Lecture slides to M.A.Sc. students on pros and cons of various dispute resolution venues with a case study added that moved 10-year case from complaint to appeal court decision

1. LITIGATION
and
ARBITRATION
and
MEDIATION
1
University of Toronto
Court of Public Opinion
PLAINTIF
DEFENDANT
3rd PARTY DEFENDANT

2. Dispute Resolution in Ontario
Gerald R. Genge,
P.Eng., C.Eng., BDS, BSSO, C.Arb. Q.Med.
Senior Principal – Arbitech ADR
President – GRG Building Consultants Inc.
2

3. Topics
• Contracts
• Resolving Disputes
• Litigation
• Arbitration
• Mediation
• Litigation Process - Process, Pros and Cons
• Arbitration – Process, Pros and Cons
• Mediation – Process, Pros and Cons
• Break
• CCDC Project ADR
• What’s new? Hot Tubbing, ODR
• Case Study 3
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4. Contract
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5. Contract – What is it?
• A “Contract” is an agreement between two or more
parties to do something for something.
• Need not be in writing – but its difficult to prove an
unwritten contract
• … except real estate which must be written
• Since written contracts are common, there are many
prepared form contracts which are intended to set
down the terms of the agreement.
• Examples:
• Construction Contract CCDC Forms
• Architectural or Engineering Services Agreements
• Municipal form Contracts
• Intellectual Property, Credit Card, etc. 5
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6. Contract Interpretation
• Often, if there is a dispute
as to the fulfillment of a
Contract the courts will
usually try to interpret
the expressed intention of
the terms.
• If the terms are vague,
the court will likely look at the overall intent of the
Contract to interpret the matter.
• If the Contract is too one-sided or unfair, the court
may interpret against the party that drafted the
Contract.
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7. Contract Terms
• Contracts exist to set out clearly, the rules of
engagement.
• (and to try to find someone to blame)
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8. Contract Disputes
• Disputes are common and, if everyone is reasonable,
they are manageable.
• Initiation of a dispute resolution process is often best
handled before there is a dispute.
e.g., Dispute resolution
parameters are set out
in CCDC Contracts
• Do not just assume that
you’ll be able to “work it out”.
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9. Side Bar - Business is Business
• While dispute resolution processes are now common in
contracts, resolution often takes another path. e.g.,
• Initiate legal action to preserve rights under the Limitations
Act of Ontario,
• establish a “Stand Still” agreement,
• Proceed with some form
of ADR.
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10. Resolving Disputes
• Litigation
• Arbitration
• Mediation
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11. Litigation
• Outside of Small Claims Court (Claims <$25,000)
where persons commonly self-represent….
Involves Lawyers.
• … a common misquote…
• “The wheels of justice grind slowly but finely”
• …. A likely more-accurate quote:
• “Justice turns the scale, bringing to some learning
through suffering”….
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12. Litigation
Pros:
• The decision will have force of law…
• You will get a final decision,
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• ………………………………..Eventually

