On January 1, 2010 significant amendments were made to the Ontario Rules of Civil Procedure (the "Rules"). The amendments were made on the recommendations of Justice Coulter A. Osborne, Q.C., as set out in his report titled "Civil Justice Reform Project: Summary of Findings and Recommendations" (the "Osborne Report"),2 and in order to address the ongoing concerns of the bench, bar and public respecting access to civil justice, cost and delay of litigation. The recommendations resulted in the most significant amendments to the Rules since 1996.3 The amendments range from an increase to the monetary jurisdictions of the Small Claims Court and Rule 76 Simplified Procedure regime, to the requirement that parties confer and agree on a "discovery plan" before they exchange evidence, to a significant overhaul to the procedures available on motions for summary judgment. Finally, the amendments codify the concept and requirement of "proportionality" in civil litigation.
Just over a year has passed since the amendments to the Rules. This paper will discuss the changes and cases that have arisen out of the amendments that relate to the monetary jurisdiction of the Small Claims Court, the amendments to the Simplified Procedure regime, and proportionality.
The Small Claims Court
The Small Claims Court is widely known as the "people's court". Prior to April 2001, the monetary jurisdiction or limit on matters to be dealt with in the Small Claims Court was $6,000. In April 2001, the monetary limit was increased to $10,000. On January 1, 2010, the monetary limit of the Small Claims Court more than doubled to $25,000. The Small Claims Court is often praised as straightforward and hospitable to unrepresented litigants, and capable of dispensing justice quickly.4
In the Osborne Report, Justice Osborne recommended the increase to the monetary jurisdiction of the Small Claims Court to $25,000, on the basis that that is the same monetary jurisdiction of small claims Courts in British Columbia, Alberta, the Yukon and Nova Scotia, as well as Saskatchewan, which has recently increased its monetary jurisdiction to $20,000.5
The increase in the monetary jurisdiction of the Small Claims Court was intended to address concerns that cases were not being pursued by potential litigants because the amount of the claims were in excess of the $10,000 monetary jurisdiction of the Small Claims Court, but the higher Court fees and complexity of the Superior Court of Justice made it prohibitive for some litigants.6
What is interesting about the change to the Court's monetary jurisdiction is that Justice Osborne also recommended that the increase be staged - with an immediate increase to $15,000 and the increase to $25,000 to be implemented within two years.7 The basis for the recommendation was volume: Justice Osborne reported that in 2005-2006, the Small Claims Court in Ontario processed over 75,000 new cases. By comparison, in 2005-2006, in the Ontario Superior Court of Justice approximately 63,250 new proceedings were commenced.8 Further, Justice Osborne reported that of those cases in the Superior Court, 6,500 of them sought amounts between $10,001 and $25,000.9 Thus, Justice Osborne estimated that with an increase to the monetary jurisdiction of the Small Claims Court, approximately 6,000 cases would be transferred from the Superior Court to the Small Claims Court, and that that volume of new cases coming into the Small Claims Court all at once would cripple its resources. Nevertheless, that particular recommendation was not implemented, and on January 1, 2010 the Small Claim Court jurisdiction increased from $10,000 to $25,000.
In its Court Services Division Annual Report for 2009-2010, the Ministry of the Attorney General reported that in 2009-2010 there were 97,000 new proceedings issued in the Ontario Superior Court of Justice, which represents a 23% increase since 2005-2006.10 Further, proceedings commenced in the Small Claims Court represent 40% of that figure, meaning that 64,250 new proceedings were commenced in the Small Claims Court,11 which is actually a decrease from the 2005-2006 numbers considered by Justice Osborne
Nevertheless, the increase in the Small Claims Court's monetary jurisdiction has been described as a success. On January 5, 2011, the Office of the Attorney General reported that the Civil Justice Reform Project was bringing Ontarians access to a faster and more affordable justice system. Specifically, it reported:
...in 2010, the Superior Court of Justice dealt with 11,652 fewer civil actions, a 17 per cent decrease from 2009, and the Small Claims Court dealt with 6,337 more actions, an 11 per cent increase from 2009. With thousands more civil actions heard in Small Claims Court in 2010 than in 2009, and thousands fewer heard in the Superior Court of Justice during the same period, cases moved from the slower, more expensive system to one that is faster and more affordable. This means that more people settled their disputes faster and at less cost.12
Justice Osborne observed that the increase in the Small Claims Court's monetary jurisdiction may involve more personal injury cases being brought in that Court. Further, some commentators have specifically noted that the increase to the Small Claims Court's monetary jurisdiction has resulted in an increase in wrongful dismissal actions being brought in the Small Claims Court.13
Another change to the Small Claims Court Rules related to acceptable manners of service. Under the old regime, a plaintiff could serve their statement of claim by regular mail, but after January 1, 2010, a plaintiff is required to serve by registered mail or courier and obtain verified receipt by the defendant. This amendment has been criticized for providing defendants with more opportunities to evade service.14
