Legal Consequences of Breach of Fiduciary Duty in Canadian Law

Published by:
David Johnson

Reviewed by:
Alistair Vigier
Last Modified: 2024-05-28
Are you concerned about a breach of fiduciary duty in Canada? You may have heard the term fiduciary duty before. For example, a lawyer has a fiduciary duty to their client. It is the legal obligation to take care of someone or something.
These are important duties. The law says that people in a position of trust must act fairly.
A law firm must always represent its client. It cannot do anything that would hurt its clients for the benefit of someone else. A business partner must take care of the business, and a board member must make decisions for the company’s good.
Issues of the trustee’s duty also often come up during estate litigation. Before making a big decision, you should always get legal advice from a law firm.
Learn more about business law and then contact us. Book a time below for a lawyer to call you. This is the best way in Canada to get a free consultation with a lawyer.

Types of Breach of Fiduciary Duty under Canadian Jurisprudence
A breach of fiduciary duty in Canadian law carries serious implications. It sets the stage for recovering losses resulting from the breach. To understand this, we must delve into what constitutes fiduciary duty. It’s a legal obligation of one party, the fiduciary, to act in the best interest of another, known as the beneficiary.
When this trust is broken, it’s a serious issue. It tarnishes the fiduciary relationship and could lead to numerous legal consequences. Canadian courts don’t take these violations lightly, and the legal remedies they have can be severe.
Let’s start with financial compensation. If a breach is proven, the court often orders the fiduciary to repay the beneficiary’s losses. The sum reimbursed is determined by the extent of the loss suffered because of the breach. This amount could sometimes skyrocket into thousands, if not millions, of dollars.
Legal Remedies for Breach of Fiduciary Duty in Canada
The courts may order an account of profits. This remedy compels the fiduciary to surrender any profit from the breach. It’s a potent deterrent, signalling to potential violators that betraying trust won’t be profitable.
In other cases, the court may require the fiduciary to transfer property gained through the breach to the beneficiary. This is known as a constructive trust, and it aims to restore the balance and prevent unjust enrichment.
A breach of fiduciary duty can also impact one’s professional standing. If the guilty party is an experienced professional, they may face disciplinary actions from their professional body. This could lead to suspension or loss of professional license for lawyers, doctors, and others.
Case Studies on Breach of Fiduciary Duty in Canadian Courts
Such a breach can tarnish an individual’s reputation. The damage can be colossal in an era where public perception can make or break careers. Once the information is public, rebuilding trust can be long and arduous.
Beyond these consequences, the courts may implement injunctive relief to prevent further breaches. This legal tool can stop a fiduciary from causing additional harm while the legal process unfolds.
Fiduciaries who breach their duties can face punitive damages. While less common, courts award these to punish the fiduciary and deter similar conduct in the future.
The Consequences of Breaching Fiduciary Duties in Canada
Consider the psychological burden. Being involved in legal proceedings, facing financial loss, and potential damage to reputation contribute to significant stress.
Canadian law treats breach of fiduciary duty with severity, reflecting the high value placed on trust. From financial restitution to punitive measures, the potential consequences ensure fiduciaries think twice before straying from their obligations.
The non-quantifiable toll – stress, damage to reputation, and professional standing – often proves the heaviest burden to bear.
Penalty For Breach Of Fiduciary Duty
There are different types of penalties if someone violates their duties. You can file a lawsuit if someone with a fiduciary duty to you breaks it.
However, remember that you must prove that they did not act appropriately. You will also need to show that you incurred damages.
If someone steals money from you, you can file a lawsuit to get your money back. If a Realtor violates their duty, they might have to pay their commission fee back.
Sometimes, there might be special costs that can apply to punish someone for their actions. This mainly aims to show others not to do that action.
Elements Of A Breach Of Fiduciary
Estate litigation is often a reason for breach of fiduciary claims. When someone becomes an estate trustee, they have to make decisions according to their will.
The trustee cannot make decisions for their own personal benefit. If a trustee doesn’t know what to do, they should get legal advice from a lawyer.
A lawyer acting for the client must always avoid conflict of interest. They can never act on behalf of someone else involved. A client places good faith in the lawyer or law firm.
It’s the same thing with a corporation board. If you are a board member of ABC Company, you have a fiduciary obligation to ABC Company. Let’s say ABC company is exploring buying products from XYZ company. You have broken your fiduciary duty if you are also working with XYZ company.
Why? Because XYZ wants to sell its products for as long as possible. ABC wants to buy the products as cheaply as possible. You have broken the trust and confidence placed in you. You should be removed from the corporation board.
Someone Suffered Damages
If you find out someone on a board of directors is doing something dishonest, you must act. You can book a free consultation with a lawyer to protect yourself.
We can connect you to lawyers who can assist with the following legal services:
- provide legal advice about case law
- help you start a lawsuit
- defend a lawsuit
- send a demand letter
- communicate on your behalf anonymously
- deal with an out-of-control business partner
- deal with a conflict of interest
Formal duty of law firms
There are two different types of fiduciary duties. One is informal and the other is formal. There is a formal duty of law firms, real estate agents, and the board of directors.
Some might not be lawyers, but it might apply if they assume a fiduciary duty. There might be an informal duty if you care for a senior person.
In estate law, a trustee can be removed if they breach their duties or have a conflict of interest. For example, if a trust owns part of a real estate project and the trustee owns the other part, that’s a conflict of interest.
The trustee might think it’s a good property and want to keep it. The people who want their inheritance might want the property sold. In this situation, you should speak to an estate lawyer. We can connect you with one.
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