February 13, 2025
It is important to know who you are doing business with. It is just as important to be clear which name you are doing business under.
It is not unusual for several related corporations, partnerships or even individuals to bill themselves as “THE ABC GROUP”. This creates a risk of confusion, which can be costly.
Take the example of JCL Concrete Pumping Ltd. v. SEMA Railway Structures Inc.,. The Defendant had issued a purchase order to something called JCL Group Inc. Work was performed, and construction liens registered in the names of JCL Concrete Pumping Ltd. and Ontario Trucking and Disposal Ltd. These were apparently all related corporations.
The lawsuits were brought by JCL Concrete and OTD, not by JCL Group Inc. The defence was that the wrong parties filed the liens and commenced the lawsuits- that the contracts were with JCL Group Inc.
Under the law of construction liens, the correct party must file the lien or it is void and has no force or effect.
The lawsuits were premised on there being contracts in favour of the two Plaintiffs. The Defendant hotly contested this. The court refused to consider an alternate theory of liability. Pleadings govern what may be argued and what a court will consider.
Although there was no dispute that JCL Concrete and OTD supplied the goods and services in question, they did so without a contract. They were out of luck in part because of sloppiness in administration of their business, and in part by not appreciating the legal technicalities. Their claims were dismissed. We anticipate that to add injury to insult, the Plaintiffs will be ordered to pay the Defendant at least partial indemnity costs of the two actions.
HOW WEILERS LLP CAN HELP YOU
Our corporate lawyers will provide you with appropriate advice on how to arrange your business affairs, and the risks inherent if you do not set up systems to implement the proper arrangements.
Our litigation lawyers understand the distinction between legal entities and will work with you to see to it that the correct entity brings the lawsuit, and sues the right party. We are careful to draft pleadings which advance the best arguments available.
Whether you are new in business, or your business is growing more complex, give us a call and see if we are the right lawyers for you.