CITATION: Cunningham v. Moran, 2011 ONCA 476

DATE:  20110624

DOCKET: C52752

COURT OF APPEAL FOR ONTARIO

Rosenberg, Simmons and Karakatsanis JJ.A.

BETWEEN

Douglas M. Cunningham

Appellant

and

Mayo Moran, Sheila Holmes and Robert Lawson

Respondent

Gary Joseph and Vanessa Lam for the appellant

Philip M. Epstein, Q.C. and Michael Zalev for the respondent

Heard: June 7, 2011

On appeal from the order of Justice Randall S. Echlin of the Superior Court of Justice dated August 27, 2010.

By the Court:

I.         Introduction

[1]              The appellant and the respondent are former common-law partners. During cohabitation, they had one child together and purchased a home. Following their separation, they maintained joint custody of their child.

[2]              After protracted family law proceedings that were eventually resolved through mediation/arbitration, the appellant issued a statement of claim against the respondent and her counsel in the family law proceedings, claiming, among other things, that as a result of misrepresentations, the appellant and her counsel fraudulently induced him to pay more child support than he should have and fraudulently concealed the respondent’s ability to pay child support to him. He claimed damages for these and various ancillary claims.

[3]              The respondent and her counsel moved to strike the appellant’s statement of claim as outside the court’s jurisdiction by virtue of a Mediation/Arbitration Agreement. They also claimed that the statement of claim amounted to a collateral attack on existing court orders, and that the appellant’s claims were both res judicata and frivolous, vexatious and an abuse of process.

[4]              In response, the appellant brought a cross-motion for summary judgment in the terms of the claims in his statement of claim and for an order that the Mediation/Arbitration Agreement be set aside under s. 51 and 56(4) of the Family Law Act, R.S.O. 1990, c. F.3, because of the respondent’s misrepresentations and failure to make proper financial disclosure.

[5]               On August 27, 2010 Echlin J. struck out the appellant’s statement of claim without leave to amend and dismissed the appellant’s cross-motion for summary judgment. He concluded that the appellant’s statement of claim is frivolous and vexatious, that it constitutes an abuse of process and that his claims are barred by the doctrine of res judicata (both issue estoppel and cause of action estoppel).

[6]              The appellant submits that the motion judge erred in striking out his statement of claim and in refusing to grant his motion for summary judgment.

[7]              For the reasons that follow, we dismiss the appeal.

II.        Background

[8]              In January 2004, the respondent issued a statement of claim against the appellant claiming, among other things, joint custody of their child, child support and partition and sale of their jointly owned home. The appellant responded to the respondent’s claims with a statement of defence and counterclaim. Neither party’s pleadings in the family law action are in the appeal record. They are however described, to some extent, in other documents and decisions.

[9]              On June 9, 2005, Goodman J. made a temporary order on consent in the family law action requiring, in paragraphs 1 and 2 of the order, that the appellant pay to the respondent $800 per month on account of temporary child support and $1,100 per month representing a 60% share of the cost of a nanny for the child.

[10]         Paragraph 3 of the June 9, 2005 order provided that such payments were “without prejudice to either party’s right at trial to challenge the requirement for any monthly child support or the quantum of any such support following the separation.”

[11]         Paragraph 4 of the order stipulated that the “issues of retroactive child support and retroactive sharing of section 7 expenses shall be adjourned to be determined by the Trial Judge.”

[12]         The trial of the family law action was scheduled to commence on December 11, 2006. That morning, the appellant and the respondent entered into Minutes of Settlement in which they agreed to submit all of their respective claims in the action[1] to Thomas Bastedo, Q.C., for mediation/arbitration. Paisley J. made an order dated December 11, 2006 in terms of the Minutes of Settlement.[2]

[13]         Subsequently, the appellant and the respondent entered into a Mediation/Arbitration Agreement dated March 9, 2007, implementing the Minutes of Settlement and December 11, 2006 order, in which they appointed Mr. Bastedo as mediator/arbitrator and submitted the issues outlined in the Minutes of Settlement to him for mediation/arbitration.

[14]         In the Mediation/Arbitration Agreement, the parties specifically agreed that “the Courts shall stay all proceedings before the Court with respect to the matters dealt with in this Mediation/Arbitration Agreement” and also waived all rights of appeal. Both parties received independent legal advice in relation to this agreement.

