COURT FILE NO.: FS-15-20432

DATE: 20220802

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Ingrid Kubecka

Applicant

– and –

Jacqueline Novakovic and Michele Kubecka (in their capacity as Estate Trustee for the Estate of Josef Kubecka), Jacqueline Novakovic and Michele Kubecka

Respondents

Christopher Mamo and Patricia Gordon, for the Applicant

David Anthony, for the Respondents

HEARD: July 28, 2022

Judge: Pinto J.

REASONS FOR DECISION

Overview

Overview

1I heard the applicant's motion for the appointment of former Superior Court Justice Emile Kruzick as the replacement arbitrator pursuant to the parties' Mediation-Arbitration Agreement dated April 12, 2021. At the conclusion of the hearing, I granted the motion and reserved on the issue of costs with written reasons to follow. These are my written reasons including with respect to the issue of costs.

Background

Background

2The background facts are well summarized by the arbitrator, Rosanna Breitman, in an Interim Decision that she released dated May 19, 2022, that was delivered to the parties on May 24, 2022:

By way of brief background, Ingrid Kubecka and the late Josef Kubecka ("Josef") were married on or about July 30, 1955. After 60 (sixty) years of marriage, they separated on or about September 12, 2015 - almost seven years ago - when they were 84 and 82 years of age. High-conflict litigation ensued in the Ontario Superior Court of Justice and remained ongoing when Josef passed away on June 10, 2020. Ingrid is currently 91 (ninety-one) years of age.

Subsequent to Josef's passing, Ingrid and Josef's two daughters, Jacqueline Novakovic ("Jacqueline") and Michele Kubecka ("Michele") - collectively referred to herein as "Trustees" or the "Estate Trustees" - have acted as Trustees of Josef's Estate in these proceedings. The Trustees' brother, Kenneth Kubecka ("Ken") resides with Ingrid in the former matrimonial home and is aligned with her.

As a result of complex family dynamics including serious discord within the family business, the circumstances around Ingrid and Josef's separation, and the tortured history of this litigation/arbitration, Ingrid is not on speaking terms with her daughters and vice-versa. Ken is also not on speaking terms with his sisters and vice-versa.

In the spring of 2021, following Josef's passing, Ingrid and the Estate entered into the mediation-arbitration process in an attempt to resolve the outstanding issues. Mediation concluded with the execution by the parties of Partial Minutes of Settlement on August 18, 2021 (the "Partial Minutes of Settlement") which resolved some issues but not others. At the conclusion of mediation, the arbitration process began.

3Ms. Breitman advised the parties that she was resigning as the arbitrator by way of a letter dated May 3, 2022.

4The issue on this motion is whether, in circumstances where the parties disagree, the court should appoint a replacement arbitrator, and whether that arbitrator should be the Honourable Mr. Kruzick as the applicant wants, or whether the court should permit the parties to terminate the arbitral process and continue the litigation in court.

Analysis

Analysis

5The parties made a number of submissions about the proper interpretation of their Mediation-Arbitration agreement. I found that the motion largely turned on the interpretation of section 12 of the parties' Mediation/Arbitration Agreement:

12. WITHDRAWAL FROM MEDIATION OR ARBITRATION

12.1 Neither party may unilaterally withdraw from this Agreement at either the mediation or arbitration stage. However, the parties may jointly terminate this Agreement by their written agreement. Subject to paragraph 12.2, the Arbitrator shall proceed with an arbitration as provided for in this Agreement notwithstanding that the mediation has been unsuccessful or that one of the parties no longer wishes to participate in the arbitration.

12.2 Ms. Breitman may at any time resign from her appointment as arbitrator by providing written notice of her resignation to the parties.

12.3 In the event that Ms. Breitman's appointment is terminated, and the parties are unable to agree on a replacement, a court of competent jurisdiction shall appoint a replacement arbitrator on either party's application to the court.

12.4 In the event that Ms. Breitman's appointment is terminated, the parties agree that any interim or interlocutory award(s) made by Ms. Breitman will continue to bind the parties and will continue in full force and effect as the basis for the continuation of the arbitration with a replacement arbitrator.

6The parties, in the affidavit material and submissions, also made a number of assertions about their experience in arbitration with Ms. Breitman and how this related to the continuation or termination of the arbitration. I did not find these submissions particularly relevant as I find the language of the parties' Mediation-Arbitration binding, particularly para. 12.3.

