citation: "Dreesen v. Dreesen, 2021 ONCA 557" parties: "Tracey Catherine Dreesen and Stefan Siegfried Dreesen" party_moving: "Stefan Siegfried Dreesen" party_responding: "Tracey Catherine Dreesen" court: "Court of Appeal for Ontario" court_abbreviation: "ONCA" jurisdiction: "Ontario" case_type: "appeal" date_judgement: "2021-08-05" date_heard: ["2021-06-10"] applicant:
- "Tracey Catherine Dreesen" applicant_counsel:
- "Victoria E. Craig" respondent:
- "Stefan Siegfried Dreesen" respondent_counsel:
- "Gary S. Joseph"
- "Julia McArthur" judge:
- "Harvison Young"
- "Fairburn"
- "Jamal"
summary: >
The appellant father appealed the dismissal of his motion to decrease child and spousal support, arguing a material change in circumstances due to job loss and seeking termination of spousal support. The central issues were the imputation of his pre-tax corporate income and the refusal to terminate spousal support. The Court of Appeal dismissed the appeal, finding no material change in circumstances warranting a reduction in child support, upholding the imputation of corporate income, affirming the averaging of income, and confirming the step-down spousal support order. The court also found no error in determining the motion on affidavit evidence alone.
interesting_citations_summary: >
This decision reinforces the principles for varying support orders, particularly regarding the onus on the payor to establish a material change in circumstances (citing Colucci v. Colucci). It clarifies the application of s. 18 of the Federal Child Support Guidelines for imputing corporate pre-tax income to a payor who is a sole shareholder/director, emphasizing the need for sufficient evidence to justify retained earnings or business expenses. The court's discretion in averaging income for support calculations and in determining spousal support duration, including step-down orders, based on compensatory and needs-based entitlements and efforts towards self-sufficiency, is also highlighted.
final_judgement: The appeal was dismissed, and the appellant father was ordered to pay costs to the respondent mother.
winning_degree_applicant: 1
winning_degree_respondent: 5
judge_bias_applicant: 0
judge_bias_respondent: 0
year: 2021
decision_number: 557
file_number: "C68996"
source: "https://www.canlii.org/en/on/onca/doc/2021/2021onca557/2021onca557.html"
cited_cases:
legislation:
- title: "Federal Child Support Guidelines, S.O.R./97-175" url: "https://laws-lois.justice.gc.ca/eng/regulations/sor-97-175/" case_law:
- title: "Colucci v. Colucci, 2021 SCC 24" url: "https://www.canlii.org/en/ca/scc/doc/2021/2021scc24/2021scc24.html"
- title: "Bravo v. Pohl (2008), 62 R.F.L. (6th) 209 (Ont. S.C.)" url: "https://www.canlii.org/en/on/onsc/doc/2008/2008canlii19214/2008canlii19214.html"
- title: "Koester v. Koester (2003), 50 R.F.L. (5th) 78 (Ont. S.C.)" url: "https://www.canlii.org/en/on/onsc/doc/2003/2003canlii2150/2003canlii2150.html"
- title: "Kowalewich v. Kowalewich, 2001 BCCA 450, 92 B.C.L.R. (3d) 38" url: "https://www.canlii.org/en/bc/bcca/doc/2001/2001bcca450/2001bcca450.html"
- title: "Thompson v. Thompson, 2013 ONSC 5500" url: "https://www.canlii.org/en/on/onsc/doc/2013/2013onsc5500/2013onsc5500.html"
- title: "R. v. G.F., 2021 SCC 20, 71 C.R. (7th) 1" url: "https://www.canlii.org/en/ca/scc/doc/2021/2021scc20/2021scc20.html"
- title: "Mason v. Mason, 2016 ONCA 725, 132 O.R. (3d) 641" url: "https://www.canlii.org/en/on/onca/doc/2016/2016onca725/2016onca725.html"
- title: "Bloom v. Bloom, 2018 ONSC 5343 (Div. Ct.)" url: "https://www.canlii.org/en/on/onscdc/doc/2018/2018onsc5343/2018onsc5343.html"
- title: "N.L. v. R.R.M., 2016 ONCA 915, 88 R.F.L. (7th) 19" url: "https://www.canlii.org/en/on/onca/doc/2016/2016onca915/2016onca915.html"
# COURT OF APPEAL FOR ONTARIO
**Date:** 2021-08-05
**Docket:** C68996
**Before:** Fairburn A.C.J.O., Harvison Young and Jamal JJ.A.
**BETWEEN:**
**Tracey Catherine Dreesen**
Applicant (Respondent)
and
**Stefan Siegfried Dreesen**
Respondent (Appellant)
**Counsel:**
Gary S. Joseph and Julia McArthur, for the appellant
Victoria E. Craig, for the respondent
**Heard:** June 10, 2021 by video conference
On appeal from the order of Justice Michael R. Gibson of the Superior Court of Justice, dated December 22, 2020.
