Broker’s Liabilty And Coverage For Gross Fault

On September 27, 2012, the Quebec Court of Appeal, in a judgment written by Justice Pierre J. Dalphond, rendered an important decision on the liability of a life insurance and investment broker in Audet v Transamerica Life Canada¹ ("Audet"). This judgment, rendered subsequent to the same court's decision in Souscripteurs du Lloyd's v Alimentation Denis & Mario Guillemette Inc.² ("Guillemette") sheds new light on exclusions for gross fault in liability insurance policies.

Audet involved an action against Jacques- André Thibault, a broker, instituted by two former clients, Marie and Pierre Audet (the "Audets"). The Audets inherited approximately $1.5 million each upon their mother's death in 1998 and retained Mr. Thibault to devise and implement an investment strategy for them. The Audets alleged having suffered significant losses further to Mr. Thibault's faulty advice.