Source: http://www.isthatlegal.ca/index.php?name=Fiduciary-Duties
Timestamp: 2019-04-25 11:47:59+00:00

Document:
'Fiduciaries' are parties with a special care relationship with respect to another. Sometimes it arises from the nature of the relationship (ie. lawyers to clients, trustees to beneficiaries) and other times the relatioship will have to be examined to see if a fiduciary relationship has been created ad hoc.
 At the outset, it is important to emphasize that the characterization of an individual as a “fiduciary” carries a particular meaning at common law, and reflects a conclusion of mixed fact and law: Waxman v. Waxman (2004), 2004 CanLII 39040 (ON CA), 186 O.A.C. 201, at para. 716 (C.A.), leave to appeal dismissed  1 S.C.R. xvii (note). A fiduciary relationship arises where: (1) there is an undertaking by the fiduciary to act in the best interests of the beneficiary; (2) the beneficiary is vulnerable to the fiduciary’s exercise of discretion or control; and (3) an identifiable legal or practical interest of the beneficiary stands to be adversely affected by the fiduciary’s exercise of discretion or control: Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24 (CanLII),  2 S.C.R. 261, at para. 36. With respect to certain traditional, or per se, fiduciary relationships, these elements are presumed to exist. In other circumstances, they will arise on case-by-case, or ad hoc, basis: Hodgkinson v. Simms, 1994 CanLII 70 (SCC),  3 S.C.R. 377, at pp. 408-410; Elder Advocates, at paras. 29-36.
 Mr. McGoey’s fiduciary duties included an obligation to act in good faith and in the best interests of the corporation. He had a specific obligation to scrupulously avoid conflicts of interest with the corporation and not to abuse his position for personal gain: Peoples Department Stores Inc. (Trustee of) v. Wise, 2004 SCC 68 (CanLII),  3 S.C.R. 461, at paras. 35 and 42; and BCE Inc. v. 1976 Debentureholders, 2008 SCC 69,  3 S.C.R. 560, at paras. 39 and 89.
 Disclosure of a directors’ interest in a transaction is just the first step. Disclosure does not relieve a director of his or her obligation to act honestly and in the best interests of the corporation: UPM-Kymmene Corp. v. UPM-Kymmene Miramichi Inc. (2002), 2002 CanLII 49507 (ON SC), 214 D.L.R. (4th) 496 (Ont. S.C.), aff’d (2004), 2004 CanLII 9479 (ON CA), 183 O.A.C. 310 (C.A.).
 I do not accept Mr. McGoey’s rather novel argument that there can be no finding of a breach of fiduciary duty because, before he could be paid under the SAR Cancellation Awards or the Bonus Pool, he was removed from office by the shareholders of UBS. Counsel for Mr. McGoey suggests that the breach is incomplete because no damages have been suffered.
 Similarly, in Canson Enterprises Ltd. v. Boughton & Co., 1991 CanLII 52 (SCC),  3 S.C.R. 534, at p. 553, McLachlin J. (as she then was) stated that “[a] breach of fiduciary duty is a wrong in itself, regardless of whether a loss can be foreseen”.
 It would be a remarkable result if a fiduciary could be allowed to act in a manner contrary to his duty with impunity, on the basis that he was prevented by the beneficiary’s vigilance from receiving a personal benefit.
. Garneau v. Industrial Alliance Insurance and Financial Services Inc.
 The test for establishing an ad hoc fiduciary duty has been modified since Frame v. Smith, 1987 CanLII 74 (SCC),  2 S.C.R. 99. This duty will only be found where the alleged fiduciary has provided an express or implied undertaking to act in the best interests of the other party: Galambos v. Perez, 2009 SCC 48 (CanLII),  3 S.C.R. 247, at para. 66; Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24 (CanLII),  2 S.C.R. 261, at para. 30.
 The appellant argues that the concept of passive acquiescence as it relates to the conduct of fiduciaries is not known to law and liability cannot be imposed on this basis.
 I disagree. A fiduciary who knows about wrongdoing committed against the beneficiary has a duty to tell the beneficiary: Dunsmuir v. Royal Group, 2017 ONSC 4391 (CanLII), 41 C.C.E.L. (4th) 93, at para. 134, aff’d 2018 ONCA 773 (CanLII), 50 C.C.E.L. (4th) 310, at para. 14. As a matter of law, a fiduciary who knows of a fraudulent scheme perpetrated against the beneficiary and passively acquiesces to its continuation has breached his duty to the beneficiary.

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