Court File and Parties

COURT FILE NO.: FS-17-21900 DATE: 20180815 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Pamela Dunsmore, Appellant AND: Robert Ross Dunsmore, Respondent

BEFORE: Kiteley J.

COUNSEL: Brahm D. Siegel, for the Appellant William C. Fanjoy, for the Respondent

HEARD: May 8, 2018

Endorsement

[1] This is an appeal pursuant to s. 45(2), (3) and (6) of the Arbitration Act [1] from the award of Arbitrator Judith Nicoll dated October 25, 2017. For the reasons that follow, the appeal is dismissed.

Background

[2] The parties married in September 1982 and had children born in 1983 and 1986. They separated in early March, 2006. In 2006 the Appellant started proceedings in this court. By separation agreement dated April 15, 2011, they settled all issues. The divorce was granted in 2012.

Separation Agreement dated April 15, 2011

[3] Paragraph 4 of the Separation Agreement dated April 15, 2011 (“the Separation Agreement”) is a detailed dispute resolution term. If the parties disagreed about a reviewable or variable term they agreed to try to resolve the dispute through negotiation. If either sought a change in spousal support, life insurance coverage or medical benefits, s/he was required to give to the other notice of the proposed change, evidence supporting the proposed change, and any requests for information necessary to determine the issue. The recipient was required to answer within 30 days. If the parties were unable to agree within 30 days of the request for review or variation, they agreed to try mediation and if that failed then arbitration.

[4] In the separation agreement, the parties selected Judith Nicoll to act as mediator and agreed to share the costs of mediation equally. If they could not resolve the issue by mediation, they agreed to arbitrate the dispute with Ms. Nicoll. They agreed that the arbitration would be conducted as a secondary arbitration under the Arbitration Act and the Family Statute Law Amendment Act, 2006 [2]. In addition, they agreed to waive s. 35 of the Arbitration Act. The costs were to be shared equally subject to re-apportionment by the arbitrator.

[5] Paragraph 5 of the Separation Agreement contains the spousal support provisions of the agreement. The following provisions are relevant to this appeal:

5.1 Ross [the Respondent] will pay Pamela [the Appellant] spousal support of $19,500.00 a month, starting November 1, 2010. Ross will make the payments, in equal amounts, on the first and fifteenth day of each month. This shall not be variable by either party before Ross becomes age 65 unless there is a material change in circumstances prior to Ross becoming age 65. The quantum of support is based upon Ross having income of $700,000.00 and Pamela having income of $10,000.00.

5.4 Pamela knows that she must contribute to her own support to the best of her ability.

5.5 Spousal support may be changed by either party if there is a material change in circumstances, even if the change was foreseen or foreseeable. The change may be:

(a) in either party’s financial position, each party shall supply the other with a copy of his or her income tax return for the previous year on or before June 1 st along with all and every document reasonable [ sic ] required to establish income including but not restricted to the material referenced in Para 5(7) herein.

(b) Pamela’s remarriage,

(c) Pamela’s cohabitation with another person in a relationship resembling marriage for more than 6 months,

(d) in Ross’ health,

or any other similar change.

5.7 Notwithstanding any of the foregoing, spousal support shall be reviewed upon Ross becoming 65 years of age. This review may be commenced by either party 5 months prior to Ross becoming 65 years of age. If the parties cannot, within 3 months prior to Ross becoming 65 years of age, agree upon the spousal support to be paid upon Ross becoming 65 years of age, then that issue will be the subject of the Dispute Resolution section herein. This review provision applies also to the life insurance to be utilized to secure the support obligation. In review of that support (and life insurance) the income of the parties at that time (and the expense of any life insurance premiums) shall be utilized to make the determination of the appropriate levels of support and life insurance. In order to make that review the parties will provide each other with their income tax returns and any corporate financial statements (for private corporations in which they have shareholdings) for the prior 3 years. [Emphasis added.]

[6] Pursuant to paragraph 6.1 Ross was required to continue to make premium contributions necessary to provide medical, extended health and dental coverage subject to the Appellant’s continuing eligibility in accordance with the Plan. Pursuant to paragraph 6.3, the parties agreed that Ross’s responsibility to pay the premiums would be reviewed when he became age 65.

[7] Pursuant to paragraph 7.1, Ross agreed to keep a life insurance policy on his life in the amount of $1.2 million naming Pamela as beneficiary of $600,000. He agreed to maintain that policy and designation until he became age 65 and then could reduce to $500,000. He was not required to maintain that policy beyond his age 71 years.

[8] Pursuant to paragraph 8, Ross made an equalization payment and pursuant to paragraph 9, Ross transferred his interest in the matrimonial home to Pamela.

The Review

[9] In May 2014, in anticipation of his 65 th birthday on July 25, 2014, the Respondent informed the Appellant he wished to review the support and life insurance provisions and that he wanted Ms. Nicoll to conduct the review as provided for in the separation agreement.

[10] For reasons explained in the material, the process did not unfold within the time frames anticipated by the separation agreement. In late October 2016, each with legal advice, the parties signed a mediation/arbitration agreement that included the following:

1. The following issues are submitted for determination on a final and/or interim basis:

Entitlement to spousal support;

Duration of spousal support;

Quantum of spousal support;

Lump sum support;

All property issues including security issues;

Costs;

Such further issues that may arise from the above or otherwise, to be specified, as and when such issues arise by each party.

4. The arbitration will be conducted in accordance with the laws of Ontario and the laws of Canada as they apply in Ontario, as more particularly described in paras. 5-6 below.

5. Issues relating to . . . spousal support (on an interim and permanent basis) shall be determined in accordance with the provisions of the Family Law Act, R.S.O. 1990, c. F.3, as amended or the Divorce Act . . . as amended, as may be applicable.

6. By submitting to arbitration those issues designated in paragraph 1 above, to the extent that the law allows, the parties hereby waive any right to further litigate those issues in court, whether pursuant to the Family Law Act, the Divorce Act, or any other statute, subject to the rights of judicial review and appeal.

