Ontario court approves $8-million DRI Healthcare investor settlement

Ontario’s Superior Court of Justice has approved an $8-million settlement of an investor class action involving DRI Healthcare Trust, accepting a negotiated compromise that ends the litigation without deciding whether the alleged misrepresentations were proved.

In Reid v. DRI Healthcare Trust et al., 2026 ONSC 5404, released September 29, 2026, Justice Leiper approved the settlement, its distribution and notice arrangements, class counsel’s fees and a $2,000 honorarium for representative plaintiff Andrea Reid.

DRI Capital Inc., now Persis Capital Inc., agreed to pay the $8 million on behalf of the defendants in exchange for a full and final release and dismissal of the action with prejudice and without costs. The amount is a gross settlement fund, not $8 million available for direct investor payments: legal fees, taxes, disbursements, administration expenses and other approved deductions come out first.

A claim following a sharp drop in unit prices

DRI Healthcare Trust’s business involves buying royalty entitlements on medical products, and its units trade on the Toronto Stock Exchange. DRI Capital was its manager and supplied executive officers.

According to the reasons, the trust announced on July 8, 2024 that it had demanded and received the resignation of then-chief executive Behzad Khosrowshahi after investigating irregularities involving alleged consulting and other expenses presented for reimbursement. It also announced that then-chief financial officer Chris Anastasopoulos had been suspended with pay.

The units closed at $15.24 on July 5 and $11.17 on July 8. On August 6, the trust restated previously issued financial statements for 2022 and 2023, but its unit price did not fall further following that disclosure.

Reid alleged misrepresentations concerning expenses, governance, internal controls and financial reporting. She advanced statutory securities claims and a common-law negligent-misrepresentation claim. Those were allegations in the lawsuit, not findings made in the settlement decision.

The parties reached an agreement in principle at mediation in December 2025, before contested motions for permission to pursue the statutory claim and for class-action certification were argued. The settlement terms were finalized in January 2026, and the court certified the action for settlement purposes, on consent, on March 5.

Why the court accepted the compromise

A class-action settlement must be fair, reasonable and in the class members’ best interests. The court’s task was to decide whether this deal fell within a reasonable range of outcomes, considering what investors would receive in return for giving up their litigation rights, rather than demanding a perfect result.

The damages estimates differed substantially. The plaintiff’s expert estimated approximately $32.6 million in recoverable damages, including $23.4 million for secondary-market purchases and $9.2 million for primary-market purchases. DRI Capital’s assessment, informed by its expert, put secondary-market damages at about $16.3 million and denied that there were recoverable primary-market damages.

Leiper noted that the settlement was approximately half the defendants’ damages estimate. That comparison was part of the fairness assessment; it is not a promise that individual investors will recover half their losses.

Several unresolved legal risks favoured settlement. The defendants could argue that the July 8 announcement was not a qualifying public correction under securities legislation because it did not expressly correct earlier disclosures. If only the August 6 restatement qualified, most potential damages could disappear because the price did not decline after that announcement.

Other risks included whether the alleged misrepresentations were material, the effect of expense repayments, limitation-period defences affecting older purchases, and whether primary-market purchasers had recoverable losses. Counsel also warned that recoverable damages could shrink if major institutional holders sold at higher post-correction prices. These were risks evaluated in negotiating a settlement, not final rulings accepting the defences.

The judge found that counsel had sufficient disclosure, trading data and expert work to assess the compromise despite its relatively early timing. No class member had opted out or objected by the hearing, and the court found no structural signs of collusion or conflicting interests. Avoiding further cost and delay also supported approval.

Investors must submit claims

Payment is not automatic, even for investors who still hold units. The approved process requires a claim form containing contact and trading information. Leiper emphasized that a broad notice campaign mattered because eligible investors must learn about the settlement and apply to receive any benefit.

Under the distribution protocol described in the reasons, a class member may submit a claim if they acquired DRI units during the February 11, 2021 to August 6, 2024 class period and still held some or all of those units at the opening of trading on July 8, 2024, or at the end of the class period on August 6. The settlement is subject to exclusions; the decision does not mean every person who ever bought DRI units qualifies.

Verita Global Inc. was approved as claims administrator. The court also approved a bilingual national notice program. The reasons do not specify a calendar claims deadline. Class counsel’s case page provides contact details and settlement documents; investors can seek current claims instructions from counsel or the administrator.

Allocation weights are not repayment percentages

The administrator will calculate a settlement-defined recognized loss using acquisition cost and reference prices, with applicable adjustments. That amount is then weighted to reflect the litigation risks associated with different purchases:

• A multiplier of 0.10 applies to units acquired in the February 19, 2021 initial public offering and to secondary-market units acquired before November 7, 2021, reflecting limitation-period risks.
• A multiplier of 1.00 applies to secondary-market units acquired from November 7, 2021 through July 7, 2024, the category viewed as having the strongest prospects.
• A multiplier of 0.50 applies to units acquired from July 8 through August 6, 2024, after the first disclosure.

These figures determine relative allocation within the available fund. They do not guarantee reimbursement of 10, 50 or 100 per cent of an investor’s loss. A calculated share below $50 will not be paid. Remaining funds may be redistributed proportionally where cost-efficient, with any final residue going to the Windsor Law School Class Action Clinic.

Fees and other deductions reduce the fund

The court approved legal fees of $2,664,000, representing 33.3 per cent of the settlement, plus $346,320 in HST and $350,433.08 in disbursements, including taxes. Leiper found the fees proportionate to the result and the risks counsel assumed; they represented about 2.4 times the value of counsel’s recorded work.

The Class Proceedings Fund’s levy also applies. The reasons describe it as repayment of financial support for disbursements plus 10 per cent of settlement funds to which class members benefiting from the Fund are entitled, not simply an additional 10 per cent of the gross $8 million. Administration expenses and Reid’s $2,000 honorarium are also deductions. The decision does not fix a final net payout for individual investors.

The ruling brings the lawsuit to an approved settlement and claims process. It does not establish liability for the alleged disclosure failures or resolve the securities-law questions that made continued litigation uncertain.