Judgment

Gilmore J.

OVERVIEW

[1] This is an appeal of the order of Madam Justice M. Donohue dated June 5, 2013 and her related costs order dated August 5, 2013.

[2] The Appellant seeks from the Respondent:

(a) $80,143 for retroactive child support and section 7 extraordinary expenses;

(b) $9,606.04 for equalization of net family property;

(c) An order that the Respondent insure his child support obligation until the children are no longer dependants and name the Appellant as the irrevocable trustee of the policy;

(d) Pay the Appellant $58,792.40 for her costs of the trial;

(e) Pay her costs of the appeal.

[3] The Appellant also seeks pre-judgment interest on any amounts owed to her (although this was not sought at trial) and notes that Justice Donohue failed to make an order for ongoing child support in her judgment.

[4] Based on Justice Donohue’s judgment and costs award, the court did not impute income to the Respondent and ordered that he pay arrears of child support of $16,670 for the period of January 1, 2009 to December 31, 2011. He was also ordered to pay his proportionate share of $53,333 being the section 7 expenses as found by the court for the period ending December 31, 2012 and his proportionate share of such expense. He was also ordered to pay his proportionate share of $6,600 for braces.

[5] The court found that there were no items of excluded property and ordered counsel to prepare a new Net Family Property Statement based on the values attributed to certain items of personal property.

[6] Finally, Justice Donohue ordered that the Respondent insure his child support obligation until the children were 18 years of age and that he name the Appellant as the irrevocable trustee of the said policy.

ISSUES ON APPEAL

[7] Did Her Honour err in fact/law by:

(a) Not imputing income of at least $100,000 per annum to the Respondent in 2008/2009 and 2010?

(b) Capping the s.7 extraordinary expenses to be shared at $10,000 per year?

[8] Did Her Honour err in law by:

(a) Failing to order ongoing child support?

(b) Linking the children’s achievement in figure skating to the consideration of s.7 entitlement?

(d) Failing to order pre-judgment interest?

(e) Failing to order costs of the trial payable by the Respondent?

[9] Did Her Honour make certain errors in fact?

STANDARD OF REVIEW

[10] This is an appeal of a judicial order and as such the principles set out in Housen v. Nikolaisen[^1] prevail. That is, questions of law are reviewed on a standard of correctness; questions of fact are reviewed only where a “palpable and overriding error” has occurred and questions of mixed fact and law may be reviewed on a spectrum or the “palpable and overriding error” standard applies if the questions of fact and law cannot be separated.

[11] The Ontario Court of Appeal has made it clear that strong appellate deference is to be given to findings of fact made at trial.[^2] This deference is heightened in family matters to the point of requiring a “material error or serious misapprehension of the evidence.”[^3]

THE ISSUES

Did the Trial Judge err in Law by Failing to Order Ongoing Child Support?

[12] Counsel advised at the outset that this matter was resolved on consent prior to the hearing of the appeal.

Did the Trial Judge Err in Declining to Impute Income of $100,000 per annum to the Respondent for 2008, 2009 and 2010?

[13] The Appellant submits that the income of the Respondent in the year of separation (2007) of $99,235 should be used as a benchmark as to what the Respondent was capable of earning during the period of 2008-2010 inclusive.

[14] The Appellant relies on the principles in Drygala v. Pauli[^4] in which the court found that intentional under-employment may be found where a support payor chooses to earn less than what they are capable of earning. No specific finding of bad faith or an intent to evade child support is required.

[15] In this case deference is owed to the factual findings of the trial judge which underpinned her decision not to impute income to the Respondent. First, she found that there was a reasonable excuse for the Respondent’s termination from his employment in 2007. The trial judge adverted to the hostile nature of his separation from the Appellant and the arrest at his place of employment for child abuse in November 2007. As a result, he was ejected from his home. Further, he was unemployed for only one month and his income in 2008, 2009 and 2010 increased steadily such that by 2010 he was earning $85,506.

[16] There is ample evidence to support the trial judge’s finding that the Respondent was not intentionally under-employed pursuant to both the case law and section 19(1)(a) of the Federal Child Support Guidelines.

Did the Trial Judge Err in Capping the Quantum of Section 7 Expenses

[17] The trial judge found that the parties spent about $10,000 per year on skating expenses for both children in the year prior to separation. The total cost of skating for both children between 2007 and 2012 was $89,249 based on the evidence produced by the Appellant. The Appellant kept excellent records and the court accepted that these amounts were actually spent by the Appellant.

