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Corporations

1. General
2. Piercing the Corporate Veil
3. Corporations and Fiduciary Duties
4. Corporations and the Oppression Remedy

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1. General

Corporations are entirely creatures of statute, both at the Ontario level (the Business Corporations Act, commonly the 'OBCA') and the federal level (the Canadian Business Corporations Act, or the 'CBCA'). As well, there are other corporate statutes dealing with non-profits, co-operative corporations, condominiums and others.

Most litigation deals with the business corporate forms, and that is the present focus of the guide.

2. Piercing the Corporate Veil

. Density Group Limited v. HK Hotels LLC

In Density Group Limited v. HK Hotels LLC (Ont CA, 2014) the Court of Appeal commented as follows on when the 'corporate veil' can be pierced to render a principal of the corporation personally liable:
[163] In this court’s decision in ScotiaMcLeod Inc. v. Peoples Jewellers Ltd. 1995 CanLII 1301 (ON CA), (1995), 26 O.R. (3d) 481, leave to appeal refused, [1996] S.C.C.A. No. 40, Finlayson J.A. discussed situations in which directors may be held personally liable for actions ostensibly carried out in the corporate name. I think it is helpful to review the principles set out at pp. 490-91:
The decided cases in which employees and officers of companies have been found personally liable for actions ostensibly carried out under a corporate name are fact- specific. In the absence of findings of fraud, deceit, dishonesty or want of authority on the part of employees or officers, they are also rare. Those cases in which the corporate veil has been pierced usually involve transactions where the use of the corporate structure was a sham from the outset or was an afterthought to a deal which had gone sour. There is also a considerable body of case-law wherein injured parties to actions for breach of contract have attempted to extend liability to the principals of the company by pleading that the that the principals were privy to the tort of inducing breach of contract between the company and the plaintiff: see Ontario Store Fixtures Inc. v. Mmmuffins Inc. 1989 CanLII 4229 (ON SC), (1989), 70 O.R. (2d) 42 (H.C.J.), and the cases referred to therein. Additionally there have been attempts by injured parties to attach liability to the principals of failed businesses through insolvency litigation. In every case, however, the facts giving rise to personal liability were specifically pleaded. Absent allegations which fit within the categories described above, officers or employees of limited companies are protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own.
[164] In ADGA Systems International Ltd v. Valcom Ltd. 1999 CanLII 1527 (ON CA), (1999), 43 O.R. (3d) 101, leave to appeal refused, [1999] S.C.C.A. 124, Carthy J.A. had occasion to review the law in relation to when an officer or director may be held personally liable even though purportedly acting bona fide in the best interests of the corporation. At p. 107 he stated:
The 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, always subject to the Said v. Butt exception.
[165] The so-called “Said v. Butt exception” is a longstanding rule dating back to a 1920 decision by the Court of King’s Bench. As that decision comes into play into this case, it is worth briefly reviewing it.

[166] The facts of the case are as follows. Mr. Said wanted to be present at the opening night of a play but knew that if he ordered a ticket in his own name his request would be refused because had made certain serious and unfounded charges against some members of the theatre’s staff. He therefore obtained a ticket through a friend but when he showed up at the theatre with the ticket, he was spotted by the theatre’s managing director, Sir Alfred Butt, and was denied admission. Mr. Said sued Sir Butt on the basis that he wrongfully and maliciously procured the company to break a contract made by the company in selling him a ticket to the performance.

[167] McCardie J. concluded that there was no contract upon which Mr. Said could have sued the theatre. Nonetheless, the trial judge went on to consider whether if the plaintiff had established that there was a valid contract between the theatre and himself, the claim against Mr. Butt personally could have succeeded.

[168] The trial judge concluded, at p. 506, that:
…if a servant acting bona fide within the scope of his authority procures or causes the breach of a contract between his employer and a third person, he does not thereby become liable to an action of tort at the suit of the person whose contract has thereby been broken.
[169] He also clarified that nothing in his decision should be taken as being “inconsistent with the rule that a director or a servant who actually takes part in or actually authorizes such torts as assault, trespass to property, nuisance, or the like may be liable in damages as a joint participant” in such a tortious wrong: p. 506.
. Shoppers Drug Mart Inc. v. 6470360 Canada Inc. (Energyshop Consulting Inc./Powerhouse Energy Management Inc.)

