[Indexed as: Koutsaris v. Koutsaris]
SOTIRIOS (SAM) KOUTSARIS (Appellant / Respondent) and CONSTANTINA (DENA) KOUTSARIS (Respondent / Petitioner)
Ontario Divisional Court
Blair R.S.J., J. Macdonald, Lane JJ.
Heard: March 10, 2003
Judgment: July 8, 2003`
Loftus J. Cuddy for Appellant
Constantina Koutsaris for herself
*A corrigendum issued by the court on September 9, 2003 has been incorporated herein.
Blair R.S.J.: Mr. Koutsaris appeals from the Order of Madam Justice Backhouse dated July 31, 2001 dismissing his motion to vary child support and to rescind child support arrears. He asks this Court to make the order he sought before the Motions Judge or, alternatively, that the matter be remitted for trial in the Superior Court. This alternative relief is sought only in Appellant counsel's factum; it was not sought in the Notice of Appeal.
2 The parties were married in 1986. They separated in 1994 and were divorced by Order of O'Connell J. on March 8, 2000. There are two teenage children of the marriage, a daughter, Irene (aged 14 at the time of the hearing) and a son, Demetri (aged 13).
3 Following the separation, Walsh J. granted an order on consent for the payment of child support by Mr. Koutsaris in the amount of $450 per month. At the time of the divorce, O'Connell J. ordered the appellant to pay child support in the amount of $570 per month, based upon an imputed annual income of $40,000.
4 By March 2001, Mr. Koutsaris was in arrears of child support in the amount of $20, 263.45. In May, 2001 he moved to vary and suspend both the interim order of Walsh J. and the support order of O'Connell J. on the grounds that, i) there had been a material change in circumstances since the date when the first support order was made; ii) the income imputed to him in the divorce judgment was substantially in excess of his income and income potential; iii) his income had been severely diminished by economic, medical and physical setbacks since the date of the first support order; and that, iv) he did not have the means to pay support arrears with respect to his children.
5 Justice Backhouse dismissed the motion to vary on the basis that she was not satisfied the arrears should be rescinded or the support order varied. She found that Mr. Koutsaris has not met his onus of establishing that the income he is or could be earning is less than the $40,000 attributed to him by O'Connell J. The endorsement outlining her reasons is short and concise. In its entirety it reads as follows:
The Respondent has not satisfied me that the arrears of child support should be rescinded or that the court orders should be varied. He has worked in various family food businesses most of his adult life. During the parties' marriage, a substantial portion of his income was cash. His pay cheque at Sherway Inn bears his brother's signature. He made little or no effort (other than what was automatically deducted) to pay child support before a bench warrant was issued. He has abdicated all responsibility for the children. The Respondent owns property which someday may be available to pay the arrears. It is difficult to discern the Respondent's income. He did not have income tax returns for several years. However, I am not satisfied that he has met the onus on him to establish that the income he is earning or could be earning is less that the $40,000 attributed to him by Justice O'Connell. Costs to the applicant.
6 With respect to the issue of the imputed income, Mr. Cuddy conceded at the hearing before this Court that O'Connell J. had justly and appropriately imputed an income of $40,000 per year to Mr. Koutsaris at the time of the divorce order. In any event, the appropriate forum for contesting that decision was by way of appeal from the Order of Justice O'Connell — which was never taken — and not by way of a motion to vary.
7 In paragraphs 3 and 4 of the Appellant's factum, Mr. Cuddy set out the two main issues for determination on this appeal as follows:
The main issue in this appeal is whether, having regard to the evidence before the motions court judge, the appellant was, and is, entitled to a variation downward in the child support payable, and whether such entitlement ought to have included a rescission of support arrears.
A second issue, closely linked to the main issue, is whether the motions court judge properly and adequately considered the evidence brought before the court by the appellant, whether her findings are justified having regard to the evidence, and whether in her deliberations she failed to take into account evidence marshalled by the appellant which, had same been given proper weight, would have been sufficient to warrant a variation in child support and rescission of arrears. Closely linked, in turn, to this second issue, is the treatment of the respondent's evidence by the motions court judge, having regard to the nature, relevance and weight of same, and whether any of it, as a matter of fact, provided a sufficient basis for the motion court judge's findings ... (he then went on to summarize the findings of the Motions Judge)
The Standard of Review
8 Mr. Cuddy also acknowledges that the proper test for this Court to apply is that set out by L'Heureux-Dubé J. in Hickey v. Hickey, [1999] 2 S.C.R. 518 (S.C.C.), at para. 11: "appeal courts should not overturn support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong".
Decision
9 In a very brief four-page affidavit in support of the motion to vary, Mr. Koutsaris deals with his financial circumstances in 11/2 pages. Only three of those paragraphs concern the period that post-dates the Order of Justice O'Connell in March 2000. He recounts the failure of his business in 1994 (prior to the separation), and indicates he was working at Peter Koulay's Tap & Grill (an establishment in which his brother, Louis, has an interest), earning $750.00 per week at the time of the consent Order of Walsh J. in November 1995. He says that he received unemployment insurance from June 1997 through May 1998 and thereafter applied for and received welfare. There was no supporting documentation to support this originally, but in a supplementary affidavit filed in response to the Respondent's materials he attached a Record of Social Assistance showing a total of $8,029.02 for the years 1998 and 1999 (this information did not find its way into his 1999 income tax return). Mr. Koutsaris acknowledges that in December 2000 — the first and only reference to his work experience after the Order of O'Connell J. — he began working full time at the Sherway Inn (another establishment operated by a family member). He states that he "felt very depressed" and has mostly stayed indoors and slept long hours, and that he resides with his parents, who look after him financially and provide him with room and board free of charge. He filed a letter from a family doctor saying that he had been referred to a psychiatrist, and in a second supplementary affidavit attached a handwritten report of a psychiatrist saying he was currently suffering from major depression, but not stating that he was unable to work.
