COURT FILE NO.: FC-02-81-4 DATE: 20180830 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

LYNN LA FONTAINE Applicant – and – JAMES MAXWELL Respondent 2306614 ONTARIO INC., 2394022 ONTARIO INC.-148-152 SPARKS ST. INC., 402 PRESTON INC. – 2375645 ONTARIO INC., 2280595 ONTARIO LTD., 2406864 ONTARIO INC., 2415266 ONTARIO INC., 2418482 ONTARIO INC., 2425315 ONTARIO INC., 2583484 ONTARIO INC., 9002561 CANADA INC., 9003452 CANADA INC., 9082859 CANADA INC., CHEZ INVESTMENT HOLDINGS INC. – 2406788 ONTARIO INC., COFFEE BOOSTER INC. – 2585669 ONTARIO INC., CORPORATE FURNITURE GROUP INC. – 1924533 ONTARIO INC., FP FINANCIAL INC. – 2422070 ONTARIO INC., FRED GUY MOVING & STORAGE LTD. - 275948 ONTARIO INC., HAPPY ELEPHANT ENTERPRISES INC. – 8735808 CANADA INC., INVESTMENT PARTNERS FUND INC./2199376 ONTARIO INC., JJD INVESTMENT HOLDINGS INC. – 443255 ONTARIO INC., MAXX CO LTD. – 2337412 ONTARIO INC., NITAM SOLUTIONS INC. – 2506507 ONTARIO INC., P.V.L. MOVING AND STORAGE INC. – 0573663 CANADA INC., TREMBLANT GETAWAY GP INC. – 2577558 ONTARIO INC., 1270632 ONTARIO INC., 7902476 CANADA INC. – 8129363, MAX AUTO SUPPLY LIMITED – 259613 ONTARIO INC., GORMAX HOLDINGS LIMITED – 2256448 ONTARIO INC., AVENYN PROPERTIES GROUP INC. – 2250801 ONTARIO INC., AVENYN PROPERTY MANAGEMENT – 2376763 ONTARIO INC., JDM INVESTMENTS PARTNERS FUND INC. – BUSINESS #1166925355 Non-Party/Third Party Respondents

Philip W. Augustine, for the Applicant Any Mayer, for the Respondents

HEARD: In writing, on consent of the parties

REASONS FOR DECISION Audet J.

Introduction

[1] This is an application brought by the Applicant, Ms. La Fontaine, against the Respondents, Mr. Maxwell and 31 corporations in which he has an interest, seeking an order compelling them to produce financial disclosure in accordance with the terms of a consent arbitration award made in an arbitration between Ms. La Fontaine and Mr. Maxwell.

[2] In March 2012, Ms. La Fontaine and Mr. Maxwell entered into an arbitration agreement by virtue of which they agreed to submit various issues to arbitration, including Ms. La Fontaine’s retroactive and ongoing child support entitlement. They chose Ms. Kathryn D’Artois as their arbitrator. Mr. Maxwell’s income for support purposes is a key issue in that proceeding. The first three years of the arbitration process was dedicated almost exclusively to disclosure and other procedural issues.

[3] According to a consent arbitration award dated December 15, 2017, Mr. Maxwell agreed that the financial disclosure sought by Ms. La Fontaine from him personally and from the 31 corporations and corporate entities (non-party in the arbitration) was relevant for the purpose of establishing his income. He further agreed to make a written request to all non-parties (individual or corporate) who had possession and/or control of any of the information and documentation he had been asked to produce, within seven days.

[4] While Mr. Maxwell and some of the corporate entities over which he has control (a total of 10) have provided some of the disclosure set out in the consent arbitration award, all corporate entities in which he has a minority interest only (a total of 21) have refused to produce the requested disclosure.

[5] As a result, and as envisioned in the consent arbitration award, Ms. La Fontaine filed a court application against the 31 corporate entities, as well as Mr. Maxwell, seeking an order compelling them to provide all of the requested financial disclosure. In response to Ms. La Fontaine’s court application, Mr. Maxwell now seeks an order releasing him from the arbitration process commenced in March 2012 on the basis of bias and unfair procedural treatment by the arbitrator. In the alternative, he seeks an order removing the arbitrator and replacing her with another arbitrator mutually agreed upon.

[6] The respondent corporate entities who dispute Ms. La Fontaine’s request for disclosure have filed Answers in this proceeding, as well as affidavits. On consent of all parties, this matter was dealt with by the court based on written materials and submissions, in chambers.

[7] For the reasons that follow, Mr. Maxwell’s application to be relieved from the arbitration process and to replace Ms. D’Artois as the arbitrator is dismissed, and Ms. La Fontaine’s application for an order compelling the Respondents to provide the financial disclosure set out in the detailed consent arbitration award dated December 15, 2017 is granted.

