Court File and Parties
Court File No.: DFO 5311/11 Date: 2013-06-20 Ontario Court of Justice
Between:
Bernadette Lacey Applicant
— And —
Leonard Lacey Respondent
Before: Justice E. B. Murray
Heard on: June 13, 2013
Decision released on: June 20, 2013
Counsel
Ms. Bernadette Lacey ........................................................................................ appearing in person
Mr. Reginald M. McLean .................................................................................... for the respondent
Decision
MURRAY, E. B., J.:
[1] Background and Procedural History
[1] Leonard ("Len") and Bernadette ("Bernadette") Lacey were married in 1982 and separated in July 2008. They entered into a separation agreement on February 19, 2009, which contained provisions as to child support and which Bernadette filed with the court for enforcement. Len brought a motion to change child support in January 2012, asking that his obligation to support the child Sean be terminated, and acknowledging a continuing obligation to support the child Margaret. Bernadette cross-claimed for arrears of support. Len is represented by a lawyer, and Bernadette is self-represented. The motion was heard pursuant to Rule 15 of the Family Law Rules, and only documentary evidence was considered. This is my decision on the motion.
[2] A number of issues between the parties were resolved by a consent order on September 17, 2012. This decision concerns the remaining issue—what support should be payable by Len for Margaret, born August 4, 1993, from September 1, 2012 and on an ongoing basis. Margaret is a university student.
[3] The questions which I must answer are:
What is each parent's income? There is no debate about Bernadette's income; she is a T4 employee. There is debate about Len's income. He says that he is an employee of a corporation owned by himself and his current spouse, Deborah.
Should support for Margaret be payable in a table amount, or by reference to the circumstances and resources of the child and of each parent, as provided for in s. 3(2)(b) of the Guidelines? Len says that I should take the latter approach. Bernadette has no position on the approach I should take.
If I decide that support in a table amount is not appropriate:
- a) What are Margaret's reasonable needs, and what resources does she have to meet those needs?
- b) What is the financial ability of each parent to contribute to Margaret's support?
[4] Bernadette says that Margaret needs a minimum of $700 monthly from her father, and asks for an order for at least that amount. Len says that he should pay between $300-400 monthly.
1. The Agreement
[5] The relevant provisions of the parties' agreement are set out below.
5. CHILD SUPPORT
5.1 In this section,
(1) "Table" and "income" mean "Table" and "income" as those terms are defined in s. 2(1) of the Guidelines,
(2) "special or extraordinary expenses" means "special or extraordinary expenses" as this phrase is defined in s. 7(1) of the Guidelines,
(3) "child support" refers to the monthly amount upon which the parties have agreed and may include both Table support and special or extraordinary expenses.
5.2 For purposes of determining support for Sean and Margaret, while currently not employed, Len's imputed annual income is $65,000.00 and Bernadette's annual income is approximately $36,000.00 for the period from February 15, 2009 to February 15, 2010. Len has agreed to pay support to Bernadette for this period in advance in accordance with clause 8.1 c) herein.
5.3 Commencing February 15, 2009, subject to clause 8.1 c) herein and on the first day of each month, Len will pay to Bernadette as child support for Sean and Margaret:
(1) the Table amount of One Thousand Dollars ($1,000.00), and
(2) his share of the special or extraordinary expenses set out in section 5.4 until a terminating event under section 5.13 or a change under section 5.16 or section 5.19.
5.4 The children's current special or extraordinary expenses are
(1) Nil at present.
5.5 The parties will only contribute to a child's special or extraordinary expenses if the parties consent to the expenses in advance, in writing. Neither party will unreasonably withhold consent. If the parties cannot agree, they will use Part 6 of this Agreement to resolve this issue.
5.6 These items will not constitute special or extraordinary expenses:
(1) all customary and recurring expenses, such as clothing, food, supplies, and transportation to and from school,
(2) any school event that costs less than One Hundred Dollars ($100.00).
5.13 Child support ends for each child when:
(1) the child ceases to be a "child" as defined in the Divorce Act,
(2) the child no longer resides with the custodial parent. ("Resides" includes the child living away from home for school, summer employment or vacation),
(3) the child turns 18, unless the child is unable to become self-supporting due to illness, disability, education or other cause,
(4) the child becomes self-supporting,
(5) the child obtains one post-secondary degree or diploma,
(6) the child turns [age] years of age,
(7) the child marries,
(8) the child dies, or
(9) a party dies.