Harvison Young J.A.:
[1] The appellant father appeals from the dismissal of his motion to decrease the quantum of the child and spousal support payable to the respondent mother on the basis that the loss of his job in July 2017 had been a material change and that his subsequent income had dropped significantly. He also appeals from the motion judge’s refusal to terminate spousal support.
[2] The central issues in this appeal are whether the motion judge erred in imputing the father’s pre-tax corporate income in calculating his income available for support, and whether he erred in ordering step-down spousal support rather than terminating spousal support as the father sought.
[3] The relevant facts may be briefly summarized. The parties were married in 2000 and separated in 2012. The parties’ minutes of settlement on child and spousal support were reflected in the consent order of Miller J. dated August 2, 2017, although the minutes of settlement had been executed earlier in April 2017. The order of Miller J. provided that, among other things:
* both parties would pay set-off table child support in accordance with the [Federal Child Support Guidelines, S.O.R./97-175](https://laws-lois.justice.gc.ca/eng/regulations/sor-97-175/) (“CSG”), based on the father’s income per his notice of assessment of the previous year or that may otherwise be imputed to him and based on the greater of the mother’s actual income or $48,000;
* in the event of a material change in circumstances, either party could seek a variation of the child support arrangements;
* the parties would adjust child support on a going forward basis every year based on their respective incomes in the prior year, the living arrangements of the children, and the CSG;
* the father would pay the mother compensatory spousal support in the amount of $4,292 per month based on the mother’s imputed income of $48,000 and the father’s annual income of $257,312;
* spousal support could be changed if there is a material change in circumstances, even if the change was foreseen or foreseeable; and
* there would be a review of spousal support in October 2019, which would be an assessment of the mother’s efforts to become self-sufficient.
[4] When the parties entered their minutes of settlement, the father was employed by Yellow Pages, but he had also started his own business in 2012, Volt Media Inc., which acquired another corporation, Smart Workplace Inc., in 2018. He was laid off from Yellow Pages in July 2017. He commenced a motion to change on June 28, 2019 which was ultimately heard on September 1, 2020 on the basis of affidavit evidence. In the meantime, he had unilaterally reduced support to reflect what he claimed his actual income was at that point. In his motion, he sought to have his child and spousal support reduced retroactively and going forward and to terminate spousal support.
[5] The motion judge found that the father had not demonstrated a material change in circumstances warranting a retroactive or ongoing reduction in child support. The father’s employment with Yellow Pages ended in July 2017, prior to the date of Miller J.’s order, and it was known at that time. Further, the father continued to have significant self-employment income available for support. The motion judge accepted the mother’s submission that the father’s income had actually increased since the date of Miller J.’s order. It was appropriate to add back the pre-tax corporate income and any unreasonably deducted expenses to the father’s income for child support purposes in this case, where the father was the sole shareholder and director of two corporations and had complete control over the income that he was paid. The motion judge determined that it was also appropriate to average the last three years of the father’s income from 2017-2019, such that his average income was $401,534.67. The total amounts of the father’s child support arrears and spousal support arrears were $81,407 and $52,626, respectively.
[6] For child support going forward, the motion judge ordered that the father pay set-off table child support based on incomes of $401,502 imputed to the father and $48,000 imputed to the mother. The motion judge also found that the mother had made efforts to become self-sufficient but that she continued to have need for support. He noted that the mother was agreeable to a step-down and ultimate termination of spousal support and that step-down support would best balance her ongoing entitlement to compensatory and needs-based support with the need for her to transition to full self-sufficiency. He ordered the full spousal support amount of $4,292 per month for the year following the October 2019 review date, followed by a three-year step down and termination of spousal support after a final payment in September 2023.
[7] The appellant father alleges a number of errors that he says warrant allowing the appeal and granting the relief he claimed in his motion to change:
1. The determination that the father’s change in financial circumstances did not constitute a material change given the language in Miller J.’s order that a change may be foreseen;
2. The imputation of pre-tax corporate income;
3. The averaging of the father’s income;
4. The failure to terminate spousal support; and
5. The determination of the motion on a written record alone.
[8] I will address them in turn.
