The structure many incorporated clients lean on just sprang a costly leak in Alberta
A professional corporation did not shield an Alberta dentist from personal liability for unpaid rent - a warning for incorporated professionals and their advisors.
The Court of King's Bench of Alberta on June 4, 2026 dismissed an appeal by Tan Dat Tran Professional Corporation and dentist Tan Dat Tran, leaving Dr. Tran personally responsible for rent his corporation owed after defaulting on a commercial lease (Telsec Property Corporation v Tan Dat Tran Professional Corporation, 2026 ABKB 424).
The dispute traces to a ten-year lease the corporation signed in October 2016 for dental-office premises. The landlord, Telsec Property Corporation, alleged in its statement of claim that the corporation failed to pay June 2021 rent and issued a written breach notice on July 6, 2021, identifying $19,167.27 in outstanding rent for one month. No further payments followed.
Telsec re-let the space and was collecting full rent again by March 31, 2022. An applications judge granted summary judgment in March 2024, with a principal amount of $88,389.65 and, after a separate interest ruling, a total judgment of $153,888.52.
The question on appeal was narrow but consequential: does section 107 of the Health Professions Act make a regulated professional personally liable for the business obligations of their professional corporation? Dr. Tran had not signed the lease in his own name and had expressly refused to give a personal guarantee or indemnity. He argued that personal liability under the statute should reach only the provision of professional services to patients, not commercial contracts.
Justice N. M. Carruthers disagreed. The court found that leasing premises for the practice is connected to carrying on the corporation's business in the broader sense, and that section 107 reaches that conduct. On that reading, personal liability extends beyond patient care to business obligations that support the practice.
The court was direct about the stakes, calling the question "a significant issue for the shareholders of professional corporations and those with whom they do business."
That is the part wealth professionals should sit with. Incorporated doctors, dentists, lawyers, and accountants are a core client base, and the professional corporation is often valued for its tax advantages and a sense of separation between personal and business affairs. This ruling reinforces that, for regulated professionals in Alberta, the separation is thinner than clients may assume. Liability for business obligations tied to the practice - leases, equipment, employee wages - can land on the shareholder personally.
The court also rejected two fallback arguments. It found no right of set-off for leasehold improvements the defendants valued at $585,000, citing clear lease terms, and it held the landlord's mitigation efforts reasonable after Telsec moved quickly to install a new dental tenant.
Justice Carruthers noted the outcome flows from the statute as written, observing that "legislative amendments would be necessary to change the extent of the personal liability of regulated professionals." Until then, professionals seeking to limit exposure may need separate structures, such as a management company, rather than relying on the professional corporation alone.
