Three Ports Fisheries Ltd. v. Jeffrie et al., (2014) 347 N.S.R.(2d) 46 (SC)

• Judge: Boudreau, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: June 19, 2014
• Jurisdiction: Nova Scotia
• Citations: (2014), 347 N.S.R.(2d) 46 (SC);2014 NSSC 228

Three Ports Fisheries v. Jeffrie (2014), 347 N.S.R.(2d) 46 (SC);

    1098 A.P.R. 46

MLB headnote and full text

Temp. Cite: [2014] N.S.R.(2d) TBEd. JL.021

Three Ports Fisheries Limited (applicant) v. Roderick Jeffrie and H. Hopkins Limited (defendants)

(354159; 2014 NSSC 228)

Indexed As: Three Ports Fisheries Ltd. v. Jeffrie et al.

Nova Scotia Supreme Court

Boudreau, J.

June 19, 2014.

Summary:

Three Ports Fisheries Ltd. (Three Ports) alleged that Jeffrie and his company, H. Hopkins Ltd. (Hopkins) had breached their fiduciary duty to Three Ports and caused it to suffer damages by competing with Three Ports. Jeffrie had been a director and officer of Three Ports prior to a disagreement with Three Ports' other equal shareholder, Hendriksen. Three Ports also sought reimbursement of allegedly unjustified and inappropriate sums of money.

The Nova Scotia Supreme Court dismissed Three Ports' claim for breach of fiduciary duty. The court allowed Three Ports' claims for reimbursement of the sums of $20,000 and $17,500 against the defendant Jeffrie only, in the amount of $37,500, plus prejudgement interest at the rate of 3.5% per annum from December 27, 2013 (being the date when the last Amended Notice of Application was filed) to the date of payment.

Company Law - Topic 4052

Directors - Appointment or election - Resignation - The Nova Scotia Supreme Court held that a director who was shown as such on the Registry could rebut the presumption that he continued in that capacity by adducing convincing evidence to the contrary - See paragraphs 22 to 24.

Company Law - Topic 4081

Directors - Removal - General - [See Company Law - Topic 4052 ].

Company Law - Topic 4262

Directors - Duties - General principles - Fiduciary duty - Three Ports Fisheries Ltd. (Three Ports) alleged that Jeffrie and his company, H. Hopkins Ltd. (Hopkins) had breached their fiduciary duty to Three Ports and caused it to suffer damages by competing with Three Ports - Jeffrie had been a director and officer of Three Ports prior to a disagreement with its other equal shareholder, Hendriksen - The Nova Scotia Supreme Court found no breach of fiduciary duty - As a former and continuing director of Three Ports, Jeffrie would have been presumed to owe a fiduciary duty to the company - However, that presumption could be rebutted with cogent and convincing evidence to the contrary - Here, Jeffrie could be presumed to have resigned as a director and officer of Three Ports when he agreed to sell his shares to Hendriksen in mid-September 2010 - This would have been the obvious result of the sale - Moreover, Jeffrie was effectively and totally shut out of Three Ports by Hendriksen after September 2010 - Thereafter, Hendriksen ran Three Ports to Jeffrie's exclusion, yet he refused to purchase Jeffrie's shares or sell his shares to Jeffrie - See paragraphs 33 to 36 - Further, it would not have been just and equitable to impose a fiduciary duty - Jeffrie could, in effect, have been held "hostage" indefinitely by Hendriksen - Neither shareholder would have agreed to a non-competition clause as a condition of the sale of their shares, nor would they have expected such a clause from the other - Jeffrie had not personally, nor through Hopkins, unfairly or unreasonably sought to attract the business of fishing groups which had previously dealt with Three Ports - Jeffrie had not acquired any confidential information from or through Three Ports - Hendriksen had made very little, if any, efforts personally to retain the business acquired by Jeffrie and Hopkins, apparently because he was well aware of those individuals' loyalty to Jeffrie - See paragraphs 37 to 41 - In any event, Three Ports had failed to prove that Jeffrie or Hopkins caused it any economic losses, or their extent - The variances in Three Ports' gross business or bottom line was so tied to the whims and ups and down of the industry that these could not be attributed to any particular activity on Jeffrie's or Hopkins' part - The changing loyalty of fishermen vis a vis fish buyers and brokers was an ongoing trait of the business - See paragraphs 42 to 46.

Company Law - Topic 4262

Directors - Duties - General principles - Fiduciary duty - The Nova Scotia Supreme Court stated that "unlike many other jurisdictions, Nova Scotia has not codified director's fiduciary duties in its Companies Act, RSNS 1989, c. 81. The existence and scope of the duty of a director of a Nova Scotia incorporated company depends on the interpretation of fiduciary doctrine as found in the common law. Having said that, there is an interesting provision in section 153 of the Companies Act which appears to give a court a wide discretion when hearing an action against a director: 'Court Discretion 153 - If in any proceeding against a director, or person occupying the position of director, of a company for negligence or breach of trust it appears to the court hearing the case that the director or person is or may be liable in respect of the negligence or breach of trust, but has acted honestly and reasonably and ought fairly to be excused for the negligence or breach of trust, that court may relieve him, either wholly or partly, form his liability on such terms as the court may think proper.'" - See paragraph 20.

Equity - Topic 3607

Fiduciary or confidential relationships - General principles - Relationships which are not fiduciary - [See first Company Law - Topic 4262 ].

Cases Noticed:

Jeffrie v. Hendriksen et al. (2013), 330 N.S.R.(2d) 200; 1046 A.P.R. 200; 2013 NSSC 50, refd to. [para. 9].

Elder Advocates of Alberta Society et al. v. Alberta et al. (2011), 416 N.R. 198; 499 A.R. 345; 514 W.A.C. 345 (S.C.C.), refd to. [para. 21].

McCarthy v. Workers' Compensation Appeals Tribunal (N.S.) et al. (2001), 193 N.S.R.(2d) 301; 602 A.P.R. 301; 2001 NSCA 79, appld. [para. 23].

Bernhardt v. Main Outerboard Centre Ltd. (1995), 96 Man.R.(2d) 194 (Q.B.), refd to. [para. 24].

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. 25].

Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592, refd to. [para. 26].

Veolia ES Industrial Services Inc. v. Brulé et al. (2012), 289 O.A.C. 207; 2012 ONCA 173, refd to. [para. 27].

3464920 Canada Inc. v. Strother et al. (2007), 363 N.R. 123; 241 B.C.A.C. 108; 399 W.A.C. 108 (S.C.C.), refd to. [para. 29].

Belliveau v. Belliveau, [2011] N.S.R.(2d) Uned. 236 (S.C.), refd to. [para. 30].

Plus Group Ltd. & Ors v. Pykes, [2002] EWCA Civ 370, refd to. [para. 31].

Authors and Works Noticed:

Hansel, Carol, Directors and Officers in Canada: Law and Practice, vol. 2, p. 95 [para. 21].

McGuinness, Kevin, Canadian Business Corporations Law (2nd Ed.), generally [para. 26].

Counsel:

Ezra B. van Gelder, for the applicant;

Vincent A. Gillis, Q.C., for the respondents.

This application was heard in Halifax, N.S., on November 13, 18, 19 and 20, 2013, by Boudreau, J., of the Nova Scotia Supreme Court, who delivered the following decision on June 19, 2014.