13. Litigation
Cons:
• What does your judge
know about the subject?
• Are they biased?
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14. Litigation
Cons:
• TV isn’t reality…How much time do you have?
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15. Litigation
Cons:
• Are you physically and emotionally prepared?
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16. Litigation
Cons:
• How much justice
can you afford?
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17. Litigation
Litigation is expensive!
• My normal advice is that if
the claim is less than $250,000,
sue to preserve rights but
settle to preserve your bank account.
• Legal fees can be $500 to $1000/hr for
construction claims
• …. So why are you in engineering which bills at
$100 to $300/hr?
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18. Litigation – Time Table
Cases go through a process involving:
• Preparing and filing the Statement of Claim
(searches, valuation and technical experts)
• Preparing and responding to Statements of
Defense
• Preparing Counterclaims
• Responding to Counterclaims
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19. Litigation
Process (cont’d).
• Appearances and submissions before a judge or
case master to establish timelines (if you are
lucky)
• Appearances and submissions for motions for
various blocking or preserving tactics
• Settlement conferences
• Client meetings
• Examinations for Discovery
• Review of Transcripts
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20. Litigation
Process (cont’d).
• Engaging experts
• Technical investigations
• Damages valuation
• Fact witnesses
• Expert witnesses
• Non-participating experts
• Expert reports (from each party)
• Reply reports
• Reply to reply reports 20
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21. Litigation
Process (cont’d).
• Pre-trail appearances
• And eventually Trial appearances
• Including:
• Lawyer and (often) second chair lawyer
• Experts (for some or all of the trial)
• Post evidence summations
• Then you wait for judgement….
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22. Litigation
What if you “win”?
• Preparation of Motions for Costs
• Statement of amounts for fees and disbursements
• Years of experience of the lawyers involved
• Copies of time dockets and invoices
• Different rates are allowed for different time and
periods.
• Additional court appearances to present Cost
submissions
… then you wait again.
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23. Litigation
What if you are awarded “costs”?
• Can you get full costs?
• Maybe but:
• It is largely up to the trial judge…
• Depends on pre-trial settlement offers to try to
avoid court.
• If your settlement offer > the damages award
you may get close to full reimbursement.
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24. Litigation
Substantial Indemnity Scale
• Different rate scale for:
• different activities,
• different seniority, and
• Other complicated “rules”
(Rule 58 of Courts of Justice Act)
• e.g. Trail days may get ± $360/hr
• What does your lawyer cost you per hr?
• ($500 - $1000)
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25. Litigation
“Costs” (cont’d)
• Partial Indemnity
• Again… Different rate scale
for different activities and
time periods.
• e.g. Trail days ±$240/hr.
• …so….could be a $250/hr
to $750/hr cost
even if you “win”.
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26. Litigation
Time and “lost opportunity”
costs can be extensive.
• Time off work
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27. Litigation
Other uses for the money
that have greater ROI
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28. Litigation
What about “Other” consequences?
• Costs and time for litigation
can cause
• Emotional trauma
• Health issues
• Relationship breakdown, and
• Its all a matter of public record
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29. Litigation
• Its all a matter of public
record
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30. Litigation
Time and “lost opportunity” costs can be extensive.
• Time off work
• Other uses for the money that have greater ROI
• What about “Other” consequences?
• Costs and time for litigation can cause
• Emotional trauma
• Health issues
• Relationship breakdown, and
• Its all a matter of public record
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31. Arbitration
Different rules for different matters
• Some Contracts have Arbitration clauses
• Arbitration Act 1991 could apply
• ADR Canada has “rules”
• International Arbitration rules that allow laws of
other countries to be considered.
• Most common is a purpose-made Arbitration
Agreement structured by companies entering into
a Contract.
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32. Arbitration
Procedures
• Rules of Civil Procedure
apply to the degree the
parties want.
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33. Arbitration
Procedures
…But basically,
• Arbitrator is selected as a sole individual or as a
panel (Canadian often differs from US)
• US may have party-appointed arbitrator with mutually-
appointed chair
• Canadian is usually one mutually-appointed individual
• Arbitration results will normally be confidential
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34. Arbitration
Different types of Arbitrator
• Chosen from a roster for:
• Technical expertise in the matter – does that result in
bias?
• Prior litigation or judicial experience
• or
• Is a publicly-appointed person e.g. Appeal Hearings
before:
• Safety and License Appeal Tribunal
• Building Code Commission
• Property Standards Committee
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35. Arbitration
The Arbitrator
• If not a publicly-appointed arbitrator, they are
paid by the parties – most often equally.
• Is limited to the type of ruling given in the
Arbitration agreement, e.g.
• Must choose one or the other position, or
• May take another position
• May be required to give written reasons or may
be required only to give a ruling.
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36. Arbitration
The Arbitration Process
• Can be amended by the Arbitrator if allowed by
the parties.
• Can be less intimidating that court. Its often in a
meeting room.
• Can be much less formal than court, have far
fewer hours spent in preparation and submission,
and
• Be generally more cost-effective (even though
you will likely not cost awarded “costs” 36
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37. Mediation
Also different rules for different matters
• Some agreements have mediation clauses
• ADR Canada has “rules”
• Most common is a purpose made Mediation
Agreement structured by companies entering into
a Contract.
• Mediation is confidential during and after.
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38. Mediation
Also different rules for different matters
• Some agreements have mediation clauses
• ADR Canada has “rules”
• Most common is a purpose made Mediation
Agreement structured by companies entering into
a Contract.
• Mediation is confidential during and after.
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39. Mediation
Common practice is to:
• Meet in an all-party opening plenary session
where the Mediator will:
• Explain how expensive court is and the benefits of
mediating
• Congratulate the parties for taking the mediation
path rather than court
• Have the attendees introduce themselves and say
what they hope to achieve (without valuation)
• Either allow opening statements from counsel or
(better) – explain his/her understanding of the
positions of the parties (G Adams) 39
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40. Mediation
The Mediator
• Is chosen from a roster for:
• Technical expertise in the matter – (be careful
about bias)
• Prior litigation or judicial experience on like
matters
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41. Mediation
The Mediator
• Is paid by the parties – most often equally.
• Is required to be impartial and unbiased.
