Summary of Dialogue Sessions: Mediators, the LSBC and the “Unauthorized Practice of Law”

Mediate BC distributed the information form to Roster mediators by email (Jan. 21, 2015) and here on the Mediate BC Blog (Feb. 19, 2015). In June, Mediate BC hosted three dialogue sessions with Mike Kleisinger, Unauthorized Practice Counsel with the Law Society of BC, as special guest.

We would like to thank all those who participated in the dialogue sessions. Mediate BC welcomes further discussion in the LinkedIn Roster Mediators group or in the comments below. If you would prefer to share something privately, we welcome your email.

Below is the summary of the three dialogue sessions held in June 2015.

Summary of Dialogue Sessions June 2015 FINAL by Mediate BC on Scribd

The Law Society of BC, the “Unauthorized Practice of Law” and Mediation

What does that line look like? Is there a line at all? How does this affect how I practice mediation and serve my clients?

These are thorny questions. They are not new and mediators in BC and abroad have been struggling with them for decades.

Over the years, the Law Society of BC has received complaints that mediators have crossed the line and, in some cases, has sought ‘undertakings’ from these mediators that they will change their activities and in other cases has applied to the Supreme Court for an injunction prohibiting that mediator from engaging in the practice of law.

Mediate BC’s Rosters include mediators from a wide variety of backgrounds and we celebrate this diversity and the range of services that are available to BC citizens to resolve their disputes. Mediate BC wants to support Roster mediators by helping to clarify what the “practice of law” means to them and how to avoid a Law Society complaint.

We are pleased to advise that the Law Society of BC has recently released an “Information Bulletin” entitled the “Unauthorized practice of law” which tackles this issue directly.

LSBC Info Bulletin Unauthorized Practice of Law by Mediate BC on Scribd

 

The bulletin highlights the situations involving particular risk:

  • Advising mediation participants on the law or their legal rights
  • Drafting enforceable contracts (including advice on how to structure their agreement)

While this bulletin is helpful, we see it as only the first step of a dialogue, first with the BC mediation community, and then with the Law Society of BC. Mediation is a key part of an effective access to justice strategy and the Law Society of BC supports the creation of new categories of “legal service providers” (regulated by the Law Society). So an important additional question needs to be addressed: How, and to what extent, can BC mediators who are not practicing lawyers provide services to the public that would, under the current definition, be considered the “practice of law”?

Mediate BC is organizing a community dialogue process over the next several months to discuss the Information Bulletin and these other important questions. We are very keen to obtain your input and ideas. Please watch for more information about dates/times/locations for these sessions.

Thank you,

Kari D. Boyle
Executive Director, Mediate BC

Mediation Confidentiality Update

In his Slaw post today (January 15 2015), Michael Erdle tackles this important issue by discussing two recent Canadian decisions:  the Supreme Court of Canada decision in Union Carbide Inc. v. Bombardier Inc.  and Jan Wong v. The Globe and Mail Inc, a decision of the Ontario Superior Court of Justice.

As Michael notes at the end of his post, it is critically important that mediators discuss with mediation participants:

  • the wording of the Agreement to Mediate which spells out the extent to which the parties contract to keep information confidential (including situations in which one party may take steps to enforce an eventual agreement); and
  • the eventual Settlement Agreement which should explicitly describe what, if anything, will be “confidential” and what happens if one party breaches those terms.

One last point:  the Settlement Agreement (like any formal contract) should also include robust and well-considered provisions describing what happens if there is a dispute between the parties about the agreement (a dispute resolution clause – including mediation of course!).

This is a good time to review your standard wording.  Let us know what you come up with!

Kari D. Boyle, Executive Director, Mediate BC Society

The Legal Consequences of a Refusal to Mediate

In the last issue of Briefly we looked at the steps necessary to prepare your plaintiff-client for trial. One of the steps in many litigated files is mediation. Mediation may be voluntary, in which case the parties are agreed it is a good idea, or by a Notice to Mediate in which one party requires a mediation.

Whether it is voluntary or conducted under a Notice, the steps you take to prepare your client for trial are also the steps you need to take to prepare your client for mediation. There is no substitute for preparation. To achieve your goals of obtaining adequate compensation for your client and having him satisfied with the result you and the plaintiff need to be well prepared for what you will face at mediation.

