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Abstract: Conceptual confusion hobbles the application of fiduciary responsibility in the corporate context. The main difficulty is that judges have wrongly characterized corporate law issues as matters of fiduciary regulation. The author sets out the conventional justification for the status and fact-based fiduciary obligations of shareholders and directors and then explains how the corporate jurisprudence has gone astray.
Fiduciary, director, shareholder, accountability, regulation
Abstract: A conceptual fog has descended on the fiduciary jurisprudence of the Commonwealth. Judges and commentators in Canada, Australia and England have misunderstood or misdescribed the conventional boundaries. The confusion impairs the principled assignment of fiduciary responsibility. The solution is to refocus fiduciary analysis on its rightful singular concern with opportunism in limited access arrangements.
Fiduciary, opportunism, scope, boundary, trust, limited access
Abstract: A number of commentators have challenged the strict character of fiduciary liability. They prefer a contextual assessment of the circumstances of the parties. Their arguments, however, lack substance. They fail to demonstrate any social erosion of the policy foundation for the strict ethic. They also fail to account for the capacity of the parties to contract out of fiduciary liability. Their analyses ultimately have the unintended consequence of confirming the prudence of the conventional position.
duty of loyalty, fiduciary, strict liability, opportunism, consent, limited access
Abstract: The conventional function of fiduciary accountability is to control opportunism in limited access arrangements. One area of the law, however, has separated itself from the general jurisprudence through an internal expansion to matters beyond the mischief of opportunism. In the corporate context, "fiduciary" responsibility ostensibly now regulates the general quality or merits of the actions of directors. That move beyond the conventional boundary was not a conscious development. It was an unschooled semantic progression into unjustified conceptual novelty. Elsewhere I have described the confusion in the modern jurisprudence. Here I explain how a large part of that confusion arose through the uninformed acceptance over time of imprecise judicial language. At no point in the past two centuries did the judges appear to appreciate how their use or acceptance of language had the effect of dissolving the conventional boundary. They did not intend to change the law. They believed on each occasion that they were only stating established principle. The law has thus been fundamentally altered inadvertently - and the control of director opportunism has been compromised immeasurably.
fiduciary duty, duty of loyalty, director, corporate law, limited access, opportunism
Abstract: Following American initiatives, interest group efforts to acquire statutory limited liability have recently accelerated in Canada. Social elites have persuaded provincial legislatures to selectively alter conventional liability rules in a variety of contexts. There is no satisfactory analytical foundation for these radical moves. In the case of the business trust, the immunity legislation was engineered through an appeal to the undeveloped notion of investor protection and the tactical exploitation of provincial concerns with market share. The intention was to reshape conventional responsibility to accommodate investor harvesting and fee generation. While those objectives were realized, it would appear that the legislation actually only confirms the original liability configuration. If it does grant non-contingent immunity, the new legislation is a testament to the efficacy of organized lobbying in elevating narrow self-interest over general legal principle.
trusts, business trusts, limited liability, public choice, interest group politics
Abstract: From an economic perspective, conventional fiduciary liability for self-dealing appears to raise little controversy. The accepted function of the duty of loyalty is to control opportunism in limited access arrangements. That legal duty is complemented by a variety of economic mechanisms that indirectly or incidentally perform the same function. Unfortunately, the conventional function is partially obscured by a number of conceptual confusions in the economic and legal literature. A review of the literature exposes the analytical misdirection and confirms the utility of the conventional proscription on self-interest.
Delaware, Journal, Corporate, Law, Economics, Fiduciary, Accountability, Liability
Abstract: The decision of the Supreme Court of Canada in Peoples Department Stores Inc. (Trustee of) v. Wise addressed what some might regard as the two main duties of directors - the duty of loyalty and the duty of care. The court determined that (1) directors do not have a status fiduciary duty to corporate creditors where the corporation is approaching insolvency and (2), on the facts, the defendant directors did not breach their duty of care. While those conclusions are factually unremarkable, the conceptualization of the law by the court is problematic in a number of respects. Of particular concern is the court's analysis of the scope and operation of fiduciary responsibility. Generally, the importance of the issues addressed in the case will give it an enduring notoriety, both positive and negative, in Canadian corporate law.
