Many of our clients are involved either in lending transactions or are providing significant goods and services on account. As the economy fluctuates and uncertainty abounds, we are seeing an increase in the number of clients looking to “paper” these transactions and this work much more thoroughly than they might have a year or two ago.
As lawyers, we couldn’t be happier. As a corporate lawyer, it makes me rest easier knowing that my clients are protecting themselves. As litigation lawyers, with particular skills in the area of debt recovery, Inga and Paul are much more confident about the likelihood of recovering on behalf of a client who has secured his lending to the greatest extent commercially possible.
Papering the deal is going to mean different things in different circumstances. If you’re a small business owner doing work for a client on credit, it may mean getting a personal guaranty on your account where once you worked on faith. For a larger business, it may mean more extensive searching of background parties, registering security under the PPSA or even guarantees that extend to the personally-held assets of guarantors.
In short, if you have any concerns about getting paid, before or after the fact, contact us. There are a variety of options available for protecting yourself, for clarifying repayment expectations and for making sure you get paid first in the event of an insolvency situation.
16 1/2 years ago I started this law firm and from day one it has earned a reputation for being different from the average law firm. I’m feeling nostalgic, so I’m taking up blog time to wax poetic about our firm philosophy and why we are a great law firm to use for your corporate/commercial needs.
On the litigation side of things I believe our firm is better than most because we always ask the question before starting “how will you collect this judgment”? From our point of view there is no good reason to have our firm be the only one who benefits from a law suit – you must be able to collect.
The theme of “collecting the final judgment” drives the pace of our litigation as well – we do not take a slow, laid back approach. Deadlines are met and enforced promptly and with professional courtesay; however, we always ensure that we are getting to Court as quickly as possible given the nature of the litigation.
On the paperwork side of the practice, we never recommend creation of documents or organizations that are not required and frequently find ourselves explaining to clients why their money would be wasted taking a step that they are suggesting.
At the end of the day, our firm is here to help make your business profitable and we can’t do that if we don’t have our eye on the bottom line.
16 1/2 years of experience, hourly rates that are reasonable and a dedication to our clients bottom line – this is why you should use our firm.
For many companies, they have limited experience in a law suit and are overwhelmed with the unknown. I am going to discuss over my next few blog entries the different types of law suits in Ontario and how their procedures differ.
This week’s entry is “Regular Procedure” – let me start off by saying there is nothing actually called the “Regular Procedure”; however, there is something called the Simplified Procedure which I”ll address another time. Before the days of the Simplified Procedure there was just the one type of way to run a law suit and to have a point of reference I”m starting with it here.
Regular Procedure is available for all law suits that are claiming over $ 50 000.00.
A statement of claim is issued and must be served within six months of being issued.
Once served with a claim the defendant(s) must serve and file a defence within a specific period of time (20 or 40 days depending on where they are located). This can be extended an automatic 10 days by filing a Notice of Intention to Defend or longer by agreement.
The plaintiff has the option to serve a Reply within 10 days of receipt of the Defence.
The Statement of Claim, Statement of Defence and Reply are referred to as Pleadings.
Once the Pleadings are exchanged, each party must serve an affidavit of documents which is a 3 schedule listing of all documents relevant to the issues in the litigation.
The next step is examinations for discovery – these are an opportunity for each party to ask a representative of the other party questions regarding their allegations under oath. A transcript is formed from the examination and it can be used to impeach credibility at trial.
At any time during a law suit, but most frequently after discoveries, either party may bring a motion before the Court asking for an Order regarding a step in the proceedings. The most commong motion after discoveries is to ask a Court to Order a party answer a question they refused to answer on discovery.
In certain cases there is mandatory mediation required – this is an off the record meeting with a neutral party who attempts to broker a settlement of the action.
All cases have a pre-trial after discoveries are concluded. The pre-trial is an off the record meeting with a Judge who does not hear the trial of the action – the purpose of pre-trial is to narrow the issues and attempt to see if a settlement is possible.
If the matter does not settle at pre-trial, the final step is trial.
The length of time all of the above takes depends on many factors, lawyer and client schedules as well as Court schedules.
In our firm the above generally takes between 1 1/2 and 4 years to complete, depending on the jurisdiction where the trial is heard.
Next blog from me will be about the Simplified Procedure.
If you are a construction contractor or your business involves the supply of services or materials for construction projects, you likely have some knowledge of lien rights.
If you have a solid understanding of liening projects, you need read no further.
But if you have only a vague understanding of lien rights, then what is below will give you some more insight.
If you have not been paid on a project, you have the right to lien for the amounts that are owed to you.However, you must do this within 45 days of the last date that you provided services or materials to the project or the date that substantial completion of the project was published in the Commercial Daily News, whichever date is earlier.This is the general rule.There are some tweaks to this, but this rule will cover most situations.
If you want to lien a project, we would search title for you to ensure that we place the lien on the correct property.You would sign the lien documents and then we would register the lien on title.By registering the lien documents on title, we have “preserved” your lien rights.Don’t wait to the last minute to have us register a lien.Title searching can be complex, especially for subdivision projects where lien rights may be expiring on a lot by lot basis.
