Court File and Parties

Court File No.: FS-17-415257 Date: 2018-10-12 Superior Court of Justice - Ontario

Re: Penny Ha Ping Lee, Applicant/Responding Party on Motion And: Fletcher Joseph Jerome, Respondent/Moving Party

Before: Madam Justice Dietrich

Counsel: Kulbir Rehal, for the Respondent/Moving Party on Motion Peter Salah, for the Applicant/Responding Party

Heard: September 13, 2018

Endorsement

[1] This is a motion brought by the Respondent father Fletcher Joseph Jerome to set aside a judgment following an uncontested trial. Mr. Jerome filed an affidavit in support of his motion in which he asserts that he did not appreciate that he was required to respond promptly to the pleadings of the applicant Penny Ha Ping Lee, that he did not understand the court procedure that led to the judgment and that he has a learning disability that does not allow him to comprehend large volumes of material at a time. Mr. Jerome submits that he has an arguable defence on the issues determined at trial.

Issue

[2] The issue on this motion is whether the final order of Justice Paisley, dated May 26, 2017, should be set aside pursuant to Rule 19.08 of the Rules of Civil Procedure or Rule 25.19(e) of the Family Law Rules.

Factual Background

[3] Ms. Lee commenced an application and served it on Mr. Jerome on February 16, 2017. In her application Ms. Lee claimed: i) a divorce; ii) child support; iii) custody; iv) guardianship over the children’s property; v) equalization of net family property; v) exclusive possession of the matrimonial home and the contents of the matrimonial home; and vi) the date of separation to be May 15, 2015.

[4] The parties were married on October 30, 2004. They have two children of the marriage: a daughter who will be thirteen years of age shortly and a son who is ten years of age. The children reside with Ms. Lee and have access from time to time with Mr. Jerome.

[5] The parties were divorced, in accordance with Justice Paisley’s order, 31 days from the date of that order. The order was issued on July 6, 2017 and Mr. Jerome received a copy on July 12, 2017.

[6] Following an undefended trial, on May 26, 2017 Justice Paisley ordered, among other things that: i) the parties be divorced 31 days from the date of the order; ii) Ms. Lee shall have sole custody of the children; iii) Mr. Jerome may have access with the children on such terms as may be agreed to from time to time by the parties; iv) for the purposes of child support obligations, Mr. Jerome shall have an imputed income of $50,000 per annum; v) Mr. Jerome shall pay table child support and retroactive table child support (23 months) based on such imputed income of $50,000, which amount shall be deducted from the equalization payment owing to him by Ms. Lee; vi) Mr. Jerome shall pay 72.7% of section 7 expenses for the children, including a retroactive contribution to section 7 expenses and certain anticipated section 7 expenses, which amounts may be deducted from the equalization payment; vii) commencing September 1, 2017 Mr. Jerome shall pay $281.60 monthly as his proportionate share of the section 7 expenses; viii) the family law value of Mr. Jerome’s Ontario Teacher’s Pension Plan shall be divided at source such that 50% of the family law value shall be paid to Ms. Lee based on a date of marriage of October 30, 2004 and a date of separation of May 15, 2015; and ix) Mr. Jerome shall pay Ms. Lee 50% of the growth in the value of his property in Listuguj, Quebec from the date of marriage to the date of separation. These enumerated items are the focus of Mr. Jerome’s motion.

[7] Ms. Lee submits that the parties separated on May 15, 2015, when she announced her intention to separate at a meeting among Mr. Jerome, herself and their marriage counsellor Ms. Ratusny. They continued to live separate and apart in the same residence until July 21, 2017 shortly after Mr. Jerome received the divorce order. Mr. Jerome submits that the parties separated on February 4, 2017, when Ms. Lee sent him a text to let him know that his personal items had been placed in the living room for him to collect.

[8] Shortly after May 15, 2015, the parties agreed to a mediation with Ms. Ratusny. When that failed Ms. Lee retained counsel to assist in the negotiation of a separation agreement. Mr. Jerome continued to work with the mediator to define the terms of the separation agreement but he did not provide financial disclosure to Ms. Lee. On November 24, 2016 Ms. Lee informed Mr. Jerome that if he would not co-operate in the negotiations then she would need to commence court proceedings. On February 16, 2017, Mr. Jerome was served with Ms. Lee’s application for divorce.

