January 24, 2022
In Ontario, any person or corporation carrying on business under any name other than their own name is required to resister that name under the Business Names Act.
This makes sense. It should be easy to know who you are doing business with. In addition to registration, you are required to use both the registered business name and your own real name (or corporate name) in all contracts, invoices, negotiable instruments (remember cheques?), and orders for goods or services.
The tricky part of the Act which a lot of people overlook is section 7(1), which provides that a person carrying on business without registering their business name, or without keeping their registration information up to date, is not permitted to sue in Ontario without “leave of the court”, that is, an order granted by a judge.
That order is supposed to only be granted if the court is satisfied that:
- the failure to register was inadvertent;
- there is no evidence that the public has been deceived or misled; and
- at the time of the application to the court, the person is not in contravention of the Act or the regulations.
So the first thing you need to do if you failed to resister is to fix that problem. Then you should start to use the name properly on invoices, etc., to further show compliance.
Failure to fix the name problem promptly might cause you additional grief because you are not allowed to take further steps in your action, and thus, your clock on dismissal for delay runs against you, and might run out.
That requires not only coming into compliance with the Act, but bringing a motion. Though most such requests are routinely granted, they do add cost and delay, and a contested motion is not only more expensive, you might even fail the test and lose the right to proceed. Other less harsh, but expensive, consequences are also possible. In a recent case, though leave was not opposed. In addition to the costs of the leave motion, the Plaintiff was required to pay the defendant’s “costs thrown away” as a result of the postponement, and would of course have had its own wasted efforts.
We have written before about the importance of naming proper parties, focusing on the need to sue the correct defendants, but this illustrates that “proper party” issues apply to naming the correct Plaintiff, and naming them correctly, as well.
The best way to avoid this particular problem is to keep your business name registrations current and use those names together with your legal name as required. The corporate law section at Weilers Law is set up to assist you with these needs. The cost is much less than the price of fixing non-compliance later.
If you are acting under a business name, the litigation lawyers at Weilers Law have the necessary knowledge and expertise to help you avoid the pitfalls of section 7 of the Business Names Act, and can work seamlessly with the corporate section on any required compliance steps.
If you are sued by someone not complying with the Act, we will offer sound advice on the consequences and steps that you should take.
What’s in a name? More than just your good reputation. Using the wrong name may be expensive.