Supreme Court

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IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES BETWEEN: THERESA EVOY,

and \ .,^. JAMES M. EVOY, ^^'"y RESPONDENT

Application by the respondent to set aside noting in default and to vary a spousal support order. Allowed with directions.

REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE J.Z. VERTES Heard at Yellowknife, Northwest Territories on June 2 1 , 1993

Reasons filed: June 28, 1993^ Counsel for the Petitioner: Elaine Keenan Bengts Counsel for the Respondent: Thomas H. Boyd

6101-02081 / . V \,j O Q PETITIONER

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No. 6101-02081 IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES BETWEEN: THERESA EVOY, PETITIONER - AND-JAMES M. EVOY, RESPONDENT REASONS FOR JUDGMENT INTRODUCTION The parties were divorced by a judgment rendered on June 2, 1993. For sake of convenience, and notwithstanding the divorce, I will refer to them in these reasons as the "wife" and the "husband" respectively.

I am asked to rule on two applications by the husband: (1) to set aside default with respect to the wife's matrimonial property claim; and, (2) to vary the amount of spousal support payable by him to the wife. Because these applications came before me in a somewhat convoluted fashion, I will set out the procedural history of this litigation in some detail.

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HISTORY OF THE LITIGATION 3 The parties separated in 1990 after twenty-five years of marriage. The wife's Petition for Divorce was filed and served in July of 1991. In it she sought a divorce, spousal support in an unspecified amount, and a division of matrimonial property.

4 In February of 1992 the wife filed a motion for interim support of $650 per month. This motion was eventually argued, with both parties represented by solicitoi's, and judgment rendered on April 6, 1992. The motions judge adjourned the application sine die with a direction that the parties either settle this issue or move quickly to get the matter ready for trial. Both aspects of this direction made eminent good sense but neither ™ one was achieved. 5 At the hearing on the motion for interim support, the husband indicated that he was voluntarily paying the wife support of $425 per month and would continue to do so. In July, 1992, however, the husband gave notice to the wife's lawyer that he was (a) stopping these voluntary payments as of the end of August, and (b) henceforth going to be acting as his own lawyer.

6 In December of 1992 a new solicitor acting on behalf of the husband filed a Notice to Produce Documents. However, throughout these entire proceedings, no Demand of ^ Notice, Answer, or Counter-Petition, had been filed on behalf of the husband. So, on

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February 10. 1993, the husband was noted in default. It should be made clear that the wife's solicitor cannot be faulted in any way for noting in default. She gave ample time and numerous warnings to the husband's solicitor that this was going to be the next step.

7 On June 2, 1993, the wife's solicitor moved, in accordance with accepted practice, for a divorce judgment and corollary relief order on an ex parte basis with only the affidavit evidence of the petitioner in support. Also, in accordance with ethical practice, she disclosed in the ex parte application the fact that the husband was represented by a solicitor and her dealings with him.

8 The chambers judge who reviewed the ex parte application issued the divorce ' P judgment but deferred on the corollary relief until he met with both counsel in his office. That meeting was simply to settle the wording of the corollary relief order and did not constitute a hearing on the substantive issues relating to it.

9 The corollary relief order that was eventually entered reads: The parties hereto having been divorced by a Divorce Judgment rendered on the 2nd day of June. 1993. and this matter having come on for hearing in the absence of the parties and counsel, and upon considering the pleadings and the affidavit of Theresa Evoy as presented, it is hereby ordered:

1. That the question as to division of matrimonial property be and is hereby severed from all other issues in this actran, and is adjourned sine die.

2. That the Respondent shall pay to the Petitioner the sum of $1000.00 per month on the first day of each and every month, commencing in the month immediately following the issue of this Order, and continuing on the first day of each

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and every month thereafter, by way of spousal support. 3. The Respondent shall be at liberty to move this Court to vary the amount of the spousal support hereby ordered, provided that such application is brought no later than June 21st. 1993.

4. The Respondent shall be at liberty to move to set aside default with respect to the property matters only, provided that such application is sought no later than June 21st. 1993.

