QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2018 SKQB 90 Date: 2018 03 16 Docket: QBG 1576 of 2017 Judicial Centre: Saskatoon BETWEEN: THE EMPIRE LIFE INSURANCE COMPANY and THE AGRICULTURAL CREDIT CORPORATION OF SASKATCHEWAN RESPONDENT Docket: QBG 1318 of 2017 Judicial Centre: Saskatoon BETWEEN: THE AGRICULTURAL CREDIT CORPORATION OF SASKATCHEWAN and EMPIRE LIFE INSURANCE COMPANY Counsel: Sharilyn C. Nagina for Empire Life Insurance Company Randall T. Klein for the Agricultural Credit Corporation of Saskatchewan DECISION AND DIRECTIONS SCHERMAN J. March 16, 2018 Introduction [1] The ultimate issue in these proceedings is who is entitled to certain insurance premium surpluses totalling $3,552,881.00 as of October 31, 2016 plus interest accrued since. These surpluses were generated between September 1, 1990 when Empire Life Insurance Company [Empire Life] issued the subject Group Life Insurance Policy No. G-6253 [Policy] to Agricultural Credit Corporation of Saskatchewan [Ag Credit] and January 1, 2015 when Ag Credit terminated the Policy. [2] Empire Life is in possession of the surpluses. It claims no interest in the funds but is concerned that the claim of Ag Credit to these funds is not clear and that the rights to refund of such surpluses may belong to individual borrowers of Ag Credit whose lives were insured over the years under the Policy and whom it views as having paid the premiums resulting in the surplus. Thus it seeks to interplead, pay the monies into court and have the Court give directions as to how the determination of ownership will be decided including what persons will be given notice of the proceedings. [3] number of preliminary issues fall to be decided under the Originating Application of Empire Life. In its application Empire Life asks the Court for various relief including:a. An interpleader order permitting it to pay the surpluses into court; b. An order releasing it from any further participation in the proceedings upon payment into court or in the alternative directing that it is entitled to payment of its current and future costs associated with the interpleader proceedings; c. An order releasing it from any liabilities arising from the accumulation and administration of the surplus or from paying it into court or as directed by the Court; and d. Directions as to what other parties are entitled to notice of their or other applications and as to how those other parties’ interests are to be represented or dealt with. [4] In its application Ag Credit takes the positions that:a. The funds paid as premiums were Crown funds and thus any surpluses are the property of the Crown and properly payable to it as the Crown’s agent;b. Since no other person has a competing interest to Ag Credit’s right and title, the interpleader order sought by Empire Life is unnecessary; c. The surpluses can and should be paid to it without the necessity of any interpleader order or any directions as to the involvement of or representation of other persons. [5] Ag Credit would have the Court determine, on this application, that it alone is entitled to payment of the funds in question. It argues that if in fact other parties do have claim to some or all of these funds, those individuals would remain entitled to advance their claims directly against it. Background Facts [6] In the course of providing loans to various agricultural producers Ag Credit (and predecessor “FarmStart”) had made arrangements with Empire Life (or predecessor insurer) to provide group life insurance for its borrowers. The purpose was to ensure that outstanding loans were paid in the event of borrowers’ deaths. While Ag Credit says it paid the total annual premiums to Empire Life with its funds and thus takes the position that the surplus is its property, the evidence available to me leads me to the conclusion that it collected, or was entitled to collect, each borrower’s respective premium amount from them either before or after paying the premiums. [7] The Empire Life form of policy in evidence before me makes it clear that Empire Life was making group life insurance available to Ag Credit clients or borrowers for amounts equal to the total of their loans and forgivable grants. Clause of the Policy stipulates that it is the clients who become insured upon making qualifying application. The borrowers are the insured parties and the beneficiary of the insurance is Ag Credit to the extent of the borrower’s indebtedness. The Policy provides in clause that: If, on the death of Client, the amount of insurance exceeds the amount owing by the Client to the Corporation, the Corporation shall pay such excess to the Client’s estate. [8] Clause 15 sets forth an annual premium per $1,000 of loan that varies with the age of the clients. The policy repeatedly speaks of the premium payable by the client or borrower. This same clause