Starting a Small Claim (20:V)

A. Settlement Letter

The fastest and least expensive way to resolve a dispute is to tell the other person what you are claiming from them and why you are claiming it. If the other person agrees with the amount or responds in a manner that leads to a settlement, both parties will save the time, effort, expense, and uncertainty of a lawsuit.

Bona fide attempts to settle may involve concessions and admissions of liability. For example, a claimant may offer to settle for less than the claim to account for the cost, time investment, and risk of going to trial. A defendant, for example, may admit liability but dispute the amount owed. Whenever parties can agree on certain points, the likelihood of settlement increases.

Because of the strong public interest in settlement, these bona fide settlement attempts are protected by settlement privilege. This means that, if the matter is not settled, any reductions in the claim or admissions made disappear and cannot be used against the party who made them38. It is prudent to include the words “WITHOUT PREJUDICE” in correspondence involving bona fide attempts to settle to indicate that the party sending the document wishes to rely on settlement privilege; settlement privilege will still apply, however, even if “WITHOUT PREJUDICE” is not included.

Settlement letters should be brief, factual, and clearly state the amount claimed even if that amount exceeds $25,000. Settlement letters should have a courteous tone as a letter that invokes a hostile reaction from the recipient will be counter-productive. A party writing a settlement letter should never threaten criminal or regulatory penalties; extortion is a criminal offence.

B. Identifying the Defendant(s)

When drafting a notice of claim and throughout the litigation process, it is important to stick to the relevant facts. Court is not a forum for airing grievances that do not give rise to a claim. For example, in a claim for breach of contract, the fact that the defendant acted rudely is generally not relevant to the claim. Including irrelevant facts confuses the issues, wastes time, raises tensions, and makes it more difficult to successfully prove the claim. A good rule to follow for each type of claim is to include only the facts necessary to satisfy the legal test for that type of claim; brief is better.

It is important to make your cause of action (e.g., negligence, breach of contract, etc.), type of damages, and amount of damages very clear. Do not let the judge guess what you want.

1. Suing a Business

a) Corporation

A corporation is a legal entity that is separate from its shareholders and employees. It is identified by a corporate designation such as Incorporated, Limited, Corporation, their abbreviations Inc., Ltd., or Corp., or their French equivalent following the business name.

A corporation may register a sole proprietorship or partnership and operate under that name. To sue such a company, a claimant should include both the corporate name and the name of the proprietorship or partnership: e.g., 0123456 BC Ltd. dba Joe’ s Bakery. The letters dba stand for “doing business as”. Variations such as “coba” meaning “carrying on business as” are also acceptable.

A corporation can enter into contracts and can sue or be sued. Generally speaking, a corporation’ s shareholders, officers, directors, and employees are not liable for the actions or liabilities of the corporation or their own actions while acting within the scope of their office or employment. A person who feels that a shareholder, director, officer, or employee of a corporation might be liable should obtain legal advice.

Corporations may be either provincially or federally incorporated. A federal company is incorporated under the Canada Business Corporations Act, RSC 1985, c. C-44 [CBCA]. A BC corporation is incorporated under the Business Corporations Act, SBC 2002, c 57 [BCBCA]. Corporations may also be registered under the laws of the other provinces and territories.

Because a corporation can have multiple locations, every corporation, including non-BCBCA corporations, doing business in BC must provide an address where it can be served with notices of claim and other important documents. A claimant must perform a company search to obtain the current registered address for the defendant corporation3940. This address must be listed as the corporation’ s address on the notice of claim form.

b) Partnership

A partnership can exist between one or more persons and is governed by the Partnership Act, RSBC 1996, c 348 [PA]. A person includes a corporation.

The rules for determining whether a partnership exists are set out in s 4 of the PA. Generally speaking, all partners are personally liable for the debts of the business: s 7 of the PA. As it is impossible to tell whether a business is a partnership or a sole proprietorship from the name alone, a claimant should perform a company search to learn the true structure of the business as well as the name and address of each partner.

The proper way to list each partner on the notice of claim is:

Jane Doe d.b.a. XYZ Partnership

John Doe d.b.a. XYZ Partnership

ABC Company Ltd. d.b.a. XYZ Partnership

NOTE: “d.b.a.” stands for “doing business as”

NOTE: One should be careful to not confuse partnerships with limited partnerships (LP) or limited liability partnerships (LLP).

c) Sole Proprietorship

A sole proprietorship allows a single person or corporation to do business under a business name. Sole proprietorships are registered under Part 4 of the PA. A sole proprietor is personally responsible for the debts of the business.

