Court File and Parties

Court File No.: Halton 442/14 Date: 2015-08-28 Ontario Court of Justice

Between: Nicole Sos-Porritt, Applicant

— AND —

Christopher Porritt, Respondent

Before: Justice Sheilagh M. O'Connell

Heard on: March 17, 2015

Reasons for Judgment

Counsel:

• Joshua Cohen, for the applicant
• Darryl A. Willer, for the respondent

O'CONNELL J.:

1: INTRODUCTION

[1] The Respondent, Christopher Porritt ("the father") has brought a motion to change the child and spousal support provisions in the parties' separation agreement dated December 22, 1999.

[2] In particular, the father seeks an order that his child support obligations from 2009 to 2014 should be based on the following findings regarding his income for child support purposes:

• 2009 - $80,000 annual income, or $1799 per month in child support;
• 2010 - $71,119.19 annual income, or $1639 per month in child support;
• 2011 - $65,196.81 income or $1515 per month in child support;
• 2012 - $41,791.05 income, or $962 per month in child support;
• 2013 - $50,075.54 income, or $1135 per month in child support.

[3] The father further seeks the following orders:

1. that he pay ongoing child support in the amount of $1,223.00 per month, commencing July 1, 2015, based on an imputed income of $52,521.87;
2. that he pay 70% of the net cost of private school for the two younger children for the 2014-2015 school year only; and
3. that arrears of child support owed by him be fixed at zero.

[4] In her response to the father's motion to change, the Applicant, Nicole Sos-Porritt ("the mother") seeks the following order:

1. that the father's income continue to be imputed at $80,000 per annum for child support purposes;
2. that the father pay $1,823.00 per month in child support for the four children of the marriage, commencing October 1, 2014, pursuant to the Child Support Guidelines;
3. that the father pay $600.00 monthly for the 2014-2015 private school expenses for the two younger children of the marriage and that he continue to pay his proportional share of the youngest child's private school fees for the 2015-2016 school year;
4. that the child support arrears by the father be fixed at $11,165.00 as of October 1, 2014, and that the arrears be payable at a rate of $500.00 per month.

[5] The parties resolved the issues of spousal support, arrears and the father's proportional contribution to the children's section 7 expenses prior to this hearing.

[6] The parties agreed to hold a focused trial of the remaining issues pursuant to Rule 2 of the Family Law Rules, O. Reg.114/99. The affidavits, financial statements and document briefs filed by the parties constituted their direct evidence. Both parties testified and were cross-examined on the evidence filed.

2. ISSUES:

[7] The issues for me to decide are the following:

1. Has there been either a material change or a change in circumstances since the parties' separation agreement that affects the child support provisions in the Agreement?
2. What is the father's income for child support purposes?
3. What, if any, contribution should the father continue to make towards the youngest child's private school expenses?
4. Depending on the determination of the father's income, what arrears of child support, if any, should be paid?

3: BACKGROUND FACTS:

[8] The father is 45 years old. The mother is 42 years old. The parties were married on July 1, 1995. They separated on April 20, 2008 after 13 years of marriage.

[9] The parties have four children, namely Nicholas (age 18), Meghan (age 16), Jeremy (age 14), and Matthew (age 10).

[10] At the time of the separation, the father was an account manager for Uptown Communications, an authorized dealer for Rogers Wireless Communications. He was paid as a self-employed contractor and his gross commissions were $126,708.00 annually. The mother was the primary caregiver of the children and had minimal part-time income of $4,800.00 annually.

The Separation Agreement:

[11] On December 22, 2009, the parties entered into a separation agreement with the assistance of counsel resolving all parenting, support and property issues between them ("the Agreement"). The relevant portions of the parties' separation agreement are as follows:

• the parties shall share joint custody of the children, with the children to reside primarily with the mother, and access to the father on alternating weekends from Friday evening until Sunday evening and every Wednesday overnight, including holiday and vacation time;

• The father's income for child support purposes shall be fixed at $80,000.00 per annum, and the father shall pay child support to the mother in the amount of $1,799.00 per month, which is the Table amount for four children, based on his an income of $80,000;

• The father shall pay 80% of the child's section 7 expenses and the mother to pay 20% of the children's section 7 expenses. This division of expenses was based on the father's annual income of $80,000 and the mother's part-time income at the time of $4800. The father shall also pay the mother $10,063.64 for his contribution to the private school expenses for the children covering the period up to June 2010;

• The father shall pay spousal support mother in the amount of $701.00 per month, commencing January 1, 2010, until a further amending agreement, court order, or arbitration award.

[12] The court was advised that parties agreed to fix the father's income for support purposes at $80,000.00 for the purpose of settlement. This amount is approximately 63% of the commissions that the father earned with Uptown Communications at the time ($126,708.00). There was no other evidence regarding how the parties determined that the father's income for support purposes would be 63% of his gross commission income.

[13] The Agreement also contained a "material change in circumstances" clause as follows:

6.(8) Either the husband or the wife may seek a change in child support if there is a material change in the condition, means, needs or other circumstances of the husband, the wife, Nicholas, Megan, Jeremy or Matthew that would affect child support.

6.(9) 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:

a. A material change in either parties financial position; b. A change causing undue hardship for either party or the children; c. A change in the number of children entitled to receive support under this agreement; d. A change in the child's special or extraordinary expenses; e. A change in the child's residence that affects the amount of child support under the guidelines; f. A child turning 18 years of age; or g. A change in the child's need for support.

6.(10) Whoever seeks to change will give the other in writing:

a. notice of the proposed change; b. evidence supporting the proposed change; and c. any request for information necessary to determine the issue. [Emphasis added.]

[14] Paragraph 6(7) of the Agreement also provides as follows:

Until support is adjusted by an amending agreement, court order or arbitration award the husband will continue to pay the child support and his contribution to the children's special and extraordinary expenses under the parties' most recent separation agreement, court order or arbitration award.

[15] Following the Agreement, the father's commission income with Uptown Commissions started declining. From 2010 to 2014, the father reduced his child support payments annually, based on his declining commissions. Prior to so doing, the father would provide the mother with a statement of his gross income and expenses and his calculations setting out how he determined his income for child and spousal support purposes for the coming year. The father appeared to adopt the same formula used in the parties' separation agreement, by attributing income to himself at 63% of his total commissions.

[16] In 2011, after the mother obtained full-time employment, the father stopped paying spousal support.

[17] In 2014, the mother filed the parties' separation agreement with the court, pursuant to section 35 of the Ontario Family Law Act so that the support provisions could be enforced by the Family Responsibility Office ("FRO") as a court order pursuant to the legislation. As a result, the father owed child and spousal support arrears in excess of $40,000.00 and FRO began enforcement procedures.

[18] After the mother filed the separation agreement with the court, the father commenced this Motion to Change.

