In Heine v Worsfold, 2025 ABKB 307, the court enforced a consent award rendered in a family dispute over objections that the arbitrator – who had also mediated the parties’ settlement – had demonstrated bias against the Applicant in the mediation. While the case raised a plethora of other issues, at the core were allegations about the mediator/arbitrator’s conduct in the mediation process.
The Dispute – The parties agreed to arbitrate disputes over the division of family property and partner support at the end of their relationship. The arbitration agreement provided, among other things:
- The parties may agree to mediate, in which case the arbitrator would also serve as the mediator and determine the procedure in consultation with the parties;
- Mediation would continue until both parties agreed to terminate it, or the “arbitrator” decided that continued mediation was not likely to resolve the dispute;
- The arbitrator shall not be disqualified for having first mediated the parties’ dispute; and
- The arbitrator must release the award within 60 days after completion of the hearing or the last written arguments of the parties (subject to extension on the parties’ consent).
A mediation session was held on July 11, 2023, at which the Applicant asserted that the Respondent was fraudulently withholding records and hiding assets. The Applicant did not discontinue the mediation and/or invoke arbitration, or ask the mediator/arbitrator to order the Respondent to produce records. Rather, the parties agreed to settle the dispute and record it in a consent award.
The parties’ counsel then worked to prepare a mutual waiver of support and orders in respect of property division to be appended to the consent award. A dispute arose about the end date of the joint accrual period for pension division. The Applicant submitted to the mediator/arbitrator that the parties had agreed to a pension accrual end date in June 2020. The Respondent denied that and argued that the pension accrual end date should be in September 2020, which both parties had agreed was the “date of separation.”
In the summer and fall of 2023, the parties’ counsel followed up several times to seek direction from the arbitrator about the dispute concerning the pension accrual end date, and for the consent award to be rendered. On November 17, 2023, the Applicant’s counsel communicated with Respondent’s counsel and advised that the Applicant did not consider the parties to have reached a binding settlement, and asked the Respondent to disclose additional financial records. Several weeks later, the arbitrator scheduled a status call that was held on January 10, 2024. The arbitrator then rendered the consent award on January 29, 2024. The consent award did not specify the dates of the joint pension accrual period, instead providing that it commenced on “the date of cohabitation” and ended on the “date of separation.”
Challenges to the Consent Award – The Applicant sought to set aside the consent award on several grounds.
Arbitration Act s. 45(1)(i) – Fraud – The Applicant alleged that the Respondent had fraudulently concealed assets, material transactions, and financial records and requested set-aside of the consent award under s. 45(1)(i) of the Alberta Arbitration Act, RSA 2000 c. A-43 (the “Act”). The Respondent answered that the Applicant chose to settle rather than to seek compulsory disclosure through the arbitrator.
The court rejected this challenge because the Applicant’s fraud allegations were, as the court explained at para. 56, “well known” to him before the mediation on July 11, 2023. The Respondent cited ENMAX Energy Corporation v TransAlta Generation Partnership, 2022 ABCA 206 for the proposition that failure to exercise diligence in pursuing an issue in arbitration may preclude a party from later “complain[ing] of some perceived unfairness resulting from their failure to do so.” Accordingly, as the court concluded at para. 61, allowing the Applicant to pursue those allegations for the first time on an application to set the award aside would “inject more cost, more delay and more uncertainty into family disputes, and seriously and unnecessarily subvert the underlying values of the arbitration process including proportionality and finality.”
Finality – As a threshold issue, the court found that the consent award was final and binding under s. 49 of the Act. The Applicant’s claims that the award was incomplete, that his unjust enrichment claim was not resolved, and that the pension accrual end date was uncertain were rejected. The Court determined the end date for pension accrual was the “date of separation,” which the parties agreed was September 11, 2020.
The Applicant’s allegation of bias – The Applicant sought to set the consent award aside on the basis that the arbitrator had demonstrated bias against him during the mediation. He alleged that he had been “bullied” into the settlement.
While observing that family law settlements are scrutinized more closely than commercial ones, the court found, at para. 126, that the Act nonetheless protects consent awards like the one in this case “from bias challenges made for the first time on a set aside application that reasonably could have been made to the arbitrator.” Accordingly, the Applicant’s claim was barred by s. 45(4) of the Act. But because the parties had extensively argued the bias allegations before the court, it reviewed their merits as well. The Applicant’s claim was based on comments the mediator/arbitrator had made during the meditation, and then in connection with the January 10, 2024 status call, which are discussed in greater detail in the commentary below. In short, while the court expressed some concern about the mediator/arbitrator’s manner of expression, it did not find that the comments gave rise to a reasonable apprehension of bias.