states that: The Insurance Company shall not be required to accept payment of any premium otherwise than from the Corporation. All premiums collected from the Client by the Corporation shall be promptly remitted to the Insurance Company. [9] The Empire Life policy and predecessor polices contained provisions for so-called “Experience Credits”. While the following statement is simplistic summary, it is sufficient to set the stage for the decisions made herein. Empire Life was in effect administering group life insurance program for Ag Credit, under which various permitted “charges” were made against the premiums paid, including: a. All death benefits paid; b. Charges for disability benefits provided, taxes paid in respect of premiums paid; and c. An administration fee to Empire Life and various contingency reserve charges. The excess of premiums paid over such charges were designated as “Experience Credits” and/or various categories of “Reserves” under the Policy. It is these Experience Credits and Reserves which have generated the above-noted surplus. In other words, the premiums paid have over the life of the policy generated surplus over and above the payout of benefits under the policy and the charges or costs of administering the group life insurance program. [10] The program stipulated form of application for creditor group life insurance under which each borrower made an individual application for creditor insurance under the group policy. This application form provided for an annual premium dependent on the amount of the insurance, that the insurance would terminate on the failure to pay the premium, for waiver of premium in the event of disability and for refund of unearned premiums in the event of termination by the creditor. [11] While various of the borrowers may have defaulted in payment of loan obligations and/or related insurance premiums and Ag Credit may have chosen to nonetheless pay the premiums on their behalf, the evidence available to me provides me with no details regarding the extent to which this occurred. Clause 17 of the Policy provides: The Corporation shall advise the Insurance Company in writing of any Client who has not made payments as required by the Corporation. Such loan shall remain insured provided the premiums for such loans are paid by the Corporation as due. The only logical conclusion can reach at this stage is that for the most part the individual borrowers paid the premiums applicable to them by paying those amounts to Ag Credit who in turn remitted premium payments to Empire Life. [12] The surplus of $3,552,881.00 as of October 31, 2016, plus interest accrued since, originated from accounts designated “Experience Credit Account”, “Claims Fluctuation Reserve” and “Unearned Premium Reserve”. The amounts so generated have been transferred to two separate Experience Credit Accounts totalling the above-noted surplus. [13] The Policy provisions with respect to these reserves or accounts are as follows: a. Regarding the Experience Credit Account clause 23 provides, inter alia: 23. EXPERIENCE RATING Ninety days after the end of each Policy Year the Insurance Company shall calculate the charges as set out in Section 24 of this Policy. An Experience Credit shall be calculated for each month of the policy year. On the last day of each month the Experience Credit shall be the difference between premiums paid and all charges incurred during the month. Each such premium or charge shall also include any interest earned from the date the transaction occurs to the last day of the month. Interest will be earned at rate as defined in Section 25. The Insurance Company shall establish an Experience Credit Account on behalf of the Corporation. After transferring the amounts required under Section 25 of this Policy to the Claims Fluctuation Reserve the balance, if any, shall be credited to the Experience Credit Account. Any amounts allocated to this account shall be deemed to be credited on the last day of the month. In no event will the Experience Credit Account have negative balance. The Claims Fluctuation Reserve will be debited by such an amount as necessary for the Experience Credit Account to have zero balance. Interest shall be credited to amounts left on deposit in the Experience Credit Account for each full day that such amounts remain in the account. Interest on the Claims Fluctuation Reserve and the Unearned Premium Reserve shall be earned for each day in the month. Clause 23 is silent with respect to the disbursement of funds remaining in this account at Policy Termination. b. Regarding the Claims Fluctuation Reserve Clause 25 provides: 25. CLAIMS FLUCTUATION RESERVE At the end of each month the Insurance Company shall transfer the Experience Credit to the Claims Fluctuation Reserve (hereinafter called the Reserve) along with any interest earned on the Reserve and