10 That was the evidence put forward in support of the motion to vary.
11 In my view, however, there was ample basis in the record to justify the Motions Judge's decision not to rescind the arrears or vary the support order on the ground that Mr. Koutsaris had not satisfied the onus of establishing there had been a material change in circumstances since the granting of either the consent Order of Justice Walsh on November 14, 1995, or the divorce judgment of Justice O'Connell on March 8, 2000. The onus was on him. Yet he filed no income tax returns showing his income for the years 1995, 1996, 1997 or 1998. He filed income tax returns for the years 1999 and 2000, showing NIL income. Yet there is evidence that he was working at motels or inns owned by family members during that period, and even on his own affidavit evidence he was working "full time" at his brother's Sherway Inn in December 2000. In his supplementary affidavits filed before the Motions Judge, Mr. Koutsaris does not deny the evidence of Ms. Koutsaris that he was working at the Sherway Inn earlier than that, and he does not say that he was not working part-time.'
12 It is not disputed that Mr. Koutsaris has worked over the years in food or hospitality related businesses operated by his family members, although there is a dispute on the evidence as to the extent of his earnings in that regard. It is evident, as the Motions Judge found, that he did not pay child support (other than automatic deductions) until a bench warrant was issued for his failure to pay arrears. Mr. Cuddy candidly conceded he made no effort to pay child support until required to do so.
13 In all of these circumstances, it was open to the Motions Judge to conclude, as she did, that it "is difficult to discern [Mr. Koutsaris'] income", and that he had not met the onus of persuading her a variation should be ordered and arrears rescinded.
14 The Motions Judge also noted that "[Mr. Koutsaris] owns property which someday may be available to pay the arrears". Mr. Koutsaris remains the registered owner of a piece of property located at 376 Steeles Ave. East. The property is adjoining or close to other property owned by the Koutsaris family members. The evidence is that Mr. and Mrs. Koutsaris signed a Transfer of that property to two other members of the Koutsaris family in 1989 in exchange for funds that were to be used to enable them to purchase a house of their own (the house was subsequently sold under power of sale following the separation of the parties and the failure of their business). The Transfer has never been registered, however, and Mr. Koutsaris has continued to sign financing documents in relation to it since 1989.
'The motion was originally launched in May 2001. This appeal was argued on March 10, 2003. No attempt was made to file, or mention made of, Mr. Koutsaris' income tax returns for the years 2001 and 2002 (although the time limit for filing the latter had not yet expired).
15 Whether the transfer of the interest of Mr. Koutsaris in the Steeles Ave. property was a true transfer of his interest and he continues to hold title simply as a nominee or trustee for other family members, or whether it was some other kind of financing transaction to assist Mr. and Mrs. Koutsaris in buying a home, is an issue that cannot be resolved on a motion to vary support, based upon conflicting affidavit evidence. In my opinion, however, it was not an issue that needed to be resolved for the Motions Judge to arrive at the decision she made, because the onus was on Mr. Koutsaris to satisfy her on all the evidence that there had been a material change in circumstances since the original support orders had been made. He failed to do so, and I can see no basis for interfering with her decision to dismiss his motion.
16 In his factum, and at the hearing before us, Mr. Cuddy somewhat tepidly advanced the argument that there was conflicting affidavit evidence before the Motions Judge and therefore the matter should be remitted for the trial of an issue. I would not give effect to this submission in the circumstances of this case.
17 First, with the possible exception of the Motions Judge's reference to the Steeles Ave. property, there was sufficient uncontested evidence in the materials before her to support the conclusions she reached.
18 Secondly, it was the Appellant who brought the motion before the Motions Judge, and proceeded with it, on the basis of the record as it presently exists. Ms. Koutsaris was unrepresented at the Hearing. Mr. Koutsaris was not.
19 Thirdly, the relief of a referral back for trial was not sought in the Appellant's Notice of Appeal, nor raised therein as a ground of appeal. Although it was referred to at the end of Mr. Cuddy's factum, it was clear on the appeal that the primary relief he was seeking was to have this Court set aside the Order of Backhouse J. based upon a review and a reconsideration of the evidence, and to substitute our view of the evidence in doing so. I have cited above the two "issues" put forward at the outset of his factum as the issues to be determined on this appeal. In the alternative, he sought to have the matter sent back to a Superior Court Judge to be heard by way of motion (his clear preference) or trial.
20 There may well be circumstances in which a Motions Judge may conclude the central issues are so interwoven with and dependent upon the resolution of disputed affidavit evidence that the trial of an issue must be directed, even where counsel have not suggested it. Given the manner in which the case was put forward by the Appellant, however, —both before the Motions Judge and in this Court — and having regard to all the factors outlined above, this is not one of those cases where such an order is required, in my opinion.
21 I would therefore dismiss the appeal.
22 The Respondent was self-represented. I would award her costs in the amount of $500 to cover her disbursements and fix the costs in her favour in that amount.
Lane J.: I agree.
J. Macdonald J. (dissenting): I am respectfully of the view that, in dismissing Mr. Koutsaris's motion, the Motions Court Judge erred in principle in failing to order the trial of an issue, and in making findings of fact on the basis of affidavits which were very much in conflict and which therefore did not provide a reliable or satisfactory basis for such findings. Further, by making a finding unsupported by any evidence that Mr. Koutsaris owned property, and by not giving effect to uncontradicted psychiatric evidence confirming disability which diminished Mr. Koutsaris's earning capacity, the Motions Court Judge significantly misapprehended the evidence. I would therefore set aside the order of the Motions Court Judge and direct trial of the issues herein.
The Motion
2 The appellant moved to vary his child support payments and to rescind child support arrears. His child support obligations had been determined by O'Connell J's Judgment of March 8, 2000. O'Connell J. ordered the appellant to pay child support in the amount of $570.00 per month, based upon an imputed annual income of $40,000.00. The appellant did not lead evidence at the trial of the divorce action. His pleadings had been struck out.
