Milton Registry No. 158/11
ONTARIO COURT OF JUSTICE
RE: ANNE MARGUERITE THOMSON — Applicant (Respondent on motion)
PETER ANDREW THOMSON — Respondent (Applicant on Motion)
BEFORE: Justice Roselyn Zisman
COUNSEL: Linda V. Joe, counsel for the applicant mother, Anne Marguerite Thomson
Annie Noa Kenet, counsel for the respondent father, Peter Andrew Thomson
HEARD ON: 31 January 2012
JUSTICE R. ZISMAN (endorsement):—
1This is a motion by the respondent (“father”) to stay the proceedings commenced by the applicant (“mother”) pursuant to subsection 7(1) of the Arbitrations Act, 1991, S.O. 1991, c. 17.
1: BACKGROUND FACTS
2The parties were married on October 17, 1987 and after almost fifteen years of marriage separated on August 31, 2002. There are two children of the marriage, Matthew Robert Thomson, born October 21, 1992 and Gregory Andrew Thomson, born August 9, 1994.
3Following the separation, the mother commenced legal proceedings. Both parties were represented by counsel throughout. Both parties agree that the legal proceedings were emotionally, physically, mentally and financially exhausting. In addition to financial issues, the parties litigated the issues of custodial and residential arrangements regarding the children.
4Dr. Irwin Butkowsky was retained to conduct a section 30 assessment pursuant to the Childre’s Law Reform Act, R.S.O. 1990, c. C-12, as amended. However, during the initial intake process, Dr. Butkowsky determined that the parties were motivated to resolve the parenting dispute through mediation. With the assistance of Dr. Butkowsky, the parties reached an agreement regarding the children that was summarized by Dr. Butkowsky in a memorandum of understanding. The agreement provided for joint custody and that the children would reside equally with each parent.
5The parties then agreed to attend with Mr. Philip Epstein to mediate the property and child and spousal support issues. The parties were able to resolve those issues and Mr. Epstein drafted a memorandum of understanding. The memorandum of understanding also clarified that, if there was a dispute regarding he children, Dr. Butkowsky would act as an arbitrator and provided that, if there was a dispute regarding any financial issues, Mr. Epstein would act as the mediator/arbitrator. It was agreed that the terms would be incorporated into a formal separation agreement.
6The parties executed a formal separation agreement on October 6, 2005 that incorporated the agreements reached with Dr. Butkowsky regarding the children and with Mr. Epstein regarding the financial issues.
7The separation agreement requires the father to pay child support on a set-off basis, as the children were to reside equally with both parents. The agreement provides the father pay $339.00 per month, based on the father’s income of $75,000.00 and the mother’s income being imputed at $30,000.00. The parties are to share all extra-ordinary expenses equally. The agreement acknowledges that the parties currently have two RESPs for the children’s future educational expenses and stipulates how to allocate those funds. When the children attend a post-secondary institution the issue of each party’s contribution to the education costs and the child support payable is to be reviewed by Mr. Epstein in his capacity as the mediator/arbitrator.
8The separation agreement also requires that the father pay the mother spousal support of $1,324.00 per month. The spousal support could be varied after June 2007 if there was a material change in circumstances. There is a further provision that child and spousal support would be reviewed de novo in May 2007 by Mr. Epstein. All relevant financial disclosure was to be exchanged prior to the review.
9The separation agreement also contains the usual provision that the parties exchange their notices of assessment annually by June 15th, and review their child support obligations and, if they do not agree, they will resolve their dispute in accordance with the dispute resolution clause of the separation agreement.
10In addition to the annual disclosure requirement, the separation agreement provides that either party can request, in writing, inter alia, the documents required in subsection 21(1) of the Child Support Guidelines, O. Reg. 391/97, as amended, and other information needed to review child support. The other party shall within thirty days provide the requested information.
11The separation agreement contains the following dispute resolution clause:
If a dispute arises as the interpretation of this Agreement or the obligations of the parties hereunder, other than with respect to the matters referred to the parenting coordinator, Dr. Butkowsky, in ss. 5 and 6, within thirty (30) days all such matters shall be referred to Mr. Philip Epstein, Q.C. who shall decide such matters acting as a mediator/arbitrator whose decisions shall be final and binding upon the parties. If Mr. Epstein is unwilling or unable to act, the parties agree that an arbitrator/mediator chosen by the then Chair of the Family Law Section of the Ontario Bar Association shall determine the dispute whose decision shall also be final and binding upon the parties without appeal.
