COURT FILE NO.: FS-20-0020275

DATE: 20211223

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Helene Solcz, Applicant

AND:

Michael Solcz, Respondent

BEFORE: M. Kraft, J.

COUNSEL: Cheryl Goldhart and Maneesha Mehra, for the Applicant

Harold Niman and Hayley Cairns, for the Respondent

HEARD: November 9, 2021

REASONS FOR JUDGMENT

Overview.. paras. [1]-[4]

The Agreements in Issue - Defined. para. [5]

Background. paras. [7]-[24]

(i) Circumstances Surrounding the July 17th, 2012 Agreement paras. [25]-[33]

(ii) Circumstances Surrounding the July 20th, 2012 Agreement paras. [34]-[40]

(iii) Circumstances Surrounding the 2014 Amending Agreement paras. [41]-[50]

(iv) Litigation/Dispute Resolution History. paras. [51]-[61]

(v) Prior Solicitors’ File. paras. [62]-[68]

Principles Involved in a Summary Judgment Motion. paras. [69]-[81]

Summary of the Arbitrator’s Findings. paras. [82]-[90]

Grounds of Appeal para. [91]

The Issues for Appeal para. [92]

(i) Prelimnary Grounds of Appeal paras. [93]-[94]

(ii) Other Grounds of Appeal paras. [95]-[97]

(iii) Remedy para. [98]

The Standard of Review.. paras. [99]-[105]

Preliminary Grounds of Appeal

(i) Did the Arbitrator exceed his jurisdiction and breach the rules of natural justice when he gave leave to Michael to bifurcate the issues in the case on his own motion without a motion before him for such relief and permitting Michael to bring the motion not contemplated by and without proper notice to Helene? paras. [106]-[112]

(ii) Did the Arbitrator err in law in allowing Michael’s summary judgment to proceed under Rule 16(1) when the divorce had not been severed from the corollary issues, contrary to Rule 16(2) of the Family Law Rules?. paras. [113]-[121]

Other Grounds of Appeal

(i) Did the Arbitrator make palpable and overriding errors of law in his findings of fact and law on the issues of Michael’s failure to disclose and Helene’s inability to understand the nature and consequences of the terms of the July 20th, 2012 Agreement and the terms of the 2014 Amending Agreement ?

(a) July 20th, 2012 Agreement paras. [122]-[145]

(b) 2014 Amending Agreement paras. [146]-[149]

(ii) Did the Arbitrator make palpable and overriding errors in his findings of fact and law on the issue of duress in relation to the July 20th, 2012 Agreement and the 2014 Amending Agreement?

(a) July 20th, 2012 Agreement paras. [150]-[162]

(b) 2014 Amending Agreement para. [163]

(iii) Did the Arbitrator make a palpable and overriding error in his findings of fact and law in analyzing the July 20th, 2012 Agreement and the 2014 Amending Agreement as one package as opposed to analyzing each Agreement independently para. [164]

Remedy - What is the Appropriate Next Step?. paras. [165]-[166]

Order. paras. [167]-[169]

Overview

[1] The Appellant, Helene Solcz (“Helene”), appeals the arbitration award of Stephen M. Grant (“the Arbitrator”), dated October 8, 2020 (“the Arbitration Award”), in which he granted summary judgment in favour of the Respondent, Michael Solcz (“Michael”), and thereby dismissed Helene’s claims to set aside two domestic contracts the parties had signed prior to their marriage. Her appeal lies to this Court pursuant to s.45(6) of the Arbitration Act, 1991, S.O. 1991, c. 17.

[2] The summary judgment motion was heard by the Arbitrator on July 23, 2020, on the basis of affidavit evidence and with oral submissions by counsel. There was no viva voce testimony or cross-examinations.

[3] At the core of all the issues raised by Helene, the question I must answer on this appeal is whether the Arbitrator committed reviewable error(s) when he found that there was no genuine issue requiring a trial regarding Helene’s claims to set aside two domestic contracts signed by the parties prior to their marriage.

[4] Helene asks that if the Court grants her appeal and sets aside the Arbitration Award, that her claims be remitted to a new Arbitrator for redetermination. Michael asks that if the Court grants Helene’s appeal and remits her claim to set aside the two domestic contracts to Arbitration that it return before Mr. Grant, the Arbitrator both parties chose when they signed their Mediation/Arbitration Agreement on July 24, 2019.

[5] For the reasons below, I have granted Helene’s appeal and set aside the Arbitrator’s summary judgment order. The matter shall be returned to Arbitration for a full hearing on all claims, including Helene’s claims to set aside two domestic contracts signed by the parties.

The Domestic Contracts in Issue - Defined

[6] In total, the parties signed three domestic contracts, called a Cohabitation Agreement, dated July 17, 2012; a Domestic Contract, dated July 20, 2012; and an Amending Agreement, dated October 7, 2014. The parties agree that the Cohabitation Agreement, dated July 17, 2012 was revoked by the Domestic Contract, dated July 20, 2012. There is, therefore, no claim by Helene to set it aside. However, as will be seen, the circumstances surrounding the Cohabitation Agreement, dated July 17, 2012 become important. For purposes of this appeal the Cohabitation Agreement, dated July 17, 2012, will be referred to as “the July 17th, 2012 Agreement”; the Domestic Contract, dated July 20, 2012 will be referred to as “the July 20th, 2012 Agreement”; the Amending Agreement, dated October 7, 2014, will be referred to as “the 2014 Amending Agreement”; and the July 20th, 2012 Agreement and the 2014 Amending Agreement are referred to together as the “Domestic Contracts.”

Background

[7] Helene and Michael met in June 2005. At the time their relationship began, Michael was 47 years old and Helene was 48.

[8] When the parties met, Helene was a commissioned artist and operated an art business, Helene Smith Artworks, and Michael was re-establishing his career and role within his family business, Valiant Machine and Tool. Valiant Machine and Tool was owned by Solcz Group Inc., a company owned by Michael, his siblings and his parents.

[9] Both parties had been married previously and had children from their prior marriages. Helene had two sons and a daughter, all of whom were living as independent adults in 2005. Michael had been married twice and had two young daughters, Lauren and Annie, who resided primarily with their mother in Michigan. In 2005, Lauren was 15 years of age and Annie was 8 years of age.

[10] The parties do not agree when they began cohabiting. Helene’s evidence is that the parties began cohabiting in 2008 and Michael’s evidence is that the parties did not begin cohabiting until 2012, when they became engaged. Regardless, in the July 17th, 2012 Agreement, the parties agreed they had been in a relationship since April 2005 and cohabiting since June 2008.

[11] The parties were married on October 18, 2014. They separated three years later, on November 7, 2017.

[12] Throughout the relationship and after the marriage, Michael and Helene’s finances became intertwined and Michael was generous with Helene and her children. The parties agree that their families integrated to varying degrees.

[13] In 2007-2008, Lauren and Annie’s mother, with whom they resided in Michigan, was diagnosed with terminal cancer. Helene’s evidence is that Michael asked her to move in with him in June 2008 to assist him in caring for his two daughters if their mother died. Lauren and Annie’s mother died in September 2008. In October 2008, Annie moved into the parties’ home with Michael and Helene on a full-time basis. Lauren remained in the U.S.

[14] Helene’s evidence is that once Annie moved in with her and Michael, she became a full-time parent to Annie and dramatically reduced the time she had been spending working as an artist, while Michael worked and supported the family.

[15] According to Helene, in or about 2010, Michael took over payment of her living expenses and provided her with weekly sums of monies to cover her personal expenses and the costs associated with her former residence in Windsor, Ontario, which she continued to own and rent out. The parties also began to bank jointly together. Helene was very involved in raising Annie and looking after the parties’ household. Michael financially supported the family.

[16] In the spring of 2012, when the parties became engaged, Michael asked Helene to sign a domestic contract, the purpose of which was to protect the Solcz family’s business assets. According to Helene, Michael was insistent that the contract be signed but was reassuring to her and told her she had nothing to be concerned about. According to Michael, Helene was aware of the Solcz family wealth and knew Michael wanted to protect his family’s business assets if they separated.

[17] The parties signed the July 17th, 2012 Agreement and the July 20th, 2012 Agreement, the circumstances and terms of which are discussed thoroughly below.

[18] In 2013, the parties purchased the matrimonial home in Windsor.

[19] On October 7, 2014, the parties signed the 2014 Amending Agreement. Eleven days later, on October 18, 2014, the parties were married. The terms and circumstances surrounding the 2014 Amending Agreement are discussed thoroughly below.

[20] After the parties were married, Helene officially retired from her career as a commissioned artist/interior designer and focussed on the parties’ relationship.

[21] In March/April 2017, Michael’s family business, the Solcz Group Inc., was sold for $375 million. Michael’s share of the business was $72 million. After the family business was sold, Michael gifted Helene the sum of $750,000, which she shared with her children.

[22] The parties then undertook an extensive renovation to their matrimonial home and purchased a home in Naples, Florida. The Florida property is owned by the Latron Trust, of which Helene is the sole Trustee. Michael’s two daughters, Lauren and Annie, are the beneficiaries. Michael is the Settlor of the Latron Trust, but neither a Trustee nor a beneficiary.

[23] The parties separated on November 7, 2017. At the time of separation, Helene was 60 years old and Michael was 59 years old.

[24] Since separation, Helene has continued to reside at the matrimonial home. Michael was paying support to Helene of $6,000 a month.

(i) Circumstances Surrounding the July 17th, 2012 Agreement

[25] The July 17th, 2012 Agreement was prepared by Mr. Brian Chillman, of the law firm Shibley Righton LLP. This law firm was retained by and represented the Solcz Group Inc. and Latron Management Inc. Latron Management Inc. is owned solely by Michael and, as stated above, the Solcz Group Inc. is owned by Michael, his siblings and his parents.

[26] In this Agreement, Michael’s business interests were excluded from the calculation of his net family property if a breakdown of the parties’ relationship were to occur. Specifically, Michael’s “Protected Corporations” were defined as:

[A]ny and all interests Michael has now or may acquire in: the Solcz Family Business; any related, subsidiary or affiliated corporation to the corporation referenced to in paragraph 6.2(a)(i) above, the word “related” having the meaning ascribed to it in the Income Tax Act and the word “affiliated” having the meaning ascribed to it in the Business Corporations Act, R.S.O. 1990, c.B.16, as amended.

[27] In the July 17th, 2012 Agreement, Helene waived her rights to seek property division; released any right she may have to claim spousal support from Michael; and limited any right to claim possession of the matrimonial home[^1] (owned solely by Michael) in the event of their separation.

[28] It is Helene’s evidence that at the time the July 17th, 2012 Agreement was signed, she did not understand or appreciate that Mr. Chillman did not represent Michael or herself in their respective personal capacity. Further, Helene did not have any financial details of the Solcz Group Inc., Latron Management Inc. or, in fact, anything regarding Michael’s financial affairs.

[29] The parties agree on the evidence that there were no certificates of independent legal advice for this Agreement and they did not exchange financial disclosure when this Agreement was signed.

[30] The parties agree that the July 17th, 2012 Agreement was revoked in favour of the July 20th, 2012 Agreement, signed three days later.

[31] Michael’s evidence is that he and Helene had discussions between July 17th and 20th, 2012, which resulted in the revocation of the July 17th, 2012 Agreement and the execution of the July 20th, 2012 Agreement. His evidence is that the parties renegotiated the terms and the limitations on Helene’s rights to spousal support. Further, Michael asserts that Helene met with Mr. Chillman alone more than once. This evidence is disputed on the record by Helene.

[32] According to Helene, she does not recall any discussions that took place between her and Michael between July 17th and 20th, 2012. She does not recall meeting with Mr. Chillman alone. Her evidence is that she was extremely stressed and overwhelmed when the July 17th, 2012 Agreement and the July 20th, 2012 Agreement were signed, as she was busy with parental responsibilities of Annie.

