Does someone owe you money? Consider small claims court!

Did your subcontractor fail to meet the obligations set out in the contract? Have you not been paid by a customer? Or perhaps a supplier didn’t deliver the merchandise you ordered and paid for? Despite your best efforts to get the other party to listen to reason, you’re unable to settle the dispute. At this point, you need to initiate legal action.

First step: Send a formal notice
Before getting into a complex and costly lawsuit, you can often reach a settlement just by sending a formal notice. Indeed, the formal notice lets you explain to the other person exactly what you are alleging as well as the remedial action (and time frame) required if they want to avoid going to court.

This letter of formal notice doesn’t have to be drafted or sent by a lawyer. You can write it yourself – but do keep in mind that the contents can be used against you in court. So, it’s advisable to be brief and polite! 

Is the dispute still unresolved? Time to meet in small claims court.
If your dispute cannot be settled amicably, you’ll then need to turn to the courts. If you’re eligible, small claims court, with its simplified procedure, is the appropriate venue. 

Do I have access to small claims court?
To be eligible to bring a case before small claims court, a company must have had at least 10 employees in the 12-month period preceding the application. Moreover, the eligible remedies are as follows:

• Remedies for claims not in excess of $15,000 (exclusive of interest charges).
• Requests for resolution, termination or cancellation of a contract whose value and, if applicable, whose claimed amount do not each exceed $15,000.

Do I need a lawyer?
Your company can be represented in small claims court only by a manager or employee. Although you’re prohibited from being represented by legal counsel, there’s nothing to prevent you from seeking the help of a lawyer for the preparation of your case.

Can I sue for my legal fees?
Generally speaking, you cannot claim the fees paid to your lawyer to assert your rights, even if your claim is successful.
Nevertheless, and in exceptional circumstances, the judge may consider the request of the other party to be excessive and order that they compensate you for your lawyer’s professional fees.

Can I claim the fee for filing my application with the court?
Generally speaking, you can receive reimbursement for these costs from the other party if your claim is successful. 

On the other hand, if you filed your application with the court but did not previously send a formal notice and the other party agreed to do what you asked within a reasonable time frame, they will not have to reimburse you.

My claim was successful, but I’m still waiting to be paid…
If the other party has been ordered to pay you a sum of money as the result of a decision of the small claims court, they have 30 days after this decision in which to do so (but only 10 days if the other party has not disputed your request, meaning that a default judgment was rendered).

If the other party fails to pay within the prescribed time period, you can commence a forced execution procedure (seizure). In this case, you can consult the clerk of the small claims court, a lawyer or a bailiff as to how to proceed.

Do you have any questions about sending a formal notice or seeking a remedy in small claims court? If so, get in touch with your CFIB Business Counsellor!