One of the interesting cases of last year which related to procedures in the Small Claims Court was Van de Vrande v. Butkowsky.15 In that case, the defendant brought a motion for summary judgment under the Small Claims Court Rules, which was granted by the trial Judge. The plaintiff appealed and the Divisional Court set aside the Order, analogizing to the previous Rule 20 respecting summary judgment, and finding that the Judge could not make findings of fact on a motion for summary judgment. The Court of Appeal restored the finding of the trial Judge and dismissed the claim, noting that there was no Rule 20 equivalent in the Small Claims Court Rules, nor should one be read in. Rather, the Court found that Rule 12.02 of the Small Claim Court Rules allowed a party to bring a motion to strike out a document, including a pleading, which it said was more akin to a Rule 21 motion. Thus, the Court of Appeal found that Rule 12 of the Small Claim Court Rules fit conceptually somewhere between Rule 20 and Rule 21 of the Rules. The Court also noted that such motions are often brought by self-represented litigants, who lack the training of counsel, and said the test applied on such motions should reflect that reality to avoid the complexities of a traditional Rule 20 motion for summary judgment. The Court noted as follows:
Conceptually, I view r. 12.02 as being situated somewhere between the rules 20 and 21 of the Rules of Civil Procedure. It is not a summary judgment motion involving extensive affidavits and a requirement such as contemplated in r. 20 of the Rules of Civil Procedure where the responding party must put his "best foot forward". It is more akin to a r. 21 motion, although it is worded more broadly and does not have the same prohibition on the filing of affidavit evidence. It is a motion that is brought in the spirit of the summary nature of Small Claims Court proceedings and involves an analysis of whether a reasonable cause of action has been disclosed or whether the proceeding should be ended at an early stage because its continuation would be "inflammatory", a "waste of time" or a "nuisance."16
The findings in Van de Vrande were considered in Toronto Dominion Bank v. Thind et al.17 In that case, the plaintiff commenced three separate claims in the Ontario Superior Court claiming a total amount of $22,000. The defendants moved to transfer the actions to the Small Claims Court, and the plaintiff brought a cross‐motion for summary judgment on the basis that the defendants did not dispute that the amounts claimed were owed to it. The Court granted the motion for summary judgment, noting that based on the findings in Van de Vrande, no procedure corresponding to summary judgment was available in the Small Claims Court. The decision in Toronto Dominion Bank also raises two related points, respecting transfer of cases to the Small Claims Court and awards of costs when a party has commenced their claim in the "wrong" Court, which I discuss below.
While the increase in the Small Claims Court's monetary jurisdiction creates a forum for more cases of a higher value to be heard, it may be too early to say with any certainty how the resources of the Court are handling the increase in volume and whether the increase in cases going into the Small Claims Court has impacted the speed in which those cases are resolved. Two other cautions respecting Small Claims Court cases should be noted: first, service of a statement of claim must now be made personally on a defendant, and second, the summary judgment procedure available under Rule 20 is not available at the Small Claims Court. It may be that the process contemplated by the Court of Appeal in Van de Vrande is a more relaxed process, but based on the discussion in Toronto Dominion Bank, the traditional concept of summary judgment may be still more appropriate for certain cases.
The Simplified Procedure (Rule 76) Regime
Simplified Procedure or Rule 76 was introduced in Ontario as a pilot project in 1996, with a monetary jurisdiction of $25,000. Since that time, Simplified Procedure has become a permanent fixture in the Rules, and was intended to offer litigants cost and time saving mechanisms including relaxed summary judgment requirements and early disclosure of witness names and documents.18
However, as discussed in the Osborne Report, the observations from the bench and bar were that Rule 76 was not working as intended. Three major concerns were cited:19
- Parties ignored Rule 76.04, which prevented examinations for discovery in Simplified Procedure matters. Instead, parties were routinely consenting to pre-trial discoveries, thus reducing the time and cost saving benefits of Rule 76;
- Parties were not taking advantage of the opportunity to proceed by way of summary trial under Rule 76.12. Instead, parties were electing to proceed by way of ordinary trial, again reducing the time and cost saving benefits of Rule 76; and
- While plaintiffs could "opt-in" to Simplified Procedure for actions which sought amounts in excess of $50,000, provided the defendant did not object, pursuant to Rule 76.02, plaintiffs were not opting-in and cases between $50,000 and $100,000 were proceeding in the ordinary regime.
To address these concerns, several amendments were made to Rule 76.
Amendment No. 1 - Increase to the Monetary Jurisdiction of Rule 76
Perhaps to mirror the increase in the monetary jurisdiction of the Small Claims Court, at the recommendation of Justice Osborne, the monetary limit on claims brought under Simplified Procedure was increased from $50,000 to $100,000, effective January 1, 2010.
Further, under the old Rule 76, the monetary limit applied to the claim of each plaintiff, meaning that if two plaintiffs each had a claim for $50,000, both claims could be brought in the same action under Simplified Procedure, resulting in total exposure of the defendant of $100,000. Rule 76.02(2) was not amended, and two (or more) plaintiffs, each with a claim of $100,000, can still bring their claims together in the same action under Rule 76.
Amendment No. 2 - Examinations for Discovery Allowed to a Maximum of Two Hours
To address the concern raised in the Osborne Report that counsel and parties were ignoring the Rule prohibiting examinations for discovery, and to address other concerns from counsel about going to trial —blind" and to facilitate meaningful settlement discussions, another significant amendment to Rule 76 was to permit examinations for discovery to a maximum of two hours per party. However, Rule 76.04 still prohibits examinations by written questions and answers, cross-examinations on an affidavit or examinations on a motion.
