The important decision in Kieswetter Sales and Leasing Ltd. v. 713460 Ontario Ltd., 2008 ONCA 859, released today, confirms the long established proposition that a corporate agent does not attract personal liability for inducing a breach of contract by the corporation unless the agent acted for personal benefit or outside the scope of corporate duty. Some trial courts had imposed liability despite the failure to act outside of the role as corporate agent -- such imposition is an error.
The Court held:
[4] The trial judge held that Dobes was personally liable because he put Heirloom in the untenable position of having to breach one of the two lease agreements it had entered into. In so doing, she erred. Entering into two lease agreements was not in itself a tortious act outside the scope of Dobes' authority. Heirloom could have assigned or sublet one of the leased premises or sought to buy out one of the leases. The trial judge made no finding that Heirloom was not a legitimate business. She made no finding that Dobes was acting outside the scope of his authority in entering into the second lease. Her finding that Dobes was not honest related to his attempt on behalf of the company to get out of the lease by testifying that the Kieswetter premises were unsuitable for a clock company and not to the act of entering the second lease. Further, we do not see that Dobes' actions were on behalf of an identity separate from that of Heirloom. Accordingly, the appeal of Dobes as to personal liability is allowed.
James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4
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