Remember to Read a Mediation Agreement Carefully

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. 

When the Family Fight Starts, Bring In the Elder Mediator!

For those involved in a dispute and who wish to avoid the cost, time, and unpredictable nature of litigation, mediation can be a good way of resolving things.  This is particularly the case when the parties are relatives and there’s a desire to salvage (or at least minimize the damage on) family relationships. 

The Wall Street Journal recently published an article discussing the increase in the number of mediators specializing in disputes that involve the elderly.  This is a phenomenon I mentioned in a previous blog on dementia and the Globe and Mail discussed elder mediation during its September series on aging.   

Elder mediators can help families resolve a wide range of conflicts – ranging from whether an aging parent should move to a nursing home to whether a vacation home will need to be sold to fund a parent’s care.  Sometimes mediation is entered into voluntarily, while other times it will be required by the court. 

Here are some things to consider when planning a mediation of this type:

  • What type of mediator will be best?  The mediator should have a background in elder mediation but, beyond that, would the issues in dispute be better mediated by someone with a legal background or would someone with a background in, say, social work be better?
  • How will the elderly person’s interests be represented? If she isn’t attending the mediation then someone (such as a professional advisor or trusted friend) should attend on her behalf.
  • Who will pay for the mediator?  Mediation can be expensive and apportionment of costs should be agreed upon beforehand, preferably in writing.   
  • Who will attend the mediation?  Are the issues such that lawyers or other types of professional advisors should be in attendance?
  • What will happen if a settlement is reached?  When litigation has been commenced then creating a binding settlement can be fairly easy.  However, when the mediation is more informal, consideration should be given to how the settlement will be enforced. 

As a final note, it’s desirable to make sure that the objectives of the mediation and the issues to be discussed are clear to all well prior to the mediation!

Should the Court Award Costs for a Voluntary Mediation?

In some situations, the law requires parties to a legal proceeding to attend at a mediation.  However, in circumstances where it isn’t required, it is not unusual for the parties to voluntarily agree to mediate.  The Divisional Court’s recent cost endorsement in Saltsov v. Rolnick considers whether the costs incurred by parties as a result of participating in a voluntary mediation are recoverable. 

The court noted that the parties all were proceeding on the assumption that the fees incurred in a voluntary mediation should be considered by the court when determining costs.  However, in this situation, the court disagreed. 

Firstly, it found that the fact the parties believed costs for a specific part of a proceeding could be awarded did nothing to alter the court’s jurisdiction to fix costs.  Further, It pointed to the fact that in some situations mediation is mandated by the Rules of Civil Procedure (such as under R. 24.1 and R. 75.1); however, voluntary mediation is not a step which is authorized by the Rules.  As such, the court held that legal fees and disbursements incurred at a voluntary mediation were not properly the subject of a cost award. 

The court found that the parties to a voluntary mediation could enter into an agreement that the successful litigant to a proceeding will be able to later claim mediation-related costs.  However, the court also found that this was an agreement which should be made prior to the mediation and that this did not occur in the present case. 

The court pointed to policy reasons why voluntary mediation should not be subject to a cost award.  Firstly, parties may be discouraged from participating if they fear that, if the matter does not settle, costs will be increased and might be subject to a cost order.  Secondly, the court will not be in a position to assess the conduct of parties during a mediation (nor would it be desirable for it to attempt to do so) which makes it difficult to determine how the associated fees should be apportioned during the cost phase of a proceeding.

As a result, the court found that the costs of a voluntary mediation process should be borne equally by the participants and declined to make any cost award. This case is a good reminder that when parties are voluntarily mediating, the issue of costs should be addressed prior to the mediation.

Collaborative Law and Estate Disputes

An article in the latest edition of Canadian Lawyer magazine explores the question of why collaborative law has not caught on for estate disputes. 

For the uninitiated, collaborative law is a form of dispute resolution which is popular in family law matters.  The objective is to resolve disputes without invoking the court process.   The parties and their counsel all sign an agreement that they will not go to court and attempts are made to resolve the dispute through discussions, information-sharing, and mediation. 

The process is consensual, and the parties are permitted to withdraw from it at any time; however, if they do decide to litigate the dispute, the counsel involved in the collaborative process cannot continue to represent them.  The website for Collaborative Family Lawyers of Canada provides useful information on the approach. 

There have been initiatives to integrate collaborative law into the estates and trusts field but, so far, success has been limited.  A large stumbling block is the notion that if the collaborative process fails (and litigation ensues) the parties will need to retain new counsel. 

From a practical level, this is problematic because the estates and trusts bar is pretty small – this, combined with the fact that estates disputes often have numerous parties, would create complications if counsel were disqualified from a file. 

Another problem relates to situations where there are minor or mentally incapable beneficiaries, thus requiring the involvement of the Office of The Children’s Lawyer (“OCL”) or the Office of the Public Guardian and Trustee (“PGT”).  Both government agencies only have the authority to act once a legal proceeding has been commenced, which obviously creates problems if the premise of the collaborative approach is to avoid litigation.  Additionally, the potential disqualification of counsel if the approach is unsuccessful again becomes a problem – the OCL and the PGT are the only ones with the authority to represent minors and incapable persons, respectively.  