What happens if one side comes to mediate and the other does not participate in a meaningful way? Some recent case law has come out from Ontario and the UK on this topic.

English courts have encouraged the use of mediation to resolve litigation and have shown a willingness to penalize parties who do not participate in mediation when invited. Parties successful at trial who refused mediation have received reduced costs which otherwise would have been ordered; similarly parties who were ordered to pay costs have had them increased as a result of a refusal to mediate.

In Dunnett v Railtrack [2002] EWCA Civ 302 the court refused to order costs to a victorious party who refused mediation.

In Halsey  v Morton Keynes NHS Trust [2004] EWCA 3006 Civ 576 the English Court of Appeal set out a list of factors to take into account in determining if a party was reasonable in refusing mediation, including:

  • The nature of the dispute
  • The merits of the case ( ie. the strength of one party’s case)
  • The extent of any attempts at settlement
  • Whether the costs of mediation would have been disproportionately high
  • Whether delay associated with mediation would have been prejudicial
  • Whether the ADR process had a reasonable prospect of success

The English Court of Appeal in PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288 refused to order costs to the Defendant where it had unreasonably refused to mediate.

In the PGF II Sa case the Court of appeal held:

  • silence in the face of an invitation to participate in ADR is on its face unreasonable;
  • failure to respond to such an invitation may make a party liable for penalties in costs;
  • not providing reasons for refusing to mediate leaves the other side unable to accommodate them;
  • depriving a party successful in court of costs may seem harsh but should encourage participation in ADR.

Recently, the Ontario Superior Court had an opportunity to consider a similar situation. In Ross v. Bacchus, 2013 ONSC 7773 the plaintiff was awarded $248,000 in damages by a jury in a six day motor vehicle negligence case.

The defendant had offered to settle the case for $40,000 and made it clear that that was not negotiable. That offer was withdrawn before trial. The plaintiff offered to settle for $94,000 plus prejudgement interest and costs and requested mediation.  The defendant countered with $30,000 plus PJI and costs. The Plaintiff countered at $79,065 and costs and PJI.

The Court said:

Counsel for the defendant agreed to brief mediation at limited cost but wrote, ” (the insurer ) are not interested in settling this case”. Mediation took place…but the defendant’s insurer stood firm. I infer that it took a six-day trial with all its attendant risks 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 is clear to me that the defendant’s participation in mediation was a sham…

I would award $140,000 in costs, plus $17,000 in disbursements….By reason of the refusal to mediate I augment the award by $60,000 plus HST.

Note that the trial judge referred several times to provisions in the Ontario Insurance Act which appear to require defendants to attempt expeditious settlement and allow for consequences in costs.

Compare that case with Branco v Alliance Insurance Co. of Canada 2004 CanLII 45036 (ONSC). This was a case stemming from a motor vehicle collision in which the plaintiff recovered modest damages from the defendant. The case was defended in a number of ways including that it did not meet the Ontario “threshold question”: that is, that any injury sustained was not disfiguring or resulting in permanent impairment.

The defendant did not deliver an offer to settle prior to trial, and the plaintiff sought increased costs as a result.

The trial judge said:

I am not aware of any obligation on the part of an insurer to deliver an offer to settle prior to trial. In this action…it was reasonable for the defendant to proceed on the basis that it had some possibility of being successful on the “threshold motion” and that… the jury award might be negligible. It was also reasonable not to serve an offer to settle in the face of the plaintiffs’ offers…”(which varied up and down considerably).

The insurer had every right to make its own assessment of the likely jury award and conduct itself accordingly.

What these cases do not address is the evidence required to establish them. In British Columbia, all commercial mediations are confidential, and mediators insist on the parties agreeing that the mediators are not compellable witnesses.

The evidentiary issue aside, what the writer takes from these cases is developing case law indicating that some jurisdictions are strongly encouraging the use of mediation before trial. The courts are prepared to punish parties, even when successful at trial,when they unreasonably refuse to mediate. If a party does refuse mediation, it had better be able to show a legitimate reason why.