[19] The first case conference in the father's Motion to Change was held on November 14, 2014. At that time, the parties entered into a Consent Order, which provided that the father's spousal support obligation to the mother be terminated and that there would be no arrears of spousal support or section 7 expenses.

[20] At the same case conference, the parties also agreed that the father's proportional contribution to the children's section 7 expenses would be adjusted downward to 70 percent and that the mother's contribution be adjusted to 30 percent. They were not able to agree on what should be section 7 expenses, and in particular, whether the children's private school tuition fees are appropriate section 7 expenses.

4: THE FATHER'S POSITION:

[21] The father submits that his gross commissions have declined by more than $40,000.00 since the Agreement was entered into by the parties and that this is a material change in circumstances that affects his ability to pay child support. It father's position that the court should fix his income for child support purposes at 63% of his gross commission income, which changes each year, to determine his available income for support. This is based on the same formula used by the parties in their separation agreement. In 2014, the father's gross income was $83,368.00 and it is therefore the father's position that child support should be based on an imputed income of $52,827.00.

[22] The father also submits that he has overpaid child support since 2009 and that there should be no arrears owing. However, he is not seeking an overpayment. It is also his position that the mother is barred from seeking the arrears owing under the Agreement, should the court determine arrears are owing as she accepted without objection the disclosure and explanation letter that he sent to her annually regarding the reduced child and spousal support payments for the upcoming year.

5: THE MOTHER'S POSITION:

[23] It is the mother's position that the father's income for child support purposes should continue to be imputed at $80,000 per annum. Although she acknowledges that the father's commission income with Uptown Communications has declined since the parties' separation, she submits that the father is underemployed and that he has failed to take advantage of the income available to him by actively pursuing his commissions and other sources of income.

[24] The mother states that the father was well aware that his commissions were declining in 2010, which is why he obtained his real estate license and his mortgage broker's license in 2012. He has failed to utilize either of those licenses to supplement his reduced income and to fulfill his legal child support obligations, notwithstanding being offered a position at a family member's real estate company.

[25] The mother's further submits that the father has maintained an affluent lifestyle since the parties' separation, he no longer pays $701 monthly in spousal support to her since she obtained full-time employment, and he is well capable of maintaining the child support that he agreed to at the time of the separation, while she struggles to make ends meet for herself and the four children of the marriage.

6: SUMMARY OF THE RELEVANT EVIDENCE:

1. The Father's Financial Circumstances:

[26] The father now lives in Etobicoke, Ontario with his current partner, Ms Sheila Medina, a registered nurse who works at St. Michael's Hospital. They have been in a relationship since April 2010 and have cohabited since July of 2011. They reside with Ms Medina's 11 year old daughter of a previous relationship. There was no evidence as to whether Ms Medina receives child support for her daughter, and if so, the amount. There was also no evidence regarding Ms Medina's income as a registered nurse.

[27] Ms Medina and the father purchased a home together in 2012 which is valued at $750,000.00, according to the father's sworn financial statement. They share all living expenses. The parties' children continue to see their father on alternating weekends, and one evening mid-week, in addition to holidays and special occasions.

[28] The father continues to be an account manager with Uptown Communications. He does not work for any other company. The father manages small and large or "enterprise" clients for the company. The father's "enterprise" or large clients include Barrick Gold, Pitney Bowes, and the Region of York. The father looks after all of the cell phone needs and services for these companies, including new cell phones and upgrades for employees. [1] The father is paid a commission for any new cell phone activations and for any cell phone upgrades that he delivers to these companies. He testified that he has developed close relationships with these companies, their employees and their IT departments, who call him "24/7" for assistance and service.

[29] The father does not receive a salary from Uptown. He is 100% commission based. He gets paid on the 10th and the 25th of each month by the company for every transaction, either for a new cell phone or for an upgrade that he sells during that pay period. The company issues a T4A slip for the gross commission income that he earns, as a self-employed independent contractor.

[30] The father testified that due to market and regulatory changes beyond his control, Rogers unilaterally changed the pay structure for cell phones and upgrades. For example, the father testified that in the past, he was paid 80 percent of the $60 fee for each upgrade of a cell phone. He is now paid 25 percent of that fee and therefore he is getting paid significantly less for the same amount of work. He testified that as of July 1, 2014, commissions on cell phone activations for "enterprise clients" or large companies decreased from $75 per activation to $40 per activation. There was no evidence from Rogers communications or Uptown communications confirming that the commission rates had dropped by that percentage.

[31] The father states that these reductions in his commission income have materially and detrimentally affected his ability to pay child support and constitute a material change in circumstances that are beyond his control. He testified that since 2010, his gross commission income declined as follows:

• his commissions in 2010 were $113,000;
• his commissions in 2011 were $103,487;
• his commissions in 2012 were $66,335;
• his commissions in 2013 were $80,558;
• his commissions in 2014 were $83,368.

[32] As a self-employed person, the father deducts business expenses from the gross commissions that he earns from Uptown Communications. Since 2009, according to the father's CRA notices of assessment and reassessment produced, the father's net income for tax purposes was the following:

• in 2009, his net taxable income was $31,842, (gross revenue of $126,708);
• in 2010, his net taxable income was $27,887, (gross revenue of $113,000);
• in 2011, his net taxable income was $28,293, (gross revenue of $103,487);
• in 2012, his net taxable income was his $14,335, (gross revenue of $66,335);
• in 2013, his net taxable income was $19,686, (gross revenue of $80,558);

[33] The father produced his Statement of Income and Expenses prepared by his accountant for each year at issue. He also produced a statement setting out his entire expenses, both business and personal for each year following the parties' Agreement. There were no invoices or receipts produced for any of the business expenses that he claimed were incurred and deducted, nor was the breakdown between personal and business expenses explained. However, the father produced all of his credit card statements and his bank statements for the same period of time, which demonstrated that the majority of the expenses incurred were for meals, travel, gas and entertainment. The bank and credit card statements produced all appeared to be used for both personal and business expenses. There was no distinction between personal or business bank and credit cards statements.

[34] The father testified that he works from home approximately sixty percent of the time, and thus saves on gas and transportation expenses. He testified that although he does have an office at the company's head office in Richmond Hill, he usually travels into the office approximately twice a week, and at all other times, he works from home. On occasion, he will meet clients at their companies or elsewhere for "relationship building" or other tasks.

[35] The father further acknowledged that his accountant has deducted fifteen percent of his personal housing expenses, which includes his mortgage payments, insurance and utilities for his home with Ms Medina, as a business expense for a home office. It was unclear if this was the total housing expense or just the father's share, since Ms Medina pays half of the housing expenses. There was no evidence that the father meets with clients at his homes.

[36] According to the father's most recent sworn financial statement filed, the father's total annual income from commissions is $83,368.08 and his total annual expenses are $80,307.84, resulting in a surplus of $3,060.24 yearly.

