Three Things You Must Know Before Starting A Small Claims Court Action In Ontario

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Before you start an action in small claims court in Ontario, review this lecture to understand the jurisdiction of small claims court. This lecture explains the monetary jurisdiction, the territorial jurisdiction and the powers of the court.

This lecture is taught by Amer Mushtaq, LL.B., M. Engineering , B.Sc. (Hons.), who is the Principal and Founder of Formative LLP.   Through his YouTube channel, YouCounsel, Amer shares practical advice from his years of legal experience to help anyone access justice and achieve their goals.  Subscribe today to learn more.


Show Notes:


Lecture Slides:

Welcome everyone this is Amer Mushtaq from YouCounsel.

If you are thinking of starting a court action in small claims court there are a few things that you must consider before you do so.  We will talk about 3 important things that you must have in your mind before you commence.  We begin with our usual disclaimer that this course is not legal advice.  If you have any specific questions regarding your case you must contact a lawyer or a paralegal or contact the Law Society of Ontario for a referral.

What are the 3 things that you must keep in mind number? [A] One the monetary limit of Small Claims Court;  [B] Number 2, the location of the court; and [C] Number 3, what other powers does the small claims court have, that you should know before you proceed with your court action.

[A] Monetary Limit: a lot of people already know this; the monetary limit of small claims court is $25,000.00—it used to be $10,000.00 a few years ago.  Then the Ministry of Attorney General increased the limit to $25,000.00. What you want to keep in mind is that $25,000.00 is only the value of the claim – it does not include disbursements.  Disbursements are the cost of running that court action. For instance, when you file the claim in the court you have to pay certain fees.  Those fees are called disbursements.  You may have to serve documents on the other party—you may incur cost.  You may have to prepare documents or book of documents for Trial and you may have binding charges, photocopying charges, faxes and whatnot. Those are all the costs that are associated with the running of the court action.  In court these are called disbursements.  The disbursements are on top of $25,000.00.  There are certain limitations in terms of how much disbursements you can get.  For instance, for a service of a document, I believe the limit is $60.00 for that particular service.  There may be some other limits but the important point that you want to keep in mind is that $25,000.00 does not include disbursements.  You claim disbursements in addition to $25,000.00. Also $25,000.00 does not include other costs; e.g., if you have retained a lawyer or paralegal to pursue your case, and you are successful; you may be able to get some costs on top of your claim. I believe it’s Section 29 of the Courts of Justice Act that prescribes that you can only get costs up to 15% of the value of your claim.  If you get a judgment for $20,000.00, your costs will be limited to $3,000.00.  What you also want to understand about costs, is that there are circumstances in which you can get more costs. The Rules of Small Claims Court (I believe it’s Rule 19) and also Section 29 of the Courts of Justice Act indicate that if the other party has acted unreasonably (and unreasonably could be: prolonging the proceeding improperly, not accepting a reasonable offer that you made under the Rules of Small Claims Court or acted in any other improper way) you can bring it to the attention of the court on completion of trial and before the costs are awarded.  The court may actually impose additional costs against that party as a penalty.  You may be able to get more costs if you are successful in showing that the other party did act improperly.  What you want to keep in mind is that $25,000.00 does not include interest.  The court is also empowered to award prejudgment and post judgment interest.  These are 2 different kinds of interest but those interests could be awarded.  You may claim those on top of $25,000.00.  All in all your claim maybe $25,000.00 but the total recovery may be higher than $25,000.00, depending upon all these costs that you may have incurred in the process of pursuing your court action.

