Court File and Parties

Court File No.: D42192/07 Date: 2014-12-11

Ontario Court of Justice

Between:

MAXINE STEPHENSON Acting in Person Applicant

- and -

MARK THOMAS Respondent

Counsel: Gordon Zlatko Bobesich, for the Respondent

Heard: December 9, 2014

Justice: S.B. Sherr

Reasons for Decision

Part One – Introduction

[1] Both parties have asked the court to change the child support order, dated October 26, 2007, requiring the respondent (the father) to pay the applicant (the mother) child support for their 20-year-old son (the child) in the sum of $462 per month.

[2] The father asked the court to terminate his child support obligation as of July 1, 2013. He claims that this was when the child became disentitled to support, as he was no longer in a full-time program of education. In the alternative, he asks that his child support arrears and ongoing child support obligations be reduced and that the court fix a date when his child support obligation will end.

[3] The mother asked the court to dismiss the father's motion. In addition, she asked the court to require the father to contribute to the child's special expenses pursuant to section 7 of the Child Support Guidelines (the guidelines).

[4] The parties both gave oral evidence and were cross-examined by the other.

[5] The issues for this court to determine on these motions are:

a) Has there been a change of circumstances that supports changing the October 26, 2007 court order?

b) Did the child become disentitled to support at any time?

c) If so, did the child's entitlement to support revive at any time?

d) Should the father receive credit for child support arrears accrued while the child was disentitled to support, and if so, what credit should he receive?

e) If the child's entitlement to support revived, what amount of child support should the father should pay pursuant to the guidelines? In particular:

i) What are the incomes of the parties for the purpose of the support calculation?

ii) In calculating the presumptive guidelines amount, what should the child's contribution be to his post-secondary expenses?

iii) What amount, if any, should the father contribute to the child's post-secondary expenses?

Part Two – Factual Background

[6] The parties have never resided together. The child is their only child.

[7] The mother applied for custody and child support in 2007. The father did not file an Answer and the mother proceeded on an uncontested basis. On October 26, 2007, the court awarded the mother custody of the child and imputed the father's income at $50,000 per annum for support purposes. The father was ordered to pay the mother child support of $462 per month, starting on September 1, 2007.

[8] The father moved to change this order in 2008. He was ordered to provide financial disclosure about his business. The father was given several extensions to provide this disclosure. When he failed to provide it, the court, on May 11, 2009, dismissed his motion to change, while giving him 60 days to move to restore his motion, if the financial disclosure ordered was provided.

[9] The father did not provide the financial disclosure in 60 days. However, the father subsequently provided enough financial disclosure to convince the court to restore his motion to change.

[10] The father's motion to change was dismissed after an oral hearing on October 2, 2009.

[11] The father brought another motion to change in 2010. This motion was dismissed as the father had still not provided satisfactory documentation about his business. The court endorsed:

As stated at last motion, it is incumbent on payor to establish clear documentary record of his financial affairs. Once again, he has not done so.

[12] The child has always lived with the mother.

[13] The child completed high school in June of 2012.

[14] From September of 2012 until June of 2013, the child attended at post-secondary school full-time. He completed the Media Foundation Program at Humber College.

[15] The child did not return to school during the remainder of 2013. He did not work.

[16] The child attended at the Off Center DJ School, on a part-time basis, from January to April of 2014. He hoped that this might lead to his becoming a music producer.

[17] The child returned to school on a full-time basis in September of 2014 at Humber College. He began the Media Communications Program and will attend their Journalism Program starting in January of 2015. His participation in the Media Communications Program this fall will be credited to his Journalism course. The program takes three years, and will end in April of 2017.

[18] The child worked at a part-time retail job in September and October of 2014. He did not otherwise find employment in 2014. The mother testified that the child plans to work in a retail job each year from April to August, when school is not in session.

[19] According to the records of the Family Responsibility Office, the father is $6,357.42 in arrears of child support as of December 1, 2014.

Part Three – Entitlement to Child Support

[20] Subsection 37 (2.1) of the Family Law Act (the Act) permits the court to change a support order prospectively or retroactively if there has been a change in circumstances since the last order was made. The fact that the child was no longer in a full-time program of education as of July 1, 2013 is a change in circumstances warranting a re-examination of the existing order and the child support arrears accumulated.

[21] Section 31 of the Act reads as follows:

Obligation of parent to support child

31. (1) Every parent has an obligation to provide support, for his or her unmarried child who is a minor or is enrolled in a full time program of education, to the extent that the parent is capable of doing so.

Idem

(2) The obligation under subsection (1) does not extend to a child who is sixteen years of age or older and has withdrawn from parental control.

[22] The onus of establishing the entitlement of an adult child to support is on the party seeking the support. See: Rebenchuk v. Rebenchuk, 2007 MBCA 22.

