As of January 1, 2020, the Ontario Small Claims Court, a branch of the Ontario Superior Court of Justice, has increased its monetary jurisdiction to $35,000.00. Plaintiffs can now seek money damages for claims up to $35,000.00, an increase from the original $25,000.00 limit. As a result, the stakes of commencing an action become higher for parties, particularly for self-represented litigants. While Small Claims Court allows plaintiffs to efficiently resolve matters through a less formal process, seemingly small mistakes could have a devastating impact on your overall case, particularly if you are faced with a cost penalty.
Below is a list of the six common mistakes self-represented parties make in Small Claims Court, as well as tips to assist parties while they navigate the legal system:
- Plaintiffs May Not Have Standing
- Failing to Mitigate Damages
- Seeking the Wrong Remedy
- Failing to Set Reasonable Expectations for Compensation
- Refusing to Settle
- Failing to Seek Independent Legal Advice
The single-most important aspect to every case is whether you have “standing”. The first question to ask yourself in any potential action is whether there is a sufficient connection between: (a) the party you wish to sue/enforce against, and (b) the harm you have suffered.
Consider the following example: You have hired a 21-year old electrician, Robert, to carry out work in your kitchen. Robert causes an electrical fire in your kitchen, which causes significant damages to your home. Later on, you discover that Robert has no assets, is self-employed, and lives with his parents.
While you may have a claim against Robert, you do not have a sufficient connection between: (a) Robert’s parents, as he has no assets, and (b) the damages to your kitchen. In this case, you do not have standing for a claim against Robert’s parents, and could suffer a cost penalty if you include them as defendants in the action.
In order to recover their full civil claim in court, a plaintiff has a duty to mitigate their damages. This means that an injured party must takes steps to rectify, improve or repair their damages/injuries, and recover the costs later. The rationale behind the principle of mitigation is to dissuade plaintiffs from allowing their damages to escalate substantially by failing to take any remedial steps.
Consider the following example: You have hired a contractor to install a brand new in-ground pool in your backyard in spring. You spend your summer months enjoying the pool. By the end of summer, you notice that there is a rip in the pool liner. You contact the installer and he refuses to take responsibility. Instead of taking steps to fix the repair or source other contractors to assist, you spend two years fighting with the installer to recover the costs of the rip. In the meantime, the tear becomes a large hole and compromises the integrity of the entire pool.
What would have been a relatively minor repair, has now turned into a $20,000.00 claim. Under most circumstances, by failing to mitigate, the court will only award you damages for the repair of the rip, as you are expected to hire another contractor to carry out the repair, and seek damages for the cost. In this case, you would be responsible to pay for the repairs on the pool, even if the initial rip was not your fault.
Traditionally, the Ontario Small Claims Court will only award damages as a remedy for a civil claim. This means that if your claim reaches a trial, you will only receive money to compensate you for your loss, as opposed to injunctive relief, which can include freezing assets or ceasing an action, or declaratory relief, which can include an order to take an action, such as moving a fence.
Consider the following example: Your neighbor has decided to start a rock band. The band plays loud music in the garage all night. You have complained to the City, and even though the band has been fined, they continue to play and you are unable to sleep. You start an action for claim in nuisance. In this case, the court will quantify of your claim based on a number of factors and award damages accordingly. The Court cannot order that the neighbor stop playing music, as this would be considered declaratory relief. The Small Claims Court can award damages, which are quantified based on the loss of enjoyment of your property. Under most circumstances, the Court cannot stop the music from playing through a court order.
Another crucial element to any civil claim is to determine what claims are compensable. The principle of tort law and contract law is to place the injured party in the position they would have been, but for the tortious conduct or contract breach. In these cases, you must assess which aspects of your claim are compensable and which aspects could be considered “double recovery” or too remote.
Consider the following example: You have ordered a car part online, which was required to operate your vehicle. The manufacturer failed to send you the correct part. As a result, you were unable to get to work. By failing to get to work on time, you were demoted and sustained a loss of income. In this circumstance, while there is a tenuous connection between the car part manufacturer’s breach of contract and your loss of income, the court would likely find the claim for loss of income too remote and not compensable in law. It is important to set reasonable expectations on the quantification of your claim; the Court will only compensate damages that directly flow from the tortious action or breach of contract.
Other common claims that are not compensable for self-represented parties include the time spent preparing your claim, and pain and suffering for having to litigate your own case.
Parties are neither obligated to settle their claims outside of court, nor is settlement always the best option. However, refusing to settle your claim on a reasonable basis can have serious cost consequences down the line.
In Small Claims Court, you will be given the opportunity to argue your case in front of a Deputy Judge at a settlement conference. During this crucial step in your litigation, the Deputy Judge will provide both parties with their opinion on the case, and often provide a reasonable prospect for settlement. By refusing to settle with the opposing party, you may face significant cost consequences, particularly if the opposing party has legal representation.
Under the Rules of Small Claims Court, a successful party can recover up to 15% of their claim in legal costs. For example, you have a claim for $20,000.00 and you are successful at trial. If you are represented, you can recover an additional $3,000.00 in legal fees, plus any disbursements you have incurred. However, under Rule 14 of the Rules of Small Claims Court, if you send a “with prejudice” offer to settle for $15,000.00, and you were awarded $20,000.00 in court, you now have a claim to recover 30% of your claim in legal fees, or $6,000.00. The rationale behind this principle of cost awards is to encourage parties to reach reasonable settlements.
Consider this situation in the reverse: you are a self-represented party and the defendant has retained a lawyer. You have sued the defendant for $20,000.00 and they offer to settle your claim for $5,000.00. You refuse to settle. At trial, the Court finds that you have not established your case on the evidence. You lose. Not only have you lost your case, but you now may have to pay an additional $6,000.00 in legal fees, plus disbursements, to the defendant.
When discussing settlement with someone who has wronged you, it can be very difficult to keep emotions out of the discussion. However, keeping the cost provisions in the Rules of the Small Claims Court in mind when discussing settlement can save you significant time and money down the line.
The Small Claims Court offers a benefit to those with minor claims or those who do not wish to retain a lawyer. The process is expedited and less formal, which allows individuals to access justice without the assistance of a lawyer. However, as the monetary jurisdiction of Small Claims Court continues to rise, the cost consequences become potentially devastating for unsuccessful parties.
If you are unable to obtain representation, it is crucial to at least obtain a legal opinion on your case. A legal opinion at the onset of your claim could save you thousands in the long run, and could also provide you with vital procedural information to assist you with your file.
Please do not hesitate to contact me to discuss matters covered in this post.
Associate – Personal Injury and Litigation Law Groups
Disclaimer: This article is provided as an information resource. This article should not be relied upon to make decisions and is not intended to replace advice from a qualified legal professional. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. Please note that this information is current only to the date of posting. The law is constantly changing and always evolving.