CITATION: Goetschel v. Goetschel, 2016 ONSC 4088

DIVISIONAL COURT FILE NO.: 34/16

DATE: 20160623

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

MARROCCO A.C.J., DAMBROT and PATTILLO JJ.

B E T W E E N :

WILLI GOETSCHEL

Applicant

– and –

SAMIRA GOETSCHEL

Respondent

Willi Goetschel, in person

Michael J. Stangarone and Ryan Kniznik, for the Respondent

HEARD: June 20, 2016

AMENDED REASONS FOR JUDGMENT

M. DAMBROT J.:

Background

[1] The appellant and the respondent were married in1998, separated in 2006 and divorced in 2008. There are two children of the marriage. On December 15, 2011, on consent, Paisley J. ordered joint custody of the children, with the appellant being obligated to pay $3,400 per month in child support.

[2] The issues of custody and support were revisited on a motion to change heard by Perkins J. in March, 2014. After an eight-day trial, he ordered sole custody of the children to the respondent, with the appellant obligated to pay $2,926.00 per month for child support and additional amounts to cover education and health insurance.

[3] On September 30, 2014, Perkins J. ordered the appellant to pay costs of the motion before him in the amount of $125,000. $62,500 was payable immediately and the remaining $62,500 payable on April 30, 2015, but with interest running from the date of the costs order.

[4] Instead of paying the costs as ordered, the appellant paid only $44,500 in October 2014, reflecting a unilateral deduction by him of $18,000 from the costs ordered, and paid a further $56,135.21 in April, 2015, this time unilaterally deducting $7,330.26. As a result, there was a shortfall of costs owing of $25,330.26, or $26,998.07 including interest.

[5] The deductions made by the appellant were on account of monies that he claimed were owing from the respondent to the appellant, but which are in dispute. There was nothing in the orders of Perkins J. that permitted the appellant to make deductions or set-offs from the costs that he was directed to pay to the respondent. On the contrary, as I have said, he ordered a fixed amount to be paid immediately, and a second fixed amount to be paid by a fixed date.

[6] On October 5, 2015, the respondent brought a motion seeking an order for: payment of the outstanding costs award; outstanding child support arrears; certain unpaid taxes; interest on a line of credit; certain outstanding debt; certain on-going educational expenses; and disclosure of various information. On October 29, 2015, the appellant brought a cross-motion asking for a dizzying array of relief. He did not seek an order for retroactive approval of his unilateral set-off. Both motions came before Pollack J. She decided to sever and hear first the discrete issue of set-off which was apparently raised orally before her by the appellant. She did not seize herself of the remainder of the two motions, which remain unheard to this date.

[7] Upon hearing the motion in respect of set-off, Pollack J. concluded that in the absence of a court order, the appellant had no right to unilaterally claim the right of set-off and withhold payment of $26,998.07. She stated that the right of set-off was not provided for in the order of Perkins J., and could not be inferred.

[8] The parties had agreed that the successful party on the motion before Pollack J. would be entitled to partial indemnity costs of $3,500, subject to the right to argue that another scale of costs was appropriate. On January 27, 2016, Pollack J. awarded substantial indemnity costs to the respondent fixed in the amount of $8,398. She concluded that the conduct of the appellant justified making an order on this scale.

[9] The appellant brings this appeal from both orders made by Pollack J.

The Evidence

[10] At the hearing before Pollack J., the appellant claimed that $11,000 of the deduction from the initial $62,500 instalment was “repayment” of $11,000 advanced by him to the respondent in or around April, 2014. The respondent’s position was that the $11,000 was not an advance, but was in fact a payment to cover education expenses owed by the appellant to the respondent and outstanding since 2012. Both parties relied on a series of emails between them to support their respective positions.

[11] Pollack J. reviewed this email evidence and concluded that it was too vague and did not clearly support either party’s position.

[12] It is not necessary in these reasons to outline the appellant’s rationale for the other deductions he made from his payments to the respondent. It is sufficient to say that they relate to alleged, but disputed child support overpayments, alleged but disputed tuition overpayments, alleged but disputed health care payments, and other similar disputed matters.

The Grounds of Appeal

[13] The appellant raises seven grounds of appeal, but they can really be reduced to four:

Did the motions judge err in concluding that the appellant had no right of set-off in making his cost payments?
Did the motions judge err in failing to conclude that the $11,000 payment in April 2014 was an advance on the future costs instalments?
Did the motions judge err in severing set-off from the remainder of the two motions before her?
Did the motions judge err in awarding substantial indemnity costs to the respondent fixed in the amount of $8,398?

