Canada: Great-West Life Held Liable For Acts Of Fraud Committed By Agent

Great-West was recently held liable for the fraud of its former agent, where it permitted him to continue dealing with clients and operate from its premises for years, following termination of his agency contract for dishonest conduct. It then took the position that the former agent was an independent broker, for whom it bore no responsibility. Justice Keyser disagreed and awarded the plaintiffs $528,834 (plus interest), in compensation for funds that the former agent had misappropriated from them over a number of years.1

The agent, Gary Palmer ("Palmer"), was initially hired as an agent in 1991, and sold insurance annuities for Great-West Life ("GWL") between 1991 and 2006. The plaintiffs, Michel and Lorraine Mignault, became Palmer's clients in 1991, and with his assistance they began to consolidate their holdings exclusively into GWL products. Palmer handled transactions for the Mignaults and he continued to look after their investments.

Beginning in 1995, however, GWL was made aware of several instances of duplicitous conduct on Palmer's part towards other GWL clients. As a result, GWL terminated Palmer's agency contract. Astonishingly, however, GWL decided to permit Palmer to continue to service existing GWL clients, without any notice to them of Palmer's conduct. GWL did not inform the Mignaults of Palmer's termination; instead, Palmer was allowed to continue to service their existing GWL accounts.

Inexplicably, in 1998, GWL rehired Palmer as a broker. However, although changes were internally made at GWL to reflect Palmer's change in status, he was still identified as 'agent' on all forms sent to clients from then on.

Within months of being rehired, Palmer began to persuade the Mignaults to withdraw money from their GWL annuity accounts. The Mignaults believed that they were simply transferring money between their various GWL portfolios, when in fact they were signing their money over to Palmer and his company. In this manner, Palmer misappropriated hundreds of thousands of dollars from the Mignaults and other victims.

The Mignaults were finally notified for the first time in 2006 of Palmer's misconduct.

Palmer was eventually convicted of fraud involving the Mignaults and other clients, and was sentenced to eight years in prison.

The Mignaults then filed a civil lawsuit. As against GWL, they sought to hold GWL vicariously liable for Palmer's fraudulent activities, which resulted in the loss of over half a million dollars' worth of their retirement fund. The Mignaults argued that at all times Palmer was acting as GWL's agent, and that GWL was consequently responsible for his action.

GWL took the position that Palmer was not their agent, but was in fact in independent contractor acting as the Mignaults' agent in their dealings with GWL. Alternatively, GWL argued that if Palmer was its agent, then he was acting outside of the scope of his authority in his dealings with the Mignaults.

Ultimately, the case turned on classic principles of agency and the doctrine of "apparent authority". According to Justice Keyser,

[a]pparent authority (also called ostensible authority) exists where the words or conduct of the principal would lead a reasonable person to believe that the agent was authorized to act, notwithstanding the fact that the principal and ostensible agent had never discussed such authority. The doctrine applies regardless of whether the agent is acting in fraud of the principal, but is negated where the third party is aware of this fraud.

Citing this and other principles developed in previous case law from other provinces, notably Thiessen v. Mutual Life Assurance Co. of Canada,2 the Court ultimately found for the Mignaults. It held that it was necessary to look at the case "not from the perspective of the principal [i.e. GWL], but from the perspective of the vulnerable customer of that principal" in the context of the business being done.

Keyser J. found that by all accounts, GWL was holding Palmer out as its agent. It "cloaked [Palmer] with the attributions of apparent authority." The key facts that the Court found compelling were:

  • in all communications between the Mignaults and GWL, Palmer was identified as an 'agent', including client letters, client statements, transaction statements and confirmation notices
  • GWL never advised the Mignaults of the limitations of Palmer's authority as an independent contractor, because this was deemed to be internal
  • GWL never advised the Mignaults that Palmer was not a true agent of GWL (in the opinion of GWL)
  • GWL never advised the Mignaults that Palmer was terminated in 1996
  • when Palmer was rehired in 1998, GWL never advised the Mignaults the new limitations of his authority
  • based on an internal GWL investigation, it was found that other defrauded victims were under the same impression as the Mignaults with respect to Palmer's authority

This case demonstrates the readiness with which courts will find that a principal-agent relationship exists between an insurer and its agent or broker, especially in cases where clients are not aware of the true relationship between the insurer and the broker. Based on this case, it is clear that if insurers wish to guard against being found to be brokers' principals, they must be specific with their insureds as to the true nature and extent of a broker's authority vis-a-vis the insureds' dealings with him/her.


1 Mignault v. Palmer, 2013 MBQB 300 (Man. Q.B.).

2 2002 BCCA 501.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions