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Can Some Family Law Matters Be Taken to Small Claims Court?

Can Some Family Law Matters Be Taken to Small Claims Court?  

A Ontario Superior Court of Justice decision heard a few weeks ago cleared up the issue of whether separating common law spouses can have certain of their unresolved issues heard in Small Claims Court, rather than having to take the matter to Family Law Court (as legally married couples must do).

In this case, the couple lived together common law for about three years.  When they separated, the woman brought a Small Claims Court action against the man, to recover money she allegedly owed him under a verbal agreement.  The money related to some debts for living expenses.

At an initial hearing, the man claimed that the woman’s Small Claims action should be dismissed, because in actuality the matter pertained to Family Law, and so the Small Claims Court had no jurisdiction to deal with it.   A first judge hearing the matter had not agreed with him, and allowed the woman to proceed with the claim and take steps to set a date for trial.

The man appealed the judge’s ruling.  Among his arguments were the following:

1) the woman’s claim was based either on an alleged oral cohabitation agreement, or was based on constructive trust principles (which are court-created concepts, designed to address common law situations where the parties’ financial and legal affairs are not covered by contract or statute).   Both of these are Family Law matters.

2) As such, the matter should properly be heard in the Family Law courts, not in Small Claims; and

3) Furthermore, the constructive trust claim is actually a means of obtaining relief in equity, which was beyond the Small Claims Court’s jurisdiction in terms of the type of relief such courts were allowed to grant.

(In contrast, the woman argued that – while it was true that the parties were living together – it was not true “cohabitation” in the Family Law sense, nor was it a “common law relationship” because she was still legally married to another man the entire time.  She claimed she could not have two “spouses”, so the verbal agreement relating to the debt for living expenses could not be a “cohabitation agreement” under the Family Law Act.  Instead, she likened it to a “loan to a friend”.)

The court hearing the appeal disagreed with the man’s position.   True, this was a common-law relationship, and – absent a contract – the only claim for property or debt between common law partners is grounded in the concept of constructive trust, which is a Family Law matter.   However, if the woman wanted to assert both arguments (i.e. that there was a contract in place and/or that there was a constructive trust), then there was no point in forcing her to take the contract aspect of her claim to a different court.   Plus, there was also recent precedent for the idea that the Small Claims Court does indeed have jurisdiction to grant equitable relief – after all, it is a “court for the people”, with the aim of bringing justice “effectively and cost-effectively to people”.

But even acknowledging that Small Claims Courts do generally lack jurisdiction in Family Law matters, the current case involved on a stand-alone issue:  the validity of an alleged verbal loan between the parties, and one that did not have the required formality nor meet the established test for what constitutes a “domestic contract” under the Family Law Act.   This was not a case where one party was seeking support, division of family property, or relief related to the sale of a matrimonial home.  Instead, this was a simple contract case between two people who used to live together.  

Finally, the court clarified that the Small Claims Court does indeed have jurisdiction to award legal or equitable relief, provided the judgment comes below the $25,000 monetary limit of that court.

For the full text of the decision, see:

Matteau v. Johnson, 2012 ONSC 1179 http://canlii.ca/t/fq62d