As it is impossible to tell whether a business is a partnership or a sole proprietorship from the name alone, a claimant should perform a company search to learn the true structure of the business as well as the name and address of the proprietor.

The proper way to list a sole proprietor on the notice of claim is:

Jane Doe d.b.a. XYZ Company

John Doe d.b.a. XYZ Company

ABC Company Ltd. d.b.a. XYZ Company

NOTE: “d.b.a.” stands for “doing business as”

d) Other

For other forms of businesses such as limited partnerships (LP), limited liability partnerships (LLP), and unlimited liability corporations (ULC), legal advice is recommended.

2. Suing a Person over 19 Years Old

Do not use titles such as Mr., Mrs. or Ms. Use full names, not initials (i.e., “Dr. D. Smith” should be “Doris Smith”). Claimants may sue more than one defendant if the claim against each defendant is related. Divide the “To” space in half and use one half for the name and address of each defendant; alternatively, the notice of claim filing assistant41 makes it convenient to add multiple defendants.

3. Suing a Society

A society is a type of not-for-profit corporation registered pursuant to the Society Act, RSBC 1996, c 433. The procedure and principles for suing a society are the same as for corporations. A company search is required to ascertain the society’ s registered address42.

4. Suing I.C.B.C.

A claimant who is suing for the deductible portion of an insurance policy must name both the driver and the registered owner of the vehicle as defendants rather than ICBC. A claimant who only has the number plate of the vehicle can obtain the owner’s name by writing a letter to ICBC’s Vehicle Records Office.

ICBC Insurance Enquiries

151 West Esplanade

North Vancouver, BC V7M 3H9

Telephone: (604) 661-2233 or 1(800) 464-5050

Note: If a motor vehicle has caused personal injury or property damage or a claimant has been denied coverage by ICBC, refer to the entire Law Students’ Legal Advice Program’s “Automobile Insurance (ICBC)” guide. Claims involving motor vehicles and motor vehicle insurance can be complicated; it is not possible to cover all possibilities in this Small Claims guide.

A claimant should be alert to the following:

• a claim involving motor vehicle insurance may have a shorter limitation period;
• parties other than the driver (e.g., the owner of the vehicle) may also be liable;
• a lawsuit for Part 7 (No Fault) benefits should be filed if appropriate;
• ICBC may be liable if damage is caused by an unidentified (i.e., hit and run)43, under, or uninsured motorist44; and
• personal injury claims are very difficult to value and it may be appropriate to consider bringing the claim in Supreme Court if the injuries are more than trivial.

Many personal injury lawyers work on a contingency basis. A claimant may wish to consult a personal injury lawyer prior to filing the claim to ensure that the amount claimed is reasonable and all parties are properly listed on the Notice of Claim.

Whether or not ICBC is named as a defendant, in a claim for damages caused by a vehicle in British Columbia, a claimant must serve ICBC with a copy of the Notice of Claim and a blank Reply form in the same manner as serving a corporate defendant45.

Where ICBC is properly named as a defendant, its correct legal name is the Insurance Corporation of British Columbia. It is a special type of corporation and the usual corporate designation such as Inc. is not required.

5. Suing the Government

a) Federal Government

The federal government should be named as either “Attorney General of Canada” or “Her Majesty in right of Canada”. If an agency of the Crown is to be sued and if a federal Act permits, the agency may be sued in the name of that agency.46

b) Provincial

The provincial government should be named as “Her Majesty the Queen in right of the Province of British Columbia”.47

6. Suing the Police

The “Royal Canadian Mounted Police” is not a legal entity that can sue or be sued48.

A claimant who wishes to sue for damages arising from the conduct of a police officer should sue the individual police officers and the Minister of Justice and Attorney General49. A claimant who is suing a municipal police force should sue the individual police officers as well as the municipality employing the police officers. It is critical that a claimant provide written notice to the city within two months of the event giving rise to the cause of action50.

7. Suing a Municipality

Municipalities are special corporations incorporated by letters patent. Depending on its size, a municipality is referred to as a village, town, city, or a district municipality51. When letters patent are issued, the name of the incorporated municipality is published in the BC Gazette52. A claimant should search the BC Gazette53 to obtain the legal name of the municipality.

8. Suing a Young or Mentally Incompetent Person

A minor, also called an infant, is a person who is under 19 years of age at the time the claim is filed. Mentally incompetent persons as well as minors are persons with a legal disability. When suing such persons, Rule 20-2 of the Supreme Court Civil Rules applies, with the exception of Rule 20-2(4) (which does not apply in Small Claims cases)54. Persons with a legal disability must be represented by a litigation guardian. With some limitations, a litigation guardian can be any person ordinarily resident in British Columbia.

