| CASE OF THE MONTH
In my January 2011 Newsletter, I looked at a topic which lawyers and mediators rarely think about which is, are the costs of an unsuccessful mediation recoverable under legal costs if successful at trial? This is not a problem in mandatory mediations conducted under Rule 24.1 or 75.1 as they clearly are. But what about the costs of mediation that are not part of the mandatory regime?
The costs endorsement in the Divisional Court case of Saltsov v. Rolnick 2010 ONSC 6645 (CanLII)in December 2010 dealt with the question head on and came to the conclusion that unless the parties have dealt with this point in their mediation agreement, they are not. The court commented
In this case, while there is no formal agreement on costs of the mediation, it appears that the claim by the successful appellants to partial indemnity costs and disbursements related to mediation is not disputed in principle by the respondent Saltsov. However, as noted above, an agreement in principle does not fetter the jurisdiction of this Court to deny a claim for mediation-related costs and disbursements.
Referring to earlier case law from 1993, when mediation was not quite so mainstream, the court adopts Mr. Justice Blair's concerns that "parties may be discouraged from engaging in constructive dispute resolution processes for fear that at the end of the day, if such proceedings do not lead to settlement, costs will be increased".
With great respect, that decision seems contrary to a policy of encouraging settlement and does reflect the fact that mediation is now embedded in the litigation culture of Ontario.
We now have a Superior Court of Justice costs endorsement released on January 16, 2012 from Mr. Justice David M. Brown. In 3574423 Canada Inc. v. Baton Rouge Restaurants Inc., 2012 ONSC 296 (CanLII) dealing with a party's position that mediation costs were not recoverable, he stated:
 Finally, I do not accept the plaintiff's submission that counsel's fees for the mediations are not recoverable. Judges of this court strongly encourage parties to mediate their disputes. Fees paid for mandatory mediations are recoverable under Tariff Item 23.1, and in my view fees paid to mediators for mediations which were not mandatory would be recoverable under Tariff Item 35. I regard the counsel fees incurred by a party for a mediation as reasonably related to the conduct of the proceeding and therefore also recoverable.
This makes good sense and I hope Mr. Justice's Brown's position is adopted by other judges in Ontario.