Episode 6: The Settlement Conference

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Welcome everyone to the Ontario Small Claims Court Podcast.  I want to thank you for taking the trouble to download this episode today and I hope that I can help you in some small way.

 

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In this Episode 6 of the podcast, we are going to talk about going to a settlement conference.

 

Now you are in the thick of things.  The Plaintiff or Plaintiffs have filed and served a claim; the Defendant or Defendants have served and filed a defence; maybe one of the Defendants have filed and served a Defendant’s claim against one or more of the parties to the original action.  Lines have been drawn in the sand, and defaults have been noted to the clerk of the small claims court.  Let the games begin.

 

Within ninety days of filing the first defence, a settlement conference will be scheduled by the court clerk.

 

The purposes of a settlement conference are five-fold:

  1. It is supposed to help resolve or narrow the issues in the case;
  2. It is supposed to speed up resolution of the matter;
  3. It is supposed to encourage settlement of the action;
  4. It is to assist the parties in preparing for trial; and
  5. It is to provide full disclosure between the parties of the relevant facts and evidence.

 

Let’s remember first of all that this is a court that is built for self-representation.  One of the biggest things that deputy judges will try to do is to find out if there are areas of common ground; facts that both sides can agree on.  That way, if there is a trial to be had, the hope is that only the significant and important evidence will be heard.

 

This is me speaking as a paralegal right now that has experience working in the Small Claims Court.  The value I give my clients is my knowledge of the legal tests involved in a given matter.  That knowledge allows me to sort through the evidence to determine what is really needed; not to throw everything in, including the kitchen sink to make my case.  Section 25 of the Courts of Justice Act says that the small claims court is to hear and determine in a summary way all questions of law and fact.  That means the quicker I get to the point the better.  Section 27 of the Courts of Justice Act states that the small claims court may admit as evidence, oral testimony or any document or other thing, only so long as it is relevant and not repetitious.  Knowing what is relevant to your case makes for a quicker trial.  Knowing how much relevant evidence is needed for your case makes for a quicker trial as well.

 

So, the settlement conference, for a deputy judge or referee, is kind of like legal triage.

 

A typical settlement conference goes like this:

  1. The deputy judge or referee will explain what will happen during the settlement conference.
  2. The deputy judge or referee will talk to the plaintiff first. The plaintiff will explain to the deputy judge what their case is about.  The deputy judge is trying to see if you understand what kind of case you need to make if you are to be successful at trial.  The deputy judge might ask you some questions to clarify some point or evidence that might be relevant to your case.
  3. The deputy judge or referee will talk to the defendant next. The deputy judge is trying to see if you understand what kind of case you need to make if you are to be successful at trial.  The deputy judge might ask you some questions to clarify some point or evidence that might be relevant to your case.
  4. Sometimes, the deputy judge or referee may challenge you or your evidence. They want to see if you can appreciate the weaknesses in your case.  Don’t be defensive or offended by it.  It may become more difficult at trial, so be prepared for that challenge.  Besides, it’s better to know at a settlement conference what weaknesses your case has than to be at trial and suddenly your case inexplicably becomes pear-shaped.
  5. There will be an attempt to try and facilitate a settlement between the parties.
  6. If either one or both sides are entrenched in their positions, then it will be recommended to go to trial.
  7. The Deputy Judge will make an order to clean up any issues or to require further disclosure before trial.
  8. If the Settlement Conference is held before a Referee, then the Referee will make recommendations to a Deputy Judge for orders on a later date.

 

The settlement conference is a mandatory step within the Small Claims Court process when the court knows that it is a defended action.  The clerk of the court sets the time and date for the settlement conference within 90 days after the first defence is filed.

 

Both parties and their representatives either have to be at the settlement conference in person or connected by telephone or video conference call.  If there is a person that needs to be consulted, like a director or an officer of a corporation, that has to give their approval before an agreement can be made, then the party must arrange to have that person available by telephone during the settlement conference.  The parties that are appearing in person must have the authority to enter into a settlement agreement, so as not to frustrate the purposes of the settlement conference.  The court may order the parties to attend another settlement conference.

 

When you get the date of the first settlement conference you will also get a Form 13A, a Witness List.  Both sides need to serve upon the others this Witness List with all of the names and contact information that are expected to show up for trial.  There is also a section that includes other people that you believe that have knowledge of your matter, but are not sure yet as to making them a witness for your side.

 

You will also have to put together any additional disclosure materials and documents that you intend to rely upon at trial, whenever that is scheduled.  If you don’t have everything together, don’t worry if you can’t get your hands on it yet. You still have 30 days before trial to disclose documents or other evidence.  But, if you do have it, then go ahead and serve it.  You must serve the documents that you have and intend to rely upon at trial on or before 14 days ahead of the settlement conference date.  These documents and the Witness List must be served on the other party and filed with the court.  This can be served in any number of ways, and it doesn’t have to be personal service.  Service by regular mail is fine, but again, add five days to the service timeline, making it at least 19 days before the settlement conference date.  Rule 8 should be consulted here and you can listen to Episode 3 of this podcast to review your options.