[9] The first page of the application clearly sets out the consequences of failing to file an answer with the court. Yet, Mr. Jerome failed to file an answer.

[10] Even though Mr. Jerome received the divorce order on July 12, 2017, he did not bring his motion to set aside the divorce order until June of 2018. In September of 2017 Mr. Jerome served motion materials to advise Ms. Lee of his position but he did not then file them with the court. At this point Mr. Jerome let it be known that he was looking for a resolution through negotiation or mediation. Ms. Lee agreed to negotiate the issues identified in the order which remained outstanding and required resolution (e.g., reasonable access to the children and the valuation of Mr. Jerome’s pension and his property in Listuguj, Quebec); however, she confirmed that she was not prepared to allow the default order to be set aside. Following disclosure by each of the parties, a settlement meeting was arranged for February 27, 2018. Mr. Jerome cancelled the meeting, retained new counsel in April of 2018 and scheduled this motion in June of 2018 to be heard in September of 2018.

[11] Mr. Jerome has filed evidence on this motion in support of his claim that he misunderstood the contents of the application and the need to respond promptly, and that he has a learning disability that prevents him from comprehending large volumes of material.

Motion to Set Aside

[12] The motion to set aside the order was brought pursuant to rule 25 (19)(e) of the Family Law Rules which provides that the court may, on motion, change an order that:

(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.

[13] The parties also refer to rule 19.08 of the Rules of Civil Procedure, which allows the court to set aside judgment obtained against a defendant noted in default or who fails to attend a trial. In Gray v. Gray, 2017 ONCA 100, 137 O.R. (3d) 65, the Court of Appeal held that Rule 25 (19)(e) of the Family Law Rules includes the power to set aside an order in similar circumstances, and that the use of this Rule promotes the underlying philosophy, scheme and purpose of the Family Law Rules.

[14] In Mountain View Farms v. McQueen, 2014 ONCA 194, the Court of Appeal set out five factors to be considered in determining whether the interests of justice favour relieving the moving party from the consequences of not participating in the court process that led to the order. These factors, set out at paras. 48-49, are as follows:

(1) Was the motion was brought promptly after the moving party learned of the default judgment (i.e., timeliness of motion to set aside)? (2) Is there a plausible excuse or explanation for the moving party’s failure to respond and default in complying with the Rules? (3) Whether the facts set out by the moving party support the conclusion that there is an arguable defence on the merits. (d) What is the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the party obtaining the order should the motion be allowed? (e) What is the effect of any order the court might make on the overall integrity of the administration of justice?

[15] The Court of Appeal noted that these factors are not to be treated as rigid rules and must consider the facts and circumstances of each case. The Court of Appeal held, at para. 51, that the presence of an arguable defence on the merits may justify the court exercising its discretion to set aside the default judgment, even if the other factors are unsatisfied in whole or in part. The defendant need not show that the defence will inevitably succeed but must show that it has an air of reality. The Court of Appeal has since held that a defendant’s default had been “adequately explained” instead of supported by a plausible explanation: Peterbilt of Ontario v. 1565627 Ontario Ltd. (2007), 2007 ONCA 333, 87 O.R. (3d) 479 (Ont. C.A.). The factors must be considered in light of primary objective of the Family Law Rules, which is to enable the court to deal with cases justly.

[16] I will now consider these five factors to determine whether it is just to relieve Mr. Jerome from the consequences of not participating in the court process that led to Justice Paisley’s order.

Was the motion brought promptly?

