Arbitration Agreements – Staying Court Action and Best Interests of the Children

Parker v Pal, 2014 ONSC 7035

This high conflict case considers the jurisdiction of the courts to deal with a matter undergoing arbitration under an Arbitration Agreement.

Background

The parties separated and signed a Separation Agreement with a shared custody arrangement and alternative dispute resolutions provisions.  However, there were no provisions purporting to restrict the court’s jurisdiction.

The Children’s Aid Society (CAS) and police became involved after Mr. Parker alleged Ms. Pal physically and sexually abused the children while they were in her care.  Deciding that he wanted sole custody and to restrict Ms. Pal’s access, Mr. Parker sought to vary the Separation Agreement through arbitration.

The parties signed an Arbitration Agreement (the Agreement) permitting the Arbitrator handle all custody and access issues.  Subsequently, the Arbitrator dismissed Mr. Parker’s motion to vary, upheld the existing custody arrangement, and awarded costs to Ms. Pal.  Since the custody matter was in private arbitration, the Office of the Children’s Lawyer (OCL) declined to become involved.

Mr. Parker brought numerous court motions to suspend arbitration and interfere with the Arbitrator’s awards.  He argued that the Court had authority to do so under sections 6 and 7 of the Arbitration Act and that it was in the children’s best interests that it assume jurisdiction.

Analysis

Section 6 – Unfairness to the Children

Ultimately, the Court lacked jurisdiction to interfere with the agreements and the arbitration process.  Section 6 of the Arbitration Act precludes court intervention except in certain enumerated exceptions.  The Court disagreed with Mr. Parker that the third exception in section 6 applied “to ensure that arbitrations are conducted in accordance with arbitration agreements” with respect to the children’s interests and the alleged risk posed by their mother.

The purpose of section 6, exception 3 is to prevent unfair or unequal treatment of the parties to the arbitration.  The exception was inapplicable to the children because they were third parties to the Agreement and thus not parties to the arbitration.  There was no evidence of unfairness to Mr. Parker as he clearly received the benefits of a full hearing and had independent legal advice prior to signing the Agreement.

Section 7 – Staying the Arbitration

Under s. 7(1) of the Arbitration Act, a person contesting a court’s jurisdiction to hear a proceeding may bring a motion to stay.  The Court held it lacked jurisdiction under this provision and noted that it was illogical for Mr. Parker seek a section 7(1) stay for the arbitration as he both brought the court proceeding and sought the stay.

Mr. Parker also relied on exception 3 of section 7(2), which grants the court discretion to stay a proceeding where the subject matter of dispute cannot be the subject of arbitration under Ontario law.  He argued that the Arbitrator lacked inherent jurisdiction regarding the best interests of the child, thus precluding the OCL’s involvement and raising a possibility of danger to the children.

The Court disagreed, finding that the issues raised were acceptable subject matter as per the Arbitration Agreement.  The parties had agreed that the Arbitrator had all the powers of a judge in relation to custody, access, and the children’s interests.  The Arbitrator was granted broad powers to order examinations and to obtain recommendations from assessors regarding the children or parents under various relevant statutes.

Additionally, the appointment of the OCL is not the ‘subject matter’ of the dispute as contemplated by exception 3 of s. 7, but is merely a mechanism available to assist the court.

Section 56(1) of the Family Law Act

According to Rosenberg v. Minister, a court may set aside an arbitration agreement under section 56(1) of the Family Law Act where it is in the child’s best interest to do so.  Despite Mr. Parker not raising section 56(1), the Court included this hypothetical analysis since the best interests of the children was raised as an issue.

The Court would have refused to set aside the agreements and arbitral awards.  The Arbitrator was well experienced in family law both as a practitioner and arbitrator/mediator.  The hearings were utterly fair as the parties were assisted by experienced family law counsel through the drafting of the various agreements and the conduct of the arbitration itself.

Furthermore, Mr. Parker’s evidence failed to establish that the children’s best interests would be better served by the Court.  This was especially true as the police, CAS, and the Arbitrator rejected his unsubstantiated allegations of abuse.

In the end, the carefully drafted agreements clearly demonstrated the parties’ intention to resolve their matter entirely through dispute resolution processes outside of court and for access to the courts be strictly limited to appeal or enforcement of the final order.  Thusly, Mr. Parker’s application and motions were dismissed.

Andrew Feldstein

The Feldstein Family Law Group (FFLG) is one the largest family law firms that practices Family Law exclusively in Greater Toronto, with ten lawyers and counting. The boutique law firm has won the Top Choice Award for Family Law™ in Toronto for the past eleven years (2007 to 2017 inclusive).

Managing Partner Andrew Feldstein has been practicing family law for more than 20 years and frequently comments on Family Law issues through the media. The Feldstein Family Law Group offers vast written, video, and media resources on its website to those who find that they need to end their relationship.

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