Piercing the Corporate Veil (LTB)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-24
CLNP Page ID:	2412
Page Categories:	Piercing the Corporate Veil (LTB)
Citation:	Piercing the Corporate Veil (LTB), CLNP 2412, <https://rvt.link/d2>, retrieved on 2024-11-24
Editor:	MKent
Last Updated:	2024/10/21

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Residential Tenancies Act, 2006, S.O. 2006, c. 17

Findings of Board

202 (1) In making findings on an application, the Board shall ascertain the real substance of all transactions and activities relating to a residential complex or a rental unit and the good faith of the participants and in doing so,

(a) may disregard the outward form of a transaction or the separate corporate existence of participants; and

(b) may have regard to the pattern of activities relating to the residential complex or the rental unit.

Statutory Powers Procedure Act, R.S.O. 1990, c. S.22

Powers re control of proceedings Abuse of processes

23 (1) A tribunal may make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes.

Wakunick-Fleury et al. v Star Towers Ltd et al., 2024 ONLTB 68104 (CanLII)

34. On August 19, 2024, I issued an endorsement (the ’19 Aug 24 Endorsement’) in which I identified to the parties that on August 26, 2024, I intended to address the following issues:

(a) where the LTB should exercise jurisdiction under section 202 of the RTA to disregard the separate corporate existence of Star Towers;

(b) whether the shareholders of Star Towers should be made responsible for the payment required by the 21 May Order; and

(c) whether the LTB should make an order requiring Star Towers and the shareholders to complete whatever work to the units is necessary to allow the Tenant to retake possession of their units. [See DOC-3953410]

(...)

55. As was noted in the 19 Aug 24 Endorsement, the LTB has jurisdiction under section 202 of the RTA to disregard the corporate existence of a landlord.

56. As was noted in 642947 Ontario Ltd. v. Fleischer [2001 CanLII 8623 (ON CA)], the separate legal personality of a corporation is a fundamental principle of corporate law and should be disregarded in only exceptional cases. At common law, the corporate veil will typically be ‘pierced’ to impose liability on shareholders only where to respect the separate legal personality of the corporation would be flagrantly unjust.

57. In my view, the LTB’s statutory jurisdiction to ignore the separate corporate existence of a landlord is somewhat broader than at common law and allows the LTB to ‘pierce’ the corporate veil in circumstances where doing so is necessary to protect the interests of tenants. The Court of Appeal has repeatedly found that the RTA has a ‘tenant protection focus’. [See Slapsys (1406393 Ontario Inc.) v Abrams, 2010 ONCA 676 (CanLII), Elkins v. Van Wissen, 2023 ONCA 789 (CanLII) and Price v. Turnbull's Grove Inc., 2007 ONCA 408 (CanLII)] and the Divisional Court has found the the RTA should be interpreted to ensure the realization of its objectives [Schram v. Thompson, 2022 ONSC 6922 (CanLII)]. Section 202 of the RTA is, in my view, intended to ensure that the LTB is able to do justice between landlords and tenants, and should be interpreted and applied accordingly.

58. In Shoppers Drug Mart Inc. v. 6470360 Canada Inc. [2014 ONCA 85 (CanLII)], the Court of Appeal found that the separate existence of a corporation could be ignored where those in control directed the corporation to do a wrongful act. Essentially, a person cannot use a corporation to commit a wrong and thereby avoid liability for the consequences of their actions. [See FNF Enterprises Inc. v. Wag and Train Inc., 2023 ONCA 92 (CanLII)] This is, in my view, how subsection 202(1) should be applied—where the directing mind(s) of a corporate landlord cause the landlord to do ‘wrongful’ acts—breach the RTA—the directing mind(s) can be found personally liable to tenants who are impacted by those wrongful acts.

59. In this case, the separate corporate personality of Star Tower is, in my view, being exploited by the Shareholders—who are also the directors of Star Towers—to run roughshod over the rights of the Tenants and to cause serious prejudice to the Tenants without fear of personal responsibility.

(...)

62. Aside from the specific jurisdiction in section 202, the LTB has broad jurisdiction under the SPPA to make orders to prevent the abuse of its processes. [SPPA, s. 23(1)] In appropriate circumstances, that can, in my view, include disregarding the separate corporate personality of a corporate landlord to impose liability or responsibility on the shareholders.

63. In this case, the separate corporate personality of Star Towers has allowed the Shareholders to abuse the LTB’s processes. Not satisfied with the delays that were being experienced in getting an order terminating the tenancies and evicting the Tenants and standing behind the separate corporate existence of Star Towers, the Shareholders ignored the RTA and the applications they filed with the LTB in December of 2023, took matters into their own hands and, quite literally, ‘renovicted’ the Tenants leaving them without practical recourse against what appears to be an insolvent Star Towers.

64. In my view, so long as the Shareholders are allowed to hide behind the separate legal personality of Star Towers, the legal rights of the Tenants and the orders made by the LTB will continue to be ignored with impunity and the Shareholders will continue to take action and make decision without regard to the RTA or the orders of the LTB. In my view, it is only if the separate legal personality of Star Towers is ignored and the Shareholders face personal responsibility for their actions and decisions that the interest of the Tenants will be adequately protected. For that reason, I am amending these applications to include Haroon Rashid, Bushar Rashid and Aniqa Maria Rashid as landlords/respondents.