Jasen v. Karassik

95 O.R. (3d) 430

Court of Appeal for Ontario,

O'Connor A.C.J.O., Doherty and Goudge JJ.A.

March 20, 2009

Family law -- Domestic contracts -- New York-resident father and Ontario-resident mother entering into child support agreement -- Agreement constituting "domestic contract" within meaning of s. 35 of Family Law Act -- "Domestic" referring to subject matter of agreement and not to territorial or jurisdictional factors -- Interjurisdictional Support Orders Act not providing complete code for interjurisdictional support proceedings but rather providing alternative process -- Ontario Court of Justice having power to vary contract under Family Law Act -- Family Law Act, R.S.O. 1990, c. F.3.

The parties were unmarried and had a child. The child was born in Ontario and lived there with the mother; the father lived in the United States. In 1994, the parties entered into an agreement dealing with custody and child support. The mother commenced an application to vary the agreement and filed the agreement in the Ontario Court of Justice pursuant to s. 35(1) of the Family Law Act ("FLA"). The father defended the application and did not raise jurisdictional objections. The application judge varied the terms of the agreement and ordered the father to pay retroactive support as well as increased ongoing support. The appeal judge allowed the father's appeal, holding that the application judge did not have jurisdiction under the FLA to vary the agreement because the agreement was interjurisdictional in nature. The appeal judge found that the agreement was a "U.S. contract". He concluded that the Interjurisdictional Support Orders Act, 2002, S.O. 2002, c. 13 ("ISOA") provided a complete code for interjurisdictional support proceedings. The mother appealed.

Held, the appeal should be allowed.

The Ontario Court of Justice did not lack jurisdiction to vary the agreement under the FLA because the father resided out of the jurisdiction at the time the mother sought to vary the agreement. The father attorned to the jurisdiction of the Ontario court. Moreover, there was a real and substantial connection among the parties, the subject matter of the application and the Ontario court such that the application judge properly assumed jurisdiction. [page431]

The agreement was a "domestic contract" within the meaning of the FLA. "Domestic" in s. 35 of the FLA refers to the subject matter of the agreement rather than to territorial or jurisdictional factors. The agreement was a "paternity agreement" within the meaning of the FLA. The fact that the agreement contained provisions which were contrary to the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) as it stood at the time the agreement was entered into did not mean that it was not "entered into in accordance with Ontario's internal law" pursuant to s. 58(a) of the FLA. Section 58 is only engaged if a contract is governed by foreign law. There was no finding to that effect in this case. However, even assuming that the agreement was governed by foreign law, it was "entered into in accordance with Ontario's internal law". That phrase refers to the formal requirements set out in s. 55(1) of the FLA and possibly to matters going to the essential validity of the contract, such as consent and capacity. It does not extend to substantive provisions in a domestic contract such as those relating to deductibility and taxability of support payments under the Income Tax Act.

The appeal judge erred in finding that the ISOA is a "complete code". A resident of Ontario may bring an application for support or variation of a support agreement under either the FLA or the ISOA. Applicants who choose to bring a support proceeding under the FLA against a non-resident father are required to effect service ex juris and to show that Ontario law has a real and substantial connection to the subject matter of the application. If the applicant is successful, the regime provided in the ISOA may be available to the applicant to enforce the resulting order in a reciprocating jurisdiction.

APPEAL from the judgment of Czutrin J. (2008), 2008 38462 (ON SC), 92 O.R. (3d) 283, [2008] O.J. No. 3031 (S.C.J.) allowing the appeal from an order varying a child support agreement.

