5 GOOD REASONS FOR MEDIATING SMALL CLAIMS COURT DISPUTES

Litigating small claims can still take a big toll on bank accounts, and rapidly deplete our most valuable currency: Time.  Aside from that, there is the risk, publicity and lack of finality that go along with every lawsuit small and large.  This where is a mediator can help. Mediation is an effective way to resolve bitter and sometimes long-standing fights that would otherwise leave both sides damaged. Plus, here’s what I’ve observed over the years as a mediator and lawyer: the smaller the claim, the harder it is to settle. Why? Every dollar counts.

As there is no mandatory mediation in Ontario Small Claims Courts, a voluntary mediation culture has not bloomed as of yet. That doesn’t mean the government hasn’t tried. The Ministry of the Attorney General once said the following about mediation and Small Claims Court on its website:

Is it possible for you to resolve the issue in another fashion? You may want to consider mediation, which is a less formal method of resolving a dispute through a neutral third party. Mediation can be less time-consuming, more flexible, and less expensive than proceeding in court. It can also help you find your own solution to the dispute and preserve your relationship with the person/business. 

I do not believe that removing that statement from the Ministry website had anything to do with a change in policy.  The increase in Small Claims Court jurisdiction from $25,000 to $35,000 as of January 2020 means we will see more Small Claims Court cases commenced than ever before, thereby further taxing limited court resources.

While some Small Claims Courts offer free, mediation services provided by Osgoode Hall law students (I’ve had the privilege of serving as a coach for years), availability is limited, and services take place only on the trial date.  I do not know how COVID-19 might impact these in-person services once the Court fully opens; it has been effectively closed since March 16.

If that isn’t enough to show mediation is a better route to a positive outcome, here are five more reasons why voluntary, paid mediation of Small Claims, conducted by private mediators, should catch on with the new $35,000 ceiling:

1. Treat All Mediations as Mandatory – especially Virtual Mediations

As a result of the current pandemic, like me, many Ontario mediators are conducting virtual mediations of non-Small Claims cases using videoconference platforms such as Zoom. I encourage        lawyers and paralegals to begin mediating Small Claims disputes online for the other reasons set out below, and to comply with:

• The Consolidated Notice to the Profession, Litigants, Accused Persons, Public and the Media, effective May 19, 2020. In it, the Superior Court of Justice (of which the Small Claims Court is a branch): “…calls upon the co-operation of counsel and parties to engage in every effort to resolve matters. For civil proceedings, this includes attendance at mediation – whether prescribed or not where a mediator is willing to engage in a virtual mediation”.

• Their ethical obligations under Rule 3.2-4 (Commentary [1]) of the LSO’s Rules of Professional Conduct (lawyers), and Rule 3.02 (12) of the Paralegal Rules of Conduct.

Read my May blog, Virtual Mediation is Now “Mandatory” for Civil Cases in Ontario

2. A Settlement Conference Is Not a Mediation – I often hear that mediations are not needed in Small Claims Court because there are Settlement Conferences. But here’s the thing: Settlement Conferences in most Small Claims Courts are relatively short (i.e., 45 minutes in Toronto) as compared to the average mediation (a half-day). Settlements take time. Further, those who preside over Settlement Conferences may not be trained as mediators, which makes sense since they are not conducting mediations. Similarly, Superior Court judges and masters are not conducting mediations at Pre-Trials.  Finally, you can probably schedule your own mediation on a date that is earlier than when the Court can offer you a Settlement Conference.

3. Motions for Summary Judgment Do Not Exist in Small Claims Court – Even when the Courts fully reopen, there is no way to fast track a Small Claims case by bringing a motion for summary judgment to save time and money. Therefore, there is value of paying a mediator to short track a case with a limited amount of issues.

4. Trial Time– A Small Claims Court trial is a full trial, not a summary trial or a mini trial.   Assuming you are reached on the first scheduled date (not always the case) you may not be done the same day. The trial may be adjourned for weeks or months later.  A mediation will take around a half day, and you can schedule it as early as you want.

5. The “Costs Trap” – The legal costs you may recover in Small Claims Court after trial will, like the claim, be “small”:  No more than 15% of the amount claimed– although the costs awarded can be doubled (at most) if you beat your final offer to settle in certain circumstances.  Yet one reason people choose Small Claims Court is that if you win $35,000 or less in the higher Superior Court (then no costs are awarded) isn’t as compelling  if you win a Small Claims trial and receive a relatively insignificant amount for costs as compared to the actual expense. I call this phenomenon the “Costs Trap.” Settling early with a mediator’s help helps avoid the Costs Trap.

As for the best timing for a mediation of a Small Wrongful Dismissal Claim – in order to maximize savings – mediations should be held prior to the delivery of a Defence, assuming counsel engage in a fulsome exchange of relevant documents prior to mediation. However, even a mediation following a Settlement Conference, but prior to trial, can still yield large rewards.

I’ll see you in Mediation!

P.S. I am currently charging a discounted rate for a Small Claims mediation. To book one, or for more information including available dates and rates, click here.

This blog is for educational purposes only and is not intended as legal or other professional advice.

*ADR and legal services provided by Mitchell Rose Professional Corporation.