[17] I find that Mr. Jerome did not move in a timely manner to set aside the order as soon as he became aware of it. Nearly a full year elapsed between the date on which he received a copy of the order (July 2017) and the date on which the motion was set down (June 2018) to be heard in September 2018. The evidence is that, upon receipt of the order, Mr. Jerome sought advice from duty counsel who advised him to retain counsel. Mr. Jerome then retained a lawyer, Charles Baker. Ms. Lee was then advised that Mr. Jerome wished to negotiate some of the terms of the order that he did not think were fair as well as the matters not finalized in the order (e.g., access and the valuation of his pension and Quebec property) as opposed to bringing a motion to set the order aside. It is Ms. Lee’s evidence that she confirmed that she would only negotiate the matters that had not been finalized in the order. In September of 2017 motion materials were prepared by Mr. Jerome and served but not then filed and no motion date was set. Mr. Jerome and his counsel continued to take the position that they wished to negotiate as opposed to litigate. Financial disclosure was exchanged and a settlement meeting was scheduled between the parties and their counsel for February 27, 2018. Mr. Jerome unilaterally cancelled the settlement meeting and advised that he would move to set aside the divorce order. Mr. Jerome then hired his current lawyer, Kulbir Rehal, in April of 2018, who filed materials for this motion in June of 2018.

[18] Mr. Jerome had the benefit of advice from duty counsel, Mr. Baker and Ms. Rehal and yet he did not file his motion materials promptly. In addition to access to counsel who would be aware of the importance of bringing the motion promptly, Mr. Jerome himself has legal training. The evidence is that, in addition to partially completing a law degree at Western University, Mr. Jerome has also represented himself in other legal (non-family) matters. Through that experience, he would have gained some appreciation for court procedures and the potential consequences of failing to take immediate action in the face of a final order.

Is there a plausible explanation for failing to respond and participate in the court proceedings?

[19] I find that Mr. Jerome’s explanation for failing to participate in the court proceedings is implausible and inadequate. Mr. Jerome was properly served on the application and he does not deny having received it. He submits that he did not appreciate that the order could be taken out so quickly and that he has a learning disability that prevents him from being able to comprehend large volumes of material. I note that there is no expert evidence to support this learning disability and it was admitted that Mr. Jerome has not been formally diagnosed with any such condition. This bald assertion will not assist Mr. Jerome in his motion. The record shows that, in addition to his legal training, Mr. Jerome has obtained a degree in education from University of Toronto OISE and a Bachelor of Arts in psychology from Saint Mary’s University. With these academic achievements, I do not find it plausible that Mr. Jerome could have misunderstood the first page of Ms. Lee’s application where the possible consequences of failing to file an answer with the court are clearly set out. Further, the record shows that Mr. Jerome informed his neighbours that he received the application for divorce and one of those neighbours, who was familiar with divorce proceedings, encouraged Mr. Jerome to respond to the application immediately. Accordingly, I find that even if Mr. Jerome did not read the application or misapprehended what he read, he was clearly warned by his neighbor that time is of the essence when responding to an application for divorce.

[20] Based on the record, I find it more likely than not that Mr. Jerome read the application. The record shows that Mr. Jerome sent a text message to Ms. Lee on February 17, 2017, the day after he was served, in which he stated: “… it will be very easy to counter-claim your divorce claim.” This text makes it apparent that Mr. Jerome had read Ms. Lee’s pleadings.

[21] The record also shows that the application would not have come as surprise to Mr. Jerome. The parties had been discussing separation since October of 2014 and had engaged a counsellor to mediate a separation agreement. During the two years while the parties were attempting to negotiate the agreement, Mr. Jerome assured Ms. Lee that he would set aside blocks of time to draft the agreement, which he never did. Prior to Mr. Jerome receiving Ms. Lee’s application Mr. Jerome received and ignored letters from Ms. Lee’s counsel relating to the separation. One of such letters, dated November 21, 2016, states: “We ask that you or your lawyer on your behalf reply within 15 days, failing which our client has instructed us to immediately commence court proceedings to avoid any further delay.”

[22] Mr. Jerome submits that he was in denial that the relationship was coming to an end. This position is inconsistent with his text messages with Ms. Lee following her service of the application on him. Further Mr. Jerome attempts to shift the blame for his failure to file an answer on Ms. Lee. I do not accept his suggestion that Ms. Lee, with whom he was still sharing the matrimonial home once the application had been served, ought to have made inquiries of him as to why he had not filed and answer and whether he was going to. As noted above, Mr. Jerome is an educated man with training and experience in legal matters. I find that Mr. Jerome does not have a plausible excuse or an adequate explanation for failing to file and answer and to attend the trial. He failed to pay attention to important legal documentation and to heed the warning of his neighbor on the importance of responding promptly to the application. He is the author of his own misfortune.

