ONTARIO COURT OF JUSTICE
BETWEEN:
Brandon Feyen
Applicants
— AND —
Samantha Mills
Respondents
Before Justice S.E.J. Paull
Trial Held June 19-23, 2023
Reasons Released on July 10, 2023
Sandy Bruce counsel for the applicants
Amanda Taerk counsel for the respondents
PAULL J.:
1The parties are the parents of one child, Jonathan born […], 2014.
2They resolved on a final basis the decision-making and parenting time issues and filed minutes of settlement on April 12, 2023 agreeing to a week about shared parenting arrangement.
3The trial proceeded on the financial issues of child support and spousal support. Both parties seek to impute income on the other for the purposes of the support claims. Both agree that Mr. Feyen is entitled to credit for the monies he has already paid.
4With respect to spousal support Mr. Feyen is not disputing entitlement at the time of separation but is of the view that the voluntary payments he has already made for spousal support have satisfied Ms. Mills’ claim. Ms. Mills argues that Mr. Feyen’s income is significantly higher than claimed and that he has underpaid child and spousal support.
5The court heard evidence from the parties, their current partners, and the applicant’s father.
The Law
6The Family Law Act requires that a court making an order for the support of the child to do so in accordance with the Child Support Guidelines (CSG). Section 19 provides that the court may impute to a spouse “such amount of income … as it considers appropriate” and provides a non-exhaustive list of such circumstances.
7Section 19(1)(a) of the CSG permits the court to impute such income to the spouse if they are 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 spouse.
8Imputing 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. Clause 19(1)(a) of the guidelines is perceived as being a test of reasonableness. Drygala v. Pauli 2002 41868 (ON CA), [2002] O.J. No. 3731(Ont. CA).
9The Ontario Court of Appeal in Drygala v. Pauli 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 reasonable educational needs, the needs of the child of the marriage, or reasonable health needs?
If not, what income is appropriately imputed?
10The 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.
11The first element of the test requires a consideration of whether the spouse is intentionally unemployed or under-employed. The onus is on the person requesting an imputation of income to establish an evidentiary basis for such a finding. Homsi v. Zaya, 2009 ONCA 322
12However, in Graham v. Bruto, 2008 ONCA 260, the court inferred that the failure of the payor to properly disclose would mitigate the obligation of the recipient to provide an evidentiary basis to impute income.
13If underemployment is established, the onus shifts to the payor to show one of the exceptions of reasonableness. Rilli v. Rilli, 2006 34451 (ON SC), 2006CarswellOnt 6335 SCJ.
14Cook v. Burton 2005 1063 (ON SC), [2005] O.J. No. 190 (SCJ) and Stoangi v. Petersen 2006 24124 (ON SC), [2006] O.J. No. 2902 (SCJ) set out that cogent medical evidence in the form of detailed medical opinion should be provided by the payor in order to satisfy the court that his/her reasonable health needs justify his/her decision not to work.
15Even if the court accepts that the party has health-related challenges that may impact their income earning capacity, it must consider the nature and extent of the impact and whether the party could work on a part-time basis or in a less demanding position. Bentley v. Bentley, 2009 CarswellOnt 562 (S.C.J.); Kinsella v. Mills, 2020 ONSC 4785.
16The court in Lawson v. Lawson, 2006 26573 (Ont. C.A.) cites Dryagla:
Section 19 (1) (a) of the Guidelines is perceived as being a test of reasonableness. The court must have regard to 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.
17Lifestyle is clearly not a type of income, receipt or benefit included in total income. Canadians are not taxed on lifestyle, but lifestyle can be evidence to ask the court to draw a reasonable inference that the payor has greater income than that disclosed. Bak v. Dobell, 2007 ONCA 304.
18Once basic maternity leave ended, the court imputed full income to mother when she wanted to take extended leave in Lachapelle v. Vezina, 2000 22446 (ON SC), [2000] O.J. No. 3171 (SCJ). Followed in Scott v. Szluinska, 2019 ONSC 5804, where income imputed to father after staying at home with new child for 7 months. It is recognized that generally a newborn child or a child of very young age is a child who needs care at home in the context of s. 19(1)(a), but childbirth does not provide an automatic relief from a parent’s child support obligations, the circumstances of each situation must be evaluated, any period of non-support must be reasonable in the circumstances. McCaffrey v. Paleolog, [2011] B.C.J. No. 1753 (C.A.).
19A party’s childcare responsibilities to other children can be a legitimate reason for a reduction in income. J.C.M. v. K.C.M., 2016 ONCJ 475, par. 171; Black-Johnson v. Black, 2016 ONCJ 736. However, the choice to reduce income for this reason must be reasonable. See: H.A. v. M.M., 2016 ONCJ 246.
20In Loscerbo v. Loscerbo, 2008 MBQB 183, [2008] M.J. No. 246 (Q.B. (Fam. Div.)), the court held that income can be imputed to a parent for a decision to reduce hours to have a second family. Followed in Terracol v. Terracol, 2010 ONSC 6442.
21Section 19(1)(g) of the Child Support Guidelines permits the court to impute such income to a spouse including when a spouse unreasonably deducts expenses from income.
22A review of the case-law respecting business deduction claims reveals a general theme that in determining whether expenses should be added back into a parent’s income for child support purposes, an important consideration is whether there is a benefit derived from the business expenses that employed people would have to cover from their personal income. Izyuk v. Langley, 2015 ONSC 2409.