[18] However, as the parties did not communicate, the Appellant spent these amounts without consultation with the Respondent. While there was some delay in production of the invoices for amounts spent, the Respondent never denied that he would owe some contribution nor that skating benefited the children.

[19] Section 7(1) of the Child Support Guidelines mandates that the court consider both the necessity of an extraordinary expense in relation to the children’s best interests and the reasonableness of the expense in relation to the parties’ incomes and the family’s spending pattern prior to separation.

[20] The children had been heavily involved in skating prior to separation and there was evidence from the Appellant at trial, which the trial judge accepted, that skating was good for the children’s self-esteem and taught them to “win with pride and lose with grace.” There is therefore no reason to interfere with the court’s view that the expense was “necessary” in relation to the children’s best interests. The more problematic issue was the reasonableness of the expense. The court’s view at trial was that increasing the skating expense post separation by a third or more was not reasonable because of the family’s pre- separation spending pattern and the necessity of ensuring that there were sufficient funds to pay regular household expenses and the upcoming cost of post-secondary education.

[21] Based on the above reasoning, the trial judge “capped” the section 7 expense for extraordinary expenses for the four years and four months post separation at $53,333 or $10,000 per year. The Respondent was ordered to pay his proportionate share of that amount.

[22] Determining the reasonableness of a section 7 expense based on the second part of the test under section 7(1) is a matter of judicial discretion in the context of a particular family after considering all of the relevant factors.[^5]

[23] Justice Donohue considered all of the relevant factors including the pre-separation spending and family emphasis on skating, the value of the activity in relation to the children’s best interests, the expenditures by the Appellant, the debt incurred as a result of the expenditures and the incomes of the parties. The “capping” of the expense was reasonable in that contributions to section 7 expenses are not meant to be unlimited but based on a variety of important factors which were considered by the trial court and which are owed deference by this court.

[24] The court also considered the children’s skating ability in arriving at the amount of $10,000 per year for this expense. This is a valid consideration given the wording of Section 7(1.1)(iii) of the Child Support Guidelines which specifically references “any special needs and talents of the child or children.” The Appellant conceded that the children were not “Olympic material” although they had had some success in competition. The children’s skill in skating is a “relevant factor” in determining the reasonableness of the expense and part of the generous judicial discretion afforded in the consideration of the section 7 entitlement. There was, therefore, no error on the part of the trial judge in including this factor in her considerations.

Did the Judge Err in Including Certain Items of Personal Property and Vehicles in the Appellant’s Net Family Property?

[25] The Appellant argues that certain household goods and two vehicles should not have been included in her net family property because they were gifted to her by her family.

[26] The Respondent’s position is that the household goods (which the court valued at $10,000) were included in the purchase price of the home when it was bought from the Appellant’s family and the vehicles were gifted to both of them for family use.

[27] While the trial judge accepted that the items were gifted, this was qualified by her finding that the gifts were intended for the use of both parties. She did not accept the Appellant’s evidence that the household contents and vehicles were intended solely for her. I do not find that there is any basis to disturb those factual findings by the trial judge. The trial judge was correct in including the personal property and vehicles in the Appellant’s net family property as those items remained in her possession post separation.

Did the Judge Err in Limiting the Respondent’s Requirement to Insure his Child Support Obligation?

[28] The Appellant argues that the trial judge erred in requiring the Respondent to insure his child support obligation only until the children are 18 years of age.

[29] Section 34 of the Family Law Act provides that the court may make an interim or final order;

(i) Requiring that a spouse who has a policy of life insurance as defined under the Insurance Act designate the other spouse or a child as the beneficiary irrevocably.

[30] Such orders are made routinely in family matters and commonly the requirement to insure a child support obligation is ordered to continue until the children are no longer dependents. However, in this case the evidence was that the children have not seen their father since separation and have no relationship with him. Once the children are over 18 the presumptive rule in section 3 of the Child Support Guidelines no longer applies. Whether or not the children have a relationship with their father may factor into considerations with respect to what amount, if any, would be owed by the Respondent pursuant to the considerations in section 3(2) of the Child Support Guidelines for children over the age of majority.

[31] Given the evidence in this case, it is unclear whether the Respondent would still have a support obligation once the children turn 18. As such, the trial judge’s order in this regard should be given deference. In any event, if the children remain dependent after age 18 the Appellant is free to bring a variation application with respect to extending the limit of the life insurance policy beyond age 18.

Did the Judge Err in Failing to Order Pre-Judgment Interest?

