When What Happens in Vegas Doesn’t Stay There: Two Recent Court Decisions About Mediation Confidentiality May Surprise You


Occasionally, and with a certain audience, I will explain mediation confidentiality to some (but not all) mediation participants by making reference to the advertising slogan—“what happens here, stays here”—put out by the Las Vegas Convention and Visitors Authority in 2003 and their Visit Las Vegas TV commercials (or, the less-than-mediocre romcom “What Happens in Vegas”, the title of which was inspired by said slogan). However, I also make mention that there can be exceptions to the rule—and my mediation agreement refers to some of these exceptions.

Yet many lawyers and mediators just assume that what happens at mediation always stays at mediation (mediation being a relatively boring stand in for Las Vegas—although one could say that both are “dry”). In other words, they instinctively believe that mediation communications—including offers to settle made at mediation and various hijinks—can never find their way into any court proceedings. However, mediation confidentiality is not absolute.

Two recent Ontario court decisions are good examples of two situations when mediation communications may be disclosed to the court in certain circumstances – although one is more controversial than the other (I suppose the same can be said about trips to Vegas).  Both decisions arise out of employment law disputes, but they have direct application to other civil disputes as well. I also provide some additional information for context, along with some analysis, and, finally, recommendations for your next mediation.












💼 1: Motions to Enforce Settlements

In Peres v. Moneta Porcupine Mines Inc., 2021 ONSC 5798, the Plaintiff brought a successful motion under R. 49.09 to enforce a settlement agreement reached via email between counsel within an hour following the end of a virtual mediation. The mediator was copied on the emails. There were no minutes of settlement, and the Defendant denied that a settlement was reached. Mediation communications (including evidence about settlement offers made at mediation) were revealed to court on the motion and can be found in the decision.

While some people may be baffled as to why mediation communications wound up in a court decision, they shouldn’t be. After all, this is the less controversial of the two cases. The Supreme Court of Canada in Union Carbide Canada Inc. v. Bombardier Inc.,  2014 SCC 35 (and more recently in the family law context in Association de médiation familiale du Québec v. Bouvier 2021 SCC 54) held that parties must clearly contract out of the exception to common law settlement privilege (in this context, the Court was referring to mediation confidentiality, or what some have called “mediation privilege”,) permitting the disclosure of otherwise confidential mediation communications in order to prove the terms of a settlement. The disclosure to prove a settlement is known as an “exception to settlement privilege” and, it, like settlement privilege, is a creation of the common law.

In short, telling the court about what happened at mediation in order prove or disprove a settlement that took place at or after a mediation is permitted unless the parties clearly agree otherwise in advance that they are renouncing the exception to settlement (mediation) privilege.

Union Carbide was not considered by the court in Peres because there appears to have been no dispute between the parties regarding the disclosure of mediation communications for the purposes of the motion and because, presumably, the mediation agreement signed by the parties (if there was one – more on that below) did not clearly indicate that the parties renounce exception to settlement privilege.

To sum up, think of this way: What happens in Vegas may not stay in Vegas unless you sign an agreement with your travel companion before arriving that states otherwise. But, if you signed that agreement, and you and your companion later argue in front of your friends about what actually took place on your trip (maybe one of you woke up with a terrible hangover and temporary memory loss), no one is going to stop you from talking about it—despite your prior agreement not to do so—if both of you don’t object to talking about it.












💼 2: Assessment of Costs

While mediation aficionados may know all about the exception to mediation confidentiality to prove a settlement as discussed above, they may be surprised that disputants can, apparently, reveal mediation communications to the court for the purposes of a party and party assessment of costs.  In Karolidis v. Orthotics Holdings Inc. (2022) (currently unreported) the Defendant accepted the Plaintiff’s R. 49 offer to settle less than two weeks prior to the hearing of the Plaintiff’s motion for summary judgment. The offer provided for payment by the Defendant of $273,333.22 plus “the Plaintiff’s costs up to the date of the acceptance of the offer, on a partial indemnity basis as agreed, or….as determined by a Judge…”

In his costs submissions, the Plaintiff argued that the “Defendant’s previous lawyer substantially increased the costs of the action “in an attempt to drive up costs and to “strong arm” the Plaintiff into accepting a lower settlement offer.”. As one of several examples, Plaintiff’s counsel referred to an offer made by the Defendant at mediation that was considerably lower than one that was made pre-litigation.

In fixing the Plaintiff’s partial indemnity costs at $70,000.00 (the Plaintiff claimed $97,290.91, and the Defendant argued that costs should be $40,000.00), the Judge considered the factors identified in R. 57.01.

