Controlling the Abuse of Small Claims Courts
Christopher S. Axworthy*
1. Introduction
One of the greatest problems faced in the operation of small
claims courts is the overwhelming predominance of corporate plain-
tiffs who are attracted to the courts by the cheap, fast, and simple
adjudication of their claims. This is to the almost total exclusion of
individual claimants.’ If small claims courts are to prove effective,
this problem must be solved.
2. The reasons for the existence of small claims courts
The need for the modem small claims court was recognized in
1913 by Dean Roscoe Pound:
For ordinary causes our contentious system has great merit as a means
of getting at the truth. But it is a denial of justice in small causes to drive
litigants to employ lawyers, and it is a shame to drive them to legal
aid societies to get as a charity what the state should give as a right. 2
The legal system exists, then, as an avenue through which every
person in society who has a valid claim against another should be
able to move to attain satisfaction of that claim. Conversely, it should
be a protection to persons against invalid claims from other members
of society. The fact that a claim is small or held by a person without
the knowledge or capabilities to enforce it should be of no im-
portance whatsoever. If the claim is a valid one it should be capable
of enforcement. When a claim cannot be enforced because the relative
cost is prohibitive, there is, as Pound has said, a “denial of justice”.
* Assistant Professor of Law, Dalhousie University.
‘In Manitoba between November 1971 and July 1972 only 31% of small
claims were brought by individuals. See J. R. Gerbrandt, T. Hague and A.
Hague, “Preliminary Study of the Small Claims Court Procedure in Manitoba”,
a study conducted under an Opportunities for Youth grant under the supervi-
sion of Professor Janet Debicka of the Faculty of Law, University of Manitoba,
Winnipeg (1972), 22 (hereinafter referred to as Gerbrandt, Hague and Hague).
In J. W. Samuels, “Small Claims Procedure in Alberta”, prepared for the
Institute of Law Research and Reform, University of Alberta, Edmonton
(1969) (hereinafter referred to as Samuels), at 86 it is indicated that in Alberta
between June 1967 and December 1968 only 24.5% of claims were brought
by individuals.
2 R. Pound, The Administration of Justice in the Modern City (1912-13) 26
Harv.L.Rev. 302. 308.
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CONTROLLING THE ABUSE OF SMALL CLAIMS COURTS
481
The administrative cost, complications, and other difficulties are
no excuse for these denials of justice. As such, something must be
done to enable these claims to be effectively enforced: a very cheap
and efficient adjudication process.3 Prujiner calls this process the
“democratisation de la justice”.4 It has been the rationale behind
small claims courts.
It is necessary to ask two important questions when formulating
proposals for an improved small claims court.5 Firstly, what groups
of people should the small claims court serve, and the corollary,
what groups, if any, should be excluded? And secondly, what sort of
claims should be included within the court’s jurisdiction?
The question involving the type of claim is not really so difficult.
There would appear to be a reasonable amount of agreement in
Canada that any actions relating to a person’s reputation (for ex-
ample, defamation: malicious prosecution and breach of promise to
marry), actions relating to land, or the validity of bequests and
wills, are not appropriate for a small claims court. It is the more
difficult problem, of who can sue in the court, which will be the
subject of this discussion.
3. The objectives of small claims courts
The courts can attempt to deal with all types of small claims,
whether held by business interests or individuals, in response to the
general criticism that the judicial process is too expensive for the
adjudication of small claims. Or, there can be an effort to provide
a “people’s court” designed as an instrument through which social
justice and equity might be achieved in a forum for those unable to
pursue their valid claims through the normal channels.
When the Small Claims Court and Conciliation Branch of the
Municipal Court of the District of Columbia was established, the
3As was stated in a report of the United Kingdom Consumer Council,
Justice Out of Reach: A Case for Small Claims Courts; A Consumer Council
Study (1970), 5:
“… it is a prime duty of a civilised society to provide an easily accessible
means of settling disputes; not necessarily courts in exactly the same form
as they exist today, but some forum where disputes may be brought.”
See also R. L. Walker, Compulsory Arbitration Revisited (1966) 38 Penn.B.Assoc.
Q.36.
4 A. Prujiner, L’ambiguitj des “small claims courts” et ses effets sur leur
adaptation qudbecoise (1971) 12 C.de D. 175.
