COURT FILE NO.: FC-13-2063-2
DATE: 2022/02/08
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MONICA JULIA FEKETE, Applicant
-and-
DEREK MAXWELL BROWN, Respondent
BEFORE: D. Summers J.
COUNSEL: Enoch Anekwe, for the Applicant
Marie-Helene Godbout, for the Respondent
HEARD: April 6, 2021
ENDORSEMENT
[1] On August 6, 2020 Justice Shelston made a final order with the consent of the parties. Among the many terms, there are provisions stating that all future disputes between the parties, including any future spousal support review, shall be conducted by arbitration. The motion brought by the respondent seeks to enforce these terms and asks that the court direct the applicant to enter into the requisite Arbitration Agreement with respect to the current spousal support dispute – something she has thus far refused to do, choosing instead to deliver a Motion to Change Shelston J.’s order. The respondent also asks the court for an order staying that process.
[2] The applicant opposes the respondent’s motion. She raises two questions. First, she asks whether it is a necessary precondition to a family law arbitration to have an arbitration agreement that meets the requirements of the Family Arbitration Regulation 134/07. If the answer is yes, her second question is whether the final order of Shelston J. constitutes such an agreement. The applicant submits that the court should answer yes in the first instance, and no in the second, such that the path is clear for her to proceed with her Motion to Change, in court.
[3] The answers to the applicant’s questions are yes to the first and no to the second, however, that does not determine the issue before the court. Justice Shelston made an order. If the order is enforceable, then the parties must comply with the order, complete the necessary steps to give effect to it, including entering into an Arbitration Agreement that is compliant with the legislation.
[4] Shelston J.’s order is enforceable, and I grant the order sought by the respondent. The applicant shall sign the Arbitration Agreement and proceed with the arbitration process. The Motion to Change initiated by the applicant is stayed.
Factual Context
[5] The parties separated in August 2011. Litigation followed and resulted in three final orders, the most recent one being the order of Shelston J., dated August 6, 2020. In the spring of 2020, the parties were engaged in a mediation/arbitration process with Julie Guindon, an experienced family law lawyer, mediator, and arbitrator. They reached agreement, signed Minutes of Settlement on June 15, 2020, and in August, took the additional step of obtaining the final order that is now in issue.
[6] Not long after the order was made, there was a change in the circumstances of an adult child that gave rise to an alleged material change of circumstance by the respondent and the legal issue of whether child support for this adult child should be terminated. Under paragraph 18 of the final order, at such time as this child was no longer a child of the marriage for support purposes, a review of spousal support was to occur at the same time.
[7] Also relevant to the motions before the court are paras. 19 and 27 of Shelston J.’s order. They provide as follows:
Any support review moving forward shall be on a moving forward basis with no retroactive adjustment. The review shall be prospective, and not retroactive. It shall be conducted via an in-writing Arbitration process with Ms. Julie I. Guindon. The initial costs associated with this process shall be shared equally by the parties.
All future disputes between the parties will be resolved via an Arbitration process. This term replaces subparagraph 12.5 of the Final Divorce Order.
[8] When the support issues arose, the respondent contacted Ms. Guindon. Both parties participated in preliminary meetings with her, the respondent with counsel and the applicant self-represented. The first meeting was held by conference call and was described by the arbitrator as a pre-arbitration hearing prior to an arbitration being held pursuant to the final order dated August 6, 2020. A timetable for filing documents was set.
[9] The second contact with the arbitrator was made by the applicant to request extra time to review and prepare documents, pointing out her financial circumstances. In support of this request, she provided further information including a medical letter. In response to her submissions, the arbitrator made an Interim Award dated November 4, 2020 extending the timetable for filings by two months and the time for each party to pay their $2,500 retainer.
[10] In October 2020, an Arbitration Agreement was drafted and circulated. It was signed by the respondent and the arbitrator, but not the applicant. By January 5, 2021 the applicant had secured a lawyer who, on January 15, wrote to opposing counsel and the arbitrator advising that his client would be opposing the arbitration process on jurisdictional grounds. Subsequent correspondence and the applicant’s affidavit confirmed that he was retained through Legal Aid Ontario, and it funded only court process, not arbitration.
