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The landscape of civil litigation and small claims adjudication has experienced significant changes since the Manitoba Law Reform Commission issued a Report titled The Structure of the Courts, Part II: The Adjudication of Smaller Claims in 1983. These changes have spurred a number of initiatives to reform civil justice systems in Manitoba and elsewhere in Canada. In light of these developments, the Commission decided that it was timely to revisit the small claims system in Manitoba.
The hallmarks of a small claims system have been identified as simplicity, accessibility and effectiveness. The various objectives of the Small Claims Court system can at times, however, be contradictory. In undertaking this study, therefore, the Commission has borne in mind at all times the various factors that must be considered and the various goals that the small claims system is intended to achieve.
The Small Claims Court of Manitoba (the "court") has at its essence an informal and uncomplicated process. The court is an adjunct of the Court of Queen's Bench, staffed by specialized registry personnel. It has jurisdiction over all claims for an amount of money not exceeding $5,000, which may include general damages in an amount not exceeding $1,000, and all claims for an assessment of liability arising from a motor vehicle accident in which the vehicle of the claimant is not damaged. There are exceptions to the court's jurisdiction: it does not, for example, have jurisdiction over matters that fall within the exclusive authority of the Director of Residential Tenancies or the Residential Tenancies Commission, and it is not allowed to hear proceedings that involve a number of specific types of more complex claims.
A claimant begins a small claims action by filing a simple statement setting out the particulars of the claim. The registrar sets a date for the hearing of the claim, which must be within the next 60 days, and the claimant must then serve each defendant with a copy of the claim. A defendant may, but need not, respond to a claim by filing a Notice of Intention to Appear. A defendant may also make a counterclaim against the claimant; if for $5,000 or less, and not joined with a claim for any other relief, the counterclaim will be dealt with at the same time as the main claim; otherwise an action must be commenced in the Court of Queen's Bench. If a defendant is entitled to claim contribution or indemnity from a person not already a party to the claim, the defendant may be permitted to initiate third party proceedings against that person. There are no interlocutory proceedings in the court.
Claims are heard and adjudicated by deputy registrars of the Court of Queen's Bench, known as "hearing officers", some of whom do not have legal training. Claims are dealt with in a summary manner, and the hearing officer may conduct the hearing in such manner as he or she deems appropriate to effect an expeditious and inexpensive determination of the claim. No decision of a hearing officer can be set aside solely because the rules of evidence have not been followed.
Parties may represent themselves at a small claims hearing or may be represented by a lawyer or properly supervised law student.
If a defendant fails to appear at a hearing, the hearing officer may award the claimant default judgment against that defendant; if the claimant fails to appear, the hearing officer may either dismiss the claim or adjourn the hearing.
The hearing officer may award costs against an unsuccessful party, which are not to exceed $100 plus reasonable disbursements except in "exceptional circumstances".
A decision of the hearing officer may be appealed to a judge of the Court of Queen's Bench. An appeal is by way of a new trial, following which costs may be awarded in such amount as the judge may allow. A party may further appeal to the Court of Appeal, with leave of a judge of that court, only on a question of law.
Following a hearing, the court issues a Certificate of Decision to all parties, which is enforceable as a decision of the Court of Queen's Bench -- primarily by garnishment, writ of seizure and sale, or registration of the judgment against real property, followed by judgment sale. As well, the judgment creditor (the successful claimant) is entitled to examine the judgment debtor (the unsuccessful defendant) in aid of execution before a court reporter. If the judgment debtor does not cooperate, he or she can be punished for contempt of court. Ultimately, however, it is up to the judgment creditor, and not the court, to enforce the judgment. Many individual claimants fail to realize this fact before filing their claims and are subsequently disappointed.
The Report also reviews the small claims systems in place in the nine other Canadian provinces and two territories, for comparative purposes. Some of these systems differ quite significantly from the Manitoba system, while others are broadly similar. British Columbia and Ontario have both overhauled their small claims systems in recent years, and other provinces and territories have attempted innovation to varying degrees and of varying nature in response to pressures brought to bear by users of the system. The Commission gleaned several useful ideas from this overview of other systems and has attempted to adopt those ideas that are useful while discarding those it considers have not worked or are inappropriate to the Manitoba situation.
The Commission considered a number of different areas in which reform of the current small claims system might be beneficial. Broadly speaking, the final list of recommendations can be divided into four areas: the appointment and powers of the court's adjudicators; the court's jurisdiction; the hearing process; and the enforcement of judgments.
With respect to the court's adjudicators, all Canadian Small Claims Courts are staffed in whole or in part by judges or legally trained individuals with the exception of Manitoba's court which is staffed in part by non-legally trained officers. While there appears to be a general consensus that the hearing officers are doing a good job and that the system fits the small claims model which values expeditious and low-cost handling of claims, it may also create problems. Given the Commission's recommendations with respect to the monetary and substantive jurisdiction of the court, the Commission recommends that hearing officers should be legally trained. The Commission has also recommended that the hearing officers be granted express jurisdiction to make whatever orders are necessary to determine the claims before them which would bring Manitoba in line with most other Canadian jurisdictions and would avoid possible disputes over the extent of their powers.
There are two primary aspects to the jurisdiction of the Small Claims Court: monetary and substantive. In most respects, the Commission is of the view that the jurisdiction of Manitoba's Small Claims Court is satisfactory. There are, however, areas in which the Commission believes some improvements can be made. From a monetary perspective, it recommends that the limit be increased from $5,000 to $7,5000 and that the limit on claims for general damages be increased from $1,000 to $3,000. As well, in the substantive area, it recommends that the court should be permitted to hear and deal with interpleader applications, given its recommendation that hearing officers should be legally trained.
It is in the area of the court's hearing process that several of the Commission's most significant recommendations appear. Many of these recommendations are intended to streamline the court's procedures and reduce the required amount of time and resources. The first is that a (voluntary) mediation programme be implemented, so that parties are encouraged to settle their disputes without the necessity of appearing in court. The second such recommendation is that the court establish a new default judgment procedure, requiring defendants to respond to claims and enabling claimants to obtain judgment against defendants who do not respond, again without requiring an appearance in court. Thirdly, the Commission has recommended that a process be introduced to enable parties to introduce written evidence without having to call the author to testify in court.
Finally, as noted earlier, the enforcement of judgments has historically been a sore point for litigants in Small Claims Court. No province appears to have managed to provide an enforcement mechanism that successfully simplifies and improves the enforcement mechanism so as to relieve the frustration and aggravation experienced by so many small claims judgment creditors. Manitoba's former County Courts did, however, allow judgment creditors to have a judgment debtor summonsed before the court for an inquiry into the reasons for non-payment, following which the court could set a payment schedule. The Commission has recommended that such a procedure be reintroduced into the small claims system, in the expectation that it will alleviate, at least to some extent, the problems caused by recalcitrant judgment debtors.
Report #99,
March 1998
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