COURT FILE NO.: FS-21-0027
DATE: 2021 10 03
ONTARIO
SUPERIOR COURT OF JUSTICE
APPEAL COURT
B E T W E E N:
Nerissa Khan
Todd C. Hein, for the Applicant/ Respondent in appeal
Applicant
Respondent in appeal
- and -
Sharad Khan
Self-Represented Respondent
R. Fernandes, for the Appellant in appeal
Respondent/Appellant
HEARD: October 4, 2021
ENDORSEMENT
On appeal from the Final Arbitration Award of Mr. Marty Klein
dated June 8, 2020 as amended July 6, 2020
McGee J.
Decision
[1] For the reasons that follow, the appeal of the final arbitration award and its costs award of July 29, 2020 are dismissed.
Background
[2] The parties were married on September 3, 1999 and separated on December 24, 2015. The mother started this proceeding in May of 2017.
[3] The parties continued to reside separate and apart in their jointly owned matrimonial home until March of 2019, when the mother left the home with the parties’ two children, Lyla Aneesa Khan born March 7, 2008 and Shazara Alissa Khan born June 27, 2014 to reside with her parents.
The Klein Arbitration Agreement
[4] After initial litigation steps in the Brampton Superior Court of Justice, the parents agreed to refer all issues arising from the end of their marriage to Mr. Marty Klein for mediation/arbitration. Each parent received independent legal advice before executing an Arbitration Agreement dated April 27, 2018.
[5] The Arbitration Agreement provided for the joint retainer of two experts to assist in the resolution of the issues: Stephen Cross on the parenting issues, and Jo-Anne Fiore on the financial issues. If the matter did not resolve, paragraph 4.6 of the Agreement provided that “[i]f this matter proceeds to Arbitration, the Arbitrator will call upon the child consultant to prepare a report and/or give oral evidence, with respect to his findings/recommendations; and paragraph 5.4 reads that “the Arbitrator will call upon the financial professional to prepare a report and/or give oral evidence, with respect to her findings/recommendations.”
[6] A series of mediations and arbitrations were conducted, which I summarize as follows:
a) May 29, 2018, the parties agreed to attend for a s. 30 assessment conducted by Mr. Cross, but to save money, they also agreed that a full report would not be requested, only the recommendations.
b) August 29, 2018, the Arbitrator issued an Interim Order which governed the parties’ behavior while they continued to live together during the assessment.
c) February 11, 2019. Mr. Cross strongly recommended that the parties physically separate to prevent the children from being exposed to the ongoing conflict. However, the father refused to sell the jointly retained home, so the mother scheduled a February 8th, 2019 motion for partition and sale. The father retained counsel who sought an adjournment. The Arbitrator ordered that the parties provide further financial disclosure to Ms. Fiore.
d) February 26, 2019, on consent, the parents agreed that the children would reside primarily with the mother at the maternal grandparents' home, and that the father would have parenting time with them every Monday, Tuesday and Thursday afternoon, and on alternate weekends, from Friday afternoon to Sunday evening. Exchanges were to take place at the mother’s home but for the Monday exchanges, which were to occur at the matrimonial home.
e) The February 26, 2019 consent schedule continued until April 16, 2020 (see below.) The parties were to split the expenses of the matrimonial home until March 1, 2019 at which point the father would assume all expenses. The sale of the home was deferred to June 2019.
f) November 22, 2019, the parties could not agree on terms for the sale of the home and an arbitration hearing was held. Not on consent, the matrimonial home was ordered to be sold. The father subsequently appealed this award, which was later set aside on consent of the parties.
g) January 24, 2020. On consent, the parties agreed that the father could purchase the mother’s half-interest in the matrimonial home for $240,000 by February 14, 2020, inclusive of all outstanding property and financial issues; failing which, the home would be listed for sale.
h) The father subsequently failed to purchase the mother’s interest.
i) March 3, 2020. By interim Award, police assistance to enforce the parenting schedule was authorized.
j) March 27, 2020. The Arbitrator released a procedural Award governing a full arbitration hearing to be heard over two days: April 7 and 14, 2020, through ZOOM videoconferencing. Neither party was to provide direct evidence in chief. Instead, each party was to be cross-examined on affidavit evidence. Mr. Cross and Ms. Fiore were also to be cross-examined on their respective recommendations.
k) On April 6, 2020 (the day before the scheduled final Arbitration hearing), Mr. Khan asked for a written report from Mr. Cross. At this late stage, there was insufficient time for its preparation, so the parties agreed to have Mr. Cross interview the children just before the arbitration hearing so that he could update his recommendations during his oral testimony.
l) April 16, 2020. An interim award was made pending the final decision (and to accommodate changes brought on by the pandemic) that the father would have the children on alternate weekends, from Thursday at 2:00 pm to the following Sunday at 7:30 pm; and every Tuesday, from 2:00 pm to 7:30 pm.
