Paul Fauteux

This appeal addressed whether the trial judge erred in declining to pierce the corporate veil to hold a personal defendant liable for a corporation's breaches of contract.

The Court of Appeal affirmed that piercing the corporate veil is an exception, particularly in commercial settings where parties understood they were contracting with a corporation.

The court found that the corporate defendant's "unreasonable" and "capricious" breaches of contract did not amount to "improper conduct" sufficient to justify piercing the veil, as doing so for every breach by a one-person company would undermine corporate separateness.

The cross-appeal was dismissed.

The plaintiffs and defendants entered into two joint venture agreements for real estate investments, where the defendants acted as passive investors holding legal title and mortgages, while the plaintiffs managed the properties and held beneficial ownership.

At the end of the four-year terms, the defendants refused to cooperate with the sale of the properties, claiming the plaintiffs breached the agreements and seeking beneficial ownership.

The court found that the defendants breached the agreements by unreasonably refusing to sell, dismissed the defendants' counterclaim, and ordered specific performance for the sale of both properties along with damages for the delay.

The applicants, Erica and Geoff Chovaz, brought motions to strike the pleadings of the respondents, 7120761 Canada Inc., Daniel St. Jean, and Laurel Simmons (collectively "712 group"), in both Superior Court and Small Claims Court actions, alleging non-compliance with pleading rules.

The Chovazs also sought costs for 712 group's abandoned motion to transfer the Small Claims action to Superior Court.

The court granted the motions to strike, finding significant deficiencies in 712 group's pleadings, including lack of clarity regarding causes of action, misrepresentation elements, and damages.

Leave was granted to file amended pleadings.

The court also awarded costs to the Chovazs for the abandoned transfer motion, citing 712 group's problematic litigation conduct.

The defendant corporation brought a motion to set aside a default judgment obtained by the plaintiff for breach of contract in the amount of $426,767.51.

The defendant alleged the judgment was obtained through sharp practice and misleading information and sought to challenge a related default order in a separate action.

The court found the litigation had become a cycle of unproductive without‑notice orders involving an insolvent company and adjourned the motion to allow responding materials and potential settlement discussions.

The court clarified that the default judgment did not impose personal liability on non-parties and imposed interim restrictions preventing enforcement of judgments or bankruptcy proceedings without leave.

The judge seized himself of both related proceedings pending further developments.

Following a successful Rule 51.06(2) motion that resulted in partial judgment, the plaintiff sought costs and pre-judgment interest.

The court considered costs arising from both the motion and the adjournment of the scheduled trial after the defendants’ counsel was granted leave to withdraw.

Because the motion did not resolve all issues in the action, the court declined to assess the effect of prior settlement offers under Rule 49.

The court awarded the plaintiff partial indemnity costs for the motion and for wasted trial preparation caused by the adjournment.

Pre‑judgment interest was also granted pursuant to s. 6 of the Arthur Wishart Act (Franchise Disclosure).