Court File and Parties
Ontario Court of Justice
Between:
J.C.M.
Applicant
- and -
K.C.M.
Acting in Person
Respondent
Heard: May 4 and July 25, 2016
Justice: S.B. Sherr
Reasons for Decision
Part One - Introduction
1The parties have both brought motions to change the child support terms contained in their separation agreement dated October 30, 2007 (the agreement), relating to their children (the children), who are now 18 years old (the daughter) and 16 years old (the son).
2The applicant (the father) asks the court to order that the respondent (the mother) pay him the sum of $37,144 for all retroactive support adjustments. He also seeks child support from the mother for the son in the amount of $895 per month, starting on August 1, 2016, based on an annual income imputed to the mother of $102,000.
3The respondent (the mother) asks the court to order that the father pay her the sum of $253,652 for all retroactive support adjustments. She seeks an order that she not be required to pay child support for her son.
4The parties could not agree upon what the children's living arrangements had been after September 1, 2013. In particular, the father claimed that the son had been primarily living with him since July 1, 2014. The mother disagreed.
5At the trial management conference, the parties agreed to a process where the court would conduct a judicial interview of the children and make its findings about the children's living arrangements after September 1, 2013 based on these discussions. The parties agreed that the trial would then be adjourned to a later date.
6This process saved the parties considerable time and expense as they had both proposed to call multiple witnesses to determine this issue. Providing clarity on this issue assisted the parties in preparing their respective support calculations and submissions.
7The judicial interview of the children was conducted on May 4, 2016. The court gave oral reasons the same day and made the following findings:
a) The daughter resided in a residential treatment facility (the treatment facility) from September 24, 2013 to September 1, 2015.
b) The daughter lived with the father from September 1, 2015 until the end of January of 2016.
c) The daughter has not lived with either parent since February of 2016. She has not been eligible for child support since that time.
d) The son has primarily lived with the father since September 1, 2014, as the father's home was close to his school.
8The parties agreed to file their direct evidence on the remaining issues by affidavit. They were permitted to provide supplementary oral direct evidence. They cross-examined each other and made submissions.
9The significant remaining issues for this court to determine are:
a) Should the father be required to pay retroactive support to the mother, and if so, how much?
b) Should the father's child support obligation be retroactively reduced for the period of time that the daughter was in the treatment facility, and if so, how should it change? Within this determination, the court has to determine if the daughter withdrew from parental control after September 24, 2013.
c) In assessing the parties' support obligations, should income be imputed to the mother, and if so, how much for each year?
d) In calculating the mother's 2015 income for support purposes, should her RRSP withdrawals in that year be included in her income?
e) What credits for child support should the father receive for the times the children have been in his primary care?
f) What child support should the mother pay for the son on an ongoing basis? In particular, has the mother established undue hardship as defined in section 10 of the Child Support Guidelines (the guidelines) which would permit the court to reduce the guidelines table amount of child support she must pay?
Part Two – Background Facts
10The mother is 48 years old. The father is 52 years old.
11The parties married in 1995 and separated on November 1, 2004.
12The parties had the two children together.
13The father earned $225,000 per annum at the time of the agreement in October of 2007. The mother earned $102,000 per annum.
14The mother remarried and has another child from that relationship, who is 8 years old.
15The mother has separated from her husband. They share joint custody of their child.
16The parties equally shared parenting time with the children until the daughter went to the treatment facility on September 24, 2013.
17The son continued to spend equal time with the parties until he went to live primarily with the father on September 1, 2014.
18The father issued his Motion to Change on October 7, 2015. He also filed the agreement the same day pursuant to section 35 of the Family Law Act (the Act).
19The mother issued her Response to Motion to Change on November 7, 2015.
Part Three – The Agreement
20The parties both received independent legal advice prior to executing the agreement.
21The agreement provides that the parties have joint custody, care and control of the children.
22The relevant child support clauses in the agreement are as follows:
14.2 The husband represents that his income for 2007 is $225,000. The wife represents that her income for 2007 is $102,000.
14.3 Commencing on the first day of November, 2007 and on the first day of each month thereafter, the husband shall pay to the wife child support for the two (2) children of the marriage, in the amount of $2,800 per month.
14.4 The husband has agreed to pay the amount of child support set out in paragraph 14.3 notwithstanding that the same does not take into account the shared parenting arrangement set out in this agreement.
14.6 Although the amount of child support is different than the child support prescribed by the Child Support Guidelines, the parties acknowledge that the child support arrangements are reasonable and meet the objectives of the Guidelines.
14.7 The amount of child support set out in paragraph 14.3 shall not be increased unless the differential on Child Support Guideline table amount for shared custody exceeds $2,800 per month. For example, if the husband's income is $300,000 resulting in a table amount of $3,732 and the wife's income is $100,000 resulting in a table amount of $1,404, the differential is $2,328; therefore there is no change in child support. However, if the husband's income is $350,000 resulting in a table amount of $4,312 and the wife's income is $100,000 resulting in a table amount of $1,404, the differential is $2,908; then the child support shall be increased to $2,908.
15.2 The parties shall contribute to the children's special or extraordinary expenses based on a 68.8%/31.2% share ….
15.3 …..Neither party shall be required to contribute to any additional special or extraordinary expenses without the prior written consent of the other party, which consent shall not be unreasonably withheld….
15.4 Where one party incurs a special or extraordinary expense without the consent of the other party, then he or she shall be solely responsible for that expense without contribution by the other party.
15.6….A party shall only contribute to a child's special or extraordinary expense if that party's consent to the expense has been obtained in advance, in writing. A party shall not unreasonably withhold his or her consent. Neither party shall be required to contribute to an expense unless his or her consent is obtained in advance, in writing.
23The agreement provides for termination of child support in paragraph 19. This includes termination clauses if the child ceases to be ordinarily resident with the wife at least 50% of the time and if a child turns 18 years old, unless the child is unable to become self-supporting due to illness, disability or other cause.
24Paragraph 20 of the agreement provides that each party, once annually, commencing on July 1, 2008, will provide in writing disclosure about their income and the children's special or extraordinary expenses, and any other information required to review child support, to the other, within 30 days of the request.
25Paragraph 23.1 of the agreement provides that the agreement can be varied by reason of a material change in circumstances directly affecting the circumstances of the parties whether foreseen or unforeseen, foreseeable or unforeseeable.
26Paragraph 23.3 of the agreement provides that a material change in circumstances may include: changes in a spouse's income, a change in the number of children entitled to be supported under the agreement, a change in a child's special or extraordinary expenses, a change in a child's residence that affects the amount of child support under the guidelines and a child turning 18. The paragraph states that the listed changes do not limit what might constitute a material change in circumstances.
27Paragraph 23.4 of the agreement states:
The party wanting the variation shall give to the other party written notice of the variation he or she is seeking and the reasons therefor, and the husband and wife shall then make disclosure to each other of their financial means and circumstances by exchanging sworn Financial Statements and may then confer with each other either personally or through their respective solicitors to settle what, if any, variation should be made.
28The parties equalized their net family property in the agreement. The mother released any claims for spousal support against the father.
Part Four – Positions of the Parties
4.1 Position of the Father
29The father asks for an order finding that the mother owes him child support of $37,144. He also seeks the guidelines table amount of child support for his son on an ongoing basis, based on the mother's current income of $80,000 per annum. This would be $895 per month.
30The father calculated the amount owed to him as follows:
a) He agreed that his child support obligation should be increased based on his actual annual income retroactive to January 1, 2013.
b) He asked the court to impute the mother's income at $102,000 per annum from January 1, 2013.
c) Consistent with the support calculation mechanism set out in paragraph 14.7 of the agreement, he calculated the difference in the guidelines table amounts that each would annually pay the other (the guidelines set-off amount), based on the children living with each of them 50% of the time.
d) No support would be paid for the two years his daughter was in the treatment facility.
e) The mother would be required to pay child support to him for the 4 months that the daughter was in his care (from September 1, 2015 until January 31, 2016).
f) The mother would be required to pay child support to him for his son from September 1, 2014.
g) He would be credited with the monthly support ($2,800) he continued to pay for the children during the times they were not residing 50% of the time with the mother.
h) The father calculated that he had overpaid child support by $33,600 and the mother owed him child support for the time the children were with him, in the sum of $23,310. He deducted the sum of $19,766, being the amount of child support he felt he owed the mother from January of 2013 until August of 2014, based on his increased annual income.