We would place the owner of the property on notice of your lien, as well as the contractor and any mortgage company who has registered a charge against the property.The lien will generally stop the flow of construction funds from the mortgage company to the owner.
If the lien does not result in you getting paid and us discharging the lien that we registered, then you have to “perfect” your lien.This means that we have to start a court action no later than 90 days after the last date that you provided services or materials to the project or the date that substantial completion was published, whichever date is earlier.Once again, this is the general (but not universal) rule.Notice is put on title that an action was commenced, which then perfects the lien.
We then have two years to set the matter down for a trial and we begin to duke it out with the other lawyers.
Something else to remember – under the Construction Lien Act, an owner’s liability for the debt owed to you will be restricted to the amount of the holdbacks it has in hand and any portion of the contract not yet paid out to the party above you in the construction chain.
When it comes to lien matters, I always recommend that you do your best to ensure you have a strong position going in.Ensure the contract is signed and all change orders are in writing and signed.Keep stringent records of all phone calls.Keep copies of all plans, emails, letters, payments, invoices and purchase orders – and of course, keep my number handy.
Two weeks ago our Blog Entry dealt with when to use a law firm in Small Claims Court, but the question doesn’t just come up with matters that are $ 10 000.00 or less.
In the ordinary course of your business you may run into a situation where you would be better off (and spend less money on legal fees in the long run) if you called a lawyer, rather than dealing with the situation yourself.
A good general rule is that if you are contacted by a law firm representing someone other than your company, you should consult a lawyer.
This rule applies to both positive and negative situations – if a lawyer contacts you regarding a client who is interested in entering into a trade relationship with you or if the lawyer represents a former employee seeking compensation.
No doubt you’re wondering why you should call if a positive event is happening, well, colour me pessimistic, but deals can go sour and while people enter into deals with the best of intentions, it is important to protect yourself, just in case things go wrong.It is also much less expensive to have a lawyer review documentation before entering into atransaction, rather than paying a litigation lawyer to fix the problems it after the fact.
With respect to calls or letters from lawyers threatening to sue you, this is very dangerous territory to handle without a lawyer: you likely do not know the law, nor what can be used against you as evidence: it is better to simply take a name and number and contact your lawyer to ensure you are protected.
A common situation that many employers believe they can handle on their own is termination of employees and this is simply not the case.Employment law is changing regularly and your obligations to your employees may be different than you believe them to be.A Wrongful Dismissal Law Suit that goes to the conclusion of trial will cost at least $ 15 000.00 in legal fees.Obtaining legal advice prior to dismissal will usually be less than $ 1 000.00.The savings on money and the headache of a law suit are worth consulting your lawyer.
Another common problem that many business owners have and sometimes don’t even realize they have is protecting their ability to take back product that is not paid for under a conditional sales agreement.A lawyer can guide you through what your agreement must contain in order to be able to register it and take priority over any other creditors – an important consideration given the economy these days, you don’t want your goods going to your customer’s bank instead of back to you if they are not paid for.
So while the old joke claims that athousand lawyers at the bottom of the sea is a“good start”,before you put us there, you may want to consider how we can help you save money and protect the business you have worked hard to create.
So you’re thinking about suing that customer that defaulted on its account. Or perhaps your company is being sued by a disgruntled former employee. The amount is under $10,000.00, and therefore it falls within the jurisdiction of the Small Claims Court. You wonder: should I represent myself at court?
Here is some food of thought when deciding whether you should just DIY at court:
Consider if you have the time to represent yourself. Many people think that they only have to attend at court for an hour or two. This is not true, and whoever told you this was misinformed. If you’re scheduled to appear at court, be prepared to be there from 9 am to 4:30 pm. If you are there for a trial, there is a possibility that the judge may put it to another day. Do you have the time to deal with all the paperwork involved? It may take you some time to complete court documents if you are unfamiliar with the process. Also, you will likely have to take time communicating with the other party throughout the process, especially if you both want to settle. Do you have time to deal with all this?
Also, ask yourself: how well do you understand the legal process? Because if you are not familiar with them, you could make mistakes, and those mistakes could cost you. For example, if you failed to file a defence with the court before the deadline, and a judgment is awarded against you. Or, if you bring a Motion without filing sufficient evidence, a judge might order you to attend court again with better evidence – costs would be awarded against you for wasting everyone’s time. In litigation, timing is everything. The multiple documents that have to be issued, served, and/or filed on time can be overwhelming. Even the language used in the court system – what we call legalese – can be difficult to understand.
Lastly, do you think you can handle arguing evidence and law before a judge? Not only can it be intimidating, but often, laypeople do not know what type of evidence is relevant to the matter and should be raised before the Court, or irrelevant and need not be raised. There is a misconception that the legal issues in the Small Claims Court is somehow different from those that appear in the higher courts, when in fact, the only difference between the courts is the lower monetary jurisdiction. The legal issues are the same, and often, the interpretation of the facts of a case can turn on the legal arguments raised by the parties.
