Teck Corp Ltd v Millar
Teck Corp Ltd v Millar, (1972), 33 DLR (3d) 288 (BCSC) is an important Canadian corporate law decision on a corporate director's fiduciary duty in the context of a takeover bid. Justice Berger of the British Columbia Supreme Court held that a director may resist a hostile take-over so long as they are acting in good faith, and they have reasonable grounds to believe that the take-over will cause substantial harm to the interests of the shareholders collective. The case was viewed as a shift away from the standard set in the English case of Hogg v. Cramphorn Ltd. (1963). Recent scholarship has made the following observation:
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[94] The decision in Teck v Millar, a seminal case on directors' duties, is consistent with the duty to protect shareholder interests from harm. Teck Corporation, a senior mining company, had acquired a majority of voting shares in Afton Mines Ltd., a junior mining company that owned an interest in a valuable copper deposit. In doing so, Teck sought to ensure procurement of a contract with Afton to develop the copper property. Before Teck could exercise its majority voting control to replace the board of directors with its own nominees, the Afton board signed a contract with another company that effectively ended Teck’s control position in Afton. In evaluating the evidence, Justice Berger was satisfied that Teck, the majority shareholder, "would cause substantial damage to the interests of Afton and its shareholders." In determining that the directors had not breached their fiduciary duty to the corporation, shareholder interests were distinguished from control interests. Drawing this distinction is key, "because once Teck's interest in acquiring control is put to one side, its interest, like that of the other shareholders, was in seeing Afton make the best deal available." Accordingly, the directors had made a decision that, despite affecting the control interests of the majority shareholder, had protected the shareholder interests of all shareholders (including Teck's) from harm. This concern for the collective interests of shareholders, rather than strict adherence to majority rule, is consistent with the tripartite fiduciary duty.[1] |
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