Court Of Appeal Affirms Director's Personal Liability For Value Stripping: FNF Enterprises Inc. v. Wag And Train Inc.

• Published date: 31 July 2023
• Law Firm: Dale & Lessmann LLP
• Author: Mr Geoff Janoscik

The recent decision of the Court of Appeal for Ontario in FNF Enterprises Inc. v. Wag and Train Inc., 2023 ONCA 92 confirms that the oppression remedy in section 248 of the Business Corporations Act, R.S.O. 1990, c. B. 16 ("OBCA") remains a potential tool for creditors seeking personal recovery from directors that improperly strip corporate assets in the face of liabilities owed to them.

The defendant at issue in FNF, Linda Ross ("Ross"),was a sole director, officer, and shareholder of the corporate defendant, Wag and Train Inc. ("Wag and Train"). The plaintiff, FNF Enterprises Inc. ("FNF"), had leased commercial premises to Wag and Train.

FNF alleged that Wag and Train abandoned the leased premises and ceased paying rent. FNF also claimed that Ross stripped assets from Wag and Train while aware of its liabilities for having breached the lease.

FNF asserted three causes of action against Ross personally, namely:

1. Ross interfered with contractual relations because she made decisions that constituted Wag and Train's breach of the lease;
2. Ross conducted...