Bak v. Dobell
86 O.R. (3d) 196
Court of Appeal for Ontario,
Borins, Armstrong and Lang JJ.A.
April 23, 2007
Family law -- Support -- Child support -- Child Support Guidelines -- Income -- Imputed income -- Respondent suffering from mental illness and being unable to work -- Respondent's father providing him with place to live, contributing large amounts of money to his education in attempt to make him employable and paying him allowance -- Trial judge not erring in refusing to impute income to respondent under s. 19(1) of Guidelines based on respondent's lifestyle and his receipt of gifts from his father -- Child Support Guidelines, O. Reg. 391/ 97, s. 19(1). [page197]
The appellant and the respondent are the parents of a 13- year-old child. The respondent had had little contact with the child since shortly after her birth. The respondent suffered from severe personality disorders, among other conditions. The disorders were chronic and severe, and rendered him effectively unemployable. His father, W, had made extensive efforts to assist him, funding career training and providing him with an allowance which covered his day-to-day needs. He also bought a condominium for the respondent's use and registered it in the respondent's name to instill a pride of ownership that he hoped would motivate the respondent to "behave in a more conventional manner". The condominium was sold in 2004, and the respondent moved into a house owned by W. In 1998, the appellant obtained a consent order for child support in the amount of $117 monthly, based on the respondent's then annual earnings of $14,500. The respondent was unable to maintain his employment and had not earned any significant income since then. The appellant brought an application to increase the respondent's obligation to pay child support to $2,300 monthly by imputing income under s. 19(1) of the Child Support Guidelines based on the respondent's lifestyle and his receipt of gifts from W. The respondent asked for the termination of the child support on the basis that he was not capable of earning any income. The trial judge dismissed the appellant's claim and vacated the consent child support order. The appellant appealed.
Held, the appeal should be dismissed.
Under the Guidelines, child support is calculated on the payor's total income for income tax purposes. Lifestyle is not a type of income, receipt or benefit included in total income. Rather, it is evidence from which an inference may be drawn that the payor has undisclosed income that may be imputed for the purpose of determining child support.
W's gifts of money to finance the respondent's training and to allow him to pursue a motorcycle building business could not be said to be income to the respondent under either the Guidelines' definition of presumptive income or as income that it was appropriate to impute to the respondent. As for W's provision of residences for the respondent, the residences were bought to provide the respondent with a roof over his head so that he would not live on the street. The respondent was not at liberty to sell those properties and use the funds for other purposes. The trial judge did not err in concluding that the capital value of the condominium or of the house in which the respondent was residing at the time of the trial, should not be imputed to the respondent as income. It was also within the trial judge's discretion to refuse to impute to the respondent as income W's payment of his medical, psychological, legal and other similar bills. The professional fees all came within a category of necessary medical or therapeutic expenses, or were truly in the nature of gifts to assist with unusual and non- recurring expenses. They were not given to the respondent for use in his day-to-day living, nor to be spent as he wished.
Although the legislature did not include the receipt of gifts given in the normal course in presumptive income, or as an example of an appropriate circumstance in which income will be imputed under s. 19(1) of the Guidelines, a court may consider whether the circumstances surrounding the particular gift are so unusual that they constitute an appropriate circumstance in which to impute income. In considering whether it is appropriate to include the receipt of unusual gifts in income, a court will consider a number of factors, including the regularity of the gifts; the duration of their receipt; whether the gifts were part of the family's income during cohabitation that entrenched a particular lifestyle; the circumstances of the gifts that earmark them as exceptional; whether the gifts do more than provide a basic standard of living; the income generated by the gifts [page198] in proportion to the payor's entire income; whether they are paid to support an adult child through a crisis or period of disability; whether the gifts are likely to continue; and the true purpose and nature of the gifts. In exercising his discretion not to impute income to the respondent on the basis of the periodic support paid to him by W, the trial judge considered that the intended duration of the gifts was limited; that the gifts were intended only to encourage the respondent's self-sufficiency; that the gifts were made to a disabled child and were more in the nature of support for an adult child than in the nature of an allowance; and that the quantum of the gifts did no more than support a basic lifestyle. For those reasons, he was entitled to refuse to include the gifts in income. From a policy perspective, this type of support to an adult child is to be encouraged, not discouraged, particularly in the circumstances of this case where it might serve to provide a currently disabled parent with the means to become a self-sufficient member of society, and a parent capable of contributing to his own child.
APPEAL from an order of Manton J. of the Superior Court of Justice, dated October 12, 2005, dismissing an application to increase child support.
