This action has been started by the Plaintiffs for the relief set out in Part 2 below.

Transcription

1 r l \ I 1 \ IN THE""SOPREME COURT OF BRITISH COLUMBIA No. VANCOUVER REGISTRY BETWEEN: Francoise Leonard and Leanne Ranniger AND: PLAINTIFFS The Manufacturers Life Insurance Company, Manulife Financial Corporation, Benesure Canada Inc., Broker Support Centre Inc., Credit Security Insurance Agency, Tacamor Holdings Inc., Davis+ Henderson Limited Partnership and John F. Lorriman DEFENDANTS Proceeding under the Class Proceedings Act NOTICE OF CIVIL CLAIM This action has been started by the Plaintiffs for the relief set out in Part 2 below. If you intend to respond to this action, you or your lawyer must (a) (b) file a Response to Civil Claim in Form 2 in the above-named registry of this court within the time for Response to Civil Claim described below, and serve a copy of the filed Response to Civil Claim on the Plaintiffs. If you intend to make a counterclaim, you or your lawyer must (a) file a Response to Civil Claim in Form 2 and a Counterclaim in Form 3 in the above-named registry of this court within the time for Response to Civil Claim described below, and

2 (b) serve a copy of the filed Response to Civil Claim and counterclaim on the Plaintiffs and on any new parties named in the Counterclaim. JUDGMENT MAY BE PRONOUNCED AGAINST YOU IF YOU FAIL to file the Response to Civil Claim within the time for Response to Civil Claim described below. TIME FOR RESPONSE TO CIVIL CLAIM A Response to Civil Claim must be filed and served on the Plaintiffs, (a) (b) (c) (d) if you reside anywhere in Canada, within 21 days after the date on which a copy of the filed Notice of Civil Claim was served on you, if you reside in the United States of America, within 35 days after the date on which a copy of the filed Notice of Civil Claim was served on you, if you reside elsewhere, within 49 days after the date on which a copy of the filed Notice of Civil Claim was served on you, or if the time for Response to Civil Claim has been set by order of the court, within that time. CLAIM OF THE PLAINTIFFS PART 1: STATEMENT OF FACTS The Representative Plaintiffs 1. The Plaintiff, Francoise Leonard ("Leonard"), is an accountant who resides at 9226 Mountview Road, Lake Country, British Columbia. 2. The Plaintiff, Leanne Ranniger ("Ranniger"), is an operations manager who resides at East ih Avenue, Vancouver, British Columbia. 2

3 3. On or about June 24, 2009, Leonard was issued an MPP insurance policy by Manulife and the Benesure Group covering death arising "solely from an accident, and independent of any other cause". The policy excluded death caused by "any sickness, illness or disease". The annual premium charged Leonard by the Benesure Group and Manulife was $ The policy was one of the Products and covered Leonard's mortgage, which was approximately $297, as of June "MPP", the "Benesure Group", "Manulife" and the "Products" are defined herein. 4. In 2012 Ranniger obtained a mortgage through a mortgage broker. She specifically refused to apply for any insurance offered by Manulife or the Benesure Group. She did not consent to her mortgage broker or any other individual or entity sharing or receiving her confidential information, other than those necessary for her to obtain her mortgage. Nonetheless, her Personal Information was divulged by Davis + Henderson to the Benesure Group and Manulife and she received the Safety Catch Letter as part of the Safety Catch Scheme. "Personal Information", "Safety Catch Letter" and "Safety Catch Scheme" are defined herein. The Defendants 5. The Defendant, The Manufacturers Life Insurance Company, is a company incorporated pursuant to the laws of Canada having an address for delivery in British Columbia at West Pender Street, Vancouver, British Columbia, V6E 2M6. 6. The Defendant, Manulife Financial Corporation, is a company incorporated pursuant to the laws of Canada having a registered office at Suite NT-10, 200 Bloor Street East, Toronto, Ontario, M4W 1 E5. 7. The Defendants, The Manufacturers Life Insurance Company and Manulife Financial Corporation, are referred to collectively as "Manulife". 3

