COURT FILE NO.: FC-15-1328 DATE: 20200312 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Karen Joyce Raaflaub, Applicant AND: George Gonosch, Respondent
BEFORE: McDermot J.
COUNSEL: Shannon More, for the Applicant Kim Cartwright, for the Respondent
HEARD: March 5, 2020
ENDORSEMENT
INTRODUCTION
[1] Ms. Raaflaub and Mr. Gondosch were married in 1989. They raised three children together. Mr. Gondosch worked for Ontario Hydro and Ms. Raaflaub was a hairdresser. They separated after 23 years of marriage, in 2012.
[2] Ms. Raaflaub began matrimonial litigation in 2015, including a claim by the Applicant for spousal support. Ms. Raaflaub’s application was eventually settled by way of a final consent order of Vallee J. on March 11, 2016. At the time of the settlement, the children were just falling away and becoming independent. The parties therefore agreed to spousal support awards “with child support” and “without child support.” The order therefore said, in para. 6, that once the child support terminated on December 31, 2016, Mr. Gondosch would pay Ms. Raaflaub spousal support of $2,275 per month. He has paid that support directly to Ms. Raaflaub, consistently and on time, and continues to do so today.
[3] Mr. Gondosch’s income has now decreased. He now wants to change the support and began Motion to Change proceedings on April 16, 2019. After the DRO event, he brought this motion for a temporary change in spousal support. He notes that his income, when the order was made, was more than $102,000 per year. Since then, however, there have been cuts at Ontario Hydro. Little or no overtime is available, and on-call work has been reduced or eliminated. Counsel agreed during argument that Mr. Gondosch’s income has been reduced to $86,000 per year. They also agreed that Ms. Raaflaub’s income, set at $35,000 when the matter settled, remains the same.
Disposition
[4] For the reasons set out below, I have determined that there will be a temporary order reducing spousal support to $1,775 per month retroactive to November 1, 2019.
ANALYSIS
[5] The jurisdiction for the court to order a change in spousal support is set out in s. 17 of the Divorce Act, [1] which governs in the present case as the parties were divorced in 2017. [2] That section permits a court to make an order changing spousal support only if the court finds “a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order” (s. 17(4.1)).
[6] Counsel in argument limited themselves to three issues as being determinative of whether there should be an interim variation in spousal support:
a. Is there a material change in circumstances warranting a variation in spousal support?
b. Is there hardship to the Respondent sufficient to warrant an interim change in spousal support?
c. If the support is varied, should that variation be retroactive, and as to what date?
[7] Notwithstanding argument by counsel, recent case law suggests there are other issues to be considered by the court. For some time, cases suggested that there was limited jurisdiction under s. 17 to make temporary changes to a final order for support: see for example Andries v. Andries, 1998 MBCA 14093, [1998] M.J. No. 196 (C.A.) and Vipond v. Vipond, [1990] O.J. No. 3292 (S.C.J.). There have been cases since then which suggest that there is jurisdiction to change support orders on a temporary basis. In Hayes v. Hayes, 2010 ONSC 3650 for example, Spies J. suggested that a support order could be temporarily varied on the same basis for which a stay could be granted (prima facie case; urgency; hardship) and in Berta v. Berta, 2019 ONSC 505, Kurz J. suggested further refined the test for an interim variation to add a further requirement for the moving party to have clean hands. Therefore, the cases now state that, for there to be a temporary change in support, the moving party must address four issues:
Is there a good prima facie case for a variation of support;
Would continuation of support result in a hardship to the payor?
Is the matter sufficiently urgent to vary support on a temporary basis; and
Does the moving party come to court with clean hands?
[8] Argument in the present case focused on the issues of a change in circumstances and hardship only, which addresses the first two factors set out above. However, I will also consider briefly the third and fourth factors noted in these cases, urgency and clean hands, in order to provide a complete analysis of whether an interim variation to spousal support should be granted in this case.
Material Change
[9] As noted above, s. 17(4.1) of the Divorce Act requires a change in circumstances prior to the court making an order varying spousal support. Presumably, this requirement would apply to an interim variation of a spousal support award.
[10] In the present case, the change in circumstances that the Respondent relies upon was his loss of overtime and on-call duty resulting in a reduction to his annual income from $102,000 to $86,000.
[11] For the change to be sufficient to vary spousal support, it must be significant. Chappell J. stated in Roloson v. Clyde, 2017 ONSC 3642 (at para. 49):
The case-law that has addressed the meaning of the phrase "material change in circumstances" in the context of child and spousal support variation proceedings has also established that a change will only be considered "material" if it is significant and long-lasting (Brown v. Brown, 2010 NBCA 5, 2010 CarswellNB 30 (N.B. C.A.); Haisman v. Haisman, 1994 ABCA 249, 1994 CarswellAlta 179 (Alta. C.A.), leave to appeal to the S.C.C. refused, [1995] 3 S.C.R. vi (note) (S.C.C.)). Trivial, insignificant or short-lived changes will not justify a variation (Hickey v. Hickey (1999), 1999 SCC 691, 46 R.F.L. (4th) 1 (S.C.C.); Marinangeli v. Marinangeli, 2003 ONCA 27673, 2003 CarswellOnt 2691 (Ont. C.A.)).
[12] In other words, there must be a change in circumstances where, had the change existed at the time of the prior order, the judge would have made a different support award: see Gallagher v. Gallagher, 2013 ONSC 916 at para. 18 and Willick v. Willick, 1994 SCC 28, [1994] 3 S.C.R. 670 at para. 22. Again, this would exclude temporary or insignificant changes in circumstances which would not make a material difference to the result in the original proceedings.
[13] In the present case, the situation has changed to the extent that the Respondent no longer has any regular overtime or on call duties. That was initially confirmed by an email from Orin Pereira dated June 15, 2019. [3] That email was not sufficient for the Applicant, as it only said that the Mr. Gondosch’s “current role does not require [him] to be on ‘on-call’ duty” and did not specifically confirm that he was not actually performing on-call duties. Therefore, a further email dated November 15, 2019 was obtained which confirmed that Mr. Gondosch’s “over-time and on-call duties have been eliminated with no future availability.” [4]
[14] Nothing could be clearer. Mr. Gondosch does not now have on-call or overtime available through his employment and the parties acknowledge that his income has therefore been reduced from $102,000 to $86,000 per annum.
[15] Ms. More for the Applicant argues that this change is insufficient to permit a change in spousal support. She relies upon Gallagher v. Gallagher, supra for the proposition that a 15% change in income, as in the present case, is too minor to permit a change in support. She notes that in Gallagher Annis J. refused to change support where there was a 20% reduction in income while Mr. Gondosch’s income reduction is only 15%.
[16] That case considered a request to vary spousal support fixed in Minutes of Settlement which were treated as a domestic contract; they were not reduced to a court order but were filed with the court for enforcement purposes under s. 35 of the Family Law Act (the “FLA”). [5] Section 35 permits the agreement to be varied under s. 37 of the FLA “as if it were an order of the court.”
[17] In Gallagher, Annis J. relied upon a paragraph in the Minutes of Settlement which permitted a change in support in the event of a “material change in circumstances with respect to a part[y]’s income or employment.” However, he was also confronted with a conflicting provision in the agreement, which stated that the parties acknowledged that there may be “changes in [the parties’] respective income, assets and debts” and that those changes would not “give either the right to claim any alteration of any of the terms of these Minutes of Settlement”. Although Annis J. eventually resolved the conflict in favour of the earlier clause, giving effect to the specific over the general, he also stated that the latter clause “provides a contextual direction that materiality should be strictly construed.” [6] This was the basis for his finding in that case that a 20% reduction in income failed to meet the threshold of a material change in circumstances while a 50% reduction did.
[18] In the present case, there is nothing in the court order that is sought to be varied which would provide such a “contextual direction” as in Gallagher. That makes the present case distinguishable from the facts in Gallagher.
[19] Moreover, it is important to note that Annis J. determined in that case that his jurisdiction to change spousal support lay under the FLA, which provides in s. 2(10) that a domestic contract, such as the Minutes of Settlement in issue in that case, “prevails unless this Act provides otherwise.” In the present case, the variation proceedings are brought under s. 17 of the Divorce Act and under that statute, domestic contracts are, although important, only one factor in setting spousal support: there is nothing in the Divorce Act similar to s. 2(10) of the FLA which would bind the court to the provisions of a domestic contract: see Miglin v. Miglin, 2003 SCC 24, [2003] S.C.J. No. 21. The decision in Gallagher might very well have been different had the governing statute been the Divorce Act because the criteria under which support is varied under s. 17 would have allowed the court to overlook the provisions of the domestic contract considered by Annis J. This would also distinguish Gallagher from the present case.
[20] For those reasons, I do not find Gallagher to be helpful in determining whether the Respondent’s reduction in income is a change in circumstances which would result in a variation in spousal support in the present case.