31The father had also asked for a sole custody order of the son in his pleading, but indicated that he was not pursuing this relief at trial.
4.2 Position of the Mother
32The mother asked the court to order the father to pay her retroactive child support of $253,652.84 forthwith. This consisted of retroactive guidelines support of $227,569.21 and $26,083.63 for unpaid retroactive special expenses pursuant to section 7 of the guidelines that the mother claimed the father owed to her.
33The mother calculated this amount as follows:
a) Child support would be ordered retroactive to January 1, 2010.
b) Child support would be adjusted based on the parties' actual incomes. No income would be imputed to her. The mother asked the court to exclude from her income RRSPs that she withdrew during 2015.
c) The father would continue to pay her the guidelines set-off amount provided for in paragraph 17.4 of the agreement for the time that the daughter was in the treatment facility.
d) The father would pay her his proportionate share of retroactive special expense payments (mostly the treatment facility expenses she paid).
e) The father would pay her the guidelines set-off amount during the times the children were in the father's primary care.
f) The father would pay her the guidelines set-off amount for the son alone after February 1, 2016.
g) She would have no obligation to pay child support to the father.
34The mother also asked at trial that the paragraphs dealing with custody of the children in the agreement (equal time sharing and joint custody) be ordered. This was not identified as being a live issue for trial at the trial management conference. Further, given the son's age and expressed views and preferences, the court would not make such a parenting order. The son has determined where he will live since September 1, 2014. He is doing well. The mother acknowledged that she would not want to force the son to live with her against his will.
35The mother said that she will try to convince the son to live with her 50% of the time. At this point, the son has decided to primarily live with his father and the ongoing calculations will be determined on this basis. If this changes, the mother will be able to move to change this order.
Part Five – Findings of Fact
36The parties agreed that the changes in their incomes in 2008 and 2009 did not result in any change to child support when applying the calculation mechanism set out in paragraph 14.7 of the agreement.
37The mother gave birth to the child of her second marriage in September of 2008 and went on maternity leave for one year.
38At the completion of her maternity leave, the mother was advised by her employer that her project had ended. The mother was offered another position at the same income, but the mother felt that she was very vulnerable to being laid off (this will be discussed in more detail below). The mother took a severance package of $30,000 instead.
39The mother did not work again until 2010. She started a Lighting and Interior Design Business with her husband. She also did some freelance copywriting work. The business was unsuccessful and was discontinued in October of 2012.
40The mother did not work from October of 2012 until February of 2014. She then obtained a contract job that lasted 3 months. She was paid at the rate of $80,000 per annum.
41The mother obtained a marketing job in June of 2014. She was paid at the rate of $83,000 per annum. This job ended in October of 2015. The mother received a severance package of $16,000.
42The mother obtained a position as a Product and Marketing Director in November of 2015. She earned $75,000 per annum at this job.
43The mother testified that she found another marketing position in July of 2016. This job will pay her at the rate of $80,000 per annum.
44The father's income increased significantly starting in 2010. He did not disclose these increases in income to the mother.
45The father's reported income since 2010 has been as follows:
2010 - $393,775
2011 - $409,420
2012 - $401,056
2013 - $465,524
2014 - $609,342
2015 – $575,088
46The mother's reported income since 2010 has been as follows:
2010 - $10,140
2011 - $9,416
2012 - $54,495
2013 - $9,844
2014 - $50,111
2015 - $147,317
2016 - $80,000
47On September 9, 2010, the mother sent the father an email stating that she could no longer afford to pay the children's special expenses.
48The mother agreed that the father paid the children's orthodontic expenses. She disputed that the father paid the balance of the children's special expenses. Neither party sought a contribution for special expenses from the other prior to this action. Only the mother sought a contribution to historical section 7 expenses at this trial.
49The mother did not seek an adjustment of child support until September of 2013, despite her significant reduction in income.
50The parties did not exchange any financial information after 2009. The mother advised the father in 2015 that she was years behind in filing her tax returns.
51The mother asked the father for an increase in child support by email on September 19, 2013. The father did not increase his support payments or provide financial disclosure.
52The mother did not pursue an increase in child support any further until after the father started this court action.
53The father did not seek a change in child support when the daughter went into the treatment facility, or when his son first came to live with him in September of 2014.
54The father first broached the issue of adjusting child support with the mother in June of 2015, when the family was preparing for the daughter to leave the treatment facility. The mother refused to do this.
55The father continued to pay the mother $2,800 per month until September of 2015.
56The parties each paid 50% of the daughter's costs when she was in the treatment facility. From September of 2013 until July 4, 2014, these costs were not funded by OHIP, although the parents received a bursary. The parties agreed that the monthly costs for this period were $3,600 per month for each parent. Both parents paid these amounts, as required in an agreement with the treatment facility.
57On July 4, 2014, the family became eligible for a funded bed (by OHIP) for the daughter. This reduced their total monthly costs for the daughter to $300 per month for each parent. This was their monthly obligation until the daughter left the treatment facility at the end of August of 2015.
Part Six – Changes in Circumstances
58Subsection 37(2) of the Act provides that a provision for support contained in a domestic agreement that is filed with the court under section 35 of the Act may be varied as if it were an order of the court.
59Subsection 37(2.1) of the Act reads as follows:
Powers of court: child support
(2.1) In the case of an order for support of a child, if the court is satisfied that there has been a change in circumstances within the meaning of the child support guidelines or that evidence not available on the previous hearing has become available, the court may,
(a) discharge, vary or suspend a term of the order, prospectively or retroactively;
(b) relieve the respondent from the payment of part or all of the arrears or any interest due on them; and
(c) make any other order for the support of a child that the court could make on an application under section 33.
60The court must also consider the parties' intentions when determining whether to change the terms of an agreement. See: Sos-Porritt v. Porritt, 2015 ONCJ 477. The agreement stated that to change its child support terms, any change in circumstances must be material.
61The distinction in the tests (material change vs. change) is not important in this case. There have been several material changes in circumstances that have occurred since the agreement was executed, including:
a) The mother left her job in 2009. She had a significant reduction in income.
b) The father's income materially increased.
c) The daughter went into the treatment facility for almost two years starting on September 24, 2013.
d) The son lived primarily with the father as of September 1, 2014.
e) The daughter lived primarily with the father from September 1, 2015 until the end of January of 2016.
f) The daughter moved out on her own, became independent and was no longer eligible for support as of February 1, 2016.
Part Seven – Retroactive Support
7.1 Legal Considerations
62The Supreme Court in D.B.S. v. S.R.G.; Laura Jean W. v. Tracy Alfred R.; Henry v. Henry; Hiemstra v. Hiemstra, 2006 SCC 37 outlined the factors that a court should take into account in dealing with retroactive applications. Briefly, there are four points that the court raised:
Whether the recipient spouse has provided a reasonable excuse for his or her delay in applying for support.
The conduct of the payor parent.
The circumstances of the child.
The hardship that the retroactive award may entail.
63None of the above factors are decisive or take priority and all should be considered in a global analysis. In determining whether to make a retroactive award, a court will need to look at all of the relevant circumstances in front of it. The payor's interest in certainty must be balanced with the need for fairness and flexibility.
64Retroactive awards are not exceptional. They can always be avoided by proper payment. (D.B.S. par. 97).
65Where ordered, an award should generally be retroactive to the date when the recipient gave the payor effective notice of his or her intention to seek an increase in support payments; this date represents a fair balance between certainty and flexibility (D.B.S., par. 5).
