Our litigation bulletin series is designed to demystify the litigation process. This latest bulletin in the series is about the simplified procedure that applies to actions in Ontario that meet certain criteria. The most notable of these criteria is that actions may proceed under the simplified procedure if the amount claimed in the action is less than $50,000.
The simplified procedure, which is sometimes referred to as the simplified rules, was created in order to provide a less expensive way of litigating claims of modest amounts. The simplified rules streamline the procedural steps in the litigation. For example, as will be discussed further below, no examination for discovery is permitted in an action under the simplified procedure. This has the effect of reducing the time and expense involved in litigating a claim.
Claims for amounts up to $50,000 must be brought under the simplified procedure. The claim can be for:
a) money in the amount of $50,000 or less;
b) for real property or personal property where the fair market value of the property, as of the date the action is commenced, is $50,000 or less; or
c) a combination of money and property totalling $50,000 or less.
When considering whether a claim amounts to $50,000 or less, interest and costs are not included in the total. If there is more than one plaintiff making a claim in an action, the simplified procedure must be used if each plaintiff’s claim, considered separately, amounts to $50,000 or less.
A plaintiff may also bring an action under the simplified procedure where more than $50,000 is claimed. However, in that case the defendant has the option to object to the use of the simplified procedure in its statement of defence. If the defendant objects, the plaintiff then has the option of either abandoning the excess of its claim over and above $50,000 in order to keep the action under the simplified procedure, or, if the plaintiff chooses not to abandon the excess, the action will proceed under the ordinary procedure. For example, if a plaintiff brings a claim for $60,000 under the simplified procedure and the defendant objects, the plaintiff could abandon the excess of $10,000 and proceed with a claim under the simplified procedure for $50,000. The benefits of using the simplified procedure may sometimes warrant such a decision by the plaintiff.
Generally, it is in the defendant’s interest to object to the use of the simplified procedure in claims over $50,000 because the end result is that the plaintiff either abandons part of its claim, or the claim reverts to the ordinary procedure and the plaintiff may face the costs consequences discussed below.
Counterclaims, Crossclaims or Third Party Claims
Where a plaintiff has brought an action under the simplified procedure and the defendant makes a counterclaim, crossclaim or third party claim for less than $50,000, the action will remain under the simplified procedure. If the counterclaim, crossclaim or third party claim is for more than $50,000, the defendant bringing such a claim may state in its pleading that the counterclaim, crossclaim or third party claim is to proceed under the ordinary procedure. If the defendant does not make this statement in its pleading, the action remains under the simplified procedure unless the defendant to the counterclaim, crossclaim or third party claim objects to the action proceeding under the simplified procedure, and the defendant making the claim does not abandon the portion of its claim which is in excess of the $50,000 limit.
Moving from the Ordinary Procedure to the Simplified Procedure
If an action was started under the ordinary procedure and the plaintiff later wishes to amend its claim to meet the $50,000 or less requirement of the simplified procedure, it is possible to move the action from the ordinary procedure to the simplified procedure regime. The plaintiff must file the consent of all parties to the amendment of the statement of claim and must deliver a notice stating that the action is now continuing under the simplified procedure.
Despite the availability of this option, it is still to the plaintiff’s benefit to think carefully from the outset about which regime is more suitable. If the plaintiff begins the claim under the ordinary procedure and later amends its claim so that the claim can be continued under the simplified procedure, the plaintiff will have to pay costs incurred by the opposing party, on a substantial indemnity basis, up to the date of amendment if those costs would not have been incurred had the claim originally been commenced under the simplified procedure, unless the court orders otherwise. This cost consequence would arise even if the plaintiff were ultimately successful in the action.
There is a very strong incentive for parties to commence their actions under the simplified procedure where the $50,000 or less requirement is met. There will be cost consequences to a plaintiff who fails to use the simplified procedure for an action that appropriately should fall under that regime.
