In the estates and trusts world, the presence of a fiduciary relationship is generally a given in our matters. After all, executors are referred to as estate trustees.
In Barker v. Barker, 2022 ONCA 567, the preliminary question of whether a fiduciary relationship even existed between the parties was argued at length at trial and on appeal.
Barker is a case involving 28 claimants who were patients of a maximum-security Oak Ridge Division of the Mental Health Centre in Penetanguishene (“Oak Ridge”) between 1966 and 1983. The defendants were the Province of Ontario (the “Province”), because the Province is ultimately responsible for administering Oak Ridge, and two doctors who were the Clinical Directors of Oak Ridge during the 1960’s and the 1970’s (the “Physicians”). The claimants sought damages for breach of fiduciary duty, assault, battery, and intentional infliction of emotional distress. At trial, the claimants were successful in establishing that the Province and Physicians were fiduciaries. Damages were assessed on a case-by-case basis and $9,585,000.00 in total damages were awarded against the Province and the Physicians.
The Court of Appeal affirmed the trial judge’s finding that the Province was an ad hoc fiduciary to the patients of Oak Ridge. However, this finding that the government was a fiduciary is not a categorical one. The Province is not a fiduciary in every instance to every person or group unlike other relationships that are categorically, per se fiduciary in nature. Examples of per se fiduciaries are trustee-cestui que trust, executor-beneficiary, lawyer-client, agent-principal, director-corporations, and guardian-ward or parent-child (para. 62).
The test to find that an ad hoc fiduciary relationship exists, outside of the categorical per se fiduciary relationships, was set out in Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24, and it is made up of four elements (para. 54):
- (1) the alleged fiduciary’s undertaking to act in the alleged beneficiary’s best interest,
- (2) a defined person or class vulnerable to the fiduciary’s control,
- (3) a beneficiary’s legal or substantial practical interest that may be adversely impacted by the fiduciary’s exercise of discretion or control, and
- (4) the beneficiary’s vulnerability arising from the relationship”.
This same test is equally applicable to individuals and governments but it must be applied with an understanding that governments have a broad responsibility to act in the public interest and that this broad responsibility may be at odds with the core nature of a fiduciary relationship which is to be loyal to the interests of the beneficiary to the exclusion of all other interests. Accordingly, “situations in which a government will owe a fiduciary duty to a particular person or a group are therefore limited” (see para. 68 of Barker).
Here, “a statutory obligation [pursuant to the Mental Health Act] of a psychiatric facility of observation, care, and treatment of a patient suffering from a mental disorder is one that necessarily implies that in the exercise of the psychiatric facility’s power and responsibility in connection therewith, it will act solely in the patient’s best interests. There would be little meaning to the concept of “observation, care and treatment” of a person with a mental disorder in a medical facility were it otherwise. And there is a strong correspondence, given the statutory imposition of responsibility, with the relationship that exists between a patient and doctor, which, as we discuss below, is a fiduciary relationship” (para. 77).
After a fiduciary relationship was found to exist between the Province and the patients of Oak Ridge, the Court of Appeal also rejected the Province’s argument that there is Crown immunity with respect to their breach of fiduciary duty. Where there is legislation that imposes an obligation that gives rise to duties of a fiduciary nature on the Crown, as was the case through the Mental Health Act, that legislation must be taken as waiving Crown immunity for breach of the very obligation that was imposed by legislature (see paras. 93-94).
Stay tuned for my next blog on the fiduciary relationship between the Physicians and the patients.
Thanks for reading!