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Settlement Options Overview

Going to court can involve a lot of time and expenses. It takes time to complete court forms, gather evidence and prepare for trial. Plus, there are court fees to be paid. On average, it takes more than one year to receive a trial decision in BC’s Small Claims Court. Settling out of court is often the best option. Here are some options for Claimants and Defendants.

Claimant:

If you start a lawsuit against someone you would be the claimant. There are a number of reasons you might want to sue someone, they broke the terms of a contract, they owe you money, they damaged your property…etc. As a claimant you can pursue settlement options before starting court proceedings or even after you have started a small claims case. It’s important to keep an open mind about settling to avoid costly court battles. 

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

  • Sending a Demand Letter
  • Online Dispute Resolution
  • Go to Mediation
  • Use a collection agency

Demand Letters

A demand letter is a formal notice that demands the other person (or corporation) performs a legal obligation, such as fixing a problem, paying a sum of money or honouring a contractual agreement. The letter gives the recipient a chance to perform the obligation without being taken to court, if the action is taken according to specific terms and within a specified time.

Sending a demand letter does not mean that the sender is suing the recipient. The decision to to sue someone court is made if the recipient does not meet the terms described in the demand letter. A demand letter may be written by the sender, by a lawyer or by someone else on behalf of the sender. After a copy has been made, the original must be sent in a way that provides proof of delivery (e.g. – registered mail). It is important for the sender to keep a copy of the demand letter and the confirmation of delivery.

A demand letter should contain the following information:

  • Date and the recipient's contact information
  • Term: DEMAND LETTER stated in the body of the letter, to direct the recipient to act accordingly
  • Legal phrase WITHOUT PREJUDICE to protect the sender from the contents of the letter being used against them
  • Summary the problem or issue
  • Demand for a specific relief or payment
  • Deadline stating when the matter must be settled
  • Sender's contact information and signature

After reading the demand letter, the recipient should have a clear understanding of the sender’s issue and how best to settle the matter. The sender should be sure to be fair regarding the specified terms. If there is no settlement, the demand letter may later be used in court and the judge should be satisfied that the sender’s terms were reasonable.

Online Dispute Resolution

This website provides people in dispute with tools to help them settle online, without going to court. SmallClaimsBC.ca provides a secure Online Dispute Resolution platform. Similar technology is used by Ebay each year to settle more than 60 million disputes online. It’s fast. It’s free. It works!

If you are thinking of suing someone, you can start right now and submit a claim.

Learn More

Mediation

Mediation is 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 to 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.

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

Learn more about Mediation.

Arbitration

Arbitration is a settlement option where parties in dispute select an arbitrator and then submit their information to receive a judgment. The arbitrator is impartial and may be trained in the law, or have other expertise relevant to the dispute. The BC Arbitration and Mediation Institute provides a directory of arbitrators that you can search.

Collection Agencies

A collection agency is a business that pursues payments on debts owed by individuals or businesses. Most collection agencies operate as agents and collect debts for a fee or percentage of the total amount owed. The main advantage of hiring a collection agency is that it becomes their business to get payment from the other party. In addition, amounts that are not paid to a collection agency may become part of the credit history of the owing party. In this way, debtors are motivated to make payment and settle disputes.

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.

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.

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.

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 or Arbitration

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.

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

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.