Navigating Family Law: The Challenges of ADR and Court Intervention

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Embracing alternative methods of dispute resolution (ADR) is no guarantee that your family law matter will stay out of the courts..

Many splitting spouses are drawn to mediation, arbitration and med-arb — a kind of amalgamation of the two — to avoid the expense and delay commonly associated with our court system.

While the goals of a faster and more cost-effective outcome are met in the majority of ADR proceedings, there are times when litigation cannot be avoided, as one couple recently discovered when they found themselves arguing their case at the province’s Court of Appeal, almost three years after they thought an arbitrator had settled the matter.

The Facts

The couple at the heart of the decision in Eldridge v. Eldridge is a pair of archaeologists who separated in 2010 after 33 years of marriage. During that time, they started a business together before the wife stepped aside to be their four children’s primary caregiver.

The couple ultimately sealed their divorce in 2015 after signing a separation agreement that addressed property division and spousal support. The agreement, which was reached with the help of lawyers, accountants, a business valuator and a mediator, provided for a base amount of monthly support at $5,000 that would escalate according to the husband’s income in a given year until he hit 65. At that point, the contract gave either party the option to review spousal support.

When the husband turned 65 in 2018, he activated the review clause, but when mediation failed to produce a settlement, the parties proceeded to an arbitration hearing presided over by the same neutral who had conducted the mediation.

Following a four-day hearing, the arbitrator set a schedule for a graduated decline in spousal support, anticipating that the husband’s income would reduce significantly if he switched as planned to part-time work or sold his consulting business. Starting in 2021, the arbitrator set spousal support at $7,500 per month, with yearly reductions until 2025, when it would terminate altogether.

Unsatisfied with the result of the arbitration, the wife took the matter to court, where a chambers judge concluded that the arbitrator had erred in law by terminating support before the husband had actually retired, and by basing the amount on a speculative assessment of his future income.

Setting aside the termination date, the chambers judge instead ordered that the husband continue paying spousal support based on the escalation formula set by the original separation agreement, including arrears up to the arbitration date.

That ruling, in turn, prompted the husband to appeal the matter to the province’s top court.

The Results

At the Court of Appeal, the appeal was granted in part, dividing success between the parties.

The unanimous three-judge panel found that the chambers judge was within her rights to intervene as a result of legal errors in the arbitration award, concluding that there was nothing in the record before the arbitrator that would have justified terminating spousal support prior to the husband’s retirement.

However, the appeal court panel found that the chambers judge had overstepped the mark when it came to her remedy by returning the parties to their original separation agreement formula without considering whether it was still appropriate.

Under the terms of the agreement, the appeal panel wrote that the husband was entitled to a fresh review of support entitlement and quantity, with the possibility that the original formula could be modified, terminated or left in place.

The panel also overturned the chambers judge’s ruling on the costs of the arbitration, finding that the arbitrator’s original decision to offset support arrears due to the wife against costs she owed to the husband was entitled to deference.

With the quantity of the wife’s spousal support from 2021 onwards still outstanding, the appeal court ultimately declined to substitute its own award, remitting the issue back to the arbitrator for determination — leaving the parties back roughly where they started.

The Lessons

This decision should serve as a reminder of the limits of ADR processes and the ability of a judge to step in and overrule an arbitration award that contains legal errors.

The advantage of a mediation-arbitration is that the hybrid process guarantees the parties some kind of out-of-court resolution if they can’t reach an agreement through mediation alone.

However, it can be a double-edged sword, since parties may be less willing to engage in the kind of open and cooperative dialogue necessary for a successful mediation when they know they have the arbitration option to fall back on if they fail to agree.

As this case demonstrates, an arbitrator’s award may not even be final if a court finds that the decision-maker made legal errors in coming to their conclusions.

Some couples are also uncomfortable with the med-arb process due to the dual role the mediator must assume and the potential for perceived bias when moving into arbitration. This stage requires starting anew, compelling the neutral party to disregard any previously acquired information from the mediation — although there was no suggestion that either party in the Eldridge case shared these concerns.

If you are considering med-arb for your dispute resolution and need more information about its implications, we encourage you to contact one of our lawyers. Our team is ready to provide insights and guidance tailored to your unique circumstances.

**This post is not intended to be legal advice and should not be taken as such. Please contact McConnan Bion O’Connor & Peterson if you have any questions regarding this post or require assistance or legal advice regarding family law matters.