In Shoppers Drug Mart Inc. v. 6470360 Canada Inc. (Energyshop Consulting Inc./Powerhouse Energy Management Inc.) (Ont CA, 2014) a retailer who had hired a consultant to manage and pay their energy bills sued both the corporation and the sole individual behind it for misappropriation. On the legal test for piercing the corporate veil the court stated:
[43] ..... Fleischer [642947 Ontario Ltd. v. Fleischer 2001 CanLII 8623 (ON CA),] is the appropriate test to apply to piercing the corporate veil in Ontario. In Fleischer, Laskin J.A. stated that only exceptional cases that result in flagrant injustice warrant going behind the corporate veil. It can be pierced if those in control expressly direct a wrongful act to be done. At para. 68, he stated:
Typically, the corporate veil is pierced when the company is incorporated for an illegal, fraudulent or improper purpose. But it can also be pierced if when incorporated “those in control expressly direct a wrongful thing to be done”: Clarkson Co. v. Zhelka at p. 578. Sharpe J. set out a useful statement of the guiding principle in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. 1996 CanLII 7979 (ON SC), (1996), 28 O.R. (3d) 423 at pp. 433-34 (Gen. Div.), affd [1997] O.J. No. 3754 (C.A.): “the courts will disregard the separate legal personality of a corporate entity where it is completely dominated and controlled and being used as a shield for fraudulent or improper conduct.”
[44] The motions judge found a misappropriation. Black’s Law Dictionary, 7th ed., at p. 1013 defines “misappropriation” as, “the application of another’s property or money dishonestly to one’s own use.”

[45] There can be no doubt that Beamish was the directing mind and caused the misappropriation and misrepresentation by 647 and the ensuing unjust enrichment. He had sole signing authority over the accounts and authorized the transfer of significant amounts of money, which were supposed to be dedicated to the payment of utility bills, to an Operating Account in the names of himself and a company of which he was the sole shareholder. He expressly directed and caused the wrongful act. Applying the correct test, in these circumstances, effect should be given to the second and third grounds of appeal. There was an unjust enrichment and the corporate veil should be pierced.
. Meridian Credit Union Limited v. Baig

In Meridian Credit Union Limited v. Baig (Ont CA, 2016) the Court of Appeal stated 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. ....
. Pita Royale Inc. (Aroma Taste of the Middle East) v. Buckingham Properties Inc.

In Pita Royale Inc. (Aroma Taste of the Middle East) v. Buckingham Properties Inc. (Ont CA, 2019) the Court of Appeal considered an issue of piercing the corporate veil:
[30] The trial judge also erred in failing to consider the nature of the allegations pleaded against Mr. Mandelbaum. In McDowell v. Fortress Real Capital Inc., 2019 ONCA 71 (CanLII), this court emphasized the need to plead the particulars of tortious conduct separate from that of the company when suing officers and directors. In the statement of claim, Mr. Mandelbaum was sued on the basis that he “was at all material times the director, president and controlling mind of Buckingham Properties Inc.” There were no allegations of separate misconduct levelled against him. It is unconscionable to find an officer or director of a company liable in circumstances where they do not know the precise nature of the alleged malfeasance and how it leads to liability separate from that of the corporation.