the Unearned Premium Reserve until the Reserve attains the Maximum Amount. Upon attainment of the Maximum Amount such funds, or portions thereof, shall be credited to the Experience Credit Account. The interest rate applied in respect of any such day shall be based on 95% of the 90 Day Treasury Bill Rate in effect at the end of the previous month. The maximum amount to be held in reserve is $150,000.00 Should this policy be cancelled any credit balance in the Reserve, less any reasonable charges for expenses incurred in the cancellation, shall be refunded to the Corporation, once it has been established that all claims have been reported. The Corporation shall use such refund to reduce future premiums payable by the Client. After the Insurance Company has refunded the credit balance in the Reserve after the cancellation of this policy, no further claims are payable by the Insurance Company. c. Regarding the Unearned Premium Reserve (referenced in Clause 23) under the heading Charges at Clause 24 g. the Policy states as follows: g. The increase in the Unearned Premium Reserve for the Policy Year where the Unearned Premium Reserve is defined as the aggregate of the unearned portion of the premium remitted on behalf of each Client. The unearned portion of any Client’s premium at any point in time is the prorata share of such premium from that point in time until the next premium due date for such Client. Clause 24 g. is silent with respect to the disbursement of funds remaining in this reserve at Policy termination. [14] During the initial years of the Policy, section of the Superintendents’ Guidelines governing group insurance provided as follows: “8. In the case of contract of creditors group insurance where specific charge is levied against the debtor to pay the whole or part of the cost of the insurance: (a) experience refunds or dividends shall not be directly or indirectly paid or allowed unless the experience refund or dividend, (i) is paid to the debtor; or (ii) is applied to stabilize premiums under the contract; or (iii) is retained by the Insurer to stabilize future premiums for similar type contracts.” [15] The Superintendents’ Guidelines were replaced by the Canadian Life and Health Insurance Association Inc.’s Creditor’s Group Insurance Guideline (the “CLHIA Creditor’s Group Guideline”) in March 1993. The CLHIA Creditor’s Group Guideline (as amended in September 2003 and June 2009) do not address any restrictions with respect to the disbursement of any accumulated reserve. [16] Given the absence of clear direction in the Policy and any legislation or Superintendent of Insurance Guidelines, Ag Credit and Empire Life had extended discussions about how to deal with surplus. In November 26, 2014 letter of Ag Credit to Empire Life, Ag Credit stated inter alia, the following: ACS has now received legal opinion through an outside legal firm that the surplus belongs to those that contributed to the surplus over time less any costs incurred (ie. legal fees etc.). Two potential distribution options were identified i) pro rata option or ii) lump sum option. ACS feels that distributing under the Pro Rata Option is the fairest option as Clients who contributed higher amount of premiums would receive correspondingly greater share in the surplus. ACS has compiled the data from 1988 to present and is prepared to distribute any remaining surplus to the approximate 6,000 Clients on pro rata basis, with an individual Client’s share being based on his or her respective contribution towards the accumulation of the surplus. ACS would also be entitled to receive, on pro rata basis, any life insurance premiums that were written off as these premiums were remitted to Empire Life on the Clients behalf. [17] Subsequently Ag Credit changed its mind as to how to deal with the surplus and has assumed its present position that its clients have no interest in the surpluses and says the surpluses are the property of the Crown and should be paid directly to it. Empire Life’s position is that it holds the surpluses in trust for those entitled to the same and that there is significant uncertainty as to who is entitled to participate in the surplus. Thus it seeks to pay the monies into court and have the Court give directions as to process under which decision will be made as to who is entitled to the surpluses. Analysis of Ag Credit’s peremptory position that the surplus is the property of the Crown and thus there is no need for an interpleader. [18] am unable to conclude, at this stage of the proceedings, that Ag Credit owns the surplus and is entitled to an order that the surplus funds be paid to it. Indeed, find it somewhat disconcerting that Ag Credit would now take the position that the surplus is its property and the Court should order the funds be paid to it without consideration of the potential claims of the insured