5.14 Child support will change when a child moves away from home to attend a post-secondary educational institution. In addition to child support, Len will also pay his share of the child's post-secondary educational expenses directly to the post-secondary institution, including tuition, residence or equivalent shelter and food costs, books and supplies. Bernadette will pay her share of the same expenses directly. If Len and Bernadette cannot agree on their post-secondary educational expense contributions, they will use Part 6 of this Agreement to resolve the issue.
5.17 If either party asks in writing for disclosure, each party will, in writing, provide the following information to the other, within 30 days of the request:
(1) the documents required in s. 21(1) of the Guidelines that have not previously been provided,
(2) current information about the children's special or extraordinary expenses,
(3) current information about a party's claim of undue hardship, if any, and his or her household's standard of living,
(4) details of child tax benefits or other child benefits received in the previous year and anticipated in the coming year, and
(5) any other information needed to review child support.
This may be asked for once a calendar year.
5.18 Until the support is adjusted by an amending agreement or court order, Len will continue to pay the child support and his contribution to the children's special and extraordinary expenses under the parties' most recent written agreement or court order.
5.19 In addition to a yearly review, either Len or Bernadette may seek a change in child support if there is a material change in the condition, means, needs or other circumstances of Len, Bernadette, Sean or Margaret that would affect child support.
5.20 A material change in the condition, means, needs or other circumstances of the parents or children may be foreseen or unforeseen, foreseeable or unforeseeable, and may include:
(1) a material change in either party's financial position,
(2) a change causing undue hardship for either party or the children,
(3) a change in the number of children entitled to receive support under this Agreement,
(4) a change in the child's special or extraordinary expenses,
(5) a change in the child's residence that affects the amount of child support under the Guidelines,
(6) a child turning 18 years of age, or
(7) a change in the child's need for support.
5.21 Whoever seeks a change will give the other, in writing:
(1) notice of the proposed change,
(2) evidence supporting the proposed change, and
(3) any request for information necessary to determine the issue.
5.22 The following will not justify a change in child support:
(1) a child earning up to $10,000.00 from personal earnings, scholarships, bursaries, grants, loans, inheritances or gifts from third parties,
(2) a child residing with Len during the summer months, or
(3) Bernadette taking a sabbatical.
2. History of Proceedings
[6] On March 16, 2012 the parties appeared at court for the first time, and an order was made on consent that Len serve and file certain basic income disclosure. The matter was put over for a case conference to May 25, 2012. Bernadette and Len's lawyer attended on that day, and the case was put over to July 13, 2012.
[7] On July 13, 2012, Bernadette and Len's lawyer attended for a case conference. Financial disclosure was ordered again from Len, and the matter was adjourned to September 17, 2012.
[8] Bernadette and Len's lawyer re-attended on September 17, 2012. Len had not provided much of the disclosure previously ordered, particularly with respect to his business income. An order was made on consent providing that Len pay to Bernadette $5,000 for arrears of child support which accrued prior to January 2012, payable in monthly instalments of $1,000 commencing October 1, 2012. Len was ordered to provide further financial disclosure, and a comprehensive medical report addressing the claim that he was temporarily unable to work, and Bernadette was ordered to provide disclosure with respect to Margaret's earnings and expenses, OSAP entitlement and the RESP contributions which were available for Margaret.
[9] The matter was put over to November 30, 2012, and further adjourned to February 28, 2013 for oral argument on the issue of support for Margaret. On February 20, 2013, Len's lawyer asked for an adjournment because Len had not forwarded required material with respect to his income and medical condition in a timely manner. Bernadette protested that the matter had been adjourned several times, and there was no order for support for Margaret, despite the fact that the child was in school and her expenses had to be paid. Bernadette also complained that payments on the $5000 of arrears ordered in September were not up-to-date. I granted the adjournment, but as a term of the adjournment made a without prejudice interim order for Len to pay support of $594 monthly, based on imputed income of $65,000 annually, commencing September 1, 2012. That was the order sought by Len when he commenced this case.
[10] The matter was adjourned to April 10, 2013. On that day, I made a further order requiring Len to provide explanations and documentary back-up with respect to his business expenses, and his 2012 tax return, and requiring Margaret to provide her 2012 tax return and an affidavit addressing her income for 2013 and her current living circumstances.
[11] Bernadette complied with the disclosure orders, including orders requiring disclosure from Margaret. Len was late in furnishing some of the disclosure, and failed to produce other disclosure ordered at all.
