In this unanimous decision of the Supreme Court of Canada, the
court determined that there is no fiduciary duty owed by the
government to the plaintiffs. The plaintiffs, made up of a large
class of residents of long-term care facilities in Alberta, alleged
that the provincial government artificially inflated the cost of
"accommodation charges" – a direct charge on
residents for their housing and meals while in care – in
order to subsidize the publicly funded costs of medical services.
The plaintiffs claimed that this over-charging consisted of a
breach of fiduciary duty, negligence, bad faith and/or unjust
enrichment, and they further brought an equality claim under s.
15(1) of the Canadian Charter of Rights and Freedoms. The
Province of Alberta challenged the plaintiffs' statement of
claim as not disclosing a cause of action.
The court stated that to establish a fiduciary duty outside of
the existing categories, a claimant must show: (1) an undertaking
by the alleged fiduciary to act in the best interests of the
alleged beneficiary; (2) a defined person or class of persons
vulnerable to a fiduciary's control (vulnerable in the
sense that the fiduciary has a discretionary power over them); and
(3) a legal or substantial practical interest of the beneficiary
that stands to be affected by the exercise of control.
The court recognized that the government context necessarily
refines the elements identified above. First, the requirement of an
undertaking will be lacking where what is at issue is the exercise
of government power or discretion; a fiduciary duty would conflict
with the government's general duty to act in the best
interests of society as a whole. Undertakings of loyalty to a
particular group from the government will be rare.
Second, it may be difficult to establish a defined person or
class of persons vulnerable to the exercise of discretionary power.
Where the government duty is in effect a private duty being carried
out by government, such as in the role of public guardian and
trustee, this requirement may be found.
Third, the court indicated that it will be difficult for an
individual to establish that government power affected a legal or
significant practical interest. It is not enough that a government
decision impacts on a person's well-being, property or
security, but rather the affected interest must be a specific
private law interest to which the person has a pre-existing,
distinct, and complete legal entitlement. A government benefit
scheme is an entitlement of public law, not a private law
Finally, the court indicated that the degree of control that
must be exercised by the government in the fiduciary relationship
must be equivalent or analogous to a direct administration of the
interest. Legal control that arises from the ordinary course of
statutory powers is insufficient.
In this case, the court found that there was no evidence in the
pleadings of an undertaking by the province to act with undivided
loyalty towards the class members when setting and administering
accommodation charges. Nor did the relevant provincial legislation
impose any obligations on the government to account for
anyone's particular interests in setting the accommodation
Although the court struck out the plaintiffs' claims
relating to fiduciary duties, negligence and bad faith, the
pleadings were found to disclose a supportable cause of action in
the remaining claims and the plaintiffs as a class were allowed to
proceed on those issues.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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