66Effective notice is defined as any indication by the recipient parent that child support should be paid, or if it already is, that the current amount needs to be renegotiated. All that is required is for the subject to be broached. Once that has been done, the payor can no longer assume that the status quo is fair (D.B.S., par. 121).
67The date when increased support should have been paid, however, will sometimes be a more appropriate date from which the retroactive order should start. This situation can most notably arise where the payor parent engages in blameworthy conduct. Once the payor parent engages in such conduct, there can be no claim that (s)he reasonably believed his/her child's support entitlement was being met. This will not only be the case where the payor parent intimidates and lies to the recipient parent, but also where (s)he withholds information. Not disclosing a material change in circumstances — including an increase in income that one would expect to alter the amount of child support payable — is itself blameworthy conduct. The presence of such blameworthy conduct will move the presumptive date of retroactivity back to the time when circumstances changed materially. A payor parent cannot use his/her informational advantage to justify his/her deficient child support payments (D.B.S., par. 124).
68The court should not hesitate to find a reasonable excuse for delay where:
a) The recipient spouse harbored justifiable fears that the payor parent would react vindictively to the application to the detriment of the family or;
b) The recipient lacked the financial or emotional means to bring an application or;
c) The recipient was given inadequate legal advice (D.B.S., par. 101)
69The difference between a reasonable and unreasonable delay is often determined by the conduct of the payor. If they inform the recipient of income increases in a timely manner, do not pressure or intimidate the recipient, they will have gone a long way to showing the delay was unreasonable (D.B.S., par. 102).
70A court order is presumptively valid when assessing conduct. However, the larger the difference between the order and what should be paid, the less reasonable it becomes to rely upon it. (D.B.S., par. 65).
71The same analysis applies to agreements, but they have less weight than orders. (D.B.S., par. 78).
72The court should take an expansive view of what constitutes blameworthy behaviour. Blameworthy behaviour is anything that privileges the payor's own interests over the children's right to an appropriate amount of support (D.B.S., par. 106).
73The more material the increase in income, the less likely the payor will be presumed to believe they were meeting their obligations (D.B.S., par. 108).
74Courts ordering a retroactive award must still ensure that the quantum of the award fits the circumstances. Blind adherence to the amounts set out in the applicable guideline tables is not required — nor is it recommended. There are two ways that the federal regime allows courts to affect the quantum of retroactive awards (D.B.S., par. 128). The first involves exercising the discretion that the guidelines allow. Courts may exercise their discretion with respect to quantum in a variety of other circumstances under the guidelines. See: ss. 3(2), 7, 9 and 10 of the guidelines (D.B.S., par. 129). The second is by altering the time period that the retroactive award captures. While the date of effective notice should be chosen as a general rule, this will not always yield a fair result. For instance, where a court finds that there has been an unreasonable delay after effective notice was given, it may be appropriate to exclude this period of unreasonable delay from the calculation of the award. Unless the statutory scheme clearly directs another outcome, a court should not order a retroactive award in an amount that it considers unfair, having regard to all the circumstances of the case (D.B.S., par. 130).
75The proper approach can therefore be summarized in the following way: payor parents will have their interest in certainty protected only up to the point when that interest becomes unreasonable. In the majority of circumstances, that interest will be reasonable up to the point when the recipient parent broaches the subject, up to three years in the past. However, in order to avoid having the presumptive date of retroactivity set prior to the date of effective notice, the payor parent must act responsibly: (s)he must disclose the material change in circumstances to the recipient parent. Where the payor parent does not do so, and thus engages in blameworthy behaviour, there is no reason to continue to protect his/her interest in certainty beyond the date when circumstances changed materially. A payor parent should not be permitted to profit from his/her wrongdoing (D.B.S., par. 125).
7.2 Start Date for Retroactive Support – Analysis
76The parties both agreed that a retroactive adjustment of the support terms in the agreement was warranted. They disagreed on the start date of the retroactive order and how it should be calculated.
77The father agreed that a retroactive order should be made to January 1, 2013, based on his increased annual income. He relied on the general rule from D.B.S. that a retroactive award will not ordinarily be made for a period more than 3 years from the date of formal notice of the claim.
78The mother asks that the retroactive order be made retroactive to January 1, 2010.
79The father gave an excellent answer about why he waited until June of 2015 to seek a change to the agreement. The daughter and family, he said, were in crisis. It was critical for the daughter that the parents insulate her from conflict and focus all of their energies on her treatment and mental health. The court finds that it was reasonable for the father to wait until the daughter was about ready to be released from the treatment facility to broach the support issue with the mother.
80This reason also justifies some of the delay by the mother in seeking a retroactive change to the agreement.
81Some of the delay by the mother was not well justified. Despite her own significant decrease in income, she did not seek more support from the father until her email to him in September of 2013. She explained that she was having difficulties in her own marriage and could only concentrate on one thing at a time.
82The father did not believe that he had engaged in blameworthy conduct. He explained that he did not provide any financial disclosure to the mother after 2009 because in 2010 the mother asked him to pay all of the children's special expenses. He said that he felt the purpose of annual disclosure was only to adjust the proportionate shares of the children's special expenses. He felt that since he was paying for all of these expenses, there was no longer a reason to disclose his financial information.
83The court does not accept the father's explanation. Not only did he engage in blameworthy behaviour, the blameworthy behaviour was significant and unacceptable.
84The father's income increased by over $168,000 per year between 2007 and 2010 and by over $384,000 per year between 2007 and 2014.
85The father was well aware of the support recalculation mechanism set out in paragraph 17.4 of the agreement. He was aware by 2010 that his increase in income would result in a sizeable increase in his monthly support obligations.
86The father pointed out that paragraph 21 of the agreement only required annual financial disclosure upon request and that the mother never requested this disclosure. This does not excuse the father's behaviour. He should have disclosed his significant increases in income in a timely manner to the mother and adjusted the support payments accordingly. By failing to do so, he preferred his own interests to those of the children.
87The father compounded his blameworthy behaviour by failing to adjust child support after the mother broached the subject with him in September of 2013.
88The father's failure to provide financial disclosure also goes to explain some of the mother's delay in seeking retroactive support. She acted on the assumption that the father's financial circumstances were unchanged. It is likely that she would have sought a more timely adjustment to support if she had been made aware of the father's actual financial circumstances.
89No evidence was led that the circumstances of the children were disadvantaged by the failure of the father to pay the proper amount of support. The court recognizes that a retroactive support at this time will no longer benefit the children as neither child resides any longer with the mother.
90A retroactive award will not cause hardship to the father. He has significant assets to pay the award.
91The dominant factor in this analysis is the father's blameworthy behaviour. It is sufficient to rebut the general rule that a retroactive order will usually not go back more than 3 years from the date of formal notice. The father had a contractual obligation to increase support once his income level triggered the support increase contemplated in paragraph 17.4 of the agreement. He is a very sophisticated person and would have been very well aware of this obligation. He made a conscious choice not to reveal his actual income to the mother, as he knew this would have resulted in an increase in child support.
92The court would have gone back to January 1, 2010 in adjusting child support as requested by the mother except for the following factors:
a) Some of the mother's delay in applying for retroactive support was not justified.
b) The mother failed to provide her own financial disclosure to the father.
c) The court accepts the father's evidence that he was paying most of the children's special expenses at this time. Neither party provided any receipts for the special expense payments made between 2010 and 2013, so a precise calculation is impossible. However, this has been taken into account in determining the retroactive start date.
d) The circumstances of the children were not disadvantaged by the failure of the father to pay the appropriate level of child support. They will not benefit from the mother being paid this support at this time.
93Balancing all of these considerations, the court will make its support order retroactive to January 1, 2011.
Part Eight – Support Adjustments for the Son
94The father asks for support adjustments to reflect the fact that the son was in his primary care after September 1, 2014. He asks that: his child support obligation terminate as of that date, he be credited with the support he has paid for his son since September 1, 2014 and that the mother be required to pay him child support from that date.