Where participation is no more than perfunctory, litigants in these jurisdictions may face severe cost consequences.

What will happen in BC remains to be seen.

I am indebted to Barb Cornish of Singleton Urquhart for bringing most of these cases and the issues raised therein to my attention.

 

Our special guest blogger today is Brian Gibbard, experienced lawyer and mediator and a member of the Board of Directors of Mediate BC Society. He recently published an article in Briefly!, the newsletter published by the Law Courts Centre (thank you Dom) and kindly agreed to allow us to reproduce it here.

 

Mediation Confidentiality and Deceit

The promise that discussions in mediation are confidential and cannot be raised in a later court action (or otherwise) are critical in order to encourage the parties to engage in candid and forthright discussions towards settlement.

So what happens if one party makes statements or produces documents in mediation that are later found to be knowingly inaccurate and “deceitful”?

The British Columbia Supreme Court recently considered this issue in Ramsden v. Ramsden 2013 BCSC 949 May 30, 2013.  In that family case, Master Caldwell was asked to order production of two documents produced by the husband during a mediation which had not resulted in settlement.  The husband objected on the basis that the documents were privileged and not producible since they were created for the mediation process.  The wife argued that the husband breached the mediation agreement (containing confidentiality clauses) and was not able to rely on it since the documents in question were created by the husband knowing they were inaccurate and misleading.

Interestingly, it doesn’t appear that the husband denied that the documents were in accurate; he simply argued that the Court was limited to reviewing the revised versions he produced for this application.

Master Caldwell had little trouble ordering production of the documents.  Paragraphs 17 – 20 of his decision are as follows:

[17]         I am fully in agreement with the position and the authorities that mediation is an important option to the litigation process, that it is to be encouraged and that mediation privilege is important to that process; I am also of the view that there is a significant difference between legitimate mediation and attempted ambush by deception.

[18]         There is a reason why parties to a mediation process are required to sign and abide by an agreement to “disclose fully and honestly all the information and documents relevant to the issues being mediated.” The litigation process contains the safeguards of cross-examination and the watchful eye of the court to ferret out truth from fiction. The mediation process relies on honest, full disclosure and the integrity of the system itself, particularly within the context of matrimonial disputes.

[19]         Where, as here, there is every appearance of evasiveness at best and deceit at worst the court must rally to support the integrity of the true mediation process in order that the immediate, as well as future, participants in that process may have assurance that it is a process with legitimacy, not simply a shell game where they “pays their money and takes their chances”. This is all the more the case where the parties have no alternative but to attempt mediation before they can have access to the court system.

[20]         The order sought, requiring the production of and allowing the use of the Form 8 and the employment letter will, in my respectful view, not discourage parties from entering into mediation; it will rather encourage parties to enter into the mediation process knowing that they will be protected by the court in the event of deceptive disclosure by another of the parties. To protect such documents from disclosure would, on the other hand, lend court approval to practices of deception within the mediation process. Should that occur, mediation would cease to have any meaningful role, particularly in resolving matrimonial disputes.

Note how careful Master Caldwell was to emphasize that his order supported rather than undermined the mediation process which he encouraged.

This decision is useful for a number of reasons:

  • it affirms the integrity and legitimacy of the mediation process
  • mediation confidentiality and settlement privilege cannot be used to protect a participant from the consequences flowing from their failure to act in good faith
  • it affirms the useful and prominent role that mediation has as an alternative to litigation (and as a vital part of the litigation process)
  • it demonstrates that a court will protect the integrity of the mediation process and will not approve practices of deception within the process

Mediators might want to review their Agreement to Mediate Forms to ensure they include good faith provisions.

Query:  would the result be the same in a commercial case where the Agreement to Mediate did not include positive duties on all parties to disclose fully and honestly all information and documentation?

Finally, a recent Supreme Court of Canada judgment provides a helpful discussion of “settlement privilege” including its purpose (to promote settlement) and its exceptions (including misrepresentation, fraud and undue influence):  (N.S.C.A., December 22, 2011) (34678).  Thanks to Eugene Meehan for this one!

Your thoughts?

Kari Boyle, Executive Director, Mediate BC Society

 

Photo by Kristina Flour on Unsplash