Equitable grounds for piercing corporate veil rejected by Canadian courts

Plaintiff P Ltd. was solely owned, operated and controlled by SP. SB was owner of both corporate defendants, MVMB Inc. and tenant, R Ltd.. MVMB Inc. owned land upon which construction lien had been placed by plaintiff. Last significant work was done on April 27, 2016 and final work was done on May 15, 2016. Invoice in amount of $34,601.66, as representing outstanding claim by plaintiff, was issued on May 18, 2016. Defendants have neglected or refused to pay it. Plaintiff brought action claiming to be entitled to lien upon interests of defendants on property for sum of $34,601.66. Action allowed. Plaintiff was granted judgment in amount of $34,101.66. Judgment was against two corporate defendants and not against SB, personally. SB should not be held liable for any successful claims by plaintiff for improvements done and unpaid for. There had been no significant evidence of bad faith and certainly no evidence of fraudulent activity on his part or with respect to either corporation that he controls. There were number of legitimate reasons to incorporate businesses, including a legitimate concern to protect personal liabilities, but also tax considerations, ability to retain earnings, etc.. Equitable grounds for piercing corporate veil had been rejected by Canadian courts and principles referred to above were governing principles. It was established law that supported incorporation of businesses in the manner done so by defendant, SB. There was no evidence being provided at this trial to justify establishing his personal liability. Plaintiff sent invoices to R Ltd. quite properly. They were not aware of existence of MVMB Inc..

Pryers Construction Ltd. v. MVMB Holdings Inc., et al (2018), 2018 CarswellOnt 21480, 2018 ONSC 7605, K.E. Pedlar J. (Ont. S.C.J.).