Insurer Hit With $40,000 Penalty for “Hardball” Tactics

In the past two decades, mediations have become a fixture in Ontario.  A mediation can be described a settlement meeting between the parties to a lawsuit, with an impartial mediator.  Typically, the parties agree on a mediator who will help bridge the gap between their positions.   The mediator cannot impose a settlement, and focuses instead on trying to build a consensus or reach a compromise.

More recently, the Rules of Civil Procedure have imposed a requirement of mandatory mediations for many lawsuits.  Most of the time, all parties make an effort to treat a mediation as a serious opportunity to settle a lawsuit.  However, on occasion, a plaintiff or defendant (most often a defendant) may treat the mediation as a nuisance.

In one extreme case, an insurance company refused to attend a mandatory mediation altogether.  In a decision released August 11, 2010, Ontario’s top court held that this insurer should pay a hefty $40,000 penalty for its conduct.  The Court stated that an insurance company cannot disregard a legal obligation to participate in a mediation.

The Court felt that a “significant” penalty was appropriate to reflect the Court’s disapproval and to ensure that the accident victim was properly compensated for the insurer’s conduct.

The decision serves as notice that insurance companies are not exempt from the rules that govern all litigants.

Patrick Brown


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