2023 MBKB 82, 2023 MBKB 82

Date: 20230516 Docket: FD 21-01-26505 (Winnipeg Centre) Indexed as: Benkie v. Nichol Cited as: 2023 MBKB 82 COURT OF KING’S BENCH OF MANITOBA B E T W E E N: barbara dawn benkie, ) Danielle Fraser ) For the Petitioner/Appellant Petitioner/Appellant, ) ) - and - ) ) kristopher paul nichol, ) Natalie Roberts Respondent/Respondent. ) ) for the Respondent/Respondent ) ) Judgment delivered: ) May 16, 2023 THOMSON J.

Introduction [ 1 ] This proceeding follows from a final arbitration award (“the Award”) published on September 19, 2022, addressing a number of disputes between these parties, including parenting arrangements for their children, child and spousal support, and family property. [ 2 ] The petitioner filed an appeal of that Award on October 14, 2022, pursuant to The Arbitration Act , C.C.S.M. c. A120 (“ the Act ”), and to the provisions of the written Arbitration Agreement (the “Agreement”) made between the parties. [ 3 ] The petitioner’s notice of application (document no. 15) states: 1.

The applicant makes application for: 1. An appeal of the Arbitration Award released by Pamela Leech on September 20, 2022; 2. Specifically, that the finding in the Award that the sum of “$84,473.47 in cash... retains its excluded status under the FPA accounting” was a mistake in law under the provisions of The Family Property Act , and should be reversed; 3. Specifically, that the statement that “it is agreed that since June 1, 2022 JACKSON has resided primarily with KRIS who acknowledges that a flexible

schedule with maximal contact with both parents is in JACKSON’S best interest” is a mistake in fact , and does not take into account the fact that the Applicant was only temporarily out of her residence, and that it was stated that JACKSON would resume residing with each of the parties, on a shared parenting schedule, forthwith (and in fact that this is what has occurred since at least October 1, 2022); [emphasis added] [ 4 ] Throughout, I will refer to the purported “mistakes” as “errors” and, individually, as “error #1” and as “error #2. [ 5 ] The disposition sought in respect of the first error alleged to have been committed by the Arbitrator is identified; that error #1 “be reversed”.

[ 6 ] Regarding error #2, the disposition sought is not explicit.

I gather that in addition to the reapportionment of the parties’ parenting time with their child Jackson, the petitioner’s focus is also on the consequential alteration to the quantum of child and spousal support payable, which she says must flow from “correction” of the alleged factual error made by the Arbitrator. [ 7 ] This appeal engages issues respecting the application of the terms of the Act and the terms of the parties’ Agreement; the consequences of the parties’ election to pursue arbitration on the specific terms in the Agreement; what constitutes the “Appeal Record” for purposes of the appeal hearing; and, the applicable standards of review for the alleged errors of law, and of fact.

Background/Arbitration Process [ 8 ] The parties were in a common-law relationship for some 20 years, beginning in April 1997. Together they have two children, Maxwell and Jackson. [ 9 ] The petitioner filed a petition on February 12, 2021; the respondent’s answer followed on March 10, 2021. Interim proceedings initiated by the petitioner then resulted in two orders.

Soon after the second of those interim orders was made, the parties chose to pause their court proceedings, and to pursue an alternative dispute resolution process. [ 10 ] The petitioner and respondent have been, throughout, represented by legal counsel, and it appears as a result of discussions among the four of them, that the specifics of that “out of court” process were agreed to; it was initially conducted as a mediation and later, material to this proceeding, through arbitration. [ 11 ] The salient terms of what was an evolving process are contained in three documents, which are before me: their Agreement, dated October 15, 2021; the Addendum to that Agreement dated April 19, 2022; and, correspondence given to them by the Arbitrator (in particular, a letter dated June 1, 2022). [ 12 ] The customary terms of a typical arbitration agreement, as well as the requisite statutory provisions under the Act , are contained in their Agreement, and need not be recited here.

