DATE: February 15, 2024 COURT FILE NO. D42554/22 ONTARIO COURT OF JUSTICE
B E T W E E N:
YASMIN FENTON ACTING IN PERSON APPLICANT
- and –
JULIAN THOMAS ACTING IN PERSON RESPONDENT
HEARD: FEBRUARY 13, 2024
JUSTICE S.B. SHERR
REASONS FOR DECISION
Part One – Introduction
1This trial was about the support arrangements for the parties’ two children. The children are 9 and 5 years old (the children).
2The applicant (the mother) asks the court to impute the respondent’s (the father’s) annual income at $55,000 for support purposes. [1] She seeks child support starting on April 14, 2022. This is the date she issued her application. She also asks the father to contribute $300 each month to the children’s special and extraordinary expenses (section 7 expenses), starting on April 14, 2022, pursuant to section 7 of the Child Support Guidelines (the guidelines).
3The father asks the court to only order ongoing support based on an annual income of $32,240. He opposes the mother’s request to impute additional income to him. He proposed to contribute $100 each month to the children’s section 7 expenses. [2]
4The court relied on the trial affidavits and financial statements filed by the parties. The parties both testified. No other witnesses were called.
5The issues for the court to determine are:
a) When should child support start? b) Should income be imputed to the father, and if so, how much each year? c) What are the children’s eligible section 7 expenses? d) What amounts should the father contribute each year to the children’s eligible section 7 expenses? d) What credits should the father receive for support paid? e) How should the father pay any arrears found owing?
Part Two – Brief background facts
6The mother is 38 years old. She works in automobile sales and presently earns about $95,000 annually.
7The father is 37 years old and lives with his brother. He is self-employed as an Uber driver. He has no other children.
8The parties cohabited from 2012 until 2018. The children have lived with the mother since the parties separated.
9The mother issued her application seeking parenting and child support orders on April 14, 2022.
10On October 7, 2022, Justice Melanie Sager made a temporary without prejudice order requiring the father to pay the mother child support of $500 each month. This was based on the father’s annual income of $32,240. This remains the operative child support order.
11The father has paid the child support ordered by Justice Sager.
12On April 3, 2023, Justice Sager, on consent, ordered final decision-making responsibility for the children to the mother.
13On June 14, 2023, Justice Sager, on consent, made a final parenting time order and sent the remaining support issues to trial.
Part Three – Start date for child support
14The mother asks that child support start from the date she issued her application – April 14, 2022. The father asks that support only be calculated on an ongoing basis.
15Support from the date an application is issued is prospective support and is presumptively payable. See: Mackinnon v. Mackinnon, 2005 ONCA 331.
16This presumption was not rebutted by the father. The child support shall start on May 1, 2022, the first day of the first month following the date the application was issued.
Part Four – The mother’s income
17The mother earned $75,819 in 2022 and about $95,000 in 2023.
18The mother has also worked part-time as an Uber driver for the past month.
Part Five – The father’s income
5.1 Positions of the parties
19The mother asks the court to impute the father’s annual income at $55,000 for support purposes. She submits the father is earning or is capable of earning this level of income.
20The mother states the father is unreasonably deducting personal expenses from his Uber income. She submitted the father’s expenses should only amount to 25-30% of his gross business income. [3] She said this is the percentage amount she is deducting from her gross business income. The father reported gross business income of $79,179 in 2022. If he deducted 30% of this amount for expenses ($23,753), this would leave him with annual net income of $55,426.
21The mother also alleged the father was hiding income from other sources. The evidence did not support this allegation.
22In the alternative, the mother alleged the father was deliberately under-employed. She said he was employed as a customer service representative at a bank during their relationship and left this job. This job paid him $40,000 annually. In addition, she said the father worked part-time as an Uber driver. She submitted the father could be earning annual income of $55,000 if he looked for other work.
23The father asks for his table child support to continue at $500 each month, being the amount he is paying pursuant to the temporary order of Justice Sager dated October 7, 2022.
24The father denied hiding income or improperly deducting expenses.
