they received and from whom, how they understood or processed those
    representations and information, the extent to which they relied upon them, and
    their own wishes and intentions.

[175]

An
    individualized and contextual analysis was particularly important in this case
    because, among other things: (a) there is a relationship of vulnerability
    between insurer and insured; (b) many of the plaintiffs are unsophisticated with
    respect to the insurance industry; (c) the insurance policies are complicated
    and not easily understood; (d) misrepresentations were made to some consumers
    and not others; (e) some or all of these misrepresentations were made by
    individuals on whom the plaintiffs might reasonably rely; (f) there is no
    evidence that the insurer expressly corrected the misrepresentations; and (g)
    the insurer may have reinforced or made further misrepresentations, to some or
    all of the plaintiffs, during the life of the policies.

[176]

While the
    motions judge was prepared to take the plaintiffs claims at face value, he did
    not conduct the kind of granular analysis that was required in order to support
    his conclusion that they could each have discovered their claims by reading their
    policy or as a result of subsequent communications made to them by Sun Life or
    its predecessors.

[177]

I
n dismissing both the misrepresentation claims and portions of the
    breach of contract claims, the motions judge applied a presumption, based on
Provident
    Savings
, that once an insurance policy is delivered to an
    insured, the insured is taken to have read the policy and accepted its terms.
    He therefore concluded that the plaintiffs ought to have discovered the
    insurers misrepresentations when they received their insurance policies. This
    resulted in an analysis that was divorced from the plaintiffs individual
    circumstances and knowledge, which forms the heart of the discoverability
    analysis.

[178]

The factual and legal landscape of
Provident Savings
,
    a 1902 decision of the Supreme Court of Canada,
is far removed
    from this case. The jurisprudence in relation to the duties of insurers and
    their agents has evolved. Case law, such as the decision of this court in
Fines
    Flowers Ltd. et al. v. General Accident Assurance Co. of Canada
(1977), 17 O.R. (2d) 529, 81 D.L.R. (3d) 139, and the decision of
    the Supreme Court of Canada in
Fletcher v. Manitoba Public Insurance
    Co.
, [1990] 3 S.C.R. 191, 74 D.L.R. (4th) 636, has
    confirmed an obligation on sellers of insurance to provide accurate advice and
    information to their customers.

[179]

Further, Mr. Mowat, in
Provident Savings
, was quite unlike the plaintiffs in this case. He dealt directly
    with the insurers agent and the insurers general manager in negotiating the
    terms of his policy. He submitted an application for insurance and attached a
    slip or memorandum allegedly containing certain terms he wished to have
    included in the policy. One of these terms, he said, was that the premium was
    to be fixed for the life of the policy. When he received the policy, which
    included his application but not the memorandum or its terms, he pronounced
    himself satisfied and paid the premiums for seven years before raising any
    issue. In fact, the policy he received stated that the premium could be
    increased. When the company claimed the right to do so, Mr. Mowat objected. The
    Supreme Court held that he was bound by the terms of the policy.

[180]

Mr. Mowat was clearly a sophisticated insured. He insisted on terms
    he wanted included in the policy and when he received the policy he could have
    determined, had he read it, that those terms were not included. It was
    reasonable in the circumstances to hold him bound by the language of the
    policy.

[181]

It is in my view unrealistic to apply
Provident Savings
to a case in which the policy language was complicated, the
    plaintiffs were not sophisticated purchasers, and the insurer had made
    representations about what the policy language meant.

[182]

In addition to relying on a presumption based on
Provident
    Savings
, the motions judge relied on subsequent
    communications from the insurer to the plaintiffs, advising of increases in the
    COI. He found that the communications about the COI increases should have
    revealed to the plaintiffs the alleged misrepresentations with respect to those
    rates. In some of those communications, however, Sun Life represented that it
    had a right to make COI adjustments, a matter that is very much in issue in
    this proceeding.

[183]

The motions judge further relied on the actual or projected
    performance of the plaintiffs policies, at various times, to find that the
    plaintiffs discovered or ought to have discovered the misrepresentations
    claimed.