3. Background
[12] Len works as a construction supervisor, and lives in Florida with his current spouse, Deborah. Deborah works as a real estate agent. Bernadette works in administration at a hospital and lives in Toronto. She has not re-partnered.
[13] Len and Bernadette have four children: Margaret, Sean, Liam and Siobhan. At the time of their agreement, only Margaret and Sean (born April 18, 1990) were eligible for support. Both children lived with Bernadette. Between the time the agreement was signed and Len's commencement of this case in January 2012, both children moved back and forth between their parents' homes. At some points, Bernadette paid Len child support.
[14] When Len started the case, Sean and Margaret were living with Bernadette, but that changed quickly. Sean is a troubled boy, and was then facing drug-related charges. He and Margaret had a bitter argument in January 2012, and Margaret moved to Len's house, where Liam was also living. Not long after, Len moved to Florida to live with Deborah.
[15] Len sent funds back to Liam to pay for expenses on the house and food. That did not work well. Margaret's evidence is that frequently there was no food. At some point some utilities were turned off, forcing Margaret to seek shelter from friends and relatives. Bernadette gave Margaret money for food and other expenses during this period. In August 2012, Len stopped paying the rent on the Toronto house; he could not afford to continue.
[16] Margaret did not move back to Bernadette's home. She concluded that it is not healthy for her to be in the same house as Sean. Bernadette agreed. Len has not argued otherwise. Margaret has, however, been unable to afford to rent accommodation of her own.
4. Bernadette's Financial Situation
[17] Bernadette now earns about $40,000 annually, and receives interest income of about $5,000 a year. She lives in an apartment with Sean. I have no information as to whether Sean is working or attending school, but he is not paying rent. Bernadette retained sole ownership of the former matrimonial home when the parties' net family property was equalized. She sold the home, and now has savings (including RSPs) of approximately $235,000. A comparison of financial statements that Margaret filed at the beginning of this action and more recently indicates that her expenditures significantly exceed her income, and her savings are decreasing concomitantly.
[18] When the case began, Len questioned whether Bernadette was actually contributing to Margaret's support. I received voluminous evidence indicating that she does, and has been doing so consistently through the period in question. Bernadette pays $350 monthly directly to Margaret, and in addition spends significant amounts for her expenses for dentist and medications, for cell phone, clothing, and other expenses.
[19] Bernadette paid $1500 towards Margaret's university fees and expenses in January 2012, and a further $3000 for these expenses for the 2012/2013 school year. These funds came from an RESP which Bernadette received in the equalization process. Bernadette allocated the monies in the RESP equally among Margaret, Sean and Liam, and the funds for Margaret are now exhausted.
5. Len's Financial Situation
5.1 Len's Assets and Debts
[20] Len received about $62,000 in cash and an unspecified amount of RSPs in the equalization of net family property in 2009. He now has no assets except his car. He has consumer debt, including the balance remaining on the vehicle loan, of approximately $15,000. Len says that he plans to apply for bankruptcy in Canada.
5.2 Len's Guideline Income
[21] What is Len's Guideline income?
5.2.1 Deblen's Structure/Work History
[22] Although Len is an employee of a company called "Deblen Development LLC", he is essentially self-employed. Len and Deborah incorporated Deblen in 2012. Although Len refers in his affidavit to Deborah as a "passive investor", there is no evidence that she has invested any monies in the company. Len says that Deblen has no assets. Len's interest in the company is not shown as an asset on his financial statement. Len's evidence is that Deborah does not work for the company, and that he is the only employee. No shareholders' agreement was produced. Len says that the company pays him $750 weekly.
[23] Len worked as a construction supervisor in Canada before moving to Florida and has continued this work in the U.S. His evidence indicates that there was only one year between 2008-2011 when his annual income fell below $70,000. He was able to earn this income despite regular periods between contracts or employment.
5.2.2 The Appropriate Approach to Determine Len's Income
[24] In determining Len's income, section 16 of the Guidelines directs that I look to line 150 of Len's tax return, subject to section 17 to 20 of the Guidelines. Len has not provided a tax return for 2012. I have the option, pursuant to s. 17 of the Guidelines, of considering Len's pattern of income over the past three years. If I considered the years 2009-2011, that exercise would yield an average annual income of $62,000. I do not think that this approach is appropriate, as Len worked in Canada in those years, and he began to work in the U.S. in 2012. I cannot assume that he would generate the same income after this change.
