Nov 30, 2014

Lac minerals ltd. v. International corona resources ltd. (1989) - Supreme Court

Lac minerals ltd. v. International corona resources ltd., [1989] 2 SCR 574



CML – Lac Minerals Ltd. v. International Corona Resources Ltd. [1989] SCC [p. 103-105]


Facts:


·Corona and Lac were negotiating for a joint mine exploitation venture.


·It discussed with Lac Minerals about options, and provided them with private information. Including the possibility of purchasing the Williams property


·Lac Minerals acquired the Williams property but never informed Corona.


Issue: Was there a fiduciary obligation from Lac to Corona even if no contract was formed?


Held: YES and it was breached.


Reasoning: LaForest



  • Fiduciary relationship is not precluded by the fact that the parties were involved in pre-contractual negotiations.

  • Pre-contractual phaseàunjust enrichmentà restitution is appropriate


Ratio:



  • Protect a party from something that went wrong during the negotiations or the pre-contractual stage.

  • Institution of good faith is one that is worthy of legal protection when the protection accords with the expectations of the parties

  • Creative use of constructive trust to remedy bad faith negotiations.


Comments:



  • Constructive trust: a trust that is construed by the law

  • Bizarre since Corona got his expectation interest; the mine. Hence dissenting judges say appropriate remedy would be damages.