Is there an arguable defence on the merits?

[23] Mr. Jerome raises a number of issues relating to the order and he submits that he has an arguable defence in respect of many of the claims made by Ms. Lee in her application. Mr. Jerome’s evidence on the merits is focused on: i) the correct date of separation; ii) the value of the matrimonial home as stated on Ms. Lee’s financial statement; iii) the equalization payment, including the characterization of amounts paid to Ms. Lee from her mother; iv) the custody of the children; v) Mr. Jerome’s income for the purposes of child support and s. 7 expenses; and vi) spousal support for Mr. Jerome. For the reasons that follow, I do not find that Mr. Jerome has an arguable defence on any of these issues. His defences do not have an air of reality.

i) The Correct Date of Separation

[24] Mr. Jerome submits that the correct date of separation is February 4, 2017 and not May 15, 2015 as claimed by Ms. Lee in her application. This date is relevant in determining the equalization amount owing to Mr. Jerome, and the value of the matrimonial home, as at that date. Mr. Jerome submits that he and Ms. Lee continued to live under the same roof after May 15, 2015; the community and the couples’ son were not informed of the separation until late 2016; and the parties continued to function as a family, including having some meals together. Ms. Lee’s evidence is that she informed Mr. Jerome in a counselling session on May 15, 2015, in the presence of the counsellor that she intended to separate and that Mr. Jerome acknowledged this fact and participated, albeit half-heartedly, in separation negotiations with Ms. Lee and at mediation sessions with their counsellor Ms. Ratusny. The record shows that Mr. Jerome was aware of the separation well before February, 2017. For example, his tax records for 2015 and 2016 indicate his status as “separated” as of 2015. It is admitted that Ms. Lee prepared Mr. Jerome’s tax returns, but it is nonetheless Mr. Jerome’s responsibility to review his tax returns before signing them to ensure that all information on the return is accurate. Further, the record is replete with text and email exchanges in 2015 and 2016 among Ms. Lee, Mr. Jerome and their counsellor Ms. Ratusny relating to the separation and the separation agreement including a text from Mr. Jerome on August 1, 2015 in which he acknowledges the end of the parties’ matrimonial relationship, and another on August 8, 2015 in which Mr. Jerome indicates that he will look for a residence once Ms. Lee buys out his interest in the matrimonial home.

[25] Further, Ms. Lee’s evidence is that the conduct of the parties is wholly inconsistent with a separation date of February 4, 2017. In particular, Mr. Jerome moved out of Ms. Lee’s bedroom in October of 2014 and began to sleep in the living room. At this same time, they began to address their matrimonial issues. Their son was deliberately protected from news of the separation until 2016 when he was told by Mr. Jerome. It is also Ms. Lee’s evidence that numerous family members, neighbours and friends knew of the separation. Their daughter learned of her parents’ separation in August 2015. Ms. Lee’s evidence is that she had removed Mr. Jerome from her cell phone plan by September 2015 and had asked him to stop using the home phone and internet at that time. The parties’ joint bank account was closed on September 15, 2015. On the evidence before the court, I am not persuaded that Mr. Jerome has an arguable defence relating to the date of separation.

ii) The Value of the Matrimonial Home

[26] Mr. Jerome submits that the value of the matrimonial home as stated in Ms. Lee’s financial statement does not reflect the value of the home on the correct separation date and further submits that Ms. Lee’s more recent appraisal similarly does not reflect the value of the home on the correct separation date. Ms. Lee’s evidence is that she engaged Erin Gregory, a realtor, to prepare a letter of opinion as to the value of the matrimonial home as of May 2015. Ms. Gregory opined that the value of the matrimonial home would be in the range of $428,000 to $438,000 as of May, 2005. In preparation for this motion, Ms. Lee obtained an appraisal from Lebow Carrington Appraisal, dated July 24, 2018. The appraisal shows the matrimonial home as having value of $455,000 as at May 15, 2015.