[33] There was no evidence from Mr. Chillman, either in the form of an affidavit from him or from the production of his previous file, in the record before the Arbitrator.

(ii) Circumstances Surrounding the July 20th, 2012 Agreement

[34] As noted, three days later, the parties signed the July 20th, 2012 Agreement which excluded Michael’s family’s business interests but did not restrict Helene’s right to make a spousal support claim or to claim possession of the parties’ matrimonial home if there was a subsequent breakdown of the relationship.

[35] The July 20th, 2012 Agreement did not mention spousal support or refer to possession of the matrimonial home. Further, the July 20th, 2012 Agreement did not mention the July 17th, 2012 Agreement. The parties agree, however, that the July 20th, 2012 Agreement revoked the July 17th, 2012 Agreement.

[36] Helene’s evidence is that the July 20th, 2012 Agreement was signed at a table where she and Michael sat with Mr. Chillman; she felt intimidated and was extremely stressed and overwhelmed regarding this document; she did not fully understand the purpose or implications of what she was asked to sign; and she did not understand that Mr. Chillman did not represent her or Michael or that he represented the Solcz family business.

[37] For purposes of this appeal, the parties agree that the terms of the July 20th, 2012 Agreement were more favourable to Helene than the July 17th, 2012, in that she retained her right to seek spousal support if the parties separated since the contract is silent as to spousal support. Although the July 20th, 2012 Agreement entitled Helen to claim possession of the parties’ matrimonial home if there was a breakdown of their relationship, pursuant to Part II of the Family Law Act, R.S.O. 1990, c. F.3, it is questionable whether this entitlement was more favourable to her than the term relating to exclusive possession in the first contract, given that a domestic contract that attempts to limit this possessory right is unenforceable in any event.

[38] The July 20th, 2012 Agreement indicates that the parties were satisfied with the disclosure they had. It is agreed that the parties did not exchange any financial disclosure prior to signing this contract.

[39] The July 20th, 2012 Agreement indicates that they both acknowledged that they were urged to obtain independent legal advice. Neither party did so.

[40] Helene seeks to set aside the July 20th, 2012 Agreement on the following three grounds: 1) a lack of financial disclosure; 2) she did not understand the nature and consequences of the Agreement; and 3) she was under duress when she signed it.

(iii) Circumstances Surrounding the 2014 Amending Agreement

[41] Two years later, on October 7, 2014, and 11 days prior to the parties’ marriage, the parties signed the 2014 Amending Agreement.

[42] The evidence is that in July and September 2014, Helene met with a lawyer, Harpreet Burmy, to discuss how she could protect her home in Windsor on Argyle Road and her art business if the parties were to separate. Helene consulted with Ms. Burmy, a matrimonial lawyer, over a series of a few months, to draft a contract that would protect these assets.

[43] Helene’s evidence is that she does not recall discussing the terms or implications of the July 20th, 2012 Agreement with Ms. Burmy; nor do Ms. Burmy’s notes specifically express that she explained the concept of “equalization of net family property” or the concept of “exclusions” to Helene.

[44] In Helene’s Application, she stated that she only met with Ms. Burmy twice. However, when Ms. Burmy’s file was produced, the dockets indicate that Helene met with Ms. Burmy on six occasions.

[45] The 2014 Amending Agreement confirmed the terms of the July 20th, 2012 Agreement.

[46] Both Helene and Michael had independent legal advice when the Amending Agreement was signed. Helene was represented by Ms. Burmy and Michael was represented by David Mueller.

[47] It is agreed that the parties did not exchange sworn financial statements or any financial disclosure when the 2014 Amending Agreement was signed. It is also agreed that Helene did not ask for financial disclosure from Michael.

[48] On the same day Helene signed the 2014 Amending Agreement (October 1, 2014), she executed an Acknowledgement, Confirmation and Direction to Harpeet Burmy, in which, among other things,

(1) she acknowledged that she understood the nature and effect of the Amending Agreement;

(2) she signed the Amending Agreement freely and voluntarily;

(3) she was advised by Ms. Burmy that full financial disclosure and independent legal advice are both very important and necessary to ensure that she understands the legal and financial consequences of signing this Amending Agreement;

(4) she confirmed that she told Ms. Burmy that she does not wish to provide a sworn financial statement;

(5) she confirmed that she is satisfied with the financial information she has for Michael;

(6) she confirmed that she instructed Ms. Burmy not to make any requests for further financial disclosure in the form of a sworn financial statement by Michael in order to save time and costs;

(7) she confirmed that her solicitor has advised that she is not in a position to provide her with proper and complete legal advice or an opinion with respect to the terms of the Amending Agreement without complete financial disclosure of the parties;

(8) she confirmed that she was advised by her solicitor that either party may still make an application for division of pension credits from Canada Pension Plan earned during the marriage;

(9) she confirmed that she was advised by her solicitor that a court may make an order for spousal support notwithstanding an agreement which provides for spousal support or terminates spousal support; and

(10) she confirmed that she was advised by her solicitor that relevant family law legislation has established that a court may, on application, set aside a separation agreement or a provision in it if a party failed to disclose to the other significant assets or significant debts or other liabilities, existing when the agreement was made; if a party did not understand the nature or consequences of the contract; or otherwise in accordance with the law of contract.

[49] The parties agree that the 2014 Amending Agreement was more favourable to Helene than the July 20th, 2012 Agreement, in that it excluded her home in Windsor and her art business from the calculation of her net family property if there was a subsequent breakdown of the parties’ marriage.

[50] Helene seeks to set aside the 2014 Amending Agreement on the following three grounds, 1) there was no financial disclosure; 2) she did not understand the nature and consequences of it; and 3) she was under duress when she signed it.

(iv) Litigation/Dispute Resolution History

[51] On December 3, 2018, an Application was issued by Helene in the Superior Court of Justice seeking, among other things, to set aside the July 20th, 2012 Agreement and the 2014 Amending Agreement; spousal support; exclusive possession of the matrimonial home; equalization of net family property; financial disclosure and interim disbursements of $75,000.

[52] On January 17, 2019, Michael filed an Answer.

[53] On March 24, 2019, the parties attended a case conference before Hebner, J.

[54] Thereafter, on July 14, 2019, the parties entered into a Mediation/Arbitration Agreement with the Arbitrator.

[55] Pursuant to paragraph 4 of the Mediation/Arbitration Agreement, the parties submitted the following substantive issues for interim and/or final determination by the Arbitrator: Spousal support; Security for support; Indexing spousal support; Equalization of net family property (and related property issues including, but not limited, possession, sale, etc.); Unequal division of net family property; Interim fees and disbursements; Preservation/non-dissipation of assets; Disclosure; Preservation/non-dissipation; Exclusive possession; Costs; and Other – setting aside of the parties’ marriage contract[s].

[56] Paragraph 14 of the Mediation/Arbitration Agreement sets out that a party may appeal the Arbitration Award in accordance with subsection 45(1) of the Arbitration Act, 1991; or on a question law, question of fact, or a question of mixed fact and law.

[57] Helene brought two motions for disclosure necessary for her to be able to determine Michael’s net worth at the beginning of the parties’ cohabitation, marriage and separation and to determine his income. Specifically,

(a) On October 3, 2019, Mr. Grant ordered Michael (a) to produce the disclosure requested by Helene and by her valuator, ap Valuations; (b) to produce his bank, investment, credit card and line of credit card statements, from January 2012 to the current date; and (c) to sign an Authorization and Direction to Mr. Chillman for the release of the entirety of his file related to the Domestic Contract, dated July 20, 2012;

(b) On January 28, 2020, the parties had a further procedural motion before Mr. Grant. Helene had three summons for non-parties from which she sought disclosure, which Mr. Grant signed, and Michael indicated he would be bringing a motion to quash the summons. On February 3, 2020, Mr. Grant directed Mr. Mersky, counsel for the witness[^2], to bring a motion, whether to quash the summons or otherwise; Helene to bring a motion for an oral hearing with sworn evidence taken; and subject to Helene’s counsel’s argument and any ruling he may make, he would hear, or at least timetable, Michael’s summary judgment motion; and

(c) On February 28, 2020, in response to Mr. Mersky’s motion to quash a summons and Helene’s motion to hear from the non-parties by way of viva voce evidence, Mr. Grant directed and ordered the non-parties to produce further disclosure related to Solcz Group Inc. namely, the shareholder agreements in effect as at the date of marriage, the date of separation and currently; as well as other agreements that restrict the transfer of shares; and its financial statements for 2011 to 2018. The non-parties and/or Michael were also ordered to produce the trust income tax returns for the Michael G. Solcz Family Business Trust (“MGS Trust”) from 2014 to 2018 and the Trust’s financial statements for 2014 to 2017 and/or a summary of the Trust’s assets and liabilities from 2014 to 2018. Finally, Michael was ordered to deliver this production along with his outstanding personal disclosure and the Michael J. Solcz Family Business Trust (“MJS Trust”) within 30 days.

[58] On March 2, 2020, Michael, Lauren and Annie commenced an Application against Helene in the Superior Court of Justice in connection with the Latron Trust (which owns the Naples property), seeking, among other things, to remove her as Trustee of the Latron Trust. This action remains ongoing.

[59] On March 9, 2020, Michael served and filed a motion seeking to sever the divorce from the corollary relief issues. This motion was heard in this Court in or around November 2020.[^3] The divorce was not granted nor was it severed from the corollary relief because of potential prejudice to Helene in terms of her status as a “spouse” under the Latron Trust, with respect to her claims in relation to the Florida property and/or her claims for exclusive possession.

[60] Michael’s motion for summary judgment in connection only with Helene’s claims to set aside the July 20th, 2012 Agreement and the 2014 Amending Agreement was returnable before the Arbitrator on July 3, 2020. The Arbitrator released his Award on October 8, 2020, granting Michael summary judgment and finding that Helene’s claim to set aside the July 20th, 2012 Agreement and the 2014 Amending Agreement was not a genuine issue requiring a trial.

[61] Helene’s appeal of the Award is made pursuant to s.45(6) of the Arbitration Act, 1991, which provides:

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. 2006, c. 1, s. 1(6).

(v) Prior Solicitors’ File

[62] Pursuant to Mr. Grant’s October 3, 2019 Arbitral Award, Michael was ordered to sign an Authorization and Direction to Mr. Chillman for the release of his file in connection with the July 17th, 2012 Agreement and the July 20th, 2012 Agreement. Mr. Chillman was unable to produce the contents of his file because he had left Shibley Righton LLP and transferred his practice to McTague Law Firm. The entire Solcz family files were sent to Norton Rose Fulbright at that time.

[63] On April 14, 2020, Mr. Grant ordered Michael to deliver all correspondence with Mr. Chillman in relation to his requests for his file. According to Helene, Michael refused to provide the particulars of those communications in breach of the Arbitral Award.

[64] Mr. Chillman obtained his file from Shibley Righton LLP, but all it contained were the July 17th, 2012 Agreement and the July 20th, 2012 Agreement. There were no solicitors’ notes, memos or dockets.

[65] Michael’s counsel inquired with Norton Rose Fulbright to see if there were any further relevant documents at their offices related to the July 17th, 2012 Agreement or the July 20th, 2012 Agreement. No such documents were located.

[66] Accordingly, the Arbitrator did not have the contents of Mr. Chillman’s file or evidence from Mr. Chillman in the form of an affidavit.

[67] Similarly, Michael’s counsel sought the release of Ms. Burmy’s file. Helene produced the file contents that had been disclosed to her by Ms. Burmy but advised that Ms. Burmy’s former employer had refused to release any notes and/or dockets from Ms. Burmy’s file. Ms. Burmy then retained counsel and the entirety of her file was produced on February 28, 2019. Ms. Burmy’s file contained multiple versions of the 2014 Amending Agreement and a copy of the July 20th, 2012 Agreement. Ms. Burmy’s dockets show that Helene met with her on, at least, six occasions and had multiple phone calls.[^4]

[68] Ms. Burmy’s notes of her initial consultation with Helene were also in her file.

