Are you owed money? Do you have a debt to a business or individual but dispute the amount? Our Debt Collection Lawyer can help.
One of the most common issues McMackin Law deals with are businesses that are having difficulty in collecting an account. In most cases the accounts are sub $35,000.00 which puts it in the jurisdiction of the small claims court.
Below is an outline as to how we go about collecting debts that fall in the jurisdiction of the small claims court.
The first step we usually recommend is sending a demand letter. A demand letter is a short letter coming from a lawyer that outlines the amount owing and typically mentions at the end of it that if this amount is not paid by such and such a date then my client has advised me to commence proceedings.
Usually the debtor will respond by doing one of the following five things:
Assuming no agreement is made we usually recommend proceeding to the next step of commencing an action.
Prior to commencing a proceeding, we typically request that you provide us all relevant documentation which includes invoices, all correspondence, any other potentially relevant document, and a summary of any verbal discussions relevant to the issue.
Upon receiving the documentation and summary we review it and then draft a “Plaintiff’s Claim.” This can be found on the Ontario Court Forms website and is Form 7A under the Small Claims Court section. Typically, it is best to have a small claims lawyer draft a Plaintiff’s Claim as in the Pleadings portion you need to clearly outline your case.
If the matter is related to debt collection, we will usually attach the relevant documents to the Claim. After the Claim is complete, we will hire a process server who will file the Claim at the relevant courthouse and then will serve the Claim on the Defendant in person.
If the process server is unsuccessful serving the Defendant in person or it is not possible, we file a motion seeking an Alternative to Personal Service. (This commonly occurs when the Defendant uses only a P.O. Box and has no fixed address of business or residence)
After the Defendant is served, they will have 20 days to respond to the Claim. If they hire a lawyer, it is customary to grant the lawyer a small extension in some circumstances.
The Defendant at this point will usually do one of the following things:
Depending on if the Party defends will determine what our next step is.
Where the debtor does not defend, we will typically note the defendant in default. This is done by filing a Request to Clerk with the Court.
The next step is to determine how to obtain a Default Judgment. Ideally there is a contract that was signed by both parties clearly outlining the amount owing. If there is, we can Request to the Clerk that they sign a Default Judgment right after they accept the Request to Clerk.
In the case that there is not a contract clearly outlining the amount owing there are two options. The first is to file a motion in writing. The second is to request an assessment hearing before a Deputy Judge. Based on the facts and details of your case we will discuss which option is better suited for your case.
For a motion in writing an Affidavit will need to be completed. A Deputy Judge will review the Plaintiff’s Claim and Evidence and then decide as to the amount owing.
After obtaining a Default Judgment, the following are the methods of collection we commonly use:
In most cases using these methods we will be able to successfully collect the debt owing. You should consult with a Debt Collection Lawyer prior to taking any of these steps.
If the Debtor defends, your lawyer will receive the Defence and the Court will mail them a date for Settlement Conference. At least 14 days before Settlement Conference each party is to provide the other with a List of Proposed Witnesses and all relevant documents.
Depending on the Courthouse, Settlement Conference can be a half day affair or at a specific time. You should be available all day regardless. You and your lawyer will attend the Courthouse. There will be assigned room(s) in which a Deputy Judge or Official will be hearing Settlement Conferences. Often there will be a long list of Settlement Conferences. You could be first, or you could be last depending on how the Deputy Judge decides to hear said cases.
Each party will at some point be called into a Courtroom or a conference room. The Plaintiff sits on the right and the Defendant on the left. Usually the Deputy Judge will ask each side to tell their story briefly. After listening to each side, the Deputy Judge usually will give comments and see if the matter can be settled.
If the matter can be settled, then a terms of settlement form may be provided at the Court. Both sides will sign the agreed Terms of Settlement and present it before the Deputy Judge. In the case that the matter can not be settled typically the Plaintiff will have the option to set the matter down for Trial at that time or at a later date.
Over 90% of cases in Ontario settle before trial. However, in some circumstances Trials are required to enforce your legal rights.
On the date of your Trial you will go to the Court house. All your witnesses should also attend the Court house. There are many situations in which you should summons a witness. We frequently employ this measure to ensure attendance.
Once Court begins both parties will provide their names and legal status (Lawyer, Paralegal, Self-Represented) to the Deputy Judge. The Plaintiff will provide an opening statement outlining their case and what they will be proving. The Defendant will then do the same.
The Plaintiff will then call their first witness. Typically, this will be the creditor. Your lawyer will ask you open ended questions (Direct Examination) so that you can tell your story. After your lawyer is done asking questions then the Defendant may ask questions in cross examination. This entitles the Defendant to ask leading and closed questions. See below for a demonstration of the difference between Direct Examination and Cross Examination.
Direct Examination: Where were you on December 14th?
Cross Examination: You were at 555 Green River Avenue on December 14th, Correct?
After the Defendant ends their cross examination you may ask further questions based on new lines of questioning the Defendant brought up that were not addressed in your Direct Examination. This is known as Reply.
The same process will occur for each of the Plaintiff’s witnesses. After the Plaintiff finishes presenting their case then the Defendant will begin to call their witnesses. This time it works the same way except the Defendant will be the first to ask questions and will be entitled to Direct Examination and Reply as opposed to Cross Examination.
Once both parties finish asking questions then the Plaintiff will make Closing Submissions. This will typically involve legal arguments and case law for why they are entitled to payment. The Defendant will follow with Closing Submissions doing the same.
The Deputy Judge after hearing closing submissions will usually decide to do one of the following three things:
Once the Deputy Judge provides their decision with reasons then the Deputy Judge will allow cost submissions. The successful party will go first. In most cases lawyers can claim costs of up to 15% of the Judgment though it will not always be granted. A lawyer who only does $2000 in work cannot claim for $5000 in costs either. It is based on the amount billable up to 15%. Disbursements will also be requested on top of Costs.
The Deputy Judge will make a decision on costs usually considering a variety of factors. One of the main factors is whether there were any offers to settle that provided more favourable terms than the Judgment. It should be noted that in rare circumstances a successful party may be entitled to more than 15% in costs.
After deciding on costs, the Deputy Judge may engage in discussion about payment terms. In that case each side will try to come up with agreeable terms of payment.
In the case that no payment terms are agreed to and / or you are not able to collect payment then we will do as we did in “Step 4 Where Debtor doesn’t Defend”
If the amount owed is over $35,000, we will have to discuss whether to bring the action in Small Claims or in the Superior Court of Justice. If the amount is only slightly more than $35,000 it is often a better option to waive the amount over $35,000 as the Small Claims process is significantly more cost-effective and takes significantly less time. It is important that if you are owed money to contact a Debt Collection Lawyer as soon as possible.
If you’d like more information on the Small Claims Court Click the following link: Small Claims Lawyer
There is typically a 2-year limitation period to collect a debt. If certain things occur the limitation period can restart such as if the Debtor makes a partial payment.
If you contact a Debt Collection Lawyer shortly after a debt occurs, you will have a higher chance of collecting the debt than if you wait. This is because the Debtor may go bankrupt, accrue debts, and witness memory tends to decline with the passage of time. At McMackin Law we have knowledge and experience in collecting debts and defending against alleged debts.
At McMackin law we have assisted businesses and individuals with their Debt Collection matters since the late 1980’s. We are proud to serve Pickering, Ajax, Whitby, Oshawa, Durham Region, Bowmanville, Newcastle, Clarington, Port Hope, Cobourg, Brighton, Toronto and surrounding areas.