COURT FILE NO.: 10-44608

DATE: 2020-03-06

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Deborah Marie Irons

Applicant

• and -

Samuel Martin Irons

Respondent

HEARD: April 24, 25; November 13, 14, 15, 2019 and February 5, 2020

JUDGMENT

THE HONOURABLE MADAM JUSTICE L. MADSEN

Overview

[1] In this trial, the Respondent, Samuel Martin Irons (“Mr. Irons”) seeks to set aside a final order made by the Honourable Hambly J. on May 16, 2012 (the “final order”). At the time the final order was issued, Mr. Irons was in default. The Applicant, Deborah Marie Irons (“Ms. Irons”), asks that Mr. Irons’ request to set aside the final order be dismissed.

[2] On the evidence in this case, neither Mr. Irons nor Ms. Irons took all of the steps they should have taken at the times they should have taken them. Mr. Irons failed to respond to Ms. Irons’ application on a timely basis notwithstanding several consents to late filing. Ms. Irons proceeded on an uncontested basis in the face of an order that materials be served, failed to tell the court the full story, and was dilatory with the service of orders. When Mr. Irons became aware of the final order obtained in 2012, he failed to move with dispatch, or even reasonable diligence, to seek to have the order set aside, initiating proceedings only in 2016 after intervention by the Family Responsibility Office (the “FRO”).

[3] In all of the circumstances, weighing the many factors in this case and for the reasons set out below, Mr. Irons’ request to set aside the final order is dismissed.

Procedure on this Trial

[4] Mr. Irons’ request to set aside the final order was brought in the context of a motion to change issued August 11, 2016, almost three and a half years after the final order was made. In the motion to change, he sought to set aside the final order, set child support owed at $0.00, and terminate spousal support as at May 16, 2012, the day that Hambly J. granted the final order.

[5] Ms. Irons signed her response to motion to change on September 29, 2016. She sought an order that the motion to change be dismissed with costs. In her amended response dated March 4, 2019, Ms. Irons sought an increase to the spousal support provided for in the final order, effective January 15, 2018, based on Mr. Irons’ gross 2018 income of approximately $134,000.

[6] From 2016 to February 2019, there were numerous appearances on the matter, including a case conference on January 9, 2017, a settlement conference on June 15, 2018, a trial management conference on November 2, 2018, a continued trial management conference on January 4, 2019, and a motion to strike Mr. Irons’ pleadings on February 28, 2019 on the basis of non-disclosure. That motion was dismissed, although Braid J. identified items of non-disclosure and provided that Ms. Irons may seek an adverse inference on the basis thereof.

[7] The matter came before Gordon J. for trial on April 14-15, 2019. At that time, he ordered that the trial be bifurcated, with the question of the setting aside of the default judgment to be addressed first, as a threshold issue. Gordon J. also indicated that Mr. Irons’ former counsel, Mr. Flannery, should attend to give evidence on the circumstances surrounding Mr. Irons’ failure to file his answer despite it twice having been served on Ms. Irons’ counsel.

[8] On April 24-25, 2019, the matter came before Milanetti J. for two days on the threshold issue of setting aside the default judgment. She heard evidence of Mr. Flannery and Mr. Irons, the two witnesses in Mr. Irons’ case. Ms. Irons’ witnesses were not heard, and counsel were directed to schedule three further days through the trial coordinator, failing which they were to attend at assignment court on May 31, 2019 to schedule the remainder of the trial.

[9] It was not possible to complete the trial with Milanetti J. Counsel were offered the choice to start the trial anew with another judge, or to be provided with transcripts and then continue the trial with another judge. Counsel opted for the latter approach. Accordingly, counsel and the court were provided with transcripts of the hearing on April 24-25, 2019, and the matter then continued November 13-15, 2019 and February 5, 2020 before me.

[10] As at the date of final closing submissions on February 5, 2020, it was more than seven and a half years since the date the final order was made.

Positions of the Parties

[11] Mr. Irons argued that the final order of Hambly J. should be set aside for reasons including the following:

(a) Ms. Irons was not permitted to move forward with her application on an uncontested basis on account of an order of Campbell J. dated November 1, 2011;

(b) Ms. Irons failed to make full disclosure to Hambly J. when seeking the final order in May 2012; and

(c) In applying the test set out in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, 119 OR (3d) 561, Mr. Irons moved as promptly as possible given the complicated nature of the case, he has an arguable case on the merits, and he would be substantially prejudiced were the final order to stand.

[12] Ms. Irons argued that Mr. Irons’ claim to set aside the default order should be dismissed for reasons including the following:

(a) Mr. Irons failed to file his responding materials despite being granted three consents to late filing and being put on notice that Ms. Irons would proceed on an uncontested basis if he did not file his materials;

(b) Mr. Irons knew or ought to have known that Ms. Irons was proceeding with her claims for child and spousal support at least as early as April 2012;

(c) Mr. Irons became aware of the final order in 2012 and delayed matters unduly by waiting until 2016 to bring his motion to change; and

(d) Ms. Irons would be significantly prejudiced were the order to be set aside.

Brief Chronology

[13] The following is a brief chronology of the most significant dates in this matter:

August 16, 1989 Date of marriage

April 1, 2009 Date of separation

December 5, 2009 Parties sign separation agreement

October 1, 2010 Ms. Irons initiates divorce proceeding

November 23, 2010 Mr. Irons serves answer and financial statement

November 2010 Ms. Irons provides first consent to late filing

May 19, 2011 Mr. Irons serves answer and financial statement again

May 19, 2011 Ms. Irons provides second consent to late filing

September 2, 2011 Ms. Irons provides third consent to late filing

October 3, 2011 Court issues notice of approaching dismissal

October 28, 2011 Motion without notice to Mr. Irons seeking to proceed on an uncontested basis

November 1, 2011 Campbell J. dismisses motion without notice and requires service of materials on Mr. Irons

November 17, 2011 Campbell J.’s endorsement is faxed by the court to Ms. Irons’ counsel’s office

December 15, 2011 Notice of dismissal

December 21, 2011 Ms. Irons initiates Canada Revenue Agency (CRA) application

December 29, 2011 Ms. Irons brings motion without notice seeking to set aside dismissal order

January 3, 2012 Gordon J. sets aside dismissal order

January 4, 2012 Mr. Irons makes assignment into bankruptcy

January 13, 2012 Mr. Irons is served with CRA application

April 18, 2012 Consent judgment of Flynn J. in CRA application

May 11, 2012 Ms. Irons brings motion without notice seeking retroactive and ongoing child and spousal support, prejudgment interest and costs

May 16, 2012 Hambly J. makes final order (at issue in this trial)

April 3, 2013 Mr. Irons makes first payment to the FRO

April 18, 2016 First consent between FRO and Mr. Irons requiring motion to change to be initiated by May 16, 2016

May 16, 2016 Second consent between FRO and Mr. Irons requiring motion to change to be initiated by July 11, 2016

August 11, 2016 Mr. Irons initiates motion to change

Witnesses and Credibility

[14] There were four witnesses in this trial: Mr. Irons, Ms. Irons, Mr. Flannery (Mr. Irons’ former counsel), and Ms. Serena Russell (formerly Ms. Saba, law clerk at Miller Thomson, LLP when Ms. Irons retained that firm).

[15] All witnesses were encumbered by the significant passage of time since the key events in question. All demonstrated some confusion as to timelines and what documents they had seen and when they had seen them. This is unsurprising given that the trial was held over seven years after the final order was made.

[16] As will be seen below, I found Mr. and Ms. Irons’ respective testimony credible in some respects and less so in others. As noted by Fryer J. in Lefebre v. Lefebre, 2020 ONSC 311, [2020] O.J. No. 506 at para. 37, the court may accept none, some, or all of a witness’ testimony. In arriving at my decision on this trial, I have accepted some but not all of each party’s evidence.

