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Contracts or Invoices: Concerns for Splitting a Cause of Action in Small Claims Court
Question: Can I file separate Ontario Small Claims Court claims for different unpaid invoices if they all come from the same contract?
Answer: In Ontario, you generally shouldn’t split multiple unpaid invoices into separate Small Claims Court lawsuits when they all arise from one underlying contract, because the court can treat them as one cause of action and may dismiss or consolidate the claims under Rules of the Small Claims Court, O. Reg. 258/98, Rule 6.02 and the reasoning in Sloane Capital Corp. v. Beacon Holdings Ltd., 2023 ONSC 184. For guidance that fits your situation and affects how you proceed in court, MuskokaCriminal.Law™ is a Criminal Defence Team serving Bracebridge, Huntsville, Parry Sound, and surrounding Ontario communities.
Suing for Breach of Contract Involves a Contract Rather Than Invoices
Splitting a cause of action occurs when a party attempts to pursue multiple lawsuits for different portions of a single legal claim, rather than advancing the full claim within one proceeding. In the Small Claims Court context, this issue can arise when a creditor files separate claims for multiple unpaid invoices that all stem from the same underlying contract. While each invoice may reflect a distinct amount owing, the court may view the debts as part of one continuous financial cause of action, making separate claims procedurally improper and potentially subject to dismissal or consolidation. Recognizing when invoices form part of the same contractual relationship is critical to avoiding procedural challenges and ensuring compliance with litigation rules.
The Law
The restriction forbidding splitting a cause of action, meaning bringing multiple breach of contract claims alleging separate invoices arising from breach of the same contract is expressly stated within Rule 6.02 of the Rules of the Small Claims Court, O. Reg. 258/98, as well as related case law decisions which state:
6.02 A cause of action shall not be divided into two or more actions for the purpose of bringing it within the court’s jurisdiction.
[36] In this case, the question that I have to determine is whether each invoice triggers a separate cause of action, which is a question of contractual interpretation. If the answer to that question is yes, then the Deputy Judge did not exceed his jurisdiction. If the answer to that question is no, then I must consider whether the Respondent waived its right to enforce the remaining invoices. These are questions of mixed fact and law and, as a result, some deference is owed to the Deputy Judge’s findings. Creston Moly Corp. v. Sattva Capital Corp, 2014 SCC 53, [[2014] 2 S.C.R. 633.
[37] However, as a matter of law, there is no dispute that the jurisdiction of the Small Claims Court is limited to $35,000.00. Section 23(1) of the Courts of Justice Act, R.S.O. 1990 c. C.43 states that the jurisdiction of the Court to provide monetary relief is limited to the prescribed amounts. Section 1 of Regulation 626/00 states that the maximum amount of a claim in the Small Claims Court is $35,000.00 and the maximum amount of a claim over which a Deputy Judge may preside is $35,000.00. These statutory provisions must inform my determinations in respect of this appeal.
[38] The Respondent relies on the Annex Publishing decision to support its argument that the Deputy Judge was only adjudicating the question of three invoices and was acting within his jurisdiction. In my view, Annex Publishing is distinguishable and does not support the Respondent’s position in this case.
[39] In Annex Publishing, the Defendant, L&W, published a quarterly magazine and the Plaintiff, Annex, printed it. L&W failed to pay for two separate printings of the magazine and Annex brought two claims for $10,000.00 in the Small Claims Court. One claim was brought in Toronto and the other in Simcoe County. Annex successfully argued that these claims were separate actions as there were separate contracts for each printing of the magazine. That conclusion fits the facts in Annex Publishing, as there was no requirement for L&W to use Annex for the next printing of the magazine simply because they had been used for the last printing. Similarly, there was no requirement for Annex to print the next printing of the magazine simply because they had printed the last one. The two printings that gave rise to the two actions were separate events resulting in s separate contracts. The failure to pay each invoice was a separate cause of action.
[40] The contract in this case is different. There is clearly only one agreement between the parties. The rights to trailer fees arise out of the one agreement, and the trailer fees are calculated based on the terms of the one agreement. The fact that there are separate invoices does not matter. The contractual right to the payments in this case flows from the terms of the contract, which had been entered into years previously. It does not matter that the payments were periodic payments that were not all due at the time that the action was commenced. The payments all arose under the same contract.
[41] Put another way, so long as the Notes were outstanding, the rights of the Respondent to collect trailer fees continued to exist. Unlike the Annex Publishing case, here neither party had to take any further steps to create contractual rights or obligations. The corollary of that fact is the fact that the Respondent must be limited to only one action to enforce its’ rights against the Appellant. Any other conclusion would be both unreasonable and unsupportable.
[42] Rule 6.02 of the Rules states that “a cause of action shall not be divided into two or more actions for the purpose of bringing it within the court’s jurisdiction.” Similarly, at law the Plaintiff must sue for all applicable damages in a single proceeding. Athanassiades v. Lee, [2010] O.J. No. 4605 (Small Claims Ct.) at para. 35. Plaintiffs are not allowed to litigate in installments. Williams v. Kameka, 2009 NSCA 107 at para. 44.
[43] Having determined that all of the Respondent’s rights flow from one contract, it follows that the Respondent was obligated to bring one action to enforce those rights.
As shown, where invoices arise from the same contractual relationship, Small Claims Court claims for any unpaid invoices arising from that contract must be made collectively; however, where invoices arise from separate contracts, even if within the same business relationship, may be pursued through separate claims.
Conclusion
When multiple unpaid invoices arise from a single contractual relationship, the principle against splitting a cause of action requires that all claims be pursued together in one proceeding. Careful assessment of the contractual foundation for each invoice is therefore essential before commencing litigation, ensuring that the claim is advanced in a manner consistent with both the rules of court and established legal precedent.
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