5 See B. M. Stoller, Small Claims Courts in Texas: Paradise Lost (1968-69)
47 Texas L.Rev. 448, 450.
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Committee of the United States Senate responsible for the District
stated that the purpose of the court was
… to improve the administration of justice in small civil cases and make
the service of the municipal court more easily available to all of the
people whether of large or small means; to simplify practice and procedure
in the commencement, handling, and trial of such cases; to eliminate
delay and reduce costs; to provide for installment payment of judgements;
and generally to promote the confidence of the public in the courts
through the provision of a friendly forum for disputes small in amount
but important to the parties.6
These have been the objectives behind the formation of most small
claims courts. Incidentally, the provision of a forum devoted ex-
clusively to legitimate claims of small value relieves the mounting
pressure on the superior courts. However, the extensive use of the
courts by business interests has to all intents and purposes defeated
most of these objectives and has relegated most small claims courts
to the status of debt collection agencies.
This is not thought to be a problem by every commentator.7 One
obvious argument, and one which is difficult to refute, is that if a
business plaintiff is able to recover his legitimate claims in the
cheapest possible way, then those defendants who are ordered to pay
their bills are subjected to minimal costs:
It is a quick and easy method of clearing up overdue accounts. A small
business can collect these sums without … risking much money in the
collection process. The defendant too has advantages. He is given his
day in court, and his costs of defending the action are small. He does
not have to hire a lawyer and, if he loses, the payments are scaled low
to give him every chance to meet them.8
Coats, Gantz, and Heathcote view the practice of excluding
businesses as inequitable. They say, “[it] does not seem to be subs-
tantially fair to exclude an entire class of citizens from a useful
adjudicative process for the abuse of a few”.9 It should also be
6Quoted in N. Cayton, Small Claims and Conciliation Courts (1939) 205
Annals 57, 60. See also Small Claims Court: Reform Revisited, infra, note 9,
4849.
7 See e.g., Institute of Judicial Administration, Small Claims Courts in the
United States, New York, 1959 Supplement 1-2 (Rep. No. 7-US7, March 13,
1959).8 Comment, Small Claims Courts as Collection Agencies (1951-52) 4 Stan.L.Rev.
237, 421.
9 D. Coates, C. D. Gantz and B. Heathcote, Small Claims in Indiana (1969-70)
Ind. Leg.F. 517, 534. See also Small Claims Court: Reform Revisited (1969) 5
ColumJ.L.& Soc. Prob. 47, 62:
“[T]he exclusion of one type of claim may not only be unfairly pre-
judicial to the group pursuing it, but also inimical to the interests of the
1976]
CONTROLLING THE ABUSE OF SMALL CLAIMS COURTS
483
remembered that where debts are owed (either to businesses or
individuals) there should be no obstacle to their recovery 9a
But the fact of the matter is that since small claims courts are
inundated with business claims the real beneficiaries are business
not individuals. 10 Where studies have been conducted
interests –
into the social class of individuals using the court,” it has been
shown that they are almost all “middle class” and well educated.
Moulton concludes that small claims courts are courts of the poor
”only in the sense that many poor people are brought in to them by
compulsory process”. 2
The now-disbanded United Kingdom Consumer Council suggested
a system of small claims courts for England and Wales, which, if
set up, would be “genuine people’s courts” and therefore that
“companies, partnerships, associations, and assignees of debts should
not be allowed to sue”.’ 3 The report continued:
The purpose would be to prevent the court’s becoming widely used by
firms for debt collecting and its approach thus becoming more geared
to businesses than to individuals.
This is a real danger, as some American small claims courts have shown.
Business representatives are usually easier for the court officers and
judges to deal with than are individual litigants: they speak the same
language, and are generally more articulate and less emotionally involved
in the dispute. If company representatives –
particularly representatives
of the same companies –
became a familiar part of the scene, there
would be a danger that individuals would become the “odd” parties, the
ones to be dealt with on sufferance, with the implication that they were
wasting the court’s time.’4
judicial system and society. For example, if business interests are excluded
their claims will congest the regular civil docket, or perhaps simply go
unlitigated, being passed on to the consumer in the form of higher prices.”