Cases referred to Haq v. Haq, [2003] O.J. No. 4687, 126 A.C.W.S. (3d) 835 (S.C.J.); Scholes v. Scholes, 2003 2349 (ON SC), [2003] O.J. No. 3432, 125 A.C.W.S. (3d) 313 (S.C.J.); Whelan v. O'Connor, 2006 13554 (ON SC), [2006] O.J. No. 1660, 28 R.F.L. (6th) 433 (S.C.J.), supp. reasons 2006 16361 (ON SC), [2006] O.J. No. 1946, 28 R.F.L. (6th) 444 (S.C.J.), consd Other cases referred to Biamonte v. Biamonte, 1998 29663 (ON SC), [1998] O.J. No. 541, 36 R.F.L. (4th) 349 (Gen. Div.); Davids v. Davids, [1998] O.J. No. 2859, 66 O.T.C. 321 (Gen. Div.); E. (C.R.H.) v. E. (F.G.), [2004] B.C.J. No. 1057, 2004 BCCA 297, 29 B.C.L.R. (4th) 43, 1 R.F.L. (6th) 173 (C.A.); Ellis v. Carpenter, [1999] O.J. No. 934, 87 A.C.W.S. (3d) 323 (Gen. Div.); Fransoo v. Fransoo, 2001 SKQB 102, [2001] S.J. No. 121,14 R.F.L. (5th) 303 (Q.B.); Hunt v. Smolis-Hunt, 2001 ABCA 229, [2001] A.J. No. 1170, 20 R.F.L. (5th) 409, 205 D.L.R. (4th) 712 (C.A.); Jackson v. Jackson, 1997 12392 (ON SC), [1997] O.J. No. 4790, 46 O.T.C. 66 (Gen. Div.); M.A.K. v. K.A.B., 2000 PESCTD 6, [2000] P.E.I.J. No. 8, 187 Nfld. & P.E.I.R. 224 (S.C.T.D.); Mascarenhas v. Mascarenhas, 1999 14642 (ON SC), [1999] O.J. No. 37, 44 R.F.L. (4th) 131 (Gen. Div.); Riel v. Holland (2003), 2003 3433 (ON CA), 67 O.R. (3d) 417, [2003] O.J. No. 3901, 232 D.L.R. (4th) 264, 42 R.F.L. (5th) 120 (C.A.); Risen v. Risen, 1998 14571 (ON SC), [1998] O.J. No. 3184, 78 O.T.C. 189 (Gen. Div.); St. Amand v. St. Amand, [2006] N.B.J. No. 261, 298 N.B.R. (2d) 357 (Q.B.) Rules and regulations referred to Child Support Guidelines, O. Reg. 391/97, ss. 1 [as am.], 2, 3(1), 10(1), 16 [as am.], 19(1) [as am.], 21(1), 23, 25(2). Authorities referred to Driedger, Elmer A., The Construction of Statutes (Toronto: Butterworths, 1974) McLeod, James G. and Alfred A. Mamo, Annual Review of Family Law (Toronto: Thomson Canada Limited, 2006) Payne, Julien D. and Marilyn A. Payne, Child Support Guidelines in Canada (Toronto: Irwin Law, 2006) Sullivan, Ruth, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths Canada Ltd., 2002)
Robie S. Loomer, for appellant. Barry M. Tobin, for respondent. [page199]
The judgment of the court was delivered by
LANG J.A.:--
Overview
1The appellant applied to increase the respondent's obligation to pay child support from $117 monthly to $2,300 monthly by imputing income under s. 19(1) of the Child Support Guidelines, O. Reg. 391/97 based on the respondent's lifestyle and his receipt of gifts from his father. In submissions at trial, the respondent asked for the termination of child support. He made this request because he earned no income and was not capable of earning any income.
2After a five-day trial, Manton J. dismissed the appellant's claim, including her claim for retroactive support and for an order that the respondent contribute to the child's special or extraordinary expenses. The trial judge also vacated the consent child support order of $117 monthly. In her factum, the appellant seeks to set aside the trial judge's order and substitute an order for child support in the amount of $1,180 monthly, retroactive in varying amounts to 1998. In oral argument, the appellant sought an order for child support of $1,500 monthly. The appellant's counsel advised that, if the appellant is unsuccessful in achieving this relief, she is not pursuing child support based on any social assistance or disability income that could be imputed to the respondent.
3For the reasons that follow, in my view and in the circumstances of this case, the trial judge made no reversible error in exercising his discretion to refuse to impute income to the respondent. Accordingly, I would dismiss the appeal.
Background
4The appellant, Stephanie Bak, age 38, and the respondent, Mark Dobell, age 41, are the parents of Jacqueline, who is now 13 years of age. Jacqueline has various disabilities, which leave her at a disadvantage in her education, as well as socially.
5Jacqueline was born while the parties were living together when both were students at the Ontario College of Art in Toronto. Three months after Jacqueline's birth, the appellant moved with the child to Ottawa. Since then, the respondent, and his family, have had little or no contact with Jacqueline.
6The appellant works as an artist. She has generally earned less than $10,000 annually. While her art is gaining more recognition, she projected an income of no more than a $15,000 for this year. The appellant lives with Jacqueline in a rent-geared-to-income [page200] cooperative. Although her means are not entirely clear on the record before this court, it would seem that Jacqueline has access both to extra tutoring and to significant extra-curricular activities. It seems that the appellant manages these expenses with assistance from her mother and other family members.
7The respondent, Mark Dobell, has long-term problems, which began in elementary school and persisted through the four different high schools he attended. A thorough psychological assessment undertaken in 2004 established that the respondent suffers from severe personality disorders, including both Antisocial Personality Disorder and Borderline Personality Disorder. He also presents with symptoms of Attention Deficit Hyperactivity Disorder and mood swings. These disorders, which are chronic and severe, explain the respondent's historic and ongoing inability to sustain employment, even though he receives therapy twice weekly and follows an anti-depressant medication regime. At trial, the evidence indicated that the respondent would need ongoing therapy for three to five years. While the respondent's behaviour has improved with therapy and medication, his ability to earn an income has not. The evidence of the respondent's inability to earn an income, which was confirmed in follow-up reports late in 1994 and in 1995, was not challenged at trial.
