Justice for Some: Regressive Effects of Increased Access to Small Claim Courts

Abstract

Small claims courts enable parties to resolve their disputes relatively quickly and cheaply. Parties often represent themselves and trials – should they occur – are typically confined to a single day. This court’s limiting feature, by design, is that the alleged damages must be small, in accordance with the jurisdictional limit at that time. One might expect that a large increase in the upper limit would increase the court’s accessibility to a larger and potentially more diverse pool of litigants. We examine this proposition by studying the effect of the Ontario Small Claims Court increasing its jurisdictional range. Prior to January 2010, claims between $0 and $10,000 could be litigated in the small claims court. After January 2010, this jurisdiction expanded greatly to include all claims between $0 and $25,000. We study patterns in over 600,000 small claims disputes over the period 2006-2013 and observe three main results following the increase in the jurisdictional range. Two of these results are counterintuitive. First, (as one might expect) the average damages claim increased, from an average of approximately $3,500 before the jurisdictional change to $7,000 after the jurisdictional change. Second, the number of claims increased only modestly after the jurisdictional change, by less than 4%. Third – and most importantly – the jurisdictional change resulted in fewer claims from poorer plaintiffs. The drop is most pronounced for plaintiffs from the poorest 10% of the population. These findings, taken together, suggest that legislative attempts to make the courts more accessible may have unintended regressive consequences. 1 Both authors are faculty at the University of Toronto Faculty of Law. The authors would like to thank the Social Sciences and Humanities Research Council (SSHRC) for its generous research support. Alison Harvison Young, Ed Morgan, Eric Posner, Michael Trebilcock, and participants at the STILE Law & Economics Workshop in Naples, Italy provided helpful suggestions in the development of this project. Elizabeth White provided excellent research assistance. All remaining errors are our own.