Lac Minerals V. International Corona Resources Notes

LAC Minerals v. International Corona Resources

Facts

The parties to these proceedings are International Corona Resources Ltd. (which I will refer to as [page587] either "Corona" or the "respondent") and Lac Minerals Ltd. (which I will refer to as either "Lac" or the "appellant"). Corona, which was incorporated in 1979, was at material times a junior mining company listed on the Vancouver Stock Exchange. Lac is a senior mining company which owns a number of operating mines and is listed on several Stock Exchanges. This action arises out of negotiations between Corona and Lac relating to the Corona property, the Williams property and the Hughes property, all of which are located in the Hemlo area of northern Ontario.

In October 1980, Corona had retained Mr. David Bell, a geologist consultant to carry out an extensive exploration programme on its property which involved extensive diamond drilling. Bell hired Mr. John Dadds, a mining technician, to assist him. Mr. Bell testified that by February, 1981, he was sufficiently encouraged by the results of the drilling programme that he decided that it was time to acquire the Williams property and the claims to the north.

According to Bell, no one from Lac ever told him that they would not acquire the Williams property and Lac was never told that the information given to it was private, privileged or confidential. Although the evidence was contradictory, the trial judge found as a fact that the pursuit by Corona of the Williams property was mentioned at the meeting. This and other information revealed to Lac went beyond the information that had been made public. This finding was confirmed by the Court of Appeal. The trial judge also found that it was agreed that a proposal would be sent by Lac to Corona within three weeks, and that the purpose of the meeting was to discuss a possible deal between Corona and Lac in order to provide Corona with the financing needed to develop a mine.

But instead of purchasing the property through a joint venture with Corona, Lac directly purchased the property by outbidding Corona.

Question

Is a constructive trust an available remedy for a breach of confidence as well as for breach of a fiduciary duty, and if so, should this Court interfere with the lower courts' imposition of that remedy?

Holding

Sopinka J. (dissenting)

While the remedy of the constructive trust may continue to be employed in situations where other remedies would be inappropriate or injustice would result, there is no reason to extend it to this case.

The Williams property was acquired as a result of information which was in part public and in part private. It would be impossible to assess the role of each. The trial judge went no further than to find that the confidential information was "of value" to Lac and

...of assistance to Lac not only in assessing the Corona property but also in assessing other property in the area and in making an offer to Mrs. Williams [at p. 768].

The Court of Appeal went further and stated, at p. 65, that "but for the confidential information LAC received from Corona, it is not likely that it would have acquired the Williams property". The reasons do not disclose any factual basis for extending the finding of the trial judge and I see no basis for so doing. The best that can therefore be said is that it played a part. When the extent of the connection between the confidential information and the acquisition of the property is uncertain, it would be unjust to impress the whole of the property with a constructive trust.

The case has been presented on the basis that either a transfer of the property or damages is the appropriate remedy. The respondent contends that the former is appropriate and the appellant the latter. No submissions were made in oral argument for or against an accounting of profits. Moreover, damages were assessed in the alternative in the event that on appeal this was considered the appropriate remedy. In all the circumstances, therefore, I have concluded that of the two alternatives presented, damages is the proper remedy.

La Forest J.

I agree with Sopinka J. that Lac misused confidential information confided to it by Corona in breach of a duty of confidence.

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