News & Views

Small Claims Court or Superior Court: Where to Begin?
October 15, 2018

Small Claims Court or Superior Court: Where to Begin?

Written by Robert A. Izsak

In 2007, the Civil Rules Committee requested a report on steps that could be taken to streamline procedures in civil litigation with a view to increasing accessibility, reducing costs and reducing delays.

In November 2007, the Honourable Mr. Justice Coulter Osborne produced the “Osborne Report” which included recommendations for changes to the civil procedures.

The Report recommended an increase in the jurisdiction of the Small Court to $25,000 which recommendation was implemented. However, to this day, many people, including lawyers, are unaware that there is no rule which requires a case to be commenced in Small Claims Court where the balance claimed is less than $25,000. Accordingly, a Plaintiff who is seeking payment of an amount less than $25,000 may commence his/her claim in the Superior Court of Ontario (the “Superior Court”).

There are pros and cons as to the choice of venue which must be taken into account when the amount claimed is less than $25,000. It should be noted that the jurisdiction of the Small Claims Court is limited to actions for the payment of money or the recovery of personal property where the balance in dispute is less than $25,000. More complex proceedings seeking injunctive relief or declarations of the Court, to name only a couple of examples, can only be brought in the Superior Court. As such, simple contract cases including unpaid invoices for services provided or goods purchased represent the majority of cases heard in Small Claims Court.

Representation

For the most part, in order to engage in proceedings in Superior Court, a party ought to be formally represented by a lawyer. A corporation that is a party to proceedings in Superior Court must be represented by legal counsel. Conversely, in Small Claims Court, parties are often unrepresented or in some cases, parties will retain a paralegal to represent them, as opposed to a lawyer. A licensed paralegal is permitted to fully represent parties in Small Claims Court, however a paralegal cannot attend to make submissions in Superior Court.

Cost

The cost structure associated with proceedings commenced in Superior Court is considerably higher than for proceedings commenced in Small Claims Court. There are rules applicable to both proceedings which provide that the losing party must pay, at least a portion, of the legal costs incurred by the winning party. In Superior Court, legal costs will often be incurred in the tens of thousands of dollars to fully litigate an issue and as such, litigation carries a real risk of financial loss particularly in the case of a loss, where the losing party must pay, not only their own legal costs but those of the victor as well.

In Small Claims Court, even in circumstances where a lawyer or paralegal represents the parties, the legal costs that can be awarded to the victorious party are severely curtailed by the Small Claims Court rules. As such, while the possibility of receiving a large costs award is significantly reduced in Small Claims Court, similarly, the risk of loss by way of an adverse costs award is considerably less.

As noted above, when a Plaintiff commences a Claim in Superior Court, when the amount claimed is less than $25,000 (i.e. the Claim could have been brought in Small Claims Court) the costs awarded to the Plaintiff if successful, will ordinarily be restricted to the lesser cost structure applicable to Small Claims Court proceedings, based on the rules set out in the leading cases on this issue and the practices adopted by the court registrars.

Efficiency

There are key differences when it comes to the efficient and timely completion of matters as between the two courts. The overwhelming majority of cases are either settled prior to trial or are otherwise disposed of by way of a Default Judgment, which occurs in situations where the Defendant does not serve or file a Statement of Defence.

For disputes involving simple contracts, the Small Claims Court can provides a quick and efficient means to proceed to a full trial of the issues. After pleadings (Claim and Defence) are exchanged, the matter will then proceed to a settlement conference within weeks or months thereafter and if the matter cannot then be resolved, the matter can be set down for trial and most Small Claims Courts in Ontario are scheduling trials within two to four months after the matter has been set down. Conversely, contested litigation in Superior Court will usually take considerably longer to work through the entire litigation process, which will include discoveries, with matters proceeding to trial in a time frame that is usually measured in years.

In respect of matters that are anticipated to be undefended, there are some notable advantages to proceeding in Superior Court. Supporting documents are not required to be appended to the Claim for it to be issued in Superior Court. Whereas, in Small Claims Court, the registrar, will not issue the Claim if the supporting documents are not included. Furthermore, the overall process to obtain Default Judgment can be considerably quicker in Superior Court.

Conclusions

In circumstances where the outstanding balance is less than $25,000, the choice of venue may have a large impact on the Plaintiff, as to the costs of litigation, the risks associated with litigation and the speed and efficiency by which the matter is ultimately determined or resolved. The decision as to choice of venue must be carefully considered between lawyers and their clients prior to entering the litigation arena.

If you would like additional information, please feel free to contact Robert A. Izsak directly at rizsak@fijlaw.com or at 905 763 3770 x211.

*The material provided in this article is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.

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About the Author:

Robert Izsak, is a respected leader in the debt recovery sector. Combining a systematic approach with a sensitivity to the individuality of debtor issues, Rob provides unrivalled collection portfolio management and litigation support to financial institutions and large commercial enterprises.

Ontario Court of Appeal: Solar Power Network Inc. v. ClearFlow Energy Finance Corp.
September 19, 2018

Ontario Court of Appeal: Solar Power Network Inc. v. ClearFlow Energy Finance Corp.

Written by Amanda Maio

On September 4, 2018, the Court of Appeal released its decision in Solar Power Network Inc. v. ClearFlow Energy Finance Corp., 2018 ONCA 727. At the core of the dispute was a term in the loan agreement between the two parties that required Solar Power to pay a “discount fee” of .003% of the outstanding loans on the repayment date, and for every day thereafter, while the loan remained outstanding. Solar Power contended that the agreement was in contravention of Section 4 of the Interest Act which requires that “if an agreement provides for interest at a rate for any period less than one year, the agreement must include an express statement providing an equivalent annual rate.” In the event this requirement is not complied with, the interest in the loan is capped at 5%. Justice Thomas McEwan of the Superior Court of Justice held that the agreement did not meet the requirements as set out in Section 4 and ClearFlow was only entitled to interest at a rate of 5% per annum. The Court of Appeal determined that Justice McEwan erred in his finding.

An important aspect of this decision is embedded in the Courts discussion on the use of formulas and Section 4, in which the Court of Appeal affirmed that the use of an annualizing formula in loan agreements can satisfy the requirements as set out by Section 4 of the Interest Act.I It is likely that this decision will, if it has not already, disseminate a feeling of relief among the lending community as widespread practices used in lending documentation have now been recognized by the Courts.

This decision is an essential reference for lawyers handling complex and sophisticated loan transactions going forward. 

If you would like additional information, please feel free to contact Amanda Maio directly at amaio@fijlaw.com or at 905 763 3770 x209.

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*2018 ONCA

*Ontario Court of Appeal Releases its Decision in Solar Power Network Inc. v. ClearFlow Energy Finance Corp. by Practical Law Canada Finance (Thomson Reuters - Practical Law; September 10, 2018).

*Interest Act R.S.C., 1985

*The material provided in this article is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.


About the Author:

Amanda Maio, focuses primarily in the area of commercial litigation. Through the continued mentorship and guidance of the experienced litigation lawyers at FIJ, Amanda works with both large financial institutions and individual clients to support their litigation needs.