Can You Only Recover $50,000 in Ontario Small Claims Court? What if Set-Off Is Involved?

By: Enze Zhang, Licensed Paralegal

Ontario Small Claims Court now has a monetary limit of $50,000, excluding interest and costs. For many claims, this means that if your actual loss is higher than $50,000, you must either waive the excess amount or proceed in the Superior Court of Justice.

However, there is an important distinction where counterclaims and set-off are involved.

In a regular one-sided claim, the plaintiff cannot simply claim $80,000 in Small Claims Court and ask the court to award the full amount. The Small Claims Court limit still applies.

But where the defendant brings a proper Defendant’s Claim, and both sides claim that the other owes money, the court may need to calculate each side’s entitlement first, then apply set-off.

For example:

A contractor sues a homeowner for $45,000 in unpaid work.

The homeowner counterclaims for $90,000 due to defective work.

If the court finds that the contractor is owed $45,000, but the homeowner proves $90,000 in damages, the court may set off the two amounts.

The net result would be:

$90,000 minus $45,000 equals $45,000

In that situation, the final net judgment may still fall within the Small Claims Court limit.

This principle was addressed in 2146100 Ontario Ltd. v. 2052750 Ontario Inc., 2013 ONSC 2483, where the court confirmed that, in a set-off situation involving a counterclaim, the focus is on the final net amount awarded, not necessarily every amount considered during the calculation.

That said, this is not a general way to avoid the Small Claims Court limit. It is mainly relevant where there is a proper counterclaim and a real set-off issue between the parties.

The practical takeaway is simple. If you are defending a Small Claims Court matter and believe the plaintiff also owes you money, do not assume that a defence alone is enough. You may need to file a Defendant’s Claim and clearly plead set-off.

This issue often comes up in construction disputes, unpaid invoice claims, shareholder or business disputes, and contract disputes where both parties say the other side breached first.

Clarity Legal Services assists with Ontario Small Claims Court matters, including claims, defences, counterclaims, and set-off issues. Contact: ezhang@claritylegal.ca

This post is for general information only and is not legal advice. Each case depends on the pleadings, evidence, and facts.