Background

[8] The history of this matter was summarized succinctly by the arbitrator in her February 4, 2013 arbitration award as follows. The parties were in a relationship for approximately 14 years. They separated on November 1, 2000. They have three children together (now aged 22, 24 and 26). A little less than four years after their separation, and following extensive litigation and negotiations between them, the parties signed a final separation agreement on September 7, 2004 through which they resolved all of the legal issues arising from their marriage and separation, including child support rights and obligations.

[9] In 2011, Ms. La Fontaine filed a court application in which she sought child support from Mr. Maxwell. In late 2011, the parties agreed to submit the legal issues raised in the court proceedings to arbitration. They signed an arbitration agreement dated March 12, 2012 in which they identified all of the issues each of them wanted to submit to arbitration. Neither party is alleging that any of the provisions of the Arbitration Act, S.O. 1991, c.17 or Family Law Act, R.S.O. 1990, c. F. 3 (“FLA”) related to the validity of arbitration agreements have not been adhered to. Both parties have been legally represented by experienced family counsel throughout.

[10] In the arbitration proceeding, Ms. La Fontaine seeks an award requiring Mr. Maxwell to pay both retroactive and ongoing child support (among other claims) in a much higher amount than contemplated by the separation agreement which provided for fixed and non-variable child support (unless some specific circumstances occurred). In support of her claim, Ms. La Fontaine is relying on s. 56(1.1) of the FLA which provides that a court may disregard any provision of a domestic contract pertaining to child support if the provision is unreasonable having regard to the child support guidelines. She argues that in order to properly put forward her case in support of a child support award being made in her favour which would override the terms of the parties’ separation agreement, she must have the ability to determine Mr. Maxwell’s income within the meaning of the Child Support Guidelines. Mr. Maxwell disputes his obligation to pay child support to Ms. La Fontaine either retroactively or on an ongoing basis. In the arbitration proceeding, he takes the position that the terms of the parties’ separation agreement represent a final, binding, and non-variable settlement of all child support issues between the parties, and that the determination of his income is irrelevant.

[11] On March 12, 2012, the arbitrator heard a motion by Mr. Maxwell for an award bifurcating the arbitration hearing, and a cross motion by Ms. La Fontaine requiring Mr. Maxwell to make significant financial disclosure in order to establish his income since the parties’ separation agreement (2004). Mr. Maxwell’s motion for bifurcation was denied by the arbitrator on the basis that this case was not an appropriate case for bifurcation. The arbitrator found that the financial disclosure being sought by Ms. La Fontaine was a central issue of her case. She agreed with Ms. La Fontaine’s position that the validity and bindingness of the separation agreement could only be determined subsequent to Mr. Maxwell producing full financial disclosure. Without the necessary disclosure, Ms. La Fontaine would not be able to put her case forward in accordance with s. 56(1.1) of the FLA.

[12] In her March 12, 2012 Arbitration Award (“the 2012 Award”), the arbitrator required Mr. Maxwell to make some, but not all of the financial disclosure requested by Ms. La Fontaine. At the time, Mr. Maxwell had an interest in seven corporations and corporate entities, alone and with others, and the arbitrator found that partial disclosure from these non-party corporate entities was necessary and relevant to establish Mr. Maxwell’s income for child support purposes. She ordered the production of the constituting documents and corporate registers for certain corporations, corporate financial statements, corporate tax returns and legal and closing documents respecting conveyances of some of Mr. Maxwell’s business interests during the 2004 - 2011 timeframe. As the disclosure process was only beginning, she left it open to Ms. La Fontaine to bring a further motion for financial disclosure if it became clear at a later date following preliminary disclosure, questioning and answers to undertakings, that further financial disclosure was required. Mr. Maxwell was required to pay costs.

[13] Neither party appealed the 2012 Award.

[14] At some point around that time, Ms. La Fontaine hired an expert, Mr. Timm, to provide an opinion with regards to Mr. Maxwell’s income for child support purposes. After reviewing the preliminary disclosure provided, Mr. Timm sought a large number of additional documents from Mr. Maxwell and the corporate entities in which he held an interest. As Mr. Maxwell refused to produce, a second motion was brought by Ms. La Fontaine within the arbitration process seeking the production of the additional financial disclosure sought by her expert.

[15] In her lengthy and well-reasoned Arbitration Award dated February 4, 2013 (“the 2013 Award”), the arbitrator concluded that Mr. Maxwell had not met his obligation to provide full, complete and accurate information. While she recognized that the additional disclosure sought by Ms. La Fontaine was significant, she was of the view that Ms. La Fontaine was entitled not only to test Mr. Maxwell’s evidence relating to the determination of his income (he had produced his own expert report), but also to put forward her own case regarding the determination of his income. She found that more extensive financial disclosure was required of Mr. Maxwell as a result of the complexity of his financial circumstances, which was demonstrated by the corporate and trust organizational chart that he provided in accordance with the 2012 Award, and which confirmed that he held a direct and/or indirect interest in at least five different corporations and two family trusts. She stated:

Given the complexity of the structure of Mr. Maxwell’s holdings and his financial circumstances generally, the fact that he has acknowledged that the income both he and his expert disclosed as his guideline income is inaccurate, and because the proceeding involves a claim for child support, the time and cost associated with making full and complete disclosure is secondary to the need for the parties, their counsel and the arbitrator to have available accurate evidence from which a proper and fair determination of issues raised in the proceeding may be made.