8Despite the respondent's disability, and his lack of success in sustaining employment, his father, William Dobell, has made extensive efforts to assist his son to find a means of becoming self-sufficient. At his father's expense, the respondent has tried many careers, including art, glass blowing, scuba diving (at an expense of approximately $60,000, inclusive of equipment) and training as a private investigator, none of which has resulted in gainful sustained employment.
9As well as other endeavours, most recently at the time of trial, the respondent was making efforts to establish a business in custom motorcycle building. This plan was supported by the respondent's therapist, who recommended it as the most suitable profession for the respondent. To this end, the respondent sought an apprenticeship in the United States, a $25,000 initiative supported by his father.
10In addition to his generosity in financing specific career training for his son, William Dobell supports the respondent by providing him with funds for his day-to-day needs. In 2001, that support amounted to about $1,000 monthly. It was increased to $1,450 in 2002 and to $1,750 in May 2003, and remained at that level to the time of trial. The increased amount took into account inflation and the respondent's likely increased expenses living with his partner, who was unemployed. [page201]
11William Dobell testified that, at first, he varied the support each month depending on the respondent's needs, which he ascertained by questioning him about his expenses to see if they could be decreased. However, the variable payments proved too cumbersome and the respondent had difficulty cashing his father's cheques, according to his father, because he presented to banks as "some hippie". The banks would call William Dobell before accepting the cheques. As a result, William Dobell began depositing a consistent amount into the respondent's bank account every month. He intends to discontinue this support when the respondent is able to make a living, although he is uncertain when or if this will happen.
12In addition to the monthly support, the respondent's father has also funded all the respondent's medical, psychological, chiropractic, legal, and veterinarian bills. In addition, in 2000, he bought a condominium for the respondent's use at a cost of $133,400. He registered the condominium in the respondent's name to instil a pride of ownership that he hoped would motivate the respondent to "behave in a more conventional manner".
13The respondent has managed to obtain employment from time to time, although he has not been successful in maintaining that employment. Between 1997 and 2000, the respondent worked periodically, either as a security guard or as a superintendent of an apartment building. In these jobs, he earned between $8,900 and $15,200 per year. In 1998, the appellant applied for and obtained a consent order for child support in the amount of $117 monthly, based on the respondent's then annual earnings of $14,500. William Dobell did not know about and was not involved with the appellant's application at the time. In any event, consistent with his diagnosis, the respondent was unable to maintain his employment. Since 2000, the respondent has not earned any significant income, although he received employment insurance of $2,859 in 2001. Despite his lack of employment, the respondent continued to pay the child support until the consent order was vacated by the final order under appeal.
14As this litigation progressed, the respondent disclosed the monthly support he received from his father, as well as the condominium, then valued at $242,000, a $55,000 car he received as a graduation gift, a $5,000 motorcycle and $4,500 in cash. A year later, the respondent's updated financial statement showed the condominium at a value of $315,000. In 2004, the condominium was sold for $326,000; $290,000 of which was transferred to the respondent's father and, as a result of a court order, held in trust pending the outcome of the trial. [page202]
15During the course of the proceeding, William Dobell bought a house in Stouffville for approximately $350,000, which he registered in his own name. The respondent lives in that house with his partner. William Dobell also provided the respondent with a further $75,000 to allow him to renovate the premises and to buy the materials necessary for his motorcycle business.
16Since neither party sought to adduce any fresh evidence on this appeal, this court has no information about whether the respondent is currently earning any income from this endeavour.
The Trial Proceedings
17The primary issue at trial was whether the respondent and Jacqueline were the beneficiaries of a family trust allegedly set up by the respondent's paternal grandfather. As an alternative position, the appellant sought retroactive child support calculated on an imputed average annual income to the respondent of $164,479, based on the value of his lifestyle.
18In support of her position on the issue of income imputation, the appellant called Ms. Chartrand, a co-worker of the appellant's mother. Although Ms. Chartrand had no familiarity with family law, she was accepted as an expert chartered accountant to calculate the respondent's income. Ms. Chartrand testified that the respondent had an income equivalent to $877,970 over the eight-year period between 1998 and 2005. That figure included income that Ms. Chartrand imputed to the respondent based on the value to him of the residence provided by his father, which she assessed at an annual rate of ten per cent of the value of the house. Her income calculations also included large amounts for depreciation of the respondent's car and his motorcycle, as well as amounts expended for his career training. In arriving at her figures, Ms. Chartrand did not distinguish between capital acquisitions and the periodic support.
19William Dobell testified that the monetary gifts he provided for his son, both by way of capital and as periodic support, were bestowed in an effort to promote the respondent's self-sufficiency and, pending that self-sufficiency, to keep the respondent from starving and "off the streets". Given his son's personality disorders, William Dobell testified that he was concerned about how the respondent would behave if he lived on the streets. William Dobell only supported his son for what he considered to be necessary for his day-to-day living. He saw no evidence of a "fancy" lifestyle on the respondent's part, or that of his current partner, and if he did see such evidence, he said he would reduce the amount of support. The trial judge accepted that William Dobell gave funds to his son [page203] out of a sense of obligation and to prevent the respondent from otherwise being a burden on the taxpayer.
The Trial Decision
20The trial judge, who noted that a considerable amount of trial time was spent on the issue of the alleged trust, concluded, "it is clear that the Respondent's grandfather died and left his entire estate to his two sons and not to the Respondent". The finding that there is no trust is not challenged on appeal.
