Hodgkinson v Simms
Fiduciary obligations can arise from advisor relationships marked by trust and reliance, even outside traditional categories.
At a glance
Hodgkinson's tax-planning advisor failed to disclose his conflict of interest in promoting MURBs in which he had a financial stake. The SCC held the advisor owed a fiduciary duty even though investment advisors are not categorically fiduciaries; the relationship had the hallmarks of trust, vulnerability, and reliance.
Material facts
Hodgkinson, a stockbroker, sought tax-planning advice from Simms, an accountant. Simms recommended MURBs without disclosing his promoter's fees. The MURB market collapsed; Hodgkinson lost substantially.
Issues
When does a fiduciary obligation arise? Did one exist here?
Held
Yes. Damages awarded.
Ratio decidendi
Fiduciary obligations may arise outside per-se categories (trustees, partners, directors) where the relationship is marked by (a) scope for discretion or power, (b) ability to exercise that power so as to affect the beneficiary's interests, and (c) particular vulnerability of the beneficiary to the holder. In commercial advisory relationships, vulnerability and trust may bring the relationship within fiduciary doctrine.
Reasoning
La Forest J synthesised the indicia from Frame v Smith and Lac Minerals. The advisor's failure to disclose his interest in the recommended product was a breach of the duty of loyalty central to the fiduciary obligation.
Significance
Standard authority on ad hoc fiduciary duties in commercial relationships. Cited in Galambos v Perez (2009) which constrained ad hoc fiduciary duties to relationships exhibiting an undertaking of loyalty.
How to cite (McGill 9e)
Hodgkinson v Simms, [1994] 3 SCR 377, 1994 CanLII 70 (SCC).
Bench
La Forest J, L'Heureux-Dubé J, Sopinka J, Gonthier J, Cory J, McLachlin J, Iacobucci J, Major J
Source: scc-csc.lexum.com