According to the Courts of Justice Act, (“CJA”) section 23.1 a) and b), you can bring any action for the payment of money that does not exceed the proscribed amount and any action for the recovery of possession of personal property where the value of that property does not exceed the proscribed amount. (Currently, the proscribed amount is $10,000, pursuant to O.Reg. 626/00).

Section 96 (3) of the CJA makes it clear that only Superior Court of Justice or the Court of Appeal can grant equitable relief, for example an apology in a libel action.

Practically speaking, this means when your client comes through your door, you need to explain to her/him that the primary focus of Small Claims is on inexpensive litigation for money or the return of personal property. The return of personal property was covered elsewhere today under motions. Here the focus will be on monetary recovery.

If your client wants to sue to make a point or a stand on principle, explain they can do so in Small Claims. However, the only way to establish who wins and who loses is with money. In essence, from the start, ensure your client understands that recovery of funds is how they can establish their principle was upheld.

Your client, then, wants to recover funds from Small Claims Court in the most cost effective manner possible.

Regardless of your business or business model, you will want a satisfied client at the end of the day. A satisfied client means additional work and the all important referrals that are the lifeblood of any business. A paralegal practice will be geared to provide low cost litigation and will be looking for more small claims files. A law practice will be looking to establish or maintain its relationship with the client.

No client is happy if the file ends with a successful judgment at trial but no payment. It is a hollow victory if no funds are recovered. It is also a hollow victory if recovery of those funds costs as much or more as the funds recovered.

How can you make sure you have a satisfied client?

Small Claims collections starts when the client walks through your door, not at the judgment stage. In the initial interview, you have to educate your client. Many will feel that they are 100% in the right and they may well be. They will not understand the need to discuss things like the cost of litigation, the cost of enforcement and recovery of assets. They believe they go to court, the Judge rules and they are made whole. It is your job to establish clear expectations at that the onset of the relationship. And it helps if you can discuss settlement options here if your client is ready.

You also have an opportunity to develop your relationship with and provide extra value to your client. Review the provided documentation carefully. Is your client an individual? Discuss what your client can do in the future to strengthen their position should they find themselves in similar circumstances. Understand the situation your client was in and provide information that will assist them in the future. If your client is a small business, check their documentation and listen to the process regarding the transaction that gave rise to the action. Can you make suggestions for better practices going forward?

Can you offer clauses and language that will assist them ( and you!) in future situations?

For the client, litigation is a costly proposition, both in terms of time and money and also personal resources. Providing additional value to the client will develop your rapport with the client. And discussing the situation will invariably lead to the discovery of information that was overlooked in the initial interview.

Next comes the obligatory demand letter. Check to see if your client is a member of either Equifax or TransUnion. Many small businesses are members for the purposes of obtaining credit reports but may not be utilizing the reporting capabilities of these organizations.

If the client is not a member of any credit reporting service, see if you can utilize a collection agency. Do not have the account reported as written-off or as a collection file. I suggest a “5” rating, indicating some 120 days plus in arrears. This is serious enough to cause credit difficulties, which can in turn result in payment and/or settlement.

However, you retain the ability to adjust that rating to a “1”, “fixing” the credit rating. This gives you leverage in settling the file. Where the account has been reported as a “9” , it can only be adjusted if it was reported in error.

The ability to adjust the credit bureau is a powerful incentive to settlement in many circumstances and can bear fruit immediately or years down the road.

For Law Firms, consider the use of an insured, competent paralegal to provide cost effective service for your client. There may be jurisdictional issues and there will be cost issues when proceeding in Small Claims. A trusted small claims paralegal is a valuable asset for you and your client.

At the claim stage (or defence stage if your client is being sued), you need to have a discussion with your client re settlement. Outline the upcoming costs and timeframes for your client, advise of the potential outcomes and review the situation. Client education is key.

Then, with your claim or defence, also send an initial offer to settle. Two reasons, for costs (Small Claims Court Rule 14.07 (1) & (2)) and to prepare the other side to settle, force them to think about the issue. They will have to proceed with the action and that will cost money, particularly if they have or hire representation. Start them weighing the cost/benefit analysis immediately. Continue that approach through trial.

When serving a statement of claim, consider who you are serving. Service by Mail is fine where there is communication between the parties, or one of the parties is an operating business (i.e. doors open, clients welcome as opposed to an active status revealed by a corporate search).

However, using a process server where service is on an individual and there has been little or no communication is a good idea. It first and foremost brings the matter to the attention of the person being served in a manner consistent with the seriousness warranted by litigation. Many people ignore service by mail. And it also helps avoid delays caused by people either not receiving the claim or not responding in an appropriate fashion because they do not understand the immediacy of responding to a legal action. Your client incurs a higher initial cost but the time saved in moving the matter forward makes service by a process server worth the expense outlay in these circumstances.

If and when, despite your best efforts, the matter ends up at trial, make sure you have a bill of costs ready, with supporting invoices for service, copying, expert reports, travel and accommodation and other expenses as per Rule 19.

Your goal is to obtain money for your client. The more costs you can recover, the less money comes directly out of your clients’ recovery. Happy clients mean more business.

Don’t forget to claim $50.00 for preparation of documents under Rule 19.03. How much can be awarded for your appearance? Up to 15% of the claimed amount, under section 29 of the CJA….and as you have beaten your early offer to settle, you can double that. For a solicitor, $3,000.00 plus disbursements is available on a $10,000.00 claim, while $1,500.00 is the limit for agents and students–at–law. In very extraordinary circumstances, a parties behavior can attract additional costs.

When you have your judgment, enforcement begins in earnest. How to cost effectively ensure you get money for your client?

Start with a Writ, on every single judgment you obtain.

Your next step is dependant upon the information available to you. If you have current bank or employment information, file garnishments at once. Where you do not have current bank or employment information, get it. Use of a reputable skip tracing company will increase your efficiency and recovery. Many agencies work on a no find, no fee service and will guarantee their information. Emptying a bank account or garnishing an employer will get results. A Judgment Debtor exam can assist in locating assets, equally important, it can engage the Debtor in resolving the matter. The Contempt Hearing, discussed earlier, assists in this regard.

Two Unusual Circumstances

Scenario One

Your client comes to see you to discuss the recent seizure of their work vehicle. The client maintains they had some work done but the work was shoddy/not authorized/ deficient in some manner. In the documents they provide is a signed Acknowledgment of Debt, signed when your client received the vehicle back from the shop. Hard to argue with a signed document – except in this instance.

The Repair and Storage Lien Act, Part two, Non-Possessory Liens, 7.(6) provides that the acknowledgment of debt in these circumstances is Without Prejudice on the owner or any other person to dispute in a proceeding the amount the lien claimant is owed. You can bring an action to assist your client, based on the available evidence, without being hampered by the Acknowledgment of Debt.

Scenario Two

Your client has some equipment under a lease. Your client wishes you to proceed against the lessees. However, the business location is up for sale and your client fears the equipment, a walk in cooler and a commercial dishwasher, will be sold with the property. This might be the only recovery your client will obtain and the equipment may very well be gone before any court action can be heard. The amount of money dictates a Small Claims Court Action is the only economical recovery.

The Personal Property Security Act (“PPSA”) can assist. Likely your client has registered its interest under the PPSA, also it has likely not registered its interest directly on the property. Section 54. 1 (a) of the PPSA allows for the registration on title of Notice of Security Interest, where the property is or may become fixtures. This will ensure your clients interest will be dealt with on sale of the property or at the least, the new owners will take subject to your clients interest. Often in these circumstances, you will get your client paid out without any additional legal work required.