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Presentation - Corporate DirectorsCorporate representation by other than a lawyer is allowed with the Superior Court's permission (sought by motion): RCP R15.01(2) and by Small Claims Court practice. Representation by a director is common for a small, closely-held corporation in the Ontario courts, though it appears to be much more difficult in federal courts.
. Stayside Corporation Inc. v. Cyndric Group Inc.
In Stayside Corporation Inc. v. Cyndric Group Inc. (Ont CA, 2024) the Ontario Court of Appeal grants a R15.01(2) ['Where Lawyer Is Required (Corporation representation exception)']:[8] Rule 15.01(2) provides that a corporation that is party to a proceeding shall be represented by a lawyer, “except with leave of the court”. The decision to permit a non-lawyer to represent a company is a discretionary decision made having regard to all relevant circumstances in a particular case. Granting such permission is exceptional: GlycoBioSciences Inc. (Glyco) v. Industria Farmaceutica Andromaco, S.A., de C.V. (Andromaco), 2024 ONCA 481, at para. 6. As noted by Huscroft J.A. in GylcoBioSciences, at para. 7, “[p]ermitting a non-lawyer to act … risks creating an undue burden on the respondents and the court. These considerations must be balanced with any concerns that may arise about access to justice”. . GlycoBioSciences Inc. (Glyco) v. Industria Farmaceutica Andromaco, S.A., de C.V. (Andromaco)
In GlycoBioSciences Inc. (Glyco) v. Industria Farmaceutica Andromaco, S.A., de C.V. (Andromaco) (Ont CA, 2024) the Ontario Court of Appeal dismisses a motion by a individual corporate principal to represent a corporation [under RCP R15.01(2)]:The Rule
[5] Rule 15.01(2) provides as follows:A party to a proceeding that is a corporation shall be represented by a lawyer, except with leave of the court. [6] In other words, the default position is that corporations must be represented in legal proceedings by a lawyer. The court may permit otherwise, but the granting of leave is exceptional. Leave is discretionary but cannot be granted in a manner that normalizes what the rule otherwise prohibits.
[7] The rationale for the rule requiring representation by a lawyer is plain. A non-lawyer who is closely tied to the corporation granted leave under r. 15.01(2) is akin to a self-represented party, but the separate legal personhood of the corporation means, in effect, that the non-lawyer is providing legal services to another person, contrary to s. 26.1(1) of the Law Society Act, R.S.O. 1990, c. L.8. Moreover, non-lawyers are not bound by the Rules of Professional Conduct, nor are they subject to the personal financial consequences associated with cost orders that self-represented litigants face: Leisure Farm Construction Limited v. Dalew Farms Inc. et.al., 2021 ONSC 105 at paras. 12-15. Permitting a non-lawyer to act also risks creating an undue burden on the respondents and the court. These considerations must be balanced with any concerns that may arise about access to justice, as discussed below.
Discussion
[8] There is little authority concerning r. 15.01(2) from this court. It appears that individuals have sometimes been permitted to act because their participation was not contested, or in some cases the rule was overlooked. I do not intend to canvas the caselaw. It suffices to say that the decision to permit a non-lawyer to represent a corporation is a discretionary decision that must be made having regard to all of the circumstances in a particular case.
[9] I begin with two threshold matters. First, Mr. Drizen’s history of acting for the corporation, even in this court, is not determinative of whether he should be permitted to act on this or any other matter in future. Mr. Drizen seems to have assumed that he is entitled to act because he has acted for the corporation on other occasions, typically in bringing actions in the corporation’s name. Indeed, he appears to have acted as a sort of in-house counsel for the corporation. But he has no entitlement to do so. The agreement of the parties or the failure of a party to object neither requires nor justifies the decision to grant permission to a non-lawyer to represent a corporation.
[10] Second, a corporation’s authorization of an individual to represent it is a necessary condition for an order under r. 15.01(2) but it is not sufficient. Thus, the resolution of the directors of GlycoBioSciences Inc. authorizing Mr. Drizen to act for the corporation is not determinative, nor is the nature of his position within the corporation.
[11] Mr. Drizen submits that his representation is necessary to ensure that the corporation has access to justice. He says that the corporation used to retain lawyers but can no longer afford to do so, and that he has acted for the corporation since 2017. At the same time, however, Mr. Drizen stated that the company had obtained several million dollars in settlement payments and millions of dollars in revenue. He says that he is the directing mind of the corporation – effectively its alter ego – but adds that the corporation has four directors and several shareholders. When pressed, he said there were many more shareholders, perhaps 30.
[12] I am left in some doubt as to the nature of this corporation and its financial affairs. The respondents say that GlycoBioSciences Inc. has commenced numerous proceedings in the Ontario Superior Court against foreign entities with no Canadian operations, proceedings designed to pressure them into settling for an amount they would otherwise be required to pay to defend the claims. Similar claims have been made about GlycoBioSciences Inc. in other cases. I need not resolve the matter here. The burden is on Mr. Drizen to establish that he should be permitted to represent the corporation on this appeal and he has failed to meet that burden. This is not a case in which access to justice supports the granting of his motion.
