Giddings v. Giddings

Ontario Reports

Ontario Superior Court of Justice

Gray J.

December 11, 2019

149 O.R. (3d) 548 | 2019 ONSC 7203

Case Summary

Appeal — Standard of appellate review — Parties in matrimonial litigation signing mediation agreement which included a provision for appraisal of property — Both parties dissatisfied with appraisal process — Mediator declaring that he was not bound by appraisal and had ultimate authority to determine the property's value — Matters involving contractual interpretation subject to reasonableness standard of review — Mediator's conclusion reasonable — Parties could not proceed without executing family arbitration agreement.

Arbitration — Application of arbitration legislation — Parties in matrimonial litigation signing mediation agreement which included a provision for appraisal of property — Both parties dissatisfied with appraisal process — Mediator declaring that he was not bound by appraisal and had ultimate authority to determine the property's value — Mediator's conclusion reasonable — Parties could not proceed without executing family arbitration agreement. [page549]

Arbitration — Award — Setting aside — Parties in matrimonial litigation signing mediation agreement which included a provision for appraisal of property — Both parties dissatisfied with appraisal process — Mediator declaring that he was not bound by appraisal and had ultimate authority to determine the property's value — Mediator's conclusion reasonable — Parties could not proceed without executing family arbitration agreement.

Arbitration — Jurisdiction — Parties in matrimonial litigation signing mediation agreement which included a provision for appraisal of property — Both parties dissatisfied with appraisal process — Mediator declaring that he was not bound by appraisal and had ultimate authority to determine the property's value — Mediator's conclusion reasonable — Parties could not proceed without executing family arbitration agreement.

Contracts — Duty of good faith — Parties in matrimonial litigation signing mediation agreement which included a provision for appraisal of property — Both parties dissatisfied with appraisal process — Mediator declaring that he was not bound by appraisal and had ultimate authority to determine the property's value — Husband refusing to execute family arbitration agreement — Mediator's conclusion reasonable — Husband's refusal inconsistent with obligation of good faith contractual performance — Parties could not proceed without executing family arbitration agreement.

Family law — Arbitration — Appeal — Parties in matrimonial litigation signing mediation agreement which included a provision for appraisal of property — Both parties dissatisfied with appraisal process — Mediator declaring that he was not bound by appraisal and had ultimate authority to determine the property's value — Mediator's conclusion reasonable — Parties could not proceed without executing family arbitration agreement.

Parties in matrimonial litigation signed a mediation agreement which named a specific mediator. They subsequently entered into final minutes of settlement. The parties agreed in their minutes that three properties would be appraised and the mediator, if necessary, would arbitrate equalization matters. Issues involving two of the properties were resolved, and the mediator appointed an appraiser for the third property. Disputes arose over the appraisal process. After the final appraisal report was prepared, an issue arose as to whether the mediator was bound by that report or whether he had the right to finally determine the value of the property. In his arbitration award, the mediator declared that he had the authority to determine the extent of his jurisdiction as well as to determine the ultimate value of the property. He invited the parties to execute a proper arbitration agreement, either with himself or with another arbitrator. The husband moved for leave to appeal the mediator's award and in the alternative applied to set aside the award under s. 46 of the Arbitration Act, 1991.

Held, the motion and application should be dismissed.

The arbitrator had no power to proceed in the absence of a family arbitration agreement. The legislation clearly set out certain formalities to be observed to establish a valid family arbitration agreement, and those formalities had not been observed.

The arbitrator had ample authority to express his view that he had the jurisdiction and authority to override the appraisal and determine the value of the property for equalization purposes. In expressing that opinion, he was obliged to interpret the minutes of settlement. While his reasoning was brief, he interpreted the minutes as a whole and considered the surrounding circumstances. The minutes stated that the "issue of equalization shall be summarily arbitrated" by the mediator, so it was reasonable to conclude that he had the ultimate authority to determine the value of the property at issue.

The parties were ordered to execute a family arbitration agreement using the existing mediator. Both parties agreed under the minutes of settlement to execute [page550] a formal, enforceable family law arbitration agreement. The only reason offered by the husband for refusing to execute such an agreement was the fact that the mediator expressed his opinion that upon the execution of such agreement he would have the authority to decide the value of the property at issue. The husband's refusal to execute the agreement was not consistent with his obligation of good faith contractual performance.

Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, 2014 SCC 53, 373 D.L.R. (4th) 393, 461 N.R. 335, [2014] 9 W.W.R. 427, J.E. 2014-1345, 358 B.C.A.C. 1, 59 B.C.L.R. (5th) 1, 25 B.L.R. (5th) 1, 242 A.C.W.S. (3d) 266, 2014EXP-2369; Teal Cedar Products Ltd. v. British Columbia, [2017] 1 S.C.R. 688, [2017] S.C.J. No. 32, 2017 SCC 32, 411 D.L.R. (4th) 385, [2017] 9 W.W.R. 1, 98 B.C.L.R. (5th) 211, 279 A.C.W.S. (3d) 563, EYB 2017-281383, 2017EXP-1852, 4 L.C.R. (2d) 1, apld

