| There are currently operating in Canada a number of judicial approaches to the question of when directors may be found liable to parties outside the corporation for tortious corporate acts. These include the position that directors can never be found liable if they are acting in the course of duty, that judges may find them liable if to do otherwise would create injustice, that they are liable only if their own personal behaviour was tortious, that they may be liable if the corporation is a sham, and that there are certain categories of offences that impose liability (such as fraud) while other offences do not.;In addition to the general problem of co-existing and therefore unpredictable doctrines, none of these approaches is fully satisfying individually. The one that comes the closest to being an appropriate balancing of the potential policy utility of director liability with the need for a coherent doctrine is the third, where liability follows direct involvement in the harm. But it proves poorly suited to areas where inaction, rather than action, causes harm.;The strict liability standard imposed for some statutory offences, with its attendant "due diligence" defense, offers the potential to fill this gap. It has proven a workable balance between the need to protect society by controlling corporate acts and the need of directors to be able to effectively manage corporate business without undue risk of liability. |
