The plaintiff, Cornerstone Properties Inc., sued Southside Construction Management Ltd. seeking to pierce its corporate veil to satisfy approximately $53,500 in costs orders.
These costs were awarded against 2108790 Ontario Inc. (2108), a company beneficially owned by Southside, in a prior action.
Cornerstone alleged that 2108 was a "mere puppet" created by Southside for a fraudulent or improper purpose to acquire land and avoid liability for costs.
The court applied the Transamerica test for piercing the corporate veil, which requires complete control of the subsidiary and its incorporation for a fraudulent or improper purpose or use as a shell for improper activity.
The court found that 2108's formation to acquire the Urlindale lands was for a lawful purpose, and there was no evidence of fraudulent or improper conduct.
The court also determined it lacked jurisdiction to make a standalone costs order against Southside as a non-party to the original action.
The action was dismissed.
