Settling Out of Court: Defendants

If you have received a Small Claims Court Notice of Claim, you are being sued – but it is not too late to settle out of court. If you were in BC when you received the Notice of Claim, you have 14 days to file a reply – or to settle the case and have the claimant withdraw the claim. If you were not in BC, you have 30 days.

Going to court can involve a lot of time and expenses – for you and the claimant. It takes time to complete all the paper work and to file it. There are court fees to be paid. Plus, if you and the claimant have a working relationship, it will likely be damaged by going to court.

For defendants, the most common options for settling out of court include:

  • Negotiate a settlement
  • Arrange payment terms
  • Go to mediation.

Negotiate a Settlement
A demand letter is a formal notice demanding that the recipient perform a legal obligation, such as fixing a problem, paying a sum of money or honouring a contractual agreement.  You may have received a demand letter that explained the terms the claimant desired to settle the dispute. Read the terms of the letter again to see if you are willing and able to comply. You may need to get legal advice. If you can settle now, based on the terms in the demand letter, you will likely be able to save yourself the time and expense of going to court. If you think you can negotiate a settlement, contact the claimant as soon as possible. If you reach  agreement, you should put it in writing – this makes things clear to both parties and confirms that you have both agreed on the terms.

Arrange Payment Terms
If you have not responded to the claimant because you are not able to pay the amount in dispute, you should consider negotiating to arrange suitable payment terms. If you accept that it is your responsibility to settle the dispute, consider how you can create a payment schedule to transfer funds, over time, to the claimant. Talk to the claimant and negotiate payment terms that you can meet. Try to arrange payment terms that reflect your capacity to pay.

Go to Mediation
Mediation generally refers to any situation where a third party helps others to reach agreement. Professional mediators are trained to help people resolve disputes and they bring a range of skills to negotiations and discussions. The mediator’s role is not to take sides or decide the case, but rather, to help both parties find an agreement to resolve the dispute.

Mediation is particularly helpful when both parties have an ongoing relationship with each other. Where court cases create bitterness, mediation builds bridges of understanding. In Small Claims Court, mediation is always an options and it may be required, depending on the case and where it is filed.

For more about mediation, see the Ministry of Justice’s Guide to Mediation in BC. To find a qualified mediator in British Columbia, visit the website of Mediate BC or the BC Arbitration and Mediation Institute.

For more about out-of-court options, see Collection of Debts.  If you are already in the process of a lawsuit, it doesn’t mean you have to go to trial. If you’ve been to a settlement conference, you or the other party have 30 days to make a written Offer to Settle.