Kosmopoulos V. Constitution Insurance Co. of Canada

Kosmopoulos v. Constitution Insurance Co. of Canada 1 S.C.R. 2 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.

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 insurers position was consistent with the 1925 decision of the House of Lords in Macaura v. Northern Assurance.

Although the SCC rejected the plaintiffs corporate veil argument, and his bailee argument, the court did not over-rule 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.