Mediate or Litgate, Eh?

Don Procter

April 2006

Ask the average American what’s the difference is between Canada and the United States, and he or she might answer, "the weather and the word "eh.’” True enough, no where do we Canucks have a climate even remotely like Florida’s ... but then neither does Minnesota.

However, we do some things differently from our American brothers. For one, we aren’t as quick to sue our neighbors—at least we like to think we aren’t. Some Americans might suggest that we’re too polite and perhaps a bit too shy to kick up such a fuss.

In the world of construction, however, we are anything but shrinking violets, says a prominent Toronto lawyer. Canadian contractors aren’t afraid of a fight, so they are inclined to get into one. The problem is that small disputes often ripen into major disagreements that can become explosive and costly—especially if they go to court.

Lawyer Stanley Naftolin, of a legal firm called Team Resolution, believes that mediation is a great alternative to litigation. He spells out good reasons for why contractors should shy from court. If a contractor files a claim for say $100,000 against an owner, that contractor should expect reprisals. For example, in response the owner might file a counter-claim for deficiencies, unfinished work and delays for which the contractor wasn’t aware.

"Now you have to deal with a claim by the owner that might be more than $100,000, and before you know it, your costs exceed the value of your case,” said Naftolin, legal counsel to Goldman Sloan Nash & Haber LLP. "While that may seem unrealistic, believe me, it happens.”

Naftolin, who has practiced construction law for 36 years and successfully mediated many construction disputes, says mediation is less likely to break the bank, and it is a growing alternative to litigation in Toronto.

A great reason to consider mediation over litigation is the time saved to come to a resolution. Typically, if a court case is expected to take three or more days in trial, litigants could be on a one- to two-year waiting list for a trial date in Toronto. What’s more, the parties face a judiciary system with judges often unfamiliar with the technical intricacies of the construction industry, Naftolin points out.

Mediation is also a more flexible process than litigation, and the only rules are those agreed upon by the parties. Furthermore, resolutions in mediation are more likely to be satisfactory to all parties. That means they are more likely to be amenable to doing business together in the future. You can’t say the same for litigation.

The lower stress factor of mediation shouldn’t be overlooked as well, he says, pointing out that contractors can better perform their business activities when not undergoing an antagonistic, protracted court case.

Still, mediation is no cake walk. "Bring a sense of humor, a thick skin and maybe even a hard hat” to the table, he advises contractors. Even when claimants do everything right though, they may still leave a lot of money on the table to resolve the dispute.

American builders are no strangers to mediation. On some projects mediation boards are set up, tailored to resolve disputes before they explode, points out the lawyer. Moreover, the American Bar Association takes its dispute resolution section very seriously, and there is a move afoot in the United States to create a uniform code for mediators.

"Mediation is very popular in the States,” says Naftolin.

Perhaps we’re not all that different after all, eh?

About the Author
Don Procter is free-lance writer in Ontario, Canada