[16] While the arbitrator accepted Mr. Maxwell’s position that he did not have a controlling interest in any of the corporations, she found that he had the ability to make a formal written request for the production of documentation and information from these corporations with the expectation that the request would be granted by them. She ordered him to make formal written requests to those non-party corporate entities seeking the additional disclosure that she had ordered. If those non-party corporations refused to produce, she observed that there was a process available to Ms. La Fontaine under the Family Law Rules, O. Reg. 114/99 through which she could bring motions against these individuals/entities to compel production. She concluded:

The corporations are not international corporations in which Mr. Maxwell holds a minuscule interest. He is not estranged from his brother [with whom he owned those corporations directly and/or indirectly]. They jointly operate several businesses together and presumably have ongoing regular contact with each other. In my view, Mr. Maxwell is taking advantage of his corporate restructuring to diminish his own capacity to make full financial disclosure.

[17] Mr. Maxwell was ordered to bear the costs associated with the production of the disclosure, while Ms. La Fontaine was to pay photocopy charges at the Legal Aid rate.

[18] Neither party appealed the 2013 Award.

[19] Although Mr. Maxwell complied with his obligation to request it, the non-party corporate entities refused to provide the financial disclosure sought from them. As a result, Ms. La Fontaine was required to bring a court application against all these corporate entities seeking an order compelling them to provide the financial disclosure sought. After a motion was heard by Justice James with all parties present (including the various corporate entities), on November 28, 2013 an order was made compelling the non-party corporations to provide the financial disclosure ordered by the arbitrator. Justice James stated at par. 8:

My understanding is that Exhibit A represents the culmination of the disclosure process that has been underway for some time. Mr. Black [the non-party corporate entities’ counsel] did not appear to dispute the applicant’s request for the information set out in Exhibit A. Even if he had, I would be inclined to grant the relief sought by the applicant.

[20] One of the live issues in the context of this motion was Mr. Maxwell and the non-party corporations’ claim that Ms. La Fontaine should bear the cost of locating, reviewing and compiling the information to be disclosed. Justice James disagreed. He concluded that those should be borne by Mr. Maxwell with Ms. La Fontaine assuming the cost of copies at the Legal Aid rate. In coming to this conclusion, he found the following considerations persuasive:

1. it was Mr. Maxwell’s decision to intermingle personal with corporate expenses;
2. it is easy to criticize time spent tracking a particular item that goes nowhere. Ultimately it is the aggregate result that counts and the information gathering process is not yet complete;
3. to date the applicant had achieved some success in reviewing various records to reconstruct Mr. Maxwell’s true income for support purposes;
4. the arbitrator concluded that the disclosure to date was inadequate.

[21] As requested by all respondents, the court ordered the parties to enter into a confidentiality agreement applying to all documents already provided or to be provided by the corporate entities. He was of the view that private companies and other private entities, especially non-parties, were generally entitled to expect that the information provided during the course of litigation would be treated and handled as confidential. Finally, Mr. Maxwell was ordered to pay costs to Ms. La Fontaine.

[22] Neither party appealed Justice James’ decision.

[23] Mr. Maxwell and the non-party corporate entities complied with Justice James’ order. However, and for reasons that will be explored in more details below, no meaningful steps were taken in the arbitration process for almost three years. In 2016, Ms. La Fontaine was forced to retain new counsel and, in December 2016, she retained Mr. Nihmey, a new expert, to provide an opinion with regards to Mr. Maxwell’s income. Mr. Nihmey reviewed all of the financial disclosure voluntarily produced, awarded or ordered to that date from Mr. Maxwell or individual or corporate third parties, covering the period of 2004 (date of the separation agreement) to 2011 (date of the first disclosure motion before the arbitrator).

[24] In February 2017, Mr. Nihmey compiled a comprehensive chart of further financial disclosure which he required to determine Mr. Maxwell’s income. According to Mr. Nihmey’s evidence (which is not contradicted by the respondents), the additional financial disclosure he requested was largely an extension of what had already been produced to bring it up to date to cover the time period from 2012 to 2016 (“the Initial Financial Disclosure Chart”). A supplementary list of disclosure was also requested on April 20, 2017.

