CITATION: Verkaik v. Verkaik, 2020 ONSC 7993

DIVISIONAL COURT FILE NO.: DC-19-62-0000

DATE: 20201222

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Penny, Kristjanson and O’Brien JJ

BETWEEN:

DOUGLAS VERKAIK

Applicant (Appellant in Appeal)

• and -

ANN VERKAIK

Respondent (Respondent in Appeal)

Paul McInnis for the Appellant

Karen Cunningham for the Respondent

HEARD: December 2, 2020

Overview

1This is an appeal by the applicant father from the Order of Fitzpatrick J. dated February 4, 2019. The trial judge dismissed the applicant father’s application to review and change minutes of settlement of September 20, 2010 respecting child support under the Child Support Guidelines from October 1, 2013 forward: 2019 ONSC 883. The applicant father also seeks leave to appeal the order as to costs dated June 10, 2019: 2019 ONSC 3598.

2The central issue on this appeal concerns the interpretation of minutes of settlement in the context of the CSG and whether, in the absence of making any findings of fact, it was open to the trial judge to simply order as child support the “continuation” of the sum agreed to be paid by the applicant father in the minutes of settlement for the first three years – that is, $725 monthly.

3For the reasons that follow, I would conclude that it was not open to the trial judge to simply continue the original sum in the absence of any findings of fact about the parties’ income as of October 1, 2013 and the impact of the parties’ equal time parenting plan under s. 9 of the CSG. That he did so constitutes an error of law and a palpable and overriding error of fact.

Background

4The parties were married June 10, 2001 and separated April 13, 2006. They were divorced September 20, 2010. They have one child born 2001. The child is now 19 years of age attending university. The parties have joint custody of the child and have equally divided parenting time under an agreement executed November 23, 2009.

5There is a very long litigation history to this file. The parties have spent inordinate amounts of money pursuing this litigation.

6On the eve of a trial scheduled to deal with various support issues, the parties entered into Minutes of Settlement. It was agreed that the applicant father would pay child support in the amount of $725 per month commencing October 1, 2010. This amount was fixed and non-variable for a period of three years. During the three-year period, neither party was obliged to provide financial information as would otherwise have been required by the CSG. The child support obligations under the Minutes became reviewable as of July 1, 2013, with any new amount commencing October 1, 2013. There was otherwise no right to retroactive adjustment. The Minutes also provided that “during the three-year period, which will expire on October 1, 2013, the parties will share the costs of any agreed upon section 7 expenses, equally.” The issue of section 7 expenses payable on October 1, 2013 and thereafter was also open to review on July 1, 2013, with effect from October 1, 2013.

7As submitted by Mr. McInnis, the figure of $725 monthly was notionally based on an income for the applicant father of $80,000 (and an income of zero for the respondent mother). It also appears, from other evidence, that the amount of child support was also in part negotiated based on a number of other matters subject to the Minutes, including, in supplementary minutes of settlement, the acknowledgement that a lump sum payment of $30,000 had been paid by the applicant father to the respondent mother in partial consideration for the terms of the child support set out in the Minutes.

8The applicant father paid the child support required under the Minutes for the three-year term.

9However, upon expiry of the three-year term of the Minutes, the parties returned to their litigious ways. The applicant father stopped paying child support, based on his position that, on review, his child support obligations would be reduced or eliminated altogether. Both parties also became involved in a protracted dispute about the sufficiency of financial disclosure and the calculation of their incomes for child support purposes, including for the purposes of the application of s. 9 of the CSG. Eventually, the applicant father commenced this application on November 19, 2015.

The Reasons for Judgment and the Cost Endorsement

10The trial judge presided over a protracted 6-day trial, essentially for the purpose of determining the parties’ incomes.

11The trial judge found, in his Reasons for Judgment released on February 4, 2019, that he was unable to determine the appropriate incomes of either party. He gave extensive reasons, regarding both the applicant father and the respondent mother, explaining why he was not prepared to accept their evidence about their respective incomes. For example, regarding the applicant father, he said:

It is very clear that the multi millions of dollars in assets and overall finances in evidence suggest an income for support well beyond the limited personal income suggested by Mr. Verkaik or set forth in his Line 150 annual returns. Unfortunately, he did not provide the evidence I needed to determine his income.

12On this basis, the trial judge dismissed the applicant father’s application to review and to change child support on and after October 1, 2013. The trial judge made no mention of a monetary judgment in connection with monthly child support payments post-October 1, 2013 in the Reasons for Judgment.