[23] The father submits that his child support obligation should be terminated effective July 1, 2013. He believes that the child's absence from school for 14 months is a sufficient reason to permanently end it.

[24] The mother submits that the child should be entitled to child support, for all but the three months in 2014 that he attended school part-time.

[25] The court disagrees with both positions.

[26] The child was not entitled to support from July 1, 2013 until August 31, 2014, as he was not in a full-time program of education as required by subsection 31 (1) of the Act during that period.

[27] However, the case law is clear that child support can be revived if a child returns to school after taking a hiatus from their school studies. Each fact situation must be analyzed carefully and the time that the child was out of school must be considered. See: Lawless v. Asaro, 2003 O.J. No. 2522 (SCJ). Child support was revived for a child who had been out of school for longer periods of time than the child in this case, in Haley v. Haley and in MacLean v. Taylor, 2014 ONCJ 449.

[28] In his paper, "Child Support for Adult Children: When Does Economic Childhood End?" Professor Nicholas Bala suggests that when the question of reinstatement arises, the courts should consider the following:

a) The time spent independently by the child. He suggests that time over two years may result in an unsuccessful attempt to be reinstated.

b) The child's living arrangements while independent. If the child is living in a common-law relationship then it will become more difficult to be reinstated.

c) The child's employment while independent. If the child can be considered to be reasonably supporting themselves, then reinstatement is more difficult.

d) Intentions while independent. If it seems that the child has made a clear choice about their future that does not include education, then they will have more difficulty obtaining parental support.

[29] The case law has set out a variety of factors for the court to consider when determining the issue of entitlement to child support for an adult child. These factors include: the reasonableness of the child's course of education and career plans, the age of the child, the ability of the child to contribute to their own support, the availability of student loans, the child's past academic performance, the plans the parents have made for the child's education and whether an adult child has unjustifiably and unilaterally terminated his or her relationship with the payor. See: Farden v. Farden.

[30] The child is still young and has a reasonable and practical education plan that is supported by both parents. The father, to his credit, was supportive of this plan. He testified that it was realistic and he supports it, if it is what the child wants. The child is making some contribution to his education through his employment income. He plans to work on a part-time basis in retail jobs when he is not in school. The child has never been independent, as he has been fully supported by his parents.

[31] The court finds that child support should be revived as of September 1, 2014.

[32] The mother argued that the father should not receive a full support credit for the period from July 1, 2013 until August 30, 2014 because she paid the child's tuition in 2012-2013, without contribution from the father. The father will receive the full support credit for this period. The child was not entitled to support and did not work to contribute to his expenses during this period. The existing court order did not provide for contribution to special expenses and the mother did not move to court to seek such an order. Lastly, the mother had an obligation to notify both the father and the Family Responsibility Office after July 1, 2013, that the child was no longer entitled to support and failed to do so.

[33] The father's child support credit will be $6,468, being $462 per month for 14 months.

Part Four – The Amount of Support Payable

4.1 Should the Guidelines Be Applied?

[34] Subsection 3 (1) of the guidelines sets out the presumptive rule for the calculation of child support for children under the age of majority as follows:

Presumptive rule

3. (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.

[35] In this case, there is a possible exception for the court to consider in determining whether to deviate from the presumptive guideline amount set out in subsection 3 (1). This exception arises because the child is over the age of majority. Subsection 3 (2) of the guidelines reads as follows:

3(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.

[36] The onus is on the party alleging that the guidelines are inappropriate to establish this on a balance of probabilities. See: MacLennan v. MacLennan, 2003 NSCA 9, at paragraph 48.

[37] Subsection 3 (2) is presumptive and must be used unless the court considers that approach would be inappropriate. See: Lewi v. Lewi, [2006] O.J. No. 1847 (C.A.).

[38] The closer the circumstances of the child are to those upon which the usual guidelines approach is based, the less likely it is that the usual guidelines calculation will be found to be inappropriate. See: Rebenchuk v. Rebenchuk, 2007 MBCA 22, at paragraph 30. For instance, when an adult child attends school out of town, the guidelines calculation will usually be inappropriate. See: Park v. Thompson, 77 O.R. (3d) 601 (Ont. C.A.).

[39] The father did not actively pursue an argument that the guidelines are inappropriate. The evidence established that the guidelines are appropriate. The child is living at home and his circumstances are closer to those of a child to which the usual guidelines approach is based.

4.2 Incomes of the Parties

[40] The mother's income is $44,052 per annum.

[41] The father, in both of his financial statements filed, represented that his ongoing income was $33,507 per annum. At trial, he submitted that his income should be based on that set out in his 2013 income tax return of $43,128 per annum. The mother asked the court to maintain the father's income at $50,000 per annum.