Denial of opportunity to present case – The court found that the Applicant had an opportunity to “discuss in mediation whether the matters including disclosure could be resolved without resorting to arbitration.” The Applicant then had a choice to arbitrate the issue of disclosure or to settle on the basis of the information available; he chose to settle. In the absence of fundamental unfairness in the bargaining process, the court refused to set aside the consent award on this ground.
Delay in rendering the consent award – As noted above, the arbitration agreement provided that an award would be rendered within 60 days of the end of the hearing, or the filing of final written arguments by the parties. The court agreed with the Applicant that the mediator/arbitrator’s failure to deliver the consent award within 60 days of July 11, 2023 breached that agreement, but found, at para. 190, that the Applicant had not demonstrated any prejudice from the delay “sufficient to vitiate the proceedings.”
Contributor’s Notes:
As the introduction sets out, this case is an issue-spotter’s dream, featuring statutory, procedural, evidentiary, and policy questions. This case note does not attempt to address them all. Readers of this blog may be most interested in how this case displays the tensions inherent in combining the roles of mediator and arbitrator.
On the one hand, family law disputes (like all disputes) can be financially and emotionally taxing, and the court described alternative processes – including med/arb – as “fundamental” to advancing efficiency, flexibility, timely justice, proportionality, fairness, and finality within the modern family law dispute resolution framework. Consenting to appoint an arbitrator who may also mediate the dispute may save time and costs (although the six-month wait the parties endured in this case for a consent award may not be the best example).
But it also carries risks.
Mediations of all kinds can be difficult and emotionally complex. As the court indicated, mediators have wide discretion about the techniques they use to help parties resolve disputes in a time-limited arena, including “informality or loose language,” focusing on finding common ground and interests rather than on legal rights and entitlements, and guiding parties to focus on the cost effectiveness of pursuing certain issues in the context of their individual circumstances. In short, as the court wrote, “mediation is not an arbitral hearing,” and the mediator is under no obligation to give the parties a full opportunity to make their cases. Where a mediator/arbitrator’s conduct may cross over to a reasonable apprehension of bias is a “fine line,” in the court’s view, that may be different depending on the facts and context of each case.
Here, the Applicant alleged that, acting as mediator, the mediator/arbitrator made various comments that, in the Applicant’s submission, showed she would not be fair or impartial if the proceeding switched from mediation to arbitration. For the court, the mediator/arbitrator’s comments – for example, asking pointedly (“so what?”) what is to be gained from further records inquiries, or asking if the Applicant wanted to incur the cost of proceeding to arbitration – were not improper, oppressive, or “evidence that she would treat him unfairly or lacked impartiality.” The court was more critical of the mediator/arbitrator’s “graphic expressions” about the reasonableness of the Applicant’s expectations, given that there was no cohabitation agreement and that he had accepted – in the mediator/arbitrator’s phrasing – “someone sitting on the couch eating bon bons as a contribution” to the relationship.
This “fine line” is, obviously, difficult to draw in the abstract and it is a risk inherent in any mediation/arbitration. While the court concluded that these comments did not establish a reasonable apprehension of bias in this case, the close scrutiny of the mediator/arbitrator’s choice of methods to achieve settlement is itself instructive. It is not difficult to conceive of situations in which an appointed arbitrator may feel or be constrained not to employ certain strategies to identify potential solutions in a mediation, even with express party consent. For example, would such a mediator/arbitrator feel comfortable suggesting to a party that it should consider alternatives to subtly (or not) hint that its position may not be as strong at the hearing as the party thinks? Would such a mediation be as successful as one in which the mediator had unfettered access to his or her entire “toolkit”? What chilling effect might the scrutiny of a mediator/arbitrator’s methods shown in this case have, especially – as the court correctly observed – when taken out of the context in which they were used?
While mediation/arbitration is popular and can be effective to resolve or narrow disputes, this case underlines the importance of setting out clearly the expectations of the parties, and of the mediator/arbitrator, in applicable rules or in a submission agreement. For example, the ADRIC Med/Arb rules, published in 2020, provide structure and guardrails for the mediation and arbitration processes, including specific delineation of one from the other and rules about how information shared in the meditation process may be used (or not) in the arbitration. And, finally, it is worth underlining that med/arb processes may be best suited to contexts in which sophisticated users understand the tradeoffs that come with appointing one person to perform two different, sometimes complementary, functions.