Cases referred to

Muscutt v. Courcelles (2002), 2002 44957 (ON CA), 60 O.R. (3d) 20, [2002] O.J. No. 2128, 213 D.L.R. (4th) 577, 160 O.A.C. 1, 13 C.C.L.T. (3d) 161, 26 C.P.C. (5th) 206, 114 A.C.W.S. (3d) 634 (C.A.), apld Leonard v. Booker, [2007] N.B.J. No. 381, 2007 NBCA 71, 286 D.L.R. (4th) 451, 321 N.B.R. (2d) 340, 44 R.F.L. (6th) 237, 161 A.C.W.S. (3d) 118; V. (L.R.) v. V. (A.A.), [2006] B.C.J. No. 264, 2006 BCCA 63, 264 D.L.R. (4th) 524, 222 B.C.A.C. 178, 52 B.C.L.R. (4th) 112, 43 R.F.L. (6th) 59, 148 A.C.W.S. (3d) 452, Supp. reasons [2006] B.C.J. No. 1610, 2006 BCCA 341, 270 D.L.R. (4th) 532, 228 B.C.A.C. 315, 54 B.C.L.R. (4th) 273, 43 R.F.L. (6th) 91, 151 A.C.W.S. (3d) 426, distd Other cases referred to Blagaich v. Blagaich, 2007 37352 (ON SC), [2007] O.J. No. 3399, 43 R.F.L. (6th) 350, 159 A.C.W.S. (3d) 860 (S.C.J.); Ghavamshirazi v. Amirsadeghi, [2007] O.J. No. 5359, 166 A.C.W.S. (3d) 848, 2007 62844 (S.C.J.); Jahangiri-Mavaneh v. Taheri- Zengekani 2005 17771 (ON CA), [2005] O.J. No. 2055, 14 R.F.L. (6th) 9, 139 A.C.W.S. (3d) 518 (C.A.), revg (2003), 2003 1962 (ON SC), 66 O.R. (3d) 272, [2003] O.J. No. 3018, [2003] O.T.C. 705, 39 R.F.L. (5th) 103, 124 A.C.W.S. (3d) 744 (S.C.J.); Kendregan v. Kendregan, [2009] B.C.J. No. 30, 2009 BCSC 23, 62 R.F.L. (6th) 82; Mittler v. Mittler, 1988 8645 (ON SC), [1988] O.J. No. 1741, 17 R.F.L. (3d) 113, 12 A.C.W.S. (3d) 125 (H.C.J.); Prichici v. Prichici, 2005 16626 (ON SC), [2005] O.J. No. 1979, [2005] O.T.C. 369, 14 R.F.L. (6th) 425, 139 A.C.W.S. (3d) 281 (S.C.J.); Regina Police Assn. Inc. v. Regina (City) Board of Police Commissioners, [2000] 1 S.C.R. 360, [2000] S.C.J. No. 15, 2000 SCC 14, 183 D.L.R. (4th) 14, 251 N.R. 16, [2000] 4 W.W.R. 149, J.E. 2000-539, 189 Sask. R. 23, 50 C.C.E.L. (2d) 1, [2000] CLLC Â220-027, 95 A.C.W.S. (3d) 385; Rothgiesser v. Rothgiesser (1999), 2000 1153 (ON CA), 46 O.R. (3d) 577, [2000] O.J. No. 33, 183 D.L.R. (4th) 310, 128 O.A.C. 302, 2 R.F.L. (5th) 266, 94 A.C.W.S. (3d) 128 (C.A.); Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, [2004] 2 S.C.R. 427, [2004] S.C.J. No. 44, 2004 SCC 45, 240 D.L.R. (4th) 193, 322 N.R. 306, J.E. 2004-1386, 32 C.P.R. (4th) 1, 132 A.C.W.S. (3d) 142; [page432] Tolofson v. Jensen, 1994 44 (SCC), [1994] 3 S.C.R. 1022, [1994] S.C.J. No. 110, 120 D.L.R. (4th) 289, 175 N.R. 161, [1995] 1 W.W.R. 609, J.E. 95-61, 51 B.C.A.C. 241, 100 B.C.L.R. (2d) 1, 77 O.A.C. 81, 26 C.C.L.I. (2d) 1, 22 C.C.L.T. (2d) 173, 32 C.P.C. (3d) 141, 7 M.V.R. (3d) 202, 52 A.C.W.S. (3d) 40

Statutes referred to

Courts of Justice Act, R.S.O. 1990, c. C.43, s. 138 Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) Family Law Act, R.S.O. 1990, c. F.3, Part III, ss. 33(4) [as am.], (a) [as am.], 35, (1), (2), 37, 51, 55(1), 52(2), 56 [as am.], (1) [as am.], (4)(a), 58, (a), (b), (c), 59 [as am.] Family Relations Act, R.S.B.C. 1996, c. 128 Income Tax Act, S.C. 1970-71-72, c. 63 Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 56.1 Interjurisdictional Support Orders Act, 2002, S.O. 2002, c. 13, s. 51 Uniform Interstate Family Support Act, O.S. , s. 104

Rules and regulations referred to

Child Support Guidelines, O. Reg. 391/97 Family Law Rules, O. Reg. 114/99, Rule 6 Federal Child Support Guidelines, SOR/97-175

Authorities referred to

McLeod, James G., The Conflict of Laws (Calgary: Carswell Legal Publications, 1983) Walker, Janet, ed., Castel & Walker: Canadian Conflict of Laws, looseleaf, 6th ed. (Markham, Ont.: LexisNexis Butterworths, 2005)

Martin Teplitsky, Q.C., for appellant. D. Smith, for respondent. Owen Young, for intervenor the Attorney General of Canada.

The judgment of the court was delivered by

O'CONNOR A.C.J.O.: -- Overview

[1] By order dated April 24, 2007, Cohen J. (the "application judge") of the Ontario Court of Justice varied the terms of a child support agreement (the "agreement") pursuant to provisions of the Family Law Act, R.S.O. 1990, c. F.3 (the "FLA"). She ordered the father to pay retroactive support as well as increased ongoing payments based upon the Ontario Child Support Guidelines, O. Reg. 391/97 (the "Guidelines").

[2] Czutrin J. of the Superior Court of Justice (the "appeal judge") allowed the father's appeal. He held that the Ontario Court of Justice did not have jurisdiction under the FLA to vary [page433] the agreement because the agreement was interjurisdictional in nature. The father lived in the United States and the appeal judge found the agreement was a "U.S. contract". In addition, the appeal judge concluded [at para. 65] that the Interjurisdictional Support Orders Act, 2002, S.O. 2002, c. 13 ("ISOA") provided a "complete code for interjurisdictional support proceedings" and as a result, the Ontario Court of Justice did not have jurisdiction under the FLA to vary the agreement.

