Court Information
Ontario Court of Justice
Parties
Between:
Lenora McHayle Applicant
— AND —
Otis Harvey Respondent
Judicial Officer
Before: Justice Philip J. Clay
Heard on: November 3, 2016
Reasons for Judgment released on: December 15, 2016
Representation
The Applicant represented herself.
The Respondent represented himself.
CLAY J.:
SUMMARY HEARING
PROCEDURAL BACKGROUND
1The Applicant mother ("mother") brought a motion to change the final order of Justice S.R. Clark dated February 10, 2009. She sought to retroactively change the child support payment for the child Olivia Harvey born March 29, 2005. She stated that the Respondent father ("father") had underpaid child support in the years 2012, 2013 and 2014. The father filed a response to motion to change in which he sought to reduce his child support payment to zero due to his loss of employment. The father's employment loss had led to child support arrears which precipitated the mother's motion to change.
2The first case conference was held on June 23, 2016. At that time a disclosure order was made and the matter was adjourned to a summary hearing on affidavit evidence only on November 3, 2016. Timelines were provided for supplementary affidavits to be filed. The hearing was to proceed on all of the sworn evidence in the continuing record.
ISSUES
(1) Has there been a material change in circumstances since the final order was made?
(2) Should the child support order be retroactively adjusted due to changes in the father's employment income?
(3) Should the child support order be suspended due to the father's unemployment?
THE LAW
3Motions to change child support are governed by s. 37 (2.1) of the Family Law Act which provides 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. 1997, c. 20, s. 6.
4If a court finds that there has been a material change in circumstances then the court must determine upon what income the payor should pay child support. The Child Support Guidelines (CSG) provide for the imputation of income under s. 19 (1) which reads as follows:
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;
5The leading case on income imputation is the decision of the Ontario Court of Appeal in Drygala v. Pauli, [2002] O.J. No. 3731 (O.C.A.). That case considered the interpretation of s. 19 (1) (a) and established a three-part test as follows:
(1) Is the spouse intentionally underemployed or unemployed?
(2) If so, is the intentional underemployment or unemployment required by virtue of his reasonable educational needs, the needs of the child of the marriage, or reasonable health needs.
(3) If the answer to #2 is negative, the court must decide whether it should exercise its discretion, and if so, what income is properly imputed in the circumstances.
6The Court of Appeal held that once a party establishes underemployment, the onus shifts to the payor to show one of the exceptions of reasonableness. Parents can take jobs with less money, as long as the decision is reasonable.
7In Drygala the court found that:
(a) there is no need to find a specific intent to evade child support obligations before income be imputed. The key is whether the underemployment is voluntary and reasonable;
(b) the payor is intentionally under-employed if they choose to earn less than they are capable of earning; and
(c) imputing 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 legal obligation, a parent must earn what she is capable of earning.
8The same court in Lawson v. Lawson cited Drygala and stated that:
Section 19 (1) (a) of the Guidelines is perceived as being a test of reasonableness. The court must have regard to a the parent's capacity to earn income in light of such factors as employment history, age, education, training, skills, health, available employment opportunities and the standard of living earned during the marriage. The court looks at the amount of income the payor could earn if he or she worked to capacity.
FATHER'S POSITION
9The father filed a supplementary affidavit dated August 23, 2016. He stated that he was employed as a communications technician at Allstream Inc. He received a lay-off notice in "the last quarter of 2013." He said he lost his job because the company was downsizing. He filed a Record of Employment which confirmed that Feb 28, 2014 was his last day worked. He received a severance package that was based upon $5,000 per year with the company. He worked there for 13 years so he received $65,000. He said that he was unable to obtain a copy of the severance package to comply with the disclosure order. He stated that Allstream had been purchased by a company called Zayo.
10The father admitted that he took the severance package and then did not look for work. He received E.I. once the severance period expired. The E.I. ended in December 2015. In all of this time he only applied for three positions that were not in his field. The father said that he did not look at communications technician jobs prior to August 2016 because the industry was downsizing so after his E.I. ran out he thought about learning a trade. He attended a 4 day retraining seminar for a second career. He thought he might begin a second career in welding or home renovations. He stated that he attended at several colleges to research their programs. In July 2016 he decided not to apply to college because most of the programs did not start until January 2017 and if he enrolled he would only be able to work part-time (15 hours a week) or he would not qualify. He stated that he would rather obtain full-time work and save up money for a college program.
11With respect to his claim of undue hardship the father stated that there was no one else in his household. He had been separated for 2 years. He rents a room in a relative's home. Although he had filed a child support order concerning the child Keon Harvey, born July 21, 1999 he stated at the hearing that the child's mother withdrew the enforcement of it 2 years ago. The father did not put forward any other grounds that met the stringent criteria of undue hardship as defined by s. 10 of the Child Support Guidelines.