directors, fiduciary, duty of loyalty, duty of care, creditors
Abstract: It has become common, primarily in the employment context, for judges to assert the existence of a duty of "fidelity" distinct from fiduciary duty. As we will see, however, the duty of fidelity is an invention or development that rests on serial failures to comprehend the course of the case law. A linear progression of inattentive authority recast conventional fiduciary accountability as the supposed independent duty of fidelity. Early cases that spoke of "breach of confidence" were wrongly understood as constituting a distinct doctrinal category. The actual crystallization of that misperception appears to have occurred only recently in the middle of the twentieth century. Coincidentally with that crystallization, the separate recognition of an independent duty of "fidelity" was founded on the same line of cases. In both instances, the breakaway into novel doctrinal categories occurred without any discussion or apparent appreciation of severance or disconnection. The independence of the doctrines was literally assumed. Today, notwithstanding the awkward confusion produced by the taxonomic masking of their functional redundancy, the duties of confidence and fidelity endure essentially as forms of fiduciary accountability. I will examine the developments that produced the [fiduciary] duty of fidelity.
fiduciary, fidelity, confidence, breach of confidence, duty of loyalty
Abstract: It is frequently asserted that ordinary employees do not have fiduciary duties. Only senior or key employees are burdened by fiduciary accountability. That supposed dichotomy has the appearance of both simplicity and logic. In fact, it is a senseless dichotomy, the adoption of which constitutes fundamental juristic mistake. There is no conceptual or practical distinction between ordinary employees and key employees for the purposes of fiduciary accountability, either before or after the formal termination of the relation.
fiduciary, duty of loyalty, employee
Abstract: There is a stubborn confusion as to the scope of fiduciary accountability. That confusion may be relieved in part by examining the fiduciary aspects of the mechanic undertaking. Some might think it fanciful to regard mechanics as subject to fiduciary accountability. That, however, is only the sequelae of the existing confusion. Mechanics are engaged in limited access arrangements, and all such arrangements are regulated by fiduciary accountability. It does not matter that an arrangement may be of modest character, or may not involve subjective trust. Other employment and independent contractor arrangements further illustrate the nature of the opportunism mischief that fiduciary regulation is designed to control. Professors, lawyers, police officers and interior designers have fiduciary obligations to the extent of their limited access. That fuller appreciation of the nature of the fiduciary jurisdiction leads to rejection or reconstruction of a number of propositions that enjoy currency in the courts today.
Abstract: The English Court of Appeal has determined that directors must disclose their own fiduciary breaches. The court justified its conclusion with a number of policy arguments. None of the arguments, however, provide a credible foundation for what is plainly a novel imposition on fiduciaries. A duty to disclose fiduciary breaches is both practically unrealistic and inconsistent with our general freedom from self-incrimination.
fiduciary duty, director, disclosure, confess
Abstract: Legislatures in the United States and Canada have recently granted varying degrees of tort immunity to volunteers in nonprofit organizations. These developments lack justification. Defective arguments and political expediency produced the new dispensations. The author exposes the weakness and adverse consequences of the immunity claim.
Nonprofit, volunteer, tort, negligence, immunity
Abstract: Liability assignments for wrongs committed within a jurisdiction are generally intended to apply equally to all local and foreign persons. Local liability policy, however, can be circumvented through the use of foreign legal forms. Both local and foreign persons may reduce their liability exposure by conducting their activities in the local jurisdiction through a foreign form that has been endowed by its jurisdiction of origin with a wider limitation of liability. The differences in liability exposure are often significant. They appear to be tolerated or embraced because they serve local commercial, professional and governmental interests. Ultimately the costs of the resultant elevated risk of loss are borne by local residents.
jurisdiction shopping, conflict of laws, internal affairs, liability differentials, risk regulation
Abstract: In his recent monograph, Professor Leonard Rotman offers a novel vision of fiduciary accountability. He follows a collection of commentators who have romantic notions of the potential of fiduciary regulation to control power or correct injustice. Ultimately his conceptual objectives are not realized. He does not credibly justify his proposed expansion of the jurisdiction beyond the conventional function of regulating opportunism in limited access arrangements.
Fiduciary, fiduciary obligation, duty of loyalty
Abstract: Likely reacting to the perception of a confused jurisprudence, several writers recently have sought to clarify (or reconfigure) the core nature of fiduciary accountability. Their claims, including various assertions of prescriptive content, differ in significant respects. That discordance only fuels the perception of confusion. A review of the claims indicates that none of the normative arguments offer a superior conceptual apparatus for framing the conventional function of the regulation, and none justify prescriptive content.
fiduciary, duty of loyalty, nature, core, accountability, limited access, opportunism
Abstract: Commercial actors commonly describe their group undertakings as joint ventures. That practice has infiltrated the judicial lexicon and appears to be fostering a supposition on the part of some judges that a joint venture is a distinct legal form. The supposition is unwarranted. A review of the American, English, Australian and Canadian case law and commentary discloses no substantive basis for the claim of distinct status.