23In Osmar v. Osmar, 2000 22530 (ON S.C.), Aston J. held that: There is a substantial body of case-law under s.19(1)(g) of the Guidelines, not all of it consistent. It is fair to conclude that judicial discretion in this area makes the determination of income more of an art than a science. In my view, the Guidelines require the court to examine expenses from the perspective of balancing the business necessity against the alternative of using those funds for child support. The court should respect the right of self-employed persons to run their business as they see fit, but may, nevertheless, question whether particular expenditures ought to be indirectly subsidized by lower child support. (para. 5).
24It is a fundamental obligation in support cases that a parent must make full and complete financial disclosure to ensure that the information required to make a decision on the issue is before the court.
25A self-employed person has the onus of demonstrating clearly the basis of their gross and net business income. This includes demonstrating that the deductions from gross income should reasonably be taken into account in the deduction of income for child support purposes. Whelan v. O’Connor, 2006 13554 (ON SC), 2006 CarswellOnt 2581 (SCJ).
26The same test for imputing income in child support cases (Drygala v. Pauli) applies in spousal support cases. Rilli v. Rilli, [2006] O.J. No. 2142 (SCJ); Perino v. Perino 2007 46919 (ON SC), [2007] O.J. No. 4298 (SCJ).
Evidence and Analysis
27The parties met and were married young. Jonathan was born […], 2014 when Ms. Mills was 17 and Mr. Feyen was 21. There were married on June 27, 2015 and lived with Mr. Feyen’s grandparents until the summer of 2019 when they moved to their own rental home in Woodstock and then the rented home on the edge of Norwich that Mr. Feyen still resides in.
28They separated on July 8, 2020 when Ms. Mills moved out of the home. She initially rented a home in Woodstock but later moved back to Norwich in close proximity to Mr. Feyen and to Jonathan’s school. Since separation the parties have maintained shared decision-making and a week about shared parenting schedule. This was confirmed in the final order made on consent on April 12, 2023.
29Mr. Feyen is a residential framer by trade. In 2018 he was employed as a framer and also started his own business called Feyen Precision Framing. The business is not incorporated and run as a sole proprietorship. He has operated this business since that time, and it remains his only source of income starting in 2019.
30The level of income he earns from his business was at issue in this trial. His personal income tax returns and notices of assessment and reassessment disclose the following significant losses:
a. For 2018 his ITR and NA show $44,949 of employment income.
b. For 2019 his NA shows $36,250 of employment income with net business income of $-262,482, for a total line 150 income of $-226,232.
c. For 2020 his notice of reassessment shows $65,000 of employment income with net business income of -$161,743, for a total line 150 income of $-98,743.
d. For 2021 his ITR shows $66,250 of employment income with a net business income of $-184,439.57, for a total line 150 income of $-18,189.57.
e. For 2022 his ITR shows $52,500 of employment income with net business income of $-20,188.26 for a total line 150 income of $32,311.74.
31Mr. Feyen also provided unaudited profit and loss statements with details for 2019-2022 showing the following business losses:
a. 2019: $-41,288
b. 2020: $-167,707.41
c. 2021: $-231,121.48
d. 2022: $-18,432.26
32While he had significant gross revenue he also had high levels of expenses, particularly for wages as he had several crews operating in 2020 and 2021. The level of wages alone paid in these years were roughly equivalent of his gross income which included the HST that he collected and was required to remit.
33Mr. Feyen testified that the employment income he reported on his tax return came from the business based on an amount he determined he could draw. However, there were times when he did not pay himself when there was not enough money in the business, and he would make up these payments at a later date.
34Mr. Feyen had no prior business or bookkeeping experience and acknowledged that errors were made that he is trying to rectify now. His father, Bradley Feyen, has been assisting him in keeping the books for the business, and has lent him money along with other family members when needed, usually for the purposes of meeting payroll. He also used monies collected for HST and employee remittances to keep afloat. He testified that the result is that he now has debt totaling $346,052.79 which is mostly owed to CRA for outstanding HST and employee remittances. He testified that he is currently working with CRA on a plan to pay the money he owes.
35He testified that he has only two bank accounts, one for business and one for personal use. While he endeavored to keep them separate, monies became intermingled at times. He provided several years of bank statements for both accounts.
36He testified that he is not good with numbers and that his father was responsible for bookkeeping. When confronted by counsel with the multitude of apparent discrepancies and vagaries in his records, he repeatedly stated that he did not know and deferred to his father. He did acknowledge that he was ultimately responsible for his business and that he was the only one to have the authority to move money out of his bank accounts.
37His father testified that he assisted his son with the bookkeeping by using QuickBooks. He acknowledged no experience or training in business bookkeeping and to feeling “in over his head” particularly when Mr. Feyen started running multiple crews. He testified that he did the best he could but that mistakes were made. Bradley Feyen confirmed that he and other family members had loaned Mr. Feyen money at times to keep the business afloat so that he could make payroll.
38Mr. Feyen stated that he was “robbing Peter to pay Paul” which led to the significant liabilities he now has, primarily with CRA. Mr. Feyen acknowledged that he required an accountant but never hired one because he could not afford it.
39There were references in the bank statements and the profit and loss reports to loan repayments. Many of these and other withdrawals were taken as cash back transfers to Mr. Feyen’s personal account for the business account and then withdrawn in whole or in part in cash. He testified he would often repay these loans in cash. He also appears to owe $40,000 as part of an interest-free Covid-19 loan the government offered.
40However, neither Mr. Feyen, his father, nor his financial documents make it clear the full extent and current status of the loans and debts.
