Estate litigation can have all the ‘ingredients’ of a recipe fraught with intractable disputes, not quite disaster – but near enough!:
- Lengthy;
- Often with a life-time of family resentment;
- Feelings of inequality/inadequacy;
- Lack of inclusion;
- Competition & rivalry amongst siblings;
- Recent loss and bereavement; and
- Possibly an issue of abuse- whether financial, physical, or other.
So, often estate disputes arise out of misunderstanding or miscommunication, conflicting expectations, or resistance to compromise, and an irrational quest for control.
Generally speaking, there is a very high success rate with mediation in estate disputes since participants must focus on the real issues and are encouraged to find a practical outcome given the time and cost in proceeding through court processes.
Identifying all the reasons for the mediation sessions, assists in its resolution even where there are non-legal issues involved.
Estate mediation is “interest-based”– it explores solutions that meet the needs and interests of the participants, rather than “rights-based” focused solely on rights, rules, and the law.
I will start with a brief overview of alternative dispute resolution in general, and then focus on mediating estate disputes from with some tips to consider when developing a Recipe For Success that will not only be digestible, but have a Michelin Star Outcome, and, I will finish-up with why I do it! And like it!
Alternative Dispute Resolution
Canadians have embraced alternative dispute resolution/ADR or sometimes called, “Appropriate Dispute Resolution” to help settle their disputes.
The ADR Institute of Canada (ADRIC) is a professional organization designed for ADR professionals and provides training for several ADR designations, including Chartered Mediator; Chartered Arbitrator; Qualified Mediator; and Qualified Arbitrator.
The difference between Chartered and Qualified, meaning – Chartered is the most senior designation offered.
And Qualified recognizes members who have completed sufficient dispute resolution training to be qualified to practice as mediators or arbitrators.
Arbitration involves adjudication by a neutral third-party.
Most arbitration proceedings are designed to be binding.
Arbitration will, in most instances, take place because of an agreement between the parties, either under a pre-existing contract, or based on specific terms of an arbitration agreement entered after a dispute has arisen.
Unless otherwise agreed, the terms of the applicable arbitration legislation will govern (for example the federal Commercial Arbitration Act, RSC 1985, c 17 (2nd Supp), or under the applicable provincial legislation, the Ontario’s Arbitration Act, SO 1991 c 17.
Arbitration is often chosen as a litigation alternative in commercial or corporate disputes in Canada.
Mediation is another form of alternative dispute resolution and is a process in which the parties agree to an impartial facilitator (a neutral third party) to assist participants’ in reaching a voluntary settlement of the issues in dispute.
Unlike arbitration, the mediator does not render a decision, and the parties may terminate the process at any time.
If, however, a voluntary settlement is reached, it only becomes binding on the parties when a formal settlement agreement/contract is executed, often in the form of Minutes of Settlement.
Mediation is a highly effective, successful, and often less costly (though in itself not inexpensive), alternative or addition to an adversarial court process.
“Med-Arb” is also popular – this is a hybrid approach which combines the benefits of both mediation and arbitration.
The way it works is that the parties first attempt to reach an agreement with the help of a mediator, and if that does not produce results, or if the issues remain unresolved, the parties may move on to arbitration.
If the mediator is also an arbitrator, the same person could potentially fulfill both roles and make a binding decision since being already familiar with the facts in dispute.
While Mediation and Arbitration are the most popular forms of ADR, there are several others that are used, including:
- group facilitation (lead by an impartial facilitator);
- collaborative law (involving joint meetings with clients and specially trained lawyers – often used in family law); and,
- restorative justice, used in criminal law which focuses on the needs of the victims and offenders rather than just punishment.
To Mediate or Not to Mediate?
Whether or not to mediate an estate dispute in the province of Ontario is an easy consideration: especially, in Toronto, Ottawa, or Essex County (Windsor area) since these jurisdictions maintain mandatory mediation.
Parties must attend a mediation unless this requirement is ordered to be waived by a court.
Mandatory mediations are required for several proceedings, including:
- formal proof of testamentary documents;
- objections to issuing a certificate of appointment;
- claims against an estate; and
- proceedings under Ontario’s Substitute Decisions Act, Estates Act, and Trustee Act.
Most estate disputes involve will, estate & trust challenges; dependant support claims; FLA elections; passing of accounts by attorney/ guardian/trustee/estate trustee; POA disputes; trust variations/interpretations/rectifications; guardianships for property/person; elder law/abuse; capacity/undue influence; predatory marriages; failure to provide the necessaries of life; end-of-life disputes; fiduciary disputes; tax treatment; will challenges; solicitors ‘negligence; insolvency/bankruptcy….
More Complex estate disputes may involve associated issues of:
- family businesses;
- corporate documents;
- shareholder agreements; and
- Complicated valuations.