4 8. The Defendant, Benesure Canada Inc. ("Benesure"), is a company incorporated pursuant to the laws of Canada having a registered office at 11 0 Nashville Road, Suite 200, Kleinburg, Ontario, LOJ 1 CO. 9. The Defendant, Broker Support Centre Inc. ("BSC"), is a company incorporated pursuant to the laws of Ontario having a registered office at 11 0 Nashville Road, Suite 200, Kleinburg, Ontario, LOJ 1 CO. 10. The Defendant, Credit Security Insurance Agency ("CSIA''), is a company incorporated pursuant to the laws of Ontario having a registered office at 11 0 Nashville Road, Suite 200, Kleinburg, Ontario, LOJ 1 CO. 11. The Defendant, Tacamor Holdings Inc. ("Tacamor"), is a company incorporated pursuant to the laws of Newfoundland and Labrador having a registered office at 1 Augusta Place, Placentia, Newfoundland, AOB 2YO. 12. The Defendant, Davis + Henderson Limited Partnership ("Davis + Henderson"), is a limited partnership having a registered office at PO Box 11130, 3000 Royal Centre, 1055 West Georgia Street, Vancouver, British Columbia, V6E 3R The Defendant, John F. Lorriman ("Lorriman") is a businessman who resides in Ontario with a business address at 110 Nashville Road, Suite 200, Kleinburg, Ontario, LOJ 1CO. 14. Manulife is authorized to undertake the business of insurance in Canada and underwrites risk through a variety of different insurance products, including group creditor insurance. 15. Benesure, CSIA, BSC and Tacamor (the "Benesure Group") and Manulife have at all material times conducted business as a partnership or joint venture under the firm name Mortgage Protection Plan ("MPP"). MPP offers life and disability insurance products under the brand names "Mortgage 4

5 Protection Plan" and "Credit Security Plan" (the "MPP Product" and "CSP Product" respectively and the "Products" collectively). 16. In the alternative, at all material times the Benesure Group and each of them were agents for Manulife and acted within the scope of their authority, express or implied, given them by Manulife. 17. In the further alternative, at all material times the Benesure Group and each of them acted under the ostensible authority of Manulife and had ostensible authority to take part in the marketing, selling and administration of the Products. 18. At all material times Davis + Henderson was agent for Manulife and the Benesure Group and acted within the scope of its authority, express or implied, given it by Manulife and the Benesure Group. 19. In the alternative, at all material times Davis + Henderson acted under the ostensible authority of Manulife and the Benesure Group and had ostensible authority to take part in the marketing, selling and administration of the Products. 20. On or about October 24, 2012, Manulife announced that it had agreed to purchase Benesure and the sale completed in January, The Classes and Class Period 21. This action is brought on behalf of all British Columbian residents who: a) purchased the Products; or b) had their Personal Information transmitted by Davis+ Henderson to Manulife and/or the Benesure Group; or c) who received the Safety Catch Letter; or 5

6 d) such other class as may be certified (the "Class" and "Class Members"). The Class excludes employees, officers and directors of the Defendants or any entity affiliated with the Defendants, and their legal representatives, heirs, successors or assigns. Claim Summary 22. All individuals and companies selling, administering and underwriting insurance in Canada are licensed and regulated by provincial and federal governments in order to protect consumers by ensuring that qualified individuals and business entities provide proper advice and properly perform other duties and that insurance providers are solvent and otherwise reliable. 23. The Financial Institutions Act, R.S.B.C. 1996, c. 141 ("FIA") requires individuals and companies marketi~g. selling and administering insurance to be licensed. The Insurance Licensing Exemptions Regulation, B.C. Reg. 328/90 provides limited exemptions to this requirement which do not apply to the Benesure Group. 24. The FIA and the Insurance Companies Act, S.C. 1991, c. 47 (the "/CA') require that insurance companies be on a sound financial footing and deal fairly with their policy holders by requiring that they be licensed, they keep adequate reserves and have appropriate investments, have appropriate bodies for corporate governance and report regularly to government regulators. 25. With the knowledge and consent of Manulife, the Products have been underwritten, marketed, sold and administered solely by the Benesure Group despite the fact th?lt none of the Benesure Group or their agents and employees has been licensed to do so. In addition, with the knowledge, consent and assistance of Manulife, Benesure has solely undertaken the 6

