Court File and Parties
Court File No.: Toronto D10973/17 Date: September 17, 2018 Ontario Court of Justice
Between:
E. K. Applicant
— AND —
N. B. Respondent
Before: Justice Roselyn Zisman
Heard on: July 26 and August 23, 2018
Reasons for Judgment released on: September 17, 2018
Counsel:
- Hossein Niroomand and Ira Cyril, for the Applicant
- Elham Moaveni, for the Respondent
Reasons for Judgment
Introduction
1This is a temporary motion for child support for the child, T.K. born in […] 2009. The Applicant (mother) seeks ongoing child support, retroactive child support and that the Respondent (biological father) pay the child's full share of section 7 expenses. The mother also seeks to impute income to the father based on an income of $240,000.
Background
2The parties are the biological parents of the child.
3The parties have known each other for many years as the father is the best friend of the mother's older brother.
4The parties dated briefly in 2008. At the time, the father was separated from his wife and had 2 children. According to the father, they had a one night stand and the mother told him that she could not get pregnant.
5Several months later the mother called and told him that she was pregnant. He made it clear that he was not interested in having a third child or a relationship with his best friend's sister. He also was not sure he was the biological father as they were both dating other people at the time.
6When the child was born the mother did not name the Respondent as the father on the child's statement of live birth. Their paths crossed over the years as the father was a family friend. According to the mother, she asked the father for financial assistance and involvement in the child's life. However, it was the father's position that the mother chose to have the child and it was therefore her obligation to raise him.
7In 2012 and 2013 the mother emailed the father requesting he assist her with some of the child's expenses such as his soccer and private school fees.
8In March 2013 the mother contacted legal counsel and she sent the father a letter requesting that they exchange financial information and negotiate the payment of child support. The mother did not pursue a court proceeding as she could not afford the legal retainer and decided to not pursue the matter at that time.
9The mother is a physiotherapist and was the owner of 2 clinics and 2 swim schools. However, in 2017 the mother was involved in a serious motor vehicle accident and has been unable to work since that time. She was forced to close her physiotherapy business and declare bankruptcy. The mother was then required to rely on her mother's financial assistance and in August 2017, she moved with the child to Florida where her mother resides.
10The father is self-employed as a general contractor in the construction business. He is the sole owner of a company called […] Construction.
Position of the Mother
11It is the position of the mother that she has made requests over the years that the father meet his financial responsibility to support his child and that he become involved in his child's life. Based on the father's incomplete financial disclosure, the mother requests that income be imputed to him at $240,000 retroactive to January 2009. She is also requesting that he pay the full share of the child's special and extraordinary expenses as she is unable to work.
12It is the position of the father that despite being found to be the biological parent of the child, he should have no financial responsibility as the mother was aware that he did not wish to have another child, she decided to raise the child on her own and has now decided to pursue him so she can obtain money from him. It is further submitted that he has been deprived for all of these years of a role in the child's life, there is no benefit to the child in this court proceeding and it is unfair for the mother to pursue him after 10 years. If it is found that he is required to pay child support, he is requesting the mother provide information about the child and financial disclosure and that the determination of child support be adjourned until the mother provides the requested disclosure.
Issues to be Determined
13The issues to be determined on this motion are:
- Is the father a "parent" who has a legal obligation to support the child?
- If so, what income should be imputed to the father?
- Should the father be required to pay the full share or any share of the child's special and extraordinary expenses?
- Should retroactive child support be ordered and if so, from when and in what amount?
Litigation History
14The mother commenced this Application on her own in June 2017 and only sought child support. At the first appearance on August 4, 2017 both parties were represented by duty counsel. The father was given an extension to file his pleadings until September 5th.
15In September the mother borrowed funds from her mother to hire counsel to assist her in this proceeding.
16The father was given a further extension to serve and file his responding materials to October 4, 2017.
17On October 4th the father requested yet another extension to file his materials on the basis that his accountant needed more time to prepare his 2015 and 2016 tax returns as the accountant had been involved in a long standing dispute with CRA about his tax returns for the last 8 years that had just been resolved. The father was granted yet another extension but on terms that he file his Answer, 35.1 and financial statement with proof of his 2016 and 2017 income based on whatever information he currently has available. He was ordered to serve and file his Notices of Assessment for 2015 and 2016 as soon as they are received and to also serve the mother with a copy of his tax returns as soon as his accountant prepares them. The matter was adjourned for a case conference.