9a See e.g., T. Murphy, D.C. Small Claims Court – The Forgotten Court
(1967) 34 D.C.B.J. 14.
lo B. Moulton, The Persecution and Intimidation of the Low-Income Litigant
as Performed by the Small Claims Court in California (1969) 21 Stan.L.Rev.
1657, 1659. The survey Ms. Moulton conducted revealed that “… local tax
collectors or business organizations –
typically finance companies and those
specializing in credit sales of furniture and appliances – have discovered the
relative ease and efficiency of the small claims court as a collection device,
using it routinely to collect on delinquent accounts … ” (at 1661).
“Ibid., 1662. See also Gerbrandt, Hague and Hague, supra, note 1.
‘2 Moulton, supra, note 10, 1662. The transfer option provided by art.983
C.C.P. of the Province of Quebec, clearly provides an answer to such a
criticism.
‘s Supra, note 3, 30.
14 Ibid.
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The grouping of claims is another illustration of the misuse of
the court; it further decreases the cost of recovery and illustrates
the “collection agency” characteristic of the small claims court. It
has been said that mass
… filing of claims seems to clearly cut against the equality values which
the small claims court was designed to effectuate. A drastic procedural
change directly affecting debt collection efforts in small claims court by
corporations and other business concerns may be called for. Those organiz-
ations which are able to afford the services of a collection agency or
more expensive court authorized debt collection should be compelled to
employ them.15
Limiting the number of times any one person (legal or individual)
could sue would deal with this problem to a large extent, but, if the
court is not to be a collection agency, mass claims must be removed
in some way. If commercial interests were prohibited from suing in
small claims court, the court could not be used as a commercial
debt collection agency. Unfortunately, a consequence of such a de-
cision would be to increase the incidence of such claims in the
higher courts. The commercial interests being barred from the small
claims court would have no choice, if they wished to enlist the aid
of the judicial system, but to bring their actions in these higher
courts.
As the small claims adjudication process is so attractive, many
actions are instigated which would not be worth-while in its absence.
The individual with a claim, especially an individual of limited
means, is not normally aware that a small claims court exists to help
him pursue his claim. 16 Neither is an individual likely to feel com-
petent to take on a large corporation or even a local businessman.
For many people,
… especially the poor, small claims … courts are the legal system; it is
their experience in these inferior tribunals that shapes the attitudes of
low-income litigants toward the law and society it reflects. Thus an ap-
praisal of small claims courts necessarily poses the question of whether
we feel it is important to reduce the alienation of the poor and to increase
their sense of participation – and their actual participation –
in the legal
process. It is not enough to look at the surface efficiency of small claims
courts and their apparent saving of judicial resources that results without
asking how this efficiency and economy is obtained, and at whose
expense.’T
15Comment, Small Claims Courts and The Poor (1968-69) 42 S.C.L.Rev.
493, 497.
16 For instance, in the study by Gerbrandt, Hague and Hague, supra, note 1,
it was found that although 80% of persons with high incomes were aware
of the court only 32.6% of those with low incomes knew of its existence.
17 Moulton, supra, note 10, 1668.
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CONTROLLING THE ABUSE OF SMALL CLAIMS COURTS
485
Traditionally, matters which are worth adjudicating have been
those which it is economically efficient to adjudicate, i.e. those
claims of such an amount that once the legal and other fees have
been deducted, a valuable and worth-while amount remains to the
successful party. With small claims this cannot possibly be the
justification for going to court; the costs involved in normal court
action are staggering. By reducing costs small claims courts attempt
to reduce the importance of this criterion.
