Collie v. Collie

Ontario Reports

Ontario Superior Court of Justice,

Stevenson J.

October 4, 2013

117 O.R. (3d) 697 | 2013 ONSC 6213

Case Summary

Family law — Arbitration — Appeal — Arbitrator appointed to arbitrate interim issues only — Arbitrator issuing interim award finding that calculation valuation report prepared by respondent's expert was adequate and dismissing applicant's motion for order that respondent provide independent business valuation report — Applicant's motion for leave to appeal dismissed — Test for leave to appeal interim arbitration award being that set out in s. 45(1) of Arbitration Act and not that set out in rule 62.02(4) of Rules of Civil Procedure — Applicant free to challenge report at trial — Applicant failing to meet test for leave to appeal under s. 45(1) of Act — Arbitration Act, S.O. 1991, c. 17, s. 45(1) — Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 62.02(4).

Under the terms of the parties' mediation/arbitration agreement, the arbitrator was appointed to arbitrate interim issues only. The agreement provided that the parties would have "the right to review the Arbitration Award in accordance with s. 46 of the Arbitration Act and such right to appeal the Award on a question of law, with leave, as provided in s. 45 of the Arbitration Act and the Family Statute Law Amendment Act". The arbitrator issued an interim award dismissing the applicant's motion for an order that the respondent provide an independent business valuation report. The arbitrator found that the calculation valuation report provided by the respondent's expert was adequate. The applicant moved for leave to appeal that award.

Held, the motion should be dismissed.

The test for leave to appeal the interim arbitration award was that set out in s. 45(1) of the Arbitration Act, not that set out in rule 62.02(4) of the Rules of Civil Procedure. The applicant failed to meet the test for leave to appeal under s. 45(1). As the applicant was free to challenge the report at trial or to obtain a report of his own, the importance to the parties of the matters at stake did not justify an appeal and the determination of the questions of law at issue would not significantly affect the rights of the parties.

Cases referred to

Aronowicz v. Aronowicz (2007), 2007 1885 (ON SC), 84 O.R. (3d) 428, [2007] O.J. No. 295, 154 A.C.W.S. (3d) 761 (S.C.J.); Collie v. Collie, April 18, 2012, Court File No. FS-08-00338385-0000 (Mamo); Ejsymont v. Ejsymont, [2010] O.J. No. 2739, 2010 ONSC 3037, 2010 CarswellOnt 4558 (S.C.J.); Farm Credit Canada v. National Bank of Canada, [2011] S.J. No. 551, 2011 SKQB 321, 382 Sask. R. 162, 31 Admin. L.R. (5th) 111, [2012] 6 W.W.R. 284, 207 A.C.W.S. (3d) 191; Grenville Mutual Insurance Co. v. Co-operators General Insurance Co., [2001] O.J. No. 432, [2001] O.T.C. 73, [2001] I.L.R. I-3928, 103 A.C.W.S. (3d) 172 (S.C.J.); McAsphalt Marine Transport Ltd. v. Liberty International Canada, 2005 11794 (ON SC), [2005] O.J. No. 1424, [2005] O.T.C. 262, 22 C.C.L.I. (4th) 129, 15 C.P.C. (6th) 167, 138 A.C.W.S. (3d) 603 (S.C.J.)

Statutes referred to

Arbitration Act, S.O. 1991, c. 17, s. 45(1), (a), (b)

Rules and regulations referred to

Family Law Rules, O. Reg. 114/99, rules 20, 38, (1), (46)

O. Reg. 575/07 (Courts of Justice Act), s. 6(1)

Rules of Civil Procedure, R.R.O. 1990, Reg. 194 [as am. by O. Reg. 575/07, s. 6(1)], rules 62, 62.02, (4)

MOTION for leave to appeal an interim arbitration award.

Gary S. Joseph and Kristy Maurina, for applicant.

Kenneth A. Cole, for respondent.

Endorsement of STEVENSON J.: —

Introduction

[1] The applicant, James Cameron Collie (the "applicant"), moves for leave to appeal an interim arbitration award of Arbitrator Alfred A. Mamo dated April 18, 2012. Within the arbitration process, the applicant brought a motion seeking an order that the respondent, Gail D. Collie (the "respondent"), provide an independent business valuation report, including, but not limited to, obtaining third party appraisals of all her corporate and trust interests held in Tanjo Investments Limited, Fourth Generation Investments Limited and the Frances Joy Mandell Family Trust, at the date of marriage and the date of separation. The applicant submitted that the calculation valuation report provided by the respondent's expert was inadequate and contained many flaws.