[17] The following summary sets out my main observations regarding credibility of the witnesses’ evidence. The facts are set out more fully below in the section entitled “Findings of Fact.”

Mr. Flannery

[18] Mr. Flannery had a poor recall of specific events during his retainer with Mr. Irons, and his evidence was quite general. He had not reviewed the file when he attended court. He did confirm that he was retained from November 2010 until December 14 or 15, 2011, and that he explained the impact of the notice of dismissal to Mr. Irons sometime in December 2011 after the retainer ended.

[19] I accept Mr. Flannery’s testimony that over the course of autumn 2011, Mr. Irons generally appeared to become depressed and unmotivated to participate in the family proceeding and was not responding to letters or taking phone calls. I also accept his evidence that Mr. Irons did not provide some of the required documents to him. This was corroborated by Mr. Irons’ acknowledgement in cross-examination that he did not file his 2010 income tax return until 2015.

Mr. Irons

[20] I found Mr. Irons’ evidence regarding the broad strokes of his relationship with Ms. Irons consistent and matter-of-fact. He confirmed that the parties came to Canada from Scotland, that Ms. Irons stayed home with the parties’ two children until they started school, and that he always had the higher income during their relationship.

[21] However, I had difficulty with some aspects of Mr. Irons’ testimony. For example, he seemed to suggest that Mr. Flannery had not taken the steps he should have taken on his behalf and denied being hard to get ahold of or being unresponsive. He seemed to put the blame on Mr. Flannery for his materials not having been successfully filed. He initially testified that he gave Mr. Flannery the tax “paperwork” for 2010 in the fall of 2011; yet, as noted above, it came out in cross-examination that the 2010 income tax return, which was the missing document which would permit him to file his responding materials, was not prepared until 2015. Further, in describing the process of gathering his financial documents, Mr. Irons stated that “Mr. Flannery was in a rush to get the stuff into court.” That would suggest that Mr. Flannery was actively working to assist Mr. Irons rather than failing in his responsibilities as counsel.

[22] In his testimony Mr. Irons had some difficulty with timelines surrounding the original application and when he became aware of the final order. While he testified that he received a letter from the FRO in October or November 2012 and picked up a copy of the order from the courthouse “about two months” after that, at questioning in May 2017 he confirmed that he received the final order shortly after it was made, likely in May 2012. Challenged on this discrepancy at trial, Mr. Irons said he got confused by the way the questions were asked and only became aware of the order when the FRO contacted him.

[23] Mr. Irons’ evidence about steps he took when he became aware of the final order was vague. He said he consulted 12-15 lawyers but didn’t retain one because he couldn’t afford to. He said he organized the consultations with various lawyers by email. However, he provided no copies of emails confirming those consultations, and could only recall the name of one lawyer he consulted. Given that Mr. Irons bears the onus on the request to set aside and the importance of his explanation for his significant delay, I found the lack of detail regarding steps he took after he became aware of the order to be both surprising and revealing.

Ms. Irons

[24] In general, I found that Ms. Irons testified in a direct and straightforward manner, although like Mr. Irons, she was sometimes less than completely clear about timelines. She acknowledged that circumstances could have been more fulsomely presented in her affidavit in May 2012 and that she did not know why they were not.

[25] Ms. Irons acknowledged that her May 2012 affidavit would have been more accurate had she clearly stated that she had twice been served with Mr. Irons’ answer and financial statement, and that it was inaccurate to not have listed the funds she was to receive in the Canada Revenue Agency (“CRA”) application related to Mr. Irons’ bankruptcy, about $87,000. She acknowledged that she failed to list a small tax-free savings account (TFSA), the value of her vehicle, or “accounts receivable” in relation to the bankruptcy funds in the sworn financial statement put before Hambly J. Having said that, she did list her half interest in the parties’ home, which had been sold, which was largely the source from which the funds she received in the bankruptcy derived.

[26] While counsel for Mr. Irons made much of a discrepancy of account numbers in relation to debts paid off from funds received in the bankruptcy, suggesting that Ms. Irons paid off sole rather than joint debt (this being a further benefit to her from the bankruptcy pay-out), I accept Ms. Irons’ explanation that the discrepancy in the account numbers likely related to the difference between the account numbers and corresponding access card numbers. Overall, it appears that she paid $23,000 towards joint debt, of which she received about $20,000 in the bankruptcy for that purpose. She acknowledged that this being the case, she did not shoulder most of the joint debt, although her 2012 affidavit materials suggested that she had.

[27] I was concerned by Ms. Irons’ oral evidence that she had never worked in Mr. Irons’ business and had not been a bookkeeper for him. This stood in contrast with her statements in her application and two affidavits that she had performed bookkeeping duties for Mr. Irons’ business on an unpaid basis.

[28] I also had concerns about Ms. Irons’ evidence at trial that after the parties separated and before she moved out of the home, she paid Mr. Irons half of her income. She did not deny that she did not previously make this assertion at questioning, in her affidavit in support of the final order, or even in her application. I find it unlikely that Ms. Irons would have failed to mention this in court documents prepared before the trial, were the claim accurate.

Ms. Russell (previously Ms. Saba)

[29] Ms. Russell is a legal assistant at the law firm Cohen Highley LLP. She worked at Miller Thomson LLP for approximately eight years, ending in 2019, and worked on the Irons matter during the initial application brought by Ms. Irons. She testified that she had reviewed the file and had some recollection of the events that took place but that her recollection was “not great.” She did not recall each step in the proceeding.

[30] Ms. Russell testified that counsel’s usual practice was to serve orders obtained and that from her perspective, the likelihood that orders were served on Mr. Irons was “pretty high.” She also testified, however, that if cover letters had been drafted enclosing copies of orders, there would be copies in the firm’s files, and that in some cases there would be an affidavit of service. At the same time, she stated that the document management system in place in 2012 was used more “sparsely” than it is currently. Ms. Russell stated that if served, the orders in question would have been sent to Mr. Irons’ address in the court record.

[31] While Ms. Russell initially stated that she saw Campbell J.’s endorsement of November 1, 2011 during the original application, she then stated she was not sure when she saw it.

[32] I found Ms. Russell to be a credible witness. She was candid about what she could and could not recall. I do not find it surprising that she would not have independent recall of the specific steps in the original application given the passage of time since those events and the many cases she would have worked on since then.

Findings of Fact

[33] The parties, to their credit, arrived at a 147-paragraph statement of agreed facts (in contemplation of a trial on all of the issues in the motion to change). The court thanks the parties for their efforts in this regard, which served to shorten the amount of trial time spent on background issues.

[34] Mr. and Ms. Irons were married from August 16, 1989 until their separation on April 1, 2009. They lived together until December 2009 when Ms. Irons moved out of the home into a rental apartment.

[35] Mr. Irons is 57 years of age and Ms. Irons is 51. They have two now-adult children: Laura, who is 27 and Samuel, who is 29. The children were 2 and 4 years of age respectively when Mr. and Ms. Irons emigrated from Scotland. Ms. Irons cared for the children until they were in school full-time.

[36] At separation, Laura was 17 years old and Samuel was 19. Laura resided with each parent for a period of time after separation. Laura turned 18 in September 2010, about one month before Ms. Irons started her application. Laura was not in full-time studies at that time.

[37] Mr. Irons worked for Union Energy until 2006. Thereafter, he owned and operated his own business, “Ironclad Heating and Cooling.” His line 150 income in the three years preceding separation was as follows: 2006: $73,836; 2007: a loss of $59,645; and 2008: $69,739[^1]. His income for 2009, the year of separation, was: $68,372, based on his 2009 income tax return.