[3] The mother appeals to this court with leave. I would allow the appeal. In my view, the agreement is a "domestic contract" as defined in the FLA and as such, the Ontario Court of Justice had the power to vary it under the FLA. In the case of interjurisdictional support proceedings, the ISOA does not displace jurisdiction under the FLA; rather, it provides an alternative process.

Facts

[4] The parties met in 1989. In February 1991, the mother moved to Moscow to live with the father. The parties separated in the spring of 1992 and the mother then returned to Canada. In 1993, she had a child, Bryan. The mother and Bryan have lived in Ontario ever since. In recent years, the father has resided in New York State.

[5] Shortly after Bryan's birth, the mother commenced an application against the father in the Ontario Court of Justice for child support under the FLA. The father retained American counsel and was careful not to attorn to the jurisdiction of the Ontario court.

[6] The father requested a paternity test which established that he was Bryan's father. On July 25, 1994, the parties entered into the agreement. As the title of the agreement indicates, it deals with custody, visitation and child support. The agreement provides that support payments are to be paid in American dollars and indexed according to American cost of living calculations. It also provides that the payments are not tax deductible to the father and are not to be included in the mother's taxable income. This provision was contrary to the Income Tax Act, S.C. 1970-71-72, c. 63 as it stood at the time the agreement was entered into. [See Note 1 below] A recital in the agreement provided that the agreement was final with respect to child support. Pursuant to [page434] the agreement, the mother's claim for child support under the FLA was dismissed with prejudice.

[7] The agreement did not contain a forum selection or a choice of law clause.

[8] Over the ensuing years, the father paid all of the amounts owing under the agreement. The payments were increased periodically in accordance with the indexing provision in the agreement.

[9] On December 7, 2004, the mother filed the agreement in the Ontario Court of Justice pursuant to s. 35(1) of the FLA. Shortly beforehand, she had commenced the application to vary the agreement which underlies this appeal.

[10] The father retained Ontario counsel. The notice of application was served on the father's counsel by special service pursuant to Rule 6 of the Family Law Rules, O. Reg. 114/99.

[11] The father, through his counsel, defended the application. He filed affidavits and his counsel made submissions. The father did not object to the jurisdiction of the Ontario court, nor did he argue forum non conveniens. He did not submit that the agreement was governed by the law of New York State or any jurisdiction other than Ontario.

[12] The application judge allowed the mother's application to vary the agreement. She ordered the father to pay retroactive child support in the amount of $94,824 and increased future child support payments in accordance with the Guidelines based on the father's income as she found it. [See Note 2 below]

[13] The father appealed to the Superior Court of Justice. He raised a number of grounds relating to the merits of the application judge's order. In addition, he submitted, for the first time, that the Ontario Court of Justice lacked jurisdiction because the only process by which the mother could seek to vary the agreement was pursuant to the ISOA.

[14] The appeal judge accepted the father's argument that the Ontario Court of Justice did not have jurisdiction to vary the agreement. He found that even if the father's participation in the proceeding below was sufficient to constitute attornment, it could not confer jurisdiction where none existed. The appeal judge took the view that the mother should bring her application under the ISOA, which in his view [at para. 65] provided a "complete code for interjurisdictional support proceedings". [page435] Given his conclusion as to jurisdiction, the appeal judge did not address the father's other grounds of appeal.

Issues

(1) Did the application judge lack jurisdiction to vary the agreement pursuant to the FLA because: (a) the Ontario Court of Justice lacked jurisdiction over the parties or the subject matter; (b) the agreement is not a "domestic contract" within the meaning of the FLA; (c) the agreement is contrary to s. 58 of the FLA?

(2) Assuming the Ontario Court of Justice had jurisdiction to vary the agreement under the FLA, did the appeal judge err in concluding that the ISOA displaced that jurisdiction and provided the only means by which the mother could apply to vary the agreement in Ontario?

Analysis

1. Did the application judge lack jurisdiction to vary the agreement pursuant to the FLA?

(a) Jurisdiction under the FLA

[15] On this appeal, the father argues that the Ontario Court of Justice lacked jurisdiction to vary the agreement under the FLA because he resided out of the jurisdiction at the time the mother sought to vary the agreement.

[16] Jurisdiction may be asserted against an out-of-province father in three circumstances: the father is physically present in Ontario; the father consents, agrees or attorns to the jurisdiction; or Ontario has a real and substantial connection to the matter being litigated and service ex juris has been properly effected: Muscutt v. Courcelles (2002), 2002 44957 (ON CA), 60 O.R. (3d) 20, [2002] O.J. No. 2128 (C.A.), at paras. 19-20.

[17] In this case, the father was not physically present in Ontario. However, he did appear and participate, through his counsel, on the application. His counsel did not raise any issue that service had not been properly effected nor did he argue that the court lacked jurisdiction. In particular, his counsel did not take the position that the father's residence, New York State, was a bar to the Ontario court's jurisdiction. In the [page436] circumstances, I am satisfied that the father attorned to the jurisdiction of the Ontario court.