13The trial judge did, however, make four monetary awards:

(1) judgment in favour of the applicant father for $12,516.19 for the respondent mother’s share of s. 7 expenses from October 1, 2010 to November 18, 2016;

(2) judgment in favour of the applicant father for $846.55 for costs related to the respondent mother’s failure to exchange copies of the family photographs;

(3) judgment in favour of the respondent mother for $1,277.22 for her interest in a timeshare property (to be deducted from the sums that the respondent mother owed to the applicant father under the judgment); and,

(4) judgment against the respondent mother requiring her to immediately repay funds she removed from the child’s RESP.

14There were then extensive submissions as to costs. These submissions involved, among other things, consideration of offers to settle made by the applicant father. The applicant father maintained that the judgment was more favourable to him than the amount of his offer to settle. He therefore sought costs on an elevated scale.

15In his Cost Endorsement of June 10, 2019, the trial judge ordered the respondent mother to pay the applicant father’s costs of the trial in the amount of $20,000. However, the trial judge also went on to make findings relevant to the Reasons for Judgment which had not previously been mentioned. In particular, the trial judge stated that:

The minutes obligated the Applicant to pay $725.00 monthly subject to any adjustment at or following October 1, 2013. Given that I made no adjustment, that $725.00 monthly payment continues to be payable.

16Although the Reasons for Judgment granted no judgment for arrears of child support, in the Cost Endorsement the trial judge stated that arrears were due and owing. He said, at para. 4 of the Cost Endorsement:

Given that I made no adjustment, that $725.00 monthly payment continues to be payable.

17And at para. 11 of the Cost Endorsement, he said:

the $725.00 monthly continued to accrue such that [the applicant father] owes retroactive table child support in that amount monthly from October 1, 2013 forward.

Analysis

The Findings Required on an Application for “Review”

18The Minutes do not provide for a “variation” of child support. The child support payable under the Minutes for three years was “fixed and non-variable”. Critically, para. 3 of the Minutes provides that the child support payable commencing October 1, 2013 “will be reviewable” (emphasis added) as of July 1, 2013, with effect from October 1, 2013. As of July 2013, both parties were required to provide “the income information set out in section 21 of the Child Support Guidelines”.

19Paragraph 4 of the Minutes goes on to provide that “any adjustment to child support” payable as of October 1, 2013 “will not be retroactive” and “will be payable in accordance with” the Child Support Guidelines.

20These Minutes constituted a temporary solution to the problem of child support, entered into on the eve of what would likely have been a lengthy and costly trial. They were meant to “buy peace” for three years and to provide some stability. This was not an application “to vary”the Minutes. This was not a motion to change under Rule 15 of the Family Law Rules. As specifically provided in para. 3 of the Minutes, this was an application for review of the parties’ child support obligations as of October 1, 2013. There was no prior order of the court fixing child support. There was no requirement to show a “change in the condition, means needs or other circumstances of either former spouse”. There was, however, under the CSG, a requirement to make factual findings about the parties’ incomes.

21Canadian law has, for some time, recognized a clear distinction between a “motion to change” and a “review”: Leskun v. Leskun, 2006 SCC 25. A review involves an application for support without the need to prove a material change in circumstances. And, importantly for this case, unless the review is restricted to a specific issue (which, in this case, it is not), a “review” of support payable is generally equivalent to an initial application for support and necessitates a complete rehearing of every issue from entitlement to quantum: Fisher v. Fisher, 2008 ONCA 11 (Ont. C.A.) at para. 63.

22As Prof. James G. McLeod said in his annotation to Trewin v. Jones (1997), 1997 1105 (ON CA), 26 R.F.L. (4th) 418 (Ont. C.A.) at 420, under a review, either party may return the matter to court at a fixed time. On the return, the court will review support entitlement, form, duration and quantum on the facts as they exist on the return date. The issue of support is determined afresh on the facts and the original onus of proof applies.

23It does not appear that these principles were argued, or even raised, by the parties before the trial judge. The trial judge, in his understandable frustration with the quality of the parties’ evidence, fell back on the original agreed sum of $725 per month. However, in the circumstances of a review, he could only do so if his conclusion, that the amount payable was $725 per month, was founded on specific factual findings as to the parties’ incomes and an assessment, now that the initial three-year period was over, of the effect of the parties’ equal time parenting plan under s. 9 of the CSG.