[2] The applicant also took an alternative position on the motion before the arbitrator. He was seeking an award that the respondent be required to conduct a spot audit of the properties owned through her corporate and trust interests at her cost, rather than appraise every property. The applicant proposed that the parties agree on 25 per cent of the real estate assets to be independently valued, and the applicant could then determine if the respondent's valuations were correct. If the valuations were incorrect, the applicant proposed that the respondent be required to conduct an independent valuation of all of her corporate interests.

[3] The report completed by Mr. Cohen, the respondent's valuator, was prepared pursuant to the consent order of Jarvis J. dated March 30, 2010. The order required the respondent to obtain a calculation valuation report. The arbitrator concluded that the report completed by Mr. Cohen was sufficient for the respondent to discharge her onus to provide a value for her property and he dismissed the applicant's motion. [page699]

[4] The applicant moves for leave to appeal on the basis that the arbitrator made many errors of law and fact. Initially at the hearing of this motion, the applicant was also requesting an order permitting the introduction of fresh evidence on the appeal; however, during the course of the hearing of the motion counsel indicated that he would not be pursuing the introduction of fresh evidence, but he was reserving his right to raise the issue at a later date.

[5] Under the terms of the parties' mediation/arbitration agreement (the "agreement"), the arbitrator was appointed to arbitrate interim issues only and the final determination of all issues as between the parties was to be determined by the Superior Court of Justice, under this court file no. FS-08-00338385-0000, unless otherwise agreed between the parties.

[6] As set out in the agreement, specifically at paras. 28 and 29, the parties agreed that they would have "the right to review the Arbitration Award in accordance with s. 46 of the Arbitration Act and such right to appeal the Award on a question of law, with leave, as provided in s. 45 of the Arbitration Act and the Family Statute Law Amendment Act". In para. 29 of the agreement, it was stated that "in addition to the appeal rights provided in s. 45(1) of the Arbitration Act, a party may appeal any Award. Such appeal (but an interim appeal requires leave), shall be on a question of law without leave; a question of fact; a question of mixed fact and law."

[7] Both parties agree that the award was an interim award, but they do not agree on the test to be applied for leave to appeal. The applicant submits that regardless of the test to be applied, he meets the test for leave to appeal. The respondent disagrees and submits that the applicant fails to meet the test for leave to appeal.

Issues

[8] The following are the issues for determination:

(i) What is the test for leave to appeal the interim arbitration award?

(ii) Does the applicant meet the test for the granting of leave to appeal?

Issue #1 -- What is the test for leave to appeal the interim arbitration award?

[9] With respect to obtaining leave on questions of law on an interim award, the applicant submits that the parties clearly agreed in their agreement that s. 45(1) of the Arbitration Act, S.O. 1991, c. 17 [page700] would apply, not rule 62.02(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended by O. Reg. 575/07, s. 6(1), as argued by the respondent. He submits that the respondent's position makes no logical sense as the parties were proceeding in accordance with the Arbitration Act and the intention was that the Arbitration Act would apply. He further contends that there was no indication in the agreement that in order to obtain leave to appeal on an interim award the parties would have to resort to the Rules of Civil Procedure.

[10] Section 45(1) of the Arbitration Act states:

Appeal on question of law

45(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that,

(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and

(b) determination of the question of law at issue will significantly affect the rights of the parties.

[11] Counsel for the respondent contends that counsel for the applicant has not provided the correct test for leave to appeal an interim award. He submits that all of the case law provided by the applicant considers final decisions on questions of law, but no case law was provided with respect to matters that were interlocutory in nature. He contends that the wording of the parties' agreement is imprecise, that the proper test for this interlocutory issue is set out in rule 62.02(4) of the Rules of Civil Procedure and that s. 45(1) of the Arbitration Act does not govern.

[12] Rule 62.02(4) of the Rules of Civil Procedure states:

Grounds on Which Leave May Be Granted

62.02(4) Leave to appeal shall not be granted unless,

(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or

(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

[13] I do not agree with the submissions of the respondent that the test for leave to appeal in this matter is pursuant to rule 62.04(4). The parties signed the agreement for the purpose of having interim issues determined. If Rule 62 were to be [page701] applicable, this would render paras. 28 and 29 of the agreement meaningless given those paragraphs discuss appeal procedures under the Arbitration Act.

[14] Further, rule 38(46) of the Family Law Rules, O. Reg. 114/99 ("FLRs") contemplates the procedure to be followed with respect to appeals of family arbitration awards. There is no differentiation between final or interim arbitration awards. Rule 38(46) also specifies numerous subrules under Rule 38 that apply to appeals of family arbitration awards. The rule does not provide that subrule (1) applies, which is the subrule stating that Rule 62 of the Rules of Civil Procedure is applicable. In addition, rule 62.02 also makes it clear that the rule governs interlocutory appeals from a judge.