[32] At trial, the Appellant did not request pre-judgment interest on outstanding amounts owing to her, although she claimed it in her original Application. The Respondent submits that she is not entitled to such interest given that it was not pursued at trial. The Applicant submits that this court has discretion pursuant to section 128(1) of the Courts of Justice Act to order the interest payment.

[33] It is not clear to me that pre-judgment interest was sought at trial. Appellant’s counsel was unable to point me to any such submission being made by him either in his opening statement or his final submissions. Further, no information was provided to the court with respect to what the pre-judgment amount would actually be, either based on the trial judgment or the Appellant’s position on appeal.

[34] The wording of section 128(1) is not mandatory and discretion is afforded to the trial judge with respect to the awarding of pre-judgment interest. As it was not pursued at trial, the claim cannot be resurrected on appeal.

Did the Trial Judge Make Significant Errors of Fact?

[35] The Appellant submits that the trial judge made numerous errors of fact in both the trial judgment and the costs decision. Specifically, the Appellant refers to ten alleged errors of fact as follows:

(a) The court stated that the Appellant reported to the police that the Respondent had child pornography in his possession. In fact, the Appellant told the police that she had some concern over possible child pornography on the Respondent’s computer. She did not say he had child pornography in his possession.

(b) The court stated that the Appellant reported to the police that the Respondent had sexually abused their oldest child. The Appellant never made such a report.

(d) The court stated that the Appellant did not submit her tax returns until trial. According to the Appellant this appears to have factored into the trial judge’s decision on costs. The Appellant submits that that her tax returns were provided one year prior in April, 2012.

(e) The court stated that the spending pattern of the parties pre-separation on extraordinary expenses was $10,000 per year. The evidence was that this was the amount spent on skating alone.

(f) The court stated that there was no evidence that the children were promising provincial skating competitors. According to the Appellant there was ample evidence that the children had in fact placed in provincial competitions.

(g) The court stated that the household contents were to be gifted to both parties when there was evidence at trial that contradicted this statement.

(h) The court stated that the Appellant’s mother gifted her the Mercury Marquis and the Dodge Caravan. According to the Appellant, the evidence was that the Marquis was a gift from the Appellant’s grandfather. This evidence was not contradicted.

(i) The court stated that the Appellant’s mother did not consider the household furniture to be of much value when she gifted it. However, Her Honour went on to ascribe a value of $10,000 to the furniture and failed to give adequate weight to the testimony of the Appellant’s mother who was the person who actually purchased the furniture.

(j) The court stated that there was no evidence as to why the Respondent was not allowed on the property to clean out his workshop before the home sold. The Appellants submit that there was evidence that the Respondent’s bail conditions prohibited his attendance at the property.

[36] In More v. Ross[^6] Justice Molloy in citing Moge v. Moge[^7] reiterated the deference that is owed to trial judges in family cases as follows:

….it is not our place, particularly in matters of family law, to substitute our own discretion or conclusion in place of that of the trial judge. Rather, we should only intervene if the reasons of the trial judge disclose “material error” or a “significant misapprehension of the evidence.”

[37] None of the errors of fact made by the trial judge were material nor did they demonstrate any misapprehension of the evidence. For example, the fact that the Appellant is not an accountant is immaterial as her income was disclosed and considered by the court in determining the reasonable of section 7 expenses. The fact that the parties spent more than $10,000 a year on extraordinary expenses pre-separation does not interfere with the broad discretion afforded a trial judge when determining the reasonableness of what amount of section 7 expenses will be shared by the parties.

[38] The fact that the Appellant did or did not report sexual abuse or the possession of child pornography by the Respondent is immaterial. Neither custody nor access was an issue in this trial and therefore any evidence relating to the Respondent’s parenting capacity was not related to the Appellant’s claims.

[39] It is correct that the trial judge stated that there was no evidence that the children were promising provincial skating competitors. More specifically, she stated that “the evidence fell short of establishing that the children were competing at a high level or were capable of achieving any provincial or national renown in the sport.”[^8] This aligns with the Appellant’s evidence that the children would never be Olympic level skaters. The trial judge did not misapprehend the evidence in this regard as she went on to award a significant amount of s. 7 expenses for skating, focusing on the importance of the activity to the children as opposed to their future promise in the sport. That conclusion is entirely reasonable based on the considerations required under s.7 of the Child Support Guidelines.

[40] The trial judge made certain findings with respect to the household contents and vehicles. Although evidence was presented with respect to the ownership and value of those items, she rejected much of it and determined that both the vehicles and the household contents were gifted to both parties. Simply because certain evidence was uncontradicted does not mean that the trial judge was bound to accept it. She was in the best possible position to make credibility findings and she rejected the evidence of ownership and value presented by the Appellant.