A plaintiff who obtains a judgment for $50,000 or less in any action will not recover any costs unless certain circumstances exist. First, the plaintiff will be eligible to recover costs if the action was under the simplified procedure at the commencement of the trial. However, if the action was under the ordinary procedure at the commencement of the trial, the court must be satisfied that it was reasonable for the plaintiff to have a) commenced and continued the action under the ordinary procedure; or b) allowed the action to be continued under the ordinary procedure by not abandoning claims or part of claims that do not comply with the $50,000 or less requirement. The plaintiff can also be ordered, in the trial judge’s discretion, to pay all or part of the defendant’s costs, including costs on a substantial indemnity basis, in addition to any costs that may be awarded in certain situations as a result of the plaintiff’s failure to accept a settlement offer.1
The cost consequences described above would not apply if the simplified procedure was not available due to a counterclaim, crossclaim or third party claim made by the defendant which took the action outside of the simplified procedure.
It is also possible for the defendant to suffer cost consequences where a claim should have proceeded under the simplified procedure but did not, due to the defendant’s objection. Where a plaintiff has brought an action under the simplified procedure that includes a claim for real or personal property and the defendant objects to the action proceeding under the simplified procedure on the grounds that the property’s fair market value exceeds $50,000 at the date the action was commenced, and the court ultimately finds that the value did not exceed that amount, the defendant will have to pay, on a substantial indemnity basis, the costs incurred by the plaintiff that would not have been incurred had the claim originally complied with the simplified procedure requirements, unless the court orders otherwise.
Main Features of the Simplified Procedure
The simplified procedure has a number of features that are designed to encourage a more expeditious and cost-effective resolution to claims than would otherwise be achieved under the ordinary procedure.
Automatic Dismissal for Delay
The court registrar will consider an action as having been abandoned and will automatically dismiss the action if more than 180 days have passed and nothing has happened to advance the action. This will occur where no statement of defence has been filed, the action has not been disposed of by final order or judgment, and the action has not been set down for trial or summary trial within the 180 day timeline. The registrar will first give 45 days’ notice of the pending dismissal of the action before taking steps to finally dismiss the action.
Similarly, if a statement of defence has been filed in an action but 150 days have passed since it was filed, and the action has not been disposed of by final order or judgment and the action has not been set down for trial or summary trial, the registrar will dismiss the action after first giving 45 days’ notice of the pending dismissal.
Documentary Discovery and Examinations for Discovery
Each party is required to serve an affidavit of documents disclosing all documents relating to any matter in issue in the action that are or have been in the party’s possession, control or power and copies of any non-privileged documents disclosed in the affidavit of documents. This is also a requirement of the ordinary procedure.
An additional requirement with respect to affidavits of documents delivered under the simplified procedure that does not exist in the ordinary procedure is that parties must include a list of the names and addresses of persons who might be expected to have knowledge of matters at issue in the action. Unless the court gives its permission, parties will not be permitted to call a witness at trial unless the witness’s name was disclosed in the affidavit of documents.
A key distinction between the ordinary procedure and the simplified procedure is that there is no ability for parties to conduct either oral or written examinations for discovery. This generally has the effect of moving the action forward more rapidly because time is not spent on such examinations.
Settlement Discussion and Documentary Disclosure
Within 60 days after the statement of defence is filed in a simplified procedure action, the parties must have a meeting or telephone call to discuss whether all documents relating to any matter at issue have been disclosed to one another, and whether settlement of any or all issues is possible. The required settlement discussion takes place on a without prejudice basis and usually involves only the lawyers for each of the parties.
Since the parties do not have the benefit of examination for discovery evidence under the simplified procedure regime, it can be difficult for parties to assess their settlement positions within 60 days after the statement of defence is filed. As a result, actions often do not settle at this stage of the action, although it is of course possible.
Under the simplified procedure, there are many types of motions, such as a motion to set aside default judgment or a motion to amend a statement of claim, that can be dealt with by the court registrar if certain conditions are met. The registrar can make an order in certain types of motions if the motion is on consent of all the parties, or if it is not on consent, no responding motion material was filed.
As with motions under the ordinary procedure, affidavits may be filed as evidence supporting the motion. However, under the simplified procedure, no cross-examination of the person who swore the affidavit is permitted (as is permitted under the ordinary procedure). Furthermore, there is no ability to summons a non-party witness and examine that person before the hearing of the motion for the purpose of having a transcript of his or her evidence available for use at the hearing, as is the case under the ordinary procedure.
