International Corona Resources Ltd. v. LAC Minerals Ltd., (1989) 101 N.R. 239 (SCC)

• Judge: McIntyre, Lamer, Wilson, La Forest and Sopinka, JJ.
• Court: Supreme Court (Canada)
• Case Date: August 11, 1989
• Jurisdiction: Canada (Federal)
• Citations: (1989), 101 N.R. 239 (SCC);[1989] SCJ No 83 (QL);26 CPR (3d) 97;[1989] ACS no 83;44 BLR 1;35 ETR 1;6 RPR (2d) 1;[1989] CarswellOnt 126;16 ACWS (3d) 345;[1989] 2 SCR 574;36 OAC 57;61 DLR (4th) 14;JE 89-1204;69 OR (2d) 287;101 NR 239;1989 CanLII 34 (SCC)

Intl. Corona Res. v. LAC Minerals (1989), 101 N.R. 239 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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LAC Minerals Ltd. v. International Corona Resources Ltd.

(No. 20571)

Indexed As: International Corona Resources Ltd. v. LAC Minerals Ltd.

Supreme Court of Canada

McIntyre, Lamer, Wilson, La Forest and Sopinka, JJ.

August 11, 1989.

Summary:

Corona believed there was gold under a property referred to as the Williams' property and was attempting to purchase the property. Corona needed extra funds to develop the mining potential of the property and LAC expressed an interest in the development. Corona and LAC entered negotiations towards a joint venture to develop the property. Using information obtained from Corona during these negotiations, LAC purchased the Williams' property before Corona had a chance to do so. The joint venture negotiations were terminated before an agreement was reached and LAC proceeded to develop the property. Corona commenced an action to have the property transferred to it, alleging a breach of confidence and breach of fiduciary duty by LAC in using the information obtained from Corona during the joint venture negotiations. The trial judge allowed the action, holding that there was a breach of confidence and fiduciary duty. He held that LAC held the property in a constructive trust for Corona and ordered that the property be transferred to Corona upon payment of compensation to LAC for LAC's improvements to the land (e.g., a mine and mill). LAC appealed the transfer order. Corona cross-appealed the requirement that it pay compensation to LAC.

The Ontario Court of Appeal, in a decision reported 23 O.A.C. 263, dismissed the appeal and cross-appeal. LAC appealed and Corona cross-appealed.

The Supreme Court of Canada, per La Forest, Lamer and Wilson, JJ., dismissed the appeal and cross-appeal. Sopinka, J., dissenting (McIntyre, J., concurring), would have allowed the appeal in part and dismissed the cross-appeal.

Equity - Topic 3603

Fiduciary or confidential relationships - Fiduciary v. confidential relationships - La Forest, J., of the Supreme Court of Canada, distinguished between the law respecting fiduciary obligations and the law respecting confidential relationships - See paragraphs 38 to 41.

Equity - Topic 3606

Fiduciary or confidential relationships - Fiduciary relationship - What constitutes - La Forest, J., and Sopinka, J., of the Supreme Court of Canada, expressed separate opinions on the law respecting fiduciary relationships - The opinions included a discussion of the factors giving rise to such relationships and whether fiduciary obligations may be imposed in arm's length commercial transactions - See paragraphs 20 to 59, 119 to 145.

Equity - Topic 3606

Fiduciary or confidential relationships - Fiduciary relationship - What constitutes - Corona and LAC were negotiating towards a joint venture agreement respecting the purchase of land for mining - LAC used information obtained in the negotiations to acquire the land for itself - Lamer, Sopinka and McIntyre, JJ., of the Supreme Court of Canada, held that no fiduciary relationship existed between LAC and Corona - See paragraphs 81, 119 to 145 - La Forest, J., opined that a fiduciary obligation existed which was breached by LAC - See paragraphs 20 to 59 - Wilson, J., opined that no ongoing fiduciary relationship existed, but that a fiduciary duty arose in LAC when Corona made available confidential information, which duty was breached by LAC - See paragraphs 86, 87.

Equity - Topic 3606

Fiduciary or confidential relationships - Fiduciary relationship - What constitutes - La Forest, J., of the Supreme Court of Canada, discussed whether there was a practice in the mining industry which imposed fiduciary obligations on parties while negotiating joint ventures - See paragraphs 42 to 46 - Sopinka, J. (McIntyre, J., concurring), opined that the practice among geologists to act honourably toward each other is no doubt admirable and a practice to be fostered, but it should not be used to create a fiduciary relationship where one does not exist - See paragraphs 138 to 140.

Equity - Topic 3647

Fiduciary or confidential relationships - Breach of fiduciary relationship - By prospective business partners - [See second Equity - Topic 3606 above].

