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Legal Blog:
Aug
01
2009
She Tries, She Lies
The bankruptcy system is said to exist to assist the honest but unfortunate debtor who finds herself in over her head. It is not intended to help people who are attempting to beat the system. Often, the dishonest and fortunate debtor is able to do just that; sometimes, however, she is not. In Re Nahreen Yalda Mako, a 2009 decision of the Registrar in Bankruptcy, the bankrupt received a rude awakening.
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01
2009
Incorporation
One of the main reasons for a person to incorporate is to obtain the benefit of limited liability (i.e. the corporation, as a separate legal entity, is liable for its debts; its shareholders are not). However, regardless of incorporation, directors can be held liable for a corporation’s obligations in a number of ways. Some liability is created through statute (e.g. tax withholdings at source, Construction Lien Act obligations, etc.) and some through contract (e.g. a guarantee by which an individual guarantees the debts of a corporation to a creditor).
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01
2009
Mitigation
As we all know, a vendor who has to comply with a condition prior to closing must use its best efforts to do so. In addition, if a purchaser incurs damages because the vendor fails in its obligations, the purchaser has a duty to mitigate its damages. Both of these issues arose in Southcott Estates Inc. v. Toronto Catholic School Board 2009 W.L. 253328, 2009 CarswellOnt 494 (Ont S.C.J.).
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