21After considering the relevant provisions of the Guidelines, including its definition of income and the potential for imputing income under s. 19(1), the trial judge declined to impute the gifts provided by William Dobell to Mark Dobell as Guidelines income. Furthermore, he held that the grandfather should not indirectly be required to pay support for an obligation that was not his responsibility.
22In support of this conclusion, the trial judge found that William Dobell's generosity was purely voluntary, the respondent had no entitlement to the gifts, the gifts were intended only to encourage the respondent's self-sufficiency, the gifts did not provide the respondent with an extravagant lifestyle, and they were provided by William Dobell because he is a "person of substantial means that will not let his son depend on welfare".
23Since the trial judge was not asked to impute any other income to the respondent, such as an amount equivalent to social assistance or a Canada Pension Plan disability pension, he dismissed the appellant's claim for child support and vacated the $117 consent order.
Analysis
24In her factum on this appeal, the appellant argued that it is appropriate, in the circumstances of this case, to impute income to the respondent based on the respondent's lifestyle. In addition, the appellant submitted during oral argument that the gifts from the respondent's father should be imputed to the respondent as Guidelines income. As part of [her] second argument, the appellant submitted that the gift income was analogous to trust income.
25Both arguments raise issues of statutory interpretation. Any question of statutory interpretation invokes the guiding principle of Elmer Driedger, frequently quoted with approval by this court and the Supreme Court of Canada:
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context, in their grammatical and ordinary [page204] sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. 1
26Before looking at the Guidelines' definition of income and its provisions for imputing income, it is helpful to consider the purpose of the legislation.
27Prior to the Guidelines, child support was very much a matter of judicial discretion, a discretion that was generally broadly exercised to achieve a fair result in all the circumstances. This resulted in a correspondingly wide range of child support orders. Since family law lawyers were unable to predict a likely child support outcome with accuracy, the parties often chose to litigate, at significant emotional and financial expense to all.
28The Guidelines' s. 1 objectives, which inform the meaning of the particular provisions at issue, are listed as follows:
(a) to establish a fair standard of support for children that ensures that they benefit from the financial means of their parents and, in the case of divorce, from the financial means of both spouses after separation;
(b) to reduce conflict and tension between parents or spouses by making the calculation of child support more objective;
(c) to improve the efficiency of the legal process by giving courts, and parents and spouses, guidance in setting the levels of child support and encouraging settlement; and
(d) to ensure consistent treatment of parents or spouses and their children who are in similar circumstances.
(Emphasis added)
29With those objectives in mind, and except as otherwise specifically provided, Parliament decided that child support for minor children would be in "the amount set out in the applicable table" (Table support). Table support would be based on the number of children and on "the income of the parent or spouse against whom the order is sought" (Guidelines, s. 3(1)). In this way, Parliament sought to use fair and objective criteria to promote predictability and consistency so that parties would be able to resolve the issue of child support expeditiously, minimizing the financial and emotional costs of litigation.
30To maximize predictability and consistency, Parliament provided a definition of income that is clear and unambiguous and that significantly narrowed the scope of judicial discretion. Section 2 restricts "income" to a person's "annual income determined under [page205] sections 15 to 20". Section 16, the one directly applicable to this case, provides that a "parent's or spouse's annual income is determined using the sources of income set out under the heading 'Total income' in the T1 General form issued by the Canada Revenue Agency". Thus, income for support purposes is presumptively the payor's income as it appears on line 150 of his or her income tax return. This restricts the definition of presumptive "income" to income that is subject to taxation. In this way, a payor's income can be easily ascertained by reference to the payor's income tax return.
31It follows that gifts and lifestyle are not included in a payor's presumptive income because neither is subject to taxation.
32However, there are provisions that can serve to adjust the presumptive amount of Table support. 2 Of immediate application to this case is s. 19(1), which gives a court the discretion to impute income to a payor in enumerated circumstances:
19(1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include,
(a) the parent or spouse is intentionally under- employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;
(b) the parent or spouse is exempt from paying federal or provincial income tax;
(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
(e) the parent's or spouse's property is not reasonably utilized to generate income;
(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;
(g) the parent or spouse unreasonably deducts expenses from income;
(h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
(Emphasis added) [page206]
33Subsection 19(1) is clearly intended to capture cases that, in fairness, require an adjustment to the payor's presumptive income and, for this purpose, it provides a court with the discretion to impute income when it is "appropriate [to do so] in the circumstances".
34The list of circumstances in s. 19(1) is not exhaustive: the legislature only provides that the list "include" items (a)-(i). Further, there is nothing in the provision that suggests other appropriate circumstances must be analogous to those specifically enumerated, although similarity of circumstance to one listed in s. 19(1) would support the imputation of income, simply because such a circumstance would be consistent with legislative intention 3. The absence of analogy to a listed circumstance is simply a factor to be considered in interpreting the provision.
35Some cases have held that there must be similarity between a new appropriate circumstance and the listed circumstances. 4 However, Riel v. Holland (2003), 2003 3433 (ON CA), 67 O.R. (3d) 417, [2003] O.J. No. 3901 (C.A.) makes it clear that the listed circumstances are simply examples and it is open to find new circumstances in which to impute income, provided that the new ground is consistent with the purpose of s. 19(1) and the Guidelines generally. Writing for this court in Riel, MacPherson J.A. concluded at para. 36:
The wording of s. 19 of the Guidelines is open-ended ("which circumstances include"), thus indicating that the categories listed in that section are merely examples of situations in which income may be imputed. There are, therefore, other potential scenarios in which income can, and should, be imputed.
