Ontario court approves historic $32.5B tobacco settlement

A smoker puts out a cigarette in a public ash tray in Ottawa on May 31, 2016. (Sean Kilpatrick / The Canadian Press)

TORONTO — A historic deal that calls for three major tobacco companies to pay out billions in compensation to provinces and territories as well as former smokers across Canada has cleared its final legal hurdle in Ontario, bringing a decades-long court saga to a close.

Ontario Superior Court Chief Justice Geoffrey Morawetz approved the $32.5-billion plan in a ruling released Thursday, hailing the milestone as a “momentous achievement in Canadian restructuring history.”

The settlement was first proposed in October after years of mediation between the companies – JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. — and their creditors, which include plaintiffs in two Quebec class-action lawsuits as well as provincial and territorial governments seeking to recoup smoking-related health-care costs.

In his decision, Morawetz highlighted the impact of the court’s approval on the class action members, whose case began in the late 1990s.

“Thousands of claimants have sadly passed away during this period. ... The wait, for many, has been intolerable. That wait ends today,” he wrote.

The Conseil québecois sur le tabac et la santé, which is a plaintiff in one of the lawsuits, said the ruling “puts an end to years of uncertainty” and caps off a lengthy battle to ensure tobacco victims are compensated for the harm they have suffered.

“Today, we take a decisive step toward justice for tobacco victims after an excessively long legal battle. My thoughts go out to all these individuals and their families who never stopped believing in this cause,” Dominique Claveau, the organization’s interim executive director, said in a statement.

British Columbia Attorney General Niki Sharma said the settlement was “not just about financial compensation” because there would never be enough money to undo the harm caused by the companies’ deceptive practices.

“This is about ensuring that there are real consequences for corporate wrongdoing and taking steps to prevent further harm.”

The plan, crafted by the monitors appointed to each company in collaboration with a mediator, calls for the companies to pay more than $24 billion to provinces and territories over about two decades, while plaintiffs in the Quebec lawsuits will get more than $4 billion to split between them.

Another $2.5 billion will go to compensate Canadian smokers not included in the lawsuits, and more than $1 billion will go to a foundation to fight tobacco-related diseases. The money for the foundation also includes $131 million taken from the amount allocated to the Quebec plaintiffs.

The plan was unanimously approved by creditors in December and faced its final hurdle – approval from the court – over several days of hearings that began in late January.

Two of the companies, JTI-Macdonald and RBH, raised issues during the hearings, with RBH calling for a change to the way the amounts were allocated between the companies.

Morawetz said all three companies withdrew their opposition after an amended plan was presented to the court this week.

Under the terms of the settlement, the judge wrote, the companies will pay all but $750 million of their aggregate cash on hand upfront and the majority of their after-tax income until the full amount is paid.

The Canadian Cancer Society, which is a social stakeholder in the case, had also called for changes to the proposal, arguing it should include smoking-reduction measures.

Rob Cunningham, the organization’s lawyer, said Thursday he was “disappointed” the approved settlement did not contain stronger public health measures.

It’s now essential for the provinces to strengthen their smoking-reduction efforts using the money they will receive from the settlement, he said.

The legal saga started with a landmark ruling in Quebec that ordered the companies to pay about $15 billion to plaintiffs in two class-action lawsuits.

The companies then sought creditor protection in Ontario in 2019 after the ruling was upheld by Quebec’s top court.

All legal proceedings against the three were put on hold during the negotiations, which were confidential.

-with files from Brenna Owen in Vancouver

This report by The Canadian Press was first published March 6, 2025.

Paola Loriggio, The Canadian Press