It is a common refrain: “mediation is a confidential process” and “what you say at mediation can’t be used against you later on in the litigation process” (i.e. it is without prejudice). As a mediator, that is something I make sure to emphasize when I first meet with the parties. I do so because I want the parties to be comfortable participating in the discussion and not be scared that they might say the wrong thing and somehow torpedo their case. I want the parties to be comfortable being open and candid with me, both with respect to the background facts and with respect to their settlement position. That allows me to be more effective as a mediator, guiding the parties to a resolution that makes sense for both of them.
That said, by default, confidentiality at mediation is not absolute. There are actually three exceptions:
- Reference to Conduct and Offers at Mediation in the Assessment of Costs;
- Enforcement of Settlements Reached at Mediation; and
- Reference to Conduct of Counsel in Context of the Rules of Professional Conduct.
Reference to Conduct and Offers at Mediation in the Assessment of Costs
In Karolidis v. Orthotic Holdings Inc. (unreported), Chalmers J. wrote the following in his costs award:
 I am also of the view that many of the costs incurred by the Plaintiff could have been avoided if the Defendant had taken a reasonable approach with respect to the settlement of the action. The Plaintiff delivered an offer to settle on March 25, 2021. The Defendant did not accept this offer until 7½ months later and on the eve of the summary judgment motion. After the Plaintiff served his offer, the Defendant did not engage in meaningful settlement negotiations. The Defendant’s lead counsel did not attend the mediation and there were no reasonable offers made by the Defendant on the mediation. In fact, the offer made at mediation was less than the amount offered at the time of termination. Given the fact that the Defendant ultimately accepted the Plaintiff’s offer, it is reasonable to assume that if the Defendant had attended the mediation in a good faith attempt to settle the action, a settlement would have been reached before the parties were required to incur the cost of preparing for the summary judgment motion.
The Court also referenced this:
At the mediation on March 24, 2021, the Defendant made an offer, which was 7.7 months’ notice, which was less than the 12 months’ notice offered at the time of termination.
This might come as a surprise to counsel, since Rule 24.1.14 of the Rules of Civil Procedure provides that all communications at mediation are deemed to be without prejudice. However, it is important to remember that there is a significant difference between “without prejudice” and inadmissible.
We are all accustomed to the idea that offers to settle made during the course of litigation are not to be referenced during trial; they are inadmissible as evidence for purposes of determining liability. However, we are also accustomed to referring to previous offers when making submissions regarding costs. After all, Rule 57.01(1) of the Rules of Civil Procedure provides that when assessing costs “the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing… (e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding”.
Offers to settle made at mediation are no different: irrelevant for purposes of liability, but relevant when considering cost consequences. As discussed below, that is the default, but the parties can agree to change it. In my view, that is preferable, as it is preferable that the parties’ conduct at mediation not be considered by a Judge or referenced in a costs decision.