[41] With respect to the evidence relating to why the Respondent was not allowed onto the property to retrieve the contents of the barn, again, I find that this fact is immaterial to the result. The trial judge ascribed a value of $10,000 to those contents for net family property purposes. The Respondent’s initial value for the barn items was $20,000. The trial judge reduced this to $10,000 which benefitted the Appellant since those items all remained in her possession.

[42] I do not find that the trial judge made any errors of fact that were material or resulted in a serious misapprehension of the evidence. If any errors of fact were made (such as the Appellant not being employed as an accountant) they are immaterial to the result or did not result in any conclusions that were clearly wrong.

Did the Trial Judge Err in Failing to Award Costs Payable to the Appellant?

[43] The Appellant submits that Her Honour erred in law by ordering that each party should bear their own costs of the trial. The Appellant states that the court based its decision partly on the fact that it found that the Appellant had failed to produce her income information until shortly before trial and that she produced years of section 7 expenses at one time. The Appellant submits that neither of these findings is borne out on the evidence. Further, the Appellant submits that Her Honour failed to adequately consider her three comprehensive Offers to Settle made before trial.

[44] The Respondent takes no issue with having to absorb his own costs and submits that Her Honour made no error in principle in that regard.

[45] Both parties served Offers to Settle in accordance with the Family Law Rules. Both parties had an offer outstanding as of the date of trial.

[46] Comparing the offers, the Appellant offered to accept the Respondent’s share of the house sale proceeds ($33,258.81) in full satisfaction for all child support arrears, retroactive section 7 expenses and the equalization payment owing.

[47] At trial the Respondent was ordered to pay $16,670 in arrears of child support, retroactive section 7 expenses of $25,692. The Appellant was to pay the Respondent an equalization payment of $2,893.97. The trial decision therefore resulted in the Respondent making a total payment to the Appellant of $39,468.03 or $6,209.22 more than the Appellant’s offer. Given that the Appellant’s offer was better than the trial result for the Respondent, the Appellant seeks partial indemnity costs of $10,000 for the period prior to the date of service of the offer and $32,000 by way of full recovery costs thereafter, for a total of $42,000.

[48] The Respondent’s offer stipulated that the parties would share the house sale proceeds, the Appellant would pay him $10,000 by way of equalization payment, he would pay $19,936.32 in section 7 expenses for 2008, 2009 and 2010 and $19,758 for arrears of child support for 2009, 2010, 2011 and 2012 being a total of $39,694.32. The result of the Respondent’s offer is that if he paid the Appellant his share of house sale proceeds he would owe her another $6435.51. Deducted from the $10,000 equalization payment owing to him as per his offer he would net $3564.49.

[49] However, the Respondent submits that notwithstanding the Appellant’s offer he had some success based on his offer to settle dated November 2, 2012. Specifically, the Respondent highlighted the following:

(a) He offered to settle the amount of his income at $147,900. The court ordered him to pay support based on his line 150 income of $142,500.

(b) No income was imputed to him.

(d) He offered to pay section 7 expenses for skating$19,936.32 as his proportionate share of that expense for 2008, 2009 and 2010. He did not make an offer for 2011 and 2012 as no proof of expenses had been provided to him for those years as of the date of his offer.

[50] The Respondent submits that Justice Donohue made no error in ordering that both parties bear their own costs as both parties had some degree of success.

[51] With respect to ongoing section 7 expenses the court required the Respondent to pay his proportionate share of such expenses. The Respondent offered to pay ongoing section 7 expenses on a proportionate basis. The Appellant offered to receive payment for half of the section 7 expenses. Technically this was a better result than the Respondent’s offer to pay proportionally, however, as the parties’ incomes are no similar there will be little difference in the amount payable whether it is equally shared or paid proportionally.

[52] With respect to Rule 24 of the Family Law Rules, the trial judge determined that both parties acted unreasonably. She found that both had provided critical disclosure at a late date and that the Respondent had failed to make any contribution towards section 7 expenses for a six year period notwithstanding a tacit acknowledgment that some amount would be due and owing.

[53] I find that the trial judge did not engage in a review of the parties’ respective positions with respect to the results of their offers as compared to the trial result in accordance with the requirements of the Family Law Rules. Pursuant to Rule 18 of the Family Law Rules a party who makes an offer is entitled to costs, unless the court orders otherwise, to the date the offer was served and full recovery of costs from that date if the following relevant conditions are met:

(a) It is made at least seven days before the trial date.