12The separation agreement also contains the following strict performance clause:
The failure of either of the parties to insist, in any one or more instances upon the strict performance of one or more of the covenants or provisions of this Agreement, will not be and is not evidence of any waiver of, breach of, or relinquishment of for the future of such covenants or provisions, and the same will continue and remain in full force and effect.
13In September 2007, the mother retained counsel for the purpose of moving forward with the variation and review provisions of the separation agreement. Mother’s counsel corresponded with the father and noted that the notice of assessment he had provided to the mother was not adequate to the determination of his true income. The father was requested to provide three years of the financial statements of his company and the company’s tax returns as well as his personal returns of the last three years.
14The father responded with a five-page letter quoting and interpreting various clauses of the separation agreement and complaining about the mother’s lack of compliance with the terms of the separation agreement. It was his opinion that, since the de novo review by Mr. Epstein provided that there be no adjustments, no arrears and no retroactive support that he was not required to provide the requested information. He requested information from the mother and indicated that once he received that information a meeting could be arranged with Mr. Epstein.
15Upon receipt of the mother’s tax return the father corresponded again with the mother’s counsel, he complained about the mother’s lack of income, her lack of attempts to obtain employment and detailed his understanding of the goals of spousal support. The letter further states that he was looking forward to meetings being arranged with both Dr. Butkowsky and Mr. Epstein. The father wrote again about a month later with further complains about the mother and again stated he was seeking to confirm dates for the mediation/arbitration.
16Mother’s counsel did not respond to father’s letters. Neither party took any steps to seek further financial disclosure or attend for mediation/arbitration with either Dr. Butkowsky or Mr. Epstein.
17The father deposes that, after September 2007, both children were becoming withdrawn and distant and by February 2008, the children told him that they did not want to see him further. The father deposes that he felt at the time that any further attempts to attend mediation/arbitration would only further cause a rift between himself and the children. The father, in his correspondence to mother’s counsel, his e-mails to her and in his affidavit filed in support of his motion, blames the mother for alienating the children from him.
18The mother on the other hand, deposes that the father takes no responsibility for his estrangement from the children. She alleges that, prior to the children’s coming to live with her full time, the father abandoned the children physically and emotionally.
19In March 2009, the mother contacted the father by e-mail and made a further request for financial disclosure. The father again refused to provide the financial disclosure and again advised the mother that the separation agreement required any dispute about the parenting issues be resolved by Dr. Butkowsky and any other dispute by Mr. Epstein. He offered to provide the requested financial disclosure at the meeting with Dr. Butkowsky or Mr. Epstein.
20The mother made it quite clear in her e-mails that she required child support in accordance with the Child Support Guidelines, that child support was not negotiable. The mother stated that she sought financial disclosure from the father so that the parties themselves could determine the proper amount of child support that father should be paying in view of the fact that both children were living with the mother on a full time basis.
21The father sent several more emails, all of which were copied to Dr. Butkowsky and Mr. Epstein, continuing in insist on proceeding with mediation/arbitration and that any required financial disclosure would be made or discussed at the mediation/arbitration.
22In April 2009, the father emailed both Dr. Butkowsky and Mr. Epstein requesting clarification as to what enforcement mechanism he had available to enforce the dispute resolution clause of the separation agreement, whether the agreement was in full force and effect and a clarification of his rights.
23On October 19, 2009, Mr. Epstein responded to the father’s inquiries. Mr. Epstein apologized for his delay in responding but pointed out that he did reply to these same inquiries on December 4, 2007.1
24Mr. Epstein makes the following comment in that letter:
I am exceedingly sorry for your troubles and your estrangement from your children, I do not have the jurisdiction to deal with any of those issues unless the parties specifically wish to sign a new Mediation Arbitration Agreement and appoint me as mediator/arbitrator.
25Mr. Epstein goes on to confirm that he had jurisdiction to deal with the review of the child and spousal support based on the terms of the separation agreement. Although he felt that Dr. Butkowsky had the jurisdiction to deal with the parenting issues, he suggests that the father contact Dr. Butkowsky directly. Mr. Epstein did not respond to the father’s inquiry as to possible enforcement mechanisms or tell him to seek legal advice.
26The father deposes that based on this letter he believed that the mother had to consent to mediation/arbitration and that absent her consent he had no recourse available to him to enforce the dispute resolution clause in the agreement.
27Neither party took any further action.