[25] On October 6, 2017, some of the additional disclosure requested by Mr. Nihmey was delivered. As part of this disclosure, Mr. Maxwell provided an updated corporate organizational chart which revealed that his complex corporate holding structure had significantly evolved and grown over the course of the arbitration proceedings. At the time of the 2012 and 2013 Awards, Mr. Maxwell’s corporate organizational chart listed seven different corporate entities (five corporations and two family trusts). By 2017, the up-to-date corporate organizational chart revealed that his holdings now extended across 33 different corporations, trusts and holdings.

[26] After receiving the 2017 up-to-date corporate chart, and in an effort to try and narrow the scope of the additional financial disclosure required, Mr. Nihmey initially asked Mr. Maxwell to confirm what, if any, involvement he had in these new corporations, what was the nature of their business and whether he derived any income from same. At that time, Mr. Maxwell took the position that he was unable to produce the majority of the requested items from the Initial Financial Disclosure Chart because the information was not within his exclusive control and required the authorization of third parties, which they refused to provide. Further, he took the position that he could not answer the question as to whether or not he derived any income from the new corporate entities without the approval of the associated third-party business partners, which he did not have either.

[27] Having been unable to narrow the scope of the disclosure required as a result of Mr. Maxwell’s stated inability to confirm from which corporation he derived income, in a letter dated November 1, 2017 Mr. Nihmey requested a lengthy list of financial disclosure from the newly disclosed corporate entities, from the date of their inception or acquisition to 2016. Mr. Maxwell did not comply with this disclosure request.

[28] A third motion was scheduled to proceed on November 9, 2017 before the arbitrator to deal with Ms. La Fontaine’s (and her expert’s) request for further disclosure. However, before the motion was heard Ms. La Fontaine and Mr. Maxwell were able to resolve the issue. By virtue of a Consent Arbitration Award dated December 15, 2017 (“the Consent Award”), Mr. Maxwell confirmed that the requested third-party disclosure was relevant and necessary to the issues raised in the arbitration, without prejudice to his position that the separation agreement was valid and non-variable and that the issue of his income was irrelevant to the entire proceeding. Specifically, it confirmed Mr. Maxwell’s consent to an award stating that the financial disclosure sought by Mr. Nihmey in his Initial Financial Disclosure Chart, his letter of April 20, 2017 and his letter of November 1, 2017, was relevant to the issues to be arbitrated. It further mandated Mr. Maxwell to forward his requests for financial disclosure to all non-party corporations within seven days, with a request that they produce the disclosure immediately.

[29] Mr. Maxwell states that the corporations/entities which are under his control have provided all of the disclosure that was requested of them, although this is disputed by Ms. La Fontaine. The balance of the corporations/entities declined to voluntarily produce the requested disclosure.

Issues

[30] I will deal with the issues to be determined in the following order:

1. Should Mr. Maxwell be released from the arbitration process?
2. If not, should the arbitrator be replaced on the basis of bias and unfair procedure?
3. If not, should the non-party corporations and corporate entities be required to produce the disclosure listed in the Consent Award?

Release from Arbitration Process

[31] Mr. Maxwell seeks an order releasing him from the arbitration process. He takes the position that the arbitration agreement signed more than six years ago (in March 2012) is no longer binding. He submits that the parties cannot be bound by an arbitration agreement indefinitely, and blames Ms. La Fontaine for the significant delays incurred to date.

[32] In her affidavit sworn April 26, 2018, Ms. La Fontaine provides an explanation of why the matter was delayed for almost 3 years. She explains that from Justice James’ November 2013 decision (it was released in February 2014) to the Fall of 2015, counsel were negotiating outside of the arbitration process. In addition, in the fall of 2014, Davis, the parties’ son, required emergency intervention from the hospital as a result of severe anxiety and depression with suicidal ideation. Ms. La Fontaine had to go back and forth from Toronto to Ottawa and then was required to care for him at home. In the fall of 2015, as a result of a merge between Ms. La Fontaine’s counsel’s firm and another firm, he had to withdraw as her counsel as a result of a conflict of interest. It took some time for the file to be transferred over to, and reviewed by, Ms. La Fontaine’s new counsel. For reasons unknown to me, she was also forced to retain a new financial expert.

[33] While it is quite extraordinary that this matter has been ongoing for over seven years now, I do not find that the delays are solely attributable to Ms. La Fontaine. In fact, the record makes it crystal clear that Mr. Maxwell’s complex financial affairs, substantial and ongoing corporate re-organization and expansion, as well as his and his corporations’ constant resistance to providing full and complete financial disclosure, are the main causes for the lengthy delays. In addition, if Mr. Maxwell was truly concerned about the delays in this matter, he could have taken positive steps to expedite the arbitration process following Justice James’ 2013 decision and the provision of the court ordered disclosure by the non-party corporations. Quite the contrary, his actions since the release of Justice James’ decision suggest that he has little interest in expediting the process. His conscious choice to reorganize his corporate affairs in the manner that he did while he knew that the determination of his income was a key issue in this case, his refusal to attend scheduled questioning, his numerous requests to extend the strict timelines set out by the arbitrator to move the matter along since 2016, are examples of such actions.

