The N.B. legislature abolished N.B.’s Small Claims Court in 2010. The Small Claims Court gave claimants the option to deal with certain types of claims of up to $6,000 in a faster and simpler way, primarily by employing adjudicators instead of judges and eliminating certain procedural steps applicable to larger claims. Two completely new “expedited” court processes – Rules 79 (“Simplified Procedure”) and 80 (“Certain Claims not exceeding $30,000”) – that saw Court of Queen’s Bench judges adjudicate claims up to $75,000 and $30,000 respectively, replaced the Small Claims Court.

Effective January 1, 2013, N.B.’s current provincial government enacted a regulation reinstating a Small Claims Court in New Brunswick, and simultaneously repealed Rule 80. The new Court became operational on January 2, 2013.  Key aspects of the “new” Small Claims Court are:

• the Court’s jurisdiction will be over certain types of claims with a monetary limit of $12,500;
• Adjudicators – rather than judges – will once again hear disputes;
• there are new forms, but the process to deal with a claim – including elimination of pre-hearing document and witness disclosure and discovery, relaxed rules for service of a claim and for evidence at the hearing, and mandatory settlement efforts – are largely unchanged from the pre-2010 small claims regime, and more relaxed than that under Rule 80;
• settlement efforts prior to hearing are mandatory;
• a party dissatisfied with a decision on the substance of the claim has the right to a new hearing by a Court of Queen’s Bench Judge, while a party dissatisfied with a decision unrelated to the substance of the claim can apply for an appeal; and
• Adjudicators can order costs of up to $500 against an unsuccessful party.

Click here to read the Regulation bringing to new Small Claims Court into effect.

Click here to see the new Small Claims Act.

N.B.’s “new” Small Claims Court has a number of features harkening back to the pre-2010 small claims regime, and represents a significant departure from the regime created by the now repealed Rule 80.

LIMITED JURISDICTION

The Small Claims Court has two jurisdictional limits; it can only deal with:

• debt, damages and recovery of personal property claims; and
• claims of up to $12,500.

Thus, if a claim is less than $12,500, but is not a type of claim that the Small Claims Court has the authority to adjudicate, the claimant must resort to the other available court processes.  If the claim is one with which the Small Claims Court can deal, but the amount exceeds $12,500, the claimant can choose to abandon and forfeit the amount over $12,500 and proceed under the new rules; however, a claimant cannot split a single claim into two or more amounts to fit within the Small Claims Court’s monetary limit.

ADJUDICATORS NOT JUDGES

The new Court will once again utilize appointed adjudicators, rather than Court of Queen’s Bench judges, to adjudicate small claims.  Adjudicators are immune from legal action, though there is a complaint process for misconduct allegedly committed during the adjudication of a claim.

PROCESS CHANGES

There is a fresh set of forms for Small Claims Court matters, but the document filing procedure will remain largely unchanged.  Some timelines for filing and serving documents, however, are different from those under Rule 80:

• a claimant has one year (rather than the six months under Rule 80) after filing the Claim with the Court to serve the defendant(s) with the Claim; and
• parties must file and serve all amended documents at least 14 days (rather than 20 days under Rule 80) before the scheduled hearing date.

The rules for serving documents are also relaxed compared to those under Rule 80:

• a party can serve an individual by leaving documents with an adult occupant (e.g., a spouse or adult child) at the individual’s dwelling, and sending another copy by ordinary mail to the individual’s residence on the same or next day; and
• a party can serve a business by leaving documents with a receptionist at the place of business; unlike Rule 80, it is not necessary to leave the documents with someone who appears to be in control or management of the business.

When the defendant admits, either in full or in part, a claim for a debt, then the defendant may request that the matter proceed directly to a payment hearing, at which the parties can arrange a payment schedule for amounts they agree are owed to the claimant.

RELAXED EVIDENCE RULES

As was the case with the pre-2010 Small Claims Court, the new Court has less stringent rules for the admission of evidence than under Rule 80.  An adjudicator can admit oral testimony and documents as evidence at a hearing when it is:

• relevant to the subject-matter of the hearing; and
• not privileged.

A party is not required to file a list of the witnesses and documents upon which it intends to rely before the hearing.

MANDATORY SETTLEMENT EFFORTS

Also as in the pre-2010 small claims regime, parties are mandated to attempt to settle their dispute, and must engage in settlement conversations before a matter will be permitted to go to a hearing.  There is a confidential mediation process available that will not affect the court record if settlement efforts are unsuccessful.

COSTS AWARDS

The new Small Claims Court rules permit an adjudicator to order a maximum of $500 in costs against a party for unreasonably bringing or defending an action. Under Rule 80, cost awards were based on the Rule 59 tariff and could thus be much greater.

APPEALS 

A party dissatisfied with an adjudicator’s decision has two possible appeal avenues:

• a party dissatisfied with the adjudicator’s decision on the substance of the claim has an automatic right to a completely new hearing before a Court of Queen’s Bench judge. This is a significant change; the only option under Rule 80 was a request for leave to appeal to the N.B. Court of Appeal on a legal issue.  To seek a new hearing, a party must file a request for appeal within 30 days after the adjudicator’s decision is filed; the judge hearing it has the option of conducting the appeal under the Small Claims Court’s relaxed rules of evidence and procedure; and
• a party dissatisfied with the adjudicator’s decision for a reason unrelated to the substance of the claim – for example, a procedural issue like a ruling relating to the admission of evidence or service – is not automatically entitled to a new hearing.  The dissatisfied party can file a notice of appeal by application within 10 days after the adjudicator’s decision is filed.  The judge who hears the application can grant or deny the appeal, and make any order that she considers just.

EFFECT ON RULES 79 AND 80

Rule 80 is repealed, and it is no longer possible to file claims under Rule 80.  However, there is no effect on Rule 80 claims commenced before January 1, 2013, and furthermore such claims cannot be transferred to the Small Claims Court.  There is no change to Rule 79, which remains in full force and effect and continues to apply to claims in excess of $12,500 and up to $75,000.

COMMENT

The reinstitution of a Small Claims Court in N.B. has a number of positive implications for litigants; however, it is questionable whether the changes will have any practical effect for corporate and institutional litigants:

• The new legislation may provide some welcome clarity, and address confusion that changes to the rules for “smaller” claims in the last three years may have created for litigants.
• A return to the use of adjudicators rather than judges effectively removes claims within the new Court’s jurisdiction from the mainstream court docket and administrative process.  Combined with the short timeframes, this will likely result in the faster adjudication of these claims.
• Relaxed procedural and evidentiary rules also help to move the process forward more quickly, and at a lower cost.
• The new Court’s monetary limit is more than double that of the pre-2010 small claims regime ($6,000).  However, it is substantially less than the $30,000 threshold under Rule 80.  Thus, the scope of Rule 79 has effectively been expanded to cover claims from $30,000 to $75,000, to covering claims from $12,501 to $75,000.

Since many corporate and institutional “small” claims are likely to be between $12,501 and $75,000, and Rule 80 is repealed, these corporate and institutional litigants will have to proceed under Rule 79 for “smaller” claims.  For a summary of Rule 79, click here to read McInnes Cooper’s October 7, 2011 Legal Update “Keep It Simple:  The Highlights of Simplified Procedure and the New Small Claims Regime.”  Thus, practically, most corporate and institutional litigants will still find themselves in the traditional court system.

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Please contact your McInnes Cooper lawyer or any of member of our McInnes Cooper Insurance Team to discuss this topic or any other legal issue.

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