Mediation Before the Assessment Review Board – The Chance to Avoid Litigation Risk
Mediation is a helpful tool made available to parties in an assessment dispute. It is a good way to reach a settlement and avoid the risks associated with litigation. But what is mediation and what is litigation risk?
Lately, many of our section 40 appeals (current value assessment disputes) are heading to mediation. The Assessment Review Board (the “ARB”), like the Courts and other Boards, provides a mediation service to help parties reach a settlement. Mediation is strictly confidential and overseen by a Board Member. Appellants and MPAC can put their cases to each other and hear the views of the Board. There is no prejudice because if a settlement is not reached, the matter will go to a Hearing in front of a different Member and nothing presented during mediation can be raised by an opposing party.
Parties are encouraged to settle all or some of the issues with the hopes of avoiding a Hearing. The biggest value mediation offers to appellants is the potential to avoid litigation risk.
Mediation - What to Expect
Mediation is a chance to settle the matter and it is a chance to show the other side what your case is made of. You want to convince them that reaching a settlement in your favour is better than taking their chances at a Hearing.
When we go to mediation we bring with us the valuation consultant and the client. MPAC is usually represented by their lawyer and the assessor assigned to the property.
Many times the client is the best advocate for their property. They best understand and can best explain issues such purchase price details and allocations, why they paid what they paid, and how much they could get if they sold today (or in the base year under appeal). They have been dealing with their planners, the city approvals process, and the ratepayer associations. They know the potential and the limitations of their properties. This knowledge is extremely valuable in the mediation and should the matter go to a Hearing, this client will undoubtedly be a witness. This is the chance to show the other side the quality of the witness against them.
After the mediator explains the structure of the mediation, which varies based on the particular mediator, usually the valuation expert and the assessor break away and conference on the issues. This is sometimes called “hot-tubbing” – a term hated by many lawyers and judges.. and myself.
Hot-tubbing is useful in getting the experts on the same page, or at least understanding the other side’s position so it can be explained to the client and lawyers. The assessor and the valuation expert are educated in real-estate appraisal theory and are in the best position to argue and poke holes in each other’s work.
After hot-tubbing, the lawyers for both sides, with help from the Board Member, must assess the strength of their cases. This is the best opportunity to ask
1. How strong are the other side's arguments?
2. How strong is the evidence backing their arguments?
3. How well will their witnesses do at the Hearing?
4. What else might they have up their sleeve that they may bring to a Hearing?
5. Is the Board Member buying what we are selling?
6. How does their case compare to yours?
The answers to these questions must be weighed against any settlement offers, all the while keeping in mind litigation risk.
What is Litigation Risk?
There is a general rule of litigation all lawyers (and clients) should be aware of: No matter how good your case is, you can always lose.
A senior lawyer once told me that, as a rule, you will win 30% of the cases you should lose, and you will lose 30% of the case you should win. This uncertainty is called litigation risk.
There are a variety of reasons things may go unexpectedly. I encourage everyone to read this, informative and hilarious article by Justice Quinn of the Ontario Superior Court of Justice that helps explain things. Clients must always understand that any time they go to a Hearing, anything can happen.
Negotiation & Settlement – Assessing Litigation Risk
Mediation is designed to bring the parties to a settlement. Most likely an offer will be made.
When evaluating any settlement offer, the client must take into consideration the following:
1. How much will it cost to go to a Hearing?
2. What are the actual tax savings on the proposed settlement (not to be confused with assessment reduction dollars)?
3. How strong is the case?
After weighing the three factors above, insert litigation risk. Remember the dreaded 30% rule. Is the client willing to take that risk when rejecting the offer?
It is commonly said that a successful negotiation is one where both parties leave unhappy. A good negotiated result is one where the client feels that they got a result that is good enough to avoid the uncertainty of litigation.
Tips for a Strong Mediation
A mediation will only be successful if both parties want to reach a settlement. They must be willing to move away from their positions in exchange for avoiding a Hearing. The client must set their limits and thresholds before the mediation begins.
Strong preparation is key to a successful mediation. The other side must assess all the factors mentioned above and come to the conclusion that a Hearing viagra pas cher is not in their favour.
This means that
• plenty of strong evidence must be gathered, organized, and convincingly presented;
• witnesses must be prepared and confident; and
• both parties must be open to reaching a fair settlement.
In many ways mediation is the most important step in an assessment dispute. It provides the appellant an opportunity to avoid litigation risk and settle their matter efficiently.