Principles Involved in a Summary Judgment Motion

[69] The jurisdiction to grant summary judgment arises from r.16 of the Family Law Rules, O. Reg. 114/99 (“FLRs”). Rule 16 is reproduced below:

RULE 16: SUMMARY JUDGMENT

WHEN AVAILABLE

16.(1) After the respondent has served an answer or after the time for serving an answer has expired, a party may make a motion for summary judgment for a final order without a trial on all or part of any claim made or any defence presented in the case. O. Reg. 114/99, r. 16 (1).

AVAILABLE IN ANY CASE EXCEPT DIVORCE

(2) A motion for summary judgment under subrule (1) may be made in any case (including a child protection case) that does not include a divorce claim. O. Reg. 114/99, r. 16 (2).

DIVORCE CLAIM

(3) In a case that includes a divorce claim, the procedure provided in rule 36 (divorce) for an uncontested divorce may be used, or the divorce claim may be split from the rest of the case under subrule 12 (6). O. Reg. 114/99, r. 16 (3).

EVIDENCE REQUIRED

(4) The party making the motion shall serve an affidavit or other evidence that sets out specific facts showing that there is no genuine issue requiring a trial. O. Reg. 114/99, r. 16 (4).

EVIDENCE OF RESPONDING PARTY

(4.1) In response to the affidavit or other evidence served by the party making the motion, the party responding to the motion may not rest on mere allegations or denials but shall set out, in an affidavit or other evidence, specific facts showing that there is a genuine issue for trial. O. Reg. 91/03, s. 5.

EVIDENCE NOT FROM PERSONAL KNOWLEDGE

(5) If a party’s evidence is not from a person who has personal knowledge of the facts in dispute, the court may draw conclusions unfavourable to the party. O. Reg. 114/99, r. 16 (5).

NO GENUINE ISSUE FOR TRIAL

(6) If there is no genuine issue requiring a trial of a claim or defence, the court shall make a final order accordingly. O. Reg. 114/99, r. 16 (6).

POWERS

(6.1) In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties, and the court may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence. O. Reg. 69/15, s. 5 (1).

ORAL EVIDENCE (MINI-TRIAL)

(6.2) The court may, for the purposes of exercising any of the powers set out in subrule (6.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation. O. Reg. 69/15, s. 5 (1).

ONLY ISSUE AMOUNT OF ENTITLEMENT

(7) If the only genuine issue is the amount to which a party is entitled, the court shall order a trial to decide the amount. O. Reg. 114/99, r. 16 (7).

ONLY ISSUE QUESTION OF LAW

(8) If the only genuine issue is a question of law, the court shall decide the issue and make a final order accordingly. O. Reg. 114/99, r. 16 (8).

ORDER GIVING DIRECTIONS

(9) If the court does not make a final order, or makes an order for a trial of an issue, the court may, in addition to exercising a power listed in subrule 1 (7.2),

(a) specify what facts are not in dispute, state the issues and give directions about how and when the case will go to trial (in which case the order governs how the trial proceeds, unless the trial judge orders otherwise);

(b) give directions; and

(c) impose conditions (for example, require a party to pay money into court as security, or limit a party’s pretrial disclosure). O. Reg. 114/99, r. 16 (9); O. Reg. 69/15, s. 5 (2, 3).

(10), (11) Revoked: O. Reg. 69/15, s. 5 (4).

MOTION FOR SUMMARY DECISION ON LEGAL ISSUE

(12) The court may, on motion,

(a) decide a question of law before trial, if the decision may dispose of all or part of the case, substantially shorten the trial or save substantial costs;

(b) strike out an application, answer or reply because it sets out no reasonable claim or defence in law; or

(c) dismiss or suspend a case because,

(i) the court has no jurisdiction over it,

(ii) a party has no legal capacity to carry on the case,

(iii) there is another case going on between the same parties about the same matter, or

(iv) the case is a waste of time, a nuisance or an abuse of the court process. O. Reg. 114/99, r. 16 (12).

EVIDENCE ON MOTION FOR SUMMARY DECISION OF LEGAL ISSUE

(13) On a motion under subrule (12), evidence is admissible only if the parties consent or the court gives permission. O. Reg. 114/99, r. 16 (13).

[70] The onus for proving that there is no genuine issue requiring a trial rests with the moving party.

[71] The party making the motion shall serve an affidavit or other evidence that sets out specific facts showing that there is no genuine issue requiring a trial: see r.16(4) of the FLRs.

[72] Each party to a motion for summary judgment has an obligation to “‘put its best foot forward’ with respect to the existence or non-existence of material facts that have to be tried”.[^5]

[73] In response to the evidence of the moving party, the responding party may not rest on mere allegations or denials but shall set out in affidavit or other evidence, specific facts showing that there is a genuine issue for trial: see r. 16(4.1). In the oft-repeated maxim of Osborne, J.A., the responding party to a motion for summary judgment must “lead trump or risk losing”.[^6]

[74] In other words, once the moving party discharges the burden of showing that there is no genuine issue requiring a trial, the onus shifts to the responding party to provide evidence of specific facts showing that there is a genuine issue requiring a trial.[^7]

[75] On a motion for summary judgment, the court is required to take a hard look at the merits of the case. If there is no genuine issue requiring a trial with respect to a claim or defence, the court shall make a final order: see r.16(6).

[76] The term "no genuine issue requiring a trial" set out in r.16(6) has been variously interpreted to reflect the notion that the responding party cannot possibly succeed, even if granted the right to a full trial. Among the terms that have been used to describe the test are the following: "no chance of success;" "manifestly devoid of merit"[^8], or “the outcome is a foregone conclusion”[^9], or “no realistic possibility of an outcome other than that sought by the applicant”.[^10]

[77] In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties. In addition, it may use its expanded powers to weigh the evidence; evaluate the credibility of a deponent and draw reasonable inferences from the evidence: r.16(6.1).

[78] In exercising its expanded powers, the court may hear oral evidence from one or more of the parties, with or without time limits, in the form of a mini-trial: see r. 16(6.2).

[79] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada set out the process to be followed in applying the expanded civil summary judgment rules, at para. 66:

(1) The court will first consider whether there is a genuine issue for trial based only on the evidence before the court. This decision is made without exercising the court’s expanded powers.

(2) But if there appears to be a genuine issue for trial, the court shall then determine whether the need for a trial can be avoided using those expanded powers. That decision is a discretionary one. But the court shall not exercise its discretion if doing so would be against the interests of justice.

(3) The exercise of the expanded powers will not be against the interests of justice if it would lead to a fair and just result; one that serves the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[80] These new rules have expanded the number of cases in which there will be no genuine issue requiring a trial. They do so by permitting motion judges to weigh evidence, evaluate credibility and draw reasonable inferences: see Hyrniak, at para. 44.

[81] In keeping with the principles set out in Hryniak, the court must also consider subrules 2(2) - (5) to ensure that a case is dealt with justly. It does so by ensuring that the procedure is fair to all parties, saves time and expense and that the case is dealt with in ways that are appropriate to its importance and complexity.

Summary of the Arbitrator’s Findings

[82] In this case, the Arbitrator correctly identified the process to be followed when making a summary judgment determination enunciated in Hyrniak. However, the Arbitrator failed to instruct himself as to the difference between the first and second step in Hyrniak, in that, the Arbitrator did not consider whether only on the evidence available on the record before him there was a genuine issue requiring a trial with respect to Helene’s claims to set aside the July 20th, 2012 Agreement and the 2014 Amending Agreement. Instead, the Arbitrator went directly to step 2 of Hyrniak and exercised his discretion and fact-finding powers, weighing the evidence on the record before him, and evaluated credibility and drew inferences in granting summary judgment. The Arbitrator conflated steps one and two of the Hyrniak test and that, in and of itself, is an error of law. However, no one argued the appeal on this basis. Rather, the appeal was based on the findings of fact and mixed fact and law that the Arbitrator made. In fairness to the parties, I will address all of the errors in law, fact and mixed fact and law that Helene articulated were made by the Arbitrator.

[83] The Arbitrator correctly considered s.56(4) of the Family Law Act, which sets out the grounds on which a domestic contract, or a provision in it, may be set aside and understood that the setting aside of a domestic contract is an exercise of judicial or quasi-judicial discretion.

[84] The Arbitrator found that “Helene has failed to demonstrate any evidentiary basis for her claims beyond generic and unsupported allegations. Summary judgment dismissing her claims relating to the sett[ing] aside of the Contract[s] fits squarely in the discretion of the Arbitrator pursuant to Rule 16 and satisfied the primary objective pursuant to Rule 2(2)” (para. 64 of Award).

[85] The Arbitrator identified in his Award that he found the following facts relevant from which he made his Award:

(1) The July 20th 2012 Agreement was requested by Michael and was prepared by Mr. Chillman, legal counsel for his companies.

(2) There were, at least two versions of the domestic contract. The first, entitled “Cohabitation Agreement”, dated July 17, 2012 [the July 17th, 2012 Agreement], was signed by the parties and confirms that the parties were in a relationship since April 2005 and cohabiting since June 2008 but are not married. The parties acknowledged that they might marry and agreed that the agreement survived their subsequent marriage. They also acknowledged that each are able to support himself and herself and their own children.

(3) This agreement [the July 17th, 2012 Agreement] provides that the parties are separate as to property in that each waives all rights to share in the property of the other. They waive any claims to resulting or constructive trust, and equalization of net family property. The parties acknowledge that Michael has significant business interests, including but not limited to, Latron Management Inc. and Solcz Group Inc. Helene specifically releases any right to make a claim in an interest in these assets or any growth in value of these assets.

(4) The [July 17th, 2012 Agreement] limits Helene’s possessory rights to the matrimonial home.

(5) The [July 17th, 2012 Agreement] provides that the parties wish to remain financially independent of each other while cohabiting and before being legally married. They release the other from all support obligations. The agreement then provides for a structure of spousal support depending on the length of the parties’ marriage.

(6) The [July 17th, 2012 Agreement] provides for financial disclosure and a term that they did not wish to exchange financial statements. The parties also acknowledged that they were urged to obtain their own independent legal advice in that Mr. Chillman was only involved to ensure Helene’s release of any claims against Michael’s corporate interests.

(7) The second domestic contract, titled “Domestic Contract”, dated July 20, 2012 [the July 20th, 2012 Agreement], was signed by the parties. In form and structure, it is an entirely different agreement. It makes no mention of the [July 17th, 2012 Agreement]. The parties, however, agree that the [July 20th, 2012 Agreement] is the prevailing agreement, and the [July 17th, 2012 Agreement] was revoked in favour of it.

(8) The [July 20th, 2012 Agreement] provides for the exclusion of the Solcz Family Business from any equalization of net family property.

(9) The [July 20th, 2012 Agreement] provides that the parties have fully and completely disclosed to the other their financial information, the parties are satisfied with the information and particulars received, and there are no requests for further information that have not been met to complete satisfaction. They also acknowledged that they were urged to obtain their own independent legal advice in that Mr. Chillman was only involved to ensure Helene’s release of any claims against Michael’s corporate interests.

(10) The [July 20th, 2012 Agreement] is silent as to possessory rights of a matrimonial home and spousal support. It was signed over two years before the parties were married.

(11) The [2014 Amending Agreement], dated October 7, 2014 was signed by the parties and refers to the [July 20th, 2012 Agreement] “which settled all of their issues related to their cohabitation”. A copy of the [July 20th, 2012 Agreement] is attached to the [2014] Amending Agreement.

(12) The [2014 Amending Agreement] states that the parties wish to “amend the terms of their [July 20th, 2012 Agreement] pursuant to paragraph 11 and “the parties agree to be bound by this [2014] Amending Agreement which settles all issues between them and this Agreement varies the [July 20th, 2012 Agreement] they entered into on July 20, 2012”. It later adds that they “remain bound by all the terms of the [July 20th, 2012 Agreement].

