Court File and Parties

Court File No.: DFO 02 10295 00 B1 Date: 2013-04-14 Ontario Court of Justice

Between:

DIRECTOR, FAMILY RESPONSIBILITY OFFICE, FOR THE BENEFIT OF MONIQUE ELIZABETH ZARRY Applicant/Responding Party

— AND —

STEPHEN DOUGLAS DICK Respondent/Moving Party

Before: Justice E. B. Murray

Heard on: March 21, 2013

Reasons for decision released on: April 15, 2013

Counsel:

• Mr. Theodore Nemetz and Lauren Speers, for the Respondent
• Mr. Shane Foulds, for the Family Responsibility Office

Decision

MURRAY, E.B. J.:

Background

[1] On March 21, 2012, the Respondent father moved before me to set aside or vary a warrant of committal issued because of non-payment of child support, as well as a final default order. The Director, acting for the recipient mother, opposed the Respondent's motion.

[2] The Respondent did not attend the committal hearing on September 24, 2012, although he had notice. The warrant of committal was ordered on that day, and provided that he was to be incarcerated for 180 days unless arrears of child support of $170,505 were paid. The warrant was issued on January 18, 2013, and executed on February 17, 2013.

I ordered that the warrant be varied to reflect time served by the Respondent, with reasons to follow[1]. These are the reasons for the decision.

[3] The Respondent's motion was brought under Rule 25(19)(e) of the Family Law Rules (FLR), or alternatively pursuant to Rule 19.08 of the Rules of Civil Procedure, invoked pursuant to Rule 1(7) of the FLR. The text of these rules is set out below.

Family Law Rules

25(19) The court may, on motion, change an order that,

• (a) was obtained by fraud;
• (b) contains a mistake;
• (c) needs to be changed to deal with a matter that was before the court but that it did not decide;
• (d) was made without notice; or
• (e) was made with notice, if an affected party was not present when the order was made because the notice was inadequate or the party was unable, for a reason satisfactory to the court, to be present.

Rules of Civil Procedure

19.08

(1) A judgment against a defendant who has been noted in default that is signed by the registrar or granted by the court on motion under rule 19.04 may be set aside or varied by the court on such terms as are just.

(2) A judgment against a defendant who has been noted in default that is obtained on a motion for judgment on the statement of claim under rule 19.05 or that is obtained after trial may be set aside or varied by a judge on such terms as are just.

(3) On setting aside a judgment under subrule (1) or (2) the court or judge may also set aside the noting of default under rule 19.03.

The Support Order

[4] The Director is enforcing a temporary support order made on consent on October 17, 2002, which provides that the Respondent is to pay to the Applicant mother support for two children in an amount of $2,073 monthly. The order was based on imputed annual income of $180,000.

[5] The Director's records show that $96,900 was owing at the time of the first scheduled default hearing, on February 6, 2008. Throughout the enforcement proceeding and until the motion before me, the Respondent was not represented by counsel, although he was assisted on each appearance by duty counsel.

[6] The default hearing was adjourned four times. The first date was adjourned because the Respondent failed to attend. The second, third, and fourth dates were adjourned for the Respondent to commence a motion to change, and he was ordered to make payments pursuant to temporary default orders. On the fourth appearance, the Respondent advised the Director that he did not want to pursue a motion to change, because he had new employment. He provided information to allow his wages to be garnished.

[7] On the fourth appearance, the default hearing was adjourned to November 27, 2008. The Respondent did not appear on that day, and a final default order was issued providing that he pay arrears of $121,000 or be incarcerated for 180 days. He was also ordered to keep ongoing support payments current, and to be incarcerated for three days for each default. The Director sent a copy of the order to the Respondent.

[8] More than two years elapsed; the Director's records show that the Respondent made payments of approximately $32,000 over that period, but the arrears continued to mount.

[9] The Director brought a motion for a warrant of committal returnable on January 23, 2012. That motion was adjourned four times to allow the Respondent to commence a motion to change. The Respondent was also ordered to make temporary default payments of $682 monthly pending the motion's resolution, and to provide his tax returns for 2009-2011.