[11] In paragraph 21, the parties agreed to the exchange of documents including a current sworn financial statement and income tax returns and notices of assessment for the most recent three years.

[12] Pursuant to paragraph 24, the parties agreed as follows;

The Mediator/Arbitrator’s award shall be final and binding upon the parties and may be incorporated into an order or judgment, as the case may be, of the Ontario Superior Court of Justice, Family Court, at the initiation of either party.

[13] In paragraph 28 the parties agreed as follows:

The parties acknowledge that they are specifically prohibited by legislation from waiving their rights of appeal and, accordingly, acknowledge and agree to the following:

Any award may be appealed as follows:

A party may appeal the award on . . .

(1) a question of law, . . .

(3) a question of mixed fact and law.

[14] The mediation was held on October 25, 2016 and was not successful.

[15] In anticipation of the arbitration, the parties exchanged extensive affidavits with exhibits, the transcripts from the questioning of the Respondent in 2006 and in 2009, and facta. On June 26, 2017, counsel made oral submissions.

Arbitration Award [3]

[16] At paragraph 8, the Arbitrator indicated that the Respondent sought the following relief:

(a) A reduction of spousal support from: $19,500 from age 65 (July 25, 2014) to $8,000 per month to the end of 2016 and to $5,000 per month commencing January 1, 2017.

(b) Termination of support on December 31, 2017.

(c) If support not terminated effective December 31, 2017, if he is declared by a physician to be incapable of practicing law, spousal support would be suspended until he is able to resume practice. If he is in receipt of any disability payments then the issue of what, if anything, should be paid for Pam’s support will be dealt with by me by way of a subsequent mediation/arbitration process.

(d) That he no longer be required to provide medical coverage to Pam effective the earlier of: i) his retirement from the practice of law; ii) December 31, 2017; (iii) when such benefits are no longer available to him from his law practice; and iv) his being declared by a physician to be incapable of practicing law.

(e) That his obligation to provide life insurance to secure his support obligation end on December 31, 2017. In the alternative, if support continues to be payable beyond December 31, 2017, that his obligation to provide life insurance should end upon the earlier of: i) the termination date for the support; and, ii) his becoming 70 years of age (July 25, 2019). Furthermore, that the current amount of the death benefit of $500,000 be permitted to be reduced to $200,000 immediately.

(f) That all arrears of support be rescinded and that he be repaid overpayment of support in the amount of $273,660 (to the end of May 2017 plus any payments thereafter).

(g) That he be reimbursed for his costs of this arbitration, plus the $1,500 paid by him toward Pam’s costs of the mediation.

[17] In paragraph 9, the Arbitrator indicated that the Appellant sought the following relief:

(a) Retroactive lump sum spousal support of $120,931.17 (after tax) and payable forthwith.

(b) Commencing January 1, 2017, Ross to pay to Pam ongoing spousal support in the amount of $21,021, with credit to Ross for payments received by Pamela in 2017 per month.

(c) Ross to take all necessary steps to facilitate Pamela dealing directly with the provider of the health insurance coverage that he is maintaining for her benefit.

(d) Ross’s life insurance to end upon Ross becoming 71 years of age. Ross to be permitted to reduce the death benefit from $600,000 to $500,000 upon attaining the age of 65 years of age.

(e) That the material change clause contained in the parties’ Separation Agreement remain in full force and effect.

(f) Costs on a full indemnity basis.

[18] The Arbitrator released the award dated October 25, 2017. Both counsel made written requests for clarification to which the Arbitrator responded on February 9, 2018. The award as clarified, was as follows:

72. I therefore award the following further spousal support:

(a) Spousal support shall continue to the end of December 2017 on the existing separation agreement in the amount of $19,500;

(b) Effective January 1, 2018, and continuing up to and including December 31, 2018, spousal support shall be paid by Ross to Pam in the amount of $9,000 per month;

(c) Effective January 1, 2019 and continuing up to and including December 31, 2019, spousal support shall be paid by Ross to Pam in the amount of $4,500 per month;

(d) Effective January 1, 2020 and continuing up to and including June 30, 2020, spousal support shall be paid by Ross to Pam in the amount of $2,250 per month; and

(e) With the last payment for June 2020, spousal support shall forever terminate. . . .

74. The life insurance provisions of the separation agreement shall be amended to provide that the existing $500,000 of life insurance shall be reduced by Ross to the amount of $176,404. This life insurance obligation shall be upon the same terms as the provisions of section 7 of the existing separation agreement except that any life insurance existing at the date of Ross’s death, shall be used as a fund to pay out the after tax spousal support still owed to Pam under the terms of this award with any balance then remaining to be paid to Ross’s estate. . . . I therefore award that, upon payment in full of the outstanding arrears in the amount of $77,340, the obligation for life insurance will be reduced to $100,000.

75. With respect to retroactive adjustments as requested by both parties, I find that there is no basis upon which to award an increase in spousal support for the years in question, nor was there a basis upon which to reduce the spousal support for those years. The separation agreement did not provide for an automatic annual adjustment to spousal support nor, in my view, did it oblige even annual disclosure. It did not provide for annual indexing. Clearly, given the minimal debt that Pam had at the time of this review, she did not incur debt to live and, in fact, increased her net worth considerably. I find there was no basis for a retroactive increase, as Pam was clearly able to live within her means on the support she received, and in fact, was able to accumulate additional wealth.

76. With respect to Ross’s request that there be a retroactive reduction in support to the date of the anticipated review, being July 2014, had Ross’s circumstances actually changed at that time, it may have been in order to consider a reduction in support. However, by the report of either of the experts, Ross continued to have income which was consistent with that upon which the agreement was premised. As he stated in his June 6, 2017 affidavit: “I had no reason to think I would have to pay retroactive support. I had always thought my income was around or under the $700,000 annual threshold set out in the Separation Agreement. I had no idea what Pam’s financial position (including her income) was for the years 2014 and 2015, until she provided disclosure within this mediation process.”

