Court File and Parties
COURT FILE NO.: CV-21 - 88
DATE: 2022/02/09
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Braysan Properties Inc. “In Trust” Plaintiff
AND:
Garry Muchos, Michael Muchos, Robert Muchos,The Estate of Marion Muchos, George Alexiou, Leslie J. McCann, Larry Rozak and Vicky Rozak
Defendants
BEFORE: Madam Justice S. K. Stothart
COUNSEL:
J. Brad Maher Agent for the plaintiff
Constantin Alexiou and Robert Kalanda Counsel for the defendants Garry Muchos, Michael Muchos, Robert Muchos, The Estate of Marion Muchos, Larry Rozak and Vicky Rozak
James Cook Counsel for the Defendant, George Alexiou
HEARD: February 9, 2022
Reasons for decision
Motion for leave to allow J. Brad Maher to appear as agent on behalf of the plaintiff
[1] The plaintiff corporation, Braysan Properties Inc., seeks leave of the court to be represented by a non-lawyer pursuant to Rule 15.01(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The plaintiff proposes that it be represented by J. Brad Maher (“J.B. Maher”), who is described in this motion as an “executive consultant” with the corporation. J.B. Maher is the son of Francis Maher (“F.J. Maher”), the principal of the plaintiff. J.B. Maher is not a lawyer.
[2] The defendants object to the plaintiff corporation being represented by a non-lawyer, and more specifically by J.B. Maher.
[3] For the following reasons, leave is denied.
Background:
[4] Although the plaintiff has named itself in the statement of claim as Braysan Properties Inc. “In Trust”, the court is satisfied that the plaintiff is, in fact, “Braysan Properties Inc.”, also known as 2383809 Ontario Inc. The sole shareholder, Director, President, Secretary and Treasurer of Braysan Properties Inc. is Francis J. Maher.
[5] In November, 2020 the plaintiff corporation entered into an agreement of purchase and sale with the Estate of Marion Muchos, Garry Muchos and Michael Muchos to purchase property located at 1932A Lake Joseph Road, Mactier, Ontario. The agreed-upon purchase price was $1,575 000. For a number of reasons, the sale of this property has not been completed.
[6] On September 17, 2021, the plaintiff corporation commenced an action against eight defendants by way of a statement of claim. All eight defendants have allegedly played a role in the ongoing attempt to purchase the Lake Joseph Road property.
[7] In the statement of claim, the plaintiff corporation claims fraud, breach of contract and unlawful interference with contractual relations. The plaintiff corporation seeks various headings of damages totalling over 6 million dollars, pre- and post- judgment interest, and its costs.
[8] The defendants brought a motion returnable January 10, 2022 seeking various forms of relief, including an order striking the plaintiff’s claim as frivolous and vexatious. In the alternative the defendants seek an order for security for costs.
[9] As part of their motion, the defendants raise the preliminary issue that the plaintiff corporation has never sought leave of the court to be represented by a non-lawyer, as required by Rule 15.01 of the Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[10] On January 10, 2022, the last return date of this matter, J.B. Maher appeared on behalf of the corporation. He indicated that the corporate plaintiff wants him to represent it in the proceedings as its “agent”. The matter was adjourned to today’s date so that the plaintiff corporation could bring the appropriate motion before the court seeking leave to allow J.B. Maher to represent the plaintiff corporation.
Position of the parties:
Plaintiff’s position:
[11] In support of its motion seeking leave, the corporate plaintiff has filed the affidavit of F.J. Maher, dated February 2, 2022.
[12] F.J. Maher states that he is the president and shareholder of Brayson Properties Inc. He further states at paragraph 3 of his affidavit:
I consent to have J. Brad Maher (hereinafter referred to as “JBM”) represent the Plaintiff corporation Braysan Properties Inc. “In Trust” in these proceedings and on this motion as an Agent for the Plaintiff, and he is capable of doing so for an interim period. JBM is not a lawyer and will not be paid legal fees by the corporation. If at some point I believe that the corporation needs outside counsel to represent it on the record, I shall appoint same.
[13] F.J. Maher adds that JBM has represented matters in court on real estate and construction matters over approximately the last five years before several justices and masters in Ontario courts.