95The mother objected to this. She insisted that the father continue to pay her child support for the son from September 1, 2014 because the agreement had not been changed by a court order.
96The mother's position is untenable. As of September 1, 2014, the father's obligation to pay child support to the mother terminated and the mother had a responsibility to pay child support to the father.
97The mother clearly had difficulty accepting this basic support principle at trial. This lack of understanding was also reflected by her claiming tax credits with the Canada Revenue Agency (CRA) for the son during 2015, when the father should have been the person claiming them.
Part Nine – Support for the Daughter
9.1 Positions of the Parties
98The parties took very different positions about support for the daughter for two periods – the time she was in the treatment facility and the time she lived with the father.
99Starting with the easier issue, the father should not be required to pay child support for the daughter during the 4 months that the daughter primarily lived with him. The mother should have paid him child support.
100The issue of how to treat the support obligations for the time the daughter was in the treatment facility is more complex. The mother asks that the father be required to pay the guidelines set-off amount plus his proportionate share of the costs of the treatment facility (as a section 7 special expense) for this period.
101If the court accepted the mother's argument, the father would be required to pay the mother the guidelines set-off amount ($6,503.81 per month for both children in 2014), plus virtually all of the expenses of the treatment facility. This is not a realistic position.
102The father's position is that he should not have had to pay any child support for the daughter during this period as she was over 16 years of age for most of her stay in the treatment facility and had withdrawn from parental control. He asks for a credit for the amounts he overpaid for the daughter. Section 31 of the Act states:
Obligation of parent to support child
- (1) Every parent has an obligation to provide support for his or her unmarried child who is a minor or is enrolled in a full time program of education, to the extent that the parent is capable of doing so.
Idem
(2) The obligation under subsection (1) does not extend to a child who is sixteen years of age or older and has withdrawn from parental control.
103The father stated that he and the mother had an agreement that they would both pay 50% of the costs of the treatment facility and not treat it as a special expense pursuant to section 7 of the guidelines. He said that both of them paid their share of these expenses and there should be no further adjustment.
9.2 The Treatment Facility
104The daughter resided at the treatment facility from September 24, 2013 until September 1, 2015, when she moved in with the father.
105This was an intensive treatment program. It deals with teens who have severe behavioural and addiction issues.
106The program has very strict rules. The daughter was in a wilderness camp for the first four months of her treatment. Subsequently, she lived in a dormitory at the program's site in Shelburne, Ontario.
107The daughter did not leave the program site for her entire stay. She did not stay at either of her parent's homes. She never even had a day pass.
108The parties were able to schedule times to see the daughter at the treatment facility.
109The treatment facility was very expensive, as set out in paragraphs 56 and 57 above.
110The parties agreed that the treatment facility was very beneficial for the daughter. They agreed that she is functioning very well now.
9.3 Did the Daughter Withdraw from Parental Control?
111The father provided three cases in support of his submission that the daughter had withdrawn from parental control while she was at the treatment facility, being: L.I.P. v. L.H.E.B., 2013 MBQB 37; M.A. v. F.A., 2013 BCSC 1077 and Clewlow v. Clewlow.
112All of these cases are distinguishable from this case. They all dealt with whether a child support obligation should continue when a youth was jailed for a significant period of time. The children in these cases were in jail involuntarily. The daughter was at the treatment facility voluntarily and could have left at any time.
113In L.I.P., the court found that the state assumed full responsibility for the child's financial care and support and by statute prohibited his parents from providing him with the necessities of life. In none of the cases presented by the father were the parents required to fund the child's treatment. There is also no indication in any of these cases that the parents were involved in the child's treatment plan.
114The court made the following observations in L.I.P.:
a) Physically residing away from both parents is not determinative as to whether or not a child is under the charge of a parent, although it is an important factor to be considered (par. 27).
b) The court cites paragraph 14 of Thompson v. Ducharme (2004) MBCA 42 that states:
…..while the meaning of "charge" has some uncertainty, the act of withdrawing from the "charge" of a parent is an act performed by the child. The word "charge" may be somewhat ambiguous, but I am quite sure that as used in s. 2(1) of the Act, it is intended to be an economic term. To be in the charge of a parent means, as s.15.1 says, that a parent pays for the support of the child. That means financial care."
c) The court might have still found that the child had not withdrawn from parental control, if not for the fact that he would not be released from jail until after he had reached the age of majority.
115The mother submitted the case of Burrows v. Burrows, 2012 BCSC 874. In Burrows, the court continued a payor's child support obligation when the child attended a youth wilderness camp for troubled teens.
116In H.A. v. E.M., [2010] O.J. No. 5401 (OCJ), the mother planned to send the child to a wilderness camp treatment program for one year. The court determined how child support would be paid in this scenario.
117Implicit in both of these cases was that the children attending the treatment programs had not withdrawn from parental control.
118The daughter was not independent from her parents while at the treatment facility. She was immersed in a very intensive treatment program. Her stay at the treatment facility was funded by her parents, at great expense to them. The parents remained fully responsible for the daughter's financial care. They were involved in her treatment. The expectation was that the daughter would be released to the care of one or both of her parents at the completion of the program.
119The court finds that the daughter did not withdraw from parental control while she resided at the treatment facility and remained entitled to support during this time.
9.4 What Mechanism Should the Court Use to Calculate the Father's Support Obligation While the Child Was at the Treatment Facility?
120The court has tried to maintain the structure of the agreement in determining the support obligations. For the most part, this mechanism creates a fair apportionment of support between the parties.
121However, the support mechanism was premised on the children actually living in the homes of each parent. It did not anticipate the daughter not living with either parent for almost two years.
122The mother relied on two cases to support her position that the father should have continued to pay support applying the mechanism in paragraph 17.4 of the agreement. Both cases were distinguishable from this case.
123In Cochrum v. Lyons, 2010 ONSC, the payor was required to maintain his child support payments when his son was in jail. However, the son was only away from his mother's residence for a brief period of time (4 months). The mother frequently saw the child and had significant travel costs. She routinely deposited funds for him, bought him clothing and maintained the home.
124In Burrows v. Burrows, supra, the payor was required to maintain his child support payments when the child went to the wilderness camp for 4 months. During this time, the mother redecorated the child's bedroom and purchased new furnishings for it. She purchased clothing and food for him and maintained payment on his cell phone.
125This case is very different. The daughter did not live with either parent for two years. She did not spend one night in either home during this period. This was not a brief period away from a primary caregiver, as it was in the cases submitted by the mother.
126The court finds that the support mechanism set out in paragraph 17.4 of the agreement would not result in an equitable apportionment of the parties' support obligations as it is premised on the child actually living with both parents.
127The issue is what mechanism should be used to replace the one set out in paragraph 17.4 of the agreement for the time the daughter was at the treatment facility.
128The guidelines do not envision a situation where a child under the age of 18 is not living with either parent, but the parents are paying for the child to live in a treatment facility.
129The court considered whether it could use its discretion under section 9 of the guidelines to determine a fair amount of child support for the daughter during this period. However, before a court can apply section 9 of the guidelines it must first find that a parent or spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year. Neither of these preconditions are met in this case. The court cannot use section 9 in its analysis.
130The court also considered whether it should use its discretion under section 4 of the guidelines to readjust support as the father's annual income is over $150,000. However, this section contemplates the guidelines table amount being paid up to an income of $150,000 together with an apportionment of section 7 expenses. The costs of the treatment facility would be such a special expense. The court's discretion relates to whether additional table support should be paid based on the payor's income over $150,000 per annum. In this court's view, this would create an unfair and awkward analysis.
131It is subsection 37(2.3) of the Act that gives the court the flexibility to make an appropriate order in these unusual circumstances. It should be read together with subsection 37(2.2) of the Act. These subsections read as follows:
Application of child support guidelines
(2.2) A court making an order under subsection (2.1) shall do so in accordance with the child support guidelines. 1997, c. 20, s. 6.