[34] While I have been provided with significant legal authority with regards to the court’s ability to remove an arbitrator on the basis of bias or unfair process, I have been provided with no authority that would support a court’s jurisdiction to release a party from an arbitration process in circumstances where the validity of the arbitration agreement is not in issue. Even if I had the power and/or the discretion to do so, I would not release Mr. Maxwell from the arbitration process on the grounds he submits.

[35] The parties have been participating in this arbitration process for almost seven years, which included three motions, several conferences with the arbitrator and the exchange of significant documentary evidence with respect to the issues in the case. The arbitration hearing has been scheduled on a number of occasions but has been deferred at Mr. Maxwell’s requests, first to deal with the issue of the non-parties’ obligation to disclose, and now as a result of his challenge to the arbitration process itself. It is apparent that the matter is very close to coming to an end, as the arbitration hearing will finally take place once this decision is released. The arbitrator has an in-depth knowledge of this file, having been extensively case-managing it for seven years, and it would in my view be a significantly denial of justice to allow Mr. Maxwell to withdraw from the arbitration process at this stage of the proceeding, with the delays and costs which will undoubtedly be associated with returning this matter to court.

Removal of Ms. D’Artois as Arbitrator

[36] In the alternative to being released from the arbitration process, Mr. Maxwell seeks an order removing Ms. D’Artois as the arbitrator. He takes the position that she allowed for an unfair and biased process to take place. Further, it is his position that the arbitrator has a personal bias against him, that she has formed a negative impression of him and has unfairly characterized him as a difficult and non-cooperative party.

[37] Section 6 of the Arbitration Act gives the court authority to intervene in matters governed by the Act only in the following situations:

1. To assist the conducting of arbitrations.
2. To ensure that arbitrations are conducted in accordance with arbitration agreements.
3. To prevent unequal or unfair treatment of parties to arbitration agreements.
4. To enforce awards.

[38] Section 11(1) provides that an arbitrator shall be independent of the parties and shall act impartially. The arbitrator’s duty to treat the parties fairly and equally is so important that s. 19 of the Act gives a special status to the parties’ right to equal and fair treatment, and confirms that parties cannot contract out of that requirement. As stated by Justice Templeton in Hercus v. Hercus, [2001] O.J. No. 534, at para. 75:

75 It is settled law that the right to a fair hearing is an independent and unqualified right. Arbitrators must listen fairly to both sides, give parties a fair opportunity to contradict or correct prejudicial statements, not receive evidence from one party behind the back of the other and ensure that the parties know the case they have to meet. An unbiased appearance is, in itself, an essential component of procedural fairness.

[39] Justice Gray in the recent case of McClintock v. Karam, 2015 ONSC 1024, 124 O.R. (3d) 616 reviewed the law pertaining to the test for reasonable apprehension of bias in an arbitrator, which he summarized as follows;

66 The classic test to be applied in determining whether there is a reasonable apprehension of bias is set out in the dissenting reasons of de Grandpré J. in Committee for Justice & Liberty v. Canada (National Energy Board), [1978] 1 S.C.R. 369. While in dissent, the test he set out was not disputed by the majority of the court, and has been quoted with approval in virtually every subsequent case involving alleged bias, including cases in the Supreme Court of Canada: see Wewaykum Indian Band v. Canada, 2003 SCC 45, [2003] 2 S.C.R. 259; and R. v. R.D.S., 1997 SCC 324, [1997] 3 S.C.R. 484.

67 The appropriate test was set out by de Grandpré J., as follows:

The proper test to be applied in a matter of this type was correctly expressed by the Court of Appeal. As already seen by the quotation above, the apprehension of bias must be a reasonable one held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information. In the words of the Court of Appeal, that test is “ what would an informed person viewing the matter realistically and practically - and having thought the matter through - conclude. Would he think that it is more likely than not that Mr. Crowe, whether consciously or unconsciously, would not decide fairly.”

I can see no real difference between the expressions found in the decided cases, be they ʻreasonable apprehension of biasʼ, ʻreasonable suspicion of biasʼ, or ʻreal likelihood of biasʼ. The grounds for this apprehension must, however, be substantial and I entirely agree with the Federal Court of Appeal which refused to accept the suggestion that the test be related to the “very sensitive or scrupulous conscience.”

This is the proper approach which, of course, must be adjusted to the facts of the case. The question of bias in a member of a court of justice cannot be examined in the same light as that in a member of an administrative tribunal entrusted by statute with an administrative discretion exercised in the light of its experience and of that of its technical advisers.

The basic principle is of course the same, namely that natural justice be rendered. But its application must take into consideration the special circumstances of the tribunal.