[13] There are additional concerns. Despite Mr. Drizen’s confidence in his abilities, he is not a lawyer and is not entitled to practice law. His performance in recent litigation, as well as on this motion, demonstrate some of the problems.
[14] For example, his recent application for judicial review to challenge a costs order was dismissed as an abuse of process: GlycoBioSciences Inc. v. Herrero and Associates, 2023 ONSC 4143. In recent litigation in this court, GlycoBioSciences Inc. v. Herrero and Associates, 2023 ONCA 331, substantial indemnity costs were ordered to be paid by the corporation, among other things because of Mr. Drizen’s “reckless allegations” impugning the integrity of opposing counsel and the motion judge and “an improperly voluminous record”. The respondents note that the corporation has not paid the outstanding costs – $50,000 from the jurisdiction motion and $26,000 from the appeal. For his part, Mr. Drizen acknowledges the costs have not been paid but says that is because counsel for Herrero has not sought to collect them. I do not know what the true situation is.
[15] Mr. Drizen’s actions on these motions are also problematic. It is not clear why a sealing order was necessary in order to respond to the security for costs motion, but Mr. Drizen did not bring his motion for a sealing order in a timely manner in any event. When faced with this difficulty he did not accept the offer to put a temporary seal on his material pending the outcome of his sealing order request and instead sought to bring his motion ex parte. When this was not permitted he sought to adjourn the motions.
[16] In summary, Mr. Drizen has not met his burden of establishing that he should be permitted to represent the corporation.
[17] Accordingly, the motion is dismissed. Mr. Drizen may not act for the corporation on this appeal. . Macciacchera (Smoothstreams.tv) v. Bell Media Inc.
In Macciacchera (Smoothstreams.tv) v. Bell Media Inc. (Fed CA, 2023) the Federal Court of Appeal considers (and denies) a request for a corporation to be represented by it's corporate officers (a request quite commonly granted in the higher Ontario courts):[3] Rule 120 provides that “[a] corporation ... shall be represented by a solicitor in all proceedings, unless the Court in special circumstances grants leave to it to be represented by an officer…”. Messrs. Macciacchera recognize that they bear the onus of showing “special circumstances”. They also recognize that this onus generally requires that they demonstrate that (i) they cannot afford a lawyer, (ii) they will not be required to be both advocate and witness; (iii) the issues are not so complex as to be beyond their capabilities; and (iv) the appeal can proceed in an expeditious manner: Glycobiosciences Inc. v. L’Oreal Canada, 2022 FC 1517 at para. 25 (Glycobiosciences); UBS Group AG v Yones, 2022 FC 487 at paras. 7-10.
[4] The Glycobiosciences decision cited by Messrs. Macciacchera goes on at paragraph 27 to state as follows:The onus on the moving party to establish special circumstances is a high one. The moving party must provide clear and unambiguous evidence establishing special circumstances, and these circumstances must be unusual, uncommon and exceptional, and the result of external forces as distinct from the voluntary acts of the plaintiff (Alpha Marathon Technologies Inc v Dual Spiral Systems Inc, 2005 FC 1582 at para 4 (“Alpha”)). [5] Having carefully reviewed the submissions of Messrs. Macciacchera, I have concluded that their motion should be denied because they have failed to demonstrate that they cannot afford a lawyer, and hence they have not convinced me that special circumstances exist.
[6] As stated in Alpha at paragraph 5, “[t]he ability of [the moving party] to pay for legal representation is without a doubt the most important factor for the Court to consider.”
[7] As stated in El Mocambo Rocks Inc. v. Society of Composers, Authors and Music Publishers of Canada (SOCAN), 2012 FCA 98 at para. 4, “[t]he demonstration that a corporation cannot afford a solicitor should usually be made by submitting complete and clear financial information concerning the corporation, preferably by means of financial statements.”
[8] Messrs. Macciacchera address the requirement that they cannot afford a lawyer at paragraph 11 of their written representations. Though they argue that they are committed to pursuing this appeal, and that many steps leading to a hearing have been completed, they do not allege that they cannot afford a lawyer. They provide no financial information whatsoever.
[9] I recognize that the respondents do not oppose Messrs. Macciacchera’s motion. However, though that may be a relevant factor in addressing a motion under Rule 120, it is not determinative. In this case, it does not outweigh the absence of evidence that Messrs. Macciacchera cannot afford a lawyer.
[10] The dismissal of Messrs. Macciacchera’s motion has implications for the progress of the present appeal. Without representation, the corporate appellants cannot act. Accordingly, I will order, just as Justice Donald J. Rennie did in his Order dated December 8, 2023, that they appoint new solicitors of record in accordance with Rule 124 within 30 days. . Canada v. BCS Group Business Services Inc.
