Choosing the Proper Forum for Small Claims (20:IV)

There are several options for resolving most civil disputes in British Columbia: Alternative Dispute Resolution, specialised tribunals, Small Claims Court, and the Supreme Court of British Columbia. On May 31, 2012, the Civil Resolution Tribunal Act, SBC 2012, c 25 [CRTA] was given Royal Assent and may be proclaimed in force by regulation. Once in force, the Civil Resolution Tribunal will become another option for resolving civil disputes.

Certain claims must be made through administrative tribunals instead of the courts. See, for example, Chapter 9: Employment Law, Chapter 7: Workers’ Compensation, Chapter 8: Employment Insurance, Chapter 19: Landlord and Tenant Law, and Chapter 6: Human Rights.

In order to bring a claim in British Columbia, the court or tribunal must have territorial jurisdiction. If either the subject matter of the claim (e.g., the contract or wrongful act) occurred in British Columbia or the Defendant resides or does business in British Columbia, this may be a sufficient connection for a court or tribunal to assert jurisdiction. It is sometimes unclear whether British Columbia has a sufficient connection to the claim and is the most appropriate forum. If the court’s jurisdiction is not clear, a claimant should obtain legal advice and review applicable case law16.

Where the dispute is contractual, the existence of a “forum selection clause” may provide further jurisdictional difficulties. Forum selection clauses require the adjudication of claims in the named jurisdiction. Such clauses will generally be upheld absent a finding of “strong cause” to hear the matter in the jurisdiction of another court17.

A. Small Claims Court

The Small Claims Court is the civil division of the British Columbia Provincial Court and is designed to accommodate unrepresented parties who do not have legal training. The overriding purpose of the Small Claims Court is to resolve disputes in a “just, speedy, inexpensive, and simple manner.”18 The Court uses simplified forms, procedures, and rules and encourages settlement.

Small Claims Court is a formal court that applies the law. Although the procedures and rules of evidence are slightly relaxed in order to make it more accessible to the public, it is significantly more formal and principled than the courts portrayed in television programmes.

There are three primary considerations when choosing Small Claims Court: the amount claimed, the court’s jurisdiction, and costs.

1. Amount Claimed

Small Claims Court can award a judgment of up to $25,000. A person whose claim exceeds $25,000 may still choose Small Claims Court but must expressly state in the notice of claim or counterclaim that they will abandon the amount necessary to bring their claim or counterclaim within the court’s jurisdiction19. Interest and costs are not included in calculating the $25,000 limit.

A claimant must sue all responsible parties for damages arising from a single event in one claim; the claimant cannot split claims for damages arising out of a single event into multiple claims in an attempt to circumvent the $25,000 limit. If, however, there are multiple events giving rise to a claim, even if closely related, they may be brought in separate actions20. For example, if a contractor issues an invoice for $15,000 at the end of January for work done in January and issues another invoice for $15,000 at the end of February for work done in February and both invoices go unpaid, the contractor may sue on each invoice in a separate claim. Rule 7.1(4) permits certain related claims to be heard together.

Where a defendant has pleaded a set-off (the plaintiff owes the defendant money that should be deducted from their award), contributory negligence (the plaintiff’s negligence also contributed to their loss), or shared liability (there is another party who is also liable fo the same action), the court may consider these defences against the full amount of the claimant’s claim provided that the net judgment does not exceed $25,000. This also applies when a set-off forms the basis for a standalone counterclaim. For example, if the claimant proves a $50,000 claim and the defendant establishes a $25,000 set-off, the claimant will have a net judgment of $25,000. The SCA21 permits the monetary limit to be set by regulation at any amount up to $50,000. Claimants should confirm the current monetary limit prior to filing a claim.

2. Jurisdiction

The Small Claims Court derives its authority from the SCA, the Small Claims Rules, BC Reg 261/93 [SCR], and other acts that expressly confer jurisdiction upon the Provincial Court.

The court has express jurisdiction in claims for:

• debt or damages;
• recovery of personal property;
• specific performance of an agreement relating to personal property or services; or
• relief from opposing claims to personal property.

