Date: Mon, 4 Jun 2007 17:18

From: Charles Mitchell

Subject: Supreme Court of Canada on disgorgement

Dear Vaughan et al

Besides the vicarious liability point which you emphasize, it is also interesting to see Binnie J holding at [90]-[91] that claims to recover a fiduciary's unauthorised profits are subject to a remoteness cap - at any rate that is what I take him to mean when he says that a 'cut off' is needed and that 'at some point, intervention of other events and actors (as well as the behaviour of the claimant) dissipates the effect of the breach'. Warman v Dwyer is cited as an example of a case where this was previously done, bearing out my analysis of that case in a piece in the King's Law Journal last year.

Best wishes
Charles

At 12:44 01/06/2007 -0300, Vaughan Black wrote:

Today the Supreme Court of Canada handed down its judgment in Strother v. 3464920 Canada Inc.

The part of the case that will be of most interest to participants in this discussion group is that of vicarious liability for disgorgement (or gain-based damages). The court held that the defendant law firm could be held liable for the gain-based damages assessed against the other defendant, a rogue partner, even though the firm did not itself receive those gains. However, the court said this result only followed because of a statute -- British Columbia's Partnership Act said that a firm should liable for "penalties" assessed against its partners acting in the ordinary course of business of the firm. The court indicated (at para. 103) that, were it not for the statute, a gain-based remedy against the law firm (which did not itself receive the gain) would not be appropriate.

There's a little bit of discussion about the disgorgement measure generally, but nothing very helpful.

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