When you have experienced loss, injury, or damages because of a company’s wrongdoing, hiring a lawyer to sue a company may cross your mind. The legal considerations that you must take note of will be discussed here to help you in suing a company in Canada.
Can I sue a company in Canada?
A juridical entity (i.e., a company or a corporation) operating in Canada can be sued in their own name before a Canadian court. In addition, they can also be sued for the acts or injuries caused by their employees.
This flows from the rights and obligations granted to it by law similar to a person. It can own and sell properties, engage in a business for itself, and more importantly, it can sue and be sued.
Suing a company can be for any injuries or damages they’ve caused to a person or to another corporation, or for any criminal act they have committed.
Legal Basis
Suing a company in Canada can be a:
- Civil claim or action: for breach of contract, damages, personal injuries, or for other civil remedies
- Criminal case: for any of its violations against Canada’s Criminal Code
Depending on what relief are you asking for, consult with a lawyer to sue a company in Canada for a civil charge, a criminal charge, or both.
Do I need a lawyer to sue a company in Canada?
When suing a company or a corporation in Canada, a lawyer who is an expert on your case is needed to represent you in court. Even for out of court procedures such as negotiating or mediating with a company for a settlement, a lawyer is still highly recommended.
This will ensure that your interests are protected. You also stand a better chance of having the court grant the remedy that you’re asking for.
Most actions filed against a corporation fall under a civil case. Watch this video to know more about the procedures in civil cases in Ontario:
Consult with a lawyer in your area to sue a company, its employees, or its officers. If you’re from Toronto or Ottawa, for example, talk to the best professional liability lawyers in Ontario as ranked by Lexpert.
How do I sue a company in Canada?
After hiring the services of a lawyer to sue a company in Canada, the next step would be to determine:
- whether the company exists
- whether the company is liable for the acts of its employees
- whether the individuals operating the company can be held liable along with the company
1. Existence of the Company
First, you need to determine the company’s legal existence. This is important so that you know who to sue and for the validity of certain court processes.
When an entity is incorporated as a corporation, it can be sued in its own name and through the acts of its employees, shareholders, officers, or directors.
If an entity you’re suing is a sole proprietor or a partnership, your case may fall against the individuals in relation to their personal liabilities.
Incorporation
A company in Canada is incorporated:
- at the federal level through the Canada Business Corporations Act
- at the provincial level through each province’s Business Corporations Act
In some instances, entities may be incorporated at both the federal and provincial levels.
If they’re provincially incorporated, you may start your search by looking at the company or business registry of your province or territory.
For example, in Ontario, check Ontario Business Registry’s entity search feature to look for a business or corporation. You could also use Canada’s Business Registries website for your search.
If it’s federally incorporated, use Corporation Canada’s online search function.
2. Vicarious Liability
Since employers such as companies and corporations “act” through their employees, it is necessary that they be held liable for the acts of all their employees. This is a legal concept called vicarious liability.
Vicarious liability also applies when the professionals employed by the company or corporation acted negligently in the service of its clients. For example, insurance companies may be held liable for the acts or negligence of their brokers and agents.
To establish vicarious liability, the following elements must be present:
- there is an employee-employer relationship between the liable person and the company
- the company’s employee commits an act or negligence which resulted in injuries or damages
- the injuries or damages occurred within the scope of employment
Check with a lawyer to sue a company for the acts of its employees and see if these elements apply to your case.
3. Piercing the Corporate Veil
In general, when a case is filed against a corporation, its officers, directors, or shareholders will not be held liable along with the corporation. This is based on the legal concept that a corporation has a separate and distinct “identity” from the individuals running the corporation.
In addition, the properties of a corporation’s officer, director, or shareholder cannot be seized to satisfy any claims against the corporation. Unless a personal guarantee has been given by such persons.
Exception
However, this rule is not absolute. An exception to this rule is the doctrine of “piercing the corporate veil” that also applies in Canada. According to this doctrine, certain circumstances will allow the court to look beyond the corporation and hold individuals to be personally liable for the acts of the corporation.
These circumstances which allow the court to piece the corporate veil are:
Where the corporation has been established:
- to protect individuals from fraudulent or criminal activities; or
- with no legal or proper business purpose
Where the corporation’s shareholders, directors, or officers:
- owe the corporation some money
- failed to deduct, withhold, remit, or pay tax amounts of employees to Canada Revenue Agency (e.g., GST withheld, CPP premiums, income taxes, Employment Insurance)
- assumed the personal rights, power, duties, and liabilities following an agreement by the shareholders
- received a distribution from the corporation instead of having it paid to the corporation’s creditors for its debts
- transacted with a third party, who is made to believe that they are transacting with an individual shareholder, director, or officer rather than with the corporation
Since these are best determined by the specific facts of each case, it’s better to consult with a lawyer to sue a company based on the doctrine of piercing the corporate veil.
Consult with a Lexpert-Ranked Canadian professional liability lawyer for any questions on suing a company in Canada.