[14] For his part, J.B. Maher confirmed that he is not connected in an official manner with the plaintiff corporation. He is not a shareholder or director of the corporation. He is the son of F.J. Maher.
[15] J.B. Maher submits that he has been permitted to represent other corporations in other court proceedings in the past and that he feels he has the knowledge and experience to represent the plaintiff corporation in this matter. He submits that this is a simple matter involving a real estate transaction, and it is not complex. He submits that if, at some point, the matter becomes complex the plaintiff corporation will retain counsel.
[16] J.B. Maher points to a reported decision, 2222028 Ontario Inc. v. Adams and Nguyen, 2017 ONSC 3113, where he represented a corporation as agent. He claimed that other courts have had no issue with him appearing as agent for a corporation.
Defendants’ position:
[17] Mr. Alexiou, on behalf of most of the defendants, submits that J.B. Maher should not be granted leave to represent the corporate plaintiff.
[18] Mr. Alexiou submits that J.B. Maher holds no position with the corporate plaintiff. He is not an officer, director, or shareholder with the plaintiff corporation and as such does not fall within the recognized exceptions to Rule 15.01(2) of the Ontario Rules of Civil Procedure, where a non-lawyer has been permitted to represent a corporation.
[19] Contrary to the assertions of J.B. Maher, Mr. Alexiou submits that this is a complex case. The plaintiff in this action is seeking millions of dollars in damages and there are multiple defendants. The statement of claim alleges multiple allegations of fraud and breach of contract.
[20] Mr. Alexiou submits that that J.B. Maher will likely be the primary witness in the action, as he was heavily involved in the negotiation of the transaction at issue. This will further complicate the proceedings.
[21] Mr. Alexiou points to irregular circumstances that have already arisen in this case, including that J.B. Maher requisitioned that the defendants be noted in default despite having been served with a statement of defence and counterclaim. Further, J.B. Maher has filed affidavits containing hearsay and privileged settlement discussions. Finally, when met with resistance to his suggestions, J.B. Maher has threatened to file an action against Mr. Alexiou and his law firm.
[22] Given the history of this matter Mr. Alexiou submits that it would be manifestly unfair to his clients to allow J. B. Maher to represent the corporate plaintiff in this matter.
[23] Mr. Cook, counsel for the defendant George Alexiou agrees with the position of the other defendants. He agrees that the matter is complex. With respect to this motion seeking leave, he was not served with the plaintiff’s materials. Upon receiving notice of confirmation for the motion, he had to reach out to J.B. Maher to obtain a copy of the plaintiff’s motion materials. Upon receipt of those materials, he was deeply concerned to see that the supporting affidavit referred to privileged settlement discussions that he had held with J. B. Maher.
The Law:
[24] Rule 15.01(2) of the Ontario Rules of Civil Procedure, R.R.O. 1990, Reg.194 provides that a party to a proceeding that is a corporation shall be represented by a lawyer, except with leave of the court (emphasis added).
[25] There have been circumstances where courts have granted leave to a corporate party to be represented by a non-lawyer. In many, if not all, of these cases the individual seeking to represent it was a senior officer with the corporation or a sole shareholder. In those cases, 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 CanLII 6218 (ON SC), 2004 CarswellOnt 3213 (Ont.S.C.J.).
[26] In Extend-A-Call Inc. v. Granovski, 2019 CarswellOnt 3754 (Ont.S.C.J.), at para. 19, Boswell J. reviewed a number of decisions on the issue of leave and set out a non-exhaustive list of factors to be considered when addressing a motion under Rule 15.01(2). Those factors were:
Whether the proposed representative has been duly authorized by the corporation to act as its legal representative;
Whether the proposed representative has a connection to the corporation;
The structure of the corporation in terms of shareholders, officers, directors and whether it is a closely held corporation;
Whether the interests of shareholders, officers, directors, employees, creditors and other potential stakeholders are adequately protected by granting of leave:
Whether the proposed representative is reasonably capable of comprehending the issues in the litigation and advocating on behalf of the corporation. The Court should not impose too high a threshold at this stage, given that the courts abound with self-represented litigants of various skills. The proposed representative should, however, be reasonably capable of comprehending the issues and articulating the case on behalf of the corporation;
Whether the corporation is financially capable of retaining counsel. Access to justice has been a concern troubling courts at all levels in Canada for some considerable time. It is fundamental to integrity of the courts and the reputation of the administration of justice that the parties have reasonable access to our courts. If the refusal to grant leave would effectively bar a corporation from access to justice, this factor should be given considerable weight; and
Any other relevant factor specific to the circumstances of the individual case.
