Ontario makes changes for small claims court and the rules of simplified procedure: What could This mean for employers?

The Ontario Ministry of the Attorney General recently announced a number of significant changes regarding matters proceeding in Small Claims Court as well as those proceeding under Rule 76 of the Rules of Civil Procedure ("Simplified Procedure"). These changes will come into force on January 1, 2020 although the effects, in some cases, may be felt immediately.

Changes to Claim Limits

The most notable changes relate to the upper limit for claims under these two regimes. The maximum monetary claim permitted in Smalls Claims Court was raised from $25,000 to $35,000 while the claim limit for Simplified Procedure was increased from $100,000 to $200,000.

It is noteworthy that plaintiffs with outstanding actions that have already been filed under a different regime will be permitted to seek transference of these actions to either Small Claims Court or Simplified Procedure if the claim amount falls under the new threshold. For example, a $180,000 claim previously filed in Superior Court under Ordinary Procedure might now be transferred to Simplified Procedure.

Additional Changes

Other changes with respect to Simplified Procedure were also announced. These changes include:

• limiting cost awards to a maximum of $50,000, and limiting disbursements to a maximum of $25,000, both exclusive of HST;^[1]
• increasing the time allowed for oral examinations for discovery from two hours to three hours per party; and
• limiting the duration of trials to a maximum of five days.

Analysis

These changes are clearly intended to increase access to justice for individuals without the resources or the capabilities to litigate. It is no surprise that many potential claimants with smaller value claims are reluctant either to commence an action, or to pursue litigation beyond a certain point, due in large part to the complexity, time and cost of the process.

Litigation in Small Claims Court and, to a lesser extent, under the Simplified Procedure, is simpler, less expensive, and more expeditious. As a result, these changes may encourage more individuals to aggressively pursue a claim and even to see the litigation process through to completion. In this regard, plaintiffs will now be able to rely on the Simplified Procedure in pursuit of a claim without having to accept a $100,000 limit on their potential damages. Further, limits to trial length and cost awards reduce a plaintiff's time commitment and potential liability in the event they are unsuccessful in their claims. It is likely that this will result in more matters proceeding deeper into litigation and eventually all the way to trial.

Practical Implications for Employers

It is likely that areas such as commercial litigation will be largely unaffected by these changes. Most litigation in these areas relate to claims worth significantly more than $200,000 so the changes will have little practical impact on many litigators or their clients. The effect on employment law, however, could be more significant.

The majority of employment-related claims, particularly wrongful dismissal claims, seek damages in the lower end of the litigation spectrum. It is also true that the vast majority of employment claims settle well before trial, often shortly after the filing of pleadings (if not earlier). These two facts are clearly connected. The lower value of the claims means it often makes little sense for the parties to go through a complex litigation process. The changes to the Small Claims Court and Simplified Procedure processes may spark an increase in employment claims being filed.

The changes may also result in an increase in employee plaintiffs being willing to see the claim through to trial. The Simplified Procedure changes seem particularly impactful in this regard. Doubling the potential damages claim and limiting the potential cost and time associated with the process seems likely to make more employees consider a trial to be worth the risk and investment. Employers may find themselves facing more aggressive demand letters from plaintiff counsel as well as more willingness to simply file a claim rather than engage in early-resolution negotiations.

Given the potential impact, it may be time as an employer to re-evaluate the way in which your organization responds to and addresses potential or actual disputes with employees. Seeking appropriate legal advice before a disagreement becomes a dispute may become more important than ever in the face of the new procedural landscape. A member of our Employment, Labour and Equalities group is available to assist.

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