18At the case conference on November 3, 2017 the mother's counsel was present and the mother participated by telephone conference and the father was assisted by duty counsel. The father advised that he wished an adjournment to arrange for paternity testing. The father wished to file loose copies of his Notices of Assessment for the years 2010 to 2014 but these were returned to him and he was advised that these should be served on the mother's counsel and properly filed.
19The father was given leave to file his financial statement. On the basis of his stated income of $72,000, on a temporary without prejudice basis, the father was ordered to pay child support in accordance with the Child Support Guidelines of $657.00 per month.
20An order was made to permit the father to arrange for paternity tests and that he and the mother to co-operate in making the necessary arrangements. Further timelines were set for the father to serve and file his pleadings and his financial statement. The father was also ordered to serve and file the latest statements available for his company and a letter from his accountant to explain the father's outstanding issues with Canada Revenue Agency.
21A date for a temporary motion for child support was set for January 23, 2018 whether or not the father had counsel. Costs of the case conference were reserved as the father had not been prepared or complied with the outstanding filing deadlines.
22Counsel for the mother sought an adjournment of his motion by 14B as the father had not fully complied with the disclosure order and he required more time to review the materials and the father had not completed the paternity testing. The father opposed the adjournment. Mother's counsel was then required to attend court on January 5th and the adjournment was granted. The father was ordered to cooperate with the DNA testing laboratory chosen by the mother and the mother was ordered to cooperate with the mail-in DNA testing chosen by the father. The test results of both laboratories were to be served and filed.
23The motion was then re-scheduled for March 28, 2018. However, on the return date the father, who attended on his own, sought an adjournment to obtain counsel and prepared responding motion materials. There was also an issue with respect to the paternity test results as although both parties cooperated there was an error by the laboratory.
24The father had not paid the outstanding child support order and was ordered to pay all of the arrears owing. The father was also ordered to comply with respect to the Request for Information by April 20th. The motion was then adjourned to May 4th. Costs were again reserved.
25On consent the May 4th motion was adjourned to July 26th as father had retained counsel and counsel indicated that they hoped they could engage in settlement discussions.
26On July 26 both parties and counsel attended. At the outset of the motion, counsel for the father submitted that based on recent amendments to the Children's Law Reform Act that although the father was found to be the biological parent of the child, he was not a parent within the expanded definition of "parent" in the Children's Law Reform Act. It was submitted that the father was only a sperm donor and the mother had advised him that she was not medically able to have a child and that he had never wished to have a child with her.
27Counsel for the mother submitted that he was totally caught off guard as the issue had not been previously raised and mother's counsel had only that morning given him the case of M.R.R. v. J.M. that she was relying on. Further, I note that the father's counsel had not served a motion with respect to the finding she wished the court to make.
28I advised father's counsel that as a preliminary observation it appeared that the case of M.R.R. v. J.M. was distinguishable as the parties in that case had entered into a verbal agreement pre-conception and then signed a written agreement after the child was born that the Respondent would act as a sperm donor, would not be a parent to the child and once born the child would be the child of the Applicant and her partner. The mother then purported to withdraw the agreement. The court found that the biological father met his onus to show the pre-conception intention of the parties was that he would not be a parent and the declaration of non-parentage was granted.
29I suggested that counsel provide case law pertinent to the facts of this case. Mother's counsel sought an adjournment in order to properly prepare to respond to the father's submissions. Both counsel were given new timelines to serve and file any further submissions and case law. The motion was adjourned to August 23, 2018.
30Both counsel served Facta and attached the cases relied upon.
31In support of the motion mother's counsel also relies on the mother's original Notice of Motion returnable March 26, 2018 and the mother's affidavits sworn March 15, July 17 and 24 and August 8, 2018.
32The father relies on his Notice of Motion returnable August 23, 2018 and his supporting affidavit sworn August 17, 2018 and his prior affidavit sworn July 16th with his financial statement attached as an exhibit.
