Legal Effect of Mediation
By Brian C. Atherton
A. PRELIMINARY CONSIDERATIONS
- Does the insured have the right to mediate?
- Has he/she complied with Section 22 and 23 of the regulations re: completing an Application and making his/herself reasonably available for
independent medical examinations?
- If not, raise this as a preliminary procedure issue prior to attending mediation.
- If not and mediation proceeds, the insurer may have waived potential defences.
- Keep in mind limitation period for commencing arbitration (i.e., two years from refusal to pay benefit or such a longer period as set out in the
- Note amendments to regulations in SABS that arbitration or court proceeding under Section 281 may be commenced within 90 days after mediator
reports to parties.
- Mediators have no power to make rulings on this preliminary issue.
- But it may be assumed/given if mediation commences, before this procedural point is raised.
- If relying upon Section 23 of the Regulations (unreasonable refusal to attend IME) ensure facts within parameters of (Opatowski and Wawanesa).
B. ISSUES ADDED BY CONSENT OF PARTIES
- Authority for this procedure found at Section 280 (4) of the Statute.
- Mediators are required to attempt to resolve as many issues or matters in dispute between the parties as possible.
- No compulsion on insurer to agree to add an issue which is not the subject of an Application for Mediation.
- Agreement will result in waiver of potential defences, which may become an important consideration for arbitration or litigation.
- Consider "information sharing" regarding new issues prior to agreeing to add them for discussion.
- Note, be careful not to mislead mediator as to purpose in pursuing this course of action.
C. OUTCOME OF MEDIATION
Four possible outcomes:
- Partial Settlement
- Failed mediation with procedure agreement
- Failed mediation: Incomplete mediation
- Under SABS, no settlement without disclosure agreement.
- Under OMPP, settlement achieved during mediation, not always upheld.
- Even both parties signing confirmation in writing may not be upheld.
- See Mouriopoulos ats Citadel General Assurance Company (A002166) and Aggarwal ats Allstate Insurance Company (A-002621).
2. Partial Settlement
- Issues that remain in dispute go on to arbitration/litigation.
3. Failure With Procedural Agreement
- Parties agree that additional information/documentation required before taking final position.
- Mediator can fail mediation to protect insured's rights to immediately proceed to arbitration/litigation.
- Situations where additional time required to investigate claim, or to use information to help build defences.
- Query: Is a procedural agreement, a binding settlement and enforceable? If so what are the consequences on failure to abide by the agreement?
4. Failure of Mediation
- Mediation can only "fail" within the parameters of Section 280 and 281, and Rule 5 of the Dispute Resolution Practice Code.
- Section 280 (6) - Power of Mediator to declare mediation failed in advance of time limit for same.
- Section 280 (7) -Mediation fails when mediator gives notice that in his/her opinion it will fail, or the time limit expires.
- Section 280 (8) - If Mediation fails, Mediator shall prepare and give report to parties setting out insurers last offer and mediator's description
of issues that remain.
- Section 281 -If Mediation fails, insured may bring Application for Arbitration or Litigation.
- Rule 5 (a) -Mediation fails when notice given by Mediator to parties.
- Rule 5 (b) -Mediation fails when time limit expires or when time limit agreed to by parties expires.
- Rule 5 (c) -Mediation fails when insured person makes request for report indicating that mediation has failed.
D. REPORT OF MEDIATOR
- Some controversy as to practical effect of report.
- Decisions at OIC suggest that report is nothing more than "opinion" of Mediator as to issues between the parties and Arbitrator is not
bound by same (see Bailey ats CAA Insurance Company (Nos .1 and 2- ) A-001139 and Mouriopoulos ats Citadel General Assurance Company (A-002166) and Aggarwal.
- Report of Mediator does form pleadings for purposes of arbitration.
- It is crucial to ensure that the report accurately reflects the discussions and agreements reached at mediation; if not, immediately request that
the mediator issue a new report
- Report includes last offer of insurer which it must pay in accordance with Section 281 (3) and (4) of the Act.
- Report is only document provided to arbitrator; therefore the arbitrator relies upon it to get his/her understanding of the issues, and some sense
of the conduct of the parties.
- Insured's Application for Appointment of an Arbitrator based on issues that fail; Insurer must respond to issues raised in Report in Response to
Application for Arbitration.
- set forward all issues, no new issues can be with leave of the arbitrator (11.2 (d) of Rules). The statute does not contain a similar provision,
and it may actually be beyond the power of the arbitrator to add issues which have not yet been mediated.
- Report of mediator does not form pleadings for purposes of litigation; although only issues noted in dispute in report can proceed to litigation.
- Courts cannot gain jurisdiction over issues which have not been mediated, and which have failed.
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