$50,000, and you no longer get to choose: Ontario's forum rules for commercial debt

Two things changed in Ontario, and almost every discussion of them gets the emphasis backwards.

The one that made the headlines: on 1 October 2025, O. Reg. 42/25 raised the Small Claims Court's monetary jurisdiction from $35,000 to $50,000.

The one that actually changed how a creditor behaves: since 1 July 2024, section 23(1.1) of the Courts of Justice Act provides that an action within the Small Claims Court's jurisdiction shall not be commenced in the Superior Court of Justice except with leave.

Put them together and the result is this: as of 1 October 2025, a commercial money claim of $50,000 or less belongs in Small Claims Court, full stop, unless a judge is persuaded that it is in the interest of justice to allow it elsewhere. That is not a cost calculation. It is a rule.

The regulation

O. Reg. 42/25 was made 24 April 2025, filed 1 May 2025, published in The Ontario Gazette on 17 May 2025, and came into force on 1 October 2025. It does two things, both by simple substitution:

• Section 1 of O. Reg. 626/00 — “$35,000” becomes “$50,000” wherever it appears. The consolidated regulation now reads flatly: the maximum amount of a claim in the Small Claims Court is $50,000.
• Section 2 — the threshold for appealing a final Small Claims Court order to the Divisional Court rises from $3,500 to $5,000. Note there are two prescribed amounts, one for money under s. 31(a) of the Courts of Justice Act and one for personal property under s. 31(b).

The “exclusive of interest and costs” language that everyone quotes is not in the regulation at all; it is in section 23(1)(a) of the Courts of Justice Act.

Any demand letter template, intake sheet or website page still citing $35,000 is out of date. That figure had been in place since 1 January 2020.

The leave requirement, which is the real story

Section 23(1.1) of the Courts of Justice Act, in force 1 July 2024, provides that an action that is within the Small Claims Court's jurisdiction shall not, despite subsection 11(2), be commenced in the Superior Court of Justice except with leave of the Superior Court of Justice as provided in the rules of court.

Rule 14.01.1 of the Rules of Civil Procedure implements it. The motion may be made without notice unless the court orders otherwise, and leave may be granted only if it is in the interest of justice. Subsection 23(1.2) carves out counterclaims, crossclaims and third party claims where the main action was properly commenced in the Superior Court.

So the old framing — you can sue in Superior Court for a $40,000 debt, you just risk a costs penalty under Rule 57.05 — is no longer right. You need leave first.

And Rule 57.05 is still there behind it, with a subrule added in 2024 aimed squarely at creditors who try to engineer their way around the limit. Rule 57.05(1): if a plaintiff recovers an amount within the monetary jurisdiction of the Small Claims Court, the court may order that the plaintiff shall not recover any costs. Rule 57.05(5): if the court determines that a plaintiff included a claim for relief in a proceeding in order to be able to commence the action in the Superior Court of Justice instead of in the Small Claims Court, the court may order the payment of costs by the plaintiff.

Padding a $45,000 debt claim with a speculative head of relief to reach Superior Court is now an identified and sanctionable manoeuvre. The rule also runs the other way: rule 6.02 of the Rules of the Small Claims Court provides 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. You cannot split a $70,000 debt into two $35,000 claims either.

The map, as of today

• Up to $50,000 — Small Claims Court, mandatory absent leave (CJA ss. 23(1)(a) and 23(1.1); O. Reg. 626/00 as amended by O. Reg. 42/25).
• $50,001 to $200,000 — Superior Court, Simplified Procedure mandatory (Rules of Civil Procedure, r. 76.02(1)).
• Over $200,000 — Superior Court, ordinary procedure.

Rule 76.02(1) still sets the Simplified Procedure ceiling at $200,000 exclusive of interest and costs, where it has been since 1 January 2020. The Small Claims increase did not move that ceiling — it moved the floor, so the mandatory Simplified Procedure band is now $50,001 to $200,000 rather than $35,001 to $200,000.

A detail worth knowing where several suppliers are owed by the same debtor: rule 76.02(2) contains an express per-plaintiff rule for Simplified Procedure — if there are two or more plaintiffs, the rule applies if each plaintiff's claim, considered separately, qualifies. There is no equivalent express provision for the Small Claims Court, and the commonly repeated statement that the $50,000 limit applies per plaintiff could not be traced to any authority worth relying on. If you have co-plaintiffs, have it checked rather than assumed.

What this does to the economics

Small Claims Court is not a lesser version of the Superior Court; for debt recovery it is frequently the better one.

• No examinations for discovery. On a documented invoice claim, discovery is where cost accumulates and delay lives. Losing it is mostly a gain.
• Costs are capped. Section 29 of the Courts of Justice Act: an award of costs, other than disbursements, shall not exceed 15 per cent of the amount claimed, unless the court considers it necessary in the interests of justice to penalize a party for unreasonable behaviour. On a $50,000 claim that is $7,500.
• Representation. Under section 26 of the Courts of Justice Act a party may be represented by anyone authorized under the Law Society Act — a lawyer or a licensed paralegal. (A real difference from Quebec, where no one may be represented by a lawyer in the Small Claims Division.)
• Settlement conference first. A structured, early, relatively cheap opportunity to resolve — which in a collection file is usually where the money actually comes from.

Note which way the costs cap cuts. It is 15% of the amount claimed, not recovered. Claim $50,000 and recover $12,000, and your costs ceiling is still $7,500 — but so is the exposure of a defendant who loses.

The cap also reframes the decision for a claim just above the line. On a $54,000 invoice, waiving $4,000 to stay in Small Claims Court buys you no discovery, a capped costs exposure, a faster hearing and a forum you can enter as of right. Depending on the defendant and the documents, that is often the better $54,000.

One open question, and it matters here

Both section 23(1)(a) and rule 76.02 say “exclusive of interest and costs”. Neither the Act nor the regulation defines what counts as interest for this purpose, and no primary source resolves whether accrued contractual interest — as distinct from prejudgment interest under section 128 of the Courts of Justice Act — is excluded from the $50,000 computation.

For a debt recovery practice that is not academic. A $47,000 principal carrying two years of properly disclosed 24% contractual interest sits either comfortably inside the Small Claims limit or well outside it, depending on the answer. Where a file is near the line, that question should be settled before the claim is issued, not after.

If you have a file already open

Commenced in Small Claims Court before 1 October 2025 for less than you are owed? O. Reg. 42/25 contains no transition provision — it is three sections long and says nothing about pending matters. The ordinary amendment right in rule 12.01 of the Rules of the Small Claims Court is what you would use, filed at least 30 days before the scheduled trial date unless the court permits shorter notice. Several Ontario firms take the position that existing plaintiffs can amend upward to $50,000 on this basis. That is practice guidance, not a rule, and it is subject to prejudice and the stage of the proceeding.

Sitting in Superior Court with a claim now inside Small Claims jurisdiction? Section 23(2) of the Courts of Justice Act permits transfer by the local registrar on requisition, with the consent of all parties, filed before trial commences, where the only claim is for money or recovery of personal property. A defendant who likes the costs exposure you are carrying can simply refuse.

Bottom line

Forum selection in Ontario commercial debt is no longer a strategy question for most files. Below $50,000 it is mandatory; between $50,001 and $200,000 the procedure is mandatory too. The judgment calls that remain are narrower and more specific: whether to waive the excess on a claim just over the line, how much to claim given a costs cap tied to the amount claimed, and whether your contractual interest pushes the file across a threshold.