Other cases referred to

Bhasin v. Hrynew, [2014] 3 S.C.R. 494, [2014] S.C.J. No. 71, 2014 SCC 71, 379 D.L.R. (4th) 385, 464 N.R. 254, [2014] 11 W.W.R. 641, J.E. 2014-1992, 4 Alta. L.R. (6th) 219, 27 B.L.R. (5th) 1, 20 C.C.E.L. (4th) 1, 245 A.C.W.S. (3d) 832, EYB 2014-244256, 2015 CCLG para. 25-556, 2014EXP-3530; Canada Square Corp. v. VS Services Ltd. (1981), 1981 CanLII 1893 (ON CA), 34 O.R. (2d) 250, [1981] O.J. No. 3125, 130 D.L.R. (3d) 205, 15 B.L.R. 89, 11 A.C.W.S. (2d) 443 (C.A.); Horowitz v. Nightingale (2017), 138 O.R. (3d) 10, [2017] O.J. No. 2353, 2017 ONSC 2168, 94 R.F.L. (7th) 151, 279 A.C.W.S. (3d) 96 (S.C.J.); Lopatowski v. Lopatowski (2018), 140 O.R. (3d) 731, [2018] O.J. No. 676, 2018 ONSC 824, 289 A.C.W.S. (3d) 12, 3 R.F.L. (8th) 411 (S.C.J.); Marchese v. Marchese, [2007] O.J. No. 191, 2007 ONCA 34, 219 O.A.C. 257, 35 R.F.L. (6th) 291, 154 A.C.W.S. (3d) 275; Olivieri v. Sherman (2007), 86 O.R. (3d) 778, [2007] O.J. No. 2598, 2007 ONCA 491, 284 D.L.R. (4th) 516, 225 O.A.C. 227, 159 A.C.W.S. (3d) 364; Paulsson v. Cooper, [2010] O.J. No. 123, 2010 ONCA 21, 184 A.C.W.S. (3d) 12; Stonehocker v. King, [1993] O.J. No. 2653, 43 A.C.W.S. (3d) 735 (Gen. Div.)

Statutes referred to

Arbitration Act, 1991, S.O. 1991, c. 17, s. 46 [as am.], (8)

Family Law Act, R.S.O. 1990, c. F.3 [as am.]

Rules and regulations referred to

Family Arbitration, O. Reg. 134/07

MOTION for leave to appeal and appeal a mediator's award; APPLICATION to set aside award under the Arbitration Act, 1991.

Laura Natalizio, for applicant (respondent).

Mark T. Rush, for respondent (appellant).

[1] GRAY J.: — The parties have been engaged in matrimonial litigation for several years. They entered into final Minutes of Settlement on August 9, 2018. Notwithstanding their intention that the Minutes of Settlement be final, they have continued to litigate, this time with the assistance of a mediator, Stephen Grant.

[2] The parties agreed, in their Minutes, that certain properties would be appraised, and then Mr. Grant would, if necessary, arbitrate equalization issues. [page551]

[3] Disputes have arisen over the appraisal of one of the properties. This has led to a dispute as to whether Mr. Grant has the authority to override the opinion of the appraiser in arbitrating equalization issues. He has determined that he has that authority.

[4] The respondent has now challenged Mr. Grant's view of his jurisdiction and authority, by way of a purported appeal from Mr. Grant's decision (including a motion for leave to appeal) and, in addition, has brought an application to set aside the award pursuant to s. 46 of the Arbitration Act, 1991, S.O. 1991, c. 17.

[5] The parties have not yet executed a family arbitration agreement pursuant to the Family Law Act, R.S.O. 1990, c. F.3, and the Arbitration Act, 1991. This constitutes one of the grounds on which the respondent argues that Mr. Grant had no authority to issue his award.

[6] In the result, I hold that Mr. Grant has no authority to proceed further because a family arbitration agreement has not been executed. However, I also hold that Mr. Grant had every right to express his opinion, in his award, that he has the jurisdiction and authority to override the appraisal in coming to his eventual decision on equalization. It is also clear, for the reasons I will outline, that the respondent is required to enter into a family arbitration agreement, as he specifically agreed to do in the Minutes of Settlement.

[7] While, as noted, the respondent has brought both an appeal and an application to set aside Mr. Grant's award, to avoid confusion I will hereafter refer to him as the "appellant", and the applicant as the "respondent".

Background

[8] The parties were married on September 16, 2004. They have one child, born March 17, 2005.

[9] The parties were involved in litigation for approximately four years, in this court. They were scheduled to proceed to trial in October 2017. The appellant's former counsel unfortunately passed away in October 2017, and this resulted in an adjournment of the trial.

[10] The parties signed a mediation agreement in July 2018, under which they agreed to retain Steven Grant as a mediator. Subsequently, on August 9, 2018, they signed final Minutes of Settlement. Each party was represented by counsel.

[11] The parties agreed to settle all matters in dispute, including child support, custody and access, spousal support and equal-ization. The provisions regarding equalization have overarching importance, and they are as follows: [page552]

22. Counsel shall resolve all outstanding issues with respect to the parties' respective Net Family Property, save and except for the present-day value of the properties, real estate commission and capital gains, which will be resolved once the value for the properties listed in paragraph 23 and 27 are determined as provided for in this agreement. In the event the parties are unable to resolve the Net Family Property issues by September 30, 2018, the issue of equalization shall be summarily arbitrated by Mr. Stephen Grant, by way of written submissions. The parties shall proceed to domestic violence screening and thereafter execute an Arbitration Agreement with Mr. Stephen Grant.

23. On or before September 15, 2018, the parties shall jointly retain an appraiser(s) to formally appraise the following properties as of present date: 6602 Snowgoose Lane, Mississauga, Ontario; and 554-556 Chartwell Road, Oakville, Ontario.

24. The parties' Mediator, Mr. Stephen Grant shall choose an appraiser(s) to complete the appraisals of the above listed properties. The expense of said appraisals shall be borne by the parties equally (50/50). The parties shall provide Stephen Grant with any information they wish to pass on to the appraiser with respect to the properties listed in paragraph 23.

25. Once the appraisals have been completed, the parties shall use the present date appraised value for all the properties listed in paragraph 23 above in their respective Net Family Property Statements and calculate real estate commission, legal fees and capital gains.

26. Diane shall register a matrimonial home designation on title to the matrimonial home, located at 524 Blenheim Crescent, Oakville, Ontario.

27. Diane and Paul shall jointly list for sale the matrimonial home, located at 524 Blenheim Crescent, Oakville Ontario. The parties shall jointly choose a real estate agent, the listing price, and all conditions of sale. The parties shall jointly execute a listing agreement by no later than September 15, 2018.

