Do You Have a Small Claim? (20:III)

In order to have a legal claim, it must be recognised by the law. A frivolous claim is one that does not disclose a legal cause of action, is incapable of proof, or is otherwise bound to fail. A vexatious claim is one that is brought in order to annoy, frustrate, or antagonise the defendant. A claim may be both frivolous and vexatious.

If a claim is frivolous or vexatious, the claimant will lose and may be penalised up to 10% of the amount of the claim1. The penalty could be up to $5,000 on a $25,000 claim; it pays to research your cause of action and limit your claim to the proper amount.

A. Types of Claims

It is helpful to research each of the following types of claims to ensure that a claim falls within at least one of them. See Appendix G for a partial list of specific causes of action. If you are unable to fit your claim into one of the listed categories, you should consult a lawyer to see if you have a cause of action.

1. Tort

Torts are offences committed by one person against another. Examples include assault, battery, and negligence. Each tort has its own test and defences. Tort law continues to evolve and a person planning to bring a claim in tort should research what must be proven to be successful and which defences may be available to the defendant. Resources include CanLII.org, the courthouse library, and a practising lawyer.

2. Contract

Contract law governs voluntary relationships between parties. It is a complicated and nuanced area of the law and a person planning to bring a claim in contract should research what must be proven to be successful and which defences may be available to the defendant. Resources include CanLII.org, the courthouse library, and a practising lawyer.

NOTE: Courts will generally not enforce illegal contracts or dishonest transactions (see Faraguna v Storoz, [1993] BCJ No. 2114). However, Transport North American Express Inc. v New Solutions Financial Corp., 2004 SCC 7 states that a court may enforce legal portions of a contract, thus effectively severing the illegal portion. A common example involves contracts purporting to charge interest rates prohibited under s 347 of the Criminal Code. The court will not enforce a term in a contract purporting to charge such a rate. (However, section 347.1 exempts payday loans from criminal sanctions, if certain conditions are met; see Section V.G: Regulation of Payday Lenders and Criminal Rate of Interest in Chapter 9: Consumer Protection).

3. Equity

The usual remedy for torts and breaches of contract is monetary damages. In circumstances where monetary damages are inadequate or where a legal remedy is improper in the circumstances, the court may grant other relief such as an injunction. The Small Claims Court, pursuant to s 2 of the Small Claims Act [SCA]2, has a limited inherent jurisdiction to grant equitable remedies.A party seeking an equitable remedy such as an injunction should consult with a lawyer and will likely need to apply to the Supreme Court for relief.

4. Restitution

The law of restitution3 applies to circumstances where a party has benefited, the other party has suffered a loss as a result, and there is no legal basis for the party to have benefited. This claim is commonly referred to as “unjust enrichment” and is a complicated and evolving area of the law.A person planning to bring a claim for restitution should research what must be proved to be successful and which defences may be available to the defendant. Resources include CanLII.org, the courthouse library, and a practising lawyer.

5. Statute

Certain statutes create a right of action that does not exist in the common law. The statute will set out what must be proved, the defences that apply, the types of damages that can be awarded, and how the claim must be brought.A person planning to bring a claim under a statutory cause of action should research the statute as well as how the courts have interpreted it by noting up the applicable provisions. Resources include CanLII.org, the courthouse library, and a practising lawyer.

B. Types of Damages

Although the Small Claims Court has the jurisdiction to award $25,0004, the awards in most cases are significantly less. There must be a principled basis for an award of damages and it is helpful to separate a claim into the following types of damages. Ensuring that there is a legal basis for a claim is a critical step as there are penalties for proceeding through a trial in Small Claims Court on a claim that has no reasonable basis for success5.

1. General Damages

General damages are those that are not easy to quantify and for which a judge must assess the amount of money that, in the circumstances, will compensate for the loss. A common example of general damages is “pain and suffering”. The purpose of general damages is to compensate and not to punish; a party should not expect to profit or realise a windfall through an award of general damages. A person planning to claim general damages should provide evidence of the loss and research the case law to determine how the courts have assessed damages in cases with similar losses and circumstances. Resources include CanLII.org, the courthouse library, and a practising lawyer