5. The Petitioner shall be entitled to her costs of the divorce, to be taxable forthwith.

10 The husband now applies pursuant to the provisions contained in paragraphs 3 and 4 of this order.

A PRELIMINARY OBSERVATION I 11 One may perhaps be forgiven for stating the obvious. This case has become overly complicated for no good reason. 12 If the husband had filed an Answer and Counter-Petition, disputing the wife's claims, the matter could have proceeded in the normal course through pre-trial discoveries and a trial on the merits. But now, I am asked to decide the question of support on the merits based only on competing affidavits without the benefit even of cross-examination and without production of documents. Litigants run a big risk when they ask judges to make substantive decisions when they themselves have not gathered together all of the evidence.

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f 13 With respect to the property claim, if I simply set aside the default then the parties could be back at "square one" on that issue and then go through all of the time and expense of litigating it. But if I do not set aside the default the wife could, theoretically, apply unilaterally and ex parte for judgment.

14 All of these complications (and attendant costs) could have been easily avoided by the simple step of filing a response to the Petition for Divorce.

15 To top things off, it appears that neither counsel gave much if any attention to the requirements of Practice Direction No. 27 issued on March 5, 1993. Those Directions were enacted for a reason and all counsel should have regard to them for contested # applications. SETTING ASIDE DEFAULT 16 The husband's application to set aside the noting in default is limited, by the terms of the corollary relief order, to the wife's claim for a division of matrimonial property. This claim was joined in the Petition for Divorce and I set it out in full:

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The particulars of the Petitioner's application for division of matrimonial property are as follows:

a) The Petitioner, throughout the marriage, contributed both directiy and indirectly to the financial well-being of the family and she therefore seeks an equal division of all matrimonial property.

b) The Petitioner states that the property to be divided includes the following items:

(i) A house and 128 acres of land located in Frambois. Nova Scotia;

(ii) A home in L'Ardoise. Cape Breton. Nova Scotia, which is currently the subject of an agreement for purchase and sale;

(iii) Household furniture and effects in the possession of the Respondent in Yellowknife. Northwest Territories;

(iv) A vehicle and boats in the possession of the Respondent: (v) Household furniture and effects in the possession of the Petitioner;

(vi) Household fumiture and effects located in the home in Frambois, Nova Scotia:

(vii) The Respondent's employment pension plan; (viii) The potential proceeds of litigation presently being conducted by the Respondent with respect to a wrongful dismissal which occurred during the marriage:

(ix) Such further and other assets as might be determined at trial; As will be readily apparent, this is not a complete pleading as one would find in a formal statement of claim. This is in keeping with the spirit of the rules which permit the joinder of various family-related causes of action in the one divorce proceeding. The need for steps to be taken beyond this basic pleading, however, in the case of a trial of the issue, is also recognized by Rule 4(4) of the Transitional Divorce Rules (1986) which permits a judge to give directions as to how such issue is to be tried.

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The significance of a noting in default (and this is a point that is often overlooked) is that it traditionally has been deemed to be an admission by the defendant and sets up an estoppel as to the specific relief claimed: Kok Hoonq v. Leonq Mines. [1964] 1 All E.R. 300 ( P . O . For that reason, an application to open up a noting in default is governed by the same principles as setting aside a default judgment: Wilson Arches v. Savers. [1974] 2 W.W.R. (Alta.CA.). This is clearly contemplated by Supreme Court Rule 166 which allows the court to "set aside or vary any judgment entered upon default... or may permit a defence to be filed by a party who has been noted in default."

The principles applicable on this application are well known: 1. The application should be made as soon as possible after the judgment has come to the knowledge of the defendant.

2. Mere delay will not bar the application unless an irreparable injury will be done to the plaintiff or the delay has been wilful.

3. The application should be supported by an affidavit setting out the circumstances under which the default arose and disclosing a defence on the merits.

4. It is not sufficient to merely state that the defendant has a good defence on the merits. The affidavits must show the nature of the defence and set forth facts which will enable the court or judge to decide whether or not there was matter which would afford a defence to the action.

5. If the application is not made immediately after the defendant has become aware of the judgment, the affidavits should explain the delay in making the application. And if the delay is of long standing, the defence on the merits must be clearly established.

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-8-I See Cook v. Howling. [19861 N.W.T.R. 109 (S.C); Costa v. Sanavik Co-Qp. Assn.

(1980), 15 C P . C 27 (N.W.T.S.C).

