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Simon Shields, LLB

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Torts - Fraud - By Corporate Director

Liability - Piercing the Corporate Veil - When Unnecessary

Meridian Credit Union Limited v. Baig (Ont CA, 2016)

In this case the Court of Appeal commented on the elements of the tort of civil fraud. The case is useful for the fact analysis that the court engaged in respecting the individual elements of fraud:
[26] The Supreme Court of Canada recently affirmed in Hryniak v. Mauldin, 2014 SCC 7 (CanLII), [2014] 1 S.C.R. 87, at para. 87, that a plaintiff asserting a claim for civil fraud must prove the following on a balance of probabilities:

1) A false representation by the defendant;

2) Some level of knowledge of the falsehood of the representation on the part of the defendant (whether knowledge or recklessness);

3) The false representation caused the plaintiff to act;

4) The plaintiff’s actions resulted in a loss.


The court also pointed out that tortious misrepresentations made by directors were directly actionable against them without recourse to the doctrine of piercing the corporate veil:
[39] Subject to an exception that does not apply in this case, “[t]he consistent line of authority in Canada holds simply that, in all events, officers, directors and employees of corporations are responsible for their tortious conduct even though that conduct was directed in a bona fide manner to the best interests of the company”: ADGA Systems International Ltd. v. Valcom Ltd. (1999), 1999 CanLII 1527 (ON CA), 168 D.L.R. (4th) 351 (Ont. C.A.), at para. 18. ...

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