[31] In addition, Beaver Steel was relied on by the trial judge without reference to the leading case in Ontario on officers and directors’ liability, being ScotiaMcLeod Inc. v. Peoples Jewellers Ltd. (1995), 1995 CanLII 1301 (ON CA), 26 O. R. (3d) 481 (C.A.). That case was binding on the trial judge. In it, Justice Finlayson said the following about the personal liability of directors and officers for torts, at pp. 490-91:
The decided cases in which employees and officers of companies have been found personally liable for actions ostensibly carried out under a corporate name are fact- specific. In the absence of findings of fraud, deceit, dishonesty or want of authority on the part of employees or officers, they are also rare. Those cases in which the corporate veil has been pierced usually involve transactions where the use of the corporate structure was a sham from the outset or was an afterthought to a deal which had gone sour... Additionally there have been attempts by injured parties to attach liability to the principals of failed businesses through insolvency litigation. In every case, however, the facts giving rise to personal liability were specifically pleaded. Absent allegations which fit within the categories described above, officers or employees of limited companies are protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own.
[32] More recently, in 642947 Ontario Ltd. v. Fleischer (2001), 2001 CanLII 8623 (ON CA), 56 O.R. (3d) 417 (C.A.), at para. 68, Laskin J.A. stated as follows:
Typically, the corporate veil is pierced when the company is incorporated for an illegal, fraudulent or improper purpose. But it can also be pierced if when incorporated “those in control expressly direct a wrongful thing to be done”: Clarkson Co. v. Zhelka at p. 578. Sharpe J. set out a useful statement of the guiding principle in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 at pp. 433-34 (Gen. Div.), aff’d [1997] O.J. No. 3754 (C.A.): “the courts will disregard the separate legal personality of a corporate entity where it is completely dominated and controlled and being used as a shield for fraudulent or improper conduct.
[33] In this case there was no evidence that the Buckingham was incorporated as a sham or was being used as a shield for fraudulent or improper conduct. If the trial judge’s analysis were accepted, then any time a corporation engaged in a tort its officers and directors would be personally liable. In summary, this is not one of those exceptional cases where the corporate veil should be pierced to impose liability on an officer or director.

3. Corporations and Fiduciary Duties

. Density Group Limited v. HK Hotels LLC

In Density Group Limited v. HK Hotels LLC (Ont CA, 2014) the Court of Appeal commented on the issue of breach of fiduciary duty in the corporate context:
[171] In her analysis of the fiduciary duty claim against Mr. Kallan, the motion judge referred to a number of leading Supreme Court of Canada decisions on fiduciary duties: Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377, which cites the Court’s earlier decision in Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99, and Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24 (CanLII), 2011 SCC 24, 2 S.C.R. 261.

[172] In particular, she highlighted the principle from Hodgkinson v. Simms that to establish a fiduciary duty outside the established fiduciary categories “what is required is evidence of a mutual understanding that one party has relinquished its own self-interest and agreed to act solely on behalf of the other party”: pp. 409-10.

[173] She also referred to the requirements set out in Elder Advocates for establishing a fiduciary relationship outside a recognized category. First, there must be evidence that the alleged fiduciary undertook to act in the best interests of the beneficiary. Second, it must be shown that the alleged fiduciary has a discretionary power over a defined person or class of persons. Third, there must be evidence that the alleged fiduciary’s power may affect the legal or substantial practical interests of the beneficiary: Elder Advocates, paras. 30 to 34.
. Midland Resources Holding Limited v. Shtaif

In Midland Resources Holding Limited v. Shtaif (Ont CA, 2017) the court stated as follows on a director's fiduciary duty to a corporation:
[148] Directors must serve the corporation selflessly, honestly, loyally, and in good faith; they must avoid abusing their position to gain personal benefit: Peoples Department Stores Inc. (Trustee of) v. Wise, 2004 SCC 68 (CanLII), [2004] 3 S.C.R. 461, at para. 35. These fiduciary duties flow from the trust and confidence shareholders repose in the directors to manage the corporation’s assets, including those transferred to the corporation by the shareholders: Peoples, at paras. 34-35.

[149] As a result, a director owes a corporation a fiduciary duty to act honestly, which includes a duty to disclose material information: see, generally, Kevin P. McGuinness, Canadian Business Corporations Law, 2d ed. (Markham, Ontario: LexisNexis Canada Inc., 2007), at §11.40; 484887 Alberta Inc. v. Faraci, 2002 ABQB 406 (CanLII), 311 A.R. 355, at para. 28, citing Jackson v. Trimac Limited, 1994 ABCA 199 (CanLII), 20 Alta. L.R. (3d) 117, at p. 5.