Amendment No. 3 – Examination-in-chief at Summary Trial to a Maximum of Ten Minutes
The Osborne Report noted that the summary trial provided for in Rule 76 was underused. In fact, only 126 summary trials were reportedly held in Ontario in 2005-2006.20 To encourage the use of summary trials and to allow litigants to tell their side of the story first-hand, another amendment to Rule 76 was to grant parties 10 minutes for examination-in-chief as part of the summary trial: Rule 76.12(1.1) and (4.1). The Osborne Report noted that this time for examination-in-chief at a summary trial may be particularly helpful to parties in cases where credibility is in issue.21
However, no amendments were made to the summary trial procedure which allowed affidavit evidence at trial, despite the concerns reported in the Osborne Report that such evidence made a summary trial more costly. Further, parties are still able to elect whether to proceed by way of summary or ordinary trial.22
Amendment No. 4 - Summary Judgment under Rule 20 Eliminated
Further Rule 76.07, which related to motions for summary judgment in Simplified Procedure matters was removed from the regime. Rule 76.07 allowed parties to bring a motion for summary judgment following the close of pleadings, and noted that the test on such a motion was similar, but less onerous, than the test on a motion for summary judgment under Rule 20. Now, parties who choose to move for summary judgment are required to use the process contemplated under the new Rule 20.
Amendment No. 5 – Pre-trial Timing Increased
Finally, the timing of the pre-trial conference under Rule 76.09 was changed from being scheduled within 90 days from the first defence, to being scheduled 180 days from the first defence.
Pros and Cons of the Amendments to the Simplified Procedure (Rule 76) Regime
"Pro" No. 1 - Increase to the Monetary Jurisdiction
The first pro of the amendments to Rule 76 is, obviously, the increase in the monetary jurisdiction of the regime, which allows parties to pursue matters for greater monetary value and take advantage of a more straightforward process, thereby facilitating faster and more cost effective resolution of disputes.
"Pro" No. 2 - Examinations for Discovery Allowed
The second pro is, as described above, that parties are now allowed a maximum of two hours for oral examinations for discovery. However, recall that Justice Osborne noted that parties were already agreeing to pre-trial discovery in simplified procedure matters, so it is possible this amendment is more of a codification of the existing practice, rather than a change in how Rule 76 cases are conducted.
"Con" No. 1 - Lack of Clear Transition Provisions, Grandfathering of Pre-2010 Cases
When the amendments to the Rules were first announced, questions arose about the transition provision of the new Rules. For new actions commenced after January 1, 2010, it was clear that they would fall entirely under the new Rule 76 regime, but for existing proceedings it was much less clear. Judges appear to be operating under the assumption that cases commenced before January 1, 2010 are subject to the old regime. For example, in Zerucelli v. Parravano et al.23, the plaintiff sought an order to discover the defendants and the Court noted that when the action was set down for trial in 2009, discovery was not permitted by the Rules. The Court went on to note the benefits of allowing pre-trial discovery, including facilitating meaningful settlement discussions and preventing parties from going to trial "blind", and ordered that "...despite the age of this case, I hold that the 2010 amendments to the Rules of Civil Procedure apply to this action".24 See also Warman v. National Post et al.25, which noted that despite the amendments to the Rules, examinations were prohibited in that Simplified Procedure case pursuant to Rule 76.04, and thus the plaintiff's only recourse to additional discovery was by way of a motion to the Court.
"Con" No. 2 - Discovery Plan Required?
As noted above, in Zerucelli the Court permitted the parties to conduct examinations for discovery, however the Court went on to order the parties to prepare and a agree to a discovery plan, and further noted that if the parties were unable to agree to a discovery plan, either party could bring a further motion for the appropriate relief.26 Keeping in mind the spirit and purpose of Rule 76 as described in the Osborne Report, to impose the preparation of a discovery plan on parties appears to fly in the face of the ease and simplicity contemplated by Rule 76.
Neutral - Costs Consequences of Rule 76
The factor which seems neutral, because the impact of the Rule will vary from case to case, relates to the cost consequences which are set out in Rule 76.13. Rule 76.13 provides that if a plaintiff brings their action in the ordinary procedure and recovers an amount that is within the jurisdiction of the Simplified Procedure, the plaintiff shall not recover any costs unless the Court is satisfied that it was reasonable for the plaintiff to bring his or her action in the ordinary procedure. This Rule has been amended and a transition provision added (Rule 76.13(11)) to account for the increase of Simplified Procedure matters to $100,000, i.e. Rule 76.13 will be applied to actions that were commenced before January 1, 2010 as though the limit of Rule 76 is $50,000, and actions that were commenced after January 1, 2010 will be considered based on the increased jurisdiction of Rule 76 to $100,000.
However, at least recently, the Courts seem reluctant to apply Rule 76.13.
In Marentette v. Amherstburg Police Services Board et al.27, the plaintiff claimed damages and lost benefits as a result of the termination of his employment with the defendant. His total claim was $227,000 and he recovered $7,000 at trial. The Court considered Rule 76.13 and noted that the case law indicated that the Rule should be strictly enforced, and only deviated from when the plaintiff can demonstrate that it was reasonable for him or her to commence the action under ordinary procedure. The Court found that certain heads of damage claimed by the plaintiff were not frivolous, and it was not unreasonable for the plaintiff to have instituted the claim in ordinary procedure, and this refused to apply Rule 76.13.