[38] Mr. Irons swore a financial statement on November 19, 2010 indicating that his income at that time was $61,999.92. On his 2010 income tax return, Mr. Irons’ gross business income is stated to be $401,570 while his net income is shown as $37,907.58. In 2011, Mr. Irons declared gross business income of $172,984.76 and net business income of $51,304.86. In 2012, the year Hambly J. made the final order, Mr. Irons declared gross business income of $82,526, and net business income of $16,657.05.

[39] Mr. Irons did not file his 2010 income tax return until 2015. He did not file his 2011 income tax return until 2016. He did not file his 2012 income tax return until 2017.

[40] Ms. Irons’ income as shown on her notices of assessment was as follows just before and shortly after separation: 2009: $20,462; 2010: $37,000; 2011: $38,721; 2012: $42,622.

[41] Mr. Irons testified that Ms. Irons was a bookkeeper for business in the years leading up to the separation and that she prepared his taxes. Although Ms. Irons had stated in her application and in two affidavits that she had acted as a bookkeeper for his business on an unpaid basis during the marriage, she denied this at trial. In view of Ms. Irons’ prior affidavit evidence, I prefer Mr. Irons’ evidence at trial on this point.

[42] Mr. Irons also testified that he was less confident in his income figures until the year of separation because Ms. Irons prepared the tax returns, and that he was more confident in the figures from 2010 onwards when he retained an arm’s length third party to prepare his taxes. Ms. Irons denied preparing Mr. Irons’ tax returns. Again, I accept Mr. Irons’ evidence in this respect given Ms. Irons’ contradictory statements about her bookkeeping role.

[43] The parties agreed that during the marriage, Ms. Irons always earned less than Mr. Irons (notwithstanding that Mr. Irons 2007 income for tax purposes was negative $59,645).[^2]

[44] Mr. Irons drafted a separation agreement and presented it to Ms. Irons in November 2009. On December 5, 2009 the parties signed the agreement. Under the agreement, Ms. Irons was to receive a lump sum payment of $54,450 as well as a vehicle, and Mr. Irons would keep the home and retain all personal and business debts. Child support would be paid in accordance with the Child Support Guidelines and there would be no other support payable. Mr. Irons testified that he did not receive legal advice on the agreement. Ms. Irons initially testified that she did not receive legal advice on the agreement although later stated that she might have seen a lawyer in the fall of 2009. The parties’ son, who was 19 years old at the time, witnessed the agreement.

[45] Mr. Irons initially retained Mr. Flannery to notarize the separation agreement to assist him in obtaining financing for a home he had purchased. The agreement was not notarized. Mr. Irons testified that consequently the financing was not approved, and his purchase fell through. The vendor took steps to sue Mr. Irons.

[46] Ms. Irons commenced divorce and corollary relief proceedings on October 12, 2010 by service of the divorce application on Mr. Irons’ counsel, Mr. Flannery.

[47] Mr. Flannery served Mr. Irons’ answer and financial statement on Ms. Irons’ counsel on November 19, 2010. The materials were not filed at that time.

[48] Mr. Flannery again served Mr. Irons’ answer and financial statement on Ms. Irons’ counsel on May 19, 2011. The materials were again not filed. The court filing office rejected Mr. Irons’ materials because he did not have his 2010 notice of assessment. No chambers motion was brought to request permission to file responding materials without that document.

[49] Ms. Irons’ counsel provided three consents to late filing of Mr. Irons’ responding materials: November 2010; May 19, 2011; and September 2, 2011. Still, the materials were not filed.

[50] When the third consent to late filing was provided on September 2, 2011, Ms. Irons’ counsel advised by letter that if Mr. Irons did not file his materials by September 16, 2011, she would proceed without further notice to Mr. Irons with a motion for summary judgment. That letter was acknowledged by Mr. Flannery by letter dated September 8, 2011, in which he “apologized profusely” and thanked Ms. Irons’ counsel for her indulgence.

[51] Mr. Irons still did not file his materials.

[52] The parties both received a notice of approaching dismissal dated October 3, 2011.

[53] On October 28, 2011, Ms. Irons brought an ex parte chambers motion seeking severance of the divorce and leave to proceed without further notice to Mr. Irons. In her supporting affidavit she advised the court that if the order were to be granted, she intended to proceed by way of an affidavit for an uncontested trial.

[54] By endorsement dated November 1, 2011, Campbell J. declined to make the order sought and ordered the materials served on Mr. Irons. Although the endorsement was successfully faxed to the law firm representing Ms. Irons on November 17, 2011, Ms. Irons testified that she had never seen the endorsement. Although Ms. Russell, the law clerk who was working on the case at the relevant time, initially testified that she saw Campbell J.’s endorsement in the original application, she then stated she did not remember when she saw it, whether during the original application or since the motion to change was brought.

[55] Mr. Flannery’s representation of Mr. Irons ended on or about December 14, 2011.

[56] The matter was administratively dismissed. Both parties received a copy of the dismissal order dated December 15, 2011. Although his retainer had ended, Mr. Flannery testified that he “vaguely” remembered meeting Mr. Irons to discuss the dismissal order (after the termination of the retainer), and that Mr. Irons had lost his ability to care about what was happening and didn’t want to do anything about it. Mr. Irons confirmed that on or about December 20, 2011 he received advice from Mr. Flannery about the dismissal order.

[57] Less than two weeks later, on December 29, 2011, Ms. Irons brought an ex parte chambers motion to set aside the dismissal order, without notice to Mr. Irons. On January 3, 2012, Gordon J. granted this motion.

[58] Although a process server was sent by Miller Thomson LLP to the court in February 2012 to follow up on the October 29, 2011 motion before Campbell J., it was unclear from the form filled in by that individual whether the motion had been dealt with. The response from the process server referred to the motion to set aside the dismissal order which went before Gordon J., not to the motion that went before Campbell J.

[59] Ultimately, the endorsement of Campbell J. was not taken out as an order. The materials were not served on Mr. Irons, contrary to Campbell J.’s order. Mr. Irons was not served with a copy of the endorsement.

[60] It is unclear whether Gordon J.’s order setting aside the dismissal order was served on Mr. Irons. Neither an affidavit of service nor a cover letter was produced in evidence, although Ms. Russell testified that it was the firm’s practice to serve such orders and that it was “pretty likely” that it was in fact served. However, she had no specific memory of serving the order. Ms. Irons’ counsel suggested that it was served, and that it was likely sent to Mr. Irons’ address in Cambridge, Ontario, which was his address of record.

[61] Mr. Irons made an assignment into bankruptcy on January 4, 2012. Mr. Flannery gave notice to Ms. Irons' counsel that Mr. Irons was not taking a position with respect to the proceeds of sale of the home, which were being held in trust, and advised her counsel that he was not retained to deal with the bankruptcy.

[62] Ms. Irons commenced a civil action (the “CRA application”) to secure a share of the proceeds of sale of the home. Ms. Irons and the bankruptcy trustee negotiated a settlement wherein the bankruptcy trustee was to receive $55,000 of the approximately $142,000 in trust, and she was to receive the balance (approximately $87,000). This represented her 50% interest in the home, as well as approximately $20,000 for payment toward joint debt. This settlement was confirmed by order of Flynn J. dated April 18, 2012. The order also gave Ms. Irons leave to proceed in the family action with her request for retroactive and ongoing support.

[63] Flynn J.’s order was served on counsel for the bankruptcy trustee and a copy of a cover letter to that effect was produced as evidence in the trial. Counsel for Ms. Irons took the position that this in effect constituted service of Flynn J.’s order on Mr. Irons himself.

[64] Mr. Irons testified that he moved to London, Ontario from Cambridge, Ontario in January 2012. He did not file a notice of change of address with the court. His counsel suggested this may have been because he had been served by the court with the dismissal order and believed the case was over. The fact that Mr. Irons was moving was set out in his affidavit sworn January 24, 2012 and filed by Ms. Irons in the CRA application in early 2012. Mr. Irons denied having prepared the portion of the affidavit which set out his address as being in Cambridge, Ontario.