.....

[156] Directors owe their fiduciary obligation to the corporation: Peoples, at para. 43; BCE, at para. 66. And, in BCE, the Supreme Court of Canada noted that “[n]ormally only the beneficiary of a fiduciary duty can enforce the duty”: para. 41. The court acknowledged this could work a harsh result because “the directors who control the corporation are unlikely to bring an action against themselves for breach of their own fiduciary duty”: para. 41. However, in light of the availability of several other remedies to shareholders – such as the oppression remedy, a derivative action, or an action based on a director’s duty of care – the Supreme Court has resisted characterizing corporate stakeholders as the beneficiaries of directors’ statutory fiduciary duties: Peoples, at para. 53; BCE, at paras. 42-45.

[157] That said, a director may owe an ad hoc fiduciary duty to a shareholder, especially in “situations involving a family or other close special relationships of trust and dependency between the claimant and the defendant director, in which the director was seeking to take advantage of that relationship for personal gain or profit”: Kevin McGuinness, Canadian Business Corporations Law, Second Edition, at §11.194; Harris v. Leikin Group Inc., 2013 ONSC 1525 (CanLII), at para. 401-2; affirmed 2014 ONCA 479 (CanLII). However, although the respondents pleaded the existence of an ad hoc fiduciary duty owed by Roberts to Shnaider and Shyfrin, the trial judge made no factual findings that such a duty arose in the circumstances.

4. Corporations and the Oppression Remedy

(a) Provisions of the Corporations Act

. Wilson v. Alharayeri

In the Quebec case of Wilson v. Alharayeri (SCC, 2017) the Supreme Court of Canada considers the oppression remedies available under the Canada Business Corporations Act (CBCA s.241), which are essentially the same as those set out in Ontario's Business Corporations Act (OBCA s.248):
[25] What is at issue is whether the trial judge appropriately exercised the remedial powers provided in s. 241(3) by holding Mr. Wilson personally liable for the oppression. Section 241(3) reads as follows:
(3) In connection with an application under this section, the court may make any interim or final order it thinks fit including, without limiting the generality of the foregoing,

(a) an order restraining the conduct complained of;

(b) an order appointing a receiver or receiver-manager;

(c) an order to regulate a corporation’s affairs by amending the articles or by-laws or creating or amending a unanimous shareholder agreement;

(d) an order directing an issue or exchange of securities;

(e) an order appointing directors in place of or in addition to all or any of the directors then in office;

(f) an order directing a corporation, subject to subsection (6), or any other person, to purchase securities of a security holder;

(g) an order directing a corporation, subject to subsection (6), or any other person, to pay a security holder any part of the monies that the security holder paid for securities;

(h) an order varying or setting aside a transaction or contract to which a corporation is a party and compensating the corporation or any other party to the transaction or contract;

(i) an order requiring a corporation, within a time specified by the court, to produce to the court or an interested person financial statements in the form required by section 155 or an accounting in such other form as the court may determine;

(j) an order compensating an aggrieved person;

(k) an order directing rectification of the registers or other records of a corporation under section 243;

(l) an order liquidating and dissolving the corporation;

(m) an order directing an investigation under Part XIX to be made; and

(n) an order requiring the trial of any issue.
(b) The Test for Oppression

. Montor Business Corporation v. Goldfinger [I]

In Montor Business Corporation v. Goldfinger [I] (Ont CA, 2016) the court considers principles applicable to a finding of oppression under the Ontario Business Corporations Act:
[98] Turning to the merits of the oppression ground of appeal, this court has recognized that the oppression remedy contained in s. 248 of the OBCA is a “flexible, equitable remedy that affords the court broad powers to rectify corporate malfeasance”: see Unique Broadband Systems, Inc. (Re), 2014 ONCA 538 (CanLII), 121 O.R. (3d) 81, at para. 107. The granting of an oppression remedy is a discretionary decision.