[27] Justice Boswell referred again to these factors in De La Rocha v. Markham Endoscopy Diagnostics Inc., 2010 ONSC 5100, and added the following at paragraph 3:
Ultimately, the court must give effect to what order is in the interests of justice and must pay heed to Rule 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.
[28] In Leisure Farm Construction Limited v. Dalew Farms Inc. et.al., 2021 ONSC 105, Ellies R.S.J. granted the unopposed application for leave to one of the two shareholders of a family farm corporation to represent the corporation. In doing so, Justice Ellies expressed concerns about two important factors that come into play when a non-lawyer seeks to represent a corporation. Firstly, the court is allowing a non-lawyer to represent a litigant, contrary to the Law Society Act and the Solicitors Act. Secondly, the individual who represents the corporation does not face the same personal financial consequences that a self-represented litigant would face, a factor that normally constrains litigation decision-making.
[29] In Robert M. Simon Construction Ltd. v. Waterloo (Regional Municipality), 2007 CarswellOnt 3240 (Ont.S.C.J.), the plaintiff corporation sought leave pursuant to Rule 15.01(2) to have an engineer represent it as agent as part of the court proceedings. The plaintiff corporation submitted that it could not afford to hire a lawyer in the proceedings. The plaintiff corporation argued that although the engineer was not an officer or director of the plaintiff corporation, he was a project manager involved in the matter that was the subject of the litigation. Finally, the corporate plaintiff pointed to the fact that the engineer had represented his own company in the past as agent and argued that this was evidence that he was sufficiently knowledgeable to act as agent in the matter.
[30] In refusing leave in that case, Master Graham concluded that the discretion to grant leave under rule 15.01(2) should be limited to those circumstances where the corporation is to be represented by an officer or director or shareholder of the corporation, which would in effect allow the corporation to represent itself. Extending that leave to a non-lawyer, who is not related to the corporation, runs the risk of violating the Law Society Act and the Solicitor’s Act.
[31] Section 26.1 of the Law Society Act, R.S.O. 1990, c. L.8, prohibits any person who is not a licensee from practising law in Ontario or providing legal services unless permitted by the Law Society of Ontario’s bylaws.
[32] The term “licensee” is defined in section 1 of the Law Society Act as a person licensed to practice law in Ontario as a barrister and solicitor or a person licensed to provide legal services in Ontario.
[33] The definition of “providing legal services” is also set out in section 1 (6) of the Law Society Act and includes giving a person advice with respect to legal interests, rights or responsibilities, drafting a document for use in a proceeding before an adjudicative body (defined in s.(1)(a) to include a federal or provincial court) and representing a person in a proceeding before an adjudicative body.
[34] Section 1(7) of the Law Society Act sets out the definition of "representing a person in a proceeding" and includes determining what documents to file in relation to the proceeding, conducting an examination for discovery and engaging in any other conduct necessary to the conduct of the proceeding.
[35] Section 1 of the Solicitors Act, R.S.O. 1990, c.S.15, imposes a penalty on any person who commences, prosecutes or defends an action, unless that person is a party to the proceedings or a person licensed under the Law Society Act to provide legal services.
Analysis:
[36] Rule 15.01 of the Ontario Rules of Civil Procedure uses the word “shall” when referring to the requirement that a corporation be represented by a lawyer. This demonstrates clear legislative intention that in most cases a corporate party will be represented by a lawyer.
[37] While the court is cognizant of the need to ensure that parties have access to justice, there are valid policy reasons that support Rule 15.01 of the Ontario Rules of Civil Procedure. As pointed out by Regional Senior Justice Ellies in Leisure Farm Construction Limited v. Dalew Farms Inc., allowing a non-lawyer to represent a litigant essentially allows for the non-licensed practice of law. Further, the non-lawyer is not constrained by the possible consequences of his or her actions, as any costs would be borne by the corporation.
[38] In addition to the policy reasons expressed by R.S.J. Ellies, I would add 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 of a lawyer to abide by those rules leads to serious consequences. An agent is not bound by any professional obligations, and as such faces no such consequences.