28. In the event the parties are unable to agree on the conditions of sale, including but not limited to the selection of a real estate agent, the listing price, changes to the listing price, terms of sale, or the final sale price, the issues shall be summarily arbitrated by Mr. Stephen Grant by way of written submissions. The parties shall proceed to domestic violence screening and thereafter execute an Arbitration Agreement with Mr. Stephen Grant providing him with arbitral power.

29. In the event the matrimonial home, located at 524 Blenheim Crescent, Oakville, Ontario, is not sold by November 30, 2018, the parties shall retain the services of the appraiser as selected by Mr. Stephen Grant in accordance with paragraph 24 above, in order to obtain an appraisal of the matrimonial home at present date value. That value shall be used in Paul's Net Family Property Statement inclusive of real estate commission, legal fees, and capital gains.

30. Any equalization payment owing to Diane or Paul shall be paid on or before December 31, 2018.

31. In the event the parties are unable to resolve the equalization issue, the issue of equalization shall be summarily arbitrated by Mr. Stephen Grant, by way of written submissions. The parties shall proceed to domestic violence screen and thereafter execute an Arbitration Agreement with Mr. Stephen Grant providing him with arbitral power. [page553]

32. Subject to any equalization payment pursuant to paragraph 30, the parties shall each retain property held in their respective name free and clear from the other.

33. Subject to the equalization payment pursuant to paragraph 30, the parties shall enter into a Separation Agreement that shall include full and final property and estate releases. In the case of RRSPs, RRIF, registered or un-registered private or employment pensions, investment, life insurance, and any such similar property, the parties disclaim any and all rights arising from and benefits payable to them from the other's plans, including any survivor benefits or rights or benefits which may arise on the death of the other, or any designations to the contrary.

[12] Also relevant are the following terms of the Minutes:

49. The terms of these Minutes of Settlement shall be incorporated into a comprehensive Separation Agreement containing all standard clauses and releases. The Separation Agreement is to be prepared by Diane's counsel.

50. If there is any dispute regarding the wording of the Separation Agreement it shall be resolved summarily by Mr. Stephen Grant. The parties shall attend for domestic violence screening and sign an Arbitration Agreement with Mr. Grant in the event that Mr. Grant is to summarily resolve any wording issues involving finalizing the parties Separation Agreement.

[13] As reflected in the Minutes, there were three properties that required valuation:

(a) the matrimonial home located at 524 Blenheim Crescent, Oakville;

(b) the respondent's rental property at 6602 Snowgoose Lane, Mississauga; and

(c) the appellant's rental property at 554-556 Chartwell Road, Oakville.

[14] Issues involving the first two properties were resolved. The valuation regarding the property at Chartwell Road remained unresolved. Pursuant to an e-mail from Mr. Grant dated September 17, 2018, he appointed Hadley Duncan as the appraiser for the Chartwell property.

[15] Disputes arose over the way in which Mr. Duncan went about appraising the property. Accusations have been made by both parties that he had inappropriate communications with each party, to which the other party was not apprised. This resulted in correspondence among counsel and Mr. Grant, and ultimately a conference call among counsel and Mr. Grant on November 9, 2018. This resulted in an arbitration award by Mr. Grant dated November 16, 2018. Included in his award are the following paragraphs:

4. As to the Chartwell property, Ms. Hergel Giddings complains about lack of partiality by Mr. Giddings in trying to affect the appraiser's (Mr. Hadley Duncan's) appraisal because of the production by Mr. Duncan of a draft [page554] report and the request by Mr. Rush for certain reconsideration. (In passing, Mr. Duncan takes umbrage at the suggestion.)

5. In any event, the fair thing to do is that upon receipt of Mr. Duncan's appraisal, Ms. Hergel Giddings will have 10 days to challenge it, by submissions to me, with any critique applicable, after which, obviously allowing Mr. Giddings to persuade me otherwise, I will make the determination on a summary basis.

[16] It appears that the respondent retained a different appraiser, who proceeded to prepare a valuation of the property. There is a dispute as to whether it is an "appraisal" or a "critique", which is what was contemplated in Mr. Grant's award dated November 16, 2018. Ultimately, Mr. Duncan issued a final appraisal report, and there are complaints as to the process he followed in doing so.

[17] Ultimately, there were a number of conference calls among counsel and Mr. Grant, which culminated in a conference call on May 2, 2019.

[18] It would appear that the main issue discussed in that conference call was whether Mr. Grant had the right to finally determine the value of the Chartwell property, or whether he was bound by the appraisal report. Counsel for the appellant followed up with Mr. Grant with correspondence dated May 29, 2019, in which he stated "we have been awaiting your arbitration decision with respect to the issues argued on that occasion. Can you advise when you would expect to have your decision for us?"

[19] Mr. Grant issued his arbitration award on July 17, 2019. His award is fairly short, and because it is of critical importance, I will reproduce it in full:

1. The parties are at a new impasse about the appraisal of the Chartwell property.

2. Without putting too fine a point on it, Ms. Hergel asserts that the process followed by Mr. Duncan to arrive at his revised appraisal report is flawed, leading inescapably to the conclusion that he is, or at least there is the appearance, that he is biased, and his report lacks impartiality. (In passing, Mr. Duncan takes umbrage at the suggestion.)

3. Whether this is so has raised, in turn a more fundamental questions, namely, what is the extent of my arbitral jurisdiction?

4. Mr. Rush says that I cannot adjudicate the value of the property but that it is to be determined solely by Mr. Duncan whom I chose in the first place.

5. Ms. Natalizio disagrees saying that I am the only person who has the authority to make the final decision.

6. As a result of correspondence and several conference calls with counsel, I agree with Ms. Natalizio for these reasons.