individuals. [19] In November of 2014 Ag Credit was clearly proposing to Empire Life that the surplus be distributed, on pro rata basis, to the approximate 6,000 of their clients who had paid the insurance premiums. This proposal must have been made based on then held view that the surplus belonged to those clients as opposed to Ag Credit. [20] Ag Credit has not shared with the Court the legal opinion it was relying on when it made its November 2014 proposal. do not need to know the details of such opinion to infer that it is probable that legal opinion reasoned that if the clients paid more premiums than necessary to fund the insurance they were purchasing, then in the absence of clear contractual language providing otherwise, they had claim to their overpayment of premiums or the surplus. [21] Ag Credit now attempts to finesse what is clearly an arguable case that the surplus belongs to the clients with the proposition that since the Crown in right of Saskatchewan, via its agent Ag Credit, paid the insurance premiums to Empire Life with Crown funds, that the surplus has always been and remains the property of the Crown. This proposition or argument has the following logical flaws: a. The premise that the Crown paid the insurance premiums to Empire Life is not founded in fact and to so state is distortion of the true nature and effect of what occurred. It may be literally correct to say the Crown paid the insurance premiums to Empire Life; but the monies it was paying to Empire Life were either first collected by Ag Credit from its clients (and thus what was being paid was in reality the clients’ money) or were being paid by Ag Credit for and on behalf of the clients who were obligated to reimburse Ag Credit for this payment made on their behalf; b. Ag Credit argues that it was not fiduciary to its clients and the relationship was simply one of debtor/creditor. While the overall relationship was one of debtor/creditor, it is clearly arguable that to the extent Ag Credit collected monies from the clients for the purposes of paying their insurance premiums, Ag Credit had fiduciary duty to do precisely that; c. The fact that s. 4(4) of The Agricultural Credit Corporation of Saskatchewan Act, SS 1983-84, A-8.1, provides: (4) All real or personal property and all money acquired, administered, possessed or received by the corporation is the property of the Crown and is, for all purposes, including taxation of whatever nature and description, deemed to be the property of the Crown. should not be interpreted as making monies it receives, either in trust or pursuant to specific contractual obligation, to use for the benefit of the client, property of the Crown. This section was never intended to deem property of third parties received by Ag Credit as property of the Crown, without duty to account back to the rightful owner. Such an interpretation would be contrary to the spirit and intent of the Act generally and quite simply not plausible interpretation to be given to the section given the purpose of the legislation. d. Ag Credit argues that because “public money” is defined in The Financial Administration Act 1993, SS 1993, F-13.4, as being: (p) “public money” means money: (i) belonging to the Government of Saskatchewan; or (ii) held by the Government of Saskatchewan or an employee or officer of the Government of Saskatchewan for the benefit of or in trust for any government or any person; any monies it held in trust to pay the premiums was public money and thus the resulting surplus is public money. In my opinion this definition does not assist Ag Credit’s reasoning. This definition applies within the confines of that Act. The phrase “public money” is not found within Ag Credit’s Act. The argument that since by definition any monies received by Ag Credit are “public money” within the meaning of The Financial Administration Act, 1993, they are also therefore “public money” under Ag Credit’s Act and thus Crown property for the present purposes is non-sequitur. [22] am not satisfied on any of the arguments advanced by Ag Credit that it paid the premiums with its own money and thus any overpayment of premiums or surpluses arising under the contract are its property. Ag Credit is entitled to take the position that when all factors are considered it has valid claim to the surplus by virtue of the language of the Policy. But equally am satisfied there is good arguable case that the insured clients of Ag Credit may be the persons entitled to the return of some or all of the surpluses arising under the Policy. Thus, what have categorized as Ag Credit’s peremptory reasons for claiming entitlement to the surpluses fails, the evidence before me satisfies me, consistent with the concerns of Empire Life, that the insured parties under the Policy may be the persons entitled to the return of the surplus premiums