7 contracts of insurance underlying the Products and received the premiums despite not being a licensed insurance company. As a result Manulife and the Benesure Group have avoided the consumer protection legislation governing the insurance industry and avoided associated expense. 26. Further, Manulife and the Benesure Group developed a scheme to obtain revenue from the Class Members using three techniques: a) for the MPP Product, Manulife and the Benesure Group employed a deceptive standard form document which was represented as being a document by which one could waive purchase of the Products, but in fact it is worded in such a way that made waiver of purchase impossible (the "MPP Waiver"). As a result Class Members were deceived into applying for the Products (the "Deceptive Waiver Practices"); b) if a Class Member did not sign a waiver for the CSP Product or the MPP Waiver they would be subjected to a program called "Safety Catch" whereby Manulife and the Benesure Group sends to these Class Members a letter (the "Safety Catch Letter") falsely stating that it is written by the Class Member's mortgage broker and strongly recommending purchase of the Products (the "Safety Catch Scheme"). The Safety Catch Scheme depended upon Manulife and the Benesure Group obtaining information about such Class Members with the assistance of Davis + Henderson through breach of the Class Members' privacy and of the Personal Information Protection Act, S.B.C. 2003, c. 63 ("PIPA"), which is actionable under the Privacy Act, R.S.B.C. 1996, c. 373 ("PA"); c) if a Class Member did intentionally apply for one of the Products, the Class Member was required to complete a health 7

8 questionnaire that was designed to ensure that most Class Members would answer affirmatively to having a condition that required individual assessment. Those with mortgages above an undisclosed amount or above a particular age were also subject to individual assessment. The individual assessment and underwriting for the policies was conducted by unlicensed employees of Tacamor on behalf of the Benesure Group. Class Members who were individually assessed were switched to less valuable insurance policies that provided restrictive coverage at prices significantly higher than the price of similar policies in the marketplace (the "Excessive Charges Practices"); and 27. In addition, Manulife and the Benesure Group have issued errors and omissions insurance policies to mortgage brokers covering claims against them relating to the Products and related activities. Manulife and the Benesure Group are not licensed to issue errors and omissions insurance policies and have not kept reserves for claims on their books as required by the F/A and /CA. (the "Brokers' E and 0 Policies") Wrongful Conduct a) Conducting the Business of Insurance Without Being Licensed Contrary to the FIA and the ICA 28. At all material times, with the knowledge and consent of Manulife, Benesure falsely held itself out to the public as an insurance company and conducted the business of insurance in Canada, including offering and undertaking contracts of insurance (i.e. the Products), issuing insurance certificates, administering the insurance policies and adjusting and adjudicating claims. The members of the Benesure Group have never been licensed pursuant to the FIA and are therefore prohibited from undertaking the business of an insurance company or insurance agent. 8

9 29. At all material times the Benesure Group, with the knowledge and consent of Manu life, conducted and controlled every aspect of the underwriting, insuring, marketing, sale and administration of the Products and the adjusting and adjudication of claims, including: i. developing policy wording and certificates for the Products; ii. receiving, keeping and investing insurance premiums and setting reserves for claims; iii. setting up a network of regional representatives, agents, financial institutions and mortgage brokers to sell the Products; iv. paying commission or other remuneration to members of the Benesure Group and remunerating Davis + Henderson and others, all of whom are unlicensed under the F/A, for selling or assisting in selling the Products; v. underwriting policies (i.e. assessing risks), administering policies, adjusting and settling claims and generally acting as an insurance adjuster; vi. setting up and operating websites directly soliciting class members to purchase the Products and providing them with insurance advice and information; vii. setting up a system whereby the Benesure Group pays Davis + Henderson for private information that is disclosed and used to impersonate mortgage brokers in correspondence touting the Products, intending to cause Class Members to purchase the products; 9

10 viii. entering into contracts of insurance with consumers and otherwise carrying on the business of insurance; ix. entering into Brokers' E and 0 Policies with mortgage brokers indemnifying them for errors and omissions claims relating to any dispute arising from an MPP application. (collectively the "Benesure Group's Operations") 30. The Benesure Group's Operations require licensing under sections 59, 159 and 171 of the FlA. The members of the Benesure Group are not so licensed. 31. The Benesure Group's Operations infringe sections 75, 171(2) and 180 of the FlA. 32. Manulife and the Benesure Group jointly entered into the Brokers' E and 0 Policies. Manulife is not licensed under the /CA to issue errors and omissions policies. 33. At a date unknown to the Plaintiffs the Benesure Group began to advertise that the Benesure Group's Operations were conducted through CSIA, a licensed insurance agency, in an attempt to appear to have appropriate licensing to conduct insurance business. In fact, CSIA did not perform any of the Benesure Group's Operations and its mere existence does not satisfy licensing requirements. In addition, CSIA's licensing covers only the acts of an insurance agent and not the other activities of the Benesure Group's Operations. 34. Manulife and Benesure paid a commission to Davis + Henderson for each insurance policy application made as a result of obtaining the private information described above (as part of the Safety Catch Scheme described below). Davis + Henderson is not a licensed insurance agent. Payment of 10