[7] The final Arbitral Award was released on June 8, 2020. It is supported by 51 pages of comprehensive reasons that detail the history of the conflict, the applicable law – particularly that of parenting decision, the Arbitrator’s findings of fact and his application of the law to the facts.
[8] On the parenting issues, the Arbitrator concluded that it was in Lyla's and Shazara’s best interests that they continue to be primarily resident with their mother and that she has final decision-making authority. The father’s parenting time was set out in a fixed schedule.
[9] On the financial issues, the father’s table child support was set at $755 per month based on annual imputed income of $50,000. His claim for spousal support was dismissed. The jointly owned former matrimonial home was ordered to be sold, with the mother receiving a net credit of $9,240.48 from the father’s 50% share of the net sale proceeds, calculated as the arrears of child and section 7 expenses owed to the mother, less the equalization payment owed to the father.
[10] Both parties submitted questions regarding the Final Award. The Arbitrator provided an Explanation to Final Award dated July 6, 2020 with the terms of the final Award as amended. He declined to change summer access, or the term regarding health benefit coverage, or to change to the equalization calculation, as requested by the mother. He did amend the police enforcement clause.
[11] The father issued this Appeal two days later on July 8, 2020. He asked that the July 6, 2020 Award be set aside in its entirety and his preferred result substituted.
[12] On July 29, 2020, Mr. Klein released his Costs Award which required the father to pay the mother’s costs of the arbitration in the amount of $33,900 from his half share of the net sale proceeds of the matrimonial home.
[13] In breach of the January 24, 2020 consent, the house remained unsold throughout the fall of 2020. The breach was resolved on February 9, 2021 when the mother made yet another concession: allowing the father to purchase her half ownership of the matrimonial home for $261,000 despite a significant increase in its value since separation.
[14] The father amended his Notice of Appeal on April 19, 2021 to remove his claims with respect to the sale of the home, but then added the July 29, 2020 Costs Award to the list of Awards to be set aside, and he asked for further financial relief to reduce his payment of post separation section 7 expenses and child support arrears.
Jurisdiction
[15] Pursuant to paragraph 21.1 of the party’s Arbitration Agreement either parent may appeal a final Award in accordance with section 45 of the Arbitration Act, 1991, on:
a) a question of law, (questions about what the correct legal test is); or
b) a question of mixed law and fact (questions about whether the facts satisfy the legal tests).
[16] Subsections 45(2) and 45(3) of the Arbitration Act provide that an appeal of a final Family Arbitration Award lies to the Family Court (in those areas where it has jurisdiction) or otherwise to the Superior Court of Justice. Leave is not required.
Standard of Review
[17] 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 (S.C.C.), at paras. 8, 10, 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.
[18] The decision of an Arbitrator deserves as much deference on appeal as does the decision of a trial judge: Reati v. Racz, 2016 ONSC 1967, 81 R.F.L. (7th) 166 (Ont. S.C.J.), at para. 28.
[19] Considerable deference is paid to decisions of first instance because trial judges and Arbitrators have the opportunity to observe first-hand both the witnesses and the family dynamics. An award should not be set aside where the arbitration award was based, in part, on findings of credibility and significant non-disclosure by a party, see Gragtmans v. Gragtmans, 2020 ONSC 5322.
[20] Moreover, as the Court of Appeal held in Petersoo v. Petersoo, 2019 ONCA 624, 29 R.F.L. (8th) 309 (Ont. C.A.), at para. 35:
Mediation/arbitration is an important method by which family law litigants resolve their disputes. Indeed, the courts encourage parties to attempt to resolve issues cooperatively and to determine the resolution method most appropriate to their family. The mediation/arbitration process can be more informal, efficient, faster and less adversarial than judicial proceedings. These benefits are important with respect to parenting issues, which require a consideration of the best interests of children. The decision of an Arbitrator, particularly in child related matters, is therefore entitled to significant deference by the courts.