[18] I am also satisfied that there was a real and substantial connection among the parties, the subject matter of the application and the Ontario court such that the application judge properly assumed jurisdiction. In Muscutt, Sharpe J.A. outlined the following list of factors relevant to the real and substantial connection inquiry at paras. 77-110: -- The connection between the forum and the plaintiff's claim; -- the connection between the forum and the defendant; -- unfairness to the defendant in assuming jurisdiction; -- unfairness to the plaintiff in not assuming jurisdiction; -- the involvement of other parties to the suit; -- the court's willingness to recognize and enforce an extra- provincial judgment rendered on the same jurisdictional basis; -- whether the case is interprovincial or international in nature; [and] -- comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.

[19] Most of the Muscutt factors support the conclusion that there was a real and substantial connection in this case. There was a strong connection between the forum and the subject matter of the claim, which was an application to vary support for a child who had lived in Ontario with his mother since birth. As discussed above, the father attorned and submitted personally to the jurisdiction of the court. There was no apparent unfairness to him in the Ontario court assuming jurisdiction. While the mother would not necessarily be forced to litigate in another jurisdiction if the Ontario court declined jurisdiction, she would have been compelled to start another proceeding under the ISOA. Further, had analogous proceedings been initiated in a foreign jurisdiction, I am satisfied that Ontario courts would recognize and enforce an order rendered on the same basis as the application judge rendered her decision. Finally, while the case involves a resident of New York State, the application for variation of support for a child who has lived in Ontario since birth can hardly be described as having significant "international" elements. In sum, I am satisfied that there was a real and substantial connection to Ontario in this case. [page437]

[20] As explained in Muscutt, at para. 42, even if there is a real and substantial connection among the subject matter, the parties and the forum, the court retains a discretion to decline jurisdiction on the basis that there is a more convenient forum for the action. In this case, the father did not argue forum non conveniens, nor was there any evidence before the court that there was a more convenient forum for the application.

[21] It is worth noting that had the father raised issues of jurisdiction simpliciter or forum non conveniens in the courts below, the application judge or the appeal judge could have considered many of the factors now relied upon by the father in support of his argument that the agreement is not a "domestic contract" within the meaning of the FLA.

(b) Domestic contract

[22] The father submits that the application judge lacked jurisdiction to vary the agreement because the agreement was not a "domestic contract" within the meaning of the FLA. There are two parts to this argument, which I will consider in turn.

(i) Foreign as opposed to domestic contract

[23] The father submits that the agreement was a "foreign" or "U.S." contract and therefore not a "domestic contract" within the meaning of the FLA. I do not accept this argument. In my view, the father's submission misconstrues the meaning of the word "domestic" in the term "domestic contract". The definition of a "domestic contract", as well as other provisions of the Act, indicate that "domestic" refers to the subject matter of the agreement rather than to territorial or jurisdictional factors.

[24] The application judge varied the support provisions in the agreement pursuant to ss. 35 and 37 of the FLA. Section 35(1) enables a party to a "domestic contract" to file the contract with an Ontario court. Section 35(2) provides that when a contract is filed under subsection (1), a provision for support or maintenance in the contract may be enforced or varied under s. 37 of the FLA as if it were an order of the court where it is filed.

[25] The relevant text of s. 35 reads as follows:

35(1) A person who is a party to a domestic contract may file the contract with the clerk of the Ontario Court of Justice or of the Family Court of the Superior Court of Justice together with the person's affidavit stating that the contract is in effect and has not been set aside or varied by a court or agreement.

(2) A provision for support or maintenance contained in a contract that is filed in this manner, (a) may be enforced; [page438] (b) may be varied under section 37; and (c) except in the case of a provision for the support of a child, may be increased under section 38,

as if it were an order of the court where it is filed.

[26] In making his argument that the agreement is not a "domestic contract", the father relies on a number of factors. He points out that he did not attorn to the jurisdiction of the Ontario court when the mother first applied for support in 1993. That application was dismissed with prejudice. Further, the agreement was prepared by the father's American attorney and uses language typically used in American family law agreements. The father, the payor, lives in the United States and the payments are to be made in American dollars and indexed according to American indicators. The tax consequences of the agreement were inconsistent with Canadian tax law at the time the parties entered into the agreement.

[27] The appeal judge referred to some of these factors and said [at para. 21]:

[T]he evidence is consistent with a finding that the child support contract was a U.S. contract. . .

[28] With respect, I do not agree that any of the factors relied upon by the father lead to a conclusion that the agreement was not a "domestic contract" within the meaning of the FLA. A contract is a "domestic contract" if the subject matter is domestic in nature in that it relates to a family law issue or subject.

[29] Section 51 defines the five types of contracts that are included in the definition of a domestic contract. A "domestic contract" means "a marriage contract, separation agreement, co- habitation agreement, paternity agreement or a family law arbitration agreement". All of these agreements relate to matters that are "domestic" in the sense that they are family law related. None of the definitions contain territorial or jurisdictional limitations.

[30] In addition, s. 58 of the FLA is informative. Section 58 is a choice of law provision and is entitled "Contracts made outside Ontario". It provides:

58. The manner and formalities of making a domestic contract and its essential validity and effect are governed by the proper law of the contract, except that, (a) a contract of which the proper law is that of a jurisdiction other than Ontario is also valid and enforceable in Ontario if entered into in accordance with Ontario's internal law; [page439] (b) subsection 33(4) (setting aside provision for support or waiver) and section 56 apply in Ontario to contracts for which the proper law is that of a jurisdiction other than Ontario; and (c) a provision in a marriage contract or cohabitation agreement respecting the right to custody of or access to children is not enforceable in Ontario.