In Qubti v. Reprodux Ltd.28, the plaintiff claimed damages following termination of his employment with the defendant. The plaintiff recovered $9,000 at trial and sought costs in the amount of $132,000. The defendant also sought costs in the amount of $40,000, on the basis that the plaintiff did not commence the action in the proper forum, noting that the plaintiff moved the claim from Simplified Procedure to the ordinary procedure and recovered only a mere fraction (4%) of his claim. The Court accepted the plaintiff's position and basis for maintaining the action in ordinary procedure, noting in particular that a simplified trial would not have been the appropriate forum to deal with the issues raised in the litigation. Thus, the Court refused to deprive the plaintiff of his cost in accordance with Rule 76.13 and awarded $40,000 in costs.
Finally, in Frank & Sons Painting & Decorating Ltd. v. M/2 Group Inc. et al.29, the plaintiff recovered $43,000 in a claim pursuant to the Construction Lien Act. The Court considered Rule 76.13 and disallowed the plaintiff's claim for costs associated with its claim for lien (on the basis of its finding that the claim for lien was registered out of time) but awarded the plaintiff $25,000 for its costs and disbursements.
Costs and Transferring Cases between Simplified Rules and Small Claims Court
The issue of costs and the possible penalties that may be visited on a party for failing to commence their proceeding in the appropriate forum then raises the question of when is it appropriate to transfer a case from one forum to another.
Under Section 23(2) of the Courts of Justice Act, an action in the Superior Court of Justice may be transferred to the Small Claims Court by the Registrar on consent of the parties, if the claim relates to the payment of money or recovery of personal property and the claim is within the monetary jurisdiction of the Small Claims Court:
(2) An action in the Superior Court of Justice may be transferred to the Small Claims Court by the local registrar of the Superior Court of Justice on requisition with the consent of all parties filed before the trial commences if,
(a) the only claim is for the payment of money or the recovery of possession of personal property; and
(b) the claim is within the jurisdiction of the Small Claims Court.30
Further, where a party will not consent to the transfer, a Judge of the Superior Court can order the matter transferred, see Shoppers Trust Co. v. Mann Taxi Management Ltd. et al.31 and Graves v. Avis Rent A Car System Inc. et al.32
While Shoppers Trust and Graves both involved cases where the action in question was being transferred from the Superior Court to the Small Claims Court, and in the case of Shoppers Trust, the transfer was sought as a direct result of the increase to the Small Claims Court jurisdiction (from $3,000 to $6,000), there have been other cases where the action in question has been transferred from the Small Claims Court to Simplified Procedure in the Ontario Superior Court. For example, in Municipality of Sioux Lookout v. Goodfellow,33 the Court transferred eight separate Small Claims Court proceedings, which claimed an aggregate of $21,000 against the same defendant, to the Superior Court.
In transferring cases from the Small Claims Court to the Superior Court of Justice, a variety of factors are considered as were articulated in Farlow v. Hospital for Sick Children34, including:
- the complexity of the issues;
- the need or importance of expert evidence to determine the case;
- the need for full discovery;
- whether the case involves issues of general importance; and
- the desire for a just and fair determination of the dispute.
In addition, the Court in Farlow noted that the factors above must be balanced against the principle that the Court should rarely exercise its discretion to transfer a case and the litigant's choice of forum should be respected.35
More recently, the issue was considered in 1000728 Ontario Limited o/a Baron Finance v. Kakish et al.36 There, the Court ordered the transfer of a Small Claims action which sought the recovery of unpaid invoices in the amount of $10,195.00 to the Superior Court of Justice on the basis of the Farlow factors, including by noting that Rules 53.03 and 76.10(4) had a procedure for experts which the Small Claims Court did not offer, and that the Simplified Procedure regime, as amended, offered examinations for discovery which would be sufficient to establish the necessary factual basis in the case.
As described above, the issue of a transfer was considered in Toronto Dominion Bank,37 where the defendants sought to transfer three separate Superior Court proceedings which claimed a total of $22,000. The Court granted the plaintiff's cross motion for summary judgment and noted that in the circumstances, including the availability of the summary judgment procedure pursuant to Rule 20, it would make no sense to transfer the actions to the Small Claims Court.
Likewise, in Capano et al. v. Rahm38, the plaintiffs commenced a negligence claim against the defendant seeking damages under $50,000. The action was commenced under Simplified Procedure and had been set down for trial and one pre trial conference had been conducted. After the amendments to the Rules, and the increase to the monetary jurisdiction of the Small Claims Court, the plaintiffs moved to have the action transferred from the Superior Court to the Small Claims Court. The Court refused to grant the transfer because the action was too far along or the transfer to be appropriate, the Court noted that it was not convinced that a transfer would secure the "just, most expeditious and least expensive determination" of the dispute.39
One further point made by the Court in Capano related to the issue of costs. The Court noted that the plaintiffs had shown concern respecting their own cost exposure, and that they had been "insensitive" to the defendant's cost exposure.40 As noted in the Osborne Report, the Small Claims Court Rules provide that a party can recover no more than 15% of the value of their claim, thus limiting the costs exposure of any party to $1,500.41 With the increase to the monetary jurisdiction of the Small Claims Court, that exposure to costs has increased to $3,750, which is still a modest amount. However, if a party is requesting a transfer to the Small Claims Court, the limits on exposure to costs in that Court may weigh against a transfer, particularly in cases where the parties have already invested time and resources to moving the matter forward in the Superior Court as was the case in Capano.
