



COURT OF APPEAL FOR ONTARIO

CITATION:
Grosman v. Cookson, 2012
    ONCA 551

DATE:  20120824

DOCKET: C54704

OConnor A.C.J.O. and Ducharme J.A.
*

BETWEEN

Brian Grosman

Applicant (Respondent on Appeal)

and

Penny-Lynn Cookson

Respondent (Appellant)

Harold Niman and Daniel Bernstein, for the respondent
    (appellant)

R. Steven Baldwin, for the applicant (respondent on
    appeal)

Heard:  May 14, 2012

On appeal from the judgment of Justice J. Johnston of the
    Superior Court of Justice, dated November 25, 2011.

OConnor
    A.C.J.O.:

[1]

Does a court have jurisdiction to vary the amount of spousal support in
    a valid separation agreement contrary to an exclusive arbitration provision if
    the payee spouse files the agreement for enforcement under s. 35 of the
Family
    Law Act
,
RSO 1990, c. F.3
(
FLA
)
.  In my view, it does not.

facts

[2]

In 2001, after 34 years of marriage, the appellant wife and the
    respondent husband separated.  Following their separation, they attended for
    mediation with Mr. Stephen Grant and in February 2004, they entered into a
    comprehensive separation agreement (the separation agreement).

[3]

The separation agreement provides that the husband will pay spousal
    support in the amount of $8,500 per month.  It also provides that if either
    party seeks to vary the amount of the spousal support, Mr. Grant will be
    appointed the mediator/arbitrator pursuant to a mediation/arbitration
    agreement.  The mediation/arbitration agreement provides that Mr. Grant is
    appointed as sole arbitrator pursuant to the
Arbitration Act
, 1991, S.O.
    1991, c.17.  It also provides that the agreement shall constitute a submission
    pursuant to the provisions of the
Arbitration Act
.

[4]

The parties divorced in August 2004.  By its terms, the separation
    agreement continued in force.  For convenience, I will refer to the parties as
    the husband and the wife after the divorce.

[5]

The husband is now 77 years of age and was a successful lawyer.  On
    March 30, 2010, he wrote the wife indicating his intention to retire as a
    partner in his law firm at the end of 2010.  After retirement as a partner, he
    would continue as counsel with the firm and receive a reduced income.  He
    proposed a variation of the amount of spousal support.

[6]

In September 2010, the parties attended a mediation before Mr. Grant to
    mediate the husbands request for a variation.  The mediation failed.

[7]

It appears that an arbitration was scheduled for December 2010.  The
    husband changed counsel and the arbitration did not proceed.

[8]

On February 1, 2011, the husband stopped paying spousal support to the
    wife.  Through his counsel, he expressed interest in discussing an amicable
    resolution.

[9]

Towards the end of February 2011, the wife filed the separation
    agreement with the Ontario Court of Justice pursuant to s. 35(1) of the
FLA
with a view to enforcing its terms
.  On
    April 20, 2011, the Director of the Family Responsibility Office (FRO)
    notified the husband that he was required to make future spousal support
    payments to the FRO .

[10]

On June
    14, 2011, the husband filed an application in the Superior Court of Justice
    seeking to vary or terminate his obligation under the separation agreement to
    pay spousal support.

[11]

On
    September 6, 2011, the Director of the FRO sent a notice to the husband
    pursuant to s. 34(1) of the
Family Responsibility and Support Arrears
    Enforcement Act
, 1996, SO 1996, c. 31
(the 
Enforcement Act
) indicating that the support arrears were
    $61,212.39.  The notice also indicated that the Director would be taking steps
    to suspend the husbands drivers licence.

[12]

The husband brought a motion pursuant to s. 35(1) of
    the
Enforcement Act
for an order that the Director of the FRO refrain
    from suspending the husbands drivers licence.
On October 4, 2011,
    McMunagle J. granted the husbands motion and required him to pay $1,400 per
    month for spousal support pending a hearing of the husbands application to
    vary the spousal support payment.

[13]

The wife
    brought a motion in the Superior Court to dismiss the husbands application to
    vary the amount of spousal support on the basis that the court lacked
    jurisdiction because the separation agreement required such a request be dealt
    with by way of arbitration.

[14]

On
    November 25, 2011, the motion judge dismissed the wifes summary judgment
    motion.  The wife appeals that dismissal.

motion judges reasons

[15]

The motion
    judge recognized that there are strong policy reasons requiring parties to
    adhere to their agreements, in this case, their agreement to arbitrate requests
    to vary the spousal support.