7The respondents argue that the reference to "terminated" in paragraph 12.3, does not include the scenario where Ms. Breitman has resigned. Therefore, in circumstances where Ms. Breitman has resigned, paragraph 12. 3 does not apply.

8I disagree.

9First, it would be surprising if the mere resignation of an arbitrator, which can be for any variety of reasons, would trigger the end of the arbitral process and a return to the court's jurisdiction. This seems to fly in the face of the overall language of the Mediation-Arbitration Agreement which speaks to the parties' firm commitment to a mediation-arbitration process. Second, I am not aware of any reason why a resignation cannot also be considered a termination, in which case section 12.3 would apply. The respondents did not provide any reason other than that different words were used as between section 12.2 and 12.3.

10Finally, it is noteworthy that section 14 of the Arbitration Act, 1991, S.O. 1991, C.17, states:

4 (1) An arbitrator's mandate terminates when,

(a) the arbitrator resigns or dies;

(b) the parties agree to terminate it;

(c) the arbitral tribunal upholds a challenge to the arbitrator, ten days elapse after all the parties are notified of the decision and no application is made to the court; or

(d) the court removes the arbitrator under subsection 15 (1).

11The fact that, under the Arbitration Act, 1991, a resignation is a form of termination strongly suggests that when the parties entered into their Mediation-Arbitration Agreement and used the word "termination" in paragraph 12.3, they were impliedly including a scenario where their arbitrator resigns.

12Accordingly, paragraph 12.3 is applicable and a replacement arbitrator must be appointed. I find there is currently no scope for this matter to be returned to court.

13I rejected the respondents' additional submission that, since the arbitrator herself had allegedly claimed in her Interim Award that this matter must be returned to court, that assertion should sway the court. I noted that there is no agreement between the parties that the arbitrator's Interim Award made such a declaration and, even if it had, I would not find it binding on the court in the face of the parties' Mediation-Arbitration Agreement.

Selection of the Honourable Mr. Kruzick

Selection of the Honourable Mr. Kruzick

14After I advised that I would be directing this matter be returned to arbitration, the respondents requested that the court grant the parties additional time to reach a consensual decision on the selection of the replacement arbitrator.

15I declined the respondents' request on a number of grounds. First, the applicant's Notice of Motion was clear that not only was the applicant seeking a ruling that the matter would continue in arbitration, but also that the Honourable Mr. Kruzick would be appointed as the replacement arbitrator. Second, there is nothing in Ms. Novakovic's affidavit of July 22, 2022 that takes issue with Mr. Kruzick's appointment. Finally, I find given the applicant's age and the "tortured history" of this litigation, it is essential that the parties waste no further time in arguing over the selection of a replacement arbitrator.

Costs

Costs

16The applicant has been successful on the motion and is entitled to costs. The applicant submitted a Bill of Costs indicating that full indemnity costs would be $14,28.96. Instead, the applicant is seeking $11,383.17 in costs which corresponds to substantial indemnity costs at 80%. The applicant submitted that she had served an Offer to Settle on June 27, 2022 such that if the Offer to Settle were accepted on or before June 30, 2022, there would have been no costs for the applicant's motion. The Offer to Settle remained open for acceptance until one minute after the commencement of the motion.

17The respondents argued that the applicant's Bill of Costs was excessive and that, at the time the Offer to Settle was made, the respondents were self-represented. As well, the respondents argued that the respondents' own costs were in the range of $7,000. I note, however, that the respondent did not serve a factum.

18Costs are in my discretion. The touchstones are proportionality and reasonableness. A successful party in a family law case is presumptively entitled to costs. An award of costs is subject to the factors listed in Rule 24(12) of the Family Law Rules, and the directions set out under Rule 24(4) (Unreasonable Conduct), and Rule 24(8) (Bad Faith).

19The two Court of Appeal cases, Beaver v. Hill, 2018 ONCA 840 at paras. 9 to 14, and Mattina v. Mattina, 2018 ONCA 867 at paras. 8 to 18, have laid out the principles to be applied with respect to costs in family law matters.

20I find that, while the applicant should be entitled to her full-indemnity costs on the basis that she served an Offer to Settle early that was not accepted, the time spent by her counsel was somewhat excessive. For example, over 18 hours were spent by applicant's counsel in preparation of the applicant's affidavit and reply affidavit. Whereas the applicant seeks $11,383.17 in costs, I find that the appropriate costs award is $10,000 (all-inclusive), which should be paid within 30 days of the release of this endorsement.

Pinto J.