(13) The [2014] Amending Agreement excludes Helene’s property from equalization of net family property.

(14) The [2014] Amending Agreement confirms that paragraph 10.4 of the [July 20th, 2012 Agreement] now applies to both parties.

(15) The [2014] Amending Agreement provides that each party has investigated the other’s financial circumstances to his or her satisfaction. That each party has been urged to exchange sworn financial statements, but each has refused this recommendation. Regardless, they are each satisfied with the financial information they have about the other. The parties confirmed that they have each had independent legal advice, read the agreement, understand the agreement, acknowledge the terms are fair and reasonable and are signing voluntarily, under no coercion, undue influence or duress.

(16) The parties acknowledge that the terms of the [2014] Amending Agreement were a result of extensive negotiations. Helene signed on October 1, 2014, and Michael signed on October 7, 2014.

[86] Specifically, the Arbitrator found that the lack of financial disclosure in any of the agreements did not raise a genuine issue requiring a trial. He found that Helene knew at the time of the July 20th, 2012 Agreement, or at least at the time of executing the 2014 Amending Agreement, that full disclosure might well have been sought and she was advised to see it. However, Helene declined to do so. The Arbitrator, however, was not persuaded that had full and particular disclosure been made at the time of either the July 20th, 2012 Agreement or the 2014 Amending Agreement, that Helene would have refused to enter into either Agreement or that the terms of either of the Agreements would have been materially different.

[87] Further, the Arbitrator found that Helene was not under duress when she signed the July 20th, Agreement because a) this Contract provided her with more favourable terms than the July 17th, 2012 Agreement she signed three days earlier; b) it was signed two years before the parties were married; c) there was no urgency or time constraints associated with Michael’s request that Helene sign the Contract; and d) there is no evidence that Michael dominated Helene’s will at the time the Contract was executed.

[88] With respect to the 2014 Amending Agreement, the Arbitrator also found that Helene was not under duress based on the fact that she was the party who requested the 2014 Amending Agreement for her benefit, namely, to exclude her home in Windsor and her art business from the calculation of her net family property and equalization.

[89] The Arbitrator considered the July 20th, 2012 Agreement and the 2014 Amending Agreement as a “package”, but he also considered the circumstances surrounding the signing of each Agreement, along with the July 17th, 2012 Agreement. He found that each contract had its own independent process for negotiation and execution which he considered in his analysis.

[90] The Arbitrator declined to dismiss any other claims put forward by Helene, such as exclusive possession of the matrimonial home; equalization of net family property; spousal support; and financial disclosure.

Grounds of Appeal

[91] Helene’s appeal is broad. The issues for the appeal identified in her Notice of Appeal and in her factum are that the Arbitrator erred in law, fact and mixed fact and law by:

(1) Granting partial summary judgment to Michael;

(2) Allowing Michael’s motion for summary judgment to proceed pursuant to r.16(1) of the FLRs without notice to her and while a claim for divorce remained outstanding;

(3) Finding that Michael had satisfied his evidentiary burden pursuant to Rules 16(4) and 16(4.10) of the FLRs to determine that there was no genuine issue requiring a trial with respect to the validity and enforceability of the July 20th, 2012 Agreement and the 2014 Amending Agreement;

(4) Considering the July 17th, 2012 Agreement, the July 20th, 2012 Agreement and the 2014 Amending Agreement as a “package” as opposed to assessing the validity and enforceability of each domestic contract independently;

(5) Making findings of fact and credibility not supported by the evidence and resolving issues of credibility on the basis of a written record without live evidence and/or cross-examinations;

(6) Failing to give appropriate weight to Michael’s failure to provide financial disclosure that materially impacted the nature, operation and consequences of the July 20th, 2012 Agreement and the 2014 Amending Agreement. In particular, finding that the lack of disclosure did not negatively impact Helene’s ability to understand the nature and consequences of the July 20th, 2012 Agreement and the 2014 Amending Agreement, including but not limited to non—disclosure of the existence of and his interest in the MJS Trust;

(7) Making determinations as to Helene’s subjective state of mind at the time of the negotiation and execution of the July 20th, 2012 Agreement and the 2014 Amending Agreement (including but not limited to her understanding the nature and consequences of both Agreements, her understanding of Michael’s financial circumstances, feelings of duress and/or undue pressure) based upon a written record without live evidence and or cross examination;

(8) Relying upon unsubstantiated statements and mere allegations put forward by Michael as material facts, particularly in the face of Helene’s specific evidence and Michael’s willful breach of his disclosure obligations including his refusal to disclose communications with Mr. Chillman?; and

(9) Failing to comply with the principles of natural and procedural justice, including but not limited to, providing leave to bifurcate the issues in the case on his own motion without a motion before the arbitrator for such relief and permitting Michael to bring the motion not contemplated by and without proper notice to Helene.

The Issues for Appeal

[92] My review of the nine grounds of appeal put forward by Helene is that there are two grounds of appeal which are preliminary and three other grounds of appeal, as follows:

(i) Preliminary Grounds of Appeal

[93] Did the Arbitrator exceed his jurisdiction and breach the rules of natural justice by, among other things, providing leave to Michael to bifurcate the issues in the case on his own motion [that is, without a motion before him for such relief] and permitting Michael to bring the motion not contemplated by and without proper notice to Helene?

[94] Did the Arbitrator err in law in allowing Michael’s summary judgment to proceed under Rule 16(1) when the divorce had not been severed from the corollary issues, contrary to Rule 16(2) of the FLRs?

(ii) Other Grounds of Appeal

[95] Did the Arbitrator make palpable and overriding errors in his findings of fact and law on the issues of Michael’s failure to provide disclosure and Helene’s inability to understand the nature and consequences of the terms of the July 20th, 2012 Agreement and the terms of the 2014 Amending Agreement?

[96] Did the Arbitrator make palpable and overriding errors in his findings of fact and law on the issue of duress in relation to the July 20th, 2012 Agreement and the 2014 Amending Agreement?

[97] Did the Arbitrator make palpable and overriding errors in his findings of fact and law when he considered the July 20th, 2012 Agreement and the 2014 Amending Agreement as a “package” as opposed to assessing the validity and enforceability of each domestic contract independently?

(iii) Remedy

[98] If I find that the arbitrator erred in granting Michael summary judgment and set the Arbitration Award aside, what is the remedy?

The Standard of Review

[99] The leading case on classifying legal issues as questions of law, fact or mixed fact and law is Canada (Director of Investigation and Research, Competition Act) v. Southam Inc., 1997 385 (SCC), [1997] 1 S.C.R. 748 ("Southam"). In Southam, the Supreme Court of Canada commented, at para. 35, that, "[b]riefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests."

[100] The parties agree on the appropriate standards of review. The standard of review on questions of law is correctness, while findings of fact and factual inferences are reviewable for palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 10 and 25. A question of mixed fact and law involves the application of a legal standard to a set of facts, and is subject to review for palpable and overriding error, except for extricable questions of law: Housen, at para. 26. A question of law may be extricable from a question of mixed fact and law if, for example, the incorrect legal standard is applied, or a part of a legal test is not considered by the decision-maker. The extricable question of law is reviewed on a correctness standard.

[101] The standard of palpable and overriding error was further articulated by the Ontario Court of Appeal in Waxman v. Waxman, 2004 39040 (ON CA), at paras. 296, 297 and 300:

[296] The “palpable and overriding” standard addresses both the nature of the factual error and its impact on the result. A “palpable” error is one that is obvious, plain to see or clear: Housen at 246. Examples of “palpable” factual errors include findings made in the complete absence of evidence, findings made in conflict with accepted evidence, findings based on a misapprehension of evidence and findings of fact drawn from primary facts that are the result of speculation rather than inference.

[297] An “overriding” error is an error that is sufficiently significant to vitiate the challenged finding of fact. Where the challenged finding of fact is based on a constellation of findings, the conclusion that one or more of those findings is founded on a “palpable” error does not automatically mean that the error is also “overriding”. The appellant must demonstrate that the error goes to the root of the challenged finding of fact such that the fact cannot safely stand in the face of that error: Schwartz v. Canada, 1996 217 (SCC), [1996] 1 S.C.R. 254 at 281.

[300]…First and foremost, as indicated above, the “palpable and overriding” standard applies to all factual findings whether based on credibility assessments, the weighing of competing evidence, expert evidence, or the drawing of inference from primary facts.

[102] In Spadacini-Kelava v. Kelava, 2020 ONSC 5561, at para. 32, Kurz, J. referred to the decision of Desormeau, J. in Rosenberg v. Yanofsky, 2019 ONSC 6886, as offering an excellent review of the law regarding the standard of review of the decision of an arbitrator in a family law proceeding, in which she wrote:

7 The decision of an arbitrator deserves as much deference on appeal as does a decision of a trial judge: Palmer v. Palmer, 2010 ONSC 1565 (Ont. S.C.J.) at para. 3 (cited in Reati v. Racz, 2016 ONSC 1967, at para. 28)

8 In reaching an award, an arbitrator sits in the same position as a judge in a lower court when a decision is appealed to a higher court, and for a decision to be overturned on appeal, the appellate court must find that the reasons amount to an error [in] law and that the decision is not correct, or that a palpable and overriding error was made on a question of mixed fact and law: Gray v. Brusby, 2008 CarswellOnt 4045 (Ont. S.C.J.) at para. 27, and Palmer, supra, at para. 5, cited in Reati v. Racz, 2016 ONSC 1967, at para. 29.

13 The Court should not interfere with an arbitrator's award unless it is satisfied that the arbitrator acted on the basis of a wrong principle, disregarded material evidence, or misapprehended the evidence: O'Connell v. Awada, 2019 ONSC 273, at para. 9, citing with approval Robinson v. Robinson, [2000] O.J. No. 3299 (Ont. S.C.J.), at para. 5.

[103] The issues raised in this appeal involve questions of law; questions of fact; and questions of mixed fact and law. The Arbitrator’s determinations with respect to questions of fact and mixed fact and law are entitled to deference and cannot be interfered with unless they amount to palpable and overriding error in facts or in mixed fact and law. The question is whether, the Arbitrator erred, with respect to identifying the correct legal test (an error of law), or correctly identified the legal test but erred in applying the test to the facts (an error of mixed fact and law).

[104] Due to the fact-based and discretionary nature of family law cases, trial judges and arbitrators must be afforded a high degree of deference: see Wright v. Holmstrom, 2016 ONCA 360.

[105] I turn now to the two non-substantive grounds of appeal.

Preliminary Grounds of Appeal

i) Did the Arbitrator exceed his jurisdiction and breach the rules of natural justice when he gave leave to Michael to bifurcate the issues in the case on his own motion without a motion before him for such relief and permitting Michael to bring the motion not contemplated by and without proper notice to Helene?

[106] Helene submits that the Arbitrator erred and breached the principles of natural and procedural justice by (a) granting Michael leave to bifurcate the issues in the case on his own motion, without Michael having brought such a motion, and without proper notice to Helene; and (b) allowing Michael to proceed with his motion when it was unclear as to whether he was relying on r.16(1) or r.16(12) of the FLRs.

[107] I find that granting Michael leave to bring a summary judgment motion did not amount to the Arbitrator bifurcating the case. The Arbitrator did not make an arbitral award in which he ordered that a trial on the issue of the validity and enforceability of the Domestic Contracts was to proceed before the trial of the other issues. Rather, the Arbitrator permitted Michael to bring a summary judgment motion on one of Helene’s claims. If such a motion was successful, then a trial on the validity and enforceability of the Domestic Contracts would be unnecessary and the trial would then proceed on the balance of Helene’s claims only. If the motion was unsuccessful, then the case would proceed to trial on all of the claims unless a party were to apply for and obtain a bifurcation order. The logical import of Helene’s submission seems to be that a bifurcation order is a pre-condition to a motion for partial summary judgment. I do not accept her position. Michael did not bring a bifurcation motion, the effect of which, if he succeeded on it, would have been that a trial on the Domestic Contracts claim would proceed before the trial of the other issues. He brought a summary judgment motion, which, if successful, would eliminate issues to be tried at trial. Even if one could reasonably argue in an appropriate case that ordering a mini-trial on a summary judgment motion amounted to a bifurcation of the issues, a mini-trial did not occur in this case.

