Kawchuk v Kovacs, 2016 ABQB 118

Court of Queen ’ s Bench of Alberta Citation: Kawchuk v Kovacs, 2016 ABQB 118 Date: 20160226 Docket: 4801 154253 Registry: Calgary Between: Risa Irene Kawchuk Plaintiff - and - James David Kovacs Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice A.D. Macleod _______________________________________________________ [ 1 ] Mr. Kovacs (Dad) seeks to enforce an Arbitration Award against Ms. Kawchuk (Mom). Mom seeks to set it aside. [ 2 ] After thirteen years of marriage during which they had two children, Dad and Mom separated in September 2012.

In April 2015, the parties entered into a mediation/arbitration agreement (the “Agreement”). The parties executed the Agreement after receiving independent advice from their respective lawyers in April. The mediator/arbitrator, Ms. Sherry Kachur Q.C., did not execute the Agreement until the day of the mediation on June 11, 2015. The Agreement includes a waiver of the right to litigate the parties’ rights

under various acts including the Matrimonial Property Act , RSA 2000, c M-8 (the “ MPA ”). The issues to be resolved with Ms. Kachur included all issues between the parties including distribution of property, child support and spousal support. [ 3 ] Dad says he and Mom together with their respective lawyers and reached an Agreement, facilitated by Ms. Kachur, on June 11, 2015. The Agreement resolved all financial matters. Dad says that his lawyer, in the presence of Mom and her legal counsel, requested that Ms. Kachur incorporate the terms of the Agreement into the Arbitration Award.

He says Mom and her lawyer agreed that the terms of the Agreement were to be incorporated into the Arbitration Award. On July 14, 2015, Ms. Kachur issued her Arbitration Award, following which counsel for Dad sent a settlement letter to Mom’s lawyer with a draft form of a Consent Order. Counsel for Dad requested that it be executed and sent back pursuant to the Agreement and

section 36 of the Arbitration Act , RSA 2000, c A-43 (the “ Act ”). [ 4 ] On August 12, 2015, Mom’s lawyer sent a letter by fax to Ms. Kachur requesting further explanation of the basis for the Arbitration Award, and for correction pursuant to sections 40(1) and 43(1) of the Act . On August 20, 2015 the parties attended before Ms. Kachur, and Dad said she made it very clear that the Arbitration Award was a consent Award and, accordingly, she could not provide any reasons or make any corrections. This was confirmed in a letter dated September 18, 2015, from Ms.

Kachur to counsel, which included the following: In his correspondence of August 12, 2015 Mr. Moldowan asked for some explanations or corrections. However, the explanation and corrections were not on the actual Arbitration Award but were a part of what was discussed in the identification process of the mediation. They are not actual corrections, such as a mathematical error, on the actual Arbitration Award. Mr. Moldwan’s comments provided in his August 12th letter deal with numbers that he believes should be changed on the property charts.

The property charts were prepared with input from both parties during the mediation sessions. What numbers each party may have ultimately accepted to come to an agreement may have differed to arrive at the ultimate numbers. Again, this is not a correction to the Arbitration Award that Mr. Moldowan is seeking. Also, Mr. Moldowan comments that further disclosure is required. Again, the parties are at liberty to reach an agreement with the disclosure that they have or choose not to reach an agreement until further disclosure has been provided. Ultimately, an agreement was reached by the parties.

This Award was not arbitrated but, in essence, is a Consent Order. I was a Mediator on this file at that time. I did not make any determinations under law or fact as to what should have occurred. The parties ultimately agreed to a process to divide the property, deal with spousal support, and deal with retroactive child support. As it was a consent agreement there are no errors that I could correct in the Award. An error that I could correct would be the misspelling of the names, a typographical error of some sort, or incorrectly doing some math. Mr.

Moldowan is not asking me to change or correct these types of errors. In mediation, I can look at the differences but, ultimately, if an agreement was reached and put into an Arbitration Award, I cannot make “changes” to the overall settlement. As such, I am not rejecting Mr. Moldowan’s requests pursuant to section 43(3) of the Arbitration Act ; I am stating that he is not actually asking for corrections or explanations of reasons. I cannot give explanations of the reasons as I did not make the determination. This is a Consent Award.

I cannot make corrections of any error because there are no “errors” in the Award to be corrected pursuant to Mr. Moldowan’s comments. [ 5 ] Mom says that she had received incomplete disclosure and, in particular, the statements and income tax returns of one of Dad’s companies. The parties agreed that they had not been prepared and were not available on the date of mediation. It is common ground between the parties that Dad had agreed to provide the information. What is not common ground is whether or not the settlement reached was subject to her reviewing that information when it became available.

It is clear from the evidence that Dad, his counsel, and Ms. Kachur thought that the parties had settled matters, notwithstanding that disclosure was incomplete. Mom takes the opposite position. She says that she understood that the settlement would be “without prejudice” until she had reviewed the information that she was supposed to receive. She said in her affidavit: Neither my lawyer nor the Arbitrator informed me that the settlement was not subject to verification after the records were produced. [ 6 ] When questioned on her Affidavit, Mom confirmed her mistaken assumption that the settlement was not final.

It appears that everyone else at the mediation, including her own lawyer, was aware that the parties had agreed on the financial terms of the settlement. Mom must have become aware of her misunderstanding shortly after receiving the Arbitration Award on June 11, 2015. [ 7 ] If Mom did not in fact know that settlement discussions could result in a binding agreement, it would appear her counsel provided inadequate legal advice, as he was aware of the nature of the settlement.

This poses a conflict between Mom and her counsel because, though he presented no evidence on this application, he continues to represent her. The conflict can only be resolved if Mom abandons her current position. [ 8 ] Upon discovering her mistake, Mom had two options. She could have claimed the entire process was null and void because of her misunderstanding, effectively repudiating the Agreement, or she could have waived that position and sought a remedy under the Act . In my view, in consultation with her lawyer, Mom chose the latter.

