Landlords May Rely On The Oppression Remedy For Lease Default

Can directors and/or shareholders be personally liable for a corporate tenant's lease obligations?

It is a pillar of corporate organization that corporations are their own persons, with their own rights, obligations, and legal identity. Typically, a director or shareholder will not be found liable for the obligations of a corporation in the absence of a personal guarantee, indemnity agreement, or other direct agreement entered into by such individual director or shareholder. The oppression remedy is one very powerful exception to this rule.

The Ontario Court of Appeal's recent decision, FNF Enterprises Inc. v. Wag and Train Inc., 2023 ONCA 92 confirms that a director and shareholder may be found personally liable where they are found to have stripped value from a tenant-corporation in light of known and outstanding lease liabilities. In this case, the tenant, Wag and Train Inc. ("Wag and Train") entered into a lease with the landlord, FNF Enterprises Inc.