36If appropriate circumstances arise, particularly ones unforeseen by the legislature, a court has the discretion, to be exercised on a principled basis, to impute income to a payor parent. When considering whether a circumstance is an appropriate one in which to impute income, a court will bear in mind the objectives of the Guidelines to establish fair support based on the means of the parents in an objective manner that reduces conflict, ensures consistency and encourages resolution.
37Thus, the open-ended wording of s. 19(1) does not mean that courts have an untrammelled discretion to add circumstances, particularly when a review of the legislation suggests a deliberate intention on the part of the legislature to exclude a particular circumstance. [page207]
38Accordingly, I begin by asking whether any presumption of interpretation applies that would make it more or less likely to conclude that the legislature intended to either include or exclude gifts as Guidelines income, or whether the absence of reference to gifts in the Guidelines reflects a gap in the legislation.
39Before turning to that question, I will first deal with the appellant's argument concerning lifestyle. I will then discuss separately gifts in their many forms, including in this case gifts in the nature of capital "given" to the respondent and those in the nature of monthly support.
Lifestyle
40As I have said, under the Guidelines, child support is calculated on the payor's total income for income tax purposes. Lifestyle is clearly not a type of income, receipt or benefit included in total income. Canadians are not taxed on lifestyle.
41Equally clearly, however, a payor's lifestyle often will be relevant to whether a court may impute income under s. 19(1) of the Guidelines. For example, it may be apparent from lifestyle that a payor is receiving undeclared income because he or she has historically worked, lives comfortably with the usual trappings, and yet declares minimal income for tax or child support purposes. In such a case, the recipient who calls evidence of the payor's lifestyle will ask the court to draw the reasonable inference that the payor must have a greater income than he or she has disclosed.
42This occurred in Davids v. Davids, [1998] O.J. No. 2859, 66 O.T.C. 321 (Gen. Div.), where a chartered accountant was able to demonstrate from the husband's financial data that he was receiving income from a source he could or would not explain. Given the absence of any explanation, the court drew an inference that the husband's earnings were more than reported. Similarly, in Biamonte v. Biamonte, 1998 29663 (ON SC), [1998] O.J. No. 541, 36 R.F.L. (4th) 349 (Gen. Div.), based on evidence of the parties' lifestyle, income was imputed to a husband who was shown to have a cash component to his restaurant business in addition to his declared income. While these cases demonstrate that a party's lifestyle can inform the question of whether the payor has diverted income, or underreported income, 5 lifestyle is not a stand-alone ground for imputing income. [page208]
43On this issue, I conclude that lifestyle is not income, but rather evidence from which an inference may be drawn that the payor has undisclosed income that may be imputed for the purpose of determining child support.
Imputed income
44I turn to the appellant's second argument: whether the gifts from William Dobell should be imputed to the respondent as income, considering first, the capital amounts provided by William Dobell and second, the monthly support.
(i) Capital
45The appellant argues that income should be imputed based on the lump sum amounts spent by William Dobell to provide education, shelter, a car, a motorcycle and medical and other benefits for the respondent.
46This question is most easily approached by dividing the gifts into three categories: first, those funds advanced to finance the respondent's training and proposed business; second, the funds used to provide the respondent with a home and a car; and third, the funds provided to the respondent to cover professional fees, such as his medical and veterinary expenses.
47First, William Dobell provided the respondent with large amounts of money to finance his training and to allow him to pursue his motorcycle business.
48These funds were not used to finance the respondent's day-to-day expenses nor were they given to the respondent to spend in his discretion. Instead, they were akin to an investment by William Dobell in the respondent's future: an investment, as the trial judge noted, that may lead to the respondent generating income in his own right.
49An example of this type of expenditure was the expensive scuba training, which included significant equipment costs as well as the expense of buying a vehicle adequate to transport equipment. Unfortunately, the respondent's potential for a scuba diving career ended when he suffered physical injuries, which continue to require treatment. The motorcycle business proposed at trial is similarly costly, both in terms of training and the cost to set up shop.
50In my view, expenditures of this nature made, not by the respondent, but by his father for the specific cost of career advancement cannot be said to be income to the respondent under either the Guidelines' definition of presumptive income or as income that it is appropriate to impute to the respondent.
51Second, in addition to supporting the respondent's training, William Dobell provided the respondent with a place to live, first in [page209] the condominium and later in the Stouffville property. As the trial judge found, the residences were bought to provide the respondent with a roof over his head so that he would not live on the street. The respondent was not at liberty to sell these properties and use the funds for other purposes. The evidence disclosed that the condominium was registered in the respondent's name for the sole purpose of trying to create a sense of pride of ownership so that the respondent would follow a "normal" lifestyle and become a functioning member of society. The evidence supports the conclusion that neither the condominium, nor its proceeds, were available to the respondent to expend as he wished. Furthermore, the respondent has no ownership interest or entitlement to the present Stouffville property, which is registered in his father's name. In these circumstances, the trial judge made no error in concluding that neither the capital value of the condominium, nor of the Stouffville property, should be imputed to the respondent as income.
