Sehovic v. Gadzic, 2015 ONSC 4099
COURT FILE NO.: FS-14-396984
DATE: 20150625
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jasna Sehovic, Applicant
AND:
Dejan Gadzic, Respondent
BEFORE: Kiteley J.
COUNSEL: Maria Margarita L. Primero, for the Applicant
Jessica Gagne, for the Respondent
HEARD: June 16, 2015
ENDORSEMENT
[1] This was a motion on behalf of the Respondent for an order setting aside paragraph 2 (custody), and paragraph 4 (child support) of the default final order of Paisley J. dated April 27, 2015. For the reasons that follow, the motion is granted.
Background
[2] The Applicant and Respondent were married in 1999 and have two children: a girl who is 17.5 years old and a boy who is almost 16 years old. The parents separated on June 2, 2014 and have lived separately in the matrimonial home since then.
[3] The Applicant retained a lawyer at the end of May. That lawyer wrote to the Respondent by letters sent June 4 and August 7 but he did not respond. The Applicant said that, to force a response, she caused the Application to be issued on August 19, 2014. On August 22 the Respondent was served with a copy of the Application, Form 13.1, and Form 35.1. According to Family Law rule 10(1) he had until September 22 to file responding material but he did not do so.
[4] The Applicant’s Form 23C Affidavit for Uncontested Trial is dated November 7, 2014. It appears that it was filed on December 19, 2014.
[5] In an endorsement that I made dated December 22, 2014, I denied a 14B motion by the Applicant for severance of the divorce from the corollary relief claims on the basis that it was premature.
[6] In an endorsement dated January 9, 2015, Paisley J. adjourned the uncontested trial on the basis that the draft judgment was silent as to child support and s. 7 expenses and was silent as to the disposition of the proceeds of sale of the matrimonial home. He required an explanation or amendment of the material.
[7] Counsel for the Applicant filed an affidavit of her law clerk dated February 24, 2015 explaining the Applicant’s position with respect to child support.
[8] In an endorsement dated February 27, 2015, Paisley J. again adjourned the uncontested trial on the basis that he required clarification as to whether the Respondent was to receive ½ of the net proceeds of sale.
[9] Counsel for the Applicant filed an affidavit of her law clerk dated April 20, 2015 explaining the Applicant’s position with respect to the proceeds of sale of the matrimonial home.
[10] In an endorsement dated April 27, 2015, Paisley J. granted the order as requested, namely as follows:
Paragraph 2: sole custody of the children to the Applicant
Paragraph 4: finding that the Respondent’s income was $74,500 and directing him to pay $1098 per month for the support of the children starting March 1, 2015
Paragraph 4: on the basis of the Applicant’s income of $134,974, directing the Respondent to pay s. 7 expenses in the amount of $121.62 per month commencing March 1, 2014
Paragraph 10(1): ordering sale of the matrimonial home and dispensing with consent of the Respondent;
Paragraph 10(2): ordering that the Applicant have exclusive possession of the matrimonial home
Paragraph 10(3): ordering division of the proceeds of sale of the matrimonial home that included division of the net proceeds equally
Paragraph 10(5) and (6): ordering the Applicant to transfer her half interest in the vehicle to the Respondent
Paragraph 13: ordering costs to be paid by the Respondent “fixed at $-----“
[11] That order was signed and entered on April 29, 2015.
[12] In an email dated May 22, 2015, the Applicant provided to the Respondent a copy of the order of Paisley J. dated April 27, 2015. On May 25, 2015, the Respondent consulted a lawyer. Counsel for the Respondent brought a motion returnable June 16, 2015 in which he sought to set aside the entirety of the order. That motion and the affidavit of the Respondent dated June 1, 2015 were served on June 1, 2015 on counsel for the Applicant. The Applicant subsequently provided an affidavit sworn June 8, 2015 in which he explained that he was in the process of obtaining documentation from his therapist regarding his mental state since the separation and he attached a copy of a letter from his physician. In that affidavit, he deposed that he had paid the child support and s.7 expenses required by the order for the months of March to and including June 2015. In that affidavit he also deposed that he had spoken with the children and they had told him that, after the house sold, they would like to live half the time with each of their parents. That affidavit was served June 8, 2015.
[13] On June 9 2015, counsel served an amended Notice of Motion in which the Respondent asked for an order setting aside paragraphs 2, 4 and 10(2), an order permitting him to file his Answer and Financial Statement and to participate in the proceeding, and an order staying the enforcement of the order by the Family Responsibility Office as well as an order for costs.
[14] On June 10, 2015, counsel for the Applicant served her client’s affidavit sworn June 8, 2015.
[15] On June 11, 2015 counsel for the Applicant served her client’s affidavit sworn June 11, 2015.
[16] On June 12, 2015, counsel served the Respondent’s affidavit sworn June 12.
[17] While waiting to be heard on June 16, 2015, the parties entered into a consent that included the following:
Paragraph 10(2) of order dated April 27, 2015: deleted
Both parties co-operate on the sale of the home and sign any documents necessary. Applicant to propose three realtors and Respondent shall choose one of them; neither party unreasonably interfere with the sale. Parties accept all reasonable offers.