24The trial judge’s conclusion that $725 per month was an appropriate amount for the applicant father to pay as child support in 2019 (and as he later clarified, as of October 1, 2013), implies a factual finding in these circumstances that the applicant father’s income was $80,000 and the respondent mother’s income was zero (the 2010 CSG stipulate child support of about $725 per month on one income of $80,000). Not only did the trial judge not make these findings; they were, on the evidence and by his own assessment of that evidence, manifestly incorrect and unsupportable.

25Judges in family court cases are faced with inadequate, incorrect and sometimes misleading evidence of the parties’ incomes all the time. The CSG contemplate circumstances of this nature and provide specific instruction on what to do and the necessary tools to do it. Section 15 of the CSG explains that annual income for child support purposes is determined by the court in accordance with ss. 16 to 20. This includes, among other things, the power of the court to impute income, including in circumstances where “the parent or spouse has failed to provide income information when under a legal obligation to do so”. This, according to the trial judge, was precisely the situation he encountered in this case. It was also within the trial judge’s power to insist upon production of other collateral sources of information such as personal bank and credit card statements from which lifestyle and patterns of expenditure (and therefore available income) might be derived.

26It was, in my view, an error of law for the trial judge to make any order for payment of child support without first determining, on a de novo basis, the income of the parties for child support purposes.

27The trial judge also made a palpable and overriding error of fact when he reached the conclusion, without evidentiary support or necessary findings of fact, that the appropriate amount of child support payable by the applicant father was $725 per month.

28In light of the parties equal parenting time agreement, which appears not to have been controversial, the trial judge was also required to come to grips with the implications of s. 9 of the CSG. Here too, there is clear direction from appellate level courts and academic commentary which outlines the process a trial judge should follow in a s. 9 analysis: see, for example, J.C.M. v. M.J.M., 2018 NBCA 42, citing, with approval, a case comment by Prof. Rollie Thompson in Contino v. Leonelli-Contino (2004), 42 R.F.L. (5th) 326. The trial judge’s failure to follow this process, by falling back on the original agreed upon amount from October 2010, was also an error of law in the context of the acknowledged equal parenting time and a “review” of the parties’ child support obligations following the expired term of the Minutes.

29For these reasons, I would set aside the order of the trial judge that the amount of the applicant father’s ongoing child support obligations since October 1, 2013, is and has been $725 per month.

Whether the Obligation to Pay $725 per Month Continued Past October 1, 2013 If Not Changed by Agreement or Court Order on Review

30A great deal of the parties’ time and effort was spent arguing about whether the applicant father was obliged to continue to pay $725 per month pending the decision of the court on his review application.

31This dispute, in my view, is a red herring. The applicant father stopped paying the original amount on the theory that, under a de novo review, and with the benefit of the application of s. 9 of the CSG, his child support obligations would be reduced or eliminated. It was open to the respondent mother, in those circumstances, to initiate the review herself and to move for interim child support, in any amount supportable by the evidence, pending the determination of the application for review. She chose not to do so. Whether the applicant father ought to have continued the payments is not a question we are required to answer at this point.

32There is no doubt, given the child of these parties was only twelve in 2013, that both parents had an ongoing legal obligation to support their child. There is also no doubt that the review process under the Minutes was eventually initiated and that any order for payment of child support, if one is ever made, will take effect from as early as October 1, 2013. Whether the applicant father “ought” to have continued to pay child support in accordance with the Minutes is moot. The fact is that he did not. The respondent mother had (and, for that matter still has) her remedies, none of which were pursued. The review required a fresh finding, on the available evidence, of the parties’ incomes and an assessment of the impact of s. 9 of the CSG. Had that been done, it would have been entirely appropriate for the trial judge to order the payment of arrears, with interest, from October 1, 2013. Because it was not done, however, the order made was based on errors of law and a palpable and overriding error of fact.

Remedy

33An inordinate amount of time and money has been consumed by the parties’ protracted legal wrangling over child support. Indeed, it appears that the combined cost of the trial and this appeal may already have exceeded any amount reasonably in issue.

34If the factual findings of the trial judge and the available supporting evidence in the record on appeal permitted us to arrive at an appropriate determination of the quantum of child support payable, we would have undertaken the necessary analysis and made an order accordingly. Unfortunately, this is an appellate court. We are in no position to resolve conflicting evidence and make other than obvious factual findings from an incomplete written record.

