Court File and Parties
COURT FILE NO.: FC-19-1569 DATE: 2020/07/03 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Jennifer Magotiaux, Applicant AND Keith Stanton, Respondent
BEFORE: Mackinnon J.
COUNSEL: Applicant, Self-Represented Antoine Merizzi, for the Respondent
HEARD: In Writing
Endorsement
[1] This motion was assigned to be heard in writing by order of Master Kaufman. The single issue is whether the applicant may bring a motion to the court or whether she must follow the process in the parties Interim Parenting Agreement dated September 23, 2019.
[2] That provision provides as follows:
6.1 If Jennifer and Keith disagree about any parenting issue or child support, they will first try to resolve the dispute through negotiation, either between themselves or with their respective counsel, on the following terms:
(a) The parties will jointly retain Julie Guindon to act as a mediator/arbitrator/Parenting Coordinator. The parties shall share the up-front costs of the process equally.
(b) Julie Guindon shall retain the right to apportion costs between the parties during any of these processes.
(c) Julie Guindon’s decision shall be binding on the parties.
(d) If Julie Guindon must conduct an arbitration, the parties waive section 35 of the Arbitration Act and will constitute a secondary arbitration under the Arbitration Act and the Family Law Act.
[3] The respondent seeks a stay under section 7 of the Arbitration Act, 1991, S.O. 1991, c. 17:
7 (1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding. 1991, c. 17, s. 7 (1).
Exceptions
(2) However, the court may refuse to stay the proceeding in any of the following cases:
A party entered into the arbitration agreement while under a legal incapacity.
The arbitration agreement is invalid.
The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.
The motion was brought with undue delay.
The matter is a proper one for default or summary judgment.
[4] The respondent maintains the Interim Parenting Agreement is a binding arbitration agreement. The parties entered into it with independent legal advice provided by each of their counsel. He says the agreement makes the agreed upon alternate dispute resolution process mandatory and shows an intention to execute a formal secondary arbitration agreement in future when necessary.
[5] The applicant maintains the provision does not bar her from proceeding to court. She relies on provisions of the Arbitration Act and the decision in Horowitz v. Nightingale, 2017 ONSC 2168.
[6] For reasons that follow I conclude that the Interim Parenting Agreement is not a bar to the applicant proceeding in court and that the stay motion should be dismissed. Parties need to ensure that their agreement complies with the necessary formalities required by statute and regulation. Where the legislator has mandated express terms for family arbitration agreements the court may not imply them.
[7] The situation might be different if the parties had expressly undertaken in their agreement to execute an arbitration agreement that complies with the governing Act and Regulation. In that situation, the court might order the party in breach to comply with their undertaking. The Interim Parenting Agreement does not include such an express provision.
[8] Prudence dictates that family litigants wishing to provide for a potential future arbitration should append a detailed family arbitration agreement containing the mandatory terms to their settlement document and should agree to complete and execute the agreement in the form attached, at the appropriate time.
Legislative Provisions
[9] The definition of a family arbitration agreement is located in section 1 of the Arbitration Act.
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;
“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;
“family arbitration agreement” and “family arbitration award” have meanings that correspond to the meaning of “family arbitration”.
2006, c. 1, s. 1 (1) – 30/04/2007; 2006, c. 19, Sched. C, s. 1 (1) – 22/06/2006 2009, c. 33, Sched. 2, s. 5 - 15/12/2009
[10] Family Arbitration, O.Reg. 134/07 made under the Arbitration Act defines both mediation-arbitration and secondary arbitration in the context of a family arbitration agreement:
- In this Regulation, “mediation-arbitration agreement” means a family arbitration agreement that provides that,
(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;
“secondary arbitration” has the same meaning as in subsection 59.7 (2) of the Family Law Act.
[11] Family Law Act, R.S.O. 1990, c.F.3, as am. provides in section 59.1(2) that in the event of conflict between it and the Arbitration Act, the Family Law Act prevails. Section 59.6(1) provides as follows:
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.
[12] Section 59.7(1) and (2) of the Family Law Act defines secondary arbitration and modifies some of the section 59.6 requirements in relation to secondary arbitrations:
59.7 (1) The following special rules apply to a secondary arbitration and to an award made as the result of a secondary arbitration:
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.
Despite clause 59.6 (1) (b), it is not necessary for the parties to receive independent legal advice before participating in the secondary arbitration.
Despite clause 59.6 (1) (c), the requirements of section 38 of the Arbitration Act, 1991 need not be met. 2006, c. 1, s. 5 (10).