Indeed, her counsel’s position before me was that because she had not received the disclosure that was promised, she was effectively misled into resolving matters based on her understanding of what the disclosure was going to reveal. Moreover, she indicated that her understanding was due to Dad’s intentional misrepresentation. [ 9 ] As the mediator indicated, people frequently decide to enter into settlement negotiations without complete disclosure.

It is not without risk, but it often leads to an expeditious settlement without which the parties would spend more time and money. [ 10 ] The relevant sections of the Act include the following: Mediation and conciliation 35(1) The members of an arbitral tribunal may, if the parties consent, use mediation, conciliation or similar techniques during the arbitration to encourage settlement of the matters in dispute.

(2) After the members of an arbitral tribunal use a technique referred to in subsection (1), they may resume their roles as arbitrators without disqualification. Settlement 36 If the parties settle the matters in dispute during arbitration, the arbitral tribunal shall terminate the arbitration and shall record the settlement in the form of an award. Binding nature of award 37 An award binds the parties unless it is set aside or varied under

section 44 or 45. Form of award 38(1) An award shall be made in writing and, except in the case of an award made under

section 36 shall state the reasons on which it is based.

(2) An award shall indicate the place where and the date on which it is made.

(3) An award shall be dated and signed by all the members of the arbitral tribunal, or by a majority of them if an explanation of the omission of the other signatures is included

(4) A copy of an award shall be served on each party. Setting aside award 45(1) On a party’s application, the court may set aside an award on any of the following grounds: (

a) a party entered into the arbitration agreement while under a legal incapacity; (

b) the arbitration agreement is invalid or has ceased to exist; (

c) the award deals with a matter in dispute that the arbitration agreement does not cover or contains a decision on a matter in dispute that is beyond the scope of the agreement; (

d) the composition of the arbitral tribunal was not in accordance with the arbitration agreement or, if the agreement did not deal with the matter, was not in accordance with this Act ; (

e) the subject-matter of the arbitration is not capable of being the subject of arbitration under Alberta law; (

f) the applicant was treated manifestly unfairly and unequally, was not given an opportunity to present a case or to respond to another party’s case, or was not given proper notice of the arbitration or of the appointment of an arbitrator; (

g) the procedures followed in the arbitration did not comply with this Act or the arbitration agreement; (

h) an arbitrator has committed a corrupt or fraudulent act or there is a reasonable apprehension of bias; (

i) the award was obtained by fraud. [ 11 ] I am satisfied that the parties entered into the Agreement pursuant to the Act and that the Act applies to the Agreement. Under

section 35, the Arbitrator is able to use mediation, conciliation or similar techniques during the arbitration.

Section 36 provides that if the parties settle the matters in dispute during the Arbitration, the Arbitrator shall terminate the process and record the settlement in the form of an Award, which is what Ms. Kachur did. That Award binds the parties unless it is set aside or varied under

section 44 or 45. [ 12 ]

Section 44 applies in case of an appeal, but the Arbitration Award in this case is not an Award on the merits. Rather it is a consent Award, for which there is no appeal mechanism in the Act . [ 13 ]

Section 45 provides for grounds upon which this Court may set aside an Award, but I find that none of the sub paragraphs (

a) to (

i) apply. The procedures followed by these parties complied with the Act and the Agreement. I find that Mom was treated fairly and was given every opportunity to present her case and respond to Dad. [ 14 ] As a matter of policy, this Court encourages settlement of matrimonial disputes through mediation and promotes dispute resolution outside of the Court process. It makes little sense to undermine this policy by allowing those unhappy with the results to avoid them by arguing that they did not know the nature of the process. This is particularly true when those parties are represented by counsel.

Not only was Mom ably represented by counsel, she was generally familiar with her husband’s business affairs. She was a director for one of the companies and had access to its bank accounts. She also had general information as to the income of the other company. It would not have been surprising to anyone familiar with this case and the mediation process that the parties seized upon the opportunity to settle the matter on June 11, notwithstanding incomplete disclosure. Moreover, the ultimate settlement was within a reasonable range. There is no basis to set aside the Arbitration Award under

section 45.

[15] Given my findings, it in unnecessary to deal with arguments about the failure to comply with time requirements under the Act. [16] Finally, Mom relies upon the formal requirements of sections 37 and 38 of the MPA. There is no question that the Agreementprovided for the resolution under the Act and the Divorce Act, RSC 1985, c 3, by way of arbitration/mediation. There is also no questionthat the parties both received independent legal advice and that paragraphs 38(1)(a-

e) of the Act were complied with. The object of theMPA as described by the Alberta Court of Appeal at para 32 of Corbeil v Bebris (AB CA), [1993] AJ No 587, 141AR 215, was clearly met. Mom’s counsel conceded during argument that, had arbitration been conducted, the Arbitration Award wouldnot have attracted scrutiny under sections 37 and 38. But I do not think that distinction is meaningful. Both the Act and the Agreementcontemplate the eventuality of settlement. [17] Accordingly, Mom’s appeal and her application to set aside the Arbitration Award are dismissed.

Dad’s application to enforcethe Arbitration Award as set out by Ms. Kachur is granted. [18] Dad has claimed solicitor client costs based on the Agreement. While the issue was addressed, the amount was not. Sinceamounts matter, I invite counsel to address the issue further. Heard on the 26th day of November, 2015. Dated at the City of Calgary, Alberta this 26th day of February, 2016. A.D. Macleod J.C.Q.B.A. Appearances: Sean Moldowan for the Plaintiff Brendan Myers Miller for the Defendant