Directors\' Liability in the Post-ADGA Era

On April 6, 2000 the Supreme Court of Canada dismissed the applications for leave to appeal in Adga v. Valcom and the two cases that applied it (Meditrust and Dofasco), thereby confirming the general principle that directors, officers and senior managers are personally liable for the torts they participate in on behalf of their corporation.

The ‘ADGA trilogy’ produced by the Ontario Court of Appeal last year firmly rejects the argument that the ‘Saloman’ principle and the corporate shell protects the directing minds of corporations and those who follow their orders from being sued for wrongful acts they do strictly on behalf of their corporations. While protecting individuals from the traditional menace of lawsuits which fundamentally allege torts in the context of breach of contract actions solely for tactical purposes under the so-called ‘Said v. Butt’ exception, the Ontario Court of Appeal has firmly ensconced the principle that the Nuremburg defences of ‘just following orders’ or ‘just doing my duty to act in the best interests of my corporation’ are no more excusable for committing wrongful acts in corporate life than they are in other contexts.

ADGA was argued by David Debenham of Yegendorf, Brazeau, Seller, Prehogan & Wyllie for the Respondent ADGA and James O’Grady and Kay Young of O’Grady & Young for the Appellant McPherson. Dofasco was argued by Thomas Corbett of Thompson Corbett Webster for the Respondent and Jeffrey Leon and Michael Parret of Fasken DuMoulin Martineau LLP in Toronto for the Appellants. Medi-trust was argued by Ronald Manes of Torkin Manes for the Respondent and Mark Gelowitz and Clifford Lax of Osler, Hoskin & Harcourt LLP for the Appellants.