[108] After a procedural ruling, Michael was granted leave to bring his motion for summary judgment in relation to the Domestic Contracts. The Arbitrator did not permit Michael to split Helene’s case into two separate cases, claims or issues, as contemplated by r.12(5) of the FLRs. Rather, if Michael’s motion for summary judgment was not successful, Helene’s claims in relation to the Domestic Contracts would continue with the remainder of her claims and, similarly, if Michael’s motion for summary judgment was successful, Helene’s claims in relation to the Domestic Contracts would be eliminated from the remainder of her claims, and there would be no reason to bifurcate.

[109] Helene attempted to seek clarification from the Arbitrator about this and she did not receive a response. While I believe it would have been preferable for the Arbitrator to have responded to Helene’s counsel’s question for clarification, the issue was addressed at the commencement of, and prior to, the summary judgment motion being heard by the Arbitrator.

[110] As a further preliminary issue at the arbitration, Helene argued that the manner in which Michael framed his motion made it unclear as to whether he was relying on r.16(1) or r.16(12), which she claimed was important. She argued that these two rules operate as distinct summary judgment motions with different evidentiary burdens, and that she was entitled to know the onus she had to face (or the case she had to meet) and the test under which Michael was proceeding. Helene’s argument is that she was prejudiced in not knowing under which subrule of r.16 Michael was relying and in proceeding with the motion for summary judgment, the Arbitrator breached the principles of natural justice and fairness because she had no notice of the particular subrule under which the motion was proceeding.

[111] The Arbitrator found that Helene had not been prejudiced because she had appropriate notice that Michael was proceeding with a summary judgment motion pursuant to r.16(1) of the FLRs and not r.16(12). The Arbitrator based his finding on the following facts:

(1) Michael served a Notice of Motion, dated March 13, 2020 and a lengthy affidavit, sworn on March 10, 2020;

(2) In response, Helene served her own lengthy affidavit, sworn on May 29, 2020, setting out her version of events;

(3) Helene did not argue that Michael inappropriately submitted evidence contrary to r.16(13). Rather, Helene responded to Michael’s evidence as if Michael’s motion was brought under r.16(1);

(4) At all material times Helene was aware of her burden under Rule 16(4.1);

(5) This was not a motion brought at an early stage of a case, where Helene was unsure or unaware of Michael’s position on the issues. Instead, in this case, the parties had been engaged in a litigation/ADR process for over two years. From the outset, Michael had been clear that he is relying on the two Domestic Contracts as being valid and enforceable as Helene has been clear that her position is that she seeks to have the two Domestic Contracts set aside. As a result, Helene had more than sufficient time to properly prepare for and defend a motion for summary judgment under r.16(1); and

(6) Both parties advanced arguments in which the main issue was the validity and enforceability of the two Domestic Contracts. The remainder of Michael’s requested relief contained in his Notice of Motion, namely, to dismiss Helene’s claims for exclusive possession of the matrimonial home and disclosure were secondary or ancillary to the summary judgment relief he sought.

[112] I am not persuaded by the appellant that the Arbitrator exceeded his jurisdiction and/or breached the rules of natural justice, nor that he made an overriding or palpable error in his legal analysis as to whether Helene had appropriate notice of Michael’s intention to seek summary judgment in connection with the enforceability and validity of the two Domestic Contracts. I agree with the Arbitrator that based on Helene’s responding affidavit material, it is clear she understood she was responding to a motion brought under r.16(1). I note, as well, that Helene deposed that she prepared for the motion on both bases – a motion under rr.16(1) and (12). As a result, she was ready for the motion.

(ii) Did the Arbitrator err in law in allowing Michael’s summary judgment to proceed under Rule 16(1) when the divorce had not been severed from the corollary issues, contrary to Rule 16(2) of the FLRs?

[113] As was stated by the Arbitrator in paragraphs 46 to 48 of his Award, the Courts have confirmed that it is not the intent of r.16(2) to exclude non-divorce claims from summary judgment when a divorce is sought under the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.). Rather, r.16(3) confirms the appropriate procedure in which to address a divorce claim summarily.

[114] I am not persuaded that the Arbitrator erred in finding that the point of the FLRs is not that a litigant cannot bring a summary judgment motion seeking a divorce. Rule 16(2) is not intended to prevent other corollary relief unrelated to the divorce to be determined on summary judgment. That interpretation would mean that no claim in a case in which a divorce was also claimed could be subject to summary judgment – which would be almost all claims under the Divorce Act. I agree with Michael that this would be contrary to the well-established rule of statutory interpretation that the legislature does not intend to produce absurd consequences.

[115] Further, the Court of Appeal has applied this practical interpretation of r.16(2) previously. In Mattina v. Mattina, 2018 ONCA 641, the Court of Appeal dismissed the father’s appeal of a summary judgment motion, and no issue was raised regarding the fact that the divorce had not been granted.

[116] Similarly, in Dormer v. McJannet, 2006 42670 (ON SC), [2006] O.J. No. 5106 (S.C.), the Respondent argued that summary judgment was not available in a case including a claim for a divorce judgment. The Court held that r.16(2) should not be interpreted as preventing such a motion by an applicant solely because a respondent has included a claim for divorce in his or her answer: at para. 29. The Court also found that the Applicant was not seeking summary judgment for divorce or an order severing the corollary relief from the divorce itself: at para. 30. Finally, Mackinnon, J. held that “the relief sought by the Applicant in this motion for summary judgment [was] not for any corollary relief that [was] dependent upon a divorce claim… and [was] in no way related to the Respondent’s claim for a divorce, or dependent upon it being granted”: at para. 31.

[117] I adopt Mackinnon, J.’s reasoning in this case. Michael’s motion to dismiss Helene’s claims to set aside the Domestic Contracts is in no way related to the claim for a divorce, or dependent upon a divorce being granted. Accordingly, his motion under r.16(1) ought not to be prevented because the divorce claim remains outstanding.

[118] Helene relies on W.M.A.M.W. v. L.J.W., 2018 ONCA 1024, for the principle that the severance of the divorce must take place prior to the balance of the motion being heard. In that case, the appellant sought to overturn a final order on all issues. The Court of Appeal held that the appellant misconstrued the meanings of subrules 16(2) and (3) of the FLRs and clarified that subrule 16(3) provides exceptions to subrule 16(2)’s restriction that a motion for summary judgment may be made in any case that does not include a divorce claim, namely, where the divorce is uncontested or where the divorce claim may be split from the rest of the case under subrule 12(6): at para. 4. The respondent had sought the divorce in his Notice of Motion, and it was dealt with by the Court in isolation.

[119] Michael did not seek summary judgment on the divorce, nor did he seek summary judgment for any relief dependent on the divorce claim. As is acknowledged by Helene in her factum at paragraph 73, Michael had served his motion to sever the divorce. The FLRs do not suggest that he is prevented from seeking summary judgment in the circumstances, and there is no jurisprudence to indicate that Michael was required to obtain the divorce in advance of the summary judgment motion being heard or granted.

[120] Although in this case, Michael had sought to sever the divorce from the corollary relief issues and was unsuccessful because the granting of a divorce before trial would be prejudicial to Helene’s right as a spouse to claim exclusive possession of the matrimonial home in Windsor and the Florida property.

[121] I am not persuaded that the Arbitrator made an error of law in his application in rr.16(2) and 16(1).

Other Grounds of Appeal

i) Did the Arbitrator make palpable and overriding errors in his findings of fact and law on the issues of Michael’s failure to provide disclosure and Helene’s inability to understand the nature and consequences of the terms of the July 20th, 2012 Agreement and the terms of the 2014 Amending Agreement?

ii) Did the Arbitrator make palpable and overriding errors in his findings of fact and law on the issue of duress in relation to the July 20th, 2012 Agreement and the 2014 Amending Agreement?

[122] I will turn to address the other grounds of appeal referred to in the subparagraphs above, in the context of the Arbitrator’s analysis of the grounds on which Helene seeks to set aside both the July 20th, 2012 Agreement and the 2014 Amending Agreement. Although each ground of appeal is framed differently, the concern raised by Helene is that the Arbitrator made palpable and overriding errors in mixed fact and law and in fact on the basis of a written record only when he assessed the evidence and made findings of fact and credibility.

[123] As indicated above, Helene sought to set aside the July 20th, 2012 Agreement and the 2014 Amending Agreement on the grounds of non disclosure; that she did not understand the nature or consequences of either agreement; or that she was under duress when she signed each agreement, pursuant to s.56(4) of the Family Law Act. Helene does not specifically plead these grounds in her Application. However, she refers to these grounds in her affidavit material, filed in support of this appeal.

[124] Section 56(4) of the Family Law Act provides that a domestic contract, or a provision contained in it, may be set aside on these grounds:

(1) If a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;

(2) If a party did not understand the nature or consequences of the domestic contract;

(3) Otherwise in accordance with the law of contract.

(i) Did the Arbitrator make palpable and overriding errors of law in his findings of fact and law on the issues of Michael’s failure to disclose and Helene’s inability to understand the nature and consequences of the terms of the July 20th, 2021 Agreement and the terms of the 2014 Amending Agreement?

(a) July 20th, 2012 Agreement

[125] The test to set aside a domestic contract for non-disclosure, pursuant to s.56(4) of the Family Law Act, was detailed in Quinn v. Epstein Cole LLP, 2007 45714 (ON SC), [2007] O.J. No. 4169 (S.C.), at para. 47, aff’d in Quinn v. Epstein Cole LLP, 2008 ONCA 662, [2008] O.J. No. 3788 (C.A.):

(i) First, the party seeking to set aside the agreement must demonstrate that the other party failed to discharge its duty to disclose significant assets

(ii) If a court finds that a party has failed to disclose a significant asset, the court must determine, in light of the facts of each case, whether it should exercise its discretion to rescind the domestic contract. The burden of proof lies on the party seeking to set aside the contract to persuade the court to exercise its discretion in its favour. The court will take into account a variety of factors in exercising its discretion.

In considering these factors, a court should not narrowly construe the obligation of spouses to make full disclosure because the Family Law Act imposes a positive duty on both parties to disclose.

[126] Mesbur, J. explained that financial disclosure and understanding one’s legal rights and obligations under a domestic contract are related in Dubin v. Dubin, 2003 2103 (ON SC), [2003] O.J. No. 547 (S.C.). She found that these two factors operated in concert and prevented the wife from truly being able to appreciate what she was giving up when she entered into the contract. The Court of Appeal in LeVan v. LeVan, 2008 ONCA 388, 90 O.R. (3d) 1, reiterated the following, at paras. 52-53:

Marriage contracts are a device by which parties can opt out of most or part of the Family Law Act; its property provision, its support provisions, or both. Fundamental to a choice to opt out of the legislative scheme is a clear understanding of what one’s rights and obligations might be if there were no marriage contract. It is in this context that financial disclosure is critical… [in that] knowing assets and liabilities at the date of the agreement is fundamental to an eventual calculation of net family property. A party needs to know what asset base might potentially grow, in order to determine what he or she is being asked to give up in the agreement. Coupled with financial disclosure is the notion of understanding legal rights and obligations under the legislative scheme. This second notion carries with it the concept of independent legal advice. Thus, a party must know what assets and liabilities exist at the date of the contract, and must understand the general legislative scheme in order to know what he or she is giving up in the proposed agreement. [Emphasis added.]

