COURT FILE AND PARTIES

COURT FILE NO.: FS-96-11

DATE: 2014/07/28

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: LOUISE LEMIEUX, Applicant

AND:

WILLIAM BRIAN LEHANE, Respondent

BEFORE: The Honourable Justice D.A. Broad

COUNSEL:
Applicant - Self-represented

Barry T. Paquette, for the Respondent

Gregory R. Sutter, for the Director, Family Responsibility Office

HEARD: July 24, 2014

ENDORSEMENT

Nature of the Motion

[1] The respondent moves to set aside the Order of Justice Gordon dated March 23, 2012 (the “Order”), which was obtained at an uncontested trial, supported by an Affidavit for Uncontested Trial sworn by the applicant. The order provides for spousal support in the amount of $1500 per month starting on February 1, 2012.

[2] The respondent also seeks suspension of enforcement of any arrears of spousal support, or ongoing spousal support and an order reinstating his Canadian passport, which was suspended at the request of the Director, Family Responsibility Office (“FRO”) pursuant to the Family Orders and Agreements Enforcement Assistance Act, R.S.C. 1985, c.4. in or about September, 2012.

Background

[3] The parties were married on October 8, 1983 and separated April 1, 2009. The applicant is 63 years of age and the respondent is 62 years of age. From 1988 to 2009 the respondent operated a small business in Cambridge, Ontario which designed and built special purpose machinery. In May, 2009 the bank loan of the business was called and the business was liquidated and the respondent and the applicant, who had each signed personal guarantees of the bank indebtedness of the business, were forced into personal bankruptcy.

[4] The respondent moved to Mexico in June, 2009, having been recruited to participate in a business opportunity in that country, which ultimately did not materialize. He was involved in a serious motor vehicle accident in June, 2009 from which he recuperated until November, 2009.

[5] In February, 2010 the respondent lost his position with a Mexican company he was working for and in April, 2010 he began the process of starting a new equipment manufacturing venture in Mexico with a partner. The respondent is a 30% shareholder in the company, his son is a 19% shareholder and there is a Mexican partner who is a 51% shareholder. The business is not profitable, and the respondent currently draws a weekly wage of $308 US per week (4,000 pesos).

[6] The applicant commenced the proceeding on October 3, 2011 and obtained an order permitting service on the respondent by mail at his business address in Mexico. The respondent received the Application and supporting materials at the beginning of January, 2012 and retained a lawyer in Kitchener to assist him in responding to the Application.

[7] The respondent deposes in his affidavit that his former lawyer wrote to the applicant on January 25, 2012 advising that he had been contacted by the respondent and requesting time for delivery of an Answer and Financial Statement and that the applicant not note the respondent in default pending delivery of responding materials. The respondent's former lawyer wrote to the applicant again on February 29, 2012 enclosing an unsworn Financial Statement and advising that his sworn Financial Statement and Answer would be served subsequently.

[8] For her part the applicant denies that she received the letters of January 25 and February 29, 2012 and denies receiving the unsworn financial statement until September, 2012. The applicant filed an Affidavit for an Uncontested Trial on January 30, 2012 and a further Affidavit for an Uncontested Trial on March 20, 2012. In the latter affidavit the applicant deposed that she was requesting $500-$1500 per month spousal support on the basis that "the respondent should easily be paying himself [from his business in Mexico] anywhere from $50,000-$100,000/year.”

[9] The respondent deposed in his affidavit in support of the motion that his former lawyer wrote to the applicant on September 10, 2012 enclosing a signed Answer and an unsworn Financial Statement. He was required to have the documents translated into Spanish in order to have them "notarized" and then "certified" for international validity at a Mexican government office.

[10] The respondent's former lawyer attended to review the court file on September 13, 2012 and discovered the Order, as well as the two filed Affidavits for an Uncontested Trial. The lawyer wrote to the applicant on September 19, 2012, referring to his letters to her of January 25, 2012 and February 29, 2012 and accused the applicant of misleading the court in her Affidavits in support of the Uncontested Trial. He proposed that the applicant should consent to an order varying the order to ensure that the amount of spousal support was in keeping with the respondent's actual proven income. The applicant did not respond to this correspondence. She deposed that she was offended by the tone of the letter and by the allegation that she had misled the court.