28The father continued to pay the mother spousal support in accordance with the terms of the separation agreement. The father also continued to pay child support based on the set off formula in the separation agreement of only $339.00 per month despite that fact that both children had resided with the mother full time since March 2008.
29In September 2010, when Matthew began university and lived away from home, the father arbitrarily reduced child support to $169.50 per month. Although, the father deposes that he paid for all of Matthew’s post-secondary expenses, there appears to be some dispute about this fact. There is also a dispute about whether the father is still required to pay some child support for Matthew as he returns to the mother’s home on weekends and holidays.
30The mother did not seek further financial disclosure or seek increased child support until May 2011, when she retained her current counsel.
31Ms. Joe, mother’s counsel, corresponded with the father requesting financial disclosure. Ms. Joe reminded the father of his requirement to provide financial disclosure in accordance with the terms of the separation agreement and put him on notice that the mother was seeking a variation of child support and the residential schedule in view of the fact that the children had been residing with the mother on a fulltime basis since March 2008.
32In response, the father again provided his interpretation of the separation agreement, requested the mother provide information as verify there had been a material change in her circumstances, requested the parties attend with Mr. Epstein and that he would only provide the financial information requested at the meeting with Mr. Epstein.
33Ms. Joe again corresponded with the father on June 8, 2011 and again asked him to provide the financial information being requested. The father replied on June 28, 2011 yet again refusing to provide financial disclosure.
34The mother commenced the herein Application dated August 11, 2011 requesting the following relief:
An order for sole custody of the children;
An order that the father pay child support in accordance with the Child Support Guidelines for both children as of April 1, 2008;
An order that the father pay the children’s special expenses in proportion to the party’s respective incomes;
An order that the father pay spousal support of $1,479.33 per month as of April 1, 2011; such support to be indexed in accordance with subsections 34 (5) and (6) of the Family Law Act retroactive to October 1, 2006;
An order that the father provide her with the disclosure set out in section 21 of the Child Support Guidelines; in the event such disclosure in not provided that an annual income of $150,000.00 be imputed to him;
An order for an accounting of the RESPs held in trust by the father for the benefit of the children;
An order that the father execute any necessary documents to transfer the RESPs to the mother for the benefit of the children;
An order that the father provide proof that his life insurance policy is in good standing or if not, purchase a policy in the amount of $500,000.00;
Such further and other relief as this Honourable Court deems fit and just.
35The father retained the firm of Goldhart & Associates2 after being served with the mother’s application. The answer asserts that the court does not have the jurisdiction to grant the relief requested in view of the dispute resolution clause in the parties’ separation agreement. The answer requests that the parties attend at mediation/arbitration with Mr. Epstein pursuant to the terms of the separation agreement to deal with any and all issues relating to child and spousal support and that they attend arbitration with Dr. Butkowsky to deal with all issues relating to parenting. In the alternative, various grounds of relief are requested.
36It is unfortunate that neither counsel requested that the court adjudicate on the preliminary issue of jurisdiction prior to both parties incurring the unnecessary expense of attending the first appearance clerk court and attending and preparing for a case conference. Either counsel could have used a Form 14B to obtain directions for scheduling a motion to adjudicate the preliminary jurisdictional issue. I simply point this out, as there is an outcry as to the length of time and expense of court proceedings and yet, with the greatest respect to both counsel in this case, counsel do not use the tools available to them in the Family Law Rules to streamline the court proceedings.
37Prior to the case conference, counsel agreed that they would attend the conference on a without prejudice basis to the father’s position that the court had no jurisdiction to adjudicate the mother’s claims.
38At the case conference, it was agreed that the father needed to proceed with a Motion to stay the Application before any further steps could be taken. A timetable for filing of motion materials and factas was set. The motion was argued on January 17, 2012 and I reserved my decision. This is my ruling.
2: THE LAW
39The Arbitration Act, 1991, S.O. 1991, c. 17, limits the court’s involvement in a dispute where the parties have agreed to arbitrate.
40Section 6 of the Arbitration Act provides the following limited instances in which a court may interfere with matters governed by the Act:
Court intervention limited.— No court shall intervene in matters governed by this Act, except for the following purposes, in accordance with this Act:
To assist the conducting of arbitrations.
To ensure that arbitrations are conducted in accordance with arbitration agreements.
To prevent unequal or unfair treatment of parties to arbitration agreements.
To enforce awards.