Exception: special provisions
(2.3) Despite subsection (2.2), a court may award an amount that is different from the amount that would be determined in accordance with the child support guidelines if the court is satisfied,
(a) that special provisions in an order or a written agreement respecting the financial obligations of the parents, or the division or transfer of their property, directly or indirectly benefit a child, or that special provisions have otherwise been made for the benefit of a child; and
(b) that the application of the child support guidelines would result in an amount of child support that is inequitable given those special provisions.
132In McConville v. McConville, [2003] O.J. No. 4912 (SCJ), the court wrote at paragraph 13:
13 The "special provisions" exception in s. 37 (s. 37(2.3)), which is similar to the "special provisions" exception in s. 33, was considered by the Ontario Court of Appeal in Wright v. Zaber (2002), 59 O.R. (3d) 26. In that case, the decision of the majority of the court, by Sharpe J., considered the meaning of the "special provisions" and reached the following conclusions: Under s. 37(2.3), a court may only depart from the amount under the child support guidelines if there are "special provisions". The presumptive rule is the guideline amount of child support. The status of the "special provisions" as an exception suggests that its scope must be carefully delineated and thus "special provisions" must be out of the ordinary or unusual. The question to be considered is whether the parties actually objectively made those provisions, which objectively replace the child's ongoing need for support. The question is not whether the parties subjectively intended to benefit the child, but whether the special provisions actually objectively benefit the child. What is relevant is whether, viewed objectively, the arrangements in the Agreement amounted to a special provision for the financial benefit of the child.
133The court finds that payment by the parents of the extraordinary costs of the treatment facility constituted special provisions for the benefit of the child within the meaning of subsection 37(2.3) of the Act.
134The court also finds that the application of the guidelines would be inequitable in these circumstances. The father should not be required to pay the guidelines set-off amount to the mother for the daughter while she was not living with the mother, given the significant special provisions that were made for her treatment.
135The court does not find, as submitted by the father, that the parties agreed between themselves to pay 50% of the daughter's treatment program. That contract was between each parent and the treatment facility, not between the parties.
136The parties did agree that the costs of the treatment facility, plus additional expenses, came to $3,600 per month for each parent from September 24, 2013 until July 4, 2014 and $600 per month for each parent from July 4, 2014 until September 1, 2015. Based on their respective incomes an equal sharing of these expenses was not an equitable distribution of the parties' support obligations and should be readjusted.
137In H.A. v. E.M., [2010] O.J. No. 5401 (OCJ), Justice Marion Cohen dealt with the child support obligations for a child who was going to spend one year away from the parents at a wilderness camp program, similar to the program attended by the daughter. The parents in that case agreed that it was not appropriate for the father to pay the mother the guidelines table amount of child support while the child was at the treatment program. The cost of the treatment program was determined to be a special expense pursuant to section 7 of the guidelines.
138While the H.A. case was determined on consent, it gives the court some guidance on how to approach the parties' support obligations for the time the daughter was at the treatment facility. The court will readjust support to provide that the parties pay their proportionate shares of the treatment facility expenses, but not order the guidelines set-off amount to be paid.
139The court will not discount the adjusted treatment facility contributions for tax considerations. The mother did not claim any credits for the treatment facility expenses in her tax returns. In 2013, she would only have received nominal tax relief because of her low declared income. The treatment facility expenses were much lower in 2015 and there would only have been minor tax relief available to her. The mother could get some tax relief (in the range of 20% of the expenses) if she refiled her 2014 income tax return. On the other hand, the father has been able to obtain substantial tax relief for these expenses due to his high income bracket. He has already claimed them on his tax return. The court considered that he might not be able to get additional tax relief for the additional payments ordered in this case, but also considered that this is because he did not make appropriate payments at the material time.
140The court will also order the father to pay a monthly amount to the mother for the time that the daughter was at the treatment facility, representing the additional costs the mother had for maintaining a home for the daughter. Both parties maintained homes for the daughter, as it was expected that at some point she would return to the care of one or both of them. There was also uncertainty as to how long the daughter would remain in the treatment facility. The daughter ended up staying much longer than originally anticipated.
141This scenario has some similarities with the cases where a parent maintains a home for a child who is away at university. The difference is that in those cases, the child returns home on occasional weekends and holidays and in the summer. Here, the daughter did not live with either parent for two years.
142In Albert v. Albert, in the absence of specific evidence of the costs to maintain a room for the child at home for the full year, the court ordered the payor to pay $250 per month during these periods, on the basis that there is an obvious cost for doing this. This court followed that approach in Padua v. Gordon, 2008 ONCJ 421 (Ont. C.J.) where it ordered monthly support of $200 per month while the child was away at university, in Douglas v. Douglas, [2013] O.J. No. 2089 (Ont. C.J.), where the amount was fixed at $150 per month and in Clancy v. Hansman, 2013 ONCJ 622 , where it was fixed at $300 per month. The parties in this case are much better off financially than the parents in those cases.
143The father testified that the mother moved to a smaller apartment in the summer of 2014 and did not even have a room for the daughter. The mother agreed that she had to move to less expensive accommodation but claimed that she still had a room for the daughter.
144The court will adjust the support calculation by having the father pay the mother an additional $300 per month for her housing costs from October 1, 2013 until August 31, 2014 and $200 per month from September 1, 2014 until August 31, 2015, as the mother would have had lower housing costs after she moved. This adjustment takes into consideration the different financial abilities of the parties to maintain housing for the daughter.
145The father will not be required to pay the guidelines set-off amount for the daughter for the time she was at the treatment facility and the support he paid for his daughter during this time will be adjusted accordingly.
146The mother claimed other expenses for the daughter during this period, including miscellaneous expenses of just under $3,000. However, when questioned about what they were for, she answered"to be bluntly honest, I have no idea". She also claimed $2,825 she spent for a criminal lawyer for the daughter arising out of an incident that took place while in her care. Lastly, the mother paid for moving costs of $1,850 when the daughter moved out on her own in February of 2016. None of these were provable special expenses pursuant to section 7 of the guidelines and will not be allowed.
Part Ten – Imputed Income to the Mother
10.1 Positions of the Parties
147In order to complete the support calculations, the court must determine what income to attribute to the parties from 2011 to 2016. Only the mother's income is in issue.
148The father asks the court to impute the mother's income at $102,000 per annum for each year of the calculation. This was the mother's income in 2007. The father submitted that the mother made a series of unreasonable decisions including leaving her job, starting and continuing an unsuccessful business and not actively looking for employment.
149The mother denies that she has been intentionally unemployed or underemployed. She said that it was a reasonable decision to leave her job in 2009 and take a severance package, as she was vulnerable to being let go if she stayed on and took another position with her employer. She felt that starting a business was a reasonable choice as she thought it would be successful and would give her more time to look after her children. She said that after the business failed, she aggressively applied for jobs, but was unsuccessful. She felt that her actual annual employment earnings, as reflected in her income tax returns, should be used to complete the support calculations.
10.2 Legal Considerations – Imputation of Income
150Section 19 of the guidelines permits the court to impute income to the mother if it finds that she is earning or capable of earning more income than she claims.
151Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this obligation, the parties must earn what they are capable of earning. If they fail to do so, they will be found to be intentionally under-employed. See: Drygala v. Pauli, [2002] O.J. No. 3731 (Ont. CA).
152In Duffy v. Duffy, 2009 NLCA 48, the court sets out the following principles:
a) The fundamental obligation of a parent to support his or her children takes precedence over the parent's own interests and choices.
b) A parent will not be permitted to knowingly avoid or diminish, and may not choose to ignore, his or her obligation to support his or her own children.
c) A parent is required to act responsibly when making financial decisions that may affect the level of child support available from that parent.
d) The determination to impute income is discretionary, as the court considers appropriate in the circumstances.
e) A parent will not be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations or interests. Nor will it be acceptable for a parent to choose to work for future rewards to the detriment of the present needs of his or her children, unless the parent establishes the reasonableness of his or her course of action.