77. The only issue that remains for me to consider as to whether there should have been a retroactive reduction arises from the delay in getting to this review. Both parties suggest that the other is at fault, at least in part, for this matter being delayed. Unfortunately, Pam’s former solicitor, Mr. Catalano was unwell through the period when Ross first sought the review and subsequently passed away. While there may be an argument that it was incumbent upon Pam to have moved more quickly to retain new counsel, given Mr. Catalano’s circumstances, Pam also refers to some delays on Ross’s part with respect to disclosure and also to the fact that he only retained an expert some considerable time after the review process was well under way including after the mediation had taken place.

78. In the circumstances, I decline to reduce the spousal support payments prior to January 1, 2018. I find that this is the appropriate result given the income level that Ross was largely able to sustain and the fact that he did not retire nor does he intend to retire for at least the term of his new lease. [4]

79. Accordingly, I find that Ross is in arrears with respect to spousal support in the amount of $77,340 for the amounts that he reduced Pam’s spousal support to pending this review. The level of insurance that I have calculated as owing takes into consideration that this sum remains outstanding.

80. Ross shall continue to provide medical and dental benefits to Pam during the next 32 months that he is obliged to provide spousal support, provided such medical and dental benefits are available to him through his practice. This obligation shall end forever on June 30, 2020.

81. The spousal support provisions and insurance and medical coverage shall be subject to a material change of circumstances which shall be limited to Ross’s full retirement prior to June 30, 2020 based upon ill health or other involuntary circumstances.

82. In any application based on a material change in circumstances, the provisions of section 17 of the Divorce Act will apply.

83. Based on the evidence before me, I find that the spousal support provisions of this Award meet the objectives as set out in s. 15(2) of the Divorce Act.

84. I also find that it is not necessary, given my findings that I have made herein and the form and substance of the Award that I have made, to make any findings with respect to the differences between the reports provided by the two experts retained by the parties. For those same reasons, I do not find it necessary to comment on any limitations of either of the reports.

85. An award will issue pursuant to the reasons set out herein.

Appeal from the Arbitration Award

[19] In her Notice of Appeal dated November 24, 2017, the Appellant appeals from the decisions contained in paragraphs 72 and 74. The appeal record consists of 4 volumes of the material before the Arbitrator and a brief volume dealing with clarifications made by the Arbitrator.

[20] In her factum, the Appellant takes the position that the appeal involves the proper role of an adjudicator upon a spousal support review and whether the facts of the case justify a “step-down” order. She argues that the main issue is whether, in light of the length of the marriage and the parties’ roles, responsibilities and incomes and the Arbitrator’s finding that the Respondent does not intend to retire until at least June 2022 – being the end of his five-year lease at his law firm – the drastic step-down of support in 2018 and 2019 and termination in June 2020 should stand.

[21] In the factum, the Appellant cited many errors by the Arbitrator:

28. . . . The Arbitrator erred in her approach at the review. As indicated in paragraphs 60, 62, 65 and 66, instead of making findings about the parties’ incomes as required in the Separation Agreement and determining whether there was a basis for changing the spousal support, she assumed the role of “financial planner”, taking on the responsibility for trying to ensure each party has a reasonable retirement plan.

29. The Arbitrator’s mistaken focus on financial/retirement planning for the parties led her to an error in correctly identifying the parties’ intentions at the time of the review as contemplated and drafted in paragraph 5.7 of the Separation Agreement. . . .

30. The Arbitrator’s failure to make findings about the parties’ incomes at this review – in light of paragraph 5.7 of the Separation Agreement and especially in light of their arguments and materials which included detailed expert reports – constitutes an irreversible [ sic ] error of law or mixed fact and law. . . .

31. The Arbitrator’s error in failing to make findings about the parties’ incomes is compounded by the fact she cites the Spousal Support Advisory Guidelines and their objectives and ‘departs’ from them without making a finding as to either party’s income or even commenting about any of the calculations put before her by both parties with respect to temporary support, net disposable income and the calculations filed for purposes of ongoing support. This is an error of law or mixed fact and law which cannot stand.

32. The Arbitrator commits a further error in misapprehending the parties’ intentions at the time they signed the Separation Agreement. At paragraph 23 she states the Agreement “does not speak specifically to the factors to be taken into consideration when trying to achieve the stated objectives of the Divorce Act ” and that this “silence” directs her to examining what the parties’ intentions must have been in coming to the review provisions. However, as noted above, the Agreement does exactly that by mandating the Arbitrator to focus on the parties’ incomes at the time of the review. . . .

33. . . . the parties did tightly circumscribe and delineate the issue for review by providing in the Separation Agreement that subject to a material change in circumstances, the parties’ incomes at the time of the review and the cost of insurance would drive the analysis.

34. As noted above, the review provisions of the Separation Agreement do not identify means/needs/capital/savings as issues for the Arbitrator to assess – only their incomes. Yet at paragraph 43 of the Award the Arbitrator found they must be considered under section 15.2(4) of the Divorce Act. It is submitted this was an error of mixed fact and law. It is well established that the test for interpretation and certainty of the terms of a contract is objective. The question is whether paragraph 5.7 of the Separation Agreement, read in the context of the entire agreement, excludes or includes considerations other than income. It is submitted that a plain reading of this section shows that only income was the focus on the review (unlike in the event of a material change). This should have been the conclusion of the Arbitrator since although no change in circumstances is needed for a review, this was not a trial de novo . . . .

35. The fact that only income tax returns and corporate financial statements are mentioned indicates the parties intended to use “income” as the primary yardstick at the review; otherwise a sworn Form 13 Financial Statement would have been added. Reading in a consideration of means and needs at the review is inconsistent with a plain reading of the contract. The law is that generally the parties’ intentions are determined from the contract itself and the goal is to ascertain the objective intent of the parties at the time they entered the Separation Agreement. The Arbitrator was bound to apply the proper principles of contract interpretation and to follow the parameters for the review as set out therein. Her failure to do so was an error of law attracting review on the standard of correctness.