[40] Later in his decision, Justice Gray added:

75 While the mediator/arbitrator would undoubtedly have had discussions with the parties about these issues, and would have formed some tentative impressions or even conclusions about them, it was important that he remain open to persuasion and refrain from expressing strong views that might disclose a predisposition to decide one way or the other.

[41] The alleged facts upon which Mr. Maxwell bases his assertions that the arbitrator has become biased against him can be summarized as follows. Firstly, Mr. Maxwell relies on the fact that he was unsuccessful in the context of the first motion before the arbitrator, dealing with bifurcation and disclosure, and again in the context of the second motion before the arbitrator, dealing with disclosure from Mr. Maxwell and non-party corporate entities. In essence, Mr. Maxwell is of the view that the arbitrator’s decisions were wrongly decided and against his interest, thus showing bias on the part of the arbitrator.

[42] I disagree. An informed person viewing the matter realistically and practically - and having thought the matter through – could not possibly conclude that an arbitrator is biased simply because he or she rules on a disputed matter against one party, even if that occurs on more than one occasions. Ruling on a disputed issue is the essence of the arbitrator’s role. If Mr. Maxwell was of the view that the arbitrator’s awards were wrongly decided, his legal remedy was to appeal those decisions. He did not.

[43] In support of his position that the arbitrator allowed for a flawed arbitration process to take place, thus showing personal bias against him, Mr. Maxwell points to the arbitrator imposing a timetable for the arbitration process including the provision of disclosure and setting dates for questioning in the hearing. Not only is this not indicative of bias, managing the arbitration process and ensuring that the case proceeds to a final determination within a reasonable period of time is part of an arbitrator’s legal duties pursuant to ss. 19, 20, 21 and 22 of the Arbitration Act. The arbitrator in this case made her concerns about the lengthy delays in the case very clear to the parties in 2016; and from there, imposed strict timelines to insure its expeditious conclusion. There is absolutely nothing wrong with that.

[44] Further, Mr. Maxwell fails to mention that the timelines imposed by the arbitrator have had to be extended on a number of occasions as a result of his inability to meet them. He also fails to mention that the final arbitration hearing was adjourned on a number of occasions at his request, including in the context of a contested motion brought by him and heard by the arbitrator on April 23, 2018. In her Arbitration Award released on that day (“the 2018 Award”), the arbitrator allowed Mr. Maxwell’s request that the arbitration be adjourned pending this Court’s decision on both the non-party disclosure issues and Mr. Maxwell’s requests that he be released from the arbitration process or that the arbitrator be removed. Her reasons for doing so demonstrate that she took great care in balancing Ms. La Fontaine’s desire to proceed with the case expeditiously with Mr. Maxwell’s right to have his challenges to the arbitration process properly heard and dealt with by the court. This shows that she remained impartial despite Mr. Maxwell’s allegations against her, and that she was cognizant of her obligation to insure a fair process to both parties.

[45] Mr. Maxwell also alleges that the arbitrator showed a clear dislike of him in the context of recent events surrounding the payment of her retainer for the arbitration. Pursuant to an Arbitration Award made on September 18, 2017 setting out a timeline for the next steps in the case, the parties were ordered to provide a retainer of $10,000 each, on or before September 21, 2017. The retainer was to be paid via e-transfer, but due to technical difficulties, Mr. Maxwell’s retainer was not paid. He states that the day after the deadline, he received a “rude and accusatory email” from the arbitrator who had been unable to access the funds at her end. He states that she “continued to be unnecessarily rude” to him and to “demand” that he send another payment. To support his contention, he provides a copy of the email exchange between him and the arbitrator in that regard.

[46] I have read the entire email exchange, and find nothing inappropriate or rude on the part of the arbitrator during this exchange. Quite the contrary, I find that the arbitrator went out of her way, first to find out, and then to explain to Mr. Maxwell why she was unable to receive his e-transfer. Of particular note is the following excerpt of her email to Mr. Maxwell:

Hi James,

My bank has checked and the problem is with the amount of the transfer and restrictions that your bank has on e-transfers. My email did not suggest that it is you personally, but rather that the problem is at your end, not mine. Before I sent the email, I had my bank manager confirm whether there were settings attached to my bank account which was creating the error message. He connected with several people in Toronto who confirmed my settings. They also saw the attempted transfers and checked. I have been notified that your bank has “default” restrictions which impacted the transfer.

I apologize if my email suggested that you intentionally did something to impede the transfer. I sent the email because I had been asked to accept a transfer from Lynn on your behalf and I don’t feel comfortable with that occurring.

Please let me know how you will address payment of the retainer.