41Mr. Feyen testified that he is trying to get back on track and to work to pay off all his debts. Since 2022 he has reduced his operation to one crew that he runs, which is more manageable. He points to the reduced business loss in 2022 of $18,000 which he views as a hopeful sign he is moving in the right direction.
42He testified that it is his dream to have his own business but acknowledged that if his restructuring efforts are not successful the business will likely not survive the year and he will need to find a job framing for someone else.
43Mr. Feyen’s current partner, Alora Schram testified as follows:
a. she and her three children have lived with Mr. Feyen and Jonathan (during alternate weeks) since November 2020.
b. Despite having court orders, she receives no support from the fathers of her other children.
c. Since April 2021 she has been working for Mr. Feyen’s business organizing the paperwork and tracking the hours worked.
d. When she started working for Mr. Feyen she said there were papers everywhere and that you could not find anything. She has since organized and filed all the documents. She also tallies the worker’s hours and sends that information to Bradley Feyen on a weekly basis.
e. She is paid a salary of $261 a week from the business but because of a lack of funds does not always get paid. She estimates that she works three hours a day.
f. Her biggest source of income is child tax benefit of $1286 a month.
g. She has debts including a vehicle loan, student loan, two credit cards, and a Money Mart loan.
h. She acknowledged having a hard time making ends meet at times and having to borrow money from her mother.
44Ms. Mills testified as follows:
a. she is currently 27 years old.
b. When she and Mr. Feyen lived with his grandparents she acknowledged they had little money, struggled at times, and had “robbed Peter to pay Paul”.
c. She encouraged Mr. Feyen to start his business in 2018. He worked long hours and she took care of Jonathan and managed their household.
d. She experienced mental health struggles starting in 2015 which she addressed through counselling and a psychiatrist. Presently she has generalized anxiety but indicated it was nothing significant.
e. She has not worked and has no personal income. She is not currently receiving CTB because of an overpayment following separation when she continued to receive the full amount despite the parties shared parenting arrangement.
f. She has lived with her current partner, Bradley Book, in Norwich for approximately two years. They have a child together born November 2022 and she is pregnant again and expecting in November 2023. He works full time earning approximately $47,000 per year.
g. They struggle financially and sometimes have no food.
h. She acknowledged in cross-examination that following separation Mr. Feyen gave her first and last months’ rent and $2800 per month. She acknowledged that each month there were two receipts for $1150 each for spousal support and one receipt for $500 for child support.
i. She also acknowledged that she has continued to receive the $500 per month since separation, and received approximately $40,000 in addition to that until those payments were stopped in late 2021. She denies receiving any other monies from Mr. Feyen.
j. She disputes that the parties had an agreement about limiting the spousal support to $40,000.
k. She wants to work but is not working presently. She plans to complete her GED and was considering pursuing a career as a PSW. She wanted to do this previously but did not have the required identification.
l. She acknowledged that business and numbers were not “her thing”, and that she had no idea how much Mr. Feyen earned. She only became aware that the figures were “super-high” in this litigation. Prior to separation she observed Mr. Feyen spending a lot of money on tools, two trailers, and a work truck which led her to believe that he had more money. She never saw the books of the business but believed the business was “booming”.
45Ms. Mills’ partner, Bradley Book testified as follows:
a. He moved in with Ms. Mills in January 2022.
b. He pays the rent of $1995 per month and all the bills. He works full time as a machine operator and in 2021 earned $47,666. This figure was lower in 2022 because he was on parental leave for a period of time.
c. He has health benefits through work which cover Ms. Mills and Jonathan, which cover 90% of costs including for dental and optical.
46There were some areas of both parties’ evidence that were problematic.
47For Mr. Feyen some examples include:
a. His financial statement was dated February 17, 2022 and was not updated prior to trial. While he stated that his circumstances were mostly the same there were some changes including no longer having one vehicle and the loan associated with it. He also testified that the circumstances of his business changed significantly since that time.
b. Some of the figures in his financial statement were clearly erroneous. For example, he acknowledged when challenged that he was not in fact spending $750 a month on school fees and supplies. He also could not adequately explain why his pet care was $480 per month. His entry of $500 per month for tobacco also seemed excessive particularly given the evidence of his precarious financial circumstances.
c. His financial statement showed a sizable deficit between his stated income, which was the draw of $60,000 per year, and his stated expenses which were close to $160,000 per year. However, it was clear in his evidence that the entirety of his home rent and home utilities were being paid directly from his business account and not from the monies he claimed as his draw. These payments represent a personal benefit he has not indicated on his financial statement which would have increased his income. His failure to include this had the effect of inflating the monthly deficit he claimed.
d. His financial statement was also entirely unclear on his level of business and personal debts. It listed some debts including to his grandfather but did not include the $40,000 Covid-19 loan that appears on his bank statements to remain outstanding.
e. His business is a sole proprietorship and all of its assets/income and liabilities are his personally. It was not helpful that all this information was covered in his financial statement under the category “Interest in a Business” as $-346,052.79.
f. He testified to significant debts primarily to CRA but did not provide the particulars. He was very specific in his testimony that his level of debt is $346,052.79, which is the same amount he claimed on a financial statement sworn 16 months ago. It is highly unlikely that his level of debt would have remained identical over that period of time.
g. There was no other documentary evidence provided from CRA or in his business records that clearly outline the level of debt. How this number was arrived at remained unclear.
h. He was paying all his child and spousal support payments for 2020 and 2021 out of his business account as expenses primarily in the category of settlements/penalties. It had the effect of inflating his business expenses on his profit and loss reports. Further it appears he was claiming more payments from his business account going to Ms. Mills for support than appear to be the case. For example, in 2021 when all the payments entered in the profit and loss details going to Ms. Mills (under the Name or Split categories) the total is just over $50,000. Mr. Feyen’s evidence was that he paid her $2800 per month in 2021 which totals $33,600.