36. In the alternative, even if somehow, contrary to the parties’ intentions set out in the Separation Agreement, it was right for the Arbitrator to focus on the parties’ needs and means and all of the provisions in s. 15.2 of the Divorce Act by way of a de novo hearing, she made various errors in law and mixed fact and law. (examples listed in paragraphs 39 to 45)

37. Even if the Arbitrator was correct in applying all of the provisions of s. 15.2 of the Divorce Act and conducting a de novo hearing, she erred in making the step-down order she did. . . .

38. In light of these key facts – continuing entitlement, the Respondent’s income, no intention to retire early, and the fact that in June 2017 he signed a five-year lease signalling his intent to continue working full-time until June 2022 – it was an error of mixed fact and law for the Arbitrator to step-down the spousal support and to terminate it in June 2020. Simply put, there was no basis to make such an award.

39. The Arbitrator erred in imposing a termination date of June 2020 because there was no evidentiary basis upon which to set one. . . .

40. The Arbitrator’s failure to articulate the relevant principles in Fisher and correctly apply them and the SSAG to the facts of this case constitutes an error of law or mixed fact and law which cannot stand. . . .

41. The Arbitrator further erred by failing to attribute any difference in the parties’ net worth to the Appellant simply doing a better and more prudent job in saving compared to the Respondent. . . . the Arbitrator erred in law in failing to recognize the importance of the concept of “merger over time” reflected in the SSAG User’s Guide and explained in Moge v. Moge . . .

42. Further, given the Appellant’s age at separation (59) and the length of cohabitation (23.5 years), the rule of 65 applied, meaning that according to the Spousal Support Advisory Guidelines , support should be indefinite. Terminating support in June 2020 flies in the face of this principle which recognizes that an economically-dependent older spouse may have trouble thereafter attaining self-sufficiency. The Arbitrator’s failure to apply this principle is an error of law that cannot stand.

43. A further error committed by the Arbitrator was in her conclusion – at paragraph 71 – that compensatory portion of the spousal support obligation has “been met” without any analysis or consideration of the issue and the repeated stressing in the Award that the Appellant should and could better use her capital to generate income for retirement. [5]

[22] Those issues can be grouped in two categories: paragraphs 28 to 37 focus on the alleged error in law in the interpretation of the separation agreement while paragraphs 38 to 61 focus on alleged errors of law or of mixed law and fact in the exercise of discretion in making the award consistent with that interpretation.

[23] With respect to remedy, the Appellant asked for an order that the spousal support continue at $19,500 per month effective January 1, 2018 payable in equal instalments on the 1 st and 15 th of each month, subject to a material change in circumstances. In addition, she asked to be named beneficiary of the Respondent’s life insurance in an amount not less than $500,000, terminating forever when the Respondent turns 71 and that her entitlement to benefit coverage should continue subject to a material change in circumstances, and costs. In other words, the Appellant asks that the Arbitrator’s Award be set aside and that this court substitute a different order.

[24] The Respondent has not appealed any part of the award. He responded to all of the grounds of appeal and asked that the appeal be dismissed.

[25] During submissions counsel for the Respondent did not take a definitive position on the issue of remedy, should I grant the appeal. I directed counsel to make written submissions to clarify their positions on remedy. In a letter dated May 14, 2018, counsel confirmed that the Appellant sought an order of substitution while the Respondent asked that the matter be referred back to the arbitrator.

Principles of Contract Interpretation

[26] In MacDougall v. MacDougall [6] Lang J. referred to the decision in BG Checo International Ltd. v. British Columbia Hydro & Power Authority [7], in which the Supreme Court held at para. 9:

It is a cardinal rule of the construction of contracts that the various parts of the contract are to be interpreted in the context of the intentions of the parties as evident from the contract as a whole[.]

[27] At para. 22 of MacDougall, Lang J. held as follows:

Applying that principle to domestic contracts, a court must search for an interpretation that is in accordance with the parties’ intention at the time they entered into the contract. Where two interpretations are possible, the court should reject the one that would produce a result that the parties would not have reasonably expected at the time they entered into the contract. Instead, the court should favour an interpretation that promotes the reasonable expectations of the parties and that provides a sensible result in the family law context. To arrive at such an interpretation, the court must interpret the provision in the context of the entire contract, including the entirety of the section at issue, to discern the likely intention of the parties.

Standard of Review

[28] Having arrived at that conclusion, in MacDougall Lang J. went on to identify the standard of review. She held as follows:

24. The appellant argues that the nature of the question in this case raises a question of law because it relates to the legal effect to be given to the words of the contract. Such a question attracts a standard of review of correctness. The respondent argues that the question is one of mixed fact and law, attracting a standard of review of palpable and overriding error. . . .

25. To begin with, the trial judge must apply the proper principles of contract interpretation, including consideration of the clause in the context of the entirety of the contract. A failure to follow the proper principles, including a failure to apply a fundamental principle of interpretation, would be an error of law attracting review on the standard of correctness.

26. To the extent that this task of interpretation includes consideration of extrinsic evidence, or a determination of the factual matrix, the trial judge is involved in making a finding of fact, or drawing inferences from a finding of fact. Further, the trial judge’s “interpretation of the evidence as a whole” is one involving factual or inferential determinations. . . Such questions of fact are entitled to deference and are not to be overturned except in the case of palpable or overriding error, or its “functional equivalents”: “clearly wrong”, “unreasonable”, and “not reasonably supported by the evidence”. . . .

27. In interpreting the contract, the trial judge also applies the legal principles to the language of the contract in the context of the relevant facts and inferences. This requires the application of law to fact. This has been said to be a question of mixed fact and law. . .

28. Accordingly, in reviewing the trial judge’s interpretation of a contract, the appellate court must first classify the question as one of fact, law, or mixed fact and law. If the question is an inextricable intertwining of both fact and law, the question can be said to be one of mixed fact and law. . . .

[29] Counsel agree that the standard of review for questions of law is correctness and the standard of review for questions of mixed law and fact is palpable and overriding error.

