Blue Line Hockey Acquisition Co. et al. v. Orca Bay Hockey Limited Partnership et al., (2009) 266 B.C.A.C. 71 (CA)

• Judge: Newbury, Kirkpatrick and Groberman, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: February 03, 2009
• Jurisdiction: British Columbia
• Citations: (2009), 266 B.C.A.C. 71 (CA);2009 BCCA 34

Blue Line Hockey v. Orca Bay Hockey (2009), 266 B.C.A.C. 71 (CA);

    449 W.A.C. 71

MLB headnote and full text

Temp. Cite: [2009] B.C.A.C. TBEd. FE.016

Blue Line Hockey Acquisition Co. Inc., Northland Properties Corporation, Kery Ventures Limited Partnership, R. Thomas Gaglardi, Ryan K. Beedie, True North Hockey Limited Partnership and True North Arena Limited Partnership (appellants/plaintiffs) v. Orca Bay Hockey Limited Partnership, Orca Bay Hockey Inc., Orca Bay Arena Limited Partnership, Orca Bay Arena Corp., John E. McCaw, Jr., Sportco Investments Inc., Sportco Investments II Inc., Francesco Aquilini, Aquilini Investment Group Inc., Vancouver Hockey Limited Partnership, Vancouver Hockey General Partner Inc., Vancouver Arena Limited Partnership, Vancouver Arena General Partner Inc., Aquilini Investment Group Limited Partnership, Tri Power Developments Limited Partnership, 0783612 B.C. Ltd. and Vancouver Canucks Limited Partnership (respondents/defendants)

(CA035780; 2009 BCCA 34)

Indexed As: Blue Line Hockey Acquisition Co. et al. v. Orca Bay Hockey Limited Partnership et al.

British Columbia Court of Appeal

Newbury, Kirkpatrick and Groberman, JJ.A.

February 3, 2009.

Summary:

Three businessmen worked together for some months beginning in November 2003 towards the possible purchase of a 50% interest in the Vancouver Canucks. The purchase was to be carried out by a "tax-effective entity" to be formed later. One of the three men, the defendant Aquilini, withdrew from the group in March 2004. The remaining two (Gaglardi and Beedie) continued their efforts and expressed interest in buying the Canucks and General Motors Place (the enterprise). Six months later, Aquilini began his own discussions and was able to reach an agreement for the purchase of a 50% interest in the enterprise, and an option to buy the remaining 50%. His former associates, the plaintiffs Gaglardi and Beedie and others sued the defendants. They claimed that Aquilini breached a fiduciary duty owed to them as partners, either by wrongfully competing against them for the very objective of the partnership, or by appropriating a business opportunity belonging to it. Therefore, they argued that Aquilini held his interest in the enterprise on a constructive trust for them.

The British Columbia Supreme Court, in a decision reported at [2008] B.C.T.C. Uned. 985, dismissed the action. The court concluded that the relationship among Gaglardi, Beedie and Aquilini was not one of partnership or joint venture. The three pursued the acquisition of the Canucks without an agreement as to their respective rights and obligations during the pursuit or the terms of a deal they were ultimately prepared to accept. Each was free to leave the group and pursue the opportunity on his own account without regard to the others. Even assuming the relationship constituted a partnership or joint venture, it ended when Aquilini gave notice of his departure. Any fiduciary obligations arising from the relationship ended at the same time. The plaintiffs appealed.

The British Columbia Court of Appeal dismissed the appeal, holding that the trial judge was correct to dismiss the plaintiffs' claims.

Equity - Topic 3607

Fiduciary or confidential relationships - General principles - Relationships which are not fiduciary - [See Partnership - Topic 5167 ].

Equity - Topic 3647

Fiduciary or confidential relationships - Breach of fiduciary relationship - By prospective business partner - [See Partnership - Topic 5167 ].

Equity - Topic 3647.1

Fiduciary or confidential relationships - Breach of fiduciary relationship - By former business partner - [See Partnership - Topic 5167 ].

Equity - Topic 3650

Fiduciary or confidential relationships - Breach of fiduciary relationship - Joint ventures - [See Partnership - Topic 5167 ].