[16]

The motion
    judge recognized that ordinarily a court would not have jurisdiction to deal
    with a request to vary in these circumstances.  He held, however, (at para. 27)
    that, having sought the benefit of enforcement of
Section
35, the wife
    could not, argue there is no jurisdiction in this Court to consider variation
    of the spousal support Agreement.  Section 35(2)(b) permits a party who has
    filed a domestic contract with the court under section 35(1) to apply to the court
    for a variation.

[17]

The motion judge also pointed out that it was a
    condition of seeking an order that the FRO refrain from suspending the
    husbands drivers licence that the husband also seek to vary the support order
. 
    In conclusion, the motion judge held that the Superior Court had jurisdiction
    to entertain variation of the spousal support provision and dismissed the wifes
    summary judgment motion.

issues

[18]

There are
    two issues: 1) did the motion judge err in holding that s. 35 of the
FLA
provides a court with jurisdiction to entertain variation of the terms of a
    separation agreement despite an exclusive arbitration provision in the
    agreement; and 2) if so, does s. 35 (1) of the
Enforcement Act
independently
    confer jurisdiction on the court to hear a motion to vary a spousal support
    order?

section 35 of the
fla

[19]

The
    relevant portion of s. 35 of the
FLA
reads as follows:

35.          (1) A person who is a party to a domestic contract
    may file the contract with the clerk of the Ontario Court of Justice or of the
    Family Court of the Superior Court of Justice together with the persons
    affidavit stating that the contract is in effect and has not been set aside or
    varied by a court or agreement.

(2) A provision of support or maintenance contained
    in a contract that is filed in this manner,

(a) may be enforced;

(b) may be varied under section 37; and

(c) except in the case of a provision for the support
    of a child, may be increased under section 38,

as if it were an order of the court where it is filed.



(4)  Subsection (1) and clause (2)(a) apply despite
    an agreement to the contrary.

[20]

The
    appellant emphasizes that pursuant to s. 35(2)(b), once a domestic contract is
    filed, it may be varied under s. 37 as if it were an order of the court. 
    Section 37 provides for an application to the court for variation of an order
    made or confirmed under Part III of the
FLA
.
Thus, the appellant
    argues that the
FLA

specifically permits a variation
    application to the court where a domestic contract is filed with the court
    under s. 35(1) even where the domestic contract contains an exclusive
    arbitration clause.

[21]

In my
    view, however, this interpretation overlooks the effect of s. 35(4), which
    states that subsection (1) and clause (2)(a) apply despite an agreement to the
    contrary.  Subsection 35(2)(b), which permits variation, and upon which the
    appellant relies, is conspicuously absent from section 35(4).  As explained by
    Noel J.A. in
Canada
(Canadian Private Copying Collective) v. Canadian
    Storage Media Alliance
, [2004] F.C.J. No. 2115 at para. 96 (F.C.A.), dealing
    with a series of express exceptions, if a statute specifies one exception (or
    more) to a general rule, other exceptions are not to be read in.  The rationale
    is that the legislature has turned its mind to the issue and provided for the exemptions
    which were intended.  Here, subsection 35(4) gives special treatment to
    subsection (1) and clause (2)(a), which deal with filing and enforcement, to
    specify that they apply despite an agreement to the contrary.   The same
    special treatment is not afforded to clause 35(2)(b) (the variation
    provision).   It follows, in my view, that the legislature intended that an
    agreement to the contrary would supersede s. 35(2)(b).  Were it not so, the
    legislature would have so provided in s. 35(4).

[22]

The effect
    is that the
FLA
permits parties to contract out of the court variation
    procedure in s. 37, but does not allow them to contract out of the ability to
    file a domestic contract and have it enforced by a court under s. 35(1) and s.
    35(2)(a) respectively:  see for example
OConnor v. OConnor
(1990) 28
    R.F.L. (3d) 90 (Ont. C.J.).

[23]

This
    interpretation is sensible.  An agreement to pay a specific amount of spousal
    support is not self-executing.  The parties require an enforcement mechanism to
    ensure that each is kept to the bargain.  However, it remains open to the
    parties to contract for exclusive arbitration to vary the substantive terms. 
    In such cases, the court may enforce the domestic contract as it finds it.