[30] Counsel also agree with the often quoted passage from Hickey v Hickey [8] that orders with respect to entitlement to spousal support and amount and duration are discretionary decisions and are entitled to considerable deference unless the reasons disclose an error in principle, a significant misapprehension of the evidence or unless the award is clearly wrong. [9]

Analysis

A. Scope of the Review – Interpretation of the Contract

[31] As indicated above, the Appellant raised many issues. However, as reflected above in paragraphs 28, 30, 31, 32, 33, 34, 35 and 37 from the factum, the key submission in this appeal is that the Arbitrator erred in law in her interpretation of paragraph 5.7 of the Separation Agreement as to the scope of the review.

[32] Included in the four volumes of the appeal book, counsel have provided copies of the factum that was relied on by each of the parties in the arbitration.

[33] In his factum for the arbitration, the Respondent’s position was that the hearing was de novo and to be treated as an application for support under s. 15.2 of the Divorce Act. The analysis on his behalf addressed the objectives of a spousal support order, the application of the Spousal Support Advisory Guidelines (“SSAGs”) and entitlement, the support recipient’s obligation to utilize their assets appropriately and to draw upon capital, the payee’s economic self-sufficiency, the needs of both parties, the reduction/termination of support through the process of a support review, retroactive changes to support, double-dipping referable to whether the Appellant should have to include that part of her RRSP/RRIF that was equalized, and interest on capital and imputing income.

[34] In her factum for the arbitration, the Appellant’s position on the scope of review is found in paragraphs 2 to 7. She referred to Leskun v. Leskun [10] on the scope of a “review term” in a separation agreement. She quoted from Fisher v. Fisher [11] in which the Court of Appeal held that “unless the review is restricted to a specific issue , it is generally equivalent to an initial application for support and necessitates a complete rehearing of every issue from entitlement to quantum”. At paragraph 6 of the factum the Appellant asserted that the scope of this review is limited by the wording of paragraph 5.7 to a determination of the Respondent’s ongoing support and ancillary life insurance and health insurance obligations, based upon the income of the parties at the time of the review; and the expense of life insurance and extended health insurance premiums. In her factum, the Appellant responded to the issues raised by the Respondent and explained the basis of her counter-claim. (emphasis added)

[35] The difference between the positions taken by the parties was clear in their facta and no doubt in their oral submissions.

[36] At paragraphs 17 to 20, the Arbitrator quoted paragraphs 4, 5.4, 5.5 and 5.7 of the Separation Agreement. Under the heading “The Nature of this review and the legal principles of a de novo review” the Arbitrator referred to paragraphs 36 and 39 of Leskun v. Leskun [12] and at paragraph 23, she held as follows:

The agreement itself does not speak specifically to the factors to be taken into consideration when trying to achieve the stated objectives of the Divorce Act. I am left instead to look to an overall contextual analysis of the contract to ascertain whet the parties intended. Furthermore, given that silence, and the de novo nature of this proceeding, the appropriate legal principles to be applied are otherwise those found in s. 15.2 of the Divorce Act.

[37] After quoting s. 15.2 (a), 15.2(3) and 15.2(4) of the Divorce Act, the Arbitrator referred to the position the Appellant’s counsel had taken that the review provisions of the Separation Agreement did not oblige the parties to provide sworn financial statements and that the only obligation was to provide their last 3 years of tax returns and any corporate Financial Statements for any private corporations in which they had share holdings. The Arbitrator held as follows:

25. I would respectfully disagree. Although the agreement contemplates that those documents be produced, in the context of the overall terms of the agreement and the de novo review that is to be undertaken, there is nothing in the agreement to suggest that sworn Financial Statements would not be obliged. Both parties did in fact provide sworn Financial Statements for this hearing. Their Mediation/Arbitration Agreement contemplated that any hearing would be conducted in accordance with the laws of Ontario and Canada and further, at paragraph 21, that sworn Financial Statements would be provided.

26. In their agreement, the parties make several statements which, when read together, direct me to what their intentions must have been in coming to the review provisions that they did in their contract.

27. The parties provided that there was to be support of $19,500 per month, which payments were not to be variable prior to Ross turning 65, absent a material change of circumstances. There was no indexing applied to this support but, absent that material change, it was expected that there would be no interruption in this level of support to Pam.

28. By providing for the review by age 65, it can be inferred that the intention of the parties was to ensure an uninterrupted stream of support for Pam. At the same time, there was a recognition that she knew that she must contribute to her own support to the best of her ability.

29. At age 65, it must be inferred from the context of the agreement, that the parties recognized that, at age 65 for Ross (and 68) for Pam, it would be reasonable to review the support situation outside of any material change provision, to determine what their respective rights and obligations would be at a time when Ross’s legal career might be on the wane as he and Pam reached retirement age.

30. The agreement also provided that life insurance of $600,000 would remain in place with Pam as the beneficiary until Ross turned 65. At age 65, the amount could be reduced to $500,000. The agreement further states at paragraph 7.1 that “He will maintain that beneficiary designation and policy while he is obligated to pay spousal support, but shall not be required to maintain that policy beyond him becoming 71 years of age.”

31. The agreement further provided that life insurance could be reduced by Ross, taking into consideration certain factors when setting the amount of the insurance, including Ross having turned 65 years of age. Although the agreement provided that there could also be a first charge against Ross’s estate if no insurance was in place, it specifically provided that “Ross’s estate shall have no liability to Pamela beyond the amount of the life insurance policy(s) that should have been in place at Ross’ [ sic ] death”. A plain reading of that provision would indicate that there would be no estate obligation to Pam following Ross’s 71 st birthday.

[38] In paragraphs 32 and 33, the Arbitrator referred to the sworn financial statements and the reports from their respective experts.

[39] In paragraphs 34 to 36, the Arbitrator summarized the evidence as to the Appellant’s expenses and noted that her net worth was at least $3,128,636. At paragraphs 37 and 38, the Arbitrator listed the estimates of the Respondent’s income that each of the experts had made for the years 2012 to 2016 inclusive. At paragraphs 39 to 41 the Arbitrator reviewed the income in the Respondent’s sworn financial statement, considered his expenses and noted his net worth of approximately $719,670.

[40] In paragraph 42 the Arbitrator noted the position taken by the Appellant that the Respondent’s current net worth could not be ascertained without forensic analysis.

