Unintended Consequences: The Regressive Effects of Increased Access to Courts

• Published date: 01 March 2017
• DOI: http://doi.org/10.1111/jels.12140
• Date: 01 March 2017
• Author: Anthony Niblett,Albert H. Yoon

Unintended Consequences: The

Regressive Effects of Increased Access

to Courts

Anthony Niblett* and Albert H. Yoon*

Small claims courts enable parties to resolve their disputes relatively quickly and cheaply.

The court’s limiting feature, by design, is that alleged damages must be small, in

accordance with the jurisdictional limit at that time. Accordingly, one might expect that a

large increase in the upper limit of claim size would increase the court’s accessibility to a

larger and potentially more diverse pool of litigants. We examine this proposition by

studying the effect of an increase in the jurisdictional limit of the Ontario Small Claims

Court. Prior to January 2010, claims up to $10,000 could be litigated in the small claims

court. After January 2010, this jurisdictional limit increased to include all claims up to

$25,000. We study patterns in nearly 625,000 disputes over the period 2006--2013. In this

article, we investigate plaintiff behavior. Interestingly, the total number of claims filed by

plaintiffs does not increase significantly with the increased jurisdictional limit. We do find,

however, changes to the composition of plaintiffs. Following the jurisdictional change, we

find that plaintiffs using the small claims court are, on average, from richer neighborhoods.

We also find that the proportion of plaintiffs from poorer neighborhoods drops. The drop-

off is most pronounced in plaintiffs from the poorest 10 percent of neighborhoods. We

explore potential explanations for this regressive effect, including crowding out,

congestion, increased legal representation, and behavioral influences. Our findings suggest

that legislative attempts to make the courts more accessible may have unintended regressive

consequences.

I. Introduction

Conventional wisdom suggests that access to justice can be improved by reducing the

costs for litigants using the formal court system. We investigate this by examining the

*Both authors are at the University of Toronto, Faculty of Law. Niblett (anthony.niblett@utoronto.ca) is Associate

Professor and Canada Research Chair in Law, Economics, & Innovation; Yoon (albert.yoon@utoronto.ca) is Pro-

fessor and Chair in Law & Economics. Address correspondence to either author at University of Toronto, Faculty

of Law, 78 Queens Park Cres. W., Toronto, Ontario M5S 2C5.

The authors thank the Social Sciences and Humanities Research Council (SSHRC) for generous research sup-

port. They thank two anonymous referees for their comments. Alison Harvison Young, William Hubbard, Kamil

Jonski, Avital Mentovich, J. J. Prescott, Ed Morgan, participants at the STILE Law & Economics Workshop in

Naples, Italy, the Canadian Law & Economics Association meetings, and the Faculty Workshop at the University

of Toronto, Faculty of Law provided helpful suggestions in the development of this project. Elizabeth White pro-

vided excellent research assistance. All errors are our own.

5

Journal of Empirical Legal Studies

Volume 14, Issue 1, 5–30, March 2017

effects of a clean policy shock that made it dramatically cheaper for plaintiffs in certain

civil disputes to access courts in Ontario, Canada.

In 2010, the jurisdiction of the Ontario Small Claims Court (OSCC) increased dra-

matically. The small claims court resolves civil disputes where the amount of controversy

is relatively small. Prior to 2010, plaintiffs could bring claims only if the amount claimed

was $10,000 or less. If a plaintiff wished to claim more than $10,000 in damages, she

would need to use the more expensive, more formal Superior Court. Beginning in Janu-

ary 2010, this jurisdictional limit increased greatly, taking all claims up to $25,000.

It was argued—in line with the conventional wisdom—that raising the jurisdiction-

al limit of the small claims court in Ontario would increase access to justice (Ontario

Civil Justice Review 1996, 2007).

1

Before January 2010, litigants with claims in the range

of $10,000 to $25,000 may have found the cost of litigating in the more expensive Supe-

rior Court prohibitive and not bothered to file suit. Or they may simply have reduced

their alleged damages to $10,000 in order to fall within the jurisdiction of the small

claims court.

One would therefore naturally expect that this dramatic increase in the jurisdiction

of the small claims court would result in a large increase in the number of claims filed by

plaintiffs in the small claims court. This article examines the effect of this change.

We analyze data on litigant behavior from the four-year period before and the

four-year period after the January 2010 change. Our dataset includes information on

nearly 625,000 claims filed with the Ontario Small Claims Court between January 2006

and December 2013.

We present a counterintuitive finding. The number of claims made by plaintiffs

does not increase significantly. Indeed, the number of claims remains relatively stable. We

find only a very mild increase in the number of claims filed in the small claims court.

This finding presents a curious puzzle. Why would the number of claims not

increase significantly when the ceiling on claims increases by 150 percent? We offer an

insight by examining the composition of the plaintiffs who use the small claims court.

Following the January 2010 change, we find that plaintiffs using the small claims

court are, on average, from richer neighborhoods. We also find that the proportion of

plaintiffs from poorer neighborhoods drops. The drop-off is most acute in plaintiffs

from the poorest 10 percent of neighborhoods.

Approximately 70 percent of the claims in our dataset are filed by plaintiffs cate-

gorized by the court as a “business.” Although the proportion of claims made by busi-

ness plaintiffs trends upward over the course of our sample period, we find little

evidence that the jurisdictional change affected the proportion of business plaintiffs.

Our finding that plaintiffs from richer neighborhoods are displacing plaintiffs from

poorer neighborhoods holds for both individual plaintiffs and business plaintiffs.

We investigate whether plaintiffs from poorer neighborhoods are crowded out

under the new jurisdictional limit due to increased congestion within the court system.

1

Similar arguments for raising the cap for small claims courts generally can be found in the academic literature

(see, e.g., Finney & Yanovich 2006).

6Niblett and Yoon