## (1) Material change
[9] First, I do not agree that the motion judge erred in finding that there was no material change to warrant a variation of child support as requested by the father. As the Supreme Court made clear in the recent decision of [Colucci v. Colucci, 2021 SCC 24](https://www.canlii.org/en/ca/scc/doc/2021/2021scc24/2021scc24.html), where the payor applies to retroactively decrease child support, the onus is on the payor to establish a past material change in circumstances, such as a material decrease in income: at paras. 59-63, 113. Although the father is correct that the loss of his employment actually took place around three months after the final minutes of settlement were negotiated in April 2017, despite the fact that the Miller J. order reflecting the agreement was not issued until August 2 of that year, this is not a material misapprehension of evidence in light of the other reason given for the motion judge’s decision: his income did not, in fact, go down. The father did not meet the threshold requirement for a retroactive decrease in support.
[10] Further, even if the motion judge had erred in finding that there was a material increase in the father’s income, rather than a decrease, a court would need to take into account the father’s disclosure to the mother in determining the appropriate date of retroactivity, given the father’s request for a retroactive decrease to August 2017: [Colucci, at paras. 86-90, 95, and 113](https://www.canlii.org/en/ca/scc/doc/2021/2021scc24/2021scc24.html). The father had notified the mother of his lay off and 12 weeks of termination compensation in July 2017. However, in these circumstances where the father had been building a business, it is difficult to see how this could have constituted effective notice, given his failure to provide any disclosure of his corporate income at that point: see [Colucci, at paras. 87-90, 113](https://www.canlii.org/en/ca/scc/doc/2021/2021scc24/2021scc24.html).
## (2) Imputation of corporate pre-tax income
[11] Second, the father says that the motion judge erred in his application of s. 18 of the CSG, which provides that where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the spouse’s annual line 150 total income does not fairly reflect all the money available to them for the payment of child support, a court may add all or part of the corporation’s pre-tax income to the payor’s income. He argues that his line 150 income should have been used instead and that he provided evidence that it was not appropriate to add Volt Media Inc.’s pre-tax corporate income to his income.
[12] I do not agree that the motion judge’s acceptance of the mother’s position that all of the pre-tax corporate income from both corporations, and unreasonably deducted expenses, should be added was unfair in these circumstances. I see no error in the motion judge’s finding that his line 150 income did not accurately reflect his actual income. The father also did not lead sufficient evidence to explain why either corporation needed to retain earnings. In the cases to which he refers, such as [Bravo v. Pohl (2008), 62 R.F.L. (6th) 209 (Ont. S.C.)](https://www.canlii.org/en/on/onsc/doc/2008/2008canlii19214/2008canlii19214.html) and [Koester v. Koester (2003), 50 R.F.L. (5th) 78 (Ont. S.C.)](https://www.canlii.org/en/on/onsc/doc/2003/2003canlii2150/2003canlii2150.html), the payors led extensive and expert evidence on the issue.
[13] Here, the motion judge had no evidence or documentation other than the limited disclosure of the father to ground a broader consideration of the nature of the corporations’ business and had no “evidence of legitimate calls on its corporate income for the purposes of that business”: see [Kowalewich v. Kowalewich, 2001 BCCA 450, 92 B.C.L.R. (3d) 38, at para. 58](https://www.canlii.org/en/bc/bcca/doc/2001/2001bcca450/2001bcca450.html); [Thompson v. Thompson, 2013 ONSC 5500, at paras. 91-93](https://www.canlii.org/en/on/onsc/doc/2013/2013onsc5500/2013onsc5500.html). The father’s explanations for retaining income and business expenses were related to only Volt Media Inc. and lacked detail or expert evidence.
[14] He stated that he had to pay staff and that it would not be wise to pay all the revenue to himself as dividends or salary. He explained that cumulative retained earnings from 2012-2018 of around $960,000 were needed for corporate tax, an asset purchase of newsletters and subscriptions, cash reserve for payroll, a future company office, and nearly $300,000 in disbursements to his father. On appeal, he clarified that those dividends to his father were actually paid to himself. His breakdown of the cumulative retained earnings from 2012-2018 and his general statement about paying staff lacked supporting evidence and did not adequately explain why or how much corporate income from 2017 onward needed to be kept in Volt Media Inc.
[15] Similarly, his statement that his business expenses listed were “reasonable” was bald and conclusory, and it did not address the specific issues raised in the mother’s affidavit. For example, she submitted that adding back half of the telephone and internet expenses to the father’s income would be reasonable, given that he worked from home.