[15]         On April 3, 2007, the appellant and the respondent and their counsel met with Mr. Bastedo for mediation. Mr. Bastedo advised the parties of impending changes to the Family Law Act and the Arbitration Act, 1991, S.O. 1991, c. 17 regarding family arbitrations that would prevent parties from waiving all rights of appeal. The parties agreed that each would have a right of appeal, with leave, on questions of law alone.

[16]         At the mediation, the appellant and the respondent reached an agreement concerning some matters and their agreement was recorded in Mediation Memorandum No. 1, which was dictated by Mr. Bastedo in the presence of the parties and their counsel, and subsequently signed by the parties. 

[17]         Among other things, in Mediation Memorandum No. 1, the parties agreed as follows:

·        they would share joint custody of their child;

·        the child’s current residence schedule would continue;

·        commencing January 1, 2007, the appellant would contribute $250 per month towards the child’s extracurricular costs subject to a year-end adjustment under which the appellant would contribute 50% of any costs in excess of $6,000;

·        commencing January 1, 2007, the appellant would pay the respondent $400 per month as a contribution to the cost of the child’s nanny for a period of 24 months at which time the appellant’s obligation to make such contribution and the quantum of any such obligation would be reviewed;

·        the appellant “should be deemed to have satisfied fully all of the arrears, if any, owing by him to [the respondent] in respect of the provisions of [the June 9, 2005 temporary support order]”;

·        “[p]aragraphs 1, 2, 3, 4, 15 and 16[3] of the Order of Justice Goodman shall be vacated and deemed to have been terminated”;

·        in the event of any dispute relating to “ongoing matters dealing with this subject matter” the parties would appoint Mr. Bastedo as “an Arbitrator capable of conducting a secondary Arbitration (preceded by Mediation) as a dispute resolution process”;

·        the agreement would be “turned into an Award and Court Order if necessary”.

[18]         At the request of the respondent, the agreements reached in Mediation Memorandum No. 1 were subsequently incorporated into an arbitration award and a court order. On January 14, 2009, Mr. Bastedo issued Arbitration Award No. 3, which incorporated Mediation Memorandum No. 1 and certain corrections. Czutrin J. made a consent order incorporating the terms of Arbitration Award No. 3 on February 12, 2009.[4]

[19]         As contemplated by the Mediation/Arbitration Agreement, the parties proceeded to arbitration concerning the matters remaining in dispute between them over three days in August and October 2007.

[20]         On January 31, 2008, Mr. Bastedo issued Arbitration Award No. 2 in which he stated that the parties had resolved all issues relating to their child. He disposed of the issues remaining in dispute. He found that the appellant had a 70% interest in the parties’ home and the respondent a 30% interest, and directed that issues relating to the appellant’s purchase of the respondent’s interest in the home or the sale of the home should be dealt with by way of motion to him on notice to the other party.

[21]         After receiving Arbitration Award No. 2, the appellant brought two motions to have the award or the Mediation/Arbitration Agreement set aside. He also appealed the arbitration award.

[22]         Initially, the appellant moved under s. 46 of the Arbitration Act, to have the Mediation/Arbitration Agreement declared invalid and Arbitration Award No. 2 set aside. He relied on the amendments to the Arbitration Act and the Family Law Act preventing parties from fully waiving their appeal rights in a family arbitration agreement. Essentially, he argued that the legislation had retroactive effect and required that the parties negotiate a new Mediation/Arbitration Agreement and obtain independent legal advice with respect to the new agreement. Justice Jarvis concluded that the legislation did not have retroactive effect, and, on January 26, 2009, dismissed the appellant’s motion.

[23]         The appellant brought a second motion under s. 46 of the Arbitration Act asking that Arbitration Award No. 2 be set aside because of bias, or a reasonable apprehension of bias, on the part of Mr. Bastedo. The respondent moved to dismiss this motion. On June 29, 2009, Horkins J. granted the respondent’s request, holding that the second s. 46 motion was barred by issue estoppel and cause of action estoppel. The appellant served a notice of appeal of Justice Horkins’ order but failed to request leave to appeal as required under s. 49 of the Arbitration Act or to perfect his appeal.