[25] The most appropriate approach to the determination of Len's income is set out in section 18 of the Guidelines. Under that section, where a parent is the shareholder of a corporation and that parent's income as determined by sections 16 and 17 does not "fairly reflect all the money available" to the parent for the payment of child support, then the court may decide that the parent's income includes all or part of the corporation's pre-tax income. I make this finding for two reasons:
The information about Deblen which Len has chosen to disclose indicates that the corporation is nothing more than a shell holding his earnings, and
Len's spending reflects Deblen's pre-tax income, once that income is adjusted to remove improper deductions.
5.2.3 Len's Position on His 2012 and Current Income
[26] During 2012 Len did not begin work in the U.S. until at least February, and did not work after the end of July. He had arthroscopic surgery on his knee in August, and in September had a procedure to deal with a rotator cuff injury. Len said that the surgery was necessitated by an injury at work; his doctor's letter makes no mention of this, but refers to an old football injury that was causing him problems. His doctor advised that he would not be returning to work until January 2013. The income earned by Len in 2012 in the U.S. reflects earnings for 5-6 months only.
[27] It is unclear whether Len earned income in Canada in 2012. His January 2012 financial statement, sworn while he was living in Canada, says that he was earning $6933 monthly in employment income. However, in another part of that financial statement, he says that he had been unemployed since November 2011.
[28] Len has provided various figures as to what he says his income was in 2012 and on a go-forward basis. In argument, his lawyer took the position that Len's income was $39,000 ($750/wk.) in 2012, and would be the same in 2013.
5.2.4 Disclosure Required of Self-Employed Payor
[29] Every parent who is obliged to pay child support has an obligation when in litigation to make certain income disclosure. Courts have recognized that the Guideline income of a self-employed payor can often be difficult to determine, and have found that such payors have an obligation to produce the documentation necessary to allow the court and the other parent to make a rational assessment of income, documentation that shows clearly the basis for any expenses deducted from income.
[30] Justice Frances P. Kiteley addressed the extent of this disclosure obligation in Meade v. Meade:
[81] ... It is inherent in the circumstances of those who are self-employed or who have irregular income and expenses, that they have a positive obligation to put forward not only adequate, but comprehensive records of income and expenses. That does not mean audited statements. But it does mean a package from which the recipient spouse can draw conclusions and the amount of child support can be established. Where disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate or whose response to the obligation to produce is so unhelpful that cumbersome calculations and intensive and costly investigations or examinations are necessary ....
[31] Len's evidence with respect to his 2012 and current 2013 income has been confusing and inconsistent. His disclosure has been deficient, and he has failed to comply with disclosure orders made.
5.2.5 Len's Evidence About His 2012 Income
[32] Len's evidence as to his 2012 earnings is set out below.
As set out above, in his financial statement of January 12, 2012, he stated he was earning $6933 monthly in employment income.
On May 17, 2012, Len said that he was earning $6066 monthly ($72,800/yr.).
On November 27, 2012 (after his surgeries), Len produced what he said was Deblen's only contract for the year to date (for construction supervision) signed in March 2012, agreeing to pay at a rate of $2250 per week for 11 weeks, or a total of $24,750.
On November 27, 2012 Len also swore a further financial statement stating that his income was $4800/mo. ($57,600/yr.).
In response to my order for further disclosure, Len filed an affidavit sworn by Carmela Volpe, an assistant in his lawyer's office, sworn May 28, 2013, which attached a one page "Profit and Loss" statement for 2012. The report indicated gross income for Deblen for 2012 of $92,698.81, and net income of $43,822.12 ($3,651/mo.).
Attached to the affidavit were U.S. tax forms indicating payments to Deblen from two payors in 2012 in amounts of $38,984 and $53,713; the payors' names were redacted.
[33] Although I ordered disclosure of his 2012 tax return, Len produced neither a U.S. nor Canadian return. He has not filed any returns for 2012.
5.2.6 Unreasonable Deductions from Income
[34] I also ordered Len produce documentary backup for the items shown on the Deblen statement and explanation for some items. Ms. Volpe's affidavit did address the travel expenses of approximately $12,709 claimed, explaining that Len's work as a construction supervisor sometimes required him to travel away from his home in Florida. No documentary back-up or explanation was offered for $5,000 claimed for "consultant's fees". Although Ms. Volpe deposed that she was attaching a ledger which would address the $2300 claimed for "computers", nothing was in fact attached. There was no documentary backup for $4,300 claimed for "rentals".
