Setting aside a default judgement in family law

A default judgement in family law usually occurs when a party, the Respondent, receives an Application against them and they fail to file an Answer in the allotted time. This is the only default judgement this post will cover. Parties should be aware of Hilton v Hilton, 2021 ONCA 29, where the court outlined a mechanism for how to deal with orders that were made because of non-disclosure. A post on this issue can be found here. This will not be covered in the current post.

After the Respondent fails to file their Answer on time, the Applicant can try and move for an uncontested trial to get their relief without the Respondent participating in the process. However, Rule 2(2) of the Family Law Rules states that, [t]he primary objective of these rules is to enable the court to deal with cases justly. For obvious reasons, it will not always be “just” to have a family law case decided on a technicality such as a filing deadline. On the other hand, if a party completely disregards the court process, it becomes unjust for the other party who is following the rules.

In Gray v Gray, 2017 ONCA 100, the Court of Appeal said family law litigants can use Rule 25(19)(e) of the Family Law Rules to try and set aside the default judgement. Rule 25(19)(e) states:

The court may, on motion, change an order that,

…

(e) was made with notice, if an affected party was not present when the order was made because the notice was inadequate or the party was unable, for a reason satisfactory to the court, to be present.

Therefore, after a default judgement is ordered, the Respondent can move under rule 25(19)(e) to try and set it aside based off a reason satisfactory of the court.

In the recent family law case of Zia v Ahmad, 2021 ONCA 495, the Court of Appeal re-outlined the considerations a judge will use to determine whether it is just to set aside a default judgement. Notably, the litigant does not need to be successful on every consideration outlined, and the judge will essentially use their discretion, within the boundaries of the test, to determine whether it is just to set the order aside all things considered. The applicable factors are as follows:

a) whether the moving party moved promptly, after learning of the order, to have it set aside;

b) whether the moving party has provided an adequate explanation for the failure to respond to the proceeding in accordance with the Family Law Rules;

c) whether the moving party has established an arguable case on the merits;

d) whether the moving party is acting in good faith and with “clean hands";

e) the prejudice that may be suffered by the moving party if the motion is dismissed and to the responding party if the motion is allowed; and,

f) whether, in the final analysis, the interests of justice favour setting aside the judgment

Ostapyk v Ostapyk, 2022 ONSC 400 recently applied this test in a case where the mother did not file her Answer in the time allotted. This provides a decent example of how the court responds to a motion to set aside a default judgement to a specific set of facts. Notably, however, this case had parenting issues and courts are more lenient when deciding whether to set aside default judgements as they relate to parenting issues because their mandate is to have parenting cases decided based upon the best interests of the child. Ostapyk v Ostapyk provides the analysis of how the mother was able to succeed on her motion:

Whether the moving party moved promptly, after learning of the order, to have it set aside

14 The answer here is no, she did not bring her motion to set aside the February 17 order promptly. Four months elapsed before she asked the court to provide her with a date on which to seek that relief.

Whether the moving party has provided an adequate explanation for the failure to respond to the proceeding in accordance with the Family Law Rules

15 There is, however, a plausible excuse or explanation for the respondent's default in complying with the rule requiring delivery of her Answer within the set period. She lived in another province, did not have a lawyer at the time, and was trying to get assistance from Legal Aid Ontario. She was a person who, on the totality of the materials before the court, had significant mental health issues. The applicant correctly points out that the respondent herself did not offer these issues as an excuse for her lateness, but the court cannot escape the fact that they are described in the applicant's materials and are of some considerable duration.

Whether the moving party has established an arguable case on the merits

16 The respondent offers little about the merits of her defence other than saying that the children's best interests would be served by the court hearing from both parties before deciding the parenting issues. The applicant vigorously contests this submission. He asserts that the children are better off if their mother is not allowed to participate in the case as she has had very little contact with them since moving to British Columbia, has exposed them to several harrowing incidents, has subjected him to harassing communications, and has made egregious threats, that if acted on, would prove extremely disruptive to the children and himself.

17 The Ontario Court of Appeal has ruled that the utmost caution must be used before striking a party's pleading as it relates to parenting issues because a full evidentiary record that includes the participation of both parents is generally required for the court to make a custody decision in the best interests of the children. The decision in Burke v. Poitras, 2018 ONCA 1025 (Ont. C.A.) , is one example. My view is that this principle should also be considered here. It supports the general policy of the court giving preference to deciding cases on their merits rather than by default. Ultimately, it is in the best interests of the children for the court to hear from both parents and determine the impact of the respondent's actions on the parenting issues on a full evidentiary record, including her concerning and highly offensive emails to the applicant.

The prejudice that may be suffered by the moving party if the motion is dismissed and to the responding party if the motion is allowed

18 The potential prejudice to the respondent should the motion be dismissed is clear. As succinctly stated by the court in Hilton v Hilton, 2021 ONCA 29, at para. 10, "When a party does not participate in the process, things tend to not go well." This is especially so in situations such as the one here, where the respondent's future relationship with her children is at stake. Perhaps of less significance, but nonetheless important, is the applicant's claim for an unequal division of net family property. Without making any determination of, or even comment on, the accuracy of the applicant's financial statement, it at least reveals a number of areas that the respondent may legitimately wish to explore including the nil value given to his business, and some financial transactions with his mother.

19 I have no doubt that there is compensable prejudice to the applicant. He deposes, and I accept, that he incurred significant legal fees preparing for the uncontested trial, and that he is entitled to costs thrown away in that regard. The applicant further submits that he has been prejudiced by the delay in the proceedings and should not face additional delay in moving forward to finalize his claims. These concerns are appropriately addressed in the terms below on which the default order is set aside and by the assignment of a case management judge to oversee the timely progress of the file to its conclusion.

Whether, in the final analysis, the interests of justice favour setting aside the judgment

20 I find that the effect of the order to be made on the integrity of the administration of justice favours setting aside the default order and permitting the respondent to deliver an Answer. She obtained a Legal Aid Certificate, hired counsel, appeared before the court on June 17 seeking assistance, and has pursued the opportunity afforded her to bring this motion. I also accept her assertion that it was not an easy task to find a lawyer considering the conditions created by the pandemic. Moreover, and although there is no medical or diagnostic evidence before the court, the observations of the applicant and the neighbour regarding the respondent's behaviour and appearance are strong support that she struggles with significant mental health issues whether she proffers that as an explanation or not.

In the final analysis, the court felt that the findings tipped in favour of the mother to set aside the default order. However, part of the condition was that the father would be entitled to his “costs thrown away”, which were expended for the uncontested trial. In other words, he was entitled to get his legal fees for the uncontested trial, which resulted from the mother's default.

Obvious takeaways? Setting aside a default judgement is ultimately in the discretion of the motions judge, restricted to the above considerations. Courts are more willing to set aside a default judgement that involves parenting issues, but there are multiple factors to consider. The court is essentially asking, all things considered, whether it would be just to set aside the order. If the default order is set aside, it may be set aside on conditions in order to make it just, including potentially having the Respondent pay the Applicant for their original legal fees for the uncontested trial arising out of the default.