In Quebec, actions for dismissal without just and sufficient
cause against administrators and officers of a corporation can be
set aside, provided that it can be demonstrated that the
plaintiff's motion alleges insufficient facts to lead the court
to conclude that administrators and officers should be held
personally liable. Courts should not pierce the corporate veil and
search blindly and indiscriminately for any cause of action that
might work against administrators or officers where the
plaintiff's action is clearly unfounded in law.
In Ronald Stark v. F & D Plastics Inc.1,
the plaintiff was a former employee of the defendant F & D
Plastics, of which the defendants Darren and Roger Rosbury were
administrators and officers. At trial, it was acknowledged that the
plaintiff was dismissed without just and sufficient cause and that
a release had been signed, but the plaintiff alleged that that
release did not provide for sufficient notice. Therefore, he filed
a motion to institute proceedings against F & D, but also
against the Rosburys personally, in their capacity as
administrators and directors, for an indemnity in lieu of a longer
notice period. The Rosburys filed a motion to dismiss the
plaintiff's action. Justice Danielle Turcotte of the Quebec
Superior Court granted the Rosburys' motion and dismissed the
plaintiff's action against them personally.
The plaintiff alleged that there was cause to pierce the
corporate veil because the Rosburys used a legal person to violate
rules of public order. The plaintiff further alleged that they had
acted in bad faith in not giving him sufficient payment in lieu of
notice and thereby committed a fault. According to the plaintiff,
he had a right to pursue all parties at fault as co-defendants and
the Rosburys could not invoke the corporate veil to deflect their
personal responsibility for violations of rules of public order,
such as those requiring notice or payment in lieu thereof.
The Rosburys requested the dismissal of the case against them
personally since in his motion, the plaintiff alleged insufficient
facts to lead the Court to conclude that they should be held
personally liable. Furthermore, since at all relevant times the
Rosburys acted as agents of F & D, and since the
plaintiff's motion identified no distinct fault on their part,
the action was unfounded in law. As such, the plaintiff's
action constituted an improper use of procedure and the Rosburys
argued, should be dismissed.
The Court first examined whether the action against the Rosburys
was unfounded in law. The Court found that while the plaintiff
explicitly mentioned in his motion that all defendants had acted in
bad faith, he provided no facts whatsoever describing the nature of
the Rosburys' personal actions.
As for the issue of improper use of procedure, the Court
reviewed legal commentary which clearly stated that directors were
not personally liable so as long as they acted within the confines
of the powers conferred on them, and that generally, in matters of
dismissal, only the employer could be held liable. For an
individual to be held personally liable, a distinct fault on his
part had to be proven. No such fault was alleged in the
The dismissal, in and of itself, was not a fault or an abuse of
right, and none of the facts alleged in the plaintiff's motion
could lead the Court to conclude that the Rosburys had committed
any fault of their own. Their actions in carrying out the dismissal
and signing the release were performed as agents of the company and
therefore could not be considered grounds for their personal
Since an unfounded suit may constitute procedural impropriety,
section 54.2 of the Code of Civil Procedure provides for a reverse
onus where a defendant summarily establishes that an action or
pleading may constitute such an impropriety. In this case, the
Court found that the plaintiff was unable to satisfy this reverse
onus to establish that his action against the Rosburys was founded
Furthermore, the Court found that no intention to harm on the
part of the plaintiff was needed in order to dismiss the action;
the fact that he instituted an action that was unfounded in law
constituted a "culpable" action in and of itself. Quoting
legal commentary on the subject, the Court stated that where no
reasonable cause of action existed, one should not search blindly
and indiscriminately for any cause of action that might work.
In the Court's opinion, the action against the Rosburys had
no reasonable chance of success. Therefore, it dismissed the action
against them, with costs against the plaintiff.
1 Ronald Stark v. F & D Plastics Inc., FD Plastiques
Canada Corporation, Darren Rosbury, Roger Rosbury, Quebec Superior
Court, February 12, 2013.
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