On our Overdue Advice podcast we recently featured a fascinating conversation between host Bryn Griffiths and Tim Browatzke, MetCredit’s Manager of Corporate Integrity and Legal Strategies.
In this podcast episode, the speakers discussed the doubling in August 2023 of the civil debt litigation limit in the Provincial Court of Alberta (also known as Small Claims Court) from $50,000 to $100,000.
This change is especially significant because it will reduce the backlog of cases in the higher Court of King’s Bench, and will hopefully catch on throughout the country’s civil litigation processes.
During the course of the podcast episode, Bryn and Tim have a detailed conversation about the expansion of debt litigation limits in Alberta. This legal change will be very positive for individuals and companies applying for civil debt litigation.
And the doubling of the litigation limit is also beneficial for MetCredit and its business clients, who together represent a significant number of debt litigation cases in Alberta. We not only help clients collect debt, but when conventional collection means don’t work, we are also a very cost-effective means of litigating. (We also help clients who’ve independently or through a lawyer secured a judgment to collect on it, which is often not as easy as people think.)
Tim explained that there is already an increase in recent months, both nationally and regionally, in business activity related to debt litigation. This increasing activity could still result in high fees for smaller lawsuits despite the expansion in the limit of the debt litigation filed.
As you might imagine, this action is sure to result in a significant increase in activity for MetCredit, because our entire process is geared towards streamlining collections while keeping costs to a minimum. The decision also helps in reducing the backlog of current, ongoing litigation cases in the province.
With less of a backlog, more of these cases may finally get resolved, which would improve business cash flow throughout the province.
And as Tim pointed out, litigation processes could soon be impacted elsewhere, if Alberta is viewed as a positive example.
The discussion also covered how the Small Claims Court limit expansion could be a double-edged sword for the civil litigation ecosystem elsewhere in the country. The increase in the litigation limits is expected to generate faster litigation processing overall, but it’s not clear if this would ultimately reduce litigation efforts or create new bottlenecks or backlogs through increased utilization. In short, it’s worthwhile for more companies to sue in Small Claims Court, which could increase demand on the system. At the same time, many cases that would have been heard in the Court of King’s Bench are now going to be tried in provincial court.
We could also see a reduction in fees for debt litigation, which would be hugely beneficial for small to medium-sized businesses. But these changes could also raise the bar for small claims court litigation, which could negatively impact on the number of people who can get their voices heard.
With any legislative change, it’s hard to predict what will happen next. But, as we can see from the impact of previous ones regarding civil debt litigation, small businesses leaders need to remain aware of new laws that govern these sorts of legal processes.
Having a solid legal strategy in place is more important now than it’s ever been. Before filing a claim, business owners should always seek advice from knowledgeable legal professionals who have an in-depth understanding of the litigation processes.
Tim also underscored the expansion’s importance, noting that it should serve as a cautionary tale to businesses of all sizes that there are potential legal ramifications associated with non-payment of debts.
Additionally, he highlighted the importance of having a defined, robust collection strategy to deal with creditors who refuse to pay their debts.
Making use of a variety of tools and techniques, from collection agencies to lawyers, can be beneficial for businesses concerned with the high cost of debt litigation. (As you can learn from another Overdue Advice podcast with the brilliant Howard J. Sniderman, QC, there are some strong advantages to going the collection agency route in many situations — give it a listen!)
A key takeaway is that the expansion of debt litigation limits in Alberta is a massive change in the civil debt litigation landscape. It provides a valuable opportunity for businesses to streamline their legal processes, potentially reducing fees, increasing access to justice and improving the overall litigation ecosystem. I hope to see it catch on.
If you’re in Alberta and are facing overdue receivables up to $100,000, there’s absolutely no excuse to hold off. The sooner you get started, the more likely you are to be successful. In other jurisdictions, the same applies — and hopefully the Small Claims court limits there follow suit quickly.
Wherever you may be in Canada or the United States, don’t hesitate to reach out with any questions about collecting business debt. There’s never any obligation and our experts are happy to help.