Proof of damages in a breach of fiduciary duty claim

In a claim for a breach of fiduciary duty the plaintiff must elect as to the measure of damages sought. The plaintiff has the option of seeking a disgorgement of benefits or seeking actual losses.

While there are evidentiary presumptions that run against a defendant who breached a fiduciary duty those presumptions do not mean the plaintiff is relieved of the duty to prove damages. The plaintiff has to show what the benefit disgorged is or show the actual losses.

Thus yesterday's Court of Appeal decision in Reservoir Group Partnership v. 1304613 Ontario Ltd., 2009 ONCA 278 provides:

[3]               The trial judge was alive to the nature of the loss claimed by the appellants, namely, that "[a]s a fiduciary, Mr. Lychy was required to retire from the field of dealing with [clients] for a period of time to afford Reservoir a reasonable period in which to attempt to preserve the client relationship" (at para. 78).  He correctly observed that as the case involved a breach of fiduciary duty, the appellants had the option of claiming either:

(1)              disgorgement of the benefit accruing to the respondent from his breach of duty, or

(2)              recovery of the loss suffered as a result of the breach.

[4]               The appellants elected to claim recovery of the loss. Having done so, it was for the appellants to prove the quantum of the loss, even though they sued for breach of fiduciary duty: Martin v. Goldfarb (1998), 41 O.R. (3d) 161 ( C.A. ) at para. 67.  The appellants did not and could not satisfy that burden or somehow shift it to the respondent simply by proving a breach of fiduciary duty without also proving the loss suffered.
Sent from my BlackBerry device on the Rogers Wireless Network