48It was abundantly evident from his business and banking documents that his record-keeping was not done properly and the movement of money in and out, and between his business and personal accounts was not properly tracked. There was more money going into his personal account from the business account then could be accounted for by his stated draw. His responses to questions about these issues was that he did not know, or it was for debt repayments which he would transfer from the business to personal account and then withdraw in cash to pay off.
49I note that the court ordered him on February 27, 2023 to provide, among other things, any loan document with an updated statement of account for each, and an outline of all business and personal loans from 2019 to present. None of this evidence was led at trial. Overall, his evidence about the extent and status of his liabilities was left unclear, despite the fact that it was central to his position.
50As a self-employed individual he has the onus to provide clear evidence on his financial circumstances. While he provided all his bank statements and the printouts from QuickBooks, there were aspects of his financial circumstances that were not particularly clear.
51Self-employed individuals have 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. Meade v. Meade, (2002) 2002 2806 (ON SC), 31 RFL 5th 88 (Ont. SCJ).
52This includes the obligation to present information in a user-friendly fashion. A recipient should not have to incur the expense to understand it. Reyes v. Rollo, 2001 28260 (SCJ).
53While a self-employed party does not have an obligation to produce an income analysis if their income is called into question, a self-employed party has an obligation to satisfy the court of their true income. Sargalis v. Sargalis, 2019 ONSC 530 (Sup. Ct.), para. 11. This may require an expert. Lafazanidis v. Lafazanidis, 2020 ONSC 5496.
54This concern with the state of his financial situation was reflected by Justice Neill in her endorsement of November 30, 2022 which stated that the court “strongly encouraged the father to obtain a business valuation to provide an accurate assessment of his income”. This would have greatly assisted in moving this matter forward. He did not do this and testified that he could not afford to do so.
55Despite these concerns, the disclosure and evidence he did provide permits the court to make certain findings.
56It was not disputed that Mr. Feyen is a hard worker and a skilled framer. Ms. Mills confirmed he worked long hours and could run his own framing crew, which led her to support him starting his own business.
57However, he is also a young man with no apparent training or experience in running a business. He had virtually no knowledge of the state of his business, and it was run, at least financially, very poorly. I do not fault his father for his efforts to help his son, but he was also not able to manage the bookkeeping. He also had no experience or training running a business or in bookkeeping.
58I do not find that the gaps in information or the confusing state of the business records and bookkeeping are an effort on either Mr. Feyen or his father’s part to mislead or hide Mr. Feyen’s income. Rather it speaks to a lack of experience and competence in running a business. Mr. Feyen and his father were candid that errors were made, and his father acknowledged being out of his depth.
59It is clear that Mr. Feyen was also overwhelmed trying to manage the costs of multiple crews, and his father was overwhelmed trying to account for it all.
60Despite the issues with the financial disclosure provided, it nonetheless satisfies me that Mr. Feyen’s business was simply not viable and operated at a significant deficit.
61I accept the level of wages he was paying his employees as disclosed in the profit and loss statements and the details provided. It clearly outlines the specific payments to each employee over time that on their own exceeded the revenue received, particularly after the HST was deducted. His business is particularly labour-intensive requiring the movement of employees and materials to different job sites. In 2020 and 2021 he ran multiple crews and had up to 20 employees.
62Since 2022 he has only one crew which he operates. While the revenue is significantly reduced so too are the costs. In this way it can be said that his business may be approaching viability.
63As Ms. Mills points out the revenue of the business was high. Unfortunately, so to were the labour costs. Perhaps Mr. Feyen did not quote the jobs accurately or perhaps his crews were not working efficiently. Either way, even with a generous removal of non-business expenses and questionable business expenses, the labour expenses alone significantly exceeded revenue, and the more crews he operated the more the deficit mounted. Further, this does not consider the material and transportation costs which I have also accepted would be significant for this type of business.
64I accept Mr. Feyen’s evidence that as a result of this he, as many struggling businesses do, “robbed Peter to pay Paul”. He failed to make required remittances and borrowed money from family at times to make payroll. While the full extent was unclear, the detailed profit and loss reports and bank statements made references to loans from family, and more importantly there appeared to be no reference in his banking or financial statements to remittance payments to CRA. The balance of his bank accounts consistently and frequently hovered around $0.00.
65I accept the evidence of Mr. Feyen’s partner, Alora Schram. I found her evidence to be clear, convincing, and cogent. She answered questions in a straightforward manner and was consistent about the state of the household finances.
66Ms. Schram has significant debt including a Money Mart loan and a car loan that includes the amount owing from Mr. Feyen’s previous vehicle. She saves money in advance of her children’s dental appointments to make sure she has enough. They do not travel, and they own no real property. There is no evidence that they lead a lavish lifestyle. Rather, it is clear their lifestyle is a modest one and that they struggle at times to make ends meet.
67With respect to Ms. Mills there were also areas of her evidence that were problematic.