paid. [23] Counsel for Ag Credit says that should dismiss Ag Credit’s peremptory basis claims to the surplus; then the determination as to whether Ag Credit or its insured clients are entitled to the participation in the surplus is an exercise to be determined by interpretation of the language of the policies. See for example the decision in Dolansky L’Association des chirurgiens-dentistes du Québec (1994), 1994 CanLII 1311 (ON CA), 17 OR (3d) 817 (Ont CA). He acknowledges there are limited judicial decisions dealing with entitlement to surplus funds under an insurance policy and that none of the reported decisions deal directly with the issue here confronted. Since the matter appears to be primarily an interpretative exercise, it is important that the Court have the assistance of counsel advancing the arguments available to the insured clients. [24] Without limiting the scope of arguments that will ultimately be advanced by any party, I have decided, for the reasons outlined below, that I will be appointing a representative party to advance the case and interests of the insured clients class. The Interpleader Application [25] Given my conclusion that insured clients under the Policy have an arguable claim to the surpluses in question and since Ag Credit maintains its claim to these same funds, this is an appropriate case to grant interpleader relief under Rule 6‑75 of The Queen’s Bench Rules. Empire Life has satisfied me, as required by Rule 6-76, that a. It claims no interest in the subject matter in dispute, other than for charges or costs; b. It does not collude with any of the claimants. am of the opinion that Empire Life has acted in full compliance with its duty of uberrima fides in bringing the potentially valid claims of the insured clients to the attention of the Court and in resisting the claim of Ag Credit to pay the monies direct to it; and c. Empire Life is willing to pay the monies into court or as the Court directs. [26] It should also be noted that s. 254(1) of The Saskatchewan Insurance Act, RSS 1978, S-26, provides as follows: 254(1) Where the insurer admits liability for the insurance money or any part thereof, and it appears to the insurer that: (a) there are adverse claimants; or (b) the whereabouts of the person entitled is unknown; or (c) there is no person capable of giving or authorized to give valid discharge therefor who is willing to do so; the insurer may apply ex parte to the court for an order for payment of money into court, and the court may upon such notice, if any, as it deems necessary, make an order accordingly. Under this provision similarly have the power to order payment of the monies into court and make appropriate orders as to notice and procedure to deal with adverse claims. [27] Given the directions will be providing below, chose not to make an order providing interpleader relief without hearing further from both Empire Life and Ag Credit. It occurs to me that these parties may conclude that it is in the interests of all parties that the funds actually remain in the hands of Empire Life, with the potential of continuing to earn interest, rather than be placed on deposit with the Court while this matter proceeds forward to final decision. ask that these parties consult and advise me whether they are able to agree on an appropriate form of interpleader relief order. If they are not able to agree, either party may bring the matter back before me for decision. Directions as to how the Matter will Proceed [28] While interpleader relief is appropriate, the appropriate form and nature of additional relief or direction is not immediately apparent. At this stage the competing claims to surpluses are on the one hand Ag Credit and on the other hand class of some 6,000 potential claimants, none of whom have been given notice of the interpleader application or of Ag Credit’s application. In its submissions to the Court Empire Life suggests that the stakeholders that may have an interest in the surplus include, in addition to Ag Credit, the following: 55. Based on the terms of the Policy, Empire Life submits that in addition to ACCS, other stakeholders that may have an interest in the Surplus include: (a) The current Clients at the time of Policy termination; (b) Those Clients who are still alive and who paid premiums over time, which resulted in the accumulated Surplus; (c) The estates of those Clients who paid premiums over time which resulted in the accumulation of the Surplus; and (d) Those Clients who received premium holidays as result of the Surplus, having their premiums covered through the allocation of funds through the Surplus. [29] If each of the some 6,000 insured clients are found to be entitled to each receive per capita proportion of the $3,552,881.00 surplus, the individual entitlement would be in the order of $592.00. It is obvious that the costs of