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42. Mediation
Common Practices
• Plenary opening session,
• Meets with parties or smaller groups individually
(in caucus) to explain in more detail:
• Cost to them if they win in court
• Cost to them if they lose in court
• Does not disclose information disclosed in caucus
to the other parties unless permitted.
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43. Mediation
Objectives
• Identifies Party Interests behind Party Positions
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44. Mediation
Objectives
• Attempts to find commonality to:
• Bring into focus the strengths and weakness of
each party’s position
• Use cost to win/lose and strength/weakness
“leverage” to bring parties closer to agreement.
• Arrive at a mutually-disagreeable resolution.
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45. Mediation
Back to Business
• The more explicit the resolution terms, the more likely
the business relationship will survive the dispute.
• The more inflexible the parties, the less likely is
resolution.
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46. Mediation
The Mediation Process
• Is successful if:
• The parties are in a position both financially and
emotionally to settle the claim
• The mediator is sufficiently skilled
• The cost to not settle is sufficiently discouraging
• And… cynically,
if the lawyers involved have earned enough money on
the claim. 46
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47. Take 10
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48. CCDC Contracts
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49. CCDC Contracts
Articles of the Agreement
• Parties, address for notices, and value
• What is included in the contract (work) and where it
is described (List of Specifications, Drawings and
any other agreements).
• Definitions
• General Conditions
• Supplementary General Conditions
• Form of Bid / Tender
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50. CCDC Contracts
• Most common for used in construction is the
CCDC 2 Stipulated Price Contract.
• Some others are:
• Cost Plus
• Unit Price
• Design-Build
• Construction Management
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51. The Project Mediator
• GC 8.2.1 – a little used provision in Every CCDC 2
Contract
• Supposed to be appointed within 30 days of the
award of the Contract.
• Failing that…. Within 15 days of a request by either
party to appoint a Project Mediator
• What would you think if such a request were made?
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52. CCDC 2 Dispute Resolution
• GC 8 – sets out the “Rules”
• GC 8.1 – Consultant as “first arbiter of the Contract”
gives a “finding” (per GC 2.2) except financing issues
(GC 5.1)*
• GC 8.2 – Either party has 15 working days to object or
has deemed to accept the Consultant’s finding.
• CLA Review provides numerous recommendations for an
Ontario Adjudicator role to deal with Prompt Payment
disputes.
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53. Objection to a Finding
• GC 8.2.2
• Within 15 working days of a “finding” the objecting
party must send the other party and the Consultant
written notice of the particulars in dispute and the
provision of the Contract relied upon in support of
the dispute.
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54. Reply to Objection
• GC 8.2.2
• Within 10 working days of an “objection notice” the
responding party must send the other party and the
Consultant written notice of the particulars in
dispute and the provision of the Contract relied upon
in support of the dispute.
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55. The Role of Project Mediator
• GC 8.2.4
• 10 working days after receipt of the “response” to
the “objection” to the Consultant’s “Finding”, the
parties are to request that the Project Mediator
assist in negotiating an agreement.
• GC 8.2.3
• All negotiations are to be conducted amicably,
without prejudice, and providing timely disclosure of
all facts.
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56. Mediation Period
• GC 8.2.5
• The Project Mediator is given 10 working days (or any
additional agreed period) to settle the dispute.
• Anxiety and disclosure will often extend the 10 day
period unless the dispute is very simple – in which
case it may not go to mediation but be otherwise
settled or deferred by agreement of the parties.
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57. If Mediation Fails…
• GC 8.2.5
• The mediator gives notice in writing to the parties
and
• GC 8.2.6
• Either party may within the next 10 days request
arbitration to finally resolve the dispute.
• GC 8.2.7
• If no request for arbitration is given (in the 10 days)
the requirement for arbitration is not binding on the
parties
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58. Then What?…
• GC 8.2.7
• Unresolved disputes can be referred to court or any
other agreed form of dispute resolution.
• GC 8.2.8
• If arbitration is not required (by notice), all disputes
shall be held in abeyance and consolidated.
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59. Abeyance?…
• GC 8.2.8
• Unresolved disputes can be held in abeyance
and consolidated into a single dispute upon:
• Substantial Performance,
• The Contract is terminated, or
• The Contract is abandoned
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60. Alternative Dispute Resolution
Rules - CCDC 40
• Parties must have “Authority to Settle”
• Legal counsel may be present
• Project mediator shall not provide legal advice
• Parties shall be candid and make reasonable
effort to resolve the dispute
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61. Alternative Dispute Resolution
Rules - CCDC 40 (Cont’d)
• Oral Statements from each party to start- briefly
explaining the position and reasons
• Each party has a private caucus with Project Mediator
(if it will assist or is requested by the party)
• Project Mediator aides by pointing out points of
agreement and exploring alternative solutions to
disagreements
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62. Alternative Dispute Resolution
Rules - CCDC 40 (Cont’d)
• Time may be extended with agreement of the parties
• Any settlement is to be recorded explaining the:
• Issue resolved
• Obligations assumed and criteria for and test for
meeting criteria
• Consequences of failure to comply with the
agreement
• Time frame for compliance
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63. Alternative Dispute Resolution
Rules - CCDC 40 (Cont’d)
• Termination of mediation may be initiated by either party
without reason
• The Project Mediator then provides written notice of the
Termination and the date of termination.
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64. Benefits of Arbitration
• Courts unlikely to intervene if an Arbitration agreement
is in place.
• Select the Arbitrator from qualified experts
• If technically skilled an Arbitrator can expedite the
resolution
• Gives reasons for award
• My Opinion: Is final and binding (or not worth doing)
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65. Appeals on Arbitration
• Appeal of a decision to court is with “leave” only
• Courts unlikely to decline appeal unless the arbitration
was incorrect in process.
• Court may appeal on a question of:
• Law
• Fact (if the arbitration agreement allows)
• Mixed fact and law (if the arbitration agreement
allows)
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66. Litigation v Arbitration v Mediation
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Litigation Arbitration Mediation
Dollar cost Greatest Moderate Least
Time involved Greatest Varies Least
Process flexibility None Some – varies Depends on
Mediator
Emotional trauma Likely High Some Some
Physical toll Can be great Certainly some Certainly some
Public result Yes Not usually Not allowed
Satisfaction Depends on your
stamina and
tolerance for the
cost
Same as litigation
but less demanding
and less costly
Usually only if your
want closure