7. While Mr. Rush suggests that specific jurisdiction was carved out of the Minutes of Settlement such that I would not be the final adjudicator on property value, this is not the way I read them. [page555]

8. There are the relevant terms:

a. Paragraph 22: Counsel shall resolve all outstanding issues with respect to the parties' respective Net Family Property, save and except for the present-day value of the properties, real estate commission and capital gains, which will be resolved once the value for the properties listed in paragraphs 23 and 27 are determined as provided for in this agreement. In the event the parties are unable to resolve the Net Family Property issues by September 30, 2018, the issue of equalization shall be summarily arbitrated by [me] by way of written submissions . . .

b. Paragraph 23: On or before September 15, 2018, the parties shall jointly retain an appraiser(s) to formally appraise . . . 554-556 Chartwell Road, Oakville, Ontario.

c. Paragraph 24: The parties Mediator . . . shall choose an appraiser(s) to complete the appraisals of the above listed properties. The expense of said appraisals shall be borne by the parties equally (50/50). The parties shall provide [me] with any information they wish to pass on to the appraiser with respect to the properties listed in paragraph 23.

d. Paragraph 25: Once the appraisals have been completed, the parties shall use the present date appraised values for all the properties listed in paragraph 23 above in their respective Net Family Property Statements and calculate real estate commission, legal fees and capital gains.

e. Paragraph 31: In the event the parties are unable to resolve the equalization issue, the issue of equalization shall be summarily arbitrated by [me] by way of written submissions . . .

9. Mr. Rush says that these terms are specifically designed to provide that, in the case of Chartwell, Mr. Duncan has the final word, and his opinion governs.

10. Ms. Natalizio disagrees and says, instead that while the parties are free to submit their respective critiques (if any) to Mr. Duncan for him to consider and explain his rationale for the differences between his draft and final reports on Chartwell (during which time, he appears to have had communications with at least Mr. Giddings), ultimately I have the authority to determine the appraisal amount to be used in calculating the parties' respective Net Family Property/Equalization Payment.

11. Specifically, she says Ms. Hergel "takes issue in the manner in which Mr. Duncan conducted his appraisal and the way he handled what was intended to be a joint retainer by taking instructions from [Mr. Giddings] directly on several difference occasions, including but not limited to only providing Mr. Giddings with a copy of his revised draft appraisal for comment and thereafter finalizing his appraisal on Mr. Gidding's instructions only.

12. There is an additional layer of concern, however, that I must address, namely the parties have yet to sign an Arbitration Agreement with me although I have made at least one ruling along the way let alone conducted a number of procedural/substantive conference calls with counsel, as helpfully discussed by Mr. Rush in his April 26th letter. [page556]

13. To be sure, the parties have certainly acted on the basis that I have arbitral authority and, frankly, despite jurisprudence that might suggest otherwise (regarding lack of screening, etc.) I find the parties are estopped, by course of conduct at least, from claiming I do not have it.

14. In this regard, it is worth mentioning that in his April 26th letter, Mr. Rush says this: "According to my notes, on March 5th I confirmed in response to Mr. Grant's question, that my instructions from Mr. Giddings were that he would have us bring the matter before the Court if the result was going to be that Hadley Duncan's appraisal was going to be set aside a new appraisal ordered. It was my client's position that under the Minutes signed, the issues that the arbitrator was to determine were clearly defined and the value of the property was to be determined by an appraiser selected by Mr. Grant if the parties could not agree upon an appraiser. The Minutes do not provide the arbitrator with the authority to order a second appraisal in substitution for the first appraisal. This all was addressed, in much greater detail, in my letter of February 4th addressed to you both, which I understood to have been the reason Mr. Grant requested the March 5th telephone conference."

15. Whatever else, the parties' Minutes of Settlement clearly call for the execution of a proper Arbitration Agreement by them, something that I take it has yet to be done, as implored by Ms. Natalizio in her May 1st letter.

16. I have reviewed the Minutes carefully, however, and although Mr. Rush says that the final authority to determine value rests with whichever appraiser I choose, in this instance Mr. Duncan, I do not agree with him. Nowhere in the Minutes is that authority ceded to or conferred on the appraiser, apart altogether from the bias (or appearance of bias) allegation that has been raised by Ms. Hergel, and irrespective of the fact that I chose Mr. Duncan in the first place.

17. Having particular regard to my arbitral authority to determine Equalization and, at least inferentially if not explicitly, Net Family Property per Paragraph 31 of the Minutes, I am satisfied that I have the ultimate jurisdiction, rather than Mr. Duncan, to determine the appropriate value of Chartwell if either of the parties (or both) reject Mr. Duncan's conclusion as to its appraised value. As would be the ordinary course, I also have the jurisdiction to determine process if there is a disagreement, as exists here.

18. Given Mr. Rush's statement about seeking judicial intervention in the face of my conclusion, I will refrain from commenting on the substantive merits, if any, of the bias allegations.

19. In summary, therefore, I find that, if I have arbitral authority at all, I have the authority to determine the extent of my arbitral jurisdiction as well as to determine the ultimate value of Chartwell.

20. I suggest that the appropriate process now would be for the parties to execute a proper Arbitration Agreement (with anyone they wish or me, as I already have all of the relevant background); and that the arbitrator establish a process for the parties to make submissions as to a) the appropriate process to finalize the value including submitting their critiques to Mr. Duncan for his consideration and report; and/or b) setting aside Mr. Duncan's report altogether and retaining a new appraiser.

[Emphasis added] [page557]

[20] Counsel for the respondent forwarded an arbitration agreement to counsel for the appellant. The appellant has refused to sign the arbitration agreement because, as he states at para. 41 of his affidavit sworn on October 7, 2019, "I have disagreed with Stephen Grant's decision and I have declined to sign the arbitration agreement; because, the subject matter of the arbitration would have involved determining issues by a process established by Stephen Grant in the decision of July 17, 2019, which I intended to appeal and move to set aside, and from which I have appealed and moved to set aside."

Submissions

[21] Mr. Rush, counsel for the appellant, submits that I should grant leave to appeal from Mr. Grant's award; that I should allow the appeal and set aside the award; or that I should, pursuant to s. 46 of the Arbitration Act, set aside the award.

