Zoic Studios BC Inc. v. Gannon et al.

• Jurisdiction: British Columbia
• Court: Court of Appeal (British Columbia)
• Judge: Chiasson, D. Smith and Harris, JJ.A.
• Citation: (2015), 375 B.C.A.C. 114 (CA),2015 BCCA 334
• Date: 23 April 2015

Zoic Studios BC Inc. v. Gannon (2015), 375 B.C.A.C. 114 (CA);

    644 W.A.C. 114

MLB headnote and full text

Temp. Cite: [2015] B.C.A.C. TBEd. JL.054

Zoic Studios B.C. Inc. (appellant/respondent on cross-appeal/plaintiff) v. Patti Gannon, Trevor Adams, and Leviathan Studios Inc. (respondents/appellants on cross-appeal/defendants)

(CA40301; 2015 BCCA 334)

Indexed As: Zoic Studios BC Inc. v. Gannon et al.

British Columbia Court of Appeal

Chiasson, D. Smith and Harris, JJ.A.

July 24, 2015.

Summary:

Zoic Studios B.C. Inc. (Zoic BC), based in Vancouver, was a computer visual effects studio that specialized in feature films, television shows, commercials, etc. Zoic BC was a subsidiary of Zoic Inc. (Zoic LA), a Los Angeles based firm. Gannon was the "top employee" at Zoic BC. She was creative director and visual effects supervisor of Zoic BC and reported directly to the founders of Zoic LA. Adams was hired as a digital artist at Zoic BC. Zoic BC alleged that while still employed by Zoic BC, Gannon and Adams formed a company, Leviathan Studios Inc., which competed with Zoic BC. In particular, Zoic BC alleged that Gannon and Adams caused Zoic BC to lose a contract to produce season 4 of a show by the name of "Eureka". Zoic BC had been involved in producing seasons 1-3. Zoic BC sued Gannon, Adams and Leviathan Studios Inc. (the defendants), alleging breach of fiduciary duty, breach of the duty of fidelity, good faith and loyalty, breach of confidence, conversion, unjust enrichment and conspiracy. Zoic BC also claimed punitive damages.

The British Columbia Supreme Court, in a decision reported [2012] B.C.T.C. Uned. 1322, found as follows:

a) Gannon was not a fiduciary to Zoic BC;

b) Gannon breached her implied contractual duty of fidelity, good faith and loyalty by competing while employed, failing to disclose information to Zoic LA, failing to attempt to retain employees and misusing confidential information;

c) Adams breached his implied contractual duty of fidelity, good faith and loyalty by competing while employed;

d) Gannon and Leviathan Inc. breached their duty of confidentiality;

e) the defendants' breach of their duty of fidelity, good faith and loyalty did not cause Zoic BC's loss;

f) Gannon's breach of her duty of fidelity, good faith and loyalty by failing to inform Zoic LA that the visual effects producer of Eureka (Gore) would not be returning for season 4 did cause Zoic BC to lose an opportunity to attempt to renew its contract with Eureka;

g) Zoic BC was entitled to damages for loss of opportunity in the amount it would have profited had it received the Eureka season 4 contract reduced by 95% to account for the possibility it would not have received the contract;

h) Zoic BC was not entitled to an accounting for the breach of confidence, but to equitable compensation;

i) the claims for conversion and conspiracy were duplicative of the other claims and the court declined to determine them;

j) Adams was unjustly enriched by his use of Zoic BC's software to draft a partial model of a building, but damages for unjust enrichment in this case would be minimal; and

k) punitive damages were not warranted.

Zoic BC appealed, alleging that the trial judge erred in finding that Gannon was not a fiduciary of Zoic BC and by refusing to order an equitable accounting for the defendants' breach of the duty of fidelity and loyalty. The defendants cross-appealed, arguing that the judge erred in finding Gannon liable for loss of opportunity.

The British Columbia Court of Appeal allowed the appeal to the extent of remitting the matter to the trial judge with the direction that she consider whether an equitable accounting should be ordered arising out of the personal defendants' breach of their duty of fidelity and loyalty by competing with Zoic BC. The court dismissed the cross-appeal.

Contracts - Topic 4062

Remedies for breach - Accounting of profits (disgorgement) - When available or appropriate - See paragraphs 65 to 76.

Damages - Topic 206

Entitlement - Loss of chance - See paragraphs 77 to 90.

Damages - Topic 1527

General damages - Elements of - Loss of opportunity - See paragraphs 77 to 90.

Equity - Topic 3606

Fiduciary or confidential relationships - General principles - What constitutes a fiduciary relationship - See paragraphs 60 to 64.

Equity - Topic 3721

Fiduciary or confidential relationships - The employer-employee relationship - General - See paragraphs 60 to 64.

Cases Noticed:

Perez v. Galambos et al. (2009), 394 N.R. 209; 276 B.C.A.C. 272; 468 W.A.C. 272; 2009 SCC 48, refd to. [para. 63].

3464920 Canada Inc. v. Strother et al. (2005), 208 B.C.A.C. 39; 344 W.A.C. 39; 38 B.C.L.R.(4th) 159; 2005 BCCA 35, refd to. [para. 69].

3464920 Canada Inc. v. Strother et al., [2007] 2 S.C.R. 177; 363 N.R. 123; 241 B.C.A.C. 108; 399 W.A.C. 108; 2007 SCC 24, refd to. [para. 70].

Attorney General v. Blake, [2001] 1 A.C. 268 (H.L.), refd to. [para. 72].

Jostens Canada Ltd. v. Gibsons Studio Ltd. et al. (1999), 122 B.C.A.C. 122; 200 W.A.C. 122; 1999 BCCA 273, refd to. [para. 74].

Smith v. Landstar Properties Inc. (2011), 299 B.C.A.C. 106; 508 W.A.C. 106; 2011 BCCA 44, refd to. [para. 75].

Experience Hendrix LLC v. PPX Enterprises Inc., [2003] EWCA Civ. 323, refd to. [para. 75].

Graybriar Industries Ltd. v. Davis & Co. and Schwegler (1990), 46 B.C.L.R.(2d) 164 (S.C.), affd. (1992), 19 B.C.A.C. 77; 34 W.A.C. 77; 72 B.C.L.R.(2d) 190 (C.A.), refd to. [para. 78].

Trinden Enterprises Ltd. v. Ramsay et al. (2009), 272 B.C.A.C. 96; 459 W.A.C. 96; 2009 BCCA 125, refd to. [para. 78].

Pan-Asia Development Corp. et al. v. Smith et al., [1996] B.C.T.C. Uned. E08 (S.C.), refd to. [para. 82].

Gottcon Contractors Ltd. v. Manzo (1992), 49 C.L.R. 233 (Ont. Gen. Div.), refd to. [para. 83].

Gagnon Demolition Inc. v. Windsor (City) (2004), 46 M.P.L.R.(3d) 71 (Ont. Sup. Ct. J.), refd to. [para. 83].

Counsel:

D.A. Crawford, Q.C., and F.A. Sheppard, for the appellant;

M.E. Fancourt-Smith and W.J. Shaw, for the respondents.

This appeal was heard in Vancouver, B.C., on April 23, 2015, before Chiasson, D. Smith and Harris, JJ.A., of the British Columbia Court of Appeal. The following decision was delivered for the court, on July 24, 2015, by Chiasson, J.A.