Small claims are important, collectively if not individually. There
are many more small claims than large ones.’ s And although the
amounts may be small in absolute terms, to the claimant they may
form enormous sums in relation to his income. As well, more small
claims involve disputes between persons of different social and
economic status than do large ones. As Ison says,
… it is in the handling of small claims, rather than large ones, that the
integrity of justice is tested in the processes of interclass reaction. So to
the majority of the population, the handling of small claims is far more
significant than the handling of larger ones in contributing to the level
of their confidence in the administration of justice.19
Small claims courts have been set up primarily in order to make
civil justice accessible to the poor. They provide an inexpensive and
efficient means of dispute settlement for a potentially large number
of claimants, but whether they actually perform this function for
the poor is debatable, as already pointed out.20 Small claims courts
have failed to provide “a kind of participatory justice where every
citizen would have his say, no matter how small his claim”.2′
4. Solutions to the abuse of small claims courts
Small claims courts are abused by business claimants who have
turned them into debt-collection agencies. They have not responded
to the needs of the individual with a small claim. Quebec has sought
to rectify this imbalance by excluding from small claims court all
those pursuing a commercial claim. This restriction on the use of
the court by commercial interests is not as effective as it may seem
at first sight. Restricting the availability of default judgments, it is
submitted, might provide a more satisfactory alternative. It at least
18T. Ison, Small Claims (1972) 35 M.L.R. 18, 22. As Pound says, this is
where “the administration of justice touches immediately the greatest number
of people”, supra, note 2, 315.
19 Ison, ibid., 23-24.
20 See Moulton, supra, note 10.
21 Ibid., 1659.
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avoids the argument, raised by business interests, that the exclusion
from small claims court of commercial matters discriminates against
certain legitimate small claims.
One thing is abundantly clear: unless businesses are prevented
from commencing actions in the small claims court, they will
continue to predominate.22 Statistics show that few cases are being
brought by individuals.2 3 Even with the statutory requirement to
prove claims which exists in Alberta,24 corporate plaintiffs pre-
dominate.2 5
Discussions of the use and abuse of small claims courts have
centered primarily around the issue of who may be plaintiff. There
have been a variety of suggestions:
a) Do not place any restriction on who can sue in small claims
26
courts;
b) Permit anyone to sue, but split the court into two sections –
one for business claims and one for individual claims;
c) Limit the number of times in any particular time-period that
any person (legal or otherwise) can sue in the court;27
21 Art.953, C.C.P.
2 See Comment, Small Claims Court: Reform Revisited, supra, note 9,
61, 64-65; U.K. Consumer Council, supra, note 3, 26; Murphy, supra, note 9a;
C.D. Robinson, A Small Claims Division for Chicago’s New Divisiondl Court
(1963) 43 Chic.Bar.Rec. 421, 423; Comment, Small Claims Courts as Collection
Agencies (1952) 4 Stan.L.Rev. 237; Moulton, supra, note 10, 1661; J. Wright,
The Courts Have Failed the Poor, N.Y. Times, March 9, 1969, s.6, 26, 104, 106; H.J.
Fox, Small Claims Revisions – A Break for the Layman (1971) 20 De Paul
L.Rev. 912; Stoller, supra, note 5; Coats, Gantz and Heathcote, supra, note
9, 534-535; C. Pagter, R. McCloskey and M. Reinis, The California Small
Claims Court (1964) 52 Calif.L.Rev. 876.
23See U.K. Consumer Council, supra, note 3, 14; Pagter, McCloskey and
Reinis, supra, note 22, 884 et seq. and Robinson, supra, note 22, 422; Moulton,
supra, note 10.
24R.S.A. 1970, c.343, s.26.
25 Supra, note 1.
26This is the position in all Canadian provinces with small claims procedures
except Quebec, which as has been stated, limits the availability of its court
to “any physical person ‘suing’ in his own name and on his personal behalf”
with very limited exceptions: art. 953(d) C.C.P. In Saskatchewan a corporate
plaintiff may not sue for more than $200 in the small claims court of that
province, whereas the limit for individuals is $500: S.S. 1973, c.104, s.2(a). By
s.4(1)(f) of the Alberta Small Claims Act, supra, note 24, municipalities are
not permitted to sue for taxes.
27See, e.g., Prujiner, supra, note 4, 183.
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CONTROLLING THE ABUSE OF SMALL CLAIMS COURTS
487
d) Permit only businesses with “clean hands” to sue, but do not
restrict individual rights in any way; 28
e) Bar business plaintiffs from suing in the court altogether;
f) Permit anyone to sue but require proof of the claim before
giving judgment; in other words, exclude default judgments 9
a) No Restriction
Small claims courts are being monopolized by business interests
and are not fulfilling the function for which they were specifically
designed. In the absence of some other effective measure to control
this misuse, there must be some restriction on who may sue in the
court.
