Understanding Legal Costs in Small Claims Court
One major concern for several litigants is the costs involved in bringing a matter before the court.
Choosing the Right Court Division
It's often difficult to navigate the process on your own and a representative is often required.
One of the first concerns, people may have is whether to file with the civil division or simply waive the excess of the claim so it may be brought within the Small Claims Court’s monetary jurisdiction. The monetary jurisdiction of the Small Claims Court is $35,000.00.
Therefore, if the amount you are seeking is higher than that amount, the claim cannot be filed with that court.
Depending on how much more the claimed amount is, it may be wise to waive the excess amount of the claim. For example, if the amount the defendant owes you totals $40,000.00, it may be best to simply reduce the claim to $35,000.00 and abandon the excess $5,000.00.
A common question that arises is whether one can simply file two claims with the Small Claims Court to cover the entire amount. The answer to that question is a definite NO. The current Rules prohibit splitting a claim.
Given the costs involved in bringing a claim within the civil division compared to the Small Claims Court, it may still work out to be more cost-effective to simply abandon the excess amount so that the claim may be properly brought within the jurisdiction of the Small Claims Court.
Calculating Legal Fees in Small Claims Court
Once the claim is properly brought within that Court, concern still remains regarding how
reimbursement is obtained for legal fees paid to a representative.
In Small Claims, legal fees are calculated a bit differently from other courts and may be confusing for some people.
The Rules of the Small Claims Court are such that legal fees are calculated based on the claimed amount. This is calculated at a rate of 15%. Therefore, if the claim is $35,000, the legal fee that will be awarded to the winning party is $5,250.00. It is however quite possible to have this amount doubled based on the Rules of the Court with respect
to offers to settle. If, for example, the plaintiff wins the case, an offer to settle was made for less than $35,000.00, but the court awarded the full amount claimed, the Plaintiff may be awarded double costs.
In this particular scenario, the total of $10,500 would be awarded as legal fees, not including any award for disbursements such as court filing fees.
In a recent case, I brought to the Small Claims Court, this was exactly the situation. My client was therefore able to be reimbursed their entire costs for the proceeding including their own costs for parking at the courthouse, lunch during the trial, time away from work, and all other such expenses through a double costs award.