What is the test for a fiduciary relationship?

British Columbia, Canada

The following excerpt is from Pan Pacific Recycling Inc. v. So, 2006 BCSC 1337 (CanLII):

In Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377, La Forest J. set out the following principles at 408-412: From a conceptual standpoint, the fiduciary duty may properly be understood as but one of a species of a more generalized duty by which the law seeks to protect vulnerable people in transactions with others…. … [T]he concept of vulnerability is not the hallmark of a fiduciary relationship though it is an important indicium of its existence. Vulnerability is common to many relationships in which the law will intervene to protect one of the parties…. … [T]he presence of loyalty, trust, and confidence distinguishes the fiduciary relationship from a relationship that simply gives rise to tortious liability…. … [In] relationships that have as their essence discretion, influence over interests, and an inherent vulnerability … there is a rebuttable presumption, arising out of the inherent purpose of the relationship, that one party has a duty to act in the best interests of the other party…. … [There are] situations in which fiduciary obligations, though not innate to a given relationship, arise as a matter of fact out of the specific circumstances of that particular relationship…. In these cases, the question to ask is whether, given all the surrounding circumstances, one party could reasonably have expected that the other party would act in the former's best interests with respect to the subject matter at issue. Discretion, influence, vulnerability and trust … [are] non-exhaustive examples of evidential factors to be considered in making this determination. Thus, outside the established categories [of fiduciary relationships], what is required is evidence of a mutual understanding that one party has relinquished its own self-interest and agreed to act solely on behalf of the other party. … More generally, relationships characterized by a unilateral discretion, such as the trustee-beneficiary relationship, are properly understood as simply a species of a broader family of relationships that may be termed "power-dependency" relationships. … [T]he concept of a "power-dependency" relationship … accurately describes any situation where one party, by statute, agreement, a particular course of conduct, or by unilateral undertaking, gains a position of overriding power or influence over another party. … The existence of a fiduciary duty in a given case will depend upon the reasonable expectations of the parties, and these in turn depend on factors such as trust, confidence, complexity of subject matter, and community or industry standards.

In their dissent in Hodgkinson v. Simms, McLachlin J., as she then was, and Sopinka J. offered the following warning about applying too flexible a standard in determining whether a party owes a fiduciary duty. At ¶127, they wrote: The difficulty lies in determining what measure of confidence and trust are sufficient to give rise to a fiduciary obligation. An objective criterion must be found to identify this measure if the law is to permit people to conduct their affairs with some degree of certainty. … The vast disparity between the remedies for negligence and breach of contract – the usual remedies for ill-given advice – and those for breach of fiduciary obligation, impose a duty on the court to offer clear assistance to those concerned to stay in the former camp and not stray into the latter.

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