October 5, 2015

Quebec: Beware of the courts’ new jurisdictional thresholds!

Lawyers in Quebec are preparing themselves for the coming into force of the new Code of Civil Procedure in January 2016. The focus seems to be on alternative dispute resolution, joint experts and the new jurisdictional threshold of the Small Claims Division, which was raised from $7,000 to $15,000. However, it is important to note that the jurisdictional threshold of the Court of Quebec will also increase from $70,000 to $85,000 in January 2016, which is a significant change. Thus, plaintiffs who were used to reducing the amount of their claim in order to be heard by the Court of Quebec will be in a more advantageous position.

Following a recent ruling from the Court of Appeal, those planning to file a claim before January 2016 may want to adopt certain strategies in order to limit legal costs and professional fees. Indeed, the Court had to interpret the Act that provides for the new jurisdictional threshold for Quebec Small Claims Division, in force since January 2015. According to this Act, if the Court of Quebec was already “seized” of a case before January 2015, for which the amount claimed was between $7,000 and $15,000, the matter would continue before that same court. The Court of Appeal thus had to determine when a court is considered to be “seized” of a case. The amount claimed was $8,000, and the demand was filed on December 23, 2014, i.e. one week before the new threshold came into force. However, it was served on January 6, 2015, i.e. a few days after the new threshold came into force. Taking the second date into consideration, the trial judge granted the defendants’ motion to transfer the case to the Small Claims Division.

The Court of Appeal reversed the decision and ruled that a court is “seized” of a case when the statement of claim is filed in the court record, not when it is served on the defendant. Therefore, the case could not be transferred to the Small Claims Division.

This decision will certainly have an impact on similar situations that are likely to arise when the Court of Quebec’s jurisdictional threshold is increased to $85,000 in January 2016. The Court of Appeal itself even said that its ruling will have an impact on the interpretation of several articles of the new Code which use the phrase “court seized”.

Therefore, if someone intends to file a claim in the next three months for an amount ranging from $70,000 to $85,000, they would be well advised to consider the most efficient strategy in order to avoid fees related to the transfer of their file to the competent court after January 2016.

Indeed, a plaintiff who filed a claim with the Court of Quebec before January 2016 might be tempted to take advantage of the new threshold − once it comes into force − by raising the amount claimed by way of amendment. However, it is not yet known if such a strategy will be accepted by the courts. In fact, the case law of the Small Claims Division indicates that many plaintiffs who tried to increase their claim to $15,000 were denied by the Court because they were considered to have waived their right to claim more than $7,000 at the time. Even though the recovery of small claims takes place in a particular context, judges of the Court of Quebec may take the same view with regard to motions to amend presented to them.

Plaintiffs should do their best to correctly assess the amount of their claim if it is to be filed before January 2016. A correctly-assessed amount will allow the plaintiff to seize the proper court from the start and as a result, avoid the fees associated with the transfer of the file to the competent court. It will be interesting to follow how the courts will deal with this issue in 2016.