[22] Mr. Rush submits that, fundamentally, Mr. Grant had no authority to make the award, because the arbitration is a "family arbitration" as contemplated in the Family Law Act and the Arbitration Act. As such, it can only be conducted pursuant to a family arbitration agreement, and there are certain formalities that are required by the legislation, and by O. Reg. 134/07. None of those formalities have been completed here.

[23] Furthermore Mr. Rush submits that, based upon the plain wording of the Minutes of Settlement, the valuation of the Chartwell property is to be settled by the use of an appraisal conducted by an appraiser agreed to by the parties, or appointed by Mr. Grant. He submits that there is nothing in the Minutes that suggests that Mr. Grant, himself, is to vary from the value fixed by the appraiser.

[24] Ms. Natalizio, counsel for the respondent, submits that the appeal and the application should be dismissed. Furthermore, she seeks an order requiring the parties to complete and sign an arbitration agreement, as required by the Minutes of Settlement. In the alternative, she requests an order remitting the award to Mr. Grant with the court's opinion and/or directions, pursuant to s. 46(8) of the Arbitration Act.

[25] Authorities referred to by the parties include Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 S.C.R. 633, [2014] S.C.J. No. 53, 2014 SCC 53; Teal Cedar Products Ltd. v. British Columbia, [2017] 1 S.C.R. 688, [2017] S.C.J. No. 32, 2017 SCC 32; Canada Square Corp. v. VS Services Ltd. (1981), 1981 CanLII 1893 (ON CA), 34 O.R. (2d) 250, [1981] O.J. No. 3125 (C.A.); Horowitz v. Nightingale (2017), 138 O.R. (3d) 10, [2017] O.J. No. 2353, 2017 ONSC 2168 (S.C.J.); Marchese v. Marchese, [2007] O.J. No. 191, 2007 ONCA 34, 219 O.A.C. 257; [page558] Olivieri v. Sherman (2007), 86 O.R. (3d) 778, [2007] O.J. No. 2598, 2007 ONCA 491, 284 D.L.R. (4th) 516, 225 O.A.C. 227, 159 A.C.W.S. (3d) 364; Paulsson v. Cooper, [2010] O.J. No. 123, 2010 ONCA 21, 184 A.C.W.S. (3d) 12; and Stonehocker v. King, [1993] O.J. No. 2653, 43 A.C.W.S. (3d) 735 (Gen. Div.).

Analysis

[26] The relevant provisions of the Family Law Act, the Arbitration Act, 1991 and O. Reg. 134/07 are attached to these reasons as an appendix.

[27] There are three issues that arise:

(a) Does the arbitrator have jurisdiction to proceed further in the absence of a family arbitration agreement?

(b) Did the arbitrator have the right to decide the ambit of his decision-making authority, and if so, is his decision reviewable?

(c) Does the court have the power to order the parties to enter into a family arbitration agreement?

[28] I will deal with each question in turn.

a) Does the arbitrator have jurisdiction to proceed further in the absence of a family arbitration agreement?

[29] In my view, it is clear that the arbitrator has no power to proceed in the absence of a family arbitration agreement. The legislation in that respect is crystal clear. There are certain formalities that must be observed before it can be said that there is a valid family arbitration agreement in place, and those formalities have not been observed.

[30] It is unclear whether Mr. Grant is in agreement with this conclusion. At para. 13 of his award, he states ". . . the parties have certainly acted on the basis that I have arbitral authority and, frankly, despite jurisprudence that might suggest otherwise (regarding the lack of screening, etc.), I find the parties are estopped, by course of conduct at least, from claiming I do not have it". It is hard to square this statement with para. 20 of his award, where he states that the appropriate process is for the parties to execute a proper arbitration agreement. It may be that Mr. Grant is simply expressing the view that he was authorized, by virtue of the conduct of the parties, to express his opinion as to the scope of his decision-making authority if a proper arbitration agreement were to be executed. However, as he clearly recognizes in para. 20 of his award, he does not have the authority to proceed in the absence of a proper arbitration agreement. [page559]

b) Did the arbitrator have the right to decide the ambit of his decision-making authority, and if so, is his decision reviewable?

[31] In my view, Mr. Grant had ample authority to express his view that he has the jurisdiction and authority to determine the value of the Chartwell property for the purpose of equalization. It is clear from what occurred that both parties invited Mr. Grant to decide the issue, and he did so. Whether he chose to express his view in an award or in some other document is beside the point. Both parties asked Mr. Grant to determine whether he could decide the value of the Chartwell property, or whether he was bound by the appraisal.

[32] In expressing his opinion, Mr. Grant was obliged to interpret the Minutes of Settlement. In doing so, he interpreted the Minutes as a whole, and he considered the surrounding circumstances. While his reasoning in this respect is brief, it is clear that he did so in that fashion. In para. 8 of his award, he considered paras. 22, 23, 24, 25 and 31 of the Minutes, and specifically para. 31, which provides that "in the event the parties are unable to resolve the equalization issues, the issue of equalization shall be summarily arbitrated by Mr. Stephen Grant, by way of written submissions". The surrounding circumstances included the entire background to the matter, and the dispute that developed over the way in which the appraiser had conducted himself.

[33] It is now clear that the standard of review in a matter involving contractual interpretation is reasonableness. While there are some exceptions, none apply here.

[34] As stated by Rothstein J. in Sattva, at para. 50:

With respect for the contrary view, I am of the opinion that the historical approach should be abandoned. Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.

[35] At para. 106, he stated:

In the context of commercial arbitration, where appeals are restricted to questions of law, the standard of review will be reasonableness unless the question is one that would attract the correctness standard, such as constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator's expertise.

[36] The analysis of the Supreme Court in Sattva was reaffirmed by the same court in Teal Cedar Products, supra.

[37] In my view, by the use of the words in para. 31 of the Minutes that "the issue of equalization shall be summarily arbitrated by Mr. Grant", it was reasonable to conclude that Mr. [page560] Grant has the ultimate authority to determine the value of the property or properties at issue.