3 The Motions Court Judge dismissed both aspects of the motion.
The Standard of Review
4 The decision of the Motions Court Judge clearly is entitled to significant deference. The test to be applied in this appeal was stated by L'Heureux-Dubé J. in Hickey v. Hickey, [1999] 2 S.C.R. 518 (S.C.C.) at p. 525, as follows:
Our Court has often emphasized the rule that appeal courts should not overturn support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong. There are strong reasons for the significant deference that must be given to trial judges in relation to support orders. This standard of appellate review recognizes that the discretion involved in making a support order is best exercised by the judge who has heard the parties directly. It avoids giving parties an incentive to appeal judgments and incur added expenses in the hope that the appeal court will have a different appreciation of the relevant factors and evidence. This approach promotes finality in family law litigation and recognizes the importance of the appreciation of the facts by the trial judge. Though an appeal court must intervene when there is a material error, a serious misapprehension of the evidence, or an error in law, it is not entitled to overturn a support order simply because it would have made a different decision or balanced the factors differently.
The Facts in Dispute
5 There were significant factual disputes in the affidavit evidence. Mr. Koutsaris took the position that he was unable to work because of depression from June 1997 until December 2000, at which time he became employed by the Sherway Inn, earning a gross income of $290.00 per week. He also filed in evidence the report of Dr. Rehaluk, a psychiatrist, who stated that, as of the motion, Mr. Koutsaris was suffering from major depression with explosive outbursts, brought on by the stressors which originated through the divorce.
6 Ms. Koutsaris took the position that Mr. Koutsaris deliberately had evaded his responsibilities to his children, and had been assisted by his family in hiding his true income from her and from the court. She relied on Mr. Koutsaris's levels of work and earnings prior to the marriage breakdown (which had been accepted by O'Connell J. as the basis for Mr. Koutsaris imputed annual income of $40,000.00) and took the position either that he was working and earning more than admitted, or capable of working and earning more. Her evidence was that, prior to the marriage breakdown, he worked in family businesses and was paid in cash. His work at the Sherway Inn as of the motion was work for a family business. Ms. Koutsaris did not present any other evidence in support of her allegation that employment in a family business meant that his income was being hidden. As well, Ms. Koutsaris did not lead any other evidence to counter Mr.Koutsaris's evidence of disability and diminished earning capacity.
7 Ms. Koutsaris also relied on the assertion that Mr. Koutsaris was the registered owner of real property, to which she attributed substantial value. She did not assert that he was an actual owner. Mr. Koutsaris stated that he did not own the real property and he was no longer the registered owner of it.
8 Mr. Koutsaris thus led his own evidence, supported by medical opinion, that he was unable to work at least from the time of O'Connell J's determination of his child support obligations until December 2000, at which time he took work which was continuing as of the motion. This position was very different from the facts found by O'Connell J. in imputing to Mr. Koutsaris earnings of $40,000.00 per annum. Ms. Koutsaris countered this evidence with evidence of Mr. Koutsaris's ability to work and earn before the marriage breakdown. The parties separated in 1994. Consequently, her evidence of Mr. Koutsaris's ability to work and earn was based on events over six years old as of the motion, events which took place years before the time when emotional difficulties and resulting diminution of earning capacity were said by Mr. Koutsaris to have begun. Similarly, Ms. Koutsaris's evidence of payments in cash from the family businesses in which Mr. Koutsaris worked was all from prior to the marriage breakdown, years before Mr. Koutsaris's evidence of inability, and subsequent reduced ability to earn any income.
9 A key issue for the Motions Court Judge thus was whether Mr. Koutsaris's evidence of reduced earnings resulted from disability or deception. If he could not earn more money because of disability, that unearned money could not be the subject of deception. In assessing the evidence, the Motions Court Judge did not have the benefit of viva voce evidence from the parties and Dr. Rehaluk, or the benefit of cross-examination of the parties on their affidavits.
10 I will now examine in greater detail the evidence which was before the Motions Court Judge in respect of Mr. Koutsaris's alleged interest in property and in respect of his earning capacity, and then consider both the Motions Court Judge's fact finding process and her findings.
Evidence of Ownership of Property
11 In her affidavit dated June 25, 2001, Ms. Koutsaris stated that Mr. Koutsaris is "the registered owner of 376 Steeles Avenue East" which he purchased in 1979. Ms.Koutsaris also stated that his brother and sister-in-law purchased the abutting properties in 1998. The brother then signed an agreement to sell 376 Steeles Avenue East as the vendor, which is some evidence that Mr. Koutsaris was not the actual owner of the property. The sale price was $1,050,000.00. The sale did not close and litigation has resulted between vendor and purchaser.
12 Mr. Koutsaris's supplementary affidavit of June 28, 2001 stated that his father purchased this property and, "for tax and legal reasons" the property was placed in his name. In December 1989, Mr. Koutsaris sold the property to other family members for $160,000.00. He stated that Ms. Koutsaris consented in writing to this transaction, and executed the deed. However, the deed was not registered due to a solicitor's error. Since then, Mr. Koutsaris's family has mortgaged the property, and other property, to meet unstated financial difficulties. According to Mr. Koutsaris, the result is that there is no equity left in the property known as 376 Steeles Avenue East.
13 Ms. Koutsaris agrees that she consented to the sale and signed the deed.
The Motions Court Judge's Conclusions Respecting Ownership of The Property
14 The Motions Court Judge held that Mr. Koutsaris "owns property" which "some day may be available to pay the arrears" of child support owed by Mr. Koutsaris. The Motions Court Judge could only have been referring to 376 Steeles Avenue East, on the evidence.
15 None of the evidence before the Motions Court Judge was to the effect that Mr. Koutsaris owned the property. Ms. Koutsaris's affidavit stated only that he is the "registered owner". Mr.Koutsaris's affidavit stated that he was a registered owner and his father was the actual owner. Further, he had previously sold the property for $160,000.00. While it is difficult to reconcile these assertions, neither of them reasonably may be seen as evidence of present beneficial ownership of the property.