[10] On September 24, 2012, the fifth date for the motion for committal, the Respondent did not appear. The case management judge noted that the Respondent had not commenced a motion to change, had not provided his tax returns, and had missed two default payments. She ordered a warrant of committal to issue.

Respondent's Evidence

[11] The Respondent's evidence contains a detailed recital of various unsuccessful business ventures in which he has engaged since the temporary support order was made. His other evidence can be summarized as follows:

1. I waited far too long to request a change in the support order, but I did not have the money to hire a lawyer.

2. I have never earned the income upon which the support order was based.

3. I have made support payments which are in excess of what I should have paid, based on my actual income for the years in question.

4. I made "side deals" with the Applicant mother which I believed at the time resolved support arrears.

5. I paid the Applicant some monies directly, not through the Director. Those monies are not reflected in the Director's statement.

6. The Applicant's household has a far higher standard of living than my second family enjoys. My second family includes three dependent children, one of whom is seriously disabled.

7. I tried to attend court on September 24, 2012 for the committal hearing, but I suffered a panic attack when I came to the courthouse and saw the Applicant and her sister there. I fled.

8. I have suffered panic attacks before. (A letter from the Respondent's doctor confirms that he has previously suffered panic attacks, although the letter does not make reference to any treatment administered for such an attack on or near the date in question.)

9. I have tried over the past year to commence a motion to change, acting for myself. I was advised by court staff that I did not have the right paperwork.

[12] After the Respondent was incarcerated, his family did retain counsel to bring the motion to set aside the warrant of committal and the default order, and a motion to change the 2002 support order, which is returnable at a later date.

Status of the Support Order

[13] Since the order being enforced is a temporary order made over ten years ago, the court had questions about whether there was a final support order in the case. It emerged that the continuing record contains a notice of withdrawal by the Applicant of the application, dated March 17, 2003. An order dated March 17, 2003 reflects that only the solicitor for the Applicant attended court, and provides that "the notice of motion and application is hereby withdrawn", with no order as to costs.

[14] The record contains a subsequent new application commenced in 2007 by the Applicant seeking relief with respect to custody and access, but not support. That application states that "the parties have a child support agreement", and notes that there are enforcement proceedings underway because support is in arrears. That application resulted in a consent order of custody to the Applicant, with generous access to the Respondent.

[15] Counsel for the Director agreed that if the application for support had been withdrawn, that the temporary order of October 17, 2002 was of no effect from the date of the withdrawal.

[16] However, the Director did not concede that the application was in fact withdrawn, because the Applicant advised that she had never "intended" to withdraw. Counsel for the Applicant mother attended but did not participate in argument on the motion with respect to the warrant of committal. He advised that he had ordered the file from storage, but it had not yet been received.

[17] I advised the parties and the Director that:

• because of the serious consequences to the Applicant if the support order was found not to be operative as of March 17, 2003, I would not attempt to render a final decision as to the validity of the support order that day, but

• because of the fact that the Respondent was incarcerated, an expeditious decision was necessary on the motion for the warrant of committal, and I would in my decision take into account the evidence which cast doubt on the validity of the support order.

Submissions of the Parties

[18] The Director's submissions were as follows:

1. There is divided authority as to whether R. 25(19) authorizes a court to set aside a judgment or final order—as opposed to "change" an order[2].

2. Even if Rule 25(19) allows the court to set aside an order, the reason for non-attendance furnished by the Respondent is not satisfactory, but simply a self-serving excuse. The Director submits that, if the Respondent was conscious of his obligation to attend court on September 24th and had a panic attack that day, then surely he would have taken steps to determine what occurred at the hearing. He did not. The Director submits that the Respondent's non-attendance that day is a continuation of his lackadaisical attitude towards compliance, evident from the enforcement record since 2008.

3. Rule 19.08 of the Rules of Civil Procedure allows a court to set aside or vary a default judgment on terms that are "just". Many courts have relied upon this rule on motions to set aside brought in family law cases, invoking rule 1(7) of the Family Law Rules[3].

