Summary

Keywords

Commercial law — Corporations — For purposes of piercing corporate veil, whether allegation of improper conduct is similar to an allegation of fraud and demands proof of specific intention to deceive and whether contractual breach suffices to establish improper conduct regardless of specific intention to deceive — Whether best judgment rule protects corporate directors’ decisions to discharge debts owed to one pre-existing unsecured creditor over other unsecured creditors?

Summary

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Ms. Stewart entered into an agreement to sell her property to 6551450 Manitoba Ltd. The purchase was conditional on obtaining municipal approval to operate a quarry. Ms. Stewart advanced $600,000 to 6551450 Manitoba Ltd. After the agreement became void for failure to obtain municipal approval, Ms. Stewart required re-payment on the basis the advance had been a loan. 6551450 Manitoba Ltd. denied a loan agreement. Ms. Stewart commenced an action. The Court of Queen’s Bench granted damages against 6551450 Manitoba Ltd., a director, and a shareholder. The Court of Appeal dismissed an appeal.

Lower Court Rulings