Equity - Topic 3654

Fiduciary or confidential relationships - Breach of fiduciary relationship - Remedies - La Forest, J., of the Supreme Court of Canada, discussed the remedies available for breach of a fiduciary obligation and breach of confidence, including the remedy of constructive trust - See paragraphs 60 to 80 - La Forest, J., opined also that the remedies available to one head of claim are also available to the other - See paragraph 20.

Equity - Topic 3654

Fiduciary or confidential relationships - Breach of fiduciary relationship - Remedies - Corona and LAC were negotiating a joint venture agreement respecting the purchase of land for mining - LAC used information obtained in the negotiations to acquire the land for itself - The five members sitting for the Supreme Court of Canada held that LAC breached a duty of confidence in purchasing the land - La Forest, Lamer and Wilson, JJ., held that the breach of confidence gave rise to a restitutionary claim of unjust enrichment for which a constructive trust was the only appropriate remedy - La Forest and Wilson, JJ., opined that LAC also breached fiduciary obligations giving rise to the remedy of constructive trust; however, the three other judges disagreed - Sopinka, J. (McIntyre, J., concurring), agreed that there was a breach of confidence, but opined that damages, rather than a constructive trust, was the appropriate remedy.

Equity - Topic 3713

Fiduciary or confidential relationships - Commercial relationships - Arm's length commercial transactions - La Forest, J., and Sopinka, J., of the Supreme Court of Canada expressed separate opinions respecting the imposition of fiduciary obligations in commercial transactions - See paragraphs 33 to 37, 55 to 59, 119 to 145 - La Forest, J., and Wilson, J., also in separate reasons, opined that fiduciary obligations may arise between negotiating parties, notwithstanding that no agreement is ever completed - See paragraphs 58, 87.

Equity - Topic 3713

Fiduciary or confidential relationships - Commercial relationships - Arm's length commercial transactions - [See third Equity - Topic 3606 above].

Equity - Topic 3902

Fiduciary or commercial relationships - Breach of confidence - What constitutes - Corona and LAC were negotiating towards a joint venture agreement respecting the purchase of land for mining - LAC used information obtained from Corona to purchase the land for itself - The Supreme Court of Canada held that LAC breached a duty of confidence in purchasing the land for itself - See paragraphs 7 to 19, 82, 88, 146 to 161.

Equity - Topic 3904

Fiduciary or confidential relationships - Breach of confidence - Elements of action for - La Forest, J., of the Supreme Court of Canada stated that the test for determining whether there has been a breach of confidence consists of establishing three elements: (1) that the information conveyed was confidential, (2) that it was communicated in confidence, and (3) that it was misused by the party to whom it was communicated - See paragraph 7.

Equity - Topic 3906

Fiduciary or confidential relationships - Breach of confidence - Remedies - La Forest, J., and Sopinka, J. (McIntyre, J., concurring) of the Supreme Court of Canada, discussed the remedies available for breach of confidence, including the remedy of constructive trust - See paragraphs 60 to 80, 162 to 200.

Equity - Topic 3906

Fiduciary or confidential relationships - Breach of confidence - Remedies - [See second Equity - Topic 3654 above].

Joint Ventures - Topic 1402

Relations between parties - Fiduciary - [See second Equity - Topic 3606 above].

Joint Ventures - Topic 1402

Relations between parties - Fiduciary - [See third Equity - Topic 3606 above].

Joint Ventures - Topic 1403

Relations between parties - Confidence - [See Equity - Topic 3902 above].

Mines and Minerals - Topic 3

General - Trade custom or practice - [See third Equity - Topic 3606 above].

Real Property - Topic 8261

Liens - For improvements - General - Corona and LAC were negotiating a joint venture agreement respecting the purchase of land for mining - LAC used information obtained in the negotiations to acquire the land for itself - The Supreme Court of Canada affirmed that LAC breached a confidence and as a remedy LAC should transfer the land to Corona upon payment of compensation to LAC for money LAC expended on the property - The court affirmed that LAC had a lien on the property respecting its improvements on the basis that it would be unfair for Corona to be unjustly enriched as a result of the imposition by the court of a constructive trust - See paragraph 79.

Restitution - Topic 62

Unjust enrichment - What constitutes - [See second Equity - Topic 3654 above].

Restitution - Topic 123

Unjust enrichment - Remedies - Constructive trust - La Forest, J., of the Supreme Court of Canada, discussed when the remedy of constructive trust would be imposed respecting a claim for unjust enrichment - See paragraphs 71 to 76 - Sopinka, J. (McIntyre, J., concurring), expressed a separate opinion on the remedy of constructive trust - See paragraphs 162 to 184.

