Do I have a Small Claims Court Case?
Three things you should consider before suing in small claims court
Before you start a lawsuit it is always a good idea to seek out a legal representative and obtain an initial consultation to determine if you have a good case or not. Because litigation is a very serious business the last thing you want to do is start a lawsuit only to later find out later on that there are problems with certain aspects of your case. In order to help prospective litigants in this regard it is not uncommon for legal professionals to provide a free initial consultation to determine if there is a viable case or not. To that end, there are generally three things we look at whenever a prospective client calls us about suing in the Ontario Small Claims Court: Is a case winnable; Is it collectable; and, is it affordable to retain us.
This is the most difficult aspect of assessing a case. In the Ontario Small Claims Court there are dozens of statutes and legal principles that we must be familiar with in order to provide an initial assessment. They range from simple relatively simple things like limitation periods and the court’s jurisdiction to common legal principles like quantum meruit and caveat emptor to more complex situations involving contract principles, applicable statutes like the Consumer Protection Act or rights and remedies found in equity.
What an experienced legal representative will do is listen to the fact situation of your case and then apply the applicable legal principles to it. Here are some of the things that a legal professional may look for:
Is it Within the Court’s Jurisdiction
The Ontario Small Claims Court has limited powers relatively to the Ontario Superior Court of Justice. It can really only do one of two things:
1. Make an order for the payment of money up to the court’s monetary jurisdiction which, as of January 1, 2020, is $35,0000.
2. Order the recovery of possession of personal property valued at $35,000 or less.
If a prospective litigant is looking for anything other than these two remedies than the Small Claims Court may not be the proper forum. It should be noted that even if a claim is for the payment of money there are still certain types of claim that the Small Claims Court cannot hear. Some common examples are:
- Unpaid rent for a residential tenant still in possession of a rental property.
- Damage to car involved in an accident with another car on a public roadway.
- Common law termination pay after obtaining an order from the Ontario Labour Relations Board.
An experienced legal representative will immediately know if your case is one that the Small Claims Court could theoretically hear or not.
In addition to the court’s legal jurisdiction, the question may arise if the case can be heard within the court’s geographical jurisdiction because there are rules respecting that. A claim must be filed in the jurisdiction where either the cause of action arose or where the Defendant resides. Consequently, and for example, a case involving a breach of contract in Quebec with a business in Quebec properly belongs in that province even if the prospective Plaintiff is in Ontario. Knowing where a cause of action occurred is not always a simple and straight forward matter but one that a legal professional can help with.
Is it Within the Appropriate Time Limit
In Ontario there is a legal time limit to commence a lawsuit from when a cause of action occurred (or, more precisely, when litigation would be an appropriate remedy). This is known as a statute of limitations. In Ontario, under the Limitations Act, the basic limitation period to commence a lawsuit is two years after which one cannot bring a lawsuit.
Like with many things legal, there are certain exceptions such as incapacity, promissory estoppel, and acknowledgement of a debt. Again, an experienced legal professional will be able to determine if you are still within the appropriate time limit to start a lawsuit.
What is the Claim About
Once it is established that a claim can theoretically be filed in the Ontario Small Claims Court the question then becomes what is the claim about. There are over a dozen broad categories of claims commonly heard by the court some of which are as follows:
- Home renovations
- Real estate transactions
- Unpaid invoices
- Consumer debt
- Personal loans
- Subrogated insurance claims
- Employment law
- Professional malpractice
- Breach of contract
- Consumer Protection Act
- Trucking law
- Damage to property
- Personal injury
Within each category there are generally legal principles and statutes that are specific to it. For example, in employment law there not only exists the Employment Standards Act but also the court’s common law principles as they relate to employment. The role of the legal professional is to listen to the fact situation and apply the category-specific law to it in order to make a determination as to the strengths and weaknesses of the case.
If a case is determined to be winnable then the legal professional will turn their attention as to whether or not a claim is collectable. What this means, in broad terms, is that assuming a case does not settle and a Plaintiff takes a case to trial and wins a judgment how is the Plaintiff going to collect on the judgment if the Defendant does not pay voluntarily.
During an initial consultation, a legal professional will have some means to help determine if a judgment is going to be collectable or not and the prospective client may also have some information that can help in that regard. If the Defendant is an individual some of the things to look for are whether or not they own a home and have a job. If they have neither, and that is unlikely to change, then a judgment may not be collectable if it comes to that. In some cases, an individual may also be “judgment proof” meaning that what little assets they have cannot be touched and their income is exempt from enforcement (e.g. Ontario works, ODSP, pension, etc.).
If a Defendant is a business then the size and success of the business become factors. Generally speaking, the bigger the business the better the chances of collecting on a judgment.
In some cases, officers of corporations may be able to be sued personally. In such instances, one would then again look to the assets and income of the individual.
And just because a case may have poor prospects of collectability it may still be worth while to at least commence a lawsuit and see how a Defendant responds. If they choose to settle immediately, which is one of their options, then collectability may no longer be an issue.
The last thing that a legal professional should look at when assessing a claim for the first time is whether or not it is cost-effective to retain them. Generally speaking, the Ontario Small Claims Court can award a successful party up to 15% of the claim amount towards their legal fees. On a $35,000 claim this works out to $5,250.
The reality, however, is that most cases do not go to trial but rather settle at or sometime after a settlement conference. In such situations, a Plaintiff may need to waive some or all of their legal fees in order to reach a resolution with an opposing party. Consequently, a legal representative should discuss their fee structure with a prospective client to help them make up their mind. It does not make any sense to spend $2,000 in legal fees to recover $2,000 in debt. Conversely, it may make sense to spend $2,000 in legal fees to recover $10,000 or more in debt.
THE FINAL WORD
It should be noted that providing an assessment is an ongoing process. As more information and differing narratives become available to the legal representative the assessment of the strengths and weaknesses of case may change for the better or for the worse. This should not be interpreted as a failure of the legal representative but rather reflective of the reality that a legal representative during an initial consultation is only starting out with limited information from one side of the legal dispute.
An experienced and confident legal representative will not be shy in revising their assessment if circumstances warrant it and the client will be all of the better for it. Consequently, do not become critical of your legal representative should that happen.
If you’re looking for more information or further assistance on starting your legal action, you can schedule a free telephone consultation with one of our paralegals to discuss the ways in which we can assist you in collecting your debt. Click here to schedule your free consultation today!