CITATION: Kucyi v. Kucyi, 2007 ONCA 758
DATE: 20071107
DOCKET: C46358
COURT OF APPEAL FOR ONTARIO
WEILER, MACPHERSON and ROULEAU JJ.A.
BETWEEN:
SENORA KUCYI
Applicant (Respondent in Appeal)
and
ABRAHAM KUCYI
Respondent (Appellant in Appeal)
Alfred A. Mamo and Deborah MacKenzie for the appellant
Daphne Johnston for the respondent
Heard: October 3, 2007
On appeal from the order of Justice Nancy Backhouse of the Superior Court of Justice, dated November 9, 2006 and addendum dated November 22, 2006.
BY THE COURT:
[1] The issue on this appeal is whether the reviewing judge erred in setting aside an arbitrator’s award pursuant to s. 46(1)6 of the Arbitration Act, S.O. 1991, c. 17 on the grounds that “the applicant was not treated equally and fairly, was not given an opportunity to present a case or to respond to another party’s case…”
The Background to this Appeal
[2] The parties, who were formerly married, separated in 1999. In 2002, Lax J. issued a support order incorporating the terms of a separation agreement requiring the appellant husband, Abraham Kucyi, to pay $6000 a month in spousal support and $3,500 a month in child support plus tuition fees and other costs. While the separation agreement did not say what the income of the husband was at the time, it matched the table amount for child support for a payor with a total annual income of $317,000. The arbitrator found as a fact that the husband’s income was at least $350,000 at the time the separation agreement was signed.
[3] In August, 2004, the husband sought to vary the order based on a change in his circumstances. The parties agreed to have the variation issue dealt with by mediation and, if that failed, by arbitration. They did not settle at the mediation and so they agreed on arbitration dates fixed for January 18-19, 2005. In the meantime, beginning in August, 2004 arrears of support began to accumulate as the husband ceased payment of any child or spousal support with the exception of a payment of $10,000. This was confirmed in oral argument before us.
[4] The event occasioning the husband’s change of circumstances was the suspension of his pharmacist’s licence in June, 2004, for six months. As a result, he sold his pharmacy business for a price of $550,000 for good will and about $150,000 for inventory. He retained ownership of the building, and received rental income from the pharmacy as well as from the four apartments above it for a net income of about $40,000 a year. At the end of his suspension in December, 2004, the husband began working 20 hours a week for another pharmacist at the rate of $42.50 an hour and was looking for full-time work.
[5] In December, 2004, the wife fired her lawyer and retained new counsel. Her new lawyer orally requested an adjournment of the January arbitration dates, and subsequently brought a formal motion for an adjournment. However, when the arbitrator made an interim order that the wife take steps to suspend enforcement of the $47,500 in support arrears, he withdrew his request. Cross-examination of the husband on his October 2004 financial statement was fixed on consent for December 29, 2004. During that cross-examination of the husband, a number of undertakings were given, answers to which were provided on January 14, 2005.
[6] The wife filed no financial statement.
[7] On January 17, 2005, the husband’s counsel delivered a supplementary disclosure brief, including an updated financial statement, to the office of counsel for the wife. Counsel for the wife testified that he did not see it until the morning of January 18, 2005, the day of the hearing. The updated financial statement showed a dramatic decrease in the husband’s net worth by over $1 million to about $1.459 million. In addition, his monthly net income and expenses in the January financial statement were both significantly higher although the difference in net result was less than $500 a month.
[8] The parties disagree on whether counsel for the wife requested an adjournment at the outset of the hearing on January 18 to enable him to cross-examine on the January, 2005 financial statement. After a short recess, the arbitration took place. The husband gave evidence and counsel for the wife cross-examined him on his latest financial statement.
[9] On January 19,prior to oral argument, counsel for the husband gave counsel for the wife a brief of closing submissions as well as a series of Support Mate calculations, some of which were based on the latest financial statement.[^1] Counsel for the wife says he again requested an adjournment which was refused. Counsel for the husband testified that no adjournments were requested and that an adjournment was unnecessary as there was really nothing new in the documents he filed.