Restitution - Topic 123

Unjust enrichment - Remedies - Constructive trust - [See second Equity - Topic 3654 above].

Trusts - Topic 2308

Constructive trusts - Circumstances when imposed - [See second Equity - Topic 3654 above].

Trusts - Topic 2308

Constructive trusts - Circumstances when imposed - Breach of confidence or fiduciary relationships - [See first Restitution - Topic 123 above].

Trusts - Topic 2344

Constructive trusts - Basis for imposition - Breach of confidence or fiduciary relationship - [See second Equity - Topic 3654 above].

Trusts - Topic 2344

Constructive trusts - Basis for imposition - Breach of confidence or fiduciary relationship - [See first Restitution - Topic 123 above].

Cases Noticed:

Coco v. A.N. Clark (Engineers) Ltd., [1969] R.P.C. 41 (Ch.), consd. [paras. 7, 17, 19, 155].

Hospital Products Ltd. v. United States Surgical Corp. (1984), 55 A.L.R. 417, refd to. [paras. 21, 57, 120, 126].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40, consd. [paras. 21, 23-25, 47, 124, 143].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161, consd. [paras. 22, 38, 121, 122, 127].

Girardet v. Crease & Co. (1987), 11 B.C.L.R.(2d) 361, refd to. [paras. 25, 123].

Chase Manhattan Bank v. Israel-British Bank, [1981] Ch. 105, consd. [paras. 27, 71].

Goodbody v. Bank of Montreal (1974), 47 D.L.R.(3d) 335, refd to. [para. 27].

Tito v. Waddell (No. 2), [1977] 3 All E.R. 129; [1977] 1 Ch. 106, consd. [paras. 28, 29, 128].

United Dominions Corporation Ltd. v. Brian Pty. Ltd. and Others (1985), 59 A.L.J.R. 676, consd. [paras. 33, 58, 130-137].

Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd. (1948), 65 R.P.C. 203 (C.A.), consd. [paras. 38, 150].

Liquid Veneer Co. Ltd. v. Scott (1912), 29 R.P.C. 639 (Ch.), refd to. [para. 40].

Cunliffe-Owen v. Teacher & Greenwood, [1967] 1 W.L.R. 1421 (Ch.), consd. [paras. 42, 139].

Burns v. Kelly Peters & Associates Ltd. (1988), 41 D.L.R.(4th) 577, refd to. [para. 46].

Nelson v. Dahl (1879), 12 Ch. D. 568 (C.A.), refd to. [para. 46].

Norwich Winterthur Insurance (Insurance) Ltd. v. Can. Stan. Industries of Australia Pty. Ltd., [1983] 1 N.S.W.C.R. 461 (C.A.), refd to. [para. 46].

Keech v. Sandford (1726), Sel. Cas. T. King 61; 25 E.R. 223, consd. [para. 48].

Central Trust Company v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109; 37 C.C.L.T. 117; 31 D.L.R.(4th) 481, refd to. [para. 52].

Fraser Edmunston Pty. Ltd. v. A.G.T. (Old) Pty. Ltd. et al. (1986), Queensland S.C. 17, refd to. [para. 58].

Canadian Pacific Airlines Ltd. and Pacific Western Airlines Ltd. v. British Columbia (1989), 96 N.R. 1, refd to. [para. 62].

Air Canada et al. v. Attorney General of British Columbia - see Canadian Pacific Airlines Ltd. and Pacific Western Airlines Ltd. v. British Columbia. Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384; 19 R.F.L.(2d) 165; 117 D.L.R.(3d) 257, consd. [paras. 63, 68, 69, 169].

Coomber, Re, [1911] 1 Ch. 723, refd to. [para. 63].

Pre-Cam Exploration & Development Ltd. v. McTavish, [1966] S.C.R. 551, consd. [paras. 64, 71, 170].

Seager v. Copydex Ltd. (No. 2), [1969] 2 All E.R. 718 (C.A.), consd. [para. 64].

Syncrude Canada Ltd. et al. v. Hunter Engineering Co. and Allis-Chalmers Canada Ltd. et al. (1989), 92 N.R. 1, consd. [paras. 68, 71, 75].

Muschinski v. Dodds (1985), 160 C.L. R. 583, refd to. [para. 74].

Seager v. Copydex, [1967] 1 W.L.R. 923 (C.A.), consd. [para. 151].

Nichrotherm Electrical Company, Ltd. and others v. Percy, [1957] R.P.C. 207, refd to. [para. 166].

Nicholson v. Denis (1976), 8 O.R.(2d) 315, refd to. [para. 169].

Unident v. Delong (1981), 50 N.S.R.(2d) 1; 98 A.P.R. 1, refd to. [para. 169].