68For example, her financial statement sworn April 11, 2023 included entries for $250 per month each for dental and optical care. During cross-examination she acknowledged that she did not spend these amounts each month. She stated she used $250 for dental care because Jonathan recently had an appointment and that was how much it cost.
69With respect to optical she also acknowledged she was not spending $250 per month but that both her and Jonathan require glasses and her last pair cost $700 and Jonathan’s cost $600.
70These errors had the effect of inflating expenses. However, the real concern with this evidence was that her partner testified that he had employment benefits which covered both Ms. Mills and Jonathan and that he had 90% coverage of both dental and optical. While I accept that Ms. Mills is not sophisticated or financially savvy, like Mr. Feyen, she was not clear on her own financial situation.
71However, I accept her other evidence about the financial circumstances in her home. I also accept the evidence of her partner Bradley Book. His evidence was clear, convincing, and cogent and presented in a straightforward manner. Mr. Book is clearly a hard worker and supports the family as best he can. They own no real property and lead a modest lifestyle. It was clear their family also struggles to make ends meet.
72The parties have had a shared parenting arrangement since separation. The parties also agree that any support obligation start at the time of separation with Mr. Feyen being credited for monies paid. They agreed that Mr. Feyen paid $500 a month in child support since separation in addition to approximately $40,000 and spousal support.
73While they disagreed on the nature of their support agreement and when the payments ended, they agree that the sums were paid, and that Mr. Feyen is entitled to a credit in these amounts.
74I also accept Ms. Mills’ position that there was no clear agreement on these issues and that she is not precluded from seeking support in different amounts. The parties did not have a formal separation agreement or anything in writing regarding support.
75I also agree with Ms. Mills that there are no other amounts for which Mr. Feyen is entitled to credit, regardless of how he may have entered payments in his business records.
Imputing Income on Mr. Feyen
76It was argued that significant income should be imputed to Mr. Feyen under section 19(1)(g) by adding back portions of claimed business expenses that were either not business related or where he derived personal benefit.
77The submission was that these portions of expenses should be added back to his draw income of $65,000. Ms. Mills position was that this would lead to income for support purposes of $193,398 for 2020, $229,610 for 2021 and $153,522 for 2022.
78I agree with counsel for Ms. Mills that there were clearly areas of business income that would trigger imputation under section 19 (1)(g), including the support payments paid by the business, and a portion of the rent and utilities for the family home.
79However, this is not the appropriate approach to determine Mr. Feyen’s income in my view. These amounts would be added back to his total or line 150 income and not just the entry indicating his draw amount. It is important to note that while he chose to enter his draw under employment income on his income tax returns, it was derived entirely from his business operations.
80Even if I accepted the amounts sought to be imputed back to his income it would still be entirely offset by the sizable business losses. I have accepted that the wages he was paying his employees were reasonable in the circumstances of his labour intensive business. The revenue he brought in after HST was deducted could not even cover these expenses. This does not consider the transportation and material costs which I have also accepted would be significant for this type of business.
81His business was not operating in a viable manner. Imputing back expenses that were not legitimate or from which he received a personal benefit would not change that, or result in a total line 150 income approaching the level of income argued by Ms. Mills.
82In my view the appropriate section to use in this case is section 19(1)(a) which determines if Mr. Feyen is intentionally under unemployed.
83Under this analysis the onus is on Ms. Mills to establish that Mr. Feyen is intentionally under employed and she has satisfied this onus for the following reasons:
a. Mr. Feyen is an experienced residential framer and is capable of working full time and earning an income. However, his line 150 incomes in his income tax returns for all years since he started his business show no total income and only sizable losses. He has chosen to run a business in a manner that was clearly not viable rather than pursue employment elsewhere.
b. Further, his financial records were so poorly organized it was challenging to get a clear picture in certain areas. While he may not have intended to be misleading, his failure to paint a clear picture in all respects would satisfy the onus on Ms. Mills to establish underemployment.
84With respect to Mr. Feyen’s onus to establish the reasonableness of his business venture, he acknowledges that his line 150 income is not appropriate for support purposes. He also acknowledges that his draw of $65,000 is also not appropriate. On this basis and on the basis of this court’s findings that his business was not viably operated, I find that his underemployment in furtherance of this venture was not reasonable.
85The issue then becomes how much income to impute on Mr. Feyen?
86At the end of trial, Mr. Feyen submitted that in the circumstances an imputation of income of $85,000 is appropriate for support purposes.
87Whether he is able to get his business out of the red and into the black remains to be seen, but he is an experienced and hard-working framer and capable of earning a good income.
88In all the circumstances of this case I agree that $85,000 is reasonable and appropriate to impute on Mr. Feyen for support purposes commencing in 2020. If he chooses to continue to pursue this business and continues to show a net income loss, he will still be paying support on the basis of an income of $85,000. I also note that $85,000 is significantly higher than he appears from his records to have paid his highest earning employees who were in the $40-45,000 range annually.
89Based on all the evidence this court has heard throughout this trial, it is not reasonable to expect that he did or could possibly have earned between $150,000 and $230,000 in personal income from this venture as submitted by Ms. Mills.
Imputing Income on Ms. Mills
90With respect to Ms. Mills, I am of the view that Mr. Feyen has satisfied the onus of establishing that Ms. Mills is intentionally unemployed. She acknowledges a child support obligation, and while I do not find that she has intended to evade her obligation to provide child support, she has voluntarily chosen not to pursue employment since separation.
