In the recent case of Zerbin v Vrbanek, 2021 ABCA 317 the Alberta Court of Appeal confirmed a trial judge’s decision to award $1.7 million in damages against a home building contractor for dishonest performance of its contracts; this included forging documents, inflating prices, and charging false deposits.
Darren Vrbanek was the sole director and shareholder of DN Developments, and was under contract with David and Barbara Zerbin for project management services in the construction of two homes. During construction, the Zerbins learned from one of their suppliers that the supplier was coerced into paying a kickback to Vrbanek, which led to the Zerbins eliminating their contract with DN. When the matter went to trial, the judge found overwhelming evidence of Vrbanek’s fraud.
Vrbanek appealed this decision on a number of grounds in “an unfounded attempt to challenge the trial judge’s factual findings and his weighing of the evidence, under the guise of legal error.” The court reviewed the claims discussed at trial and confirmed the trial judge’s finding of liability and the damages assessed. Further, the ABCA also specifically confirmed the trial judge’s finding of personal liability for Vrbanek on the basis that fraud by the proprietor of a ‘one person corporation’ allows the Court to lift the corporate veil. A timely reminder that corporate structures alone cannot shield parties guilty of fraudulent conduct from personal responsibility, or completely shield their assets.
By Ty Schmidt – Supervised by Professor Maharaj