[37] The father acknowledged that since 2012, he and Ms. Medina had taken a numerous vacations together. According to the father's credit card statements produced, since 2012, he and Ms. Medina have vacationed in Lake Placid, Snow Valley, Maine, Bahamas, Florida, Blue Mountain, Niagara Falls, Niagara-on-the-Lake, Poconos, upstate New York, Hockley Valley, Montréal, among other places. The majority of these vacations occurred in 2013 and 2014. The father's children did not attend these vacations.

[38] In cross-examination, the father acknowledged that the expenses incurred on his credit cards by him for flights, hotels, restaurants, and other items for the above vacations. He testified that although he paid for his own flights, Ms. Medina paid for the majority of the holidays and would reimburse him for some of the expenses that he incurred. The father testified that Ms. Medina is very generous and that he has greatly benefited from living with her.

[39] The father also acknowledged that he paid a $1,500.00 deposit for a hot tub for his home in June 2012, which is the year that his commission income was the lowest since the parties' separation and he reduced his child support payments significantly.

[40] In 2014, the father did not dispute that he transferred $9,700 to his RRSP account and paid off his $17,704 car loan. The father testified that he took a cash advance from his credit card to purchase the RRSPs in order "to offset his income". The father testified that he has an active trading account, and that he has RRSPs and TFSA, although he testified that all of those funds are derived from cash advances taken from his credit cards. He further explained that he paid off his car loan by increasing his line of credit to $60,000.00.

[41] There also appeared to be a number of large withdrawals from the father's chequing account in 2013 and 2014, according to the statements he produced. When asked to explain a $3,210.00 bank draft or money order that he withdrew from his checking account in February 2013, the father could not recollect what he did with that money.

[42] There were also some very significant deposits, far greater than the commission income reported in the bank statements produced by the father. However, the father testified that he was transferring large sums from his line of credit and taking cash large advances from his numerous credit cards to make ends meet and to cover both personal and business expenses. For example in 2014, the father deposited well in excess of $100,000 into his bank account.

2. Father's Efforts to Secure other Sources of Income:

[43] The father further acknowledged that when his commission income started declining, he looked at other ways to earn income and in 2011, he commenced the process to obtain his real estate license and mortgage broker license. He completed all of the required real estate courses and obtained and registered his license for practice in 2012.

[44] The father acknowledged that his father's cousin owns Royal Lepage Porritt Real Estate in Etobicoke and that he had an opportunity to work with this company as a real estate agent once he obtained his license. He acknowledged that this was a good opportunity for him to get into the real estate industry once his commission income started dwindling. However, he testified that once Porritt Real Estate joined Royal Lepage in 2012, there was a monthly fee for all of the real estate agents. The total fees to maintain the license, including the Trebnet and insurance fees, were approximately $400 per month.

[45] The father testified that it was very hard to do the real estate work on evenings and weekends and that he could not afford the monthly fees, so he canceled his real estate license in 2013 and his mortgage broker license in 2014. He denied the mother's claim that he was not working to his full capacity, and that he could carry on his real estate work on a part-time basis. The father acknowledged that before he canceled his real estate license, he did sell one house to one of his "tax clients", described below.

[46] The father acknowledged in cross-examination that in the past during the parties' marriage, he also had a small business preparing tax returns for people on a fee-for-service basis, while working for Uptown Communications. He testified that this business has now dwindled and he only prepares tax returns for approximately two people each year. At its height, the father acknowledged that he would prepare tax returns for approximately twenty people each year. The father did not explain why this business had dwindled.

3. The Mother's Financial Circumstances:

[47] The mother is now employed full-time as an administrative assistant for a Nissan car dealership. Her income is approximately $35,000 per year per year. She is paid at a rate of $16 per hour. The children have continued to reside with the mother in Burlington, Ontario since the separation in rental accommodation. The mother has not re-partnered.

[48] After the separation, it is not disputed that the mother earned part-time income of approximately $4,800.00 annually. She made efforts to become self-sufficient and eventually obtained full-time employment with a chiropractic agency as an administrative assistant. According to the notices of assessment attached to the mother sworn financial statement, in 2011, the mother's employment income with $16,276; in 2012, the mother's employment income was $31,385, and in 2013, the mother's income was $23,807.

[49] The mother obtained her position with Nissan shortly before the motion to change hearing. The mother testified that Nissan also provides her with life insurance and there will be an opportunity for her to grow in the company and potentially earn more income, which is why she took that employment position.

[50] The mother testified that since the separation she and the children have experienced hardship. She has been unable to meet her monthly expenses since the father unilaterally reduced his child support payments over the years and completely eliminated her spousal support in 2012. She is mindful of how she spends every dollar. Since 2012, her parents have helped her pay the rent for her and the children's home.

[51] The mother gave evidence that she and the children live a frugal lifestyle as a result of her limited income and the reduced child support. She very rarely takes the children out to a restaurant and when she does, only one or two of the children accompany her out one time. Since 2009, she and the children have not been able to afford a vacation, except for one vacation funded and fully paid for by her parents.

[52] The mother gave evidence that since the separation she has borne the vast majority of the costs for all of the children's medications, birthday parties, clothing, haircuts, school supplies, and school three field trips. She testified that the father has only contributed sporadically to these costs.

[53] The mother further testified that the children have had to significantly reduce their extracurricular activities since the father's support payments dropped. The children participated in a number of different extra-curricular activities growing up prior to the separation but she can no longer afford to pay for these activities.

[54] The mother testified that the father lives in a large and expensive home, with a hot tub, a number of vehicles, 'state-of-the-art' electronics and appliances. He is able to eat out regularly at restaurants and he takes the children out to restaurants frequently when he spends time with them. She also cited other vacations not mentioned by the father, such as trips to Iceland and Scandinavia.

[55] According to the mother, the father has a poor work ethic. Since he works on commission, he decides how often and how hard he wants to apply himself to earning an income. It is her understanding, based on what she has heard from the children, that that the father routinely sleeps in during the mornings that they are with him and that he does not appear to be actively working.

[56] When the parties were together, the father had approximately 15 to 30 clients each year for whom he prepared tax returns. He would collect cash and checks for the tax returns that he paid for these clients. The mother testified that there would be "wads of cash" in the house from this small business.

[57] When asked why the mother did not take steps to enforce the child support provisions of the separation agreement until 2013, the mother testified that when the father started to reduce the child support she repeatedly raised concerns with him about how difficult this was for her. According to the mother, the father advised her that if she took the matter to court, it would be determined that he should be paying even less support, based on his declared income. The mother stated that she was afraid to go to court and risk receiving even less support. However, when the father eliminated the spousal support in 2012, she decided to see a lawyer who took the first steps in filing the separation agreement with the court for enforcement purposes.

