Friday, January 3, 2014

New Small Claim Court Rules for Representation

Effective January 1, 2014, the Small Claims Court Rules have been amended, to clarify the rules regarding representation.

The most important of them is Rule 1.08:  "For greater certainty, nothing in these rules permits or authorizes the court to permit a person to act as a representative if that person is not authorized to do so under the Law Society Act."

Arguably, this is nothing new.  The Law Society Act has long restricted who can act as a representative in courts and tribunals, including the Small Claims Court, but the Small Claims Court (among others) tends to be more informal.  Consider, for example, the very recent case of Masson v. Beneplan Inc., where the plaintiff was represented by a union officer, and the defendant was represented by a non-lawyer employee.  Deputy Judge Searle noted that neither representative provided any case law, but that he was nonetheless mandated to "hear and determine in a summary way all questions of law and fact."

The case involved an action for just under $3500 by an employee against the company that administered the health and benefit plans under the collective agreement.  It isn't clear to me why the union didn't proceed by way of a grievance, and at a glance it appears to me that this case is comparable to Campos v. Sun Life - if the precedent is applicable, then the defendant might reasonably have argued that the subject matter of the dispute was the sole jurisdiction of a labour arbitrator, and that the Small Claims Court has no jurisdiction.

However, given the amount of money at stake, one wonders if Beneplan would be the least bit chagrined to discover that a lawyer might have been able to mount a jurisdictional argument...simply, because doing so successfully would probably have cost them more than the judgment.

Who Can Represent You at Small Claims Court?

An individual (i.e. a non-corporate party) can always proceed self-represented.  I don't generally recommend it - "He who acts as his own lawyer has a fool for a client" - but that's your right.  As well, as an individual you might consider hiring a licensed paralegal; a licensed lawyer; your MPP (yep, that's an exemption); a friend, neighbour, or family member who is representing you for free (under certain circumstances); a legal aid clinic; an articling student; a Pro Bono Students Canada law student; or a not-for profit organization (under certain circumstances).

There are a few other categories of exempted representatives which are generally more applicable to businesses:  In-house legal service providers (this one could be important), and, under certain circumstances, Certified Human Resources Professionals and members of Board of Canadian Registered Safety Professionals or the Appraisal Institute of Canada.  (So, for example, it isn't unusual for a CHRP to operate a consulting business, and to occasionally act for clients in labour/employment matters.  This isn't inherently improper.)

Similarly, there's an exemption for union representatives, but this exemption extends only to grievances, labour negotiations, labour arbitrations, and administrative tribunals; not to the Small Claims Court.

This means that, in the Masson case, Mr. Masson's representative was almost certainly engaged in the unauthorized provision of legal services.  For Beneplan, it's less clear.  And this is an issue that will become important for small and mid-sized businesses.

Quite often, when a closely held corporation is sued, the owners of the corporation will respond, considering themselves 'self-represented'.  After all, I may have incorporated my business, but my business is still, really, just me, right?

At the Superior Court, it's possible to get leave to represent a corporation under such circumstances, but otherwise you need a lawyer.  At the Small Claims Court, you need to fall within the "in-house legal service provider" exemption, and the exact meaning of this hasn't been fleshed out in much detail.  The requirements are that the representative "is employed by a single employer that is not a licensee or a licensee firm"; "provides the legal services only for and on behalf of the employer"; and "does not provide any legal services to any person other than the employer".

This suggests that the practice of sending an employee, director(?), or officer of a corporation to Small Claims Court may continue to be acceptable.  However, there are a few caveats.  For example, a landlord was burned at the Landlord Tenant Board when an employee of the property management company tried to act for the landlord - they were non-arms-length, with the property management company being wholly owned by the landlord, but the employee was employed only by the property management company.

So, where there's a more complex corporate structure in play, the "in-house legal service provider" exemption might not be available.  This may extend to the corporate principals, too.  If you're the President and CEO of an operating company and a holding company, then it may well be the case that you don't meet the "single employer" requirement.

What's the Point of the Amendment?

What's most important about the amendment is that it sends a clear message to Deputy Judges that they have no discretion to allow unlicensed and non-exempt representatives to appear in Court.  In the past, it was probably something they wouldn't pay too much attention to unless their attention was drawn to it by the opposing party, and even then might turn a blind eye to.  The amendment gives them something of a mandate to police against unauthorized provision of legal services.

And while I understand the reasons they might have been more relaxed about it in the past, this is nonetheless a good thing.  In the past, I have been very alert to issues of unauthorized practice, but for me it's a tactical issue.  If the opposing party is using an unlicensed representative, then I may be able to throw a technical obstacle in their way by raising that issue - forcing them to fire the unlicensed representative, and either proceed self-represented or hire a licensed representative (no doubt at a higher cost...besides, my client is paying my hourly rate).

But while there's absolutely an 'integrity of the process' element to the rules requiring representatives to be licensed, the most central reason to require representatives to be licensed is to protect their clients, and therefore it doesn't make sense to leave it to the adversarial system.  By raising an objection to the opposing party's use of an unlicensed representative, ostensibly I am standing up to protect the interests of my opponent.

Why Should You Want A Licensed Representative?

Firstly, my license from the Law Society comes with a degree of accountability.  There's mandatory insurance which protects you, and it means that if I don't do what I'm supposed to, then I can be held to account by the Law Society.

Secondly, my license alone reflects that I (a) completed law school, (b) passed the bar admission exam, (c) completed ten months of articling under a qualified principal, and (d) have kept up with the Law Society's evolving Continuing Professional Development requirement.  (Of course, add to that my experience and specific expertise, and there's clear value.)  For paralegals, it's a little different - it's still the case that many paralegals in Ontario are "grandfathered", meaning that they have no specific educational background, but have just been working as paralegals for a long time.  So while there are some very good paralegals out there...well, they aren't all very good.

Thirdly, with an unlicensed and non-exempt representative, you may well end up in a difficult circumstance of having your representative kicked out of court on the hearing day.  That can have any number of results, but in general it's an unhappy ending for you.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

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