Other terms of the final order dated April 27, 2015 remain in full force and effect subject to submissions and decision on whether paragraphs 2 and 4 would be set aside.
[18] At the request of counsel, I made an order in accordance with that consent. I heard submissions with respect to paragraphs 2 and 4.
Analysis
[19] The test for setting aside a default judgment has been articulated as follows[^1]:
The motion to set aside a default judgment should be made as soon as possible after the applicant becomes aware of the judgment;
More importantly, the moving party’s affidavit must set out circumstances under which the default arose that give a plausible explanation for the default;
The moving party must set forth facts to support the conclusion that there is at least an arguable case to present on its merits.
[20] In Davis v Morris[^2] the Ontario Court of Appeal held that that was a useful guide, although it did not apply that approach in its decision.
[21] In a subsequent case[^3] the Ontario Court of Appeal applied the test although instead of a “plausible explanation” it concluded that the defendant’s default had been “adequately explained”. The Court of Appeal also held that the principles governing the exercise of discretion on a motion to set aside a default judgment were not rigid preconditions to the exercise of that discretion, such that the failure to satisfy any one of those supposed preconditions necessitated the dismissal of the motion to set aside the default judgment. In addition, the Court held that the motion judge must ultimately determine whether the interests of justice favour an order setting aside the default judgment and consider the potential prejudice to the moving party if the motion was dismissed as well as the potential prejudice to the responding party should the motion be allowed as well as the effect of any order the motion judge may make on the overall integrity of the administration of justice.
[22] The Court of Appeal has also set aside an order of a trial judge when the relief had not been sought by the Applicant[^4]. In that case, the Applicant had not made the request at trial for spousal support yet the trial judge awarded nominal spousal support. The same principle applies to an uncontested trial where the relief had not been sought in the Application. ?
[23] Applying those principles, the evidence is clear that the Respondent moved expeditiously to set aside the default judgment.
[24] The Respondent has provided evidence as to the explanation for the default which can be summarized as his mental state following on the Applicant’s announced separation and the reasons therefore; his belief that he would receive notice of a date to attend court as had occurred with respect to his separation from his first wife in Serbia; and his lack of understanding that he could be noted in default and would receive no further notice of any steps in the case.
[25] In her affidavit sworn June 8 2015, the Applicant explains why she does not accept his evidence and reveals a significant disparity between them as to what has been occurring. But the test is not that the moving party provides “compelling evidence” or evidence upon which a court would, on a balance of probability, make a finding of fact. The evidence provided by the Respondent, while challenged by the Applicant meets the relatively low threshold of being plausible and constitutes an adequate explanation. The evidence cannot be rejected outright.[^5]
[26] The Respondent has also put forward facts indicating that he has an arguable case on the merits. The fact is that the children are 17.5 and almost 16 years old. In her affidavit for uncontested trial, the Applicant noted that she had asked for joint custody in the Application but because he had not responded, she asserted a claim for sole custody. In the uncontested trial, there was no evidence before the court as to why an order for sole custody was needed or why it was in the best interests of the children. Indeed, the evidence of the Respondent is that, after the house sells, these teen-aged children expect to share their time equally with their parents. In her affidavit filed in response to this motion, the Applicant takes a different view.
[27] The claim asserted in the Application was for “joint custody of the two children, with the children residing primarily with her and with reasonable access for the Respondent”. She did indicate in her affidavit for uncontested trial that she had changed the claim to seeking sole custody. But an order ought not to have been made when the Respondent had not been given notice and given an opportunity to respond. He wants to pursue a claim for joint custody and it is in the best interests of the children that the court have a comprehensive record before making any decision as to custody.
[28] The Respondent has also provided evidence that his income for purposes of child support is likely overstated. He has provided evidence that suggests that he has an arguable case that his income from self-employment in 2014 should be found to be $47,627 and therefore the child support should be reduced. Furthermore, in the Application the claim was for “child support in accordance with “our incomes” and s. 7 contributions in accordance with “our incomes”. Arguably, that is not what was ordered. Additionally, the final order requires the Respondent to pay table amount of child support effective March 1, 2015 and s. 7 expenses effective March 1, 2014. Even accepting that the later date is a typographical error, according to the Respondent, since the separation, the parents have been sharing the expenses of the home. Again the Applicant takes issue with that. The point is that the Respondent has an arguable case on the merits.
[29] As indicated above, the parties agreed to set aside paragraph 10(2) of the default final order, namely the order for exclusive possession. I agree with the parties that that is appropriate given that in the Application, the claim was for “an order that the matrimonial home be listed for sale, or in the alternative, that she be granted an order for exclusive possession”. Again, the order made exceeded the relief sought in the Application for which the Respondent had received notice. He was not given an opportunity to respond to the assertion of a claim for both sale of the home and exclusive possession.
