A franchisor appealed from summary judgment dismissing its claim against a corporation's sole officer, director, and shareholder after the corporation had been found liable for misappropriating funds remitted for payment of utility invoices.
The Court of Appeal held that the individual was not personally liable under the pre-incorporation contract provisions because the corporation had adopted the agreement by conduct, but he was personally liable because he expressly directed the wrongful diversion of funds and the corporate veil should be pierced under Ontario law.
The court upheld the use of summary judgment, rejected reliance on a transition release obtained in the face of material non-disclosure, and found no binding 2007 replacement contract.
Damages were varied downward to reflect conceded deductions and an additional admitted set-off, and appeal costs were awarded against the corporation and the individual jointly and severally.
