It is a difficult task to pierce the corporate veil and hold the principal personally accountable.

The context in which an individual who has “complete control” of a corporation and where there is “conduct akin to a fraud”  may potentially lead to personal liability for the acts of the company. 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.¹

This principle may also apply where those persons in control of a corporation expressly direct a wrongful act. ^{2 3}

In such circumstances, the court will pierce the corporate veil and hold the individual personally responsible.

Such was the finding of the Ontario Court of Appeal in a 2020 decision upholding the trial judge’s finding of personal liability upon the principal: ⁴

[26] The trial judge held that Spirit was completely controlled by Kramer and that Spirit was being used as a shield for fraudulent or improper conduct. He found that (i) Kramer was “the controlling will and mind of both Spirit”; (ii) Kramer was “simply transferring all of the money in each between his own pockets”; (iii) Spirit was “just a plaything of Kramer’s”; and (iv) Spirit “must be considered an accomplice to Kramer’s fraudulent activities”.

[27] These findings of fact would be sufficient to pierce the corporate veil and hold Kramer liable for obligations of Spirit — here they have a different but equally well-founded consequence. When Kramer directed Spirit to participate in — be an accomplice to — wrongful conduct, Spirit was rendered liable for that conduct. [page590] When the controlling mind of the corporation directs it to do a wrongful act it can scarcely be argued that the corporation commits the act with impunity.

1. Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996) OCA 
2. 642947 Ontario Ltd. v. Fleischer  (2001) OCA at para. 68.
3. Clarkson v Zhelka
4. Michel v Spiritual Financial