[35] Some of the disclosure raised more questions than it answered, and suggested that Len was writing off personal expenses from his gross business income. For example, attached to Ms. Volpe's affidavit were what was identified as Deblen ledgers with respect to certain items on the statement, such as "meals/restaurant" ($9,734.30) and "fuel/auto" ($2,607.75). The ledgers show these expenses throughout 2012, including January and August-December, months in which Len was not working, according to his own evidence. Auto expenses, which include the ledger entries for "repairs and licence" ($2343), apparently relate to Len's personal vehicle, as the company has no assets. Again, expenses for this item was written off throughout the year, including the six months that Len was not working.
[36] An expense of "phone" ($3375) shown on the Deblen statement was backed up with production of AT&T statements in the same amount. Again, those statements raised serious questions as to what part relate to business expenses. The statements commence only at the end of May 2012, and stretch to the end of the year; most relate to periods that Len was not working. The amount of each statement is between $450-600. The statements cover more than one wireless number (between 2-4 numbers are covered by the account).
[37] My scrutiny of the claimed expenses yields more than $20,000 of doubtful deductions from gross income. Attached as Schedule "A" is the Deblen profit and loss statement, with add-backs indicated in italics. Pursuant to section 19(1)(g) of the Guidelines, I find that the items identified on Schedule "A" are unreasonably deducted from income. After adjustment for these deductions, Deblen's 2012 pre-tax income is $66,388.
5.2.7 Len's Spending
[38] An examination of the two financial statements Len filed in this case demonstrates personal spending which appears to correspond with Deblen's adjusted income.
[39] Len showed that he was running a substantial deficit in both financial statements he swore, one at the beginning and the other close to the end of 2012. In Len's financial statement of January 12, 2012, he showed expenses paid of $6379 monthly (or $76,551 annually) and debt (excluding his car loan) of $4900 total. This statement reflected expenses for his home in Toronto and his personal expenses. Len is not clear on when he moved to Florida, but it was at least by March 2012 (when he started work on the one contract he has produced). He continued to pay expenses on the rented Toronto house until August 2012. His financial statement of November 27, 2012 shows expenses which he is paying of $5108 monthly (or $61,296 annually), and debt of $12,000, exclusive of his car loan and unpaid support. In the statement, he deposes that he is paying ½ of the expenses of the household he shares with Deborah.
[40] It doesn't add up.
[41] Len, according to his evidence, had no assets to liquidate. His deficit has been running between $2-3,000 monthly, but the increase in his debt load of approximately $7000 total does not reflect that. In fact, Len paid down his car loan by $6000 in the 11 month period between statements. Len does not depose that anyone else, such as his wife, has been paying these expenses.
[42] The expenses which he has been paying indicate an income significantly higher than $39,000 for 2012—a figure close to the adjusted income for Deblen.
5.2.8 Deficiencies in Len's Disclosure
[43] I draw a negative inference against Len with regards to his assertion that his 2012 and current annual income is $39,000, because of his failure to make complete and proper income disclosure. Len failed to comply with my disclosure orders. He did not produce tax returns and notices of assessment for 2012. He failed to produce documentary back-up for most of the items on the Deblen statement, and failed to provide the explanations ordered for some of the line items.
5.2.9 Conclusion About Len's Income
[44] As stated above, the most appropriate approach to determining Len's 2012 income is to impute to Len all of Deblen's pre-tax income as adjusted. That figure is $66,388, which is a conservative estimate, in that it ignores the almost $7,000 which Len swore he received while in Canada in January 2012.
[45] As for 2013 income, Ms. Volpe's affidavit says that Len returned to work in January 2013, was off work for 6 weeks because of a bronchial infection, and was back at work in March, and continues to work. She refers to work in the "management of residential and commercial facilities and in construction", but provides no details about current fees payable under any contract. She says that Deblen's current project does not have a written agreement, and deposes that Len's income for this year will be the same as last year.
[46] Len's earnings through Deblen in 2012 are in all likelihood an understatement of what he will earn in 2013 and following, because he did not work for at least approximately 6 months of 2012 for reasons that are not likely to reoccur (his move and his surgery). I note that Len's own estimate of annual income in May 2012 (before he knew that he would not be working after July) was $72,800. Taking these factors into account, I will impute income to Len for 2013 of $75,000.
6. Margaret
[47] Margaret is 19 years old and in her second year of a four-year program at Ryerson University.
