Court File and Parties

COURT FILE NO.: CV-18-274-00SR

DATE: 2022/10/31

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Gary Howard and Julia Niblett, Plaintiffs

AND

1880485 Ontario Inc., o/a Above All Building, 1324789 Ontario Inc. and Magenta Waterfront Developments Corporation, Defendants

BEFORE: Madam Justice Robyn M. Ryan Bell

COUNSEL: J. Michael Hickey, for the Plaintiffs

Denise Sayer, for the Defendant Magenta Waterfront Development Corporation

No one appearing for 1880485 Ontario Inc.

Johnathan G. Beach, moving for leave to represent 1324789 Ontario Inc.

HEARD: October 20, 2022

ENDORSEMENT on motion for leave under R. 15.01(2)

Overview

[1] Mr. Beach, a non-lawyer, seeks leave of the court to represent 1324789 Ontario Inc. (“132 Ontario”) in this proceeding, including on a pending motion. In his affidavit, Mr. Beach describes himself as the “controlling mind” of 132 Ontario, a closely held corporation. Martha Lorraine Beach, Mr. Beach’s spouse, is the sole shareholder of 132 Ontario.

[2] Magenta Waterfront Development Corporation objects to Mr. Beach representing 132 Ontario. Magenta says Mr. Beach’s affidavit demonstrates that he is not reasonably capable of comprehending the issues in the litigation and advocating on behalf of the corporation. The plaintiffs acknowledge the “fairly narrow” issues on the underlying motion; however, they also note what they describe as “relevant information” in a prior affidavit of Mr. Beach.

[3] I have carefully considered Mr. Beach’s request and his motion material. For the following reasons, leave to represent 132 Ontario is denied.

Background

[4] The plaintiffs registered a notice of a purchaser’s lien against property owned by Magenta and 132 Ontario pursuant to s. 71 of the Land Titles Act[^1] for return of deposits paid by the plaintiffs toward the purchase of the property. By interim agreement between the plaintiffs and Magenta, the purchaser’s lien was vacated from title to permit the sale of the property in exchange for monies being paid into trust in the amount claimed by the plaintiffs.

[5] Magenta has brought a motion for an order declaring that the plaintiffs did not have a right to register the purchaser’s lien and for the return of the monies paid into trust in accordance with the interim agreement. Magenta’s motion is returnable before me on November 24, 2022.

[6] 132 Ontario was previously represented by counsel in this action. On April 7, 2022, Mew J. made an order removing counsel for 132 Ontario from the record in this action and in other proceedings. 132 Ontario was granted 60 days to make other arrangements for legal representation. On June 30, 2022, Hurley J. heard a motion by Mr. Beach seeking a variation of Mew J.’s order to further extend the time for Mr. Beach to retain new counsel and for other relief.

[7] Magenta, Gavin Marshall, and their affiliated corporations (collectively, the “Magenta parties”) and Mr. and Mrs. Beach, 132 Ontario and their affiliated corporations (collectively, the “Beach parties”) have been involved in acrimonious litigation for more than four years. Justice Hurley has been case managing the many actions and applications between the Magenta parties and the Beach parties. This action is not part of that case management process.

Analysis

[8] Rule 15.01(2) of the Rules of Civil Procedure[^2] provides that a party to a proceeding that is a corporation shall be represented be a lawyer, except with leave of the court. Rule 15.04(6) requires that a corporation shall, within 30 days after being served with an order removing its lawyer from the record, either appoint a new lawyer of record or obtain an order granting it leave to be represented by a person other than a lawyer.

[9] In Extend-A-Call Inc. v. Dimitri Granovski et al.,[^3] Boswell J. set out a non-exhaustive list of factors to be considered when addressing a motion under r. 15.01(2). The factors, recently considered by the court in Braysan Properties Inc. v. Muchos et al,[^4] are:

(i) whether the proposed representative has been duly authorized by the corporation to act as its legal representative;

(ii) whether the proposed representative has a connection to the corporation;

(iii) the structure of the corporation in terms of shareholders, officers, directors and whether it is a closely held corporation;

(iv) whether the interests of shareholders, officers, directors, employees, creditors, and other potential stakeholders will be adequately protected if leave is granted;

(v) whether the proposed representative is reasonably capable of comprehending the issues in the litigation and advocating on behalf of the corporation;

(vi) whether the corporation is financially capable of retaining counsel; and

(vii) any other relevant factor specific to the circumstances of the individual case.

[10] In determining whether to grant leave to a corporation to be represented by a non-lawyer, I must consider the interests of justice and r. 1.04, which directs the court to construe the Rules so as to ensure the just, most expeditious, and least expensive determination of every civil proceeding on its merits: De La Rocha v. Markham Endoscopy Diagnostics Inc., at para. 3[^5]; Sacred Heart Seniors Health and Recreation Center Inc. v. 1112396 Ontario Limited, at para. 19.[^6]

[11] The use of the word “shall” in r. 15.01(2) demonstrates the legislature’s intention that, in most cases, a corporation will be represented by a lawyer. As Ellies R.S.J. observed in Leisure Farm Construction Limited v. Dalew Farms Inc. et al.,[^7] allowing a non-lawyer to represent a litigant essentially allows for the non-licensed practice of law; at the same time, the representative does not face the same personal financial consequences that normally inform and constrain litigation decision-making. I also agree with Stothart J.’s observation in Braysan Properties that a lawyer is bound by the Rules of Professional Conduct which impose an obligation on the lawyer to act as an officer of the court; the failure to abide by the Rules of Professional Conduct leads to serious consequences. A non-lawyer representative is not bound by any professional obligations and, accordingly, faces no such consequences.[^8]

[12] Mr. Beach is not an officer, director, or a shareholder of 132 Ontario. 132 Ontario is a closely held corporation of which Martha Beach is the sole shareholder. In his affidavit, Mr. Beach states that he is the controlling mind of 132 Ontario and that he has been authorized to act as the corporation’s legal representative. No resolution of 132 Ontario’s board of directors authorizing Mr. Beach to represent the corporation’s interests in this proceeding has been provided.

