Case snapshot
At a glance
- Case
- COVID Business Interruption Insurance Class Action Settled in Ontario
- Court / Tribunal
- Ontario Superior Court of Justice
- Citation
- 2026 ONSC 6021 ↗
- Date
- October 26, 2026
- Area of law
- Litigation Law
- Key issue
- Whether a proposed class action settlement against an insurer that denied business interruption coverage during COVID-19 compelled closures was fair, reasonable, and in the best interests of class members.
- Outcome
- The Ontario Superior Court approved the combined settlement of approximately $12.375 million across two class actions, along with class counsel fees, disbursements, representative plaintiff honoraria, and a distribution plan.
- Why it matters
- Ontario businesses that purchased insurance for compelled closures and were denied coverage during the pandemic may be entitled to share in a court-approved settlement fund.
Legal principle
The rule from this case
Under the Class Proceedings Act, 1992, a class action settlement does not bind class members unless a court approves it. The court must be satisfied that the settlement is fair, reasonable, and in the best interests of the class. In making that assessment, the court looks at factors including the likelihood of success at trial, the extent of discovery completed, the terms of the deal, the experience and recommendation of class counsel, the cost and duration of continued litigation, whether there were objections, and whether the negotiations were conducted at arm's length without collusion. Contingency fees in Ontario class actions up to 33% of the recovery are treated as presumptively valid. Where class counsel has taken on significant financial risk by funding disbursements throughout the litigation, and where no class members have objected to the fee request, a court will generally approve a fee within that range. Representative plaintiffs who invest substantial time and effort on behalf of all class members may also receive a modest honorarium from the settlement fund.
Important limits
What this does not mean
This settlement does not mean that every business that was denied insurance coverage during the COVID-19 pandemic is automatically entitled to compensation. Only businesses that fall within the certified class definitions in these two specific actions — and who participate in the approved claims process — may be eligible to share in the settlement funds. The settlement does not establish a general legal rule that insurers must pay all pandemic-related business interruption claims. The court's approval also does not reflect a finding that the insurer acted wrongfully. Settlement approval is a procedural step that confirms the deal is fair to class members; it is not a judgment on the merits of the underlying coverage dispute. The actions are dismissed with prejudice against the insurer as part of the settlement terms.
What Were These Class Actions About?
In McCallum v. Aviva Insurance Company of Canada, 2026 ONSC 6021 (CanLII), Justice Morgan of the Ontario Superior Court of Justice approved the settlement of two certified class actions against Aviva Insurance Company of Canada: the McCallum action and a companion action brought by the Royal Canadian Legion. Both actions related to Aviva’s denial of coverage for business closures compelled during the COVID-19 pandemic. As the court put it, the class members said they had been completely denied insurance coverage which they had purchased in the event of a compelled business closure. The claims were issued on June 8 and June 22, 2020, were certified as class proceedings, and had been set for a trial starting January 19, 2026, which was adjourned while the parties worked toward a settlement.
How Much Was the Settlement?
The total settlement across both actions is approximately $12.375 million. In the first action, the insurer agreed to pay $6,862,724.50 for the benefit of class members. In the second action, involving an organization and its members, the insurer agreed to pay $5,512,275.50. These amounts were negotiated through five days of mediation between June and August 2025 with the Honourable George Strathy as mediator, followed by further discussions and a settlement-focused pre-trial conference with Justice Black in December 2025. The parties signed the Settlement Agreement on July 2, 2026.
What Does a Court Look at When Approving a Class Action Settlement?
A class action settlement in Ontario is not binding on class members unless a court approves it — that requirement comes from section 29(2) of the Class Proceedings Act, 1992. The court must be satisfied the deal is fair, reasonable, and in the best interests of the class. Justice Morgan applied the factors set out in Mancinelli v Royal Bank of Canada, 2016 ONSC 6953, which include the likelihood of success at trial, the amount of investigation and discovery completed, the terms of the settlement, the recommendation of experienced counsel, the future cost and duration of the litigation, the number and nature of any objections, and whether the negotiations were conducted at arm’s length in good faith.