67. Story Time
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68. Story Time
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69. Story Time
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70. Story Time
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71. Story Time
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72. Story Time
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73. Story Time
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74. Story Time
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75. Story Time
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76. Story Time
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Issues:
Builder’s building system Design not:
1. In OBC
2. Approved by Minister’s Ruling on CCMC
Evaluation Report
3. Authorized by Building Materials
Evaluation Commission, ….but was
4. Approved by P.Eng.
5. So.. a Building Permit was issued

77. Story Time
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Timeline:
• Design and Construction 2005-2007
• Municipality checked one other
installation for approval and used same
process (2005) i.e. P.Eng. Approval.
• P.Eng. Sign-off on Construction.
• “I have completed the final inspection of the work at [Address]
and with the previous inspections the work appears to be in
acceptable conformance to the work shown on the design
drawings and the Ontario Building Code.”
• No record of previous inspections

78. Story Time
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Timeline (Cont’d):
• 2007: Owner makes New Home Purchase
• 2008: report to Tarion Warranty Corp re:
leaks
• 2009: Tarion denies warranty coverage
• 2010: Owner hires Lawyer 1
• Owner’s Lawyer 1 sues City and Builder

79. Story Time
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Timeline (Cont’d):
• Late 2010:
• Owner hires Expert to assess and report.
• January 2011:
• Expert prepares report on Liability and
Evidence of Distress (no report on damages
yet)

80. Story Time
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2011 Expert Report
• Certifying P.Eng, was Negligent
• Builder breached BCA and OBC
• Building is non-code compliant
• City breached BCA and OBC
• Failed to enforce BCA and OBC
• Owner will incur damages
• due to physical damage (diminution of value)

81. Story Time
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2012: Expert Reviews SoC
• Owner’s Lawyer 1 sued City and Builder
• Expert asks…. why not the Engineer and
lawyer says… should be 3rd – partied by City.
• Legal problem looming…
• Eventually Limitations Act prevents suing
P.Eng. (2-years from date of first Expert
report) i.e. Jan 2013

82. Story Time
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• 2012
• Expert writes a follow-up Report on
Damages advising costs to repair is $240,000
• Owner also gets quotes…. Similar costs
• Spring 2013:
• Owner’s Lawyer 1 is fired. Owner’s Lawyer
2 hired (finally!)