153The Ontario Court of Appeal in Drygala set out the following three questions which should be answered by a court in considering a request to impute income:
Is the party intentionally under-employed or unemployed?
If so, is the intentional under-employment or unemployment required by virtue of his or her reasonable educational needs?
If not, what income is appropriately imputed?
154The onus is on the party seeking to impute income to the other party to establish that the other party is intentionally unemployed or under-employed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made. See: Homsi v. Zaya, 2009 ONCA 322 , [2009] O.J. No. 1552 (Ont. C.A.).
155The court stated in Drygala that there is no need to find a specific intent to evade child support obligations before income is imputed; the payor is intentionally under-employed if he or she chooses to earn less than what he or she is capable of earning. The court must look at whether the act is voluntary and reasonable.
156A common situation arises where one of the parents involuntarily loses his or her job though a layoff followed by a lengthy period of unemployment. Where the recipient alleges the payor should have been able to find substitute employment if they had looked hard enough, a contextual analysis is required. The payor's situation, options, and opportunities must be considered in the context of other individuals – or in the case of mass plant closures, groups of individuals – facing similar circumstances. The Court must be mindful of employment rates and trends, and economic conditions as a whole. The analysis cannot be done in the abstract. See: Charron v. Carriere, 2016 ONSC 4719; Gee v. McGraw, 2014 ONCJ 87 ; Miller v. Volk (2009), 74 R.F.L. (6th) 61 (Ont. S.C.).
157Absence of a reasonable job search will also usually leave the court with no choice but to find that the payor is intentionally under-employed or unemployed. See: Filippetto v. Timpano, [2008] O.J. No. 417 (Ont. S.C.).
158A person making a decision to start a business in which he or she has no experience may result in a finding that he or she is intentionally underemployed: See: Dang v. Hornby; Ruszczak v. Scherbluck, 2012 ONCJ 14; Charron v. Carriere, 2016 ONSC 4719. Where a party chooses to pursue self-employment, the court will examine whether this is a reasonable choice in the circumstances: Smith v. Smith, 2012 ONSC 1116.
159Once a party seeking the imputation of income presents the evidentiary basis suggesting a prima facie case, the onus shifts to the individual seeking to defend the income position they are taking. See: Lo v. Lo, 2011 ONSC 7663; Charron v. Carriere, 2016 ONSC 4719.
160When an employment decision results in a significant reduction of child support, it needs to be justified in a compelling way: See: Riel v. Holland, at paragraph 23. As a general rule, separated parents have an obligation to financially support their children and they cannot avoid that obligation by a self-induced reduction of income. See: Thompson v. Gilchrist, 2012 ONSC 4137 ; DePace v. Michienzi, [2000] O.J. No. 453 (Ont. Fam. Ct.); Drygala, supra, paragraph 39.
161The third question in Drygala v. Pauli, supra, is: "If there is no reasonable excuse for the payor's under-employment, what income should properly be imputed in the circumstances?" The court must have regard to the payor's capacity to earn income in light of such factors as employment history, age, education, skills, health, available employment opportunities and the standard of living earned during the parties' relationship. The court looks at the amount of income the party could earn if he or she worked to capacity. See: Lawson v. Lawson.
10.3 Analysis for the Years 2011 to 2014
162The court finds that the mother was intentionally unemployed or underemployed from 2011 until 2014 and will impute income to her for the purpose of the support calculation.
163In making this finding, the court does not find that the mother was intentionally underemployed or unemployed in an effort to obtain more child support from the father. To the contrary, she did not seek any increase in child support from the father from 2010 to September of 2013, despite her reduction in income.
164The mother did not make a reasonable financial decision when she left her job at a major corporation in 2009. According to the mother, her boss told her that the employer was obligated to offer her a job at the same pay when she returned from maternity leave. She testified that her employer told her that she would likely be laid off shortly from the new position and that she should take a severance package instead.
165The mother took the severance package instead of the job. It was highly speculative whether she would have been laid off from that job. No corroborating evidence was provided to indicate that this would have happened. If she had taken the job, she would have maintained her income and been in a better position to look for other work. Even if she was eventually laid off, she would have had legal rights to compensation.
166Part of the mother's motivation in taking the severance package was revealed in her statement that she preferred the option that would give her more time with her young child.
167The mother also earned far less than she was capable of earning when she started the business with her husband. This was a very speculative venture and was not a reasonable career choice. The mother continued operating this business for over two years despite little revenue and growing business losses.
168The mother did not work at all from October of 2012 until February of 2014. She explained that she was going through a separation from her husband at this time. She was also dealing with her daughter's difficulties. The mother said that she applied for "hundreds of jobs" but provided no evidence of this. Based on her prior history of being steadily employed, it is likely that she should have found meaningful work much earlier than February of 2014.
169The mother's decision to earn less income was not justified by her health or educational needs.
170This leaves the issue of how much income to impute to the mother.
171The court is not prepared to impute $102,000 per annum to the mother as requested by the father, for the following reasons:
a) It was uncertain that she would have still been employed in 2011 at the job she left in 2009.
b) The mother said that her base annual salary at that job was $87,000 and she received a bonus of $15,000. She said that the annual bonus was not guaranteed.
c) By 2011, the mother's decision to leave her job and take a severance package was already two years in the past. More emphasis should be placed on what she was actually capable of earning in 2011.
d) There were additional demands on the mother due to her child care responsibilities – particularly her new child and the daughter. This would have had some adverse impact on her ability to earn income.
172The mother is a highly skilled marketer. Her evidence was that she generally earned between $60,000 and $80,000 per annum at various jobs until she obtained the job that paid her $102,000 for 2007.
173Once she returned to the job market in 2014, the mother began earning income in the range of $75,000 to $83,000 per annum.
174Balancing these factors, the court will impute the mother's income for support purposes at $70,000 per annum for the years 2011-2014.
10.4 Analysis for the Years 2015 and 2016
175The mother's line 150 income in 2015 was $147,328.08. This included RRSPs she withdrew of $71,428.57. The issue is whether the RRSPs should be backed out of the mother's income.
176Fraser v. Fraser 2013 ONCA 715 stands for the proposition that presumptively, RRSP withdrawals are to be treated as income for child support purposes and are to be treated differently than other non-recurring assets. It states the following:
Section 16 provides that a spouse's annual income for child support purposes is determined using the sources of income set out under the heading "Total income" on the T1 tax form. RRSP income is included as part of Total income on the T1 tax form. Accordingly, subject to ss. 17-20 of the Guidelines, RRSP income received in a particular year is presumptively part of a spouse's income for child support purposes (par. 97). Section 17 of Guidelines permits a court to depart from the income determination made under s. 16 where it is satisfied that would not be the fairest determination of income. In such a case, the court may have regard to the spouse's income over the last three years and determine an amount that is fair and reasonable "in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years" (par. 98). Schedule III to the Guidelines, which provides some special rules for adjustments to income for child support purposes in certain cases, does not make any special provision for RRSP income (par. 101). "Although I would acknowledge the possibility that the facts of a particular equalization could in theory reach the threshold of unfairness, I have no evidence about the specifics of the equalization calculation that occurred in this case and cannot so conclude" (par. 103). "Finally, I am of the opinion, that some of the early cases relied on by the trial judge in P.(J.M.) v. K.(T.L.), at para. 161, which adopted the view that non-recurring withdrawals from RRSPs should essentially be automatically excluded from income for child support purposes, have been superseded by amendments to s. 17 and by subsequent case law such as Stevens v. Boulerice" (par. 105).
177Subsequent to Fraser, the Ontario Court of Appeal examined this issue in Ludmer v. Ludmer, 2014 ONCA 827, where it stated that the inclusion of RRSP withdrawals in income is not mandatory, but rather the court has the discretion in the appropriate circumstances to do otherwise. The court wrote at paragraph 23 that subsection 17(1) of the guidelines provides this flexibility. This subsection reads as follows:
If the court is of the opinion that the determination of a spouse's annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse's income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.