[21] Appellate courts cannot interfere with a discretionary decision just because they would have reached a different conclusion. Only where the original decision exceeds a generous ambit within which reasonable disagreement is possible and is plainly wrong can an appellate court interfere: Slaughter v. Slaughter, 2013 ONCA 432 (Ont. C.A.), at para. 6.
The Father’s Appeal
Summary
[22] The father invites the court to retry the case on all accounts, but I find that he has failed to first establish any errors of law, or palpable and overriding errors of fact or mixed fact and law. These reasons explain why I would decline to interfere with the Arbitrator’s decision.
Claim of Procedural Unfairness
[23] An Arbitrator has an obligation to treat the parties fairly and equally under s.19 of the Arbitration Act.
[24] In his Notice of Appeal, the father asserts that the Arbitrator was biased towards him which, in turn, resulted in a substantial miscarriage of justice. The father further states that he was unable to fully present his case, and that the Arbitrator erred in law by considering aspects of the mother’s evidence which the father perceives to have been irrelevant and inflammatory.
[25] The test for a reasonable apprehension of bias is as follows. Would an informed person, viewing the matter realistically and practically, and having thought the matter through, think that it is more likely than not that the decision-maker, whether consciously or unconsciously, would not decide fairly, see Read v. Alto Properties Inc., 2019 ONSC 1451at para 33.
[26] I do not find that the test is met in these circumstances. The father was able to fully present his case. The Arbitrator simply found that much of his evidence was not credible. He did not call any witness to corroborate his various positions. The father was often evasive during questioning. For example, he was asked several times at the hearing what his own birthday was, and he refused to answer.
[27] In submissions on bias, the father’s counsel primarily points to an email sent the day after the first day of the Arbitration hearing. The parties had been unable to agree on Easter Access after the first day of the arbitration hearing, forcing the Arbitrator to have to prepare another Order the day after arbitration started. The Arbitrator writes
I am not entering into negotiations with you Sharad….
There is NOTHING…NOT A THING in this case that can be resolved by parents.
[28] A careful reading of the context for this email demonstrates no basis for bias. It is clear to me that the Arbitrator is making a well-founded observation of the high conflict dynamic between the parents. Those same observations underscore his later analysis of parental decision-making.
[29] The father also asserts that he was denied procedural fairness because no written report was ever produced by Mr. Stephen Cross. He states that he could neither prepare, nor conduct his cross-examination in the absence of a formal report.
[30] I also reject this claim of procedural fairness. Mr. Cross’s consistent recommendations were clearly expressed to both parents throughout his involvement, both in discussions and in emails. Each parent had a wide scope for cross examination during the hearing. A review of the transcript of the father’s cross examination shows no disadvantage. To the contrary, the father pressed Mr. Cross in cross examination fully and aggressively.
[31] Mr. Cross was only retained to give oral evidence. The father’s request for a written report came too late in the proceeding to be available for the hearing. The decision not to commission a Report was equally detrimental to each party. Neither parent had the benefit of a Report upon which to prepare a cross examination of the parenting recommendations.
[32] With respect to the father’s concerns with the process resulting from his self representation, I find no basis for appellate review. The Arbitrator regularly checked in with the father to ensure that he understood the process, and he took additional steps to accommodate his unfamiliarity with the process as a self represented litigant. From time to time, the Arbitrator attempted observational humour that may have been misplaced, but at no time did he disclose bias.
[33] Neither was the Arbitrator inappropriate in the manner in which he stepped into the cross examination from time to time to redirect the father’s questioning, and to have him clarify his intention. An Arbitrator has the right to control his own process to make certain that time estimates are maintained, and the process is courteous, professional, relevant, and productive.
[34] Ultimately, this was a high conflict case in which the children had expressed a strong preference to reside primarily with their mother, and there was no prospect of joint decision making. Mr. Klein’s reasons amply explain how and why the decision was reached on the evidence presented.
[35] As most recently set out in N. v. F., 2021 ONCA 614, 2021 CarswellOnt 12685, appellate courts must resist the temptation to conduct what is essentially a second trial on appeal.
Appeal on the Parenting Decisions
[36] Judges and Arbitrators apply the legal principle of the "best interests of the child" in making parenting decisions. Because such decisions are driven by the factual findings, on the "spectrum", the decision falls closer to review on the standard of palpable and overriding error.