[42] The father is the sole shareholder, director and employee of a corporation that is principally a car accessory business. He testified that he also uses the corporation for working with the film industry. The father says that he operates the business out of his home. He uses his vehicle and phone for business and personal use. The father also rents out a property he owns and declared net income from the property of over $7,000 per annum.

[43] A self-employed person has the onus of clearly demonstrating the basis of his or her net income. This includes demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes. See: Whelan v. O'Connor, [2006] O.J. No. 1660, (Ont. Fam. Ct.). This principle also applies where the person's employment income is derived from a corporation that he or she fully controls. See: MacKenzie v. Flynn, 2010 ONCJ 184.

[44] The self-employed have an inherent obligation to put forward not only adequate, but comprehensive records of income and expenses from which the recipient can draw conclusions and the amount of child support can be established. See: Meade v. Meade, 31 R.F.L. 5th 88 (SCJ).

[45] In paragraphs 51-60 of Trang v. Trang, 2013 ONSC 1980, the court discussed how courts should address support change motions when income was imputed to a payor in the existing order as follows:

51. When a court imputes income, that's a determination of a fact. It's not an estimate. It's not a guess. It's not a provisional order awaiting better disclosure, or further review. It's a determination that the court had to calculate a number, because it didn't feel it was appropriate to rely on – or wait for -- representations from the payor.

52. A party who argues that an imputed income level is no longer appropriate must go beyond establishing their subsequent "declared" income. They must address why income had to be imputed in the first place. They must present evidence of changed circumstances which establish that either:

a. It is no longer necessary or appropriate to impute income. The payor's representations as to income should now be accepted, even if they weren't accepted before.

Or,

b. Even if income should still be imputed, changed circumstances suggest a different amount is more appropriate.

53. If "declared income" automatically prevailed on a motion to change support, it would defeat the purpose of imputing income in the first place. It might even be a disincentive for payors to participate in the initial court process. They could simply ignore support Applications – as they often do. They could wait to see if the court imputes income, and how much. If dissatisfied with the amount, the payor could later return to court waving their tax returns, to suggest that the original judge got it wrong.

54. Support claimants should not be forced to go through this two-step process. Our family court system certainly can't afford it.

55. Similarly, the onus should not fall on the support recipient to establish why income should still be imputed on a motion to change. That determination has already been made. The onus is on the support payor to establish that there should be a change in the way their income is to be calculated.

56. If for example the original support order imputed income because the court concluded an unemployed payor should have been working, it would be illogical to allow the payor to extinguish that determination by returning on a motion to change, with proof that he wasn't working. That wouldn't constitute a change in circumstances.

57. If a trial judge imputed income to a self-employed person on the basis that their tax return didn't reflect cash sales and excessive write-offs, there should be a presumption that so long as the payor maintains the same business activities and accounting practices, subsequent tax returns will be equally unreliable.

58. Imputed income matters. The reason why income had to be imputed matters.

59. If an aggrieved party feels income was wrongly imputed, they can take timely steps to correct the original determination. They can appeal. They can bring a motion to set aside the order based on mistake or misrepresentation.

60. But if a payor proceeds by way of motion to change, they must face the presumption that the original order was correct – and the original imputation of income was correct. If they want to rely on their declared income, they must establish why this time their representations should be accepted by the court.

[46] The father demonstrated minimal knowledge about how his income was calculated. He said that he leaves it in the hands of his accountant. It was difficult to ascertain how he calculated his income and what expenses deducted from his revenues were for personal and not business use.

[47] A review of the father's annual notices of assessment revealed that they had little relation to the income imputed to him. Between 2007 and 2012, he declared line 150 incomes in his income tax returns ranging from $6,800 per annum to $40,700 per annum. The court has little confidence in his self-declared income and expense figures.

[48] The court finds that the father did not meet his onus of showing a change of circumstances with respect to the income imputed to him on October 26, 2007. He shall continue to pay child support based on an annual income of $50,000.

4.3 Special Expenses

[49] The mother requests that the father pay his proportionate share of the child's post-secondary school expenses. The child's annual tuition expenses will be about $3,900. The child will also have to annually pay about $150 for books and $1,050 for transportation expenses for an annual total of $5,100.

[50] The child receives no student loans, grants or bursaries.

