Small Claims Court Changes May Mean That Debt Collection Will Become Easier

One particularly unpleasant element of running a business revolves around what to do if a customer refuses to pay their accounts. For the past 15 years I have presided as a deputy judge in the Small Claims Court. When I began sitting, the jurisdictional limit of the court was only $1,000, which made the court largely irrelevant from a business perspective. Since then, the jurisdictional limit has arisen significantly; first it was tripled to $3,000, then it was doubled to $6,000, then bumped to $10,000 and now, as of January 1, 2010, it is being jettisoned to $25,000. Most believe that this well used court is about to experience a flurry of increased new activity.

This recent change comes as a result of legislative changes arising from the introduction in the Ontario Legislature of Bill 212 known as the “Good Government Act, 2009.” It contains a number of amendments to the Courts of Justice Act that will affect the administration of the Small Claims Court. The Bill was carried through third reading on December 3, 2009. The amendments related to the Small Claims Court will only come into effect upon Proclamation, which is expected to occur early in 2010.

The amendments which affect Small Claims Court fall into three categories; the jurisdiction of the court, appeal limits, the age limits of deputy judges and contempt proceedings. The most notable of the upcoming changes occurs to the monetary jurisdiction of the Small Claims Court, taking effect January 1, 2010. As mentioned the jurisdictional increase of the court will go from $10,000 to $25,000. The amendments will also allow the Small Claims Court appeal limit to be established by Regulation. This jurisdictional increase should make the prosecution of cases within this monetary limit, much more affordable to the public.

There are also changes that will affect collection procedures, specifically, contempt proceedings. Contempt has always been a political football in Small Claims Court. There has always been a constitutional question as to whether it is permissible for the province to authorize deputy judges to rule on contempt matters. When I first sat on this bench, we had this power. But along the way, it was taken away and given to the higher court. Unfortunately, for practical reasons, that change has not worked well, because the full time Superior Court justices already find their workload taxing enough. Hence they had to deal with the Small Claims Court contempt matters when they could fit it into their schedules. This, for the ever increasingly demanding public, was not often enough.

The amendments re-establish that the Small Claims Court has the authority to preside over contempt proceedings in relation to the failure of a debtor to attend an examination of the judgment debtor, subject to the Rules of the Small Claims Court. The Small Claims Court may find a person in contempt if it is satisfied that, the person was required to attend the examination, the person was served in accordance with the rules of court with a notice to attend the examination, the person failed to attend the examination and the failure to attend was willful. Where the Small Claims Court finds a person in contempt, it can, among other things, now make an order that the person be imprisoned for more than five days. So contempt is being returned to the Small Claims Court. My guess is that this will not be the last word on this topic.

There will now be more structured rules for the appointment and renewal of deputy judges. Deputy Judges currently serve for renewable three year terms. The amendments will require that appointments or renewals for deputy judges aged 65 to 74 will now only be for a term of one year. Where a deputy judge is 63 or 64 years of age, the term of any appointment or renewal will automatically expire when he or she reaches the age of 65. Mandatory retirement for deputy judges will now be imposed at age 75. The amendments will not affect appointments or renewals that are in effect immediately before the amendments come into force. Any renewals made on and after that day will be subject to these amendments.

Before closing, I should mention that the forms for the court will also be changing. The Small Claims Court forms went through a complete metamorphosis several years ago, in an attempt to standardize practices across the province and to make the court more user friendly. As with all change, that metamorphosis was not without its growing pains. It now looks like what’s old is new again. The changes to forms in these amendments seem to bear a resemblance to some of the historical forms that I was more accustomed to in my first years in this court.

It is expected that these changes will dramatically change the activity in the small claims court, already the busiest court in Ontario. The purposes of these amendments are to make the justice system more accessible to the public. These changes will indeed have that effect. There will also be additional pressure put on the court. It will be interesting to see how the public responds.