If the claim involves personal injury, Rule 20-2(4) of the Supreme Court Civil Rules applies and requires that the litigation guardian act by a lawyer unless the litigation guardian is the Public Guardian and Trustee.

A party cannot take a step in default against a person with a legal disability without the court’ s permission. A settlement with a party under a legal disability is not binding unless the court approves it.

These rules also apply to a party who becomes mentally incompetent at any point in the proceeding.

9. Suing an Insurance Company other than ICBC

Claims against insurers for coverage can be complicated. A claimant should research the law surrounding uberrimae fidei, an insurer’s duty to defend, and an insurer’s duty to indemnify. A claimant should be aware that claims against insurers may have a shorter limitation period.

10. Suing an Unknown Person

If a claimant does not know the identity of one or more parties, the claimant can still file a claim using a misnomer. For example, the claimant would list the unidentified defendant as either John Doe or Jane Doe as the case may be. If there are multiple unknown parties, the claimant could add a number to each misnomer (e.g., John Doe 1; John Doe 2). Misnomer also applies to unknown companies.

A claimant should research the law surrounding misnomer and ensure that both the unidentified party and its actions are described in as much detail as possible.

If the party is unknown because of a motor vehicle hit and run, the claimant may sue ICBC as a nominal defendant.

C. Can the Defendant(s) Pay?

One cannot squeeze blood from a stone. If a defendant has insignificant assets or income, the defendant may have no means to pay a judgment; such a person is “judgment-proof” and a claimant with an uncollectible judgment is said to be holding an “empty judgment”. A claimant should consider whether it is worth the time, expense, and stress of suing a judgment-proof defendant.

A judgment is enforceable for ten years after it is issued55; after this time, unless it is renewed, the judgment expires and becomes uncollectible. On some occasions, a previously judgment-proof defendant will “come into money” by receiving an inheritance or winning the lottery. This is a rare occurrence and a claimant must invest time and effort to monitor the defendant’ s circumstances over the ten years that the judgment is enforceable. A more common change in a judgment-proof defendant’ s circumstances is the defendant securing a higher-paying job.

A claimant should also consider the likelihood of the defendant going bankrupt. If the defendant goes bankrupt, the claimant may recover little or none of the amount of the judgment. For more detail on bankruptcy, see “Enforcement of a Judgment”.

A claimant must decide whether or not to sue before the limitation period expires. If the limitation period expires, a claimant cannot later sue on that cause of action if the defendant’s circumstances change.

D. Drafting the Notice of Claim

The Notice of Claim is the document that starts an action in Small Claims Court. The Notice of Claim form is comprised of several sections and each section must be completed. The form can be either typed or handwritten. Hard copies are available from the court registry56 and an electronic copy is available online57. Where possible, a claimant should type the Notice of Claim form.

A sample Notice of Claim58 is attached and may be a helpful guideline when drafting a Notice of Claim.

1. “From”

This section must contain the claimant’s full legal name, address, and telephone number. The claimant has an on-going duty to notify the court registry of any changes to the information in this section. Failure to provide the registry with current and accurate contact information may result in the claimant’s claim being dismissed and/or the claimant being liable for costs or penalties.

2. “To”

The claimant must list the full legal name, address for service, and, if available, the telephone number for each defendant. If additional space is required, the claimant may attach a piece of paper listing this information for each defendant. Alternatively, the Notice of Claim filing assistant59 can neatly add multiple defendants onto one Notice of Claim form.

Failure to list the proper legal name of a defendant may result in the claimant’s claim against that defendant being dismissed or the judgment against that defendant being unenforceable. If the limitation period60 has already expired, the claimant may not be able to correct the error.

3. “What Happened?”

In this section, the claimant must list the facts that support the claimant’s cause(s) of action and the damages that the claimant has suffered.The claimant should adhere to the following general rules:

1. Don’t plead evidence – state what you will prove, not how you will prove it
2. Don’t plead law – unless you have a statutory cause of action
3. Use paragraphs – use one paragraph to state each fact that you will prove -- Number each paragraph beginning at 1
4. Claimant must prove every fact – therefore, stick to material facts

In this section, one must set out the facts that give rise to the cause of action, and the loss or damage that resulted. This description should be brief, but must inform the opposing party of the case to be met and give the judge an outline of what will be argued. The Notice of Claim (Form 1) has little space for the facts, but the facts can continue onto another piece of paper. The additional facts must be attached to each copy of the Notice of Claim. In general, the pleadings should be brief, complete, and as accurate as possible.