b) One Small Claims Court, Two Divisions
Robinson was the first to put forward the proposal that a small
claims court might have two divisions, one for commercial claims
and one for individual claims:
Most statutes deal with this problem in a negative way by barring the
corporation, partnership, association, and assignee, or one or more of
them, from proceeding in the small claims court. However, the proposed
procedure to a large extent is applicable to both classes of cases noted
There is no reason why all cases which may appropriately proceed under
the simplified practices suggested should not do so. There is then no
question of the so-called collection cases being excluded from the positive
aspects of this procedure, but because of the special needs of the individual
claimant with a small claim, these claims should be heard separately. The
purpose of segregating these cases is to provide an atmosphere where
the clerks and judge are oriented to the particular problems of the
litigant filing and proceeding with his own claim. As we have seen, the
bulk of cases, where there is not such a segregation, will be collection
cases. This is bound to influence and perhaps determine the flavor of
the court. Clerks and judges cannot be expected to pay the same attention
to individual litigants as to the claimant who is before the Court day after
day with court business. Busy men must be hurried out while the
occasional litigant can afford to wait –
so will go the thinking. 30
2 8 Small Claims Courts as Collection Agencies, supra, note 22, 242.
29 See supra, note 24.
3o Robinson, supra, note 22, 424; see also Fox, supra, note 22, 913. Robinson
did not, however, suggest restricting the availability of default judgments
in any way. As such, the commercial branch of his suggested court would
operate as most present small claims courts do, and there would almost
certainly be no let up in the activity of commercial claimants. As a result, it
is at least questionable whether such a proposal would be of any advantage.
Certainly it might encourage individual claimants to exercise their rights, but
it would not help defendants.
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Basic to any conception of small claims courts is the recognition
that there are different types of claimants requiring different treat-
ment.30a Separating the business claimants from the individual
claimants, either by hearing the cases on different days or by
different branches of the court,31 may correct some of the inegalities
created by herding the sheep with the goats. Business plaintiffs who
now sue in the small claims court would, under a dual system, use
the business section, and those individuals with claims would use
another section. This would be an improvement only if, as suggested
by Robinson, the segregation of the cases produced clerks and judges
more aware of and receptive to the problems of these individuals.
Otherwise there would be little advantage gained by a dual system
of small claims courts.
c) Limiting the Number of Suits
Another possible solution is placing a limit on the number of suits
that could be brought in any given period2 2 This has been done in
a number of American jurisdictions,33 the argument being that it
opens the court to everyone but prevents its abuse. 34 Indeed, Moulton
considers that such a move “effectively eliminate[s] the most trouble-
some suits” 2 5
In effect, this is merely another, more subtle, means of removing
the corporation from the court, although it can be argued that, as
the limitation would affect everyone, prospective business plaintiffs
and individuals alike, it is not discriminatory. Still, the arguments
tendered against the total exclusion of business plaintiffs from small
claims courts can, with equal validity, be used against this tactic.
However, discriminatory or not, a limitation on the number of times
an action may be brought within a given” time period, would serve
to curb the abuse by businesses of the small claims court.30
31Small Claims Court: Reform Revisted, supra, note 9, 67.
2 Prujiner, supra, note 4, 183, suggests that the limiting number could be laid
by statute or left to the discretion of the judge.
=E.g., Minnesota, Ohio, Detroit.
34 Supra, note 8, 242.
35 Moulton, supra, note 10, 1674.
36 Again, however, it should be mentioned that the problem would not be
solved, only “pushed upstairs” to the next court in the judicial hierarchy.
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CONTROLLING THE ABUSE OF SMALL CLAIMS COURTS
489
d)
“Clean Hands” Claimants Only
The proponent 7 of the suggestion that only businesses with
“clean hands” should be permitted to sue in the court submits that
the small claims court judge should have the discretion to decide
whether or not a prospective business plaintiff has “clean hands”.
Those businesses with “honourable claims” would be permitted to
sue, while those with “less honourable claims” would have to dis-
count them to collection agencies or enforce them through the normal
court structure.
A procedure involving a differentiation between honourable and
less honourable claims is rife with uncertainty, although it is con-
ceivable that legislation could lay down prima facie instances of
“honourable” and “less honourable” claims. And while “[t]wo
practices should be discouraged –
overextension of credit, and sales
which involve shoddy merchandise, overpricing, and misleading re-
presentation”, 8 without any guidelines, it would be the judge who
would decide which business practices tainted the claim to such an
extent as to make it “less honourable”.