[184]

In my view, while these were relevant general considerations, the
    motions judge erred by failing to further consider the specific circumstances
    of each plaintiff and his or her dealings with the insurer or its agents. His
    analysis should have included consideration of, among other things:

·

the individual plaintiffs experience and
    sophistication in relation to insurance and financial matters;

·

the relationship between the plaintiff and
    MetLifes agent and the extent to which the plaintiff relied on the agent for
    advice before the policy was issued and during the life of the policy;

·

the representations made by MetLifes agent when
    the policy was sold and whether those representations were false;

·

whether the language of the policy, read through
    the lens of the plaintiffs circumstances and the representations made by the
    agent, was sufficient to disclose the truth to the plaintiff;

·

communications made by the insurer or the agent
    to the plaintiff after the policy was issued and whether those communications disclosed
    to the plaintiff the falsehood of the representations, reinforced them, or
    contained fresh misrepresentations; and

·

whether the representations made at the time the
    policy was sold affected or could have affected the plaintiffs understanding of
    subsequent communications from MetLife and Sun Life.

[185]

The analysis would also take into consideration the special relationship
    between the parties, which the motions judge himself acknowledged contained a
    duty of utmost good faith.

[186]

This relationship of particular vulnerability and corresponding duty
    of utmost good faith are contextual factors which should have been taken into
    consideration in the motions judges analysis of when, with reasonable
    diligence, the plaintiffs ought to have discovered the alleged
    misrepresentations, and the reasonableness of any reliance they placed on the
    initial or subsequent representations made by the insurer and its agents.

[187]

There was much to consider in this regard. As I have said, the
    policy language was impenetrable and confusing. It is not at all clear that the
    policy language plainly contradicted some of the representations allegedly
    made. There was evidence in the Indemnity Litigation that Sun Life knew or
    ought to have known that there had been misrepresentations in the sale of the
    policies, and that those misrepresentations were not corrected.

[188]

I agree with the plaintiffs that the motions judge failed to
    consider the objective aspect of the discoverability test in s. 5(1)(b) of the
Limitations
    Act, 2002
which asks
what a reasonable person

with the abilities and in the circumstances
    of the person with the claim ought to have known. In making his determination
    on the limitations issue, he failed to give due consideration to each
    plaintiffs abilities and circumstances.

[189]

For these reasons, it is my view that the motions judge erred in
    principle in granting summary judgment with respect to the misrepresentation
    claims. As such, I would allow the plaintiffs appeal with respect to these
    claims. The plaintiffs should be allowed to proceed with these claims in the
    course of individual litigation, without prejudice to Sun Lifes ability to
    raise any applicable limitation period defences in that context.

[190]

I turn to summary judgment in relation to the breach of contract
    claims.

(g)

Did the motions judge err in granting summary
    judgment with respect to the claims for breach of contract?

[191]

As noted in the discussion of the certification appeal, the
    representative plaintiffs who held Flexiplus and Optimet policies asserted that
    Sun Life, and its predecessor Clarica, breached the contracts by raising the
    COI on the basis of factors other than those set out in the policies. They made
    similar arguments with respect to the Administrative Fee  namely, that the fee
    was increased for reasons unrelated to the cost of administration of the
    policies.

[192]

Although the motions judge had not yet decided whether there was a
    basis in fact for the allegation of breach of contract  that issue having been
    deferred for the submission of further evidence and later disposed of in his
    continued reasons  he proceeded with summary judgment on the assumption that
    the increases made by Sun Life were in breach of contract.

[193]

He found that neither the delivery of the policies to the plaintiffs,
    nor of any earlier documentation before the notices of the COI increases, provided
    the plaintiffs with the necessary knowledge to trigger the running of the
    limitation periods. He held, however, as argued by Sun Life, that the plaintiffs
    with Flexiplus policies knew or ought to have known that they had claims for
    breach of contract in relation to both the COI and the Administrative Fee in
    2001 when Sun Life announced and implemented an increase in the COI, and when
    this occurred again in 2006. He held that Mr. OHara, who had an Optimet
    policy, knew or ought to have known that he had a breach of contract claim in
    2007, when his COI was increased by ten percent.

[194]

The motions judge therefore held that the breach of contract claims
    were statute-barred up to 2008, but not subsequent years thereafter.

[195]

The plaintiffs submit that they could not have known that they had a
    claim for breach of contract based on the letters they received announcing the
    increases in their COI rates and Administrative Fees. Sun Life argues, and the
    motions judge found, that the plaintiffs knew or ought to have known from these
    notices that they had a claim for breach of contract. In support of this
    assertion, Sun Life points out that the notices advised that the monthly
    insurance rates could increase or decrease based on a number of factors,
    including the number of claims received, policy year, interest earnings, taxes,
    and other expenses. These factors, however, were not among those listed in the
    policies.