[10] By agreement, the proceedings before the arbitrator were not recorded and, in response to a request from counsel, the arbitrator declined to produce his notes.
[11] The arbitrator rendered his award on February 3, 2005. He found that the husband’s income had been reduced by 58.5% to $145,000 a year from $350,000. That finding was based on the combined total of three figures: 1) the rental income of $40,000; 2) employment income of $80,000 including attribution for full-time employment; and 3) attribution of $25,000 of income on invested capital of $612,000. As a result, the arbitrator ordered that effective August, 2004, when the husband initiated the variation application, the husband should pay Guideline child support for two children amounting to $1709 a month, in addition to the private and secondary school fees the husband had agreed to pay. He reduced spousal support to $2700 a month.
[12] The wife brought an application before the Divisional Court seeking, among other things, to set aside or quash the arbitrator’s award. The Divisional Court referred the matter to a single judge of the Superior Court of Justice (Family Division) regarding the issue of s. 46 of the Arbitration Act.
[13] On October 24, 2006 the parties appeared before the reviewing judge. Counsel who had represented the husband and wife before the arbitrator gave viva voce evidence and were cross-examined. In her cross-examination of the husband’s counsel, counsel for the wife (who is counsel on the appeal before us) sought an explanation for the differences between the October, 2004 financial statement and the January, 2005 financial statement. The lawyer acting as counsel for the husband at the arbitration was unable to provide an accurate explanation for the differences.
The reasons of the Reviewing Judge
[14] The reviewing judge preferred the evidence of the wife’s former counsel to that of the husband’s. The four reasons she gave for doing so are reproduced in full below:
[5] First, the applicant [counsel for the wife]’s evidence is more probable. He was seeking an adjournment from the moment of his retainer. The new material filed was substantial. It had not been discovered on. It is inconceivable, given the history of prior requests for adjournment that he would not have sought an adjournment when faced with this new material.
[6] Second, the alleged denial of an adjournment was raised by the applicant in a timely way. The applicant filed an affidavit dated February 24, 2005 in which this complaint was clearly advanced.
[7] The respondent [counsel for the husband] filed an affidavit in the Divisional Court dated the 22nd day of November, 2005. He did not challenge the applicant’s earlier evidence with respect to the requested adjournment.
[8] Third, regrettably, I did not find the respondent’s solicitor’s evidence on the issue of the requested adjournment credible, in the sense, that he attempted to downplay the complexity of the material filed by him at the outset of the arbitration, yet was unable to explain the $1 million difference in the financial statements. I believe that his evidence on the adjournment was mistaken.
[9] Finally, it is agreed that the arbitrator granted a short recess. I do not believe that [counsel for the wife] asked for a short recess. I conclude that [counsel for the wife] sought an adjournment. It was refused. He was allowed a short recess.
[15] After adverting to the need for caution in relation to the arbitrator’s exercise of discretion on the issue of an adjournment, she nevertheless concluded that an adjournment should have been granted. As a result of the arbitrator’s refusal to grant an adjournment, she held that “[t]he applicant [wife] was not treated fairly and was not given an opportunity to respond to the respondent [husband]’s case.” Further, “[n]o acceptable excuse was provided for the last minute filing. If the late evidence was to be received an adjournment was mandatory once requested.” Accordingly, the reviewing judge set aside the arbitrator’s award.
[16] In an addendum to her reasons, the reviewing judge also set aside the interim arbitration award which had ordered the wife to take steps to stay enforcement of the arrears of support totaling $47,500. The reviewing judge did so on the basis that no motion was brought for this relief prior to the hearing of the motion for the adjournment and, while such an order could have been made as a term of the adjournment, the adjournment had been refused. In addition the arbitrator gave no reasons for ordering the wife to stay enforcement of the entire amount of arrears as opposed to a reduction in the amount to be paid pending the outcome of the arbitration. In doing so, she again relied on s. 46(1)6 of the Arbitration Act.
