Ownership Claim to Vancouver Canucks Hockey Team Dismissed

On January 10, 2008, after a lengthy trial, the British Columbia Supreme Court dismissed an action brought by Thomas Gaglardi and Ryan Beedie and certain corporations controlled by them. The Plaintiffs claimed an ownership interest in the Vancouver Canucks hockey team, GM Place and certain surrounding land (“Team and Arena”) owned by corporations controlled by the Aquilini family.

Prior to November 2004, the Team and Arena were owned by the Orca Bay group of companies. (“Orca Bay”). In November 2004, Francesco Aquilini and his family purchased 50 per cent of the Team and Arena from Orca Bay. Thereafter, in 2006, the Aquilinis exercised a contractual option to purchase the remaining 50 per cent of the enterprise.

From November 2003 until March 2004, Beedie, Gaglardi and Aquilini were co-operating to investigate the prospect of acquiring an interest in the Team and Arena from Orca Bay. The group engaged in discussions with Orca Bay but no agreement was reached. Aquilini left the group in March 2004. After Aquilini’s departure, Gaglardi and Beedie pursued discussions with Orca Bay independently of Aquilini. In August of 2004, Orca Bay entered into a non-binding term sheet with entities controlled by Gaglardi and Beedie. That Term Sheet contained an exclusivity period as well as good faith and due diligence obligations. Negotiations between Orca Bay and Beedie and Gaglardi continued through the fall of 2004 beyond the expiry of the exclusivity period and into early November without any agreement being reached. Aquilini learned that an agreement had not been reached and commenced direct negotiations with Orca Bay for a fractional interest in the Team and Arena. An agreement between Orca Bay and companies controlled by the Aquilini family was reached in early November 2004.

In January 2005, the Plaintiffs commenced an action against both the Aquilinis and Orca Bay. The Plaintiffs alleged that there was an agreement among Gaglardi, Beedie and Aquilini to work together to acquire an interest in the Team and Arena and that agreement created a partnership or joint venture such that Aquilini, as their former partner or joint venturer, owed them a duty not to acquire the Canucks on his own behalf. The Plaintiffs alleged that Orca Bay had breached the exclusivity period, had bargained in bad faith and had breached the due diligence obligations. These latter three allegations were abandoned after the evidence was heard at trial and prior to the commencement of legal argument. The Plaintiffs also alleged that Orca Bay, by entering into negotiations with Aquilini, knowingly assisted Aquilini in his breach of duty. This allegation was pursued throughout. The Plaintiffs argued that they were the rightful owners of the Canucks and sought as a remedy an order that the Team and Arena were held in a constructive trust for the Plaintiffs.

The court concluded the relationship among Gaglardi, Beedie and Aquilini was not one of partnership or joint venture. The three individuals pursued the acquisition of the Canucks at the early stages without any agreement as to their respective rights and obligations and each was free to leave the group and pursue the opportunity on his own account without regard to the others. The court went on to conclude that even assuming there was once a partnership or joint venture arrangement, that arrangement was terminated by Aquilini’s departure from the group in the spring of 2004. It was held that thereafter each was entitled to pursue his own self interest in negotiations with Orca Bay and Orca Bay was entitled to pursue negotiations with Aquilini separately from Gaglardi and Beedie. The court found that, save and except for the agreed upon exclusivity period, Orca Bay was entitled to enter into and conclude negotiations with Aquilini without any advance notice or advice to Gaglardi and Beedie.

The court also dismissed the Plaintiffs’ argument that Aquilini owed to the Plaintiffs a duty to only compete “fairly” concluding that the relationship among the three individuals did not give rise to any such duty. The court concluded that Aquilini was entitled, as were Gaglardi and Beedie, to act in his own self interest and held that, in any event, neither Aquilini nor Orca Bay acted unfairly in any fashion.

Acting for the Orca Bay Defendants were Bill Kaplan, QC, Peter Rubin, Joanne Lysyk, Jim Sullivan and Sara Knowles of the Vancouver office of Blake, Cassels & Graydon LLP assisted by Bob Sewell, QC, of McCarthy Tétrault LLP. Hein Poulus, QC, David Brown, Margaret Grottenthaler, Paula Price, Mark Gallagher and Helene Wheeler of the Vancouver office of Stikeman Elliott LLP and Howard Shapray, QC, of Shapray Cramer LLP acted for the Aquilini Defendants.

The firm of Nathanson, Schachter and Thompson LLP represented the Plaintiffs with a team comprised of Irwin Nathanson, QC, Murray Clemens, QC, Stephen Schachter, QC, and Bob Diebolt, QC, Ardella Thompson, Geoff Gomery, Julia Lawn and James MacInnis.