[38] The conclusion reached by Mr. Grant as to the scope of his authority under the Minutes of Settlement is a reasonable one. The parties have chosen Mr. Grant to finally arbitrate the issue of equalization. While they have agreed that the appraised value will be included in their Net Family Property Statements, that does not mean that Mr. Grant is inexorably bound to accept the opinion of the appraiser, no matter what circumstances may exist that would cast doubt on the value he has arrived at.

[39] The facts of this case illustrate the problem. There are serious questions as to whether the appraiser has accorded advantages to one party or the other, in the absence of input from both parties. Surely, Mr. Grant must be able to take into account the weaknesses that may affect the appraiser's analysis in deciding whether his opinion must be accepted. Mr. Grant, as the arbitrator, must have the freedom to consider other indicia of value if he thinks it is necessary.

[40] At the very least, the interpretation arrived at by Mr. Grant is a reasonable one. In accordance with Sattva and Teal Cedar Products, his interpretation must prevail.

c) Does the court have the power to order the parties to enter into a family arbitration agreement?

[41] It is clear, from the Minutes of Settlement, that the parties have agreed that a formal, enforceable, family law arbitration agreement will be executed by them. I refer in this connection to paras. 22, 28, 31 and 50 of the Minutes.

[42] In Bhasin v. Hrynew, [2014] 3 S.C.R. 494, [2014] S.C.J. No. 71, 2014 SCC 71, the Supreme Court of Canada recognized a general organizing principle of good faith contractual performance. In Lopatowski v. Lopatowski (2018), 140 O.R. (3d) 731, [2018] O.J. No. 676, 2018 ONSC 824 (S.C.J.), I applied that principle in circumstances similar to those before me. At para. 58, I stated:

In this case, the parties had entered into a clear agreement to the use of a parenting coordinator with broad powers to assist them in parenting disputes, which was to include arbitral authority if necessary. The principle of good faith and honest contractual performance would require that the parties take the steps necessary to make that agreement operative. In a case such as this, the parties, represented by experienced counsel, would know that certain formalities would be required, including statutory formalities.

[43] In the case before me, the parties have expressly recognized that statutory formalities will be required. Notwithstanding, they have entered into a clear agreement to execute a family arbitration agreement, in order to give Mr. Grant the necessary arbitral authority. [page561]

[44] In this case, the only reason offered for refusing to execute a family arbitration agreement is the fact that Mr. Grant has expressed his opinion that upon the execution of a family arbitration agreement, he will have the authority to decide the value of the Chartwell property. This was something the parties, including the appellant, had asked Mr. Grant to decide. In my view, it does not lie in the mouth of the appellant, having asked Mr. Grant to decide the scope of his authority, to then use Mr. Grant's answer as the only reason to decline to execute an arbitration agreement when he had agreed, in writing, that he would execute such an agreement. His refusal to execute a family arbitration agreement is not consistent with his obligation of good faith contractual performance. The court must have the power, in these circumstances, to require him to live up to his obligation.

[45] For these reasons, I am satisfied that I should order the appellant to execute a family arbitration agreement, as requested by the respondent.

Disposition

[46] For the foregoing reasons, I order as follows:

(a) the motion for leave to appeal, the appeal, and the application under s. 46 of the Arbitration Act, are dismissed;

(b) the parties are ordered to forthwith execute a family arbitration agreement, appointing Stephen Grant as the arbitrator.

[47] I will entertain brief written submissions as to costs, not to exceed three pages, together with a costs outline or bill of costs. Ms. Natalizio shall have five days and Mr. Rush shall have five days to respond. Ms. Natalizio shall have three days to reply.

Motion and application dismissed.

APPENDIX A

Excerpts from the Family Law Act, the Arbitration Act, 1991 and O. Reg. 134/07

FAMILY LAW ACT

Family arbitrations, agreements and awards

59.1(1) Family arbitrations, family arbitration agreements and family arbitration awards are governed by this Act and by the Arbitration Act, 1991. [page562]

Conflict

(2) In the event of conflict between this Act and the Arbitration Act, 1991, this Act prevails.

Other third-party decision-making processes in family matters

59.2(1) When a decision about a matter described in clause (a) of the definition of "family arbitration" in section 51 is made by a third person in a process that is not conducted exclusively in accordance with the law of Ontario or of another Canadian jurisdiction,

(a) the process is not a family arbitration; and

(b) the decision is not a family arbitration award and has no legal effect.

Advice

(2) Nothing in this section restricts a person's right to obtain advice from another person.

Contracting out

59.3 Any express or implied agreement by the parties to a family arbitration agreement to vary or exclude any of sections 59.1 to 59.7 is without effect.

Conditions for enforceability

59.6(1) A family arbitration award is enforceable only if,

(a) the family arbitration agreement under which the award is made is made in writing and complies with any regulations made under the Arbitration Act, 1991;

(b) each of the parties to the agreement receives independent legal advice before making the agreement;

(c) the requirements of section 38 of the Arbitration Act, 1991 are met (formal requirements, writing, reasons, delivery to parties); and

(d) the arbitrator complies with any regulations made under the Arbitration Act, 1991.

Certificate of independent legal advice

(2) When a person receives independent legal advice as described in clause (1) (b), the lawyer who provides the advice shall complete a certificate of independent legal advice, which may be in a form approved by the Attorney General.

Secondary arbitration

59.7(1) The following special rules apply to a secondary arbitration and to an award made as the result of a secondary arbitration:

1. Despite section 59.4, the award is not unenforceable for the sole reason that the separation agreement was entered into or the court order or earlier award was made before the dispute to be arbitrated in the secondary arbitration had arisen. [page563]

2. Despite clause 59.6 (1) (b), it is not necessary for the parties to receive independent legal advice before participating in the secondary arbitration.

3. Despite clause 59.6 (1) (c), the requirements of section 38 of the Arbitration Act, 1991 need not be met.

Definition

(2) In this section,

"secondary arbitration" means a family arbitration that is conducted in accordance with a separation agreement, a court order or a family arbitration award that provides for the arbitration of possible future disputes relating to the ongoing management or implementation of the agreement, order or award.