[17] On January 31, 2007 Lang J.A. ordered that pending the determination of this appeal, enforcement of support in excess of $1709 a month for child support and $2700 a month for spousal support retroactive to August, 2004 be stayed.
The Issues
[18] The husband alleges that the reviewing judge committed four errors. They are: 1) The judge misapprehended the evidence in finding that counsel for the respondent wife requested an adjournment. There was no request for an adjournment. 2) Even if there was a request for an adjournment, there was nothing unfair about the arbitrator’s denial of an adjournment. The husband’s sworn January 17, 2005 financial statement, produced for the hearing, did not differ materially from the earlier October 17, 2005 financial statement and it was within the discretion of the arbitrator to refuse the adjournment. 3) The wife has not shown that, if the adjournment had been granted, it would have made a difference to the award. 4) The reviewing judge ought not to have set aside the arbitrator’s interim award.
[19] I propose to deal with the second and third submissions together.
Analysis
[20] Did the reviewing judge misapprehend the evidence concerning the request for an adjournment
[21] In our opinion the reviewing judge did not misapprehend the evidence. In oral argument before us, counsel for the husband submitted that if an adjournment was sought, it was only sought on the second day of the hearing, namely January 19, 2005. In support of this submission, counsel for the husband relied on the affidavit of the wife which refers to a request for an adjournment on January 19 as well as to a portion of the proceedings before the reviewing judge, specifically the cross-examination of the lawyer who was counsel for the wife at the arbitration hearing. In reply we were directed to the re-examination in which the wife’s counsel clarified that an adjournment had been requested on both January 18th and 19th.
[22] While counsel on an appeal rightly invite the court to carefully examine isolated parts of the evidence, it is the judge at first instance who saw and heard the whole of the narrative who is in the best position to make an assessment of whether an adjournment was sought. To paraphrase this court’s decision in Waxman v. Waxman, [2004] O.J. No. 1765 at paras. 291-92, strong deference to the factual findings of the trial judge best strikes the balance between the goal of achieving individual justice and the need to preserve the overall effective administration of justice. Merely because an appellate court might view the evidence differently from the trial judge and make different factual findings is not a basis for concluding that the appellate court’s findings will be more accurate and its result more consistent with the justice of the particular case than the result achieved at trial. Thus, appellate courts must defer to all findings of fact drawn by the judge at first instance unless the court is satisfied that the finding was the product of a “palpable and overriding” error. That deference equally applies to inferences from the evidence: See H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401.
[23] No such palpable and overriding error has been shown here. The appellant has not discharged its onus of showing that the reviewing judge’s findings and the inferences she drew from the evidence were clearly wrong, unreasonable, or unsupported by the evidence.
[24] Was the arbitrator’s denial of an adjournment unfair and would it have made a difference to the award?
[25] The question of whether a party has not been treated equally and fairly, or not given an opportunity to present a case or to respond to another party’s case, is a fact specific determination. See Tarapaski v. Tarapaski (2006), 2006 ABCA 314, 33 R.F.L. (6th) 48 (A.B.C.A.) at para. 9.
[26] The trial judge’s conclusion that the denial of an adjournment was unfair was based in part on the inability of the husband’s counsel to explain the $1 million difference between the financial statement provided earlier and the one provided at the arbitration. On this appeal, a footnote in the appellant’s factum states as follows:
There was not a $1 million difference as Justice Backhouse states. When the financial statements are compared it is clear that there was an arithmetic error between the two statements and not an error of any substance. The Learned Judge erred in finding that there was a substantial difference in the statements and should have accepted that when the constituent elements of the statements were compared there was not significant difference. Moreover, any differences would have been the subject of cross-examination before the Arbitrator.