41In Puigbonet-Crawford v. Crawford, 2006 CanLII 38881, 152 A.C.W.S. (3d) 991, [2006] O.J. No. 4626, 2006 CarswellOnt 7282 (Ont. S.C.), Justice Peter H. Howden explained the policy reason for the primacy of the arbitration process over the judicial process as follows: “Its purpose is to encourage parties to resort to arbitration as a method of resolving their disputes in various matters, including family law matters, and to require them to hold to that course once they have agreed to do so.”
42Section 7 of the Arbitration Act provides for a stay after proceedings have been commenced and the limited exceptions in which a stay will not be granted by the courts as follows:
- Stay.—(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding.
(2) Exceptions.— However, the court may refuse to stay the proceeding in any of the following cases:
A party entered into the arbitration agreement while under a legal incapacity.
The arbitration agreement is invalid.
The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.
The motion was brought with undue delay.
The matter is a proper one for default or summary judgment.
43The onus of establishing that one of the exception under subsection 7(2) of the Arbitration Act applies is on the person claiming the exception. See Puigbonet-Crawford v. Crawford, supra.
44The approach taken by courts in determining whether to stay a claim pursuant to subsection 7(1) of the Arbitration Act is as follows:
(a)
The court must first interpret the arbitration provision. The court then analyses the claims to determine whether they must be decided by an arbitrator under the terms of the agreement as interpreted by the court.
(b)
In interpreting an arbitration clause, the court should not make a final determination about its scope. Where it is arguable whether a claim falls within the scope of the arbitration provision that issue should be left to the determination of the arbitrator.
(c)
If the answer to (a) is yes, then the court must stay the action and refer the claims to arbitration unless the person who commenced the court proceeding establishes that one of the exceptions to subsection 7(2) of the Arbitration Act applies.
See Dalimpex Ltd. v. Janicki, 2003 CanLII 34234, 64 O.R. (3d) 737, 172 O.A.C. 312, 228 D.L.R. (4th) 179, 35 B.L.R. (3d) 41, 35 C.P.C. (5th) 55, [2003] O.J. No. 2094, 2003 CarswellOnt 1998 (Ont. C.A.), at para. [21]; Mantini v. Smith Lyons LLP, 2003 CanLII 20875, 64 O.R. (3d) 505, 174 O.A.C. 138, 228 D.L.R. (4th) 214, 34 B.L.R. (3d) 1, [2003] O.J. No. 1831, 2003 CarswellOnt 1732 (Ont. C.A.), at para. [17].
3: ANALYSIS
3.1: Is the relief claimed within the scope of the dispute resolution provision of the separation agreement?
45I find that the relief claimed by the mother in her application falls within the scope of the dispute resolution provision in the parties’ separation agreement. This finding was not strenuously opposed by the mother’s counsel.
46The dispute resolution provision of the separation agreement clearly provides that if a dispute arises with respect to the interpretation or the parties’ obligations under the agreement “all matters shall (emphasis added) be referred to Mr. Philip Epstein, Q. C. who shall decide such matters acting as a mediator/arbitrator whose decision shall be final and binding upon the parties.”
47The obligations of the parties pursuant to the separation agreement include the payment of child support, spousal support and financial disclosure. The mother’s application claims relief relating to child support, spousal support and disclosure.
48Although the application also claims new relief such as imputing income to the father, indexing spousal support, these are issues that arise and are encompassed in the support issues that the parties agreed would be submitted to mediation/arbitration. See G.S. v. A. F.S., 2010 ONSC 6609, 95 R.F.L. (6th) 364, [2010] O.J. No. 5493, 2010 CarswellOnt 9760 (Ont. S.C.) at paras. [20] and [28].
49The application also claims custody of the children. The dispute resolution provision of the separation agreement further provides that if there is a dispute arising with respect to the parenting issues Dr. Irwin Butkowsky shall arbitrate the issues. However, given that the children are now 19 and 17 years old, neither counsel pursued this issue.
50I would add that although the case law I was referred to all deal with arbitration clauses, I draw no distinction between a strict arbitration clause and the hybrid model of mediation/arbitration used in the parties’ in their separation agreement. The parties in their separation agreement agreed to Mr. Epstein being appointed as a mediator/arbitrator; this model of dispute resolution is utilized frequently in family law disputes. Further, both parties were represented by experienced family law counsel when the separation agreement was negotiated and they both agreed to this form of dispute resolution.
3.2: Has the mother met the onus of establishing that this case falls within one of the exceptions outlined in subsection 7(2) of the Arbitration Act?