However, there are other terms in that Agreement, in the Addendum, and in the Arbitrator’s letter relevant to this appeal, which bear noting. They relate to the heading in the Agreement “Documents for Mediation”; to the content and the form of the evidence, which was ultimately put before the Arbitrator at the hearing; to the Agreement’s reference to “Procedure for Arbitration”, including delineation of the parties’ discovery rights, the use of affidavits, the conduct of cross- examinations, and the like; and, to the further elaboration upon process detailed in the Arbitrator’s letter.

Among the most significant matters are the following: - An appeal of the Arbitrator’s Award is open to either party, in accordance with s. 44 of the Act , specifically as to:

i) a question of law; ii) a question of fact; or iii) a question of mixed fact and law; - Questions on Interrogatories may be served by either party upon the other, and affidavits containing Answers to Questions on Interrogatories are to be provided to the Arbitrator and to counsel opposite; - “Arbitration Briefs” are to be filed by both parties, “which shall contain the evidence and argument in support of their positions”; and, - “Cross-examinations on material contained within the Arbitration Briefs and/or Questions and/or Answers on Interrogatories, and final argument” are to take place at the hearing before the Arbitrator. [ 13 ] The Arbitrator’s Award restates certain of these elements of procedure and substance, and confirms the parties’ adherence with the prescribed hearing process.

It identifies all of the evidence, in its various forms, received and considered by her, which include both affidavits and written submissions of the parties, and cross-examinations thereupon. (For clarity, in referring to the Award here, and throughout, I mean both the Award and the Reasons of the Arbitrator, which are contained in a single document). [ 14 ] In that regard, counsel filed four volumes of documents by agreement on this appeal, constituting the Appeal Record (“the Record”).

The Record contains all that was before the Arbitrator, with certain discrete exceptions (or “gaps”) that warrant closer scrutiny and comment, and are highly consequential to the disposition of this appeal, as I will explain later in these reasons for decision.

The Law - the Act [ 15 ] The Act contains various provisions of general application to arbitration proceedings in the Province of Manitoba, and those specific to family arbitrations in particular. [ 16 ] The parties expressly acknowledge the court’s jurisdiction to determine this appeal under the Act , pursuant to those provisions specifically applicable to a “family law dispute”, a “family arbitration” and a “family arbitration agreement”, as each term is defined in s. 1(1).

I have also adverted my attention to the other jurisdictional considerations and requirements, including the arbitrator’s qualifications (s. 2 (1)); the existence of a family arbitration agreement made in writing (s. 5 (1.1)); the powers of the court to set aside a family arbitration agreement (ss. 5.1(3) and (4)); the requirement that the award be consistent with the statute; and those mandatory provisions of the Family Arbitration Regulation , Man.

Reg. 105/2019 . [ 17 ] In terms of the procedure and the substance of this appeal, it is best that the provisions of the Act , as they relate generally to arbitration appeals (under the heading “Remedies”), be read as a whole while recognizing, as already said, that certain terms within that part of the legislation have specific application only to family arbitration appeals: Appeal of award

44(1) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law, on a question of fact or ona question of mixed fact and law. Appeal on question of law with leave 44(2) If the arbitration agreement (other than a family arbitration agreement) does not provide that the parties may appeal an award tothe court on a question of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant onlyif it is satisfied that (

a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and (

b) determination of the question of law at issue will significantly affect the rights of the parties. Appeal of family arbitration award 44(2.1) If a family arbitration agreement does not provide for an appeal of the family arbitration award to the court, a party may appealthe award with leave of the court on a question of law or mixed fact and law. Court may require explanation 44(3) The court may require the arbitral tribunal to explain any matter.

Procedure on appeal of family arbitration award 44(3.1) An appeal of a family arbitration award is to proceed directly to a judge for a determination, without any case management orother intervening process. Powers of court 44(4) The court may confirm, vary or set aside the award or may remit the award to the arbitral tribunal, with the court's opinion on thequestion of law, in the case of an appeal on a question of law, and give directions about the conduct of the arbitration. Family arbitration 45(9) Nothing in this

section restricts or prevents the court from varying, suspending or terminating all or part of a family arbitrationaward for any reason for which a court order could be varied, suspended or terminated under The Family Maintenance Act. [18] I shall make a few fairly obvious observations about family arbitrations, in the context of their subsequent appeal. [19] Certain provisions in the Act recognize that family arbitrations frequently require the parties and the arbitrator to confrontdifficult conflicts concerning the best interests of children (s. 2.1(2)), domestic violence (s. 5.1(3)), mental health and addictions issues,as well as those other disputes more akin to commercial arbitrations, related to property, to support and to income determination(personal, business and corporate).