[41] In paragraph 43, the Arbitrator referred to the position the Appellant had taken:

Pam further states that a comparison of current means is not contemplated by the review provisions governing this arbitration. As I have stated above, I cannot agree with this position. The respective current means and needs of the parties are not only relevant to this proceeding but must be considered under section 15.2(4) of the Divorce Act. Any award that I make must take into consideration the financial realities of the parties as they exist at the time of the review, which review could have been commenced, by the terms of their agreement, some three years ago.

[42] In paragraphs 44 to 48, the Arbitrator reviewed the evidence as to the plans of each of the parties at the time of the hearing including the reference in paragraph 46 that the Respondent “wishes to retire but has been unable to afford to do so in the face of his debts, the need to save for retirement and his significant support obligations”.

[43] Under the heading of “What did the parties intend in their agreement of April 2011”, the Arbitrator quoted from paragraph 22 of the decision in MacDougall cited above and she held as follows:

51. In looking at this particular separation agreement as a whole, I find that the parties must have reasonably intended at least the following:

• It was reasonable to expect that Ross would retire at age 65 or that, at a minimum, his practice would be slowing down such that it would give rise to a need for a review of the support provisions of the agreement;

• It was reasonable to expect that Pam would have taken steps to contribute to her own support, including by the time Ross turned 65 when the support would be reviewed;

• Absent a material change, Pam was entitled to expect that support would continue at the level of $19,500;

• It was reasonable to expect that life insurance would also be reviewed at Ross turning 65 and, in fact, it would be reduced at age 65 from $600,000 to $500,000 and would end forever upon Ross becoming 71 years of age (July 25, 2020). . . .

53. I find that any other interpretation of this agreement would not be consistent with all of the relevant provisions of this document.

[44] Under the heading “Analysis and the Law as it relates to the relief sought” the Arbitrator held as follows:

57. It could be tempting to accede to Pam’s request to simply make a spousal support award that is then varied in the future, subject to a material change of circumstances. This would oblige me to analyze the respective income reports and to estimate what Ross’s recent income has been and what it is anticipated to be in the future while merely awarding support based on the income that Pam has or should derive from her resources. This would have the effect of postponing to another day the fundamental determination as to the rights and obligations of the parties when Ross finally retires.

58. I find that an award such as that however would not provide Ross or Pam with the certainty or stability that they each need, nor would it accord with what was clearly intended by the agreement they entered into in 2011 when they both clearly thought it was reasonable to expect Ross to retire at age 65 or, at least, to slow down at that time.

59. Both parties appear to have spent considerable time and energy in getting to the hearing of this matter in June 2017, three years after the review was contemplated. Prior to this award, they have been no further ahead in knowing what their future obligations will be and, instead, they have been involved with their respective family law and financial professionals trying to ascertain appropriate levels of income, tax rates and Guideline numbers for indeterminate periods. This has only added to the conflict which presumably, they had hoped had ended in 2006 after 5 years of litigation.

60. Both parties should be put into a position to plan for the future knowing, to the extent possible, what their financial circumstances will be so that each of them can make financial decisions that will provide them with a degree of security and peace of mind, both of which they are entitled to at this stage of their lives.

61. The authors of the Spousal Support Advisory Guidelines identify four objectives of the SSAGs as follows:

To reduce conflict and encourage settlement;

To create consistency and fairness;

To reduce the costs and improve the efficiency of the process;

To provide a basic structure for further judicial elaboration.

62. The challenge, as the Arbitrator on this review, is to consider the evidence before me, together with the relevant factors under the legislation and to devise a long term financial plan for these parties which is consistent with their intentions as found in their separation agreement. In doing so, it is hoped that I can provide each spouse with the ability to appropriately access their capital to meet their expenses once they retire from income earning, to pay off their existing debts in the meantime, and to provide the parties with sufficient funds so as not to have to incur additional debts prior to retirement.

63. In the “Spousal Support Advisory Guidelines: The Revised User’s Guide” (modified 2016-09-06) the authors address a number of cases with respect to the issue of early retirement and the implications that this might have for a variation on the basis of a material change of circumstances. Given the terms of this separation agreement, I do not find that Ross is seeking to retire early. In fact, it is arguable that Ross is entitled to have been retired by now given his age (now 68) and given the agreement which contemplated a review at age 65. In the absence of any other direction in the parties’ separation agreement, the only logical conclusion with providing for a review at age 65 is that they anticipated that this was a reasonable retirement age.

64. Without specifically identifying it as such, Ross’s potential retirement at age 65 gives rise to the review contemplated in the agreement. As stated above, there is no need to find there is a material change of circumstance given the de novo nature of this review.

65. What I am left with now is to determine how best to resolve matters for the events we know now and which we can reasonably anticipate, absent extraordinary circumstances that will occur in the next years of the lives of the parties. I turn now to the Award. The purpose of this Award is to provide a form and structure for the support obligations that will reduce the amount of legal process that will be required in the future.

[45] Under the heading “Award”, the Arbitrator confirmed at paragraph 66 that the Appellant continues to be entitled to spousal support “but that such entitlement should provide for an automatic step down in order to allow for both parties to transition into the retirement phase of their lives”. In paragraph 67 she held that both parties should be obliged to realize on their capital assets. In paragraph 68 she referred to the double recovery issue [13]. In paragraph 69 she referred to the submission by the Appellant that, “in circumstances where the ability to pay is not an issue, the parties should have the financial ability to enjoy a similar lifestyle”. [14] The Arbitrator held that those considerations must give way to the new reality of impending retirement and the need to organize their respective budgets accordingly. In paragraph 71 she referred to Halliwell v. Halliwell [15] and explained why it was appropriate to depart from the formulaic approach of the SSAGs.

[46] The details of the Award are excerpted above in paragraph 18.

[47] As the Court of Appeal directed in MacDougall, the Arbitrator considered the plain language of the Separation Agreement and the context that included both the terms of the Separation Agreement and the terms of the Mediation/Arbitration Agreement, including paragraphs 1, 4 and 5 of the latter agreement. The parties and counsel knew in advance that the threshold decision to be made by the Arbitrator was interpreting the Separation Agreement to establish the scope of the review. The Arbitrator had jurisdiction to make the decision that the review contemplated in paragraph 5.7 of the separation agreement was a de novo review that was not restricted to income.