Dowson & Mason Ltd. v. Potter, [1986] 2 All E.R. 418, refd to. [para. 173].

Talbot v. General Television Corporation Pty. Ltd., [1980] V.R. 224, refd to. [para. 173].

General Tire & Rubber Co. v. Firestone Tyre & Rubber Co. Ltd., [1975] 2 All E.R. 173, refd to. [para. 177].

Florence Realty Co. Ltd. v. The Queen, [1968] S.C.R. 42, refd to. [para. 192].

Authors and Works Noticed:

Austin, R.P., Commerce and Equity - Fiduciary Duty and Constructive Trust (1986), 6 O.J.L.S. 444, pp. 445, 446 [para. 21].

Birks, An Introduction to the Law of Restitution (1985), pp. 133, 139 [para. 62].

Birks, Peter, Restitutionary Damages for Breach of Contract: Snepp and the Fusion of Law and Equity, [1987] Lloyd's Maritime and Commercial Law Quarterly 421, p. 436 [para. 28].

Campbell, Colin L., The Advocates' Society Journal (Aug. 1988), p. 44 [para. 119].

Finn, P.D., Equity and Commercial Relationships (1987) [para. 119].

Finn, P.D., Essays in Equity (1985), p. 246 [para. 21].

Finn, P.D., Fiduciary Obligations (1977), p. 1 [para. 21].

Finn, P.D., The Fiduciary Principle (1988), generally [para. 21]; pp. 50 [para. 38]; 64 [para. 26].

Frankel, T., Fiduciary Law (1983), 71 Cal. L. Rev. 795 [para. 21].

Fridman and McLeod, Restitution (1982), p. 539 [para. 73].

Gautreau, J.R.M., Demystifying the Fiduciary Mystique (1989), 68 Can. Bar Rev. 1, generally [para. 21]; p. 11 [para. 52].

Goff and Jones, The Law of Restitution (3rd Ed. 1986), pp. 78 [para. 72]; 659 674 [paras. 165-167].

Grange, Good Faith in Commercial Transactions, [1985] L.S.U.C. Special Lectures 69, p. 70 [para. 56].

Gurry, Breach of Confidence (1984), pp. 25 [para. 165]; 26 [paras. 165, 166]; 27 [para. 166]; 161, 162 [para. 39].

Halsbury's Laws of England (4th Ed.), vol. 12, p. 28, para. 445 [para. 45].

Kennedy, J., Equity in a Commercial Context, in Equity and Commercial Relationships by P.D. Finn [para. 119].

Klinck, D.R., The Rise of the "Remedial" Fiduciary Relationship: A Comment on International Corona Resources Ltd. v. LAC Minerals Ltd. (1988), 33 McGill L.J. 600, p. 603 [para. 21].

Lindley, C.H., A Treatise on the American Law Relating to Mines and Mineral Lands (2nd Ed. 1983) [para. 59].

Mason, Anthony, Themes and Prospects, in Essays in Equity by P.D. Finn, p. 246 [para. 21].

McCamus, John D., The Role of Proprietary Relief in the Modern Law of Restitution, Cambridge Lecture 1987, p. 150 [para. 90].

Ong, D.S.K., Fiduciaries: Identification and Remedies (1986), 8 Univ. of Tasmania L. Rev. 311 [para. 127].

Oxford English Dictionary (2nd Ed.), vol. 19, p. 786 [para. 48].

Shepherd, J.C., The Law of Fiduciaries (1986), pp. 21-22 [para. 123].

Shepherd, J.C., Towards a United Concept of Fiduciary Relationships (1981), 97 L.Q. Rev. 51 [para. 21].

Waters, D.W., The Law of Trusts in Canada (2nd Ed. 1984), pp. 386-397 [para. 168]; 394 [para. 171]; 405 [para. 26].

Weinrib, Ernest J., The Fiduciary Obligation (1975), 25 U.T.L.J. 1, generally [para. 21]; pp. 4 [para. 121]; 5 [para. 28].

Counsel:

Earl A. Cherniak, Q.C., and J.L. McDougall, Q.C., for the appellant;

Alan J. Lenczner, Q.C., and Ronald G. Slaght, Q.C., for the respondent.

This appeal was heard on October 11 and 12, 1988, before McIntyre, Lamer, Wilson, La Forest and Sopinka, JJ., of the Supreme Court of Canada. The judgment of the court was rendered in both official languages on August 11, 1989, including the following opinions:

La Forest, J. - see paragraphs 1 to 80;

Lamer, J. (concurring in part) - see paragraphs 81 to 84;

Wilson, J. (concurring in part) - see paragraphs 85 to 92;

Sopinka, J., dissenting (McIntyre, J., concurring) - see paragraphs 93 to 202.