Enforcement

59.8(1) A party who is entitled to the enforcement of a family arbitration award may make an application to the Superior Court of Justice or the Family Court to that effect.

Application or motion

(2) If there is already a proceeding between the parties to the family arbitration agreement, the party entitled to enforcement shall make a motion in that proceeding rather than an application.

Notice, supporting documents

(3) The application or motion shall be made on notice to the person against whom enforcement is sought and shall be supported by,

(a) the original award or a certified copy;

(b) a copy of the family arbitration agreement; and

(c) copies of the certificates of independent legal advice.

Order

(4) If the family arbitration award satisfies the conditions set out in subsection 59.6 (1), the court shall make an order in the same terms as the award, unless,

(a) the period for commencing an appeal or an application to set the award aside has not yet elapsed;

(b) there is a pending appeal, application to set the award aside or application for a declaration of invalidity; or

(c) the award has been set aside or the arbitration is the subject of a declaration of invalidity.

Pending proceeding

(5) If clause (4) (a) or (b) applies, the court may,

(a) make an order in the same terms as the award; or [page564]

(b) order, on such conditions as are just, that enforcement of the award is stayed until the period has elapsed without an appeal or application being commenced or until the pending proceeding is finally disposed of.

Unusual remedies

(6) If the family arbitration award gives a remedy that the court does not have jurisdiction to grant or would not grant in a proceeding based on similar circumstances, the court may,

(a) make an order granting a different remedy, if the applicant requests it; or

(b) remit the award to the arbitrator with the court's opinion, in which case the arbitrator may award a different remedy.

ARBITRATION ACT, 1991

Definitions

1. In this Act,

"arbitration agreement" means an agreement by which two or more persons agree to submit to arbitration a dispute that has arisen or may arise between them; ("convention d'arbitrage")

"arbitrator" includes an umpire; ("arbitre")

"court", except in sections 6 and 7, means the Family Court or the Superior Court of Justice; ("tribunal judiciaire")

"family arbitration" means an arbitration that,

(a) deals with matters that could be dealt with in a marriage contract, separation agreement, cohabitation agreement or paternity agreement under Part IV of the Family Law Act, and

(b) is conducted exclusively in accordance with the law of Ontario or of another Canadian jurisdiction; ("arbitrage familial")

"family arbitration agreement" and "family arbitration award" have meanings that correspond to the meaning of "family arbitration". ("convention d'arbitrage familial", "sentence d'arbitrage familial")

Family arbitrations, agreements and awards

2.1(1) Family arbitrations, family arbitration agreements and family arbitration awards are governed by this Act and by the Family Law Act.

Conflict

(2) In the event of conflict between this Act and the Family Law Act, the Family Law Act prevails.

Contracting out

3. The parties to an arbitration agreement may agree, expressly or by implication, to vary or exclude any provision of this Act except the following: [page565]

4. In the case of an arbitration agreement other than a family arbitration agreement,

i. subsection 5 (4) ("Scott v. Avery" clauses),

ii. section 19 (equality and fairness),

iii. section 39 (extension of time limits),

iv. section 46 (setting aside award),

v. section 48 (declaration of invalidity of arbitration),

vi. section 50 (enforcement of award).

2. In the case of a family arbitration agreement,

i. the provisions listed in subparagraphs 1 i to vi,

ii. subsection 4 (2) (no deemed waiver of right to object),

iii. section 31 (application of law and equity),

iv. subsections 32 (3) and (4) (substantive law of Ontario or other Canadian jurisdiction), and

v. section 45 (appeals).

Waiver of right to object

4(1) A party who participates in an arbitration despite being aware of non-compliance with a provision of this Act, except one mentioned in section 3, or with the arbitration agreement, and does not object to the non-compliance within the time limit provided or, if none is provided, within a reasonable time, shall be deemed to have waived the right to object. 1991, c. 17, s. 4.

Exception, family arbitrations

(2) Subsection (1) does not apply to a family arbitration.

Rulings and objections re jurisdiction

Arbitral tribunal may rule on own jurisdiction

17(1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.

Ruling

(7) The arbitral tribunal may rule on an objection as a preliminary question or may deal with it in an award.

Review by court

(8) If the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty days after receiving notice of the ruling, make an application to the court to decide the matter. [page566]

No appeal

(9) There is no appeal from the court's decision.

Binding nature of award

37. An award binds the parties, unless it is set aside or varied under section 45 or 46 (appeal, setting aside award).

Interim awards

41. The arbitral tribunal may make one or more interim awards.

Appeals

Appeal on question of law

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

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

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

Idem

(2) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law.

Appeal on question of fact or mixed fact and law

(3) If the arbitration agreement so provides, a party may appeal an award to the court on a question of fact or on a question of mixed fact and law.

Powers of court

(4) The court may require the arbitral tribunal to explain any matter.

Idem

(5) The court may confirm, vary or set aside the award or may remit the award to the arbitral tribunal with the court's opinion on the question of law, in the case of an appeal on a question of law, and give directions about the conduct of the arbitration.

Family arbitration award

(6) Any appeal of a family arbitration award lies to,

(a) the Family Court, in the areas where it has jurisdiction under subsection 21.1 (4) of the Courts of Justice Act;

(b) the Superior Court of Justice, in the rest of Ontario. [page567]

Setting aside award

46(1) On a party's application, the court may set aside an award on any of the following grounds:

1. A party entered into the arbitration agreement while under a legal incapacity.

2. The arbitration agreement is invalid or has ceased to exist.

3. The award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement.

4. The composition of the arbitral tribunal was not in accordance with the arbitration agreement or, if the agreement did not deal with that matter, was not in accordance with this Act.

5. The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.

6. The applicant was not treated equally and fairly, was not given an opportunity to present a case or to respond to another party's case, or was not given proper notice of the arbitration or of the appointment of an arbitrator.