[48] Margaret filed extensive documentation in this case—a budget, her income tax return, OSAP documents, and credit card statements. She also swore and filed affidavits drafted in order to answer various assertions by Len; for example, she denied his assertion that she was married, and his claim that Bernadette did not contribute to her support.
[49] When this case was argued on June 13, 2013, neither Margaret nor Bernadette had received any payments from Len pursuant to the February 28, 2013 order. (Len's lawyer assured the court that a payment representing two months support had recently been sent to FRO.)
[50] Margaret has worked and borrowed in order to try to support herself. She applied for and received OSAP loans and grants both last year and this. This past year she received $7999 in loan and grant. Her current debt to OSAP is $9670. Margaret has worked in retail, during the school year as well as in the summer, in order to try to meet expenses. Last year she earned $6354. She has also used credit cards to meet her expenses, and currently owes approximately $700.
[51] As set out above, Bernadette gives Margaret $350 monthly. In addition to the monies made available from the RESP, Bernadette has paid for many of Margaret's expenses.
[52] The cost of Margaret's university fees and related expenses, such as books, totals approximately $7,500. Margaret submitted a budget, indicating expenditures of approximately $810 monthly for food, clothing, transportation and other expenses.
[53] Margaret cannot afford to pay for accommodation at the present time, and has been "couch-surfing" with various friends and relatives for the past year. She would like to be able to rent accommodation.
[54] In the affidavit which Margaret swore on April 27, 2013, she said:
"My mother gives me child support every month. I work part-time and I find it hard, stressful, and suffer anxiety making ends meet and keeping up with my studies. It is never definite where I spend my next night, but despite that, I plan to take a summer school credit this summer. Why does my father fight his own daughter? I am suffering tremendous anxiety as I am living in different houses, like a gypsy"
7. Analysis
7.1 Guideline Framework
[55] When considering a claim for support for an adult university student, a court must consider both subsection 3(2) and section 7 of the Child Support Guidelines, O. Reg. 391/91. Those provisions are set out below.
Section 3 - Presumptive Rule:
(1) Unless otherwise provided under these guidelines, the amount of an order for the support of a child for children under the age of majority is:
(a) the amount set out in the applicable table, according to the number of children under the age of majority to whom the order relates and the income of the parent or spouse against whom the order is sought; and
(b) the amount if any, determined under section 7.
(2) Child the age of majority or over. Unless otherwise provided in these guidelines, where a child to whom an order for the support of a child relates is the age of majority or over, the amount of an order for the support of a child is:
(a) the amount determined by applying these guidelines as if the child were under the age of majority; or
(b) if the court considers that approach to be inappropriate, the amount that it considers appropriate, having regard to the condition, means, needs and other circumstances of the child and the financial ability of each parent or spouse to contribute to the support of the child.
Section 7 - Special or Extraordinary Expenses:
(1) In an order for the support of a child, the court may, on the request of either parent or spouse or of an applicant under section 33 of the Act, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child's best interests and the reasonableness of the expense in relation to the means of the parents or spouses and those of the child and to the spending pattern of the parents or spouses in respect of the child during cohabitation:
(e) expenses for post-secondary education; and
(2) Sharing of Expense. The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the parents or spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.
7.2 Support Should Be Determined Under s. 3(2)(b) of the Guidelines
[56] Should Len pay support for Margaret in a table amount, or an amount calculated by some other approach? The onus is on Len to establish that payment of support in the table amount is inappropriate. I find that he has met this onus.
[57] The parties acknowledged at section 5.14 of their agreement that support would "change" from the table amount if Margaret moved away from home when she was attending university. Margaret is living with neither of her parents, and has some income with which to contribute to her own support. Courts have found that support in a table amount is usually inappropriate for a child who attends post-secondary school and lives away from home.
7.3 Len's Position on the Application of s. 3(2)(b) and the Appropriate Amount
[58] Len's position as to the proper approach to determining support is that the court should:
First, calculate Margaret's expenses as $7500 annually for university fees and expenses, and add an amount for living expenses. Len submits that Margaret's current expenditures of $810 monthly are high, and should be reduced, and that nothing should be added for accommodation, as Margaret is not now incurring this expense.
Second, deduct from these expenses the maximum OSAP loan which Margaret can take, plus any grants, plus her earnings for this past year, plus the monies which Bernadette currently pays.