4. Caselaw[4] provides a three-pronged test for setting aside a default order or judgment under Rule 19.08:

   • The moving party must move promptly after learning of the order to have it set aside.
   • The moving party must provide an adequate explanation for the default.
   • The moving party must establish that he has an arguable case on the merits.

5. This test is conjunctive[5]. In other words, the moving party must meet all three criteria.

[19] The Respondent argues that the court has the authority under both the Rule 25(19) FLR and the Rule 19.08 RCP to set aside the orders, and that he meets the test under either rule. He acknowledges that he has an obligation to pay child support pursuant to the Child Support Guidelines, but says that it would be a grave injustice to continue his incarceration in the cause of enforcing a support order of doubtful validity.

Analysis

[20] The Divisional Court determined in Diciaula v. Mastrogiacomo, 268 D.L.R. (4th) 180 that a court may not set aside a default judgment pursuant to Rule 15(14) of the FLR. The provisions of the current Rule 25(19) of the FLR are identical to the former Rule 15(14). Thus, Rule 25(19) does not afford this court authority to set aside the warrant of committal. Rule 25(19) allows the court to change an order made in a party's absence, if the moving party was unable to attend for a reason "satisfactory to the court". However, I find that the explanation given by the Respondent for his non-attendance is not satisfactory, for the reasons set out below at paragraph 21.2.

[21] Section 41(15) of the Family Responsibility and Support Arrears Enforcement Act, allows the court to change an order of committal if there is a material change in circumstances. The Respondent does not allege a material change since the warrant of committal was ordered on September 24, 2012, so this provision does not assist him.

[22] I turn to an assessment of the Respondent's motion to set aside or vary the warrant of committal under Rule 19.08 of the RCP and the test set out in the caselaw.

1. I do not accept that the Respondent moved promptly to set aside the warrant of committal. It is not open to the Respondent to say he moved promptly because he did not know about the warrant until its execution on February 17, 2013. The Respondent knew that September 24th was the date for the committal hearing. He took no steps to determine what occurred at that hearing, and he gives no explanation of his failure to do so.

2. The Respondent's explanation for his failure to attend court on September 24, 2012 is inadequate. His physician provides support for the claim that he has suffered panic attacks in the past, but no support for his assertion that he experienced one that day. I agree with the Director that if one episode of panic was the explanation for the Respondent's non-attendance, that he would have made inquiries to the court or to the Director as to the result of the missed hearing. He made no such inquiries. The Respondent's evidence as a whole indicates a pattern showing that he procrastinates or ignores dealing with difficult financial issues; I expect that his failure to attend and to inquire as to the results of the September 24th committal hearing is just another example of this pattern.

3. However, the Respondent appears to have a strong case on the merits with respect to the warrant of committal (and the default order), because the validity of the underlying support order is in doubt. As was held by Justice Lane in Greco v. Greco, (2000) O.J. 3594 (Sup. Ct.), the discontinuance or withdrawal of an action claiming support renders a temporary support order made in the action inoperative, although arrears which accumulated prior to the discontinuance remain owing. Justice Lane dealt in that case with a divorce action, but in my view nothing turns on the fact that the action apparently withdrawn by the applicant here was under the Family Law Act. The Applicant was represented by counsel when the support application was withdrawn, and she confirmed the withdrawal when she commenced another application for custody in 2007. I do not at this point understand the statement that the Applicant did not "intend" to withdraw the support application. It appears that both the Applicant and the Respondent have over the past ten years acted as if they believed that the 2002 order was in force; if the action was withdrawn, they have been labouring under a misapprehension. I await evidence from the Applicant and submissions from her counsel on the next appearance as whether the 2002 order continued in force after March 17, 2003.[6]

Discretionary Approach to Setting Aside Default Orders

[23] Does the fact that the Respondent has failed to meet all three prongs of the test to set aside a default order mean that his motion must fail? I do not think so.

