Unpaid Invoice - Ontario, Canada
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Unpaid Invoice - Ontario, Canada

Unpaid Invoice - Ontario, Canada

What do you do if you have a client located Ontario, Canada, who, for no valid reason is failing to pay your invoice?


You have sent your clients reminders; you have spoken to him or her to get an understanding of the situation and you have tried to keep it amicable and friendly. So what are your options if your client is still refusing to pay?

This is a common problem in Canada and abroad and you are not alone. Fortunately, there are a number of steps you can take to get paid ranging from making your non-payment public on the Business Disputes Register, to mediation and taking the case to a small claims court.

Each option has its pros and cons and each is detailed in this article.


Here is a summary:

  File on the Business Disputes Register Mediation or Arbitration
Debt collection agency
Small claims Court
Cost $38
Depends on complexity and time required. Expect between $2000 and $4000 Typically, 25% of amount recovered

Up to $400 in court fees if representing yourself. Expect to pay over $2000 if using lawyers (recommended)



45% success rate (when client notified of dispute)


Good solution when client is local or in another province or abroad

Good for resolving a complicated dispute without involving expensive lawyers

Might save the client relationship

Allows you to move on

Get justice

May get a default Judgment

Cons May ruin client relationship


Unlikely to get full payment


Lose control of process

Will ruin client relationship

Risky: you might lose. The other party might make a counter-claim

Time consuming


Will ruin client relationship

A) File dispute on the Business Disputes Register

The most straightforward and simplest solution is to make details of your unpaid invoice public on the Business Disputes Register. Simply fill in the form giving details of your payment dispute. The fee for filing is $38 Your dispute is then automatically published on the internet on the disputes register for the general public to discover as a matter of public record. Your client will receive an email notification about the dispute being filed on the Disputes Register and is urged to contact you to negotiate its removal. If the dispute is subsequently resolved to your satisfaction, then you remove it from the register - this is a very important aspect of the service, because it is what compels your client to resolve your payment dispute. 

The dispute will appear on search engines when your client’s business name is searched by other parties. This will have a detrimental impact on the other party's reputation which is why they will be incentivised to respond and resolve your invoice promptly.

B) Mediation

Mediation is voluntary process which you and your client must be willing to undertake.  A mediator is always a neutral third party who tries to help you and your client reach an agreement. The mediator help encourages compromise, and ideally avoids you going to court.

The mediator is not a lawyer working for you, and you are encouraged to get independent legal advice for the mediation process.

Mediation services are offered by private practice mediators. The Alternative Dispute Resolution (ADR) Institute of Ontario and the Alternative Dispute Resolution (ADR) Institute of Canada are self-regulated organizations that provide standards of professional conduct as well as complaint processes.


Arbitration is similar to mediation, but the main difference is that both parties must agree to be bound by any decision made by the arbitrator. A decision made by an arbitrator is legally binding and enforceable against the parties. Arbitration is a less formal process.

An arbitration process may be more complicated and expensive than mediation, but arbitration can be faster and be less expensive than suing in court.

Arbitration services are offered by private practice arbitrators. Arbitrators may be members of the ADR Institute of Ontario or ADR Institute of Canada.

C) Appoint a Debt Collection Agency

Debt collection agencies charge a fee, typically 25% but varies depending on claim amount, age of debt and other factors.

Debt collection agencies are experts at getting invoices paid as they know which tactics work. Many cater to small businesses. Here is one debt collection agency explaining how it works:

“We aggressively contact them over the phone to have the matter resolved and we also send out a letter to reiterate that urgency. Should we continue to receive non-payment then we will automatically report them to their credit history after 30 days of submission. After that, we review for legal action. If legal action is declined, then we will continue to aggressively contact them to get the account resolved.”

Most agencies charge a fee, typically 25%, for any funds collected on your behalf, whilst others may buy the debt from you for cents on the dollar but this tends to be available for only larger companies.

Note that in Canada, there are strict rules in place around debt collection that are unique to each province and territory. For example, practices such as calling a debtor each day or using threatening language may be illegal in some jurisdictions. Debt collection agencies are well-versed in the law and can help your business to avoid accusations of harassment or illegal collections practices.

D) Small Claims court

First of all, before even considering this route, make sure your client ha sufficient funds to pay you, as it is a costly and risky solution. Expect to pay about $2000 in legal fees for a straightforward claim. The judge might order the person you are suing (“the defendant”) to pay some of the costs if you win the case, but If you lose, you might have to pay your own costs and some of the defendant’s costs.

Even if you win, the person or business you sued may not pay you or return your goods. If this happens, you will need to enforce (attempt to collect) the judgment, which also involves fees.

Small Claims Courts are for claims up to $35,000 (in Ontario). You can still use a small claims court for a higher amount, but you waive your right for the amount above $35,000. For higher claims you will need apply to the Superior Court of Justice which is not covered in this article.

In Ontario, you have two years to pursue a debt in and therefore it is imperative that you act fairly quickly. This is called a “limitation period”. Your time limit to pursue legal action for an unpaid debt may start when you knew, or ought to have known, that the debt was not going to be paid.

  1. Your first step is to file a “Plaintiff’s Claim” online, in-person or by mail.
  2. Have the Claim stamped by the Court
  3. Serve the Claim on your Client (the “Defendant”). Basically you give them a copy of the stamped Claim in person or post it to their Registered Address using registered mail.
  4. Complete an Affidavit of Service (Form 8A) (http://ontariocourtforms.on.ca/static/media/uploads/courtforms/scc/08a/scr-8a-jan21-en-fil.doc) for each defendant to prove to the court that you served the defendant(s).
  5. The Defendant then has 20 days to respond:
    • If the Defendant does not respond. Is there an agreement clearly showing the amount you are owed?
      • Yes: You can ask the court to have the defendant “Noted in Default” ($89 fee).  You can then ask the court to order the defendant to pay your claim (a “default judgment”)
      • No: Fill out a “Notice of Motion and Supporting Affidavit” (form 15A) for the judge to decide based on the documents you have provided. OR Fill out a “Request to Clerk” (Form 9B) for an assessment hearing which is like a trial, but the defendant is not in court. The judge will make a decision based on your proof.
    • If the Defendant does respond. Does the Defendant admit the claim?
      • Yes: The defendant will make a proposal for terms of payment. If you agree with the proposal then it ends here, otherwise you will go to a “settlement conference” (see next point)
      • No: you will both be required to attend a settlement conference with a judge where you will both share evidence to tell your side of the story. If you can agree a solution the case ends otherwise the next step is to go to trial ($290 for setting a date)
        • Going to trial: At a trial, each party tells their side of the story and the judge makes a decision. If you win the case, you may still have to take further steps to get the money or property from the defendant as the defendant may not be able to pay or may choose not to pay
          • If you win: “Enforcing a Judgment”. You can try to get the money:
            • by “garnishment”, for example, of the debtor’s bank account or wages
            • through the seizure and sale of personal property or land (the defendant’s personal property or land is taken and sold, with the profits being used to pay you back money owed)
          • If you lose: You will have to pay outstanding court fees and possible a percentage of the Defendant’s costs

Note: Only a maximum of 15% of legal fees can be added against the debtor and that is up to a Judge's discretion.

For more details about going to court in Ontario, see here: https://www.ontariocourts.ca/scj/small-claims-court/

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