Mediation Conduct Punished by Costs
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Should the conduct of a party in mediation be taken into account in setting cost consequences once the dispute has been adjudicated?
An insurer has been “spanked” to the tune of $60,000 by an Ontario Court for failure to participate in a mediation in “any meaningful sense”. The cost decision of Mr. Justice Ramsay in Ross v. Bacchus, 2013 ONSC 7773 (CanLII) creates the occasion to reflect on this important issue.
Briefly, the case facts are that the plaintiff, injured in a motor vehicle accident, was awarded $248,000 after a six day trial. The plaintiff then asked for $140,000 for costs, augmented by another $60,000 for the defendant’s failure to comply with its obligations under the Insurance Act to settle and to participate in mediation, plus $17,000 disbursements, with HST on all these amounts.
The defendant offered to settle for $40,000 on August 25, 2011, making it clear that this was not a starting point. The offer was withdrawn on March 28, 2012. On October 28, 2013 the plaintiff offered to settle for $94,065 plus prejudgment interest and costs and requested mediation. The defendant replied on October 29, 2013 with an offer to settle for $30,001 plus prejudgment interest and costs. The plaintiff countered with an offer to settle for $79,065 plus costs and interest.
Counsel for the defendant agreed to brief mediation at limited cost but wrote, “[Certas] are not interested in settling this case.” Mediation took place on November 14, but the defendant’s insurer stood firm.
Justice Ramsay wrote, “I infer that it took a six-day trial with all its attendant risk for the sake of $50,000. This is a litigation strategy that the defendant could well afford, but the plaintiff could not. I infer that the insurance company conducted itself this way in the hopes of intimidating the plaintiff and deterring other plaintiffs who have meritorious cases. It did not attempt to settle the action expeditiously as required by s.258.5 of the Insurance Act. It is clear to me that the defendant’s participation in mediation was a sham. It refused to participate in any meaningful sense. It did not comply with s.258.6 of the Act. Consequences of these omissions should follow when costs are considered, as provided in subss. 258.5(5) and 258.6(2) of the Act.”
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