[196]

In considering this issue, it is instructive to re-visit the
    evidence, set out above, concerning the relevant terms of the Flexiplus policy
    and the letter sent to the representative plaintiff Mr. Lucas, announcing the
    increase in the COI and explaining the reasons. That letter did not quote the
    full language of the policy. It simply said [y]our policy states: the monthly
    rate for the Cost of Insurance will be set by us from time to time. It is
    necessary to increase the costs of insurance to better reflect current interest
    rates. It
omitted
the
    wording in the policy itself which stated that the COI would be set from time
    to time, based on the primary Insureds sex, issue age, underwriting class,
    policy year and the Specified Face Amount of Insurance, an omission which the
    plaintiffs argue was misleading.

[197]

In my view, as with the misrepresentation claims, the issue of
    whether the individual plaintiffs knew or ought to have known the matters set
    out in s. 5(1)(a) of the
Limitations Act, 2002
with respect to the breach of contract claims required a much more
    individualized and contextual analysis. That analysis would have considered
    many of the matters I have referred to at para. 184, above. It would consider whether
    the individual plaintiff, or a reasonable person with his or her abilities and
    in his or her circumstances, would have understood, from reading the policy,
    how the COI would be adjusted and whether that was different from what was
    represented by the insurer. It would also consider whether any subsequent
    communications sent to the plaintiff by the insurer accurately described the
    basis of the adjustment and the insurers contractual entitlement to adjust the
    COI on that basis.

[198]

For example, as noted above with respect to the certification of
    common issue 10, a finding that Sun Life misrepresented how the policy operated
    or misrepresented its right to adjust the COI could well have influenced the
    motions judges assessment of when the breach of contract claim was discovered.

[199]

It also seems to me that an individual and contextual analysis of
    what each plaintiff knew or ought to have known would consider the content of
    the insurers communications in relation to the plaintiffs abilities and
    circumstances. An important consideration would be whether a reasonable person
    in the plaintiffs situation would have accepted Sun Lifes explanation of the
    increase (e.g. to reflect current interest rates) and relied upon Sun Lifes
    statement that it was entitled to make the adjustment, or if they would have
    examined their policy to determine whether Sun Lifes explanation was accurate
    and whether the increase was permitted. It was an error in principle for the
    motions judge not to consider these relevant contextual factors in his
    assessment of discoverability.

[200]

For these reasons, it is my view that the motions judge erred in
    granting summary judgment with respect to the breach of contract common issues.
    As with the individual claims for misrepresentation, a more thorough and
    contextual analysis was required to determine to what extent, if any, the individual
    plaintiffs claims for breach of contract were statute-barred.

[201]

I would allow the plaintiffs appeal with respect to summary
    judgment of the breach of contract claims. As I have found that these claims
    are suitable for certification, and that certain factual determinations on the
    common issues trial may impact the issue of discoverability in this case, it is
    appropriate that any limitations analysis with respect to the individual
    plaintiffs take place following completion of the common issues trial, should
    the plaintiffs succeed on the breach of contract common issues. Sun Life will
    be entitled to raise any applicable limitation period defences at that time.

(h)

Did the motions judge err in dismissing the
    maximum premium claim as premature?

[202]

As discussed above, in relation to the certification appeal, the
    owners of the Universal Plus, Flexiplus, and Optimet policies alleged that it
    would be a breach of contract for Sun Life to charge a premium in excess of the
    maximum premium and sought a declaration that the policy would be breached in
    that eventuality. There was significant overlap in the parties submissions on
    this issue across the two appeals.

[203]

With respect to the motion for summary judgment, relying on s.
    16(1)(a) of the
Limitations Act, 2002
,

the plaintiffs asserted
    that their claim for a declaration would not be subject to a limitation period.
    Section 16(1)(a) provides that there is no limitation period in respect of a
    proceeding for a declaration if no consequential relief is sought.

[204]

The motions judge observed that s. 16(1)(a) applies only where there
    is no claim for consequential relief in addition to the declaration. Since
    the plaintiffs sought damages for breach of the policies, he found there would
    be a limitation period applicable to the claim: see
Alberta
    Municipal Retired Police Officers Mutual Benefit Society v. Alberta
, 2010
    ABQB 458, 504 A.R. 41, at paras. 100-103.

[205]

However, he went on to find that the maximum premium breach of
    contract claim was not statute-barred, because the plaintiffs acknowledged that
    no one had ever been charged a premium in excess of the maximum. Rather, he
    said, the claim was premature. He therefore dismissed this claim because
    there was no evidence that this term of the contract had been breached.

[206]

Although the statement of claim sought damages for the alleged breach,
    in addition to a declaration, the plaintiffs acknowledged that no damages had
    yet been sustained and they were seeking prospective relief. It is inaccurate,
    therefore, to call the claim for declaratory relief premature. While no
    breach of contract had occurred, the plaintiffs reasonably apprehended that at
    some future date the contract would be breached when some policyholders were
    charged more than the maximum premium stated in their policies. That
    apprehension is based on Sun Lifes interpretation of the term maximum premium
    and the projections of when premiums would exceed that amount.

