An Equity Rationale for the Enforcement of the Corporate Veil?: The Alberta Court of Appeal Considers a Joint Venture Agreement in the Shadow of Corporate Reorganization
April 28th, 2008Cases Considered: Apex Corporation v Ceco Developments Ltd., 2008 ABCA 125
Common law courts have demonstrated a willingness to ‘pierce the corporate veil’ in circumstances when upholding the assumption of separate corporate legal identity would, for example: endorse an instrument that appears simply a sham; would permit for behaviour “akin to fraud”(Gilford Motor Company Ltd. v. Horne, [1933] Ch. 935 (C.A.)); or lead to a result “too flagrantly opposed to justice”(Kosmopolous v. Constitution Insurance Co. of Canada [1987] 1 S.C.R. 2). This latter language of justice, authored by Madame Justice Bertha Wilson, in particular signals a potential equitable limit to the invocation of separate corporate legal identity. And so while there are rare, if established, instances for piercing the corporate veil based upon justice concerns, the instances of an equitable enforcement of corporate personality are rarer still, and indeed may be difficult to conceive of. Involved would be a court enforcement of separate legal entity despite the claims of a corporation’s ownership. Yet, just such a curious result occurred in the Alberta Court of Appeal’s recent decision in Apex Corporation v. Ceco Developments Ltd. (per Justice Jean Côté, Justices Ellen Picard and Peter Martin concurring).
Posted in Corporate / Commercial