83. Story Time
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Settlement Discussions with Judge 1
• 2014:
• Judge 1 doesn’t think he can resolve Code
Compliance issue to he tackles just the
leaky roof issue
• Settlement provided:
• $75,000 including Builder paying for new
code compliant shingled roof

84. Story Time
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Settlement Discussions with Judge 1
(cont’d)
• Judge 1 advises Owner …
• “could sue Lawyer 1 for negligence”
[because he failed to sue P.Eng.]

85. Story Time
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Settlement Discussions with Judge 1
(cont’d)
• 2014: (after roof replaced):
• Expert writes report:
• Roof replacement P.Eng. Final certification
(inadequate repair that did not make
Owner “whole”)
• 2014:
• Expert writes report on remaining required
repairs

86. Story Time
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• Early 2015: Law suit against Owner’s
Lawyer 1
• Owner’s Lawyer 1 involves insurer [LawPro]
• LawPro hires Lawyer 3
• Lawyer 3 hires P.Eng. to review needed
work. [Lawyer 3’s Expert]

87. Story Time
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• Summer 2015:
• Owner’s Expert reviews LawPro’s P.Eng.
expert report and responds…
• Owner’s Expert says “Alternative Solution”
proposal must be implemented and
certified by LawPro’s P.Eng. And proposed
to City

88. Story Time
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Trial against Owner’s Lawyer 1 Begins….
• Late 2016: Trial Date fixed
• Early 2017: 10 day trial
• Tactical plan:
• Owner’s Lawyer and Expert have dealt with
the appointed judge before and opt for 6-
person jury trial (rather than judge)
• Judge is livid (lost his power to decide
liability and damages)

89. Story Time
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• Owner’s Expert evidence – new Damages
valuation at $265,000 to repair
• Jury finding is lesser of:
• $433,000 for repair, or
• $190,000 for diminution of value

90. Story Time
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• Judge (the cranky one) says award is
“perverse”!
• Selects diminution of value award and
cuts it to $90,000
• Capped legal cost recovery at $100,000
allowing only “Partial Indemnity”

91. Story Time
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Appeal to Supreme Court
• LawPro appeals Judgement of $90,000 on
points of law saying:
• the award must be limited to the
“probability” of getting more money out of
the P.Eng.’s insurer; therefore, must be less
than 100% of judges award.
• Jury diminution valuation was incorrect –
they must have given $0 for house and
allowed only for land.

92. Story Time
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Appeal to Supreme Court
• Owner’s Lawyer 2 cross-appeals saying
judge erred…
• Awarded cost should have been rebuild
• Did not allow any indemnity for legal costs
from initial claim against City and Builder
• Did not allow full indemnity for legal costs
in second action even though Owner had
made offer to settle for $225,000 1-yr
before trial and $175,000 1-mo. before
trial. (bettering the jury’s award)

93. Story Time
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February 2017 – 10 year’s later
• Owner’s appeal succeeds. Award of
$433,000 restored.
• Plus…Legal costs and disbursements of
$231,000 awarded including Owner’s Legal
and Expert’s costs

94. Story Time
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It’s not over yet!

95. Story Time
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• 2017: Owner’s Lawyer 1
• (remember lawyer 1?)
• Insured for $1,000,000 but…
• LawPro will likely have to pay out
$1,125,000 for all legal and expert costs
to defend …. So…
• Owner’s Lawyer 1 may have to pay
$125,000
• Guess what…?
• He’s thinking about suing Lawpro…

96. Story Time
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• Why would a lawyer sue his insurer?
• He was cut out of the decision to settle or
not settle for $225,000 and thereby avoid
all trial costs
• (would be well under his limits of
insurance)
• How does that matter to the Owner?
• Total costs to LawPro may come out of
the liability limit and reduce amount left
to pay out our Owner….

97. Story Time
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So…. What have you learned?
•Litigation
• Long, costly, just?, creates anxiety, final?
•Arbitration
• Maybe long, less costly, probably just, less anxiety, may or
may not be final
•Mediation
• Shorter, even more cost effective, achieves closure but may
not be just, is final and confidential,

98. What’s New?
• Hot Tubbing
•Premise
 Mutual examination of other
expert’s to understand their
position
 Common or at least consensus
agreement on technical points
 Abbreviate the time to resolution
through “understanding” and
“appreciation” of viewpoints 98
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99. What’s New?
• Online Dispute Resolution
• Uses Information and Communication Technology [ITC]
to facilitate access to ADR
• Uses:
• C2C disputes:
e.g. e-commerce on-line sales (e-bay, etc.)
• B2C disputes
• e.g. On-line stores
• Near Future
• ITC Arbitration – allowing use of data passed through
analogue models to decide result. 99
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100. 100
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