Director's Liability For Corporate Negligence

Plaintiffs often cast the net broadly to capture every party with assets or insurance capable of satisfying a potential judgment. Directors are often named as defendants in claims related to the negligence of the companies they oversee.

Under Canadian law, there are certain circumstances in which a director will become personally liable, but such liability usually arises from statute, such as liability for six months of employee wages, remittance of payroll deductions to tax authorities, and safety and environmental legislation.

Directors will not usually be subject to personal liability for torts committed by their companies. The foundational principles of the separate corporate identity inform any discussion of personal liability of directors. The Alberta Court of Appeal has stressed the importance of those principles:¹