What is the fiduciary obligation on a new relationship?

British Columbia, Canada


The following excerpt is from Rupert v. School Dist. No. 61, 2001 BCSC 700 (CanLII):

In Frame v. Smith (1987), 1987 CanLII 74 (SCC), 42 D.L.R. (4th) 81 (S.C.C.), the court addressed this issue. While the case dealt with family law issues, it is helpful in setting out guidelines as to relationships in which a fiduciary obligation has been imposed. Wilson J. stated at p. 98: A few commentators have attempted to discern an underlying fiduciary principle but, given the widely divergent contexts emerging from the case-law, it is understandable that they have differed in their analyses... Yet there are common features discernible in the contexts in which fiduciary duties have been found to exist and these common features do provide a rough and ready guide to whether or not the imposition of a fiduciary obligation on a new relationship would be appropriate and consistent. Relationships in which a fiduciary obligation have been imposed seem to possess three general characteristics: (1) The fiduciary has scope for the exercise of some discretion or powers. (2) The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests. (3) The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or powers.

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