Canadian Aero Service Ltd v O'Malley
Canadian Aero Service Ltd v O'Malley, [1974] SCR 592, is a leading civil case decided by the Supreme Court of Canada on corporate director and officer liability. Facts Canadian Aero Service Ltd. ("Canaero") was a company whose main business was topographical mapping and geophysical exploration. O'Malley and Zarzycki were senior officers of Canaero, and, together with Wells, were directors of the company. After the acquisition of Canaero's parent by Litton Industries in 1961, Wells resigned as director in February 1965. O'Malley and Zarzycki resigned from their positions in August 1966. Wells was aware the latter were discontented at Canaero by reason of the limitations upon their authority and the scope of independent action imposed by the Litton company, and they also feared loss of position if Canaero should fail to get contracts. Prior to their resignation, at the suggestion of Wells, the three decided to form a business venture in the same fields as Canaero. It was incorporated as Terra Surveys Limited in September 1966. In that month, Terra was chosen to receive a contract to perform a topographical survey and related mapping for the government of Guyana, and the agreement was executed in November 1966. The proposal upon which