A fiduciary relationship exists where there is confidence and trust placed in a person who is then obligated to act in good faith and with regard to the interests of the person placing the confidence and trust. Although fiduciary relationships play an important role In any business, the confidentiality surrounding resource exploration and development means fiduciary relationships are of paramount importance in the oil and gas, and mining industries. The purpose of this paper Is to explore the nature of the fiduciary relationship in both a general fashion and more specifically fiduciary relationships ithin the resource industry. To this end the First section of this paper examines:
what Is a fiduciary relationship;
the duties of a fiduciary;
the types of fiduciary relationships;
the application of the fiduciary relationship to the resource industry
when a fiduciary relationship is breached, and
the legal consequences of breaching such a relationship.
Section 2 briefly outlines what a fiduciary should do when faced with a conflict of interest situation. Section 3 examines the rial and appeal decisions of International Corona Resources Ltd, v. Lac Minerals Ltd.1("Corona"), a major legal case regarding fiduciary relationships in the mining industry, in an attempt to discern the current state of the law with respect to fiduciaries.
Many Canadian and English courts have considered the nature of a fiduciary relationship and almost unanimously each court has avoided giving a precise definition of the fiduciary relationship. The concept of a fiduciary relationship is difficult to define primarily because of the difficulty in applying the fiduciary relationship to increasingly complex social relationships, and the difficulty In imposing a structured legal system on a concept as flexible as the fiduciary relationship his area of the law contrasts other areas of the law such as contract, property, and tort law, where the legal system operates within an established set of rules, whereas in the law governing fiduciary relationships there are no hard and fest rules but merely guiding principles.
While the concept of a fiduciary relationship is not easily defined, the cases and articles that address the concept indicate that a fiduciary relationship exists where trust and confidence are placed in a person who is then obligated to act in good faith and with regard to the interests of the person placing the confidence and trust. "Accordingly the hallmark of a fiduciary is that the relative legal positions are such that one party is at the mercy of the other's discretion." 2
While the duties of a fiduciary may vary slightly depending on the nature of the fiduciary relationship, the fiduciary may be said to have three duties, all of which flow from the general duty of good faith owed by a fiduciary. First, a fiduciary owes a duty of full dlsclosure. A fiduciary must fully and honestly disclose everything affecting their relationship.
