Can a director be personally liable for a tort that the corporation committed?
Yes, in certain circumstances. While the corporation is a separate legal person that can be liable for its own torts — negligence, nuisance, fraud, and others — a director is not automatically insulated simply because they acted through the corporation. A director who personally participates in a wrongful act, directs employees to commit a wrongful act, or is the "directing mind" of the corporation in connection with the tort may be personally liable for it.
The leading principle from Canadian case law is that a director can be personally liable for torts they directly and personally participated in, regardless of whether the corporation is also liable. This means a director who personally makes a fraudulent misrepresentation to a third party, or who directly orders or carries out an act of negligence, cannot use the corporate structure as a shield against personal liability for that act.
The distinction between authorized acts of management — for which the corporation bears liability but not necessarily the individual director — and personally directed or participated wrongs is not always clear in practice. Courts look at how closely the director was involved in the conduct and whether there was a personal element to the wrongdoing. Directors in hands-on management roles have greater exposure. If your corporation is facing a tort claim and the plaintiff is also naming you personally, legal advice is essential to assess the basis and strength of the personal claim.
Key takeaways
- Directors who personally participate in corporate torts can be personally liable alongside the corporation.
- Corporate structure does not shield a director from liability for their own direct wrongful acts.
- The test is whether the director personally directed or participated in the tortious conduct.
- Directors in hands-on management roles carry greater exposure to personal tort liability.