25The father filed notices of assessment and income tax returns reflecting the following annual income:
a) 2019 - $34,784 b) 2020 - $30,489 c) 2021 - $29,492 d) 2022 - $30,700 e) 2023 - $25,273
26The father filed his 2022 and 2023 Statements of Business or Professional Affairs (SBPA). They showed gross business income of $79,179 for 2022 and $62,994 for 2023. [4] The father offered several explanations for his drop in income in 2023, including the saturation of the ride-sharing market, his stress arising from the breakdown of the relationship and having gone to Los Angeles to unsuccessfully pursue an opportunity to be a music producer.
27The father stated he cannot properly support his children on his present income. He said he planned to go back to school to become an electrician.
5.2 Legal considerations for imputing income
28Section 19 of the Child Support Guidelines, O. Reg. 391/97 permits the court to impute income to a party as it considers appropriate.
29Clause 19 (1) (g) of the guidelines permits the court to impute income to a payor who unreasonably deducts expenses from income.
30The jurisprudence for imputation of income sets out the following:
a) Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this obligation, the parties must earn what they are capable of earning. If they fail to do so, they will be found to be intentionally under-employed. See: Drygala v. Pauli, 2002 ONCA 870, [2002] O.J. No. 3731(Ont. C.A.).
b) The 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:
i) Is the party intentionally under-employed or unemployed? ii) If so, is the intentional under-employment or unemployment required by virtue of his or her reasonable educational needs, the needs of the child or reasonable health needs? iii) If not, what income is appropriately imputed?
c) The onus is on the party seeking to impute income to the other party to establish that the other party is intentionally unemployed or under-employed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made. See: Homsi v. Zaya, 2009 ONCA 322, [2009] O.J. No. 1552. (Ont. C.A.).
d) Once a party seeking the imputation of income presents the evidentiary basis suggesting a prima facie case, the onus shifts to the individual seeking to defend the income position they are taking. Lo v. Lo, 2011 ONSC 7663; Charron v. Carriere, 2016 ONSC 4719.
e) As a general rule, separated parents have an obligation to financially support their children and they cannot avoid that obligation by a self-induced reduction of income. See: Thompson v. Gilchrist, 2012 ONSC 4137; DePace v. Michienzi, [2000] O.J. No. 453, (Ont. Fam. Ct.).
f) It is not reasonable for a payor to return to school and not pay support, unless it is justified by a sufficient increase in earning ability that will benefit the children. See: Carter v. Spracklin, 2012 ONCJ 193, [2012] O.J. No. 1533 (OCJ); Ffrench v. Williams, 2016 ONCJ 105.
g) The court must have regard to the payor’s capacity to earn income in light of such factors as employment history, age, education, skills, health, available employment opportunities and the standard of living enjoyed during the parties’ relationship. The court looks at the amount of income the party could earn if he or she worked to capacity. See: Lawson v. Lawson, 2006 ONCA 600.
5.3 Analysis
31It was apparent from a review of the father’s SBPA in both 2022 and 2023 that expenses are aggressively deducted from his gross business income. Some of these expenses were clearly personal. When asked about the amount he had deducted for utilities, the father explained this was rent he paid to live at his brother’s home.
32The father’s 2022 SBPA included an expense of $28,004 described as other expenses. His 2023 SBPA included an expense of $22,923 as other expenses. Both statements referred the reader to page 7 of the income tax returns for details. The father did not provide a page 7 on either tax return. This made the tax returns unhelpful in assessing the father’s legitimate business expenses.
33The court recognizes it is the father’s responsibility to provide meaningful and comprehensive financial disclosure. See: Whelan v. O'Connor, [2006] O.J. No. 1660, (Ont. Fam. Ct.). However, the court does not believe the father was attempting to mislead the court. He presented as an unsophisticated and overwhelmed litigant, who struggled with understanding the details in his tax returns. The court believed the father’s evidence that he presented his receipts to his accountant who determined his net business income and prepared his income tax returns.
34The father’s credibility has been aided by his sincere efforts to pay child support. The father has paid the mother $500 to $600 every month for child support since they separated. He is not a person trying to avoid his support obligations.