11 such commission to an unlicensed entity and receipt of such a commission by an unlicensed insurance agent are violations of section 178 of the FlA. b) The Safety Catch Scheme 35. Manulife and the Benesure Group directly solicit consumers through the impersonation of mortgage brokers in a program called "Safety Catch". In order to do so, Manulife and the Benesure Group make use of a computer program originally named Filogix and subsequently named Expert ("Filogex"), which is operated by the Defendant, Davis + Henderson. Filogix is used by mortgage brokers and lenders in Canada to match loan requests with lenders willing to offer such a loan. Lenders provide Filogix with their lending criteria and mortgage brokers provide particulars of their client's mortgage application. Filogix then automatically submits to the mortgage broker a list of lenders who would lend on the terms their client requires. Once the borrower agrees to a mortgage Filogix sends commitment documents to the mortgage broker for signing by his or her client. 36. Manulife and the Benesure Group pay Davis + Henderson to send applications for the Products to mortgage brokers with the commitment documents. 37. Manu life and the Benesure Group also pay Davis + Henderson to use the Filogix system to obtain Class Members' names, addresses, mortgage particulars and other information (the "Personal Information"). The Class Members have not consented to this transfer of information. 38. Having received confidential information from Davis + Henderson, Manulife and the Benesure Group then sends a letter to the Class Members who have not applied for insurance. The letter is under the mortgage broker's name and is purported to be signed by the mortgage broker. The letter is worded to make it appear that it was sent by the Class Member's mortgage broker (the "Safety Catch Letter"). The Safety Catch Letter strongly recommends 11

12 purchase of the Products. Furthermore, the Safety Catch Letter includes statements designed to mislead the Class Members into thinking that their Personal Information was being protected by their mortgage broker when in fact it was already been given to the Benesure Group by Davis + Henderson. 39. The Safety Catch Letter states: From the office of [Name of Mortgage Broker} Thank you for giving me the opportunity to arrange your mortgage for you. I am writing today to confirm the status of your mortgage protection. As my client, you are entitled to apply for the Mortgage Protection Plan. My records indicate that you have not applied for this insurance, so your mortgage is not insured under the Plan. As a Mortgage Professional, I believe that every mortgage should be protected against the risk of death or disability. Whether you use our Mortgage Protection Plan option, or you arrange for protection through your own life insurance agent, or have some other means to cover your repayment obligations (such as investments or family assets you can count on)... it doesn't matter HOW you protect your mortgage, as long as you arrange some form of protection. Without it, you risk the loss of your family's home. If you have not yet arranged alternative protection, I strongly recommend that you use the enclosed form to apply for Mortgage Protection Plan today, to get the protection you need as soon as possible. If you arrange alternative protection later, then you can cancel Mortgage Protection Plan when your alternative coverage is in place. The details shown on the enclosed form are based on the information contained in my records of your mortgage application. Please rest assured that to protect your privacy, this information will only be available to Mortgage Protection Plan and it's insurer, The Manufacturers Life Insurance Company (Manulife Financial), if you apply for the Plan. If you have any questions about the insurance, please call Mortgage Protection Plan at [number]. Details about the Plan are also shown in the enclosed brochure. To apply, simply return the enclosed form in the postage paid envelope or by fax to [number] by [date]. Or you may apply by phone at the number shown above. 12

13 Once again, I urge you to make sure your mortgage is protected in some way today. Yours sincerely, (Signature) per/ [Name of Mortgage Broker] Brokerage License #: Independently owned and operated (emphasis added) 40. By the time the Safety Catch Letter was mailed to Class Members Davis + Henderson had already sold the Class Members' Personal Information to Manulife and the Benesure Group in order for them to know the Class Members' identity, mortgage particulars and other information necessary to prepare and send the Safety Catch Letter to them. Davis + Henderson, Manulife and the Benesure Group knew or should have known that the FIA prohibited them from contacting the Class Members and used the disclosure of the Personal Information and impersonation to circumvent the provisions of the F/A and P/PA. 41. Manulife and the Benesure Group knew or should have known that a letter recommending the Products coming from the Class Members' mortgage brokers would carry more weight with the Class Member than would a letter coming from Manulife or Benesure and that Class Members would rely upon and act upon the recommendation in the Safety Catch Letter whether or not the recommendations contained therein were valid. 42. Davis + Henderson's sale of the Private Information to Manulife and the Benesure Group was made intentionally or recklessly, it invaded the Class Members' private affairs without lawful justification and it is highly offensive, having distributed the Private Information without their consent and for 13

