Samantha Bogoroch

Government increases Small Claims Court limit to $35,000: What does this mean for businesses?

By Samantha Bogoroch

On October 23, 2019, the Ontario government announced that for the first time in a decade, it will increase the Small Claim Courts limit to $35,000.

Effective January 1, 2020, the Small Claim Court will adjudicate claims up to $35,000. Currently, any claims over $25,000 must proceed through the Superior Court of Justice, where it can take years before ever getting to trial. Litigating in the Superior Court, one of the busiest courts in Canada, is expensive, time-consuming, and, as a result, prohibitive to many.

Take, for example, large businesses that have claims for damages, unpaid accounts, or unpaid rent for $30,000-$45,000. These businesses often face a dilemma: Do they pursue their claim in the Superior Court of Justice or reduce their claim to $25,000 to bring it within the Small Claims Court? If they wish to obtain a quicker resolution, they will reduce their claim and commence their action in the Small Claims Court. If they choose to sue for the full amount owing and go through the Superior Court, they are looking at around a two-year wait until trial and will have spent almost as much in legal fees as the claim itself is worth. As a result, companies are often in a predicament: Do they pursue their rights fully or take an initial loss in order to expedite the process? This is ultimately a business decision and one that businesses should not have to make.

With the new amendments, corporations will be in a better position to pursue their rights and obtain remedies, whether it is for recovering a loan or suing for damages or unpaid invoices. In the Small Claims Court, litigants are not required to file affidavits of documents, go to examinations for discovery, or attend mediation (which is mandatory in Toronto, Ottawa, and Essex). Without these added processes, Small Claims Court cases are faster, less costly, and often resolved within a year. Although claims that are under $100,000 must proceed through the Simplified Procedure, which can expedite the litigation process, the Simplified Procedure still requires all of the same steps as any ordinary Superior Court action.

For those businesses that commenced actions in the Superior Court, they will be able to transfer their claims to the Small Claims Court, so long as the action falls within the $35,000 limit. And for those that brought their claims in the Small Claim Court, but reduced their claim to fall within the $25,000 threshold, they should be able to amend their claims.

The new monetary limit will certainly put businesses in a better position to pursue their rights. Hopefully, it will also reduce the back-log in the Superior Court, with many cases being transferred out of the Superior Court and into the Small Claims Court. This allows court resources to be applied to other, larger cases. Effective January 1, 2020, corporations and individuals alike will have the opportunity to pursue actions and recover when they otherwise would have been disinclined from doing so.

There are 77 Small Claims Courts across the Province. The Small Claims Court handles half of all civil claims, and in 2018 alone, 55,782 proceedings were commenced in the Small Claims Court.

If you have any questions or would like information on what is involved in commencing a Small Claims Court action, contact Samantha Bogoroch at sbogoroch@mindengross.com.

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