[31] The choice of law rules in s. 58 support the conclusion that the word "domestic" in the term "domestic contract" refers to the subject matter of the contract being of a family law nature, rather than to territorial or jurisdictional factors. If a domestic contract were meant to be distinguished from a "foreign" contract, then the choice of law rules would not refer to a contract governed by a foreign law as a "domestic contract".

[32] The father argues, however, that if a foreign contract such as the agreement in this case were a "domestic contract" capable of being filed and enforced or varied pursuant to s. 35, then parties would be able to circumvent the requirement of s. 58(a). In the father's submission, s. 58(a) requires that in order to be valid and enforceable in Ontario, a domestic contract must have been entered into in accordance with Ontario's internal law. The father submits that allowing a party to file and enforce or vary a contract governed by foreign law without demonstrating compliance with s. 58(a) would lead to an absurdity. The result would be that any foreign agreement, no matter how egregious its provisions, would be automatically enforceable or capable of variation simply because it has been filed under s. 35(1). I do not accept this argument.

[33] When a contract is filed under s. 35(1), it is open to a party who wishes to challenge enforcement or an application to vary to raise issues relating to the validity or enforceability of the contract before the court. Where choice of law issues are involved, the validity or enforceability of the contract will be determined according to the law mandated by the choice of law rules in s. 58. Contrary to the father's submission, s. 35(2) does not provide that a domestic contract containing a provision for support is automatically deemed to be a court order in all circumstances, regardless of its terms. Section 35 simply provides a summary procedure which enables a party to file a contract with the court and to seek enforcement or variation of a provision as if that provision were an order of the court. This procedure allows parties to take advantage of a variety of statutory processes designed to facilitate recovery of support and maintenance payments.

[34] There is nothing in s. 35 that prevents a party responding to enforcement or an application to vary from raising arguments [page440] with the court that the contract filed under s. 35(1) is not valid or enforceable. Indeed, it would not make sense that the mere filing of a contract that is invalid or unenforceable would have such an effect.

[35] Thus, I do not accept the father's argument that interpreting a "domestic contract" to include contracts governed by foreign laws would have the effect of circumventing s. 58(a) of the FLA.

(ii) "Paternity agreement"

[36] The next question is whether the agreement is a "paternity agreement" within the meaning of the FLA. For the following reasons, I am satisfied that the agreement comes within the meaning of that phrase.

[37] Section 51 defines a "paternity agreement" as an agreement entered into under s. 59. Section 59 provides:

59(1) If a man and a woman who are not spouses enter into an agreement for, (a) the payment of the expenses of a child's prenatal care and birth; (b) support of a child; or (c) funeral expenses of the child or mother,

on the application of a party, or a children's aid society, to the Ontario Court of Justice or the Family Court of the Superior Court of Justice, the court may incorporate the agreement in an order, and Part III (Support Obligations) applies to the order in the same manner as if it were an order made under that Part.

[38] There are two possible interpretations of the definition of "paternity agreement" in s. 51. The first is that in defining a paternity agreement, s. 51 is simply referring to the type of agreements that are described in s. 59. On that interpretation, the agreement in this case clearly qualifies. The parties were not spouses and the agreement provided for the support of a child.

[39] The second possible interpretation of the reference in s. 51 to s. 59 is that it includes only those agreements which have been subject to the court process set out in s. 59. Even if one accepts that interpretation, I do not think that it makes a difference in this case.

[40] While the application in this case was not framed under s. 59, in effect, it engaged the same process. The mother filed the agreement under s. 35(1) and sought to vary it under s. 35(2). Significantly, both the process under s. 35(2) and s. 59 provide that a contract is to be treated as if it were a court order. Under [page441] both processes, the provisions relating to varying a contract under Part III of the FLA apply. The substance of what occurred on the application in this case was the same as if an application had been made under s. 59. Moreover, throughout the proceedings, the father did not object to the court's power to vary the agreement on the basis that it is not a "paternity agreement" because the mother failed to follow the s. 59 process.

(c) Section 58

(i) Section 58(a)

[41] The father submits that when the agreement was entered into, it was contrary to the Income Tax Act which, at the time, provided that child support payments were tax deductable to the payor and taxable to the recipient. The father argues, therefore, that the Ontario court was precluded from varying the agreement because it was not "entered into in accordance with Ontario's internal law" pursuant to s. 58(a) of the FLA. I would reject this argument for the reasons that follow.

[42] Section 58 is only engaged if a contract is governed by foreign law. There has been no finding to that effect in this case. However, even if one assumes that the agreement is governed by a law other than Ontario, I am not satisfied that there has been a failure to comply with s. 58(a).