[99] In BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560, the Supreme Court addressed the oppression provision found in the Canada Business Corporations Act, R.S.C. 1985, c. C-44, which is similar to the provision found in the OBCA. At para. 68, the Court outlined the following two-step test: (1) Does the evidence support the reasonable expectations asserted by the claimant? and (2) Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest?

[100] The Court addressed the concept of reasonable expectations under the first part of the test, at paras. 62 and 63:
[T]he concept of reasonable expectations is objective and contextual. The actual expectation of a particular stakeholder is not conclusive. In the context of whether it would be “just and equitable” to grant a remedy, the question is whether the expectation is reasonable having regard to the facts of the specific case, the relationships at issue, and the entire context, including the fact that there may be conflicting claims and expectations.

Particular circumstances give rise to particular expectations. Stakeholders enter into relationships, with and within corporations, on the basis of understandings and expectations, upon which they are entitled to rely, provided they are reasonable in the context. These expectations are what the remedy of oppression seeks to uphold. [Citations omitted.]
[101] The court addressed the second stage of the test, at para. 67:
Even if reasonable, not every unmet expectation gives rise to a claim under [s. 248]. The section requires that the conduct complained of amount to “oppression”, “unfair prejudice” or “unfair disregard” of relevant interests. “Oppression” carries the sense of conduct that is coercive and abusive, and suggests bad faith. “Unfair prejudice” may admit of a less culpable state of mind, that nevertheless has unfair consequences. Finally, “unfair disregard” of interests extends the remedy to ignoring an interest as being of no importance, contrary to the stakeholders’ reasonable expectations. The phrases describe, in adjectival terms, ways in which corporate actors may fail to meet the reasonable expectations of stakeholders. [Citations omitted.]
(c) Limitations and the Oppression Remedy

. Maurice v. Alles

In Maurice v. Alles (Ont CA, 2016) the Court of Appeal engaged in an extended discussion of the application of the general two-year limitation period to a corporate oppression remedy claim, here where ongoing oppression was alleged:
(b) Applicable Limitation Period

[43] In my view, an oppression remedy claim under the OBCA is subject to the general two-year limitation period prescribed by s. 4 of the Limitations Act, 2002. Oppression is not listed under s. 16 as a claim to which no limitation period applies, nor is it exempted under s. 19 of the legislation. Special circumstances are also not available to extend the limitation period.

...

[48] I am also of the view that this is not a case where there is ongoing oppressive conduct. The sale was a singular event that occurred many years ago. The refusal to produce documents was made known to the appellant in 2008. It is true that no production was made until this proceeding was commenced, but the continuous refusal to produce documents does not operate to extend the limitation period any more than a refusal to pay an outstanding amount in a collection action extends the limitation period until payment is received. As previously mentioned, limitation periods begin when the cause of action arises, not when it is remedied: Fracassi, at para. 273.

[49] Courts must be careful not to convert singular oppressive acts into ongoing oppression claims in an effort to extend limitation periods. To do so would create a special rule for oppression remedy claims.

....

[52] A party that engages in a series of oppressive acts can always make the argument that it is all part of the same corporate malfeasance and that the limitation period begins to run with the discovery of the first oppressive act. In analyzing that conduct, courts must have regard to the remedial nature of the oppression remedy and the fact that any threatened or actual conduct that is oppressive, or unfairly prejudicial to, or unfairly disregards the interests of any complainant can constitute a discrete claim of oppression. The oppression remedy section of the OBCA is drafted in the broadest possible terms to respond to the broadest range of corporate malfeasance.
(d) Oppression and Piercing the Corporate Veil

. Wilson v. Alharayeri

In the Quebec case of Wilson v. Alharayeri (SCC, 2017) the court's particular focus is the criteria for holding directors of corporations personally liable for oppressive behaviour. This makes the case relevant to two major sectors of corporate law, the oppression remedy and piercing the corporate veil:
(3) The Principles Governing Orders Under Section 241(3) and the Application of the Personal Liability Test Going Forward

[47] To reiterate, Budd provides for a two-pronged approach to personal liability. The first prong requires that the oppressive conduct be properly attributable to the director because he or she is implicated in the oppression (see Budd, at para. 47). In other words, the director must have exercised — or failed to have exercised — his or her powers so as to effect the oppressive conduct (Sidaplex, at p. 567; see also Budd, at paras. 41-44, citing Gottlieb v. Adam (1994), 1994 CanLII 7345 (ON SC), 21 O.R. (3d) 248 (Gen. Div.), at pp. 260-61).