16 In my opinion, the evidence of registered ownership, considered in the context of the evidence as a whole, is not some evidence of Mr. Koutsaris's beneficial ownership of the property. If the evidence of registered ownership was viewed as evidence of beneficial ownership despite the abundance of evidence to the contrary, including Ms. Koutsaris's evidence that his brother sold the property, that conclusion was a significant misapprehension of the evidence, in my opinion. In any event, Mr. Koutsaris's uncontradicted evidence that there is no equity left in the property means that there is no evidence to support the Motions Court Judge's conclusion that the property may be available in the future to pay Mr. Koutsaris's arrears of child support. That conclusion is also a significant misapprehension of the evidence.
17 The conclusions that Mr. Koutsaris owns property which may be available to pay child support arrears appear to form part of the Motions Court Judge's rationale for rejecting the credibility and reliability of Mr. Koutsaris's other evidence including his evidence of disability and diminished earning capacity, which was supported by uncontradicted medical evidence. I turn now to that evidence.
Evidence About Mr. Koutsaris's Earning Capacity
18 In his affidavit of April 26, 2001, Mr. Koutsaris states:
(a) he received benefits from the Unemployment Insurance Commission from June 1997 to May 1998. Subsequently, he applied for and received welfare,
(b) from May to August 1999 he was enrolled in various courses paid for by welfare, which he did not complete,
(c) in December 2000, he began to work full time as a desk clerk as the Sherway Inn, earning $290.00 per week before deductions.
In addition, Mr. Koutsaris deposed at paragraph 17:
"I have only very recently begun to recover from that terrible time when my business failed, we lost our home and my marriage collapsed. My problems arising from my separation have affected my ability to function at my full capacity. I have felt very depressed, and have been unable to find the motivation to do anything. During my period of depression, I mostly stayed indoors and slept long hours. Attached hereto as Exhibit D is a true copy of a letter from my family doctor, Dr. Boyrazian, dated April 20, 2001. Dr. Boyrazian has referred me to a psychiatrist."
19 Dr. Boyrazian's report recites the history received from Mr. Koutsaris and confirms that he was advised to seek counseling, and was referred to Dr. Rehaluk for further evaluation and treatment.
20 Dr. Rehaluk's report is dated May 22, 2001. He states:
"Mr. Koutsaris is a forty-three year old male who is currently suffering from major depression with intermittent explosive outbursts. ...The stressors that precipitated his depression originated through the divorce and suprizes (sic) he encountered to present."
Dr. Rehaluk then details the history of discord between the parties during the divorce litigation, and Mr. Koutsaris's views as to its effect on him. Dr. Rehaluk then expresses his opinion that:
"Today, there has been no resolution in the above mentioned areas and it is expected that without some change, his mental condition will not change significantly. Symptoms include poor sleep, irritability, anxiety, loss of appetite with weight loss and low energy and motivation. He feels helpless and hopeless about his future."
Dr. Rehaluk did not state expressly that Mr. Koutsaris's emotional difficulties diminish his ability to work and earn. Nonetheless, his statement that Mr. Koutsaris suffers from major depression with symptoms which include poor sleep, irritability, anxiety, low energy and low motivation states by implication that Mr. Koutsaris's ability to work and earn is diminished by his major emotional difficulties.
21 Ms. Koutsaris's evidence respecting Mr. Koutsaris's ability to work was as follows:
(a) In August 2000, she was told by a couple of children that Mr. Koutsaris worked in the office of the "Inn on the Creek" Motel, which is used as a refuge and daycare center and apparently is owned by Mr. Koutsaris's brother.
(b) During the fall of 2000 and the winter of 2000-2001, their son Demetri was able to phone Mr. Koutsaris at the Sherway Inn. Mr. Koutsaris's brother is one of the owners.
(c) During the marriage, Mr. Koutsaris worked for his brother or in family businesses and was paid $1,000.00 every two weeks, clear, in cash.
The Motions Court Judge's Conclusions Respecting Earning Capacity and Earnings
22 In her reasons, the Motions Court Judge did not mention Mr. Koutsaris's evidence of disability or diminished earning capacity. She did not mention Dr. Rehaluk's expert evidence, or mention any consideration of the relationship between the psychiatric evidence and Mr.Koutsaris's evidence of disability and diminished earning capacity. She also did not address the fact that Mr. Koutsaris's ability to work and earn more, prior to the marriage breakdown, depended on his good health. She did not mention that the evidence of Mr. Koutsaris's disability and diminished earning capacity was uncontradicted. Finally, the Motions Court Judge did not address the extent to which Dr. Rehaluk's opinion provided confirmation of the truth and reliability of Mr. Koutsaris's evidence of disability and diminished earning capacity.
23 The Motions Court Judge found that "it is difficult to discern (Mr. Koutsaris's) income", and held that he had not ". ..met the onus on him to establish that the income he is earning or could be earning is less than the $40,000.00 attributed to him by Justice O'Connell." In her finding respecting the income which Mr. Koutsaris is earning, the Motions Court Judge thus rejected Mr. Koutsaris's evidence that he earns $290.00 gross per week, which evidence was supported by copies of his pay stubs, confirmed by Dr. Rehaluk's expert opinion, and not contradicted by other evidence except evidence of his work and earnings six years before, prior to the marriage breakdown. In her finding respecting the income which Mr. Koutsaris could be earning, the Motions Court Judge rejected uncontradicted evidence of disability and diminished earning capacity which was supported by a psychiatrist's opinion.
24 It is therefore clear that the Motions Court Judge found Mr. Koutsaris's evidence (including Dr. Rehaluk's evidence) to be completely unworthy of belief. She held:
"He has worked in various family food businesses most of his adult life. During the parties' marriage, a substantial portion of his income was cash. His pay cheque at Sherway Inn bears his brother's signature. He made little or no effort (other than what was automatically deducted) to pay child support before a Bench Warrant was issued. He has abdicated all responsibility for the children."
25 In my opinion, in determining whether the evidence established a material change in circumstances from the levels of work and the earnings imputed to Mr. Koutsaris by O'Connell J., the threshold issue for determination was whether Mr. Koutsaris had established, on the balance of probabilities, disability resulting in diminished earning capacity subsequent to O'Connell J's order. In deciding this question, the Motions Court Judge was required to consider the totality of the evidence in order to engage in a rational and just appraisal of the reliability and weight of that evidence.