Before we go on, it is important to note the following:

  1. While not explicitly mentioned by the Judge, R. 57.01 (1) states that “in exercising its discretion…to award costs, the court may consider, in addition to the result the proceeding and any offer to settle…
    …(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding….[and]…(i)  any other matter relevant to the question of costs.”
  1. The mediation in this case was mandatory and governed by R. 24.1 in that regard. R. 24.1.14 provides that “[a]ll communications at a mediation session and the mediator’s notes and records shall be deemed to be without prejudice settlement discussions.”  Essentially, this subrule codifies the common law concept of mediation privilege (or settlement privilege in the context of mediation). Note, as well, that identical wording can be found in R.75.1.11 (Mandatory Mediation – Estates, Trusts and Substitute Decisions) and R.75.2.08 (Court-Ordered Estates Mediation).
  1. One could easily argue though that subrules 57.01 (1) (e) and (i) create a statutory exception to the confidentiality/ privilege found in R. 24.1.14 and at common law thereby permitting mediation communications to be revealed for costs purposes. The argument is made stronger when you consider that R. 24.1.14 does not say that mediation communications are inadmissible in any proceedings (or all steps within those proceedings), including an assessment of costs. It simply states that the communications are “without prejudice”. It is trite law that without prejudice settlement offers made outside of mediation can be revealed to the court for costs purposes. So, the argument goes, why not settlement offers made at mediation? In fact, there is already authority for admitting the content of a mediation brief for costs purposes in the context of an MVA tort action (see: Dimopoulos v. Mustafa, 2016 ONSC 4119).
  1. There is no reference in the decision to the existence of a mediation agreement by which the parties were bound. It is also clear that the defendant did not object to the inclusion of mediation communications in costs submissions. As well, because of items 1 – 3 above, and, presumably, no contractual restriction on revealing mediation communications, Plaintiff’s counsel was free to refer to mediation communications in their costs submissions.
  1. Neither side referred to anything the mediator may have said, nor were they seeking the production of the mediator’s notes. The mediator was a non-player, as they should be. It is also rare that a court would compel a mediator to give evidence or produce notes in any event. That said, I recently learned that in class actions, the parties explicitly mention in their settlement agreements, which, must be approved by the court, that the settlement was recommended by the mediator, and they sometimes include documents exchanged during the mediation, such as expert reports.

Therefore, even though the court did not explicitly engage in my analysis above, the Judge in Karolidis included the following passage in his reasons, and it is the part of the decision that has caused a lot of debate in the mediation community (italics mine):

“[12] I am also of the view that many of the costs incurred by the Plaintiff could have been avoided if the Defendant had taken a reasonable approach with respect to the settlement of the action. The Plaintiff delivered an offer to settle on March 25, 2021. The Defendant did not accept this offer until 7½ months later and on the eve of the summary judgment motion. After the Plaintiff served his offer, the Defendant did not engage in meaningful settlement negotiations. The Defendant’s lead counsel did not attend the mediation and there were no reasonable offers made by the Defendant on the mediation. In fact, the offer made at mediation was less than the amount offered at the time of termination [of the Plaintiff’s employment giving rise to the proceeding]. Given the fact that the Defendant ultimately accepted the Plaintiff’s offer, it is reasonable to assume that if the Defendant had attended the mediation in a good faith attempt to settle the action, a settlement would have been reached before the parties were required to incur the cost of preparing for the summary judgment motion.

Some believe that, as a result of  this passage, the judge erred by referring to mediation communications, and others have pointed out that the decision could unnecessarily serve to “open the floodgates” so that we will start seeing mediation communications revealed in a variety of situations more often (“unnecessarily” because, if one reads this brief decision in its entirety, they may conclude that the court could have come to the same conclusion without reference to what transpired at mediation).

However, given my analysis above (in points 1–5), I don’t subscribe to the view that Karolidis was wrongfully decided, nor am I concerned about the floodgates being thrown open (or, to return to our Vegas theme again, I don’t believe that Hoover Dam is going to suddenly burst). The facts in Karolidis are unique, and the exception to mediation privilege here is narrow.

That said, like many mediators and lawyers, I think it is preferable that judges do not refer to mediation communications in their decisions, unless absolutely necessary—and this assumes that there is already a sound legal exception permitting their disclosure to the court. As the Supreme Court noted in Union Carbide, “settlement privilege is based on public policy considerations, as it is preferable, in the interests of the proper administration of justice, that parties try to resolve their own disputes before resorting to litigation.”  If mediation participants become overly concerned about their behaviour showing up in a court decision, it could result in a decline in mediated settlements (or even a decline in non-mandatory mediation—and a corresponding increase in court backlogs, and unhappy litigants (or, more accurately, unhappier litigants).