[48] The Arbitrator explained why and how she came to that conclusion. The Arbitrator took into consideration the terms of the separation agreement as a whole, not simply paragraph 5.7. She applied the legal framework of contract interpretation to the facts of this case to arrive at an interpretation that promotes the reasonable expectations of the parties and that provides a sensible result in the family law context. That was a decision of mixed fact and law that attracts the standard of review of palpable and overriding error.

[49] Contrary to the submission by counsel for the Appellant, this is not a case where it would “send a tremendous chill to the family law bar if the terms of the arbitration aren’t limited by the separation agreement”. The Arbitrator did not agree with the submission on behalf of the Appellant that the review was narrowly focused on incomes. Based on the record before her, including the terms of the Mediation/Arbitration Agreement, I am satisfied that the Arbitrator made a correct decision to apply the appropriate interpretation principles. I am not persuaded that the Arbitrator made a palpable and overriding error in the application of those principles to the facts of this case.

B. Other challenges to the Award

[50] As indicated above in paragraph 21, in the factum on this appeal counsel for the Appellant took the position that, even if needs and means were relevant, the Arbitrator made various errors of law or errors of mixed law and fact.

(1) paragraph 38 to 47: Errors in failing to delve into why the Respondent’s net worth was lower than the Appellant’s

[51] In her factum quoted at paragraph 21 above, the Appellant gives examples in paragraphs 39 and 40 that the Arbitrator failed to refer to two time shares and a vacation home; in paragraph 41 that the Arbitrator failed to consider the prudent financial steps the Appellant had taken in contrast to the “significant spending” by the Respondent; in paragraph 42 that the Arbitrator failed to consider as an asset of the Respondent monies which he borrowed from his professional corporation; in paragraph 43 that the Arbitrator had put the Appellant in an impossible situation by stating, on one hand that the financial statements were relevant but then, on the other hand, stating she could not “speculate” on various allegations about the Respondent’s net worth; in paragraph 44, that the Arbitrator failed to account for the contribution of the wife of the Respondent to the Respondent’s lifestyle.

[52] Those examples in paragraph 39, 40, 41, 42, and 43 refer to evidence in the record. None are errors of law or of mixed fact and law and consequently, those issues are not within the scope of this appeal. The example in paragraph 44 is an issue of mixed law, namely whether her contribution was relevant, and of fact, namely, if relevant, to what extent. Given the overall analysis by the Arbitrator, I am not persuaded that it was a palpable and overriding error to not refer to that issue.

(2) paragraphs 46 to 53: Errors in making step-down order; and paragraphs 54 to 60: Errors in making termination order and in not applying SSAGs

[53] The submissions overlap and I will address these issues together.

[54] In his factum before the Arbitrator, the Respondent took the position that a court can reduce spousal support so as to encourage a party to achieve economic self-sufficiency. The submission was based on the Appellant’s accumulation of property rather than liquidating, reducing her living expenses and increasing her capital on which she would earn a greater return of interest or dividends. He asked that income be imputed to her that would reflect that greater return and the reduced expenses. The Respondent did not take the position that a step-down would have the effect of requiring the Appellant to increase her modest employment earnings.

[55] It is the case that step-down orders are often made to encourage or force the recipient to obtain employment or obtain more remunerative employment. But the rationale advanced by the Respondent is within the framework of a step-down order, namely that the Appellant liquidate assets or have the liquidation and its consequences imputed to her. The Arbitrator accepted that submission.

[56] In paragraph 66 of the award, the Arbitrator held that the Appellant continued to be entitled to spousal support but that such entitlement should provide for an automatic step-down in order to allow for both parties to transition into the retirement phase of their lives consistent with her interpretation of the agreement.

[57] Notwithstanding the opposition by the Appellant, the Arbitrator accepted that submission. The Arbitrator did not specifically refer to step-down decisions such as those referred to by counsel in the appeal. But the rationale for the step-down was clear.

[58] In his factum before the Arbitrator, the Respondent took the position that the spousal support order should be terminated. Indeed, as indicated in paragraph 16 above, he asked that it be terminated as of December 2017 bearing in mind he had initiated the review in May 2014.

[59] In that context, the Arbitrator referred to the submission on behalf of the Appellant that in circumstances where the ability to pay is not an issue, the parties should have the financial ability to enjoy a similar lifestyle. While recognizing that proposition, at paragraph 69 the Arbitrator explained that she departed from that principle because “these considerations must now give way to the new reality of impending retirement and the need to organize their respective budgets accordingly”. The Arbitrator was equally alive to the significance of the compensatory nature of the spousal support order but at paragraph 71 the Arbitrator held that the compensatory portion of the spousal support obligation had been met, which was a prerequisite to the termination order. The Arbitrator explained the rationale and relied on the decision in Puiu v. Puiu. [16]

[60] In his factum before the Arbitrator, the Respondent took the position that the SSAGs ought not to be automatically applied when the income of the payor exceeded $350,000. That is an issue of law with which the Arbitrator agreed. The Arbitrator dealt with that issue at paragraph 61, 63, and 71, including reference to the recent decision in Halliwell. The Arbitrator applied that legal principle to the facts of this case and held that she would depart from the formulaic approach of the SSAGs. At paragraph 67 the Arbitrator referred to and appeared to accept the evidence of the Respondent that he had always thought his income was around or under the $700,000 annual threshold. As a result of her analysis, it was not necessary for the Arbitrator to review the income calculations prepared by the experts, to make findings as to his income on a year by year basis or to consider which of the many SSAG calculations provided by the parties would be reasonable.

[61] It was within the jurisdiction of the Arbitrator to make those orders each of which is a decision of mixed fact and law. The Arbitrator’s decision on each of these individual issues and collectively is consistent with her analysis of the scope of the review and can be found in the evidence.