One recent case which has given a ringing endorsement to the immediate transfer of cases was Blow v. Brethet et al.42 Following a three day trial under Simplified Procedure, the plaintiff recovered just over $21,000 and sought a further $64,000 in costs. In his costs endorsement, the Judge awarded the plaintiff only $6,000 in costs, noting:
...this is a case that cried out for immediate removal to the Small Claims Court as of January 2010. It was inevitable that the amount claimed for the damaged trailer would be reduced from the agreed valuation of $25,000 by the salvage amount of $6,800 resulting in a net award of $18,500. In addition, the loss of income claim of $2,400 was doomed to failure in the absence of any basis to justify the plaintiff's claim for income replacement of $600 per day. That left a claim of approximately $5,000 for towing and storage charges. This puts the net reasonable claim well below the $25,000 limit of the Small Claims Court.43
Parties in such circumstances have also had recourse to Rule 57.05(1), which states that if a plaintiff brings their action in the ordinary regime and recovers an amount within the monetary jurisdiction of the Small Claims Court, it may be denied its costs. However, recently, and except in extreme circumstances, the Courts seem reluctant to enforce this Rule.
In A&A Steelseal Waterproofing Inc. v. Kalovski et al.44, the plaintiff's claim was for $48,000 but was reduced to $10,000 at trial. The defendants brought a counterclaim against the plaintiff in the amount of $150,000. The plaintiff successfully recovered $10,000 and the counterclaim was dismissed. The plaintiff sought $41,000 in costs on a substantial indemnity scale. The defendants objected to the amount sought by the plaintiff and relied on Rule 57.05(1), stating that given the amount recovered by the plaintiff, it should only recover costs on the basis allowed by the Small Claims Court. The Court disagreed, in part due to the counterclaim the plaintiff was forced to defend, and awarded the plaintiff $41,000 in costs on the substantial indemnity scale.
In Toronto Dominion Bank45, the defendants sought to transfer three separate Superior Court actions, which claimed a total of $22,000, to the Small Claims Court. The motion to transfer was denied because the Court disposed of the proceedings on the plaintiff's cross motion for summary judgment. When considering the issue of costs, the Court noted several factors including the points raised on the motion to transfer and the submissions of the plaintiff as to why the proceedings were brought in the Superior Court, including because of the availability of summary judgment. Nevertheless, the Court found that such considerations could not override the clear policy adopted by the legislature and the Rules Committee that cases of less than $25,000 be administered by the Small Claims Court. Even though the plaintiff successfully obtained summary judgment for the amounts claimed in all three proceedings, the Court denied the plaintiff its costs on the basis of Rule 57.05(1).
Finally, in Toskov v. TD Canada Trust46, the plaintiffs' claim sought $25,000 and recovered only $3,000 following a trial. The plaintiffs sought $17,000 in costs and, in responding to the question of whether Rule 57.05(1) should be applied, suggested their choice of forum was strategic:
Counsel for the plaintiffs candidly submitted the reason the matter was brought in the Superior Court was in order that the plaintiffs might have a chance of securing a more considered and perhaps more favourable result. His point was that the deputy judges that preside in Small Claims Court proceedings are not actual judges but are lawyers and may not be as skilled at adjudication as judges of this court.47
The Court rejected that submission and denied the plaintiffs their costs on the basis of Rule 57.05(1). The Court further noted that the plaintiffs' position runs contrary to the goals of the Court and that parties must be discouraged from forum shopping.
