A British Columbia court has reluctantly refused to hold an insurance company liable for a fraud perpetrated by one of its agents, leaving the investor who lost his life savings high and dry.

The Supreme Court of B.C. ruled that Great-West Life Assurance Co. could not be held responsible for a fraud by one of their former agents, Paul Stenner. The plaintiff, John LeRuyet, gave $133,000 to Stenner in 1995 on the understanding that Stenner would purchase a GWL annuity that would provide him with monthly payments of $500 for a period of five years, followed by a single payment of $213,492.

Stenner did not purchase the annuity. Instead, he appropriated the money for his own purposes. Stenner concealed his deceit until February 1997 by making the monthly payments to the plaintiff himself. After the fraud was discovered Stenner was charged and convicted of fraud. The court made a restitution order in favour of the plaintiff (and others who had been defrauded by Stenner) but the plaintiff has been unable to recover any money from Stenner.

Instead, LeRuyet sought damages from GWL, alleging that Stenner was acting as agent for GWL when he misappropriated the funds. He asserted vicarious liability for the misappropriation committed by Stenner acting as its agent, and negligence in failing properly to investigate Stenner’s background and failing to supervise him.

The court concluded the claim couldn’t hold up on either ground, saying in the decision, “It is very unfortunate that the plaintiff suffered this loss as the result of the fraud of Stenner. It is unfortunate that he has been unable to recover any of his loss from Stenner. But I have come to the conclusion that GWL is not legally responsible for his loss. His action against GWL is therefore dismissed.”