New Ontario Case Explains Limits of Corporate Protection

We have long operated on the well-established principle that corporations are separate and distinct legal entities from their shareholders.  Corporate structures are designed to provide shareholders, directors and officers with protection from personal liability. The recent Ontario Court of Appeal decision in Chanderpaul v. Caesars Convention Centre Ltd., 2026 ONCA 332 serves as an important reminder that this protection is not absolute.
 
In reaffirming the principles surrounding “piercing the corporate veil,” the Court clarified that individuals behind a corporation may still face personal liability where a corporation is used as a shield for improper or abusive conduct.
 
The Court emphasized that piercing the corporate veil remains an exceptional remedy and that mere ownership or control of a corporation is not enough to impose personal liability. To succeed, a plaintiff must establish both complete domination of the corporation and evidence that the corporate structure was used for fraudulent or improper purposes connected to the harm suffered. Importantly, the Court clarified that the wrongful conduct does not need to exist at the time the corporation was formed.  Rather, misuse occurring during the operation of the business may also justify lifting the veil in appropriate cases.
 
While the plaintiff in Chanderpaul ultimately did not succeed, the decision is significant because it signals a more practical and modern interpretation of corporate veil piercing principles in Ontario. Business owners, directors, and professionals should view the case as a reminder that proper corporate governance, clear separation between personal and corporate affairs, and lawful business conduct remain critical to preserving the protections offered by incorporation.

For more information, contact Le Nguyen, Partner, LLF LAWYERS LLP at (705) 742-1674 or lnguyen@llf.ca