Applicable Legal Principles with Respect to a Finding Regarding a "Parent"
33The Ontario legislature passed Bill 28 to amend the Children's Law Reform Act on January 1, 2017 that repealed Parts 1 and 2 and introduced new provisions. The purpose of the Bill was stated by the Attorney General Yasir Naqvi "to make everyday life easier for Ontarians and to remove unnecessary burdens and costs on our families" and to "update Ontario's parentage laws so parents who have children with the assistance of a known sperm donor won't need to spend money on lawyers".
34The amended Children's Law Reform Act emphasized the need for "non-traditional" families to have their intentions set out in writing before a child was conceived.
35The relevant sections provide as follows:
Person is child of parents
4(1) A person is the child of his or her parents. 2016, c. 23, s. 1 (1)
Determining parent of a child
(2) A parent of a child is,
(a) a person who is a parent of the child under sections 6 to 13, except in the case of an adopted child;
Birth parent
6 (1) The birth parent of a child is, and shall be recognized in law to be, a parent of the child. 2016, c. 23, s. 1 (1).
Exception, surrogacy
(2) Subsection (1) is subject to the relinquishment of an entitlement to parentage by a surrogate under section 10, or to a declaration by a court to that effect under section 10 or 11. 2016, c. 23, s. 1 (1).
Other biological parent, if sexual intercourse
7 (1) The person whose sperm resulted in the conception of a child conceived through sexual intercourse is, and shall be recognized in law to be, a parent of the child. 2016, c. 23, s. 1 (1).
Presumption
(2) Unless the contrary is proven on a balance of probabilities, there is a presumption in respect of a child conceived through sexual intercourse that a person is, and shall be recognized in law to be, the parent referred to in subsection (1) if any of the following circumstances applies:
- The person was the birth parent's spouse at the time of the child's birth.
- The person was married to the child's birth parent by a marriage that was terminated by death or judgment of nullity within 300 days before the child's birth or by divorce where the judgment of divorce was granted within 300 days before the child's birth.
- The person was living in a conjugal relationship with the child's birth parent before the child's birth and the child is born within 300 days after they cease to live in a conjugal relationship.
- The person has certified the child's birth, as a parent of the child, under the Vital Statistics Act or a similar Act in another jurisdiction in Canada.
- The person has been found or recognized by a court of competent jurisdiction outside Ontario to be a parent of the child. 2016, c. 23, s. 1 (1).
Conflicting presumptions
(3) If circumstances exist that give rise to a presumption by more than one person under subsection (2), no presumption shall be made under that subsection. 2016, c. 23, s. 1 (1).
Non-application, insemination by a sperm donor
(4) This section is deemed not to apply to a person whose sperm is used to conceive a child through sexual intercourse if, before the child is conceived, the person and the intended birth parent agree in writing that the person does not intend to be a parent of the child. 2016, c. 23, s. 1 (1).
Same, sperm donor not a parent
(5) A person to whom subsection (4) applies is not, and shall not be recognized in law to be, a parent of a child conceived in the circumstances set out in that subsection. 2016, c. 23, s. 1 (1).
36Pursuant to Children's Law Reform Act Parts 1 and 2, that deal with parentage and Rules of Parentage, the court is defined as:
"court" means the Family Court or the Superior Court of Justice.
Analysis
Does the Father Qualify as a "Parent" Who Has a Legal Obligation to Support the Child?
37The most basic step in any legal analysis is whether or not the court has the jurisdiction to make the order counsel seek.
38In this case, the Notice of Motion filed by father's counsel asks the court to make a declaration of non-parentage. The Ontario Court of Justice does not have the jurisdiction to make a declaration of non-parentage as sought by father's counsel as that jurisdiction can only be exercised by a Superior Court of Justice or the Superior Court of Justice, Family.
39Upon the court advising father's counsel of this preliminary flaw in her argument, counsel immediately sought that the proceeding be transferred to the Superior Court of Justice. I declined to do so, as the father's position has no merit and the reliance on the amended provisions of the Children's Law Reform Act are clearly not applicable to the circumstances of this case.
40It is apparent that the amendments were meant to ensure that pre-conception intentions to parent would be recognised as a basis for parentage in the context of same-sex relationships and assisted reproduction including surrogacy agreements and sexual intercourse with a known donor.