The facts as alleged must give rise to a legal cause of action. After the facts, state the legal cause of action(s) that entitle you to the relief you are seeking. If there is more than one cause of action, plead the strongest one and plead the other ones in the alternative. For example, in a claim for a bad car repair, a claimant can sue for breach of contract and negligence. A pleading might read: “In addition, or in the alternative, the claimant claims damages as a result of the defendant’s negligent repair of the automobile”.

The pleadings should describe:

• a) the relationship of the parties (e.g., buyer and seller); and
• b) the dates, places, and details of amounts, services, or practices involved.

Claimants will usually be bound by the facts in the pleadings. If the facts or legal basis need to be changed, the claimant may be able to amend the Notice of Claim61.

When there is more than one defendant, the claimant should make it clear whether their liability is joint, several, or joint and several. This distinction affects enforcement of a judgment and any subsequent actions arising out of the same cause. Liability stated as joint and several is more inclusive.

If liability is joint, the defendants must be sued as a group however the claimant can recover the full amount from any or all of the defendants.

Where liability is several, the claimant can sue any or all of the defendants however each defendant is obligated to repay only his own portion of the debt.

Where liability is joint and several, the claimant may sue any or all of the defendants and may recover the full amount from any or all of the defendants. The debtors can then litigate among themselves to apportion the debt between them.

4. “Where?”

The claimant should enter the name of the municipality as well as the province where the cause of action arose. If the cause of action arose outside of British Columbia, the claimant must state in the “What Happened?” section how the court has jurisdiction over the claim62.

5. “When?”

List the date or dates when the cause(s) of action arose. Unless the date is very clear or the limitation period is about to expire, stating the month and year is sufficient. It is prudent to state the date as follows:

• when the date is known: “On or about August 15, 2012”;
• if only the month is known: “In or about August 2012”; or
• if the cause(s) of action arose over time: “From about May 2012 to August 2012”.

6. “How Much?”

This is where the claimant describes the remedy. In most cases, this will be an amount of money. However a claimant may request an alternative remedy. For example, the claimant could request the return of an item or, in the alternative, the value of it, as well as damages. A claimant who wants items returned should consider what condition they will be in, and whether he or she really wants them back.

a) Interest

If there is no mention of interest in a contract between the parties, the court will award interest to the successful claimant from the date the cause of action arose until the date of judgment63. This is called “pre-judgment interest”. Interest in a claim for debt is calculated from the date the debt became due and, in a claim for damages, from the date the damages arose.

The court sets the interest rate every six months and publishes a table listing the rates applicable to each six-month period.The Notice of Claim should indicate a claim for “Interest pursuant to the Court Order Interest Act” but leave the amount area blank; the registry will calculate the amount according to the table.

Note: While a claimant may be paying a higher interest rate on a credit card or loan as a result of the defendant’s actions, the claimant is limited to the pre-judgment interest rate set by the court unless the parties have expressly agreed that interest will be paid.

If the parties have agreed on a rate of interest, the Notice of Claim should indicate a claim for contract interest, the applicable interest rate, and the date from which the interest began to accrue.The amount of interest that has accrued up to the date of filing should be included on the Notice of Claim as well as the amount of interest that accrues each day. It is important to note that a claim for contract interest is, in substance, a claim for contractual damages. Accordingly, the claim for contract interest together with the principal amount must be within the Small Claims Court’s monetary jurisdiction. If a claim for contract interest has or could cause the total claim to exceed the court’s monetary jurisdiction, it would be prudent to state on the Notice of Claim that the claimant abandons the amount necessary to bring the claim within the Small Claims Court’s monetary jurisdiction.

If the parties have agreed that interest will be paid but have not agreed on a rate of interest, the rate of interest is five per cent per annum64.

Generally, even if the parties agree to a rate of interest expressed with reference to a period other than one year (e.g., 2% per month), a claimant can only recover a maximum of five per cent per annum unless the contract expressly states a yearly rate or percentage of interest that is equivalent to the other rate (e.g., 24% per annum)65.

It is a criminal offence to receive, or enter into an agreement to pay or receive, interest at a rate that exceeds 60% per annum66. Interest has a broad definition and includes fees, fines, penalties, commissions, and other similar charges including costs relating to advancing credit.

