Ontario Small Claims Court is Increasing Cap from $25,000 to $35,000

Ontario Small Claims Court is Increasing Cap from $25,000 to $35,000 Malcolm MacKillop Part II

The Small Claims Court removes a number of these steps and require the parties to attend a settlement conference at no cost to either party. As a result, litigating a matter in the Small Claims Court is significantly cheaper than litigating a matter in the Ontario Superior Court.

Raising the cap at Small Claims Court also increases the risk to employees who seek to leverage the cost of litigation in the Ontario Superior Court for the purposes of settlement. This is due to the Ontario Superior Court’s discretion to award no costs to a successful party if the award properly falls within the jurisdiction of the Small Claims Court (i.e. $35,000 or less, as per the upcoming changes).

However, litigating a matter in Small Claims Court is not without its own flaws. Under the Small Claims Court rules, and absent special circumstances, a successful party cannot be awarded costs that exceed 15% of the amount claimed. Under the new cap, this would mean the maximum amount a party can recover in costs is $5,250. Even with the costs savings found in litigating a matter in Small Claims Court, a party is likely to incur costs that exceed this amount.

For employers, the best means to avoid the unnecessary costs of litigating low stakes wrongful dismissal cases remains taking preemptive measures to limit the possibility of a dismissed employee commencing litigation in the first place. Such measures include, but are not limited to, having enforceable termination clauses and crafting creative termination packages.

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