Recently, the Collaborative Estates Law Working Group was formed in Ontario, with the objective of elevating knowledge and understanding of the concept amongst lawyers and the public.   It will be interesting to see whether the collaborative approach starts to gain a stronger foothold – if it is to become more popular, it would seem the model will need to be adjusted to account for the unique challenges posed by estates and trusts disputes.  

Avoid the Mistake of Not Planning for Mental Incapacity

In my practice, a common mistake I see people making is failing to plan adequately (or plan at all!) for incapacity.  

Apparently I’m not alone in this observation - the Globe and Mail recently ran an excerpt from the new book, “The 50 Biggest Estate Planning Mistakes…and How to Avoid Them” and mistake # 1 was failing to designate a substitute decision maker for property and personal care when an individual still had the capacity to do so.     

My married clients are often surprised to learn that if they become incapable their spouse does not automatically have the right to make decisions on their behalf.  Instead, the spouse (or whomever the individual wants to designate) must be named in powers of attorney for property and for personal care.   

A continuing power of attorney for property gives the person (or persons) appointed the right to do anything with respect to the grantor’s property that the grantor could do if capable except make a will.  The power of attorney can come into effect immediately or it can specify it will come into effect on a specific date or when a specific contingency occurs.  Part I of the Substitute Decisions Act governs what is involved in making a continuing power of attorney for property.

A power of attorney for personal care authorizes the person (or persons) named to make substitute decisions regarding the grantor’s personal care.  Part II of the Substitute Decisions Act sets out the law relating to powers of attorney for personal care.  Unlike a continuing power of attorney for property, which can take effect immediately, a power of attorney for personal care only takes effect when the grantor is incapable. 

If someone becomes incapable without having made powers of attorney, it’s not the end of the world – a prospective guardian can bring a court application to be appointed.  However, this can be a long and costly process (and the incapable person may end up paying the legal fees involved).  Additionally the person appointed may not be who the incapable person would have selected had they considered the issue while still capable.  Having powers of attorney prepared does not take long and it is relatively inexpensive – certainly less expensive than the cost of a court application!

"If Dementia Were a Country, It would be the World's 18th Largest Economy..."

Over the past week, the Globe and Mail has been running an interesting series on various issues relating to dementia

According to Alzheimer’s Disease International, an estimated 35.6 million people worldwide suffer from dementia.  By 2030, the number is expected to double to more than 65 million.  

The costs of caring for people with dementia are significant – it is estimated that more than $350 billion per year is spent on medical care and residential care. Unpaid labour by family caregivers has an estimated value of $253 billion.  Twenty years from now, the total costs are projected to exceed $1.1 trillion.  To put these numbers into context, Alzheimer’s Disease International estimates the current costs of dementia to be equivalent to 1% of the global gross domestic product – in geographic terms this amount would be equivalent to that of the world’s 18th largest economy, falling in between Indonesia and Turkey. 

While those suffering from dementia clearly need supportive care and medical treatment, they often also need financial protection. 

The financial risks faced by those suffering from dementia are wide ranging.  In some cases, the extent of an individual’s diminished capacity is not spotted quickly enough (or, if it is, there is no one with the authority to make financial decisions on the individual’s behalf).  This can lead to situations where the person enters into unwise financial transactions or is taken advantage of by unscrupulous acquaintances or relatives.  The Ontario Superior Court of Justice’s decision in the much discussed case of Banton v. Banton (involving an 88 year old retirement home resident who married a 31 year old waitress at the home) illustrates the devastating effects that incapacity can have on the financial decisions someone makes.

In other situations, an elderly person’s diminished capacity can provide a battleground for fighting family members, all of whom are convinced that they ought to be the one to control the individual’s finances.  The ongoing case of Abrams v. Abrams provides a good example of the complexity and scope of litigation that can emerge when family members, all with the stated objective of protecting an incapable person, become pitted against each other.

On a non-litigious note, elder mediation is growing in popularity, although it is still fairly new.  The idea behind elder mediation is to get everyone in the same room with the joint objective of getting the individual with dementia the best care.

Coming Soon - Estate Disputes Hit the Boob Tube

It was bound to happen. Really, it was only a matter of time.

A reality show about estate litigation is currently in the works. 

I happened upon this frightening piece of news while reading the Wealth Law Blog (which is published by an Oregon-based law firm).   

In mid-July, the production company responsible for “LA Ink” and “Storm Chasers” sent out a casting call for residents in the New York Tri-State area.  The production notice reads in part:

Are YOU and YOUR RELATIVES arguing over a loved one’s Will? Do you need help resolving family conflicts and evaluating the worth of objects in the Estate?

Was your loved one’s Will vague– who should get what -- and you and your relatives can’t agree, we want to hear from you!!!

Billing the show as a “life-changing new series”, the production company promises to settle the participants’ “estate nightmare” as well as to financially compensate them. 

The casting call doesn’t indicate exactly how they intend to resolve the estate disputes – will the program have a touchy-feely Oprah-esque sentiment to it, or will things be resolved Judge Judy-style?  

I’m curious to know what type of estate disputes will be featured.  A secret I’ll share with you is that a lot of estate litigation isn’t all that exciting – I doubt that disputes over trustee compensation or the appropriate interpretation of administrative clauses in wills would make for particularly fascinating viewing. 

So, would I tune into a show like that?  On the one hand, the idea is about as appealing for me as I imagine that sitting around watching COPS would be for your average police officer.  On the other hand, I can already feel the morbid curiosity getting the better of me.