Chapter 5 - ADR v. JDR

Summary

While ADR is part of the legal system in a growing number of countries, there are only a few that rely on JDR by mediating judges. The best way to illustrate the special features of JDR, as well as the way it overlaps ADR but differs from litigation, is to share the details of a JDR case. Until now, that was not possible due to JDR's confidentiality mandate, which prohibits publishing accounts of the process and the parties’ reactions.

With permission from the Alberta Court of Queen's Bench, we were able to interview the judges, lawyers and parties in nine JDRs, ranging across a number of civil law cases. The names of the parties are changed, as well as a few of the facts to preserve confidentiality, but the accounts offer the first clear picture of how JDR works, how it differs from other forms of ADR (especially mediation offered by independent professional mediators), and how parties behave differently in JDR as compared to more traditional litigation procedures. The first case we will describe is The Contaminated Land Case, which appears in its entirety in Appendix 1.

Summary of The Contaminated Land Case

Two friends, Edward and David, invested in industrial land that they thought had great development potential, only to later find out that the land was contaminated. Edward sold out and David tried to keep the land and went to great lengths to pay off his debts to the mortgage lender, ultimately handing over his family's country home. Nonetheless, the lender felt it did not get back all of its interest and principal. Several lawsuits followed and the case was ultimately settled at JDR with both sides moving on, paying nothing to each other, and walking away from all their claims.

The Deal

The friends purchased the land through a newly incorporated company, 270 Incorporated (270 Inc.), in which they were equal shareholders. Each agreed to finance half of the $750,000 purchase price. Edward financed his half with a vendor-takeback loan from the seller, who was his sister. David obtained and personally guaranteed a mortgage loan from a third party, Forte Banking Corporation (Forte Banking), which had previously provided David and his wife a mortgage for their country home.