[207]

As stated in my reasons on the certification issue, this is a case
    in which declaratory relief would be appropriate. It fits within the scope of s.
    16(1)(a) of the
Limitations Act, 2002
.
Here,
    the claim for a declaration is not ancillary to a claim for damages that are
    barred by a limitation period. Rather, the claim requests a pronouncement on
    the legal rights of the parties, without any order for enforcement or
    execution. I rely on my analysis and the authorities cited above, in the
    certification reasons, in making this determination.

[208]

What the plaintiffs seek in this case is simply a determination of
    their rights, so that both parties can understand their positions and govern
    themselves accordingly. The claim for a declaration is not time-barred. Nor is
    it premature. I would therefore allow the plaintiffs appeal as it relates to
    the dismissal of this claim for declaratory relief.

(i)

The doctrine of unconscionability and
407
    ETR v. Day

[209]

As I have granted the plaintiffs appeal with respect to summary
    judgment on both the misrepresentation and breach of contract claims, without
    prejudice to Sun Life raising limitation period defences in the future, it is
    unnecessary to make a determination at this time with respect to the
    plaintiffs arguments on the doctrine of unconscionability or the application
    of
407 ETR v. Day
.

(j)

Sun Lifes appeal of summary judgment

[210]

As Sun Life is free to raise a limitations defence to both the
    misrepresentation and breach of contract claims in the future, I do not find it
    necessary to consider Sun Lifes appeal, with respect to the issues of when the
    breach of contract claims were first properly pleaded or the applicability of a
    rolling limitation period to such claims.

(k)

Limitation period common issues

[211]

I would add that, in my view and subject to the discretion of the
    common issues judge, the individual limitations issues pertaining to the breach
    of contract claims should be deferred until after the common issues trial. If
    the plaintiffs are unsuccessful on the breach of contract common issues, the
    operation of the limitation period becomes academic. If the plaintiffs succeed
    on the breach of contract common issues, individual trials may be necessary on
    limitations issues. There may, however, be some common issues of fact and law
    pertaining to the limitations issues that could be addressed as part of the
    common issues trial.

(3)

Costs

[212]

In the result of this appeal, success has been divided and it would
    not be appropriate to address the costs without further submissions. The
    parties shall be entitled to make submissions as to the costs arising from the
    proceedings below, and in this court. Those submissions shall be limited to 10
    pages in length, excluding the costs outlines. The plaintiffs shall deliver
    their submissions within 15 days of the release of these reasons and the
    defendant shall then have 15 days within which to respond. There shall be no
    reply submissions.

E.

Order

[213]

For these reasons, I would dismiss the plaintiffs appeal from the
    order dismissing their motion for certification with respect to the
    misrepresentation common issues (common issues 3, 4, and 5) and allow the
    appeal with respect to the breach of contract common issues (common issues 6,
    7, and 8), as well as common issue 1 and common issue 10 as it relates to the applicability
    of the doctrine of fraudulent concealment to counter Sun Lifes limitation
    period defenses. I would certify the class action with respect to those common
    issues. I would allow the plaintiffs appeal from summary judgment. I would
    direct that, if necessary, the issues relating to the applicable limitation
    periods for the breach of contract claims be tried after the common issues
    trial.

Released: G.R.S.  SEP 05 2018

George R. Strathy
    C.J.O.

I agree. C.W.
    Hourigan J.A.

I agree. B.W. Miller
    J.A.

Appendix

Common
    Issues

1.

Is Sun Life
    liable for any wrongful conduct of MetLife, Mutual, and Clarica?

2.

Is Sun Life
    estopped or precluded from denying the assertions it made and the positions it
    took in the indemnification litigation against MetLife?

3.

Did MetLife owe
    Class Members a duty of care when selling the policies?

4.

Did MetLife,
    through its agents and employees, engage in and condone a pattern and repeated
    practice of misrepresenting and failing to accurately describe to its
    policyholders the nature, provisions, financial elements and benefits of the
    relevant policies sold by it?

(a) Interest
    Plus lifetime-coverage misrepresentation

(b) Universal
    Plus, Flexiplus, and Optimet "Maximum Premium" misrepresentation

(c) Flexiplus
    level Cost of Insurance misrepresentation

(d) Optimet
    Cost of Insurance and Administrative Fees not disclosed for year nine and
    onward

(e) Misleading
    illustrations and vanishing premiums

5.