[11] It appears that no further steps were taken by the respondent's former lawyer until November 25, 2013 (over one year later) when he wrote to the applicant proposing a resolution of the issue by way of a variation of the Order as an alternative to spending resources on legal fees to set aside the default Order.

[12] The respondent deposed in his affidavit in support of the motion that he only became aware that his passport had been suspended when he was arrested at the Texas border for trying to enter the United States illegally in November 2013.

[13] The respondent's lawyer wrote to FRO on November 26, 2013 proposing to negotiate a repayment schedule and to proceed with a Motion to Change the Order. The applicant wrote to the respondent's lawyer on December 6, 2013 requesting certain financial disclosure from the respondent. There is no indication that respondent's lawyer responded to this correspondence but rather he wrote to FRO on December 19, 2013 and January 7, 2014.

[14] The respondent deposes in his affidavit in support of the motion that, instead of bringing a motion to set aside the Order, his former counsel attempted to negotiate a settlement with the applicant and to resolve support issues with FRO, stating that negotiations with the applicant were not successful and that his former lawyer received no response from FRO to his correspondence. He deposed further that he has been advised by his present lawyer that there should have been a motion brought to set aside the default Order and that, instead of bringing such a motion, his former lawyer attempted to negotiate a settlement with the applicant.

[15] The respondent states that he is required to travel to South Africa in order to set up and commission a piece of equipment pursuant to a contract of his business with a customer in that country. He says that if the equipment is not commissioned and made operational the contract will go into default and the balance owing to the business of $61,900 US will not be paid. These funds are required in order to repay loans. He cannot travel to South Africa for this purpose without a valid Canadian passport.

[16] The applicant, in her affidavit in response to the motion, questions the veracity of the information set forth in the respondent's affidavit respecting his financial circumstances. She points to funds being available to the respondent for entertainment, trips and for processing the divorce in July, 2013 and states that the machines that are being manufactured by the business in Mexico should be profitable. She also questions the necessity for the respondent to travel to South Africa, stating that their son, who was largely responsible for building the equipment, is capable of starting up the equipment.

Analysis

[17] The Family Law Rules do not provide expressly for motions to set aside final orders. However, as observed by G. A. Campbell, J. in Dodge v. Dodge (2007) 2007 80075 (ON SC), 44 R.F.L. (6th) 317 (Ont. S.C.J.) at para.26, Rule 1(7) permits the court to make reference to the Rules of Civil Procedure, thereby allowing the court to set an order aside.

[18] Rule 19.08(2) of the Rules of Civil Procedure provides that a judgment against a defendant who is been noted in default that is obtained on a motion for judgment or obtained after trial a may be set aside or varied by a judge on such terms as are just. Accordingly, a decision on whether to set aside an order made on default is discretionary.

[19] Campbell, J., in Dodge observed that the questions to be determined on a motion to set aside a final order are 1) whether the respondent has moved promptly to seek to set the judgment aside; 2) whether the default has been adequately explained; and 3) whether there is an arguable defense on the merits.

[20] Dealing with the second factor first, namely whether the default has been adequately explained, the respondent deposed in his affidavit that, immediately upon receiving the applicant's court documents in early January, 2012, he retained a lawyer in Kitchener to respond to the application on his behalf. He has produced copies of letters which his former lawyer says were sent to the applicant seeking an indulgence and providing an unsworn financial statement.

[21] Although the applicant denies having received the letters from the respondent's former lawyer in January and February, 2012, it is evident that the respondent did not ignore the proceedings when he received the applicant's court documents, but rather took immediate steps to retain counsel and he had a reasonable basis for belief that his lawyer was responding to the proceeding adequately. He went to the extent of having his responding materials translated into Spanish by a certified translator to permit them to be notarized in Mexico and delivered an Answer and an unsworn Financial Statement by early September, 2012.

