Citation: 2011TCC431
Date: 20110915
Docket: 2011-2035(IT)G
BETWEEN:
1069616 ALBERTA LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Webb J.
[1]
The Appellant brought a
Motion to request that Terry Steinkey, who is not a lawyer, be permitted to represent the
Appellant in its appeal. Subsection 30(2) of the Tax Court of Canada Rules (General
Procedure) ("Rules") provides as follows:
(2) Where a party to a proceeding is not an
individual, that party shall be represented by counsel except with leave of the
Court and on any conditions that it may determine.
[2]
In Soneil
International Ltd. v. The Queen, 2008 TCC 148, 2008 DTC 3344, [2008]
5 C.T.C. 2699, I reviewed the history of this subsection of the Rules.
This subsection of the Rules has been amended twice since it was first
introduced, with the most recent amendment having been made on June 14, 2007.
This amendment removed the requirement for “special circumstances”. However,
despite the removal of the requirement for “special circumstances” by this
amendment, counsel for the Respondent still relies on the decision of Muldoon J. of the Federal Court in Kobetek Systems
Ltd. v. The Queen, [1998] F.C.J. No. 16. In that decision,
Justice Muldoon was reviewing Rule 300(2) of the Federal Court Rules
and stated as follows:
3. The pertinent current rule is 300(2), thus:
300(2) A corporation shall be represented by a solicitor in all
proceedings in the Court, unless the Court, in special circumstances, grants
leave to the corporation to be represented by an officer of the corporation.
So, the applicant must demonstrate special circumstances.
4. The jurisprudence helps to define such special circumstances….
...
6. From these cases the following factors appear to be relevant
to the determination of whether special circumstances exist: whether the
corporation can pay for a lawyer; whether the proposed representative will be
required to appear as advocate and as witness; the complexity of the legal
issues to be determined (and therefore whether it appears that the
representative will be able to handle the legal issues) and whether the action
can proceed in an expeditious manner.
[3]
Therefore Justice Muldoon was
determining the factors that would be relevant in determining whether “special
circumstances” exist for the purposes of a rule that required “special
circumstances” to exist before a corporation should be permitted to be
represented by a person who is not a lawyer. Since subsection 30(2) of the
Rules has been amended to delete the requirement for “special
circumstances”, the cases dealing with the meaning of “special circumstances”
and what factors should be examined to determine if “special circumstances”
exist are no longer applicable.
[4]
In my opinion, the cases that
should be reviewed are those from a jurisdiction which has a rule which is the
same as the current version of subsection 30(2) of the Rules. Rule
15.01(2) of the Ontario Rules of Civil Procedure provides as follows:
A party to a proceeding that is a corporation shall be
represented by a lawyer, except with leave of the court.
[5]
This rule is the same as
subsection 30(2) of the Rules in relation to corporations, except that
subsection 30(2) of the Rules also allows a Judge of this Court to
impose additional conditions. Therefore the criteria that are to be examined in
determining whether a corporation should be permitted to be represented by
someone other than a lawyer under subsection 30(2) of the Rules should
be the same as those examined by the Courts of Ontario where Rule 15.01(2)
of the Ontario Rules of Civil Procedure has been in effect for more than
20 years.
[6]
In 419212 Ontario Limited v.
Astrochrome Crankshaft Toronto Limited, [1991] O.J. No. 918, 3 O.R. (3d)
116, Master Sandler of the Ontario Court (General Division) stated as follows:
13 One of the factors to be taken into account in deciding
whether to grant leave to a corporation to act without a solicitor is the
internal situation of the corporation, and whether the person seeking to
represent the corporation in court is a senior representative of the
corporation who has been duly authorized by the board of directors, who
themselves are properly elected. Another is the nature of the action and the
issues, and whether it would be seriously unfair to the opposite party to have
the case presented or defended by a non-solicitor. Another factor is whether
the proposed corporate representative will be able to properly carry out the
duties of a litigant under the rules.
[7]
In Lamond v. Smith,
[2004] O.J. No. 3255 Justice J. W. Quinn of the Ontario Superior Court
of Justice stated as follows:
9 There are cases holding that granting leave under subrule
15.01(2) should not be encouraged. However, I do not see why such an admonition
need apply to small, one-man companies.