The court does not have jurisdiction in claims for libel, slander, or malicious prosecution unless such authority is expressly granted in limited circumstances by another statute (e.g., s-s 171(3) of the Business Practices and Consumer Protection Act allows for contraventions of this act to be heard in Provincial Court even if they involve claims for libel or slander22).

The court cannot resolve disputes involving residential tenancy agreements nor can it grant remedies created by statute if there is another dispute resolution mechanism prescribed in the statute. For example, claims for overtime must be claimed through the Employment Standards Branch and not in Small Claims Court. The court has very limited jurisdiction in residential tenancy23, employment24, human rights25, and strata property26 matters.

Other noteworthy areas of law often falling outside the jurisdiction of the Small Claims Division are divorce, trusts, wills (i.e., probate), prerogative writs, and bankruptcy. However, the court may have jurisdiction over cases where these areas of law are involved only circumstantially – where the pith and substance of the case does fall within the court’s jurisdiction27. In AMEX Bank of Canada v Golovatcheva, the claimant alleged that the defendant had committed fraud by running up a debt that she knew she would escape by declaring bankruptcy. The Small Claims court exerted jurisdiction over the issue of fraud.

The Small Claims Court has limited inherent jurisdiction. It cannot grant injunctions nor can it grant declaratory relief; however, subject to the SCA and SCR, the court may make any order or give any direction necessary to achieve the purpose of the SCA and SCR. One should review the SCA and the SCR thoroughly. [See LLC v PG, sub nom. Craig v Gidyk, [1994] BCJ No. 1591 (Prov. Ct.); RK v McBride, [1994] BCJ No. 2791; and Joey Beenz Coffee Bar Ltd. v Di Stasio (cob Neon Sign Writers), 2011 BCPC 375 (CanLII).

3. Costs

The cost to file a claim depends on the amount being claimed. The filing fee is $100 for claims of $3,000 or less and $156 for claims over $3,000. All Small Claims Court fees are listed in Schedule A of the SCR.

If a person is unable to afford the court’s fees, they can file an Application to the Registrar (Form 16) together with a Statement of Finances. If accepted, the party will be exempted under Rule 20(1) from paying fees with respect to that court file.

An unsuccessful litigant must, unless a judge or registrar orders otherwise, pay to the successful party:

• any fees the successful party paid for filing any documents;
• reasonable amounts the party paid for serving any documents; and
• any other reasonable charges or expenses that the judge or registrar considers directly relate to the conduct of the proceeding28.

Under no circumstances can any party recover any fees paid to a lawyer with respect to the proceeding: s. 19(4) of the SCA; however, reasonable disbursements charged by a lawyer with respect to the proceeding may be awarded to the successful party.

B. Supreme Court of British Columbia

The Supreme Court has a broad jurisdiction. It is not bound by any monetary limits and there are few restrictions on the types of claims that it can hear. The Supreme Court can grant injunctions, conduct judicial reviews, and make new law. The Supreme Court is not designed for lay litigants. Parties without legal training or legal advice may find it much more difficult to navigate than Small Claims Court. There are, however, a number of resources29 to help lay litigants bring and defend claims in Supreme Court. The court fees in Supreme Court are higher than in Small Claims Court; they can be waived, however, for those who cannot afford them. In Supreme Court, the losing party will often be ordered to pay to the successful party a portion of that party’s reasonable legal costs. Costs are awarded using a tariff system and generally on a party and party basis that usually amounts to about twenty per cent of the successful party’s costs. While it is possible for the successful party to be fully indemnified through an award of special costs, also known as solicitor-client costs, this is rare and should not be expected.

C. Civil Resolution Tribunal

The Civil Resolution Tribunal is designed to be an alternative to Small Claims Court. It is anticipated that the tribunal will begin operations some time in 2015. In June 2014, regulations were enacted that allowed for the appointment of tribunal members and other staff30 As of May 11th, 2015, 18 tribunal members had been selected31.