Issue #2 -- Does the applicant meet the test for the granting of leave to appeal?

(i) Section 45(1)(a) -- The importance to the parties of the matters at stake in the arbitration justifies an appeal

[15] The applicant contends that the arbitrator erred as follows:

(i) he erred in law in finding that the report by Mr. Cohen was sufficient to discharge the respondent's obligation to provide a value for her property;

(ii) he erred in law and fact in concluding Mr. Cohen's report satisfied the respondent's obligation to provide the "best estimate" of the value of her property and erred in his assessment of "best estimate" based on the facts of the case;

(iii) he erred in law and fact in failing to recognize that the respondent, as a shareholder of the corporation, is in a better position to obtain an independent business valuation report of her own asset than the applicant;

(iv) he erred in fact in ignoring the applicant's position that the respondent should be required to obtain a spot audit valuation of 25 per cent of her real estate assets;

(v) he erred in law and fact in giving undue emphasis to the fact that the respondent is a minority shareholder in a large private corporation, while ignoring the fact that the corporation is a family owned business;

(vi) he erred in both law and fact in concluding that the respondent, as a minority shareholder, was not in a position [page702] to obtain third party appraisals of the properties, absent compelling evidence in this regard;

(vii) he erred in law and fact in assessing the respondent's obligation to value her assets for family law purposes based on general corporate and oppression remedy principles, while ignoring the fact that this is a family owned business;

(viii) he erred in law and fact in concluding that the applicant's request imposed on the respondent an obligation to value her own assets to an extent that was beyond her control and absent any evidence in this regard or that such a request would be refused by the majority shareholders;

(ix) he erred in law in concluding that it was reasonable for the respondent to provide a value for her property interests which did not include valuing the underlying assets;

(x) he erred in law in failing to give proper consideration to the principles enunciated in Rule 20 of the Family Law Rules, namely, that information be disclosed if it would be unfair to the party who wants the disclosure to carry on the case without it, the information is not easily available by other methods, and the disclosure will not cause unacceptable delays or undue expense; and

(xi) he erred in law and fact in concluding that the respondent's request did not meet the principles of reasonableness or proportionality in this case.

[16] The applicant submits that there is little doubt that the issue of a proper valuation is significantly important to the parties as the interests held by the respondent on the date of marriage and date of separation are major assets of the respondent and subject to equalization.

[17] He contends that the report completed by Mr. Cohen does not even meet the standard of a proper calculation valuation report and that the respondent has an obligation to provide a more comprehensive report. He relies on the decision of Gordon J. in Ejsymont v. Ejsymont, [2010] O.J. No. 2739, 2010 ONSC 3037, 2010 CarswellOnt 4558 (S.C.J.), at paras. 47 and 48, in support of his position that the report provided by Mr. Cohen would be insufficient for trial.

[18] The applicant submits that there is little or no corroboration with respect to the information provided as Mr. Cohen accepted management's indication of the value of the majority of the corporate assets, which consist primarily of land. He [page703] contends that there is no basis for management's estimates of value in the report and there is a lack of independent analysis or corroboration. He argues that given the inadequacy of the report of Mr. Cohen, the applicant's own expert's review was limited to isolating the impact of the high discount rates that were applied by Mr. Cohen.

[19] The applicant submits that the valuation will have a significant impact on the financial position of the parties and that the amount in issue is in the millions of dollars. He further argues that the matters raised will have significant ongoing and future impact on the parties. His position is that the respondent will owe him a substantial equalization payment which makes an accurate valuation of the respondent's corporate assets essential.

[20] It is the applicant's position that the respondent is a shareholder in a family owned company. He argues she is in the best position to obtain information to complete a proper valuation and that this should not be left to the applicant. He contends that if a proper valuation is not completed by the respondent, this will significantly affect his rights with respect to equalization given his lack of access to this information and the limitations that this places upon his expert.

[21] The applicant argues that unlike the respondent, he is not a shareholder. He submits that the respondent is the cousin to the president of the corporation, the granddaughter of the individual who originally set up the corporate structure and there is a family connection. He asserts that the respondent's minority interest does not preclude her from obtaining the necessary information. Counsel for the applicant submits that the respondent clearly has more control and the ability to obtain information and she has not done so. He submits that the respondent uses her minority interest and alleged inability to obtain more information as a "smokescreen". Additionally, he contends that to ask the applicant to accept that the average value per acre of the land in question has declined over 25 years in the Greater Toronto Area as set out in the report of Mr. Cohen is significant and greatly affects the applicant's equalization claim.

