Fiduciary Obligations in the Supreme Court of Canada: A Retrospective

Abstract

This paper is a contribution to the 50th anniversary issue of the Canadian Business Law Journal, which will be dedicated to developments in key areas of Canadian law over the past 20-40 years. The paper comprises a critical analysis of Supreme Court of Canada cases on fiduciary obligations decided over the past 20 years. The paper addresses three related questions: (1) what is the nature of the fiduciary relationship; (2) what is the relationship between contract and fiduciary law; and (3) what are the remedial goals of fiduciary law? The paper argues that the SCC cases on the first question are characterized by a high level of indeterminacy, that the type of inductive reasoning the court employed in these cases (top-down reasoning) runs counter to the common law tradition of argument by analogy (bottom-up reasoning) and that adherence to more conventional techniques would have avoided much of the criticism the cases have attracted. Cases on the second question are ambivalent about whether or not fiduciary obligations are consensual and they reveal a lack of commitment on the court's part to either the contractarian theory or the anti-contractarian theory of fiduciary law. Cases on the third question reveal an ambivalence about the function of gains-based remedies, such as the constructive trust and the account of profits, and on the legitimacy of using private law for deterrence purposes. The paper argues that the court's ambivalence on both the second and third questions adds layers of uncertainty to the law of fiduciary obligations in Canada which, for the most part, are not found in other Commonwealth jurisdictions.