[11] On January 21, the arbitrator and lawyers met by Zoom. The evidence indicates little was resolved at the meeting except some amendments to the Arbitration Agreement. The arbitrator also notified counsel that once the agreement had been signed, the timelines could be adjusted if additional time to prepare was needed by the applicant’s lawyer. This version of the agreement was also signed by the respondent and the arbitrator, but not by the applicant.
[12] At some point the applicant attempted to issue a Motion to Change the Final Order made by Shelston J., however, the family counter rejected her documents because six months had not elapsed since the date of the order. Then, in February 2021, she submitted a without notice motion to the court asking for a determination of urgency and a stay of the arbitration. On February 3, 2021, Justice Audet dismissed the motion, ruling that it ought to have been brought on notice to the respondent.
[13] That same day, Justice Audet issued a separate endorsement responding to a letter from the respondent’s lawyer. The endorsement said if the respondent was looking for a ruling from the court, he should bring a motion, not write to the court asking for directions.
[14] On February 8, the applicant issued and served a Motion to Change the Final Order.
[15] The applicant maintains that she objected to the arbitration process from the outset. She says that in the fall of 2020, she questioned the arbitrator’s authority to hold the arbitration and refers the court to a lengthy email dated October 7, 2020 attached to her affidavit. However, nowhere in that email does she challenge the arbitrator’s authority. She questioned the quality of the notice given, and the date proposed for the pre-arbitration meeting saying she did not see the need to arbitrate before, say early 2023, but did not challenge the arbitration itself.
[16] According to the applicant, she only attended the preliminary meeting with the arbitrator because the respondent’s lawyer told her it was a pre-arbitration meeting, not an arbitration. Indeed, the respondent’s counsel did send a responding email the same day providing this information, however, the response was not misleading, as alleged by the applicant. On October 21, 2020, the applicant wrote to the arbitrator to clarify the purpose of the pre-arbitration meeting. The arbitrator’s response was not overly technical, as the applicant alleges, when she says she attended the meeting only to get more information. The arbitrator, in six one-line sentences, clarified the purpose of the pre-arbitration. She said it was to: identify and confirm the issues and the witnesses, establish a timetable for the exchange of affidavits, for cross-examinations, if necessary, for the hearing itself to take place, and address any other procedural issues raised. By January 29, 2021, it was clear that the applicant objected to the arbitration process.
[17] Contrary to the applicant’s assertion, she does not appear to have objected to the arbitration process in the fall of 2020. Rather, she participated in the pre-arbitration process consistent with the Minutes of Settlement and the final order.
Law and Analysis
[18] Although a court may only order parties to arbitrate with their consent, a distinction appears in the case law between court ordered arbitration and private agreements to arbitrate. In Lopatowski v. Lopatowski, 2018 ONSC 824, Justice Gray holds that a court has jurisdiction to make a consent order for arbitration as a future dispute resolution mechanism and that such an order is enforceable. The decision in Lopatowski was made in a motion that sought a finding that a recalcitrant litigant was in contempt of a consent order to arbitrate when several months after the order, the parties had not yet completed an agreement to arbitrate, in the required form. The recalcitrant party then took the position that the order was made without jurisdiction, was invalid and unenforceable, and moved to set it aside. At paras. 40 and 41, Justice Gray states:
[40] The definition of “secondary arbitration” in s. 59.7(2) of the Family Law Act is as follows:
(2) In this section,
“secondary arbitration” means a family arbitration that is conducted in accordance with a separation agreement, a court order or a family arbitration award that provides for the arbitration of possible future disputes relating to the ongoing management or implementation of the agreement, order or award. [Emphasis added]
[41] The reference to “court order” in this definition can only be a reference to an order made on consent. That must be so since it is accepted that a court order that is not made on consent cannot contain a requirement to arbitrate. While the definition does not expressly say that the court has the power, on consent, to order that disputes be arbitrated, the definition cannot be meaningfully understood unless it impliedly recognizes that the court has the power to make such an order on consent.
[19] At paras. 35 and 36, Justice Gray also said, “[t]his court’s jurisdiction to set aside or ignore one of its own orders is very limited and is set out in Family Law Rule 25(19)” and when that rule is not engaged, any challenge to an order to arbitrate must be made to the proper appellate court, not by motion to this court to set it aside or declare it unenforceable.
