Visnic v Sywak

The appeal concerned a dispute between Mr Visnic, a shareholder, and Mr Sywak, who was found to be a fiduciary in certain respects concerning four corporations. Mr Visnic sought an inquiry into alleged breaches of fiduciary duty by Mr Sywak, including an account of profits and equitable damages. The primary issue before the Court of Appeal was whether the trial judge erred in refusing to order such an inquiry.

The legal issues before the court included whether a shareholder could pursue a personal claim for loss suffered by a company due to a fiduciary's breach, the scope of a "sufficient connection" required to link a breach of fiduciary duty to an inquiry for an account of profits, and whether the trial judge considered irrelevant factors in his decision. The court also considered the distinction between a shareholder's personal loss and the company's loss, and the principle that a fiduciary may be required to disgorge benefits even if the beneficiary could not have personally obtained them.

The Court of Appeal, in dismissing the appeal, reasoned that a shareholder cannot recover damages for a loss that is merely a reflection of the company's loss. The court affirmed that a shareholder's personal loss arises from the diminution in the value of their shareholding, which is a consequence of the company's loss, not a direct personal loss. The court found that the appellant's submissions involved an impermissible conflation of duties owed to the company and personal claims. Even if a conflict of interest and duty existed regarding the shares, it did not establish a sufficient connection to warrant an inquiry into other potential breaches. The court also noted that any benefits of which the appellant was deprived could be addressed in the winding-up of the companies, and as a shareholder, he had no direct right to monies distributed by the corporations to Mr Sywak.

The appeal was dismissed with costs.