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November 11, 2019

Ontario Small Claims Court is Increasing Cap from $25,000 to $35,000

Authors Todd Weisberg and Domenica Moran

Starting January 1, 2020, litigants will be able to bring claims of up to $35,000 in the Ontario Small Claims Court.    

Currently, claims in the Small Claims Court are capped at $25,000 and cases worth more than that must be filed in the Ontario Superior Court of Justice. 

In a news release from the Ministry of the Attorney General, the Ontario government says the goal of increasing the Small Claims Court’s monetary claim limit is to reduce wait times in the Ontario Superior Court.  The Ontario government hopes the change will also increase access to justice, as the Small Claims Court allows claimants to use more affordable representation such as paralegals and law students.     

In addition to these changes, the minimum amount of a claim that can be appealed to the Divisional Court will also increase from $2,500 to $3,500.

These changes will be beneficial to employers dealing with low stakes wrongful dismissal litigation.   At times, employers are tasked with defending wrongful dismissal cases in the Ontario Superior Court that are valued at $35,000, or less, in which the cost of litigation far exceeds the cost of settlement (regardless of the merits of the case).  This is primarily due to the number of procedural steps required before a matter proceeds to trial in the Ontario Superior Court.  These steps include: document discovery, examinations for discovery, mandatory mediation, motions, and attendance at a pre-trial conference.  The Small Claims Court removes a number of these steps and require the parties to attend a settlement conference at no cost to either party.  As a result, litigating a matter in the Small Claims Court is significantly cheaper than litigating a matter in the Ontario Superior Court. 

Raising the cap at Small Claims Court also increases the risk to employees who seek to leverage the cost of litigation in the Ontario Superior Court for the purposes of settlement.  This is due to the Ontario Superior Court’s discretion to award no costs to a successful party if the award properly falls within the jurisdiction of the Small Claims Court (i.e. $35,000 or less, as per the upcoming changes). 

However, litigating a matter in Small Claims Court is not without its own flaws.  Under the Small Claims Court rules, and absent special circumstances, a successful party cannot be awarded costs that exceed 15% of the amount claimed.  Under the new cap, this would mean the maximum amount a party can recover in costs is $5,250.  Even with the costs savings found in litigating a matter in Small Claims Court, a party is likely to incur costs that exceed this amount. 

For employers, the best means to avoid the unnecessary costs of litigating low stakes wrongful dismissal cases remains taking pre-emptive measures to limit the possibility of a dismissed employee commencing litigation in the first place.  Such measures include, but are not limited to, having enforceable termination clauses and crafting creative termination packages. 

The foregoing is for informational purposes only and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyer’s by email or telephone.

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