[27] Before us, the appellant explained that there was a $500,000 computer error in the January 17, 2005 financial statement and the balance of the difference related to disposition costs (including taxes) with respect to property previously disposed of, and an increase in debt having to do with transfers between the appellant’s personal account and his companies.
[28] Inasmuch as the $500,000 computer error was not disclosed to the reviewing judge when counsel for the husband gave his evidence, I would infer that the existence of that error was also not apparent during the husband’s cross-examination before the arbitrator. On the contrary, the financial statements provided quite different values for the husband’s accounts, business interests and debts. The reason for the differences between the statements was not readily apparent and it was not obvious that $500,000 of the $1 million difference was merely due to a mathematical error. The interrelationship between the husband’s personal account and his companies required even the husband’s counsel to study the supplementary disclosure brief carefully and took him some time to work out.
[29] The amount of capital that the husband had available on which to earn income was one of the figures the arbitrator used to attribute income to the husband and on which he based his award. The presence of the discrepancy may have made it difficult or impossible for the wife’s counsel to properly understand and challenge the husband’s representations as to his capital. As a result, we are not prepared to interfere with the reviewing judge’s conclusion that, in the particular circumstances, the denial of the adjournment was unfair.
[30] The appellant relies on the decision in National Ballet of Canada v. Glasco (2000), 49 O.R. (3d) 230, a case in which an adjournment was also refused. That case held that the refusal of the adjournment did not prevent the applicant from filing his own affidavit material to contradict that of the respondent. Here, this was not the case. More importantly, we cannot say, as the court held in National Ballet, that findings of credibility were unnecessary in order to come to a decision.
[31] Nor is this a case like Tescor Energy Services Inc. v. Toronto District School Board, [2002] O.J. No. 74, where one party complained that documentation concerning material changes had been denied, yet had not availed itself of the opportunity to find out the information for itself by completing site visits to which it was entitled.
[32] To summarize, the refusal of a party’s request will be upheld where the party could readily obtain the information it was seeking for itself or had an opportunity to meet and counter the information tendered. While the differences between the financial statements may now appear to us to be readily apparent with the benefit of hindsight and counsel’s explanation, that does not appear to have been the situation before the reviewing judge. In addition, owing to the timing when the information was presented, the wife’s counsel had no opportunity to counter that information.
[33] Accordingly, we would dismiss the appeal from the setting aside of the arbitrator’s award.
The interim award
[34] Before us, the parties indicated that, if the appeal were dismissed, they were content to have the order made by Lang J.A. continue. As a result, it is unnecessary for us to deal with the question of whether the reviewing judge erred in setting aside the interim award.
Disposition
[35] For the reasons given the appeal is dismissed.
[36] The reviewing judge made no further order as to process. The parties agree, however, that the agreement to arbitrate still exists. The arbitration agreement contains no provision for an arbitrator other than Mr. Kronby to be appointed. Accordingly, we hereby order that an arbitration take place before a new arbitrator agreed upon by the parties within 30 days of this order. Failing agreement, either party may apply on motion to a judge of the Superior Court to appoint an arbitrator.
[37] Pending the arbitration award or further agreement by the parties, an order shall also go in the terms of Lang J.A.’s order.
Costs
[38] The parties may make submissions as to costs. Counsel for the wife shall deliver a bill of costs together with any submissions, in writing, in support of any requested order for costs within seven (7) days of the release of the decision. Counsel for the husband may deliver a response, in writing, within fourteen (14) days of the release of the decision. Counsel for the wife may deliver a brief reply within seventeen (17) days of the release of the decision. The submissions of the parties should be delivered to the attention of the Senior Legal Officer of the court.
RELEASED: NOV 07 2007
KMW “Karen M. Weiler J.A.”
“J.C. MacPherson J.A.”
“Paul S. Rouleau J.A.”
[^1]: In December, counsel for the wife had requested the husband’s position statement but had been told that none would be filed as the husband’s position was the same as it had been before the mediator.