Partnership - Topic 10

General - Partnership - What constitutes - Three businessmen worked together for some months beginning in November 2003 towards the possible purchase of a 50% interest in the Vancouver Canucks - The purchase was to be carried out by a "tax-effective entity" to be formed later - One of them, the defendant Aquilini, withdrew from the group in March 2004 - The remaining two (Gaglardi and Beedie) continued their efforts and expressed interest in buying the Canucks and GM Place (the enterprise) - Six months later, Aquilini began his own discussions and was able to reach an agreement for the purchase of a 50% interest in the enterprise and an option to buy the remaining 50% - Gaglardi and Beedie and others sued the defendants - The trial judge concluded that the relationship among Gaglardi, Beedie and Aquilini was not one of partnership or joint venture - The three pursued the acquisition of the Canucks without an agreement as to their respective rights and obligations during the pursuit or the terms of a deal they were ultimately prepared to accept - Each was free to leave the group and pursue the opportunity on his own account without regard to the others - Even assuming the relationship constituted a partnership or joint venture, it ended when Aquilini gave notice of his departure - The British Columbia Court of Appeal dismissed the plaintiffs' appeal - The court held, inter alia, that the trial judge did not err in finding the evidence did not support the existence of a pursuit partnership - The parties' conduct did not evidence an intention to carry business in common with a view to profit - They had a loose understanding that they would hold exploratory talks - See paragraphs 27 to 52.

Partnership - Topic 103

Tests of existence - General principles - Carrying on business in common - [See Partnership - Topic 10 ].

Partnership - Topic 104

Tests of existence - General principles - Carrying on business with a view of profit - [See Partnership - Topic 10 ].

Partnership - Topic 5167

Relations between partners - Fiduciary duties - Duty not to compete - Three businessmen worked together for some months beginning in November 2003 towards the possible purchase of a 50% interest in the Vancouver Canucks - The purchase was to be carried out by a "tax-effective entity" to be formed later - One of them, the defendant Aquilini, withdrew from the group in March 2004 - The remaining two (Gaglardi and Beedie) continued their efforts and expressed interest in buying the Canucks and GM Place (the enterprise) - Six months later, Aquilini began his own discussions and was able to reach an agreement for the purchase of a 50% interest in the enterprise and an option to buy the remaining 50% - Gaglardi and Beedie and others sued the defendants - They claimed that Aquilini breached a fiduciary duty owed to them as partners, either by wrongfully competing against them for the very objective of the partnership, or by appropriating a business opportunity belonging to it - The trial judge concluded that there was no partnership or joint venture - Alternatively, Aquilini gave notice of his departure - Any fiduciary obligations arising from the relationship ended at the same time - The British Columbia Court of Appeal dismissed the plaintiffs' appeal - The facts as found by the trial judge did not establish any of the usual hallmarks of a fiduciary relationship generally - The parties were experienced businessmen - They had legal advice at the outset of their relationship - There was no evidence that they discussed or assumed that each of them would act in the others' best interests, nor did any confer a discretion on another to act for him, thus becoming vulnerable to that other's discretion - None was empowered to bind the others in their negotiations - See paragraphs 53 to 58.

Cases Noticed:

Khan v. Miah, [2001] All E.R. 20; [2000] UKHL 55, revd. [1998] 1 W.L.R. 477 (C.A.), refd to. [para. 3].

Canadian Aero Service Ltd. v. O'Malley et al., [1974] S.C.R. 592; 40 D.L.R.(3d) 371, refd to. [para. 4].

Porter v. Armstrong, [1926] S.C.R. 328, refd to. [para. 8].

Whistler Mountain Ski Corp. v. Projex Management Ltd. (1994), 90 B.C.L.R.(2d) 283 (C.A.), refd to. [para. 9].

Surerus Construction & Development Ltd. et al. v. Rudiger et al., [2000] B.C.T.C. 955; 11 B.L.R.(3d) 21; 2000 BCSC 1746, refd to. [para. 9].

Milroy v. Klapstein (2003), 342 A.R. 352; 24 Alta. L.R.(4th) 349; 2003 ABQB 871, refd to. [para. 9].

Backman v. Minister of National Revenue, [2001] 1 S.C.R. 367; 266 N.R. 246; 2001 SCC 10, refd to. [para. 9].

Canlan Investment Corp. v. Gettling et al. (1997), 95 B.C.A.C. 16; 154 W.A.C. 16; 37 B.C.L.R.(3d) 140 (C.A.), refd to. [para. 10].

Zynik Capital Corp. et al. v. Faris et al., [2007] B.C.T.C. Uned. C57; 30 B.L.R.(4th) 32; 2007 BCSC 527, refd to. [para. 10].

Ness Training Ltd. v. Triage Central Ltd., [2002] S.L.T. 675 (Scot. O.H.), refd to. [para. 31].

Bass Clef Entertainments Ltd. v. HOB Concerts Canada Ltd. et al., [2007] O.T.C. Uned. 895; 31 B.L.R.(4th) 255 (Sup. Ct.), refd to. [para. 31].

Perreault v. Churchill, [1994] Y.J. No. 121 (S.C.), refd to. [para. 31].

Interprovincial Heat Sales Ltd. v. Minister of National Revenue, [2002] T.C.J. No. 632 (T.C.C.), refd to. [para. 31].

Davis v. Ouellette (1981), 27 B.C.L.R. 162 (S.C.), refd to. [para. 37].

