June 25 (Bloomberg) -- Toronto-Dominion Bank, Canada’s second-biggest bank by assets, won a judge’s approval to pay $50 million to settle a shareholder lawsuit over the fairness of a $3.2 billion buyout of its TD Banknorth Inc. unit.

Delaware Chancery Court Judge Stephen Lamb in Wilmington agreed that the settlement was fair and awarded shareholders’ lawyers more than $14 million in fees and expenses.

“I have no difficulty whatsoever” in approving the settlement, Lamb told the plaintiffs’ lawyers at today’s hearing. “You did an excellent job.”

Investors in Portland, Maine-based TD Banknorth sued in 2006 contending an offer for the 41 percent of the bank’s stock that Toronto-Dominion didn’t already own was inadequate. In 2007, Lamb rejected as insufficient a settlement that would have given stockholders about $3 million and lawyers more than $1 million in legal fees.

Toronto-Dominion completed the $32.33 a-share buyout in April 2007. Toronto-Dominion, based in Toronto, and former directors of TD Banknorth denied any wrongdoing in the case.

“We still believe the purchase was fairly valued,” Jennifer Carlson, a TD Banknorth spokeswoman, said in an e-mailed statement. “We’re pleased to have the issue behind us. We settled this to avoid the disruption to our business by taking this to trial.”

Toronto-Dominion, Canada’s second-largest after Royal Bank of Canada, rose C$1.58, or 2.8 percent, to C$58.52 in trading in Toronto at 4:10 p.m. The stock has risen 35 percent this year.

The case is In re. TD Banknorth Inc. Shareholders Litigation, Consolidated CA2557-VCL, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net;

Last Updated: June 25, 2009 16:13 EDT