As of January 1, 2020, Ontario will increase the value of claims that can be brought before the province’s small claims court. Soon, the maximum claim that can be filed will increase from $25,000 to $35,000.
Small claims court is a branch of the Superior Court of Justice that hears civil disputes. If a person has a claim that exceeds the maximum limit for small claims court, they need to pursue the case through the Superior Court of Justice or go through small claims court and limit the amount of the claim.
Ontario’s intent is to make it “faster, easier, and more affordable to settle claims,” while trying to alleviate some of the backlog at the provincial Superior Court of Justice, which the province notes is one of the busiest courts in Canada.
Litigation through the Superior Court of Justice process can sometimes take years, requires the assistance of a lawyer and has a much more complicated procedural process than small claims court.
Small claims court files by comparison can proceed much more quickly to trial, and paralegals or law students can provide representation, which can be more cost effective. However, many people at small claims court represent themselves.
Alberta’s equivalent of small claims court (called provincial court) increased its maximum claim amount a few years ago from $25,000 to $50,000 for civil claims, and the B.C. small claims court hears cases involving claims from $5,001 to $35,000. It’s difficult to make comparisons across provinces because of varying factors such as population size, number of practicing lawyers, volume of commercial activity, judicial staffing and court resources.
In light of the challenges people face resolving their issues through Ontario’s judicial system, this is a step in the right direction (albeit a small one) because it will allow people with a wider range of claims to access a more streamlined and cost-effective court process. For example, small claims court does not require many of the formal steps seen in the Superior Court of Justice, such as discovery or mandatory mediation (although there is a settlement conference option), and allows parties to proceed to trial more quickly. This simpler process, the option to be represented by paralegals or law students, and the possibility of self-representation can make small claims court financially feasible.
It’s difficult to predict the effect of the increased maximum on Ontario’s court system. It is not clear whether the number of existing cases with claims between $25,000 to $35,000 diverted to small claims court will lessen the burden on the Superior Court. Are there enough cases in this range to have a significant impact? If Ontario small claims courts do face a marked increase in volume, will they be adequately resourced to continue moving cases along quickly?
It will also be interesting to see whether there is an uptake in litigation as a result of the maximum limit increase. For example, people with a claim valued at just over $25,000 may have been dissuaded from pursuing their case through Superior Court because of the length of proceedings and high legal costs, and therefore may have chosen not to litigate altogether. As of January 1, 2020 there will not be the same disincentive.
The financial implications of losing in Superior Court means that a party can end up paying 50 to 60 per cent of the other side’s legal fees (in addition to their own), which can also serve as a disincentive for bringing a claim. On the other hand, in small claims court, the unsuccessful litigant can generally expect to pay about 15 per cent of the amount claimed (which will be a maximum of $5,250 in January 2020) with increased costs only awarded if a judge believes it would be in the interests of justice to penalize a party, or, because the party behaved unreasonably.
Some commentators are concerned that small claims court does not impose sufficiently high penalties for meritless litigation, allowing vexatious litigants to drown their opponents in legal fees. Vexatious litigants are generally individuals who bring multiple frivolous proceedings, usually against the same defendant, often with the intent of wearing down the other side.
One case from 2018 where a condominium unit owner brought multiple, overlapping suits against his condominium corporation for the production of records (including accounts receivable ledgers, bank statements, proxies, and lists of all the condominium unit owners) resulted in the condominium spending $158,000 in legal fees to defend the claims. The deputy judge in that case dismissed the condo owner’s claims and found the plaintiff had engaged in unreasonable behaviour during the proceedings, significant enough to result in an increased costs award of $21,270. While the costs award was precedent-setting for small claims court, some legal practitioners are concerned the case demonstrates that small claims court doesn’t provide sufficient deterrents to vexatious litigants.
The increase to the maximum monetary limit in small claims court will expand the physical accessibility of the court system for some people, but there is undoubtedly more to do to increase access to justice. As noted by the Law Commission of Ontario:
“increasing access to justice may mean ensuring physical accessibility to the courthouse, simplifying procedural rules, using plain language in a statute, explaining what the law means on the internet, provision of translation, dispute resolution other than through the courts, legal aid and similar steps to removing barriers of various kinds. A more comprehensive understanding of access to justice goes beyond the legal system to encompass efforts to assess and respond to ways in which law impedes or promotes economic or social justice, for example, recognizing the interrelationship of these systems. In short, access to justice may involve steps to diminish substantive injustice in society at large.”
Claudia Pedrero is a lawyer with Iler Campbell LLP where she works on a range of governance, human rights and housing issues for non-profit clients. Iler Campbell LLP is a law firm serving co-ops, not-for-profits, charities and socially-minded small business and individuals in Ontario.
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