[58] Shortly after she took those steps, the mother was in a serious car accident and was disabled for a period of time. She was later diagnosed with rheumatoid arthritis. During this period of time, as a result of the car accident, her disability and caring for four children, she did not have the time or the ability to pursue a court case to enforce the support payments until 2014.

[59] In cross-examination, the mother acknowledged that in addition to the table amount of child support paid by the father, in 2012, the father contributed to Megan's gymnastics, in 2013, he contributed to Matthew's swimming lessons, in 2013 he contributed to Jeremy's gymnastics, Megan's gymnastics and swimming lessons, and in 2014, he contributed to Matthew swimming lessons. The father also pays for both Nicholas's and Meghan's cell phones at an additional cost of approximately $58 per month. She also acknowledged that just recently, the father paid for a few haircuts for the children and paid for half of Nicholas's driving lessons.

4. The Children's Private School fees:

[60] The father also gave evidence that he is not able to continue paying for the private school fees for the youngest child Matthew, after the 2014-2015 academic year.

[61] According to the father, there is a Catholic school and a public school in the mother's neighborhood, approximately one minute walking distance from her home. It was the father's evidence that he did not know the net cost of the Trinity Christian School for the previous academic year or the upcoming year, as the mother has received subsidies and grants which she has not disclosed to him, therefore making it impossible for him to calculate his proportional contribution to these fees.

[62] The mother testified that while the parties were together, they had always agreed that their children would attend a private school. When they had their first child they interviewed and looked at a number of different private schools including Glenburnie, Fernhill, and MacLahan College. All four of their children have attended a private Christian school throughout the parties' marriage from junior kindergarten up until high school. The children first started at John Knox then went to Calvin Christian School before attending Trinity Christian School.

[63] Matthew is the only child remaining in Trinity and he will be entering grade 5 for the next school year. The mother testified that Matthew has made many friends at Trinity Christian School and that it will be very difficult for him to be forced to leave the school next year.

[64] The mother explained that in determining how much parents should pay in school fees, the school conducts an assessment of both parents' income and then provides a subsidy or bursary depending on need. In the 2014 - 2015 school year, the mother advised the school that she may have to pull the two children remaining out of the school. However the school provided a subsidy and an anonymous donor "stepped up" and paid a $3000 bursary so that both children could remain.

[65] She further testified that she will likely receive additional subsidies and a bursary for the 2015 - 2016 school year, thereby enabling Matthew to continue at the school provided there is some additional contribution from both her and the father. The mother is willing to pay 30% of Matthew net school costs for the next school year.

[66] The mother testified that she provides numerous volunteer hours to the school which has helped her in obtaining subsidies. Both parents are responsible for to commit to a certain amount of volunteer time at the school and the mother performs both her and the father's volunteer hours.

7: THE LAW AND ANALYSIS:

[67] The father's motion to change is governed by section 37 of the Family Law Act, R.S.O. 1990, c. F.3, as amended (" the Act ").

[68] The mother filed the parties' separation agreement with the court, pursuant to section 35 of the Act. Subsection 35 (2) of the Act provides that a provision for support contained in a separation agreement that is filed with the court under section 35 may be varied under section 37, as if it were an order of the court.

[69] The test to be applied on a motion to change the child support terms of a separation agreement filed under section 35 and the powers of the court on such a motion are set out in sections 37 (2.1) and (2.2) of the Act as follows:

37 (2.1) In the case of an order for support of a child, if the court is satisfied that there has been a change in circumstances within the meaning of the child support guidelines or that evidence not available on the previous hearing has become available, the court may,

(a) discharge, vary or suspend a term of the order, prospectively or retroactively;

(b) relieve the respondent from the payment of part or all of the arrears or any interest due on them; and

(c) make any other order for the support of a child that the court could make on an application under section 33. 1997, c. 20, s. 6.

37 (2.2) A court making an order under subsection (2.1) shall do so in accordance with the child support guidelines. 1997, c. 20, s. 6.

[70] Section 14 of the Child Support Guidelines sets out the circumstances that may permit a variation in a child support order:

14. For the purposes of subsection 37 (2.2) of the Act and subsection 17 (4) of the Divorce Act (Canada), any one of the following constitutes a change of circumstances that gives rise to the making of a variation order:

15. In the case where the amount of child support includes a determination made in accordance with the table, any change in circumstances that would result in a different order for the support of a child or any provision thereof.

16. In the case where the amount of child support does not include a determination made in accordance with a table, any change in the condition, means, needs or other circumstances of either parent or spouse or of any child who is entitled to support.

17. In the case of an order made under the Divorce Act (Canada) before May 1, 1997, the coming into force of section 15.1 of that Act, enacted by section 2 of chapter 1 of the Statutes of Canada, (1997).

18. In the case of an order made under the Act, the coming into force of subsection 33 (11) of the Act. O. Reg. 391/97, s. 14 ; O. Reg. 446/01, s. 3.

[71] Although the parties agreed (and counsel submitted) that to change the child support terms of the separation agreement any change in circumstances must be "material", that is not the test under subsection 37 (2.1) of the Act. The moving party on a motion to change child support only needs to prove, on a balance of probabilities, that there has been a change in circumstances, not a "material" change, within the meaning of the Child Support Guidelines or that evidence not available on the previous hearing has become available that would result in a different order. [2]

[72] There is a distinction between the two tests. See paragraphs [9] to [17] of Blanchet v. Blanchet, 2010 ONSC 6162, 194 A.C.W.S. (3d) 1219, [2011] W.D.F.L. 395, [2010] O.J. No. 4971, 2010 CarswellOnt 8757 (Ont. Fam. Ct.), per Justice Elizabeth A. Quinlan; and paragraph [100] sqq. of Domik v. Ronco, 2013 ONCJ 197, 227 A.C.W.S. (3d) 474, [2013] O.J. No. 1756, 2013 CarswellOnt 4448 (Ont. C.J.), per Justice Roselyn Zisman.

[73] A material change is a change such that, if known at the time, would have resulted in a different order. The sufficiency of the change must be defined in regard to the overall financial circumstances of the parties. See Willick v. Willick, [1994] 3 S.C.R 670, at paragraph 21; L.G. v. G.B., [1995] 3 S.C.R. 370.

[74] Although the court must consider the parties' intentions when determining whether to change the child support terms of the separation agreement, I am not bound by the material change in circumstances clause in the Agreement when addressing the change, if any, to the child support provisions. This would effectively bar me from invoking subsection 37(2.1) of the Family Law Act. Just as parties cannot, by private agreement, confer on the court jurisdiction that it does not have, so likewise they cannot limit or prohibit the court from exercising jurisdiction that it clearly does have. See Adams v. Mustard (2002), 116 A.C.W.S. (3d) 405, [2002] O.J. No. 3363, 2002 CarswellOnt 2871 (Ont. Fam. Ct.), per Justice Randolph J. Mazza.

