Source: The Canadian Press

A stunning $456-million judgement in a class-action lawsuit against insurance giant Great-West Lifeco Inc. (TSX:GWO) is a sign the courts are being more aggressive in keeping tabs on how corporate Canada conducts its affairs, a high-profile lawyer said Sunday.

“It’s rare,” Tony Merchant said of the size of the judgement handed down Friday by an Ontario superior court.

The prominent Saskatchewan lawyer, who has steered numerous class-action suits through the Canadian courts, said the court is accepting the responsibility to monitor the way business functions.

“There’s nothing wrong with that, it’s just not usual in relation to what we’ve expected from our courts,” Merchant, who wasn’t involved in the case, said in a phone interview.

Justice Johanne Morissette ruled after a 45 day trial in London, Ont. that Great-West breached sections of the Insurance Companies Act by transferring money from the accounts of subsidiaries London Life Insurance Co. and Great-West Life Assurance Co. to finance the 1997 takeover of London Insurance Group, the parent of London Life Insurance Co.

The move prompted 1.8 million policy holders to join a class-action suit that has been making its way through the courts over the past 12 years.

Morissette ordered the Winnipeg-based company, which is owned by Montreal giant Power Financial Corporation, to pay $372 million to policyholders of London Life and $84 million to those of Great West Life. The amounts include both capital and interest items.

The lawsuit represented policyholders from across Canada, but the biggest concentrations are in Ontario, Quebec, Saskatchewan and Manitoba.

Great-West Lifeco said in a news release that it believes there are “significant aspects” of the decision that are “in error” and it intends to launch an appeal. The company did not comment beyond its brief release.

Lawyers representing the policy holders weren’t commenting on the case, but they did issue a news release Sunday that said they are pleased with the ruling and look forward to working with the insurance giant to implement the judgement.

The fact the courts are taking a bigger role in monitoring what big institutions are doing is a positive step, says Merchant.

“Legislatures, Parliament can only set broad rules,” he said. “The courts … can take the time and look specifically at what a company or one institution is doing and set specific rules and look at: is that fair or is that unfair?

“In my view it’s the right direction to go.”

Friday’s judgement will give powerful ammunition to future David and Goliath struggles between people and big corporations, said Merchant.

“A case like this results in others of us who do a lot in the class-action world to say to the court, ‘this is an example of where you ought to be going and you should apply this to our facts and go in the same direction’.”