[24]         Subject to one adjustment relating to accounting issues, Greer J. dismissed the appellant’s appeal from Arbitration Award No. 2 on December 18, 2009. The appellant applied for leave to appeal Justice Greer’s order but his motion for leave to appeal was dismissed.

III. The Appellant’s Claims

[25]         The statement of claim forming the subject matter of this appeal was issued on March 5, 2009 under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. At the oral hearing of the motion to strike the statement of claim, the appellant withdrew his claims against the respondent’s counsel in the family law action.

[26]         The appellant’s claims against the respondent arise primarily from disclosure made and positions taken by the respondent in the family law action concerning her financial arrangements and compensation package with the University of Toronto in her capacity as a law professor, and later as Dean, of the University of Toronto, Faculty of Law.[5]

[27]         After living separate and apart under the same roof with the appellant and their son during the early part of 2004, the respondent purchased a home nearby in July 2004, and moved in in September 2004.

[28]         In a financial statement prepared for the June 9, 2005 temporary support motion, the respondent claimed she had a bridge financing loan relating to the purchase of her new home in the amount of $65,000 and a $90,000 loan from the University of Toronto. In a subsequent financial statement sworn by the respondent on November 9, 2006, the bridge financing loan no longer appeared but the respondent showed estimated indebtedness to the University of Toronto of $186,000, based on an original loan value of $230,000, consisting of two loans of $90,000 and $140,000 respectively.

[29]         The appellant contends that the respondent has never produced documents to substantiate the $65,000 bridge financing loan or to explain how it was repaid. Further, he asserts that the $90,000 and $140,000 alleged loans were not in fact loans. Rather, the $90,000 figure was an advance payment of a $15,000 per year salary increase structured for tax purposes as a six-year forgivable loan and the $140,000 figure was an advance payment of $14,000 per year discretionary allowance structured for tax purposes as a 10-year forgivable loan.

[30]         According to the appellant, instead of reflecting the $90,000 and $140,000 amounts as liabilities, the respondent should have shown these amounts as income in the year they were received for the purpose of child-support calculations. Further, the appellant says the respondent lied under oath at her June 2006 examination for discovery when she said, at one point, that monies were being deducted from her salary to repay the forgivable loans.[6] Finally, the appellant asserts that the respondent has never provided him with full financial disclosure in relation to her compensation package during 2004-2006.

[31]         The appellant claims he was induced to consent to the June 9, 2005 temporary support order, the December 11, 2006 Minutes of Settlement, and the March 2007 Mediation/Arbitration Agreement based on the respondent’s fraudulent misrepresentations concerning the $90,000 and $140,000 amounts and the $65,000 bridge loan.

[32]         In his statement of claim, the appellant claims to be entitled to recover damages for overpayment of child care costs, overpayment of child support, as reimbursement for costs orders paid[7] and legal fees, and as compensation for the respondent’s failure to pay child support to him.  He also claims damages for the loss of use of his passport and driver’s licence arising from enforcement proceedings improperly taken by the respondent and for loss of reputation together with punitive and/or exemplary damages.

[33]         In his cross-motion for summary judgment, the appellant also claimed that the Mediation/Arbitration Agreement should be set aside under ss. 51 and 56(4) of the Family Law Act because of the respondent’s misrepresentations and non-disclosure of financial information.

IV. The Motion Judge’s Decision

[34]         As we have said, the motion judge concluded that the appellant’s statement of claim is frivolous and vexatious, that it constitutes an abuse of process and that his claims are barred by the doctrine of res judicata (both issue estoppel and cause of action estoppel).

V. Discussion

[35]         This appeal must be dismissed for several reasons.

[36]         First, the appellant is attempting, in an action for damages brought under the Rules of Civil Procedure, to address issues governed by the Family Law Act, the Child Support Guidelines, O. Reg. 391/97 and the Family Law Rules, O. Reg. 114/99. In our view, this attempt, in itself, amounts to an abuse of process.

[37]         It is important at the outset to bear in mind the specific nature of the relief the appellant is seeking. Although characterized as a claim for damages, in essence, he seeks repayment of child support payments and child care costs he claims he either overpaid or should not have been required to make from the date of separation to April 2007; child support from the respondent for 2005 and 2006; repayment of legal costs improperly assessed against him; costs awards in his favour for steps taken in the family law action; and general, exemplary and punitive damages arising from the fact that he was ordered to pay support based on allegedly wrongful conduct.