[65] On May 11, 2012, Ms. Irons brought a further motion, again seeking leave to proceed without notice to Mr. Irons, but also seeking a final order for ongoing and retroactive child and spousal support, pre-judgment interest, and costs. The motion was not served on Mr. Irons and the fact of the prior motion in October 2011 (before Campbell J.) was not disclosed in Ms. Irons’ affidavit in support of the motion. Although she referred to having received some documents and a financial statement from Mr. Irons, she did not disclose that she had twice been served with an answer. Although this motion was framed as a motion for summary judgment, it seems to have proceeded simply as an uncontested trial.

[66] In her motion materials, Ms. Irons provided the court with a copy of Mr. Irons’ 2009 income tax return, as well as documents from his bankruptcy in which Mr. Irons stated his annual income was $24,000. In her affidavit she also explained that Mr. Irons had declared bankruptcy and set out the income he was claiming in that bankruptcy.

[67] Ms. Irons suggested in her motion materials that Mr. Irons’ bankruptcy had compromised her property entitlements. Although she provided a copy of Flynn J.’s order which provided that she would receive the balance of the proceeds after payment of $55,000, she did not explain that this would total approximately $87,000. She also did not explain that while she was obligated by the settlement to attend to the parties’ joint debt, the settlement allocated approximately $20,000 for that purpose. Ms. Irons did not provide Hambly J. with a copy of the net family property statement she had prepared for the CRA application.

[68] Ms. Irons’ motion materials explained that Mr. Irons had significant debt and that he had been reassessed to owe $103,721.91 in back taxes to the CRA.

[69] Ms. Irons provided retroactive spousal support calculations to the court which did not account for the tax implications of spousal support payments.

[70] On May 16, 2012, Hambly J. granted the final order which Mr. Irons seeks to set aside in this trial. The order provided as follows:

1. That Mr. Irons pay retroactive child support in the amount of $632 per month for five months in 2010, based on his 2009 income of $68,372;

2. That Mr. Irons pay spousal support arrears fixed in the amount of $25,862;

3. That Mr. Irons pay ongoing spousal support in the amount of $822 per month commencing January 5, 2012 until further court order, indexed annually;

4. That Mr. Irons pay partial indemnity costs in the amount of $12,000 of which $7,000 was to be enforceable by the FRO;

[71] In addition, Hambly J.’s order contained terms related to pre-judgment and post-judgment interest.

[72] Hambly J.’s order did not identify Ms. Irons’ income for the purpose of spousal support. However, in her materials for that motion, Ms. Irons stated that she earned $38,721 in 2011, that she had lost her job and was earning part-time income at the time of the motion in the amount of $10,800. The support calculations which accompanied the motion materials suggest that Hambly J. ordered support in the mid-range of the Spousal Support Advisory Guidelines (SSAG) based on Ms. Irons’ 2011 income of $38,721.

[73] It is unclear whether Hambly J.’s order was served on Mr. Irons. Counsel for Ms. Irons argued that the court should assume it was served on Mr. Irons at his Cambridge address which was in the court record, based on Ms. Russell’s testimony that it was counsel’s practice to serve such orders. No affidavit of service or copy of a covering letter showing service was in evidence at the trial. There was a suggestion by counsel that the document management system of the firm may have been less than comprehensive at that time, although I note that the covering letter with respect to the order of Flynn J. (to the lawyer for the bankruptcy trustee) appears to have been retrieved within the same firm for the same time period.

[74] Irrespective of whether Hambly J.’s order was served by Ms. Irons’ counsel, Mr. Irons became aware of the order in 2012 either shortly after the order was made, or in October or November 2012. At trial he stated that a couple of months after being contacted by the FRO he went to the courthouse to get a copy of the order. In any event, by in April 2013, he made his first payment to the FRO.

[75] Once he had knowledge of the order, Mr. Irons moved slowly. He made intermittent payments to the FRO between 2013 and 2016. He testified that during the same period he met with 12-15 lawyers but did not retain one. He said that they wanted retainers in the range of $15,000 to $20,000, which he could not afford. Mr. Irons’ evidence about this was general and vague. Mr. Irons provided only one name of a lawyer consulted and did not produce any documentation which would confirm his consultations with a range of lawyers.

[76] Mr. Irons stated that in 2015 he sent Ms. Irons a registered letter seeking financial disclosure and that he received no response. He did not provide a copy of the letter or of the postal registration. However, he also testified that there was no contact between himself and Ms. Irons between 2012 and 2016.

[77] Mr. Irons did not request a copy of his file from former counsel Mr. Flannery until 2015.

[78] Mr. Irons had three driver’s license suspensions arising from the involvement of the FRO. At one point, the FRO also seized funds in an account following which Mr. Irons closed the account.

[79] On April 18, 2016 Mr. Irons entered into a consent with the FRO in which he committed to bringing his motion to change or motion to set aside before the return date of May 16, 2016.

[80] He did not bring his motion to change by that date.

[81] On the May 16, 2016 return date, he entered into a further consent with the FRO which provided that he would bring this motion to change before the return date of July 11, 2016. In addition, he was to pay ongoing support then owed in the amount of $864.09 per month and $35.31 per month toward the arrears, with a default term of five days incarceration for every default to a maximum of 180 days.

[82] Even in the face of the second consent with the FRO, Mr. Irons did not bring his motion to change and/or set aside by the return date.

[83] Mr. Irons finally brought his motion to change on August 11, 2016.

[84] Mr. Irons did not make regular payments to the FRO until their intervention in 2016.

[85] When the matter went before Milanetti J. in April 2019, the arrears totaled $77,087.45. When the trial resumed before me, the parties agreed that Mr. Irons’ arrears with the FRO were approximately $76,000.

[86] Mr. Irons now works for a company called BGIS in Thunder Bay, Ontario. According to his year-end pay stub, he earned $134,509.90 in 2018.

[87] Ms. Irons is self-employed. She testified that her current income is between $35,000 and $37,000 but that she is working less than full-time presently.

Law and Analysis

[88] In this case, the court is required to consider three separate but related issues to determine whether the court’s discretion to set aside the final order of Hambly J. should be exercised:

a) The extent of the requirement of full and frank disclosure where a party moves without notice in a default proceeding and whether Ms. Irons met that requirement;

b) The application of r. 25(19) of the Family Law Rules, O. Reg. 114/99, regarding changing a final order, to the facts of this case; and

c) Service obligations in respect of orders obtained without notice, and to what extent the deficiencies in service in this case impact the outcome of this trial.

(i) Duty of full and frank disclosure where a party moves without notice

[89] The following principles emerge from a review of the caselaw in relation to the duties on a litigant who proceeds without notice. These duties apply wherever a matter proceeds without notice, such as: on an ex parte emergency motion; where the responding party is in default having not filed an answer; and even where the responding party has filed an answer but that answer has been struck for failure to meet obligations in the litigation process. While the duty is at its highest on an ex parte emergency motion where the court is typically asked to make decisions very quickly, and perhaps somewhat attenuated where a respondent party is in “flagrant violation” of court orders, in my view there is no “sliding scale” when it comes to the obligation to disclose material facts to the court.

[90] There is a “very high duty” on the applicant to make “full and frank disclosure” to the court, and a “positive duty” to at least “alert the court” to material facts required to make a just determination: see Caldwell v. Caldwell (2007), 2007 1913 (ON SC), 51 R.F.L. (6th) 399 (Ont. S.C.) at paras. 52-53. As stated by Timms J. in that case at para. 52, where the hearing proceeded on an uncontested basis following the striking of pleadings, “there is a reason that the oath administered to witnesses in our courts compels them to ‘tell the truth, the whole truth, and nothing but the truth.’”. In Caldwell, the court found that the applicant failed to meet these obligations when she omitted to advise the court of the respondent’s inheritance, his job loss, and his support obligations to his first wife. See also Sangster v. Sangster (2003), 2003 48248 (ON CA), 34 R.F.L. (5th) 154 (Ont. C.A.), an appeal of a decision declining to set aside a final order obtained on default, in which the Court of Appeal for Ontario stated at para. 7:

The want of full and fair disclosure is sufficient reason to allow the appeal and we would allow the appeal on that basis alone. A court is entitled to rely on materials filed as being full and frank, particularly where, as here, the motion is brought on an ex parte basis.

