>$400K in Legal Fees and 6 Years to Fight Over $100K: Professional Mediation Could Have Saved Time and Money

“This litigation could have been avoided, in my view, had the parties then retained a professional mediator.”

So opined Mr. Justice D.J. Gordon in today’s featured case, Bentley et al v. Charters et al, 2023 ONSC 4056.

Background

On the surface, this appears to have been a straightforward matter.  The parties had gone into business together in 2001, purchasing two franchise stores in the M&M Meat Markets (as it then was) system.  At the outset, the business was reportedly profitable for the new franchisees.

Unfortunately, this success was not to last.  M&M imposed unilateral changes on the franchisees, which ultimately resulted in separate litigation and a sale of the stores back to M&M for less than the original purchase price.  Once obligations to 3rd party creditors had been addressed, and a loan owed to the plaintiffs partially repaid, less than $93,000 remained in the corporate bank account.

Legal Proceedings

In 2016, the legal action was started, with the plaintiffs seeking damages of $100K and/or the $93K in the corporate account, along with other unspecified relief.  The defendants countersued for $159K and other unspecified damages and relief.  The end result was a division of the $93K in the corporate account:  $20K to wind-up costs, $33K to the plaintiffs and $40K to the defendants.

However, by this time, the litigation had taken 6 years to reach trial.  Even worse, each party had incurred litigation costs of almost 500% of what they ultimately received – more than $400,000 in total.  This left each side significantly worse off financially than at the outset of their dispute.

The ‘Mediation’

Previously, the parties had used a fellow franchisee, a non-mediator, to ‘mediate’ the dispute.  Unfortunately, the process was flawed, and the outcome less than successful.  In fact, the validity of a document created in the ‘mediation’ became a significant issue at trial. And since the legal action did not take place in Toronto, Windsor, or Ottawa, the matter was exempt from the pre-trial mandatory mediation required in those regions.  As a result, both sides became more entrenched, resulting in the excessive expenditures of time and money detailed above.

As stated by the learned judge, this appears to be a case where professional mediation would have helped. 

Summary

In short, if you have a commercial dispute, then consider mediation as a route to a solution.  A mediator with commercial experience, at minimum, can narrow down the issues, and as a neutral, bring valuable perspective and options to the parties, which could eliminate the need for further escalations and proceedings, saving time, aggravation and expense.