[38]         Contrary to the appellant’s assertions, with the possible exception of the last category of claims, these are not matters in relation to which a claim for damages properly lies against the respondent.

[39]         The Family Law Act and the Child Support Guidelines govern the obligations of a parent to pay child support and to contribute to child care expenses. If an adjustment is claimed with respect to amounts that were or should have been paid in the past, the proper remedy is to apply for an adjustment under the applicable legislative scheme. Absent a determination under such scheme, there is simply no entitlement to either a refund for past payments or compensation for payments not received and an action for damages does not therefore lie in relation to such amounts.

[40]         Considered in this context, the appellant’s civil action for damages against the respondent is an abuse of process. Allowing such claims to proceed would permit family law litigants to circumvent the statutory scheme governing family law claims and introduce a potentially chaotic duplication of proceedings into an already overburdened family law justice system. See Canam Enterprises Inc. v. Coles (2000), 51 O.R. (3d) 481 (C.A.), rev’d on other grounds [2002] 3 S.C.R. 307, in which Finlayson J.A. described the court’s inherent power to invoke the doctrine of abuse of process as follows at para. 31:

The court can still utilize the broader doctrine of abuse of process.  Abuse of process is a discretionary principle that is not limited by any set number of categories.  It is an intangible principle that is used to bar proceedings that are inconsistent with the objectives of public policy.

[41]         The second, and closely related, reason this appeal must be dismissed is that the appellant is attempting, in a free-standing action brought under the Rules of Civil Procedure, to attack agreements, awards and orders made in a family law action. In the absence of a claim to set aside such agreements, awards and orders, the appellant’s statement of claim is an impermissible collateral attack on the order of Goodman J. dated June 9, 2005, the order of Paisley J. dated December 11, 2006 and the order of the Czutrin J. dated February 12, 2009.

[42]         In paragraphs 1 and 2 of the order made on June 9, 2005, Goodman J. ordered the appellant to pay temporary child support and to contribute to child care expenses. She expressly reserved to the parties, in paragraphs 3 and 4 of her order, the right to challenge at trial the requirement for and the quantum of monthly child support payments following the separation and the right to address at trial the issues of retroactive child support and retroactive sharing of s. 7 expenses.

[43]         Rather than proceed to trial, the parties agreed in Minutes of Settlement to submit all issues in the family law action to mediation and, if unsuccessful, to binding arbitration. Their agreement was incorporated into a court order made by Paisley J. dated December 11, 2006 and the parties implemented their agreement in the Mediation/Arbitration Agreement dated March 9, 2007.

[44]         In Mediation Memorandum Number No. 1, the parties agreed that the appellant “should be deemed to have satisfied fully all of the arrears, if any, owing by him to [the respondent] in respect of the provisions of [the temporary child support order].” They further agreed that paragraphs 1, 2, 3 and 4 of the temporary child support order “shall be vacated and deemed to have been terminated.” Finally, they agreed on the quantum of the appellant’s ongoing contribution to s. 7 expenses as well as his obligation to contribute to child care costs during the next 24 months.

[45]         The appellant argues that Mediation Memorandum Number No. 1 did not fully resolve all issues of child support then outstanding between him and the respondent at that time.

[46]         We reject that submission. Considered in context, Mediation Memorandum Number No. 1 was a full and final resolution by the parties of all outstanding issues relating to child care expenses and child support up to April 3, 2007. The appellant was required to pay child support and contribute to child care expenses under the temporary support order dated June 9, 2005. Under Mediation Memorandum Number No. 1, he was deemed to have satisfied his obligations in that regard and his ongoing obligations under that order were terminated. Further, by stipulating that paragraphs 3 and 4 of the temporary support order “shall be vacated and deemed to have been terminated”, both parties gave up their rights to challenge the requirement for, and the quantum of, monthly child support payments following the separation to the date of Mediation Memorandum No. 1 as well as their right to address the issues of retroactive child support and retroactive sharing of s. 7 expenses.