35The father testified his annual business expenses range from 40 to 50% of his gross business income, after Uber deducts its fees and charges. He said the mother’s estimate of 25-30% is much too low. He explained that the more a driver works, the more wear and tear there will be on their vehicle. – expenses go up. This makes sense. The father is an experienced Uber driver, the mother has only driven part-time for a month. The court prefers the father’s estimate about the percentage of business expenses to income.
36In the absence of clear evidence of his actual expenses, the court finds the father’s business expenses are approximately 45% of his gross business income.
37The father’s allowable business expenses in 2022 are found to be $35,631 ($79,179 x 45%), resulting in a net income of $43,548.
38The father’s allowable business expenses in 2023 are found to be $28,347 ($62,994 x 45%), resulting in a net income of $34,647.
39This range of assessed income is similar to the annual income assessed to Uber drivers by this court in Isaya v. Ozo, 2022 ONCJ 321, and in Anyumba v. Keby, 2018 ONCJ 775.
40However, the analysis does not end there. It is appropriate in these circumstances to gross-up the father’s income, as he is declaring and paying tax on substantially less income than he was 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. See: Sarafinchin v. Sarafinchin.
41A software analysis indicates the father’s annual income after a gross-up in 2022 was $47,720. In 2023 it was $39,112. [5]
42The father expressed worry his vehicle will break down. However, at this point this concern is speculative. There will be no adjustment to the income imputed to him for this reason.
43The father testified he plans to stop driving for Uber and return to school to become an electrician. The court cautions him this will not affect its imputation of his income. His plan to return to school was vague and not well thought out. He has taken no steps to implement it. He did not know if he would first need to complete a GED program. He did not know how long that would take. He did not know where he would take the program, its cost, what funding was available, whether he could afford it and how long it would take. His children need support now. This would be an unreasonable career path.
44The father did not establish a medical reason to justify a reduction in the imputation of his income. He provided no credible medical evidence establishing any impairment to his ability to earn income. He provided a brief, unsigned note from a walk-in clinic he attended once in 2019. The note repeated what he reported to the clinic. The father has not had any follow-up treatment.
45A party who wishes to have their medical condition taken into account as a basis that they cannot work bears the onus to establish material disability. This goes beyond testifying that they suffer from depression and anxiety: they must establish that the extent of their condition disables them from work. This onus cannot ordinarily be discharged solely on the basis of the party’s testimony. … They would need to produce medical records and expert evidence about their condition, prospects and treatment. See: Geishardt v. Ahmed, 2017 ONSC 5513; Wilkins v. Wilkins, 2018 ONSC 3036. The father did not provide any of this necessary evidence and did not meet his onus to establish medical disability as a reason to reduce his imputed income.
46The court recognizes working as an Uber driver is a challenging occupation and competition has increased. On an ongoing basis, starting in 2024, the court will not impute the father’s income at his 2022 income level. However, the father should be able to annually earn $42,000 on an ongoing basis. He is an experienced Uber driver. His 2023 income was reduced, as he did not work when he traveled to the United States in his attempt to become a music producer. He should earn a slightly higher income in 2024. Further, his vehicle loan is almost paid off. This will reduce his expenses.
47The court will not impute any further income to the father, as requested by the mother. The income already imputed to him is consistent with his historical earnings. He earned this level of income when he worked as a customer service representative. He only has a grade 10 education. This is the income level the father is presently capable of earning.
48The guidelines table amount for two children in 2022, based on the father’s imputed income of $47,720, was $720 each month.
49The guidelines table amount for two children in 2023, based on the father’s imputed income of $39,112, was $586 each month.
50The guidelines table amount for two children, starting in 2024, based on the father’s imputed income of $42,000 is $624 each month.
Part Six – Section 7 expenses
6.1 Legal considerations
51The mother seeks an order that the father contribute towards the child’s retroactive and prospective section 7 expenses in proportion to the parties’ incomes.
52The relevant provisions of the guidelines regarding section 7 expenses are as follows:
7 (1) In child support order the court may, on either spouse’s request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family’s spending pattern prior to the separation:
(a) child care expenses incurred as a result of the custodial parent’s employment, illness, disability or education or training for employment;
(b) that portion of the medical and dental insurance premiums attributable to the child;
(c) health-related expenses that exceed insurance reimbursement by at least of $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses;
(d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs;
(e) expenses for post-secondary education; and
(f) extraordinary expenses for extracurricular activities.