[91] In Caldwell, the court held that the “duty of candour” on a party seeking default judgment is akin to the duty on a party seeking an order on a motion without notice (at para. 53). The caselaw governing the obligations on parties who come to court without notice establish a very high standard of transparency and accountability: Ahmed v. Hawthorne, 2016 ONSC 571, 75 R.F.L. (7th) 230, at para. 24. In Ahmed, where a wife moved to set aside a divorce judgment obtained without notice, Myers J. stated at para. 24: “Parties who seek relief without notice must make full and frank disclosure of all material facts. The failure to do so can itself lead to the order being set aside even where the moving party establishes that he ultimately had good grounds for the relief sought.” In D’Alessio v. D’Alessio, 2010 ONSC 321, 75 R.F.L. (7th) 230, where the husband sought to set aside a default judgment, Ray J. described the overarching test as one of fairness.

[92] Where inaccurate facts could have materially impacted the court’s assessment of the case, thus affecting the outcome, an order may be set aside: Ontario (Director, Family Responsibility Office) v. Shore, 2010 ONSC 5267, [2010] O.J. No. 4148 at para. 8. In Shore, the applicant proceeded on an uncontested basis after the respondent’s pleadings were struck. The final order obtained by the applicant was set aside on findings that Ms. Shore had provided one-sided and inaccurate information to the court. The court found that she failed in her duty to be “careful and candid” and that the misinformation conveyed resulted in a different order than would otherwise have been made. See also Cadas v. Cadas, 2013 ONSC 2608, 34 R.F.L. (7th) 357, per Stevenson J. at paras. 42-48.

[93] The lack of intention to mislead is not a defence to the failure to make full and frank disclosure. The issue is whether the court was in fact mislead: Rosenhek v. Kerzner, 1997 CarswellOnt 2148 (Ont. Gen. Div.) at para. 17; Mosregion Investments Corp. v. Ukraine International Airlines (2009), 2009 63600 (ON SCDC), 99 O.R. (3d) 49 (Ont. S.C., at para. 15. As stated by Cameron J. in Rosenhek at para. 19:

This court relies on full, true, and plain disclosure in all evidence presented to it. It is the foundation for the administration of justice. Compliance with the principle must be scrupulous where a party opposite in interest is not given the opportunity to cross-examine on the affidavit and present other evidence to ensure the facts before the court are complete, true, and plain. Lack of mala fides is not the issue. Substantial compliance with the principle is the issue.

[94] Relevant and material facts relied upon when proceeding without notice, in particular on an ex parte urgent motion, should be specifically referred to in the body of the affidavit: Mosregion at para. 14. See also 830356 Ontario Inc. v. 156170 Canada Ltd., 1995 CarswellOnt 4360 (Ont. Gen. Div.) at para. 23.

[95] However, on a default hearing or uncontested trial, where the court is not under similar time constraints, a court may be taken to be aware of the contents of exhibits filed as evidence in the hearing: Dodge v. Dodge (2007), 2007 80075 (ON SC), 44 R.F.L. (6th) 317 (Ont. S.C.) at para. 48.

[96] The fact that a party’s pleadings have been struck does not open the door to permit the moving party to make less than full disclosure of material facts. Thus, in Shore, the court stated at para. 2, “the fact that Mr. Shore was non-compliant will not deprive him of a remedy in such circumstances as were thereafter created by Ms. Martin.” Similarly, in Caldwell at para. 66, Timms J. stated:

While it is tempting to say that the respondent’s prior “bad conduct” should bar him from arguing that the order of Salmers J. should be changed, it is my view that justice requires that he be allowed to do so.

[97] However, the positive duty referred to above does not extend so far as to prove the respondent’s case for him. In Dodge, the husband sought to set aside an order where he argued in part that the evidence placed before the court on the default hearing was lacking “critical” information that was intentionally withheld from the court. Campbell J. found that all necessary, appropriate, and relevant information was put before the court and that the court was aware of that information. Counsel’s obligation was to be open, honest, trustworthy, reliable, and candid, but there is no obligation to put the other party’s claims or allegations before the court or argue the other party’s case. The husband could not shift his responsibility for his own “avoidant” behavior onto the wife’s counsel (paras. 45–48).

[98] In Gupta v. Gupta, 2019 ONSC 20, [2019] O.J. No. 304, where the father alleged that the mother obtained an order based on fraud and the father’s pleadings had been struck for “flagrant violations of court orders,” the court stated the “Mother’s obligation is to put forward such relevant evidence that Father produced up to that point, as to his income and the value of the assets. She has no obligation to test the veracity, accuracy or reliability of that evidence, nor is she obliged to unearth other evidence within Father’s power to disclose, that he did not disclose” (para. 36). While Gupta seems to suggest a lower standard of required disclosure where the respondent’s behavior has led to the striking of pleadings, the case nevertheless confirms the obligation on an applicant to put forward the “relevant” evidence of the respondent.

[99] I suggest that it can never be appropriate or acceptable to omit material facts or materially misstate evidence to the court. Even where a respondent has failed to obey court orders, resulting in his or her pleadings being struck, this does not justify the applicant’s filing of court documents with material omissions: Caldwell, at para. 55.

[100] I note that some of the caselaw with respect to full disclosure cited above developed under the Ontario Rules of Civil Procedure, in particular under r. 39.01(6) which states that where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and that the failure to do so is in itself sufficient ground to set aside any order obtained. In my view, there would be no reason why the disclosure obligations on applicants proceeding in the family context on an uncontested or ex parte basis or otherwise without notice, would be any less exacting than in the civil context more generally.

[101] In this case, Mr. Irons argues that Ms. Irons did not meet her obligation to disclose all material facts to the court when she proceeded without notice before Hambly J. Among the omissions and misrepresentations, he argues that:

a) Ms. Irons failed to disclose that she had twice been served with responding materials, referring only somewhat vaguely to “documents” and a financial statement she had received. He says that his case is analogous to Sangster, cited above, in which the court noted the applicant’s failure to disclose having been served with responding materials as a significant omission. He also cites Pragg v. Ramkahlawan, 2012 ONSC 3060, 2012 CarswellOnt 6421, for the same principle;

b) Ms. Irons failed to tell the court that she had brought a motion before Campbell J. for permission to proceed on an uncontested basis. Even if it is true that Ms. Irons was not aware that the motion was dismissed on November 1, 2011, the fact that the motion had been brought and a decision not received should have been disclosed;

c) Ms. Irons failed to disclose that the parties had signed a “kitchen table” separation agreement;

d) Ms. Irons failed to provide material facts about the bankruptcy, namely that she was to obtain approximately $87,000, which Mr. Irons says is relevant to the ultimate ongoing spousal support award;

e) Ms. Irons suggested that she would have been entitled to an equalization payment when she was aware that a date of marriage deduction on the part of Mr. Irons made an equalization payment unlikely;

f) Ms. Irons did not advise Hambly J. that the parties resided together for a number of months after separation, that Mr. Irons paid $2,000 towards Ms. Irons’ first and last months’ rent, and that he covered car and insurance expenses for a period of time. Mr. Irons argues that as a consequence, the retroactive spousal support amount was too high;

g) In calculating the retroactive spousal support claimed, Ms. Irons did not net down the amount for tax, nor, it appears, did Hambly J. As a result, the spousal support amount was inflated;

h) Ms. Irons claimed child support for a five-month period after the child Laura had turned 18, failing to disclose that the child had also resided with Mr. Irons for a period of time during which she did not pay child support. He also argued that the court had no jurisdiction to order child support as Laura was no longer a child of the marriage.

