Appeal by the plaintiffs from dismissal their class proceeding. The respondent was a mutual life insurance company. In 1996, it transferred its Barbados life insurance business to a Barbadian insurance company.1The transfer was legal in both Canada and Barbados. Approximately 8,000 residents of Barbados had participating policies with the respondent that were transferred as part of the sale. When the respondent demutualized in 1999, its participating policyholders were paid the value of the respondent in the amount of $9 billion. Because the appellants' policies had been transferred to the Barbadian company, they were no longer participating policyholders and, therefore, were ineligible to share in the value of the company. The appellants commenced the present class proceeding against the respondent for negligence and breach of fiduciary duty. Their negligence claim was founded on their allegation that the respondent knew it was likely going to demutualize when it transferred its Barbados business and that it ought to have structured the transfer in a way that protected or preserved the class members' rights to share in the respondent's value on demutualization. Although the trial judge found a prima facie duty of care based on the foreseeability of harm and proximity, for policy reasons the trial judge refused to recognize that the respondent owed the class members a duty of care. He noted that the Barbados policyholders had no legal right to remain as policyholders of the respondent since the statutory regimes in both Barbados and Canada authorized the transfer of the Barbados business. The appellants argued that the trial judge erred in failing to find that the respondent was negligent in its treatment of the class members by failing to protect their right to participate in a future demutualization.

HELD: Appeal dismissed. The trial judge did not err in refusing to recognize that the respondent owed the class members a duty of care at the time of the transfer. At the time of transfer, the appellants did not have a legally recognized right or interest in respect of a possible demutualization by the respondent since, at the time of the transfer, the respondent was not permitted to demutualize. A mere hope or mere expectancy that if and when the respondent were allowed to demutualize and it did demutualize, their then-existing rights as participating policyholders would entitle them to receive the benefits of that demutualization, was not a legally enforceable right or interest. Since the appellants' claim of negligence did not fall into a pre-existing category where recovery for pure economic loss had been permitted, it was a novel claim. A novel duty of care between a mutual insurance company and its participating policyholders should not be recognized in the present case. The relationship between the appellants and the respondent was not sufficiently proximate that a prima facie duty of care arose. At the time of the transfer, the class members had no legally recognized right, claim or interest to share in the value of the respondent on a future demutualization. The inchoate and tenuous nature of their interest militated against a finding that it was just and fair to impose a duty of care upon the respondent to prevent harm to this interest. Knowing that the legislation permitted the respondent to transfer the appellants' policies and end their relationship, it was not reasonable to expect that the respondent would protect their voting rights. From a policy perspective, it was difficult to comprehend how the respondent could be given the statutory right to end its relationship with the class members and yet be legally obligated to maintain one aspect of that relationship, potentially in perpetuity, by preserving the policyholders' voting or other rights in the company.