26 Mr. Koutsaris's evidence respecting his emotional difficulties and his resulting disability and diminution of earning capacity was based on his personal knowledge. Dr. Rehaluk's expert opinion evidence confirmed Mr. Koutsaris's evidence, and thus confirmed both the credibility and the reliability of Mr. Koutsaris's evidence in this regard.
27 Against this, Ms. Koutsaris led evidence of practices in prior years, before Mr.Koutsaris's disability and diminished capacity to earn. She also led evidence which confirmed that Mr.Koutsaris was working, as of the motion, at the hotel where he said he worked.
28 Clearly, it was open to the Motions Court Judge to be skeptical about Mr. Koutsaris's evidence, as she was. However, it was her obligation to decide the motion on its merits, as disclosed by the evidence. Since Dr. Rehaluk's expert opinion confirming Mr. Koutsaris's evidence of disability and diminished earning capacity was not contradicted, it was cogent evidence of a material change in circumstance from the time when Mr. Koutsaris worked and earned at higher levels, as determined by O'Connell J's Judgment. That evidence also was logically and factually relevant to the assessment of Ms. Koutsaris's position that there was no material change in circumstances. Her position was that Mr.Koutsaris's ability to work and earn more at an earlier time should infer his ability to work and earn more as of the motion. The question of whether that inference was reasonable depended entirely on the question of whether, as of the motion, his health and thus his ability to work and earn were as they had been prior to the marriage breakdown, years before the motion, when he had worked and earned at higher levels.
29 In rejecting such cogent and relevant evidence, the Motions Court Judge relied on the evidence that Mr. Koutsaris was working, at the time of the motion, in a family business. Since he had worked for family businesses during the marriage when, according to Ms. Koutsaris, a substantial portion of his "income" was cash, the Motions Court Judge appears to have concluded that working for his family meant that his true income was being hidden.
30 There were two ways that family involvement in Mr. Koutsaris's employment, as of the motion, could have been viewed by the Motions Court Judge. One was that family involvement in his employment inferred under-reporting of his income. The other possible interpretation was that, given the evidence that Mr. Koutsaris suffered from significant depression which diminished his ability to work and earn, family employment was the only employment available to him.
31 The Motions Court Judge has accepted the first of these alternatives. However, in my opinion, it was a significant misapprehension of the evidence and an error in principle to find that family employment inferred under-reporting of his income. There was no basis in the evidence for the allegation that family employment inferred concealment of Mr. Koutsaris's true level of earnings. Ms. Koutsaris's evidence was that, prior to the marriage breakwown, he "earned $1,000 every two weeks; clear and in cash...". This is not an assertion that other money was paid covertly from family businesses. This is an assertion that he was paid a known amount, in cash. There is no evidence that he earned a greater amount which was kept hidden from Ms. Koutsaris.
32 The Motions Court Judge has missed the point that all of the evidence of greater earnings at an earlier time is based upon his health at that time, and all of the evidence since that time is that his health had deteriorated. Ms. Koutsaris's submissions that Mr. Koutsaris under-reported his earnings in earlier years, with the assistance of family employers, were certainly to be considered. However, a logical, fair and just analysis of the evidence required consideration of whether, as of the motion, Mr. Koutsaris was able to work and earn more than he was. If there were a finding that he was able to work and earn more, only then it would be appropriate to turn to consideration of whether any of his earnings were not being disclosed. If Mr. Koutsaris's health did not permit him to earn more than he disclosed, then no earned income could have been hidden through the mechanism of family employment.
33 I do not suggest that the Motions Court Judge was obliged to decide this motion in favour of Mr. Koutsaris. In my opinion, the affidavit evidence, untested by cross-examination, does not permit a rational and just determination of these factual issues. Rather than basing her decision on dated evidence of dubious relevance because of the medical evidence, upon the inference to be drawn from family employment and upon credibility and reliability findings adverse to Mr.Koutsaris which were based in part upon findings unsupported by any evidence, the Motions Court Judge should have directed that the issues be tried. In this fashion, concerns about Mr.Koutsaris's true motivation, the relevancy of his past conduct and the credibility and reliability of his evidence of disability could be determined by a trial judge, who would have the benefits of viva voce evidence and cross-examination of witnesses. In my opinion, because the untested affidavit evidence herein did not permit a rational and just determination of these factual issues, it was an error in principle not to order that the issues be tried.
34 My reasons for concluding that the Motions Court Judge erred in principle require some discussion of the rules which applied to the disposition of this motion, and I now turn to them.
Error in Principle by The Motions Court Judge
(a) — The Family Case Management Rules for the Superior Court of Justice in Toronto
35 The Family Case Management Rules for the Superior Court of Justice in Toronto, being O. Reg. 655/00 as amended, pursuant to the Courts of Justice Act, R.S.O. 1990 c.C43, apply to proceedings under the Divorce Act (Canada) and thus to proceedings pursuant to s.17 of the Divorce Act brought in the Superior Court of Justice in Toronto, as was the motion in issue. For convenience, I will refer to these rules as "The Family Case Management Rules".
36 Pursuant to these rules, the Motions Court Judge was a case management Judge. Pursuant to rule 3.01(9)(f), the Motions Court Judge was empowered to "make orders, impose terms and give directions as necessary to carry out the purpose of these rules." The Motions Court Judge thus had broad discretionary powers in deciding the outcome of the motion, subject to the qualification that any order must "carry out the purpose of these rules." In my view, this purposive limitation on the breadth of the Motions Court Judge's discretionary powers pursuant to rule 3.01(9)(f) is significant.
37 The purpose of these rules is established by rule 1.02 and is:
.to establish a case management system that reduces unnecessary costs and delay in family litigation, facilitates early and fair settlements and brings proceedings expeditiously to a just determination while allowing sufficient time for the conduct of the proceeding.