Ontario Courts will only dispense with mandatory mediation where there is a clear reason to do so.
In jurisdictions within Ontario where there is no mandatory mediation, and since 2016, a Court has express authority to order parties to attend a mediation.
Notably, the Court does not require the consent of the parties.
Even where mediation is not mandatory, or it has not been ordered, there are several reasons why mediation is a good choice in estates disputes – since with most litigation, but even more so with estate litigation – the “real dispute” may have nothing to do with the legal issues involved.
Some benefits of mediating an estate dispute include:
- the fact that there is no clear winner or loser;
- everyone involved in a mediated settlement can control the process and take ownership of the outcome;
- both sides can tell their story and hear the details of the opposing view which may be of assistance for all involved;
- it is less expensive;
- it is faster than trial:
- it can facilitate dialogue;
- mediation is strictly confidential and subject to settlement privilege; and
- even if not ultimately successful on all issues, perhaps it can facilitate a narrowing of the issues in dispute……
Mediation Confidentiality and Settlement Privilege in Canada
Settlement privilege: is a rule of evidence that protects communications exchanged by participating parties as they try to settle a dispute.
Justice Abella of our Supreme Court of Canada said, in the case of Sable Offshore Energy Inc v Ameron International Corp 2013 SCC 623, “privilege wraps a protective veil around the efforts parties make to settle their disputes by ensuring that communications made in the course of these negotiations are inadmissible.”
The purpose of settlement privilege is to encourage and promote settlement by allowing full and frank discussion between the parties.
There is a prima facie presumption that any communication made in furtherance of settlement is inadmissible.
But – that presumption in some instances of course, can be displaced.
Settlement privilege applies regardless of whether a settlement is reached.
However, the exception to settlement privilege, permits parties to produce evidence of confidential communications to prove the existence or the scope of a settlement agreement.
Confidentiality: Under Ontario’s Rules of Civil Procedure – all communications at a mediation session and the mediator’s notes and records shall be deemed to be without prejudice settlement discussions.
In addition, many mediation agreements will have a confidentiality clause. Such clauses require the parties to keep anything that transpires in the mediation, confidential. A confidentiality clause in a mediation agreement differs from settlement privilege since the former is not a rule of evidence, but a matter of contract. Some provisions are even part of the minutes of settlement where permitted and appropriate having regard to the interests of the parties.’
The Supreme Court of Canada weighed in on the interaction between settlement privilege and confidentiality clauses in mediation in the case of, Union Carbide Canada Inc v Bombardier Inc 2014 SCC 35.
The SCC was asked to consider whether an absolute confidentiality clause in a mediation contract trumped the exception to settlement privilege, permitting disclosure of confidential communications to prove the existence or scope of an agreement.
The SCC held that it is open to parties to contract for greater confidentiality than that provided by settlement privilege, but doing so requires a clear and unequivocal statement of the parties’ intention to oust the common law.
A standard mediation confidentiality clause would not have that effect.
6 TIPS To Improve the Chances of a Successful Estate Mediation:
- Tip # 1-Choose the right MEDIATOR
What kind of mediator should you use?
This will in part, depend on the issues and personalities involved.
It is important to consider the complexity of the matter and the type of assets and interests involved: Family corporate enterprises? Real estate? Complex trusts? Elder Abuse? Power of Attorney Dispute? Guardianship? Breach of fiduciary obligation?
Complex estate disputes can touch on any, or several of these….
Choose a mediator knowledgeable and skilled in the subject matter, with the right experience, with credibility and seniority such that the participants can have trust in the process.
The mediator is the objective, neutral, has no stake in the dispute.
Counsel should consider the style of the mediation that the proposed mediator will conduct, for example, facilitative, or evaluative, or a bit of both….
FACILITATIVE: A facilitative mediator is a neutral objective person who assists the parties in taking ownership of the issues and resolving the dispute amongst themselves…….
A facilitative mediator manages the process and guides the participants to a mutually agreeable resolution through facilitating discussion, asking questions to identify and resolve issues, giving participants a voice and opportunity to be heard, to communicate, and to narrow the issues.
EVALUATIVE: An evaluative mediator will evaluate the strengths/weaknesses of the participant positions.
An evaluative mediator may push or urge the parties to settle by predicting the outcome in court.
For an evaluative mediation to work, the mediator should have a significant amount of relevant experience.
This approach demands clients be prepared for possible negative feedback on their positions. A reiteration of counsel’s advice or perhaps a departure from…should be sensitively approached so as not to undermine counsel.
- Tip # 2-Spend time on the MEDIATION BRIEF
Use the mediation brief as a tool to assist in settling the matter.
