Courts reject company’s request to be represented by a consultant – Civil Law

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Our justice system is designed to operate efficiently and uphold the highest principles of integrity. In general, parties appearing in court must either be represented by an attorney duly licensed by the respective provincial bar associations or represent themselves. A party cannot simply be represented by an “agent”. With respect to corporations, Ontario
Rules of civil proceduremandate that a company must be represented by a lawyer and that the authorization of the court must be sought when a company seeks to represent itself. However, as recently determined in Brayson Properties Inc. “In Trust” c. Muchos2022 ONSC 940 (not yet available on CanLII), the threshold for a corporation to be self-represented is high, and further, a corporation cannot be represented by an “attorney”.

The company in this case brought an application under the rule
15.01(2) of the Rules of civil procedure to be represented by JM, who described himself as an “executive consultant”. Although he was the son of the officer of the company, JM was neither a lawyer, nor a director, nor an officer of the company.

The action of the corporation was also complex. It was a claim related to a failed purchase of property and sought $6 million in damages for fraud, breach of contract and unlawful interference with contractual relationships.

JM argued that he should be allowed to represent the company on the basis that he had been licensed to represent companies before and had sufficient knowledge and experience to represent his father’s company in this action.

The defendants disagreed for several reasons, including that JM would likely be the main witness in the action because he had been heavily involved in the failed real estate transaction and there had already been irregular circumstances related to the handling of the case. The defendants showed that JM requested that they be noted in default despite serving a defense and counterclaim and that JM filed affidavits containing hearsay and privileged settlement discussions with one of the defendants’ attorneys. .

Although the rules give the Court the discretion to allow a corporation to be represented by a non-lawyer, the case law demonstrates that this discretion is guided by a number of non-exhaustive and public policy factors.

In Extend-A-Call Inc. c. Granovsky2009 CanLII 33047 (ON CS), the Court listed a number of factors to be considered in a motion seeking permission for a company to be represented by a non-lawyer. These factors included whether the proposed representative was related to the company, whether the proposed representative was reasonably capable of understanding the issues in the case and representing the interests of the company, and whether the company was financially able to hire a lawyer.

The Court is also bound to take into account the interests of justice when a company seeks to be represented by a non-lawyer since the representation by a non-lawyer of any litigant is contrary to the
Law Society Act and the
Lawyers Act, which govern the authorized and unauthorized exercise of law. Representing a party in a legal proceeding constitutes the practice of law. In addition, when a person unrelated to a company is authorized to represent the company, the person incurs no financial consequences.

These public policy concerns have been commented on by the courts in cases such as Leisure Farm Construction Ltd. vs. Dalew Farms Inc.2021 ONSC 105 and Robert M. Simon Construction Ltd. vs. Waterloo (Municipality)2007 CanLII 18741 (ONSC).

In the circumstances, the Court rejected the company’s request to be represented by JM.

In addition to accepting public policy reasons for limiting a corporation’s ability to be represented by a non-lawyer, the Court also noted that:

(a) the company was a private company, the assets of which could not be located by the defendants;

(b) JM held no official position with the company;

(c) Government of Canada records revealed that JM was subject to pending bankruptcy proceedings;

d) JM was a likely witness in the case;

(e) a previous case in which JM had been an agent of a company was found to be frivolous and vexatious, with costs awarded against the company; and

(f) there was a real risk of material harm to the defendants if the company was not represented by counsel.

Nor did the evidence presented in the motion reveal that the company was financially unable to hire a lawyer. In fact, the opposite appeared to be true because the owner of the company had filed that the company would hire an attorney if and when it deemed it necessary.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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