ntroduction
In Chanderpaul v Caesars Convention Centre Ltd, 2026 ONCA 332, Justice Coroza of the Ontario Court of Appeal (Justices Huscroft and Monahan concurring) recently confirmed and restated aspects of the test for piercing the corporate veil, adding clarity to an occasionally muddied subject.
Background
(Note: the original trial judgment is reported at 2025 ONSC 558)
The Plaintiff was injured in a car accident, when she was riding as a passenger in Mr. Ramrattan’s car. Mr. Ramrattan was intoxicated, having allegedly been overserved by Caesars.
The directors and shareholders of Caesars, Rajesh and Kanta Kaura, were also named as defendants. The Plaintiff alleged that the Kauras negligently operated Caesars as a nightclub, failed to properly insure it, and took steps to wrongfully render Caesars judgment-proof. The Kauras and Caesar brough a motion for summary judgment, which was granted for the Kauras but dismissed against Caesars. Both the Plaintiff and Caesars appealed.
On Appeal
Although there were four issues on appeal, the primary issue in the Plaintiff’s appeal was whether they could pierce the corporate veil to hold the Kauras liable, which the trial court found they could not. This was upheld on appeal.
The Court of Appeal confirmed Transamerica Life Insurance Co of Canada v Canada Life Assurance Co as the leading case in Ontario on piercing the corporate veil, which stated succinctly the two-part test in which courts will disregard the sperate legal personality of a corporation:
- where the corporate entity is completely dominated and controlled; and
- it is being used as a shield for fraudulent or improper conduct.
The motions judge originally found that the corporate veil could not be pierced because, in addition to evidentiary reasons, the individual defendants did not engage in fraudulent or improper conduct outside—or with purpose outside—their role as directing minds of the corporation.
The Court of Appeal found the addition by the motions judge of the “outside their role as directing minds” to be an error.
Additionally, the Court of Appeal reiterated a number of guiding principles for governing the corporate veil:
- Piercing the corporate veil is an equitable exception, not the rule.[1]
- The corporate veil should be disregarded when the corporation is “completely dominated and controlled and being used as a shield for fraudulent or improper conduct”.[2]
- The fraudulent or improper conduct has “given rise” to the liabilities the plaintiff seeks to enforce.[3]
Further, the Court clarified that the defendant corporation did not have to be incorporated for an illegal, fraudulent, or improper purpose. While this could certainly meet the test, “wrongful conduct is plainly not limited to the time of incorporation”.[4] Fraud or wrongful actions that occur post incorporation are just as actionable and may also provide a cause to pierce the corporate veil.
Although the Court of Appeal largely agreed with the motion judge’s analysis, they noted the motion judge erred in stating “the fraudulent or improper conduct had to be taken by the respondents for a purpose outside of their role as directing minds, and had to be independently actionable as against them.”[5]
The Court of Appeal reiterated that the corporate veil can be pierced if “those in control expressly direct a wrongful act to be done by the corporation” and there is no requirement the wrongful acts be “related to the operation of the corporate defendant itself” or stem from an individual’s role as directing mind.[6]
The Court of Appeal held plainly the question is simply:
- whether corporate entity is completely dominated and controlled; and
- whether those in control expressly direct a wrongful thing to be done.[7]
Alberta Takeaways
The Alberta Court of Appeal observed in the 2022 decision of Driving Force Inc v I Spy-Eagle Eyes Safety Inc that there is no “unifying test” for piercing the corporate veil, and such cases tend to be highly fact-specific.[8]
The Driving Force Court noted further that the oft-cited situation of piercing the corporate veil when the corporation is a merely a “sham” or “alter ego” of its shareholder(s) is “imprecise” and “not often helpful” unless the corporation has been illegitimate “from the beginning”.[9] The Chanderpaul Court appears to have massaged this “imprecision” and rendered the principal more useful.
While the Ontario Court of Appeal decision is not binding on Alberta judges, we anticipate that this expansion and clarification of the Transamerica test (and other principles arising downstream) is likely to be followed in Alberta.
For assistance in determining whether the corporate veil can be pierced, and ways to recover your losses when the company responsible has declared bankruptcy, we invite you to contact one of DWF’s commercial litigators.
[1] Chanderpaul v Caesars Convention Centre Ltd, 2026 ONCA 332 at para 72.
[2] Ibid at para 46, citing Transamerica Life Insurance Co of Canada v Canada Life Assurance Co, 1996 CanLII 7979 (ON CTGD).
[3] Ibid at para 47.
[4] Ibid at para 57.
[5] Ibid at para 63.
[6] Ibid at para 66.
[7] Ibid at para 66.
[8] Driving Force Inc v Spy-Eagle Safety Inc, 2022 ABCA 25 at para 54.
[9] Ibid at para 55.