MOTHER'S POSITION
12The mother filed a comprehensive affidavit on October 22, 2016. She noted that the order made in 2009 was based upon the father's then income of $59,976.24. She said that the father's income rose to a high of $79,180 in 2012 but he did not advise her of the increase and did not offer to pay more child support. Her position was that the ongoing child support should be based upon the father's income in 2013 which was $75,000.
13The mother stated that the father had worked as an electronics technician since he obtained his college certificate in 2002. She said that the father was very upset with the child support clause in the 2009 order and often threatened to quit his job to avoid making child support payments. She claimed that he threatened to stop visiting his daughter if she refused to consent to a reduction in child support. She felt that he had engineered a buy out from his employer and that is why he received the $65,000 in severance and why he did not actively look for work. She noted that the father had failed to produce a lay-off notice or the letter with the particulars of his severance and she thought it was because it would not be helpful to him.
14The mother's view was that the father was intentionally unemployed and that income should be imputed to him. She noted that his affidavit showed said that he had applied to 7 employers since March 2014 but the father was only able to prove that he applied to three employers. The mother noted that the father had extensive experience in his field and she provided Government of Canada job bank information to show that there is work in his field.
15The 2009 order provided in paragraph 2 that the father was to pay the sum of $100 per month toward daycare expenses. The child was nearly 9 years old when the father lost his job in February 2014. The mother consented to an order terminating the daycare expense at that time.
ANALYSIS
Material change in circumstances
16I find that there has been a material change in circumstances since the final order of 2009. The father's income had increased by approximately $18,000 by 2012. The father has not worked since February 2014. The court can look at all of the facts and determine what a new order should be.
Retroactive increase in child support?
17The evidence was clear that the father's income increased significantly but he did not advise the mother and the child support did not increase. The mother asks for an increase retroactive to January 1, 2012 based upon the income earned in each year. This motion to change was commenced in March 2016. However, the father had previously brought a motion to change in which he sought to reduce child support and rescind arrears. In her response to that motion to change filed December 9, 2015 the mother sought a retroactive increase in child support. That motion to change was withdrawn by the parties on February 16, 2016 after the deficiencies in the pleadings were noted by Justice L.S. Parent. This meant that the father was given notice of the mother's request for a retroactive increase in child support at least as early as December 2015.
18The father's income in 2013 it was $75,370, it was $99,943 in 2014 and he reported 21,360 in E.I. income in 2015. In 2014 his income tax return filed showed that his income was comprised of the following:
(a) Employment income $22,225.29
(b) RRSP income $11,862.79
(c) Other income – non-eligible retiring allowance-$65,000
(d) Business income (on a gross of $3,185.00) $469.70
19The Supreme Court of Canada decision in D.B.S. v. S.R.G., 2006 SCC 37 effectively stated that it is usually appropriate to retroactively adjust child support to a period no more than three years prior to effective notice being given of a claim to an increase. In this matter, the mother's response to motion to change giving effective notice was filed in December 2015. This would be an increase for 2013 to 2015 inclusive. I note that the only year that the father's income was based upon his actual employment was 2013 when he earned $75,370.
20The 2014 income tax return does raise questions when it refers to a "retiring allowance." However, without further evidence I cannot conclude that the father "retired." He was clearly given a severance package and then E.I. He should have retained the documentation concerning the severance especially given that he was the one who brought the motion to change on the basis of that severance and the resulting unemployment. He did make belated efforts to obtain the document and did obtain the Record of Employment. I cannot determine whether the father was concerned about downsizing (the company was subsequently sold) and wisely obtained a severance package while he could, or whether he had no choice but to accept the package. Given the father's failure to look for other work in his field I find that whether he left voluntarily or was pushed out he had a cushion that should have allowed him to find work in his field over the course of the next year.
21I will exclude from the father's 2014 income the $11,862.79 in RRSP withdrawals as they are non-recurring withdrawals of capital and not income earned in that year. This leaves a 2014 adjusted income of $88,080.21 upon which the father should pay child support. In 2015 the father should have looked for work and if he had been diligent in so doing he might well have approximated the income that he earned before he left Allstream. However, as the father's evidence was that he could not have retained his job and as there was evidence that Allstream was purchased by another company I am not satisfied that the father voluntarily left a job that would have paid him $75,000 for the indefinite future. I am satisfied though that if the father had immediately looked for work he should have found employment in his field in 2015. I find that it is reasonable to impute to him an income of $60,000 which is the amount that he earned at Allstream in 2009 when the order was made and $15,000 less than he earned in 2013.