[43] For convenience, I repeat s. 58(a):

58. The manner and formalities of making a domestic contract and its essential validity and effect are governed by the proper law of the contract, except that, (a) a contract of which the proper law is that of a jurisdiction other than Ontario is also valid and enforceable in Ontario if entered into in accordance with Ontario's internal law;

[44] There are two possible interpretations of this provision. The first, which was assumed by all of the parties to this appeal, is that s. 58(a) is a mandatory requirement for the validity or enforceability of a domestic contract governed by foreign law. That is, regardless of whether the agreement is valid and enforceable under the proper law, in order to be valid and enforceable in Ontario, the agreement must have been "entered into in accordance with Ontario's internal law". Some cases have assumed the correctness of this interpretation, largely without discussion: see Jahangiri-Mavaneh v. Taheri- Zengekani (2003), 2003 1962 (ON SC), 66 O.R. (3d) 272, [2003] O.J. No. 3018 (S.C.J.), at paras. 34-35, revd on other grounds 2005 17771 (ON CA), [2005] O.J. No. 2055, 14 R.F.L. (6th) 9 (C.A.); Prichici v. Prichici, 2005 16626 (ON SC), [2005] O.J. No. 1979, 14 R.F.L. (6th) 425 (S.C.J.), at paras. 47-48; [page442] Blagaich v. Blagaich, 2007 37352 (ON SC), [2007] O.J. No. 3399, 43 R.F.L. (6th) 350 (S.C.J.), at para. 8.

[45] The second interpretation of s. 58(a), which is arguably more consistent with the language and purpose of s. 58, is that it provides an alternative ground for upholding a domestic contract that is governed by foreign law. On this view, resort to s. 58(a) is only necessary if the contract is invalid or unenforceable under the foreign law. In that situation, a domestic contract is nonetheless valid and enforceable in Ontario if it is entered into in accordance with Ontario's internal law: see Mittler v. Mittler, 1988 8645 (ON SC), [1988] O.J. No. 1741, 17 R.F.L. (3d) 113 (H.C.J.), at pp. 129-31 R.F.L.; Ghavamshirazi v. Amirsadeghi, [2007] O.J. No. 5359, 2007 62844 (S.C.J.), at paras. 11-13; James G. McLeod, The Conflict of Laws (Calgary: Carswell Legal Publications, 1983), at p. 386.

[46] It is not necessary in this case to decide which interpretation is correct. For the reasons that follow, I am satisfied that the agreement was "entered into in accordance with Ontario's internal law". That conclusion provides a complete answer to the father's s. 58(a) argument under either interpretation of the section.

[47] In my view, for a contract to be "entered into in accordance with Ontario's internal law", it must at least meet the formal requirements set out in s. 55(1) of the FLA: see Mittler, at p. 131 R.F.L.; Ghavamshirazi, at para. 12; Janet Walker, ed., Castel & Walker: Canadian Conflict of Laws, looseleaf, 6th ed. (Markham, Ont.: LexisNexis Butterworths, 2005), at 25.3.c. Section 55(1) provides:

55(1) A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed.

[48] In addition, the reference to "Ontario's internal law" in s. 58(a) may well include matters going to the essential validity of the contract, such as consent and capacity. It may also be that it includes various provisions of the FLA governing the validity and enforceability of certain terms in a domestic contract: see, e.g., s. 52(2) (provisions limiting spouse's rights to matrimonial home are unenforceable).

[49] However, whatever the scope of s. 58(a), I am satisfied that the phrase "entered into in accordance with Ontario's internal law" does not extend to substantive provisions in a domestic contract such as those relating to deductibility and taxability of support payments under the Income Tax Act. That phrase must be interpreted in the context of s. 58(a) as a whole. Section 58(a) refers to the requirements for entering into [page443] a valid and enforceable domestic contract in Ontario and includes the types of matters I have just mentioned. Further, the general rule in s. 58 is that, subject to limited exceptions set out in s. 58(a)-(c), the validity and effect of a domestic contract will be governed by the proper law of the contract. If a domestic contract had to comply with the entire body of substantive law of Canada and Ontario, there would be no purpose for the general rule.

[50] Aside from his argument regarding the Income Tax Act, the father does not argue, nor is there any evidence, that the agreement is otherwise invalid or unenforceable. The agreement is in writing. No one has suggested it was not signed by both parties or that it was not witnessed. Notably, at the time the agreement was negotiated and executed, the mother was represented by an Ontario lawyer. One can assume she would have been familiar with the relatively straightforward requirements for entering into a domestic contract. Moreover, there is no suggestion that the parties lacked capacity, that either party was under duress or that there were any other defects going to the essential validity of the agreement.

[51] Accordingly, I would reject the father's argument that the agreement was invalid or unenforceable within the meaning of s. 58(a) of the FLA.

(ii) Section 58(b)

[52] Next, the father argues that s. 58(b) limits the Ontario court's jurisdiction with respect to a contract governed by foreign law to those matters specifically authorized by that section -- exercising the powers under ss. 33(4) and 56. For convenience, I repeat s. 58(b):

58. The manner and formalities of making a domestic contract and its essential validity and effect are governed by the proper law of the contract, except that, . . . . . (b) subsection 33(4) (Setting aside provision for support or waiver) and section 56 apply in Ontario to contracts for which the proper law is that of a jurisdiction other than Ontario;

[53] The sections referred to in s. 58(b) set out specific circumstances in which an Ontario court may set aside a domestic contract or certain provisions thereof. Those circumstances include support or waiver of support provisions that would be unconscionable (s. 33(4)(a)), failure to protect the best interest of the child (s. 56(1)) and non-disclosure of financial assets (s. 56(4)(a)), to name a few. [page444]

[54] The father argues that because s. 58(b) does not contain the power to vary a domestic contract governed by foreign law, there is no power to do so. I do not agree. That argument ignores the scheme of s. 58. As an exception to the general rule in s. 58, s. 58(b) prevents parties to a domestic contract from excluding the court's discretion to override or set aside the provisions in domestic contracts referred to in ss. 33(4) and 56, notwithstanding that those provisions may be permitted under the proper law. The fact that s. 58(b) does not refer to ss. 35(2) or 37 does not deprive the court of the power to vary a domestic contract governed by a foreign proper law.

