A group of insurance policy buyers trying to get a class action going against an insurer have lost their bid to keep their plans for funding the suit secret.

According to a May 7 decision from the Ontario Superior Court of Justice, the motion from the plaintiffs in the case gets into the “still unexplored legal territory of third party funding” of class action suits in Ontario. The policy buyers are suing Sun Life Assurance Company of Canada for $2.5 billion for “negligent misrepresentation”, in a “proposed David v. Goliath type class action”. The case has yet to be heard.

The decision indicates that the policy buyers would only pursue the case if their lawyers would take the case on a contingency fee basis, and if they were indemnified from paying costs if they lose the suit. Their lawyers agreed to this providing that the court approved an agreement allowing a third party to fund the litigation (named as Bridgepoint Global Litigation Services Inc. in the decision). And, they were seeking: that a motion for approval of the third party financing and indemnity agreement be heard without notice to Sun Life; that the hearing of the motion be closed to the public; and, that the documents for the motion be sealed.

The policy buyers group argued that the funding agreement discloses elements of the their litigation strategy and that the agreement is privileged. They also said that disclosure of the agreement could reveal the resources available to prosecute the action, giving Sun Life a tactical advantage in the litigation. Additionally, they said that disclosure of the agreement would violate solicitor-client privilege, harming their access to justice and a fair trial.

The decision indicates that Sun Life opposed the motion, and it asked that it be permitted to participate in the funding motion, and the court agreed with the firm, ruling that that a class action funding agreement is not privileged.

However, the court also said that special procedural rules for a motion for approving a third party agreement need to be developed, albeit not the secret procedure suggested by the plaintiffs in this case. “Best practices also need to be developed. Third-party agreements ought not to disclose information about the plaintiff’s lawyer’s views about the strengths or weaknesses of his or her client’s proposed class action,” it says.