52This conclusion is consistent with a model of child support based on a payor's income, not on his or her capital. While income from investments is part of a payor's total income, his or her underlying investments are not. A payor is not expected to sell capital assets, such as a house and car, for the purpose of generating income from which to pay support, unless the "property is not reasonably utilized to generate income" (s. 19(1)(e)). Even assuming the applicability of this provision, on the facts of this case, the respondent did and does not have the option to sell capital assets to generate investment income, particularly in the circumstance that the particular acquisitions were made by William Dobell for the specific purpose of encouraging the respondent's conventional conduct, with the overall objective that he achieve financial independence.
53This does not mean that capital is never relevant to the issue of support. In Jackson v. Jackson, 1997 12392 (ON SC), [1997] O.J. No. 4790, 46 O.T.C. 66 (Gen. Div.), support was awarded based on the receipt of capital, as opposed to income derived from capital. In Jackson, Pardu J. calculated support on the husband's receipt of trust funds, which included both capital and income. While capital is not usually considered income, the trial judge noted that the family standard of living, for almost four years prior to the parties' separation, had been based on the receipt of capital payments made at the rate of $105,000 annually. Importantly, the order made was only an interim one and Pardu J. explicitly noted at para. 25 that the wife may "ultimately have to accept a lower standard of living".
54The facts of the case before this court are quite different, including the important fact that the respondent had no control over the capital expenditures made by William Dobell. Further, [page210] the receipt of capital is not usually considered income 6 because it is not taxed as income.
55In contrast to the receipt of capital, income that could be earned from capital is relevant to child support and will be included in income. For example, in both Ellis v. Carpenter, [1999] O.J. No. 934, 87 A.C.W.S. (3d) 323 (Gen. Div.) and St. Amand v. St. Amand, [2006] N.B.J. No. 261, 298 N.B.R. (2d) 357 (Q.B.), a payor parent accrued significant one-time, non- recurring sums of capital -- in Ellis, by way of inheritance and in St. Amand, 7 by way of the sale of property. In determining the payor's obligation to pay child support from those capital amounts, the trial courts concluded that it was reasonable for the payor to spend portions of the sums on capital acquisitions, including the purchase of living accommodations, as well as for the payment of debt. However, investment income on the remaining capital was imputed to the parent for the purpose of calculating his child support obligation.
56Thus, pursuant to Ellis, St. Amand and s. 19(1)(e) circumstances, part or all of the income that could be derived from capital may be imputed as income. However, in this case, because of the nature of the capital investments, they generate no income and the respondent is not in a position to sell them to generate income.
57Furthermore, if the shelter (and vehicles) had been provided for the respondent's use by his current partner, and not by his father, resulting "income" would likely not have been imputed to the respondent, except to the extent that the respondent's expenses were reduced as a result. This is because it is the parent's obligation to provide support and not the obligation of the parent's new spouse. The result should not be different solely because the provider is the respondent's father, rather than his spouse.
58Turning to the third category of medical, psychological, chiropractic, legal, and veterinary bills paid by the respondent's father, it was within the trial judge's discretion to refuse to impute these expenses to the respondent as income. The professional fees all came within a category of necessary medical or therapeutic expenses, or were truly in the nature of gifts to assist with unusual and non-recurring expenses. They were not given to the [page211] respondent to use for his day- to-day living, nor to be spent as he wished. For this reason, they should not be imputed to him for the purpose of calculating child support.
59Thus, in my view, the trial judge made no error in refusing to impute income to the respondent on the basis of the gifts in the nature of capital.
(ii) Monthly support
60I turn to consider the more difficult question of whether the periodic support received by the respondent from his father should be considered as the respondent's income for the purpose of calculating the respondent's child support obligation. I do this by returning first to the question of whether any presumptions of statutory interpretation assist with determining legislative intent on this issue. I look first at whether the government deliberately excluded gifts from the definition of income and from the circumstances included as appropriate ones in which to impute income. I then consider, if that is the case, whether gifts can ever be included in income for child support purposes.
61When the Guidelines were enacted, the legislature is presumed to have been knowledgeable about the various sources of taxable and non-taxable income available to an individual, including the fact that neither gift nor trust income is taxable. It can be presumed from this knowledge that the legislature deliberately omitted both gifts and trust income from presumptive income.
62The legislature, however, did list trust income as a s. 19(1) circumstance in which income could be imputed. It did not list gifts. Since the legislature did not include gifts within the ambit of imputed income, it can be presumed, in the normal course, that the legislature did not intend the receipt of gifts to be an "appropriate circumstance" in which to impute income. 8 For this reason, usual gifts, such as those given to mark a special occasion, are not included as income.
63If the legislature knowingly excluded gifts from presumptive and imputed income, can they ever be considered to be an appropriate circumstance in which to impute income under s. 19(1)? It is helpful to consider this question by comparing gifts to the "appropriate" circumstances listed by the legislature in s. 19(1). Income will be imputed where the respondent is intentionally unemployed or underemployed (s. 19(1)(a)); has special income [page212] tax circumstances or unreasonable deductions (s. 19(1)(b), (c), (g) or (h)); has diverted income (s. 19(1)(d)); has failed to reasonably utilize capital to generate income (s. 19(1)(e)); or has failed to make disclosure (s. 19(1)(f)).
64These circumstances reflect two main themes: they either allow for the imputation of income to a spouse able to generate income who refuses to do so (or who does not provide proper disclosure of income information), or they adjust the payor's income to compensate for anomalous income tax treatment. Neither is relevant to the receipt of gifts generally and, clearly, the circumstances in this case bear no similarity to the examples listed in ss. 19(1)(a)-(h).