[24]

In this
    case, clause (5) of the separation agreement deals with spousal support.  The
    mechanism for review is in clause 5.5.  It reads:

Mr. Stephen Grant will continue to be the appointed
    mediator/arbitrator for all matters related [to] the review of Spousal Support
    pursuant to the terms of a Mediation/Arbitration Agreement dated November 12,
    2003 (the Mediation/Arbitration Agreement), a copy of which is attached  as Schedule
    B.

[25]

Clauses 3
    and 6 of the Mediation/Arbitration Agreement respectively provide:

3. WAIVER OF RIGHTS TO LITIGATION IN COURTS

By submitting to arbitration  the parties hereby waive any
    right to further litigate those issues in court, whether pursuant to the
Family
    Law Act
, R.S.O. 1990, c. F.3, the
Divorce Act
, R.S.C. 1997, or
    any other statute, subject to the judicial review rights.

6.  PRE-ARBITRATION CONFERENCE/MEDIATION

A mediation will be attempted but if it fails to resolve all
    the issues, the remaining issues will be immediately presented for final
    binding arbitration by the mediator who will become the Arbitrator.  The
    parties specifically agree that the participation of the Arbitrator in the
    mediation process shall not disqualify the Arbitrator from arbitrating the
    disputes between them.

[26]

Where an
    arbitration agreement exists, courts will stay their own proceedings and compel
    the parties to arbitrate:
Dormer v. McJannet
(2006), 35 R.F.L. (6
th
)
    418 at paras. 20 and 34; and
Puigbonet-Crawford v. Crawford
, [2006]
    152 A.C.W.S. (3d) 99 at paras. 8, 13 and 14.

[27]

In
    summary, I am of the view that s. 35 of the
FLA
does not supersede the
    parties agreement in a domestic contract to arbitrate rather than litigate
    disputes about varying spousal support.

section 35 
enforcement act

[28]

In the
    alternative, the husband argues that the interpretation of s. 35 of the
FLA

that I have reached above does not apply in circumstances where the
    Director of the FRO has initiated the process to suspend the payors drivers
    licence.

[29]

The Director
    of the FRO may commence a process to suspend a payors drivers licence under
    s. 34 of the
Enforcement Act
.  It states:

34.  When a support order that is filed in the Directors
    office is in default, the Director may serve a first notice on the payor,
    informing the payor that his or her drivers licence may be suspended unless,
    within 30 days after the day the first notice is served,

(a)  the payor makes an arrangement satisfactory to the
    Director for complying with the support order and for paying the arrears owing
    under the support order;

(b) the payor obtains an order to refrain under subsection
    35(1) and files the order in the Directors office; or

(c)  the payor pays all arrears owing under the support order.

[30]

In the present case, the husband sought an order under
    s. 35(1) of the
Enforcement Act
that the Director refrain from suspending his licence
.
That
    section provides:

35. (1) If a payor is served with a first notice under section
    34 and makes a motion to change the support order, the payor may also, on
    notice to the Director, make a motion for an order that the Director refrain
    from directing the suspension of the payors drivers licence under subsection
    37(1), on the terms that the court considers just, which may include payment
    terms.

[31]

Section 35(1) requires the payor to make a motion to
    change the support order as a condition of bringing a motion for an order that
    the Director refrain from suspending the payors drivers licence.

[32]

The
    husband argues that the motion to change the support order in s. 35(1) refers
    to a motion to a court.  He finds support for his argument in s. 35(6) of the
Enforcement
    Act
which states:

35. (6) The court that has jurisdiction to change the support
    order is,

a) in the case of a support order that was made in Ontario,

(i) the court that made the support order, unless sub-clause
    (ii) applies,

(ii) if the support order is a provision in a domestic contract
    or paternity agreement, the Ontario Court of Justice or the Family Court; and

b) in the case of a support order that was made outside
    Ontario,

(i) if the support order was made under the
Divorce Act
(Canada), the Superior Court of Justice or the Family Court,

(ii) if the support order is registered under the
Inter-jurisdictional
    Support Orders Act, 2002
, the court in Ontario that has jurisdiction under
    that Act to vary the support order.

[33]

Thus, the husband argues that the statutory regime
    requires that having moved for an order that the Director refrain from
    surrendering his licence, he is implicitly permitted under s. 35(1) of the
Enforcement
    Act
to move in court to change the underlying support order.
If it
    were otherwise, he would have no recourse to avoid license suspension.