[102] I agree with counsel for Mr. Irons that Ms. Irons’ affidavit should have been more comprehensive. It should have clearly stated that she had been twice served with responding materials, rather than simply stating that Mr. Irons had “provided” her with “a financial statement and some supporting documents.” It should have made clear that she was about to receive funds in relation to property following Flynn J.’s order in relation to the CRA application and the approximate amount she expected to receive. She should have disclosed that the parties had signed a separation agreement even if she did not believe it to be relevant.

[103] Disclosing these facts was incumbent on her as a party proceeding without notice, even if she was frustrated with Mr. Irons’ lack of participation in the process to that point. Had she done so, Hambly J. would have had more fulsome context before him when he made the order on May 16, 2012. This could have been helpful to the court.

[104] However, I do not agree, on the specific facts of this case, that the shortcomings in Ms. Irons’ disclosure are sufficient to set aside the final order. While the omitted facts may have painted a fuller picture, they were not in my view material to the determinations made by Hambly J. For example:

a) That Ms. Irons was twice served with responding materials would not likely have led to a different determination by Hambly J. given that those materials were never filed notwithstanding three consents to late filing. Mr. Irons had ample opportunity to participate in the proceeding and chose not to.

This case is distinguishable from Sangster, cited above, because Ms. Irons’ counsel had clearly put Mr. Irons’ counsel on notice in her letter dated September 2, 2011 that if Mr. Irons’ materials were not filed by September 16, 2011, she would be proceeding without further notice to seek a final order. Her letter, which could not have been more explicit, stated in part:

Our client is in a destitute situation and requires the money which is currently being held from the sale of the home. Your client’s conduct has deliberately prejudiced my client and her ability to support herself. This matter has gone on long enough.

Your client has had more than sufficient time to get his financial affairs in order and to address this lawsuit. I can only assume he has chosen not to do it in a timely manner and keep my client in a precarious position.

I enclose herewith a Consent to Late Filing of your client’s Answer and Financial Statement. This Consent to Late Filing is only until September 16, 2011.

Please be advised that if your client does not have anything filed by that date, we will immediately have him noted in default and move for summary judgment without any further notice to you. [Emphasis added.]

b) The property amount payable to Ms. Irons by virtue of the CRA application was unlikely to have affected Hambly J.’s determination with respect to spousal support. Ms. Irons claimed spousal support at the high end under the SSAG. Hambly J. awarded mid-range spousal support based on the income information before him. He had evidence that this was a twenty-year marriage in which the parties had two children, Mr. Irons was the higher income earner, and even Mr. Irons testified that Ms. Irons stayed out of the paid workforce until the children were in school full-time. Spousal support in the amount ordered was a reasonable outcome not just on the evidence before the court but on the evidence available at that time to be put before the court. The property amount, whereby Ms. Irons effectively obtained the value of her interest in the matrimonial home (give or take) was not of such magnitude as to be likely to have swayed the ongoing spousal support amount and was unlikely to have reduced support below the mid-range under the SSAG. This was not a case like Caldwell where the court found that the default judgment resulted in the court ordering a payment which was “patently hundreds of thousands of dollars too high” (para. 54). Nor did the court in this case fail to determine Mr. Irons’ income, as the court initially failed to do in Caldwell.

c) The analysis above applies also to the argument that Ms. Irons failed to acknowledge in her materials that she might not have been entitled to an equalization amount (property itself not being before Hambly J.), while suggesting that she had been deprived of an equalization entitlement by virtue of Mr. Irons’ bankruptcy. In my view, the property aspect of the Irons’ separation had little bearing on the appropriate support arrangements given the amount of the payment. This could of course be quite different in a case with a more significant property component.

d) The most significant aspect of Hambly J.’s final order from a financial perspective was the ongoing monthly spousal support. Ms. Irons fairly put forward her own income for the relevant years and that of Mr. Irons to the extent that she had been provided with documentation by him. Specifically, Ms. Irons provided Hambly J. with Mr. Irons’ 2006-2008 notices of assessment, his 2009 income tax return, and documents related to his bankruptcy in which he asserted his annual income at that time was $24,000. Providing the 2010 sworn financial statement in which he reflected his income to be $61,999.92 is unlikely to have materially affected the outcome with respect to ongoing spousal support. I do not find the failure to provide that document to be a material omission.

e) With respect to retroactive spousal support, Ms. Irons claimed only 50% of the otherwise applicable spousal support amount for the period that the parties cohabited after separation in 2009, effectively reducing her claim based on factors including those cited by Mr. Irons (payment of insurance, etc). Had the additional evidence been provided regarding payments made by Mr. Irons, this was unlikely to have made a material difference to Hambly J.’s determination on this issue. Ultimately retroactive spousal support is a matter of discretion.

f) Also regarding retroactive spousal support, Hambly J. had before him the evidence with respect to the parties’ incomes for the relevant period of time (to the extent provided by Mr. Irons) and the support calculations. He would have been aware that the amounts claimed were not net of tax. This is an allegation of legal error, not of a lack of disclosure.

g) Further, with respect to the child support claim, Mr. Irons’ own evidence (even at trial) as to when the child Laura was with him was unclear and contradictory. In any event, in the context of the overall order made, the five-month retroactive child support term in respect of Laura is a negligible component and certainly not worth the expense and extensive process in this case. The allegation that there was no jurisdiction to make the retroactive child support order given Laura’s age and circumstances is also an allegation of legal error not of a lack of disclosure.

h) The failure to disclose the existence of the “kitchen table” separation agreement was not material in this case. The two-page agreement witnessed by the parties’ son was unlikely to have impacted in Hambly J.’s decision. The existence of this agreement was not pled in Mr. Irons’ answer suggesting that he himself did not regard it as relevant.

[105] I am troubled by the failure to disclose that a motion was brought before Campbell J. in October 2011 for permission to proceed on an uncontested basis. Even if the court accepts that Ms. Irons was not aware that an order had been made on November 1, 2011 in relation to the motion, the evidence is that the endorsement was faxed to her lawyer’s firm shortly after it was made and the firm must be deemed to have been aware of the order. Hambly J.’s attention should have been drawn to the prior motion and the outcome thereof. Were the outcome not known, the fact of the motion having been brought and that a determination was awaited should have been included in the motion materials.

[106] However, on a review of the evidence in this trial and applying the cases referred to herein, the omissions were not material and did not mislead Hambly J. This determination is amplified by the analysis below with respect to the question of prejudice to either party on the request to set aside the order.

ii. Test for setting aside an order made without notice

[107] The relevant rule for consideration in this case is r. 25(19) of the Family Law Rules which provides as follows:

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 reason satisfactory to the court, to be present.

[108] The Court of Appeal for Ontario in Gray v. Gray, 2017 ONCA 100, 137 O.R. (3d) 65 confirmed that the authority to “change” an order under r. 25(19) includes authority to set aside an order, as is sought in this case. The court held at para. 31, “[a]n interpretation of ‘change’ as including ‘set aside’ best promotes the efficient and just resolution of family law matters.” Citing Frick v. Frick, 2016 ONCA 799, 132 O.R. (3d) 321, the court confirmed at para. 29 that this interpretation best accords with the underlying philosophy, scheme and purpose of the Family Law Rules which provides for active case management, complete and ongoing financial disclosure, emphasis on early resolution, mediation, and ways to save time and expense in proportion to the complexity of the issues.