7 (1.1) For the purposes of paragraphs (1)(d) and (f), the term “extraordinary expenses” means
(a) expenses that exceed those that the spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that spouse’s income and the amount that the spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate; or
(b) where paragraph (a) is not applicable, expenses that the court considers are extraordinary taking into account
(i) the amount of the expense in relation to the income of the spouse requesting the amount, including the amount that the spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate,
(ii) the nature and number of the educational programs and extracurricular activities,
(iii) any special needs and talents of the child or children,
(iv) the overall cost of the programs and activities, and
(v) any other similar factor that the court considers relevant.
7 (2) The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the parents or spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.
7 (3) Subject to subsection (4), in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.
53Unlike section 3 of the guidelines, which presumptively provides for the table amount of child support, an order for section 7 expenses involves the exercise of judicial discretion. See: Park v. Thompson, 2005 ONCA 331, 77 O.R. (3d) 601, (Ont. C.A.).
54In Titova v. Titov, 2012 ONCA 864, the court set out the following framework for determining a party’s contribution to a child’s section 7 expenses:
a) Calculate each parties’ income for child support purposes. b) Determine whether the claimed expenses fall within one of the enumerated categories of section 7 of the guidelines. c) Determine whether the claimed expenses are necessary “in relation to the child’s best interests” and are reasonable “in relation to the means of the spouses and those of the child and to the family’s spending pattern prior to the separation.” d) If the expenses fall under paragraphs 7 (1) (d) or (f) of the guidelines, determine whether the expenses are “extraordinary” as defined by subsection 7 (1.1) of the guidelines. e) The court considers what amount, if any, the child should reasonably contribute to the payment of these expenses and then applies any tax deductions or credits. f) The court determines the proportions that each party should contribute to the expenses, with the guiding principle being that the expenses will be shared in proportion to their incomes.
55The onus is on the parent seeking the special or extraordinary expenses to prove that the claimed expenses fall within one of the categories under section 7 and that the expenses are necessary and reasonable, having regard to the parental financial circumstances. See: Park v. Thompson, 2005 ONCA 331, supra.
56Where the expense is not within the means of the parties, the court may limit or deny recovery of that amount. See: Ebrahim v. Ebrahim, [1997] B.C.J. No. 2039 (SCJ); L.H.M.K. v. B.P.K., 2012 BCSC 435, [2012] B.C.J. 593 (SCJ); Simone v. Van Nuys, 2021 ONCJ 652.
57The court has the discretion to apportion the section 7 expense in a different manner than pro-rata to the parties’ incomes, depending on the circumstances of the case. See: Hamilton v. Salmon, 2023 ONCJ 343, per Justice Danielle Szandtner; Salvadori v. Salvadori, 2010 ONCJ 462, [2010] O.J. No. 4425 (OCJ); Buckley v. Blackwood, 2019 ONSC 6918.
6.2 Comment about section 7 expenses
58The court understands why the mother is seeking a $300 monthly contribution by the father to the children’s section 7 expenses. Her monthly child care expenses are substantial. The father has never contributed to them.
59Subsection 7 (3) of the guidelines sets out that in determining the amount of a section 7 expense, the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.
60The tax deductions and credits related to the mother’s child care expenses are substantial at her income level. This is because both the Federal and Provincial governments provide these benefits and credits. This means that the net amount of the child care expenses will be much lower than their gross cost, resulting in a lower monthly contribution by the father. The details of these benefits and credits are itemized in the software calculations that will be attached to this decision.
6.3 2022
61The mother incurred child care expenses of $5,257 for the children in 2022. This was a reasonable and necessary expense. It is an eligible section 7 expense.
62A software analysis shows the father’s proportionate share of the net amount of this section 7 expense was $33 each month.
6.3 2023
63The mother incurred child care expenses of $7,500 for the children in 2023. This was a reasonable and necessary expense. It is an eligible section 7 expense.