[13] While there have been circumstances where the director or shareholder of a corporation has been permitted to represent a small corporation, this has occurred in limited circumstances where the individual seeking leave to represent the corporation is the corporation’s directing mind or “alter ego.” In granting leave in those circumstances, courts have drawn an analogy to the self-represented litigant: Braysan Properties, at para. 40. I am concerned that Mr. Beach, who holds no position with 132 Ontario, would not face the same personal financial consequences that normally inform and constrain litigation decision-making.

[14] Based on the evidence filed on this motion, I have grave concerns about whether Mr. Beach is capable of comprehending the issues in this litigation (as opposed to other litigation in which he is involved) and advocating appropriately on behalf of 132 Ontario in this litigation. Mr. Beach’s affidavit in support of his motion contains inaccuracies and displays a lack of understanding of the nature of this action. For example, he states that his spouse is “also named in this action.”[^9] Martha Beach is not named as a defendant in this action.

[15] In his affidavit, Mr. Beach is apparently unable to separate this action from the other matters that are being case managed by Hurley J. Much of Mr. Beach’s affidavit is spent addressing what he describes as the “Fraudulent Concealment, Misrepresentation, and Conversion Claim, CV-22-251.” With respect, that action is among those being case managed by Hurley J.; this action is not.

[16] In his affidavit, Mr. Beach refers to the “many motion decisions” from the Superior Court of Justice and Court of Appeal that were “obtained by fraud” and that “will become subject to detailed review, [and] in many cases will be set aside.”[^10] He asserts that the “Beach Parties can show and prove that the [Magenta parties] have fraudulently added to the Beach mortgages. This does not need to be relitigated as this declaration is a concrete fact.”[^11] These statements display not only a misapprehension of the parties and issues in this action, but also a fundamental misunderstanding of the litigation process.

[17] Finally, I note that, at the hearing, Mr. Beach submitted that “we don’t believe the Howards should not receive their deposit monies back.” This position is antithetical to 132 Ontario’s statement of defence and crossclaim, filed by 132 Ontario’s previous lawyer of record. At para. 6 of the pleading, 132 Ontario states that “the plaintiffs had no right to register any lien against the subject property, which lien was vacated by payments ... made to the credit of this action.” This contradiction raises concerns about Mr. Beach’s ability to act in 132 Ontario’s best interests.

[18] If the refusal to grant leave would effectively bar a corporation from access to justice, this factor should be given considerable weight: Extend-A-Call, at para. 19. No access to justice issues arise in this case; Mr. Beach has not led evidence that 132 Ontario is impecunious and unable to afford a lawyer.

Disposition

[19] Accordingly, the motion is dismissed. Pursuant to r. 15.01(2) of the Rules of Civil Procedure, 132 Ontario shall be represented by a lawyer in this proceeding.

[20] If the parties cannot agree on costs of the motion, they may make brief written submissions limited to a maximum of three pages. Magenta shall deliver its costs submissions by November 14, 2022 and Mr. Beach on behalf of 132 Ontario shall deliver its costs submissions by November 28, 2022. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.

Madam Justice Robyn M. Ryan Bell

Date: October 31, 2022

COURT FILE NO.: CV-18-274-00SR

DATE: 2022/10/31

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Gary Howard and Julia Niblett, Plaintiffs

AND

1880485 Ontario Inc., o/a Above All Building, 1324789 Ontario Inc. and Magenta Waterfront Development Corporation, Defendants

BEFORE: Madam Justice Robyn M. Ryan Bell

COUNSEL: J. Michael Hickey, for the Plaintiffs

Denise Sayer, for the Defendant Magenta Waterfront Development Corporation

No one appearing for 1880485 Ontario Inc.

Johnathan G. Beach, moving for leave to represent 1324789 Ontario Inc.

ENDORSEMENT ON MOTION FOR LEAVE UNDER R. 15.01(2)

Justice Ryan Bell

Released: October 31, 2022

[^1]: R.S.O. 1990, c. L.5. [^2]: R.R.O. 1990, Reg. 194. [^3]: 2009 CanLII 33047 (ON SC), at para. 19. [^4]: 2022 ONSC 940, at para. 26. [^5]: 2010 ONSC 5100. [^6]: 2022 ONSC 5035. [^7]: 2021 ONSC 105, at paras. 12-15. [^8]: Braysan Properties, at para. 38. [^9]: Affidavit of Mr. Beach, sworn October 17, 2022, at para. 2. [^10]: Affidavit of Mr. Beach, at paras. 33-34. [^11]: Affidavit of Mr. Beach, at para. 63.