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Corporations - Piercing the Corporate Veil (2)

. Bilodeau v. Her Majesty The Queen in the Right of Ontario

In Bilodeau v. Her Majesty The Queen in the Right of Ontario (Div Ct, 2022) the Divisional Court made an interesting conclusion regarding piercing the corporate veil in the context of the duties of a corporate director under the EPA [S.194(1)]:
[64] In Transamerica Life Insurance Co. of Canada v. Canada Life Insurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423, (Gen. Div.) at p. 433, aff’d [1997] O.J. No. 3754 (C.A.), one of the leading authorities on piercing the corporate veil, Sharpe J. (as he then was) stated: “It is also the case that courts will look behind corporate structures when it is necessary to give effect to legislation, especially taxation statutes”. As found by the Designee, the Act is remedial legislation. While its purpose as a whole is not expressly set out, one of the express purposes of a plugging order is to remove a hazard to the public or to the environment (s. 7.0.1 of the Act). When the 2019 Plugging Order was issued the inspector who issued the order detected gas leaks of both an explosive gas and/or a poisonous gas at 7 of the wells. Thus, one of the reasons it was issued was to protect both the public and the environment. As the Supreme Court of Canada has noted, “environmental protection [has] emerged as a fundamental value in Canadian society.”(114957 Canada Ltée (Spraytech, Société d’arrosage v. Hudson (Town), 2001 SCC 40, [2001] 2 S.C.R. 241 at para. 1). While not explicitly phrased in this way, the Designee implicitly found that the only way to give effect to the plugging order was to impose liability on Energex’s directing mind, Mr. Bilodeau. Having made this finding, piercing the corporate veil was justifiable and reasonable.

[65] Section 194(1) of the EPA provides that every officer and director has a duty to do a number of things to prevent a corporation from violating the EPA and further provides that a failure to carry out that duty is constitutes an offence. The EPA, like the Act, provides that the Director can make remedial orders against a “person having charge and control” of a land or building. In Bristol Metal Industries, supra, one of the decisions relied upon by the Designee, the Board dealt with an argument that it was inappropriate for the Director to make a remedial order against a corporate director because if the legislature wished to make directors personally liable for such orders it would have said so explicitly. The corporate director raised the predecessor of s. 194(1) as support for his submission. The legislature had been explicit with respect to who could be prosecuted; by implication by not doing so when it came to liability for remedial orders, the personal liability of directors of directors had been excluded. The Board rejected this argument, finding that construing the phrase “person who has or had charge and control” so narrowly, would undermine the objectives of the EPA. Thus, contrary to the Applicant’s submissions, the EPA jurisprudence (of which Bristol Metal is one example) does not rely on s. 194(1) to find officers and directors liable. It relies on the wording of the EPA and the reference to “person”. This aspect of the wording is the same as the wording in the Act, which as the Designee reasonably found, is also remedial legislation that should be construed broadly, if doing so helps accomplish its purpose.


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