[22] The applicant relies upon the decision of Perell J. in Aronowicz v. Aronowicz (2007), 2007 1885 (ON SC), 84 O.R. (3d) 428, [2007] O.J. No. 295 (S.C.J.), at paras. 32 and 34, in support of his position that in considering the importance to the parties of the matter at stake, a significant impact on the financial positions of the parties would satisfy the prerequisite of being important to the parties, but is not a necessary factor for leave to appeal to be [page704] granted. He also argues that as set out in Aronowicz, the amount in issue, in both absolute and relative terms, is relevant to determining the importance to the parties of the matters in issue.

[23] The applicant further contends that as stated in Aronowicz, at para. 29, a future ongoing significant impact is a sufficient factor for deciding whether the first prerequisite of the test for leave to appeal is satisfied. Additionally, whether or not the determination of the question of law will have an impact on the future of the right of the parties is a consideration; however, future impact is not a necessary factor.

[24] The applicant also relies upon the decision of Pedlar J. in Grenville Mutual Insurance Co. v. Co-operators General Insurance Co., [2001] O.J. No. 432, [2001] I.L.R. I-3928 (S.C.J.), at para. 7, where a $200,000 issue was found to be significant to the parties and sufficient to satisfy the criteria under s. 45(1)(a) of the Arbitration Act.

[25] In contrast to this, the respondent contends that the applicant relies upon case law in which quantifiable financial gains to a party could be lost if leave to appeal is not granted. She argues that there is no quantifiable gain available to the applicant if the respondent is ordered to produce a further valuation report because the applicant has not produced any expert evidence providing that the value ascertained by Mr. Cohen is incorrect. It is the respondent's position that a further valuation could corroborate Mr. Cohen's report, or result in a report ascribing a lower value to the respondent's corporate interests. The respondent contends that the issue is only important to the applicant if the new valuation report results in a value for the respondent's business interests that is significantly higher than that set out in Mr. Cohen's report.

[26] The respondent also argues that she has spent over $100,000 on Mr. Cohen's valuation report and there would be substantial costs of obtaining a further report. She submits that proportionality needs to be considered. Additionally, the respondent submits that she would have a significant date of marriage deduction as she owned her minority interest at both the date of marriage and the date of separation and it is unlikely that the potential gain or loss exceeds the cost for a further report. The respondent further argues that due to her minority interest she has very little control.

[27] The respondent distinguishes the decision of Farm Credit Canada v. National Bank of Canada, 2011 SKQB 321, [2011] S.J. No. 551, 31 Admin. L.R. (5th) 111 (Q.B.) also relied on by the applicant. She submits that the court concluded in that case that an appeal was justified as the matter was important to the parties [page705] because the determination of the question could result in the gain or loss to either party of several million dollars. Given the respondent had a minority interest at the date of marriage that would allow for a significant deduction, she again argues that it is unlikely that the gain or loss exceeds the costs of obtaining a further report.

[28] I cannot conclude that the importance to the parties of the matters at stake justifies an appeal. In this case, while there is speculation by the applicant that a further independent business valuation report may result in a difference in the values provided by Mr. Cohen in his report, and that the properties concerned are worth millions of dollars, there is nothing provided by the applicant's expert and filed on this motion to lead me to conclude that there is a large monetary issue at stake between the parties that could be resolved by a valuator's report. I agree with the submissions of counsel for the respondent that there is no evidence that a further valuation report will result in any difference in values than those provided by Mr. Cohen and, in fact, the values could be lower on date of separation and could result in a significant date of marriage deduction for the respondent.

[29] There is no doubt that the issue of equalization is important to both parties; however, this is a report that has been presented by the respondent and it is open to the applicant to challenge that report at trial. This decision by the arbitrator is not decisive of the outcome of the case as the applicant preserves his right to challenge the report at trial. This was referred to in the arbitrator's very detailed award wherein he addressed the issue raised of issue estoppel. Despite the fact that the applicant had consented to the respondent obtaining a calculation valuation report as per the order of Jarvis J., the arbitrator concluded that the applicant, in consenting to the order, was not making any commitment with respect to the appropriateness of a calculation valuation report. This can also be done at trial. The trial judge will be able to assess the quality of the evidence and will be able to draw any adverse inferences if the report is found to be inadequate.

