Canada: Mediating a Road Authority Claim on Behalf of a Municipality

Mediation is an increasingly common form of dispute resolution and one which provides many benefits to any party who would otherwise engage in litigation. However, there are several benefits and concerns which are unique to municipalities named as defendants in motor vehicle accident claims. Municipalities are limited to judge only trials, they often have significantly higher insurance limits than their co-defendants, and they are often resistant to settling a claim early on a purely economic basis. These are all considerations that counsel for a municipality must consider when advising a client.

The Risks of Litigating a Claim

Section 1 of the Negligence Act requires that where two defendants have contributed in any way to a plaintiff's damages "they are jointly and severally liable" and that in the absence of any contract saying otherwise, each of them is liable to contribute to or indemnify the other. Therefore if a municipality has even one percent of the liability for the plaintiff's damages, it is potentially liable for a disproportionate amount if the other defendants cannot pay their share. Although the municipality may have the least liability for the plaintiff's injuries, as the party who often has the largest insurance limits and financial resources, this presents a real challenge for assessing a municipality's exposure. If the other parties have limited insurance coverage, the municipality could be responsible for the remaining amount of the award above and beyond its actual liability as found.

In this context, a settlement with its certainty is a very attractive option to municipalities. The municipality will only be responsible for the share of the liability and settlement amount which it has agreed to pay. The plaintiff cannot come after the municipality to pay the amounts that are unpaid by another party.

Furthermore, even if the municipality has met its statutory obligations, it may still be found liable for a plaintiff's injuries. Courts have been inclined to circumvent the statutory minimum maintenance standards1 and require that municipalities not just react within the required timeframes, but actually take proactive steps before a deficiency arises. For example in Giuliani v. Region of Halton,2 Justice Murray for the Ontario Superior Court found that although the municipality had met the minimum standards, this was not a defence to the claim. Justice Murray found that more was required and that the municipality should have monitored the weather conditions so that they could apply salt or sand in a prompt and reasonable manner.3

Furthermore, where a municipality is named as a defendant, the trial must be a judge alone trial. This presents an additional risk to a municipality who proceeds to trial, as the judge who decides the case provides a written decision which will be reported and made publicly available. The decision will remain as a precedent to be followed by judges in future trials. If the decision is unfavourable to the municipality, then it will serve as a harmful precedent going forward for all municipalities.

The Benefits of Mediating

Understandably, municipalities are reluctant to settle a case on an economic basis. Municipalities do not wish to present themselves as an easy target for potential claimants and thereby increase the volume of claims. Given the amount of equipment that they have on the roads bearing their logo, municipalities are in fact an easily identifiable target for claimants.

However, when advising a municipal client it is essential to ensure this concern is weighed against the risk, cost, uncertainty, and precedent setting of a trial. In doing so, the client should be made aware that mediations are kept confidential. The confidentiality of mediation means that, unlike a judge-alone trial, there will not be a reported outcome regardless of whether the mediation succeeds or fails. Mediation eliminates the risk of a negative judicial precedent and guards against the possibility of increased exposure in future cases, which would be the result of a negative decision at trial. Likewise, the ability to negotiate future claims would not be impeded as it might be by a harmful judicial precedent.

There are many other benefits to participating in mediation. Unlike trials, the parties can choose their mediator, which would allow counsel to identify a mutually agreeable mediator who will not only be neutral, but more importantly, experienced in municipal liability. Mediators typically do not offer their opinions unless specifically asked; they are to remain neutral throughout the process. However, when a party meets privately with the mediator in caucus, it is certainly open to the party to ask for the mediator's opinion, which may be valued given his or her experience in that area of law.

...mediation is a more congenial process than the adversarial trial process.

Mediation also allows the parties to control the process and the outcome. Mediations do not follow a set procedure. While the mediator will direct the process to a large extent, the parties have input into the process and can make changes as may be necessary. The aim of a mediation is to resolve the dispute and, failing that, narrow the issues going forward. Therefore, the mediator with the help of the parties and their lawyers, will go in whichever direction may be necessary or employ any tactics that may be beneficial during the course of the mediation. The process is fluid and can be adjusted when or where required in order to try to achieve a resolution. Another attractive feature is that no one decides the case for the parties, as noted above. Only the parties can dictate the outcome. The worst that can happen is that the matter does not resolve, but even then, the table has been set for future settlement discussions.