[51] The following legal principles apply to the mother's claim for these expenses:

a) The onus is on the parent seeking the special or extraordinary expenses to prove that the claimed expenses fall within one of the categories under section 7 of the child support guidelines and that the expenses are necessary and reasonable, having regard to the parental financial circumstances. See: Park v. Thompson, supra.

b) The list of special and extraordinary expenses under clauses 7 (1) (a) to (f) is exhaustive. If a claim does not fall within any of the listed categories, then it must be dismissed. See: Kilrea v. Kilrea, 1998 CarswellOnt 3652 (Ont. Gen. Div.).

c) Unlike section 3 of the guidelines, which presumptively provides for the table amount of child support, an order for section 7 expenses involves the exercise of judicial discretion. When exercising its discretion, the court should also consider the objectives of the guidelines, including clause 1(a), which reads as follows:

1(a) to establish a fair standard for children that they benefit from the financial means of their parents and, in the case of divorce, from the financial means of both spouses after separation;

d) The relevant provision of the guidelines reads as follows:

7. (1) In a child support order the court may, on either spouse's request, 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 spouses and those of the child and to the family's spending pattern prior to the separation:

(e) expenses for post-secondary education;

e) The court has discretion to determine what contribution a child should make to a section 7 expense. In paragraph 42 of Lewi v. Lewi, supra, the court wrote:

[42] In short, I accept neither of the extreme positions advanced by the parties, namely, that an adult child of the marriage with savings is required to contribute all of those savings towards his or her post-secondary education before the parents are called on to contribute or that such a child need contribute none of his or her savings. As a general rule, an adult child should be required to make a reasonable and meaningful contribution towards post-secondary education expenses. The amount of that contribution will depend on all of the circumstances but must include a consideration of the "means" of the parents and the children. In such a consideration, it is appropriate to consider income and savings of both the parents and the child. In fairness, when a child has savings that are being looked to for the purpose of determining the amount of his or her contribution, the savings and comparable assets of each of the parents ought also to be considered.

[52] The court makes the following findings:

a) The post-secondary expenses claimed by the mother are reasonable, necessary and proportionate.

b) The child should be able to earn about $3,000 per annum working in retail jobs for the four months each year that he isn't in school.

c) Given the modest financial means of his parents, the child should be expected to contribute 75% of his annual income ($2,250) towards his post-secondary expenses. This is similar to the approach that the court took in Padua v. Gordon, 2008 ONCJ 421 and in Singh v. Khan, 2009 ONCJ 759.

d) There is no evidentiary basis to deviate from the guiding principle that the parties should share the balance of the post-secondary expenses in proportion to their incomes as set out in subsection 7 (2) of the guidelines. The father's share of this expense is 53.2%. This equates to $1,197 per annum, or $99.75 per month.

Part Five – Termination of Support and Payment of Arrears

[53] The father asked the court to set a termination date for his child support obligations. The mother agreed to an end date of April 30, 2017. The child should finish his Journalism Program by then. The court will make this order. The court also agrees with the father's request that the mother produce the child's school transcript each year by June 30th to confirm that the child is still in a full-time program of education.

[54] The father's child support arrears as of this date shall be set at $288.42, calculated as follows:

Arrears as of December 1, 2014	$6,357.42
Credit to father (as set out in paragraph 33)	$6,468.00
Debit to father for section 7 expenses accrued since September 1, 2014	($399.00)
Total arrears	-$288.42

[55] The father shall pay the arrears by January 31, 2015.

Part Six – Conclusion

[56] An order shall go on the following terms:

a) The October 26, 2007 order of the court shall be changed to provide that the father shall, in addition to the table amount of child support of $462 per month, pay the mother the sum of $99.75 per month for special expenses, starting on September 1, 2014.

b) The child's entitlement to support shall end on April 30, 2017, unless the mother can establish a material change in the circumstances of the child.

c) The mother shall provide the father with the child's school transcript by June 30th each year, to establish that the child is in a full-time program of education.

d) The mother shall immediately notify the father and the Family Responsibility Office if the child is no longer in a full-time program of education. This does not include the time from April-August each year when school is not in session.

e) The father shall be credited for child support in the sum of $6,468, as set out in paragraph 33 above.

f) The father's arrears should be adjusted by the Family Responsibility Office to be $288.42, as of this day, as calculated in paragraph 54 above.

g) The father shall pay the arrears of $288.42 by January 31, 2015.

h) A support deduction order shall issue.

[57] If either party seeks costs, they are to serve and file written submissions by January 5, 2015. The other party will then have until January 19, 2015 to make written response. The submissions should not exceed two pages, not including any bill of costs or offer to settle. The submissions should be delivered to the trial coordinator's office on the second floor of the courthouse.

Justice S.B. Sherr

Released: December 11, 2014

Footnotes

[1] The mother made this claim in an affidavit attached to her financial statement, but did not include it in her Response to Motion to Change. The father was given the option of having the hearing of the motion adjourned to permit the mother to formally amend her pleading to make this claim and to allow him to respond. He chose to proceed with the motion, agreeing that the mother's claim for a contribution to section 7 expenses would be determined by the court.

[2] It appeared from the statements provided by the father that he was mixing some personal and business expenses for rent, vehicle, entertainment and phone.