SUING A CORPORATION
Customers disappointed with goods, clients unsatisfied with services, visitors injured in buildings—all of them may be unhappy with the people they were dealing with, but ultimately their claim may be with the corporation behind them.
Suing a corporation may often be the better legal and strategic route to resolving your claims when all else has failed, but it’s not always as simple as going after the name on the door.
First, you need to be sure that the business you are dealing with is incorporated. A business name search online through the NUANS system will search the Ontario Ministry of Government Services records to see if the business name is registered and who registered it, whether it was one person as a sole proprietorship, several people as a partnership, or a corporation.
This search is crucial in determining who to sue and who can be found liable. Generally speaking, corporations are considered liable for the actions and omissions of their owners, managers and employees (vicarious liability) and not those people themselves. Sole proprietors and partners are generally personally liable.
If you are suing a corporation, you need to make sure that it still exists. You cannot sue or obtain judgment against a corporation that has been dissolved. A Corporation Profile Report will confirm if it is still legally active (which is much different from carrying on business), its registered head office address (which could be different from its business address) and contain the names and addresses of its officers and directors. This information will help you in serving a claim on the corporation.
Although most corporations in Ontario are incorporated under the Ontario Business Corporations Act, some are federally incorporated under the Canada Business Corporations Act, particularly if they do business in other provinces or countries, or in federally regulated industries. You can do the same searches online as for Ontario corporations.
PIERCING THE CORPORATE VEIL
While corporations are created to insulate their shareholders, directors and officers from personal liability, that protection is not absolute. If those in control of a corporation deliberately direct something wrong to be done, or have set up the corporation for illegal, fraudulent or other improper purposes, they can be sued and held personally liable for such actions carried out while acting for the corporation.
The legal test to pierce the corporate veil is strict and vicarious liability generally covers almost all claims. A claim for breach of contract for unpaid bills will not likely permit you to pierce the corporate veil, but a fraud committed with no intention of ever paying those bills might.
Sometimes it may be impractical or impossible to recover from the corporation because it is insolvent, ceased doing business, or holds few or no assets. The oppression remedy found in both the Ontario and Canada Business Corporation Acts allows you to hold the corporation liable for any acts or omissions that “are oppressive or unfairly prejudicial or that unfairly disregards the interests of any…creditor” and pursue a wide range of remedies, including holding the shareholders as well as the officers and directors personally liable. This can be useful especially in dealing with small, closely-held corporations with few shareholders.
However, this remedy only applies if your claim is as a creditor of the corporation. Personal injury or wrongful dismissal claims would not apply, and courts do not often grant this remedy if others are available.
The lawyers at Alemi Law Group can assist you with claims against corporations and help you through the complexities of corporate law to reach a fair and just resolution of your claims.
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