65The remaining listed circumstance is income or other benefits from a trust (s. 19(1)(i)). The trial judge in this case determined that the respondent is not the beneficiary of a trust; however, on appeal the appellant argues that the respondent's receipt of gifts is analogous to receipt of trust funds.
66While the stream of income from William Dobell to the respondent bears some similarities to trust income, there are also important differences, most significantly that William Dobell remains in complete control of the funds, the amount of which are closely tied to the respondent's basic needs. The respondent has no entitlement to the stream of income, which could be reduced or terminated at any time by his father with no recourse to the respondent.
67Nonetheless, it is important to consider s. 19(1) in light of the Guidelines' objectives of s. 1, which tell us that their purpose is to establish fair support for Jacqueline to ensure she benefits from the "financial means" of both her parents.
68The appellant cites numerous authorities to support her argument that fair support requires that the respondent's gifts be imputed to him as income as part of his "means". However, many of the authorities cited deal with the imputation of income under specific subsections of s. 19(1). 9 Others deal with the discretion under s. 23 to impute income to a payor who has failed to comply with his or her obligations to make financial disclosure, a situation that also does not arise in this case. [page213]
69The appellant does cite cases that specifically consider parental gifts as income; however, those cases do so by agreement between the parties, without any discussion or analysis of the relevant provisions of the Guidelines.
70For example, in Scholes v. Scholes, 2003 2349 (ON SC), [2003] O.J. No. 3432, 125 A.C.W.S. (3d) 313 (S.C.J.), while this court was primarily concerned with the payor's underemployment, it also included in his income, on consent, financial assistance that the payor received from his parents. However, this result largely followed from the absence of evidence in that case about the payor's earning capacity, making it necessary to impute income inferred from the family's pre-separation lifestyle. Given the concession by the payor's counsel that parental assistance should be included, the trial judge gave no reasons for doing so. Moreover, the order at issue was only on an interim basis.
71While the appellant also relies on Haq v. Haq, [2003] O.J. No. 4687, 126 A.C.W.S. (3d) 835 (S.C.J.), the respondent in that case did not resist the inclusion of parental assistance in his income for the purpose only of an interim support order. Perhaps of equal significance to the imputation of income in that case, was the fact that the respondent owned $1.8 million of capital assets. Accordingly, Haq cannot be authority for a general principle that parental gifts are included in Guidelines income.
72More recently, the issue was considered in Whelan v. O'Connor, 2006 13554 (ON SC), [2006] O.J. No. 1660, 28 R.F.L. (6th) 433 (S.C.J.), where, regarding one of the issues before her, Justice J.R. MacKinnon declined to impute income from gifts given to a payor spouse in circumstances where the funds were provided by the payor's parents on a temporary basis to assist her through a period of disability. The Whelan facts bear some similarity to the facts of this case, although the duration of assistance in that case was for a more limited period.
73The appellant cited no case where parental assistance was imputed to a respondent as income or as part of the respondent's means in a final order. A review of the authorities and the purpose of the legislation indicates that each case is necessarily fact specific. The result depends on the circumstances of the family at issue. 10 This is presumably why the legislature provided the courts with a residual discretion to be exercised by a trial judge based on his or her factual findings. [page214]
74Although it seems the legislature intentionally did not include the receipt of gifts given in the normal course in presumptive income, or as an example of an appropriate circumstance under s. 19(1), a court will consider whether the circumstances surrounding the particular gift are so unusual that they constitute an "appropriate circumstance" in which to impute income.
75In considering whether it is appropriate to include the receipt of unusual gifts in income, a court will consider a number of factors. Those factors will include the regularity of the gifts; the duration of their receipt; whether the gifts were part of the family's income during cohabitation that entrenched a particular lifestyle; the circumstances of the gifts that earmark them as exceptional; whether the gifts do more than provide a basic standard of living; the income generated by the gifts in proportion to the payor's entire income; whether they are paid to support an adult child through a crisis or period of disability; whether the gifts are likely to continue; and the true purpose and nature of the gifts.
76Clearly, on the facts of this case the amounts provided by William Dobell to the respondent are not gifts given "in the normal course" to mark a special occasion. This is apparent from the circumstances of the gifts, including the quantum, regularity and duration of the periodic payments, as well as the fact that they provided the sole means of support for the respondent, and at least to some extent for his unemployed partner.
77In exercising his discretion not to impute income to the respondent on the basis of the periodic support, the trial judge considered that the intended duration of the gifts was limited; that the gifts were intended only to encourage the respondent's self-sufficiency; that the gifts were made to a disabled child and were more in the nature of support for an adult child than in the nature of an allowance, and that the quantum of the gifts did no more than support a basic lifestyle. In my view, for these reasons, the trial judge was entitled to refuse to include these gifts in income.
78Regarding the respondent's lifestyle, at trial, the appellant did not argue that the respondent had excess income from William Dobell's gifts that was available for the purposes of child support. Indeed, the evidence established that the amount of the monthly support given by William Dobell met, but did not exceed, Mark Dobell's needs. This was not challenged in cross-examination, where the appellant simply sought and obtained confirmation that the respondent used all his income every month.
79In any event, it is clear from the submissions made at trial, and a reading of the trial judge's reasons, that the essence [page215] of the appellant's argument was not that the respondent had the ability to provide child support, but that William Dobell had the ability. The appellant's trial counsel argued that a child support order would "not cost Mark Dobell a cent", because the expense would be assumed by William Dobell, who would not want his son found in contempt of a court order. The problem with this argument, as the trial judge noted, is that it is not William Dobell's obligation to pay child support and, in the circumstances of this case, any order of child support made against the respondent would "in fact be imposing that obligation on the respondent's father".
