First Majestic Silver Corp. et al. v. Davila et al., (2013) 340 B.C.A.C. 117 (CA)

• Judge: D. Smith, J.A.
• Court: Court of Appeal (British Columbia)
• Case Date: June 18, 2013
• Jurisdiction: British Columbia
• Citations: (2013), 340 B.C.A.C. 117 (CA);2013 BCCA 312

First Majestic Silver Corp. v. Davila (2013), 340 B.C.A.C. 117 (CA);

    579 W.A.C. 117

MLB headnote and full text

Temp. Cite: [2013] B.C.A.C. TBEd. JL.012

First Majestic Silver Corp., First Silver Reserve Inc., and Minera El Pilon, S.A. de C.V. (respondents/appellants on cross-appeal/plaintiffs) v. Hector Davila Santos and Minerales y Minas Mexicanas, S.A. de C.V. (appellants/respondents on cross-appeal/defendants)

(CA040924; 2013 BCCA 312)

Indexed As: First Majestic Silver Corp. et al. v. Davila et al.

British Columbia Court of Appeal

D. Smith, J.A.

June 27, 2013.

Summary:

Davila was a director and the president and majority shareholder of the plaintiff First Silver, which operated a silver mine in Mexico. In April 2006, he entered into an agreement to sell his 63% holding in First Silver to the plaintiff First Majestic for $53 million. Thereafter, he ceased to be a director and an officer of First Silver. The plaintiffs sued Davila and a company controlled by him, alleging fraud and breach of fiduciary duty in relation to Davila's personal acquisition of a property that First Silver had had an option on.

The British Columbia Supreme Court, in a decision reported at [2013] B.C.T.C. Uned. 717, concluded that Davila had breached his fiduciary duty to First Silver by engaging in misrepresentation, misconduct and wrongful acts in order to advance his own self-interest. The court awarded the plaintiffs equitable damages (equitable compensation) for the loss of opportunity (loss of profits) from the operation of the mine since 2008. The court assessed damages at approximately $93.84 million U.S. The defendants appealed, seeking to overturn the court's finding of liability or, alternatively, the award of damages. The plaintiffs cross-appealed respecting a prejudgment ruling in which the court required them to elect between the remedies of equitable damages and disgorgement of the defendants' gain/benefit. The plaintiffs applied under s. 10(2)(b) of the Court of Appeal Act to have the defendants post security for the trial judgment and, if granted, for a further order that, in the absence of the security being posted, they be granted leave to apply to have the appeal dismissed as abandoned.

The British Columbia Court of Appeal, per D. Smith, J.A., ordered the defendants to post $79 million U.S. as security for the trial judgment or, alternatively, a letter of credit in that amount within 90 days, with liberty to apply for further directions on the form of the security, if necessary. In the event that the defendants failed to comply with the order, the plaintiffs were granted leave to apply for an order dismissing the appeal as abandoned.

Editor's note: There are several other prior cases involving these parties which have been assigned the Indexed As of either First Majestic Silver Corp. et al. v. Santos et al. or First Majestic Silver Corp. et al. v. Davila et al.

Practice - Topic 6076

Judgments and orders - Payment of judgments - Security for payment pending appeal - See paragraphs 15 to 25.

Cases Noticed:

Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592; 40 D.L.R.(3d) 371, refd to. [para. 6].

Creative Salmon Co. v. Staniford (2007), 242 B.C.A.C. 299; 400 W.A.C. 299; 2007 BCCA 285, refd to. [para. 15].

Paz et al. v. Hardouin et al. (1995), 61 B.C.A.C. 302; 100 W.A.C. 302; 10 B.C.L.R.(3d) 232 (C.A.), refd to. [para. 16].

Cadinha v. Chemar Corp. et al. (1995), 69 B.C.A.C. 70; 113 W.A.C. 70; 17 B.C.L.R.(3d) 347 (C.A.), refd to. [para. 16].

Kedia v. Shandro Dixon Edgson (2007), 243 B.C.A.C. 80; 401 W.A.C. 80; 42 C.P.C.(6th) 366; 2007 BCCA 316, refd to. [para. 17].

Chan et al. v. Vancouver Trade Mart Inc. et al., [1997] 4 W.W.R. 286; 91 B.C.A.C. 144; 148 W.A.C. 144 (C.A.), refd to. [para. 17].

Aikenhead et al. v. Jenkins (2002), 166 B.C.A.C. 293; 271 W.A.C. 293; 2002 BCCA 234, refd to. [para. 18].

Richland Construction Inc. v. Manningwa Developments Inc. (1996), 71 B.C.A.C. 311; 117 W.A.C. 311 (C.A.), refd to. [para. 20].

Counsel:

D. Church, Q.C., and M. Buhler, for the appellants;

B. Cramer and F. Lamer, for the respondents.

This application was heard in Chambers at Vancouver, British Columbia, on June 18, 2013, by D. Smith, J.A., of the British Columbia Court of Appeal, who delivered the following reasons for judgment on June 27, 2013.