Can a director or officer be held personally liable to rectify corporate oppression?

The issue in Budd v. Gentra was the adequacy of the pleading against directors. The court found that specific acts had not been alleged against specific directors or officers and that the claim did not reveal a reasonable cause of action against them personally. As discussed in Budd v. Gentra at para. 52: As indicated above, the remedial reach of s. 241 is long, but it is not unlimited. Any order made must "rectify the matter complained of" by the parties seeking the remedy. To maintain an action for a monetary order against a director or officer personally, a plaintiff must plead facts which would justify that kind of order. The plaintiff must allege a basis upon which it would be "fit" to order rectification of the oppression by requiring the directors or officers to reach into their own pockets to compensate aggrieved persons. The case law provides examples of various situations in which personal orders are appropriate. These include cases in which it is alleged that the directors or officers personally benefitted from the oppressive conduct, or furthered their control over the company through the oppressive conduct. Oppression applications involving closely held corporations where a director or officer has virtually total control over the corporation provide another example of a situation in which a director or officer may be held personally liable to rectify corporate oppression.

Here the trial judge found the respondents severally liable to compensate the appellants for payments from which they had derived personal benefit and jointly liable for the payment to the third party. The trial judge did not err in principle or make an unjust decision in reaching his conclusions based on considerations of good faith. He took all of the circumstances into account and made the order he thought fit as he was entitled to do. To use the words in Budd v. Gentra noted above, it was not an error in principle or otherwise unjust to find that these are not circumstances where it would be “fit” to require the respondents to “reach into their own pockets to compensate” the appellants for all of their loss. To again use the words in Budd v. Gentra, the respondents did not have “virtually total control” over a closely held corporation nor did they further their control over the corporation by their oppressive conduct.