Third, order that Len pay the shortfall of approximately $400 monthly. Alternatively, Len submits that he and Bernadette should contribute equally to Margaret's university fees and expenses of $7500, which would mean monthly payments of approximately $330 each, and that Margaret should pay for all of her own living expenses.
[59] I do not agree with Len's position.
7.4 The Court Has Broad Discretion to Determine Amount of Support
[60] In Lewi v. Lewi, the Ontario Court of Appeal told us that when the issue of contributions to post-secondary education costs for an adult child is before a court, the court has a broad discretion to consider the appropriate contribution, if any, of the child and of each parent to post-secondary education costs, after taking into consideration the means of the child and of each parent and any other relevant circumstance. A further factor relevant in such decisions is the reasonableness of the quantum of the expenses, taking into account the child's and the parents' means and any intention that the family may have formed on this issue prior to separation. There is no "formula" to establish the proper contribution from the child, if any contribution is required.
[61] The Court of Appeal held in that case that a child with independent means should be required to contribute something towards the cost of his education, but that he should not be required to exhaust his means before the appropriate parental contribution is determined.
[62] The contribution expected from the adult child may be made from the child's earnings or savings, or from scholarship funds, or from a student loan.
Cases have held that in calculating an adult child's expenses for the purpose of determining appropriate support, that those expenses should be reduced by a reasonable percentage (not necessarily 100%) of that child's earnings.
Other cases have held that a child is not necessarily obligated to take a student loan, and is certainly not obligated to take the maximum loan payable before any parental contribution is sought.
In Comtois-Theriault v. Theriault, 2010 ABCA 178, the Alberta Court of Appeal held that an adult child was not required to expend all his savings before a parental contribution was ordered, noting that the father had a poor record of payment of child support, and that the child might need savings to cover his expenses in a timely manner.
7.5 What Are Margaret's Reasonable Needs?
[63] What are Margaret's reasonable needs? Len's lawyer was critical of Margaret's spending, citing her expenditure for food of $380 monthly, which included expenses for meals out. Determination of a child's "needs" is a relative exercise, which takes into account the child's and each parent's circumstances, and family history.
[64] In assessing what spending is reasonable for Margaret, I have considered, among other factors, what each of her parents spend. According to his latest financial statement, Len spends $5,000 monthly, including $1000 monthly for food (which he says is ½ of what he and Deborah spend). Bernadette spends $6500 monthly, including $800 monthly for food for herself and Sean. I find that Margaret's spending is reasonable.
[65] I find that the sum of $1500 monthly would be a reasonable budget for Margaret. This figure takes into account her current expenditure, and allows $700 monthly for accommodation. In Toronto, this might fund a room or a basement apartment, or represent a contribution towards rent on shared accommodation.
[66] Margaret thus requires $7500 annually for her Ryerson expenses and $18,000 annually for living expenses, for a total of $25,500 annually for the next two years.
7.6 What Contributions Should Be Made by Margaret and Her Parents to These Needs?
[67] What contribution to these expenses should be expected from Margaret? Three factors lead me to conclude that I should not impose an expectation on Margaret that she will work the number of hours in future school years that she has worked this past year.
Section 5.22 of the parties' agreement provides that a child may enjoy income of "up to $10,000" from any source (including loans) and that this fact will not "justify a change in child support". The operational meaning of this provision is not entirely clear, but it suggests that in more cooperative times the parties intended that their children need not devote every resource to paying their own costs before a parental contribution was determined.
The amount of time which Margaret has had to devote to paid employment while she is a full-time student has placed undue stress on her.
The resources of each of Margaret's parents are such that it should not be necessary to require Margaret to work to the extent that she has in the past. Len is asset-poor, but has a significant income. Bernadette's income is much less than Len's, but she has savings from which she can contribute.
In my view, taking into account Margaret's resources, and her parents' resources and the intention expressed in their agreement, I am of the view that she should be required to contribute $10,000 annually towards her total annual costs of $25,500. This contribution can be made from earnings, OSAP loans and grants, or any other source available to her.
8. The Order
[68] The remaining cost of $15,500 shall be contributed by Len and Bernadette in amounts proportionate to income, Len contributing 63% and Bernadette contributing 37%.
[69] Len shall therefore pay child support to Bernadette for Margaret in the amount of $814 monthly, commencing July 1, 2013. Support will be payable until the earliest of the following:
- Margaret obtains her B.A.;
- June 30, 2015;
- Margaret's marriage; or
- Margaret's death.
