Mediation in Lawsuits > Obligations of Parties To Mediate

You start a lawsuit after being hurt in a car accident. Your lawyer asks the defendant to the lawsuit (i.e. the insurance company of the defendant) to meet and discuss potentially settling your case, with the help of an experienced neutral lawyer who will help facilitate conversation, but the insurance company refuses. They refuse because they say your injuries are minor; that legal case is worth very little in terms of potential damages; and potentially, that you may recover nothing in your lawsuit as a result of the Bill 198 threshold and deductible (see our previous blogs for explanation of Bill 198).

You then proceed to Trial and win some damages, though less than what you claimed.

After the Trial you are entitled to some legal costs from the insurance company on the other side. At the hearing to determine the amount of legal costs, you raise an issue: that by refusing to “meet” and discuss possible settlement (which is a “mediation”), the insurance company on the other side breached their statutory obligation under s. 258.6(1) of the Insurance Act to mediate and their statutory obligation under s. 258.5 of the Insurance Act to attempt to settle the claim as expeditiously as possible.

You point out that s. 258.6(2) of the Insurance Act states that the insurance company’s “failure to comply with this section shall be considered by the court in awarding costs.”

Can you receive some additional legal costs, arising from the insurance company’s refusal to informally discuss settlement with you during the lawsuit?

In the recent interesting case of Keam v. Caddey (2010 Ontario Court of Appeal), the Court of Appeal awarded $40,000 in additional legal costs in addition to the $110,000 of legal costs previously awarded by the Trial Judge in Keam v. Caddey, 2009 CanLII 51262.

The Court of Appeal noted that the insurer refused to mediate and for four years, took the position that the plaintiff’s case was worth zero damages. Then 3 months before the Trial, the defendant offered $17,500 for general damages plus interest, thereby acknowledging a likelihood that the plaintiff would recover some damages in his lawsuit.

It is important to note that this particular lawsuit started in the Hamilton Court Registry and prior to the introduction of the mandatory obligation to mediate (over and above the Insurance Act statutory obligations set out in s. 258.6), See Ontario Rules of Civil Procedure – Rule 24.1.

In Toronto, all lawsuits involving car accidents which seek damages arising from injuries are required to proceed to mediation.