[75] In my view, I must follow the test set out under the Act when determining the father's motion to change. Having said that, there have been some material changes since the parties' original agreement, so the distinction is not as important in this case. The relevant changes in circumstances, material or not, are as follows:

• the father is no longer paying spousal support to the mother;
• the father has re-partnered, purchased a new home, and lives with his partner;
• the father's new partner shares all of his living expenses;
• the mother is now employed full-time and earning $35,000 per annum;
• the father obtained a real estate license and mortgage broker's license;
• the three older children are no longer at private school, only the youngest left;
• the father's commissions decreased from $126,000 to $84,000 per annum.

[76] Once the court determines that that there has been a change in circumstances the court is entitled to re-assess the needs of the children as a result of change in circumstances and embark on a fresh inquiry as to the appropriate amount of child support. See Willick v. Willick, [1994] 3 S.C.R. 670 paras. 26, 100, 102 and 109.

7.1 The Determination of the Father's Income for Child Support Purposes:

[77] Although I have determined that there have been a number of changes in circumstances since the parties negotiated their separation agreement, I find that these changes should not affect the amount that the parties fixed in the Agreement to impute the father's income for child support purposes. His income should continue to be imputed at $80,000 annually for the following reasons.

[78] The purpose of the Child Support Guidelines is to establish a fair standard of support that ensures that children continue to benefit from the financial means of both spouses after separation, using a methodology that strives to achieve objectivity, efficiency and consistency.

[79] Both parents have an absolute responsibility to support their children to the extent that they are able to do so. Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children.

[80] Although it is certainly true that the father's gross commission income is now approximately $40,000 less than the commission income he was receiving at the time of the separation agreement, I find, for the reasons that follow, that the $80,000 chosen as the father's imputed income in the parties' separation agreement was not a fair and accurate reflection of the income available to him to pay child support, considering that the father's gross income was $126,708 at the time.

[81] There was no evidentiary basis provided at this hearing for how the parties determined that $80,000 would be attributed as the father's income for support purposes at the time the Agreement was negotiated. Father's counsel explained that the parties decided to attribute 63% of the father's gross commissions as his imputed income "for the purpose of settlement."

[82] Father's counsel urges me to apply the same formula to determine the father's current gross income for child support purposes going forward, in order to be consistent. This would be 63% of the $83,368.00 in commissions earned in 2014, or $52,522.00, resulting in a child support obligation of $1,223.00 per month for four children.

[83] A trial judge who chooses to attribute income arbitrarily and without explanation commits an appealable error. A court must have evidence to lay a factual foundation in order to impute income to a payor. See: Drygala v. Pauli, 61 O.R. (3d) 711, 164 O.A.C. 241, 219 D.L.R. (4th) 319, 29 R.F.L. (5th) 293, [2002] O.J. No. 3731, 2002 CarswellOnt 3228 (Ont. C.A.); Converti v. Escobedo, 2011 ONCJ 627, 210 A.C.W.S. (3d) 728, [2012] W.D.F.L. 3940, [2011] O.J. No. 5482, 2011 CarswellOnt 14615 (Ont. C.J.), per Justice Stanley B. Sherr.

[84] I do not accept that it is fair and reasonable to continue to use a ratio of 63% of the father's gross income to determine the father's income going forward, nor am I obliged to accept it. Section 56 (1.1) of the Family Law Act makes it clear that a separation agreement is subject to the Child Support Guidelines and provides as follows:

" (1.1) In the determination of a matter respecting the support of a child, the court may disregard any provision of a domestic contract pertaining to the matter where the provision is unreasonable having regard to the child support guidelines, as well as to any other provision relating to support of the child in the contract. 1997, c. 20, s. 10 (2); 2006, c. 1, s. 5 (8) ."

[85] The father is self-employed, although he has only worked for the same company, Uptown Communications, for the past several years, including at the time of the parties' separation. He is a senior account manager for this company. It appears that the father has greatly benefited from being treated as self-employed, as he is has been able to significantly reduce his professional net income and thereby lower or reduce the taxes that that he must pay on that income.

[86] A review of the father's notices of assessment for the past four years compared to his gross revenue for the same period demonstrate that he has been able to write off, on average, approximately eighty percent of his income and pay very little tax. Although this may be considered reasonable and acceptable from a business point of view, it is not a fair recognition of the actual income available for child support, when determining an appropriate income for child support purposes, particularly when the father has a legal obligation to support four children between the ages of ten and eighteen years old. To the father's credit, he has not asked for his income to be based on his declared line 150 income, as he recognizes that this would be unfair. However, it is also unfair to continue to apply the ratio of 63% of gross income to determine child support.

[87] Subsections 19(1) and (2) of the Child Support Guidelines, O. Reg. 391/97, as amended, assist the court in determining the income of a self-employed person for child support purposes. Subsection 19(1) includes nine specific sections in which income may be added back or imputed to the payor. The entire section reads as follows [emphasis added]:

19. Imputing income.—(1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include,

(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;

(b) the parent or spouse is exempt from paying federal or provincial income tax;

(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;

(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;

(e) the parent's or spouse's property is not reasonably utilized to generate income;

(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;

(g) the parent or spouse unreasonably deducts expenses from income;

(h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and

(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.

(2) Reasonableness of expenses.— For the purpose of clause (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act (Canada).

[88] A self-employed person clearly has the onus of demonstrating the basis of his or her income for child support purposes. This includes demonstrating that the business deductions from gross income should not be taken into account in the calculation of income for support purposes. See Whelan v. O'Connor, 28 R.F.L. (6th) 433, [2006] O.J. No. 1660, [2006] O.T.C. 409, 2006 CarswellOnt 2581 (Ont. Fam. Ct.).

[89] It is also well established in the case law that the self-employed person has an obligation to put forward adequate and comprehensive records of income and expenses, so that a proper determination of the amount of child support can be established. The onus rests on the parent seeking to deduct expenses from income to provide meaningful documentation supporting those deductions, failing which an adverse inference can be drawn. See Meade v. Meade, 31 R.F.L. (5th) 88, [2002] O.J. No. 3155, 2002 CarswellOnt 2670 (Ont. S.C.J.) and Orser v. Grant (2000), 96 A.C.W.S. (3d) 644, [2000] O.J. No. 1429, 2000 CarswellOnt 1354 (Ont. S.C.). As Justice Frances P. Kiteley summarized in Meade v. Meade, supra:

[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.

