Suing or being sued in small claims court? For corporations, identity checks are a must.

Corporations are interesting legal entities. In the eyes of the law, they are persons. Accordingly, corporations have rights that they can pursue through the courts via a representative. As with individuals, in order for a corporation to pursue its interests in a court of law, the corporation must, in fact, exist. In a corporation’s case, “existence” means being registered with relevant authorities as a provincial or federal corporation. This is fairly common sense. Being sued by a non-existent corporation is like being sued by a person who never lived.

This makes the issue of whether a corporation legally exists very important to any small claim or defence.

If a corporation is suing you in small claims court, and you find out that it’s not registered anywhere in Canada, “the plaintiff does not exist” will make for an excellent defence to any type of claim: this is the first defence you should consider. We recommend running an official check of whether a corporation exists no matter how sure you may otherwise be of its legal status. As an example, we had a case in our practice where a small claim defendant signed a contract with the corporate plaintiff, let’s say Acme Corporation. Acme Corporation then sued the defendant based on the contract. It maintained its existence throughout the trial. Acme Corporation hired paralegals and a lawyer who said they represent it. After all that, the defendant checked whether Acme Corporation is legally registered somewhere in Canada, and, lo and behold, it turned out that Acme Corporation never existed. Acme Corporation could not have, therefore, sued the defendant, hired a representative or issued any other court proceedings. It could not even accept payment on a judgment in its favour.

If you are on the other side and are suing a corporation, it’s equally important for you to check whether the corporation you are suing legally exists. Again, fairly common sense – a judgment against a person that does not exist is useless. You would not be able to collect any money from a non-existent entity, and attempting to rename the defendant after the judgment is received is a cumbersome, and potentially unsuccessful, process.

It’s important to note here that by law, any paralegal or lawyer who undertakes to represent a corporation in a court of law must check that the corporation exists. However, it’s always better to be safe than sorry – check again for yourself, just in case.

So, now that we’ve established that checking the corporation’s existence is important, let’s turn to the mechanics of this check. A corporation can be provincial or federal, that is, it can be registered as a company operating in a province or in all of Canada. To show that a corporation does not exist, you must check both the provincial and federal databases. Provincially, this registration can be checked by running a search using the corporation’s name with the Ministry of Government Services, for a fee of $12.00. In Toronto, the search must be run in person on the second floor at 375 University Avenue (click here for more information from the Ministry). If the corporation exists or has existed, the Ministry will provide a Corporate Profile Report. This is an official document that confirms the corporation’s existence, lists its name, directors, shareholders and officers and their contact details, as well as other useful information. If the corporation has never existed, you can obtain a Certificate of No Record, which confirms this fact.

If a corporation does not exist provincially, it may be federal. A search for a federal corporation is free and can be run using its name online, here. The search will provide you with an informative search result similar to the corporate profile report if the corporation exists, and a “0 results” page if the corporation does not exist.

You can also avoid the hassles of running the searches yourself by hiring a business service provider who can run the search for you. A list of several trusted providers can be found on the ServiceOntario website, though this list is not exhaustive.

To summarize, the moral of this particular story is that corporate identity checks are not expensive or difficult to run – we strongly suggest you do your homework to avoid the risk of getting into lengthy litigation with an entity that may not even exist.

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Sylvie, Toronto

I really appreciated your attention to details, your level of preparation which was impressive, and enthusiasm. I am really happy we have Spectrum Paralegal in our corner. Thank you for being the champion of our small claims court!