Access to appellate intervention is less rigidly restricted (ss. 44(2) and 44(2.1)), and arguably broaderremedial dispositions are available (s. 45(9)), in family arbitration appeals. [20] Despite these distinct features of family arbitrations and appeals therefrom, what is shared with other forms of arbitration arevarious positive attributes of the process, including privacy, expediency, lower conflict and reduced cost.

In the decision Petersoo v.Petersoo, 2019 ONCA 624 , the Ontario Court of Appeal described it this way: [35] Mediation/arbitration is an important method by which family law litigants resolve their disputes. Indeed, the courts encourageparties to attempt to resolve issues cooperatively and to determine the resolution method most appropriate to their family. Themediation/arbitration process can be more informal, efficient, faster and less adversarial than judicial proceedings. These benefits areimportant 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: see Patton-Casse v. Casse, 2012 ONCA709, 298 O.A.C. 111, at paras. 9, 11.

[36] The essence of arbitration is that the parties decide on the best procedure for their family... [21] There is arguably less finality associated with a family arbitration than in the case of a pure commercial arbitration, with moreready access to the court on appeal and on wider questions of mixed law and law, or of fact alone if the parties’ agreement, as here, soprovides. [22] The provisions of the Act in this regard appear commensurate with the sensitive subject matter of many family arbitrations - atleast those involving children and the support of children.

But, a greater degree of finality may be achieved by individual parties (andvarious other pitfalls avoided) by the thoughtful and individualized crafting of the terms of their arbitration agreement, to narrow issueson appeal, to define with precision the types of errors which may be subject of appeal (to the extent the Act permits), and to ensure asensible and coherent record of the hearing is available in the event of an appeal. - the standard of review [23] As noted already, the petitioner says she has identified meritorious questions of law and of fact in her appeal of the Arbitrator’sAward.

She submits that the court should find two discrete errors were committed. [24] There is no issue but that the proper standard of review for the purported error of fact (error #2) is “palpable and overridingerror.” The decision in Mahjoub v. Canada (Citizenship and Immigration), 2017 FCA 157 is helpful to consider whenconducting that review: [61] Palpable and overriding error is a highly deferential standard of review: Benhaim v. St-Germain, 2016 SCC 48, [2016] 2 S.C.R.352, at paragraph 38; H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401.

When arguing palpable and overridingerror, it is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall. See Canada v. South YukonForest Corporation, 2012 FCA 165, 431 N.R. 286 [South Yukon], at paragraph 46, cited with approval by the Supreme Court in St-Germain, above. [62] “Palpable” means an error that is obvious. Many things can qualify as “palpable”.

Examples include obvious illogic in the reasons(such as factual findings that cannot sit together), findings made without any admissible evidence or evidence received in accordancewith the doctrine of judicial notice, findings based on improper inferences or logical error, and the failure to make findings due to acomplete or near-complete disregard of evidence. [63] But even if an error is palpable, the judgment below does not necessarily fall. The error must also be overriding. [64] “Overriding” means an error that affects the outcome of the case.

It may be that a particular fact should not have been foundbecause there is no evidence to support it. If this palpably wrong fact is excluded but the outcome stands without it, the error is not“overriding”. The judgment of the first-instance court remains in place. [25] Respecting error #1, the parties disagree as to the applicable standard of review on appeal, where a question of law is raised. Thepetitioner’s first position is that the standard is one of correctness, while the respondent argues reasonableness.

I acknowledge that thereare differing opinions among courts and judges in Canada concerning the proper standard. [26] In Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited, 2022 MBKB 239 (“Christie#2”), our Chief Justice addressed the “legitimate debate” regarding the standard of review for errors of law in private arbitrationproceedings and the underlying dispute about the impact of the Supreme Court of Canada’s judgment in Canada (Minister ofCitizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 SCR 653, stating: [81] In Canada (Minister of Citizenship and Immigration) v.