[109] Similarly, in Benarroch v. Abitbol et. al., 2018 ONSC 5964, 15 R.F.L. (8th) 33, at para. 29, McGee J. noted that the application of r. 25(19) is to be understood in the context of r. 2(2) of the Family Law Rules which provides that “the primary objective of [the] rules is to enable the courts to deal with cases justly.”

[110] There are five factors for consideration on an application to set aside an order obtained without notice. In Mountain View Farms Ltd., a case decided under the Rules of Civil Procedure but routinely applied in applications and motions to set aside under the Family Law Rules, the Court of Appeal held that those considerations are as follows:

a) whether the motion was brought promptly after the defendant learned of the default judgment;

b) whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules;

c) whether the facts establish that the defendant has an arguable defence on the merits;

d) the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should the motion be allowed; and

e) the effect of any order the court might make on the overall integrity of the administration of justice.

[111] The Court of Appeal for Ontario has held that these factors are not to be treated as rigid rules; rather, the court must consider the particular circumstances of each case to decide whether it is just to relieve the defendant of the consequences of his or her default (at paras. 47-50). See also Benarroch, at para. 29, and Bompas v. Henry, 2018 ONSC 7718, 2018 CarswellOnt 21795, at para. 15. A careful balancing of the factors is required in each case.

[112] The onus is on the party who moves to set aside the order: D’Alessio at para. 9.

[113] Ultimately, the decision as to whether to set aside is a matter of judicial discretion: Mountain View Farms Ltd., at para. 55; Dodge, at para. 68; Lemieux v. Lehane, 2014 ONSC 4462, 47 R.F.L. (7th) 215, at para. 27.

[114] Delay on the part of the respondent in moving to set aside is an important factor for consideration: Dodge, at para. 27. Unexplained delay may weigh against the setting aside of an order: Bompas at para. 16; D’Alessio.

[115] At the same time, the presence of delay is not necessarily “fatal” to the success of an application to set aside a default judgment. See Lemieux, above, in which Broad J. quoted the following passage at para. 22 from Johnston v. Barkley (1905), 10 O.L.R. 724 (Ont. Div. Ct.):

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.

[116] An “arguable defence” means whether the party seeking to set aside the order can show that his defence has an “air of reality,” not whether the defence will necessarily succeed: Mountain View Farms Ltd., at para. 51. The Ontario Superior Court has described this as: whether the outcome of the trial “could well have been materially different” if the respondent’s evidence had been heard and found credible by the trial judge: Steckly v. Steckly, 2016 ONSC 3385, 2016 CarswellOnt 8406, at para. 41; whether the misinformation resulted in a different order than that which would otherwise have been made: Shore, at para. 8; and, whether there is a “serious issue to be adjudicated”: Lemieux, at para. 25. In the latter case, the respondent’s evidence of his income raised a serious issue about the appropriate support order.

[117] The balancing required in considering potential prejudice to each party was illustrated by McGee J. in Benarroch, discussed above. In that case, McGee J. weighed the prejudice to the moving party if the motion to set aside were dismissed against that to the responding party if the motion were to be granted. In finding disproportionate prejudice to the moving party if the motion were not allowed, she ordered certain portions of the ex parte order to be set aside. In Mountain View Farms Ltd., the court considered evidentiary prejudice to the respondent arising from the passage of time, including the death of a process server, destruction of original invoices, and mental competence of the respondent.

[118] In considering the effect an order may have on the integrity of the administration of justice, the court is to consider all of the factors set out above, and to weigh them in the context of the facts of the case. Thus, in Mountain View Farms Ltd. the Court of Appeal upheld the determination of the motions judge that having found an arguable defence on the merits, the integrity of the administration of justice favoured varying (rather than setting aside) the order notwithstanding what was characterized as “inexplicable delay” of six years from the making of the default order and the respondent’s move to set it aside.

[119] In applying the test set out above, I am unable to find that this is a case in which the court should exercise its discretion to set aside the final order. This is so for the following reasons:

[120] The motion to set aside the final order was not brought promptly. Mr. Irons became aware that an order had been made either in 2012. He did not bring his motion to change until August 2016. This is a very substantial delay. At para. 14 of the respondent’s factum, Mr. Irons’ suggested that he could not have moved promptly to set aside an order that the applicant failed to serve him with. While I understand that he is unhappy with the lack of diligence in service (and more will be said about service below), he cannot rely on those difficulties to explain more than three years of delay where he clearly knew of the order. Once he learned that there was an order and the FRO was collecting funds, it was incumbent on him to obtain a copy of the order on which that collection was based if he was not content with that outcome.

[121] Mr. Irons did not adequately explain his delay in bringing the motion to change. His evidence about consulting 12-15 lawyers after he found out about the final order and before he retained current counsel was vague. As stated, he named only one of the lawyers he consulted. He said that he could not afford the significant retainers requested but did not explain in any detail what he himself did to move the matter forward. As noted, he did not request his file from his former counsel until 2015, which any new counsel would need in order to advise him. While his lawyer stated that it was not until she was retained that Mr. Irons fully understood the various steps that had been taken by Ms. Irons, had Mr. Irons been acting diligently and promptly, he could have attended the courthouse in late 2012 or 2013 to review the continuing record.

[122] Even in 2016 when Mr. Irons finally took steps to address the final order, he continued to delay matters. As seen above, he entered into two consents with the FRO which required that he start his motion to change, first by May 16, 2016, and then by July 11, 2016. He failed to meet the timelines in both of those consents, only initiating his motion to change in August 2016. The pattern of delay commenced in 2010 and did not abate until the motion to change was commenced on August 1, 2016.

[123] Out of an abundance of caution, I am considering the issue of “arguable defence” both from the perspective of what Mr. Irons claimed in his served-but-not-filed answer, as well as his current position with respect to what incomes spousal support should have been based on at the time of Hambly J.’s order. I do so without finding that the latter approach is applicable in the circumstances. I focus on spousal support (retroactive and ongoing) as this was the most financially consequential aspect of the order.

[124] In his answer, Mr. Irons sought an order that there be no spousal support payable. On the evidence to date in this trial, including the statement of agreed facts, I am not able to find that his defence, had it been before the court, had an “air of reality” or that the outcome “could well have been materially different.” As noted above, the parties were married for twenty years, had two children, and Ms. Irons stayed out of the paid workforce until the children were in school. Mr. Irons was always the higher income earner. In the year of separation (2009) Mr. Irons earned $68,372 according to his income tax return and Ms. Irons earned $20,462. The evidence in the trial was that Ms. Irons had primary responsibility for the children when the parties were together. On these facts, I cannot find that there is an “air of reality” to a defence that seeks an order for no spousal support payable, or that there is a serious issue to be adjudicated.

[125] Mr. Irons’ counsel argued that the court should consider the question of arguable defence with reference to Mr. Irons’ 2010 income of $51,304 as shown in his income tax return (as opposed to the 2009 income of $68,372 that was before Hambly J.), and that this would have resulted in a lower ongoing spousal support amount than ordered. However, at trial it became clear that the 2010 return was not filed until 2015 and thus was not available to Ms. Irons in 2012 when the matter went before Hambly J. While Mr. Irons’ counsel argued that perhaps if Mr. Irons had been “invited to the table” he would have prepared his 2010 return on a timely basis and it might have been available at the hearing, with respect, that is a stretch. I am not prepared to use hindsight to assess what could have been the outcome if the 2010 income tax return had been prepared by Mr. Irons on a timely basis, and if he had disclosed that tax return to Ms. Irons in the original proceeding. None of those things happened. Mr. Irons was repeatedly “invited to the table” and failed to file an answer.

[126] Further, Hambly J. had before him evidence regarding a significantly lower income, namely the $24,000 claimed by Mr. Irons in the bankruptcy. This was set out in Ms. Irons’ affidavit and in the supporting documents provided as exhibits. Hambly J. had that evidence and must be taken to have rejected it.

