Surprisingly, evidently not. Briefly the facts in Plate v. Atlas Copco Canada Inc., 2019 ONCA 196: an Executive in the role of Vice President Global Strategic Customers was terminated for just cause grounded in a decades-long defrauding of the company and its benefits provider in conspiracy with the latter’s consultant, to the extent of over $20,000,000, over a million of which resulted to the Executive personally. His argument that he was a bystander incidentally enriched to the knowledge of the employer failed, conviction entered, no appeal pursued.

In the course of the criminal process the Court readily found that the Executive was a “fiduciary”, a formidable position of trust: the duty of replete fidelity, selfless devotion to the “beneficiary” (here the employer), compelling so-called “righteousness” behaviour.

Sure we jealously guard against a knee-jerk finding of “fiduciary”. But to be fair, it is not rocket-science: as a default individuals in a senior management role (like this guy) are fiduciaries. One would not criticize the Criminal Court’s view that “beyond a reasonable doubt” this executive owed and breached that duty of “utmost good faith” by participating in and benefiting from the fraud regardless if a “passive” recipient.

We are reminded of two things: “beyond a reasonable doubt” is a very high onus. Equally, fiduciary compliance requires “righteous” behaviour— an extremely high standard. Any departure whatsoever from that pristine behaviour is a breach of duty, known as “civil fraud”.

The twist? Notwithstanding criminal conviction he elected to pursue wrongful dismissal damages, reframing his conduct in the civil process as something akin to non-participatory ‘innocent bystander’ incidental enrichment.

Creative perhaps, but against the requirement that a fiduciary act “selflessly”, one would anticipate little judicial appetite for such remedial pursuit from a convicted felon. One might also predict intolerance for re-adjudicating the issue of fiduciary status in a forum which compels a much less stringent onus “on a balance of probabilities”.

But this particular proceeding provides some further twists. Unsurprisingly the employer attempted to cauterize this wound by promulgating the Criminal Court’s finding of fiduciary status (and the conviction for fraud) as a complete answer to upstart litigation of that which was already judicially considered— what lawyers call res judicata: “already been decided”.

The Judge hearing the peremptory application— the Summary Judgement— agreed: ‘been there done that’: another Court on a much higher onus found that he was a fiduciary and was guilty of fraud, rulings from which he did not appeal. Regardless, one would not anticipate any contrary ruling undermining a ‘safe’ — arguably trite—conclusion that as a Senior Executive he owed a fiduciary duty: “the highest duty known to law”.

Done. Okay: not done. On appeal from the Summary Judgement Order dismissing the civil claim, the Court of Appeal ‘drilled down’ on both process and disposition, providing insight into the interaction of criminal versus civil, and between summary judgement versus trial.

Lessons learned? Well, don’t be so fast to assume that a criminal finding of status migrates seamlessly into parallel civil proceedings. Secondly, don’t be so fast to dispose of such matters by way of summary judgement application when there may be “substantial issues requiring a trial”, therefore ordering that the civil matter go to trial. In other words, quixotically the “criminal fiduciary” may not be the “civil fiduciary” or at least that status requires a fulsome trial to adjudicate.

Easy to get into the weeds on this. Staying above them, the Appeal Court likely wished to emphasis that the Rule of Law requires that res judicata not prohibit a fulsome inquiry in a civil trial on “a finding of fact and law”, as is the case of fiduciary standing. Correspondingly, while the Supreme Court has tasked all levels of Court to default to Summary Judgement versus long, expensive, Court-consuming trials, not all square pegs fit into the proverbial round holes.

From 10,000 feet it is available to question not the logic of adherence to first principals of jurisprudence, but certainly the result: this senior executive would conventionally be easily found to owe a fiduciary obligation to his employer, and certainly not to insinuate himself in practices that result in clandestine personal benefit, known as a “secret profit”. It is also available to question the purpose of revisiting such status in a protracted wrongful dismissal action against the backdrop of criminal conviction. One would argue that the end result is inevitable regardless of the granularity of the process by which to get there.

One should not question the oversight Court’s emphasis on due process. But certainly into the tangled weeds we go as the matter now proceeds to a protracted trial on a point already well argued and compellingly disposed of elsewhere.

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Photo of Mark Ellis Mark Ellis

Mark Ellis is an experienced litigator who appears regularly before all levels of courts and tribunals in Ontario. Mark has also appeared as lead counsel on several occasions at the Supreme Court of Canada. As the author of Canada’s leading treatise on fiduciary obligations and three related books, his opinion is regularly sought in Canada’s boardrooms regarding all aspects of corporate compliance and governance. Mark is a highly-regarded speaker, having chaired over two hundred conferences throughout his career, and spoken internationally regarding compliance, governance and anti-corruption. He is also a visiting professor at Queen’s University.