[90] Subsection 19(2) of the Guidelines makes it clear that the "reasonableness of an expense deduction" is not "solely governed by whether the deduction is permitted under the Income Tax Act (Canada)". Unlike the Income Tax Act, the reasonableness of an expense for Guideline purposes requires the court to examine whether the deduction results in a fair recognition of the actual income available for child support. See Osmar v. Osmar; [2000] O.J. No. 2058; (2000) 8 R.F.L. (5th) 368; 2000 CarswellOnt 1928 (S.C.J. Family Court), per Justice David Aston. As Justice Aston held at paragraph 5 of that decision:

"In my view, the Guidelines require the court to examine expenses from the perspective of balancing the business necessity against the alternative of using those funds for child support. The court should respect the right of self-employed persons to run their business as they see fit, but may, nevertheless, question whether particular expenses ought to be indirectly subsidized by lower child support."

[91] In 2014, the father's gross commission income was $83,368.06. He claimed $45,107.71 in business expenses and declared a net income of $38,260.35. The father provided a spreadsheet of all of his expenses in 2014 by category in his document brief. This statement showed that his total expenses, including both personal and business in 2014, were $75,266.84.

[92] In looking at the father's statement of income and expenses for the year ending December 31, 2014, I note the following:

a. Motor Vehicle Expenses:

The father claims $13,793.83 in motor vehicle expenses, which is eighty percent of his total motor vehicle expenses of $17,242.29. There was no evidence from the father demonstrating that the use of his vehicle was eighty percent business and twenty percent personal. In fact, the evidence supported quite the contrary. His own testimony is clear that that he works from home approximately sixty percent of the time "to save on gas and transportation expenses". He testified that although he does have an office at the company's head office in Richmond Hill, he usually travels into the office approximately twice a week. He conducts most of his work over the telephone and electronically. It is also worth noting that in reviewing the father's child support calculations and statements of income expenses delivered to the mother each year after the separation agreement was signed, he did not include any motor vehicle expenses incurred by him as a business expense when determining his income for child support purposes. I find that only twenty percent of the father's car expenses should be deducted from his income, resulting in $10,344.55 being added back for support purposes.

b. Meals and Entertainment Expenses:

The father has deducted fifty percent of his meals and entertainment expenses for the total amount of $5,591.00 from his income as a business expense. Again, the father did not produce any receipts for his meals and entertainment expenses. There was no evidence that any of the items charged as meals and entertainment were necessarily incurred by the father for the purpose of generating income. In fact, based on the evidence, it appeared that the vast majority of the expenses incurred for meals and entertainment by the father in his credit card statements were for meals with the children, his spouse, or for vacation purposes. The onus is on the party the father as a self-employed person to demonstrate that these expenses were incurred for business purposes or for the purposes of generating income. In my view all of those expenses should be added back to the father's income for child support purposes.

c. Interest and Bank Charges:

The father claimed $2,642.94 in interest and bank charges. There was no evidence that these interest and bank charges were for business borrowings. A review of the credit card statements produced indicates that the vast majority of the expenses incurred were personal expenses. The father did not provide evidence of any business debt, rather he provided significant evidence of personal debt. He appears to be restructuring his finances so that his personal debt is converted to a business debt which would be deductible. This continues to represent a subsidy of the father's personal lifestyle rather than any demonstrated or genuine need for money to fund the running of his business. The interest amount should therefore be added back to his income for the purposes of the child support guidelines.

d. Office Expenses:

The father has deducted $5,075.50 in office expenses although no evidence was produced by him that he is required to incur office expenses for business purposes. Indeed, he has an office at Uptown Communications' head office. There was no evidence of any receipts or invoices or details of what those office expenses would be. A review of the credit card statements did not shed any light on those expenses as the vast majority of the expenses on the credit card statements appear to be personal in nature.

e. Business Use of Home:

The father has deducted $4,736.47 of his personal housing expenses (mortgage, utilities and house insurance) as a "business use of home" expense. This is fifteen percent of his total personal housing expenses. There is no evidence that the father regularly meets with clients in his home, or requires a larger home or special space requirements as a commissioned salesperson. The father's housing expenses would likely be the same even if he were not a commissioned salesperson. While the father is certainly entitled to get a tax advantage by properly deducting a business use of home expense, to make these same deductions from income for the purposes of determining child support deprives his children of needed child support. See Wilson v. Wilson 2011 ONCJ 103, [2011] O.J. No. 1088; 2011 ONCJ 103; 2 R.F.L. (7th) 233, at paragraph 31. This entire amount should be added back to his income each year for the purposes of the child support guidelines.

f. Telephone and Utilities:

In addition to the 'business use of home expense' deducted, the father has deducted $4,381.38 in telephone and utilities, which is his entire expense in this area. Again, no receipts or invoices were provided, nor any explanation regarding the breakdown of what is a personal expense and what is a business expense. I would only attribute forty percent of these expenses for business use, as the father would presumably have the same telephone and utilities expenses in his home for his personal use, and the children should not be deprived of available income for support.

g. Travel Expenses:

Similarly, the father has deducted $2,877.71 in travel expenses. He has provided no receipts or invoices for what travel he incurred for business purposes. As indicated, it is clear from his testimony that the vast majority of the father's travel has been personal in nature for holidays that he has taken with his partner and her daughter. It is unreasonable for the father deduct this as a business expense when it appears to be largely for his own personal benefit. Again, the father should not be allowed to subsidize his personal lifestyle at the expense of the children and this amount should also be added back.

h. Advertising and Salaries:

The father claims $390.68 in advertising and $504.37 in salaries and wages, yet he provided no explanation for what advertising is necessary for him to generate a business income or why he needs to pay someone a salary, and if so, whether this was an arms-length relationship. Presumably, his company would be doing any marketing or advertising to attract new clients. Again, the father did not invoices or receipts for any advertising or salaries. Both of these amounts will be added back to the father's income for child support purposes in accordance with the child support guidelines.

[93] Based on the above assessment, the following adjustments should be made to the father's 2014 income and added back to his income to determine appropriate child support:

• business use of home: $4,736.47
• interest and bank charges: $2,642.94
• motor vehicle expenses: $10,344.55 ($13,793.83 minus $3,448.45)
• office expenses: $5,075.50
• telephone and utilities: $2,628.82 (60% of $4,381.38)
• travel: $2,877.71
• advertising: $390.68
• salaries wages and benefits: $504.37

Total Amount of "Add-backs": $29,021.04

[94] When adding back this income to the father's net income of $38,260.35, the father's total net income is therefore $67,281.39. However, the income analysis does not end there. It is appropriate in these circumstances to gross-up the additional income to the father before the tables are applied. This is done to ensure consistency of treatment of support payors under the Guidelines where a party is found to have arranged his affairs to pay less tax on income, and therefore has more income with which to pay support. See Sarafinchin v. Sarafinchin, 189 D.L.R. (4th) 741, [2000] O.J. No. 2855, 2000 CarswellOnt 2640 (Ont. S.C.) at paragraph 63; Orser v. Grant [2000] O.J. 1429 (Ont. S.C.); Juliette Vanessa M. v. Floyd Dale P., 2011 ONCJ 615, 211 A.C.W.S. (3d) 122, [2011] O.J. No. 5437, 2011 CarswellOnt 13828 (Ont. C.J.), at par. 85.