59.7 (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. 2006, c. 1, s. 5 (10).
[13] The Family Arbitration Regulation sets out required standard provisions.
Standard Provisions
- (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). O. Reg. 134/07, s. 2 (1).
(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). O. Reg. 134/07, s. 2 (2).
(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). O. Reg. 134/07, s. 2 (3).
(4) The following are the provisions referred to in subsections (1), (2) and (3):
- 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.
- 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.
The arbitrator for this arbitration is ......................... ( name of arbitrator ).
( 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 )
- 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 )
[14] The respondent submitted that subsection 2(3) excluded mediation-arbitration agreements from the application of subsections 2(1) and (2). I disagree. Properly read, 2(3) does not apply to mediation-arbitration agreements because they have been specifically dealt with in subsections 2(1) and (2).
[15] The ability of the court to intervene is limited by section 6 of the Arbitration Act:
6 No court shall intervene in matters governed by this Act, except for the following purposes, in accordance with this Act:
To assist the conducting of arbitrations.
To ensure that arbitrations are conducted in accordance with arbitration agreements.
To prevent unequal or unfair treatment of parties to arbitration agreements.
To enforce awards. 1991, c. 17, s. 6.
[16] These provisions are not applicable here.
Case Law
[17] Horowitz v. Nightingale, 2017 ONSC 2168 dismissed a motion to stay a family law proceeding brought on the basis that Minutes of Settlement contained an agreement to submit specific remaining unresolved issues to arbitration with a named arbitrator. The court held that the Minutes of Settlement did not comply with the mandatory requirements of the Regulation made under the Arbitration Act. The respondent submits Horowitz does not apply because it dealt with an agreement to arbitrate existing disputes and was not a secondary arbitration agreement. This difference does not assist the respondent having regard to subsections 2(1) and (2) of the Regulation.
[18] The respondent also distinguishes Horowitz on its facts. In Horowitz, the Minutes of Settlement contemplated that if an arbitration agreement was not signed by a set date the case would proceed to trial. The parties had worked towards executing an arbitration agreement but had not done so in the time frame permitted by the Minutes. These facts do show an intention to leave open access to the court if the deadline passed without an executed arbitration agreement. I agree with the respondent that the Interim Parenting Agreement shows an intention to resolve parenting issues arising under it by mediation, arbitration or parenting coordination.
[19] The question remains whether the court may imply terms into the Interim Parenting Agreement so that it would include the Standard Provisions required by the Regulation. The court in Horowitz answered this question in the negative not because of the parties’ intentions but because of the express requirements of the Regulation:
[44] In M.J.B. Enterprises Ltd. v. Defence Construction (1951), [1999] 1 S.C.R. 619, at page 634, Justice Iacobucci referencing Justice LeDain in Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711, states:
…terms may be implied in a contract: (1) based on custom or usage; (2) as the legal incidents of a particular class or kind of contract; or (3) based on the presumed intention of the parties where the implied term must be necessary “to give business efficacy to a contract or as otherwise meeting the ‘officious bystander’ test as a term which the parties would say, if questioned, that they had obviously assumed” (p. 775). …
[45] This reasoning does not apply in the circumstances of this case as the Legislature has chosen to make certain formal requirements necessary in order to have a legal and binding arbitration. If the respondent were correct, the court would be implying a process as opposed to “terms”. This it cannot do. The contractual arrangement that Justice LeDain was focused upon was purely private, not governed by legal formal requirements as is the case before me.
[46] Similarly, in Winfair Holdings (Lagoon City) v. Simcoe Condominium Corp. No. 46, [1997] O.J. No. 3495; 30 O.T.C. 110; 73 A.C.W.S. (3d) 541, Winfair was estopped from contesting the validity of an agreement on the basis of ratification because of dealings between it and the defendant. Once again, this was a purely private contract between commercial parties that was not governed by formal legislative requirements.
[47] … While courts cannot take an active role by ordering parties to arbitrate, a court may make an order on consent once parties have themselves chosen that process. To overcome formal deficiencies, however, a court should not imply or engraft terms upon what is essentially a consensual process chosen by the parties.
[20] The respondent tries to distinguish Horowitz by pointing to paragraph 53 where the judge states that, “… in the case at bar, there is no arbitration agreement. The Minutes of Settlement do not qualify as an arbitration agreement.” The respondent submits that the Interim Parenting Agreement is an arbitration agreement as defined in the provisions set out above. My view is that in Horowitz the court ruled that the agreement to arbitrate did not comply with the mandatory provisions in the Regulation and accordingly was not a valid arbitration agreement. The same can be said here.