38 In deciding this motion, the Motions Court Judge thus had the discretionary power pursuant to rule 3.01(9)(f) to make an order for the purpose of reducing "unnecessary costs and delay" and bringing the proceeding "expeditiously to a just determination...". This discretionary power was not intended to do away with all costs and delay in family litigation because some costs and some delay are necessary to meet the requirements of fundamental justice such as reasonable notice of claims and allegations, the opportunity to consult and to instruct counsel, the right to be heard in respect of the merits, etc.. The power to make an order disposing of this motion being subject to rule 1.02, the power was exercisable for the purpose of reducing unnecessary costs and delay. In particular, the power to make an order disposing of this motion was exercisable for the purpose of moving expeditiously to a just determination.
39 The order made by the Motions Court Judge clearly avoided further costs and delay, and was an expeditious determination of these issues. However, in my opinion, it was not a just determination. I will return to this conclusion after I have finished addressing the rules which applied to this motion.
40 The Family Case Management Rules do not exclude the operation of the Rules of Civil Procedure. Rule 1.01(2) of these rules states:
The Rules of Civil Procedure also apply to proceedings to which these rules apply, but these rules prevail in the event of conflict.
I therefore turn to the Rules of Civil Procedure.
(b) — The Rules of Civil Procedure
41 It is necessary to consider the purpose and effect of some provisions of these rules before turning to the question of whether they conflict with the relevant provisions of the Family Case Management Rules.
42 The relevant parts of rule 69.24.1 are as follows:
(1) This rule applies where a person asks to vary only a provision of an interim or final order that deals with child support and asks only for one or more of the following in the variation order:
An order that child support be paid, whether in accordance with the Child Support Guidelines or not, or an order that child support be terminated.
An order suspending, reducing or rescinding child support arrears.
An order setting a payment schedule for child support arrears.
Costs.
(2) Despite subrule 69.24(1) (variation by application), a person who asks for a variation order described in subrule (1) shall do so by motion.
(22) Where the court is of the opinion that a variation motion, whether or not on consent, can not be properly determined because of the material filed, because of the matters in dispute between the parties or for any other reason, the court may give directions accordingly, including an order under clause 37.13(2)(b)(trial of issue).
43 Rule 69.24(1), which is mentioned in rule 69.24.1(2), states:
(1) A person who wishes to vary, suspend or rescind a final order for support, custody or access under section 17 of the Act or to obtain such an order after a divorce shall do so by notice of application.
44 The effect of these rules is as follows. A person seeking to vary, suspend or rescind a final order for support, custody or access under section 17 of the Divorce Act must do so by notice of application, subject to the following exception. Pursuant to rule 69.24.1(2), where a person seeks to vary a provision of an interim or final order that deals with child support, and seeks one or more of the orders enumerated in rule 69.24.1(1), the proper method of proceeding is by notice of motion.
45 Previously, the issues mentioned in rule 69.24.1(1) were brought before the court by notice of application. Contested issues of fact often resulted in an order directing a trial of the contested factual issues. As a result, delay was often incurred in determining child support issues. By changing to the motions procedure, the Family Rules Committee intended that a more summary procedure should apply in such disputes, because of the need for more prompt disposition of child support issues.
46 However, it is also clear that the Family Rules Committee did not intend to do away with trial of disputed issues in the types of case which are mentioned in rule 69.24.1(1). That is because rule 69.24.1(22) says that the court may "give directions", including an order for the trial of an issue, where a variation motion "can not be properly determined". For the purpose of this analysis, the important part of rule 69.24.1(22) is the phrase "can not be properly determined...".
47 These rules contain rule 1.04(1), which states:
(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
It will be seen that this is an interpretation provision which applies to all of these rules. Once again, costs and delay are addressed, but do not override the requirement of a just determination of every proceeding, on its merits.
48 Consequently, the Motions Court Judge was required to consider whether this motion could not be "properly determined", pursuant to rule 69.24.1(22), whether because of the material filed or because of the matters in dispute, or for any other reason. If the motion could not be "properly determined", the Motions Court Judge had the discretion to give directions, including an order directing trial of the issues. In exercising this discretion, the Motions Court Judge was required to give the phrase "can not be properly determined" in rule 69.24.1(22) a liberal construction to secure the just determination of this motion, on its merits.
(c) — Is There Conflict Between These Rules?
49 Rule 3.01(9)(f) of the Family Case Management Rules empowered the Motions Court Judge to make an order which was necessary to carry out the purpose of these rules. That purposive limitation is significant. There was no power to impose an expeditious determination of this motion unless that determination was a just determination.
50 In the Rules of Civil Procedure, rule 1.04(1) governs how rule 69.24.1 is construed. While the Family Rules Committee intended the motions procedure to provide for a more summary hearing and disposition of child support variation issues, the Committee preserved in rule 69.24.1(22) the discretion to order the trial of an issue if the motion could not be "properly determined", which means determined in a way which secured, amongst other things, a just determination of the motion on its own merits.
51 Consequently, the relevant provisions of the Family Case Management Rules and of the Rules of Civil Procedure are all directed to securing a just determination of every proceeding. I am therefore of the view that there was no conflict between the relevant provisions of the Family Case Management Rules and the Rules of Civil Procedure. It follows that the relevant portions of both sets of rules (as recited above) apply to this motion.
52 It also follows that, in deciding how to dispose of this motion, the Motions Court Judge was required to ensure that the disposition was a just disposition.
Judicial Exercise of The Discretion to Order Trial of An Issue
53 Many of the cases which deal with the discretion to order trial of an issue arose from applications, not motions. In Moyle v. Palmerston Police Services Board (1995), 25 O.R. (3d) 127 (Ont. Div. Ct.), Borins J. (as he then was) held for the court that different considerations apply in applications than apply in motions. In addition, certain types of interlocutory motions must be decided on the basis of conflicting affidavit evidence, while other motions may not properly be decided on that basis. The nature of the relief sought in a motion often plays a significant role in determining whether it is appropriate and just to decide it on affidavit evidence, or to order the trial of an issue.