While you might not be aware of the legal issues involved or the necessity of filing a particular court documents, lawyers and paralegals, on the other hand, are trained to understand and work in the legal system. That said, hiring legal representation will mean paying legal fees for their services, and this too is something you need to consider: of course our firm handles this on a flat fee basis, which makes it economical to have us represent you in Small Claims Court.
With the coming of spring and life reborn, thoughts turn to the sounds of returning robins, upcoming summer vacations and time to spend outdoors with friends and family.
In reality, you should be thinking about people who owe you money and how to get paid.
A demand letter sent by us to your debtor followed up by a statement of claim is great if it gets you paid. If not, it is a waste of time and money.
So, how to decide when to pay us to chase a debt for you?
Here are some tips, hopefully you are using some or all of them already:
–do you have lien rights, whether they are construction liens, repair liens or PPSA liens? If so, there are mechanisms to register your liens to protect your rights in the property and possibly arrange for a seizure to then force payment on the debt
–if you could use lien rights as a means of leverage with your customers in the future, then consider setting up an appointment with our corporate lawyer, Scott Young, who can prepare the necessary paperwork for you to have your customers sign before you do work for them.
–Has a debtor bounced a cheque on you? Consider trying to certify it a half dozen times before you contact us to send a demand letter or chase the debt in court. If you can’t certify it a half dozen times, this may give you an indication of how successful collection by us will be.
–How sophisticated is your debtor? Threats of litigation or actual litigation can spur payment at an early stage from unsophisticated debtors.
–Limit your own demands for payment to two verbal demands and 1 written demand. If payment is not forthcoming, continued demands by you for payment without taking any other action is like having a guard dog with no teeth. If payment is not forthcoming, it is time to engage legal counsel.
–If you are a supplier of product, put your debtor on COD payment status, requiring double payments for any product ordered.
–Is the debt owed to you between $10,000.00 and $25,000.00? Consider waiting until 2010 to sue, as the small claims court limit will be moving to $25,000.00 on January 1, 2010.
–Significant legal cost savings can be had by proceeding in small claims court, so consider waiving a part of the debt if you are owed more than the small claims court limit.
–Beware of the general limitation period of 2 years to sue from the time of default by the debtor in delivering payment to you.
–In your dealings with your debtor, did she/he/it authorize you to conduct a credit inquiry? Do an updated inquiry with the Credit Bureau or Equifax and see what it reveals about the debtor’s financial status.
–Have us conduct a PPSA or writ search on the debtor. Sometimes Rev Can will register in those systems for unpaid remittances. If there is a debt owing to the government, the likelihood of collection via litigation may be slim unless a voluntary payment is made by your debtor in settlement. Writ searches will also reveal any other creditors who have already obtained judgment.
–If the debtor owns real estate, have us conduct a property search to reveal the extent of mortgages on the property. If it is mortgaged to the hilt, it will not be a viable source for payment on your judgment if the debtor defaults with the bank.
–Don’t chase the carrot, squish it underfoot. Some debtors dangle small payments in front of your nose while still racking up their debt with continued purchases. It’s a loser’s game, and we know which side you are on if you choose to play. Focus your energy on paying customers and let us chase payment from the deadbeat.
I look forward to hearing about your summer plans and who you want me to sue.
Rumour has it the economy is not doing so well. Seriously. I’ve read it in papers and as you know, if you read it in the papers, it must be true. Unless of course you read something unflattering about our firm in the papers in which case it’s all lies and likely defamation.
I digress.
So, with the economy faltering, more companies are finding their customers are slowing down payments and the question becomes: when do you do something drastic about it, like hiring our firm to pursue the debt.
Many factors that pop up in evaluating this decision from your perspective are:
Is this customer able to pay, but choosing not to?
Is this customer not paying because they are not being paid?
Is this customer likely to recover their ability to pay in the near future?
Does this customer have ties to other customers and if I pursue them, will I lose other customers?
In evaluating the decision from our perspective, here are the things we look at:
Does your customer have other people suing them or worse, judgements against them?
Does your customer own any property that we could sell once we obtain judgment against them?
Does your customer have cash available to them?
Does your customer have indebtedness to a bank or others which would rank ahead of your judgment in the event of bankruptcy?
If your customer has assets of some sort, including receivables, it is likely worth pursuing, but don’t wait to pursue this, call us now.
My motto is 30 – 60 – 90 – Sue. These days, however, you might want to ditch the 90 and sue after 60 to ensure there is something to recover.
The implementation of the motto goes like this: after thirty days (or whatever your agreed terms are) send a gentle reminder notice. Follow this up with a phone call seven days later to check in with when payment can be expected. If there is no payment after sixty days send a more firm notice advising the fact that this will be turned over to your lawyers if it is not paid right away. If you don’t have the money by 90 days, call our firm and we’ll take it from there.
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