10 Other cases have expressed concern about whether granting
leave under subrule 15.01(2) would be unfair to the other party or parties who
then would be opposed by a non-solicitor. With respect, I do not consider this
to be a material consideration. Invariably, when one of the litigants in a
civil action is self-represented, there is a substantially increased burden not
only upon the remaining parties but upon the court. This is now a fact of life.
11 It also has been held that the court should have regard for
whether the proposed representative of the corporation will be able to fulfill
his or her duties under the Rules of Civil Procedure. I must distance myself
from such a proposition. In an era when self-represented litigants abound, it
does not make sense to worry whether Mr. Smith is capable of carrying out the
responsibilities of a litigant. Absent proven mental incompetence, his
intelligence and litigious capabilities, in my view, are quite irrelevant.
...
13 Mr. DeLorenzo submits that it has not been suggested that
the corporate defendant is unable to pay for a lawyer. This is correct. And,
indeed, it appears that a lawyer already is in the picture, so to speak, as
evidenced from the quality of the materials filed by Mr. Smith. Mr. DeLorenzo
relies upon 92417 Canada Ltd. v. Bank of Montreal et al. (1984), 45
C.P.C. 149, [1984] O.J. No. 2248 (Ont.Mast.), as authority for the proposition
that a corporation may be represented by a non-lawyer where it will be unable
to seek the remedies to which it is entitled because it is unable to obtain the
necessary funds to hire counsel. Impecuniosity may be one reason why leave
should be granted in a motion under subrule 15.01(2), but it is not a necessary
reason. Frankly, I do not see why the ability or inability to afford a
lawyer should be a relevant factor. The court would not question a
self-represented individual about his or her finances and I fail to appreciate
why the matter should be different with corporations. Some people and companies
may think that they have better things to do with their money than to pay
lawyers. They may be right; they may be wrong.
...
15 The historical reluctance of trial courts to grant leave to
a corporation to be represented by a non-lawyer has little merit in the case of
a small, one-man company.
(emphasis added)
[8]
In the case of Mirashrafi v.
Circuit Center, [2007] O.J. No. 2373 Master J. Haberman of the
Ontario Superior Court of Justice stated as follows after referring to the
above decision of Justice Quinn:
9 Quinn J. concluded by stating that the court's historical
reluctance to grant leave to a corporation to be represented by a non-lawyer
had little merit in the case of a small, one man-company. While Circuit Centre
in a "2-person" company and not particularly small judging by its
operating line of credit, I fail to see why the same principles should not
apply here. Mr. Javdan's personal interests clearly appear to coincide with
those of the corporate defendant and he is in a position to bind Circuit.
[9]
Master J. Haberman also stated
that:
14 On the basis of the foregoing, I find that the financial
status of the corporation is not a relevant factor.
[10]
In this particular case the
Appellant has two shareholders - Terry
Steinkey and Robert Steinkey. The relationship between the two shareholders is
not disclosed. I agree with the comments
of Justice Quinn and Master Haberman that for closely held companies the owners
of the companies should be permitted to represent the companies in proceedings
before the Court. Since Terry Steinkey is one of the owners of the Appellant
(of which there are only two owners) she should be permitted to represent the
Appellant.
[11]
As well, the financial information
for the Appellant and whether the Appellant could pay for a lawyer is not
relevant. As noted by Justice Quinn, the financial information is not relevant
for individuals who are allowed to represent themselves without counsel. If Terry Steinkey and Robert Steinkey would have been carrying on business through a
partnership, they could represent themselves without the necessity of
disclosing any of their financial information or whether they could pay for a
lawyer. So why should this information be relevant for closely held corporations
that will be represented by their owners?
[12]
As a result, the Motion is granted
and Terry Steinkey is entitled to represent the Appellant in this
appeal. As the Appellant did not ask for costs in this Motion, no costs will be
awarded. (Canada (Attorney General) v. Pascal, 2005 F.C.A. 31).
Signed at Ottawa, Canada, this 15th day of September 2011.
“Wyman W. Webb”
Email this Content