Tell your client’s story in a compelling and persuasive way with appropriate evidentiary tools.
Briefs should be clear, concise, and easy for the mediator to read and understand. Educate the mediator, counsel and the parties alike.
Consider adding an “Overview” of the theory of your case and highlight the main issues in dispute.
Consider including a family tree explaining the relationships, estrangements, or insights into family dynamics.
Be careful of your tone. You are trying to settle this matter, not ignite already incendiary behaviour. Refrain from provocative, inflammatory instigative rhetoric.
- Tip # 3-Obtain DOCUMENTS & EXPERT REPORTS
Have all the documents you need to make informed decisions about the legal issues in dispute and that are required to reach a settlement.
Consider including only the “key” documents, there is no need to include the entire file: for example, where appropriate,
- Testamentary documents;
- Charts evincing estate assets and liabilities – joint assets-assets passing outside of the estate;
- Domestic contracts; co-habitation agreements;
- Solicitor’s notes;
- If Capacity an issue? Medical records- consider the value of an expert report;
- Obtain real estate valuations;
- If it is a dispute over a fiduciary accounting obtain and understand vouchers;
- Dependant’s support claim? Consider seeking an expert report- life style analysis/valuation; and
- Court Orders and Endorsements.
- Tip # 4-Prepare the CLIENT!
An unprepared client will likely become easily frustrated with the process.
Grumpy clients with unmanaged expectations-will become very difficult to manage.
Mediation can work when participants are prepared and understand the goal & purpose of mediation.
Explain the process, the role of the participants, timing, location, expectations of the day, negotiation tactics, cost, legal limitations, objectives and so on……
Explain the need to disengage from anger and entrenched views – depart from blame and principle.
Sometimes mediations fall apart over what seems to be inexpensive or insignificant items.
Emotional connection drives many of these disputes, not rationale or reason.
Consider having clients prepare a list ahead of time of the items the client really wants and have a conversation with the client about the realistic expectations of receiving those items and an accurate value for those items (not what the client thinks they must be worth).
- Tip # 5-PREPARE for the DAY
Before the mediation, prepare a shell or skeleton of Minutes of Settlement and Releases together with a collation of necessary supporting documents/exhibits, and advance preparation of a court Order/Judgment. This will save time on the day of mediation which will be lengthy.
Ensure all participants are to be in attendance & with the authority to settle.
A mediation will be less likely to succeed if the participants expected to consent to settlement are not present.
Consider which non-parties should attend, if any– either as support, or to “approve” the settlement if an actual party will be relying on a non-party’s input, opinion or advice. The non-party participant lying in the weeds can blow up all of the hard work done on the day.
Consider using a social worker, or other professional if it will help with non-legal issues.
If possible, agree to the format of the mediation ahead of time – should there be a plenary session? How many days are needed? Will non-parties be present for the plenary? Will counsel be expected to give opening statements?
Have experts and accountants on stand-by by phone if not in attendance where warranted.
Mediations can go well into the evening – tiredness can set in – make sure there is plenty of food and water and advance notice of this tendency.
- Tip # 6-Consider Ancillary Settlement Factors
Consider the “actual” value your client will be receiving or giving up; consider whether tax advice is required, what are the legal fees, etc…… before an offer is accepted by a party.
Are any parties under disability? Will judicial approval be required?
If a mediated settlement is reached, remember that an executed settlement agreement is a legally binding & enforceable contract.
Obviously, there is no guarantee that an estate dispute will be settled at a mediation – however, if all participants put in the effort & necessary preparation in, before & during– the chances of a successfully mediated outcome increases substantially.
Finally, What Motivated me to Pursue the Development of a Mediation Practice?
I am and was-an estate litigator before I added a mediation practice 23 years ago now.
This meant that I first had significant experience with mediations in the estates & trust context as a participant lawyer/representative of clients’ interests.
So, I took from that significant experience & put it to work as a mediator and continue to do so.
I took a course with the International School of Conflict Management in Chicago and have added other training/education courses and updates along the way and will continue to do so. In April, I will be attending in-person, the Harvard Advanced Mediation Certificate Course.
I see mediation as a viable alternative in what is already a costly and lengthy process. I see mediation as a great service to clients in this area of practice.
These types of disputes are almost always better suited to mediation than litigation in what are always very human, emotionally driven, and complex circumstances. Helping participants to avoid lengthier, increasingly unpredictable outcomes is a valuable service. Too, in a digital era, avoiding your life being plastered all over the internet, may well be a driving incentive.
Helping parties solve their disputes in a private, less adversarial forum, where at least for a “snapshot in time” they can seek to resolve the dispute without a scorched earth approach to personal relationships, will hopefully stop further acrimony AND THAT IS WHAT I LIKE TO DO!