[62] The Appellant takes the position that some of the foregoing were errors of law while others were errors of mixed fact and law. In my view, in respect to each of the foregoing challenges, the findings and decision of the Arbitrator are of mixed fact and law which attracts the standard of review of palpable and overriding error. As the extensive excerpts from the award indicate, the Arbitrator touched on much of the evidence and incorporated relevant legal principles. An Arbitrator is not required to refer to, analyze and distinguish all of the evidence. At paragraphs 7 and 10 of his factum, the Respondent pointed out that there is considerable evidence in the record that support the conclusions reached by the Arbitrator which was ignored by the Appellant. I am not persuaded that the Arbitrator significantly misapprehended the evidence.

[63] As the Supreme Court has indicated, the discretionary decision as to spousal support is entitled to considerable deference. I am not persuaded that the reasons disclose an error in principle, a significant misapprehension of the evidence or are clearly wrong. For that reason, deference is owed.

[64] In Holman v. Holman [17] the Court of Appeal held at paragraph 29 as follows:

Ms. Holman argues that the motion judge erred by terminating spousal support 11.5 years after separation. While I am sympathetic to Ms. Holman’s argument, in my view, the alleged overemphasis on the goal of self-sufficiency while underemphasizing the compensatory nature of her claim amounts to a criticism of the motion judge’s balancing of factors rather than to an error in principle.

[65] The same can be said here: the many challenges by the Appellant to the exercise of discretion reflect a criticism of the Arbitrator’s balancing of factors rather than to an error in principle. Not surprisingly, the Appellant disagrees with the analysis and the outcome but I am not persuaded that the Arbitrator has made a palpable and overriding error.

Conclusion

[66] As indicated above at paragraph 20 the Appellant takes the position that the appeal involves the proper role of an adjudicator upon a spousal support review and whether the facts of a case justify a “step-down” order and that the main issue is whether, in light of the length of the marriage and the parties’ roles, responsibilities and incomes and the Arbitrator’s finding that the Respondent does not intend to retire until at least June 2022 – being the end of his five-year lease at his law firm – the drastic step-down of support in 2018 and 2019 and termination in June 2020 should stand. Those are not the issues in this appeal. The issues are whether the Appellant has established that the Arbitrator made errors of law or made errors of fact and law. The Appellant has not done so.

Costs of the Mediation/Arbitration

[67] At the hearing of submissions on this appeal, counsel had provided written submissions to the Arbitrator as to costs but the decision had not been released. For that reason, the question of costs of the mediation/arbitration was not before me.

Costs of the Appeal

[68] Counsel had not brought costs outlines and could not estimate the costs their clients had incurred in the appeal. In addition, Mr. Fanjoy advised that his client had served an offer to settle. I directed counsel to make written submissions as to costs including providing the offer to settle in a sealed envelope.

[69] In the letter dated May 14, 2018, counsel reported that they could not agree on costs. The total costs of the Appellant were approximately $35,000 and of the Respondent approximately $26,000. Counsel offered to submit a bill of costs if requested. Mr. Fanjoy provided the offer to settle in a sealed envelope. He also indicated that the parties asked that I decide the issue of costs at this time.

[70] Having arrived at my decision on all of the foregoing, I have considered the contents of the letter dated May 14 and have opened and considered the sealed offer to settle which was served by the Respondent on March 13, 2018 and provided that the appeal be dismissed, that neither party pay costs to the other in respect of the appeal and that the offer was open for acceptance until one minute after the commencement of argument of the appeal.

[71] The Respondent has been successful on this appeal and, pursuant to rule 24(1) of the Family Law Rules, he is presumptively entitled to costs. More than 50 days before the hearing of the appeal he had served an offer that is consistent with the outcome of the appeal. Pursuant to rule 18(14), he is entitled to costs to the date the offer was served and full recovery of costs from the date of the offer. His factum was filed February 23, 2018 which means that the majority of his total costs of $26,000 had been incurred before the offer was served.

[72] Counsel have confirmed their clients’ “total costs”. I do not intend to require that the Respondent submit a bill of costs that distinguishes between the costs incurred before and after the service of the offer. The parties have asked that the decision be made on the basis of the information provided.

[73] I am satisfied that an order of costs close to the “total costs” incurred is consistent with the reasonable expectations of the parties and is fair, given the importance of the issues involved and the complexity of the case.

ORDER TO GO AS FOLLOWS:

[74] The appeal is dismissed.

[75] The Appellant shall pay costs to the Respondent fixed in the amount of $18,000.00. which may be set off against the arrears owed by the Respondent pursuant to paragraph 79 of the Award of the Arbitrator.

Kiteley J.

Date: August 15, 2018

[1] S.O. 1991, c.17 [2] S.O. 2006, c.1 [3] The Arbitration Award is not available in any electronic system. For that reason, this decision has incorporated extensive excerpts. [4] In June 2017, the Respondent entered into a five-year lease. [5] In paragraph 3 of the notice of appeal, the issue of lack of reasons was raised. In the factum at paragraph 68 there is a submission that the Arbitrator erred in not drawing adverse inferences against the Respondent. In submissions, neither was raised on behalf of the Appellant. [6] , [2005] 262 D.L.R. (4th) 120 . [7] , [1993] 1 S.C.R. 12 . [8] , [1999] 2 S.C.R. 518 at paras. 11-12 . [9] Fisher v. Fisher , 2008 ONCA 11 , 88 O.R. (3d) 241 at para. 25 . [10] 2006 SCC 25 , [2006] S.C.R. 920 . [11] Supra, note 9. [12] Supra, note 10. [13] Boston v. Boston 2001 SCC 43 , [2001] 2 S.C.R. 413 . [14] Lakhani v. Lakhani , 43 R.F.L. (5th) 125 ; Moge v. Moge , [1992] 3 S.C.R. 813 . [15] 2017 ONCA 349 , 138 O.R. (3d) 671 . [16] 2011 BCSC 1791 , [2012] W.D.F.L. 1695 , aff’d on this point 2011 BCCA 480 , 10 R.F.L. (7th) 108 . [17] 2015 ONCA 552 , 65 R.F.L. (7th) 273 .