Written by Nick Noonan
In the case of Prairie Risk Management Inc. v. Marsh Canada Ltd. et al., the plaintiff, Prairie Risk Management Inc. (PRM), alleged that the defendant, Marsh Canada Ltd. (Marsh), had engaged in a series of unlawful activities that resulted in substantial economic loss for PRM. The plaintiff claimed that Marsh, while under contract, had unlawfully accessed and utilized confidential client information to solicit PRM’s clients for its own benefit. The confidential information included not just a list of clients, but also intricate details about their operations and underwriting information, which PRM had developed over time. The plaintiff further alleged that this conduct led to a loss of income and a reduction in the company’s value.
The central legal issue to be decided was whether Marsh had breached various obligations and duties under the contract, common law, and equity. Specifically, the court had to consider claims of breach of contract, breach of confidence, breach of the duty to act honestly, breach of fiduciary duty, unlawful interference with economic relations, and breach of trust.
Justice Harris embarked on a considerate analysis of each claim. On the breach of contract and breach of confidence claims, the court found in favour of PRM, noting that Marsh had indeed used confidential information for its own benefit, which was not only a violation of the contract but also a breach of confidence. The court cited GasTOPS Ltd. v. Forsyth and Bhasin v. Hrynew to emphasize the importance of honesty and good faith in contractual performance. On the issue of breach of fiduciary duty, the court found that Marsh had an obligation to act with absolute loyalty towards PRM, especially when handling confidential client information. The court dismissed the claims of unlawful interference with economic relations and breach of trust, stating that PRM had not sufficiently demonstrated how the evidence gave rise to these torts. In determining the appropriate remedy, the court cited Lac Minerals Ltd. v. International Corona Resources Ltd., stating that it could consider whether common law or equity provides the plaintiff with the appropriate remedy. Justice Harris concluded that equity demanded remedial flexibility here, because this was not merely a breach of contract. The Court ordered damages in the amount of $1,534,000 plus pre- and post-judgment interest and costs.
For businesspeople, this decision serves as a lesson on multiple fronts. First, it underscores the importance of maintaining the integrity of contractual obligations, particularly when confidential information is at stake. Companies must exercise extreme caution in how they handle such information, even in competitive settings. Second, the case amplifies the concept of fiduciary duty beyond traditional categories, suggesting that courts are willing to impose such duties in a broader range of relationships, especially where confidential information is involved. Third, the decision highlights the court’s willingness to employ equitable remedies in such cases, which can be more flexible and potentially more burdensome than common law remedies. This could mean higher damage awards, as was evident in this case.
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