Apart from the problem of uncertainty, this is an attractive pro-
position. It would permit the inclusion of businesses as plaintiffs in
the small claims court, while preventing claims which resulted from
oppressive or shady business practices. Any reticence on the part of
judges in holding that shady practices gave rise to less honourable
claims, however, would leave the court in the same position which it
now occupies –
a cheap, fast, efficient, and simple debt-collection
procedure with little or no scrutiny of claims before it.
A recent study by the National Institute for Consumer Justice39
proposed a variation on this theme: a judge should have the power
to bar any litigant from appearing for a period of a year if he has
“abused or misused” the court. A claimant who had obtained several
default judgments based on fraudulent or unfair trade practices or
who had filed under a fictitious name to avoid the prohibition on
mass filing or who had filed suit without making any effort to
resolve the matter with the defendant, would be deemed to have
abused or misused the court.
37 See supra, note 8, 242.
38 Ibid.
39 National Institute for Consumer Justice, “Redress of Consumer Griev-
ances” in National Institute for Consumer Justice Staff Studies on Small
Claims Courts, Boston (1972).
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e) Total Exclusion of Business Claimants
The most sweeping proposal is to exclude businesses from the
small claims court, as has been done in Quebec. Article 953(d) of the
Code of Civil Procedure includes in its definition of a small claim,
for the purpose of the special procedure, a requirement that it be
“exigible by any physical person in his own name and on his personal
behalf, except for a purchaser of accounts, or by a tutor or curator
in his official capacity”.
If the small claims court were closed to business interests, much
of what Prujiner calls commercial “agressivit6 juridique”4 would be
“defused”. It would, perhaps more correctly, be diverted to other
courts or collection methods. Exclusion would merely allow the
default judgment to be obtained in a higher court, with the subse-
quent higher costs being paid by the defendant.
This problem can be solved in two ways. A statutory provision
could provide that a judgment could not, under any circumstances,
in any court, be awarded in the absence of the defendant without
proof being shown by the plaintiff. On such a wide scale, this is
impractical. The Province of Quebec has chosen the second alter-
native and has stipulated that an action brought in a higher court
by a business, because of the exclusion of businesses from the small
claims court 4 1 may, at the option of the defendant, be heard in
small claims court 2 In effect, it means that the small claims court
is faced with a claim being pursued by a business. If the small claims
procedure is as good as is anticipated, if the individual defendant is
informed of his choice, and if the advantages of opting for the small
claims court are explained to him, surely in almost every case in
which the option is available it will be exercised. Therefore, the
situation will be the same as it was prior to the exclusion of business
claimants from the court. It is difficult to see the value to the
individual in excluding business claimants from instituting an action
in the small claims court and providing for this optional transfer
of the hearing.
If the option is not exercised by a defendant where this is
available, and the plaintiff is successful in his claim, the costs
payable by the defendant will be greater than if the case had been
transferred to the small claims court. Default judgments being
available in the higher courts is an added problem to defendants,
40 Supra, note 4, 176.
41 Art.953 C.C.P.
42 Art.983 C.C.P.
1976]
CONTROLLING THE ABUSE OF SMALL CLAIMS COURTS
491
especially if they find it impossible to take time off work to defend
the claim against them. The chances of successful defense are no
higher and, because of the nature of the court, might even be
considered to be lower, than in the small claims court.
Perhaps the only benefit is psychological: the consumer will have
chosen to come to the small claims court. It has been suggested that
this maintains the integrity and efficacy of the small claims court
as a people’s court. If the defendant loses, however, he or she will
not be any more understanding of the judicial system merely
because the defeat took place in a forum chosen, not by the com-
mercial claimant, but by the defendant.