[37] For that reason, a decision of an Arbitrator, particularly in child related matters, is entitled to significant deference by the courts: see Patton-Casse v. Casse, 2012 ONCA 709, 298 O.A.C. 111, at paras. 9, 11 confirmed by the Ontario Court of Appeal in Petersoo v Petersoo, 2019 ONCA 624.
[38] The father takes the position that the Award should be overturned because the Arbitrator made errors of law in the parenting decision, but I can discern no errors of law as stated in paragraphs 4 to 10 of the father’s Notice of Appeal. The proposed errors of law are predominantly findings of fact that have been mischaracterized.
[39] For example, the father sets out in his factum an exchange with the Arbitrator in which he is pressing for joint decision making, citing the parents’ ability to agree to surgery for Lyla. The Arbitrator counters that it took a year to reach that consent. The father then conflates this comment with testimony of the assessor in which Mr. Cross agreed that it was reasonable for the father to have sought a second opinion for Lyla’s surgery. The two comments are unrelated. While a second opinion may not have been unreasonable, a year delay in making a major medical decision is not in a child’s best interests. This is a finding of act that was open to the Arbitrator to make.
[40] In a similar manner, the father conflates his concern with Mr. Cross re‑interviewing the children with a recommended change in the parenting schedule. The further interview was, in fact, requested by the father based on his belief that the children wanted to spend more time with him, which proved not to be the case.
[41] Mr. Cross testified that the parties’ children consistently advised him that they did not want to spend more time with the Appellant, but rather, they wanted to keep the Tuesday and Thursday evening access, and alternating weekend access. These views were expressed over several interviews with the children, including the updating interviews during the arbitration hearing when Lyla would have been 12 years old and Shazara was almost 6.
[42] Finally, the father asserts that the Arbitrator did not give effect to the maximum contact principle which, in his view, as he expressed throughout the hearing, could only be achieved through an equal time-sharing schedule.
[43] My review of the record shows that the Arbitrator made a number of factual findings that did not support equal time sharing, foremost being the children’s views and preferences, the lack of positive parenting available to them while at their father’s home, the absence of any historic joint decision making, the lack of predictability and structure in the father’s home, his lack of awareness of the children’s key service providers, and finally; the twin findings that the father was the primary source of conflict between the parents and that the mother was the more skilled and competent parent.
[44] These were findings amply available to the Arbitrator on the record, and the inferences that the Arbitrator drew from those findings of fact and the application of the applicable law are sound. Section 16(6) of the Divorce Act provides that children should have as much time with each spouse as is consistent with their best interests. That optimal amount of time depends on each child’s circumstances and must take into account all factors with the overarching factor being the child’s safety, security, and well-being. It is a customized deliberation based on the evidence of the child’s best interests and not a de facto formula of equal sharing.
[45] I am not persuaded that the Arbitrator made any errors of law, or any palpable and overriding errors with respect to parenting. The appeal on the parenting issues is dismissed.
Appeal on the Support Issues
[46] The father did not update his Financial Statement after February 19, 2019 and failed to provide key disclosure supporting his actual income and the value of his business from 2014 to 2017, despite earlier consenting to provide such disclosure in Minutes of Settlement. He was evasive regarding his business finances, stating that he needed an accountant to fully explain them, but then never proffering the evidence of an accountant. The father failed to provide his 2019 Income Tax Return.
[47] Much of the necessary financial evidence had to be inferred by the jointly retained financial advisor, leading to an absurdity. During the Arbitration hearing, the father cross examined the financial advisor on her lack of direct evidence as to his income, which he had chosen not to make available. In the face of this absurdity, the father now seeks to appeal the Arbitrator’s imputation of income to him in the amount of $50,000 per annum.
[48] Imputed income is a question of mixed fact and law. A Court may impute such amount to a spouse as it considers appropriate in the circumstances, which circumstances include when the payor spouse has failed to provide income information when under a legal obligation to do so, see section 19(f) of the Federal Child Support Guidelines.
[49] The father has a history in the automotive field and has earned as much as $100,000 per annum in 2015 when employed by Mercedes. He has chosen to be self-employed, carrying on a home-based business as an installer of custom automotive LED lights. He objects to the Arbitrator concluding that he is “a licensed mechanic with some twenty years experience”, and the taking of judicial notice that $50,000 per annum is an average income available to an automotive mechanic.
