Refusing mediation in a matter, where mediation is not mandatory, can be extremely costly, and unexpected.

The decision of Mew J. in Canfield v. Brockville, Ontario Speedway, 2018 ONSC 3288 in a personal injury proceeding demonstrates why refusing to participate in mediation proves to be expensive. The above-referenced case was a seven-day jury trial in Belleville where liability and damages were an issue. The jury found that the plaintiff was 25% contributory negligent and damages were assessed at $212,000 including interest. The plaintiff initially sought costs on a partial indemnity basis which was $269,371 plus tax. The defendant argued that a $150,000 including tax was appropriate.

The Judge considered the various criteria and general principles relevant to the fixing of costs, including that "the usual rule in Ontario is that costs follow the event ... subject to overarching discretion of the court to determine by whom and to what extent costs should be paid."  Specific reference was made to R. 57.01, which provides guidance on the exercise of that discretion.

Normally costs are paid on a partial indemnity scale unless the Rules of Civil Procedure provide for or the circumstances of the case warrant costs on a substantial indemnity or full indemnity scare.  Amongst other things, the Court considered offers to settle ("although the parties did not make offers to settle which would engage the costs consequences of [R]. 49.10 .... the outcome achieved by the plaintiff was significantly better than the last offer of the defendant, which was little more than a nuisance offer.") which included a refusal by the defendant to mediate.

Even if mediation is mandatory in the jurisdiction where the action was commenced, the potential costs of refusing to go to mediation in Ontario means that it would be prudent to treat mediation as if it were mandatory.

In almost every dispute, the merits are always in issue and each side strongly believes their position is the correct one, and that the opposing party is wrong.  In a court proceeding, a judge or jury will decide the outcome.  Keep in mind, that going this way always means one party will win, and one will lose.  It means one party will be content with the judge's decision and will not.  Do you really want to be on the losing end of the spectrum?   Most would say they would not.  It's a large risk to take.

The costs of mediation are rarely disproportionately high.  The parties may be facing a multi-day trial, time for discoveries, pre-trial and then finally a trial.  It may take years to get to trial.   Whereas mediation can be resolved in one or two days.  Not to mention, the mediator is reasonably priced.  It makes complete sense to mediate a matter.

It is impossible to predict the prospect of success, whether in court or in mediation.  Mediation has excellent success rates, sometimes settling after a few hours of mediation, irrespective of the fact that many times the parties attend mediation without even thinking their matter could settle.  Giving mediation a fair chance can save you thousands in costs, and legal fees.

It is important that parties enter mediation in good faith with a view to trying to settle the matter.  Mew J. took a positive approach to mediation and assumed that the parties would have put their "best feet forward" and a skilled mediator would guide them to resolution.  Equally crucial is that the parties treat mediation as an important, if not most important part of the process.

Some parties look at mediation as somewhat of a chore, something they must do to get to trial.  That should not be the outlook of either of the parties while approaching mediation.  Most cases do settle out of court.  Sometimes, people need to be reminded of that.  It makes much more sense for the matter to settle at mediation and not too far along into the court process.  It takes time, stress, and money the further along in your proceeding you go.  An early mediation would resolve all that and more.

"In cases were each of the parties has an arguable case, and each faces a risk of loss in the proceeding, mediation can offer a reasonable prospect of settlement."

It is important to note that in this case the defendant's refusal to mediate cost them approximately $20,000.  If the parties had agreed to mediate this matter, the overall savings would have been more than that amount. Perhaps the defendant felt like mediation was not a viable solution to reach a settlement.  Even so, had the mediation not resulted in a resolution, the expected costs for mediation on both side and lawyer fees, may have been a fraction of the financial costs for not mediating.

The reasons for judgment include the following:

"[41] The plaintiff argues that the refusal of the defendant, or more specifically, the defendant's insurer, to participate in mediation, should be a factor in determining costs.  [Plaintiff's counsel] argues that this case would likely have settled with the assistance of a skillful mediator, thereby avoiding significant costs.  He points to various exchanges that occurred between counsel on the subject of mediation.  In April 2015, [Plaintiff's counsel] wrote to [Defence counsel] to confirm a telephone conversation in which the latter had advised that the defendant and its insurer were not willing to engage in a mediation settlement process.  This was following the delivery by the plaintiff of its offer to settle of $300,000."

"[42] In July 2017, the plaintiff suggested mediation again. The availability of a number of mediators was provided.  No mediation resulted."
Some of Mews J. conclusion included the following:

"[66] The time spent on this case was, as previously stated, significant. There is no doubt that the case was extremely well prepared."

"[69] Weighing these elements and the other factors discussed as best I can, without embarking upon a full scale assessment of the plaintiff’s fees, an appropriate downward adjustment to the plaintiff’s claim for $269,371 (plus H.S.T.) would be in the order of 30%, or $80,000."

"[70] However, as I have also indicated, the defendant’s refusal to mediate is a relevant factor. That refusal was unreasonable. It deprived the parties of an opportunity to settle the case without the necessity for a trial.

"[71] As a result, instead of adjusting the plaintiff’s claim for costs downward by $80,000, I have made the adjustment a little under $60,000 and have therefore concluded that an appropriate award of costs in this case is $210,000 plus applicable taxes.”

Blog posts are for informational purposes only and do not constitute legal advice.
Written by Marian Grande, Mediator
September 1, 2020

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