On Jan. 1, 2010, Ontario will become the fifth Canadian province to increase the cap on damages in Small Claims Court to $25,000.
Articling students who work with civil litigators are frequently called upon to assist with small claims files. This decision is often based on a need to leverage legal services to manage the client’s litigation costs.
Often charging significantly less than an experienced litigator, articling students can generally devote more time and attention to these files than would otherwise be justified by a lawyer based on the minimum financial interest at stake.
This being the case, Small Claims Court has become an effective and cost-beneficial means for students-at-law to receive practical litigation experience. Other than possibly provincial offence prosecutions, small claims files are one of the few occasions for students to participate in the litigation process from start (drafting of the claim) to finish (collection of the judgment).
Work on small claims files allows articling students to become familiar with the litigation process. For example, they learn to manage the labyrinth of forms and are largely responsible for tracking the tight deadlines associated with most litigation files.
Students will occasionally deal with difficult clients on the hunt for “justice” or apathetic clients, uninvolved in their ongoing litigation.
While the court’s monetary jurisdiction will increase, the question for many articling students is whether they will benefit from continued involvement on small claims files.
Notwithstanding the potential for increased damage awards, the 15-per-cent cap on recovery of costs in Small Claims Court may lead some experienced litigators to deem it unjustifiable to pursue such cases.
Despite the current proportionality rule in the award of costs, large firms often charge considerable fees to recover (or defend a claim of) $25,000 under the Simplified Rules.
In 2010, however, sophisticated clients may be more reluctant to pay these fees, since they will be unable to recover the full extent of their costs. In these cases, however, there will be occasion for students to take an active role in managing the file.
The challenge for larger firms will be to convince clients and potential clients to pursue claims in the $10,000 to $25,000 range in Small Claims Court, using student labour.
Firms will have to promote the competency of their articling students to handle these files. Firms that are successful at doing so may reap the benefits of a vigorous and profitable small claims practice.
Furthermore, an anticipated increase in the number of users of the Small Claims Court — due both to the increased monetary jurisdiction and the reduced costs to pursue a case — also may mean that more files will trickle down to articling students.
The increased caseload will, however, be dependent on the continued appropriateness of delegating management of these files to articling students, files that only one year earlier would have been brought in the Superior Court.
The student’s role on individual files may change as well.
Motions work is another staple of student work assignments. While it can, in some cases, be ineffective from a cost perspective to bring a motion in Small Claims Court, the increased jurisdiction along with changes to the Rules of Civil Procedure may make motions a more attractive and common endeavour.
Changes to the Rules of Civil Procedure will have a direct effect on the Rules of the Small Claims Court, which incorporate the former rules by reference.
For example, lawyers may consider advising their clients under the new Rules to move for summary judgment where the evidence demonstrates that there is no “genuine issue requiring a trial.”
Having recently graduated from law school and therefore familiar with the nuts-and-bolts details of the law of contracts, torts, and unjust enrichment, law students may be in a favourable position to take an increased role in drafting supporting facta and affidavits on these motions.
Furthermore, with a cap on costs, the incentive to pursue motions for summary judgment may increase too.
Another effect of the increase in monetary jurisdiction may be an increase in the investment in pretrial work. While settlement conferences are mandatory under the Small Claims Rules, there is little financial incentive to invest in the preparation of settlement conference briefs when the matter is headed toward a trial.
More investment in pretrial preparation may lead to a greater appreciation of the issues in the case. In turn, the representatives of the respective parties may come to a more informed settlement position when they meet at the pretrial conference.
Only time will tell whether the proposed increase in the monetary jurisdiction of the Small Claims Court will truly affect the work of Ontario’s articling students.
Hopefully, the increase will encourage lawyers to continue to rely on articling students to manage small claims files, such that students can both benefit from the experience of handling these files and continue to develop the necessary skills to serve the public in the long term.
Joshua Krane is an articling student with Gowling Lafleur Henderson LLP in Ottawa.