Mediation has become an effective and popular tool to achieve a settlement of existing and even threatened litigation, particularly in employment law cases going to trial. In civil cases in Toronto (and Ottawa and Windsor), mediation is a mandatory process.

The Mediator

The court will appoint a mediator from a “roster” of approved mediators, should the parties be unable to agree between themselves to such a person. Usually, there is no need to use the roster list.  There is a body of experienced employment law mediators in Toronto, and the lawyers will typically be able to find one they can agree on.

The Mediation

The mediator has no power to force either party to a settlement. Nonetheless, the mediation process has proven to be very successful in resolving employment law disputes, usually at a relatively early stage of the case when costs are still rational.

It is important and sometimes may be mandatory to have all relevant documents exchanged between the parties before the mediation date. This will include documents detailing the plaintiff’s job search in the case of wrongful dismissal, the termination letter, supporting performance materials, if in issue, and generally all documents relevant to the issues in the case.

If the case is resolved, minutes of settlement will be signed at the mediation. Where settlement funds are required by the agreement, payment is usually made within two to three weeks. A general release will always be required. This release typically will state that all actions, not simply the existing action will be foreclosed. The release will not apply to any subsequent wrongdoing, such as a defamation claim. Often the employee plaintiff will request a reference letter be provided as a settlement term. If so agreed, this will become a covenant of the agreement. A reference will be required to be in accordance with the minutes and will not allow the usual defence of fair comment, that is, the right to make an inaccurate comment about an employee’s performance when made honestly.

Confidentiality & Privilege

The mediation is usually based on a mediation agreement by which the parties agree that the contents of the mediation discussion cannot be repeated to others outside of the mediation. A breach of this confidentiality covenant may lead to an independent action or even a finding of contempt.

Similarly, yet differently qualitatively, the mediation is subject to a privilege known as “settlement privilege”.  The concept of “privilege” in the broadest sense means that the contents of the mediation cannot be repeated outside of the mediation. In that sense, it is similar to the confidentiality covenant.

Settlement privilege is a common law rule of evidence. It applies to negotiations on a settlement of litigation or contemplated litigation. It is often also referred to as the “without prejudice” rule.

Formal offers to settle have been protected by Rule 49.06 of the Ontario Rules of Civil Procedure.] Similarly, all mediation communications are deemed by Rule 24.1.15 to be without prejudice settlement discussions.[

As discussed in the case Meyers v. Dunphy, the privilege is itself an exception to the general rule that an admission contrary to interest is always admissible to prove any fact which is so admitted expressly or by implication. This is the public policy origin of the rule. The origin, however, is one of public policy and of contract. While the main objective of the rule is designed to protect against the use of admissions against one’s interest, the rule applies to the entire contents of the communications. There are a number of theories suggestive of the reasoning behind the rule discussed in this case, which appear to be of no consequence today. The privilege has now been clearly defined as a class privilege and the Wigmore test is no longer applied.

The purpose of the rule is to allow the parties to take down their guard, make admissions openly and frankly, and to make settlement offers. It is hence intended to lead to a possible resolution of the claim and not allow for either party to suffer later repercussions within the litigation should the case not settle. As stated in Sable Offshore Energy Inc. v. Ameron International Corp., this privilege also applies to the details of the final settlement which has been achieved.[

The Exceptions

The most important issues of settlement privilege are, however, the exceptions, rather than the general rule. These exceptions are numerous and they must be understood carefully.

One such exception to settlement privilege was raised in a recent tax case in which CIBC was questioned as to deductions taken from its tax liability, the dispute centring on whether the admitted losses were the liability of the parent bank or its operating subsidiaries.[

The CRA sought disclosure of details of settlement documents intent on determining the truth of this issue in such means. Many of the questions relating to the settlement issues were ordered to be produced. The court noted, rightly, that such an order could put a “chill” on such settlement discussions and indeed, reflected that the decision could be seen as “putting CRA in the room during the mediation, having access to every relevant document” and that “it seems apparent that CIBC would alter its behaviour during mediation discussions if CRA was in the room with it”.

More will be said of these exceptions in a later blog.

Advice on Mediation

Whether you are an employee or an employer, it is important to understand the mediation process and its significance. When conducted fairly, it can often lead to an early settlement of the case and can save time and money for all parties.

Contact the offices of Toronto employment and labour lawyers Mallins Law. We regularly advise employees and employers on legal workplace issues. Contact us online or by phone at 647-792-0310 to schedule a consultation.