As of May 14th, 2015, the Civil Resolution Tribunal Amendment Act (CRTAA)32 has been passed by the legislature and received royal assent. Although the regulations have not yet been enacted, the CRTA and CRTAA set out the general process and jurisdiction.

For up to date information on the Civil Resolution Tribunal and associated legislative changes, please visit their website at https://www.civilresolutionbc.ca/.

1. Jurisdiction

The tribunal classifies claims as “Small Claims Matters”, “Strata Property Matters”, or “Other Matters”. These classifications are set out in the Schedule to the CRTA and may be further clarified by regulation.

a) Small Claims Matters

The tribunal’s jurisdiction is similar to that of the Small Claims Court, except that the tribunal cannot hear matters for or against the government, or any matters that may be specified in future regulations33. The monetary limit may also be different once it is set by regulation. If, however, a claim can be dealt with under either s 6 or s 7 of the Schedule, it must be brought as a strata property matter rather than a small claims matter.

b) Strata Property Matters

A person may make a request for tribunal resolution of a claim that concerns:

• the interpretation or application of the Strata Property Act or a regulation, bylaw, or rule under that Act;
• the common property or common assets of the strata corporation;
• the use or enjoyment of a strata lot;
• money owing, including money owing as a fine, under the Strata Property Act or a regulation, bylaw or rule under that Act;
• an action or threatened action by the strata corporation, including the council, in relation to an owner or tenant;
• a decision of the strata corporation, including the council, in relation to an owner or tenant; or
• the exercise of voting rights by a person who holds 50% or more of the votes, including proxies, at an annual or special general meeting.

The foregoing list contains a number of limitations. A person considering tribunal resolution of a claim listed above should review s 3.6 (2) of the CRTAA to ensure that a limitation does not deny jurisdiction to the tribunal.

c) Other Matters

The tribunal may, by regulation, be granted jurisdiction over other matters that cannot be classified as either a small claims matter or a strata property matter.

2. Process

Using the tribunal to resolve a dispute will be mandatory. The tribunal is designed to be more informal, faster, and less expensive than Small Claims Court, and will be conducted primarily using the internet.Unlike Small Claims Court, the tribunal generally, with some exceptions, requires the parties to be self-represented; lawyers are generally not permitted.

There is no guarantee, however, that tribunal adjudicators will be legally trained. For a tribunal small claim, if a party is unhappy with the tribunal decision, they will be able to file a notice of objection and bring the small claim as a claim in the Provincial Court34. A party who is dissatisfied with the ruling on a strata property matter can only seek limited judicial review in the Supreme Court of British Columbia. The standard of review is correctness unless the decision relates to:

• findings of fact for which the finding must either be unreasonable or made without any evidence to support it;
• discretionary decisions for which the decision must be arbitrary, made in bad faith, be based entirely or predominantly on irrelevant factors, or fail to comply with a statute; or
• natural justice and procedural fairness which are considered with the tribunal’s mandate in mind.

Resolving a dispute through the tribunal has up to three phases.See Appendix J for more details on the Tribunal’s procedures.

3. General

Once the tribunal has accepted the request for tribunal resolution, the limitation period is postponed until:

• the tribunal notifies the parties of its refusal to facilitate the settlement of, resolve, or adjudicate the claim;
• the date the tribunal certifies that case management is completed, unless the claim has been referred to a hearing under section 30;
• the date a party files a notice of objection; or
• the date the time for filing a notice of objection expires.

A lawyer or another person cannot represent a party unless the party is a child or person with impaired capacity, the rules permit the party to be represented, or the tribunal, in the interests of justice and fairness, permits the party to be represented.

Tribunal orders relating to strata property matters are enforceable as an order of the court.

D. Alternative Dispute Resolution

Alternative dispute resolution is useful because it is efficient, inexpensive, confidential, informal, and flexible; the parties have control over the outcome. A trial, on the other hand, is formal, less flexible, and can be more expensive. With few exceptions, everything that is said in a courtroom or written in a filed document can be accessed by any member of the public.