51The mother did not specifically submit which exception within subsection 7(2) of the Arbitration Act she was relying on. However the mother’s allegations can be grouped into three main headings namely, lack of compliance with the term of the separation agreement, failure to enforce the mediation/arbitration clause and her lack of financial resources to mediate/arbitrate.
52Specifically the mother alleges that the father never complied with the terms of the separation agreement in that he:
(a)
failed to provide financial disclosure despite requests to do so;
(b)
failed to provide post-dated cheques; and
(c)
failed to provide proof of his life insurance policy.
53The mother alleges that the father failed to pursue enforcement of the mediation/arbitration provision of the separation agreement and is now relying on that provision as a means of avoiding payment of additional child support.
54The mother submits that she does not have the financial means to pay for lawyers, or engage in the mediation/arbitration process.
55On behalf of the father it is submitted that none of the allegations made by the mother satisfy or establish any of the exceptions outline in subsection 7(2) of the Arbitration Act. In the alternative, it is submitted that the only exceptions that might apply would be paragraph 7(2)¶2, the arbitration agreement is invalid or paragraph 7(2)¶4, the motion is brought with undue delay.
3.3: Does the lack of compliance render the dispute resolution invalid?
56It is submitted by father’s counsel that the father’s failure to provide financial disclosure is not an exception under subsection 7(2) of the Arbitration Act and that if either party has an issue with the other’s disclosure or lack thereof, the issue must be resolved with the assistance of Mr. Epstein in the context of the mediation/arbitration.
57The father’s counsel relies on the case of Kay v. Korakianitis, 2007 CanLII 29278, 40 R.F.L. (6th) 402, [2007] O.J. No. 2905, 2007 CarswellOnt 4748 (Ont. S.C.) for this proposition of law. In that case, in the context of a motion to disqualify Mr. Malcolm Kronby, who was the arbitrator, because he communicated with Mr. Philip Epstein, who was the mediator, the court outlined the best practice for seeking financial disclosure. The court stated that in the two-step procedure that the parties agreed to, the applicant should ask the mediator to request financial disclosure as a condition precedent to continuing the mediation. If financial disclosure is not provided before mediation then mediation would be a waste of time and the parties should move on to arbitration. If the relevant financial disclosure is not made by a party voluntarily prior to arbitration then a motion before the arbitrator to compel financial disclosure is available to the aggrieved party.
58However in this case, the father was already compelled by the terms of the separation agreement to provide not just annual disclosure of his notice of assessment but further disclosure if requested. Specifically, the mother’s counsel wrote to the father in September 2007 requesting financial documents relating to his business. Such information was necessary so that the mother and her counsel could determine if there was a need to even engage in mediation/arbitration. The father either ignored the request or stated that he would provide it at the meetings with Dr. Butkowsky and Mr. Epstein.
59The mother then again in March 2009 contacted the father by email to request financial disclosure. By this time the children were living full time with the mother and the father must have been aware that he was required to pay more child support that the original agreement. In May 2011, mother retained counsel to again request financial disclosure.
60Essentially it is the father’s position, that the mother could have compelled the father to provide financial disclosure or she could have enforced the provisions of the separation agreement for financial disclosure by requesting a meeting with Mr. Epstein, as the mediator/arbitrator.
61In reading the father’s responses to the requests for financial disclosure, I am sympathetic to the mother not moving forward with the mediation/arbitration in 2007and 2009 to compel the father’s compliance. It was clear from the father’s diatribe that he would not co-operate voluntarily and that he intended to re-open all aspects of the separation agreement including the mother’s entitlement to spousal support. The father’s failure to provide the requested financial disclosure was in my view a breach of the contract and nothing short of a sign of bad faith.
62However, the question then becomes whether or not the dispute resolution clause can survive a repudiation or breach of contract?
