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No Cause of Action

Toronto Parking Authority v. BSAR (Eglinton) Ltd. 2019 Ont SCJ

Plaintiff sold land, but retained a right to purchase the retail component of the project. When it attempted to exercise this right, it found that the defendant had already sold the retail portion to someone else. The plaintiff commenced an action against the corporate defendant and the individual defendants who signed the agreement on behalf of the corporate defendant. The plaintiff claimed that the individuals had induced the corporate defendant to sell the retail component. The judge struck the allegation under Rule 21.01(1)(b) as failing to disclose a reasonable cause of action. The law is well established that individuals are not liable for a corporation’s actions unless the individuals have commenced torts of their own; merely directing the corporate entity to breach its contract is insufficient. The plaintiff then moved to amend its claim to allege that the individuals diverted the sale proceeds to themselves, stripped the corporate defendant of its assets and were acting independently of their roles as the principal and guiding minds of the corporation. These allegations were sufficient to allow the action to continue against the individuals.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.