Offices in Ottawa and Perth
(613) 722-1500

CONTACT US (613) 722-1500

Other Sources of Liabilities for Directors

Other Sources of Liabilities for Directors

Mann Lawyers

Posted December 5, 2018

In a recent blog, I presented the duty of care and the fiduciary duty of directors as a potential source of liabilities for them. This blog will cover other sources of liabilities for directors.

Directors of a corporation are jointly and severally liable with the corporation for certain tax arrears of a corporation, a corporation’s failure to withhold or remit certain amounts on account of employee tax/pensions/benefits, failure to withhold or remit certain amounts on account of HST or Excise Tax the corporation’s penalties for failing to file annual returns with the Provincial or federal authority responsible to receive such declaration, up to six (6) months of unpaid wages owed to employees of the corporation, the costs associated with some environmental offences committed by the corporation, and any payments made to shareholders when the corporation is nearing insolvency. Moreover, directors may attract personal liability for tortious conduct of the corporation: “Where those actions are themselves tortious or exhibit a separate identity or interest from that of the corporation so as to make the act or conduct complained of their own, they may well attract personal liability” (see Blacklaws v. Morrow, 2000 ABCA 175 at para.  41).

Directors may also be liable when they take on a direct supervisory role. As an example, in Nielsen Estate v Epton (Nielsen Estate v. Upton, 2006 ABCA 382, affirming 2006 ABQB 21), the plaintiff was crushed in the course of lifting a heavy industrial load with a crane. The director, Epton, had supervised the fabrication, transportation and installation of the structures from a work-site office. The employer’s other director and shareholder was responsible for office management and sales. The director’s failure to attend to the duties that were assigned to him attracted personal liability.

As a final note, please be advised that directors are also personally liable for any debts of the corporation that they personally guarantee.  We therefore advise an abundance of caution before you decide to personally guarantee any corporate debt.

Directors may consider reducing this potential liability by having the corporation purchase directors’ errors and omissions insurance on their behalf. This insurance may be difficult and costly to maintain. It is recommended that the directors take care to ensure that all of the corporation’s payments are made on time, separate funds are created to hold any remittances or employee pensions/benefits, the corporation complies with all environmental laws and regulations, and the corporation is in good financial standing prior to declaring any dividends or approving any share redemptions/repurchases. 

Should you have any further questions about director liability, I would be glad to provide you with further information.

This blog post was written by Robert P. Bissonnette, a member of the Business Law team, who is licensed in both Ontario and Quebec.  Robert can be reached at 613-369-0365 or at

More Resources

Blog |
Business Law, Wills, Trusts and Estates


Posted June 28, 2022

As entrepreneurs, we tend to be optimistic people – that is what I have found, for the most part, and what seems to be part[...]
Blog |
Business Law


Posted June 20, 2022

The Federal Government of Canada recently launched the Canada Digital Adoption Program (“CDAP”) run by Innovation, Science and Economic Development Canada (“ISED”). It is a[...]
Blog |
Estate Litigation


Posted June 13, 2022

Trust companies are often faced with a dilemma when the fees associated with the administration of a testamentary trust exceed the income generated by it. [...]
Blog |
Environmental Law


Posted June 6, 2022

On May 10, 2022, the Alberta Court of Appeal released its opinion in Reference re Impact Assessment Act (the “Act”), 2022 ABCA 165, on the[...]
Blog |
Personal Injury


Posted May 30, 2022

As the warm weather of summer approaches, the number of cyclists enjoying Ottawa’s shared path system is increasing day by day. I have noticed that[...]
Blog |
Family Law


Posted May 25, 2022

Cohabitation agreements and marriage contracts (or “prenups”) are common contracts for couples to enter into prior to moving in together or getting married. Reasons for[...]

Subscribe to Our Newsletter

This field is for validation purposes and should be left unchanged.