[95] A Divorcemate software analysis shows that, with the grossing up of his income for tax purposes, the father's gross income should be imputed at $80,234.00. Thus, for simplicity, the father's income for the purpose of calculating child support will continue to be imputed at $80,000.00.

[96] The above analysis makes it very clear that the father has been significantly underpaying child support for a number of years since the parties entered into the separation agreement (with the exception perhaps of 2012) given how he has structured his financial affairs. He is certainly entitled to do this from a business point of view but not for determining child support under the Guidelines.

[97] In my view, a more accurate and fair amount of the child support that the father should have been paying in 2009 and going forward should have been based on gross commission income, given the nature of the father's employment and how he structured his financial affairs. This is corroborated by the father's most recent Form 13 sworn financial statement in this proceeding, in which he deposes that his gross income is $83,368.00 and his annual expenses, at Part 2 of the Statement, are $80,307.84.

7.2 Is the Father Intentionally Under-employed?

[98] I must also consider the mother's position that the father is intentionally under-employed and that he should have made efforts to secure other sources of income once it became apparent that his commissions were declining. For example, in 2012, the father's gross commission income was only $66,000.00, although all other years, it was significantly higher.

[99] Section 19. (1) (a) of the Guidelines provides that the court may impute such amount of income to a spouse as it considers appropriate in the circumstances if "the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the spouse."

[100] The Ontario Court of Appeal in Drygala v. Pauli, [2002] O.J. No. 3731 (Ont. C.A.) set out the following three questions which should be answered by a court in considering a request to impute income:

1. Is the party intentionally under-employed or unemployed?
2. If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?
3. If not, what income is appropriately imputed?

[101] The onus is on the party seeking to impute income to the other party to establish that the other party is intentionally unemployed or under-employed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made. See: Homsi v. Zaya, 2009 ONCA 322, [2009] O.J. No. 1552. (Ont. C.A.).

[102] The court stated in Drygala, supra, that there is no need to find a specific intent to evade child support obligations before income is imputed; the payor is intentionally under-employed if he or she chooses to earn less than what he or she is capable of earning. The court must look at whether the act is voluntary and reasonable. "Intentionally" means a voluntary act. It does not apply to situations beyond one's control. See Tillmanns v. Tillmanns, 2014 ONSC 6733 (S.C.J.) at paragraph 18.

[103] Once under-employment is established, the onus shifts to the payor to prove one of the exceptions of reasonableness. When an employment decision results in a significant reduction of child support, it needs to be justified in a compelling way: See: Riel v. Holland, at paragraph 23. It must be reasoned, thoughtful and highly practical: See: Hagner v. Hawkins, (Ont. S.C.) at paragraph 19. As a general rule, separated parents have an obligation to financially support their children and they cannot avoid that obligation by a self-induced reduction of income. See: Thompson v. Gilchrist, 2012 ONSC 4137; DePace v. Michienzi, [2000] O.J. No. 453, (Ont. Fam. Ct.).

[104] The third question in Drygala v. Pauli, supra, is: "If there is no reasonable excuse for the payor's under-employment, what income should properly be imputed in the circumstances?" The court must have regard to the payor's capacity to earn income in light of such factors as employment history, age, education, skills, health, available employment opportunities and the standard of living earned during the parties' relationship. The court looks at the amount of income the party could earn if he or she worked to capacity. See: Lawson v. Lawson.

[105] The court except the father's evidence that the decline in his commission income over the years appear to the result of market and regulatory conditions that were beyond his control. However, the evidence also establishes that by 2011 if not earlier, the father was well aware that his commission income was declining. This is why, as he explained, he undertook the necessary coursework and requirements to obtain his real estate license and his mortgage broker's license in 2012. The father also had a ready-made opportunity to work at a family member's real estate firm and was offered a position there.

[106] The court does not accept that it was reasonable for the father to cancel his real estate and mortgage broker's licenses because the monthly fees of $400 were "too high" and it was too hard to work on the evenings, during the week or on weekends to supplement his income. In my view, the father had a legal obligation to supplement his declining income at that time given that he had four young children to support. As counsel for the mother demonstrated in his calculations, the father only had to sell one house for $500,000.00 (a less than average price in Etobicoke) at 5 percent commission, to bring his income up to that which he was earning on commission.

[107] Further, the father had no explanation for why he was no longer preparing tax returns for clients to supplement his income, a practice which he acknowledged doing prior to separation in which he estimated that he has approximately twenty clients yearly, although the mother estimated closer to thirty clients.

[108] The father's working hours as a commissioned salesperson are flexible, he does not have a '9 to 5' job, and the children are only with him two weekends each month and one night during the week. The father testified that he can work from home most of the time. In 2012, the year that his income was reduced significantly, he purchased a hot tub at a cost of $1500, went on a number of holidays with his new partner, and instead of utilizing his real estate licenses, he canceled them. In my view, this is not reasonable behavior, given the father's legal obligation to support four children and the mother's obvious financial struggles in meeting their needs and expenses on her limited income.

7.3 The Youngest Child's Private School Fees:

[109] The mother's claim for the youngest child's private school fee is governed by section 7 of the Child Support Guidelines, which deals with special or extraordinary expenses. The relevant sections are as follows:

"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:

(d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child's particular needs;…

(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.

(3) Subsidies, tax deductions, etc. -- Subject to subsection (4), in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense."

[110] 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 section 1(a), which reads as follows:

(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;"

[111] 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 and that the expenses are necessary and reasonable, having regard to the parental financial circumstances. See Park v. Thompson, 77 O.R. (3d) 601, 197 O.A.C. 158, 252 D.L.R. (4th) 730, 13 R.F.L. (6th) 415, [2005] O.J. No. 1695, 2005 CarswellOnt 1632 (Ont. C.A.).

[112] In awarding section 7 special and extraordinary expenses, the trial judge determines each party's income for child support purposes and determines whether the claimed expenses fall within one of the enumerated categories of section 7 of the Guidelines. The court must be satisfied that the special or extraordinary expense is:

1. necessary "in relation to the child's best interests"; and
2. reasonable in relation to the means of the parents and those of the child and to the family's spending pattern prior to the separation.

[113] In Correia v. Correia, [2002] M.J. No. 248, 2002 MBQB 172, 29 R.F.L. (5th) 28, Justice Allen set out a number of factors to be taken into account in determining the reasonableness of a section 7 expense in relation to the means of the parents:

1. the combined income of the parties;
2. the fact that two households must be maintained;
3. the extent of the expense in relation to the parties' combined level of income;
4. the debt position of the parties;
5. any prospects for a decline or increase in the parties' means in the near future; and
6. whether the non-custodial parent was consulted regarding the expenditure prior to the expense being incurred.