If the judgment is not paid immediately, post-judgment interest may be awarded. The court has the discretion to vary the rate of interest or to set a different date from which the interest commences67.

b) Claims Over $25,000

In order to sue in Small Claims Court for a claim exceeding $25,000, the claimant must state, “The Claimant abandons the portion of any net judgment that exceeds $25,000”68. At any time prior to trial, the claimant can decide to sue for the full amount and apply to transfer the claim to the Supreme Court of British Columbia69. Once the trial has been heard, however, the abandonment is likely permanent.

There is an exception to the $25,000 limit. If more than one claimant has filed a Notice of Claim against the same defendant(s) concerning the same event, or, if one claimant has filed Notices of Claim against more than one defendant concerning the same event, the judge may decide each claim separately, even though the total of all the claims (not including interest and expenses) exceeds $25,000.70 Such claims often have a trial at the same time although the claimant(s) must request this.

c) Filing Fees

Filing fees are those fees paid to file the Notice of Claim and are either $100 or $156 unless the fees have been waived. The registry staff will enter this amount.Filing fees are recoverable if the claimant is successful.

d) Service Fees

Service fees are an estimate of the cost of serving the defendant(s). The amount varies based on the method of service and the number of defendants. The registry staff will enter this amount. Service fees are recoverable if the claimant is successful; however, as the claimed amount is only an estimate, a judge has discretion to either increase or decrease the allowed service fees.

e) Other Expenses

Unless a judge or the Registrar orders otherwise, an unsuccessful party must pay to the successful party71:

• any fees the successful party paid for filing any documents;
• reasonable amounts the successful party paid for serving any documents; and
• any other reasonable charges or expenses directly related to the proceedings72.

An example of a reasonable expense related to the proceedings is a company search. Another example is costs to purchase cases used in argument73. For additional case examples, please see footnote 72. If such expenses are known at the time of filing, they should be stated on the Notice of Claim. If they occur afterwards, the successful party may request them at the conclusion of the trial.

Although legal fees cannot be recovered, legal disbursements may be recoverable if they fit one of the criteria above.

Parties are not compensated for the time they spend preparing for or attending court.

E. Filing a Notice of Claim

1. Cost

The cost to file a notice of claim is $100 if the claim is for $3,000 or less. The cost increases to $156 for claims above $3,000 and up to $25,000.A person who is unable to afford the filing or other fees may apply to the registrar for a fee waiver74 by filing an Application to the Registrar and a Statement of Finances.

2. Where to File75

A claimant must file the notice of claim at the Small Claims registry76 nearest to where:

• the defendant lives or carries on business77; or
• the transaction or event that resulted in the claim took place.

This can sometime be unclear in the case of contracts that are executed by fax or email or in other claims, such as negligence, where the conduct complained of took place in a number of locations78.A claimant may wish to obtain legal advice if there is any uncertainty regarding where to file.

If two different Small Claims registries have jurisdiction, the claimant should choose the one that is most convenient. If the defendant disputes the claimant’s choice, the defendant can file an application for change of venue and a judge will decide the most appropriate location.

A company can live in multiple locations including where it is registered, where it carries on business, and where its records are kept79.

3. How to File

The claimant must file at least four complete and identical copies of the notice of claim. One copy is for the court, one is for the claimant, one is a service copy, and one is required for each defendant.

Once the notice of claim has been filed and stamped by the registry and the fee, unless waived, has been paid, the claimant must, within one year, serve a copy on the defendant.

F. Serving a Notice of Claim

A copy of the filed Notice of Claim together with a blank Reply form (available from the registry) must be served on each defendant80. A claimant has 12 months from the date of filing to serve the defendants81. If more time is required, the claimant can apply to the registrar for an extension82.

The permissible methods for serving a defendant depend on who the defendant is. The table below sets out how each category of defendant can be served. If a defendant is evading service or, after a diligent search, cannot be found, a claimant may apply to a judge for an order for substitutional service.

Defendant	Permitted Methods of Service
Individual Over 19 Years Old83	Personal service Registered mail to residence
Individual Under 19 Years Old84	Personal service on the minor’s mother, father, or guardian Personal service on another person as directed by a judge upon application
Individual outside BC	See “Individual Over 19 Years Old” or “Individual Under 19 Years Old” Defendant has 30 days to respond85
BC Corporation86	Leaving a copy at the delivery address for the registered office Registered mail to the mailing address for the registered office Personal service on a receptionist or manager at the company’s place of business Personal service on a director, officer, liquidator, trustee in bankruptcy, or receiver manager If the company’s registered office has been eliminated, as directed by a judge on application
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