The Quebec Superior Court recently ruled, in Teolis et
Clinique Podiatrique de l'Est inc. c. Iacono, Lloyd's et
American Home, that two professional liability carriers
insuring a financial planner were not obliged to compensate a claim
made by the client of the financial planner.
The ruling addresses the prior knowledge of the financial
planner with regards to complaints arising out of his services,
which were made before the inception of the professional liability
policies, as well as the claim, although made by the client against
his financial planner within the policy period, was not reported by
the insured financial planner against his professional insurers
during the policy period.
Before concluding that the claims were excluded because of the
gross negligence and wilful violation by the insured of the
regulation on securities, the court ruled that coverage was not
triggered because the definition of "professional
services" was not met. In fact, the policies dictate that the
services of the insured must be ones concerning financial planning
activities where the agent is fully licensed or registered with the
regulatory body as a licensed financial planner. The evidence
allowed the court to conclude that the financial planner traded
securities and financial products without authorization and outside
the limits of his certification and consequently was not within the
execution of his professional duties for which he was insured.
It's important to mention that the Quebec regulatory body
for financial securities (AMF) had previously dismissed the claims
filed by the client victim on the basis that the services rendered
by the financial planner were of a private nature and did not
relate to activities or financial planning within the terms of the
Quebec law on the distribution of products and financial services.
The dismissal of those requests for compensation with the AMF
indemnity fund was unfortunate but allowed the court to conclude,
within the evidence filed during trial, that the services of the
financial planner cannot be deemed as covered within the definition
of "professional services" or "professional
activities". Although the court could have dismissed the
lawsuit strictly based on the above, it nevertheless evaluated
whether or not exclusions did apply to the claim filed, assuming
the coverage was triggered.
Justice Sylvie De Vito decided that the exclusion for
"wrongful act" defined as gross negligence, etc.,
qualified as applicable due to the evidence filed. The financial
planner's errors and omissions were, by nature, necessarily
construed as a conduct which revealed a blatant disregard, gross
negligence and total recklessness with regards to the financial
interests of his client.
Unfortunately, the court had no choice but to dismiss the
lawsuit, notwithstanding its sympathy towards the claimant who was
involved in this sad business affair.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under B.C.'s former and current Limitation Act, the limitation period for a Plaintiff's claim can be extended on the basis of a Defendant having acknowledged in writing some liability for the cause of action.
Automobile drivers, like fine wine, tend to get better with age. Older drivers can draw on a wealth of experience from their years on the road to assist them when faced by a variety of dangerous conditions.
The insurance industry will be interested in Ledcor Construction Ltd v. Northbridge Indemnity Insurance Co because of principles the Supreme Court of Canada applied to the "faulty workmanship" exclusion in a Builders' Risk policy.
For the first time in BC, a Court has decided that an insured is entitled to special costs, rather than the lower tariff costs, solely because they were successful in a coverage action against their insurer.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).