Summary Judgment Motions
A summary judgment motion is a type of motion in which the moving party seeks to obtain a judgment from the court without the necessity of having a trial. It is appropriate to bring a summary judgment motion in cases where there are no material facts in dispute that will need to be decided by the trial judge in order for the trial judge to reach a conclusion about the entire case. Our September 2008 bulletin provides more detailed information about this type of motion.
A summary judgment motion can be brought in an action under either the ordinary procedure or the simplified procedure. However the legal test for obtaining summary judgment is less onerous under the simplified procedure. Under the ordinary procedure, the test is that the court shall grant summary judgment if (a) the court is satisfied that there is no genuine issue for trial with respect to a claim or defence; or (b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment. In contrast, under the simplified procedure the test is that the presiding judge shall grant summary judgment unless (a) he or she is unable to decide the issues in the action without cross-examination; or (b) it would be otherwise unjust to decide the issues on the motion.
Essentially, the main difference between the two tests is that under the simplified procedure, a judge has the power to grant summary judgment even if there is a genuine issue for trial, as long as the judge is satisfied that based on the material put before the court, the genuine issue can be resolved on the motion for summary judgment.
Matters to be Set Down for Trial within 90 Days
Under the simplified procedure, a plaintiff must deliver a notice of readiness for pre-trial conference within 90 days after the first defence is filed. The delivery of this notice has the effect of “setting the matter down for trial”, which means that the plaintiff is indicating to the court that the matter is ready to proceed to the pre-trial and trial stages. In the notice of readiness for pre-trial conference, the plaintiff must certify that the mandatory settlement discussion referred to above has taken place.
Attendance at a pre-trial conference is required under the simplified procedure. Both the parties and their lawyers are required to attend, although it is sometimes acceptable in certain jurisdictions in Ontario for only the lawyers (and not the parties) to attend the pre-trial conference. If the person attending the pre-trial conference requires the approval of another person before agreeing to a settlement, the person with the authority to approve a settlement must be available by telephone during the pre-trial so that instructions may be obtained from him or her.
At the pre-trial conference a date for the trial will be fixed by the pre-trial judge or master.
A trial under the simplified procedure may proceed in the ordinary manner in which a trial would proceed under the ordinary procedure, or, if the parties agree, the trial may proceed as a summary trial. In a summary trial, the steps are:
a) the plaintiff adduces evidence by way of affidavit (instead of through an oral examination-in-chief of each witness at trial);
b) an adverse party may cross-examine witnesses on any affidavit of the plaintiff;
c) the plaintiff may re-examine a witness after cross-examination for not more than 10 minutes;
d) the defendant adduces evidence by affidavit;
e) an adverse party may cross-examine witnesses on any affidavit of the defendant;
f) all of a party’s cross-examinations shall be completed within 50 minutes;
g) the defendant may re-examine after crossexamination for not more than 10 minutes;
h) with leave of the trial judge, the plaintiff may adduce any proper reply evidence;
i) after the presentation of evidence, each party may make oral argument for not more than 45 minutes; and
j) the trial judge may vary the order and time of presentation and extend the time limits prescribed above.
In a trial under the ordinary procedure, there are no time limits for examinations, and evidence is typically presented orally rather than by affidavit. There are also no pre-set time limits on oral argument at an ordinary trial, and parties may be permitted to make opening statements. The net effect of the summary trial rules is that trials under this procedure are time-limited.
The simplified procedure in Ontario provides a mechanism for litigating claims of relatively modest amounts in a more expeditious, cost-effective way than would otherwise be possible under the ordinary procedure. Counsel can assist parties with the determination of whether a claim belongs under the simplified procedure or whether as a plaintiff, it may be strategically beneficial to abandon a portion of a claim in order to bring the action under the simplified procedure. Counsel can also assist with the challenges inherent in a simplified procedure action, such as effectively assessing a party’s settlement position in the absence of examination for discovery evidence.