41In the recent case of P. (P.) v. D. (D.) the Ontario court of Appeal confirmed the continued presumption of parentage under sections 4 and 7 and the Children's Law Reform Act where a child is conceived through sexual intercourse. In that case, the father acknowledged that he was the biological father of the child but sought damages against the mother for fraudulent misrepresentation for involuntary parenthood as she had falsely represented that she was on birth control pills. In dismissing his appeal, the court found at paragraph 45 of the decision that"the appellant agreed to have unprotected sex with the respondent and, although he accepted the risk of pregnancy that exists when a sexual partner is taking contraceptive pills, he was not prepared to accept the risk of pregnancy if the respondent was not taking contraceptives."
42The cases of M.R.R. v. J.M. and M.L. and J.C. that are relied upon by father's counsel are clearly distinguishable. These cases involve parties having pre-conception discussions about parentage through sexual intercourse or surrogacy and then after the birth of a planned pregnancy disagreements arose as to which parties should be deemed to be the legal parents of the child.
43In this case, the father had consensual unprotected sexual intercourse with the mother. He was therefore prepared to take the risk that as a result of sexual intercourse the mother could become pregnant regardless of any previous fertility issues. This was not a situation where the mother asked him to be a sperm donor and they agreed or even discussed his obligations if she should become pregnant. This was a typical situation of two consenting adults having unprotected sex and a child being born. I accept the father's statement that he did not want the child but child support is the right of the child and it would be contrary to the spirit, purpose and policy of the legislation for the father to be absolved of his obligation to support his biological child.
44The case law supports the proposition that even if a father is "duped" or misled into having a child or has been assured that a mother would not seek child support and then pursues child support, the father still has a child support obligation.
45Accordingly, I find that the father as the biological parent of this child has a legal obligation to pay child support.
46Further, I declined to grant an adjournment of the motion or grant a stay until the mother provided information about the child as requested by the father in his Notice of Motion as such information is irrelevant to the issues before the court. Further, on prior attendances the father was asked if he wished to commence a relationship with the child and he declined. The father has already caused significant delay in this proceeding and this recent request is just another delay tactic.
What Amount of Child Support is the Father Required to Pay? Should Income be Imputed to the Father for Child Support Purposes?
Applicable Legal Principles with Respect to Child Support
47The presumptive rule for the amount of child support payable is the amount set out in the applicable child support table, according to the number of children and the income of the payor.
48Section 3 (1) of the Child Support Guidelines provides as follows:
- (1) Unless otherwise provided under these guidelines, the amount of an order for the support of a child for children under the age of majority is,
(a) the amount set out in the applicable table, according to the number of children under the age of majority to whom the order relates and the income of the parent or spouse against whom the order is sought; and
(b) the amount, if any, determined under section 7.
49The father maintains that any child support ordered should be based on his actual income of about $25,714 as set out in his most recent financial statement. The father submitted that the prior temporary without prejudice order based on his income of $72,000 was in error as his incomes for 2 years had been conflated.
50It is the mother's position that income should be imputed to the father. The statutory authority for imputing income is set out in Section 19 of the Child Support Guidelines provides as follows:
19 (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:
(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;
(b) the spouse is exempt from paying federal or provincial income tax;
(c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
(e) the spouse's property is not reasonably utilized to generate income;
(f) the spouse has failed to provide income information when under a legal obligation to do so;
(g) the spouse unreasonably deducts expenses from income;
(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
Reasonableness of expenses
(2) For the purpose of paragraph (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act.
51Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children.
52Income can be imputed on a temporary motion. However, as motions are limited by the evidence available, it is incumbent on the person seeking to impute income to provide the court with sufficient evidence upon which the court can draw a reasonable inference. This evidence is generally the presence of some documentary evidence that assists the court in drawing an estimate of the appropriate income.
53On temporary motions, the onus initially is on the party alleging that the other party received a benefit or improperly deducted expenses to establish this, before the onus shifts to the other party to demonstrate that the payments or benefits were reasonable.
54The 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.
55A self-employed person has an inherent obligation to put forward not only adequate, but comprehensive records of income and expenses, from which the recipient can draw conclusions and the amount of child support can be established.