[70] I intend that Bernadette use all the monies received from Len, together with her own contributions, to cover Margaret's costs after the child's own contribution is taken into account.
[71] With respect to support owing from September 1, 2012 to June 1, 2013, a ten-month period, my order is different from the order made above for two reasons. First, over this past school year, costs were defrayed because Bernadette devoted $3000 from the RESP towards reducing Margaret's costs (that contribution exhausted the 1/3 of the RESP that is earmarked for Margaret). Second, Margaret had no accommodation cost during this time—because she could not afford the cost. These two deductions reduce Margaret's expenses over this period to $12,500.
[72] Of those expenses, I think that it is fair and reasonable that Margaret be responsible for roughly ½, or $6250, and that her parents be responsible for the balance. I am conscious of the fact that this allocation will in fact result in a reimbursement to Margaret from child support to be paid by Len for a portion of the expenses she has paid over this period. This will allow Margaret to pay down some of the debt (OSAP and credit card) which she has accumulated.
[73] The balance of Margaret's expenses for this period (after Margaret's contribution is taken into account) is $6250, or $625 monthly. Len's proportionate share of those expenses is 60% for September to December of 2012 and 63% for the first six months of 2013.
[74] My order with respect to support to be paid for the period September 1, 2012 to and including June 1, 2013 is that:
based on his 2012 income of $66,388, Len shall pay child support from September 1, 2012 to December 1, 2012 the sum of $375 monthly, and
based on his 2013 income of $75,000, Len shall pay child support from January 1, 2013 to and including June 1, 2013 of $394 monthly.
[75] This order replaces the without prejudice order made on February 28, 2013.
Released on: June 20, 2013
Signed: Justice E. B. Murray
Schedule "A"
DebLen Developments LLC Profit & Loss
January 1, 2012 - December 31, 2012
| Item | Amount | Write-Backs |
|---|---|---|
| Gross Income | $92,698.81 | |
| Travel | $12,709.39 | — |
| Rentals | $4,300.00 | $4,300* |
| Consulting Fee | $5,000.00 | $5,000* |
| Meals/Restaurant | $9,734.30 | $4,867** |
| Auto | $2,646.00 | $1,323** |
| Repair/Licence | $2,343.00 | $1,171** |
| Tolls | $309.00 | — |
| Materials | $1,099.00 | — |
| Office Supplies | $532.00 | — |
| Computer | $2,300.00 | $2,300* |
| Shipping | $160.00 | — |
| Uniforms | $333.00 | — |
| Entertainment | $297.00 | — |
| Insurance Auto | $2,610.00 | $1,305** |
| Phone | $3,375.00 | $2,300** |
| Storage | $1,129.00 | — |
| Total Expenses | $48,876.69 | Total Write-Backs: $22,566 |
| Net Income | $43,822.12 | Adjusted Income: $66,388 |
* Explanation and/or documentary backup ordered, not provided
** Reduced for months of only personal use (Jan, Aug-Dec)
Footnotes
[1] Len's tax returns show annual incomes of $96,718, $72,303 and $51,560 between 2008-2010. No tax return was produced for 2011, but Len's financial statement of January 12, 2012 says that he earned $70,000 in the prior year, 2011.
[2] Whelan v. O'Connor, 2006 CarswellOnt 2581 (Ont. Fam. Ct.)
[3] Meade v. Meade, 2002 O.J. 3155 (Sup.Ct.)
[4] Contained in an affidavit sworn by Carmela Volpe, Len's lawyer's assistant.
[5] Ms. Volpe deposed that the statement was prepared by accountants; the statement advised that a report was attached, but there was in fact no report attached.
[6] Len does depose that it is Deborah who has been paying the arrears of support for prior years owing to Bernadette, but this is not an expense shown on his financial statement.
[7] Len was in Toronto and not working in January, and not working because of his surgery after July.
[8] I note that Len earns US dollars. I was unable to calculate the appropriate exchange rate, as he did not submit evidence on this point.
[9] Bockhold v. Bockhold, 2006 BCCA 472
[10] Annual Review of Family Law, Carswell, James MacLeod and Alfred Mamo, p. 263
[11] Lewi v. Lewi, 209 O.A.C. 344
[12] Mongillo v. Mongillo, 2007 CarswellOnt 2731 (S.C.J.), Portelance v. Young, 2012 ONSC 2930
[13] Sauvé-Roy v. Hart, 2003 CarswellOnt 4882 (Ont. Fam. Ct.)