[48] But this first requirement alone is an inadequate basis for holding a director personally liable. The second prong therefore requires that the imposition of personal liability be fit in all the circumstances. Fitness is necessarily an amorphous concept. But the case law has distilled at least four general principles that should guide courts in fashioning a fit order under s. 241(3). The question of director liability cannot be considered in isolation from these general principles.

[49] First, “the oppression remedy request must in itself be a fair way of dealing with the situation” (Ballard, at para. 142). The five situations identified by Koehnen relating to director liability are best understood as providing indicia of fairness. Where directors have derived a personal benefit, in the form of either an immediate financial advantage or increased control of the corporation, a personal order will tend to be a fair one. Similarly, where directors have breached a personal duty they owe as directors or misused a corporate power, it may be fair to impose personal liability. Where a remedy against the corporation would unduly prejudice other security holders, this too may militate in favour of personal liability (see Koehnen, at p. 201).

[50] To be clear, this is not a closed list of factors or a set of criteria to be slavishly applied. And as explained above, neither a personal benefit nor bad faith is a necessary condition in the personal liability equation. The appropriateness of an order under s. 241(3) turns on equitable considerations, and in the context of an oppression claim, “It would be impossible, and wholly undesirable, to define the circumstances in which these considerations may arise” (Ebrahimi v. Westbourne Galleries Ltd., [1973] A.C. 360, at p. 379 (“Ebrahimi”)). But personal benefit and bad faith remain hallmarks of conduct properly attracting personal liability, and although the possibility of personal liability in the absence of both of these elements is not foreclosed, one of them will typically be present in cases in which it is fair and fit to hold a director personally liable for oppressive corporate conduct. With respect to these two elements, four potential scenarios can arise:

i) The director acted in bad faith and obtained a personal benefit;

ii) The director acted in bad faith but did not obtain a personal benefit;

iii) The director acted in good faith and obtained a personal benefit; and

iv) The director acted in good faith and did not obtain a personal benefit.

[51] In general, the first and fourth scenarios will tend to be clear-cut. If the director has acted in bad faith and obtained a personal benefit, it is likely fit to hold the director personally liable for the oppression. On the other hand, where neither element is present, personal liability will generally be less fitting. The less obvious cases will tend to lie in the middle. In all cases, the trial judge must determine whether it is fair to hold the director personally liable, having regard to all the circumstances. Bad faith and personal benefit are but two factors that relate to certain circumstances within a larger factual matrix. They do not operate to the exclusion of other considerations. And they should not overwhelm the analysis.

[52] Further, even where it is appropriate to impose personal liability, this does not necessarily lead to a binary choice between the directors and the corporation. Fairness requires that, where “relief is justified to correct an oppressive type of situation, the surgery should be done with a scalpel, and not a battle axe” (Ballard, at para. 140). Where there is a personal benefit but no finding of bad faith, fairness may require an order to be fashioned by considering the amount of the personal benefit. In some cases, fairness may entail allocating responsibility partially to the corporation and partially to directors personally. For example, in Wood Estate, a shareholder made a short-term loan to the corporation with the reasonable expectation that it would be repaid from the proceeds of a specific transaction. Those proceeds were instead applied to corporate purposes, as well as to repayment of the loans made to the corporation by the defendant directors and officer and by another shareholder. D.M. Brown J. held the defendant directors and officer liable for the amounts used to repay their own loans and the shareholder loan, and also ordered the corporation to pay an equal amount towards the balance of the loan. As this last example shows, the fairness principle is ultimately unamenable to formulaic exposition and must be assessed on a case-by-case basis having regard to all of the circumstances.

