Four companies under the same umbrella can’t be sued as one

Danilkewich v. Calco Equipment Sask. Inc. (2002), 22 C.C.E.L. (3d) 71 (Sask. Q.B.)

A dismissed employee, Terrance Danilkewich, started an action for breach of contract against not only his former employer but three other companies as well. He alleged the four companies were in reality one entity and, therefore, the other three companies could be held liable for the wrongful conduct of his former employer.

The court described the relationship between the four companies as follows: The four corporations were incorporated in three different provinces. Three of the companies carried on the same business and they all had one common shareholder and director who was the directing mind of all the corporations. The court found there was commercial interaction amongst the three corporations and they had, on occasion, provided support to one another.

Nonetheless the court found the corporations were separate and independent entities. Although all the accounting procedures were performed in one central office, there were separate financial records for each company.

Any sales which took place amongst the companies were charged to the purchasing corporation, albeit at cost. Therefore the court found the circumstances were not sufficient to attach liability to any of the three corporate defendants.

The employment agreement and other contracts were only between Danilkewich and his former employer, and the other three corporate defendants were in no way a party or privy to those agreements. The claims against the three corporate defendants were dismissed.

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