[47]         Accordingly, under the terms of Mediation Memorandum Number No. 1, the appellant is not entitled to seek repayment of monies he paid under the temporary support order dated June 9, 2005 – and having paid child support to the respondent and given up his right to challenge his obligation to do so, he is not now entitled to seek child support from the respondent for the period preceding Mediation Memorandum No. 1.

[48]         Mediation Memorandum Number No. 1 was subsequently incorporated into Arbitration Award No. 3 and into an order made by Czutrin J. on February 12, 2009.

[49]         Absent setting aside the various agreements, awards and court orders, the appellant is not entitled to any of the relief he claims and his statement of claim is an impermissible collateral attack on the court orders: R. v. Wilson, [1983] 2 S.C.R. 594; see also R. v. Litchfield, [1993] 4 S.C.R. 333.

[50]         As we have said, in his motion for summary judgment, the appellant requested an order setting aside the Mediation/Arbitration Agreement dated March 9, 2007 because of alleged misrepresentations and non-disclosure. Since the appellant did not include a claim for such relief in his statement of claim, procedurally this was not a proper request.

[51]         However, even if such a claim had been included in the statement of claim, that too would have been improper.

[52]         Absent special circumstances, in order to set aside an order in a particular proceeding, in our view, a party should apply for relief in that proceeding. To hold otherwise would be to sanction multiplicity of proceedings. To the extent that Lawyers’ Professional Indemnity Co. v. Geto Investments Ltd. (2001), 54 O.R. (3d) 795 (S.C.) may suggest otherwise, we disagree with it.

[53]         The third reason this appeal must be dismissed is that the appellant already applied to set aside the Mediation/Arbitration Agreement dated March 9, 2007 in his first motion brought under s. 46 of the Arbitration Act. That motion was dismissed. In this regard, we agree with the conclusion of Horkins J., that in seeking to set aside the Mediation/Arbitration Agreement, the appellant was required to advance all of the arguments of which he was aware, or ought reasonably to have been aware, at the time. Subsequent attempts to raise additional arguments are barred by cause of action estoppel: see Freedman v. Reemark Sterling I Ltd. (2003), 62 O.R. (3d) 743 (C.A.).  

[54]         The fourth reason this appeal must be dismissed is that the appellant consented to the Minutes of Settlement dated December 11, 2006 and to the Mediation/Arbitration Agreement dated March 9, 2007 and signed Mediation Memorandum No. 1 at times when he was fully aware of the alleged deficiencies in the respondent’s disclosure and his concerns about the true nature of the respondent’s compensation package upon which he now seeks to rely.

[55]         That this is so is demonstrated by various requests for documentation relating to the $65,000 bridge loan; by questions put to the respondent by the appellant’s counsel on the respondent’s June 2006 examination for discovery in which appellant’s counsel demonstrated his understanding of the respondent’s compensation package based on documents received from the University of Toronto; and by the appellant’s mediation brief submitted for the April 3, 2007 mediation.

[56]         In his mediation brief, the appellant specifically raised the issue of whether the respondent was required to pay child support to him and also requested that the respondent’s actual income for the years 2004 and 2006 be determined. Moreover, he expressed concerns about the true nature of the $90,000 and $140,000 payments received from the University by the respondent.

[57]         Based on our review of the record, the appellant was at all material times well aware of the issues he now seeks to raise and yet chose to proceed with a settlement without obtaining all of the disclosure he now says he requires. Moreover, the record suggests that the settlement the parties made was in substantial compliance with the objectives of family law legislation. In these circumstances, it is simply not open to the appellant to seek to undo the agreements and orders to which he consented.

VI. Disposition

[58]         Based on the foregoing reasons, the appeal is dismissed.

[59]         As we have said, the claims advanced in this matter are not only barred by the settlements and agreements the appellant entered into, they are also barred by cause of action estoppel and constitute an abuse of process. Given the appellant’s conduct in commencing a civil action in the face of the existing family law action, costs of the appeal are to the respondent on a substantial indemnity basis fixed in the amount of $14,000, inclusive of disbursements and applicable taxes.

Signed:           “M.  Rosenberg J.A.”

                        “Janet Simmons J.A.”

                        “Karakatsanis J.A.”

RELEASED:  “JS” JUNE 24, 2011