Suing a Customer for an Unpaid Invoice in Ontario: A Step-by-Step Guide

An unpaid invoice is not just a cash flow problem — it is a breach of contract. In Ontario, businesses and self-employed professionals have clear legal tools to pursue customers who refuse to pay for goods or services they have already received. Suing a customer for an unpaid invoice is a structured process, and understanding each step helps you pursue it confidently and cost-effectively.

This guide covers what you need to sue, which court to use, what the process looks like, and how to actually collect once you win.

Before You Sue: What You Need to Establish

To succeed in a claim for an unpaid invoice, you generally need to show:

1. You provided the goods or services — you performed what was agreed
2. The customer agreed to pay — there was a contract (written, verbal, or implied by conduct)
3. An invoice was rendered — you billed for the amount you are claiming
4. The invoice was not paid — and the due date has passed
5. You gave notice — ideally a demand letter was sent before filing

The stronger your documentation, the stronger your case. Contracts in writing, invoices with clear payment terms, emails confirming the work, and delivery records all help. A verbal agreement for services can still be enforced, but documentation makes things faster and cleaner.

Step 1 — Send a Demand Letter

Before filing in court, send a formal demand letter stating:

• The invoice number(s), date(s), and amount(s)
• A brief description of the services or goods provided
• The payment deadline (typically 10–14 days from the letter)
• Your intention to file a lawsuit if not paid

Many disputes resolve here. A lawyer's demand letter, in particular, signals that you are serious and prepared to proceed. Even if the customer does not pay, the letter establishes that they had clear notice — which courts view favourably.

Step 2 — Choose the Right Court

The claim amount determines your court:

Small Claims Court is designed to be accessible for businesses and individuals without lawyers (though having one helps). The forms are relatively straightforward, the rules are simplified, and timelines are generally shorter than Superior Court.

For larger invoice disputes, Superior Court is the only option, but the process is significantly more complex and legal representation is strongly recommended.

Step 3 — Prepare and File Your Claim

In Small Claims Court, the primary document is a Plaintiff's Claim form. You will include:

• Your name and address (as plaintiff)
• The defendant's full legal name — for a business, use the registered legal name (check the Ontario Business Registry if unsure)
• The amount claimed and how you calculated it
• A plain-language description of what happened: services provided, invoice rendered, due date passed, no payment received

Attach copies of:

• The written contract (if any)
• All unpaid invoices
• Any written communications acknowledging the debt
• Your demand letter

Pay the filing fee (verify the current amount with the court — it varies by claim size) and file at the Small Claims Court office for the region where the customer's business or residence is located, or where the contract was performed.

Step 4 — Serve the Defendant

After filing, you must serve the Plaintiff's Claim on the defendant within a set time period. Rules for service vary — in Small Claims Court, you can often serve by:

• Personal service (handing it directly to the individual or an officer of the company)
• Registered mail to their last known address
• Courier with proof of delivery

File an Affidavit of Service with the court confirming how and when service was completed.

Step 5 — What Happens Next

The defendant has a set period to file a Defence. If they do not:

• You can move for a default judgment — the court awards the claim without a trial

If they do file a Defence:

• The court schedules a settlement conference — a judge-assisted discussion aimed at resolving the matter
• If no settlement is reached, the matter goes to trial

Settlement conferences resolve many Small Claims cases. Even customers who initially refused to pay often become more cooperative when a judge is asking questions about why.

What You Can Claim

Beyond the invoice amount, you may be able to claim:

• Pre-judgment interest — calculated from the date the invoice was due (Ontario law sets a rate as of writing — verify)
• Post-judgment interest — accrues from the date of the judgment until paid
• Court costs — Small Claims Court has a formula for recoverable costs; verify current limits
• Representation fee — if you hired a lawyer, a limited amount of their fee may be recoverable

You cannot recover every dollar you spend on legal fees in Small Claims Court, but you will recover a portion.

Step 6 — Collect the Judgment

Winning a judgment is not the same as getting paid. If the customer still does not pay after judgment:

• Garnish their bank account — redirect funds from their account to you
• Garnish wages — a portion of each paycheque is redirected (if the debtor is an individual)
• File a writ of seizure and sale — creates a lien on their real property or allows seizure of personal property
• Examine the debtor — bring them to court to answer questions about their assets under oath

Most defendants pay once enforcement begins in earnest.

Special Situations

Suing a Sole Proprietor vs. a Corporation

A judgment against a corporation is only enforceable against the corporation's assets, not against the individual owners personally (unless they guaranteed the contract or there are grounds to "pierce the corporate veil" — a rare and complex remedy). Confirm who you contracted with: the individual or their company?

Retention of Title / Lien Rights

If you are a contractor or supplier in the construction context, Ontario's construction lien legislation provides additional remedies beyond a simple civil claim. These lien rights are time-sensitive and work differently from the general civil process described here — get specific advice if you are in the construction industry.

Frequently asked questions