[127] Thus, while a substantial delay may not be “fatal” to the success of an application to set aside a default judgment, in this case, unlike in Lemieux, the delay is not mitigated by the presence of an arguable defence.

[128] On the question of potential prejudice, I have weighed carefully any prejudice to Mr. Irons of declining to set aside the order against potential prejudice to Ms. Irons of the opposite.

[129] Having regard to the evidence before the court on the most financially consequential issue, namely ongoing spousal support, I cannot find significant prejudice to Mr. Irons from declining to set aside the order. It may be that Mr. Irons’ income declined after the final order was made, and more will no doubt be before the court about that when the second part of this trial commences. However, that issue is best addressed through his request for retroactive variation and rescission of arrears rather than through this request to set aside.

[130] By contrast, the prejudice to Ms. Irons of setting aside the order at this time would be significant. She has been underpaid in relation to the order made, there being currently some $76,000 in arrears. To now set aside the order with the result of setting arrears at zero and putting her in an overpayment position would be highly prejudicial to her given the potential ongoing spousal support entitlement in this case.

[131] It should be clear from the narrative of this case neither party has done all that they should have done at various stages of this proceeding. As noted, I have concerns with the disclosure made by Ms. Irons to Hambly J., and as will be seen below, I also have concerns with respect to certain issues regarding service. However, weighing all of the factors in this case, including but not limited to Mr. Irons’ failure to respond to the initial proceedings despite repeated consents to late filing and his very significant delay in taking action after the final order was made, I find that the integrity of the administration of justice is best advanced through an order dismissing the request to set aside Hambly J.’s order.

iii. Duties in relation to steps taken in court without notice

[132] The Family Law Rules provide for service of orders obtained on the opposing party, even where the party is otherwise not entitled to notice of steps taken.

[133] For example, where a party proceeds under r. 14(12) to bring a motion without notice, r. 14(15) provides that an order made shall immediately be served on all affected parties, together with all documents used on the motion.

[134] Further, r. 25(2) provides that a successful party must prepare the court order, and r. 25(13) provides that the order shall be served on every other party including a party otherwise not entitled to further steps in the case. That would include, of course, the respondent on an uncontested trial.

[135] While the onus on an application or motion to set aside an order is on the party moving to set aside, the onus of proof with respect to service shifts between the parties. The party who proceeded without notice has the initial burden to show that the other side was served with the order in question. That burden is usually not difficult to meet if service is undertaken in accordance with the Family Law Rules. Where that burden is met, the onus shifts to the other party to rebut service. At that stage, a bald denial of service is unlikely to suffice. Further, a party cannot rely on a technical defect in service where it is clear he or she received actual notice. See E.S.R. v. R.S.C., 2019 ONCJ 381, 2019 CarswellOnt 8952 at paras. 80, 85-91, per Finlayson J.; and Ortiz v. Almeida, 2017 ONCJ 213, 2017 CarswellOnt 4791, at para. 22, per Zisman J.

[136] While the order at issue in this case is the final order of Hambly J., I have concerns with the steps taken (or not taken) to serve Mr. Irons at various stages of the proceeding and will comment briefly thereon.

a) The order of Campbell J. dated November 1, 2011: This order was not served on Mr. Irons. The endorsement was faxed to Ms. Irons’ counsel’s firm on November 17, 2011, but apparently did not make it to counsel. It appears that inadequate steps were taken to ascertain the outcome of the motion before Ms. Irons proceeded with her motion before Hambly J. When the process server went to the courthouse to follow up, his report was not clear, and no copy of the endorsement was provided to counsel. Steps should have been taken to obtain a copy of the endorsement. The order arising from it should have been served on Mr. Irons. Neither happened.

b) The order of Gordon J. dated January 3, 2012, setting aside the dismissal order: The court was asked to “assume” that the order had been served on Mr. Irons at his Cambridge address based on the firm’s “usual practice.” If the order was served, records should have been kept and made available at trial to confirm same.

c) The order of Flynn J. dated April 16, 2012, in relation to the CRA application: Ms. Irons’ counsel took the position that service of this order on counsel for the bankruptcy trustee constituted service on Mr. Irons. This was significant because it was on this basis that Ms. Irons argued that Mr. Irons had notice that she was continuing with her support claims in the family law proceeding. The bankruptcy trustee would not have stood in Mr. Irons shoes in respect of support issues. The order should have been served on Mr. Irons directly.

d) The order of Hambly J. dated May 16, 2012 (the order in question): As with the order of Gordon J., counsel for Ms. Irons argued that the court should assume this was served on Mr. Irons based on the firm’s usual practice. Again, if it was served, records should have been kept and made available for trial.

[137] I note that Mr. Irons did not change his address in the court record when he moved from Cambridge to London, Ontario in January 2012. While he stated that he had his mail forwarded when he moved, he provided no evidence other than his testimony. Thus, even if service could have been shown in relation to the orders above, Mr. Irons still might not have received the documents.

[138] At the same time, I accept his counsel’s argument that when Mr. Irons received the notice of dismissal from the court in December 2011, he was entitled to assume that the case was over (at least until it became clear that that was not the case), and would not at that point have needed to file a notice of change of address in the court file.

[139] At the end of the day, however, while the evidence of service at each of the steps set out above was dissatisfactory, Mr. Irons learned of the final order in 2012 and did not take concrete steps until well into 2016 to address it. He cannot rely on technical defects in service of the order in question where he clearly had notice of the order now sought to be set aside. He is responsible for his own lack of diligence.

Conclusion and Order:

[140] In summary then, I have found as follows:

a) While Ms. Irons’ disclosure to Hambly J. was in some respects lacking, the omissions were not ultimately material to the issues before him and I am not prepared to set aside the order on that basis;

b) In applying r. 25(19) of the Family Law Rules and the applicable caselaw to the facts of this case, I find that lack of a satisfactory explanation for delay, the absence of an arguable case, the prejudice to Ms. Irons and lack thereof to Mr. Irons, and the effect on the integrity of the administration of justice were the order to be set aside, all militate against setting aside the final order; and

c) While I have concerns about service at various stages of the proceedings, I am satisfied that Mr. Irons knew of the final order in 2012 and could at that point have started taking steps had he wished to do so.

[141] On the basis of the foregoing, I make the following order:

1. Mr. Irons’ request to set aside the order of Hambly J. dated May 16, 2012 is dismissed;

2. The balance of the issues in this trial are set to the trial sittings commencing April 13, 2020 for a 4- to 5-day trial, with assignment court on April 6, 2020 at 10:00 am;

3. This matter is also set to a trial management conference on March 11, 2020 at 2:30 pm, at which time only the planning of the second phase of the trial will be undertaken;

4. If the parties would like a further settlement conference before another Judge, they may request same through the trial coordinator;

5. The trial management conference and the trial continuation shall continue before me if I am available;

6. Costs in relation to this portion of the trial are reserved to the hearing of the balance of the issues in the trial.

Madsen J.

Released: March 6, 2020

COURT FILE NO.: 10-44608

DATE: 2020-03-06

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Deborah Marie Irons

Applicant

• and -

Samuel Martin Irons

Respondent

REASONS FOR JUDGMENT

Madsen J.

Released: March 6, 2020

[^1]: Mr. Irons testified that his 2008 income was inflated by $30,000 which included an amount from his brother which he had put in his business account. He stated that Ms. Irons, as his bookkeeper, had included this in his income.

[^2]: There was some discussion at trial about this contradiction in the evidence. The parties agreed in their statement of agreed facts, and Mr. Irons testified, that he “always” earned more than Ms. Irons. However, they also agreed that his 2007 Notice of Assessment showed a negative income of $59,645. I do not find that much turns on this issue. It was clear that over the many years of their relationship Mr. Irons was the higher income earner, even if in 2007 he suffered a business loss.