[30] In addition to meeting each of the components of the test, I am satisfied that the interests of justice favour an order setting aside paragraphs 2 and 4. The Respondent ought to have an opportunity to put forward his position with respect to custody of the children and a failure to comply with the Family Law Rules ought not, in the circumstances of this case impair his ability to advance the position that the best interests of the children suggest an order for joint custody or do not mandate any order for custody. Furthermore, it is not in the interests of justice that a Respondent who was properly served with the Application and then failed to respond was given no notice of three attempts to obtain relief (one for severance and two for uncontested trial) even though he was readily available and continued to reside in the same home. In addition, as a short term measure, the Respondent immediately complied with the child support obligation. In the circumstances of this case, I do not agree with counsel for the Applicant that if paragraphs 2 and 4 are set aside, that that will be a licence to respondents to ignore legal proceedings.
[31] According to rule 10(5), the consequences of not responding within 30 days are the same as those set out in paragraphs 1 to 4 of subrule 1(8.4), namely that the defaulting party is not entitled to any further notice of steps in the case; the party is not entitled to participate in the case in any way; the court may deal with the case in the party’s absence and a date may be set for an uncontested trial of the case. The fact that those consequences are clearly set out in the subrule does not alter my view that in the interests of justice, the Respondent ought to be given the opportunity to fully participate in the case.
[32] I am also persuaded that the Applicant will suffer no prejudice if paragraphs 2 and 4 are set aside. Giving the court an opportunity to consider the issue of custody of these children cannot be prejudicial to her. Allowing the Respondent to establish his income for purposes of child support and s. 7 expenses cannot be considered prejudicial to her. But the lack of an opportunity for the Respondent to pursue both issues will be very prejudicial.
[33] According to the net family property statement provided in the uncontested trial, the Applicant has a pension. In her evidence on this motion, she explained how she tried to secure the Respondent’s co-operation in order to obtain the family law value as required by the rules. The further prejudice to the Respondent is that if he is not permitted to file an Answer in which he seeks an equalization of net family property, he will be deprived of the opportunity to do so in this proceeding. I accept the submission of counsel for the Applicant that even if he is not permitted to file an Answer and make such a claim he could commence his own Application and seek that relief. However, he may well be met with a res judicata argument. Without commenting on the viability of such a submission, it is not consistent with the primary objective in rule 2(2) and (3) that court resources as well as legal and financial resources on behalf of the parties should be engaged in such a pursuit when the alternative is clear.
Costs
[34] At the conclusion of submissions on the motion to set aside paragraphs 2 and 4, counsel made brief submissions as to costs. Counsel for the Applicant took the position that her client was entitled to costs of the steps taken to obtain the final order dated April 27. She argued that Paisley J. had directed that the costs be fixed. She provided a bill of costs for fees and disbursements up to the default final order that included full and partial indemnity costs in the area of $6000 including HST.
[35] Paisley J. did not order costs, nor did he order that written submissions as to costs be made. As indicated above, paragraph 13 indicates “costs fixed at $------“ Arguably the Applicant is not entitled to costs. However, counsel for the Respondent wisely concedes that the Applicant ought to recover costs thrown away which she proposed would be $1500. I agree that the Applicant is entitled to costs thrown away but based on the costs outline, the proposed amount is too modest.
[36] Counsel for the Respondent asked for costs of this motion. She provided a bill of costs that included fees in the amount of $5287.50 and, together with HST and disbursements, totaled $6304.46. Counsel for the Applicant provided a bill of costs with respect to this motion that totaled approximately $8200. Counsel indicated that offers had been made which I did not receive pending release of this endorsement.
[37] Rule 24(1) includes a presumption that the successful party is entitled to recover costs. However, s. 24(11) gives the court broad discretion in awarding costs and in fixing the amount. I will receive written submissions as to costs of the motion if either counsel insists. However, my view is that it would be unfair to the Applicant, who pursued the case as she was entitled to do, if she were required to pay costs to the Respondent of his successful motion when he had failed to comply with rule 10(1). Subject to such written submissions, I would order no costs of the motion.
ORDER TO GO AS FOLLOWS:
[38] Paragraphs 2 and 4 of the final order dated April 27, 2015 are set aside.
[39] Neither the Applicant nor the Family Responsibility Office will take any steps to enforce paragraph 4 of the final order dated April 27, 2015.
[40] By July 24, 2015 the Respondent shall serve and file his Answer and Financial Statement form 13.1 in accordance with the recent amendments to the Family Law Rules.
[41] The Respondent may participate in the case.
[42] By July 24, 2015, the Respondent shall pay to the Applicant costs thrown away in the amount of $2000.
[43] Unless by July 24, 2015, counsel for each party makes written submissions consisting of no more than 3 pages plus offers to settle, there shall be no order as to costs of this motion.
Kiteley J.
Date: June 2015
[^1]: Lenski v. Roncaioli (1992) 11 C.P.C. (3d) 99 (Ont. Gen. Div.)
[^2]: 2006 8196 (ON CA), [2006] O.J. No. 1043
[^3]: Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd. 2007 ONCA 333, 87 O.R. (3d) 479
[^4]: Baiu v Baiu 2015 ONCA 288
[^5]: McDonald v McDonald 2015 ONSC 2605