7. The procedures followed in the arbitration did not comply with this Act.

8. An arbitrator has committed a corrupt or fraudulent act or there is a reasonable apprehension of bias.

9. The award was obtained by fraud.

10. The award is a family arbitration award that is not enforceable under the Family Law Act.

Further appeal

49. An appeal from the court's decision in an appeal of an award, an application to set aside an award or an application for a declaration of invalidity may be made to the Court of Appeal, with leave of that court.

Enforcement of award

Application

50(1) A person who is entitled to enforcement of an award made in Ontario or elsewhere in Canada may make an application to the court to that effect.

O. REG. 134/07 MADE UNDER THE ARBITRATION ACT, 1991

Interpretation

1 In this Regulation,

"mediation-arbitration agreement" means a family arbitration agreement that provides that, [page568]

(a) a mediation between the parties is to be conducted before any arbitration is conducted, and

(b) if the mediation fails, the mediator shall arbitrate the dispute and make a binding resolution of it; ("convention de médiation-arbitrage")

"secondary arbitration" has the same meaning as in subsection 59.7 (2) of the Family Law Act.

Standard provisions

2(1) Every mediation-arbitration agreement made on or after September 1, 2007 shall contain,

(a) if made before April 30, 2008, the provisions set out in paragraphs 1, 2, 3 and 4 and subparagraphs 5 i and iii of subsection (4); or

(b) if made on or after April 30, 2008, the provisions set out in paragraphs 1, 2, 3 and 4 and subparagraphs 5 i, ii and iii of subsection (4).

(2) Every secondary arbitration agreement made on or after September 1, 2007 shall contain,

(a) if made before April 30, 2008, the provisions set out in paragraphs 1, 2 and 3 and subparagraphs 5 i and iii of subsection (4); or

(b) if made on or after April 30, 2008, the provisions set out in paragraphs 1, 2 and 3 and subparagraphs 5 i, ii and iii of subsection (4).

(3) Every family arbitration agreement made on or after September 1, 2007, other than a mediation-arbitration agreement or a secondary arbitration agreement, shall contain,

(a) if made before April 30, 2008, the provisions set out in paragraphs 1, 2, 3 and 4 and subparagraphs 5 i and iv of subsection (4); or

(b) if made on or after April 30, 2008, the provisions set out in paragraphs 1, 2, 3 and 4 and subparagraphs 5 i, ii and iv of subsection (4).

(4) The following are the provisions referred to in subsections (1), (2) and (3):

1. The arbitration will be conducted in accordance with, (choose either i or ii)

i. the law of Ontario, and the law of Canada as it applies in Ontario, or

ii. the law of ......................... (name other Canadian jurisdiction), and the law of Canada as it applies in that jurisdiction.

2. Any award may be appealed as follows: (choose either i or ii)

i. A party may appeal the award in accordance with subsection 45 (1) of the Arbitration Act, 1991.

ii. A party may appeal the award on, (choose one or more of the following)

A. a question of law,

B. a question of fact, or

C. a question of mixed fact and law. [page569]

3. The arbitrator for this arbitration is ......................... (name of arbitrator).

4. (For each party): I, ......................... (print name of party), confirm that I have received independent legal advice and have attached to this agreement a copy of the certificate of independent legal advice that was provided to me under subsection 59.6 (2) of the Family Law Act.

(Signature of party)

5. I, ......................... (print name of arbitrator), confirm the following matters:

i. I will treat the parties equally and fairly in the arbitration, as subsection 19 (1) of the Arbitration Act, 1991 requires.

ii. I have received the appropriate training approved by the Attorney General.

iii. The parties were separately screened for power imbalances and domestic violence and I have considered the results of the screening and will do so throughout the arbitration, if I conduct one.

iv. The parties were separately screened for power imbalances and domestic violence by someone other than me and I have considered his or her report on the results of the screening and will do so throughout the arbitration.

(Signature of arbitrator)

Qualifications of arbitrator

3 Every arbitrator who conducts a family arbitration shall have received the training approved by the Attorney General for the arbitrator or class of arbitrators, as set out on the Ministry's website.

Records of family arbitrations

4(1) Subject to subsection (2), every arbitrator who conducts a family arbitration shall create a record of the arbitration containing the following matters:

1. The evidence presented and considered.

2. The arbitrator's notes taken during the hearing, if any.

3. A copy of,

i. the signed arbitration agreement,

ii. the certificates of independent legal advice,

iii. if the screening for power imbalances and domestic violence was conducted by someone other than the arbitrator, the report on the results of the screening, and

iv. the award and the arbitrator's written reasons for it. [page570]

(2) An arbitrator who conducts one or more secondary arbitrations under a separation agreement, court order or family arbitration award, shall create a record containing the following matters:

1. A copy of the separation agreement, court order or family arbitration award.

2. For each secondary arbitration conducted by the arbitrator under the separation agreement, court order or family arbitration award,

i. the evidence presented and considered,

ii. the arbitrator's notes taken during the hearing, if any, and

iii. the award and the arbitrator's written reasons for it.

(3) The arbitrator shall keep the record for at least 10 years after the date of the award.

Arbitrator's report

5(1) Every arbitrator who conducts a family arbitration shall report the following information about the award to the Attorney General, in a form provided by the Ministry of the Attorney General:

1. The date and length of the hearing, if any, leading to the award.

2. The matters addressed in the arbitration and in the award.

3. Details of the following, to the extent relevant to the award:

i. The ages of the parties to whom the award relates, the length of their relationship, their approximate incomes and the approximate total value of each party's assets.

ii. The ages and genders of any children of any party to whom the award relates, and custody and access arrangements and child support awarded in respect of them.

iii. Spousal support awarded.

iv. Equalization of property awarded.

v. Any provisions in the award restraining contact or communication between the parties.

(2) The reports required by subsection (1) shall be provided,

(a) for family arbitrations completed during the period from April 1 to September 30, on or before November 30; and

(b) for family arbitrations completed during the period from October 1 to March 31 of the following year, on or before May 31.

End of Document