14 unlawful purposes. The sale of the Class Members' information is in breach of section 6 of the PIP A, and is an actionable tort under section 1 of the PA. c) The Excessive Charges Practices 43. Class Members applying for the products are required to answer a series of written standard form health questions (the "Health Questions"). The application form states that if incomplete or inaccurate information is given in response to the Health Questions no benefits would be paid for any reason. 44. The Health Questions require Class Members to answer truthfully and completely as a condition of coverage and are phrased in such broad language that most applicants answer affirmatively to at least one of the Health Questions. 45. The applicants who did not answer any of the Health Questions affirmatively were issued the type of insurance for which they applied ("the Accepted Applicants"). 46. Manulife and the Benesure Group denied the applications of those who answered one of the Health Questions affirmatively, or who were over a certain age or mortgage amount, and channeled those applicants into the process of individual underwriting (the "Individually Underwritten Applicants"). 47. Individually Underwritten Applicants were referred to a call center run by Tacamor, which engaged in an unlicensed underwriting process using an automatic application review system known as AURA. Tacamor is not licensed to administer or underwrite insurance contracts. By conducting interviews regarding the medical history of applicants Tacamor engaged in the administration and underwriting of insurance contracts contrary to the FlA. 14

15 48. Having received information regarding the Class Members' medical history from Tacamor, Benesure then offered the Individually Underwritten Applicants a limited policy (such as an accidental death policy or a policy with restrictions on claims arising from certain conditions) at prices that grossly exceeded the total price at which Individually Underwritten Applicants could readily have obtained similar insurance coverage {the "Excessive Charge Practices") d) The Deceptive Waiver Practices 49. Manulife and Benesure or, alternatively, Benesure with the consent and assistance of Manulife, have advised mortgage brokers offering the Products to have the Class Members execute the MPP Waiver that appears to be, on a superficial reading, a means to record whether they apply for or waive purchase of the Products. In fact, in small print, the MPP Waiver states that the Class Member is, upon signing it, applying for any insurance products offered by Benesure that are not specifically waived by the applicant. 50. The MPP Waiver states: I hereby apply for insurance (except coverages waived above) or such alternative coverage as may be available under Mortgage Protection Plan. (emphasis added) 51. The alternate coverages made available under MPP are not described in the MPP Waiver and Class Members who have waived life and disability insurance are in fact sold the more restrictive accidental coverage and charged a premium that is excessive when compared to the cost of similar insurance available in the market. e) False Representations about the Products 52. The Defendants made the following false express or implied representations to the Plaintiffs and the Class Members: 15

16 i. the Benesure Group and each of them and their representatives are licensed by the appropriate authorities to undertake the business of insurance and insurance agency, enter into contracts of insurance to market, sell and administer the Products and that they have the consumer protection afforded by regulation of insurance companies and agents; ii. the Products were specifically recommended by the Member's own mortgage broker through the Safety Catch Scheme; iii. the Products and underlying insurance were provided by Manulife; and, iv. the Products were reasonably priced and preferable to term life insurance. (collectively, the "Representations") f) Liability of Lorriman 53. Lorriman was at all material times the president, principal shareholder (personally or through a holding company he controls) and controlling mind and will of Benesure, which in turn was the entity which directed the conduct described herein. At all material times he has owed a duty of care to the Plaintiffs and Class Members. He personally developed and directed the establishment and operation of an unlicensed insurance company and personally developed and directed the Representations and the implementation of the means by which the Representations were made, the Deceptive Waiver Practices, Excessive Charges Practices and Safety Catch Scheme. He personally directed, authorized, permitted and acquiesced in the deceptive practices and misleading acts, practices and representations described herein. As principal shareholder he has intended to benefit and has benefitted from monies acquired by Benesure and other members of the Benesure Group as a result of the unlawful activities described herein. In addition, in or about January 2013 Manulife concluded purchase of the 16

