Update on Ontario Small Claims Court Changes

Ontario's Small Claims Courts, which are the busiest civil courts in the Province, will be getting considerably busier on January 1, 2010.

As we noted in our December 11, 2009 post, the arrival of the new year will bring an increase in the Court’s maximum monetary jurisdiction from $10,000 to $25,000 and a significant influx of new, larger cases is likely to follow.

The increased Claim limit has been under consideration for quite some time. In November 2007, former Associate Chief Justice of Ontario, Coulter Osborne, who headed the Civil Justice Reform project committee, submitted his findings and recommendations to the Ministry of Attorney General, including a recommended increase in the monetary limit in Ontario Small Claims Courts proceedings.

The recommendations were intended to enhance access to justice for Ontario residents by reducing the legal costs of litigation, and simplifying the prosecution of smaller, civil actions in the Province.

The changes ahead will bring Ontario in line with British Columbia, Alberta, the Yukon and Nova Scotia, all of which have a $25,000 Small Claims Court limit. Saskatchewan, too, will soon follow suit.

Ontario's Small Claims Court is a branch of the province's Superior Court of Justice. Examples of typical claims filed in the Small Claims Court include actions related to:

• unpaid accounts for goods or services;
• unpaid loans and rent;
• compensation for property damage;
• wrongful dismissal of employment;
• damages for personal injuries;
• damages for breach of contract.

The majority of the cases in Ontario's Small Claims courts are heard by Deputy Judges, who are lawyers appointed to preside, part-time, over hearings conducted at the Court.

The imminent raise in monetary jurisdiction will likely lead to a significant increase in the Court's case loads.

According to the Osborne report, 75,041 new proceedings were commenced in Ontario's Small Claims Court in 2005-2006. By comparison, during the same period, only 63,251 new civil proceedings were commenced the province's Superior Courts.

Of those 63,251 Superior Court cases, 6,555 included claims for amounts between $10,001 and $25,000, and would therefore be typical of cases likely to proceed in the expanded Small Claims Court system.

According to the Osborne Committee, the increased jurisdiction limit is likely to result in a need for additional facilities, court staff and judges.

Toronto, for example, has only one Small Claims Court, housed on one floor in a small office building at 47 Sheppard Avenue East, in the city’s Yonge and Sheppard area. According to a recent Ministry of Attorney General press release, however, a new court house is anticipated to be built in Toronto's west end. Whether the new facility will house a Small Claims Court remains unclear.

No plans have been announced yet for the appointment of additional deputy judges to service the expanded Courts, nor have amendments to the Court's Rules and procedures yet been tabled.

Time is running short for the announcement of such changes.

Potential litigants in these "smaller" $10,000.00 to $25,0000.00 claims already face daunting questions on how to proceed:

• In which of the Province's courts should new legal proceedings now be commenced?
• Will it be more cost-effective or strategically wise to simply wait until January to start new claims (so long as no limitation periods will pass in the interim)?
• If a proceeding is commenced today in Superior Court that will be within the future Small Claims limit, will there be a subsequent requirement to transfer courts?
• If an action is commenced today for $10,000.00 in Small Claims Court, will it be possible - or simple - to amend a Claim in January to increase the sum requested?

With little, specific guidance from the Attorney General's office as to the transition ahead, access to justice is not benefiting from a current paucity of information.

The expansion of the Court will have significant procedural and practical implication that must be addressed by current and future litigants - and legal professionals:

• the ability of successful litigants to recover partial or substantial indemnity for their legal fees is significantly reduced in Small Claims Courts. Costs awards in the Court are currently capped at 15% of the value of a claim. As a result, the maximum costs award (i.e., on a $25,000 claim) will be $3,750.00;
• Junior lawyers and articling students will require training in Small Claims Court advocacy. “Firms will have to promote the competency of their articling students to handle these files,” says Joshua Krane, an articling student with Gowling Lafleur Henderson LLP, in his March 2009 Canadian Lawyer magazine article on the pending changes. “Firms that are successful at doing so may reap the benefits of a vigorous and profitable small claims practice.”
• As noted, transitional procedures have yet to be announced to clarify whether there will be mandatory or optional transfer to Small Claims Courts of existing Superior Court actions in which $25,000.00 or less has been claimed. Further, the procedures and costs consequences of effecting such file transfers remain undefined;
• The fate of mandatory mediation in the Court after January 1st is unclear. Mediation has emerged as an extremely effective tool for achieving settlements in many types of Superior Court actions. While Small Claims Courts will continue to require mandatory settlement conferences before Judges and Deputy Judges, these differ in procedure, duration and scope from Superior Court mediations, which are typically convened with private mediators with specific expertise in the subject matter of the claim involved. British Columbia's Small Claims Court Rules provide for differing types of mediation, depending on the amount claimed in a proceeding;
• Amendments will likely be required to Ontario's Rules of the Small Claims Court to expand documentary disclosure obligations and to enable case management of complex cases;
• Questions abound as to whether all Small Claims actions will be treated alike under the new system. Will there be different procedural tiers, determined by the sums in dispute, as is the case in B.C.?

Some concern has additionally been voiced as to whether the Court's contingent of Deputy Judges has adequate judicial expertise and training to address the increased complexity of the higher-value cases that will soon be before the Court.

In a February 2009 article, Sun Media legal columnist Alan Shanoff noted that the new $25,000 monetary limit will likely bring larger and more complicated contract cases, defamation suits, and medical malpractice claims to the Court's docket.

As Mr. Shanoff astutely cautioned, "Certainly, the public deserves a full-time professional roster of judges and proper facilities. Let's not trade one set of problems for another."

- Bill Rogers, Shashi Raina and Garry J. Wise, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net

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