Corporate Law Cases.docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 2276A/B
Frederick King

Corporate Law Cases 4/22/2013 1:58:00 PM LIFTING THE CORPORATE VEIL Lockharts Ltd. v. Excalibur Holding Ltd. et al., Nova Scotia Supreme Court – transfer of property to avoid law suit  Facts: o Baron and Excalibur are separate corporations (separate legal entities) both owned by Mr. and Mrs. Harrison o Baron – has the right to a piece of land and they enters in a contract with Lockhart to supply building materials in exchange for money  Lockhart supplies but Baron doesn’t pay  Baron transfers the land to Excalibur (the other company)  Lockhart sues Baron but its of no value because Baron has no assets after selling the house to Excalibur  Lockhart then sues Excalibur because they now have the assets – the problem is that Lockhart and Excalibur didn’t have a contract  The court disregarded the defence of separate legal existence that would normally apply, because the corporation was being used for a fraudulent purpose – transferred property so Lockhart wouldn’t be able to sue since Baron didn’t pay Riverside Fisheries Ltd. et al. v. Economical Mutual Insurance Co. et al., Ontario Supreme Court – fire set on own company, tried to claim insurance  Facts: o Property owned by Riverside was destroyed by fire o The insurance company refused to compensate because the fire was clearly deliberately set by an arsonist  Court responded to the claim that even if Goldhar, president and principal shareholders of Riverside, was liable for the fire, which he was, that Riverside is a separate legal entity and shouldn’t suffer from Goldhar’s wrongdoing, by saying that given the interwoven family business relationships, Riverside is not considered an “innocent partner” DUTIES OF A DIRECTOR UPM-Kymmene Corp. v. UPM-Kymmene Miramichi Inc., Ontario Supreme Court of Justice – self interested contract  Facts: o The company and Berg have a contract, and a shareholder went to court using the oppression remedy requesting the Berg contract be set aside o Berg has generous payments and perks in the contract with the company – but he brought no benefits to the corporation  Corporation must act in a responsible manner – avoiding negligence and using a standard of care  The question was whether or not the corporation acted in a reasonable manner when entering into this contract  Even if the decision is a wrong decision, if they acted reasonably they have fulfilled their duty  The court found they did not act reasonably, so they set aside the contract LIABILITY OF DIRECTORS Jama (Litigation guardian of) v. McDonald’s Restaurants of Canada Ltd., Ontario Superior Court of Justice – severed rat head in Big Mac  Facts: o People get a Big Mac at a McDonalds and find a severed rat head in the burger o They proceeded to sue the franchise, the manager, both the directors of McDonald’s Canada and USA as well as both McDonald’s Canada and USA  Defendants asked for procedural relief to be removed because their
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