litigating the issue of entitlement could be significant and may well substantially reduce potential recovery. The class of some 6,000 insured persons will not necessarily have identical interests or claims. Various subordinate entitlement issues have been identified as including the following: 56. Empire Life submits that additional entitlement issues include: (a) Does the Surplus revert only to ACCS to be utilized as it deems fit, including reverting the funds to General Revenues for the Province of Saskatchewan? (b) Does the Surplus revert to Clients who paid the premiums that resulted in the Surplus? (c) If the Surplus reverts to the Clients who paid the premiums, do they receive interest on their portion of the Surplus or are they treated the same as those Clients whose payments were more current? (d) If the Surplus reverts to the Clients, is the Surplus distributed on pro-rated basis without adjustment for the time over which their contributions were held? (interest and inflation adjustment) (e) If the Surplus reverts to the Clients, do the Clients who got premium holiday share in pro-rated or other basis in the Surplus? (f) If the Surplus reverts to the Clients, is there to be differentiation between Clients who are still alive and where there is an Estate? (g) If the Surplus reverts to the Clients, should there be minimum payment threshold before Client or an Estate of Client is entitled to participate? (h) If the Surplus reverts to the Clients, does it go to current Clients as at the time of termination of the Policy, or should it be distributed on pro-rata basis to all Clients who have ever been insured under the Policy and the Original Policy? (i) Do Clients covered by certificates issued under the Original Policy benefit from any Surplus? (j) Should the distribution of the Surpluses contained in each of the reserve funds be treated the same? (k) If ACCS has advanced premiums on behalf of Clients and not been reimbursed, is ACCS entitled to reimbursement of premiums it advanced on behalf of Clients? [30] While have concluded that the insured clients’ class needs to participate in assisting the Court in determining whether Ag Credit or they as class are entitled to receive the surplus, the economic realities of the litigation necessarily involved needs to be recognized. In this respect have regard to the following: Rule 1-3 of The Queen’s Bench Rules: 1-3(1) The purpose of these rules is to provide means by which claims can be justly resolved in or by court process in timely and cost effective way. (2) In particular, these rules are intended to be used: (a) to identify the real issues in dispute; (b) to facilitate the quickest means of resolving claim at the least expense; (c) to encourage the parties to resolve the claim themselves, by agreement, with or without assistance, as early in the process as is practicable; (d) to oblige the parties to communicate honestly, openly and in timely way; and (e) to provide an effective, efficient and credible system of remedies and sanctions to enforce these rules and orders and judgments. (3) To achieve the purpose and intention of these rules, the parties shall, jointly and individually during an action: (a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense; (b) periodically evaluate dispute resolution process alternatives to full trial, with or without assistance from the Court; (c) refrain from filing applications or taking proceedings that do not further the purpose and intention of these rules; and (d) when using publicly funded Court resources, use them effectively. (4) Resolving claim justly in timely and cost effective way includes, so far as is practicable, conducting the proceeding in ways that are proportionate to: (a) the amount involved in the proceeding; (b) the importance of the issues in dispute; and (c) the complexity of the proceeding. Section 27 of The Queen’s Bench Act, 1998, SS 1998, Q-1.01: 27(1) Procedure in the court is to be in accordance with this Act and the rules of court. (2) Where, in particular case, procedure is not expressly provided for by this Act or the rules of court, the procedure to be followed is the procedure for similar circumstance or the procedure that judge, on an application made ex parte or on notice, directs. Rules 2-10, 2-11 and 2-13 of The Queen’s Bench Rules: 2-10(1) If numerous persons have common interest in the subject of an intended claim, one or more of those persons may make or be the subject of claim or may be authorized by the Court to defend on behalf of or for the benefit of all. (2) If certification order is obtained pursuant to The Class Actions Act, an action referred to in subrule (1) may be continued pursuant to that Act. 2-11(1) In this rule: “absent person” means person for whom representative is or may be appointed pursuant to this rule and includes an unborn person, an