The Differences of Small Claims Court vs. the Superior Court of Justice in Insurance Claim Files

For insurance claims in the common law jurisdiction of Ontario, it is important to understand the differences in legal actions that can be brought before the Small Claims Court and Superior Court. These two legal avenues offer distinct paths for seeking redress in disputes. Below, we’ll outline the types of insurance claims that can be heard in these courts, and the key differences between the types of disputes.

Note that this blog is for information purposes only. It is important to remember that legal advice should be obtained before proceeding with any legal action, and nothing in this blog should be considered legal advice, or relied upon for commencing legal action.

Small Claims Court vs Superior Claims Court: Key differences

Understanding the differences between Small Claims Court and the Superior Court is crucial to understand, as what court a claim is held in can have significant consequences to both the plaintiff and defendant.

Monetary Jurisdiction

One of the most significant differences between Small Claims Court and the Superior Court lies in their respective monetary jurisdiction. For Small Claims Court in Ontario, the limit is to bring a claim for $35,000. Claims exceeding this limit must be filed in the Superior Court.

However, claimants have the option to waive the amount exceeding the jurisdictional limit of $35,000 and proceed with their claim in Small Claims Court if they wish. This flexibility allows individuals to pursue claims within the jurisdictional limits of Small Claims Court, even if the total amount claimed exceeds the threshold. However, by doing so the claimant must accept that he or she will never recover more than $35,000.

In addition to having no monetary cap, the Superior Court can apply equitable remedies such as declarations and injunctions which (with two exceptions) the Small Claims Court cannot.

Costs

In Small Claims Court, the costs associated with litigation are generally lower compared to the Superior Court. This makes it a more accessible option for individuals seeking resolution for disputes without incurring substantial legal expenses. The general rule is that an award of costs in the Small Claims Court will not exceed 15 per cent of the amount claimed.

The Superior Court proceedings typically involve higher costs, including legal fees and court expenses associated with additional complexity, making it a less cost-effective option for smaller claims. Unlike Small Claims Court, a Judge will look to the amount of money incurred by the successful party when determining what amount of costs to award. However, parties should note that a Court will almost never award a successful party 100% of the legal costs incurred by them.

Formality

Small Claims Court proceedings are generally less formal compared to the Superior Court. The rules of evidence and procedure are often more relaxed, and parties more often represent themselves without legal representation. Trials are often heard by a deputy judge and typically last a single day. This less formal setting can make the litigation process more approachable for individuals who wish to self represent.

By contrast, Superior Court proceedings adhere to stricter rules of evidence and procedure, often requiring legal representation and adherence to formal courtroom etiquette. Trials are heard by a judge and can last for days or even weeks.

Other methods of dispute resolution

If a claim is brought in one of the courts, defending parties will often attempt to settle the matter to avoid litigation if possible. Defending a lawsuit in any court (whether it’s the Small Claims Court or a Superior Court) takes time and costs money.

There are a number of avenues available to parties for a potential settlement:

Negotiation

Sometimes when a claim is brought, a defence team is able to negotiate a settlement outside of the courtroom. Often claims involve financial consideration, but sometimes another remedial action can be found to help resolve a dispute.

Mediation

Mediation involves a neutral mediator facilitating discussions between parties to reach a settlement. This process fosters communication and encourages compromise, potentially convincing a claimant to discontinue the proceedings.

Insurers may generally have mediators that they can recommend. If not, the Alternative Dispute Resolution (ADR) Institute of Ontario and the Alternative Dispute Resolution (ADR) Institute of Canada are organizations that can likely assist.

Arbitration

Arbitration employs a neutral arbitrator to resolve disputes without court involvement.

Parties agree to abide by the arbitrator’s decision, which holds legal weight and is enforceable. Unlike trials, arbitrations are less formal, offering a compelling alternative.

Arbitrators assess evidence presented by both sides and must adhere to the Arbitration Act. While arbitration may involve complexity and expense, it often proves quicker and less costly than litigation.

Claims Management for Insurance Programs

The differences between the Small Claims Court and the Superior Court has a significant impact on a legal action, the approach, and outcome. It is important to consider the implications of each when a legal action is commenced.

The claims group at Axxima is experienced at managing claims portfolios for complex insurance programs, including providing direction and strategy to legal teams defending matters in various courts and tribunals.