[20] Lopatowski was followed by Justice Laliberte in Moncur v. Plante, 2021 ONSC 5164, where the final order for future dispute resolution by mediation/arbitration had been made on consent. The court states at paras. 17, 18 and 22:
[17] Having considered the circumstances, the Court is of the view that family mediation and arbitration as agreed upon by the parties and accordingly ordered by Justice Kershman should prevail over a return before the Court as proposed by the Applicant.
[18] To be clear, the Court is very mindful of the fact that the “Dispute Resolution” clause in this matter is not a valid arbitration agreement. There is no question that it does not contain the required standard provisions set out in the Family Arbitration Regulation 134/07. However, what is clear is that the parties consented to the terms set out in the said clause which unequivocally reveal a common intent to resolve future disputes through the mediation/arbitration process. The wording makes mediation and arbitration mandatory. It states:
− “If the parties Disagree about the parenting, they shall first try to resolve the dispute...”
− “If the parties are unable to resolve the dispute through negotiation and/or mediation within 30 days... they shall arbitrate the issue...”
[22] The essence of the Court's decision is that the Applicant is bound by the terms of Justice Kershman's order which are based on Minutes of Settlement to take steps necessary to make the order operative. This obligation is for him as well as the Respondent to enter into a formal and secondary arbitration agreement with the required standard provisions set out in the Family Arbitration Regulation 134/07. The Court must have the power to require parties subject of a court order to live up to their obligations.
[21] Case law diverges on the issue of whether a private agreement between the parties to arbitrate future disputes that does not, itself, constitute a family arbitration agreement may be enforced by a subsequent court order. In Giddings v. Giddings, 2019 ONSC 7203, Justice Gray relied on the contractual obligation of good faith contractual performance, to enforce an agreement that took the form of minutes of settlement that were intended to be final but had not been made into a court order, and directed the parties to execute a formal, enforceable family law arbitration agreement.
[22] In Magotiaux v. Stanton, 2020 ONSC 4049, Justice Mackinnon ruled that an interim parenting agreement was not a bar to a proceeding in court, stating at paras. 6, 7 and 8:
[6] … I conclude that the Interim Parenting Agreement is not a bar to the applicant proceeding in court and that the stay motion should be dismissed. Parties need to ensure that their agreement complies with the necessary formalities required by statute and regulation. Where the legislator has mandated express terms for family arbitration agreements the court may not imply them.
[7] The situation might be different if the parties had expressly undertaken in their agreement to execute an arbitration agreement that complies with the governing Act and Regulation. In that situation, the court might order the party in breach to comply with their undertaking. The Interim Parenting Agreement does not include such an express provision.
[8] Prudence dictates that family litigants wishing to provide for a potential future arbitration should append a detailed family arbitration agreement containing the mandatory terms to their settlement document and should agree to complete and execute the agreement in the form attached, at the appropriate time.
[23] At paras. 22 and 30 in Magotiaux, Mackinnon J. distinguished Giddings from the case before her, as follows:
[22] The agreement in Giddings specified that if the equalization issue was not resolved it would be arbitrated by a named arbitrator, that the parties would proceed to domestic violence screening and thereafter execute an arbitration agreement with the arbitrator to provide him with arbitral power. The court relied on this provision to rule that the recalcitrant party was required to execute a family arbitration agreement as he had agreed to do and in accordance with his obligation of good faith contractual performance.
[30] … I was not persuaded that case law provided a basis on which the court could read in the mandatory requirements to the Interim Parenting Agreement or imply a term to enter into a compliant arbitration agreement to give effect to its dispute resolution clause. I conclude that the Interim Parenting Agreement does not comply with the Regulation and the stay should be denied.
[24] In Moncur, Justice Laliberte described this area of the law as unsettled, however, there does not appear to be divergent case law on the point of whether the court may enforce its own order by requiring parties to execute a compliant family law arbitration agreement.
[25] In addition to the clear statement of law in Lopatowski, I also note that after Shelston J. made the final order, both parties conducted themselves in a way that is consistent with the provision requiring dispute resolution by arbitration with Ms. Guindon. To the extent that the order was based on their consent and signed Minutes of Settlement, the preliminary steps they both participated in is evidence of their knowledge and intention to be bound by them.
