Court File and Parties

Court File No.: FC-15-1328-02 Date: 2020-05-19 Superior Court of Justice - Ontario

Re: Karen Joyce Raaflaub, Applicant And: George Gondosch, Respondent

Before: McDermot J.

Counsel: Shannon More, for the Applicant Kim Cartwright, for the Respondent

Heard: By Written Submissions

Costs Endorsement

[1] On March 5, 2020, I heard a motion in this matter to reduce spousal support payable by the Respondent to the Applicant.

[2] By consent order made on March 11, 2016, Mr. Gondosch was paying spousal support to Ms. Raaflaub in the amount of $2,275 per month based on his income of $102,000 per annum. Since then, Mr. Gondosch’s income has reduced to $86,000 per year and he brought a Motion to Change and moved for a temporary reduction in his support obligation. Ms. Raaflaub resisted that claim. At the motion, Mr. Gondosch was successful in having his spousal support reduced to $1,775 per month retroactive to November 1, 2019.

[3] Mr. Gondosch now seeks his costs of the motion in the amount of $8,000. He seeks full recovery costs based upon his success at the motion, his offers to settle as well as the Applicant’s unreasonable behaviour.

[4] Ms. Raaflaub does not agree to the payment of any costs. She says that she had attempted to negotiate in good faith, and was prevented from doing so by the Respondent and his counsel. She also accuses the Respondent of unreasonable behaviour.

Entitlement to Costs

[5] Under Rule 24(1) of the Family Law Rules, costs of a proceeding generally follow the event. The successful party is presumed to payment of costs because he or she should not have had to defend or bring the motion.

[6] That being said, there are some exceptions to that rule. Firstly, unreasonable behaviour may displace the successful party’s entitlement to costs: if the person who wins the proceedings acted unreasonably, then he or she may be deprived of costs: see Rule 24(4).

[7] Connected to this are the offers to settle made in the proceeding. If a party has made an offer to settle which is better than the result, that party may then be entitled to costs notwithstanding the appearance of success or lack thereof: see Rule 18. As well, unreasonable behaviour can be determined in light of the offers to settle made by the parties: see Rule 24(5)(b).

[8] At the motion, I ordered that spousal support be varied to $1,775 per month effective November 1, 2019. In the present case, there were a number of offers made by both parties all of which skirted around the result and commencement date, but none of which were on the mark. These offers were all, in my view, genuine attempts to settle the matter, but none were effective to trigger the costs consequences under Rule 18 as none were better than the results for either party at the motion.

[9] The Respondent began negotiations by offering a reduction in spousal support to $1,600 per month on September 12, 2019. On September 24, 2019, he made a formal offer of $1,707 per month effective October 1, 2019 (on a final basis). That never changed substantially as he offered $1,707 per month retroactive to March 1, 2019 plus costs of $5,000 on November 20, 2019, $1,685 per month again to March 1, 2019 plus costs of $10,000 on February 25, 2020 and $1,719 per month retroactive to July 1, 2019 plus costs of $7,000 on February 26, 2020. All of these latter offers were final and not temporary.

[10] I note that the Respondent also included in her submissions several offers to settle the costs issue. As I am considering that issue, I ignored these offers; they should not have been presented to me as part of the costs submissions.

[11] On September 30, 2019, the Applicant offered to reduce support to $1,975 per month effective October 1, 2019. She then made a November 14, 2019 offer of $1,900 per month effective November 1, 2019 and then on December 5, 2019, she offered to accept $1,835 per month effective December 1, 2019. On February 27, 2020, she offered to accept $1,800 per month. All of the Applicant’s formal offers were without costs. As well, as with the Respondent, all of the formal offers were final in nature.

[12] The net effect is that, by the time the motion was argued, the parties were $81 per month apart. With tax consequences, this was a nominal amount. What appeared to get in the way is the demand by the Respondent that the Applicant pay significant costs as a condition of settlement.

[13] An offer that contains costs consequences begs the question as the offer itself has costs consequences. It cannot be better than the result at the motion as the costs are yet to be determined, and those costs may be based upon the offers to settle under both Rule 18 and 24. That is especially so where, as in the present case, the offers are not severable. The party responding to the offer is left with the unenviable option of accepting an offer with costs consequences partly in order to avoid the costs consequences of the motion. In this case, the Respondent is requesting costs of $8,000 for the motion, and had the Applicant accepted the February 25 offer, she would have paid more costs than those being requested in these costs submissions. That makes no sense whatsoever.

[14] As the offers spoke to a final order (and this was a motion for a temporary order) and they were not bettered by the party making the offer at the motion, the offers do not have costs consequences under Rule 18. Because they are all very close to the result, they also do not result in costs consequences under Rule 18(16), which permits the court to take an offer into account even where it does not meet the criteria for a full recovery costs award under Rule 18(14).

[15] I also do not find unreasonable behaviour on the part of either party which would affect entitlement to costs. I was unimpressed by the Applicant’s suggestion in her April 15, 2019 email that the Respondent “put a request into the court” rather than negotiate; however that was before I noticed that Ms. Cartwright had confirmed on April 11, 2019, “that my client will be taking this back to court as you have clearly not consented to a reduction in payments”; at that point no offer had been made by the Respondent or his counsel and no number had been proposed. Both parties appeared to threaten court proceedings without having made any sort of reasonable attempt at settlement.

[16] All of this goes to the issue of who is the successful party. Both parties were close to the result in their offers, but were unwilling to make an offer sufficiently high or low to close the transaction. Had the Respondent not insisted on costs in his offers or made his offers severable, the matter would probably have been settled.

[17] That leaves the court with assessing success from the argument of the motion itself. By that measure, the Respondent was clearly successful; he requested a reduction in support with some retroactivity to that result and he had provided sufficient disclosure by November, 2019. The Applicant refused to accept that and demanded more. The Respondent was therefore successful on all points argued at the motion and there is no sufficient reason to depart from the presumption in Rule 24(1). The Respondent is therefore entitled to the costs of the motion.

Quantum

[18] The time dockets are attached to the costs submissions and show when and how the work was done on the file. Considering Ms. Cartwright’s experience (she was called to the bar in 2009), her hourly rate is reasonable, and the time spent on the file and the fees claimed are reasonable.

[19] There is no basis for full recovery costs either by way of unreasonable behaviour of either party or by reason of the offers to settle.

[20] As discussed above, there is also nothing which can affect the quantum of a costs award by way of unreasonable behaviour or in the offers to settle other than the Respondent’s demand for costs in his offers which made settlement impossible. I have already commented on the offers to settle made by the Respondent at least one of which contained a demand for costs which went well beyond the costs claimed by the Respondent even in these submissions. These offers impeded rather than assisted in settlement. Although I did not find this to be sufficiently unreasonable to displace the costs assumptions in Rule 24(1), I do find this to be unreasonable behaviour under Rule 24(11)(b) in assessing the amount of costs payable to him for the motion.

[21] I would normally have ordered costs of the motion on a partial recovery basis in the amount of about $6,000 inclusive of disbursements and HST. Because the Respondent’s offers to settle actually hindered settlement, I am reducing that amount to $4,000. The Respondent shall have his costs of the motion in the amount of $4,000. Those costs shall be payable within 60 days.

[22] Because of the tax consequences of spousal support, I am not ordering this to be set off against the spousal support payable by the Respondent.

McDermot J. Date: May 19, 2020