[24] I have reviewed the cases cited by the Director which he asserts support the argument that the test to be met is conjunctive[7]. I do not agree that they support his argument. In fact, in one of the cases cited, Oelbaum v. Oelbaum, the court called attention to the decision of the Ontario Court of Appeal in Peterbilt of Ontario Inc. v. 156567 Ontario Ltd., 2007 ONCA 333, 41 C.P.C. (6th) 316, observing that "the ultimate determination is whether the interests of justice favour setting aside the judgment"[8].

[25] In Peterbilt of Ontario Inc., the Court of Appeal held as follows:

"The motion judge erred in treating the principles identified in the case law governing the exercise of discretion on a motion to set aside a default judgment as rigid preconditions to the exercise of that discretion, such that the failure to satisfy any one of those supposed preconditions necessitated the dismissal of the motion to set aside the default judgment.

On a motion to set aside a default judgment, the motion judge will be guided by the principles identified in the authorities. The motion judge must, however, ultimately determine whether the interests of justice favour an order setting aside the default judgment. In doing so, the motion judge will have regard to the potential prejudice to the moving party should the motion be dismissed, the potential prejudice to the respondent should the motion be allowed, and the effect of any order the motion judge may make on the overall integrity of the administration of justice."

[26] In this case, it is clear that the prejudice to the Respondent of not varying the committal order to allow him to be freed exceeds any prejudice which the Applicant may suffer if that order is set aside or varied. For that reason, I varied the committal order to release the Respondent.

[27] I have delayed dealing with any final variation of the default order until the status of the underlying support order is established on the return date of May 6, 2013. Neither party is prejudiced by this delay.

[28] As a footnote, I add that it might have been possible to consider setting aside the warrant of committal in exercise of the court's inherent jurisdiction. There is conflicting caselaw as to whether the Ontario Court of Justice has authority to do so[9]. Given the findings I have made above, it is unnecessary for me to consider this issue.

Released: April 15, 2013

Signed: "Justice E. B. Murray"

Footnotes

[1] I also ordered that the default order be temporarily varied to provide that the Respondent pay $1,000 monthly towards ongoing support commencing April 1, 2013, gave leave for questioning, and scheduled a settlement conference.

[2] See Boers v. Boers, 2010 ONSC 1264, and Gotkowski v. Gotkowski for cases in which an order was set aside pursuant to R. 25(19), and Maslic v. Maslic, 2012 ONSC 271, in which it was held that R. 25(19) allows the court to change, but not to set aside an order.

[3] R. 1(7) allows a court, if a matter is not adequately dealt with by the FLR, to decide a matter by analogy to a number of sources, including the RCP.

[4] E.g., Maslic v. Maslic, supra.

[5] The Director cites Maslic v. Maslic, supra; Gray v. Rizzi, 2010 ONSC 2858; Diciaula v. Mastrogiacomo, (2006), 268 D.L.R. (4th) 180 (Ont. Div. Ct.); Oelbaum v. Oelbaum, 2010 ONSC 4874.

[7] The cases are referred to in footnote 5.

[8] In Oelbaum, the court determined that R. 19.08 was inapplicable, because the husband's pleadings had been struck before the hearing at which the judgment was issued, and the husband had no right to participate in the hearing pursuant to R. 10(5)(b). In Khan v. Khan, 2010 ONSC 5880, Justice J.R. Sproat set aside a default judgment against a respondent husband, despite the fact that he had not moved to set aside the judgment promptly, because the interests of justice favoured such an order. The judgment had awarded the wife a 100% interest in the matrimonial home, and left the husband with little, after a marriage of some length. Justice Sproat found that the husband had an arguable case on the merits, and that the prejudice to him of not granting the order would be greater than the prejudice to the wife of making the order.

[9] See B.(C.) v. F.(R.), (1998), 38 R.F.L. (4th) 214 (Ont. C.J.) and Children's Aid Society of Halton Region v. R.(C.J.), (2005) 2005 ONCJ 514, 29 R.F.L. (6th) 384 (Ont. C.J.) for positive view on this issue, and Boivin v. Smith, 2010 ONCJ 3942 for a negative view.