Business or commercial claimants should not be excluded alto-
gether from small claims courts, but, if the transfer-option safeguard
is used as in Quebec, the danger remains that the court will be
used as a collection agency. In order to prevent this abuse, the
procedure must be such as to require more scrutiny before judgment
is awarded to recover a debt. This would appear to be most satis-
factorily dealt with by restricting or curtailing the availability of
default judgments which account for the vast majority of decisions
rendered in small claims courts.
f) Exclusion of Default Judgments
The harmful effects of default judgments cannot be remedied
by measures aimed at the litigants. The small claims procedure of
the province of Quebec does little to alter the effect of default
judgments. Article 965 of the Civil Code of Procedure, however,
does provide for the judge to scrutinize the evidence more closely
than in a traditional type of case; he may render judgment when
the defendant does not appear after “examining the exhibits in the
record, or, if he considers it necessary, after hearing the proof of
the [plaintiff]”. It is at the discretion of the judge whether he
actually requires the plaintiff to prove his case 4 3
Alberta is one jurisdiction which has actually tried to come to
terms with the difficult problem of default judgments. Section 26
of The Small Claims Act 44 provides, in situations where the defendant
43 See, however, arts.195 and 196 C.C.P. which indicate that, generally, un-
defended claims have to be proven. Art.194, however, would indicate that
liquidated debts are dealt with in the same way as in common law courts.
44R.S.A. 1970, c.343. The pertinent sections read as follows:
(1) Where a defendant fails to appear for trial the magistrate may
“26.
in his discretion allow the plaintiff to prove his claim in the same manner
that a defendant may prove a counterclaim under section 25, subsection
McGILL LAW JOURNAL
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does not appear, for a judgment to be awarded in his absence. The
section, however, stipulates that the magistrate “may in his discretion
allow the plaintiff to prove his claim” by oral evidence given under
oath by the plaintiff and/or his witnesses or by means of affidavit
evidence where the magistrate is satisfied that oral evidence cannot
for some good reason be presented to the court. The magistrate,
then, has the discretion to require the plaintiff to prove his claim
whether or not the defendant appears. The exercise of the discretion
would, of course, mean that the plaintiff would receive no benefit
from the non-appearanoe of the defendant: his path to a judgment
is no easier. Section 26 gives the magistrate a choice; he may allow
the claimant to prove his case, adjourn the trial to a later date or
award judgment by default on production of such evidence as he
considers sufficient. Thus, the magistrate in Alberta has the discre-
tion to preclude default judgments, in the normal sense, from his
court.
There emerge four possible ways of dealing with default judg-
ments. The status quo, as it exists in most provinces, can be
maintained: no proof is required for liquidated debts. Or, as in
Alberta, discretion may be given to the judge either to award a
default judgment or require the claimant to prove his claim. More
radical yet, would be a statutory provision requiring the claimant to
prove his claim, whether or not the defendant makes an appearance.
To preclude default judgments being awarded where the defendant
does not appear is clearly unacceptable; no defendant would ever
appear under such circumstances.
The present system in most provinces would seem equally
unacceptable; claimants recover their debts, legitimate or not, very
cheaply and efficiently. The vast majority of cases go by default
(2), or the magistrate may adjourn the trial to a later date or may sign
judgment by default on production of such evidence as the magistrate
considers sufficient.
25.
If a magistrate dismisses a plaintiff’s claim pursuant to sub-
section (1), he shall not give judgment on any counterclaim asserted by
the defendant until the defendant has presented his case in respect of the
counterclaim
(2)
(a) by the oral evidence given under oath of the defendant and any
witnesses he may have, or
(b) by means of affidavit evidence where the magistrate is satisfied
that oral evidence cannot for special good reason be presented to the
court.”
See also R.S.B.C. 1960, c.359, s.29; R.S.S. 1965, c.102, s.19; R.S.M. 1970, c.S-140,
s.17.
1976)
CONTROLLING THE ABUSE OF SMALL CLAIMS COURTS
493
with virtually no assessment of their merits. Neither is judicial
discretion in the awarding of default judgments an ideal solution.
It is likely to effect very little change in the existing system.
It is, therefore, recommended that legislation provide that wheth-
er the defendant appear or not, the claimant must prove his claim.
This would make the award of a judgment to a claimant dependent
upon whether he could prove his claim, and would have the result
of safeguarding the individual from the commercial plaintiff who
at present uses the small claims procedure partly because his
claims receive little scrutiny by the judge.
With the requirement that proof be shown, groundless claims or
those of doubtful value would either not be brought or would
quickly be dispensed with by the judge. Few doubtful claims would
result in judgments being awarded against individual defendants.
