| Lac Minerals Ltd. v. International Corona Resources Ltd. | |
|---|---|
| Court | Supreme Court of Canada |
| Date decided | 1989-08-11 |
| Citation(s) | Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC); 69 OR (2d) 287; 61 DLR (4th) 14; 44 BLR 1; 26 CPR (3d) 97; 36 OAC 57 |
| Judges sitting | McIntyre, Lamer, Wilson, La Forest and Sopinka JJ. |
| Decision by | La Forest J. (Sopinka, J. dissenting in part) |
| Case history | |
| Prior action(s) | (1987), 44 D.L.R. (4th) 592, (1987) 62 O.R. (2d) 1; (1986), 25 D.L.R. (4th) 504, 53 O.R. (2d) 737 |
| Appealed from | Ontario Court of Appeal |
| Keywords | |
| trade secrets, fiduciary relationships, breach of confidence, unjust enrichment, restitution | |
Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574[1] is a leading Supreme Court of Canada decision on the nature of fiduciary and confidential relationships that can be created in the course of business, together with appropriate remedies for restitution when such relationships are breached.
Contents |
International Corona was a junior mining company that was investigating the mineral potential of a property at Hemlo in Northern Ontario. Lac Minerals, a senior mining company, heard of Corona's activity and arranged to visit the site. Corona showed Lac's representatives detailed information about their geological findings, together with their underlying theory about its mineral potential and importance. In further discussions about development and financing options, detailed private information was disclosed. Corona was advised by Lac to aggressively pursue the Williams property. The matter of confidentiality was not raised.
Lac proceeded to stake their own claims east of Corona's property, and acquired the property on which Corona had been working, without the latter having been advised of Lac's intentions. Subsequent attempts by Corona to negotiate the transfer of Lac's interest in the property failed.
Corona formed a joint venture with Teck Corporation to develop a mine on the Corona property, and proceeded to sue Lac for the return of the property.
The trial judge held that there was no binding contract, but Lac was still liable for breach of confidence and breach of fiduciary duty. He ordered the return of the property to Corona, but allowed Lac's claim in part for a lien for the cost of improvements and other payments.
The Ontario Court of Appeal affirmed the trial judge's ruling, also noting that a constructive trust was an appropriate remedy for both the breach of confidence and fiduciary duty.
There were three questions before the Supreme Court of Canada:
The court ruled unanimously that there had been a breach of confidence, and that a constructive trust was the best remedy for dealing with the unjust enrichment that had resulted.
On a 3-2 majority, it was held that no fiduciary duty existed in this case.
There are three conditions that must be present for a fiduciary relationship to exist:
There was no element of dependency shown in this case.
Three elements must exist for a breach of confidence to have occurred:
The law of confidence and the law relating to fiduciary obligations are not coextensive and yet are not completely distinct. A claim for breach of confidence will only be made out, however, when it is shown that the confidee has misused the information to the detriment of the confider. Fiduciary law, however, is concerned with the duty of loyalty and does not require that harm result. Duties of confidence, unlike fiduciary obligations, can arise outside a direct relationship. Another difference is that breach of confidence also has a jurisdictional base at law, and accordingly can draw on remedies available in both law and equity, whereas fiduciary obligations arise only in equity and can only draw upon equitable remedies.
The court can exercise considerable flexibility in fashioning a remedy for breach of confidence because the action does not rest solely on any one of the traditional jurisdictional bases for action - contract, equity or property - but is sui generis and relies on all three.
The constructive trust was the only appropriate remedy here, given the uniqueness of the property, given the fact Corona would have acquired the property but for Lac's breaches of duty, and given the virtual impossibility of accurately valuing the property. In addition, it was the only just remedy, regardless of whether it was based on breach of confidence or breach of a fiduciary relationship. The remedies available under one head are those available to the other. Given a breach of a duty of confidence, the finding of a fiduciary relationship was not strictly necessary.
The noteworthy aspect is that the Court is reluctant to impose fiduciary duties on arm's-length commercial parties, and that such duties should not supplant or amplify other more appropriate causes for action.
| “ |
The consequences attendant on a finding of a fiduciary relationship and its breach have resulted in judicial reluctance to do so except where the application of this "blunt tool of equity" is really necessary. It is rare that it is required in the context of an arm's length commercial transaction. ...the fact that confidential information is obtained and misused cannot itself create a fiduciary obligation. No doubt one of the possible incidents of a fiduciary relationship is the exchange of confidential information and restrictions on its use. Where, however, the essence of the complaint is misuse of confidential information, the appropriate cause of action in favour of the party aggrieved is breach of confidence and not breach of fiduciary duty. |
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The decision has also served to consolidate the law in Canada on the nature and use of confidential information,[2][3] as well as to clarify the nature of fiduciary relationships and duties in Canadian law.[4][5]