[27] Mr. Jerome submits that the matrimonial home had a value of $800,000 on the date he submits is the correct separation date, being February 4, 2017. This value is based on an oral statement by Mr. Jerome’s realtor friend, who was once a listing agent for the matrimonial home. It is not supported by any documentation included in the record. To demonstrate that the matrimonial home had not appreciated in value at a rate Mr. Jerome suggests, Ms. Lee sought another, current, opinion of value from Ms. Gregory. Ms. Gregory letter of opinion shows that the value of the matrimonial home as at January 2018 was in in the range of $525,000 to $530,000. Accordingly, I conclude that Mr. Jerome’s argument in support of a value of $800,000 does not have an air of reality.

iii) The Equalization Amount

[28] Mr. Jerome submits that Ms. Lee must provide financial disclosure using his separation date of February 4, 2017, as opposed to hers of May 15, 2015, so that the equalization amount can be properly calculated. As noted above, I am not persuaded that Mr. Jerome has an arguable defence on the actual date of separation. The accuracy of the information in Ms. Lee’s Net Family Property Statement in support of her application is not challenged by Mr. Jerome. The parties acknowledge that the statement is incomplete in that the value of Mr. Jerome’s teachers’ pension, his real property in Listuguj, Quebec and other assets of Mr. Jerome that have minimal value have not been brought into account. Ms. Lee’s Net Family Property statement did not include any exclusion for property that she would have been entitled to exclude pursuant to her marriage contract with Mr. Jerome, which is to Mr. Jerome’s advantage.

[29] On the subject of equalization, Mr. Jerome submits that an amount of $200,000 paid to Ms. Lee by her mother during the marriage was a gift and not a loan and therefore ought to be included in Ms. Lee’s net family property. He makes this submission notwithstanding his text message to Ms. Lee, sent on June 22, 2017 in the context of the discussions relating to their separation in which he states that he wishes to set up a payment schedule regarding the repayment of the money owing to Ms. Lee’s mother over time as opposed to paying a lump sum. The record includes copies of cheques from Ms. Lee payable to her mother beginning in January 1, 2013 in the amount of $500 per month. The “Memo” line on the face of each cheque reads “loan repayment”.

iv) Custody and Access

[30] Mr. Jerome submits that custody of the children should be joint. He disputes Ms. Lee’s assertion that he has not been an involved parent. He submits that when he was not required to work long hours, he and Ms. Lee shared parenting responsibilities equally. Nonetheless he acknowledges that Ms. Lee would not let him do as much as he would have liked and so he was left to care for the children when Ms. Lee was out or otherwise occupied. Mr. Jerome submits that this care involved cleaning the house, doing the children’s laundry, preparing meals for them, taking them to dental and medical appointments, taking them to various organized activities and ad hoc play time, and getting involved in school trips or in-classroom activities. Ms. Lee submits that she tried to involve Mr. Jerome in decisions pertaining to the children but he was frequently non-responsive or simply did not care to be involved. She disputes the involvement he describes and submits that Mr. Jerome has not done the children’s laundry for a very long time and only prepared meals during the last three years he was living in the matrimonial home. According to her evidence, he took the children to the dentist or doctor once or twice only. She agrees that Mr. Jerome did take the children to activities from time to time but her evidence is that he was often late or failed to take them at all after having agreed to do so. By the time their daughter was in the third grade, Mr. Jerome did not participate in any school activities. According to Ms. Lee’s evidence, in his affidavit in support of his claim for custody and access, Mr. Jerome incorrectly identifies the schools at which the children are currently enrolled. Ms. Lee questions certain parenting decisions made by Mr. Jerome including the length of time their son is permitted to spend on electronic devices and the freedom Mr. Jerome allows Charles to play violent video games and to stay up late when he stays with Mr. Jerome. Their son has stated that he does not want to spend more than four days every two weeks with his father. Their daughter visits her father from time to time but is reluctant to commit to any regular schedule. In light of the evidence, it does not appear that Mr. Jerome has an arguable defence on the matter of custody.