In this case, discoveries had been completed, the matter had been prepared for trial, and the negotiations involved an experienced mediator and a pre-trial judge. The objection deadline for both actions was September 11, 2026, and no objections to the settlement had been received as of the hearing date; a single objection was apparently sent to class counsel about the proposed honorarium for the representative plaintiff in the McCallum action. The court found the settlement met the required standard on all fronts.
Are Class Counsel Fees Reasonable in Cases Like This?
Class counsel fees in Ontario class actions are subject to court approval under section 32(2) of the Class Proceedings Act, 1992. In both actions, counsel had entered into retainer agreements providing for a contingency fee of 27.5% of the gross recovery, applicable where the settlement occurred after certification but before the common issues trial commenced — which is exactly what happened here.
Justice Morgan noted that contingency fees up to 33% are treated as presumptively valid in Ontario class actions, citing David v. Loblaw, 2025 ONSC 2792 and Rabbat v. Nadon, 2025 ONSC 5187. Counsel had funded all disbursements throughout the litigation at their own risk, and the court recognized that there must be an economic incentive for lawyers to take on this kind of litigation. No class member objected to the fee requests. The court approved fees of $1,538,495.89 plus HST and disbursements of $118,426.05 plus HST in the McCallum action, and fees of $1,081,047.96 plus HST and disbursements of $242,730.87 in the Legion action.
What Is a Representative Plaintiff Honorarium and Is It Common?
A representative plaintiff is the individual or organization that steps forward to lead a class action on behalf of all class members. In both of these actions, the representative plaintiffs invested significant time helping prepare information packages, coordinating with class members, assisting with motion materials and affidavits, and participating in examinations for discovery. They took on the risks of litigation without any expectation of payment.
The court approved a $15,000 honorarium for each representative plaintiff, paid from the settlement funds. Justice Morgan described this as a modest recognition of their valuable services, consistent with amounts approved in prior Ontario class actions such as Bodnarchuk v. Guestlogix Inc., 2020 ONSC 4789.
How Will the Settlement Money Be Distributed to Class Members?
The court approved a Distribution Protocol designed to allocate the settlement funds equitably among participating class members. Davis Martindale, a forensic accounting firm that had been involved in the proceedings for several years, was appointed as Accountant. MDD Forensic Accountants was appointed as Claims Administrator to manage and distribute the funds.
The protocol is designed to minimize administration costs, maximize the amount reaching class members, and offer a straightforward claims submission process. Each participating class member’s share is calculated on a pro rata basis — proportionate to their individual claim relative to the total value of all valid claims submitted.
Questions and Records to Discuss with a Lawyer
- Whether your business falls within the class definition in either of these actions and what claims steps and deadlines the court-approved notice sets out
- What documentation you have showing the insurance coverage you purchased and the denial of your claim
- Whether your business interruption losses were quantified at the time of the denial and what records exist to support that calculation
- Whether you received notice of the settlement and what steps, if any, you took in response
- Whether any separate claim or coverage dispute you have with an insurer is still open and within any applicable limitation period
If you have questions about a denied insurance claim or want to understand your options in a coverage dispute, our Ontario litigation lawyers can help you assess your situation. Businesses in the Hamilton and Burlington region facing insurance disputes can also reach our team through our Burlington litigation page or our Hamilton litigation page.
If you would like to discuss your own circumstances, you are welcome to reach out to UL Lawyers through our contact page.
This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.
FAQ
Frequently asked questions
The court approved the settlements and a Distribution Protocol on October 26, 2026, and the formal orders were still to issue. Whether you can share in the funds depends on whether you fall within the certified class definition in either action and on the claims steps and deadlines set out in the court-approved notice materials, so review those materials or speak with a lawyer to confirm your eligibility.
Dismissed with prejudice means the class actions against the insurer are ended on a final basis and cannot be brought again. The decision approving this settlement dismisses both actions against Aviva with prejudice; exactly which individual claims are released is governed by the Settlement Agreement, so a class member should review its release terms or get legal advice about how it affects them.
Distribution depends on the plan the court approves in each case. In this case, the approved Distribution Protocol shares the net settlement funds pro rata, meaning each participating class member receives a share proportionate to their individual claim relative to the total value of all valid claims.