[21] In the present case, it is acknowledged that the Spousal Support Advisory Guidelines (the “SSAG”) played an important role in the award of spousal support in the March 11, 2016 order. Using an annual income figure of $101,335 for Mr. Gondosch and $35,000 for Ms. Raaflaub, the midrange figure under the SSAG for spousal support is $2,225 per month, [7] only $50 per month less than the support amount in that final order. Using the figure of $86,265 per annum for the Respondent, with Ms. Raaflaub still making $35,000 per year, the midrange figure would be $1,741 per month, [8] more than $500 per month less than the amount under March 11 order. Significantly, even at the highest range of spousal support under that scenario, Mr. Gondosch would only be paying $1,943 per month, and to allow the spousal support to continue at the present range would be clearly outside of the ranges under the SSAG. To say that a $500 per month payment is insignificant would then beg the question as to why either of these parties are expending the legal fees on this argument that they are; if that amount was insignificant to either party, they would not have argued this motion.
[22] What part do the SSAG play in spousal support variation proceedings? Initially, when the SSAG were introduced, it was thought that they did not apply to spousal support variation proceedings: see Fisher v. Fisher, 2008 ONCA 11 at para. 96. However, since then the SSAG have often been used in determining spousal support in variation proceedings; this was sanctioned by Lauers J.A. in Gray v. Gray, 2014 ONCA 659 where the SSAG were applied on variation proceedings, and Lauers J.A. specifically distinguished Fisher from variation proceedings. See also Slongo v. Slongo, [2017] O.J. No. 4564 (C.A.) at para. 105, a variation case where Janet Simmons J.A. states that the SSAG, “while not binding, should not be lightly departed from.”
[23] It is doubtful that a change in spousal support alone under the SSAG would be a “change in circumstances” within the meaning of s. 17. However, Fisher and Slongo both confirm that, where the SSAG are applicable, they are presumptive and the court must explain why it is departing from the SSAG where it determines that it is going to do so. This is a “guidelines driven” age in the determination of support in family law matters and for good reason; to remove uncertainties from the determination of support gives parties consistency and permits the settlement of support issues without resort to the courts.
[24] In the present case, it is common ground that the SSAG were used to set the support amount that Mr. Gondosch had to pay to his wife. If that is the case, and if Mr. Gondosch’s income had been the amount of $86,000 per annum in 2016, this “would have likely have resulted in different terms” of the award of spousal support: see Gallagher at para. 18. Based upon this, the reduction in Mr. Gondosch’s income is a change in circumstances sufficient to vary the consent order for spousal support.
[25] However, Ms. More also argues that this change was foreseeable in nature. It is well known that for there to be a change in circumstances sufficient to change an order under the Divorce Act, that change must be unforeseeable at the time of the making of the order: see Gray v. Rizzi, 2016 ONCA 152 and Willick, supra. It must not have been something contemplated at the time the order was granted and the court cannot go behind the final order.
[26] Ms. More points out that, at the time the order was made, Mr. Gondosch knew that there was a proposal to contract out certain work by his employer, Ontario Hydro, which eventually factored into the reduction of his income. She brought to the court’s attention an email produced by the Respondent which was dated September 22, 2014, well prior to the final order, which was titled “Grounds & Site Services” and which stated that “a contract has been signed with Brookfield Johnson Controls Canada, a leader in the provision of management services for real estate portfolios”. [9] Mr. Gondosch agrees in his affidavit that this contract eventually “led to the outsourcing of employment.” [10]
[27] Although Mr. Gondosch may have known at that time that there was outsourcing taking place, it is not clear to me that he would have known at the time that this would result in the reduction of his income resultant from his loss of overtime and on-call duties. Employees were notified of the agreement with Brookfield Johnson in September, 2014, and when the consent order was made in March, 2016, Mr. Gondosch still had income of $102,000 per annum. Had he known that he was going to lose his overtime and on-call duties, it is doubtful that he would have agreed to the support that he did at the time.
[28] In any event, this is an interim motion to change spousal support and the test is whether the moving party has shown a strong prima facie case for a change in support: see Berta v. Berta, supra at para. 40. The court is unable, on an interim motion on affidavit evidence only, to make determinations of the exact situation at the time of the original order. Mr. Gondosch has proven that, since the final order was made in March, 2016, his income has substantially reduced as a result of the loss of overtime and on-call duties, and this would have reduced the support he was paying under the SSAG well below that set at the date of the original order sought to be varied. I find that there is a strong prima facie case for a material change in circumstances within the meaning of s. 17(4.1) of the Divorce Act.
Hardship
[29] The other factor which was argued by counsel was hardship. The Respondent says there is sufficient hardship to warrant an interim change in spousal support. The Applicant says there is not.
[30] At this point in time, the Respondent is paying, if support is reduced to the midpoint according to the SSAG, about $500 more a month than he should be paying. That would work out to $6,000 per annum.