178Where RRSP income was received on a one-time basis for a specific purpose, it was not included in the spouse's income for the purposes of child support. See: Foley v. Weaver, 2010 CarswellOnt 4560 (Ont. S.C.J.).
179The court finds that it is not appropriate and would be unfair to include the RRSPs in the mother's income for the purpose of the support calculation for the following reasons:
a) The mother withdrew the RRSPs because she required the monies to meet her ongoing expenses, including the costs of the treatment facility. She also required these monies to fund this litigation.
b) One of the reasons the mother needed to withdraw RRSPs was because the father had not properly met his support obligations from 2011 to 2014.
c) The mother is not withdrawing RRSPs on a recurring basis.
180The mother's income for 2015 will be fixed at $75,900.
181The mother deposed that she was paid at the rate of $75,000 per annum until she left her job in June. She obtained a new job at $80,000 in July of 2016. The court will use those figures to assess the mother's support obligations.
Part Eleven – Undue Hardship
182In her opening statement, the mother asked the court to reduce any child support obligation she has based on undue hardship pursuant to section 10 of the guidelines. She did not plead this.
183Section 10 of the guidelines reads as follows:
Undue hardship
- (1) On the application of either spouse or an mother under section 33 of the Act, a court may award an amount of child support that is different from the amount determined under any of sections 3 to 5, 8 or 9 if the court finds that the parent or spouse making the request, or a child in respect of whom the request is made, would otherwise suffer undue hardship.
Circumstances that may cause undue hardship
(2) Circumstances that may cause a parent, spouse or child to suffer undue hardship include,
(a) the parent or spouse has responsibility for an unusually high level of debts reasonably incurred to support the parents or spouses and their children during cohabitation or to earn a living;
(b) the parent or spouse has unusually high expenses in relation to exercising access to a child;
(c) the parent or spouse has a legal duty under a judgment, order or written separation agreement to support any person;
(d) the spouse has a legal duty to support a child, other than a child of the marriage, who is,
(i) under the age of majority, or
(ii) the age of majority or over but is unable, by reason of illness, disability or other cause, to obtain the necessaries of life;
(e) the parent has a legal duty to support a child, other than the child who is the subject of this application, who is under the age of majority or who is enrolled in a full time course of education;
(f) the parent or spouse has a legal duty to support any person who is unable to obtain the necessaries of life due to an illness or disability.
Standards of living must be considered
(3) Despite a determination of undue hardship under subsection (1), an application under that subsection must be denied by the court if it is of the opinion that the household of the parent or spouse who claims undue hardship would, after determining the amount of child support under any of sections 3 to 5, 8 or 9, have a higher standard of living than the household of the other parent or spouse.
Standards of living test
(4) In comparing standards of living for the purpose of subsection (3), the court may use the comparison of household standards of living test set out in Schedule II.
Reasonable time
(5) Where the court awards a different amount of child support under subsection (1), it may specify, in the order for child support, a reasonable time for the satisfaction of any obligation arising from circumstances that cause undue hardship and the amount payable at the end of that time.
Reasons
(6) Where the court makes an order for the support of a child in a different amount under this section, it must record its reasons for doing so.
184It is very difficult to make out a successful undue hardship claim under section 10 of the guidelines. There are three parts to the test:
The person making this claim must show that there are circumstances that could create undue hardship.
If this is the case, the person making the claim must show that his or her standard of living is lower than that of the responding party's.
If the first two parts of the test are made out, the court has the discretion to make a support order different than the table amount, based on the means, needs and circumstances of the parties.
See: Matthews v. Matthews, [2001] O.J. No. 876 (SCJ).
185The respondent must prove more than hardship. She must show that the hardship is exceptional, excessive or disproportionate, not merely awkward or inconvenient. See: Hanmore v. Hanmore 2000 ABCA 57 .
186The respondent has the onus of providing adequate supporting documentation to prove her undue hardship claim. See: Van Gool v. Van Gool.
187The mother led insufficient evidence to establish a claim for undue hardship. She did not come close to establishing hardship that is exceptional, excessive or disproportionate. The mother is earning a good income and has the ability to pay the guidelines table amount of child support.
Part Eleven – Summary of Findings for the Support Calculation
188The following is a summary of the court's findings for the purpose of the support calculation:
a) Retroactive adjustment of support will be ordered back to January 1, 2011.
b) The mother's annual income will be imputed at $70,000 per annum from 2011 to 2014.
c) The mother's income will be fixed at $75,900 per annum for 2015 – her RRSP income will not be included.
d) The mother's income will be fixed at $75,000 per annum from January 1, 2016 until July 31, 2016 and at $80,000 per annum from August 1, 2016.
e) The father's annual income will be as reflected in his income tax returns.
f) The court will apply subsection 37(2.3) of Act and order a support amount different than in the guidelines for the time the daughter was in the treatment facility. The court will reapportion the costs of the treatment facility in a manner proportionate to the parties' incomes and order the father to pay the mother an additional housing cost of $300 per month from October 1, 2013 until August 31, 2014 and $200 per month from September 1, 2014 until August 31, 2015. The mechanism for calculating support set out in paragraph 17.4 of the agreement will be applied for the son until he went to live primarily with the father, on September 1, 2014.
g) The father's support obligation for the son will terminate as of August 31, 2014.
h) The father's support obligation for the daughter will terminate as of August 31, 2015.
i) The daughter ceased to be eligible for support as of January 31, 2016.
j) The mother shall be required to pay support to the father for the daughter from September 1, 2015 until January 31, 2016.
k) The mother shall be required to pay support to the father for the son starting on September 1, 2014.
l) The mother's claim for additional retroactive special expenses will not be granted.
Part Twelve – The Calculations
12.1 2011
189The father's guidelines support obligation for two children at an annual income of $409,420 was $5,001 per month. The mother's support obligation at an annual income of $70,000 was $1,043 per month. The difference is $3,958 per month. The father paid the mother $2,800 per month, leaving a difference of $1,158 per month.
190The father owes the mother $13,896 ($1,158 x 12 months) for 2011.
12.2 2012
191The father's guidelines support obligation for two children at an annual income of $401,056 was $4,874 per annum. The mother's support obligation at an annual income of $70,000 was $1,037 per month. The difference is $3,837 per month. The father paid the mother $2,800 per month, leaving a difference of $1,037 per month.
192The father owes the mother $12,444 ($1,037 x 12 months) for 2012.
12.3 2013
193Two different periods need to be calculated for 2013, as the daughter was in the treatment facility for 3 months that year.
194For the period of January 1, 2013 until September 30, 2013, the father's guidelines support obligation for two children (the son) at an annual income of $465,524 was $5,609 per month. The mother's support obligation for one child continued at $1,037 per month. The difference is $4,572 per month. The father paid the mother $2,800 per month, leaving a difference of $1,772 per month.
195The father owes the mother $15,948 ($1,772 x 9 months) for the first 9 months of 2013.
196For the period of October 1, 2013 to December 31, 2013, the father's guidelines support obligation for one child at an annual income of $465,524 was $3,598 per month. The mother's support obligation for one child, based on an income of $70,000, was $639 per month. The difference is $2,959 per month. The father owes the mother $8,877 for these three months ($2,959 x 3 months).
197The total costs of the treatment facility for the daughter were $7,200 per month for 3 months for a total of $21,600. Each party paid $10,800.
198The father's proportionate share of these expenses was 86.9%, being $18,770. The father should have paid an additional $7,970 for this period ($18,770 – $10,800).
199The court will also require the father to pay the mother $900 in 2013, being a monthly amount of $300 for her to maintain her home for the daughter. This amount recognizes that the father also had to maintain his home for the daughter.
200The father continued to pay the mother $2,800 per month for the three months resulting in a total credit to the father of $8,400.
201Accordingly, for the last 3 months of 2013, the father owes the mother $9,347, calculated as follows:
Guidelines amount for son - $8,877
Adjustment for treatment facility - $7,970
Housing costs - $900
Less: Amount paid - ($8,400)
202The total amount owed by the father to the mother for 2013 is $25,295 ($15,948 for the first 9 months plus $9,347 for the last 3 months).
