In a David-versus-Goliath-like battle, a Winnipeg couple has sued Manitoba's biggest company and won.
Michel and Lorraine Mignault took Great-West Life to civil court after they were bilked out of their retirement savings by their former financial planner, Gary Palmer, a former independent agent for Great-West Lifeco Inc. They claimed the company, which has assets under administration of more than $705 billion according to its latest quarterly report, was "vicariously liable" for Palmer's fraudulent behaviour, which occurred from 1997 to 2006.
Great-West countered Palmer was an independent contractor and it wasn't responsible for his actions.
'If the Mignaults had lost, we probably would have folded our tent. In my case, I certainly would have. I couldn't afford to pay the legal fees and lose'
Manitoba Court of Queen's Bench Justice Brenda Keyser disagreed, awarding the Mignaults $528,834 and saying Great-West "cloaked (Palmer) with the attributions of apparent authority."
(Palmer communicated with clients on Great-West Life letterhead, for example.)
The Mignaults had asked for $665,000 to cover the $458,789 Palmer withdrew from their accounts, plus interest, and $500,000 in punitive damages. Keyser did not agree Great-West's actions necessitated punitive damages.
Palmer was convicted in November 2010 of defrauding 23 people, including the theft of $1.5 million during his decade-long run and sentenced to eight years in prison.
Dave Hill, the lawyer representing the Mignaults, said he is happy for his clients, who went through seven years of angst in addition to losing virtually all of their retirement assets. Their retirement nest egg was worth less than $9,600 when they first started their legal action in 2006.
"I act for one other family that was defrauded by Mr. Palmer and we've started a lawsuit (against Great-West). We were waiting to see the outcome of this case first," Hill said.
A spokeswoman for Great-West said the company is "disappointed" with Keyser's ruling.
"We are reviewing the decision and considering an appeal," Marlene Klassen said. "This is a rare and unfortunate situation where a single independent adviser was found to have committed fraud."
Greg Downey, another of Palmer's former clients, was happy to hear the Mignaults won. Now his lawsuit, as well as several others that are at various stages with lawyers at Tapper Cuddy LLP, can proceed full-speed ahead. Downey was taken for $40,000 by Palmer.
"If the Mignaults had lost, we probably would have folded our tent. In my case, I certainly would have. I couldn't afford to pay the legal fees and lose," he said.
Downey said he hopes the precedent set by the ruling will convince Great-West to settle with the rest of Palmer's former clients.
"It's a big expense for us, but it's nothing for them. I would think it would give Great-West incentive to sit down at the table and say, 'Here's an offer,' " he said.