Legal Blog

Knowing Assistance

Christine DeJong Medicine Professional Corp v. DBDC Spadina Ltd. 2019 SCC overturning

DBDC Spadina Ltd. v. Walton 2018 Ont CA

In a two-paragraph decision, the Supreme Court overturned the majority decision at the Court of Appeal and adopted the minority decision in its entirety. The action concerns a convoluted fraud by one person playing a shell game with various corporations. One group of corporations attempted to get priority for its losses over another group of corporations, who had also been defrauded. All judges agreed that there was not knowing receipt of funds because there was no tracing of money from one group of corporations to the other group of corporations. The decision as to knowing assistance turned on the inability of the first group of corporations to establish that the 2^nd group of corporations, not just the fraudster, knew of the fiduciary relationship and dishonest conduct and participated in or assisted the fraudulent or dishonest conduct. The court noted that a defendant’s liability is measured by the plaintiff’s injury consequent to the trustee’s misconduct so that, if liable, the stranger is not just liable for its share of the profit, but to the full amount that the plaintiff lost. Accordingly, knowing assistance requires the stranger’s actual, and not constructive, knowledge of the breach of fiduciary duty.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.