Were the
    misrepresentations made negligently?

6.

Was it an
    express or implied term of the policies that the COI rate may be adjusted based
    on specified factors? If so, did Sun Life breach this term by basing increases,
    in whole or in part, on other factors?

7.

Was it an
    express or implied term of the policies that Administrative Fees may be
    adjusted based on factors related to the cost of administering the policies? If
    so, did Sun Life breach this term by basing increases, in whole or in part, on
    other factors?

8.

Was it an
    express or implied term of Universal Plus, Flexiplus and Optimet policies that
    the "Maximum Premium" set out in the policies was the highest amount
    of premium that the policyholder would ever be required to pay for the policy
    in any year, in order to prevent lapse of the policy? If so, did Sun Life
    breach this term by charging any Class Members in excess of the Maximum
    Premium?

9.

Did Sun Life owe
    the Class Members a duty of good faith and fair dealing in administering the
    Policies? If so, did the Defendant breach that duty and in what way?

10.

Did Sun Life administer the
    policies in a deceitful and fraudulent manner, including by engaging in
    fraudulent concealment, or in a manner that violated section 439 of the
Insurance
    Act
, S.O. 1990, c. I.8 (prohibiting unfair and deceptive practices)?

11.

Are releases obtained by the
    Defendant from Class Members subject to rescission?

12.

If the Defendant is found liable
    on any claims asserted by Class Members, what types of damages and/or equitable
    remedies are the Class Members entitled to receive: (a) compensatory, reliance,
    or expectation damages; (b) rectification (provide policy benefits as
    represented to Class Members); (c) restitution (return amounts improperly
    charged to Class Members); (d) disgorgement (allocate profits related to the
    misconduct to Class Members)?

13.

How should recoveries under each
    type of remedy be measured?

14.

If the measure of any type of
    remedy is aggregate, what is the aggregate amount and how should it be applied
    to the Class Members?

15.

Should the Defendant be required
    to pay punitive or exemplary damages?

[1]

For ease of reference, as there is both an appeal and a
    cross-appeal in this matter, I will refer to the appellants Fehr
et al
. as the
    plaintiffs and to the respondent as Sun Life or the defendant.

[2]

A list of all the proposed common
issues
is attached as an appendix to these reasons. The proposed common
    issues are reproduced as they appeared in the motions judges reasons: 2015
    ONSC 6931, at para. 289.

[3]
The policies, and the years in which they were sold are: (1) Interest Plus
    (1985-1998); (2) Universal Plus (1987-1998); (3) Flexiplus (1992-1998); and (4)
    Optimet (1998).

[4]
Sun Life gave notice of an increase of the COI in the Flexiplus policies in
    2001, 2006 and 2015. Sun Life increased the COI in the Optimet policy by 10% in
    2007 for the balance of the term of the contract.

[5]
In 2006, Sun Life implemented an Under-Funded Life Policies Replacement
    Program, offering to provide permanent life insurance policies to certain
    Universal Plus and Interest Plus policyholders whose policies were underfunded
    and at risk of lapse. In 2008, Sun Life created the Flexiplus Options
    Program. To qualify for the program, an applicant was required to supply
    written evidence of misrepresentation by a MetLife agent at the time of sale.
    If the application was accepted, the policyholder was required to sign a
    release, forgoing the option to resolve their claim through litigation. In
    2009, Sun Life launched an Interest Plus Extension of Coverage Offer, which
    offered to extend coverage from the age of 90 to lifetime coverage for an
    increased premium or a reduction in face value of the policy.

[6]

Was it an express or implied term of the policies that the
    COI rate may be adjusted based on specified factors? If so, did Sun Life breach
    this term by basing increases, in whole or in part, on other factors?

[7]

As the motions judge observed in his continued reasons, 2016
    ONSC 7659, at paras. 33 and 40, not all policyholders received COI adjustments.
    Moreover, depending on the cohort, some received increases in the COI and
    others received decreases. Nevertheless, the method of calculation was common
    across the class.

[8]

Was it an express or implied term of the policies that
    Administrative Fees may be adjusted based on factors related to the cost of
    administering the policies? If so, did Sun Life breach this term by basing
    increases, in whole or in part, on other factors?

[9]

Was it an express or implied term of Universal Plus,
    Flexiplus and Optimet policies that the Maximum Premium set out in the
    policies was the highest amount of premium that the policyholder would ever be
    required to pay for the policy in any year, in order to prevent lapse of the
    policy? If so, did Sun Life breach this term by charging any Class Members in
    excess of the Maximum Premium?