91The second part of the test requires Ms. Mills to establish the reasonableness of her choices. She testified in cross-examination that she has not worked because of her mental health challenges. This was somewhat at odds with her evidence in chief that presently she still has generalized anxiety but that it is nothing significant. Further, she has not provided any evidence to establish a material disability.
92A party who wishes to have her medical condition taken into account as a basis that she cannot work bears the onus to establish material disability. This goes beyond testifying that she suffers from depression and anxiety: she must establish that the extent of her condition disables her from work. This onus cannot ordinarily be discharged solely on the basis of the party’s testimony. She would need to produce medical records and expert evidence about her condition, prospects and treatment. Geishardt v. Ahmed, 2017 ONSC 5513; Wilkins v. Wilkins, 2018 ONSC 3036.
93I am not persuaded that Ms. Mills mental health offers a reasonable excuse for her unemployment.
94Presently Ms. Mills has the care of Jonathan during alternate weeks, and her newborn child from her current relationship. She is also pregnant and expecting another child later this year.
95I accept that her childcare responsibilities are a legitimate reason for a reduction in her capacity to earn income. She has a very young child and another on the way. However, this does not provide automatic or absolute relief from her support obligations.
96The parties separated three years ago, and she appears to have done nothing since then to be in a position to provide support for Jonathan. This is despite the fact that the parties maintained a week about shared parenting arrangement since separation. She was not disproportionately burdened with childcare from July 2020 to the birth of her next child in November 2022, but she has taken no steps to work or to make herself employable. This was not reasonable in the circumstances given her legal obligation to support Jonathan to the extent that she is able.
97Overall, I am satisfied that Ms. Mills has established that a reduction in her earning capacity is reasonable given her childcare responsibilities, however it does not eliminate her responsibility or capacity to earn some level of income.
98The issue then is what would be a reasonable income to impute on Ms. Mills?
99Mr. Feyen submits that she is fully capable of earning full time minimum wage income which currently produces an annual income of $34,424.
100Ms. Mills is young and has not established any health issues which would reduce her earning capacity. She also presents as articulate and personable. She is employable. However, she has no employment history or experience, has not completed her GED, or received any other training. Any employment she would obtain would likely be entry level and in the minimum wage range.
101She has the capacity to earn an income, but something less than full time at minimum wage is warranted. When all the circumstances are balanced income for support purposes shall be imputed at $25,000 per year commencing in 2020.
Child Support
102As a result of the parties having a shared parenting arrangement since separation Section 9 of this CSG is triggered which reads as follows:
Shared parenting time
- Where each parent or spouse exercises parenting time with respect to a child for not less than 40 per cent of the time over the course of a year, the amount of the order for the support of a child must be determined by taking into account,
(a) the amounts set out in the applicable tables for each of the parents or spouses;
(b) the increased costs of shared parenting time arrangements; and
(c) the condition, means, needs and other circumstances of each parent or spouse and of any child for whom support is sought. O. Reg. 32/21, s. 3.
103Citing the leading case of Contino v. Leonelli-Contino, 2005 SCC 63 Armstrong, J., of the British Columbia Supreme Court, in Flick v. Flick, 2011 BCSC 264 identified the following factors for consideration in determining the amount of support to be paid in a shared parenting situation under section 9 of the Federal Child Support Guidelines which I view as applicable to section 9 of the provincial legislation:
a. the language of s. 9 warrants emphasis on flexibility and fairness (para 39)
b. it requires acknowledgement of the overall situation of the parents and the needs of the child (para 39)
c. the weight of each factor under s. 9 will vary with the particulars of the case (para 39)
d. take into account the financial situations of both parents (para 40)
e. calculating the set-off amount is the starting point, not the end of the enquiry (para 49)
f. the set-off amount does not take into account actual spending patterns as they relate to variable costs [or] the fact that fixed costs of the recipient parent are not reduced by the increased spending of the payor (para 48)
g. the court retains the discretion to modify the set-off amount where, considering the financial realities of the parents, it would lead to a significant variation in the standard of living experienced by the child as they move from one household to the other (para 51)
h. one of the overall objectives of the Guidelines is, to the extent possible, to avoid great disparities between households (para 51)
i. the court must examine the budgets and actual expenses of both parents in addressing the needs of the child and to determine if shared custody has in effect resulted in increased costs globally (para 52)
j. increased costs would normally result from a duplication and the child effectively being given two homes (para 52)
k. the expenses will be apportioned between the parents in accordance with their incomes (para 53)
l. the analysis should be contextual and remain focused on the particular facts of each case
m. the court has full discretion under s. 9(c) to consider “other circumstances”. (para 72)
104The court has found that Mr. Feyen’s income for support purposes is $85,000 and for Ms. Mills is $25,000. Under the CSG this triggers an obligation of $792 in child support for Mr. Feyen and $199 for Ms. Mills, with a set off of $593.
105This is not the end of the analysis. The court must also consider the increased costs of the shared arrangement and the condition, means, needs and other circumstances of each party and Jonathan.
106There are increased costs associated with any shared parenting arrangement. However, in the week about schedule in this case neither party has been disproportionately burdened with any particular expense or responsibility which might be the case when a shared arrangement is, for example, when one party has the child primarily during the school week, as opposed to on weekends and holidays.
107Both homes are facing significant financial pressure, and both continue to struggle to make ends meet at times. Ms. Mills is presently experiencing increased financial pressure because she is not receiving the CTB, although this was due to her not notifying CRA of her changed status after separation. She stated that it has been withheld until there was a final order on parenting. That final order was made on April 12, 2023 and will permit her to reapply once again for CTB. Given that she has Jonathan half of the time, one additional child full time and another on the way later this year, and given the household income she is likely to qualify for a significant benefit.