2. The effect of the ISOA

[55] The appeal judge accepted the father's argument that even if the FLA gave the Ontario Court of Justice jurisdiction to vary the agreement, that jurisdiction is displaced by the ISOA, which provides a scheme for the variation of support agreements. The father argues that the ISOA provides the only means by which an applicant can apply to vary an agreement when the payor resides out of Ontario in a reciprocating jurisdiction.

[56] With respect, I conclude that in accepting the father's argument, the appeal judge erred. In my view, a resident of Ontario may bring an application for support or variation of a support agreement under either the FLA or the ISOA. Applicants who choose to bring a support proceeding under the FLA against a non-resident father are required to effect service ex juris and to show that Ontario has a real and substantial connection to the subject matter of the application. If the applicant is successful, the regime provided in the ISOA may be available to the applicant to enforce the resulting order in a reciprocating jurisdiction.

[57] There are three reasons why I conclude that the ISOA does not constitute a "complete code". First, the issue of whether a particular statute provides a "complete code" for the resolution of particular claims is ultimately a question of legislative intent: Regina Police Assn. Inc. v. Regina (City) Board of Police Commissioners, 2000 SCC 14, [2000] 1 S.C.R. 360, [2000] S.C.J. No. 15, at para. 31. There is nothing in the ISOA to suggest that it was intended to remove the right of applicants to proceed under the FLA by effecting service ex juris and demonstrating that the Ontario court has jurisdiction to hear the application.

[58] Second, the ISOA expressly preserves the continued availability of remedies under other legislation. Section 51 of the ISOA reads:

51. This Act does not impair any other remedy available to a person, the Province of Ontario, a province or territory of Canada, a jurisdiction outside [page445] Canada or a political subdivision or official agency of the Province of Ontario, of a province or territory of Canada or of a jurisdiction outside Canada. (Emphasis added)

[59] Third, the broader interjurisdictional support regime contemplates that applicants will not be precluded from seeking remedies in their own domestic courts. The statutes in reciprocating jurisdictions have provisions similar to s. 51 of the ISOA. The American Uniform Interstate Family Support Act, O.S. , which was drafted by the National Conference of Commissioners of Uniform State Laws and adopted in reciprocating U.S. states, explicitly acknowledges the continuing availability of remedies under laws such as the FLA in Ontario. Section 104 provides:

104(a)Remedies provided by this Act are cumulative and do not affect the availability of remedies under other law, including the recognition of a support order of a foreign country or political subdivision on the basis of comity. (b) This Act does not: (1) provide the exclusive method of establishing or enforcing a support order under the law of this State; (Emphasis deleted)

[60] In arguing that the ISOA is a "complete code" for obtaining, varying and enforcing support orders against non- resident payors, the father relies on the decision of the British Columbia Court of Appeal in V. (L.R.) v. V. (A.A.), 2006 BCCA 63, [2006] B.C.J. No. 264, 264 D.L.R. (4th) 524 (C.A.) and the decision of the New Brunswick Court of Appeal in Leonard v. Booker, 2007 NBCA 71, [2007] N.B.J. No. 381, 321 N.B.R. (2d) 340 (C.A.). In my view, both decisions are distinguishable and neither stands for the proposition that the ISOA is a complete code for interjurisdictional support proceedings in all cases. To the extent that they can be taken to stand for this proposition, I would decline to follow them for the reasons stated above.

[61] In V. (L.R.) v. V. (A.A.), the parties married in Illinois. The father was an American citizen who had never resided in Canada. The mother had no connection to British Columbia until she moved to the province with the parties' child after they had been divorced by an order of the Washington State court. Following her move, the mother brought a motion for recognition of the Washington orders and for variation of the access order. The motion judge ordered recognition of the custody and access and child support orders. The mother then brought a motion in British Columbia for an order varying the Washington child support order. The motion judge held that the mother's application constituted an initial application for support under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.). She ordered retroactive [page446] support and payments under the Federal Child Support Guidelines, SOR/ 97-175.

[62] Before the order was entered, the father argued that the court had no jurisdiction to make the order as the parties had been divorced by a foreign court. The mother then moved to amend her notice of motion to include a claim for support under the Family Relations Act, R.S.B.C. 1996, c. 128. The motion judge dismissed the father's motion and allowed the mother's motion to amend her pleading. She also held that she had jurisdiction to make the corollary relief requested by the mother under the Divorce Act.

