It appears that Great-West Life Assurance Co. (GWL) is going to appeal a Manitoba court decision that found the firm responsible for the actions of a former broker.
The Winnipeg-based financial services giant hasn’t filed anything officially after a Court of Queen’s Bench sided with clients Michel and Lorraine Mignault in December, awarding the Winnipeg couple $528,834. The court also ruled that GWL was responsible for the fraudulent actions of Gary Palmer, who now is serving an eight-year jail term.
But Richard Beamish, a lawyer with Winnipeg-based Tapper Cuddy LLP who represents other former Palmer clients, has been told that GWL will file an appeal during the 30-day appeal window, which opened on Jan. 31.
“GWL has indicated [in judge’s chambers its] preliminary intention to appeal,” says Beamish. “I think it will run the appeal. If [GWL] wins, it’s going to be fortified. If it loses, I think [GWL will] be compelled to at least discuss settlement potential with the other plaintiffs.”
A spokeswoman for GWL says the firm has yet to decide what, if any, steps it will take.
Despite the looming appeal, Beamish already has a trial date for another former client of Palmer set for next March.
Palmer was convicted of defrauding 23 people, including the theft of $1.5 million, during his almost decade-long spree.
Starting in 1998, Palmer persuaded the Mignaults to withdraw money from their annuity accounts and deposit the same amount with J.D. Raleigh & Co. Ltd., a company owned by Palmer.
The Mignaults testified that they believed they were merely moving money from one GWL account to another. Palmer used this money to fund his insurance business and his high-end lifestyle.
GWL countered in court that Palmer was an independent contractor and that GWL was not responsible for what Palmer did. The trial judge disagreed, saying GWL “cloaked [Palmer] with the attributions of apparent authority.”
Dave Hill, a lawyer with Hill Sokalski Walsh Trippier LLC in Winnipeg who represents the Mignaults, says he wouldn’t be surprised if GWL appeals the judgment because the firm has been sued successfully twice in the past five years but had those decisions overturned in the Court of Appeal.
In one case, a $37-million judgment in favour of a pension fund was overturned. In the second, the aggravated damages awarded by a lower court against GWL in a disability claim were thrown out.
The court system encourages appeals, Hill says, because even if GWL loses at the next level, it would have to pay only 1.5% in post-judgment interest.
“For a large insurer like GWL,” says Hill, “being able to appeal and only risk losing 1.5% interest is an incentive because it can more than likely generate more than that on its own funds at the same time. It’s not a big cost for GWL to have to incur.”
Hill adds that it could be another eight months before an appeal decision is handed down.
GWL appears to have “girded its loins” on this particular case, Beamish says: “It has brought out an Achilles heel [GWL] doesn’t want to confront. It’s going to have at it.”
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