Court Denies Agreement from Mediation for Non-Disclosure

Alternative dispute resolution can be a helpful option for parties seeking to resolve matters such as child support, spousal support, parenting time, and property division after a divorce. For instance, mediation may help parties settle their family law matters without going to court. 

As a result, alternative dispute resolution, such as mediation or arbitration, can be more cost-effective and efficient than court, which can take a lengthy period to be heard. However, mediation or arbitration only works where both parties provide full disclosure to reach a fair agreement. It may only be suitable for some cases. 

This post will discuss a recent Alberta case, Loberg v. Loberg, 2021 ABQB 927, in which the court refused to uphold an agreement reached between the parties at mediation. The court found that one of the parties did not provide full disclosure at the mediation and did not uphold the agreement. This post will provide takeaways for parties considering alternative dispute resolution to settle their family law matters upon divorce. 

Parties Reached Agreement at Mediation To Settle Parenting Issues, Property Division, and Child Support

In the Loberg case, the parties were married for approximately 15 years. They had two teenage children aged 16 and 14, at the time of the decision. 

To commence mediation, the parties signed a mediation agreement. The parties attended a full-day mediation and agreed on parenting and custody issues, property division and how it was to be distributed, and child support. The terms of the agreement were set out in the mediator’s report after the mediation concluded, which was to be incorporated into a separation agreement to be drafted by the wife’s counsel. 

Four days after the mediation, there was an email exchange between the parties, both confirming that the parties had made an agreement at mediation that was legally binding. 

After the wife’s lawyer drafted the separation agreement, it was sent to the husband’s lawyer who requested some changes to the parenting schedule timing and child support payments. 

Husband’s Financial Disclosure Appeared Inadequate 

Shortly after, the wife’s lawyer reviewed the financial disclosure provided by the husband. The wife suggested that her lawyer did not have enough information based on the disclosure provided to properly determine and advise on the husband’s Guideline income to calculate child support. 

The wife also claimed that the husband, after separation, had transferred the assets of his corporation to a new corporation. For the new corporation, the husband was the sole director and shareholder. In his disclosure, he provided no information regarding the new corporation. 

Therefore, the wife sought further disclosure from the husband, including the husband’s most recent tax returns and notices of assessment, financial statements for the new corporation, bank statements and bills of sale for the previous corporation. The husband did not provide all of this disclosure, so the wife made an application before the court for this disclosure. 

Notably, the husband still needs to provide documents concerning the new corporation. Still, on his recent income tax return, his income was higher than the income set at the mediation, and much of his income came from the new corporation in the form of dividends. 

Husband Sought to Uphold Agreement From Mediation

The husband claimed that the agreement reached at the mediation was valid and binding. He pointed to the email in which both parties confirmed the agreement was reached. He also claimed that the terms were detailed and that the parties’ intentions to agree were clear. The husband argued that the wife could not refuse to uphold the agreement because she later decided not to do so. Also, the husband noted that each party was represented by counsel and had the opportunity to discuss with their counsel and seek further disclosure before accepting a specified Guideline income at mediation. 

Wife Denied Agreement Was Binding Due to Non-Disclosure 

The wife claimed that there was no binding agreement. The wife noted that the mediation agreement did not allow the mediator to impose a settlement. While she acknowledged her email that confirmed the agreement reached mediation, she argued that there was no binding agreement due to the husband’s non-disclosure, which prevented her counsel from being able to advise her properly. She also pointed to a term in the mediation agreement requiring the parties to fully disclose so that the mediator could adequately understand the issues. It stated that a failure to disclose adequately could result in an agreement being set aside. 

There was also a term in the mediation agreement that the parties would review the mediator’s report with their counsel and then incorporate those terms into a consent order or binding agreement. Therefore the wife claimed that there was no binding agreement, as the parties needed to be provided with an opportunity to review the terms with counsel before the agreement could be binding. 

The wife claimed that disclosure concerning the new corporation was significant, as it would affect matrimonial property division, child support, and spousal support. She argued that there was either no binding agreement to begin with or the agreement should be set aside due to non-disclosure on the husband’s part. 

Court Refuses to Uphold Agreement from Mediation

The court found that an agreement was reached, which incorporated the terms in the mediation report, as there was a mandatory term in the mediation agreement that the parties would do so. However, the court noted that there was also a term in the mediation agreement that full disclosure was required so that the mediator could adequately understand the issues, and a failure to disclose fully could lead to any subsequent agreement being set aside. The court acknowledged that the husband did not provide full disclosure for the new corporation, which was relevant to determine the husband’s Guideline income. Also, the court noted that the husband’s income in his recent tax return was higher than the amount agreed to at mediation. 

The court noted the importance of full disclosure for agreements between parties, referencing the Supreme Court of Canada in Colucci v. Colucci, 2021 SCC 24. 

Ultimately, the court set aside the agreement arising from mediation due to the husband’s non-disclosure. The mediator did not have full disclosure of all the relevant information to understand the issues properly. 

The wife was open to further mediation once full disclosure was provided. 

Key Takeaways

Even if parties reach an agreement at a mediation, it can be set aside based on non-disclosure if such a term exists in the mediation agreement. To have an agreement upheld through alternative dispute resolution, it is key to obtain and provide full disclosure. 

Mincher Koeman Family Lawyers Can Assist with Hidden Assets and Non-Disclosure Cases

Alternative dispute resolution, such as mediation or arbitration, can be helpful for parties, as they can provide a more cost-effective and efficient solution than proceeding with court. However, agreements reached at mediation may be impeded by non-disclosure. If you suspect that the other party has hidden assets or has not made full disclosure, you should speak with our family law lawyers at Mincher Koeman, who are experienced with these types of cases. Our Calgary family law lawyers are dedicated to finding the best resolution for you and your children after your divorce.

To book a consultation, please contact us online or by phone at 403-910-3000.