[16] The father also argues that the motion judge failed to set out “the what, the why, and the how” of his decision to impute pre-tax corporate income. While we agree that the motion judge’s reasons are somewhat lean, we are of the view that in light of the record as a whole, it is clear why and how the motion judge reached the conclusions that he did: see [R. v. G.F., 2021 SCC 20, 71 C.R. (7th) 1, at paras. 69-71](https://www.canlii.org/en/ca/scc/doc/2021/2021scc20/2021scc20.html). The issues of adding back pre-tax income and certain other expenses were squarely before the motion judge and he was alive to the issues, especially given the mother’s extensive affidavit evidence and submissions on the father’s corporate pre-tax income and expenses. It was open to the motion judge to consider all the evidence of the parties and make a determination on imputing this income. The observations in [Mason v. Mason, 2016 ONCA 725, 132 O.R. (3d) 641, at para. 170](https://www.canlii.org/en/on/onca/doc/2016/2016onca725/2016onca725.html), are equally applicable here:
Neither party led much evidence, be it expert or otherwise, concerning the question of what, if any, amount of pre-tax corporate income should be included in the husband’s income. As such, a court is left to do its best to resolve the issue with the evidence that is available. This is also consistent with achieving a just, expeditious and least expensive determination of the parties’ dispute.
## (3) Averaging income
[17] Third, I do not agree that the motion judge erred in averaging the father’s income over the past three years for the purposes of ongoing child support calculations. The father argues that his line 150 income from 2018 to 2019 was consistent and that the most recent year should have been used. The motion judge rejected the father’s submission that he had suffered a decline in income. He also rejected the use of the father’s line 150 income alone and added pre-tax corporate income and unreasonably deducted expenses, which as noted earlier, was not an error. The use of a three-year average in these circumstances where the payor is, as he said, growing a business, is fair. The father gave no reasons for expecting a continuing decline in the success of his businesses. There is no obligation to use the most current year’s income in such a situation where there is reason to think it is anomalous.
## (4) Spousal support
[18] Fourth, I do not agree that the motion judge erred in fact or law in his consideration of the mother’s entitlement to spousal support. He considered the evidence before him and concluded that she had a continued entitlement on both a compensatory and needs basis and that despite efforts to become self-sufficient, she continued to need support. In imposing a step-down in support which will terminate after a final payment in September 2023, he found that this approach “best balances the [mother’s] ongoing entitlement to both compensatory and needs-based support with the need for her to transition to full self-sufficiency”: at para. 29. It was open to the motion judge to make this finding based on the evidence of the parties.
## (5) Determining the motion on affidavit evidence alone
[19] Finally, I do not agree that this motion should not have been determined on the basis of affidavit evidence and that it required viva voce evidence. The father concedes that there had been no request for questioning and no request that the motion judge hear viva voce evidence on the motion. Further, directing a trial would have resulted in additional delay and expense for the parties. See e.g. [Bloom v. Bloom, 2018 ONSC 5343 (Div. Ct.), at paras. 8-13](https://www.canlii.org/en/on/onscdc/doc/2018/2018onsc5343/2018onsc5343.html); [N.L. v. R.R.M., 2016 ONCA 915, 88 R.F.L. (7th) 19, at paras. 27-28](https://www.canlii.org/en/on/onca/doc/2016/2016onca915/2016onca915.html).
[20] The father argues that there was significant contradictory and conflicting evidence in the affidavit material. I disagree. The problem here is not that there was conflicting evidence, but that the father did not lead evidence that might have grounded his claims on the motion. For example, he did not provide sufficient evidence of good reasons for the corporations to retain income, or why certain business expenses were reasonable, in response to the mother’s submissions. In light of this minimal amount of evidence, which he submitted late in the day and only after great effort on the part of the mother, it was open to the motion judge to accept the mother’s evidence over the father’s evidence.
[21] He also did not present conflicting evidence on what the mother had done in terms of her efforts in seeking employment and becoming self-sufficient. She had already admitted in her evidence that her businesses had not made strong profits and that one had not made profits at all. Essentially the father’s position was that those efforts were insufficient and unsuccessful. It was open to the motion judge to consider the evidence of the mother’s efforts and come to his own determination about whether she had made efforts to or had become self-sufficient.
## (6) Disposition and costs
[22] For all these reasons, I would dismiss the appeal, and order costs to the respondent of $14,000, inclusive of disbursements and HST.
Released: August 5, 2021
“J.M.F.”
“A. Harvison Young J.A.”
“I agree Fairburn A.C.J.O.”
“I agree M. Jamal J.A.”
