Condominium Publications
Condominiums and Small Claims Court
As published in the Fall 2009 edition of CondoVoice.
On January 1, 2010, the amount that a plaintiff can claim in Small Claims Court increases from $10,000.00 to $25,000.00.
What is Small Claims Court?
Small Claims Court is a branch of the Superior Court of Justice for the resolution of “smaller” monetary disputes and is designed to provide a faster and cost effective means of dispute resolution for such claims. Small Claims Court is considered to be user-friendly for litigants:
- The cost for commencing a claim or filing documents is relatively low;
- The system provides for a mandatory mediation step, called a settlement conference;
- The rules that govern procedure in Small Claims Court are less complex than the rules that govern the rest of civil procedure in the Ontario Superior Court of Justice; and
- A key component of the Small Claims Court regime, which attempts to make the system accessible by parties of all financial means, is the limit on a costs award against an unsuccessful party, which is 15% of the value of the claim, with limited exceptions. This means that the maximum financial costs risk of bringing a claim and losing, is anticipatable as it is proportionate to the value of the claim.
How does the shift to a $25,000 maximum claim affect condominiums?
No one knows for sure what will result from the increased jurisdiction in the monetary limit for small claims proceedings. It could result in more claims being brought against condominium corporations, if litigants (typically unit owners or service providers) would otherwise not have commenced a claim in Superior Court that was worth more than $10,000.00. With the new increased claim limit in Small Claims Court to $25,000.00, some litigants might give it a shot in Small Claims Court, as the costs risks are much lower and the justice process is much faster. It is possible that more lawyers will be representing parties on Small Claims matters starting in January, 2010 as a $25,000.00 claim limit will increase the maximum amount of costs that can be recovered by a successful party ($3,750.00 on a $25,000.00 claim).
What are the steps to get a Small Claim Court claim to trial?
In a nutshell, after a plaintiff commences a claim and serves the claim on the defendant, the defendant has 20 days to file a defence. If it is appropriate for a defendant to make either a counterclaim against the plaintiff, or to bring an outside third party into the proceeding as a defendant, then a Defendant’s Claim is commenced by the defendant against those parties, either within 20 days of filing the defence, or with permission of the court outside of the 20 days.
Once a defence to a claim is filed, the court issues a Notice of Settlement Conference. The settlement conference is scheduled for a date typically one to three months after the defence is filed. Certain documents have to be served and filed prior to the settlement conference, at which the condominium corporation’s lawyer and a representative of the board (or the manager) will attend. The conference is presided over by a deputy judge and the purpose of the conference is to see if a settlement can be reached and if not, then the judge may attempt to assist in narrowing down the issues for trial or make other orders.
If a settlement is not reached, either at the settlement conference or thereafter, then a trial date can be requested by a party, and the court will assign a date for the trial upon payment of a fee by the party requesting the trial. Your condominium corporation’s lawyer will prepare for trial by interviewing your witnesses, discussing their evidence and refreshing their memories concerning documents on which the condominium corporation will rely.
Condominiums as parties in Small Claims Court
How do condominium corporations end up in Small Claims Court? A condominium corporation can either commence a claim as a plaintiff, or be named as a defendant to a claim.
Typically a condominium corporation is the defendant to claims brought by disgruntled unit owners, which claims can be for anything and everything under the sun. A condominium corporation may also be a defendant to a claim brought by a service provider, most often for disputes surrounding termination of contracts and unpaid invoices.
Sometimes a condominium corporation is a plaintiff bringing a claim against a unit owner for costs incurred from damage to common elements or for unpaid common expenses, most typically if lien rights do not apply in the circumstances. Sometimes claims are brought by condominium corporations against non-owner third parties for damages to the condominium corporation’s property.
Whether or not a condominium corporation should look to Small Claims Court to recover money from a unit owner will depend on the amount of money in question, balanced against the legal costs to be incurred by attempting to recover those funds, and the strength of the evidence available in the case to win at trial. Because of the relatively small amount of legal costs that can be recovered now against a losing party (for a $10,000.00 claim, the maximum is $1,500.00 in costs) if other options, such as a lien, for recovering the monies are available, then generally a condominium corporation will look there first.
Retaining legal counsel to represent your condominium corporation on any legal proceeding should not be a difficult decision for a board to make. Even in Small Claims Court, having the expertise of a lawyer to represent you is a prudent step for the board to ensure that it complies with its requisite standard of care.
TIPS: When your Condominium Corporation is served with a Claim
- Make sure you note the date on which the claim was served, on whom it was served, and the method of service.
- Notify the condominium corporation’s lawyer of the claim and the date on which the corporation was served with the claim. A defence must be filed on behalf of the condominium corporation within 20 days of service of the claim.
- The board and management should review the claim in detail and prepare a package of any documents that relate to the claim.
- The board and/or management should prepare comments about the allegations in the claim for the lawyer to review in drafting the defence. In particular, if any of the allegations or facts (dates, people, conversations) mentioned in the claim are untrue indicate so and why. Then tell your side of the story about the circumstances surrounding the claim and the amount of damages sought by the plaintiff. If any outside third-parties may be responsible for the damages alleged in the claim, indicate who and why.
- Put your condominium corporation’s insurance company on notice of the claim in writing.
- Until the claim is settled or resolved in the court, the claim should be noted in paragraph 19 of any status certificates issued.