v) Mr. Jerome’s Income

[31] In her application, Ms. Lee submitted that Mr. Jerome has an ability to earn between $50,000 and $80,000, and that he could be earning significantly more given that his income is based on part-time supply teaching and his work as a union representative. Ms. Lee submitted that he could make himself available for more supply teaching. Ms. Lee also submitted that Mr. Jerome earns income from renting his residence in Listuguj and from doing handyman work for friends for which he is paid cash, though neither of sources of income appears on his tax return. Mr. Jerome denies that he works for cash and submits that he is not required to disclose the rental income on his tax return because the rental property is on-reserve. The rental income is included in Mr. Jerome’s June 22, 2018 financial statement, which shows his total annual income to be $55,399.56. Mr. Jerome submits that he cannot be guaranteed extra work as a supply teacher.

[32] Given that Mr. Jerome’s most current financial statement reflects gross income of over $55,000, with the caveat that there is no guarantee of regular supply teaching work for the remainder of the year, it is difficult to see how he could mount a successful defence to Ms. Lee’s claim that he has the ability to earn between $50,000 and $80,000 per year.

vi) Mr. Jerome’s Claim for Spousal Support

[33] Mr. Jerome submits that his income should be based on the amount reflected on line 150 of his tax return and not on the amount shown in his latest financial statement and, accordingly, he is entitled to spousal support. He asserts this claim on the basis that he suffered economic disadvantage when he was held back from progressing in his career while he supported Ms. Lee in the development of her career. Ms. Lee submits that Mr. Jerome has suffered no economic disadvantage. Rather, she submits that she has suffered such damage as a consequence of having had to act as primary parent to the children while earning money to support herself and the children and, from time to time, Mr. Jerome.

[34] Ms. Lee’s evidence is that she supported Mr. Jerome in his career choices. She assisted him in his applications to teacher’s college and law school. She supported him when he took a course in creative writing and when he chose to work in Listuguj for the summers of 2012 and 2014. During his absence, Ms. Lee could only work part-time as she was solely responsible for attending the needs of the children and managing the household. Ms. Lee’s evidence is that she encouraged Mr. Jerome to work more so that he too could contribute more to the household expenses. According to Ms. Lee’s evidence, the only exception to such encouragement occurred when she asked Mr. Jerome to work less, as she would do as well, so they could be more supportive of their daughter when she attended pre-kindergarten.

[35] On balance, I find that the evidence filed by Mr. Jerome on this motion does not raise an arguable defence to Justice Paisely’s findings in the May 26, 2017 order.

Prejudice

[36] The prejudice to Ms. Lee in setting aside the order is not insignificant. For over a year now, she has believed that she is divorced and that the bulk of her matrimonial issues are resolved. She has been put to considerable expense in retaining counsel, first, to attempt to negotiate with Mr. Jerome over several months to resolve the outstanding matters, and, second, to oppose this motion. Mr. Jerome had the opportunity to contest Ms. Lee’s application on the merits. He was aware of the proceedings and chose not to participate despite clear warnings of the consequences of that decision.

Interests of Justice

[37] I must decide whether the interests of justice favour an order to set aside the default judgment. No factors are determinative, and I must consider the totality of circumstances. In the circumstances of this case, I am of the view that default judgment should not be set aside. Mr. Jerome was properly served. He has legal training and experience with the court process. He was warned of the consequences of failing to respond to Ms. Lee’s application and did not heed the warnings.

Disposition

[38] Mr. Jerome’s motion to set aside the order of Justice Paisley dated May 26, 2017 is denied. Mr. Jerome is encouraged to co-operate with Ms. Lee to resolve those issues, which are set out in Justice Paisley’s order that have not been finalized, namely, access arrangements and the valuation of Mr. Jerome’s pension and the Listuguj property.

Costs

[39] The respondent Mr. Jerome has been unsuccessful in his motion to set aside the order. The applicant Ms. Lee shall therefore be entitled to her costs of this motion. I encourage the parties to agree on the costs. Should they be unable to agree, the applicant shall make written submissions not exceeding three pages (plus a cost outline) within 15 days of this endorsement and the respondent shall make written submissions not exceeding three pages (plus a cost outline) within 15 days thereafter.

Dietrich J. Date: October 12, 2018