63In determining that a dispute resolution clause survives a potential repudiation or breach of contract, Justice Robert E. Zelinski in Mind Star Toys Inc. v. Samsung Co. (1992), 1992 CanLII 7542 (ON SC), 9 O.R. (3d) 374, 6 C.P.C. (3d) 241, [1992] O.J. No. 932, 1992 CarswellOnt 425 (Ont. Gen. Div.) cited with approval the following passages from Heyman v. Darwins Ltd., [1942] A.C. 356, [1942] 1 All E.R. 337, 111 L.J.K.B. 241, 166 L.T. 306, 58 T.L.R. 169 (H.L.), in which Lord MacMillan stated at pages 346-347 [All E.R.] as follows:
Repudiation, then, in the sense of a refusal by one of the parties to a contract to perform his obligations thereunder, does not itself abrogate the contract. The contract is not rescinded. It obviously cannot be rescinded by the action of one of the parties alone. But, even if the so-called repudiation is acquiesced in or accepted by the other party, that does not end the contract. The wronged party has still his right of action for damages under the contract which has been broken, and the contract provides the measure of those damages. It is inaccurate to speak in such cases of repudiation of the contract. The contract stands, but one of the parties has declined to fulfill his part of it. There has been what is called a total breach or a breach going to the root of the contract and this relieves the other party of any further obligation to perform what he for his part has undertaken. Now, in this state of matters, why should it be said that the arbitration clause, if the contract contains one, is no longer operative or effective? A partial breach leaves the arbitration clause effective. Why should a total breach abrogate it? The repudiation being not of the contract but of obligations undertaken by one of the parties, why should it imply a repudiation of the arbitration clause so that it can no longer be invoked for the settlement of disputes arising in consequence of the repudiation? I do not think that this is the result of what is termed repudiation.
I am, accordingly, of opinion that what is commonly called repudiation or total breach of a contract, whether acquiesced in by the other party or not, does not abrogate the contract, though it may relieve the injured party of the duty of further fulfilling the obligations which he has by the contract undertaken to the repudiating party. The contract is not put out of existence, though all further performance of the obligations undertaken by each party in favour of the other may cease. It survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. The purposes of the contract have failed, but the arbitration clause is not one of the purposes of the contract.
I venture to think that not enough attention has been directed to the true nature and function of an arbitration clause in a contract. It is quite distinct from the other clauses. The other clauses set out the obligations which the parties undertake towards each other hinc inde, but the arbitration clause does not impose on one of the parties an obligation in favour of the other. It embodies the agreement of both parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own constitution. And there is this very material difference, that whereas in an ordinary contract the obligations of the parties to each other cannot in general be specifically enforced and breach of them results only in damages, the arbitration clause can be specifically enforced by the machinery of the Arbitration Acts. The appropriate remedy for breach of the agreement to arbitration is not damages, but its enforcement.
64The father’s failure to provide the financial disclosure regarding his business and the other disclosure being requested was in my opinion a fundamental breach of his obligations under the separation agreement. However, applying the above noted principles, that did not abrogate the separation agreement. The parties agreed in the separation agreement to arbitrate any disputes including the party’s obligations under the separation agreement. Therefore, if the mother wished to pursue the issue of the father’s lack of financial disclosure, her recourse was to bring a motion before Mr. Epstein, as an arbitrator, to compel disclosure. She could have also sought financial compensation as a result of the father’s breach of agreement.
65The failure of the father to provide post dated cheques or proof of life insurance despite being breaches of the terms separation agreement are not of such a significance that they would amount to a fundamental breach of the terms of the separation agreement. However, the mother could have sought compliance by the father of these provisions through the dispute resolution clause in the separation agreement.
66For sound policy reasons, family law permits and encourages separating parties to work out their own arrangements through separation agreements which include how to resolve future disputes. In this case, the parties were both represented by experienced family law counsel when they entered into a comprehensive separation agreement that provided for a contractual obligation to mediation/arbitration. Unless there are some exceptional circumstances, the parties should be required to abide by that agreement.
3.4: Are the mother’s concerns regarding the cost of mediation/arbitration or an abuse of process by the father an exception to the Arbitration Act?
67The mother alleges that she does not have the financial means to incur the cost of mediation/arbitration. However, in the separation agreement the parties negotiated agreed that any future disputes would be resolved through mediation/arbitration as opposed to using the court process. It must be presumed that the issue of the cost of such a process versus the cost of possible further court proceedings was discussed by the mother with her counsel. The cost of arbitration is not an exception under subsection 7(2) of the Arbitration Act. Further, an arbitrator has the ability to apportion costs and fix costs to deal with any possible financial imbalance between the parties.
68In family law cases, arbitration clauses have been upheld despite objections that a party could not afford to pay the arbitrator’s fees. See Puigbonet-Crawford v. Crawford, supra.
69The mother submits that the father is simply delaying the resolution of the issues by now insisting on using the mediation/arbitration provision of the separation agreement. In the past whenever the mother or her counsel requested financial disclosure, the father would delay the process by requesting disclosure from the mother, blame to mother for alienating the children, insisted on attending with Dr. Butkowsky to revisit the parenting arrangements and stating that he wished to terminate his obligation to pay spousal support. At the same time, the father refused to voluntarily increase child support despite the change in the residential arrangements for the children. The mother submits that as a result she stopped moving forward to insist on compliance with the terms of the separation agreement.