[39] Finally, it cannot be ignored that a lawyer is trained, licensed and insured to practice law. In the event that a client feels that their interests were not properly represented, there is recourse to both the Law Society of Ontario and the insurer. When a party is represented by an agent, they have no such recourse.
[40] 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 essentially the directing mind behind the corporation or is an “alter ego” of the corporation. Courts have drawn an analogy in granting leave to the self-represented litigant.
[41] In those circumstances, it is assumed that the person will be motivated to act in the best interests of the corporation because they are intricately connected to the corporation and will be personally affected by the outcome of the litigation. Indeed, in some circumstances the corporate veil may be pierced and a sole shareholder or director may be found personally responsible for damages incurred by the actions of the corporation.
[42] The plaintiff Braysan Properties Inc. is a closely held corporation, with only one shareholder, Francis Maher. In their search, the defendants were unable to locate any assets associated with this corporation.
[43] J.B. Maher holds no official position within Braysan Properties Inc. He is not a director or a shareholder. He is the son of the sole shareholder, Francis Maher.
[44] A bankruptcy and insolvency records search with the Government of Canada conducted by the defendants indicates that there are ongoing bankruptcy proceedings involving J.B. Maher.
[45] J.B. Maher is likely a witness in this matter. He was actively involved in the negotiations (and continues to be so engaged) for the purchase and sale of the property located at 1932A Lake Joseph Road, Mactier, Ontario.
[46] The plaintiff corporation does not submit that is it unable to financially afford a lawyer. Indeed, F.J. Maher has deposed that the corporation will hire a lawyer if and when it feels it is necessary. As such, the court finds that there are no access to justice issues that arise in this case.
[47] J.B. Maher submits that, because he has acted as agent for corporations in other court proceedings, this demonstrates his knowledge and ability. He has referred the court to the Adams and Nguyen decision, wherein he was noted as agent for the plaintiff corporation. However, that case merely underscores the court’s concerns. The decision refers to the fact that the plaintiff corporation’s action was determined to be frivolous and vexatious and costs were awarded against it.
[48] Ultimately each case must be decided based on its own unique facts. Based on the evidence and submissions in this motion, the court has grave concerns about whether J.B. Maher is reasonably capable of comprehending the issues in the litigation and advocating appropriately on behalf of the plaintiff. There have already been issues with the content of materials filed and the timely service of those materials.
[49] The court is concerned that allowing J.B. Maher to “represent” the corporate plaintiff in this case would in effect contravene the Law Society Act and the Solicitors Act by permitting an unlicensed, non-lawyer to represent a party in proceedings before the Superior Court of Justice. The court does not find that the circumstances in this case are akin to a self-represented litigant, given JB Maher holds no position with the corporation.
[50] The court is concerned that J.B. Maher will not be constrained in the same way that a self-represented litigant would be because he has no direct connection to the plaintiff corporation. Being a relative of the sole shareholder and someone who describes himself as a “consultant” is simply not sufficient.
[51] The court concludes that there is a real risk in this case of substantial prejudice to the defendants if the plaintiff is not represented by a lawyer. The court is also concerned that the issue noted by R.S.J. Ellies, that a non-lawyer representing a corporation does not face the same personal financial consequences that normally inform and constrain litigation decision-making, may be at play in this case.
[52] Balancing all of the factors present in this case, the court concludes that it is in the best interests of justice that the plaintiff be represented by a lawyer, as required by Rule 15.01 of the Rules of Civil Procedure.
Order:
[53] For the above reasons, the corporate plaintiff’s motion for leave to be represented by a non lawyer is dismissed.
[54] The court orders that Braysan Properties Inc., also described in the statement of claim as Braysan Properties Inc. “In Trust”, shall be represented by a lawyer in these proceedings, pursuant to Rule 15.01 of the Ontario Rules of Civil Procedure.
[55] J.B. Maher is precluded from taking any further steps in these court proceedings on behalf of the corporate plaintiff.
Costs:
[56] If the parties cannot agree on costs, they are to serve and file written submissions within ten (10) days of the release of this decision. The submissions cannot be longer than three (3) double-spaced pages, plus attachments.
The Honourable Justice S. K. Stothart
Date: February 9, 2022