This case does not easily fit within the parameters defined by these principles. First of all, there is the lack of specificity in terms of the pleading itself. What triable issues are there? Is the husband going to say that there should be an unequal division of property and, if so, how unequal should it be? The presumption is that spouses in a long-term marriage share assets equally. If there is to be a deviation from that presumption, then the burden of proof will be on he or she who seeks the unequal division.

Second, there is an obvious delay by the husband in responding to this claim. The material on file reveals that even after the husband was noted in default, the wife's solicitor gave a deadline to the husband's solicitor to bring this application before she would move for judgment. There was no response. Furthermore, the husband failed to appear for examinations for discovery in September even though served with a notice to do so. There was no communication from the husband's solicitor for over 3 months prior to the ex parte application.

24 The wife's counsel argues that the husband deliberately ignored these proceedings. ^ In such cases a litigant will not be allowed to set aside default: Winwest Drvwall &

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-9-# Buildinq Supply Ltd. v. Bruneau at al (1986), 74 A.R. 358 (Q.B.).

25 The husband's solicitor, in his oral argument, took responsibility for not filing a Demand of Notice at least so as to prevent default. But, as the wife's counsel submits, solicitor's delay will often not be a good enough excuse to set aside default: Howey v. Great-West Life Assurance Co. (1984), 48 C P . C 181 (Ont.H.CJ.).

26 On the other hand, the husband has consistently maintained his intention to contest the wife's claims. This was evidenced in his letter of July 20, 1992, informing his wife's solicitor that he would be representing himself. This was also evidenced by the service of a Notice to Produce Documents by the husband's solicitor in December of i W 1992. The types of documents sought appear to relate directly to the property claim. Finally, the material reveals that also in December the husband's solicitor forwarded a draft of a divorce judgment for the wife's approval and suggested severance of the other issues. 27 I note as well that the wife failed to respond to the Notice to Produce. This may be due to the impression that no response was required due to the noting in default. But 6 weeks passed by between service of the Notice and the noting in default. Even after default, a defendant can still demand production of documents: Jackson v. Stadnick (1981), 32 A.R. 176 (Q.B.).

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•10-18 Is there a defence on the merits? As noted before the only "defence" would be that the wife is not entitled to an equal division. To determine that question, and to rebut the presumption of equal division, the court will have to consider all of the circumstances relating to the acquisition, maintenance, and disposal of the property by the parties as well as the uses to which each item of property was put. The entire question of an equitable division of property is the triable issue.

29 Taking all of these circumstances into consideration, I have decided that, in the interest of doing justice between the parties, the noting in default should be set aside. I so order. However, wi th a view to expediting a resolution of this matter, and to put the onus on the husband, I further direct as follows: I 1. Each party is to prepare a written brief setting out, with particularity but concisely, what property is to be considered for division, how it should be divided, and why it should be divided that way.

2. The husband's brief, entitled "Respondent's Brief on Property Claim", is to be filed and served by no later than August 3 1 , 1993. If this deadline is not met, the wife may move ex parte for judgment.

3. The wife 's brief, entitled "Petitioner's Brief on Property Claim", is to A, be filed and served within 30 days of receipt of the husband's brief.

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•11-4. Each brief is to have attached to it an itemized list of all documents that are in that party's possession that are relevant to the property claim.

5. The parties may conduct examinations for discovery, exchange written interrogatories, or demand production of documents, as they are advised, but all such interlocutory proceedings are to be concluded within 90 days of the exchange of briefs.

6. The parties should jointly apply for a trial date at the conclusion of " the period for interlocutory steps. 7. If either party wishes to present at trial evidence by way of affidavit, that party should bring the appropriate application for leave to do so pursuant to Rule 279(2).

8. The trial judge may make such further directions as he or she deems advisable.

30 If further directions or clarification of any of these points are required, counsel may • see me in chambers.

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•12-I VARIATION OF SPOUSAL SUPPORT

The corollary relief order provided for spousal support payments of $1,000 per month but with leave reserved to the husband to apply to vary the amount. The first question that has to be addressed is whether I am precluded from examining the wife's entitlement to support or whether I am restricted to examining the quantum only. This begs the question as to whether this application is truly one for "variation" or one to assess de novo the claim for support.

I have concluded that I am entitled to examine the wife's entitlement to support as well as quantum. There are several reasons for this conclusion.

