Background – Which Venues are Available?
Before commencing legal action, an important decision to make is where the lawsuit should be brought. Litigants must choose what jurisdiction applies to the subject matter of the case as far as location, but they also must choose which court or other adjudicative body should hear it.
While some cases warrant adjudication before a specific tribunal, or there is an agreement to arbitrate the dispute and not go to court, the vast majority of cases in Ontario are bound for court.
As a result, the question then turns to whether you bring your lawsuit in the Small Claims Court (for most claims under $35,000), the Superior Court of Justice under Simplified Rules (for claims under $200,000) or otherwise regularly in the Superior Court of Justice.
There are some specialized courts (such as the Federal Court, Tax Court, Estates List, and Commercial List) that deal with discrete issues, however for the purposes of this blog post, we will assume none of those apply.
Chin v. Beauty Express Canada Inc.
Justice Morgan’s decision in Chin v. Beauty Express Canada Inc. 2023 ONSC 56 is a cautionary tale of the perils of choosing to pursue a lawsuit in the wrong court.
In Chin, the Plaintiff, an esthetician who was wrongfully dismissed without notice from the Defendant’s beauty shop brought a claim in the Superior Court of Justice for just under $200,000 in damages. This claim included a claim for aggravated and punitive damages, as well as damages under the Human Rights Code.
Ultimately, the Plaintiff succeeded in proving that she was wrongfully dismissed and was awarded 7.25 months pay in lieu of notice totaling $15,701.71 plus interest. The Court did not award the Plaintiff any aggravated, punitive, or Human Rights Code damages.
Under Rule 57 of the Rules of Civil Procedure, the court is given discretion to award costs of each step of litigation, including at the end of trial. Typically, the winner of a lawsuit is awarded a portion of their legal fees payable by the loser. The overarching goals of the Rules as provided for in rule 1.04 are to secure “the just, most expeditious and least expensive determination of every civil proceeding on its merits”.
As a general principal, a lawsuit in the Small Claims Court is often far faster and less expensive to bring than one in the Superior Court of Justice as there are far fewer steps in a small claims court lawsuit.
Therefore, Rule 57.05 says that if you bring a lawsuit in the Superior Court of Justice when it should have been brought in the Small Claims Court instead, the court, at its discretion, can order that the plaintiff shall not recover any of their costs.
Relying on Rule 57.05, Justice Morgan elected, in this case, to order that the Plaintiff not recover any of her legal costs despite her success in the action because her recovery was less than the $35,000 small claims court cap. Justice Morgan found that the Plaintiff ought to have brought her claim in the Small Claims Court instead of overreaching and seeking additional damages beyond $35,000 to which she was not entitled.
Lessons to Learn
Prior to starting litigation, it is important to consider the likelihood of success on each aspect of the damages you are seeking. If your damages fall under $35,000, or under $200,000, it is important to consider the cost consequences of selecting whether you bring your action in Small Claims Court, in the Superior Court under Simplified Rules for claims under $200,000, or as a regular Superior Court action otherwise. By choosing the right court, you can avoid surprises where although you win the lawsuit, you do not end up recovering any of your legal costs.
At Mills & Mills LLP, our lawyers regularly help clients with a wide range of legal matters including business law, real estate law, estate law, employment law, health law, and tax law. For over 130 years, we have earned a reputation amongst our peers and clients for quality of service and breadth of knowledge. Contact us online or at (416) 863-0125. The material provided through the Mills & Mills LLP website is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.
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