108With the imputed incomes the combined household incomes of each party are roughly similar with Mr. Feyen’s home likely being somewhat higher. However, this amount is offset to some degree by the employment benefits that Mr. Book has which cover 90% of medical and dental expenses for Ms. Mills, Jonathan, and their other children.
109Mr. Feyen and his partner have no employment benefits available and as Ms. Schram stated, she needs to save bits of money at a time in advance of appointments in order to pay for them.
110I am satisfied that the general level of overall income, benefits, and household expenses in each home establishes that there is no significant disparity in standard of living, and that both homes likely struggle at times to make ends meet.
111While there is no presumption of the table amount or a reduction in the table amount for a shared arrangement, when all the circumstances are considered the set-off table amount is appropriate in my view.
112Mr. Feyen has paid $500 a month from July 1, 2020 to present when he should have been paying $593. Therefore, up to June 30, 2023 he has arrears of $3348 (calculated as an underpayment of $93 times 36 months). He shall pay ongoing child support effective July 1, 2023 of $593 per month. He shall be required to pay the arrears of child support in full within 30 days of this order, which will assist Ms. Mills while the CTB is being reestablished.
Spousal Support
113Section 30 of the Family Law Act sets out that every spouse has an obligation to provide support for his or her spouse in accordance with need, to the extent that he or she is capable of so doing. I have considered the purposes of an order for spousal support that are set out in subsection 33(8) of the Act and the factors in determining the award set out in subsection 33(9) of the Act in making this decision.
114Spousal support is not merely a consideration of needs and means. In determining the appropriate amount of spousal support, compensatory and non-compensatory considerations should be taken into account in an effort to equitably alleviate the economic consequences of the breakdown of the relationship. Rioux v. Rioux, 2009 ONCA 569, [2009] 97 O.R. (3d) 102 (OCA). Entitlement can be based on compensatory, non-compensatory or contractual grounds. Bracklow v. Bracklow, 1999 715 (S.C.C.).
115Compensatory support is premised on a spousal relationship being a joint endeavor and seeks to alleviate economic disadvantage by taking into account all the circumstances of the parties, including the advantages conferred on either spouse during the relationship. It is concerned with an equitable sharing of the benefits of the relationship. Contractual entitlement, on the other hand, flows from the express or implied agreement. Finally, non-compensatory support may be ordered “where it is fit and just to do so.” Poirier v. Poirier, 2010 ONSC 920.
116Where compensation is not the basis, the support obligation may arise from the relationship itself when a spouse is unable to become self-sufficient. It can be based on need. Under this model, spousal support will be based on economic hardship resulting from the breakdown of the marriage, but not necessarily the roles assumed during the marriage. The needs-based support could therefore consider the recipient’s ability to become self-sufficient.
117The Court of Appeal in Fisher v. Fisher, 2008 ONCA 11 stated that before applying the Spousal Support Advisory Guidelines (SSAG), entitlement to support must first be established.
118Re-partnering in particular is a circumstance that the SSAGs suggest, at s. 14.7, requires case-by-case decision-making. Re-partnering is also specifically contemplated by the SSAGs (s. 13.8) as a reason to revisit entitlement to support and consider terminating it. Politis v. Politis, 2021 ONCA 541.
119Section 16 the Spousal Support Advisory Guidelines: The Revised User’s Guide (Ottawa: Department of Justice, 2016), echoes the sentiment in instructing that re-partnering “does not mean the automatic termination of spousal support, but support is often reduced and sometimes even terminated.” This depends on “whether support is compensatory or non-compensatory, as well as the length of the first marriage, the age of the recipient, the duration and stability of the new relationship and the standard of living in the recipient’s new household.”
120Mr. Feyen made voluntary payments which both parties characterized as spousal support. While the parties disagree on when these payments terminated, they agree he is entitled to a credit of $40,000 towards any spousal support order. Mr. Feyen acknowledged that Ms. Mills required assistance following the separation. He takes the position that the amount he has paid satisfies any claim Ms. Mills has for spousal support at this time.
121Ms. Mills has a compensatory claim arising out of the economic disadvantage from her delay in entering the workforce as a result of the childcare responsibilities. This permitted Mr. Feyen to work to attempt to build his business.
122Ms. Mills’ compensatory claim is not particularly strong, in that the length of the relationship was fairly short and she did not leave the work force when Jonathan was born or when they began cohabiting. Further, since separation there has been a shared parenting arrangement so neither party has been disproportionately responsible for providing care for Jonathan.
123However, Ms. Mills was delayed in entering the workforce for several years which permitted Mr. Feyen to focus on building his business.
124Ms. Mills also has a non-compensatory claim for support based on her need for assistance following separation. She has no work experience and had no income other than occasionally assisting Mr. Feyen in his business. As previously noted, Mr. Feyen acknowledged that Ms. Mills required financial assistance following separation to achieve independence.
125I am satisfied that Ms. Mills has a non-compensatory claim and a partial compensatory claim based on these factors.
126As outlined in Lazare v. Heitner, 2018 CarswellOnt 9389 (Ont. S.C.J.) duration and quantum of support are separate and interrelated tools available to courts to best achieve the purposes of an order for spousal support, which are to:
recognize any economic advantages or disadvantages to the spouse arising from the marriage or its breakdown;
apportion between the spouses any financial consequences arising from the care of any child over and above any obligation for the support of any child;
relieve economic hardship of the spouses arising from the breakdown of the marriage;
promote economic self-sufficiency of each spouse within a reasonable period of time;
spousal support can be restructured to maximize receipt during years of retraining or re-entry into the workforce, to bridge to a retirement period or to create a step down.