[50] The father also objects to the Arbitrator failing to take judicial notice of the economic consequences of the pandemic in April 2020, disclosure for which was in his possession alone and not provided during the hearing. A bald assertion as to income without supporting documentation ought to be given no weight by a trier of fact.
[51] I agree with counsel for the father that the record provides no evidence upon which the Arbitrator could conclude that the father was a licensed mechanic. The mother did not put that evidence forward and it was denied by the father throughout the proceeding.
[52] However, the uncontradicted evidence of the jointly retained financial advisor was that the father had at least $40,000 of non-taxable income per annum based on her review of the father’s disclosed expenses and savings from 2016 to 2018. The Arbitrator grossed up this amount and added his taxable income for a rounded figure of $60,000 per year which he then, conservatively, discounted to $50,000.
[53] The financial expert also testified that the father had qualified for a $450,000 mortgage to purchase the mother’s interest in the home, but that he refused to provide a copy of the mortgage application.
[54] The Arbitrator did not make any error of law with respect to the imputation of income, nor did he make an overriding or palpable error by imputing a figure of $50,000 which, on the appeal record, I find to be in the very lowest range of what was available to him to find.
[55] I decline to give effect to the father’s appeal of the finding of imputed income.
[56] I also decline to interfere with the Arbitrator’s assessment of the reasonable and necessary post separation section 7 expenses, but for the mathematical error on which counsel below agree. It is not an error to have assessed section 7 expenses while the parties resided together under the same roof.
[57] Finally, I must also decline to set aside the dismissal of the father’s claim for spousal support. A spousal support claimant must be fulsome and forthright in his disclosure of income. Should he fail to be utterly transparent in his finances, he risks being unable to establish an entitlement to support on either a needs basis, or a compensatory basis. Neither can he demonstrate any hardship in the payment of child support.
[58] In my view, the father’s failure to provide a current financial statement prior to the hearing was dispositive of the dismissal of his claim for spousal support. A full inquiry into his finances was shielded from the Arbitrator and it does not lie in the father’s mouth to now dispute the resulting imputation of income or the dismissal of his claim for spousal support.
[59] The dismissal of the father’s claim for spousal support discloses no error in law, or error in mixed fact and law. The Arbitrator’s characterization of the dismissal as “with prejudice” was unnecessary, as a dismissal alone is determinative of the issue. The dismissal stands.
Equalization
[60] I see no errors of law, or mixed facts and law, in the calculation of the equalization payment warranting the appellate intervention sought by the father.
[61] In fact, the father received a more favourable result on the equalization than he ought to have received. The Arbitrator gave him a date of marriage deduction for an asset not in evidence and used only a rounded down asset-based valuation of his business, the necessary disclosure for a fair market value of his business having never been produced.
[62] The appeal on the payment of equalization is dismissed.
Mathematical Error
[63] The parties agree that there were mathematical errors in the calculation of a notional disposition cost against the father’s RRSP and the calculation of post separation expenses. The remedy for an error can be found in Rule 25.19 of the Family Law Rules and is not the subject for an appeal.
Costs of June 29, 2020
[64] Costs awards are highly discretionary and rarely invite appellate intervention. The father does not set out in his factum or materials a sufficient basis to set aside the costs awarded on June 29, 2020. This ground of appeal is also dismissed.
Conclusion
[65] In my view, none of the grounds of appeal have merit. The reality is that the father does not agree with the outcome of the arbitration. He is largely challenging findings of fact or findings of mixed fact and law for which there is no basis for appellate intervention. The appeal is dismissed.
Costs of this Appeal Heard October 4, 2021
[66] Counsels have agreed that the unsuccessful party is to pay $8,000 in costs.
[67] Order to issue that the father shall forthwith pay costs of $8,000 to the mother.
McGee J.
Released: November 3, 2021
COURT FILE NO.: FS-21-0027
DATE: 2021 10 03
ONTARIO
SUPERIOR COURT OF JUSTICE
APPEAL COURT
B E T W E E N:
Sharad Khan
Applicant
- and -
Nerissa Khan
Respondent
ENDORSEMENT
On appeal from the Final Arbitration Award of Mr. Marty Klein dated June 8, 2020
as amended July 6, 2020
McGee J.
Released: November 3, 2021