(ii) Section 45(1)(b) -- Determination of the questions of law at issue will significantly affect the rights of the parties

[30] The applicant relies on the decision of Dambrot J. in McAsphalt Marine Transport Ltd. v. Liberty International Canada, 2005 11794 (ON SC), [2005] O.J. No. 1424, 22 C.C.L.I. (4th) 129 (S.C.J.), at para. 36, in support of his position that a significant impact on [page706] the rights of the parties in this matter is sufficient for meeting the second prerequisite. He argues that following McAsphalt, satisfaction of the second prerequisite does not require a future or ongoing impact on the parties but, in this case, the matters raised will have a significant ongoing and future impact on the rights of the parties. The applicant contends that the respondent will owe him a significant equalization payment given her business and trust interests and, as such, an accurate valuation of these assets is critical.

[31] The applicant further contends that it is the respondent's obligation to provide an accurate and reliable valuation report and any determination of whether the report by Mr. Cohen satisfies the respondent's obligation to value assets will make a significant difference in the results. He argues that without a proper report, the applicant's expert is limited in his review to isolating the impact of the high discount rates that were applied by Mr. Cohen. He submits that he outlined in his February 23, 2011 affidavit filed that his expert had concerns but that these concerns could not be attached to his affidavit due to a confidentiality agreement that he had to abide by concerning the respondent and the companies in question.

[32] The applicant also argues that the proposed appeal raises important matters of principle as the issues will not only significantly impact the rights of the parties, but may significantly impact the way calculation valuation reports are treated for litigation purposes.

[33] The respondent disputes these arguments raised by the applicant for a variety of reasons. Firstly, she contends that the applicant's rights have not been affected by the arbitrator's award. She submits that the applicant has access to all of the documents that Mr. Cohen relied on for his valuation, he has all of the addresses with respect to the properties at the date of marriage and the date of separation (a number of those properties being different at these two dates), and he is at liberty to obtain a new report or conduct independent appraisals to satisfy himself as to whether Mr. Cohen's report is accurate.

[34] The respondent contends that given this is an interim award, there is nothing preventing the applicant from obtaining his own report and challenging Mr. Cohen's report at trial. As such, she argues that based on the McAsphalt decision, wherein Drambot J. stated, at para. 36, that the second prerequisite "is meant to eliminate grounds of appeal that are less than decisive to the outcome of the matter", the applicant's grounds of appeal are rendered "less than decisive to the outcome of the matter" given these above factors. [page707]

[35] The respondent further contends that to force her to obtain a further valuation would be prohibitively expensive and affect her rights to proceed with litigation. She submits that she has already spent $100,000 for Mr. Cohen's report and proportionality and reasonableness also need to be considered when reviewing this second part of the test for leave to appeal.

[36] I agree with the submissions of the applicant in that the interim arbitration award does not significantly affect the rights of the parties. The applicant has the ability at trial to challenge Mr. Cohen's calculation valuation report. It is not unusual for the parties to differ significantly with respect to their views regarding the value of an asset. The trial process ensures that both parties are given an opportunity to contest the valuation of assets and the methods used to value those assets. This interim award does not preclude the respondent from opposing the report, from obtaining a report on his own and from proceeding to trial.

[37] I agree with the comments made by the arbitrator, at para. 73 of his award, wherein he stated:

I make no comment on the appropriateness of the value attributed by the Cohen Report to Ms. Collie's business interests, his methodology, assumptions or conclusions. The value that should be attributed to a particular item of property is a question of fact to be decided by the court or the arbitrator charged with the responsibility of making that decision in order to arrive at Ms. Collie's net family property. That decision will be made on the totality of the evidence educed at the hearing.

[38] The respondent has available to him the report of Mr. Cohen with attached schedules, including addresses of the properties in issue as at the date of marriage and at the date of separation. There is nothing precluding the applicant from obtaining his own appraisals if he disputes the values in Mr. Cohen's report or obtaining appraisals of some of the properties as he suggested when arguing before the arbitrator for a spot audit. The valuation was completed using a going concern approach in order to determine fair market value. The applicant's expert has every opportunity to challenge this approach, Mr. Cohen's methodology and prepare a report outlining his concerns.

[39] As I find that the applicant has not met the test under s. 45(1) of the Arbitration Act, his motion for leave to appeal is dismissed.

Order

[40] I order the following:

(i) the applicant's motion for leave to appeal the arbitration award of the arbitrator, Alfred A. Mamo, dated April 18, 2012 is dismissed; [page708]

(ii) the dismissal is without prejudice to the applicant's right to object to the valuation report of Mr. Cohen at trial;

(iii) I urge the parties to agree on costs, but if they are unable to do so, the respondent shall serve and file written costs submissions, no longer than two double-spaced pages, along with a bill of costs and offers to settle, within 14 days. Any reply submissions by the applicant shall be served and filed ten days thereafter.

Motion dismissed.

End of Document