Is there an ad hoc fiduciary relationship?

Identifying an ad hoc fiduciary relationship requires a consideration of the underlying purposes of the fiduciary doctrine. The law imposes such onerous responsibility where necessary to protect and reinforce the “integrity of social institutions and enterprises”. Fulfilling this purpose requires the stringent obligations of a fiduciary in certain circumstances because “not all relationships are characterized by a dynamic of mutual autonomy, and … the marketplace cannot always set the rules”: Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 SCR 377 at para. 48 [Hodgkinson].

Whereas contractual obligations emerge, at least in theory, in relationships characterized by mutual autonomy, fiduciary obligations emerge in relationships of trust and reliance between parties. In Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99 at p. 136, Wilson J. identified the following hallmarks of a fiduciary relationship: (a) the fiduciary has scope for the exercise of some discretion or power; (b) the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests; and (c) the beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.