In Canada v. BCS Group Business Services Inc. (Fed CA, 2020) the Federal Court of Appeal considered when a corporation might be represented by a non-lawyer under Rule 17.1 of the Tax Court Rules, which read (in English):"Right to appear "
"17.1 (1) A party to a proceeding in respect of which this section applies may appear in person or be represented by counsel, but where the party wishes to be represented by counsel, only a person who is referred to in subsection (2) shall represent the party. "
"Officers of the Court "
"(2) Every person who may practise as a barrister, advocate, attorney or solicitor in any of the provinces may so practise in the Court and is an officer of the Court. "
....
"Informal Procedure "
"Right to appear "
"18.14 All parties to an appeal referred to in section 18 may appear in person or may be represented by counsel or an agent." The court, finding that a corporation had to have a lawyer, continued:[13] As for the relevant legal context, at the time section 17.1 of the Act was drafted, neither the common law nor the civil law (as codified in the Code of Civil Procedure of Quebec (CCP)) recognized that a corporation could appear "“in person”" through its officers, directors, or shareholders. The reason for this at civil law was explained as follows by Gonthier J. in National Bank of Canada v. Atomic Slipper Co., 1991 CanLII 105 (SCC), [1991] 1 S.C.R. 1059 at 1070, emphasis added:As a preliminary point, I would note that Tardi [a physical individual] and Atomic [a corporation] were not represented by counsel. Tardi is fully entitled to appear on his own behalf, but he claimed to represent Atomic. The very nature of a corporation is such that it cannot appear in person (art. 365 C.C.L.C.). It can only appear through an agent. In Quebec, only lawyers are entitled to represent a party before the courts (art. 61 C.C.P. and s. 128 of the Act respecting the Barreau du Québec, R.S.Q., c. B-1) and it follows that a corporation can only appear in court through counsel (Thomassin v. General Finance Corp., [1953] Que. Q.B. 375). [14] In Trifidus Inc. v. Samgo Innovations Inc. et al., 2011 NBCA 59 at paragraph 20, Justice Quigg uses similar words to describe the state of the common law. She wrote that "“[u]nlike individuals, who are legally and logically capable of self-representation, corporations must inevitably rely on representation by individual agent. Even if the agent is the corporate director and sole shareholder, he or she is still considered to be legally distinct from the corporation and, therefore, a third party to it.”"
[15] It is useful in such circumstances to put GP Rule 30(2) in context and to consider that it is not unique in its approach. Courts, including statutory courts like the Federal Courts, have an implicit power or discretion to control their own process, unless limited by specific legislation (see for example article 87 of Quebec’s CCP, which lists who must be represented by counsel). This is why for many years, many courts have adopted rules of procedure allowing them to grant leave to corporations to be represented by physical individuals other than counsel in special circumstances. This has become particularly important given the increase in the legal costs of litigation and the need to foster access to justice. This approach, based on a by leave process, enables the court to balance this need with the need for efficiency in the administration of justice. In none of those cases did a statute give a corporation a statutory right to appear "“in person”". The granting of leave is a privilege arising from the court’s discretion to control its own process. Therefore, this discretion can be taken away by an express clause in the legislation constituting the court when Parliament expressly deals with representation in the courtroom. The case contains a (perhaps over-prolonged) discussion of corporations as a legal entity and their legal representation, it concludes that corporations have a separate legal existence from their directors and shareholders and that the quoted Tax Court Rules do not tolerate legal representation by such as agents:[64] I conclude from all of the above that on the proper statutory interpretation of section 17.1 of the Act, the TCC could not find that Mr. Gagnon personified BCS and that he was exercising BCS’s right to appear "“in person”". As Mr. Gagnon is not a lawyer, he could not act as counsel for BCS. The TCC could not grant leave to Mr. Gagnon to act as BCS’s agent in the appeal before it. . Sloane Capital Corp. v. Beacon Holdings Ltd.
In Sloane Capital Corp. v. Beacon Holdings Ltd. (Div Court, 2023) the Divisional Court considered the cost rules that apply in the Small Claims Court where a corporate director represents a corporation (and, it concludes, is thus 'self-represented'):[50] The Deputy Judge awarded the Respondent costs in the sum of $5,250.00 plus disbursements of $422.00. The Respondent was self-represented. Given that the decision was a nullity, that costs award is set aside.
[51] However, I should address the issue of the appropriate quantum of costs for the hearing below. Mr. Freedman was representing his company and was not a lawyer. As a result, it appears that Rule 19.05 of the Rules of the Small Claims Court (“the Rules”) O. Reg. 258/98 apply. That rule states:19.05 The court may order an unsuccessful party to pay to a successful party who is self-represented an amount not exceeding $500 as compensation for inconvenience and expense. [52] Given that Mr. Freedman was self-represented, the Deputy Judge erred in law by awarding costs of $5,000.00 to Mr. Freedman. Costs should have been limited to no more than $500.00 for inconvenience. Mr. Freedman was, in my view, a self-represented litigant.
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