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.