In addition to allowing parties more control, mediation is a more congenial process than the adversarial trial process. This allows municipalities to preserve their business relationships with their contractors. Often the plaintiff in a motor vehicle accident will sue not just the municipality but also any of its contractors to whom the relevant duties were subcontracted. For example, if the accident was allegedly caused by snow or ice on the roadway and the municipality contracted out winter maintenance, that contractor will be named as a defendant as well. The same is true for surface irregularities such as potholes. If the suit were to proceed to trial, the municipality could find itself litigating against its contractor with whom it needs to work with on a day to day basis. In a mediation, the parties can act together to reach a mutually acceptable resolution. This would allow the parties to maintain an amicable business relationship beyond the dispute.

Mediation is also a significantly less expensive endeavour than seeing a claim through to trial. Mediation requires significantly less preparation than a trial by its very nature. Mediation rarely requires expert witnesses to appear, which can be a significant expense. Further, most mediations last no longer than a day.

Considerations when Acting for a Municipality

Once the municipality decides to engage in mediation, there are several considerations for its counsel. When participating in mediation, it may be advantageous to bring a representative of the municipality. Typically it is a representative of the municipality's insurer who attends mediation with counsel, however bringing a representative of the municipality itself could make settlement a more likely outcome. Since one of the benefits of mediation is that the parties maintain control over the process and its outcome, having someone there from the municipality can give the municipality a sense of ownership over the process and outcome. This is especially true where council's approval is required. If a representative of the municipality is part of the process, intricately involved in the outcome, and has actual input into that outcome, he or she is more likely to agree to the settlement or, if approval is required, recommend it to the approving body.

It is essential that the lawyer acting for the municipality knows whether his or her client attending the mediation will have the authority to settle or can only recommend a settlement as it would require council approval. With the latter, the lawyer must be careful to advise the mediator and the other parties at the outset of the mediation that a firm settlement cannot be achieved that day because it will require council approval and that the goal is to work towards a resolution that the lawyer and municipal representative would be prepared to recommend to council.

Municipal councils typically meet at set intervals which vary from one municipality to another. It is rare that a council will meet solely to authorize a settlement. The lawyer representing the municipality should therefore know when the next scheduled meeting will take place and advise the other parties accordingly. In some instances it may be another month or two before council is scheduled to meet and a settlement can be approved.

If the municipal lawyer and representative leave a mediation agreeing to recommend a settlement, it is imperative that they do so. Neither one should feel pressured at mediation to agree to a result and pay lip-service to that result only to leave mediation and not actually recommend the settlement. If they are not prepared to recommend a tentative settlement, they should not agree to do so. It is open to the lawyer and representative to advise the opposing parties that they will not recommend a final settlement offer but will put it before the approving body for consideration.

There is always the possibility that the plaintiff will settle with some or all of the other defendants, reaching a Pierrenger Agreement, and proceed solely against the municipality. A Pierringer Agreement is a form of settlement in which one or more defendant settles with the plaintiff while allowing the action to proceed against the remaining defendants. Such a tactic may increase the pressure on the municipality to settle its piece of the litigation as well so that it does not become the sole target. That is particularly true when word of a potential Pierringer Agreement reaches the municipal representatives during the course of the mediation, which may then cause them to adjust their strategy. It should be noted, however, that the remaining defendant will be responsible severally and only for its portion of liability so that the plaintiff is not over-compensated. These agreements also allow the remaining party access to any relevant evidence in the possession of the settling parties.

...choosing not to participate in mediation, even where it is not mandated, could lead to a significant cost award against the party who chose not to participate.

Risks of not Engaging in Mediation

While mediating provides many benefits that make it worth recommending to a municipal client, there are also risks associated with not participating in mediation. In most Ontario courts, mediation is entirely voluntary. However, choosing not to participate in mediation, even where it is not mandated, could lead to a significant cost award against the party who chose not to participate. In Williston v. Hamilton (Police Service),4 the Ontario Court of Appeal increased the costs awarded against the City of Hamilton by $20,000 as well as awarding the costs of the appeal, purely on the basis that the plaintiff, Williston, had repeatedly requested that the City agree to participate in mediation and the insurer for the City repeatedly refused to participate. The Court of Appeal determined that additional costs were appropriate to reflect the censure of the Court for the behaviour of the City's representative.

Summary

Where there is a risk that a judge could find a municipality is even 1% liable, there are many benefits to engaging in mediation and settling the claim before trial, as noted above. These benefits and risks should be made clear when advising municipal clients. It is also essential that, before engaging in mediation, lawyers acting for any defendant, including municipalities, are aware of whether their client has settlement authority or whether, as noted above, the municipal representative is only able to recommend a tentative settlement which must be approved by council.

See our brochure for further information pertaining to our mediation group.


1 Minimum Maintenance Standards for Municipal Highways, O Reg 239/02.
2 Giuliani v. Region of Halton, 2010 ONSC 4630.
3 Ibid at para 48.
4 Williston v. Hamilton (Police Service), 2013 ONCA 296.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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