17 . shares of Benesure. As principal shareholder of Benesure, Lorriman has benefitted by receipt of the purchase price of his shares. 54. Further, Section 101 of the FIA and section 166 of the /CA require that directors and officers.act honestly and in good faith and section 101 of the FIA requires that they take into account the interests of policy holders. Section 1028 of the /CA and section 252(5) and 252(b) of the FIA imposes liability for breach of the Acts on directors and officers who authorize, acquiesce or participate in the breaches. By engaging in the conduct described herein, Lorriman has breached these duties. PART 2: RELIEF SOUGHT 55. The Plaintiffs and the Class Members have suffered and continue to suffer loss, damage and expense. Particulars of this loss, damage and expense including the following: i. premiums and other charges paid to the Defendants for the Products; ii. loss of bargain i.e., the loss of the value of having regulated and adequately reserved insurance; iii. loss of value of having insurance in the future; iv. general damages for breach of the PIPA and PA; and v. such further particulars as counsel may advise. 56. The restitution and damages sought by the Plaintiffs and other Class Members can be calculated on an aggregate basis for the Class as provided by the Class Proceeding Act. 57. The Defendants' conduct (including, without restriction, the deceptive drafting and dissemination of the MPP Waiver, knowingly setting up and structuring an insurance business designed to circumvent government regulation, obtaining private information they knew they were not entitled to possess and impersonating mortgage brokers} was high-handed, outrageous, reckless, 17

18 deliberate, callous, and in intentional disregard of the rights and interests of the Plaintiffs and the Class Members. Such conduct renders the Defendants liable to pay punitive damages. 58. The Plaintiffs claim on their own behalf and on behalf of all the members of the Class: i. an order certifying this proceeding as a class proceeding and appointing the Plaintiffs as representative Plaintiffs for the Class and any appropriate subclass thereof; ii. a declaration that the benefits which accrued to the Defendants as a result of their wrongful conduct unjustly enriched the Defendants; iii. a declaration that the Defendants hold in trust for the Class the benefits which accrued to the Defendants as a result of their wrongful conduct; iv. further, or in the alternative, an accounting of the benefits which accrued to the Defendants as a result of their wrongful conduct; v. disgorgement of the benefits which accrued to the Defendants as a result of their wrongful conduct; vi. a declaration that the conduct of the Defendants amounts to an unconscionable act or practice; vii. an interim and permanent injunction restraining the Defendants' unconscionable acts and practices; viii. general and special damages; ix. general and special damages or other remedies under section 36 of the Competition Act, R.S.C. 1985, c. C-34 (the "CA"); 18

19 x. the costs of administering and distributing a damage award; xi. costs; xii. interest pursuant to the Court Order Interest Act; and xiii. such further relief as may be just and necessary in the circumstances. PART 3: LEGAL BASIS a) Negligent Misrepresentation 59. The Defendants owed a duty of care to the Plaintiffs and the Class to provide accurate information about the Products, the application process and the entities offering and administering the Products. The Representations, and representations made as part of the Deceptive Waiver Practices and Safety Catch Scheme were false, misleading and deceptive. The Defendants either knew they were when they made or were reckless as to whether or not they were true, misleading or deceptive. 60. In the alternative, if Manulife did not directly make the Representations and conduct the Deceptive Waiver Practices and Safety Catch Scheme, it is jointly and severally liable for damage caused by the Representations, the Deceptive Waiver Practices and the Safety Catch Scheme made and conducted by the Benesure Group. b) Competition Act 61. The Representations, the Deceptive Waiver Practices, the Excessive Charge Practices and the Safety Catch Scheme were made and conducted for the express purpose of promoting the business interests of Manulife and the Benesure Group and marketing the Products. 19

20 62. In making or, alternatively, permitting the Representations, the Deceptive Waiver Practices, the Excessive Charge Practices and the Safety Catch Scheme, Manulife and the Benesure Group were in breach of s. 52(1) of the CA. 63. Pursuant to s. 36 of the CA the Defendants are liable to pay the damages which resulted from the breach of s Pursuant to s. 36 of the CA the Plaintiffs and the other Class Members are entitled to recover their full costs of investigation and substantial indemnity costs paid in accordance with the CA. 65. The Plaintiffs and other Class Members are also entitled to recover, as damages or costs, in accordance with the CA, the costs of administering the plan to distribute the recovery in this action and the costs to determine the damages of each Class member. c) FIA and Negligence 66. The Benesure Group and Manulife owed a duty of care to the Plaintiffs and the Class Members to act reasonably and in the Class Members' best interests and to refrain from conducting deceptive or unlawful business. Making the Representations and conducting the Benesure Operations, Deceptive Waiver Practices, Excessive Charge Practices and Safety Catch Scheme is contrary to sections 91, 93 and 101 of the FIA in addition to those provisions of the FIA referred to above, and breached the duty of care they owed to the Plaintiffs and Class Members. d) Illegal Contract and Breach of Contract 67. At all material times the entities forming the Benesure Group were not licensed to market, administer and underwrite the Products. As a result, any contracts formed pursuant to the marketing, administration and underwriting of the Products are void and unenforceable by reason of illegality. 20