56The onus rests upon the parent seeking to deduct expenses from income to provide meaningful supporting documentation in respect to those deductions, failing which an adverse inference may be drawn.
57This principle also applies where the person's employment income is derived from a corporation that he or she fully controls.
58If income is derived from a corporation then it is appropriate in these circumstances to gross-up the payor's income, as the payor is declaring and paying tax on substantially less income than the payor is actually earning. This is done to ensure consistency of treatment where a party is found to have arranged his affairs to pay less tax on income.
59The court can also draw an adverse inference against a party for the failure to comply with their disclosure obligations.
60The fundamental requirement of ongoing and complete financial disclosure has been reaffirmed by the Ontario Court of Appeal in Gray v. Rizzi wherein the court repeated the following passage in Roberts v. Roberts:
The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing.
Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled.
Financial disclosure is automatic. It should not require court orders -- let alone three - to obtain production.
Application of Legal Principles to the Facts
61In this case I find that the mother has met the onus on her to prove that income should be imputed to the father based on his lack of disclosure, his lifestyle, improperly deducting personal expenses from his corporate earnings and father's overall failure to explain how his income is calculated.
62The father was served with a Request for Information on February 15, 2018 requiring disclosure within 20 days. He simply ignored this request and did not respond.
63On March 26, 2018 the court ordered the father to comply with the Request for Information by April 20, 2018. He did not comply.
64Counsel for the mother wrote to the father on numerous occasions requesting that he comply with the disclosure order.
65On July 18, 2018, that is only 10 days before the motion was scheduled to proceed, counsel for the father provided somewhere between 500 to 1,000 pages of documents. The Certificate of Financial Disclosure filed sets out the items that were disclosed that include the father's personal tax returns for 2015 to 2017, the financial statements for […] Contracting Inc. for 2015 to 2017, bank statements for the father's business bank account for 2015 to 2018, line of credit statements for 2016 to 2018, copy of Ford Vehicle lease agreement and statement of investment income for 2015 to 2017.
66However, as outlined in the mother's affidavit there are 23 items of disclosure from the Request of Information, outstanding since February 2018, that have not been provided and no explanation for the lack of disclosure is provided.
67Many of the missing items of disclosure are very significant such as an appraisal of the father's home, a copy of the father's mortgage application, information about another company, […], of which the father is a director, information about other properties that the father owns jointly or that are held in trust for him, copies of personal bank and credit card statements and corporate tax returns.
68In submissions, counsel for the father attempted to provide some explanations which I would not permit. The father was aware of the information being requested since February 2018 and counsel for the father has been retained since at least May 2018. Counsel for the father also did not provide a disclosure brief for the court or attach to the father's affidavit or his financial statement any documents that she wished to rely upon so that some of the information that the father may have wished to rely upon was not properly before the court.
69In addition to the late disclosure and failure to comply with the Request for Information, counsel for the mother submitted that pages 5 to 6 of all of the father's bank statements that would have been copies of his cheques were missing. Father's counsel sought to explain this as a possible copying error and that mother's counsel should have advised her. However, the volume of materials were only served 10 days before the motion was to be argued and to put the onus on mother's counsel is not reasonable. Nor do I find it plausible that a copying error could be made for the same pages for each bank statement. I draw the conclusion that the father did not wish to disclose copies of his cheques as at least some of these cheques must be written to either himself or used to pay for personal expenditures.
70I draw a negative inference due to lack of compliance with the Request for Information and subsequent court orders requiring the father to provide financial disclosure.
71Although the father claims that he only earns about $25,000 to $35,000, he does not explain how he can afford annual expenses as set out in his financial statement of $100,191.
72He does not explain how he is the owner of a home valued at about $2,000,000 as per the mother's valuation (he only valued the home at $800,000) and how he can qualify for a mortgage of about $600,000 with a monthly payment of $3,804.
73Counsel for the father attempted to explain that the father held the property in trust and the mortgage was an "older mortgage". There was no evidence of any of these statements. The father prepared 3 different financial statements in these proceedings and he is listed as the sole owner of the property on each financial statement. Based on the copy of the parcel register, attached to the mother's affidavit, the property was transferred to the father alone in 2013 for $2.00 from a M.F. and on April 17, 2015 a $700,000 mortgage was registered on the property. The father's counsel is listed as the counsel who completed the sale transaction. Therefore, this was not a particularly "older" mortgage and father's counsel would be aware of the details of this transaction and in possession of the supporting documents.
