Has your incorporated business been named as a party in a lawsuit? Is your incorporated business contemplating initiating a lawsuit?
It is important to keep in mind that The Law Society Act prohibits anyone other than a “licensee” (Lawyer) from providing legal services.
The Ontario Rules of Civil Procedure state that a party to a proceeding that is a corporation shall be represented by a lawyer, except with leave of the court.
There have been circumstances where courts have granted leave to a corporate party to be represented by a non-lawyer. Many, if not all, of these cases are where the individual seeking to represent the corporation is a senior officer with the corporation or a sole shareholder because the individual seeking to represent the corporation was sufficiently connected to the corporation that they could be considered the “alter ego” of the corporation itself. (Lamond v. Smith, 2004 CarswellOnt 3213)
The Ontario courts have emphasised that allowing non-lawyers to represent corporations is the exception and not the rule. There are two good reasons for this.
- When a court permits an individual to represent a corporation, it is permitting that individual to represent someone other than themselves in a matter before the court. The courts have ruled that this is comparable to allowing a non-lawyer to represent a litigant in matters before the court which is like permitting the unlicensed practice of law.
- Treating a closely held corporation as merely the alter ego of its shareholder or shareholders and allowing them to represent the corporation ignores the fact that, at the end of the day, the individual or individuals can walk away from any judgment against the corporation free from personal liability. This could lead to scenarios where corporate officers could cause endless litigation without fear of personal liability for even the other side’s costs. This would not serve the public interest. (Leisure Farm Construction Limited v. Dalew Farms Inc. et al. 2021 ONSC 105)
In my first court appearance after being called to the bar, a corporation had a lawsuit they started against our client dismissed by the courts for failing to appoint a lawyer. The sole shareholder of the corporation ignored the courts repeated requests to appoint a lawyer.
The litigation process is quite long and can be complicated, however, with proper legal representation everything can go smoothly. If your corporation (or you individually while we are at it) needs clear and cost-efficient legal advice do not hesitate to reach out to anyone on our amazing team.
Ariel Dorfman, JD Associate Lawyer