Posted on October 23, 2009 by Chris Jaglowitz

Update on Small Claims Court

As of January 1, 2010, the maximum amount that can be claimed in an action in the Small Claims Court in Ontario will increase from $10,000 to $25,000.

This change, which we first reported here in December 2008, is intended to provide a faster and more affordable option for bringing civil disputes to court. The cost of filing a claim or other documents in Small Claims Court is relatively low, the rules of that court are less complex and the process is normally much simpler and often quicker than in the Superior Court of Justice. Legal fees for small claims proceedings are typically much lower as a result.

It is difficult to predict the effects of the increased monetary limit in small claims proceedings, but there is a strong possibility that a greater number of litigants will bring claims. Condominium boards and managers should therefore be prepared for an increase in the number of claims made by unit owners, service providers and other condo stakeholders and know how to deal with them effectively. 

Because a defence must typically be filed within 20 days of being served with a claim, the manager should notify the corporation’s lawyers as soon as possible after being served with a claim, and have ready all information and documents relevant to the case. In cases covered by an insurance policy, written notice of claims should be given to the corporation’s insurer, and all claims should be disclosed on status certificates and referred to in the annual audit inquiry letters to the corporation’s lawyers.

Condominium corporations can also take advantage of the increased small claims limit to commence their own claims to recover money owing by unit owners and third parties. As always, they should get legal advice to help weigh the benefits and costs of legal proceedings in small claims court as compared to other available options. Often a stern letter seeking compliance or registering a lien against a unit owner is sufficient to obtain your objective.  Get legal advice before posting chargebacks, however, so as to minimize the chance of a claim for a wrongful lien -- These types of claims are becoming increasingly common.

It is also important to remember that lawsuits must be commenced within 2 years of the date the debt became payable or the date that damage occurred, after which time the right to sue is forever lost. As we described in an October 2008 entry (see here), what used to be a 6-year limitation period was reduced to 2 years in 2004.  
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Posted on October 28, 2008 by Chris Jaglowitz

Certainty prevails over fairness when applying limitations law

Before 2004, a person in Ontario who suffered a loss typically had six years within which to commence a civil lawsuit to seek compensation or recover damages for the loss. With the enactment of the Limitations Act, 2002 (“the Act”), the old six-year limitation period was reduced to two years for losses (or "claims") discovered on or after January 1, 2004.

Under the old limitations law, the courts exercised significant discretion as to when the limitation period began to run and whether it could be extended in order to achieve fairness in appropriate cases, such as where a plaintiff’s lawyer failed to issue the lawsuit on time due to a miscalculation or an oversight. This discretion is known as the doctrine of “special circumstances.” While the enactment of the new Act significantly changed the law of limitations, the courts continued to apply the “special circumstances” doctrine in a number of cases. An important June 2008 ruling of the Ontario Court of Appeal has now put an end to that.

In Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469, a case where the plaintiff’s lawyer issued the lawsuit almost two months after the expiry of the limitation period because of an oversight, the Court of Appeal washed away the old doctrine of special circumstances for most claims arising after January 2004 and confirmed the principle that the two-year limit is a firm two-year limit, subject to any specific exceptions in the Act. The Court found that the aim of the new Act is “to balance the right of claimants to sue with the right of defendants to have some certainty and finality in managing their affairs.”

The result of this decision is that where a plaintiff commences a lawsuit after the expiry of the applicable limitation period, regardless of the reason, the lawsuit will most likely be statute-barred and dismissed. It appears that certainty for defendants has prevailed over fairness for plaintiffs.

While some pre-2004 claims are still subject to the old six-year limitation period, most claims discovered between January 2004 and October 2006 are now (as of October 2008) probably already statute-barred. Parties with claims discovered in 2006 and 2007 are in serious danger of losing their right to sue, as is anyone that does not understand that a lawsuit must be commenced within two years of discovering a claim.

The lesson: Carefully consider whether your condo might have claims that need to be dealt with and move them forward promptly. Incoming condo boards or managers need to get up to speed immediately upon taking office and determine whether any claims need to be acted upon and to do so quickly.

The limitations clock is ticking.

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