(b) It is not withdrawn or does not expire before the trial date.

(d) The party who made the offer obtains an order that is as favourable or more favourable than the offer.

[54] Notwithstanding the requirements of Rule 18 and the fact that the Appellant’s offer was more favourable than the trial result, the findings of Justice Donohue in relation to the parties’ conduct and the issue of proportionality must be addressed.

[55] Justice Donohue found that both parties acted unreasonably. Specifically, she stated that “the trial was necessitated by the behaviour of both parties in this litigation.”

[56] As to proportionality, in Boucher v. Public Accountants Council for Ontario et al.[^9] the court sets out well known guidelines for considerations related to the fixing of costs. Despite the fact that this case refers to Rule 57.01 of the Rules of Civil Procedure, its principles permeate all aspects of the exercise of discretion in awarding costs.

[57] Subrule (1) lists a broad range of factors that the court may consider in exercising its discretion to award costs under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The express language of rule 57.01(3) makes it clear that the fixing of costs is not simply a mechanical exercise. In particular, the rule makes clear that the fixing of costs does not begin and end with a calculation of hours times rates. The introduction of a costs grid was not meant to produce that result, but rather to signal that this is one factor in the assessment process, together with the other factors in rule 57.01. Overall, as this court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[58] In determining what is “fair and reasonable” in this case I advert to the following factors:

(a) The amount by which the Appellant’s offer exceeded the amount awarded at trial was $6,209.22.

(b) The amount costs sought by the Appellant ($42,000) exceeds the amount the Respondent was ordered to pay pursuant to the trial judgment.

(d) While the Appellant’s offer complied with Rule 18 of the Family Law Rules, proportionality dictates the exercise of discretion in fixing costs is not a mechanical one tied only to hours spent and rates charged.

(e) Notwithstanding the success referred to by the Respondent with respect to his offer to settle, he would still have been in a better position by accepting the Appellant’s offer.

[59] Given all of the above, a nominal costs award is in order in the amount of $7500.

FINAL ORDER

[60] The appeal is dismissed save for the relief requested in paragraph 4. Trial costs are awarded to the Appellant in the amount of $7500.

[61] For oral reasons given, costs of the appeal are set at $3500 in favour of the Respondent as the Appellant had only small success on this appeal. In the result the Respondent will owe the Appellant a net amount of $4000.

Gilmore J.

___________________________ Hambly J

D. Brown J.

Released: October 24, 2014

CITATION: C.A.S. v. N.A.S., 2014 ONSC 6201

DIVISIONAL COURT FILE NO.: DC-13-75-00

DATE: 20141024

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Hambly, D. Brown and Gilmore, JJ.

B E T W E E N:

C.A.S.

Appellent

and –

N.A.S.

Respondent

REASONS FOR JUDGMENT

Gilmore J.

Released: October 24, 2014

[^1]: 2002 SCC 33, [2002] 2 S.C.R. 235 [^2]: Waxman v. Waxman 2004 39040 (ON CA), [2004] O.J. 1765 (C.A.) [^3]: Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518 at para 12. [^4]: 2002 41868 (OCA). [^5]: Bradford v. Leckie, 2002 CarswellOnt 2743 para 13. [^6]: 2013 CarswellOnt 5112 (SCJ), para 7 [^7]: (1992), 1992 25 (SCC), 99 D.L.R. (4th) 456 S.C.C. [^8]: Reasons for Judgment of Donohue, J. released June 5, 2013 at para 44. [^9]: 2004 14579, para 26

C.A.S. v. N.A.S., 2014 ONSC 6201

Case Summary

Judgment

Gilmore J.

OVERVIEW

ISSUES ON APPEAL

STANDARD OF REVIEW

THE ISSUES

Did the Trial Judge err in Law by Failing to Order Ongoing Child Support?

Did the Trial Judge Err in Declining to Impute Income of $100,000 per annum to the Respondent for 2008, 2009 and 2010?

Did the Trial Judge Err in Capping the Quantum of Section 7 Expenses

Did the Judge Err in Including Certain Items of Personal Property and Vehicles in the Appellant’s Net Family Property?

Did the Judge Err in Limiting the Respondent’s Requirement to Insure his Child Support Obligation?

Did the Judge Err in Failing to Order Pre-Judgment Interest?

Did the Trial Judge Make Significant Errors of Fact?

Did the Trial Judge Err in Failing to Award Costs Payable to the Appellant?

FINAL ORDER

Judges

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 5

Legal Tests 3

Legislation 1