NEWMARKET COURT FILE NO.: FC-14-45894-00

DATE: 20180525

SUPERIOR COURT OF JUSTICE – ONTARIO – FAMILY COURT

RE: Leslie Jane Patterson, Applicant AND: Daniel Sarafian, Respondent

BEFORE: The Honourable Mr. Justice D.A. Jarvis

COUNSEL: C. Baker, Counsel for the Applicant A. Perruccio, Counsel for the Respondent

HEARD: April 19, 2017

Ruling on costS

jarvis j.

[1] This Ruling addresses the issue of the court's jurisdiction to deal with costs of motions reserved, but not decided, where the parties later agree to mediation/arbitration and settled their affairs by Separation Agreement. For convenience of reference, the parties shall be called “wife” and “husband.”

[2] These are the relevant facts: (a) the parties are involved in family law litigation; (b) on February 1, 2017 Kaufman J. reserved the costs of a disclosure motion brought by the husband to a motions judge; (c) the husband's disclosure motion was heard, and a decision made on April 19, 2017. The husband was the successful party. Directions were given with respect to delivery of written submissions for costs in the event that the parties were unable to resolve that issue themselves. Deadlines for filing the parties’ submissions in the Continuing Record were also given; (d) the parties were unable to resolve the issue of costs and subsequently filed their written submissions with the court as directed; (e) the court filing office did not advise me when the parties’ costs submissions had been filed; (f) further motions were brought by the parties and were heard by Kaufman J. on July 12, 2017. Costs of those motions were reserved. A Settlement/Trial Scheduling Conference was scheduled; and (g) on September 12, 2017 a Settlement/Trial Scheduling Conference was held by Kaufman J. Pursuant to Minutes of Settlement signed that day, the parties agreed to proceed with mediation/arbitration. Paragraphs 2 and 3 of the parties’ Minutes of Settlement (which were incorporated into an Order of the court) provided as follows:

2. The parties will equally share in the cost of the aforementioned mediation-Arbitration (50/50) subject to re-apportionment by the mediator/arbitrator.

3. The parties will execute the mediator-Arbitrator’s Standard Form Mediation-Arbitration Agreement.

[3] On September 12, 2017 the parties signed a Mediation/Arbitration Agreement (the “Agreement”). It was unclear from the evidence whether this Agreement preceded the Minutes of Settlement filed with the court that day. Paragraph 5 of that Agreement identified the issues submitted for resolution. These included property, child and spousal support and costs for both interim relief if necessary and for final determination. Paragraph 9 of that Agreement provided as follows:

9. By submitting these issues to arbitration the parties waive any right to further litigate these issues in Court, subject to their rights of judicial review and appeal.

[4] Rights of appeal were preserved.

[5] Paragraph 10 of the Agreement provided for mediation of the issues in dispute before any arbitration. Paragraph 11 of the Agreement identified what material the parties were to provide to the mediator. In particular, paragraph 11 (ii) required the parties to provide a Brief containing a summary of the relevant facts, details of any resolved issues, copies of relevant reports, an up-to-date Financial Statement, copies of any relevant court Orders or agreements, a net family property worksheet and any other information or documentation which the parties thought important for resolution of the issues.

[6] The parties attended mediation on October 24, 2017. After a full day of mediation and negotiation, they signed Minutes of Settlement. The preamble to those Minutes noted that the parties had agreed “to settle all outstanding issues between them.” Paragraph 5 of Minutes stated:

“The parties will enter into a Separation Agreement incorporating the terms of these Minutes. If the parties cannot agree to the wording of a Separation Agreement, [the mediator] will summarily arbitrate the issue.”

[7] The parties signed a comprehensive Separation Agreement (“the Separation Agreement”) having an effective date of December 14, 2017. Those paragraphs relevant to this Ruling are the following:

1. Background

1.4 They (i.e. the parties) agree to be bound by this Agreement, which settles all issues between them.

9. Releases

9.1 This Agreement is a full and final settlement of all issues arising out of the breakdown of their marriage between Leslie and Daniel and all rights and obligations arising out of their relationship…

9.2 Except as otherwise provided in this Agreement, Leslie and Daniel release each other from all claims at common law, in equity or by statute against each other, including claims under the Divorce Act, the Family Law Act, and the Succession Law Reform Act.

10. General Terms

10.2 There are no representations, collateral agreements, warranties or conditions affecting this Agreement. There are no implied agreements arising from this Agreement and this Agreement between the parties constitutes the complete agreement between them.

[8] In January 2018 counsel for the husband contacted the court to inquire about the issue of costs reserved from the April 2017 motion. A teleconference with counsel was arranged. The husband contended that the determination of the costs arising from the April 19, 2017 motion remained outstanding: the wife submitted that the court no longer had jurisdiction to deal with costs because the parties had comprehensively settled their affairs.