35It is with considerable regret that I have concluded there must be a new trial. I would, therefore, remit the question of fixing the amount of child support payable, if any, from October 1, 2013 forward, to the Central West Family Court of the Superior Court of Justice, to be heard by a different trial judge. I will deal with the issues for the new trial later in these reasons.

36I would add that this is a case that cries out for resolution. Having regard to the evidence that was considered by the trial judge, and his observations about the level of income seemingly enjoyed by the applicant father, it is entirely possible that the applicant father could be found to owe substantial amounts of child support arrears, and ongoing child support, as well as costs. It is also possible, of course, that the applicant father’s position could prevail. Given the cost of proceedings to date, and the cost of continuing with this protracted litigation, the parties would be well advised to seek a consensual resolution and bring their legal disputes to an end.

Other Issues

37The applicant father also sought leave to appeal the costs order of the trial judge. The applicant father was unsuccessful on the main issue at the trial. His cost submission, nevertheless, was that he should be indemnified for his costs because of the respondent mother’s behaviour and lack of preparedness at trial. He sought full indemnity costs of the trial in the amount of $80,000.

38The trial judge agreed that the respondent mother had caused needless costs to be incurred due her conduct and lack of preparedness at trial. He found the request for $80,000, however, to be excessive and disproportionate. The trial judge awarded trial costs against the respondent mother in the amount of $20,000.

39On this appeal, the respondent father askes for his full costs of the trial to be awarded against the respondent mother. Setting aside the trial judge’s conclusion on the amount of child support payable, however, does not mean there is any necessary impact on the trial judge’s award of costs. The applicant father’s remedy of choice on the appeal was an order that he was not obliged to pay any child support. That is not the order of this court. Rather, there must be a new trial.

40In the circumstances, I would uphold the trial judge’s award of costs against the respondent mother to the extent of the $20,000 allocation. This was based, not on relative success or failure, but on the respondent mother’s misbehaviour at trial. The balance of the costs of the first trial, however, cannot properly be resolved without knowing the outcome of the new trial. If the respondent mother is the “successful” party, there would be no change to the costs awarded at the first trial. If the applicant father is the “successful” party, there could be some basis for a further award of the original trial costs in his favour. Accordingly, the balance of the applicant father’s costs of the first trial shall be remitted to the judge to be dealt with after his or her disposition of the substantive issues at the second trial.

41During argument of the appeal, the parties advised that they had agreed to reduce the s. 7 judgment in favour of the applicant father by $1,650.00 to reflect the fact that the respondent mother provided evidence that she paid her share of certain arbitration costs. Accordingly, the trial judge’s award of s. 7 expenses of $12,516.19 shall be reduced to $10,866.19.

42The court considered the fresh evidence filed by both parties but, in the end, it was not influential in the disposition of any issues on appeal.

Conclusion

43In conclusion, the appeal is allowed in part. A new trial is ordered on the following issues:

(a) the incomes of the parents for CSG purposes;

(b) the impact of s. 9 of the CSG on the amount of any child support payable;

(c) the amount and allocation of any appropriate s. 7 expenses not previously dealt with at trial, in light of any new finding of the party’s respective incomes; and

(d) the costs of the first trial (other than the $20,000 already awarded against the respondent mother).

Costs of the Appeal

44The parties reached no agreement on the costs of this appeal. The respondent mother sought $68,000. The applicant father sought $60,000. This appeal came to the Divisional Court because the judgment appealed from was below the $50,000 threshold. I appreciate that, with arrears of child support in play, the amounts at stake are greater than the relatively small amounts awarded on the face of the original judgment. Of course, the amount of child support arrears, if any, is uncertain at this point. But it is hard to imagine that any award of child support would justify the costs already incurred at the first trial or the costs that seem to have been incurred on this appeal.

45The court cannot prevent parties from incurring excessive, disproportionate or even ruinous costs in pursuit of their litigation ends. However, the court is not required to countenance the parties’ own threshold for risk when awarding costs under Rule 57.

46Costs at the level sought are without question grossly disproportionate to both the task at hand (an appeal on essentially one issue to the Divisional Court) and the amounts in issue.

47The applicant father was substantially successful on the main issue. Costs to the applicant father of $5,000.

48The applicant mother sought the costs of ordering transcripts of the trial. Although a few references were made to these transcripts, the transcripts were not required for the issues on this appeal. I would not order any recovery for this disbursement.

Penny J.

I agree _______________________________

Kristjanson J.

I agree _______________________________

O’Brien J.