In Medjuck v Medjuck, 2024 ONSC 2980,the Court dismissed an application for a de novo hearing to decide the matter of disclosure requests that were denied in part by the Arbitrator on several grounds, including that he did not have jurisdiction to grant some of the requests. The Court held that it did not have authority to intervene in the arbitration so as to hear and rule on the disclosure request de novo. It found that the request did not fall under any of grounds listed at section 6 (court intervention limited) of the Ontario Arbitration Act, 1991, SO 1991, c 17.
Background – The parties were spouses, who submitted all disputes arising from the breakdown of their marriage to arbitration via a Mediation/Arbitration Agreement.
After certain issues were determined by way of a consent award, the only issues under the Arbitrator’s jurisdiction concerned child and spousal support from January 1, 2023 onward. In relation to these issues, Respondent sought disclosure from the Applicant to determine his and his company’s income. Following a hearing on disclosure issues, the Arbitrator granted the Respondent’s request and the Applicant provided limited disclosure, but it did not include the Applicant’s personal tax returns or corporate tax returns, which are routinely produced in family law matters before the courts.
Pursuant to a request from the Respondent, the Arbitrator made a second order, which compelled the Applicant to provide further disclosure by way of affidavit. The Applicant delivered the affidavit, in which he swore that he could not produce personal or corporate tax returns, as he had not filed them for the past 3 years. He also swore that no corporate financial statements had been filed.
Still unsatisfied, the Respondent filed another motion to the Arbitrator to compel further disclosure, including that the Applicant be forced to file personal and corporate tax returns, and complete financial statements for the company. This led to an interim award regarding the Respondent’s disclosure requests, which is the subject of this case summary (the “Interim Award”).
The Interim Award – The Interim Award granted the disclosure requested by Respondent, in part. It ordered limited production of financial documents requested by Respondent., but did not require the Applicant to produce the personal and corporate tax returns, and corporate financial statements which had not been filed.
Though the Arbitrator had refused to order disclosure of personal and corporate income tax returns, he acknowledged these were “core documents”. He found, based on the Applicant’s affidavit, that no tax documents had been filed for the past 3years, and considered that he did not have jurisdiction to compel the Applicant to file them. The Arbitrator made a similar finding with respect to the company’s financial statements.
Respondent filed a motion to the Court for leave to appeal the Interim Award under s. 45(1) of the Arbitration Act, 1991, S.O. 1991, c. 17. The motion was later amended to include a de novo hearing on an application to the Court to compel disclosure of Applicant’s personal and corporate tax returns and corporate financial statements. Respondent justified this request for a de novo hearing on the basis that the Arbitrator had determined that he lacked jurisdiction to make the order.
The Court denied leave to appeal on the basis that the questions raised were matters of mixed fact and law. This case note will only consider the motion for a de novo hearing on the disclosure issue.
Decision on the de novo hearing request to compel financial disclosure – The Court denied the Respondent’s motion for financial disclosure.
In its reasons, the Court referred to s. 6 of the Arbitration Act, 1991, which provides that a court shall not intervene in an arbitration except:
- To assist the conduct of arbitrations;
- To ensure that arbitration are conducted in accordance with arbitration agreements;
- To prevent unequal or unfair treatment of parties to arbitration agreement; and/or
- To enforce awards
The Court found that the motion made by Respondent to require the Applicant to file and disclose the tax returns and financial statements did not fall under any of the grounds set out at s. 6 of the Act. Respondent rather sought an order of the Court that the Arbitrator found he did not have jurisdiction to make, specifically to order the Applicant to file income tax and financial statements.
The Court acknowledged the existence of jurisprudence confirming that a court may compel disclosure against third parties to a family law arbitration. It distinguished this jurisprudence on the basis that the arbitral tribunal in those cases had no jurisdiction over the third parties to the arbitration, from whom disclosure was being requested. Here, the disclosure request was sought against a party to the arbitration and the arbitrator had determined that, though he had jurisdiction over the parties, he had no jurisdiction to force the Applicant to file tax returns. Therefore, jurisprudence regarding third-party disclosure was of no assistance to the Respondent.
The Court also acknowledged that courts have routinely ordered litigants to file income tax returns to facilitate disclosure in child and spousal support cases. However, it distinguished those cases on the basis that they proceeded before the courts rather than arbitration.
The Court also found that the Arbitrator had ordered disclosure of all financial documents that would be required to file income tax returns.
The Court found that the disclosure issues decided by the Arbitrator all fell squarely within his jurisdiction to decide matters related to spousal and child support from January 1, 2023. In the circumstances, the Court found it had no discretion to intervene with respect to the Interim Award, even if it disagreed with the Arbitrator’s finding that he could not order the Applicant to file personal or corporate tax returns.
Contributor’s Notes:
First, the Court distinguished cases where parties seek its assistance to compel disclosure from third parties over whom the arbitrator has no jurisdiction. In this case, the arbitrator also decided he did not have jurisdiction to compel disclosure of the documents sought by the Respondent, although the jurisdictional decision was not jurisdiction ratio personae. Nevertheless, since the arbitrator had jurisdiction over both parties, the Court found that the Respondent’s request for assistance did not fall within one of the circumstances described at s. 6 of the Arbitration Act (1991).
Second, one wonders whether the Court could have found a justification under one of the general grounds listed at s. 6 of the Arbitration Act (1991), for example, subparagraph (a) regarding assisting in “the conduct of the arbitration”. Potentially, this ground could have justified court intervention to assist with the disclosure of tax returns requested by the Respondent, since the arbitrator considered he did not have authority to compel filing of the tax returns, and since the Court acknowledged that this kind of relief is routinely ordered by the courts. However, this possibility was not specifically analysed in the Court’s reasons, which summarily dismissed the possibility of any court intervention under s. 6 of the Act .
Third, the Respondent’s motion also sought leave to appeal the arbitrator’s disclosure ruling. The request for leave was denied by the Court on the basis that the Respondent did not raise true questions of law, but rather mixed questions of fact and law.
Fourth, the Court appeared to disagree with the arbitrator’s finding that he had no jurisdiction to order the Applicant to file income tax return. More generally, the Court appears to suggest that an arbitrator has all the same powers as a court does to force disclosure as between the parties to the arbitration. The fact that the arbitrator in this case (rightly or wrongly) decided that he did not have jurisdiction to force the Applicant to file tax returns did not, in the Court’s view, warrant a de novo hearing of the disclosure requests.