[B] Location: Now the location of the court is an important point. Why? Because if you are commencing a court action in the Superior Court of Ontario, then you can pretty much go to any court in Ontario and commence your Superior Court action.  But when it comes to Small Claims Court you actually do not have that choice.  You have to commence a small claims court action in a specific territorial division—relevant municipality—if that could be understood better.  What are the factors that the court will consider in deciding which court office (which small claims court office) has the jurisdiction? There are 3 things that the court will consider.  1. Where did the events occur?  Let me explain that by way of an example:  Let’s say, you have an office in Toronto and you needed some renovations.  You hired a contracting company whose office is in Vaughan. But they came down to Toronto and completed your project or worked on your project. You had some sort of dispute because of that service.  You’re going to Small Claims Court.  Now the events occurred in Toronto.  Because the events occurred in Toronto, you can go to Toronto Small Claims Court and commence a court action.  You don’t have to go to a court office near Vaughan or in Vaughan Small Claims Court where the defendant is.  You can actually commence it in Toronto. 2. The other option is where defendant lives or conducts business.  In the same example you have the option to go to a Small Claims Court in Vaughan. Just so you know there isn’t a small claims court in Vaughan. I believe New Market has the jurisdiction for a small claims matter for Vaughan. Where ever the defendant lives or conducts business, you can go to a small claims court office in that area. In the area that has jurisdiction and you can commence your court action there or 3. in the nearest court office to where the defendant lives or conducts business.  In our example, for Vaughan you can go to Newmarket which would be the nearest court office—where the court has jurisdiction.  If you, for instance in this example, let’s say you personally live in Brampton.  You believe that it will be easier for you to pursue this court action in Brampton and that’s where you want to commence the small claims court matter.  You are not allowed to do that.  The defendant may object to it and may bring a motion raising this issue that you are not in the appropriate court.  You may be compelled to transfer your matter to the court which has jurisdiction or you may have to restart a new claim in that court.  You want to make sure that you commence your court action in the appropriate court office in the beginning so that you don’t have to deal with any further delays because of location issues.

[C] Powers of the Court: Finally, you want to understand some of the powers of the court and in my experience, I have noticed that a lot of lawyers and paralegals are at times unclear that small claims court has equitable powers.  It does have equitable powers.  A lot of people who have not dealt with small claims court frequently believe that the small claims court does not have equitable powers.  If you’re not clear about what equitable power is, you can watch a lecture that I recorded a few weeks ago—it’s called equitable remedies.  In that I explain what is an equitable remedy and what are those powers that a court may exercise.  In this lecture what I can explain is that small claims court does have equitable powers.  If you require an injunction in a matter where the value of your claim is $25,000.00 or less you can claim for an injunction; you can claim for a specific performance on a contract if the value is $25,000.00 or less; you can have an action for recovery of personal property in small claims court if the value is $25,000.00 or less; you can claim declarations. Sometimes you have a human rights matter that is added to a civil action, it’s not just a human rights matter but added to a civil action and it’s part of a small claims court proceeding, then you may seek the court’s declaration that the party was indeed discriminated against and that’s a declaratory relief that you can seek through small claims court.  All of these powers are available. 

In essence, what you want to understand is that with respect to Small Claims Court powers they are not much different than the Superior Court powers—except that the Small Claims Court deals with matters where the value of those claims are $25,000.00 or less. And so this brings us to our last point which is something that you should consider strategically.  Sometimes if your matter is for $25,000.00 or less you don’t have a choice but to go to Small Claims Court.  In fact, if you go to Superior Court for a matter that is less than $25,000.00 or $25,000.00, you may get penalized for going to Superior Court in terms of when the costs are awarded. In situations where your claim is more than $25,000.00 let’s say you are entitled to claim $30,000.00 or $35,000.00, it’s a matter of strategy whether you would like to pursue your case in Superior Court for $35,000.00 or forego $10,000.00 and go to small claims court.  Some of the things that you may consider is speed in Small Claims Court—the matters proceed much faster than Superior Court.  You can actually have a trial in 8 months, 9 months (within a year)—if you move your matter forward quickly. 2nd component that you want to consider is cost—whether you are represented or unrepresented, your cost in small claims matter may be much less because there are less steps involved in a small claims matter.  Then, finally, the process itself is much simpler.  You can easily represent yourself if you have done your homework and present your case and be successful at Trial.  These are some of the things to keep in mind before commencing a Small Claims Court action. Hopefully this lecture gives you a good understanding before you actually proceed with the small claims court matter.

Thank-you for watching and we’ll look forward to seeing you in the next lecture.

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