An Overview Of The Statutory Obligations For Insurers To Participate In Mediation And To Attempt To Settle

You will recall that the Ontario Court of Appeal in Keam v Caddey, 2010 ONCA 565 awarded the plaintiff $40,000 in additional costs after an insurer refused (twice) to participate in mediation prior to trial. Aviva Canada took the position that the plaintiff would not be able to meet threshold and therefore Aviva did not believe it was obligated to attend mediation as there was nothing to negotiate.

The Court of Appeal found that the Insurance Act imposes two obligations on the insurer. First, according to sections 258.6(1) and 258.6(2) of the Insurance Act, the insurer is obligated to participate in mediation when requested. Second, according to section 258.5(1) and 258.5(5), the insurer is obligated to attempt to settle the claim as expeditiously as possible.

As a consequence for failing to satisfy one or both of these obligations, the court is required to consider the insurer's failure when awarding costs after trial.

Playing hardball with offers tosettle

In Lakew v Munro, 2014 ONSC 7316, the defendant insurer was playing "hardball" by offering only dismissal without costs at mediation. The plaintiff asked the court to impose a cost consequence on the defendant for failing to attempt to settle as expeditiously as possible. The court noted that the defendant "executed the mediation agreement, attended with full authority to settle, made an opening statement (consistent with the position maintained all along) and offered to settle the action by way of a dismissal not with, but rather without costs."

The Insurance Act does not mandate that any particular amount of money be offered at...