[127] An issue raised by Helene at the summary judgment motion was that Michael did not disclose a significant asset that existed at the time the July 20th, 2012 Agreement was signed, namely, that he was the beneficiary of the MJS Trust[^11], which had been settled just five months prior to the July 20th, 2012 Agreement being signed and, as a result, because of this lack of financial disclosure she did not understand the nature and consequences of the terms of the July 20th, 2012 Agreement.[^12]

[128] Shibley Righton LLP, the same firm that prepared the July 17th, 2012 Agreement and the July 20th, 2012 Agreement, prepared the MJS Trust. The record indicates that the parties agree that Michael never disclosed the existence of the MJS Trust to Helene either in relation to the July 20th, 2012 Agreement or the 2014 Amending Agreement. It is agreed that Helene learned about the MJS Trust after the parties’ separated, in the course of the Arbitration proceedings.

[129] The MJS Trust was settled on February 3, 2012. Michael is the only Trustee and a capital-and-an-income beneficiary of the Trust, as are Lauren and Annie. David Mueller is the Settlor of the Trust. Mr. Mueller represented Michael in the negotiation of the Amending Agreement.

[130] The terms of the MJS Trust provide that if a beneficiary separates from his/her spouse and either the beneficiary or the spouse of the beneficiary commences a court application seeking ownership of property; support; or parenting rights, or any other matter in the settlement of their affairs, whether or not such action is based in whole or in part on a resulting trust, constructive trust or any other trust, then the right of the beneficiary to receive any income or capital from the MJS Trust shall cease and no longer be payable to such beneficiary until the claims of the beneficiary’s spouse have lapsed, become void or otherwise have become unenforceable. In other words, since these proceedings were commenced by Helene, Michael as a beneficiary of the MJS Trust, has not been and continues to not be entitled to receive any capital or income distributions from the Trust and all of his assets are currently held by the trust and it is his main source, if not his only, source of income.

[131] Again, in early 2017, and prior to the parties’ separation, the Solcz Group Inc. sold its underlying businesses for approximately $375 million. As noted above, the five shareholders in the Solcz Group Inc. are Michael, his two siblings and his parents. Each of them holds their ownership interest in the Solcz Group Inc. through corporations and trust structures.

[132] Michael’s share of the proceeds from the sale of the underlying businesses of the Solcz Group Inc. was $72 million, all of which is held by the MJS Trust, of which Michael is the sole trustee and a beneficiary. Specifically, the MJS Trust is the sole shareholder of Latron Management Inc., which company, in turn, owns shares in the Solcz Group Inc.

[133] The Arbitrator does not mention the MJS Trust anywhere in the Award. However, the Arbitrator found that Michael did not misrepresent his assets or the purpose of the July 20th,2012 Agreement. He found that the July 20th, 2012 Agreement was clear; it was to protect the Solcz family business, a common reason for a party to require a cohabitation agreement or marriage contract, seen daily in practice. Michael argued that disclosure was “available” to Helene at the time the July 20th, 2012 Agreement was executed but that she did not pursue such disclosure. However, the Arbitrator explained that without any evidence from Mr. Chillman, including his file, there is no evidence to support Michael’s claim in this regard. Accordingly, the Arbitrator did not accept that disclosure was “available” to Helene at the time the July 20th, 2012 Agreement was executed.

[134] The Arbitrator was live to the importance of financial disclosure with domestic contracts and he referred to Golton v. Golton, 2018 ONSC 6245, at para. 196, citing Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295, at para. 47, which states that “[t]he deliberate failure to make full and honest disclosure of all relevant financial information makes the domestic contract vulnerable to judicial intervention, especially where the resultant agreement is at substantial variance from the objectives of the legislation.”

[135] Notwithstanding the obligation on Michael to make full and honest financial disclosure at the time both the July 20th, 2012 Agreement and the 2014 Amending Agreement were signed, which obligation was conceded, the Arbitrator made findings of mixed fact and law that even if Helene had received such disclosure, she would have signed both Domestic Contracts in any event. The Arbitrator found at paragraph 72 of his Award as follows:

72. I also do not find that had Mr. Solcz provided the requisite disclosure of his business interests it would have impacted Ms. Solcz’s execution of the Domestic Contract [the July 20th, 2012 Agreement]. As support for this determination, I also consider the disclosure process regarding the [2014] Amending Agreement. [Italics added].

[136] The Arbitrator properly identified and applied the law that the obligation to make full disclosure before a domestic contract is entered into is a positive obligation on both parties and is not to be construed narrowly.[^13] I also agree with the Arbitrator that sometimes a general awareness of the assets of the other party may be sufficient to avoid setting aside an agreement: see Quinn v. Epstein Cole LLP, at para. 48. But, it was conceded by the parties on the evidence that Helene was not aware of the existence of the MJS Trust. Her evidence is that she knew Michael was trying to protect the Solcz family businesses; she was reassured by Michael that she would be looked after; she signed the July 20th, 2012 Agreement, believing that if she and Michael separated, she would have the right to seek an equalization of net family property (and the Solcz family business would be excluded) and the right to seek spousal support from Michael. She was not aware, however, that these rights could be seriously impacted by a different document, not disclosed to her, namely the MJS Trust (nor did she understand the extent of what she could be giving up). The existence of the MJS Trust means that, at the time the July 20th, 2012 Agreement was signed, Michael had the ability to minimize Helene’s ability to receive spousal support and her equalization claims.

[137] The “Background” section of the July 20th, 2012 Agreement states that Michael has a financial interest in the Solcz family business, which is comprised of several operating companies and several holding companies, including but not limited to the Solcz Group Inc. and Latron Management Inc. It further explains that Michael, along with his siblings and parents, own, either directly or indirectly through holding companies, all of the shares of the companies comprising the Solcz family business. Further, the July 20th, 2012 Agreement explains that, as of the Effective Date (the date on which the Agreement is executed by the second party to execute it), Michael owned all of the issued and outstanding shares in the capital stock of Latron Management Inc. and, directly or indirectly through Latron Management Inc., held an interest in the Solcz Group Inc. But, nowhere in the “Background” section is the MJS Trust mentioned, even though, at the time, the MJS Trust existed.

[138] The Court of Appeal in Virc v. Blair, 2014 ONCA 392, [2014] O.J. No. 2301, at para. 58, stated that “[i]n the face of a deliberate material misrepresentation, the onus is not appropriately placed on the recipient spouse. Rather, the party disclosing financial information bears the onus of establishing that the “recipient” spouse was aware of the non-disclosure or falsehood.

[139] Helene argues she did not have full and honest financial disclosure from Michael. Michael does not disagree and claims Helene had general knowledge of his wealth and could have asked for disclosure but failed to do so. The Arbitrator found that Helene’s “narrative as to the dramatic change in the parties’ lifestyle in 2008 and economic merger in 2010, supports her understanding of Mr. Solcz’s finances and wealth, a[t] least to the extent that he was successful and provided for her some of the finer things in life.” The Arbitrator goes on to find in paragraph 70 of his Award that “[he] does not find that Mr. Solcz misrepresented his assets or the purpose of the Domestic Contract”. This finding is not supported by the evidence.

[140] While the evidence on the record suggests that both parties knew the purpose of the July 20th, 2012 Agreement was to exclude the Solcz family business assets, the Arbitrator did not agree with Helene’s argument that Michael misrepresented his assets by his failure to disclose the MJS Trust. The Arbitrator does not explain how he came to the finding of mixed fact and law that Michael did not misrepresent his assets when Michael hid the existence of the MJS Trust from Helene.

[141] The evidence about what transpired between the July 17th, 2012 Agreement and the July 20th, 2012 Agreement is in dispute. Michael argues the parties were in negotiations, which is why the July 20th, 2012 Agreement was signed three days later, which included a right for Helene to seek an equalization payment and removed the exclusive possession restriction, in which Helene’s right to spousal support is no longer limited. However, Helene argues that she does not recall having any such discussions with Michael and she has no knowledge as to why the July 20th, 2012 Agreement was signed.

[142] Further, Michael argues that Helene understood the nature and consequences of the July 20th, 2012 Agreement because she knew the purpose of it was to exclude his family business from division, if they separated.

[143] As Benotto, J. held in Trotter v. Trotter, 2014 ONCA 841, [2014] O.J. No. 5647, “[i]t is not always a simple task to assess credibility on a written record. If it cannot be done, that should be a sign that oral evidence or a trial is required”: at para. 55. The evidence in this case is extensive and conflicting. It was open to the Arbitrator to hear oral evidence, as set out in the Mediation/Arbitration Agreement and as provided for in the FLRs.

[144] I find that the Arbitrator made palpable and overriding errors in his findings of fact and law on the issues of Michael’s non-disclosure and Helene’s inability to understand the nature and consequences of the terms of the July 20th, 2012 Agreement and the terms of the 2014 Amending Agreement, as follows:

(1) He erred in drawing an inference from the facts in his finding that even if Michael had provided the requisite disclosure of his business interests to Helene, the disclosure would not have impacted Helene and she would have signed the July 20th, 2012 Agreement in any event (paragraph 72 of the Award);

(2) He erred in mixed fact and law by failing to give any or due weight to the fact that, Michael having chosen to explain how he and his family members held their respective interests in the Solcz family business along with Michael’s holding company, Latron Management Inc. in the July 20th, 2012 Agreement, failed to disclose the existence of the MJS Trust. That information is material and highly relevant to the negotiation and impact of the July 20th, 2012 Agreement. The Arbitrator erred by failing to refer to the MJS Trust or the fact that it was concealed by Michael from Helene;

(3) He erred in mixed fact and law in his finding that Helene’s knowledge of her improved lifestyle with Michael equated to Michael having provided the required financial disclosure at the time the July 20th, 2012 Agreement was executed. The Arbitrator drew an inference that Helene’s improved lifestyle during her marriage with Michael equated to an understanding of Michael’s finances even though the evidence before him was clear that Michael did not provide proper financial disclosure when the July 17th, 2012 Agreement or when the July 20th, 2012 Agreement was signed, in his concealment of the MJS Trust. In fact, in paragraph 9 of Michael’s affidavit, sworn on July 1, 2020, filed in support of his summary judgment motion, he confirms that “[he] is unable to access [his] assets during this proceeding pursuant to the Trust Agreement” and that “once this litigation ends Helene will be entitled to whatever support payments are appropriate under the law”;

(4) He erred in mixed fact and law by not considering whether Helene’s knowledge of the MJS Trust may have resulted in her deciding not to execute the July 20th, 2012 Agreement. Based on the written record before him, there were other conclusions available to the Arbitrator than the inference he drew that even if Michael had provided the required disclosure, it would not have impacted Helene signing the July 20th, 2012 Agreement;

(5) The evidence in the record before the Arbitrator was contradictory as to why the July 20th, 2012 Agreement was drafted and/or why the July 17th, 2012 Agreement signed three days earlier was revoked. Yet, the Arbitrator found that since Helene’s spousal support rights were not limited by the July 20th, 2012 Agreement in the way they had been in the July 17th, 2012 Agreement, it was more favourable to Helene and “[s]he must have had at least a basic understanding of the nature and consequences of the Contract because of revoking the first agreement which limited her rights to spousal support and possession of the matrimonial home”. The Arbitrator made conclusory determinations that were not on the record before him. In doing so, the Arbitrator made conclusory determinations on an important factual and legal issue in dispute. The evidence did not support his finding and it was not the only conclusion the Arbitrator could have made given the agreed upon evidence on the record that Helene was entirely unaware of the MJS Trust and its terms regarding the purported impact of a separation and proceedings on Michael’s entitlement to property and income; and

(6) He erred in making a credibility finding or in drawing an inference from the facts that Helene must have understood the nature and consequence of the July 20th, 2012 Agreement. In my view, this finding could not reasonably have been made without the benefit of oral evidence given the conflicting evidence as to what was happening at the time the July 20th, 2012 Agreement was signed and the contested evidence regarding the circumstances relating to the signing of the two Agreements on July 17, 2012 and July 20, 2012.

