The Potential High Cost of a Small Claims Action

September 11, 2020

The recent decision of Justice Fred Ferguson, Mercure v Kaat Auto Sales, 2020 NBQB 39 (CanLII), (“Mercure v Kaat Auto Sales”) is another reminder to parties to think carefully before filing a Small Claims action in New Brunswick.

Background

In New Brunswick, a litigant can commence a Small Claim so long as the monetary amounts are under $20,000. The objective of Small Claims Court is to make accessing justice economical and user friendly. For example, the rules and procedure are somewhat relaxed as compared to higher levels of court. As was the case in Mercure v Kaat Auto Sales, often a party who is unsuccessful in Small Claims Court can simply appeal the decision. This is because the provisions of Section 20 of the Small Claims Act SNB 2012, c. 15, and associated regulations allow an appeal of the adjudicator’s judgment by way of a trial de novo, which means that the proceeding is repeated as a second trial.  The aggrieved party can simply request an appeal, without needing to provide any basis or reasons as to why the adjudicator’s decision ought to be appealed. The only requirement is that the appeal must be made within 30 days after the filing of the adjudicator’s decision.

In Mercure v Kaat Auto Sales, the Claimant was unhappy with the performance of a 2013 Ford Edge purchased from Kaat Auto. The complaints were primarily with respect to the steering capabilities of the vehicle. Kaat Auto attempted to rectify the alleged issues. The Claimant was not satisfied and brought an action seeking to recover the cost for fixing various issues and the cost of travel, including his time.

Decision

The Claimant was successful in Small Claims Court, however, the Defendant appealed. The Claimant was therefore forced to attend an entirely new trial that lasted two days. At the new trial, both parties are free to bring different evidence and call entirely different witnesses. The Claimant was once again largely successful at the appeal.

Mr. Justice Ferguson, in postscript, aptly stated:

This case is another example of a system of adjudication of Small Claims that is out of sync with contemporary justice in Canada. […] [I]n New Brunswick a litigant can have two trials for claims under $20,000.00. If one side loses at trial […] that litigant can simply file an appeal without any cause and force the other party or parties to repeat the process […] Merit and cost have no part in the decision. Costs orders at the end of the second trial are seriously limited by statute.

 Key Takeaway

A party who is considering commencing a Small Claim and wishes to engage legal counsel, may want to consider other avenues, such as the Simplified Procedure per Rule 79 of the New Brunswick Rules of Court.

The two main advantages to Rule 79 over a Small Claims action are:

  1. Rule 79 offers an expedited procedure. There are no examinations for discovery and in many instances evidence can be presented at trial by affidavit; and,
  2. The losing party does not have an automatic right to a new trial.

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