Kosmopoulos v Constitution Insurance Co of Canada
Supreme Court of Canada case / From Wikipedia, the free encyclopedia
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Kosmopoulos v Constitution Insurance Co of Canada[3] is a leading Supreme Court of Canada decision on the court's ability to pierce the corporate veil—to impose an interest or liability, that is, upon the shareholders of a company instead of the company itself. It was held that the veil can only be lifted where it would be "just and equitable", specifically to third parties.
Kosmopoulos v Constitution Insurance Co of Canada | |
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Hearing: November 1, 6, 1985 Judgment: January 29, 1987 | |
Full case name | Constitution Insurance Company of Canada, Simcoe & Erie General Insurance Company, Providence Washington Insurance Company, Security National Insurance Company, Upper Canada Insurance Company, Canadian Home Assurance Company, The Contingency Insurance Company Limited v Andreas Kosmopoulos and Kosmopoulos Leather Goods Limited and Aristides Roussakis and Art Roussakis Insurance Agency Limited |
Citations | [1987] 1 S.C.R. 2 |
Prior history | APPEAL AND CROSS‑APPEAL from a judgment of the Ontario Court of Appeal[1] dismissing the insurers' appeal and Kosmopoulos' cross‑appeal (against the insurance agency) from a judgment of R. E. Holland J.[2] in favour of Kosmopoulos in an action on a fire insurance policy. |
Ruling | Appeal and cross‑appeal dismissed. |
Court membership | |
Chief Justice: Brian Dickson Puisne Justices: Jean Beetz, Willard Estey, William McIntyre, Julien Chouinard, Antonio Lamer, Bertha Wilson, Gerald Le Dain, Gérard La Forest | |
Reasons given | |
Majority | Wilson J., joined by Beetz, Lamer, Le Dain and La Forest JJ. |
Concurrence | McIntyre J. |
Chouinard J. took no part in the consideration or decision of the case. |
The case is also a leading source of insurance law. The insurer refused to indemnify Mr. Kosmopoulos on the grounds that the corporation owned the property, even though he was the sole-shareholder of the corporation. The insurer's position was consistent with the 1925 decision of the House of Lords in Macaura v Northern Assurance Co Ltd.
Although the SCC rejected the plaintiffs corporate veil argument, and his bailee argument, the court did not uphold the Macaura rule. The ratio of this case is that an insured may recover an indemnity so long as they meet the factual expectancy test, regardless of whether they have bare legal title to the subject matter of the insurance contract.