74The father lists personal debts of $91,500 without any proof of these debts. One of the debtors is A. F. who may be related to the person who transferred the home to him.
75Based on an internet search the mother provided evidence of several addresses linked to the father's business, […], namely, […] Huntingwood Drive, Brampton and […] Townwood Drive, Richmond Hill. It is the mother's evidence that she believes the father is purchasing properties in other people's name. The corporate profile report produced by mother's counsel indicates that the company's address is […] Charnwood Road (the father's home) but that the mailing address is […] Huntingwood Drive. No explanation is provided by the father.
76The father does not explain why he leased a 2018 Ford truck that he uses for business in his personal name rather than in his company's name. The expenses for one vehicle are listed both in his financial statement and also on the financial statement for […]. It is alleged by the mother that the father also owns a Porsche and she produced a photograph of the car in front of the father's home. Further, although the father maintains he only has one car, there is a bank statement that indicates he purchased gas twice on the same day which would appear to corroborate the mother's assumption that the father owns two cars. The father provided no explanation.
77The father's financial statements his company […] for 2014 and 2015 indicate that he makes no profit, is losing money and is in debt. However, the mother deposes that the father runs a profitable construction business undertaking an average of 3 to 6 projects a year and has many projects worth tens of thousands of dollars. She cites as an example the fact that in 2010 and 2011, the father completed renovations for her business and he billed her company $92,264. Although the mother does not know his net profit, the overhead costs were low as he did most of the job himself with the help of a few subcontractors and she supplied some of the materials.
78The father's financial statement indicates that he pays $200 per month as child support for his two daughters. This would equate with an income of only $15,000 per the child support guidelines. The father's bank records indicates that in 2016 he paid tuition, books and a residence fee and transferred other funds for one of his daughters totalling $8,387.66. However, in 2017 and 2018 he has only transferred $1,500 and $800. No funds were paid to his other daughter who is also enrolled in university. The mother submits that this leads her to the conclusion that the father had another bank account that he has not been disclosed. A request for disclosure of proof of his support obligations for these children and a possible spousal support obligation were requested and not complied with. This would have been important information to obtain.
79The father's bank statement for October 2017, reveals a transfer from another bank account without any explanation. Again leading the mother to suspect the father has another bank account. No explanation is provided by the father.
80On the father's financial statements sworn November 3, 2017 and December 14, 2017 he lists savings with Richardson GMP No. 34969 of $84,914.60. However, on his subsequent financial statement of July 16, 2018 there are no amounts for any savings. No explanation is provided by the father.
81The father has an Equitable Bank Home Line of Credit with a limit of $65,000. The March 2016 statement indicates a balance of only $6,394.56 and the May statement a balance owing of $56,519.95. The April statement was not produced so there is no information about what the father purchased or what the funds were used for.
82The father failed to disclose […] as a business interest. That company shows a corporate address […] Upper Post Road, Maple. The father submitted that the company was dormant, without any proof other than the fact that it has not filed a return since 2012. But the 2015, 2016 and 2017 financial statements of […] include a loan from […]. No further information was provided regarding this company or any other company in which the father has an interest although this information was requested.
83Mother's counsel has examined the bank account statements produced by the father. Father's counsel took no issue with the break-down of the deposits and expenses.
84In 2015, the total deposits were $226,192.23. The father's major expenses were his home expenses of $24,122.63, his personal expenses of $4,155.32, car expenses of $16,520.51, cash withdrawals of $9,122.93 and cheques of $122,705.72. The total expenses were $211,503.38 leaving a profit of only $14,988.85. The 2015 statement of income and expenses show a net income of $10,585. No break-down for many of the cheques was possible as the pages from the bank statements with a summary of the cheques were missing and the cheques themselves were not produced. Further, if the only source of income for the father is from […], then there is no explanation as to why the 2015 financial statement of the company indicates revenues of only $182,029 which leaves an unexplained the discrepancy of $44,163.23 between the deposits of $226,192.23 and the statement of revenue and expenses.