[34]

I do not
    accept this argument.  In my view, the statutory regime of s. 35 of the
Enforcement
    Act
can be interpreted harmoniously with the interpretation of s. 35 of
    the
FLA
discussed above.  Put another way, I am satisfied that if the
FLA

does not allow the parties to avoid their bargain to use private arbitration
    as the exclusive means of settling disputes, neither does s. 35 of the
Enforcement
    Act
.

[35]

I reach
    this conclusion for three reasons.

[36]

First, the
    language of ss. 35(1) and (6) of the
Enforcement Act
is open to a
    different and more sensible interpretation than that urged by the husband. 
    Section 35(1) provides an avenue of recourse if a payor makes a motion to
    change the support order.  While the use of the term makes a motion may
    include a motion to a court, there is no reason why the language cannot be more
    broadly understood to include a motion (or written request) to an arbitrator
    where the parties have specifically agreed that this should be the exclusive
    means by which to obtain a variation.

[37]

As to s.
    35(6), it merely provides which court has jurisdiction in certain
    circumstances.  It does not provide that all motions referred to in s. 35(1)
    need be made to a court.

[38]

Second,
    the
Enforcement Act
was first enacted in 1996.  Section 35 of the
FLA
was in force at the time.  As I have indicated, s. 35 of the
FLA
recognizes that the provision in a domestic contract for exclusive arbitration
    should be applied even after an agreement has been filed under s. 35(1).  There
    is nothing in the wording of the
Enforcement Act
indicating a
    legislative intent to alter that important principle.  Had the legislature
    intended to change the effect of an agreement to arbitrate upon the
    availability of the court variation process, clearer language would be required
    than that which is found in s. 35 of the
Enforcement Act
.

[39]

The
Enforcement
    Act
complements the
FLA
by providing a mechanism whereby support
    orders filed with the court under the
FLA
, which include the terms of
    domestic contracts, are enforced.  Nothing in the
Enforcement Act
suggests
    that it is intended to alter the clear effect of the
FLA
itself
.

[40]

Interpreting
    s. 35 of the
Enforcement Act
in the manner I suggest promotes harmony
    between that Act and the
FLA
:  It is presumed that the body of
    legislation enacted by a legislature does not contain contradictions or
    inconsistencies, that each provision is capable of operating without coming
    into conflict with any other:  R.
Sullivan,
Construction of Statutes
, 5
th
ed. (Markham:  LexisNexis, 2008),
    at p. 223.

[41]

Third,
    accepting the husbands interpretation of s. 35 of the
Enforcement Act
would create perverse incentives.  If the husbands interpretation of s. 35
    were accepted, the following scenario would be possible:  Two parties enter
    into a domestic contract that includes an exclusive arbitration clause for the
    variation of its terms.  If one party wants to change the terms, without
    resorting to arbitration, that party would have an incentive to default on its
    obligations and hope that the other party submits the contract for enforcement
    under s. 35 of the
FLA
.  If the other party does, once the Director of
    the FRO attempts to enforce the domestic contract by suspending the defaulting
    partys drivers licence, the defaulting party could bring a motion to the
    court to vary the underlying obligation  thereby circumventing the arbitration
    agreement.  In other words, on the husbands interpretation, parties would be
    able to, through the
Enforcement Act
, do what they are specifically
    not permitted to do under their own agreement.

[42]

On the
    flipside, the husbands interpretation may lead to a chilling effect on spouses
    submitting their contracts for enforcement under s. 35 of the
FLA
. 
    Parties aware of the above potential scenarios might be reluctant to submit
    their domestic contracts for enforcement.  Otherwise, the party would risk
    losing the negotiated terms of the agreement.

[43]

All these
    considerations favour an interpretation of s. 35 of the
Enforcement Act

that leads to the conclusion that a party may not circumvent his agreement to
    arbitrate a variation simply because the courts enforcement mechanism has been
    engaged.

disposition

[44]

In the
    result, I would allow the appeal, set aside the order of Justice Johnston dated
    November 25, 2011, and grant the wifes motion for summary judgment dismissing
    the husbands application to the Superior Court of Justice to vary the amount
    of spousal support.

[45]

If the
    parties cannot agree on the issue of costs, they may make written submissions
    regarding the costs of the motion and appeal on a schedule set by the courts
    Senior Legal Counsel, Mr. John Kromkamp.

RELEASED:
DOC  AUG 24 2012

D. OConnor
    A.C.J.O.

I agree Ducharme
    J.A.





*

Justice Feldman heard the appeal but, due to circumstances
    that arose after the hearing, was unable to participate in the giving of the
    decision.


