Case law: Arbitration

ung woman looking downcast

Horowitz v. Nightingale 2017 ONSC 2168: This motion was brought by the husband for an order staying the family law proceeding between him and his wife. The parties were married for 16 years prior to their separation. They had three children.  The applicant wife initiated an application for custody, access, child and spousal support and equalization of net family property.

The parties signed Minutes of Settlement in which they resolved all issues except support. They agreed that the support issues would be resolved through arbitration. Shortly after the Minutes were incorporated into a court order by Justice McGee, the applicant wife fired her lawyer and declined to proceed with the arbitration on the issue of support. The husband then moved for the stay on the ground that Minutes of Settlement between the parties, dated May 10, 2016, obligated the parties to arbitrate the issues in dispute.

It was the husband’s position that the parties entered into an arbitration agreement by signing Minutes of Settlement. The agreement that the husband relied upon does not meet the mandatory regulations of the Arbitration Act with respect to making an agreement an arbitration agreement. He took the position that the Minutes of Settlement and the events that followed that should allow the court to hold that the intention of the parties was to arbitrate and, therefore, order that the arbitration proceed, notwithstanding the lack of formalities.

It was standard practice for lawyers negotiating separation agreements to include a clause providing for mediation-arbitration of possible future disagreements on implementation or interpretation of the agreement. However, in this case, Justice Nelson declined to enforce such a provision on the basis that the formalities of entering into a private arbitration regime, as required under Ontario’s Arbitration Act, had not been followed. Justice Nelson examined Justice McGee’s endorsement and found that she clearly foresaw that the parties required a secondary document and even stated that they were going to enter into a secondary document called an Agreement to Arbitrate. Because there was no secondary document to confirm the intention to arbitrate, Justice  Nelson ruled that the court should not imply terms to what is a consensual process chosen by the parties.

As a result, the court did not allow the stay of the court application. Justice Nelson outlined the steps for those who wish to properly enter into the arbitration process through a consent order of the court:

1. The parties should sign an arbitration agreement that observes the formalities at the time the consent order is requested; and

2. The parties should ask the court to stay the legal proceeding when the consent order is requested.