By: Zach Rosen
When a partner secretly pockets a larger share of partnership proceeds, getting caught is only the beginning of their troubles.
In July, the Ontario Superior Court of Justice released the decision in Macgillivray v Poirier, 2026 ONSC 3637 where a summary judgment motion brought by the defendants "boomeranged" back on them, resulting in reverse summary judgment for the plaintiff on liability.
Last week, the Court issued Macgillivray v Poirier, 2026 ONSC 6110, its decision on damages and costs, awarding restitutionary damages, partial disgorgement, punitive damages and substantial indemnity costs amounting to roughly half a million dollars against the partner who took the money, and more than $370,000 against the “friend” who helped him.
Practical Lessons for Partnership, Breach of Fiduciary Duty and Fraud Claims
The decision offers three practical lessons for cases involving breach of fiduciary duty and deceit:
Even where the test for the equitable remedy of disgorgement is met, the Courts will not automatically strip a wrongdoing partner of all the profits they earned from their fraud. Disgorgement must be tied to the breach, and the court may order only the portion of the gain that the wrongdoing actually produced, though they may be informed by a sense of “poetic justice”.
A third party who assists a partner in carrying out a scheme to breach their fiduciary duties and deprive their partner of their rightful proceeds may be held liable for restitutionary damages, punitive damages, and costs, even if they didn’t earn a dollar from the transaction. However, disgorgement will generally not be applied against them and is a remedy that will often be limited to the partner who actually received the proceeds of fraud.
Improper litigation conduct, including bringing tactical motions to avoid or delay documentary disclosure and examinations for discovery, as well as any attempt to re-argue findings already made at the damages and costs submissions stage, can be taken into account by the Court in awarding costs, and may result in an award of substantial indemnity costs.
Background
Mr. Macgillivray and Mr. Poirier were longtime law partners and co-owners of commercial properties in Thunder Bay. Mr. Poirier received offers to buy one of their properties and did not tell Mr. Macgillivray; instead, he sent their mutual friend, Mr. Provenzano, to persuade Mr. Macgillivray to sell his half for $450,000 without disclosing the outstanding offers. Mr. Poirier then collected approximately $769,000 from the sale. In a rare move, the Court dismissed Mr. Poirier and Mr. Provenzano’s motion for summary judgment seeking dismissal of the action and granted boomerang summary judgment against them for breach of fiduciary duty, deceit and unlawful means conspiracy, fiduciary breach, deceit, and unlawful means conspiracy. The Court then invited supplementary submissions from the parties on the issue of the quantum of damages and costs.
Restitutionary Damages
The first and most straight-forward category of damages that the Court quantified were pure restitutionary damages in the amount of $160,073, the exact amount that Mr. Macgillivray was short-changed given the absence of an equal 50/50 split of the sale proceeds. The Court found Mr. Poirier and Mr. Provenzano jointly and severally liable for this amount.
Disgorgement: Not All or Nothing
While Mr. Macgillivray had asked the court to order full disgorgement of all of the proceeds earned by Mr. Poirier on the transaction, the Court declined to do so. The Court explained that while disgorgement exists to deter and denounce misconduct, full disgorgement should only be ordered where the entire transaction was tainted by the wrongful conduct. The Court concluded that in this case, it would not be equitable to deprive Mr. Poirier of any proceeds from the sale; instead, in a result the Court described as “poetic justice”, it awarded an additional amount of $160,073, thereby putting Mr. Poirier in the position that he had tried to put Mr. Macgillivray in, and reducing his effective proceeds from the sale to $450,000.
Punitive Damages
In addition to the restitutionary and equitable relief, the Court also awarded $50,000 in punitive damages against both Mr. Poirier and Mr. Provenzano, jointly and severally. The Court stressed that Mr. Poirier, as a lawyer, knew the fiduciary duties he owed his partner, and that Macgillivray had continued to trust both defendants, and abused that position for personal profit. The Court also justified Mr. Provenzano’s liability for these damages, noting that while he did not receive a share of the proceeds, and may not have appreciated that fiduciary duties were at stake, he knowingly made himself "instrumental" in the plan to deceive Mr. Macgillivray, and that was enough to warrant sanction.
Substantial Indemnity Costs
Finally, the Court awarded Mr. Macgillivray substantial indemnity costs, based principally on three factors. First, by their very nature, claims for breach of fiduciary duty, fraud and unlawful means conspiracy attract elevated costs. Second, the defendants had delayed documentary production and discoveries, delivered deficient affidavits of documents, and brought “tactical” summary judgment motions, all to avoid disclosure of their misconduct. Third, both defendants refused to admit points which ought not have been in dispute: Mr. Poirier denied the very existence of a partnership despite having admitted it in earlier litigation, and both defendants denied that Mr. Provenzano had acted as Mr. Poirier's agent until the hearing itself.
Key Takeaways
The two decisions in Macgillivray v Poirier show how serious the consequences of a breach of fiduciary duty can be, and that even in a case where the notional maximum exposure might be thought to be $160,000, the Court can reasonably and justifiably increase the defendants exposure to more than double or triple that amount.
A partner who hides material facts from another partner about a transaction involving their property risks not only equalization of the proceeds, but loss of their excess profit, punitive damages, and a costs bill on the elevated scale. Furthermore, anyone who is tempted to help the breaching fiduciary carry out their scheme should know that they will share most, if not all, of that exposure.
For business owners, the practical message is simple: when a shareholder, co-owner or partnership relationship begins to break down, don’t try to make a secret profit to your business partner’s detriment. The cost of staying silent, or worse, misleading your partner, can far exceed what was gained.