127On the basis of the imputed incomes on the parties and the shared residential arrangement the SSAG produce a range of spousal support between $467-$1108 per month, with $780 being the midpoint, with a minimum duration of three years and a maximum duration of nine years from the date of separation.
128Ms. Mills was clearly in need of support at the time of separation. She had no work experience or skills, and no resources. It was reasonable that amounts of spousal support were paid as they were with additional amounts upfront to assist Ms. Mills to achieve independence.
129Ms. Mills has re-partnered which is a factor to be considered. Since at least the beginning of 2022 she has resided with Mr. Book who is financially supporting her.
130I accept that her relationship with Mr. Book is a stable one. It was clear he is committed to Ms. Mills and Jonathan. They have a child together and another on the way. Ms. Mills spoke proudly of the close bond between Mr. Book and Jonathan.
131The length of the relationship between Ms. Mills and Mr. Feyen was not particularly long, between 5-6 years, and Ms. Mills was still young when the parties separated. She had just turned 24 years old when they separated in July 2020.
132One of the purposes of a spousal support order is to assist a party to achieve self-sufficiency within a reasonable time.
133Ms. Mills has not done all that would have been reasonable since separation particularly during the time she received the support payments from Mr. Feyen. She indicated a plan to finish her GED but appears to have taken no steps to do so. She indicated a desire to pursue a career as a PSW but could not because she did not have identification. There was no evidence she has taken any steps to rectify this and go forward with this or any other plan.
134Further, following separation she had the opportunity to work and/or advance her education. Following the date of since separation the shared parenting arrangement gave her alternate weeks to work or pursue a plan of training or education without childcare responsibilities, at least until November 2022. She had this opportunity and chose not to take advantage of it.
135In this regard she has not been reasonable in her efforts to promote her own economic self-sufficiency.
136However, I note that the right of spousal support ought not to be conditional upon a spouse demonstrating that he or she has made every effort to provide for themselves or become self-reliant. Indeed, the duty to self-support imposed on every spouse by section 30, is tempered with the words, “to the extent that he or she is capable of doing so”.
137Further, her decision to rapidly grow her second family is a choice that has only increased the financial strain she testified to. She appeared to have no clear plan on how she intended to financially support Jonathan and her growing family.
138In the three years since separation she has re-partnered and her need for support has reduced as a result. I have also found that she has not done all that she should have following separation to promote self-sufficiency. Finally, I have determined that there is not a significant standard of living disparity between the homes.
139Just because there is a partial compensatory basis for support does not automatically entitle a recipient to indefinite support. Choquette v. Choquette, 2019 ONCA 306.
140As previously noted the standard of living in both homes is strained at times but relatively balanced, particularly when Ms. Mills gets her CTB reinstated. Since a final order was made in April 2023 this reinstatement should be forthcoming.
141On the basis of all these considerations I am of the view that spousal support at the midpoint of $780 per month is appropriate. With respect to duration, I am also satisfied that that a fixed period of five years for support would balance the circumstances of the parties with the purposes and objectives of the spousal support order.
142The total spousal support obligation of $780 per month for five years is $46,800. Mr. Feyen is entitled to credit toward spousal support of $40,000. Therefore, he has $6800 outstanding in his spousal support obligation which shall be paid commencing July 1, 2023 at a rate of $780 per month until this amount is paid then spousal support shall terminate.
143On the basis of the foregoing a final order shall issue as follows:
For support purposes income shall be imputed to the applicant at $85,000 per year starting in 2020.
For support purposes income shall be imputed on the respondent at $25,000 per year starting in 2020.
Based on the imputed incomes the parties will share any s.7 expenses agreed to in advance and net of any benefits available on a prorated basis with Mr. Feyen paying 77% and Ms. Mills paying 23%.
On the basis of the shared parenting arrangement, commencing July 1, 2023 and monthly thereafter ongoing child support shall be payable by the applicant to the respondent in the amount of $792 per month for one child, and by the respondent to the applicant in the amount of $199 per month for one child, which leaves a set off amount payable by the applicant to the respondent of $593 per month.
As of June 30, 2023 arrears in child support payable by the applicant to the respondent are fixed at $3348 and shall be paid in full within 30 days of this order.
The applicant shall pay spousal support to the respondent in the amount of $780 per month for a period of five years at which time spousal support shall terminate. This creates a total spousal support obligation of $46,800. The applicant is entitled to a credit towards spousal support of $40,000 which leaves $6800 ( or just under 9 months at $780 per month) in spousal support owing as of June 30, 2023.
Commencing July 1, 2023 and monthly thereafter the respondent will pay $780 per month in spousal support until the outstanding obligation of $6800 is satisfied at which time spousal support shall terminate.
If either party is seeking costs and the parties are not able to agree, the party seeking an order for costs shall serve and file written submissions, not to exceed three pages, excluding attachments which shall include a bill of costs and any offers to settle by August 31, 2023, with the responding party filing written submissions, not to exceed three pages, excluding attachments which shall include a bill of costs and any offers to settle by August 17, 2023. If no submissions are received from the party seeking costs by the deadline there shall be no order as to costs.
Released: July 10, 2023
Signed: “Justice S. E. J. Paull”