[47] Simply stated, I find no evidence before me that would suggest that the arbitrator has come to conclusions about Mr. Maxwell or about the issues in the case which impact her ability to remain impartial and to determine the issues in the case based on the evidence and applicable legal principles. I see no evidence to support the conclusion that the arbitrator has closed her mind to persuasion by Mr. Maxwell with regards to his position on the substantive issues presented in the case, or that she has expressed her views about those issues or conducted herself in a way that would affect an objective and reasonable person’s perception of her impartiality. In fact, and while I am in no position to come to any conclusion in that regard, I am quite sympathetic with Ms. La Fontaine’s suggestion that Mr. Maxwell’s recent allegations of impartiality and unfair treatment by the arbitrator, which only arise seven years into the arbitration process, may be motivated by a desire on his part to avoid a final determination of his child support obligations.

Non-Party Disclosure

[48] The respondent corporations and corporate entities who have defended Ms. La Fontaine’s application have all filed brief affidavits which for the most part mirror one another. They all take the position that they should not be required to provide the requested disclosure on the following grounds:

1. They were not informed or involved in the arbitration process whereby the requested disclosure was deemed relevant to a determination of Mr. Maxwell’s income;
2. Mr. Maxwell, through his corporate entities, is only a minority shareholder and as such, he does not have control over the finances or business decisions of any given corporations/entities;
3. The remaining shareholders of each corporations/entities are not related to Mr. Maxwell and therefore, his interest in these corporations/entities is at arm’s-length;
4. The disclosure requested contains confidential information;
5. The production of the requested disclosure will result in costs for the corporations/entities in the form of labour and reproduction;
6. The relevance of the disclosure is disproportionate to the cost and effort required to produce it;
7. There is a concern that ordering this disclosure from them will set a precedent which will allow Ms. La Fontaine to demand this disclosure on a frequent basis resulting in further costs to them;
8. Some of the corporations/entities were incorporated in 2017 or later. Since the applicant’s claim for support pertains to a period before their incorporation, their disclosure is irrelevant.

[49] An order for disclosure against a non-party is available under rule 19(11). That rule states:

19(11) DOCUMENT IN NON-PARTY’S CONTROL — If a document is in a non-party’s control, or is available only to the non-party, and is not protected by a legal privilege, and it would be unfair to the party to go on with the case without the document, the Court may, on motion with notice served on every party and on the non-party by special service.

[50] The legal principles applicable to non-party disclosure orders have been summarized succinctly very recently by Justice Madsen in Weber v. Merritt, 2018 ONSC 3086:

29 The onus on a motion for non-party disclosure and/or questioning is on the moving party. Re the Estate of Harold Edwin Ballard, 1995 CarswellOnt 1332 at 16.

30 The starting point is to consider the context, and the purpose for which the Rule is invoked. Ireland v. Ireland, 2011 ONCA 623 at 28.

31 The Court has held that the test under Rule 19(11) is an objective test which requires an analysis outside the litigant's belief system: “suspicion and conjecture will not suffice.” See Santilli v. Piselli, 2010 CarswellOnt 3317 at paragraph 12. There is no reason that the test would not be the same under Rule 20(5).

32 In Re the Estate of Harold Edwin Ballard, supra at 15, in the context of the Rules of Civil Procedure, the Ontario Court of Appeal set out six factors to be considered by the Motions judge when faced with a motion for non-party disclosure:

a. The importance of the documents in the litigation; b. Whether production at the discovery stage of the process as opposed to production at Trial is necessary to avoid unfairness to the Applicant; c. Whether the discovery of the defendants with respect to the issues to which the documents are relevant is adequate and if not, whether the responsibility for that inadequacy rests with the defendants; d. The position of the non-parties with respect to production; e. The availability of the documents or their informational equivalent from some other source which is available to the moving party; f. The relationship of the non-parties from whom production is sought, to the litigation and the parties to the litigation. Non-parties who have an interest in the subject matter of the litigation and whose interests are allied with the party opposing production should be more susceptible to a production order than a true “stranger” to the litigation.

33 Rule 20(5) has been held to be more permissive than the comparable Rule in the Rules of Civil Procedure, and to give judges more liberal and generous discretion. As noted by Justice Turnbull in Hagey-Holmes v. Hagey, 2005 CarswellOnt 2840 at 32:

That makes eminent sense when one considers that in matrimonial litigation, spouses and family members may be “used” to shield income or other assets that might be relevant in the assessment of spousal support, child support, or net family equalization issues.

34 So too in Loeb v. Loeb, 2013 CarswellOnt 3247 at 42, the Court noted that it is not uncommon in the family law context for family members and their businesses to align themselves to support and protect a family member defending a property or support claim.

35 At the same time, as set out in Boyd v. Fields, 2006 CarswellOnt 8675 at 12, as with all disclosure requests in the family law context, whether from parties or non-parties, while full and frank disclosure is a fundamental tenet of the Family Law Rules, “there is also an element of proportionality, common sense, and fairness built into these rules.” Disclosure obligations must be assessed in light of Rule 2(3).