[21] Giddings v. Giddings, 2019 ONSC 7203 makes the same point at paragraph 29:
[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.
[22] The agreement in Giddings specified that if the equalization issue was not resolved it would be arbitrated by a named arbitrator, that the parties would proceed to domestic violence screening and thereafter execute an arbitration agreement with the arbitrator to provide him with arbitral power. The court relied on this provision to rule that the recalcitrant party was required to execute a family arbitration agreement as he had agreed to do and in accordance with his obligation of good faith contractual performance.
[23] In the case at bar the Interim Parenting Agreement does not include such a clause. The respondent argues that it is implicit in the wording that says the parties will retain Ms. Guindon to act as a mediator /arbitrator/parenting coordinator and that if she must conduct an arbitration, they will constitute a secondary arbitration under the Arbitration Act and the Family Law Act. He relies on Lopatowski v. Lopatowski, 2018 ONSC 824 in support of this contention.
[24] Lopatowski was a contempt motion. Two court orders had been made. The first was a consent order wherein the parties agreed to retain a parenting coordinator with dispute resolving authority, to be conducted by one of three named individuals. The first named individual declined the retainer. One party then declined to retain either of the other two individuals. The second order required the parties to sign a parenting coordination agreement with the second individual named in the first order. This order was made on an opposed basis. The judge who made the second order had found that the recalcitrant party opposed because she felt she could not afford it. The contempt motion judge held that both orders were made with jurisdiction and were enforceable. He adjourned for 30 days without making a finding of contempt to enable the parties to sign the required agreement.
[25] The court in Lopatowski relied on principles of good faith, seemed to attribute knowledge of the formal requirements via counsel, and because no objection was raised to the lack of the formal requirements when the two court orders were made, implied an estoppel:
[58] 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. At the outset, when they made their agreement, if either party was concerned about whether something in a potential parenting coordinator agreement might be an impediment, one might have expected experienced counsel to raise it, or at least see a draft parenting coordinator agreement before executing the Minutes of Settlement. Similarly, if either party thought any of the statutory formalities were in issue, one might have expected counsel to raise it.
[59] Not only were none of these issues raised at the time the Minutes of Settlement were issued, they were not raised at the time of the motion before Gibson J. As noted by Gibson J., the only objection raised by the applicant to the appointment of a parenting coordinator was that she could not afford it.
[26] I am not persuaded that the presumption in Lopatowski about the knowledge parties would have when represented by counsel is one that should be made. This is no reflection on counsel in this or any other case. The Standard Provisions in the Regulation are for the protection of the parties and are mandatory. Presuming that represented clients know and agree to an arbitration process including those terms runs the risk of significantly diluting the intended protection.
[27] Lopatowski is also distinguishable in that the concept of estoppel dis not raised here. Nor does it appear from the reasons in Lopatowski that the issue of whether a court may imply terms which are mandated by Regulation to be express was raised with the court. The respondent here did not refer to any case that contradicted the ruling in Horowitz that terms required to be expressed by the governing Regulation could be implied by a court.
[28] Additionally, the Interim Parenting Agreement stipulates that the decision of the arbitrator is binding, whereas the Standard Provisions relating to rights of appeal requires a choice be made between a right of appeal under section 45(1) of the Arbitration Act (on a question of law with leave) or on one or more of a question of law, a question of fact or a mixed question of fact and law.
[29] Finally, the Family Law Act is legislation that will prevail over the Arbitration Act in the event of conflict between the two. Yet in section 59.6(1)(a) of the FLA the legislator confirmed that for a family arbitration award to be enforceable it must comply with regulations made under the Arbitration Act. In section 59.7(1) the FLA enacted special rules for secondary arbitration, choosing to exempt them from some provisions of the Arbitration Act, and from one but not all of the Standard Provisions mandated in the Regulation (independent legal advice).
[30] For these reasons I was not persuaded that case law provided a basis on which the court could read in the mandatory requirements to the Interim Parenting Agreement or imply a term to enter into a compliant arbitration agreement to give effect to its dispute resolution clause. I conclude that the Interim Parenting Agreement does not comply with the Regulation and the stay should be denied.
Decision
[31] The respondent’s motion is dismissed with costs to the applicant. If the parties are unable to agree on the amount, I will decide by written submissions not to exceed two pages in length plus attached Bills of Costs and Offers to Settle relevant to the issue in this motion. The applicant shall deliver her submissions by July 17, 2020, and the respondent his, by July 31, 2020.
J. Mackinnon J. Date: July 3, 2020