21 68. In the alternative, if the insurance contracts formed for the Products are not void and unenforceable by reason if illegality, it was an express or implied term of the Class' insurance contacts that Manulife and the Benesure Group would provide secure, government regulated and licensed insurance contracts sold and administered by licensed individuals and entities. The insurance contracts were made and administered by unlicensed and unregulated entities without appropriate reserves and other measures for consumer protection. Manulife and the Benesure Group thereby breached their contracts with the Plaintiffs and the Class. e) Restitution, Unjust Enrichment, Waiver of Tort and Constructive Trust 69. The Defendants were enriched by the Plaintiffs and Class Members through the receipt of premiums and other profits attributable to the Products (the "Unlawful Gains"). 70. The Plaintiffs and Class Members suffered a corresponding deprivation by paying premiums and other charges for the Products to Manulife and the Benesure Group. 71. Because of the deceptive and unlawful nature of the Defendants' conduct there is no juristic reason for the enrichment of Manulife and the Benesure Group 72. The Class Members are entitled to restitution in the amount of the Unlawful Gains and the Defendants are constituted as constructive trustees in favor of the Class Members for all the Unlawful Gains because, among other reasons: i. the Defendants engaged in deceptive and unlawful conduct that was directed at the Class Members; 21

22 ii. the Unlawful Gains were acquired in such circumstances that the Defendants should not in good conscience retain them; iii. the Defendants were unjustly enriched by opportunities to sell the Products afforded by the breach of the PA and P/PA and by the savings afforded by avoiding consumer protection legislation by: a. offering unregulated insurance products through unlicensed and unqualified entities and agents; b. administering and adjusting policies and claims through the use of unlicensed and unregulated entities and agents; iv. The Class Members suffered a corresponding deprivation which was directly connected to, and gave rise to, the Unlawful Gains, including the loss of monies used to pay for the Products; v. Justice and good conscience require the imposition of a constructive trust; vi. Manulife and the Benesure Group owed the Class Members a duty of utmost good faith and breached that duty; and, vii. There is no juristic reason for the enrichment and there are no factors that would, with respect to the Unlawful Gains, render the imposition of a constructive trust unjust. 73. In addition, and in the alternative, the Plaintiffs and the other Class Members plead the doctrine of waiver of tort and, due to the wrongful conduct of the Defendants described herein, are entitled, if they so elect, to a restitutionary award of the benefits which accrued to the Defendants as a result of their wrongful conduct. 22

23 f) Civil Conspiracy 74. The Defendants acted in concert, by agreement or common design, in committing the unlawful acts particularized herein. The Defendants' unlawful acts were directed towards the Class Members, the Defendants knew or should have known that injury to the Class Members was likely to occur from their unlawful acts and the Defendant's unlawful conduct in furtherance of their conspiracy caused harm to the Plaintiffs, including the loss of monies used to pay for the Products, which were not reliable, government regulated and secure insurance products and which were excessively priced. 75. Alternatively, the Defendants acted in concert, by agreement or common design, in committing the unlawful acts particularized herein and the predominant purpose of committing the unlawful acts was to profit by intentionally harming the Class Members by inducing them to purchase the Products, which were not reliable, government regulated and secure insurance products and which were excessively priced. g) Privacy Violation 76. The Defendants have, willfully and without claim of right, violated the privacy of the Class Members by unlawfully obtaining the Private Information and using that information to solicit the purchase of the Products. By engaging in this conduct the Defendants have committed the tort of privacy violation, contrary to section 1 of the PA. 77. By engaging in this conduct the Defendants have also collected, used and disclosed personal information contrary to section 6 of the PIP A. h) Detrimental Reliance Need Not be Proven 78. But for its unlawful conduct, including undertaking insurance business while unlicensed, the Representations, the Deceptive Waiver Practices, the 23