Vavilov, 2019 SCC 65, (“Vavilov”) the Supreme Court of Canadadetermined that appellate standards of review are to apply to statutory appeals and that, in considering questions of law, including thoseconcerning the scope of the decision maker’s authority, the applicable standard is correctness. The Court acknowledged that this was adeparture from its recent jurisprudence, but that the shift was necessary to bring coherence and conceptual balance to the standard ofreview analysis (see paras. 17, 36 – 38).

Nothing was specifically mentioned in Vavilov about the review analysis for arbitrations,which, even if regulated by statutory provisions, represent a distinct and private adjudicative forum that exists outside the typicaladministrative law framework. [82] There continues to be legitimate debate as to whether the standard of review framework reformulated by Vavilov applies to appealsof commercial arbitration awards.

As I noted in Christie, at paragraph 65, in respect of these applications, there have been a number ofdecisions from various lower courts both in this jurisdiction and other jurisdictions that would suggest that the issue of the applicablestandard of review is far from determined. Given the clarity of the Supreme Court of Canada’s reasoning and conclusions as found

in Sattva and Teal Cedar respecting the application of the reasonableness standard of review in cases of commercial arbitrations, it is notobvious, given the Court’s silence in Vavilov as it relates to commercial arbitrations, that the Supreme Court of Canada intended to socompletely depart from its previous clear reasoning and strong conclusions in Sattva and Teal Cedar. [27] As I ultimately do not accept that the petitioner has raised a question of law respecting the purported error #1, it is unnecessaryfor me to weigh in on the issue in this case.

Analysis and Decision - the Appeal Record (“the Record”) [28] In paragraph 14, above, I noted that counsel filed the Record. They both acknowledge that it contains “gaps”; that is, there wasevidence received by the Arbitrator at the arbitration hearing, and considered by her in arriving at her Award, that is not now before mein the Record filed. That important evidence includes the questions asked by counsel (and, I gather, by the Arbitrator as well) of theparties, and the answers given by each, in cross-examination at the arbitration hearing.

None of that evidence, in the usual form oftranscripts, is available because there was no recording made of the hearing, or of the distinct cross-examinations. That reflects what theparties agreed to, as regards process. [29] The potential magnitude of the problems and challenges created by an incomplete record, both to a party’s case on appeal, and tothe accomplishment of the appeal court’s task, was subject of comment by the Chief Justice of our court, in Christie Building HoldingCompany, Limited v.

Shelter Canadian Properties Limited, 2021 MBQB 77 (“Christie #1”). [30] While I now proceed to address each of the two errors alleged by the petitioner to have been committed by the Arbitrator, andupon which the appeal rests, an over-arching factor which effectively determines disposition of the case is the state of the Record, as willbe explained. - error #1 [31] The first error alleged by the petitioner in her appeal to have been committed by the Arbitrator is her holding that the sum of“$84,473.47 in cash... retains its excluded status under an FPA accounting”, which she says is an error of law. [32] As stated above, the petitioner asserts, therefore, that the standard of review is “correctness” or, in the alternative, one of“reasonableness” (the respondent’s position).

The reliance upon alternative standards denotes, as I have already observed, the sense ofuncertainty in some courts of the influence of Vavilov. [33] However, not much turns upon the particular preference of a standard of review in the end, as I agree with the respondent’sthreshold submission that there is no question of law raised. Rather, “the Arbitrator’s holding involved ‘applying a legal standard to a setof facts’ and ‘whether the facts satisfy the legal tests’” (document no. 24, Tab 5, p. 8).

I agree, and frame the purported error as one ofmixed law and fact, attracting the standard of review of ‘palpable and overriding error’, not as an error of law. And while I now proceedwith the orthodox analysis of the proceeding, and of the Award, my ability to do so is compromised by what is missing from the Record. [34] There is no dispute but that the respondent inherited monies approximately one year prior to separation, following his mother’sdeath.