joint venture, distinct status, single transaction, partnership, syndicate, strategic alliance, share product
Abstract: Considerable political freight attaches to the notion that passive capital is vulnerable. Dimensions of that idea have been important in defining the contours of much corporate regulation. The endorsement or defence of the interests of passive capital, however, may be imposture. It often serves active capital to embrace the "vulnerability" of passive capital. The legal structure moulded to acknowledge and counterbalance the passivity of passive capital may be exploited to secure the incumbency and objectives of dominant coalitions. Our regulatory designs must be attentive to the potential for the passive capital elevation of active capital.
passive shareholder, passive capital, control, corporate governance, limited liability, corporate democracy, shareholder primacy, director primacy
Abstract: The Supreme Court of Canada has toyed with the boundaries of fiduciary accountability for three decades. Some of the criteria it has advanced to identify when fact-based accountability will arise (e.g. vulnerability, power differential, reasonable expectation) are vague notions that potentially derail the conventional function of the jurisdiction. Specifically, the criteria may be taken to support the view that fiduciary accountability regulates the merits or fairness of the actions of fiduciaries. In BCE Inc. v. 1976 Debentureholders, the court now appears to have explicitly adopted that view, albeit without recourse to any of the criteria it had previously identified. It also appears to have compromised the strict operation of the conventional regulation. The decision represents yet another novel turn, and a radical one, in the court's mercurial intercourse with fiduciary accountability.
fiduciary duty, oppression, director, agency, strict liability, business judgment, loyalty, fairness
Abstract: Parents have open access to the family-focused labour of their infant children. We impose no fiduciary proscription on the appropriation of that labour. The social consensus is premised on the benefits that accrue to the child, the family and the community. In other respects, parental access is closed or limited. The labour cannot be unreasonable, or wrongly exploitive. Nor may parents take the external earnings of their children. The constraints reflect the consensus as to the proper scope of open parental access. Beyond their open access, the opportunistic impulses of parents are regulated by fiduciary accountability.
child, parent, fiduciary, labour, limited access, fact-based
Abstract: The general rule in Canada is that successful litigants are entitled to recover their costs from the losing party. Throughout most of the twentieth century, however, it was assumed that litigants who chose to represent themselves did not have that entitlement. They could recover only their disbursements. That exceptional treatment of self-represented litigants was formally premised on the supposed absence of an indemnifiable expenditure, and buttressed by assertions that self-representation created difficulties for the judicial system. Additionally, lawyers and judges piously volunteered negative assessments of the behaviours, expectations and motives of lay litigants. On the other side, the practical reality was that lay litigants lacked the means or stamina to challenge what appeared to be an undisputed practice. Recently, however, the denial of costs has come under attack as part of a general trend of accommodation of self-represented litigants. There is a recognition that access to justice is compromised by practices and procedures that hinder or block self-representation. Some courts have instituted broad changes to assist unrepresented litigants. Some have specifically concluded that costs are recoverable by self-represented litigants. Other courts sit on the sidelines. There is another dimension to the issue. The content and development of the law on the subject has throughout coincided with judicial and professional interests. That coincidence is plainly evident in the no costs rule. It is less evident, but still present, in the recent transformation of the rule in several jurisdictions. As social imperatives have fostered self-representation, judges and lawyers have shifted the specific ways in which they benefit from the costs power. In particular, judges appear to have embraced reform of the no costs rule in order to enhance juristic support for their now broad general power to use costs awards for multiple functions. This second dimension arguably is the more profound one in terms of ultimate social impact. Yet in another sense it is pedestrian insight because it has long been understood that institutional arrangements often advance the interests of those who shape them. I will necessarily probe, but not deeply explore, this other dimension. My narrow objective is to add to the doctrinal support for the view that self-represented litigants are entitled to their costs.
pro se, lay litigant, self-representation, costs, damages, public choice
Abstract: In conventional terms, because employment relations are limited access arrangements, employees attract status fiduciary accountability. That conventional view has been sidelined in certain respects in Canada. Courts and commentators have asserted that ordinary employees do not have fiduciary obligations. Instead, employees are said to have distinct duties of fidelity (good faith) and confidence. Those duties, however, are but linguistic mutations of conventional fiduciary accountability. The Supreme Court of Canada recently had an opportunity to clarify the law in this area in RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. (RBC). The opportunity was not taken. Clarification was put off to another day. Still, the decision essentially confirms that employees are subject to status fiduciary accountability, whatever terminology is used to describe that accountability.
employment, fiduciary duty, loyalty, departing employee, competition, solicitation, good faith, fidelity
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