[145] Furthermore, I find the Arbitrator made an error in law when he did not consider whether or not Michael’s failure to disclose the existence of the MJS Trust to Helene amounted to material non-disclosure which is a genuine issue requiring a trial.

(b) 2014 Amending Agreement

[146] With respect to Helene’s claim that there was a lack of financial disclosure at the time the parties’ executed the 2014 Amending Agreement, the Arbitrator made the following findings:

73. Ms. Burmy advised Ms. Solcz that she should request and disclose financial information. Ms. Burmy informed her that without financial information she could not provide complete legal advice or an opinion on the reasonableness or propriety of the terms of the Amending Agreement. Ms. Solcz confirmed her instructions were to proceed with the [2014] Amending Agreement without financial disclosure.

74. I find that it was open to Ms. Solcz to request financial disclosure, if she had required it at the time of the negotiation and execution of the Amending Agreement [the 2014 Amending Agreement]. Ms. Solcz cannot argue that there was an inadequacy of disclosure provided when she failed to ask for disclosure, had the opportunity to do so, knew that the lack of disclosure was a shortcoming in the Contracts [July 20th, 2012 Agreement and 2014 Amending Agreement], but still chose not to exchange or seek full disclosure. Her failure to do so, in my opinion, is fatal to her claim to set aside the Contracts and warrants my exercise of discretion against her claim under section 56(4) of the Act.

75. Although I find this series of events sufficient to defeat Ms. Solcz’s claims, I also note that the parties confirmed in the Amending Agreement that they are satisfied with the financial information each had and waived further financial disclosure. Parties are entitled to make agreements that satisfy their needs, and their agreement will not be lightly interfered with. Ms. Solcz chose not to pursue financial disclosure. This must be seen to have satisfied her legal interests at that time. She cannot now rely on her failure to exercise due diligence and seek whatever disclosure she required as grounds to set aside the Contracts.

76. In short, I do not find that the lack of disclosure raises a genuine issue requiring trial. Ms. Solcz knew at the time, or at least at the time of executing the Amending Agreement, that full disclosure might well have been sought and she was advised to seek it. By the time she executed the [2014] Amending Agreement affirming the terms of the Domestic Contract [the July 20th, 2012 Agreement], she knew she could ask for disclosure but refused to do so. I am also not persuaded that had full and particular disclosure been made at the time of either the Domestic Contract or the Amending Agreement, Ms. Solcz would have refused to enter into either agreement or that the terms of the Contracts would have been materially different.

77. I am also troubled by Ms. Solcz’s reliance on the lack of disclosure to set aside the Domestic Contract now when she was informed, at least as of 2014, that the contract had vulnerabilities then. Rather, she opted to proceed with the Amending Agreement which provided her benefits in the equalization scheme. The Dochuk and the Quinn factors appear to militate against setting aside the Domestic Contract.

[Emphasis added.]

[147] In terms of the 2014 Amending Agreement, Michael argues that Helene had counsel who met with her at least six times. He argues that Helene understood the nature and consequences of the 2014 Amending Agreement because she wanted to protect and exclude her home in Windsor and her art business if they subsequently separated.

[148] The Arbitrator found that when Helene sought legal advice in July 2014 and again in September 2014 from Ms. Burmy, she understood the nature and consequences of the July 20th, 2012 Agreement at that time (in 2014) because Ms. Burmy’s notes indicate that Helene told her the July 20th, 2012 Agreement was one-sided and she was trying to protect her home in Windsor and her art business by this 2014 Amending Agreement. Ms. Burmy’s handwritten notes are in point form. The Arbitrator found that “Ms. Burmy’s intake notes dated September 9, 2014, address the issues of spousal support and equalization of net family property as well as excluded property”. While a sample net family property chart is contained in Ms. Burmy’s notes, the finding that Ms. Burmy explained the nature and consequences of the July 20th, 2012 Agreement to Helene based on her handwritten notes was an inference drawn by the Arbitrator. The notes reference Helene’s wish to exclude her property in Windsor. They also reference that Helene had not released her right to spousal support.

[149] I find that the Arbitrator made palpable and overriding errors in his findings of fact and law on the issues of Michael’s non-disclosure and Helene’s ability to understand the nature and consequences of the terms of the 2014 Amending Agreement, as follows:

(1) He erred in mixed fact and law in finding that Helene knew that the lack of disclosure was a shortcoming in the July 20th, 2012 Agreement and the 2014 Amending Agreement but still chose not to exchange or seek full disclosure (para. 74 of the Award). The Arbitrator made this finding of fact and law based on his finding that Ms. Burmy had advised Helene that she should request and disclose financial information when the 2014 Amending Agreement was being signed. The record indicates that Ms. Burmy did give Helene advice that she could seek financial disclosure and, indeed, the Acknowledgment signed by Helene to Ms. Burmy confirms that “she was advised by Ms. Burmy that full financial disclosure and independent legal advice are both very important and necessary to ensure that she understands the legal and financial consequences of signing” the 2014 Amending Agreement. However, the Arbitrator found that this knowledge Helene gained in 2014, somehow amounted to Helene knowing “that the lack of disclosure was a shortcoming in the July 20th, 2012 Agreement;

(2) He erred in mixed fact and law in relying on Helene’s failure to seek disclosure when the 2014 Amending Agreement was being signed and finding that not seeking this disclosure in 2014 was fatal to her claim to set aside the July 20th, 2012 Agreement. In making this finding, the Arbitrator made a palpable and overriding error in mixed fact and law because he attempts to cure the lack of financial disclosure connected with the July 20th, 2012 Agreement with the circumstances surrounding the 2014 Amending Agreement;

(3) He erred in mixed fact and law when he found that “Helene’s failure to exchange or seek financial disclosure is fatal to her claim to set aside the Contracts [the July 20 2012 Agreement and the 2014 Amending Agreement] and warrants [his] exercise of discretion against her claim under s.56(4) of the Act” (paragraph 74 of the Award). The first step in Hyrniak is for the Arbitrator to consider whether there is a genuine issue requiring a trial based only on the evidence before him. Again, this first step is to be made without exercising the expanded powers set out in r.16(6.1) of the FLRs, i.e. exercising discretion. The evidence before the Arbitrator is that Helene had no independent legal advice and no financial disclosure when the July 20th, 2012 Agreement was signed. The Arbitrator erred in mixed fact and law in drawing an inference that the fact that Helene obtained independent legal advice and was advised she had a right to obtain financial disclosure in 2014 when the 2014 Amending Agreement was signed, rendered her claim to set aside the July 20th, 2012 Agreement on the basis of a lack of financial disclosure a failure, as found by the Arbitrator; and

(4) He made a palpable and overriding error in mixed fact and law when he concluded that Ms. Burmy explained the nature and consequences of the July 20th, 2012 Agreement to Helene. There is nothing in the notes to demonstrate that Helene fully understood the nature and consequences of the July 20th, 2012 Agreement. Further, given the non-disclosure of the MJS Trust, Helene could not have advised Ms. Burmy of the terms of the trust; thus, Ms. Burmy could not have provided a reasonable opinion to Helene about the impact of the July 20th, 2012 Agreement on her. Even though Helene clearly came to appreciate at some point in time that the July 20th, 2012 Agreement was one-sided in that Michael had received special treatment relating to assets he held at the time when she had not, it was not the only inference that was available to the Arbitrator and it does not necessarily follow that Helene then must have fully understood the nature and consequences of the July 20th, 2012 Agreement on her when she signed it.

(ii) Did the Arbitrator make palpable and overriding errors in his findings of fact and law on the issue of duress in relation to the July 20th, 2012 Agreement an the 2014 Amending Agreement?

(a) July 20th, 2012 Agreement

[150] The final ground on which Helene seeks to set aside both the July 20th, 2012 Agreement and the 2014 Amending Agreement under s.56(4)(c) of the Family Law Act, is that she signed both domestic contracts under duress. While Helene did not specifically plead that she experienced duress when she signed the 2014 Amending Agreement, her evidence in her affidavit suggests that she experienced duress in the context of both the July 20th, 2012 Agreement and the 2014 Amending Agreement.

[151] Specifically, Helene discusses a cycle of angry outbursts on Michael’s part, followed by periods of affection and gift-giving, which led to her feeling intimidated by Michael and his aggressive position that the July 17th, 2012 and July 20th, 2012 Agreement had to be signed. The Arbitrator made an overriding and palpable error in mixed fact and law when he found “it difficult to reconcile Ms. Solcz’s claims to have been under duress when she signed the [July 20th, 2012 Agreement], as it provided her more favourable terms than the [July 17th, 2012 Agreement] she signed a few days earlier.”

[152] In Turk v. Turk, 2015 ONSC 5845, 68 R.F.L. (7th) 106, Kiteley, J. similarly presided over a summary judgment motion in a case where a spouse sought to set aside a separation agreement on the basis of duress. She stated that “[d]uress is a state of mind”: at para. 98. In the course of addressing the duress issue, she relied on the following description of duress:

Duress is said to occur where there is such pressure placed on one of the parties that any consent by that party is not sufficient to uphold the agreement. There exists an absence of choice which in effect vitiates any ability to lawfully consent. However, duress sufficient to void an agreement does not arise based only upon a lack of will to proceed but rather it must be based upon a resolution on the part of the submitting party that there is no other practical choice but to perform the act in question. Duress can be established based upon actual or threatened violence or upon economic considerations.

[at para. 93]

[153] She held that she could not “fairly and justly determine the issue of duress on the motion as it was a genuine issue for which a trial was required. The question of duress is fundamentally a question of credibility as between the Applicant and Respondent”: at para. 98. Even though the FLRs permitted the court to assess credibility on a summary judgment motion, Kiteley, J. stated, at para. 98:

I am not confident that I can make findings of the necessary facts and apply the relevant legal principles so as to resolve that aspect of the dispute. In this case, it is in the interests of justice for that power to be exercised only at the trial.

[154] In making this determination, Kiteley, J. found on the first step of Hyrniak, she could not make the findings of fact needed to determine summary judgment on the record before her and, accordingly, she did not advance to step 2 of the Hyrniak test and assess the evidence, weigh credibility and draw inferences. The Arbitrator in this case, conflated the first two steps of Hyrniak and went directly to step 2, assessing the evidence, weighing credibility and drawing inferences.

[155] In this case, the parties’ affidavit evidence before the Arbitrator was in conflict about the circumstances surrounding both the July 20th, 2012 Agreement and the 2014 Amending Agreement. Neither party conducted cross-examinations on the affidavits. The statements by the individuals involved in the negotiation of the agreement are crucial to evidence of duress at that time: see Milne v. Milne, 2019 1751 (ON SC), at para. 37.

[156] If affidavit evidence is in conflict, it is incumbent upon a motions judge to resolve those conflicts and explain why one version of the facts is accepted as opposed to another. If that cannot be done, that should be a sign that oral evidence at a trial is required: see O.G. v. R.G., 2017 ONSC 6490, [2017] O.J. No. 5574, at para. 109.

[157] As found by Kiteley, J. in Turk, at para. 98, “[d]uress is a state of mind…and the question of duress is fundamentally a question of credibility…The question of duress is engaged as one factor in the s.56(4)(c) analysis but is also engaged in the disclosure factor in s.56(4)(a).” In Turk, Kiteley, J. declined to grant summary judgment to the husband in upholding the agreement, explaining that, while r.16(6.1) gave her the authority to evaluate the credibility of the parties, she was not confident that she could make findings of the necessary facts and apply the legal principles so as to resolve that aspect of the dispute.

