In late January I wrote a blog on the Ontario Divisional Court’s decision in Saltsov v. Rolnick which considered whether costs incurred by parties in the context of a voluntary mediation were recoverable at the end of a court proceeding. After I posted that blog, Philip Hesketh, a lawyer in the UK (who is the principal of Hesketh Mediation) contacted me to draw to my attention the 2006 decision of the England and Wales High Court in National Westminster Bank Plc v. Feeney & Anor [“National Westminster”].
National Westminster considered the interesting issue of how a mediation agreement entered into by parties to a proceeding might affect a later cost order by the court. Although the decision emanates from the UK, the terms of the mediation agreement in question are similar to those you often find in mediation agreements in Ontario.
In National Westminster, the parties to the proceeding had entered into, what in the UK is referred to as a “Tomlin order”. In Ontario terms, this is akin to a consent order which stays a legal proceeding as a result of settlement but keep the proceeding open subject to the completion of terms of the settlement.
In National Westminister, the Tomlin order dealt with costs of the action at hand, but the respondents to the proceeding later applied to amend their bill of costs to include fees incurred by their counsel for preparing for and attending at a mediation.
In disallowing the respondents’ claim for mediation expenses, the court examined the mediation agreement the parties had entered into. It noted that the mediation agreement provided that the parties to the litigation would bear their own costs of the mediation (a term frequently found in Ontario mediation agreements).
The court observed that, pursuant to UK rules, mediation costs are generally recoverable as costs of an action. However it also found that, in this case, the mediation agreement was specific that each party would bear its own costs of the mediation.
While the court acknowledged that it did have discretion to fix costs (as the court also does in Ontario), it determined that given the fact that the parties had all entered into the mediation agreement and given the fact that the Tomlin agreement did not specifically override the provisions of the mediation agreement, the terms of the mediation agreement should prevail. As noted above, the court disallowed the mediation costs.
Although this decision arose from the UK, given that the terms to the mediation agreement in question are similar to what you see in Ontario, it stands as a good reminder that it’s important to review the terms of any mediation agreement and consider how they may affect a proceeding.