[22] It was observed by Campbell, J. in Dodge that it has long been established that delay in seeking to set aside a final judgment or order is an important factor to be considered before arriving at a conclusion in favor of the moving party, quoting the case of Johnston v. Barkley (1905), 10 O.L.R. 724 (Ont. Div. Ct.) as follows:

If the application is not made immediately after the defendant has become aware that judgment has been signed against them, the affidavits should also explain the delay in making the application; and, if that delay be of long standing, the defense on the merits must be clearly established.

[23] It is evident from this passage that the existence of a delay of long standing is not, by itself, fatal to the success of a motion to set aside the default judgment. It is but one factor to be weighed by the court in the exercise of its discretion, including, in particular, whether a defense on the merits has been clearly shown by the moving party.

[24] In my view, the respondent has provided an explanation for the delay, and has acknowledged that his former lawyer should have moved much earlier to set aside the default Order, but incorrectly chose to attempt to negotiate a resolution of the matter with the applicant and with FRO. Although the span of time between the respondent's former lawyer’s letter to the applicant on September 19, 2012 in his next letter to her on November 25, 2013 is problematic, the applicant did not respond to the September 19, 2012 letter, and the matter seems to have been simply left in abeyance.

[25] I am satisfied that the respondent has shown an arguable defense on the merits relating to what his true income was, and is, for the purpose of determining an appropriate amount to be paid to the applicant for spousal support. The respondent's financial statement discloses his average income for the period since the Order of approximately $16,000 per year, while the support payments provided for in the Order total $18,000 per year. Although the applicant presents factors which she maintains cast doubt on the veracity of the respondent's financial disclosure, there is a serious issue to be adjudicated with respect to the respondent's true income. It is noteworthy that in the applicant's Affidavit for Uncontested Trial dated March 20, 2012, she sought spousal support in a range of $500-$1500 per month, stating that she "would be satisfied to have whatever is granted in order to have something in place within the court system," should the respondent return to Canada. It is also noted that since the date of the Order the applicant has received retraining and become employed. She has not been receiving support from the respondent pursuant to the Order but has been supporting herself on her own income. The applicant will therefore not be significantly impacted should the Order be set aside and the question of spousal support be permitted to be adjudicated on its merits, or settled.

[26] The principle of finality of court orders and judgments is an important one in our court system, as noted by Campbell, J. in Dodge. However, there is a countervailing and equally important principle that legitimate disputes between parties should be determined on their merits whenever reasonably possible. The balancing of these principles is often a difficult task, and it is in this case.

[27] In the unique circumstances of this case, and in the exercise of my discretion, applying the three-pronged test referred to in Dodge as set forth above, I am of the view that the Order should be set aside in order to permit the questions of entitlement of the applicant to spousal support and the amount of spousal support to be paid by the respondent to be determined on their merits.

Lifting of Passport Suspension

[28] Counsel for FRO submits that I lack jurisdiction to make an order directing FRO to withdraw its federal licence denial application as regards the applicant’s passport, arguing that, once the underlying support Order is set aside, the respondent may simply apply to the applicable Federal authority to have his passport reissued or the suspension lifted. In support of the proposition that this court lacks jurisdiction to require FRO to do more he cites the case of Perkins v. O’Neill 2007 CarswellOnt 6588 (S.C.J.), a decision of Justice A. de L. Panet, at para. 7, which reads as follows:

With respect to the requested reinstatement of the passport, it appears that the suspension of the Father's passport was made pursuant to a request by FRO pursuant to the Family Orders and Agreements Enforcement Assistance Act, R.S.C. 1985 c. 4(2nd supp.) as amended. This court has no jurisdiction to make the order as requested by the Father.