24 Excessive Charges Practice and the Safety Catch Scheme, Manulife and the Benesure Group would not have sold any of the Products to the Class Members. Therefore, the Class Members are not required to prove detrimental reliance in order to establish that the Defendants are liable for negligent misrepresentation and breaches of the CA. 79. In the alternative, the Plaintiffs and the Class Members reasonably acted in reliance on the Representations by purchasing the Products and the reliance was detrimental to the Plaintiffs and the Class Members. i) Manulife's Negligence in Failing to Halt the Misconduct 80. Further, and in the alternative, Manulife owed a duty of care to the Plaintiffs and the Class to take reasonable steps to investigate and monitor the Products and the conduct of the Benesure Group but failed to do so. Had Manulife done so the unlawful conduct described herein would have been detected and the Products would not have been offered to consumers at all. j) The Duty of Utmost Good Faith Breached 81. At all material times, Manulife and the Benesure Group have owed the Plaintiffs and the Class Members a duty to conduct themselves in dealing with the consumer in steps leading up to an insurance contract and to perform their obligations under the insurance contracts in utmost good faith. They breached the duty of utmost good faith by engaging in the unlawful conduct described herein. 24

25 PLAINTIFFS' ADDRESS FOR SERVICE: Address for service: Direct Fax number for service: Place of Trial: The address of the Registry is: Lerner & Company Cambie Street Vancouver, BC V6B 2M9 Attention: Bruce W. Lerner Vancouver, BC The Law Courts 800 Smithe Street Vancouver, BC DATED: February 20, 2013 Bru~' Lawyer for the Plaintiffs Rule 7-1 (1) of the Supreme Court Civil Rules states: 1. Unless all parties of record consent or the court otherwise orders, each party of record to an action must, within 35 days after the end of the pleading period, (a) prepare a list of documents in Form 22 that lists (i) (ii) all documents that are or have been in the party's possession or control and that could, if available, be used by any party at trial to prove or disprove a material fact, and all other documents to which the party intends to refer at trial, and (b) serve the list on all parties of record.

26 ENDORSEMENT FOR SERVICE OUTSIDE BRITISH COLUMBIA There is a real and substantial connection between British Columbia and the facts alleged in this proceeding and the Plaintiffs and other Class Members plead and rely upon the Court Jurisdiction and Proceedings Transfer Act, R.S.B.C. 2003, c 28 (the "CJPTA") in respect of these Defendants. Without limiting the foregoing, a real and substantial connection between British Columbia and the facts alleged in this proceeding exists pursuant to ss 1 0 (e) - (i) of the CJPTA because this proceeding: e) concerns contractual obligations that, to a substantial extent, were to be performed in British Columbia and resulted from a solicitation of business in British Columbia; f) concerns restitutionary obligations that, to a substantial extent, arose in British Columbia; g) concerns a tort committed in British Columbia; h) concerns a business carried on in British Columbia; and i) is a claim for an injunction ordering a party to do or refrain from doing anything in British Columbia. 26

27 APPENDIX PART 1: CONCISE SUMMARY OF NATURE OF CLAIM: This is a class action proceeding in which the Representative Plaintiffs claim on behalf of the Class Members damages and restitutionary remedies arising from the marketing, sale and administration of insurance products by the Defendants. PART 2: THIS CLAIM ARISES FROM THE FOLLOWING: A personal injury arising out of: A dispute concerning: [ ] a motor vehicle accident [ ] medical malpractice [ ] another cause [ ] contaminated sites [ 1 construction defects [] real property (real estate) [ ] personal property [ ] the provision of goods or services or other general commercial matters [ ] investment losses [ 1 the lending of money [ ] an employment relationship [ ] a will or other issues concerning the probate of an estate [ ] a matter not listed here PART 3: THIS CLAIM INVOLVES: [x] a class action 27

28 [] maritime law [] aboriginal law [ ] constitutional law [ ] conflict of laws [ ] none of the above [ ] do not know PART4: ENACTMENTS 1. Financial Institutions Act, R.S.B.C. 1996, c Privacy Act, R.S.B.C. 1996, c Court Jurisdiction and Proceedings Transfer Act, R.S.B.C. 2003, c Persona/Information Protection Act, S.B.C. 2003, c Insurance Companies Act, S.C. 1991, c Competition Act, R.S.C. 1985, c. C-34 28