unascertained person, or person or member of class of persons who cannot readily be ascertained, found or served, who has present, future, contingent or unascertained interest in, or may be affected by, proceeding; («personne absente») “proceeding” means proceeding concerning: (a) the interpretation of: (i) deed, will, contract or other instrument; or (ii) an enactment, order in council or municipal bylaw or resolution; (b) the determination of question arising in the administration of an estate or trust; (c) the approval of sale, purchase, compromise or other transaction; (d) the approval of an arrangement pursuant to The Trustee Act, 2009; (e) the administration of the estate of deceased person; or (f) any other matter if the Court considers it necessary or desirable. (« instance») (2) In proceeding, the Court may appoint one or more persons to represent an absent person. (3) If an appointment is made pursuant to this rule, judgment in the proceeding is binding on an absent person represented pursuant to subrule (2), unless the Court, in the same or subsequent proceeding, orders otherwise. (4) The Court may approve settlement that it is satisfied is for the benefit of the represented or absent persons if, in proceeding: (a) settlement is proposed; and (b) either: (i) person is represented in the proceeding by person appointed pursuant to this rule who consents to the settlement; or (ii) some of the persons interested in the proceeding are not parties but to require service on them would cause undue expense and delay and there are other parties of the same interest who consent to the settlement. (5) If the settlement mentioned in subrule (4) is approved, it is binding on the absent persons but, in the same or subsequent proceeding, the Court may order that the absent person is not bound if the Court is satisfied that: (a) the order was obtained by fraud or non-disclosure of material facts; (b) the interests of the absent person were different from those represented at the hearing; or (c) for some other sufficient reason the order should be set aside. 2-13(1) The Court may order that person may, without becoming party to the proceeding, intervene in the proceeding as friend of the Court for the purpose of assisting the Court by way of argument or by presentation of evidence. (2) The Court may make an order pursuant to subrule (1) on any terms as to costs or otherwise that the Court may impose. [31] have concluded that have the jurisdiction to and should, at this point in the proceedings, appoint single representative to advance the position of the insured clients class as whole entity. The economic realities of fragmenting this class into subordinate classes or interest groups strongly militate against such course of action being pursued. If separate representation of the various permutations and combinations of potential interest groups occurred it is probable the resulting cost of so proceeding would largely consume the surplus funds. My present perspective is that the appropriate approach is for the Court to designate one person to represent the interests of the overall class of insured clients with the objective of achieving pro rata participation in the surplus. However, in so directing leave it open for an application or applications to be made in the future, on behalf of one or more subsets of the insured creditors, that they be treated as having distinct interest or claim. [32] have concluded that it is not appropriate or necessary for notice of the proceedings to be served on each of the some 6,000 insured clients at this stage of the proceeding. Rather, find this insured client class to be, within the meaning of Rule 2‑11(1) “a class of persons who cannot readily be ascertained, found or served, who has present, future, contingent or unascertained interest in” “proceeding” concerning the interpretation of contract or other instrument and such other matters in relation to the subject Policy that it is necessary or desirable representation order be made. This representative’s costs and expenses will be paid out of the surplus funds. [33] have concluded that, at least for the present, only one representative will be appointed and only that representative needs to be party to the proceedings. However, before appointing such representative am asking Empire Life and Ag Credit to arrange further hearing before me so that may have their input on whom it would be appropriate or inappropriate to designate as such representative. In addition, this hearing can also consider further specific directions that the parties may feel are appropriate or necessary. This hearing can be either in person or by telephone, should those parties agree on the latter. [34] Without limitation on their input, ask these parties to jointly consider as possible representative of the insured client class either the Superintendent