What happens after a claim is issued?
It then needs to be served upon the Defendant who will then have three options:
[1] Immediately settle with the Plaintiff;
[2] File a Defence and have the matter proceed to a Settlement Conference;
[3] Do nothing and have judgment entered accordingly.
SERVICE FIRST
After a Plaintiff’s Claim has been issued by the court, a Plaintiff then has up to six months to serve it failing which service is no longer effective (although a Plaintiff could bring a motion for an extension of time). There are very particular rules regarding service in the Ontario Small Claims Court which we will not get into here. Suffice to say, a claim has to be served in such a way that the court is satisfied that it has come to the attention of the Defendant.
AFTER SERVICE
Once a Defendant has been served with a Plaintiff’s Claim they then have 20 calendar days to exercise on of the following three options:
[1] Immediately settle with the Plaintiff; [2] File a Defence and have the matter proceed to a Settlement Conference; or [3] Do nothing and have judgment entered accordingly.Notwithstanding the 20-day deadline, it is not uncommon as a matter of courtesy to provide an opposing party with some additional time if so requested – usually 10 to 20 days.
SETTLE THE CLAIM
There are two ways that a Defendant can settle a claim with a Plaintiff. One is to contact the Plaintiff or their representative directly and work out some type of settlement agreement that involves payments to the Plaintiff. This can be done by way of the court’s Terms of Settlement form or a settlement agreement specifically drafted between the parties themselves.
If a Defendant fails to make payments as per the terms the Plaintiff would be entitled to obtain judgment or, depending upon which form is used, continue as if there had been no settlement.
FILE A DEFENCE
Technically, a Defendant has three options when it comes to filing a Defence:
[1] Dispute all of the Plaintiff’s Claim and have the matter proceed to a Settlement Conference. A Defendant can file almost whatever they want as a Defence provided it speaks to the particulars of the Plaintiff’s Claim. The question then becomes will it withstand scrutiny from a trial judge should the matter go that far; [2] Admit part of the Plaintiff’s Claim, propose terms of payment and dispute the balance and have the matter proceed to a Settlement Conference; or [3] Admit all of the Plaintiff’s Claim and propose terms of payment. If the Plaintiff does not dispute the payment proposal within 20 days then it is deemed to be binding upon both parties.Given the nature of the files that we handle, most of the them are defended and proceed to a Settlement Conference about three months later. Firms that handle a lot of retail debt, on the other hand, may expect most of their files to either involve settlements or default judgments.
A Settlement Conference is, like the name suggests, a court hosted event to try to resolve the matter without the need of it going to trial. About 40% of Defended actions get resolved at Settlement Conferences and another 40% after the conference but some time before trial.
DO NOTHING
If a Defendant is properly served and does not respond within 20 calendar days after service being deemed effective then they may be noted in default and the Plaintiff may proceed to obtain judgment. Depending upon the nature of the Plaintiff’s Claim a default judgment may be obtained either from the court clerk or by way of a judge.
It should be noted that the Rules of the Small Claims Court do have checks and balances built into them and it is possible for a Defendant to bring a motion to have a default judgment set aside if the following three criteria are met:
[1] The Defendant acts quickly upon discovery the default; [2] The Defendant has an explanation for not filing a Defence; [3] The Defendant has a Defence to the Plaintiff’s Claim (the Defence simply has to be an opposing narrative to the Plaintiff’s Claim).
