duty of care
A recent decision of the Ontario Superior Court of Justice addresses directors’ duties towards the corporation and its employees. Specifically, the court addressed whether a director or officer’s fiduciary duties extend to protecting an employee from the consequences of that employee’s own fraudulent acts.
If a volunteer falls off a ladder, and there is no one around to see how or why they fell, who is liable? The Court in the following matter addresses this.
Irvin Leroux fought the Canada Revenue Agency for 18 years over allegations of unpaid taxes and gross negligence. Despite losing some of Leroux’s original documents, the CRA eventually claimed he owed close to a million dollars in taxes, penalties and interest for three years when he was starting his RV park business in British Columbia.
Regular readers may recall the article we wrote on the topic of officer liability. There we commented on circumstances in which officers of corporations under the Canada Not-for-profit Corporations Act (CNCA) (whether continued to it or incorporated there) will be exposed to personal liability. Not long after that piece was written, an Executive Director of a corporation considering continuing to the CNCA who is an employee and not an officer in accordance with the corporation’s by-laws, asked us if she would owe a fiduciary duty to the corporation under the CNCA. On reflection, we concluded that the new officer provisions in the CNCA create a statutory framework wherein employees could be held liable for a breach of the same duties that are applicable to directors of those corporations. We left, for the moment, the question as to whether these duties were “fiduciary” or not.