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October 6, 2014

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Page 6 OctOber 6, 2014 • Law Times www.lawtimesnews.com COMMENT Base small claims jurisdiction on complexity, not monetary limit By artem orlov For Law Times espite fairly recent changes to the mon- etary limit of the Small Claims Court, de- bate continues over the nature and extent of its jurisdiction. While the civil justice reform report by former Ontario associate chief justice Coulter Osborne in 2007 addressed the problems of monetary jurisdiction in the Small Claims Court, rights and representation in appeals from its decisions, jurisdiction to grant equitable remedies, and the appointment of judges, it's time to consider further changes as well. The current monetary limit of $25,000 imposed on the Small Claims Court's jurisdiction raises policy questions. What criteria does it take into account? Why is the limit $25,000 but not $26,000? An artificial, purely monetary restraint causes numer- ous problems: litigants attempt to divide the claim to fall under the monetary jurisdiction limit; claimants give up legitimate demands for recovery of monies that exceed $25,000; businesses must limit the price of goods sold or services rendered to $25,000 in order to avoid the lengthy nature of a trial before the Superior Court of Justice; and litigants don't have access to specialization or expertise in more complex areas of law. A combination of criteria related to a monetary thresh- old and complexity of the claim could better streamline the Small Claims Court. The Small Claims Court should resolve only contractual disputes regarding the payment of money or the return of property. Torts and complex contractual cases should be the domain of the Superior Court. Legal theory outlines the criteria for the separation of relationships that belong to different domains of law: the subject matter of the relationship, such as property, marriage or crime; the parties involved, such as natural persons, legal entities or states; and the content of the re- lationship when it comes to the rights and obligations of the parties (meaning the legal content) and their actual conduct (meaning the factual content). Ninety per cent of civil matters before the Small Claims Courts are purely contractual in nature and more than half of those contractual matters are simple debt col- lections, according to an article published a few years ago by Seana McGuire and Roderick Macdonald in the Os- goode Hall Law Journal. Hence, the subject matter of the impugned relationships is usually determined in a con- tract. Parties of such a contractual relationship are parties to a contract. Lastly, the legal content of a relationship is determined by the particular contract, which is the legal content, and by the breach of the contract by any party, which is the factual content. Therefore, a purely monetary limit established for the Small Claims Court is artificial because it does not fit into this three-element structure. The jurisdiction of the Small Claims Court, therefore, should relate not to the monetary limit but the nature of the case and its complexity. The nature of the case means the type of relationship while complexity re- f lects factors such as the specificity of the contractual object and evidentiary requirements. The amount of the claim — whether it's $1,000 or $1 million — does not inf luence the legal intricacy of the matter. For example, a case where a party owes $1 million under a contract may require only two documents as evi- dence before the court: the contract itself and the unpaid invoice. So the trier of fact needs to establish only the fact that the contract exists and the price under the contract was not paid and conduct simple math to calculate the interest. In contrast, a $1,000 tort action may be very com- plex and include both legal and evidentiary issues. The Small Claims Court should resolve only con- tractual disputes regarding the payment of money or the return of property. Torts and complex contractual cases should fall under the jurisdiction of the Superior Court. Among the potential benefits of this innovation is the expedition of the resolution of more contractual disputes per year because of the elimination of the $25,000 limit. At the same time, it wouldn't increase the workload of Small Claims Court judges because simple contractual disputes will be more routine and torts or complex civil cases will go directly to the Superior Court. The move away from a purely monetary jurisdiction will also facilitate enhanced access to justice for Ontarians. LT uArtem Orlov is an international student and a former lawyer from Ukraine. u SPEAKER'S CORNER u Editorial obitEr By Glenn Kauth of the issues in this case that's certainly relevant to arguments over things like legal aid is the fact that while the rules may be reasonable for the poorest litigants, they're not really fair for those who earn modest incomes that aren't sufficient for paying for both legal representation and steep court fees. In last week's case, the B.C. rules now in place provide for an exemption from the fees if the court finds a person to be "impoverished." As the Supreme Court found, that's not good enough for those with incomes just above that threshold. e case, then, is a good example of why we keep talking about access to justice. It also demonstrates why Canada's political discourse of late has focused so much on the challenges facing the middle class. It's clear that in many areas, including the justice system, governments need to do more to address that gap. — Glenn Kauth D Justice denied for middle class W ith access to justice becoming a central concern, the Supreme Court of Canada sent a strong message about the issue last week with its decision in Trial Lawyers Association of British Columbia v. British Columbia (Attorney General). e case related to a custody dispute that resulted in fees of $3,600 for 10 days of hearings. One of the parties couldn't afford that amount, and the trial judge in the case eventually found the fee schedule was unconstitutional. Last week, the majority of the Supreme Court agreed with that finding. "A fee that is so high that it requires litigants who are not impoverished to sacrifice reasonable expenses in order to bring a claim may, absent adequate exemptions, be unconstitu- tional because it subjects litigants to undue hardship, thereby effec- tively preventing access to the courts," wrote Chief Justice Beverley McLachlin in last week's ruling in the B.C. case. "It is the role of the provincial legislatures to devise a constitution- ally compliant hearing fee scheme. But as a general rule, hearing fees must be coupled with an exemption that allows judges to waive the fees for people who cannot, by reason of their financial situation, bring non-frivolous or non-vexatious litigation to court. A hearing fee scheme can include an exemption for the truly impoverished, but the hearing fees must be set at an amount such that anyone who is not impoverished can afford them. While Ontario doesn't have such fees, the case is a reminder about the need in general for governments to devise rules that are fair. One ©2014 Thomson Reuters Canada Ltd. All rights reserved. No part of this publication may be reprinted or stored in a retrieval system without written per- mission. The opinions expressed in articles are not necessarily those of the publisher. Information presented is compiled from sources believed to be accurate, however, the publisher assumes no responsibility for errors or omissions. Law Times disclaims any warranty as to the accuracy, com- pleteness or currency of the contents of this pub- lication and disclaims all liability in respect of the results of any action taken or not taken in reliance upon information in this publication. Publications Mail Agreement Number 40762529 • ISSN 0847-5083 Law Times is published 40 times a year by Thomson Reuters Canada Ltd. 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