54 I accept that there is an important distinction between applications and motions, particularly because the Family Rules Committee has determined that child support variation orders should be sought by means of the more summary motions procedure. Nonetheless, decisions to order trial of an issue where there was conflicting affidavit evidence in applications help to illuminate the proper exercise of discretion where there is conflicting affidavit evidence in a child support variation motion. In particular, these cases shed light on when motions respecting child support variation issues cannot be "properly determined" on conflicting affidavit evidence, within the meaning of rule 69.24.1(22) of the Rules of Civil Procedure, interpreted as rule 1.04(1) requires, and when a determination of such issue on conflicting affidavit evidence cannot be a "just determination" within the meaning of rule 1.02 of the Family Case Management Rules. I therefore turn to these cases.
55 In Shields v. London & Western Trusts Co. (1923), [1924] S.C.R. 25 (S.C.C.), one issue was rule 606 of the Ontario Consolidated Rules of Practice which stated in part:
606(1). The judge may summarily dispose of the questions arising on an originating notice and give such judgment as the nature of a case may require or may give such directions as he may think proper for the trial of any questions arising upon the application.
Anglin J. (Mignault J. concurring) was of the view (at pages 32-33, supra) that, especially if material facts were controverted, the discretion given by rule 606 would be properly exercised by directing that an action be brought or an issue be tried to determine these matters.
56 In Island of Bob-Lo Co. v. Malden (Township), [1969] 2 O.R. 535 (Ont. C.A.) three applications were brought to determine whether certain amusement rides were assessable as land. Kelly J.A. for the court held at page 538 that the issue:
..requires a detailed consideration of many factors, not all of which are set out in the material before the Court, or, if set out, not with that particularity which would enable the Court to make a well-founded decision. In other circumstances where there were before the Court undisputed facts of such detail as would enable the Court to come to a decision with respect to each ride, an application by originating notice on affidavit evidence might be the appropriate manner in which to proceed, but in my opinion the informality with which this matter was presented to the Court was such as to call for the learned Judge to direct the trial of an issue or viva voce evidence so that the Court would have the benefit of much more particularized information than was made available under the method followed."
As a result, the court set aside the decision below and directed that the issues be tried.
57 In R. v. Jetco Manufacturing Ltd. (1987), 57 O.R. (2d) 776 (Ont. C.A.), a notice of application was brought pursuant to the Rules of Civil Procedure for an order holding the appellants in contempt of court. The issue was determined upon affidavit evidence and the appellants were convicted and sentenced. The Court of Appeal held that, while civil procedures were involved, the proceedings were essentially criminal in nature. The appellants were entitled to the presumption of innocence and the respondent was required to prove their guilt beyond a reasonable doubt. Since all findings of facts were based on affidavit evidence, Brooke J.A. for the court held at page 181:
When there are controverted facts relating to matters essential to a decision as to whether a party is in contempt of court, those facts cannot be found by an assessment of the credibility of deponents who have not been seen or heard by the trier of fact, as was done in this case. The judge here quite simply was in no position to make the factual determination upon which his contempt order was predicated. On the disputed state of evidence before him he could not properly conclude that the municipality has established beyond a reasonable doubt that the appellants were aware of the publication order of the justice of peace. In the circumstances of this case, a trial of the issue raised by the application ought to have been ordered.
58 Strobridge v. Strobridge (1991), 31 R.F.L. (3d) 44 (Ont. Gen. Div.), per Granger J. is instructive respecting the discretion to order trial of an issue in a family law case involving children. In Strobridge, a notice of application was brought respecting custody, access and child support. The court was asked to direct the trial of an issue. Granger J. held that an order directing trial of an issue is a discretionary order which must take into the account the best interests of the children, and stated at page 47:
In my view, many matrimonial disputes can properly be determined without the necessity of a trial which is expensive and time-consuming. 1f possible, the issue should be disposed of in part or in whole on affidavit material. In many cases, it will be necessary to direct a trial of an issue to determine issues of credibility, valuation, or ownership, but the Court must be vigilant to guard against one spouse attempting to take advantage of his or her spouse by involving a trial procedure which is both lengthy and expensive.
59 In Walker v. Walker, [2001] A.J. No. 553 (Alta. C.A.) a chambers judge determined an application by imputing income to the husband, ordering him to pay child support under the Federal Child Support Guidelines and determining the amount of child support arrears which were payable. The application was decided on the basis of affidavit evidence and the cross-examination of one party. Counsel were apparently in agreement with the procedure adopted, or at least did not object to that procedure. Several key facts were in dispute in relation to the husband's alleged income. One issue was whether his leave from work was based on medical issues. A doctor reported that he had recommended that the husband take a leave of absence from his employment. Hospital records disclosed an admission because of symptoms of acute agitation and suicidal ideation. The only evidence that the husband was not suffering from stress was the wife's statement of disbelief. There was conflicting affidavit evidence about whether the husband had some employment, as of the application. The Court of Appeal set aside the decision, holding as follows:
- Reliable judgments as to credibility are difficult in these circumstances. Where credibility of one of the parties or witnesses is in issue, a trial of the underlying issue may be required to allow a judge the opportunity not only of observing the parties giving their evidence from the witness stand, but of receiving testimony from all important sources, including, for example, in this case, evidence from Mr. Walker's physician. Stevenson and Côté's Civil Procedure Guide — 1996 (Edmonton: Juriliber, 1. 996) summarizes the well-established law in this way at volume 2 in commentary under R. 384 (1) Part L (p.1351):
Since the Judicature Acts our courts have adopted the view of the common-law courts that fact disputes should be tried by oral evidence in open court before a judge. One may compare the evils of the old Chancery system of weighing competing affidavits... The court should not attempt to try contested fact matters on competing affidavits in chambers, but instead direct trial of an issue: A.-G. v Metro. Dist. Ry. (CA 1880) 5 ExD 218, ...
- The rule regarding fact finding based on the reading of conflicting affidavit evidence has been concisely stated by the Alberta Court of Appeal in Barter v. Barter (1996), 42 Alta. L.R. (3d) 221 (Alta. C.A.). The Court made the following statement at para [8]:
It is trite law that issues requiring findings of credibility cannot be resolved by reading conflicting affidavits: Guimond v. Stornberger (1980), 25 A.R. 18 (C.A.); Actem v. McConnell, [1986] A.J. No. 207; [1986] A.W.L.D. 658 (C.A.); Burton v. Burton (1987), 84 A.R. 338 (C.A.); Montgomery v. Riviere, 11989] A.J. No. 958, [1989] A.W.L.D. 1020 (C.A.).