Scragg v. Lotzkar et al., [2004] B.C.T.C. 1447; 49 B.L.R.(3d) 154; 2004 BCSC 1447, affd. (2005), 219 B.C.A.C. 53; 361 W.A.C. 53; 10 B.L.R.(4th) 173; 2005 BCCA 596, refd to. [para. 40].

Red Burrito Ltd. v. Hussain et al., [2007] B.C.T.C. Uned. E84; 33 B.L.R.(4th) 205; 2007 BCSC 1277, refd to. [para. 43].

Continental Bank Leasing Corp. v. Minister of National Revenue, [1998] 2 S.C.R. 298; 229 N.R. 58, refd to. [para. 44].

Matthews v. Maurice (1923), 54 O.L.R. 64 (H.C.), refd to. [para. 45].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 48].

May and Butcher Ltd. v. R., [1934] 2 K.B. 17 (H.L.), refd to. [para. 51].

Cassels v. Stewart (1881), 6 App. Cas. 64, refd to. [para. 53].

Holme v. Hammond (1872), L.R. 7 Exch. 218, refd to. [para. 53].

Hospital Products Ltd. v. United States Surgical Corp. (1984), 55 A.L.R. 417 (Aust. H.C.), refd to. [para. 54].

Norberg v. Wynrib, [1992] 2 S.C.R. 226; 138 N.R. 81; 9 B.C.A.C. 1; 19 W.A.C. 1; 92 D.L.R.(4th) 449, refd to. [para. 54].

White et al. v. Jones et al., [1995] 1 All E.R. 691; 179 N.R. 197 (H.L.), refd to. [para. 54].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 54].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1; 117 D.L.R.(4th) 161, refd to. [para. 55].

Island Export Finance v. Umunna, [1986] B.C.L.C. 460 (Q.B.), refd to. [para. 60].

Balston Ltd. v. Headline Filters Ltd., [1990] F.S.R. 385 (Ch.), refd to. [para. 60].

CMS Dolphin Ltd. v. Simonet, [2001] EWHC 415 (Ch.), refd to. [para. 60].

Bhullar v. Bhullar, [2003] EWCA Civ. 424; [2003] B.C.C. 711 (C.A.), refd to. [para. 60].

Phipps v. Boardman, [1966] 3 All E.R. 721 (H.L.), refd to. [para. 60].

Authors and Works Noticed:

Carrad, David Clayton, Corporate Opportunity (1961), 74 Harv. L. Rev. 765, generally [para. 60].

Carrad, David Clayton, The Corporate Opportunity Doctrine in Delaware: A Guide to Corporate Planning and Anticipatory Defensive Measures (1977), 2 Del. J. Corp. L. 1, generally [para. 60].

Finn, Paul D., Equity and Commercial Relationships (1987), p. 595 [para. 57].

Hadjinestoros, Michael, Exploitation of Business Opportunities: How the U.K. Courts Ensure that Directors Remain Loyal to their Companies, [2008] I.C.C.L.R. 70, p. 75 [para. 60].

Kennedy, J., Equity in a Commercial Context, in Finn, Paul D., Equity and Commercial Relationships (1987), p. 595 [para. 57].

Lindley and Banks on Partnership (17th Ed. 1995), p. 13-14 [paras. 2, 35].

Lindley and Banks on Partnership (18th Ed. 2002), pp. 2-03 [para. 42]; 2-08 [para. 49]; 3-12 [para. 53]; 7-16 [para. 5].

Lindley, Nathaniel, A Treatise on the Law of Partnership (7th Ed. 1905), generally [para. 2].

McGuinness, Kevin Patrick, The Law and Practice of Canadian Business Corporations (2002 Looseleaf), §§ 8.157 [para. 54]; 8.158 [para. 61].

Percell, P., Fiduciary Obligations or is it a Breach of Fiduciary Duty to Accept an Appointment to the Bench? (2004), 28 Adv. Q. 471, fn. 7 [para. 56].

Rotman, Leonard Ian, Fiduciary Law (2005), pp. 93, 95 [para. 54]; 435, 436 [para. 60].

Scott, Austin W., The Fiduciary Principle (1949), 37 Cal. L. Rev. 539, p. 540 [para. 54].

Counsel:

I.G. Nathanson, Q.C., M.A. Clemens, Q.C., R.D. Diebolt, Q.C., and S.R. Schachter, Q.C., for the appellants;

H. Poulus, Q.C., H. Shapray, Q.C., and D. Brown, for the respondents.

This appeal was heard on December 9-11, 2008, at Vancouver, B.C., by Newbury, Kirkpatrick and Groberman, JJ.A., of the British Columbia Court of Appeal. Newbury, J.A., delivered the following reasons for judgment for the court on February 3, 2009.