[26] The applicant submits there are two reasons why the preliminary steps taken are “vitiated”: first, she says she only participated in October because of the erroneous information given to her by the respondent’s lawyer that the meeting was a pre-arbitration meeting; and second, because the arbitrator had no power to proceed with the arbitration in the absence of a fully executed family arbitration agreement. Notwithstanding how the arbitrator titled her endorsements pertaining to the October meeting and the November timetable extension, both were pre-arbitration steps. Moreover, the arbitrator did not commence the arbitration. She was waiting for all parties to sign an arbitration agreement and for the court to rule on the jurisdictional issue raised by the applicant.
[27] The relevance of the parties’ participation in the preliminary steps is confirmation that the final order expressed their intention and agreement regarding their future dispute resolution process. Irrespective of the timing of the applicant’s objection, and whether she objected to the arbitration process and argued that the final order was unenforceable in October 2020 or January 2021, it would not change the outcome of this motion. Justice Shelston’s order is enforceable.
[28] There are suggestions in the applicant’s materials that the arbitrator may have shown bias in favour of the respondent and also that the court should allow her Motion to Change to proceed in court because legal aid assistance is available to her for that but not for the arbitration. The materials before me did not approach the standard required for a finding of bias or reasonable apprehension of bias. That said, the proper process would be to put that issue before the arbitrator for a ruling, and if she determines not to recuse herself, to proceed with the arbitration. Then, when the award has been made, consideration may be given to whether there are grounds for appeal, be it on the ground of bias or any other ground.
[29] The Arbitration Act, 1991, S.O. 1991, c. 17, provides little scope for a court to intervene in an arbitration. Sections 6, 7(1) and (2) provide as follows:
Court intervention limited
6 No court shall intervene in matters governed by this Act, except for the following purposes, in accordance with this Act:
To assist the conducting of arbitrations.
To ensure that arbitrations are conducted in accordance with arbitration agreements.
To prevent unequal or unfair treatment of parties to arbitration agreements.
To enforce awards.
Stay
7(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding
Exceptions
(2) However, the court may refuse to stay the proceeding in any of the following cases:
A party entered into the arbitration agreement while under a legal incapacity.
The arbitration agreement is invalid.
The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.
The motion was brought with undue delay.
The matter is a proper one for default or summary judgment.
[30] The applicant did not make submissions with respect to section 6. She suggested that the arbitration may be unfair or unequal because her legal aid certificate only covers court proceedings, however, this will not be presumed in advance. Many litigants appear in courts, tribunals and arbitral hearings without legal representation and receive fair and equal treatment. She also suggested that the respondent’s counsel prepared the first Arbitration Agreement, not the arbitrator, and that there may be a nefarious reason why the arbitrator signed it in person rather than electronically. Again, these suggestions do not establish that court intervention is required to prevent unequal or unfair treatment.
[31] Under s. 7(2), the only ground the applicant relied on was that the final order itself was the arbitration agreement and was invalid. For reasons already given, I concluded the order is not the arbitration agreement but is enforceable by means of requiring the parties to enter into a family arbitration agreement that is compliant with the legislation.
Decision
[32] The order sought by the respondent compelling the applicant to sign the Arbitration Agreement and to proceed with the arbitration process is granted and the court process initiated by the applicant is stayed.
[33] The respondent is the successful party and presumptively entitled to costs on a partial indemnity basis. If the parties are unable to agree on the amount of costs, or if there have been offers to settle exchanged between them that ought to be considered on the issue of costs, I will receive written submissions from counsel before 4:00 p.m. on March 7, 2022. Submissions shall be double spaced, use twelve-point font or higher, and not exceed two pages excluding Offers to Settle, if any, and Bills of Costs.
Justice D. Summers
Date: February 8, 2022
COURT FILE NO.: FC-13-2063-2
DATE: 2022/02/08
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: MONICA JULIA FEKETE, Applicant
-and-
DEREK MAXWELL BROWN, Respondent
BEFORE: Justice D. Summers
COUNSEL: Enoch Anekwe, for the Applicant
Marie-Helene Godbout, for the Respondent
ENDORSEMENT
D. SUMMERS J.
Released: February 8, 2022