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Small Claims Court Considerations: Jurisdiction, Procedure and Costs

Small Claims Court Considerations: Jurisdiction, Procedure and Costs

By:

Posted November 22, 2022

In Ontario, the Small Claims Court offers parties a more expedient, cost-effective process for litigating smaller value claims, in comparison to the processes of the Superior Court. The most common consideration for litigants pursuing small claims matters is the monetary cap on claims, however, there are other, lesser known, considerations which should be contemplated prior to making the decision to litigate in the Small Claims Court.

Monetary Jurisdiction

The monetary jurisdiction of Small Claims Court is $35,000.00, in addition to the potential award of interest and costs for legal fees. If a party’s damages exceed $35,000.00, they may still proceed in Small Claims Court, but would have to waive any amount over $35,000.00. It is not uncommon for litigants to waive amounts in order to stay within the Small Claims Court jurisdiction due to its benefits in relation to time and cost.

In contrast, there is no maximum threshold for the Superior Court of Justice, although claims under $200,000 are to proceed under the Simplified Procedure, which tries to somewhat reduce and streamline the process involved.

Procedure

The Small Claims Court involves fewer procedural steps. There is an initial step of preparing a Plaintiff’s Claim, and then filing it and serving it on the Defendants. They then have an opportunity to file a defence, and once they do, the Court schedules a Settlement Conference, which is a without prejudice meeting before a Judge to see if the matter can be resolved. If the matter does not settle at a Settlement Conference, it would proceed to a trial.

The Superior Court process also begins with a Claim being prepared, filed, and served, and then a defence being served by the Defendants. However, it poses a lengthier process, with more procedural steps and formalities. This will require increased preparation time, and more fees for potential disbursements. Trials in Superior Court are often longer, more formal, and involve more preparation. For example, some of the basic materials and steps would include the Claim, Affidavit of Documents, and examinations for discovery.

Cost Award Considerations

While the Small Claims Court has some discretion when it comes to awarding costs to the successful party, cost awards in Small Claims Court are more conservative than in Superior Court. In Small Claims Court, cost awards for legal fees are generally capped at 15% of the total amount claimed or awarded.

The exception to this would be in a case where an offer to settle is made by a party, and is not accepted by the other party, but the party making the offer succeeds at trial in getting a result better than the offer. In that case, the costs could be 30% of the amount claimed or awarded. Still, the small claims avenue will offer litigants a lesser reimbursement of costs, if awarded.

By the same token, the conservative cost awards of the Small Claims Court pose a lesser risk for litigants who are ordered to pay costs of the opposing party, in accordance with the percentages outlined above. This is an important note to recall, as all litigation carries risk, and in the context of Small Claims Court, cost considerations should be two-pronged.

The Superior Court process gives judges greater discretionary power when making cost awards, compared to Small Claims Court. A successful claim will most often result in an order for “partial indemnity costs” which would usually be 60% of a party’s actual legal costs incurred. Higher scale cost awards do occur, usually referred to as “substantial indemnity costs” at 80%, but they are infrequent and require exceptional circumstances.

Ultimately, there is no one-size-fits-all approach. It is up to litigants to determine the court process that is best suitable for their particular circumstances in relation to risk tolerance and personal financial circumstances. Decisions regarding how and in which court claims are pursued should be meaningfully contemplated and, where appropriate, legal advice should be sought in the early stages of decision-making.

This blog post was written by Sarah Antonious, a member of the Commercial Litigation and Estate Litigation teams.  Sarah can be reached at 613-369-0385 or at sarah.antonious@mannlawyers.com.

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