Parties who wish to preserve their relationship, avoid the stress of trial, keep the details of their dispute private, or resolve their dispute in months instead of more than a year should seriously consider alternative dispute resolution.

1. Negotiations

Negotiation is cost and risk free. Any contact between the parties should be used to attempt to negotiate a settlement. Parties can negotiate a settlement at any point before a judgment is pronounced. Negotiations are without prejudice, which means they are confidential between the parties and cannot be used against a party in court.Any documentation related to negotiation should have the words “WITHOUT PREJUDICE” written across the top.

Ask the other party if he or she is represented by a lawyer. If so, all communication should be with the lawyer. If the other party is not represented, ask the other party if he or she is willing to discuss the claim.

Telephone technique should be firm but not argumentative. Try to negotiate the best offer possible.

Make a written plan and keep detailed notes of each conversation as it occurs. Plan how best to find out the other side’s position and how best to put forward your position.

If a settlement is reached, a letter should be sent to the other party to confirm the agreement. Enclose a duplicate copy for the appropriate party to sign and return to you. Any settlement should include a mutual release agreement in which both parties agree to not bring any further claims against each other and to withdraw any other proceedings that may have been commenced.

NOTE – If there are multiple defendants, a claimant should obtain legal advice to ensure that an agreement with one defendant does not inadvertently release the other defendants from liability.

2. Mediation

Mediation is a voluntary process in which an independent, neutral party listens to each party’s position, focuses the issues in dispute, and assists the parties to come to a settlement agreement. While the mediator plays an active role in ensuring discussion remains productive, the ultimate responsibility for resolving the dispute rests with the parties. The purpose of mediation is not to determine who wins and loses, but to find solutions that meet the needs of the people involved.

Mediation as an alternative to litigation is often a more expedient, less expensive, and more satisfactory route than litigation. In order to mediate outside of the Small Claims Court process, all parties must agree. The parties typically share the cost of mediation.

The Small Claims Court requires that parties participate in either a settlement conference or mediation. Both processes are highly successful in resolving disputes and there is no additional cost to either party. For information on these processes, see the Small Claims Procedural Guides.

Parties who choose to mediate outside of the Small Claims Court process can choose their mediator35, resolve the dispute sooner and on a more convenient timeline, and spend more time resolving the dispute than the approximately 2.5 hours allocated by the court. Also, since both parties would have agreed to mediate, settlement is more likely than if mediation is compulsory.

a) Conflict Resolution Clinic (CoRe Clinic)36

The CoRe Clinic provides mediation services on a flexible payment scale. Sessions are run by a professional mentor mediator paired with a trained student mediator. The mentors are often the same mediators available through the BC Mediator Roster Society but are available at greatly reduced rates while volunteering with CoRe. All mentors have extensive Small Claims mediation experience, and significant expertise in other areas of the law as well. Students working with CoRe have undergone training through the UBC Faculty of Law Mediation Clinic and Practicum courses. Consider using the CoRe clinic for mediations under Rule 7.3. CoRe may also be particularly useful where parties have not yet filed a court action. Mediations with CoRe are voluntary, and both parties must agree to mediate in order for CoRe to assist. CoRe offers a flexible process that can be designed to accommodate the individual needs of parties to a dispute. Where requested, mediation sessions can be held in a range of locations, or by teleconference. In some cases the process will run more smoothly if parties to a dispute are kept separate. Mediation in general and CoRe in particular can provide a faster, less expensive alternative to court. For more information, refer to CoRe’s website.

3. Arbitration

Arbitration is a voluntary process in which an independent, neutral party will listen to each party’s position and resolve the conflict by choosing one of the party’s positions. If the arbitrator’s decision is binding, the dispute is settled. If the arbitrator’s decision is non-binding, the parties may accept it or proceed to litigation. Arbitration can offer a very quick resolution to disputes and encourages both parties to present reasonable offers in order to increase the likelihood that their proposal will be selected. In order to arbitrate, all parties must agree. The parties typically share the cost of arbitration. The Small Claims Court does not require or provide arbitration; parties who wish to arbitrate must do so on their own.37