Of the $136,328.55 initially deposited into the parties’ joint account, the respondent identified at the arbitration hearing that the$84,473.47 he retained at separation was “traceable as having been moved to his separate accounts” (para. 24 of the Award). [35] The petitioner’s argument on appeal has a number of facets, which prominently include that the inherited funds were co-mingledin the parties’ joint account; that the respondent did not prove that the specific assets in question were actually acquired by way ofinheritance, as there were several other possible sums of money received by the respondent in 2020 not accounted for; that his financialdisclosure and answers to Questions on Interrogatories were deficient; that he “lied”; that the circumstances surrounding one of the twobank accounts in which the funds were located at separation “cast further suspicion over [his] claimed exclusions.” [36] The Arbitrator cited the proper authorities, and correctly stated and applied the law.

In finding “that co-mingling or mixing of anexempt asset with a family asset does not necessarily destroy its exempt status” (Award, pp. 17-18) , she relied upon Windsor v. Hink,2022 MBQB 30, Kamer v. Ptashnik, 2016 MBQB 151, and Geddes v. Geddes, (MB KB). [37] Moreover, the Arbitrator twice reproduced in her Award a passage from Geddes and the statement made by then Associate ChiefJustice Hamilton: [27] ... mixing of an exempt asset with a family asset does not necessarily destroy its exempt status.

The facts and the intention of theparties must be examined in every case. [emphasis added] [38] I detect no error of law in the Award. [39] Substantial evidence was presented in various forms in the arbitration hearing. Each party was cross-examined. I am satisfiedfrom what I am able to see that there was every opportunity for the salient “facts and the intention of the parties” (Geddes) to be placedbefore the Arbitrator, to arrive at the Award she did.

[ 40 ] The Arbitrator’s Award also describes her approach to the evaluation of that evidence which was before her (document no. 22, Tab 9, p. 9): In arbitration, evidence that may be otherwise determined as inadmissible is often admitted. This was the case in this process. The Arbitrator alerted the parties at the hearing that evidence may not be accepted by me as proof or given little to no weight in the decision. Further, and perhaps more importantly, the principles of parsimony and proportionality were paramount in reaching my conclusions.

The parties do not have pensions on which they could rely in retirement, they wish to establish homes for themselves in the future, and the children are still dependent on them financially. As such, I took a focused and streamlined approach in analysing the significant amount of evidence that was submitted by the parties. [ 41 ] The foregoing comments of the Arbitrator underscore the frailty of the petitioner’s submission that “there is no evidentiary basis” for the Arbitrator’s finding. I do not have all of the evidence that was available to the Arbitrator. I do not have a complete picture.

The evidence given by each of the parties in cross-examination is absent. There was testimony of each to be weighed for reliability and credit, and in making findings of fact. [ 42 ] In Christie #1 , as here, there was no recording made of the testimony of witnesses. There was a broader dispute concerning the form and contents of the appeal record.

In the specific context of a leave application in a commercial arbitration appeal, one party sought to fashion and file a “homemade record” consisting of hundreds of pages of documents, including what was purported to be “a verbatim transcription of some of the questions asked and answers given during the direct and cross-examination and some of the witnesses who testified during the arbitration proceedings” (para. 5) prepared by one of the lawyers who was present at the hearing.

In ruling that the record of the arbitration proceedings be limited to the five exhibits marked at the hearing, the pleadings, and the arbitrator’s reasons for decision accompanying the awards, the Chief Justice stated; [34] In considering to what extent this court should participate in an effort to create or reconstruct a record for the purpose of Christie’s leave applications in a situation where the parties themselves specifically chose not to create an expansive evidentiary record at the arbitration, the court is well to keep in mind these and other relevant jurisprudential reference points which are meant to remind a reviewing court to guard against a de facto rehearing of the dispute. [35] In the present case, the parties appear to have made two decisions in respect of the procedure followed at the arbitration.

As Shelter has argued, those decisions have consequences, unintended or not, to the scope of any future appeal proceedings. The first decision was to not have a court reporter attend the hearing and prepare a transcript.

The second decision was to not mark documents as exhibits and instead proceed informally by displaying them on a television screen and providing printed copies to the arbitrator at a later date, with each side then accepting that the other side was providing to the arbitrator only documents to which specific reference was made. [ 43 ] In the case before me, there is no issue respecting the inclusion of controversial material in the Record, as was one of the issues in Christie #1 ; rather, it is simply the absence in the Record of the cross-examination evidence taken at the arbitration hearing that attracts attention.