80The respondent has a legal obligation to contribute to the support of his child; his father does not. The legislature neither provided William Dobell with any rights as a grandparent regarding his grandchild, nor imposed any obligations, such as the obligation to pay support.
81Similarly, the income of a payor's new partner, and the payor's improved lifestyle resulting from cohabitation with a new partner, 11 is not generally a relevant consideration in determining child support. If the income of the new spouse is not a relevant consideration, then neither should the gratuitous discretionary basic support provided by a parent to a disabled adult child be a relevant consideration.
82There was ample evidence, which the trial judge accepted, to support a conclusion that the periodic support given by William Dobell to Mark Dobell was in the nature of support for a disabled adult child who was otherwise unable to support himself. In William Dobell's words, the support kept Mark off the streets and from being a burden on the taxpayer.
83From a policy perspective, this type of support to an adult child is to be encouraged, not discouraged, particularly in the circumstances of this case where it may serve to provide a currently disabled parent with the means to become a self- sufficient member of society, and a parent capable of contributing to his child.
84Despite Mark Dobell's statutory obligation to support his daughter, the evidence establishes that the respondent would be unable to support himself, absent the support provided by William Dobell. Unfortunately for Jacqueline, as for other children of disabled parents, her father was simply not able to contribute to her financial support.
85Finally, I note that the appellant explicitly said she was not seeking an imputation of income to the respondent from sources such as social assistance or disability pensions. No [page216] evidence was called, for example, about whether the respondent is eligible for a Canada Pension Plan disability pension, which could include the separate child benefit payable directly to the custodial parent.
86In summary, the trial judge had the best opportunity to weigh and consider the evidence as a whole and to determine whether it was appropriate to impute the gifts to the respondent as income. I see no basis to interfere with his exercise of that discretion.
87In any event, since almost 20 months have elapsed since the conclusion of the evidence at trial, it may be that the respondent has achieved his goals, is earning money from his motorcycle-building business, and is now able to contribute to his daughter's support and will continue to be able to do so in the future. In this regard, I note that s. 25(2) of the Guidelines obliges a payor with an income below the minimum for paying support to provide the appellant annually, upon her written request, with the documents evidencing income as detailed in s. 21(1).
88Given the result, it is unnecessary to deal with the appellant's arguments regarding retroactive support and special or extraordinary expenses.
Result
89For the reasons given, I would dismiss the appeal. This is not an appropriate case for costs.
Appeal dismissed.
Notes
Footnotes
- Elmer A. Driedger, The Construction of Statutes (Toronto: Butterworths, 1974) at 67, as cited in Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths Canada Ltd., 2002) at 1.
- For example, support can be adjusted in cases where a spouse or child would otherwise suffer "undue hardship" by reason of the application of Table support (s. 10(1)).
- See Hunt v. Smolis-Hunt, 2001 ABCA 229, [2001] A.J. No. 1170, 20 R.F.L. (5th) 409 (C.A.), at para. 46.
- See for example Risen v. Risen, 1998 14571 (ON SC), [1998] O.J. No. 3184, 78 O.T.C. 189 (Gen. Div.) and Mascarenhas v. Mascarhenas, 1999 14642 (ON SC), [1999] O.J. No. 37, 44 R.F.L. (4th) 131 (Gen. Div.).
- For examples of cases dealing with lifestyle as evidence of undisclosed income see James G. McLeod and Alfred A. Mamo, Annual Review of Family Law (Toronto: Thomson Canada Limited, 2006) at pp. 238-39 and Julien D. Payne and Marilyn A. Payne, Child Support Guidelines in Canada (Toronto: Irwin Law, 2006) at pp. 182-83.
- See Scholes v. Scholes, 2003 2349 (ON SC), [2003] O.J. No. 3432, 125 A.C.W.S. (3d) 313 (S.C.J.), at para. 5 for an example of a case where capital given by parents to allow their son/payor to acquire a residence was not considered in determining the son's obligation to provide support for his children.
- In St. Amand, although the trial judge obliged the payor on the facts of that case to contribute some of his capital, the overall effect of the order was to impute income to the payor equivalent to a four per cent rate of return on the whole of the investment.
- In contrast, some jurisdictions in the United States, such as Virginia, Arizona, North Carolina and Indiana, specifically include gifts in their definition of "gross income", which is the starting point for the computation of child support. Canada and Ontario did not.
- The case of M.A.K. v. K.A.B., 2000 PESCTD 6, [2000] P.E.I.J. No. 8, 187 Nfld. & P.E.I.R. 224 (S.C.T.D.), imputed income to a father who was under-employed. While the trial judge considered the value of room and board provided to the father by his parents, and suggested an amount of income that could be imputed on this basis, the case was not decided on this basis. Instead, the trial judge imputed an annual income to the father based on the amount he was capable of earning as minimum wage.
- See for example E. (C.R.H.) v. E. (F.G.), 2004 BCCA 297, [2004] B.C.J. No. 1057, 29 B.C.L.R. (4th) 43 (C.A.); Fransoo v. Fransoo, 2001 SKQB 102, [2001] S.J. No. 121, 14 R.F.L. (5th) 303 (Q.B.).
- See, for example, Risen, supra.