[29] It is noted that no authority is cited by Justice Panet for the foregoing proposition. Moreover, Justice Panet’s Reasons made no reference to the dicta of Lakin, J.A. at para. 28 of McLarty v. Ontario (Family Responsibility Office) [2001] CarswellOnt 539 (C.A.) as follows:

In my view, s.71 [of the Family Orders and Agreements Enforcement Assistance Act] does not assist the Director because the action that led to the order of Sedgwick J. was a motion, not an appeal. Parliament must be taken to know the difference between a motion or an application and an appeal. Only an appeal is prohibited.

[30] S. 71 of the Act reads as follows:

Notwithstanding the provisions of any other Act of Parliament, of any regulation or order made under any other Act of Parliament or of any order made pursuant to a prerogative of the Crown, no appeal lies from any action taken under this Part.

[31] It is noted parenthetically that Justice Panet does refer in Perkins to McLarty in another context.

[32] The jurisdiction of the court to order FRO to withdraw a federal licence denial application made under the Family Orders and Agreements Enforcement Assistance Act was recently upheld in the case of Horner v. Benisasia 2013 ONSC 5081 (S.C.J.) a decision of Andre. J., at para. 65 as follows:

I disagree with counsel for the FRO that I lack jurisdiction to order the FRO to withdraw any federal licence denial application. Section 71 of the federal legislation merely prohibits an appeal "from any action taken under this part;" (re. Licence Denial) the provision does not apply to a motion. McLarty v. Ontario (Family Responsibility Office) [2001 CarswellOnt 539 (Ont. C.A.)], 240, 29 para. 28. However, while I conclude that I have the discretion to order the FRO to refrain from asking the Federal Government to suspend and or refuse to renew Mr. Benisasia's passport, I refrain to do so for the reasons noted above.

[33] I have not been provided with any evidence as to what would be required of the respondent to reinstate his passport based upon the setting aside of the default Order, and in particular, whether it would be possible for him to readily do so in the absence of any positive action taken by FRO to facilitate the lifting of the suspension by withdrawing its license denial application.

[34] Now that the default Order has been set aside and there is no operative support order underpinning the suspension of the respondent’s passport, in my view it is appropriate to order that FRO withdraw the federal licence denial application under the Family Orders and Agreements Enforcement Assistance Act giving rise to the suspension of the respondent’s passport. I am satisfied on the authority of Horner, supported by McLarty, that I have jurisdiction to do so. This will hopefully facilitate the lifting of the suspension of the respondent’s passport at the earliest possible date.

Disposition

[35] It is therefore ordered as follows:

(a) The final Order of Justice Gordon dated March 23, 2012 be and it is hereby set aside;

(b) The Director, Family Responsibility Office shall withdraw the federal licence denial application under the Family Orders and Agreements Enforcement Assistance Act giving rise to the suspension of the respondent’s passport.

Costs

[36] In my view, subject to any factors of which I may not be aware, this is not a case for an award of costs in favour of the respondent. Any fault for the situation that the parties find themselves in reference to the proceeding may not be laid at the feet of the applicant.

[37] Moreover the applicant is entitled to recovery from the respondent of any proper costs “thrown away” by virtue of the default Order having been taken out and any enforcement steps taken by her under it. By costs “thrown away” I mean actual out-of-pocket expenses to which the applicant was put in obtaining the default Order or in relation to steps taken to attempt to enforce it. The applicant should provide particulars of any such expenses in her submissions on costs, if submissions are necessary. I would also be prepared to consider a request by the applicant for any loss of income and travel or other expense incurred by her for her attendance to respond to the motion. It is hoped that these costs may be capable of being settled by agreement between the parties, acting reasonably.

[38] If the parties are unable to agree on costs, they may file written submissions of no more than three pages, double-spaced, in addition to any pertinent offers and supporting material, including any draft bills of costs, within 30 days. Each party may have 10 days thereafter to file brief submissions replying the other party’s submissions, if they wish to do so. Such written submissions are to be forwarded to me at my chambers at 85 Frederick Street, 7th Floor, Kitchener, Ontario N2H 0A7. If no submissions are received within 30 days, the parties will be deemed to have settled the issue of costs as between themselves.

D.A. Broad, J.

Date: July 28, 2014