22The order to be made will retroactively adjust the child support amount based upon the income actual and imputed for years 2013 to 2015 inclusive. The $100 monthly payment for child care will end effective February 28, 2014.
Suspension of child support?
23As noted above, I find that the father should have sought work in his field immediately upon no longer being employed by Allstream. The father had a dependent child to support. He was not entitled to live off his severance and his E.I. before giving consideration to what he was going to do for the rest of his life.
24The father did not make serious efforts to look for work until August 2016. I find that this is not a case where an employee needs to retrain to be able to be able to compete for employment. It may be that there is some dislocation in the communications industry in that firms acquire other firms and they may go through some periods of downsizing. The father has an education, skills and experience in a sector of the economy that is still very relevant. He is not a person who lost a non-skilled manufacturing job and needs to retrain because the plant has moved. As a father of a dependent child he needed to maximize his earning capacity at all times (see Lawson above). The field he was in paid him $75,000 the year before his job ended. While I have no evidence from the father on alternate career prospects I find it unlikely that he could have expected to earn that kind of money in another job without years of retraining and experience.
25The father now states that he is looking for work in his field. The mother states that I should impute him to have the same income as he had in the year before he lost his job. I have not done that for the 2015 year for the reasons set out above.
26The challenge faced by the court with any payor who either quits a job or is intentionally unemployed or under-employed is to determine how long the imputation of income should continue. As a direct consequence of his own decisions the father now has no income (though I note that he has declared very modest income from a business for a few years). I find that based upon s.19 of the CSG and the direction provided by the Court of Appeal in Drygala that income needs to be imputed. The reality is that the father has now not worked as a communications technician since February 28, 2014. I am prepared to reduce the imputed income to $50,000 per year. The father should be able to obtain employment that pays him 66% of the income that he was earning prior to February 28, 2014.
27As the parties to this matter are unrepresented I will set out an expectation. If the father finds full-time work either in his field, or after a legitimate effort to get work in his field, that pays him less than $50,000 the mother should consent to adjusting the child support to the amount he actually earns. If he earns more, the father should consent to paying child support on that higher amount. At this point I have to determine a reasonable amount to impute but the final order will require income disclosure. Given that income is being imputed the child support will not change based upon the father's Notice of Assessment for 2016 but it should change based upon his Notice of Assessment for 2017 but only if he has full time employment as set out above.
ARREARS
28I recognize that the father will already have arrears with the F.R.O. This order will increase the arrears by the retroactive increase in child support. The father claimed to have no income at the time of the hearing. In order to allow the father some time to find employment I will defer the payment towards arrears until April 1, 2017. I will also permit the father to pay his arrears at the rate of $200.00 per month. This will allow the father an opportunity to keep his account with F.R.O. in good standing while he finds the employment. The father will pay $450.00 per month from January 1 to March 31, 2017 and $650.00 per month from April 1, 2017 on. If he complies with the order he will be able to avoid FRO enforcement steps with the exception of a federal garnishment. I make this order as it would be counter-productive to impose a 50% wage garnishment and a driver's licence suspension until the father has had a chance to meet his obligations for child support under this order.
ORDER
29The final order of the Honourable Justice S.R. Clark dated February 10, 2009 shall be changed by adding the following paragraphs:
(1) The Respondent father shall pay child support to the Applicant mother for the child Olivia Harvey born March 29, 2005 as follows:
a) Beginning on January 1, 2013 and ending on December 31, 2013 the sum of $686.00 per month based upon his 2013 income of $75,370;
b) Beginning on January 1, 2014 and ending on December 31, 2014 the sum of $785.00 per month based upon his 2014 adjusted income of $88,080.21;
c) Beginning on January 1, 2015 and ending on December 31, 2015 the sum of $546.00 per month based upon his imputed 2015 income of $60,000.00; and
d) Beginning on January 1, 2015 and continuing on the first day of each and every month thereafter the sum of $450.00 per month based upon an imputed income of $50,000.00.
(2) The father's obligation to pay $100.00 per month to the mother for the said child's daycare expenses shall terminate effective February 28, 2014.
(3) The father shall pay the sum of $200.00 a month towards arrears of child support beginning April 1, 2017 and on the first day of each and every month thereafter until the arrears are fully paid. This clause is without prejudice to any federal garnishment the F.R.O. has in place. If the father fails to pay the child support on time or fails to pay the said amount towards arrears the F.R.O. may take any enforcement steps available to them.
Released: December 15, 2016
Justice P.J. Clay