70The mother also submits that she was never satisfied with the agreement reached regarding the parenting arrangements or the recommendations made at the mediation but she did have the wherewithal to continue with the litigation.
71Experienced mediators and arbitrators are experienced at dealing with power imbalances and tactics to delay resolution.
72Therefore, any of the mother’s concerns regarding the cost of mediation/arbitration or any concerns that the father is delaying the resolution of the issues or unduly increasing the mother’s costs can be dealt with by Mr. Epstein in the mediation/arbitration process.
3.5: Has the father delayed in enforcement of the mediation/arbitration provision and therefore rendered the provision invalid?
73The fact that a motion has been brought with undue delay is the fourth exception under subsection 7(2) of the Arbitration Act. However, in considering this exception the courts have held that the potential delay is from the time the proceedings commenced and not from the time the dispute arose. See Seguin and Masterson, 2004 CanLII 814, 5 R.F.L. (6th) 425, [2004] O.J. No. 2176, [2004] O.T.C. 441, 2004 CarswellOnt 2098 (Ont. S.C.); McLaughlin v. Healthcare Employees’ Pension Plan, 2010 MBQB 98, [2010] M.J. No. 146, 2010 CarswellMan 180 (Man. Q.B.).
74In this case, the father immediately retained counsel after being served with the mother’s Application and raised the issue of the court’s jurisdiction in his Answer. Thereafter, he attended the case conference on a without prejudice basis and with the court’s permission he proceeded with his motion to stay.
75I find that there was no delay in the father articulating his position regarding the jurisdictional issue in the court proceedings or bringing his motion to stay.
76The mother submits that prior to the commencement of these proceedings the father chose not to rely on the mediation/arbitration clause throughout the years.
77In the case of McLaughlin v. Healthcare Employees’ Pension Plan, supra, the court considered whether the party bringing the motion to stay “knowingly and willingly” chose not to rely on the mediation/arbitration clause although in that case though the court did so in the context after the proceedings had commenced.
78It is submitted by father’s counsel that the father did not “willingly and knowingly” chose not to rely on the mediation/arbitration clause. It is submitted that to the contrary, in all of his correspondence to the mother or her counsel he has indicated that it was his intention to rely and enforce the mediation/arbitration provision.
79It is also submitted that the father relied on Mr. Epstein’s correspondence to him. The father submits that Mr. Epstein did not advise him of his enforcement options, did not clarify his rights pursuant to the terms of the separation agreement and did not advise him to seek legal advice. The father deposes that this led him to believe that if the mother did not agree to submit a financial dispute to mediation/arbitration then he had no recourse.
80Ms. Kent, father’s counsel, was extremely clear in her submissions that she did not in any way fault Mr. Epstein but submitted that based on Mr. Epstein’s correspondence this was the belief of her client.
81I reject that the father was not aware of his enforcement options. It is inconceivable that father’s counsel would not have advised him of his rights to enforce the terms of the separation agreement or how the mediation/arbitration process worked when the agreement was being negotiated. How else could a party determine if it was more advantageous, cheaper or easier to use the mediation/arbitration process than the court process. I also reject that the father would not have known he should seek the advice of legal counsel if the mother was not complying with the terms of the separation agreement or that he would believe that he could do nothing unless the mother agreed.
82Although it is correct that the father insisted that he wanted to attend mediation/arbitration in all of his correspondence, this was a pre-condition to providing any of his company’s financial information and on condition that the mother provide information to him. The father never followed through with arranging or trying to arrange mediation/arbitration and used it as a means to bully and intimidate the mother in not pursuing her request for obtaining financial disclosure or an increase child support.
83I find that the father was aware of his rights and did lapse in enforcing his rights through the dispute resolution provision in the separation agreement.
84However, the separation agreement has a “strict performance” clause. Although this is frequently termed a “boiler plate” clause, nevertheless it must be interpreted in the context of contract law. The clause provides as follows:
The failure of either party to insist, in any one of more instances up on the strict performance of one or more of the covenants or provisions of this Agreement, will not be and is not evidence of any waiver of, breach of, or relinquishment of for the future of such covenants or provisions, and the same will continue and remain in full force and effect.
85For different reasons, neither of the parties required the other to comply with various provisions of the separation agreement.