[53] Second, as explained above, any order made under s. 241(3) should go no further than necessary to rectify the oppression (Naneff, at para. 32; Ballard, at para. 140; Themadel Foundation v. Third Canadian General Investment Trust Ltd. (1998), 1998 CanLII 973 (ON CA), 38 O.R. (3d) 749 (C.A.), at p. 754 (“Themadel”)). This follows from s. 241’s remedial purpose insofar as it aims to correct the injustice between the parties.

[54] Third, any order made under s. 241(3) may serve only to vindicate the reasonable expectations of security holders, creditors, directors or officers in their capacity as corporate stakeholders (Naneff, at para. 27; Smith v. Ritchie, 2009 ABCA 373, at para. 20 (CanLII)). The oppression remedy recognizes that, behind a corporation, there are individuals with “rights, expectations and obligations inter se which are not necessarily submerged in the company structure” (Ebrahimi, at p. 379; see also BCE, at para. 60). But it protects only those expectations derived from an individual’s status as a security holder, creditor, director or officer. Accordingly, remedial orders under s. 241(3) may respond only to those expectations. They may not vindicate expectations arising merely by virtue of a familial or other personal relationship. And they may not serve a purely tactical purpose. In particular, a complainant should not be permitted to jump the creditors’ queue by seeking relief against a director personally. The scent of tactics may therefore be considered in determining whether or not it is appropriate to impose personal liability on a director under s. 241(3). Overall, the third principle requires that an order under s. 241(3) remain rooted in, informed by, and responsive to the reasonable expectations of the corporate stakeholder.

[55] Fourth — and finally — a court should consider the general corporate law context in exercising its remedial discretion under s. 241(3). As Farley J. put it, statutory oppression “can be a help; it can’t be the total law with everything else ignored or completely secondary” (Ballard, at para. 124). This means that director liability cannot be a surrogate for other forms of statutory or common law relief, particularly where such other relief may be more fitting in the circumstances (see, e.g., Stern v. Imasco Ltd. (1999), 1999 CanLII 14934 (ON SC), 1 B.L.R. (3d) 198 (Ont. S.C.J.)).

[56] Under s. 241(3), fashioning a fit remedy is a fact-dependent exercise. When it comes to the oppression remedy, Carthy J.A. put the matter succinctly:
The point at which relief is justified and the extent of relief are both so dependent upon the facts of the particular case that little guidance can be obtained from comparing one case to another and I would be hesitant to enunciate any more specific principles of approach than have been set out above.

(Themadel, at p. 754)
[57] The four principles articulated above therefore serve as guideposts informing the flexible and discretionary approach the courts have adopted to orders under s. 241(3) of the CBCA. ...
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Source Links

Cases to be integrated

Toronto Standard Condominium Corporation No. 2051 v. Georgian Clairlea Inc. (Ont CA, 2019)

Corporations - Piercing the Corporate Veil
McDowell v. Fortress Real Capital Inc. (Ont CA, 2019)

------------------ Corporations / leading case on corporate veil

ScotiaMcLeod Inc. v. Peoples Jewellers Limited (1995), 1995 CanLII 1301 (ON CA), 26 O.R. (3d) 481 (C.A.), at paras. 25-26

------------------ Corporation / piercing the corporate veil leading case

Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co., 1996 CanLII 7979 (ON SC)

------------------------------- Corporation / corporate veil

[17] While the scope of individual liability as distinct from corporate liability is not always clear, it is undisputed that when a plaintiff purports to sue both a corporation and individuals within that corporation (whether officers, directors or employees), the plaintiff must plead sufficient particulars which disclose a basis for attaching liability to the individuals in their personal capacities: Normart Management Ltd. v. West Hill Redevelopment Co. (1998), 1998 CanLII 2447 (ON CA), 37 O.R. (3d) 97, at p. 102.

--------------------------- Corporation / piercing the corporate veil

- personal liability of corporate principal: Truckers Garage Inc. v. Krell (1993), 3 C.C.E.L. (2d) 157, at para. 40.

-------------------------------

Unique Broadband Systems, Inc. (Re), 2014 ONCA 538 (CanLII), see para 70+ re 'business judgment rule'.



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