Finally, the Osborne Report noted significant concerns with cases taking more time and expense than was proportionate to the amounts in dispute and the importance of the issues at stake. The concept of proportionality has become paramount in civil litigation. Specifically, Justice Osborne noted that awards of costs should reflect not only what time and expense was involved in the proceeding, but also what time and expense was justified, given the circumstances of the case.48
Proportionality in litigation has been raised in many pre‐2010 decisions including in the oftencited Trafalgar Industries of Canada v. Pharmax Ltd.49 and Culligan Springs Ltd. et al. v. Dunlop Lift Truck (1994) Inc.50, both of which related to awards of costs in Simplified Procedure cases. In Culligan Springs, the plaintiffs claimed $50,000 for defects to a forklift, and the defendant counterclaimed for $1,003 for outstanding repair invoices. The main action took approximately two days for trial, while the counterclaim required six days. The plaintiffs' claim was dismissed but the defendant was successful on the counterclaim and was awarded $1,003. The defendant was awarded $60,000 in costs by the trial Judge. The decision was appealed to the Divisional Court and, in reducing the costs payable to the defendant to $40,000, the Divisional Court noted that the principle of proportionality is relevant whether it is the plaintiff or the defendant who was successful. The Court noted:
The principles of proportionality and the reasonable expectations of the parties are, to a degree, intertwined. The principle of proportionality engages a more objective analysis given the issue and the amount in dispute, whereas the reasonable expectation principle requires the judge to examine the particular facts of the case and the subjective expectations of the parties.51
Thus, while proportionality in civil litigation is not a new concept, it has been codified with the 2010 amendments to the Rules as Rule 1.04(1.1):
In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
Although proportionality may have developed out of concerns about costs being disproportionate to the amounts and issues in dispute, in its brief stint as Rule 1.04(1.1), proportionality has been raised in various procedural contexts including in ordering examinations for discovery of non‐parties, see Blenkhorn et al. v. Mazzawi et al.52 and Din et al. v. Melady et al.53; in ordering production, see Amir Mazinani v. Zoran International, Inc.54; in interpreting the standard of a "semblance of relevance" and in making an order respecting refusals, see Brand Name Marketing Inc. v. Rogers Communications Inc. et al.55 and Vieira v. Star Navigation Systems Group Ltd. et al.56; in ordering defence medical examinations, see Girao v. Cunningham et al.57 and Bakalenikov v. Semkiw;58 and in imposing a discovery plan, see Telus Communications Company v. Sharp et al.59
In several of these cases proportionality has been described as establishing "an equality of arms" between the parties, as was noted by Lord Woolf in Access to Justice, in the chapter titled "The role of the courts and the parties in the conduct of civil litigation":
- The overall aim of my Inquiry is to improve access to justice by reducing the inequalities, cost, delay and complexity of civil litigation and to introduce greater certainty as to timescales and costs. My specific objectives are:
- to provide appropriate and proportionate means of resolving disputes;
- to establish "equality of arms" between the parties involved in civil cases;
- to assist the parties to resolve their disputes by agreement at the earliest possible date; and
- to ensure that the limited resources available to the courts can be deployed in the most effective manner for the benefit of everyone involved in civil litigation.60
However, proportionality has been most consistently cited in cases relating to orders respecting costs. In several cases there is merely a reference to Rule 1.04(1.1) as having been considered by the Court, along with the factors set out in Rule 57.01, in determining the appropriate amount for costs, see for example New Solutions Extrusion Corporation v. Gauthier et al.61, Hino Motors Canada Ltd. v. Kell,62 Re Polywheels Inc.63, and Aquafor et al. v. Whyte, Dainty and Calder64.
In Casboro Industries Limited v. Royal Composites, et al.65, the Master considered the principle of proportionality in granting an amendment to the defendants' pleading. In the context of a claim for damages related to the defendants' tenancy of a warehouse they leased from the plaintiff, the amendment was sought after the defendants located and produced two key documents which they claimed necessitated the amendment of one of which contained a release of liability clause in favour of the defendants. The motion was brought after the matter had already been scheduled, and then rescheduled, for trial, and the plaintiff claimed the amendment would require them to "start the lawsuit all over again". The Court weighed the ability to amend a pleading "at any stage" under Rule 26.01 with the new Rule 1.04(1.1) and allowed the amendment. The Court specifically noted:
In terms of "proportionality" the cost of being permitted to rely on this new defence, as opposed to perhaps paying the otherwise anticipated cost of resolving this matter, may be relatively economical.66
The Court went on to order costs to the plaintiff on a substantial indemnity basis in the amount of $16,051.87 for costs "thrown away" by reason of the amendment sought by the defendants.
The defendants appealed the costs award and, on appeal, the Court found that the failure in disclosure which necessitated the amendment and the defendants' conduct was not unreasonable. In allowing the appeal, the Court noted that the sanction of substantial indemnity costs was not appropriate: "...where both parties were obliged to disclose documents they both had in their possessions, and where one party comes forward with the documents that could fundamentally affect the litigation is not in the circumstances a fair exercise of the Master's discretion."67 In coming to this conclusion, the Court made no reference to the Master's consideration of proportionality.
On the issue of costs, there is a line of cases that has held proportionality to mean that there must be a relationship between the amount recovered and the costs awarded. For example, in MCAP Leasing Limited Partnership et al. v. Lind Furniture (Canada) Ltd.68, the Court granted a request for costs in the amount of $23,000 made by the defendants who successfully defeated a motion for summary judgment for $118,000, as not being disproportionate. The Court referred to the often‐cited case of Patene Building v. Niagara Home,69 where, in the context of a claim for damages of less than $15,000, the Court found the plaintiff's request for costs of nearly $9,000 "excessive" and awarded $5,000. The Court noted that an award of costs "...should also bear some reasonable proportionality to the amount of money awarded to the plaintiff as damages"70.
However, another line of cases does not follow the rationale described in Patene. In fact, several cases have maintained awards of costs that are the same as, or in excess of, the amount recovered. In A&A Steelseal71, the plaintiff was awarded $41,000 in costs following a trial where it recovered $10,000, the Court noted:
Further, while costs awarded must be reasonable, it is not the case that the mere fact that costs exceed the damages awarded renders such an award inappropriate: Bonaiuto v. Pilot Insurance Co., 2010 CarswellOnt 1039. As has been stated, the fact that costs significantly exceed the amount at state, at least in the main action, is regrettable but it is well known to counsel that this one of the risks involved in pursing or defending a case.72
In Absolute General Contractors Ltd. et al. v. E&W Aluminum Products Ltd.73, the Court considered the factors of Rule 76 and proportionality in awarding the plaintiffs $20,000 in costs on an award of $20,000. In addition to a counterclaim which had been commenced by the defendant, the Court considered (and disagreed) that the claim should have been transferred to the Small Claims Court given the increase in that Court's monetary jurisdiction. The Court also considered that the trial took three days, involved 86 documents and lengthy closing submissions and, citing the principles in Culligan Springs and proportionality, the Court awarded the plaintiffs $20,000 in costs.