of Insurance (see s. 3(1) of The Saskatchewan Insurance Act) or the lawyer who previously provided an opinion to Ag Credit that the insured clients were entitled to the surplus as appropriate representatives. While appreciate that Ag Credit may have concerns designating such lawyer as the representative, the knowledge base that this lawyer already has is significant financial incentive to appointing that individual. Empire Life’s Cost of Past and Future Involvement [35] In its application Empire Life sought: (a) Directions that Empire Life is entitled to payment of its current and future costs associated with the proceedings; (b) Releasing Empire Life from any further participation in the proceedings; and (c) Releasing Empire Life from any liabilities arising from the accumulation and administration of the surplus. [36] Given that have not yet made determination as to whether the surplus funds will be presently paid into court or potentially continue to be maintained and managed by Empire Life until the proceedings are concluded, it is premature for me to give such directions or make such orders. Given what have stated in paragraph 27 above, defer decisions on these matters until have had the input requested. Once have determined whether Empire Life will have any form of further participation in the proceedings will give directions as to the payment of its current and future costs associated with the proceedings, after hearing submissions of both parties on the matter. Further wish to hear submissions by the parties regarding whether or not it would be appropriate to make an order releasing Empire Life from any liabilities arising from the accumulation and administration of the surplus. Conclusion [37] The decisions I have made herein can be summarized as follows:a. I dismiss Ag Credit’s application for an order that the surplus funds be paid to it on the grounds I have categorized as peremptory basis claims;b. Empire Life is entitled to some form of interpleader relief in respect of the surplus funds;c. A representative will be appointed to represent the class of insured clients in the proceedings to determine whom as between Ag Credit and those clients is entitled to the surplus in question;d. In light of these decisions, I wish to hear further submissions from Ag Credit and Empire Life as to:i. Whether the surplus should be paid into court or can continue to be administered by Empire Life during the ensuing proceedings; ii. Who might be an appropriate representative to appoint for the insured clients as class; iii. What should be the entitlement of Empire Life to past and possible future costs; and iv. Whether Empire Life should, at this point, be released from any liabilities with respect to the accumulation and administration of the surplus. [38] Counsel may make arrangements for the further submissions requested through the Registrar. If either Ag Credit or Empire Life require any clarification of this decision and directions before arranging to make the further submissions, telephone conference call can be arranged through the Registrar’s office.
Civil Procedure – Queen’s Bench Rules, Rule 6-75 The applicant insurance company sought an order for interpleader pursuant to Queen’s Bench rule 6-75 regarding premium surpluses it held in the amount of $3,550,800 that were generated between 1990, when it issued a group life insurance policy to the respondent, Agricultural Credit Corporation (Ag Credit), and 2015, when Ag Credit terminated the policy. The applicant requested that the monies be paid into court and that directions be provided as to how the determination of ownership would be decided. Ag Credit took the position that the funds paid as premiums were Crown funds and thus any surpluses were the property of the Crown and properly payable to Ag Credit as its agent. It argued that the interpleader order was unnecessary. The purpose of the group life insurance was to ensure that outstanding loans made by Ag Credit to borrowers were paid in the event of the borrowers’ deaths. Individual borrowers paid the premiums applicable to them by paying those amounts to Ag Credit, who remitted the payments to the applicant. There was no clear direction regarding the surpluses in the policy or in the Superintendent of Insurance Guidelines or applicable legislation. HELD: The application was granted subject to the court hearing further submissions from both parties regarding such things as whether the surplus should be paid into court or left to be administered by the applicant during the proceedings. The court found that the insurance company was entitled to some form of interpleader relief and dismissed Ag Credit’s claim to the surplus. It ordered that a representative be appointed to represent the class of insured clients in the proceedings in order to determine who was entitled to the surplus.