 

Now, what if a party fails to attend the settlement conference?  For the first offence, the court may impose costs or other sanctions and order another settlement conference to be held.  For a second failure to attend a settlement conference, the court may strike the defence and dismiss the defendant’s claim (if any) and allow the plaintiff to prove the claim right then and there.  In the alternative the court may make any order as is just.

 

If a party attends the settlement conference, but is so inadequately prepared as to frustrate the purposes of the settlement conference or fails to file the Witness List and the disclosure as required, the court may award costs against the offending party.

 

Let’s assume that everybody did everything that’s needed to be done before a settlement conference: a defence has been filed; a settlement conference has been scheduled by the court; the parties have served upon each other all evidence they intend to rely upon at trial; a Witness List has been served.  How do you negotiate a settlement?

 

There are books dedicated to this one aspect of human conflict, and they are available at your local bookstore or library.  But it wouldn’t be a complete podcast without some general rules of thumb.

 

  1. This is your best time to ask for anything you need for personal closure on the matter, such as an apology or some other thing that not just about the money. The court can only give orders about the money, but settlement agreements can go far beyond what the court rules allow.  That’s why the deputy judges say that negotiation is the best resolution.  The opportunity to craft your own agreement without the court is limitless.  Leaving it all to a deputy judge will only end in disappointment.
  2. Rule 13.03 (3) says that, “At the settlement conference, the parties or their representatives shall openly and frankly discuss the issues involved in the action.” The courts use settlement conferences as safe places to talk about the issues.  Subsection (4) goes on to say, “Except as otherwise provided or with the consent of the parties, the matters discussed at the settlement conference shall not be disclosed to others until after the action has been disposed of.”  It’s like, “What happens in Vegas, stays in Vegas.”  I remember when I did my Alternative Dispute Resolution Course in Paralegal School.  It was a negotiation called the “Ugly Orange Negotiation Exercise”.  Two competing nations needed this fruit for their own purposes and can only buy all of the fruit from a third party.  One group only needed the pulp; the other group only needed the juice.  That exercise taught me that you have to separate your true interests from your positions.  And that’s why negotiations are held in private, so that all parties have the chance to reveal their true interests without repercussions.  So don’t say “no” to something without stating a reason why.  If you tell them why, they might be open to coming down from that position and may suggest an alternative altogether that works for both of you.
  3. What if one side does not want to negotiate? That may happen, but you should at least try.  It may require trying different tactics to get the opposite side to open up.
    1. “I can’t recommend that offer to my boss.” Listen carefully to what they’re saying.  They are not saying “No” outright.  They are indicating that a different number or position is in mind.  They want to see if you are willing to move from your position.
    2. “...Yeah, but you did this to me...” This is just one-upmanship.  It’s a competition for who was aggrieved more.  The only way to counteract that one-upmanship is to confront it directly to see how deep that understanding goes.  Asking why is a great way to do that.  If they can’t answer that question, then you know they are not there to settle the matter, but to score points.  Resist that urge by being ready to suspend negotiations to another time.  They’re not ready to listen to you.
    3. “I’m mad, angry, upset, etc.” Instead of looking to negotiate, the other side is trying to distract you or put you off your position.  You could match their anger with yours, but that never works.  Speaking more quietly puts the shouter at odds with the entire room, and serves to alienate the shouter.  The shouter is looking for allies or a retreat from your position.  Staying firm and speaking low will deny the shouter any advantage.  Besides, it makes the shouter seem all the more unreasonable.
    4. “Take it or leave it.” This is usually the best position that the side that uses this tactic is willing to go before going to war.  Here you have to be careful, because it usually represents their last stand.  You have two options now.  The first option is to be willing to walk away from the table and not blink.  The second option is to show why the take-it-or-leave-it guy will not get what they seek to accomplish.  But remember this: the take-it-or-leave-it guy’s reputation is now on the line.  If they back down now, they lose all credibility.  You may have to help the other side in saving face.
    5. “The silent treatment.” This is the same as “The person who speaks first, loses.”  North Americans hate the sound of silence.  Usually, the first person to break the silence is also the first person to offer a concession to a negotiation.  Used effectively then it’s a leveraging tool.  Just restate your position with the reason why and then stay silent.  Silence is a two-way tool.
    6. “False expertise.” If the other side is speaking in a way that comes across as an expert, then it’s time to ask questions as to their qualifications and expertise.  Challenge their knowledge and their information to force their hand.  I remember a trial where the police officer testified in court that the road was just cleared with snow prior to his arrival.  I immediately asked, “Oh, what time did that happen?”  The police officer immediately backed away from his statement, and the Justice of the Peace reminded him that he’s not to speculate in his testimony.
    7. “I need to talk with my spouse/wife/husband/partner/etc.” This is something you need to challenge right away.  Often, there is some sort of embarrassment or realization that they are in the wrong in some way.  This is a point in time to invite this other person into the negotiation process or have them explain why they were not here in the first place.  You would have to question the fact that the person you are negotiating with does not have the authority to sign a settlement agreement.
    8. “Let’s just split the difference.” This is a tried and true tactic.  There is so much guilt wrapped up in that statement.  “I moved a little, how about you move a little more?  It’s in the middle of our two offers, but that’s fair.”  Is it really fair?  There is nothing in a negotiation that says a number that is 50 percent of the difference between two other numbers is somehow fair.  What if the fair number is significantly higher than that 50 percent mark?  As long as you can justify a larger number, you can say no to the ‘split the difference’ tactic.
  4. Your two biggest strengths in a negotiation is to recognize that the other side may have interests that can be addressed as well as well as your own, and that you come to the settlement conference prepared. The settlement conference is scheduled for 45 minute intervals, but the deputy judge will make time for you all day if a matter can be resolved in that room.  Two cases come to mind: one was early in my career that my client was a homeowner and the defendant while the plaintiff was a contractor that did a kitchen renovation; the other case was a hydraulics company and a machine manufacturer.

