Effective January 1, 2020, the Government of Ontario has raised the monetary threshold for Small Claims Court from $25,000 to $35,000. This means that, as of that date, monetary claims of up to $35,000 will have to be brought to Small Claims Court. Anything above that amount will continue to be adjudicated by the Superior Court of Justice.
In this post, we discuss the good, the bad and the ugly of this change to come and whether it’ll impact the condo world?
What is the government hoping for?
From an “access to justice” perspective, this change appears to be progressive and worthwhile. The goal is to get more cases resolved more quickly under the more liberal and accessible procedures of Small Claims Court, as opposed to the sometimes burdensome and costly procedures of higher courts, such as the Superior Court of Justice (of which the Small Claims Court is a branch).
It also means that more prospective litigants can save precious legal fees by hiring non-lawyer representatives (paralegals, students) or by relying on their own self-representation skills. Of course, the latter comes with much risk, which should be adequately weighed against the possible cost savings.
But will the change lead to more litigation?
I would be interested to see any data to suggest that this will streamline borderline cases (those between $25,000 and $35,000) and not merely create more litigation.
Take a potential litigant with a $30,000 claim. She previously had 4 main options:
- Option 1) file at Superior Court and take on the risks and costs of that legal process;
- Option 2) file her claim in Small claims but only for up to $25,000;
- Option 3) seek alternate means of achieving justice (mediation, negotiation); or
- Option 4) decide it isn’t worth it and not file the claim at all.
Come January 1, 2020, that potential litigant may now file this claim for the total amount as a same claim at the Small Claims Court. This new option may disincentivize a potential litigant from trying Options 3 or 4. [To be fair: Small Claims Court does have mandatory settlement conferences, which can help].
How can an increase monetary limit encourage more litigants?
One of the cooling disincentives of commencing a claim in Superior court of Justice is the risk of facing costs consequences if you are unsuccessful. Indeed, unsuccessful litigants can expect to have to pay 50-60% of their opponent’s legal fees. This reality (at least in theory) should force potential litigants to carefully consider the cost and risk of litigation.
This sobering risk is far less present in Small Claims as the cost consequences are fare more affordable. Indeed, in Small Claims Court, the cost consequence of being unsuccessful cannot exceed 15% of the amount claimed, unless the court finds it necessary to penalise a party for unreasonable behaviour in the proceeding. 15% of the new maximum ($35,000) is $5,250.
By increasing Small Claims costs limit, more expensive cases can be submitted to a jurisdiction that carries a much lower risk of being hit with the opponent’s costs. Stated otherwise, I wonder whether the lower risk of having to pay cost if you lose may in fact encourage more litigants to take their chance in Small Claims Court.
This low risk (which may encourage or embolden unreasonable plaintiffs) also has a negative impact on defendants: some times, it’s almost not worth defending a case if it means that even if successful you will only recover an infinitely small portion of your fees. Some times, when the amount being claimed is low enough, it may make more sense to simply offer to pay a good portion of the claim to make it go away.
With an increased monetary jurisdiction, comes an increased exposure of having to defend unreasonable claims with little chance of recovering your fees.
But is it all bad news? Certainly not! Any efforts by our provincial government to reduce delays in our civil system are to be applauded. Ideally, this change has the intended effects. This is an important discussion worth having and I hope that useful data will be collected to properly evaluate the effects of this change.
What does this mean for the Condo World?
This will have no effect on proceedings under the Condominium Act that remain subject to the exclusive jurisdiction of the Superior Court of Justice . These include, amongst others: disputes over Board turnover (S.43), appointment of Auditors (S.60), Revision of disclosure statement by a purchaser (S.74), Orders to amend the Declaration (S.109), Appointing an Inspector (S.130) or Administrator (S.131), Compliance Orders (S.134) or Oppression Remedies (S.135), or any injunctive relief (orders “to do” or “not to do”) more generally.
It will also not have any impact on the questions over which the Condo Authority Tribunal has jurisdiction – so far only over documentary disputes. On that, we note that whenever (if ever) the CAT’s jurisdiction is expanded to cover monetary disputes (eventually, the CAT’s jurisdiction can be expanded to include those), its jurisdiction will be limited to $25,000 (the old Small Claims limit) unless the province amends the Act or the regulation. It may have made better sense not to have expressly stated a monetary limit to the CAT’s jurisdiction, merely tying it to the jurisdiction of the Small Claims court…. but I digress.
So, as of January 1st, 2020, owners and corporations may be able to bring any monetary dispute of up to $35,000 in Small Claims Court.
For assistance evaluating your risk in filing a claim before the Small Claims Court, please consult your favourite counsel. A brief discussion of strategy or risk may be worth your while.