Standard of Review

[14] The standard of review on questions of law is correctness, and on questions of fact and mixed fact and law is palpable and overriding error.

Analysis

Did the motions judge err in concluding that the appellant had no right of set-off in making his cost payments?

[15] The appellant’s argument on this issue fails for three reasons.

[16] First, contrary to the submission of the appellant, neither s. 111 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) nor the mere fact of a court ordered obligation to pay money authorizes unilateral set-off.

[17] Section 111(1) of the CJA permits a defendant in an action for debt to claim the right of set-off of a debt owed by the plaintiff to the defendant. But the appellant did not claim set-off before Perkins J. He simply disobeyed the order of Perkins J. and took it upon himself to make deductions from the monies he was ordered to pay to the respondent. He then asked Pollack J. to retroactively approve his unilateral actions. Section 111(1) provides no support for unilateral non-compliance with court orders.

[18] Second, there is no basis to conclude that the order of Perkins J. authorized set-off. The fact that he condoned a past incident of unilateral set-off does not authorize on-going set-off.

[19] Third, with respect to equitable set-off, it is sufficient to say that it is not automatic, particularly in the family law context, and especially where the recipient of child support is of limited means. In addition, as with legal set-off, equitable set-off is not available as a vehicle to advance a claim for retrospective approval of the unilateral breach of a court order.

Did the motions judge err in failing to conclude that the $11,000 payment in April 2014 was an advance on the future costs instalments?

[20] As I have noted, Pollack J. reviewed the email evidence relied on by the parties on this issue and concluded that it was too vague and did not clearly support either party’s position. This was a pure question of fact. We see no basis to conclude that the motions judge made a palpable and overriding error in her assessment of the issue. In oral argument, the appellant agreed that the key email in the record before us that he relied on to support his position was in fact vague.

Did the motions judge err in severing set-off from the remainder of the two motions before her?

[21] There is no doubt that the motions judge had the discretion to sever the issue of set-off and hear it before any other issue was considered. She also had the discretion not to seize herself of adjudicating upon the remainder of the motions, and in particular of the respondent’s motion. Her reasons for doing so are not before us. As a result, there is no basis for us to interfere with her exercise of discretion. That said, we cannot help but observe that the consequences of the fragmentation of the proceedings have been unfortunate. It would have been better if the motions judge had severed the appellant’s motion in light of her decision on set-off, but carried on and decided the other issues raised in the respondent’s motion. As I have already observed, the remainder of the relief sought in both of the motions before Pollack J. are yet to be adjudicated.

Did the motions judge err in imposing substantial indemnity costs to the respondent fixed in the amount of $8,398?

[22] The ordering of costs is an exercise of discretion that attracts considerable deference on appeal, particularly in family law matters: see Fielding v. Fielding, 2015 ONCA 90, 129 O.R. (3d) 65. In this case the motions judge awarded substantial indemnity costs having regard to the conduct of the appellant, which she said she had “referred to above” in her reasons, and the fact that he was warned prior to the hearing of the motion that his refusal to pay the full amount of the costs order was “unjustified and unreasonable.”

[23] The conduct “referred to above” can only mean the appellant’s refusal to pay the full amount of the costs order without unilateral deductions. While that conduct might justify an order of costs on an enhanced scale, we do not see how maintaining that position in the face of advice from the respondent that it is unjustified and unreasonable can amount to an additional consideration justifying an enhanced scale of costs. The motions judge erred in principle in approaching the matter in that way.

[24] As a result, we are free to replace the costs order made by the motions judge with the order we consider appropriate. In our view, the $3,500 partial indemnity costs order agreed to by the parties is entirely reasonable and we make that order. While the appellant was wrong to make unilateral deductions, this is not a case of a litigant completely ignoring a court order. He paid 80% of the costs ordered against him. We do not doubt that the appellant believed that he was justified in deducting the rest.

Disposition

[25] The application is dismissed except with respect to costs. We order costs of the motion before Pollack J. to the respondent in the amount of $3,500 all-inclusive, payable forthwith.

[26] In addition, having reviewed the respondent’s bill of costs, and having heard the submission of the parties, we order costs of this appeal in the amount of $5,000 all-inclusive to the respondent payable forthwith.

MARROCCO A.C.J.

DAMBROT J.

PATTILLO J.

RELEASED: June 23, 2016

CORRECTION NOTICE

Corrected decision: the text of the original judgment was corrected on June 23, 2016, and the description of the correction is appended:

Ryan Kniznik has been added as co-counsel with Michael J. Stangarone for the Respondent Samira Goetschel.