However, perhaps the strongest reaction to the new Rule 1.04(1.1) was stated in Cimmaster Inc. v. Piccione.74 In that case, the plaintiff's claim was commenced under Simplified Procedure but tried under ordinary procedure because of a counterclaim brought by the defendant. The trial lasted six days and the majority of the defendant's counterclaim was dismissed and, once the limited success of the defendant was accounted for, the plaintiff recovered $9,196.86. The plaintiff sought costs of $67,000 on a substantial indemnity scale. The defendant opposed the costs sought on the basis that the judgment in favour of the plaintiff was within the jurisdiction of the Small Claims Court and further, that such an amount was not proportionate to the amount recovered at trial. The Court disagreed and awarded the plaintiff $60,000 in costs, noting that most of the trial was spent on the defendant's unsuccessful counterclaim. The Court rejected the defendant's argument that the costs award was disproportionate, as follows:
Finally, I do not accept, as contended by [the defendant] MTC, that in the circumstances of this case such an amount is disproportionate. The principle of proportionality is important, and must be considered by any judge in fixing costs. Indeed, I have had occasion to apply the principle even before the promulgation of the recent Rules amendments that specifically require it to be considered: see Pitney Bowes of Canada v. Noia,  O.J. No. 4822 (S.C.J.). However, in my view, the principle of proportionality should not normally result in reduced costs where the unsuccessful party has forced a long and expensive trial. It is cold comfort to the successful party, who has been forced to expend many thousands of dollars and many days and hours fighting a claim that is ultimately defeated, only to be told that it should obtain a reduced amount of costs based on some notional concept of proportionality. In my view, as was the case in Pitney Bowes, the concept of proportionality appropriately applies where a successful party has over‐resourced a case having regard to what is at stake, but it should not result in a reduction of the costs otherwise payable in these circumstances.75
The 2010 amendments to the Rules are intended to, among other things, make access to civil justice more accessible and allow parties to resolve disputes in a more time‐and cost‐effective manner. The increase to the monetary jurisdiction of the Small Claims Court and Simplified Procedure actions have opened the doors for litigants in Ontario to bring claims of greater value in forums which allow a simpler process. However, it may be too soon to tell whether the resources of those Courts, and specifically the Small Claims Court, can cope with the volume of new cases while still providing the speed and efficiency for which those Courts are known.
Further, as the recent case law shows, absent extreme circumstances and despite being provided with the tools (specifically Rules 76.13 and 57.05) to penalize parties who fail to take advantage of simpler processes, the Courts seem reluctant to deny a successful party their costs on the basis that they failed to bring their proceeding in the appropriate forum.
Finally, while proportionality has been considered by Courts on a variety of procedural issues, and most commonly in making awards of costs, Courts do not appear to feel constrained by the concept of proportionality, and it has not provided a basis on which Courts are prepared to reduce awards of costs to an otherwise successful litigant, even in cases where such an award exceeds the amount recovered or otherwise appears to be "disproportionate" on its face.
1 I would like to thank John Zerucelli, student at law, for his assistance in preparing this paper. I would also like to express my gratitude to Jeremy Millard, my colleague and co‐Editor of the FMC 2010 Amendments to the Ontario Rules of Civil Procedure Blog at http://www.ontariorulesofcivilprocedure.com .
2 Honourable Coulter A. Osborne, Q.C., "Civil Justice Reform Project: Summary of Findings and Recommendations", (November2007), http://www.attorneygeneral.jus.gov.on.ca/English/about/pubs/cjrp/CJRP‐Report_EN.pdf [the "Osborne Report"].
3 Osborne Report, page 1
4 Osborne Report, page 15.
5 Osborne Report, page 17.
6 Osborne Report, page 17‐18.
7 Osborne Report, page 20.
8 Osborne Report, page 15.
9 Osborne Report, page 17.
10 Ministry of the Attorney General (Ontario), "Court Services Division Annual Report 2009‐2010" ("Attorney General 2009 Annual Report"), page 30.
11 Attorney General 2009 Annual Report, page 35.
12 Ministry of the Attorney General News Release: "Faster, More Affordable Civil Courts for Ontarians", January 5, 2011 at http://www.news.ontario.ca/mag/en/2011/01/faster‐more‐affordable‐civil‐courts‐for‐ontarians.html .