38 There must be an evidentiary basis to show that the documents sought or the questioning requested is relevant. The request for disclosure from a non-party and the request for questioning should not amount to a fishing expedition. Campbell v. Wentzell, 2015 CarswellOnt 15086 at 47.

[51] I find that it would be unfair to Ms. La Fontaine to proceed without the disclosure sought from the respondent corporations/corporate entities. The information is material. Both parties confirm that it is relevant to the issue of the determination of Mr. Maxwell’s income, which is one of the key issues in the context of the arbitration. If that disclosure is not secured from the respondents, Ms. La Fontaine will be deprived of her ability to establish Mr. Maxwell’s true income for support purposes. As a result, I find that it would be unfair for Ms. La Fontaine to carry on this case without the requested disclosure from the respondents.

[52] It is not disputed that the information sought from the respondent (non-parties in the arbitration) is not available by any other method. Despite Mr. Maxwell’s requests to them, the existence of a consent arbitration award in which the parties to the arbitration both confirm that the information is relevant, and despite a previous arbitration award and court order compelling the same disclosure from a smaller number of respondents in the past, the respondents have refused to voluntarily disclose.

[53] The disclosure sought from each individual corporation or corporate entity is not exaggerated or unreasonably sizeable. While I appreciate that some time will be required to put the disclosure together, most of what is requested should be easily accessible and readily available in electronic format (electronic copy of QuickBooks files and corporate financial statements). I find that Mr. Nihmey made a reasonable attempt to limit the disclosure he was seeking by limiting his request for more extensive financial disclosure to those companies and corporate entities in which Mr. Maxwell holds legal control (50% ownership or greater) either personally or through his family trusts. I do not find that the costs associated with putting this disclosure together by each individual respondent is excessive or unreasonable, as alleged.

[54] It is also important to note that while there are 31 corporations/corporate entities who defended Ms. La Fontaine’s application for disclosure, there is only a limited number of “persons of authority” who provided affidavits on behalf of all those corporate entities, who includes Mr. Maxwell’s own brother and Mr. Gordon Cutney (who is the “person of authority” for at least 14 of those companies). Although a very small number of those companies may be “true strangers" to the litigation, I am quite convinced based on the evidence before me that most of them are not. Since all corporate entities and Mr. Maxwell share the same counsel, and as there is only a small group of six or seven “persons of authority” who appear to control all these corporations, one easily come to the conclusion that these businesses and their “persons of authority” have aligned themselves to support and protect Mr. Maxwell, their business partner, from Ms. La Fontaine’s claim for support.

[55] Finally, while I appreciate the need for the respondent companies to protect confidential information pertaining to their business affairs, the disclosure requested by Ms. La Fontaine is necessary in the circumstances of this case to establish child support. I echo the arbitrator’s conclusion that the respondents’ entitlement to privacy comes second to the children’s entitlement to child support. Further, by virtue of Justice James’ 2013 Order, there is a confidentiality agreement in place between the parties (being Mr. Maxwell and Ms. La Fontaine) which requires them to keep all information provided during the course of this proceeding confidential. Any breach of this confidentiality agreement, and remedies flowing therefrom, can be dealt with in accordance with its terms, in the context of the arbitration proceeding (or through a court action if the corporations or any of them are the complainants).

Order

[56] Based on the above, the following order shall issue:

1. The Respondents shall, within 15 days, provide the Applicant with the disclosure listed in Schedules “A”, “B” and “C” of the Consent Arbitration Award dated December 15, 2017, that is within their respective possession and/or control;
2. The Respondent Mr. Maxwell shall be responsible for the costs associated with the production of this disclosure. The disclosure shall, if it is already stored in an electronic format, be provided in electronic format (on a USB key or any other acceptable electronic storage device). When this is not possible, and at the discretion of each Respondent, the disclosure may be provided in paper format and the Applicant Ms. La Fontaine shall pay the photocopy costs at the Legal Aid rate.
3. Mr. Maxwell’s request to be released from the arbitration process or to remove Ms. D’Artois as the parties’ arbitrator is dismissed;
4. Any motion, including contempt motions, resulting from the failure of any of the Respondents to provide the above disclosure shall be brought before me;
5. Should there be any issues arising from this order, I may be spoken to.

Costs

[57] Ms. La Fontaine is clearly the successful party in this application. If the parties are unable to agree on costs, I will accept brief written submissions from the parties not exceeding three pages (exclusive of Bills of Costs and Offers to Settle). The Applicant will have 15 days from the date of this decision to provide her submissions and the Respondents will have 15 days thereafter to provide theirs. The Applicant will be allowed a brief reply if deemed necessary, not exceeding one page, which shall be provided within 5 days from receipt of the Respondents’ submissions.

Madam Justice Julie Audet

Released: August 30, 2018