(Supreme Court Canada) Mr O’Malley and Dr Zarzycki were senior officers of the claimant (‘Canaero’). Having attempted, unsuccessfully, to procure a contract for Canaero to carry out a topographical survey and mapping of part of Guyana, they resigned from the company. Subsequently, they incorporated their own company, Terra Surveys Ltd (‘Terra’). Terra was successful, shortly afterwards, in obtaining the contract for the topographical survey and mapping. Canaero brought a claim against Mr O’Malley, Dr Zarzycki and Terra. The argument concentrated on breach of fiduciary duty; which was not how the case had been argued below. Laskin J: ‘Descending from the generality, the fiduciary relationship goes at least this far: a director or a senior officer like [the defendants] is precluded from obtaining for himself, either secretly or without the approval of the company (which would have to be properly manifested on full disclosure of the facts), any property or business advantage either belonging to the company or for which it has been negotiating; and especially is this so when the director or officer is a participant in the negotiations on behalf of the company . . An examination of the case law in this Court and in the Courts of other like jurisdictions on the fiduciary duties of directors and senior officers shows the pervasiveness of an ethic in this area of the law. In my opinion, this ethic disqualifies a director or other senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company, or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired.’ Referring to Regal (Hastings) neither the ‘no conflict’ rule nor the ‘no profit’ rule should be considered as ‘the exclusive touchstones of liability.’: ‘In this, as in other branches of the law, new fact situations may require a reformulation of existing principles to maintain its vigour in the new setting.’
Laskin J
(1973) 40 DLR (3d) 371
Canada
Cited by:
Cited – CMS Dolphin Ltd v Paul M Simonet and Another ChD 23-May-2001
The claimant asserted that the defendant had, having at one point been a creative director of the claimant, left to set up an alternate competing business, and diverted business from the first company to the new one. There had been disagreements . .
Cited – Ultraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
Lists of cited by and citing cases may be incomplete.
Updated: 14 October 2021; Ref: scu.183219
