Caselaw Update: Cioffi v. Modelevich et. al.

Released near the end of 2018, Cioffi v. Modelevich et. al.2018 ONSC 7084 (“Cioffi”) provides clarity on the interplay between the cost consequence of mediations under the Insurance Act(the “Act”) and Ontario Regulation 461/96 and the Rules of Civil Procedure (the “Rules”) and theAdministration of Justice Act (the “Justice Act”).

 First, some background. 

 Section 258.6(1) of the Act states the following:

 258.6 (1) A person making a claim for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile and an insurer that is defending an action in respect of the claim on behalf of an insured or that receives a notice under clause 258.3 (1) (b) in respect of the claim shall, on the request of either of them, participate in a mediation of the claim in accordance with the procedures prescribed by the regulations.

 Section 3(6) of Ontario Regulation 461/96 states:

 (6) The defendant’s insurer shall pay all reasonable fees and expenses of the mediator.

 In contrast to the above, s. 4(2) of O.Reg 451/96 of the Justice Act states the following:

 (2) Each party is required to pay an equal share of the mediator’s fees for the mandatory mediation session.

In Cioffi, the plaintiff took the position that the Act and its Regulations should prevail and the insurer should bear the entire costs of the mediation. This argument was based on Rule 1.02(1)3 which states that the Rules do not apply if a statute provides for a different procedure. Here, the plaintiff requested the mediation under the Act via letter and email to counsel for the insurer without objection.

In deciding for the plaintiff, Spies J. states the “clear intention of the Insurance Actwas to allow a plaintiff to request a mediation to be paid for by the insurer in the hope that the action might be resolved”. The practical implication of Cioffi is that where there is a request made for mediation under the Act in a Mandatory Mediation jurisdiction, the cost consequence of the Act will prevail. 

I have seen the cost issue arise near the conclusion of a mediation. To avoid this issue cropping up during an inopportune time and potentially throwing a wrench in an otherwise fruitful negotiation, it should be clear from the outset whether a mediation is proceeding under the Act. I have also seen disputes about whether or not the request was actually made. If counsel is arguing that the mediation is pursuant to the Act, and there is no consensus among the parties, counsel should of course come to the mediation with some sort of evidence proving same.

I hope this brief case update provided a reminder on the cost consequences associated with mediations under the Act along with the practical implications of the decision. On a final note, I want to wish a Happy Passover and Happy Easter to those celebrating and I look forward to working with you in the coming months.