85In 2016, the total deposits are $224,976.66. The father's major expenses were is home expenses were $41,524.23, his personal expenses of $3,403.86, car expenses of $17,130.86, expenses for his children of $8,595.09, cash withdrawals of $17,820.00 and his cheque withdrawals of $111,720.66. Similarly, no break-down of the cheques is possible due to the lack of disclosure. The total expenses were $224,976.66 leaving a profit of only $6,796.40.
86In 2017, the total deposits were $243,748.90. The father's major expenses were his home expenses of $42,776.95, his personal expenses of $1,125.90, car expenses of $19,395.71, expenses for his children of $1,500, his cash withdrawals of $2,200 and his unexplained cheque withdrawals of $158,908.53. The total expenses were $240,396.25 leaving a profit of $3,352.65.
87In 2018, from January to April, the deposits were only $29,235.30. The father's major expenses were his home expenses of $12,155.89, car expenses of $7,863.56, his personal expenses were $0, his expenses for his children of $850, he made no cash withdrawals and his cheque withdrawals were $1,205.47. There are some other amounts totalling $6,062.79 but it is not clear what these expenses were for except for three that appear to be for materials. There is an obvious and unexplained decrease in both the deposits and expenditures in 2018 which leads the court to the assumption that another account is now being used. The total expense total $30,178.83 leaving a deficit of $943.53.
88The 2018 bank statements produced did provide copies of pages 5 and 6, being a copy of the cheques. However, the only cheques written from January to April were for hydro, Enbridge and 407 ETR bills. This does not explain how the father's expenses are being paid and leads to the conclusion that he must be paying them through another account or in cash.
89The statement of revenue and expenses for […] for 2015, does not indicate a break-down of compensation paid to the father. The gross revenue is $182,029 less cost of sales of $52,700 for a gross profit of $129,329. The major expenses are listed as automobile expenses of $14,832, office and general of $50,716, subcontractors of $41,994 and telephone of utilities of $6,063. There are some further expenses for amortization, interest and bank charges and insurance totalling $3,307. Therefore the father's net income is only $10,585.
90Neither counsel provided […] statement of revenue and expenses for 2016 or 2017 in the materials filed on this motion.
91Based on the lack of disclosure and the lack of explanations of the concerning issues raised about father's income and expenses, mother's counsel has submitted that an average of the father's deposits to his bank accounts for the years 2015 to 2017, being $230,000 would be appropriate method of calculating the father's child support obligation.
92The father and his counsel became so fixated on proving that he should not be required to pay any child support that the most basic information and explanations as to his actual income are lacking.
93I draw the obvious inference that the father is earning more than the income stated on his tax returns. He is writing off his home expenses as a business expense which although may be permitted by Canada Revenue Agency may not be legitimate expenses for child support purposes. No evidence is provided that as a contractor he needs to use his home as a place to conduct his business.
94Although it is logical that he would require his truck to conduct his business if that is his only vehicle then there would be a personal component or if he has another car then there would be no justification in both cars being deducted as a business expenses. However, this is speculation on the part of the court, as the mother provide some proof that the father may have another car, namely a Porsche, the onus then shifted to the father to deny or explain why the car was in his driveway and to explain why he was purchasing gas twice in one day if he only owns one car. He also had an obligation to provide some evidence as to how he calculated the business and personal use of his car or cars.
95The father's income at this stage of the proceedings could be based on his expenses that is, $101,191. This calculation would be done by deducting his income of $25,714 and grossing up the balance of $75,477 as in this case the father has arranged his financial affairs to pay less tax. Based on this calculation, the father's income would be $141,284 and his child support obligation would be $1,234 monthly.
96However, not all of his expenses are disclosed in his financial statement. For example, his financial statement states that he pays $200 per month as child support for his daughters, but in his bank statements there are cheques for payments of university expenses that are not reflected on his financial statement. It is therefore not clear that these are all of his actual expenses. Further, his expense may be less than outlined on his financial statement as his home and car expenses are outlined on both his financial statement and his company's financial statements without any break-downs provided of a personal and business component.
97I would have preferred to calculate the father's income based on his company's 2017 statement of revenue and expenses and then adding back and grossing up the personal component of his expenses. However, this statement was not provided.