[9] Each of the parties filed affidavits, which also contained their submissions, with respect to the matter of jurisdiction. In his affidavit, the husband maintained that the issue of the costs had not been addressed in the Mediation/Arbitration proceedings. He contended that: (a) the “costs” to be resolved in the Mediation/Arbitration process, related to the costs of the mediation/arbitration, not the costs of any process preceding same…” (paragraph 17 of the husband’s affidavit sworn February 4, 2018); (b) relying on the September 12, 2017 Minutes, the husband maintained that the reference to costs “clearly stipulated that the costs of the mediation/arbitration were subject to re-apportionment by the mediator/arbitrator. These were costs of the mediation/arbitration process on a go-forward basis, not retroactive court costs” (paragraph 17); (c) “At no time did I believe that the costs of the Motion before Justice Jarvis on April 19, 2017 were to be addressed by way of mediation/arbitration” (paragraph 18); (d) the husband stated that when the parties appeared before Kaufman J., his lawyer “again made inquiries with the court staff, in the courtroom,” as to when the decision on costs would be rendered. The husband said that he understood that a decision would be rendered in October, 2017 (paragraph 20); and (e) attached as exhibits to the husband's affidavit were copies of emails from the husband's law clerk to and from the lawyer’s process server inquiring about the status of costs, the last of which referenced a December 12, 2017 letter to the supervisor of the court filing office, as well as an email dated December 20, 2017 inquiring about the costs. It is noteworthy that none of these communications was apparently copied to the wife's lawyer.

[10] The wife's position is that the issue of costs was resolved when she and her husband agreed to settle all of their outstanding issues and that, quite apart from the issue of the April 17, 2017 endorsement reserving costs of the husband's disclosure motion, there were earlier endorsements with respect to costs made by Justice Kaufman which had also been reserved but for which there had been no determination either. In her affidavit sworn February 9, 2018, the wife stated that:

1. “[The husband] did not mention, nor did I, the outstanding costs issues before Justices Jarvis and Kaufman [when they entered into their Minutes on September 12, 2017] because I believed it was clear that all outstanding issues would now be dealt with in the upcoming mediation/arbitration” (paragraph 9 of the wife’s affidavit sworn February 9, 2018);
2. At no time after the parties had filed their cost submissions in compliance with the directions given on April 19, 2017 was the wife or her counsel made aware that the husband was making efforts to discover the status of the cost submissions (paragraph 10 of affidavit). The wife maintained that if her husband “still insisted on costs arising from the motion, I would have expected his counsel to make that clear before or during the mediation and in the Mediation/Arbitration Agreement itself. She never did” (paragraph 13);
3. The mediation took a full day. Neither the husband nor his counsel mentioned the issue of costs (paragraph 14); and
4. Elsewhere in her affidavit, the wife referenced the various provisions of the parties’ Minutes of Settlement made September 12, 2017 referring the court proceedings to mediation/arbitration, the Mediation/Arbitration Agreement also signed that day, the Minutes of Settlement made after mediation on October 24, 2017 and the references contained in the December 14, 2017 Separation Agreement to the parties’ affairs being settled.

[11] In his reply affidavit sworn February 22, 2018 the husband maintained that there was “never any Agreement to have the issue of costs… dealt with in mediation/arbitration” (paragraph 6).

Analysis

[12] At all material times before the husband signed either of the Minutes of Settlement, the Mediation/Arbitration Agreement and, finally, the Separation Agreement, he was aware that there had been no decision made dealing with the costs of the April 2017 motion. While he maintains that it was his view that the costs referenced in paragraph 3 of the Minutes of Settlement signed September 12, 2017 and paragraphs 5 and 25 of the Mediation/Arbitration Agreement were limited to the costs of that proceeding, there is no evidence that he raised this issue with the wife before signing the Separation Agreement. His reference to discussions about this issue being raised by his lawyers in open court on September 12, 2017 in the presence of the wife and her lawyer is not borne out by the court recording of that day, is specifically denied by the wife, and his evidence that he expected a decision in October 2017 fails to address why, later that month and certainly in the days and weeks leading up to the negotiated Separation Agreement, he took no steps to further raise that issue with the wife’s lawyer, the mediator or even contacting the judicial secretary. Most concerning is the absence of evidence of any communication between his lawyer and the wife's lawyer at any time about this issue, or any evidence that the wife ever held out or represented to the husband that, as far she was concerned, the issue of costs remained a live issue, notwithstanding the parties’ Minutes and Agreements.

[13] The husband's submission that the issue of costs referenced in the Mediation/Arbitration Agreement limited that issue to the mediation/arbitration proceeding is ill-conceived. In Flowers v. Eickmeier, 2017 ONSC 3376, Di Luca J. allowed an appeal from an arbitrator's decision which limited the costs awarded by the arbitrator to those incurred in the mediation and arbitration process. The Agreement in that case was silent as to what the reference to “Costs” meant, like the Agreement in this case. Di Luca J. held, among other things, that the reference to costs applied to an Order reserving costs and that the arbitrator should have addressed them in his award. Unlike Flowers, the parties in this case settled their outstanding issues after a lengthy mediation and there were two other cost endorsements made in addition to the only one which the husband now argues was not compromised by the parties’ settlement. He makes no mention of these in his submissions. Moreover, the husband conflates the reference to the parties’ obligations to fund the costs of the mediation/arbitration process in paragraph 25 of the Mediation/Arbitration Agreement with the broader issue of costs submitted for resolution in paragraph 5 of that Agreement.

[14] In my view, if the husband believed that the issue of costs reserved after the April 2017 motion was a ‘live” issue when the parties signed either of their Minutes of Settlement, the Mediation/Arbitration Agreement or their Separation Agreement, he should have specifically raised that issue, not only when each of those documents was discussed, then signed, but also during the mediation and the negotiations leading up to the signing of the Separation Agreement. He had every opportunity to put the wife on notice of his position from and after September 12, 2017 and did not.

[15] The parties have settled all of their outstanding issues arising from their family law litigation. Accordingly, this court has no jurisdiction to deal with the issue of costs of those proceedings.

[16] Given the circumstances, there shall be no Order as to costs.

Justice D.A. Jarvis

Date: May 25, 2018