Page 54 - CCCA62_2011

5/13/11 10:40 AM CCCA_V5No2_Col-McCarthys-FIN.qxd:CCCA_V1No2_Col-Litigat-V1.qxd Legal Update – McCarthy Tétrault LLP Practice tips on defending against Page 54 an unrepresented corporation By Christopher A.Wayland and Qian Mou ule 15.01(2) of the Ontario Rules of interests of other stakeholders will be pro- bringing a motion for an order requiring the RCivil Procedure requires corporate par- tected adequately if leave is granted. 2 opposing party to appoint counsel. During ties to an action to be represented by coun- 2. Complexity of the issues in litigation the intervening time, the action may be sel unless they obtain leave of the court. This consideration is not strict and has stayed under Section 106 of the Courts of But,what if your organization is sued by an rarely been applied to deny an applicant JusticeAct.If the matter has been delayed con- unrepresented corporation? This situation leave.For example,in a case involving com- siderably and the plaintiff does not appoint arises from time to time, especially where a plex construction law, a court held that the counsel, or if the plaintiff continues to be 8 plaintiff company is a “mom and pop” applicant should be entitled to demonstrate unsuccessful under Rule 15.01(2), your organization with relatively few assets that he or she was capable of dealing with organization may move to dismiss the action. 9 In these situations,two issues arise:first,in the legal issues. 3 In the event that a court grants leave for a what circumstances will the court grant the 3. Whether the applicant is competent corporation to proceed without solicitor corporation leave to proceed without repre- to carry out the legal duties representation, leave is generally subject to sentation by a solicitor; and second, what Similarly,an applicant’s ability to perform the the representative’s ability to comply with recourse do you have if an unrepresented substantive and procedural duties of a repre- the procedural requirements of litigation corporation brings an action against your sentative is not generally applied to deny and any substantial prejudice which may organization without seeking leave? leave. In one frequently cited decision, the arise to the other parties. 10 court held that,absent mental incompetence, Issue #1: When is leave granted? the litigious capabilities of a representative 1 429212 Ontario Ltd. v.Astrochrome CrankshaftToronto Generally, leave of the court for a corpora- are irrelevant in an era where self-represent- Ltd., [1991] O.J. No. 918 (Gen.Div); Extend-A-Call tion to be represented by a non-lawyer is ed litigants are commonplace. 4 Inc.v.Granovski, [2009] O.J.No.2711 (S.C.J.) granted sparingly, with the onus on the 4. Financial hardship 2 De La Rocha v. Markham Endoscopy Diagnostics Inc., requesting party to show that leave is Financial hardship is often the driving factor 2010 CarswellOnt 6940 (S.C.J.). 3 Janamian v. Riocan Holdings Ltd., [2010] O.J. No appropriate in the circumstances. A court behind an applicant’s request for leave. 1360 (S.C.J.). will consider several factors under Rule Although there remain cases where courts 4 Lamond v.Smith,2004 CarswellOnt 3213 (S.C.J.). 15.01(2): 1 have refused to consider financial status, if a 5 Most notably Lamond, id. 5 court is satisfied that a plaintiff organization 6 Intersales Sports Inc. v. Co-operators Development Corp., 1. Relationship of the applicant to would otherwise be unable to continue its 1999 CarswellOnt 2634 (Master); Nirvair Transport the unrepresented corporation action if representation were required, it is Ltd.v.Dhillon,2001 CarswellOnt 4424 (Master). 7 NirvairTransport Ltd., id; Dickinson v.Toronto & Region A court may grant leave to an officer,direc- likely to grant leave. The standard of showing 6 Conservation Authority, 2003 CarswellOnt 6019 tor or shareholder of a closely held corpo- financial hardship is high; courts are loathe to (S.C.J.); John Deere Credit v. Bob Leighton & Associates ration where the individual has considerable grant leave where there is insufficient evi- Ltd. 2001 CarswellOnt 4930 (Master); Highmore v. knowledge of the organization’s affairs and dence of financial hardship, where funds can Fielding,2004 CarswellOnt 197 (Master). is authorized to act on its behalf.This factor be marshalled to hire counsel, or where the 8 See Intersales Sports, supra note 6; NirvairTransport, supra note 6; Highmore, id. is a threshold requirement and allows a cor- applicant is avoiding the cost of counsel to the 9 See Robert M. Simon Construction v.Waterloo, 2007 poration to be self-represented, similar to detriment of the other parties and the court. 7 CarswellOnt 3240 (Master); Nirvair Transport, supra individuals. Courts have recognized that note 6. corporations are different from individuals Issue #2: 10 Janamian, supra note 3. in the sense that they have other stakehold- Steps to take when faced with an ers, however. Therefore, an applicant must unrepresented corporate litigant Christopher A. Wayland is a partner in introduce evidence of the corporation’s If your organization is faced with an unrepre- McCarthy Tétrault’s Litigation Group, Toronto structure, and their relationship to the cor- sented plaintiff corporation that has not office (cwayland@mccarthy.ca). Qian Mou is an poration, to satisfy an adjudicator that the sought or received leave, you may consider articling student at McCarthyTétrault LLP. 54 CCCA Canadian Corporate Counsel Association SUMMER 2011