98Even based on the company's financial statements that have been provided there is no allocation for the father's salary or a management fee. So how the father's income is calculated also remains a mystery.
99If child support were based as requested by mother's counsel on an average of the deposits to the father's bank account for the years 2015 to 2017, being $230,000, his child support obligation would be $1,875 monthly.
100Logically this amount would appear to be high, as there are legitimate business expenses such as the cost of materials and salaries of subcontractors, bank charges and interest and some car expenses. However, the father has not filed on this motion his 2017 company's financial statement with a break-down of these expenses and it now appears from his 2018 bank statement that he is diverting income.
101I am therefore left with state of unsatisfactory alternatives.
102Although I acknowledge that basing the child support on the average of the father's bank deposits will result in a temporary child support order that is very likely higher than it should be, that is the fault of the father. The father should not be rewarded for failing to provide proper disclosure and failing to provide explanations of his business dealings.
103No submissions were made by father's counsel that if income were imputed to the father at $230,000 that this amount being over $150,000 would result in an order that was inappropriate.
104Any necessary adjustments can be made when this matter is resolved either through negotiations or at a trial.
Should There be a Retroactive Order for Child Support?
105Based on the facts of this case, the mother did not approach the father for a contribution to the child's expenses until 2012 and 2013. Although she consulted a lawyer in 2013 and sent the father a formal request for child support she did not pursue the issue as she deposes that she did not have the funds. However, it was also the mother's evidence that until her accident in 2017, she was running 2 physiotherapy clinics and 2 swim schools. Therefore the issue of why the mother did not proceed with a court proceeding at that time raises credibility issues that cannot be resolved without a trial.
106Further, it is the father's evidence that the mother decided to have the child and raise it on her own without any contribution from him and it was a shock to him that she began this litigation. The mother, on the other hand, deposed that the father was somewhat involved and was aware that she wished him to contribute to the child's expenses. This issue therefore also raises credibility issues that need to be determined. Although the father has an ongoing obligation to pay child support, it would be unfair to the father on a temporary motion to require him to pay retroactive child support on these disputed facts.
107However, this motion was originally scheduled to be heard on January 23rd and then rescheduled to March 28th and then again rescheduled to July 26th. As a result of the preliminary issue raised at the last minute by father's counsel on July 26th, the motion needed to be adjourned to permit the mother's counsel an opportunity to respond. All of the delays were a result of the father not being prepared to proceed and his litigation strategy. Therefore the child support order shall be effective as of the original date for this motion.
Should the Father be Required to Pay the Full Share of the Child's Special and Extraordinary Expenses?
108The mother initially was not represented by counsel and did not claim in her Application that the father be required to pay his share of any section 7 expenses and as a result she was not required to serve and file a financial statement. Although the motion requested an order that the father pay the full share of these expenses, the mother did not file her financial statement.
109Counsel for the mother agreed that he could not proceed with his claim with respect to the section 7 expenses without the mother's financial statement. Mother's counsel was given leave to amend his Application to include this claim.
Conclusion
110There will be a temporary order as follows:
The Respondent is found to be the biological parent of the child T. K. born […], 2009
Based on an imputed income of $230,000.00 the Respondent shall pay to the Applicant child support, based on the Child Support Guidelines, of $1,875 per month as of February 1, 2018. The Respondent shall be given credit for any funds already paid in accordance with the order of November 3, 2017.
The Applicant has leave to amend her Application within 30 days to include a claim for the Respondent to contribute to the child's special and extraordinary expenses.
This order is without prejudice to the Applicant's claim for retroactive table child support and special and extraordinary expenses.
Support Deduction Order to issue.
111As the successful party the Applicant is presumed to be entitled to costs of this motion and costs previously reserved. If counsel are unable to resolve the issue of costs, counsel for the Applicant shall submit written costs submissions not to exceed 3 pages with a Bill of Costs and any Offer to Settle attached within 30 days. Counsel for the Respondent shall submit her written response not to exceed 3 pages with any Offer to Settle and a Bill of Costs, if desired, within 30 days of receipt of the Applicant's costs submissions. All submissions to be filed with the trial co-ordinator.
Released: September 17, 2018
Signed: Justice Roselyn Zisman