When is this happening?
The Government of Ontario announced in an October 23, 2019 news release that it is increasing the claim amount for the Ontario Small Claims Court. As of January 1, 2020, claims of up to $35,000 can be brought to the Small Claims Court. This is an increase from the current claim amount of $25,000.
Why is this happening?
The government states in the news release that the purpose of this increase is two-fold: to reduce wait times in the Superior Court of Justice, where currently claims over $25,000 must be commenced; and to assist with access to justice as Small Claims Court proceedings generally require fewer resources. Matters in Small Claims Court do not have the same number of procedural steps as compared to the Superior Court, which can contribute to significantly lower costs to the parties involved and therefore allow for greater access to legal recourse.
Can claims started in Superior Court be moved to Small Claims Court?
Employers should be aware that if a claim has already been started in the Superior Court, the litigant could seek to transfer their case to Small Claims Court if the claim falls within the new monetary threshold. This is often applicable when an employee has been successful in finding new employment after starting a wrongful dismissal action, thus reducing the amount of their damages claim. In addition to fewer procedural steps, employers should note that unlike in the Superior Court of Justice, Rule 19 of the Small Claims Court and section 29 of the Courts of Justice Act do not permit a party to be awarded costs that exceed 15% of the amount claimed unless there are special circumstances. This means that in normal circumstances costs would not be awarded beyond a maximum of $5,250 in a claim of $35,000. That said, disbursements in Small Claims Court are often significantly less (i.e., costs to set and action down for trial are $290 in Small Claims Court and $810 in the Superior Court).
With an increased number of claims proceeding at the Small Claims Court beginning on January 1, 2020 as a result of the claim amount increase, the Ontario government has not announced plans for any additional resources or funding to assist with this increase.
Employers should be aware that although this change may reduce wait times at the Superior Court of Justice, without more resources it could increase wait times at the Small Claims Court instead. That said, actions in the Small Claims Court must all proceed to a mandatory mediation, or settlement conference, before a Deputy Judge which allows the parties to discuss meaningful settlement before incurring costs associated with calling witnesses and conducting a hearing.
PH Balance Tips:
Review Current Actions – Employers should review the status of wrongful dismissal actions which have been filed against them in the Superior Court of Justice. In the event the employee plaintiff has commenced new employment, ask to have to have the action transferred to the Small Claims Court for hearing. If the plaintiff refuses and is later awarded a judgment less than $35,000.00, it may be argued that the action continued in the wrong Court and the Employer may argue that costs incurred for procedural steps such as examination for discovery or a Superior Court attendance, which would not have been incurred in the Small Claims Court, are owing by the plaintiff.
Don’t Let the Lower Costs Fool You - Given the lower costs awards, Employers will likely find the lower potential costs awards, in the event you lost, attractive. The cap on fees in Small Claims court compared to the tens of thousands of dollars in costs which are often sought and awarded in Superior Court actions can often result in less of a barrier to achieving an early resolution of an action.
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Please get in touch with any questions you may have about these changes and we would be happy to assist you!