[63] On appeal, Southin J.A., for a unanimous court, held that the motion judge had no power under the Divorce Act to make an order for child support against the father. She also held that the Family Relations Act did not empower a British Columbia court to make an original order for support against a non-resident parent who had never been a resident of the province or of any Canadian jurisdiction. She stated, at para. 62:

. . . by enacting the [ISOA], the Legislature intended to make a code and did so for a very good reason; that is, to enact legislation which is complementary to legislation existing in jurisdictions with which we have reciprocal arrangements.

[64] In supplementary reasons reported at 2006 BCCA 341, [2006] B.C.J. No. 1610, 270 D.L.R. (4th) 532 (C.A.), Southin J.A. made the following comments regarding the application of the ISOA, at paras. 8-9:

The [ISOA] has a precise mechanism by which a person resident in this jurisdiction may obtain a support order against a person not resident in this jurisdiction. The mechanism engages public officers in both jurisdictions.

The courts of this Province should not entertain any proceedings which might fairly be considered to be wiggling out of the requirements of the scheme, at least in those cases in which one of the parties is a foreigner whose only tie to Canada, the habitual residence of his child, was imposed upon him by his former wife, the custodial parent.

[65] Southin J.A.'s decisions were referred to by the New Brunswick Court of Appeal in Booker, at para. 25, for the proposition that the "the notion of comity and the existence of recourse through a provincial statute that enables foreign orders to be registered -- favour adhering to the interjurisdictional support orders scheme". Larlee J.A. held that the court had no power under the Divorce Act to vary a foreign divorce decree granted in Bermuda -- a reciprocating jurisdiction under the New Brunswick ISOA -- with respect to child support and custody. At para. 33, she concluded that jurisdiction to vary a foreign support order could only be derived from [page447] provincial legislation and noted that the ISOA was provincial legislation "to that effect". At para. 35, she stated that a "foreign support order must be registered under the [ISOA] before it can be varied".

[66] Despite the language used in these cases, I do not take either of them to stand for the proposition that the ISOA provides a complete code that excludes resort to provincial legislation in all cases where the payor is seeking support from an out-of-province father who resides in a reciprocating jurisdiction. V. (L.R.) and Booker primarily dealt with the power of a provincial superior court to vary a support order made by a foreign court as a corollary to a foreign divorce. Generally speaking, the law in British Columbia and New Brunswick is no different than the law of Ontario in this regard: see Rothgiesser v. Rothgiesser (1999), 2000 1153 (ON CA), 46 O.R. (3d) 577, [2000] O.J. No. 33 (C.A.).

[67] While it is true that in V. (L.R.) Southin J.A. held that the court lacked jurisdiction to make an original order for support under the domestic legislation against an out-of- province father, the real concern in that case was the lack of connection among the subject matter of the proceedings, the parties and the British Columbia court: see Kendregan v. Kendregan, [2009] B.C.J. No. 30, 2009 BCSC 23, at para. 42. In the circumstances of that particular case, allowing the mother to serve the father with what was, in effect, a motion to vary a foreign support order under the guise of a fresh application for support under the domestic legislation would have been contrary to the interests of comity. Thus, Southin J.A. "could not have had in mind a situation where there was a real and substantial connection between the province and a non-resident respondent, nor was that issue before the Court": Kendregan, at para. 58.

[68] There is no reason why an applicant may not pursue an out-of-province father for support or for variation of a support provision in a domestic contract where service ex juris has been properly effected and the real and substantial connection test has been met. The real and substantial connection test was developed with the interests of comity in mind. In Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427, [2004] S.C.J. No. 44, Binnie J. relied on the following comments by La Forest J. in Tolofson v. Jensen, 1994 44 (SCC), [1994] 3 S.C.R. 1022, [1994] S.C.J. No. 110, at pp. 1047-49 S.C.R. At para. 60, he stated:

From the outset, the real and substantial connection test has been viewed as an appropriate way to "prevent overreaching . . . and [to restrict] the exercise of jurisdiction over extraterritorial and transnational transactions" . . . . The test reflects the underlying reality of "the territorial limits of law [page448] under the international legal order" and respect for the legitimate actions of other states inherent in the principle of international comity. (Citations omitted)

[69] Finally, as a practical matter, I note that if the father's argument that the only means for obtaining an original support order or varying a support agreement is under the ISOA, then issues of child access and custody would in some cases have to be dealt with in a different proceeding than child support where there is a non-resident payor. That would be an unfortunate result and one that would run contrary to the principle that a multiplicity of legal proceedings should be avoided: see Courts of Justice Act, R.S.O. 1990, c. C.43, s. 138.

[70] In summary, I am satisfied that the appeal judge erred in setting aside the application judge's order on the basis that the ISOA provided the only procedure by which the mother's variation application could be addressed.

Conclusion

[71] I would allow the appeal and remit the father's appeal to the Superior Court of Justice to be heard by a different judge.

[72] I would award costs of the appeal to the mother fixed in the amount of $8,000, inclusive of GST and disbursements. I leave the issue of costs of the prior appeal below to the judge hearing the next appeal.

Appeal allowed.

Notes

Note 1: The Income Tax Act was subsequently amended in 1997: see Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 56.1. The provision in the agreement is now in conformity with the amended Act.

Note 2: The order does not specifically state that the agreement is being varied. However, in her reasons, the application judge made it clear that she was purporting to vary the agreement pursuant to s. 37 of the FLA.