In other words, if what happens in Vegas no longer stays there, then no one will go to Vegas anymore. Even if it is mandatory to visit for a short time, people will just sit in their hotel rooms talking to their lawyers on Zoom, which isn’t much fun.   This is also as good a time as any to remind you that I am not really talking about Las Vegas.

In the meantime, what should lawyers do if they and their clients wish to maximize the chances that the court will not learn about mediation communications in any instance (which includes more than just offers made and rejected at mediation—and could conceivably include anything said during the mediation or filed with the mediator) in any step of a proceeding? Read on.












Recommendations for Lawyers

  1. Make sure you do not mediate without a written mediation agreement.
  2. Make sure your mediator’s mediation agreement contains language that addresses the issues raised in both Karolidis and Peres, as discussed above. For example, my mediation agreement includes the following language:

i) All communications pertaining to and arising out of the Mediation (the “Mediation Communications”), including mediation briefs, are confidential, without prejudice and subject to settlement privilege and mediation privilege and are inadmissible in any legal proceedings (including matters related to costs)The Mediator cannot be called as a witness to give any evidence or to make any report in any legal proceedings (including matters related to costs).

ii) The common law exception to settlement privilege which permits the production or disclosure of without prejudice communications to prove a settlement is renounced to the extent that no evidence of any Mediation Communications shall be produced or disclosed in any legal proceedings relating to a settlement reached at or after the Mediation, save for a written agreement containing the settlement.

It is important to point out that this blog is not legal advice, and that the language above has not yet been court-tested. So, proceed with caution and come up with your own wording. I also added the words “including matters related to costs” in 2(i) above only after reading the Karolidis decision – although I don’t believe that was necessary.

The wording in 2 (ii) above addresses the ability to clearly renounce the exception to settlement privilege (as allowed per Union Carbide), but it also goes further by helping parties reduce the need for settlement enforcement motions – or to simplify them – to make it clear that the only evidence from mediation that can be produced on such a motion are signed minutes of settlement.

The wording in 2 (i) expands the meaning of “without prejudice” and attempts to eliminate further exceptions to settlement/mediation privilege to avoid referring to mediation communications in court proceedings in contexts other than trials or motions for judgment (such as assessment of costs, pre-trial conferences, interlocutory motions, case conferences, etc.).  Whether the court will recognize this “contracting out” of other exceptions to settlement privilege remains to be seen. But it’s a start.

  1. Make sure that the mediation agreement is signed by all mediation participants prior to the start of mediation and ask the mediator for copies of the signed agreement.
  1. Make sure that you take steps to enforce your contractual obligations. While counsel and the parties may be bound by mediation agreements with the suggested language above, if one side does not seek to enforce the contract—by opposing the admissibility of mediation communications sought by an opposing side, then the contractual language will be of little value in the end.

However, and as referred to above in my discussion of Peres, if neither side wishes to abide by the strict terms of the mediation agreement at a later date, then, as a practical matter, it is unlikely that the court is going to take issue (unless a party is seeking drastic measures like compelling the mediator’s evidence, or to release mediation communications at a hearing on the merits).  Whether it is good policy for a judge to permit the parties to resile from their mediation agreement obligations, or whether a judge should at least make inquiries about existing mediation agreements, are separate issues for another day and another blog.

Another question remains though: In many mediation agreements (like mine) the mediator is also a party to the agreement. So, should it be necessary to obtain the mediator’s consent prior to releasing mediation communications to the court? But this begs another question: If asked to consent, should the mediator comply or refuse?

  1. Finally, practise civility at mediations. The LSO’s Rules of Professional Conduct apply to a lawyer’s mediation conduct. Even if the mediation agreement contains the suggested provisions above, a lawyer is not shielded from disciplinary action based on what transpired at mediation (see 2011 ONLSHP 24). You simply can’t contract out of everything!

So, if you hope that what happens at mediation stays at mediation, then you have some work to do, and you need to embrace uncertainty. Of course, no one should not assume success in such a high-risk game like litigation. Just like no one should show up in Las Vegas believing a catchy advertising slogan. If they do, they will soon learn the hard way.


For more information about my ADR practice, including mediation and med-arb, click here.

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

Print Friendly, PDF & Email

No Comments