And, in this appeal, this deprivation of evidence adversely affects the court’s ability to properly adjudicate the appeal; in its application of the law to the grounds of appeal (including the standards of review); and in the measurement of the Arbitrator’s Award for errors of law and of fact. [ 44 ] As the Chief Justice put it in Christie #2 : [11] For the reasons that follow, I have determined that: . . . iv.

Christie has either failed to clearly identify a question of law of arguable merit or, because of the impoverished and limited record from the arbitration, the court is disarmed from being able to meaningfully or adequately access whether any purported question of law is of arguable merit for the purposes of granting leave. . . . [59] In my view, Shelter is justified in saying that intended or not, the reality of the situation in the present case is that the extremely limited record has compromised and perhaps disarmed this court’s ability to perform a fair and meaningful review as to the arguable merit of any purported question of law impliedly alleging legal errors made by the arbitrator.

[60] Despite the extremely limited record, I intend in the analysis

section of this judgment, to address separately Christie’s position as best I can as it relates to the purported questions of law proposed by Christie pursuant to s. 44(2), just as I will also address separately, Christie’s submissions concerning s. 45(1).

That said, in addition to the other reasons I will advance, I wish to be clear that part of my rationale for what will be my determination to deny leave, is grounded in my inability to meaningfully conduct a fair review (one that does justice to the integrity of the arbitration hearing) as it relates to arguable merit on the leave application and what would be a similarly compromised or disarmed capacity on any more full appellate review had leave been granted. [ 45 ] The parties before me freely, and with the benefit of legal advice from their counsel, agreed to pursue arbitration and, critically, agreed as to how that arbitration would be conducted.

Now the petitioner in particular must accept the consequences of that agreement. [ 46 ] In my view, there is no basis to conclude that the Arbitrator committed an error of mixed law and fact, much less a palpable or overriding error. The petitioner’s appeal is a naked effort to re-argue or re-litigate aspects of the arbitration by filing an appeal that cloaks the purported error #1 as an error of law.

Put another way, or alternatively, in the absence of what appears to be critical testimony from the parties received by the Arbitrator and utilized by her in arriving at her decision, the court is “disarmed” in its task of analysis. [ 47 ] The petitioner’s appeal with respect to error #1 is hereby dismissed. - error #2 [ 48 ] The petitioner asserts that the Arbitrator committed an error of fact, mistakenly finding that Jackson resided primarily with the respondent in a specific timeframe.

It is a very narrow factual finding, but she says it impacts the allocation of parenting time going forward, as well as the calculation of support payable, such that it is a palpable and overriding error which must be reversed on appeal. [ 49 ] The same challenge presents, as with error #1. Can the court either conduct the requisite analysis with an incomplete Record, and/or overcome that handicap to confidently conclude that an error of fact has been committed?

The answer to the question is (again) no. [ 50 ] The petitioner repeats her entreaty that the court conclude there was “no evidence” before the Arbitrator to support the discrete factual finding now challenged here; but such a paucity of proof cannot be established, when we do not have or know all the evidence. [ 51 ] The appeal of the petitioner respecting error #2 is also hereby dismissed. Conclusion [ 52 ] Despite my somewhat categorical findings, I would not conclude that

summary dismissal of an arbitration appeal will be the reflexive result in every case where the appeal record is deficient due to the failure to preserve and transcribe cross-examinations conducted of the parties and/or witnesses at (or for) the arbitration hearing.

A judicious examination and determination ought to first be made as to whether the necessarily rigorous appellate review may be conducted despite that evidentiary gap, perhaps upon the balance of the record, mindful of the discrete issues in play, and the applicable standard of review. [ 53 ] But in the case before me here, dismissal is the only appropriate result, as the court sees nothing in the Award nor in the (materially deficient) Record establishing the Arbitrator erred, and has further been “disarmed” of its ability to conduct the requisite appellate review by the evidentiary gaps therein. [ 54 ] To reiterate, the appeal is dismissed, and the Award is confirmed in all respects.

Costs [ 55 ] Failing agreement, an appearance to address costs may be scheduled. _________________________ THOMSON J.