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.