[158] Similarly, in Rees v. Shannon, 2020 ONSC 3633, Akbarali, J. found that the evidentiary record was deficient in terms of the circumstances surrounding the formation of the contract. The parties in that case disagreed as to how the contract came about and Akbarali, J. declined to exercise the enhanced fact-finding powers provided for in r.16(4.4) of the FLRs on a motion for summary judgment on the basis that she was not confident that the process in that case allowed her to “make the necessary findings of fact, apply the law to the facts, and is a proportionate, more expeditious and less expensive means to achieve a just result”: at para. 64.

[159] Helene’s evidence was that she felt under duress at the time that she signed the July 20th, 2012 Agreement. While Helene did not pursue full financial disclosure at the time of the 2014 Amending Agreement, this does not take away from the fact that when she signed the July 20th, 2012 Agreement, she claims she felt she was under pressure to sign the agreement that was put in front of her and prepared by Mr. Chillman, Michael’s corporate lawyer. Helene’s evidence about her duress, feelings of stress and being overwhelmed, referred to specific evidence that was detailed. She deposed that she felt “extremely intimidated” and provided a detailed accounting of the parenting role in which she was engaged with Annie at the time that the July 20th, 2012 Agreement was negotiated.

[160] I find that the Arbitrator made the following palpable and overriding errors in determining Helene was not under duress at the time she signed the July 20th, 2012 Agreement and/or the 2014 Amending Agreement:

(1) The Arbitrator found, at paragraph 83 of his Award, that the July 20th, 2012 Agreement was signed over two years before the parties married and, as such, “there was no urgency or time constraints in which Helene was forced to comply with Michael’s request to signed the July 20th, 2012 Agreement.” I find that in drawing this inference from the facts on the evidence before him, the Arbitrator made an error of mixed fact and law since there were other available inferences that could have been made by him. Given the conflicting nature of the evidence, the Arbitrator, without the benefit of oral evidence, assessed Helene’s credibility in relation to her state of mind, which she has described as being intimidated, overwhelmed and preoccupied with raising Annie at this time, when the July 20th, 2012 Agreement was signed;

(2) The Arbitrator further found, at paragraph 83 of his Award, that “there was no evidence that [Michael] dominated the will of [Helene] at the time of the execution of the [July 20th, 2012 Agreement].” I find that the Arbitrator made an error in mixed fact and law in making this finding because while he correctly describes Helene’s “will” be dominated as part of the legal test to determine “duress”, he applied the test incorrectly on the facts set out in the evidence before him on the record, given Helene’s evidence that she had feelings of duress and pressure at the time the July 20th, 2012 Agreement was signed. The Arbitrator’s conclusion that there “was no evidence” of duress was a palpable and overriding error based on the record before him; and

(3) He erred in mixed fact and law in drawing the inference that because the July 20th, 2012 Agreement gave Helene rights to claim spousal support and possess the matrimonial home which rights she did not have under the July 17th, 2012 Agreement she signed three days earlier, she was not under duress. The parties agree on the evidence that it was Michael who wanted Helene to sign a domestic contract. The parties further agree that Michael had the counsel for the Solcz family business, Ron Chillman, draft the contracts. The reason as to why the July 17th, 2012 Agreement signed three days earlier was replaced by the July 20th, 2012 Agreement is not clear on the contradictory evidence on the record. However, Helene’s evidence was that she felt intimidated and under duress. She also deposed that Michael reassured her that she would be alright.

[161] Helene’s evidence is that she sat at a table with Michael and Mr. Chillman and was asked to sign an agreement. No evidence of Mr. Chillman was adduced by Michael in reply to Helene’s evidence regarding Mr. Chillman’s role in the signing of the July 17th, 2012 Agreement and/or the July 20th, 2012 Agreement. The parties’ evidence regarding the circumstances surrounding the signing of both the July 17th, 2012 Agreement and the July 20th, 2012 Agreement is in conflict. While the Arbitrator had the right to weigh the evidence as part of the expanded powers available to him under r.16, these expanded powers were only available to the Arbitrator if, on the record before him, he could make these findings, which was not the case, given that the parties disagreed on the circumstances surrounding the making of the July 20th, 2012 Agreement. Again, Helene did not raise this as a ground of appeal, but as described above in paragraph [82], this error, in and of itself, is an error of law.

[162] On the evidence, it is agreed that Helene did not willingly negotiate the terms of either the July 17th, 2012 or the July 20th, 2012 Agreement such that she determined the clauses contained in either agreement. Rather, she was asked to sign a contract and she did so. In determining that Helene was not under duress when she signed the July 20th, 2012 Agreement, the Arbitrator made a palpable and overriding error in mixed fact and law by failing to give due or sufficient weight to the whole of the conflicting evidence surrounding the circumstances of the July 20th, 2012 Agreement and in drawing inferences that Helene was not under duress, which did not flow from established facts on the record before him. Helene may not ultimately prove duress; but it is a genuine issue requiring trial.

(b) 2014 Amending Agreement

[163] Similarly, Helene argues that she was under duress when the 2014 Amending Agreement was signed, although this was not specifically plead by her. Helene points out that the 2014 Amending Agreement was signed only 11 days before the parties’ wedding. The Arbitrator dismisses the close proximity between the date the 2014Amending Agreement was signed and the wedding as an indicator of duress and finds that since “the [2014]Amending Agreement was for her benefit, any time constraint before the parties’ wedding was of her own making.” Michael’s evidence disputes the subjective feeling Helene describes as duresswithout any specificity. The Arbitrator, in assessing the evidence and the contradictions contained in it, made an assessment of credibility against Helene, not believing that she was under duress at the time the 2014 Amending Agreement was signed. Even if Helene is not successful in making out a case for duress, a trial judge will have the benefit of hearing oral evidence from Helene and the testing of that evidence when Helene is cross-examined. The powers the court has under r.16(6.1) of the FLRs is that, in determining whether there is a genuine issue requiring a trial, the court shall only consider the evidence submitted by the parties, and exercise its expanded powers, unless it is in the interest of justice for such powers to be exercised only at a trial. Given the evidence as a whole, the Arbitrator erred in mixed fact and law in making findings about duress because the conflicting evidence on the record would suggest that it was in the interests of justice for the Arbitrator not to have exercised the expanded powers contained in r.16(6.1) without a trial.

(iii) Did the Arbitrator make a palpable and overriding error in his findings of fact and law in analyzing the July 20th, 2012 Agreement and the 2014 Amending Agreement as one package as opposed to analyzing each Agreement independently?

[164] I find that the Arbitrator erred in mixed fact and law, in paragraph 75 of the Award, when he found that the fact that the “[2014] Amending Agreement confirmed the parties were satisfied with the financial information they had and waived further financial disclosure must be seen to have satisfied [Helene’s] legal interests at that time and, therefore, she cannot now rely on her failure to exercise due diligence and seek whatever disclosure she required as grounds to set aside the Contracts [the July 20, 2012 Agreement and the 2014 Amending Agreement]”. In analyzing the July 20th, 2012 Agreement and the 2014 Amending Agreement as one package, the Arbitrator made a palpable and overriding error in mixed fact and law, by concluding that the evidence on the record before him, namely, that terms in the 2014 Amending Agreement somehow have satisfied Helene’s legal interests in connection with the July 20th, 2012 Agreement. The parties agree there was no financial disclosure when the July 20th, 2012 Agreement was signed. The parties agree that Helene had no knowledge of the MJS Trust until after they separated. To draw the conclusion, notwithstanding that there was no basis in the evidence that Helene’s failure to seek financial disclosure from Michael at the time the 2014 Amending Agreement was signed equates with her legal interests being satisfied when the July 20th, 2012 Agreement was signed is not in the evidence before the Arbitrator. In dealing with both Domestic Contracts as one package, the Arbitrator made a palpable and overriding error in mixed fact and law and incorrectly moved to step two of Hyrniak by exercising his discretion and drawing inferences from the evidence, which were not in the record before him.

What is the Appropriate Next Step – the Remedy?

[165] In Tall Ships Landing Development Inc. v. Brockville (City), 2020 ONSC 5527, 152 O.R. (3d) 468, Gomery, J. determined the appropriate remedy after she had set aside three awards made by an arbitrator on the grounds that the arbitrator made legal errors and breached mandatory statutory provisions. The court appointed a new arbitrator because of the difficulty the arbitrator would have in divorcing himself/herself from conclusions they have already reached and truly considering the issues afresh. Specifically, Gomery, J. found that if the disputes were remitted back to the same arbitrator, he “would be required to address the very same issues he already addressed and in respect of which he made findings of credibility and expressed firm conclusions. There is a significant risk that he would be predisposed to reach the same outcomes as he did the first time. Whether or not this meets the test of reasonable apprehension of bias, it calls into issue the fairness of the process”: see Tall Ships Landing Development Inc., at para. 51.

[166] I agree with the analysis adopted in this case.

Order

[167] I allow the appeal, set aside the summary judgment and costs order and direct that all of the parties’ claims be returned to arbitration before a different Arbitrator for a pre-arbitration conference and full hearing with viva voce evidence. A new Arbitrator shall be appointed by the parties in accordance with the selection procedure set out in their arbitration agreement. If the parties are unable to select a new arbitrator within 45 days of this decision, either party may apply for an order from the court appointing a new Arbitrator before me, if I am available.

[168] The new Arbitrator shall be seized of all claims that the parties have submitted to arbitration.

[169] The appellant has been successful. If the parties cannot agree on costs, the appellant shall serve and file written costs submissions of no more than three pages (not including a Bill of Costs and Offers to Settle) within twenty-one days. The respondent shall file responding costs submissions of no more than three pages (not including a Bill of Costs and Offers to Settle) within seven days of receiving the appellant’s costs submissions. Reply submissions, if any, shall be no more than one page and served and filed within three days of receiving the respondent’s costs submissions.

Date Released: December 23, 2021

_______________ M. Kraft, J.

[^1]: Note the parties were not married in 2012 so the home in which they resided was not a “matrimonial home” as defined in part II of the Family Law Act. [^2]: Alan Mersky is counsel for the Solcz Group International and the Trustee of the MGS Family Business Trust. [^3]: The date of the motion was referred to in oral submissions and did not form part of the record before me. [^4]: As noted above, Helene had stated in her Application that she only met with Ms. Burmy twice. [^5]: Ramdial v. Davis, 2015 ONCA 726, [2015] O.J. No. 5630, at para. 27. [^6]: 1061590 Ontario Ltd. v. Ontario Jockey Club, 1995 1686 (ON CA), 1995 CarswellOnt 63 (C.A.), at para. 36, the principle was reaffirmed in Ramdial v. Davis, at para. 28. [^7]: Ramdial v. Davis, at para. 30. [^8]: Bedard v. Huard, 2000 22563 (ON SC), [2000] O.J. No. 969 (S.C.), at para. 6, citing K.(J.) v. B.(A.), 1996 8412 (ON CJ), [1996] O.J. No. 2641 (C.J.), at para. 46. [^9]: Catholic Children’s Aid Society of Toronto v. O. (L.M.), 1996 7271 (ON SC), [1996] O.J. No. 3018 (S.C.), at para. 80. [^10]: Children's Aid Society of Toronto v. S.D., 2016 ONCJ 31, at para. 10 citing Children’s Aid Society of the Niagara Region v. S.C., 2008 52309 (ON SC), [2008] O.J. No. 3969 (S.C.), at para. 43. [^11]: The Michael J. Solcz Family Business Trust was settled on February 3, 2012. The Settlor is David M. Mueller and the sole Trustee is Michael Solcz. The capital beneficiaries of this Trust are Michael, Lauren and Annie. [^12]: The Michael G. Solcz Family Business Trust was settled on February 3, 2012. The Settlor is David M. Mueller; the Trustees are Michael Solcz; Doreen Solcz and Martin Solcz. [^13]: LeVan v. LeVan, 2006 31020 (ON SC), [2006] O.J. No. 3584 (S.C.), at para. 181 citing Hicks v. Hicks, 2002 49566 (ON SC), [2002] O.J. No. 710 (S.C.), at para. 44; Quinn v. Epstein Cole LLP, at para. 47.