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Court Consultation re: Corporate Self-Representation (and my draft submission)

Ken Proudman - view Arbitrator profile
   Edmonton, Alberta

The Rules of Court Committee is requesting feedback on a proposed amendment to the Rules which would bring back an old Rule granting the Court discretion to permit a non-lawyer to appear on behalf of a corporation (e.g. a shareholder). I have attached to the bottom of this announcement a downloadable PDF document containing the Court's consultation memorandum. It sets out the proposed amendment, instructions to submit feedback, and some background, particularly in relation to the limitations imposed by the Legal Profession Act.

Since my practice relates primarily to divorces/separations where either or both spouses own a business, I've drafted a submission, which follows. Let me know what you think. I'll probably submit it within the next two weeks.

I'm writing to comment on the proposed Rule 2.23(4), in relation to corporate self-representation.

I'm writing because I believe that I can offer a unique perspective on this issue, as my practice consists primarily of divorces/separations where either or both spouses own a business. I'm also a member of the steering committee which is in the process of transferring the Alberta Limited Legal Services Project into a permanent non-profit society.

From what I've seen, the vast majority of corporations involved in the family courts are small businesses with only one or two owners. Often the corporation itself is involved because a Preservation Order is sought to limit its ability to dispose of assets, to seek corporate financial documentation, because of alleged shareholder oppression or other corporate misfeasance, or because it's alleged that a spouse has transferred their business or business assets to a corporation which is not owned by that spouse.

As much as I would love to retain the strategic ability to force certain self-represented litigants to retain counsel, I'm also in touch with the struggles faced by many businesses. Starting a business is inherently risky, many businesses continue to operate despite poor performance because the owner is hoping to one day turn a profit. This can be exacerbated by divorce. Studies have shown us that financial hardship is one of the leading causes of divorce, meaning that businesses may already be struggling before they enter the Family Court system. When shareholders are making their way through the stages of grief, their businesses can further suffer. An inability to make submissions to the Court is fatal to a claim or defence, and many simply cannot afford to hire a lawyer. Although the memorandum refers to the argument that operating a corporation entails additional costs, that additional cost is typically primarily accounting and bookkeeping services, and I would note that I have seen several individuals who are not Chartered Accountants complete their own corporate tax returns.

In my opinion, the discretion of the Court to permit appearances of non-lawyers on behalf of corporations, in appropriate circumstances, is necessary in order for matters to be fairly decided.

That said, I do have three suggestions in relation to the draft Rule 2.23(4):

1. Where I have seen corporate self-representation to be problematic is where a spouse purports to represent the corporation of which they are not the sole shareholder. In some cases it is not clear that other shareholders understand the implications of their corporation being involved in the action, or they may not be aware at all. Shareholders are often worried about disrupting other shareholders and causing strain on their business partnership. Where fraud or impropriety is alleged, awareness of other shareholders is particularly important. I would suggest limiting the new sub-Rule to either representation by the sole shareholder, or requiring proof of service of the Claim upon all shareholders and acquiring their unanimous consent to self-representation. Such unanimity could also facilitate compliance with section 106(2) of the Legal Profession Act.

2. Because this Rule will be aimed at self-represented parties, who may not be aware of the definition of "persons", I'm concerned that the proposed R 2.23(4) could give the impression that individuals could be represented by non-lawyers. Because the proposed R 2.23(4) is based on the exception contained in section 106(2) of the Legal Profession Act, I don't think that is your Committee's intention. It would be confusing to non-lawyers to state "persons other than individuals". I don't believe that partnerships and trusts are "persons", as they are legally relationships. It maybe problematic for a society or a cooperative to be self-represented, because of the public interest and because a lack of unity of ownership and representation might violate section 160(2). Instead of a "person", would it be less problematic to simply state a "corporation"?

3. I'm in favour of the list of considerations set out in the proposed Information Note, but concerned that it's contained within an Information Note and not the proposed Rule itself. I believe that most of us, lawyers and self-represented litigants alike, likely don't read the Rules published by the Alberta Queen’s Printer when preparing for Chambers, instead we likely read the Rules on CanLII or WestlawNext, which I don't believe publish the Information Notes (I'm not sure whether Quicklaw does). The Information Notes to the annotated Rules can be an excellent source of history or cross-reference, but I do not believe that they should list factors relevant to a determination, especially in the context of self-represented litigants.

Thank you for this opportunity to provide feedback. Please do not hesitate to contact me to discuss any of this further.

Download Corporate Self-rep Consult - PDF file attached - Jul 26, 2018

Caution: we recommend that you scan this file for viruses and malware prior to opening or otherwise using it.

1 4 years ago - edited 4 years ago

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