The corollary relief order was obtained on an ex parte application subsequent to noting the husband in default. The ex parte application was therefore a motion for default judgment and the usual rules of procedure apply: Martins v. Martins (1987), 60 O.R. (2d) 215 (H.C.J.). Rule 166 provides for setting aside or varying a default judgment. Rule 343 provides for a rescission or variation of any order obtained ex parte. If the default judgment or ex parte order is set aside, then the original application is heard de novo: Burns & Dutton Concrete & Constr. Co. v. Dominion Insurance Corp. (1966), 57 D.L.R. (2d) 327 (B.C.C.A.).

By virtue of s. l 7 of the Divorce Act, every support order is subject to variation at

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•13-any time if there is a change in circumstances. There is therefore no point including a clause in the order respecting variation. The only reason to do so, and to provide a deadline as was done here, is to explicitly recognize the fact that the order was made without a full consideration of the merits. And I think it is indisputable that there was no adjudication on the merits.

35 Furthermore there was a lack of evidentiary base so as to enable the chambers judge to fix the quantum on the merits.

36 The Petition for Divorce filed in July of 1991 did not set out a specific amount in the claim for support. The financial statements attached to the Petition show the wife's P monthly income as $566 (consisting primarily of support payments) and her expenses as $883. Her application for interim support sought $650 per month. Her affidavit in support of the ex parte application on June 2, 1993, says only that she is employed and earning $1,350 per month. So, as of June 2, there would have been no explicit notice to the husband that she was seeking $1,000 per month nor was a complete financial picture of the parties' status provided to the chambers judge.

37 Therefore, I conclude that I can consider both entitlement and quantum on the merits. Furthermore, I conclude that this is not a "variation" application as contemplated by s . l7 of the Divorce Act so the husband does not have to meet a threshold test of ^ showing a change in circumstances.

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14-I 38 On the issue of entitlement, the Supreme Court of Canada recently stated that the fundamental purpose of spousal support is to relieve economic hardship related to the marriage. In Mooe v. Mooe. [1993] 1 W.W.R. 481 , Madam Justice L'Heureux-Dub6 stated (at page 540): Marriage and the family act as an emotional and economic support system as well as a forum for intimacy. In this regard, it serves vital personal interests, and may be linked to building a "comprehensive sense of personhood." Marriage and the family are a superb environment for raising and nurturing the young of our society by providing the initial environment for the development of social skills. These institutions also provide a means to pass on the values that we deem to be central to our sense of community.

Conversely, marriage and the family often require the sacrifice of personal priorities by both parties in the interests of shared goals. All of these elements are of undeniable importance in shaping the overall character of a marriage. Spousal support in the context of divorce, however, is not about the emotional and social benefits of marriage. Rather, the purpose of spousal support is to relieve economic hardship that results from "marriage or its breakdown." Whatever the respective advantages to the parties of a marriage in other areas, the focus of the inquiry when assessing spousal support after the marriage has ended must be the effect of the marriage in either

# impairing or improving each party's economic prospects. This approach is consistent with both modern and traditional conceptions of marriage in as much as marriage is, among other things, an economic unit which generates financial benefits (see M.A. Glendon. The New Family and the New Property (Toronto: Butterworths. 1981)). The Act reflects the fact that in today's marital relationships, partners should be expected and are entitied to share those financial benefits.

39 In Moqe . there were a number of other significant comments. 40 First, it was held that what the Divorce Act requires is a fair and equitable distribution of resources to alleviate the economic consequences of marriage or marriage breakdown. Needless to say this applies to both spouses regardless of gender. The reality, however, is that in most marriages the wife is the economically disadvantaged I

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-15-partner. 41 Second, the equitable distr ibut ion tha t is contemplated can be achieved in many ways : by support payments (by lump sum or periodically, of indefinite or l imited duration), by the division of property, or by a combinat ion of the t w o .

42 Third, spousal support orders are essentially a funct ion of the evidence in each case. There is no formula that can be applied to each si tuat ion.

43 Finally, and perhaps most signi f icant ly, no one objective set out in the Divorce A c t is paramount. All of the objectives noted in the Ac t are to be applied to achieve an I equitable sharing of the economic consequences of the marriage or its breakdown. 44 Those objectives are set out in s. 15(7) and are parallelled in s. 17(7) wh ich was the specific subsection under consideration in Moqe:

15.(7) An order made under this section that provides for the support of a spouse should (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above the obligation apportioned between the spouses pursuant to subsection (8); (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.