Case information

Fiduciary duty — Business owner entering into contract with trustees of estate for sale of business formerly owned by applicants’ deceased father — Applicants alleging business owner owing them fiduciary duties — How are litigants and courts to identify fiduciary undertakings for the purpose of establishing a fiduciary duty, including in situations where there is a contract and contractual obligations.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

The applicants are the children and daughter in law of Mr. and Mrs. Winter, who died in 1965, when the children were young. The respondent, Dr. Sherman, was the applicants’ cousin. The Winters had owned a number of pharmaceutical companies (“the Empire Companies”). The applicants were the beneficiaries of the estates. In 1967, Royal Trust sold the Empire Companies to Dr. Sherman and his partner, who assigned their interests in the Empire Companies to their holding company. The purchase agreement included an option for the Winter children to be employed by the purchased business and to acquire 5% of the shares of the company if employed for two years. The option had four pre conditions attached and it was stipulated that if any one of the conditions was not fulfilled, Dr. Sherman’s obligations were to be null and void. In 1969, the holding company entered into a share swap and in 1971, the shares of the holding company were purchased by another company and the option agreement became null and void. In 1974, Dr. Sherman founded Apotex, a generic drug manufacturer. The applicants started an action against Royal Trust alleging that Royal Trust had been negligent in the drafting of the option agreement with Dr. Sherman as part of the sale of the Empire Companies. This action was summarily dismissed. In 2007, the applicants started an action against Dr. Sherman, alleging that he breached the fiduciary duty he owed to them by dishonouring the option agreement, and claimed an interest in Apotex. Dr. Sherman moved for summary judgment, arguing that the action was an abuse of process and, alternatively, that there was no genuine issue requiring a trial.