[31] Effectively, if the Respondent’s case is made out (and I have already found a strong prima facie case), and no reduction is made, he will continue to pay too much until trial. These parties have not yet had a settlement conference, and trial will take place no earlier than November, 2020, and perhaps as late as May, 2021. If the former date, he will from today pay about eight months’ too much support, or about $4,000. If the latter, which is as likely, he will have overpaid support by about 14 months or $7,000.
[32] Ms. More says that the hardship would lie on Ms. Raaflaub instead of Mr. Gondosch. She notes that Mr. Gondosch has re-partnered and his present spouse works. In contrast, Ms. Raaflaub has no one to help her with the bills.
[33] Caselaw suggests that the court must find hardship or alternatively that the continuation of the existing order would be absurd and incongruous: see Clark v. Vanderhoeven, 2011 ONSC 2286 at para. 67. This latter approach has been defined as being “inappropriate, unreasonable or ridiculous”: see Hayes v. Hayes, supra at para. 38.
[34] The financial statements of the parties belie the suggestion that Mr. Gondosch is in a better financial position to continue the spousal support than Ms. Raaflaub is able to bear a reduction. Those financial statements show that Mr. Gondosch has a negative net worth while Ms. Raaflaub has a mutual fund account worth more than $60,000 and she has a net worth of a similar amount. It is also apparent that, if the support continues at its present amount, that Ms. Raaflaub will have more than 50% of the net disposable income of the parties. [11] In light of the fairly strong prima facie case demonstrated by Mr. Gondosch for a reduction in spousal support and considering the relative financial circumstances of the parties, I find that a dismissal of the motion would result in a result that would be incongruous, or alternatively inappropriate or unreasonable.
[35] I therefore find that Mr. Gondosch has established hardship warranting a change in the support.
Urgency
[36] The issue of urgency was not argued by either party.
[37] I repeat my observation about the overpayments in support that will most probably occur if the court does not act. It will most likely result in a significant overpayment in support by Mr. Gondosch. As well, if the Motion to Change is ultimately dismissed, Mr. Gondosch will most likely pay the arrears as he has been faithful in his payment of spousal support. It is urgent that the court act as to refuse to do so will likely result in an injustice to the Respondent as it is likely that the support will ultimately be reduced.
[38] My other comment on this issue is that it appears that Mr. Gondosch acted promptly in requesting a change in spousal support. On June 15, 2019, he received an email from his personnel manager indicating that “access to overtime has been drastically reduced.” [12] By this time, his previous years’ income had gone from $102,000 in 2016, to $91,081 in 2017 and $85,923 in 2018. By the time of the email, Mr. Gondosch had already commenced this motion to change, and the parties had a DRO on September 20, 2019 and an emergency case conference on November 14, 2019 (when the motion was originally returnable before Vallee J.). It is most probable that Mr. Gondosch waited until he could confirm a substantial reduction in income over a two-year period (and as noted, the change in circumstances must be significant and long-lasting); once he could, he acted promptly.
[39] Accordingly, continuation of the support will, at best, result in a probable overpayment of spousal support of $4,000. Again, considering the relative financial positions of the parties, I find that it would be both unjust and harsh to continue the spousal support at the present rate. There is urgency insofar as it is likely that spousal support will be changed as requested by the Applicant, and the overpayment will result in the Respondent having to overpay support prior to it being paid back once there is a trial. Trial is some time off. Finally, Mr. Gondosch has acted promptly in getting this matter before the court.
[40] I therefore find that there is sufficient urgency for the spousal support to be reduced at this time by interim motion rather than awaiting trial.
Clean Hands
[41] There is a suggestion in the case law that the moving party must come to court with clean hands prior to an order for an interim variation being made.
[42] Mr. Gondosch pays the support directly in this matter and there has been no need for enforcement by the Director of the Family Responsibility Office. There was no suggestion that the support was in arrears, or that Mr. Gondosch had defaulted in payment of the spousal support. He has continued to pay the amount of support payable under the original order notwithstanding his income reduction. His hands are clean.
[43] There is therefore no equitable impediment to Mr. Gondosch bringing this motion.
Retroactivity
[44] Normally on an interim motion, retroactivity is an issue that is left to trial. However, both counsel argued the issue and have requested a ruling on retroactivity.
[45] Ms. Cartwright for the Respondent advocates for an early retroactivity date. She noted that the Respondent advised the Applicant early on of his loss of overtime and on-call duty in his November affidavit. She says that the change should be retroactive to November, 2019, when the motion was served.