 

In the homeowner/contractor case, my client owed money on a botched kitchen renovation and was being sued by the contractor.  I found out that the contractor was not licensed in the City of Mississauga.  I found case law that said that if a general contractor works in a jurisdiction that requires them to be licensed and wasn’t, then the contract is null and void.  That means that my client would not owe any money anymore.  The contractor complained that my client was holding his tools hostage.  Not true, but, “Whatever.”  So, I told my client to bring the tools to the settlement conference.  At the settlement conference I presented the case law to him and stated our position:  The deposit placed by my client will be considered forfeit and was willing to write it off in exchange for the contractor to give up on his claim.  Their concerns about the tools were negated after I told them that it was in the court parking lot.  It took about two or three hours of negotiating, but my client got exactly what he wanted, no lawsuit and the return of tools to the contractor.

 

In the hydraulics company and the machine manufacturer, I represented the hydraulics company.  My clients were owed about $15,000.00 for parts and labour while the machine manufacturer refused to pay.  I remember walking into the settlement conference with the lawyer for the manufacturer sitting across from me.  I briefly stated our case and they stated theirs, going on about how bad the parts were, and so on.  The deputy judge was about to recommend the matter to go to trial.  Then I spoke.  I remember how shocked and stunned they were when I said to the deputy judge, “That’s all well and good, however, I have instructions from my client to negotiate a settlement.”  The lawyer was taken aback.  He turned to his clients and asked, “Do you want to settle?”  You mean they came to a settlement conference and didn’t have a settlement strategy in mind?  I then put down in front of the lawyer a draft settlement agreement.  “I’m not prepared to negotiate at this time,” the lawyer said, “But there is a set of technical drawings that are owed to my client, and I bet you dollars to donuts that’s not there.”  Then I read the clause that covered the technical drawings.  “Well, I’ll take a look at the agreement,” the lawyer said.

 

Those two stories show how being prepared can make your settlement negotiations that much stronger.  They also lose steam when you are ready to address their concerns as well.

 

If a negotiated settlement is not reached, then the court might make recommendations to the parties such as the clarification and the simplification of issues; the elimination of claims or defences that appear to be unsupported; and, the admission of facts or documents without further proof.

 

The judge at settlement conference may make any number of orders under Rule 13.05(1) that a court of record could make.  Some of these orders could include:

  1. Adding or deleting parties;
  2. Consolidating actions;
  3. Staying or dismissing an action with written reasons;
  4. Amending or striking out a claim or defence under Rule 12.02(1);
  5. Directing the production of documents;
  6. Changing the place of trial under Rule 6.01;
  7. Directing an additional settlement conference under Rule 13.02(3); and
  8. Ordering costs.

 

It is possible to get a final judgment at a settlement conference once and for all if the following conditions are met:

  1. The amount in dispute is under the appealable limit of the Small Claims Court, which is $2,500.00.
  2. One of the parties files a Consent Form 13B that is signed by all of the parties in the action with the court.
  3. The Consent is filed before the settlement conference date.
  4. The Consent must specifically state that all of the parties want a final judgment at the settlement conference if a negotiated settlement is not reached.

 

If costs are ordered under Rule 13.10, then it shall not exceed $100 unless the court orders otherwise due to special circumstances.  This $100 does not include disbursements.

 

Last, but not least, if the settlement conference is heard by a deputy judge, then they cannot preside at a subsequent trial of the action.

 

That wraps up this podcast.  Your comments and questions are always invited.  There are guides written by the Ministry of the Attorney General that are available at most Small Claims Court locations or on line at www.attorneygeneral.jus.gov.on.ca/english/courts/guides.  There you will find the Guide to Motions and Clerk’s Orders.

 

Thank you for listening and I hope you join me again soon.