17....In the circumstances here, the credibility and fact contest could not be resolved on the basis of the contradictory affidavits. Because the decision on the relevant facts cannot be justified in the evidence, the decisions based on those facts also cannot stand.
60 These cases show clearly the tension between the attractions and advantages of expeditious determinations on the one hand, and the necessity of just determinations on the other hand. In Shields (supra) the rule under consideration stated that the judge may summarily dispose of the questions arising on an originating notice. Nonetheless, Anglin J. and Mignault J. were of the view that the discretion given by the rule to impose a summary disposition would be properly exercised by directing that the issues be tried, particularly if material facts were in dispute. In the Bob-Lo case (supra), Kelly J.A. speaking for the Court of Appeal did not doubt that the issues might be determined on affidavit evidence, if that evidence was sufficiently undisputed. In my opinion, the essence of Kelly J.A's decision was that, for such a disposition, the affidavit evidence must "enable the court to make a well-founded decision". Since the affidavit evidence therein did not enable the court to make a well-founded decision, the trial of an issue and viva voce evidence were required, so that the court would have "the benefit of much more particularized information...". In the Jetco case (supra), Brooke J.A. for the Court of Appeal held that the disputes in the affidavit evidence meant that the motions judge was "in no position" to make factual determinations, and that the judge "could not properly conclude" that disputed allegations had been proven beyond a reasonable doubt. Brooke J.A's reasons appear to coincide with the reasons of the Alberta Court of Appeal in Barter (supra), where the court held that findings of credibility cannot be resolved by reading conflicting affidavits. In Strobridge (supra), Granger J. considered the advantages of prompt and reasonably inexpensive disposition in family law disputes, but held that issues of credibility often make it necessary not to base decisions on affidavit evidence, but to order trial of an issue. The Alberta Court of Appeal also held in Walker (supra) that a decision based on disputed facts could not be justified by the affidavit evidence and as a result, a decision based on those disputed facts could not stand.
Conclusions
61 In my opinion, the Motions Court Judge was obliged to consider whether to exercise her discretion by directing trial of the issues even though neither party requested that. I will set out rule 69.24.1(22) again, for convenience. It states:
(22) Where the court is of the opinion that a variation motion, whether or not on consent, can not be properly determined because of the material filed, because of the matters in dispute between the parties or for any other reason, the court may give directions accordingly, including an order under clause 37.13(2)(b)(trial of issue).
62 It will be seen that this rule applies even if the parties consent to a variation of a child support order. It requires the judge hearing a child support variation motion to consider whether the motion can not be properly determined because of, inter alia, the material filed, regardless of the consent of the parties.
63 The intent of the rule is, therefore, to ensure that motions to vary support for minors (which children affected by such a motion generally are) are "properly determined". Consequently, the rule gives the judge hearing such a motion the responsibility to ensure that the interests of justice are served by the disposition which the judge imposes. This responsibility also arises from the provisions of rule 1.04(1), which requires that rule 69.24.1(22) be given an interpretation which secures a just determination of such a motion, on its merits. Consequently, in presiding over this motion, the Motions Court Judge was required to consider whether to exercise her discretion to order trial of the issues, whether or not any party requested that.
64 In addition, the Motions Court Judge was required to consider and to determine whether a disposition of this motion upon affidavit evidence, without cross-examinations and without the benefit of observing the parties and the witness testify, would amount to a "just determination" within the meaning of both rule 1.02 of the Family Case Management Rules and rule 1.04(1) of the Rules of Civil Procedure. In many child support cases, including child support variation cases, it is in the interests of justice to make prompt orders and to avoid further legal costs. However, these objectives cannot be pursued at the expense of fundamental justice. Public confidence in the administration of justice, particularly in cases affecting the rights of children, depends upon the processes of the court being seen to provide the parties with the opportunity to address the real merits of their dispute in a substantial and fair manner, and depends also on the disposition imposed by the court being seen to reflect the real merits. That did not happen in this case because the affidavit evidence was in such fundamental conflict that rational, reliable and satisfactory factual conclusions were not possible, and the Motions Court Judge did not exercise her discretion judicially in failing to order that the issues be tried.
65 The Motions Court Judge's error in finding that Mr. Koutsaris owned property was a significant misapprehension of the evidence which appears to have affected the appraisal of Mr.Koutsaris's credibility, and the appraisal of the reliability of his evidence, including Dr.Rehaluk's opinion. The evidence of Mr. Koutsaris and of Dr. Rehaluk respecting Mr.Koutsaris's disability and diminished earning capacity had that degree of evidentiary weight which, at the least, should have resulted in an order that these issues be tried.
66 The Motions Court Judge's findings against Mr. Koutsaris's credibility and the reliability of his evidence also rested upon the untested assumption and the unsupported innuendo that Mr.Koutsaris's evidence of disability and diminished earning capacity could not be believed because of suspicious employment practices involving his family years before the time in issue, when there was no question about his ability to work. The Motions Court Judge was entitled to have doubts or concerns about Mr. Koutsaris's credibility, and the reliability of his evidence. However, the proper order, because the conflicts in the affidavit evidence did not permit rational, reliable and satisfactory factual conclusions, was to order trial of the issues. In this fashion, the trier of fact would have the benefit of viva voce testimony, conflicting evidence would be tested by cross-examination and the court would be in a position to satisfy the public interest in having a well-founded decision.
67 I would set aside the order of the Motions Court Judge and direct the issues herein be tried. I would also order this matter referred to Mesbur J., the Toronto Family Team Leader or to her designate, to make such orders as are appropriate respecting a timely trial date and a fair trial.
68 At the hearing, the appellant's counsel waived costs. I would therefore make no order as to costs.
Appeal dismissed.