Citation: 2008TCC148
Date: 20080317
Docket: 2007-4786(IT)G
BETWEEN:
SONEIL INTERNATIONAL LIMITED,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket: 2007-4787(IT)G
AND BETWEEN:
SONEIL USHA INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Webb J.
[1] The Appellants, Soneil International Limited and
Soneil Usha Inc., have brought a Motion under subsection 30(2) of the Tax
Court of Canada Rules (General Procedure) ("Rules")
to allow Sachindra Jain, who is not a lawyer, to represent each of them in
their appeals.
[2] Subsection 30(2) of the 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.
[3] This rule was recently amended by SOR/2007-142 on June 14, 2007.
Counsel for the Respondent referred to several cases related to the factors to
be examined to determine if “special circumstances” existed to allow a
corporation to be represented by someone other than a lawyer in proceedings
before the Tax Court. However all of the cases (except for one) related to
the wording of this rule prior to the amendment made in 2007. In the one case
that was after subsection 30(2) of the Rules was amended, (White
Star Copper Mines Limited v. The Queen, [2008] 1
C.T.C. 2365) there is no discussion of the implications arising from the
amendment to the rule and the company in that case had 500 to 600 shareholders,
which is not the same as the current case.
[4] Counsel for the Respondent submitted that, notwithstanding the recent
amendment to subsection 30(2) of the Rules that deleted the requirement
for “special circumstances” to exist to allow a corporation to be represented
by someone other than a lawyer in proceedings before the Tax Court, this
subsection should be interpreted as if this requirement were still present. In
my opinion it is important to review the history of this rule and to interpret
it based on its current wording, not as it was worded prior to the amendment.
[5] Prior to 1993 the rule read as follows:
(2) Except as expressly provided by or under any enactment, a body
corporate may not begin or carry on a proceeding otherwise than by counsel.
[6] Therefore under the rule, in its original form, a corporation had to be
represented by counsel unless it was expressly provided by or under any
enactment that someone other than a lawyer could represent the corporation. By
SOR/93-96 dated February 23, 1993 this rule was amended, and then read as
follows:
(2) A corporation shall be represented by counsel 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.
[7] From 1993 to 2007 the rule provided that corporations could be
represented by someone other than lawyer only "in special
circumstances". This requirement that "special circumstances"
exist in order for a corporation to be represented by someone other than a
lawyer is also in the Federal Court Rules. Section 120 of the Federal
Court Rules provides as follows:
120. A corporation, partnership or unincorporated association 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, partner or
member, as the case may be.
[8] In the cases cited by counsel for the Respondent (other than White
Star Copper Mines Limited) the Courts were reviewing either the Federal
Court Rules or the previous version of subsection 30(2) of the Rules.
Both of these required special circumstances in order for a corporation to be
represented by a person other than a lawyer. The cases referred directly or
indirectly back to 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.
[9] 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.
[10] 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 solicitor,
except with leave of the court.
[11] This rule is the same as subsection 30(2) of the Rules, 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.
[12] 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.
[13] 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)
[14] 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.
[15] 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.
[16] In this particular case Sachindra Jain is the only shareholder and the
only director of one of the companies and his wife is the only shareholder and
the only director the other company. He is an officer of both companies. 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. I would also extend this to the
spouse of the owner as the economic interests of an individual and his or her spouse
will generally not be different.
[17] Justice McLachlin, of the Supreme Court of Canada, in Bracklow v. Bracklow,
[1999] 1 S.C.R. 420 stated in paragraph 49 that:
Marriage, as this Court held in Moge (at p. 870), is a "joint
endeavour", a socio‑economic partnership.
[18] In Moge v. Moge, [1992] 3 S.C.R. 813, Justice L'Heureux-Dubé also stated in paragraph 44 that
“marriage is, among other things, an economic unit which generates financial
benefits”.
[19] There was no indication in this case that the economic interest of Sachindra Jain
was any different from that of his spouse. Sachindra Jain stated that his wife
knew about this Motion and that she consented to his acting on behalf of her
corporation. As well the issue in the appeal for both companies is a claim for a
scientific research and experimental development tax credit. It would not seem
logical to have Sachindra Jain represent one company and to have his wife
represent the other company as this would not result in an expeditious and
efficient hearing process. The logical alternative would be for Sachindra Jain
to represent both companies since the issue is the same for both companies, he
has degrees in physics and engineering, he is the individual who is responsible
for the research conducted by both companies and his spouse owns all of the
shares of the other company. Since Sachindra Jain and his wife are a
socio-economic partnership and an economic unit, it seems logical to allow him
to represent her company as well as his.
[20] As well, the financial information for the companies 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 Sachindra
Jain would have been carrying on business as a sole proprietor he could
represent himself without the necessity of disclosing any of his financial
information. So why should this information be relevant for closely held corporations
that will be represented by their owners?
[21] As a result, the Motions are granted and Sachindra Jain is entitled to
represent both Soneil International Limited and Soneil Usha Inc. in these
appeals. As the Appellants did not ask for costs in these Motions, no costs
will be awarded. (Canada (Attorney General) v. Pascal, 2005 F.C.A. 31).
[22] The Respondent shall have 60 days from the date of this Order to file a Reply.
Signed at Halifax, Nova Scotia, this 17th day of March 2008.
“Wyman W. Webb”
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