A Meaningful Mediation Avoiding Remedial Costs

The issue of remedial costs, previously discussed here, posed one of the few checks on the growing power of insurance companies in Ontario for motor vehicle collisions.

The Ontario Court of Appeal recently released its decision in Ross v. Bacchus, reversing the trial judge’s award of remedial costs against the insurer for failing to comply with its obligations under the Insurance Act. Justice Doherty stated,

[51] Insurers, like any other defendant, are entitled to take cases to trial. When an insurer rejects a plaintiff’s offer and proceeds to trial, the insurer risks both a higher damage award at trial and the imposition of substantial indemnity costs after the date of the rejected offer. Both risks came to pass in this case. The insurer paid a significant financial penalty for its decision to proceed to trial. The costs provisions in ss. 258.5 and 258.6 do not address those risks, but instead address the failure to meet the specific obligations identified in those provisions. The trial judge’s assumptions about the insurer’s motivation for rejecting the respondent’s offer and proceeding to trial had no relevance to the determination of whether augmented costs should be awarded under the Insurance Act provisions.

He conceded that these sections are intended to penalize insurers for their failure to comply with statutory obligations, but indicated that the facts here, where an insurer states they are not prepared to settle a claim on the even of trial, does not fail meet the statutory requirement for the penalty to “attempt to settle the claim as expeditiously as possible.”

Justice Doherty distinguished this case from Keam v. Caddey, where the insurer had declined two requests to participate in the mediation, and a mediation was never held. He stated that a strong position while entering a mediation does not preclude meaningful participation in the process. Submissions from the appellants stated that the trial judge could not have known the reasons for the insurer’s position without potentially violating the privilege attached to communications for the purpose of settlement.

Mandatory mediation was introduced to Ontario as a pilot in 1999, and then made part of the Rules of Civil Procedure in 2001. The purpose was to reduce cost and unnecessarily go to trial. The principles under the Insurance Act, though enacted through a different mechanism, were intended to serve the same goal.


Ontario’s experience with mandatory mediation has been a mixed one. Although there were some reports of earlier resolution and greater satisfaction, there were also complaints of additional costs and unnecessary delays. This is particularly true when a party is not properly prepared for mediation, is simply going through the steps and a procedure, and has no real intention of resolving the issues.

The failure of FSCO to mediate the accident benefits component of personal injury claims in a timely fashion has been a particular concern for the personal injury bar. In a rather scathing decision in Hurst v. Aviva Insurance Company, Justice Juriansz stated,

[28] Relying on this characterization of the purpose of the legislative framework, the appellants urge that the words of the various relevant provisions be interpreted to hold that insured persons cannot commence a court action until mediation between the parties has actually been attempted and failed, and a mediator’s report has been issued.

[29] In my view, the appellants’ identification of the statute’s purpose is incomplete. No doubt, it is an important purpose of the legislative framework to make mediation mandatory. That, though, is not the whole story. Reading the provisions in their entire context makes clear that the purpose of the legislation is to make mandatory a mediation process that is timely and effective. The timeliness aspect of the mandatory mediation process is evident from s. 280(4)’s requirement that mediation be conducted within the time prescribed by regulation and s. 280(7)’s provision that mediation has failed when the prescribed time for mediation has expired.

[30] The purpose of the legislative scheme of dispute resolution is to mandate a speedy mediation process, conducted and completed on a strict timetable, in order to settle disputes quickly and economically. The speedy mediation process enables insured persons to receive the benefits to which they are entitled without delay. When the legislative purpose is properly characterized to include the timely resolution of disputes, there is no reason to resist the grammatical and ordinary sense of the legislation. Therefore, I do not accept the premise on which the appellants’ entire argument is based…

Determining the intent of an insurer when taking a hard nosed approach in a mediation will always be impossible without violating privilege. Reducing the interpretation of ss. 258.5 and 258.6 to applying on to those cases where an insurer refuses to mediate means that insurers will feel compelled to attend a mediation, without any need for negotiations in good faith.

Hard-nosed bargaining, and even a refusal to settle out of an interest to dissuade a plaintiff from proceeding to trial, can now be perfectly acceptable.


An effective mediation is one where the parties actually seek to address the issues. A meaningful mediation, where an insurer makes genuine efforts to resolve the claim without going to trial, is the only reasonable interpretation of the Act, and the best way to ensure that claims are processed expeditiously.



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