13 R.Todd, "New rules pave way for wrongful dismissal claims" (November 15, 2010), Law Times.
14 J. Farkas, "Small Claims Court a defendant's paradise?" (November 1, 2010), Law Times.
15 Van de Vrande v. Butkowsky, 2010 CarswellOnt 1777 (O.C.A.) ("Van de Vrande").
16 Van de Vrande, para 19.
17 Toronto Dominion Bank v. Thind et al, 2010 CarswellOnt 9651 (S.C.J.) ("Toronto Dominion Bank).
18 Osborne Report, page 23.
19 Osborne Report, page 26‐27.
20 Osborne Report, page 28.
21 Osborne Report, page 29.
22 Osborne Report, page 28‐29.
23 Zerucelli v. Parravano et al, 2010 ONSC 5393 (CanLII) ("Zerucelli
24 Zerucelli, para 4.
25 Warman v. National Post et al, 2010 ONSC 3670 (CanLII).
26 Zerucelli, para 4.
27 Marentette v. Amherstburg Police Services Board et al, 2010 ONSC 1853 (CanLII).
28 Qubti v. Reprodux Ltd., 2010 ONSC 2200 (CanLII).
29 Frank & Sons Painting & Decorating Ltd. v. M/2 Group Inc. et al., 2010 ONSC 4525 (CanLII).
30 Courts of Justice Act, R.S.O 1990, c. C‐43, s.23(2).
31 Shoppers Trust Co. v. Mann Taxi Management Ltd. et al., 1993 ONSC 5487 (CanLII) ("Shoppers Trust").
32 Graves v. Avis Rent A Car System Inc. et al., 1993 CarswellOnt 472 (eCarswell) ("Graves")
33 The Corporation of the Municipality of Sioux Lookout v. Goodfellow, 2010 ONSC 1812 (CanLII).
34 Farlow and Farlow v. Hospital for Sick Children et al, 2009 ONSC 63602 (CanLII) ("Farlow").
35 Farlow, paras 21 and 22.
36 1000728 Ontario Limited o/a Baron Finance v. Kakish et al., 2010 ONSC 538 (CanLII).
37 Toronto Dominion Bank, supra, note 17
38 Capano v. Rahm, 2010 ONSC 3241 (CanLII) ("Capano").
39 Capano, para 4.
40 Capano, para 14.
41 Osborne Report, page 15.
42 Blow v. Brethet et al., 2010 ONSC 6332 (CanLII).
43 Blow v. Brethet, para 2.
44 A&A Steelseal Waterproofing Inc. v. Kalovski et al, 2010 ONSC 2652 (CanLII) ("A&A Steelseal").
45 Toronto Dominion Bank, supra, note 17.
46 Toskov and Toskov v. TD Canada Trust, 2010 ONSC 6138 (CanLII) ("Toskov").
47 Toskov, para 50.
48 Osborne Report, page 134.
49 Trafalgar Industries of Canada v. Pharmax Ltd., 2003 ONSC 40313 (CanLII).
50 Culligan Springs Ltd. et al. v. Dunlop Lift Truck (1994) Inc., 2006 ONSC 13419 (CanLII) ("Culligan Springs").
51 Culligan Springs, para 33.
52 Blenkhorn et al. v. Mazzawi et al., 2010 ONSC 699 (CanLII).
53 Din et al. v. Melady et al., 2010 ONSC 4865 (CanLII).
54 Amir Mazinani v. Zoran International, Inc., 2010 ONSC 4582 (CanLII).
55 Brand Name Marketing Inc. v. Rogers Communications Inc. et al., 2010 ONSC 1159 (CanLII) ("Brand Name Marketing").
56 Vieira v. Star Navigation Systems Group Ltd. et al., 2010 ONSC 6891 (CanLII).
57 Girao v. Cunningham et al., 2010 ONSC 4607 (CanLII) ("Girao").
58 Bakalenikov v. Semkiw and Semkiw, 2010 ONSC 4928 (CanLII) ("Bakalenikov").
59 Telus Communications Company v. Sharp et al., 2010 ONSC 2878 (CanLII).
60 See, for example, Girao, para 28, as well as Bakalenikov, para 47 and Brand Name Marketing, para 52.
61 New Solutions Extrusion Corporation v. Gauthier et al., 2010 ONSC 1897 (CanLII).
62 Hino Motors Canada Ltd.v. Kell, 2010 ONSC 2419 (CanLII).
63 Re Polywheels Inc., 2010 ONSC 2445 (CanLII).
64 Aquafor et al. v. Whyte, Dainty and Calder, 2010 ONSC 3746 (CanLII).
65 Casboro Industries Limited v. Royal Composites Co. A division of Royal Group Technologies Inc. et al, 2010 ONSC 16 (CanLII) (Master) ("Casboro").
66 Casboro, para 52.
67 Casboro Industries Limited v. Royal Composites Co. et al., 2010 ONSC 1871 (CanLII) (S.C.J.), para 28.
68 MCAP Leasing Limited Partnership et al. v. Lind Furniture (Canada) Ltd., 2010 ONSC 4308 (CanLII).
69 Patene Building v. Niagara Home, 2010 ONSC 468 (CanLII) ("Patene").
70 Patene, para 1.
71 A&A Steelseal, supra, note 44.
72 A&A Steelseal, para 21.
73 Absolute General Contractors Ltd. et al, v. E&W Aluminum Products Ltd., 2010 ONSC 1655 (CanLII).
74 Cimmaster Inc. v. Piccione, 2010 ONSC 846 (CanLII) ("Cimmaster").
75 Cimmaster, para 19
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