[46] Ms. More differs with this position; she notes that the first clear proof of his loss of overtime was provided in the email attached to the affidavit sworn by Mr. Gondosch on January 14, 2020. She suggests that the retroactivity date would be limited to the date of service of that affidavit only.
[47] Neither counsel provided case law in support of their respective positions. However, it is useful to return to the basics and to review the criteria for retroactivity in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231. The criteria for retroactive spousal support parallel the criteria for retroactive child support discussed in D.B.S.: see Kerr v. Baranow, 2011 SCC 10 at para. 205.
[48] In D.B.S., Bastarache J. suggested that the date of retroactivity commences as of the date of “effective notice” of the claim. In other words, when did the moving party broach the subject?
[49] I note that Ms. More states that retroactivity should be from the date that Mr. Gondosch actually provided satisfactory proof of the change in circumstances, which would be in January, 2020. However, effective notice is not the same as the date of proof of the claim; proof might only take place at the date of trial in some cases where there has been little negotiation or opportunity to settle. The date of notice has been described in D.B.S. as the date that the subject was broached by the claimant. At that point in time, it is incumbent upon the parties to negotiate the issues and the potential claim of the moving party.
[50] In this case, the date of effective notice was, at the latest, when the Motion to Change was served on the Applicant, being April 18, 2019. Without more, that would generally be the date from which the variation in support take place.
[51] As well, I believe that the proof of the loss in overtime and on-call duty was adequately shown by the June 14, 2019 email, which is attached to the Respondent’s November 6, 2019 affidavit. To request more than that merely resulted in the Respondent “gilding the lily” and confirming what was already apparent through the previous income loss information received from the Respondent’s employer.
[52] The variation in support would, at trial, normally be retroactive to the date that the Motion to Change was commenced. Therefore, there is no prejudice to an order varying the spousal support retroactive to the date as requested by Ms. Cartwright, which was the date when the motion was served, or November 6, 2019.
Support Reduction
[53] The basis of the Applicant’s entitlement to spousal support was not set out in the consent order. There was a dispute as to whether the Applicant was entitled to support on a compensatory or non-compensatory basis.
[54] I am therefore going to reduce support based upon a similar formula to that used in the original order, which was an amount slightly higher than the SSAG midpoint value which, as noted above, was $1,741 per month as set out in the calculation provided by the Respondent.
[55] Effective November 1, 2019, therefore, spousal support shall be reduced to $1,775 per month.
ORDER
[56] There shall therefore be a temporary order to go as follows:
a. Effective November 1, 2019, spousal support payable under paragraph 6 of the order of Vallee J. dated March 11, 2016 shall be reduced on a temporary basis to $1,775 per month.
b. Any overpayment of support shall be addressed by being credited against future spousal support payments to be made by the Respondent to the Applicant.
c. SDO to issue.
[57] The parties may make written submissions as to costs, the Respondent first and then the Applicant on a 10-day turnaround. No reply material to be filed without permission of the court. Costs submissions to be no more than three pages in length not including Bills of Costs or Offers to Settle on the motion.
Footnotes:
[1] R.S.C. 1985, c. 3 (2nd Supp.)
[2] cf. Gallagher v. Gallagher, 2013 ONSC 916 at para. 14 which suggested that jurisdiction lay under the Family Law Act R.S.O. 1990, c. F.3 even though the parties were subsequently divorced. However, in contrast to that case, support in the present case was set in divorce proceedings commenced pursuant to the Respondent’s Answer and Claim by Respondent, which means that the order must be varied under s. 17 of the Divorce Act.
[3] Ex. D to the affidavit of Mr. Gondosch sworn November 6, 2019.
[4] Ex. C to the affidavit of Mr. Gondosch sworn January 14, 2020.
[5] R.S.O. 1990, c. F.3
[6] Gallagher at para. 34
[7] Ex. C to the affidavit of Ms. Raaflaub sworn November 8, 2019
[8] Ex. D to the affidavit of Tiffany Bowman sworn February 27, 2020.
[9] Ex. A to the affidavit of Mr. Gondosch sworn November 11, 2014.
[10] Ibid., para. 5.
[11] The SSAG filed at Ex. D to the affidavit of Tiffany Bowman sworn February 27, 2020 shows that, at the present acknowledged income of the parties, the highest SSAG amount of support of $1,943 per month results in an equal division of net disposable income. Mr. Gondosch is presently paying $2,275 per month, which is over $300 per month more than this maximum amount, resulting in Ms. Raaflaub receiving more in net disposable income than Mr. Gondosch.
[12] Ex. D to the affidavit of Mr. Gondosch sworn November 6, 2019.
McDERMOT J. Date: March 12, 2020