64A software analysis shows the father’s proportionate share of the net amount of this section 7 expense was $61 each month.
6.4 2024
65The mother expects her child care expenses to increase in 2024 once she files her income tax return. This is because she will no longer be eligible for a subsidy, based on her increased income. She expects this expense to increase to about $1,066 each month.
66The court will assess the eligible section 7 child care expenses for 2024 at $10,000 – reflecting that it will be less before May or June 2024, and likely more after. It is a reasonable and necessary expense.
67The court will spread payment of this expense over the entirety of the year. A software analysis shows the father’s proportionate share of the net amount of this section 7 expense is $86 each month.
68The mother also wants to enroll the children in extra-curricular activities. The court finds these expenses are reasonable and necessary. However, the court does not find they are extraordinary extracurricular activities as defined in subsection 7 (1.1) of the guidelines. They are not more than the mother can reasonably afford based on her income and the amount of table support she receives.
6.5 Proportionate payment of section 7 expenses
69The court finds the father is able to pay his proportionate share of section 7 expenses, as calculated above. He has had very low living expenses, only paying $500 each month for rent to his brother. As pointed out by the mother, he spent more on food each month than he did on child support.
Part Seven – Support credits and calculation of support arrears
70The parties agreed the father has paid child support of $500 each month since May 1, 2022. He will be credited with these payments.
71The support accrued for 2022 consists of monthly table support of $720, plus section 7 expenses of $33 each month. Support accrued for 7 months from May 1, 2022 totals $5,271. The father paid support of $3,500, leaving a balance owing for 2022 of $1,771.
72The support accrued for 2023 consists of monthly table support of $585, plus section 7 expenses of $61 each month. Support accrued for 2023 totals $7,752. The father paid support of $6,000, leaving a balance owning for 2023 of $1,752.
73The support accrued for the first two months of 2024 consists of monthly table support of $624, plus section 7 expenses of $86 each month. Support accrued for 2024 totals $1,420. The father paid support of $1,000, leaving a balance owing for 2024 of $420.
74The father’s total arrears are fixed at $3,943 ($1,771 plus $1,752 plus $420).
75The court will permit the father to pay these arrears at the rate of $100 each month, starting on March 1, 2024.
Part Eight – Conclusion
76A final order shall go as follows:
a) The father’s child support arrears are fixed at $3,943, as of this date, as calculated in this decision. b) The father may pay the arrears at $100 each month, starting on March 1, 2024. c) The father shall pay ongoing guidelines table support to the mother for the children in the amount of $624 each month, starting on March 1, 2024, based on his imputed annual income of $42,000. d) The father shall pay to the mother his proportionate share of the children’s net section 7 child care expense, in the amount of $86 each month, starting on March 1, 2024. This is based on the mother’s annual income of $95,000, the father’s annual income imputed at $42,000 and the 2024 gross child care expenses being estimated at $10,000. e) Nothing in this order precludes the Director of the Family Responsibility Office from collecting support arrears from any government source (such as income tax or HST/GST refunds), lottery or prize winnings or inheritances. Any arrears collected in this manner shall not affect the $100 each month the father is required to pay towards the support arrears. f) The parties shall exchange their complete income tax returns, notices of assessment and receipts for child care expenses by June 30th every year. g) A support deduction order shall issue.
77If either party seeks their costs, they are to serve and file written costs submissions by February 29, 2024. The other party will then have until March 14, 2024 to serve and file their responding costs submissions (not to make a new costs claim).
78The costs submissions should be no more than two pages, double-spaced, not including any offer to settle or bill of costs. They are to be delivered to the trial coordinator’s office on the second floor of the courthouse.
Released: February 15, 2024
Justice Stanley B. Sherr
Footnotes:
[1] The mother asked the court to impute annual income of $79,000 to the father in her opening statement. She changed her position in her closing submissions. [2] The father, in his opening statement, asked the court to order no contribution to section 7 expenses. He changed his position in his closing statement. [3] This amount is after Uber deducts its fees and charges to its drivers. [4] This is what the father received after Uber deducted all its fees and charges. [5] The software analysis for 2022 to 2024 will be attached to this decision.