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Digest of the Week – Fiduciary Duty

Fiduciary duty not owed to purchasers of assets of corporation.



Scott v. 921477 B.C. Ltd.
2015 CarswellBC 2774
British Columbia Court of Appeal


Business associations --- Specific matters of corporate organization — Directors and officers — Fiduciary duties — Miscellaneous

Who owes fiduciary duty — Hotel manager wished to reduce costs of sound system — After disagreements with provider of system, manager purchased system and leased it to hotel with approval of owner — Purchasers bought assets of hotel — Purchasers claimed manager breached fiduciary duty through lease, and that they had interest in sound system — Purchasers refused to release sound system to manager — Manager brought action for damages against purchasers — Manager's motion for summary judgment was granted and action was allowed — Trial judge found manager owned equipment — Manager awarded $75,000 — Purchasers appealed — Appeal dismissed — No evidence that sound equipment was purchased using corporate funds — No breach of fiduciary duty could occur, as purchaser's bought only assets of hotel corporation, and not shares themselves — Any fiduciary duty manager owed would be to hotel corporation — Owner of hotel corporation approved of sale and lease of sound system — Nothing to suggest company would have pursued any action against manager — Conclusion that manager owned equipment was — Ownership of sound system by manager was supported by documentary evidence and there was no credibility issue that required trial.
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