12.4 2014
203There are two periods of calculation for 2014, as the son primarily lived with the father as of September 1, 2014.
204For the period of January 1, 2014 to August 31, 2014, the father's guidelines support obligation for one child (the son) at an annual income of $609,342 was $4,662 per month. The mother's support obligation for one child, based on an annual income of $70,000, was $639 per month. The difference is $4,023 per month. The father owes child support of $32,184 to the mother for these 8 months ($4,023 x 8 months). The father paid the mother $2,800 per month for a total of $22,400. This leaves a balance of $9,784 ($32,184 - $22,400) owing to the mother.
205The total treatment facility costs for the daughter for 2014 were $46,800, calculated as follows:
6 months @ $7,200 per month = $43,200
6 months @ $600 per month = $3,600
206The parties each paid $23,400 for these costs.
207The father's proportionate share of these costs was 89.7%, being $41,980. The father should have paid an additional $18,580 to the mother ($41,980 - $23,400).
208The father should also pay the mother an additional $3,200 for housing costs, calculated as follows:
8 months @ $300 per month = $2,400
4 months @ $200 per month = $800
209The total amounts owing in 2014 to the mother are $31,564, calculated as follows:
a) Support owing for son - $9,784
b) Treatment Facility adjustment - $18,580
c) Housing costs - $3,200
210The father is to be credited with the support that he continued to pay the mother from September until December of 2014, being $11,200 ($2,800 per month x 4 months).
211The mother also owes the father child support of $2,556 for the four months the son was living primarily with him in 2014 ($637 per month x 4 months).
212The final amount the father owes to the mother for 2014 is $17,808 ($31,564 – ($11,200 and $2,556)).
12.5 2015
213There are also two periods to calculate for 2015, as the daughter left the treatment facility and moved in with the father on September 1, 2015.
214The costs of the treatment facility were $4,800 in 2015, being $600 per month for 8 months. Each party paid $2,400 for these costs.
215The father earned $575,088 and the mother earned $75,900 in 2015. The father's proportionate share of the treatment facility expenses was 88.3%, being $4,238. The father owes the mother $1,838 for these expenses ($4,238 - $2,400).
216The father also owes the mother $1,600 for housing costs (8 months @ $200 per month) for 2015.
217The mother owes the father the guidelines table amount for one child of $690 per month for 8 months in 2015, based on her annual income of $75,900. This comes to $5,520 ($690 per month x 8 months).
218The mother owes the father the guidelines table amount for two children for 4 months in 2015. This is $1,117 per month for 4 months, totaling $4,468.
219The father shall also receive credit for the $2,800 per month he paid to the mother for 8 months in 2015 for a total of $22,400.
220The mother owes the father the sum of $28,950 for 2015, calculated as follows:
Support paid to the mother - $22,400
Guideline support for 8 months - $5,520
Guideline support for 4 months - $4,468
Less: Adjustment for treatment facility - ($1,838)
Housing costs - ($1,600)
12.6 2016
221Based on her income of $75,000 per annum, the mother owes the father the guidelines table amount for two children for January of 2016 in the amount of $1,105.
222Based on her income of $75,000 per annum, the mother owes the father the guidelines table amount of $682 per month for one child for six months in 2016. This amounts to $4,092.
223Based on her income of $80,000 per annum, the mother owes the father the guidelines table amount of $724 per month for August of 2016.
224The total credit to the father for 2016 is $5,921.
225The mother's ongoing child support for the son will be $724 per month, starting on September 1, 2016. This is the guidelines table amount based on her current annual income of $80,000.
12.7 Final Calculation
226The court finds that the father owes the mother $34,572 for retroactive support, calculated as follows:
Amounts owing to mother:
2011 - $13,896
2012 - $12,444
2013 - $25,295
2014 - $17,808
Total: $69,443
Credits owing to father:
2015 - $28,950
2016 - $5,921
Total: $34,871
Final Balance: $34,572
Part 13 – Repayment of Arrears and Applications for Tax Credits and Benefits
227The mother asks that all arrears be paid forthwith.
228A review of the father's financial statement reveals that he has the ability to pay these arrears within a short period of time.
229In closing submissions, the father asked the court to order that he is the only person entitled to claim all tax deductions or credits for the son with CRA (and specifically the equivalent to dependent spouse credit since the start of 2015). The mother has claimed these credits in her 2015 tax return, preventing the father from doing so.
230The mother advised the court that she was agreeable to the father claiming all tax deductions and credits for the son on an ongoing basis, but did not want to readjust this for 2015.
231The father did not plead this relief. The court inquired about what jurisdiction it had to make such an order and gave the father time after the trial to deliver case law on the point. The father delivered a supplementary case brief acknowledging that the court did not have jurisdiction to make the requested order. The court cannot direct CRA regarding who can claim tax credits or benefits.
232The father then asked the court to make an order directing the mother not to submit applications for these credits as an incident of its support order. He provided no case law about the court's jurisdiction to make such an order.
233The powers of the court in making a child support order are set out in subsection 34(1) of the Act. This section does not include the relief sought by the father. The Ontario Court of Justice is a statutory court and cannot make the order sought.
234However, it is unreasonable that the mother applied for the tax relief for her son when he has been living with the father since September 1, 2014. The father should be the person who should be able to claim these tax credits and deductions. This is financially unfair to the father.
235This order has been structured to fairly adjust the support obligations between the parties. If the court ignores the mother's actions, the amount ordered is unfair to the father. The court will address this issue through the repayment of arrears, as it has discretion to determine how they will be repaid.
236The father will be required to pay $24,572 to the mother on account of the support arrears by September 30, 2016.
237Payment of the balance of support arrears of $10,000 shall be suspended until such time as the mother provides the father with evidence that she has filed the necessary documentation with CRA (including refiling her 2015 income tax return, if required) to permit the father to claim all tax credits and deductions for the son since the start of 2015. Once this documentation is provided, the father shall pay this balance to the mother within 30 days.
Part Fourteen - Conclusion
238A final order shall go changing the terms of the separation agreement on the following terms:
a) The father owes the mother the sum of $34,572 for retroactive child support as calculated in this decision.
b) The father shall pay the mother the sum of $24,572 on account of the support arrears by September 30, 2016.
c) Payment and enforcement of the balance of support arrears of $10,000 shall be suspended until such time as the mother provides the father with evidence that she has filed the necessary documentation with Revenue Canada (including refiling her 2015 income tax return if required) to permit the father to claim all tax credits and deductions for the son since the start of 2015. Once this documentation is provided, the father shall pay this balance to the mother within 30 days.
d) Child support for the daughter is terminated as of January 31, 2016.
e) The father's child support obligation for the son terminated on August 31, 2014.
f) The mother shall pay the father child support for the son in the sum of $724 per month, starting on September 1, 2016. This is the guidelines table amount for one child based on the mother's annual income of $80,000.
g) A support deduction order shall issue.
h) The mother shall provide the father with full copies of her income tax returns and notices of assessment by June 30th each year.
i) If either party wishes to claim a contribution of section 7 expenses from the other, they will provide the other party with the receipts and the father shall provide the mother with copies of his most recent income tax return and notice of assessment.
j) This order replaces in full all child support provisions contained in the agreement.
239If either party finds a mathematical error (only) in these calculations, they may serve and file written submission by August 12, 2016. The other party will then have until August 19, 2016 to serve and file any written response.
240If either party seeks their costs, they shall serve and file their written costs submissions by August 26, 2016. The other party will have until September 7, 2016 to respond. The costs submissions shall not exceed 3 pages, not including any offer to settle or bill of costs. The costs submissions should be delivered to the trial coordinator's office on the second floor of the courthouse.
241The court thanks the parties for the efforts they made in organizing and presenting this case. Hopefully, this decision will give them the clarity to move forward with their lives.
Released: August 2, 2016
Justice S.B. Sherr