Genuine claims would suffer little or no hindrance; their holders
would merely have to prove them. Needless to say, the small claims
jurisdiction would have to be exclusive in order for this to be of
value. If it were still possible to sue in higher courts the more
doubtful claims could be pursued there and so undermine the pro-
tection of the individual envisaged by the small claims court.
The use of the adjournment in order to allow the defendant
another chance to appear should be more current. The judge should
attempt to ascertain why the defendant did not appear and to
encourage him to appear at the next hearing. Where an adjournment
is decided upon, costs should be awarded to the claimant to com-
pensate him for the results of the defendant’s non-appearance and
consequent adjournment. The requirements of proof should not be
overly rigorous; the judge should require only sufficient proof as
to satisfy him as to his decision.
5. Evidence Required To Substantiate A Claim
For the prohibition of default judgments to be successful, satis-
factory rules of evidence must be applied. Two considerations
especially must be borne in mind: adequate evidence must be pre-
sented and it must not vastly increase the adjudication costs.
Those provinces precluding default judgments require evidence
to be presented in the form of either oral evidence under oath or
by affidavit where the presentation of oral evidence is not possible
for some reason.45 The judge, however, can also grant a judgment
45 See the legislation referred to ibid.
McGILL LAW JOURNAL
[Vol. 22
when the defendant is not present on the “production of such
evidence as [he] considers sufficient”. 46
This would appear to be the most suitable solution to the
problem, the only difficulty being to ensure that evidence is pre-
sented upon which the decision is based. For instance, nothing would
be achieved if bogus or doubtful claims could be pursued to judg-
ment in the same manner as they can be processed at present, in
spite of the proof requirement.
As the evidence provision must not increase the cost of small
claims adjudication unduly, requiring witnesses to appear at the
hearing would not be advisable. There may well be instances, how-
ever, where the judge wants to see a particular witness, in which case
he should be summoned. In most instances evidence by affidavit
would appear to be sufficient, although there is the danger of
perjury.
Any system of small claims adjudication, in order to be success-
ful, must be flexible and allow the judge discretion. The judge must
come to a conclusion based upon the facts presented to him; he
must ascertain whether or not the witnesses and parties are reliable;
he must make an assessment as to the truth; and he must decide
accordingly. Even if this is not considered to be a radical departure
from the present system of awarding default judgments, it is much
preferable. At least the judge will not be deciding a case on the
basis of a book entry and non-appearance of the defendant. This
should ensure that claims which would otherwise not be scrutinized,
and which would be enforced without scrutiny, will be examined and
only enforced where they can be proven to the satisfaction of the
judge. As long as a practice of standard form affidavits attested
to without concern for the truth does not grow up, this provision
will be a successful one. The discretion in the judge should prove
the means whereby this practice does not arise.
6. Conclusion
There have been two legislative approaches to the problem of the
abuse of small claims court. Quebec has precluded business plain-
tiffs from its small claims courts and has left the rules relating to
default judgments unchanged. British Columbia, Alberta, Manitoba,
and Saskatchewan have not prevented businesses from suing, but
have given the judge the discretion to require claims to be proven,
even if they relate to liquidated debts, and the defendant does not
46 R.SA. 1970, c.343, s26(1).
19763
CONTROLLING THE ABUSE OF SMALL CLAIMS COURTS
495
appear at the hearing. The remainder of the provinces with small
claims courts have not responded to the problem.
It is felt that nothing constructive can be achieved by precluding
business claimants from using small claims courts as it merely
encourages those claimants to pursue their claims in higher courts,
with the attendant higher costs being payable by the losing de-
fendants. Shifting the adjudication to a higher court may well
maintain the integrity of the small claims court as a court for
individuals, but it does not solve the problem of the indiscriminate
enforcement of small claims against individuals, with little concern
for their validity. The requirement that all claims be proven to the
satisfaction of the court, whether liquidated debts or not, is designed
to prevent small claims adjudication from being abused. In order to
prevent business claimants from avoiding the proof requirement by
bringing their action in higher courts than the small claims court,
the jurisdiction of the court should be exclusive; and so every claim
falling within the jurisdictional limits, both monetary and subject,
should be required to be pursued in the small claims court. Perhaps,
in this way, small claims courts will begin to live up to their early
expectations and become a genuine “people’s court”.