86The father alleges that the mother did not pursued increased child support until now because she waited for their youngest son to turn 17 years old so that he could no longer pursue a joint residential schedule or deal with the parenting issues. The mother alleges that the father intimidated that mother so she would not pursue increased child support.
87Regardless of why each party did not earlier pursue compliance with the provisions of the separation agreement or pursue a change in the terms because of the changes circumstances, the plain meaning of this strict compliance provision is that none of the terms of the separation agreement, including but not limited to the dispute resolution clause can lapse, be waived or be relinquished and that they always remain in full force and effect.
88Accordingly, I find that the father cannot be held to have acquiesced or waived his right to now require that the relief requested by the mother be subject to the dispute resolution provision in the separation agreement.
89The mother relied on the case of Davies v. Davies, 2011 ONSC 6105, 208 A.C.W.S. (3d) 760, [2011] W.D.F.L. 5552, [2011] O.J. No. 4514, 2011 CarswellOnt 10947 (Ont. S.C.), wherein the court held that an agreement to mediate/arbitrate was unenforceable where there is no resolve by the parties to participate in the process. However, that case is clearly distinguishable as in the Davies case the court found the agreement was ambiguous, one of the parties did not have independent legal advice and the did not understand the nature and scope of the agreement. In this case, the mother had legal advice throughout the process and the mediation/arbitration clause is clear and unambiguous.
90Counsel for the mother also relied on the case Armstrong v. Armstrong (2006), 136 A.C.W.S. (3d) 1084, [2005] O.J. No. 304, 2005 CarswellOnt 323 (Ont. S.C.), reversed in part by Armstrong v. Armstrong, 2006 CanLII 32899, 215 O.A.C. 193, 32 R.F.L. (6th) 244, [2006] O.J. No. 3823, 2006 CarswellOnt 5782 (Ont. C.A.), for the proposition that a separation agreement is rendered invalid where the parties have not complied with its terms. However, that case did not refer to the effect of a mediation/arbitration provision that required any lack of compliance by the parties of their obligations pursuant to the agreement to be submitted through mediation/arbitration. Further in this case, many provisions of the agreement were complied with.
4: CONCLUSION
91I therefore find that the mother has not met the onus on her to meet any of the exceptions to subsection 7(2) of the Arbitration Act.
92I have considered whether or not the separation agreement could be set aside pursuant to section 56 of the Family Law Act, R.S.O. 1990, c. F-3. For example, it may have been arguable that the provision regarding child support no longer complies with the Child Support Guidelines.
93On behalf of the mother, in submissions it was argued that perhaps the agreement could be set aside as not being in the best interests of the children or for non compliance. However, the mother did not claim this relief and as a matter of procedural fairness, it is my view that it would be inappropriate to permit the mother to argue this ground of relief when it was not claimed in her application or raised in her factum.
94I have also considered that there is no urgency in this matter. Although I accept that the father has paid significantly less child support than he should have paid since March 2008 when the children began to reside full time with the mother, the mother had been able to manage financially. Any claim for a retroactive readjustment to child support can be dealt with through the mediation/arbitration process.
95Counselfor the father advised the court that she had contacted Mr. Epstein’s office and that he was willing to act as mediator/arbitrator and would be able to commence the mediation/arbitration process in February.
96I wish to be clear that I do not condone the father’s actions in not voluntarily providing financial disclosure or his refusal to simply voluntarily increase his child support payments once the children began to live with the mother on a full time basis. However, once parties have agreed to a formal contractual process to resolve their disputes, there is an obligation on the parties to abide by their agreement.
97Order as follows:
The respondent’s motion is granted, the application is stayed pending the mediation/arbitration by Mr. Philip Epstein who has agreed to act on all financial issues including the issue of financial disclosure.
The return date of March 7, 2012 is vacated unless the mediation/arbitration is not proceeding.
98If the parties cannot agree on costs, the respondent shall submit brief submissions on costs, with a bill of costs within two weeks and the applicant will submit her response within the next two weeks. All submissions to be sent to the judicial secretary.
Justice Roselyn Zisman
DATE: 31 January 2012
Footnotes
- A copy of this letter was not produced by the father although Mr. Epstein’s letter of October 29, 2009 letter states Mr. Epstein attached it again. The omission of this letter only came to my attention as I was preparing this judgement.
- Ms. Cheryl Goldhart was the father’s counsel throughout the prior proceedings that culminated in the execution of the separation agreement and his current counsel, Ms. Kenet is an associate with the same firm.