[114] It is not disputed that throughout the parties thirteen year marriage, all four of their children attended private Christian schools up until grade 8. At that time, the children then went on to public school for high school. This was the agreement and choice of both parties, according to the evidence at the hearing. The youngest child, Matthew, is the only child remaining in private school. He is entering grade 5 at Trinity Christian School in the September 2015-2016 school year. Matthew has established friendships at the school with other children. He is also in an after-school and counseling program. It would not be in his best interests to change schools at this time, and leave his established friends.

[115] The mother did not give clear evidence as to the exact cost of Matthew's private school fees. This is because, according to her evidence, the school performs an income analysis for each family and provides bursaries and subsidies to assist with the payment of tuition depending on the means and needs of the family. The mother testified that because they are separated, each parent received a bursary of approximately $3000 towards the school fees for the 2014 - 2015 school year, and that a private and anonymous benefactor "stepped in" to cover her portion of the school fees in addition to the bursaries. At most, it appears that the father's costs towards Matthew's school fees is $300 monthly, after deducting the bursaries received from the school and the mother's proportional contribution. I find this to be a relatively modest expense.

[116] In this case, it is not disputed that the father was paying approximately $400 per month towards the children's private school fees, according to his sworn financial statement and his motion to change.

[117] In my view, having considered all of the factors, the private school fee for Matthew is a reasonable and necessary expense and the father should contribute up to a maximum of $300 monthly towards the net cost of this expense, after taking into consideration all of the bursaries and subsidies available, which should be fully disclosed by the mother to the father.

Should there be a Reduction or Rescission of the Outstanding Arrears?

[118] Based on my determination of the father's income, the father owes child support arrears. The mother is seeking $11,165.00 in child support arrears. In DiFrancesco v. Couto, [2001] O.J. No. 4307 (C.A.) the Ontario Court of Appeal stated that the discretion to reduce arrears must be exercised judicially and set out the following factors to be considered:

• The nature of the obligation to support, whether contractual, statutory or judicial;
• The ongoing financial capacity of the payor;
• The ongoing need of the custodial parent and the dependant child;
• Unreasonable and unexplained delay on part of the custodial parent in seeking to enforce payment of the obligation, tempered, however, in the case of child support with the fact that such support exists for the child's benefit, is charged with a corresponding obligation to be used by the custodial parent for the child's benefit and cannot be bargained away to the prejudice of the child;
• Unreasonable and unexplained delay on the part of the payor in seeking appropriate relief from his obligation; and
• Where the payment of substantial arrears will cause undue hardship, the exercise of the court's discretion on looking at the total picture, weighing the actual needs of the custodial parent and child and the current and financial capacity of the respondent, to grant a measure of relief where deemed appropriate.

[119] The mere accumulation of arrears without evidence of a past inability to pay is not a change in circumstance or special circumstance. Present inability to pay does not by itself justify a variation order. It should only be granted if the payor can also prove a future inability to pay. Otherwise, the option is to suspend, or order repayment of arrears. See: Haisman v. Haisman (1994) 1994 ABCA 249, 157 A.R. 47 (C.A).

[120] Some courts have now held that the four main factors to consider when making a retroactive support order set out in the Supreme Court of Canada's decision in D.B.S. v. S.R.G.; Laura Jean W. v. Tracy Alfred R.; Henry v. Henry; Hiemstra v. Hiemstra, 2006 SCC 37, (the recipient's reason for the delay in enforcement, the conduct of the payor, the circumstances of the children, and any undue hardship caused by the award) apply equally to claims to reduce or rescind support arrears. See: Galloway v. Cassino (Barrett) 2008 ONCJ 577; H.F. v. P.F., 2007 ONCJ 170.

[121] I have carefully reviewed all of the circumstances of this case, including the financial capacity of both parties, the fact that the father underpaid support for a number of years, the mother's delay in enforcement, the fact that there are four children between the ages of 10 and 18 who need ongoing child support, and the ongoing obligation of the father for the section 7 expenses. I find that the arrears of child support owed by the father should be fixed at $10,000.00.

9: CONCLUSION AND ORDER

[122] In conclusion, despite the decline in his commission income, the father had been significantly underpaying child support since the parties' separation agreement, by structuring his affairs in such a manner to declare significantly less income than what he earns. Although he is certainly entitled to do this from a business point of view, his children should not be deprived of a fair standard of support based on a proper assessment of the income available to the father. Further, the father did not make reasonable efforts to supplement his income given his legal obligation to support four children.

[123] Further, the father is no longer paying spousal support of $701 monthly, he shares all of his living expenses with his current partner, with whom he has purchased a new home and by all of the evidence shown, the father lives a very comfortably lifestyle and takes frequent vacations. The mother is struggling financially as a single parent and children's standard of living and lifestyle has suffered since the separation.

[124] The final order regarding the father's motion to change is therefore as follows:

1. Commencing September 1, 2015, the father shall pay child support to the mother in the amount of $1,823.00 per month, and on the first day of each month thereafter. This is the Child Support Guidelines Table amount for four children, based on the father's imputed income of $80,000.00 pursuant to the Child Support Guidelines.

2. Commencing September 1, 2015, the father shall pay a maximum of $300 per month towards the net cost of the youngest child's private school fees, after taking into consideration the bursaries, subsidies, and the mother's contribution towards the school fees. The mother shall provide full disclosure of the bursaries and subsidies received from the school towards the child's school fees.

3. If either party is seeking a contribution from the other for any extraordinary expenses for the children, then that party shall provide the other party with written proof of the anticipated cost and the other party shall confirm in writing if he or she consents to the expense, such consent not to be unreasonably withheld. The parties shall pay their proportionate share of any agreed upon expenses.

4. The total arrears of child support that are fixed at $10,000. The Family Responsibility Office's record of arrears shall be adjusted accordingly. The father shall be entitled to pay the arrears owing at a rate of $200 per month, commencing November 1, 2015. Nothing in this order precludes the Family Responsibility Office collecting support arrears from any government source (refunds) or prize winnings.

5. The parties shall exchange full financial disclosure by June 1st of each year, including but not limited to, their year-end financial statements for their sole proprietorships or corporations, including supporting documentation, their year-end statement of revenues, their complete corporate (if any) and personal income tax returns and notices of assessment, and a letter from their respective accountants setting out how the personal income has been calculated.

6. If either party seeks costs, then he or she shall serve and file costs submissions, with a bill of costs and offers to settle attached, within 30 days. The other party may serve and file his or her written response to the submissions within 20 days.

[125] I have attached as Schedule "A" to these reasons my Spousal Support Advisory Guidelines calculations using the appropriate software. If I have made an error in these calculations or in my calculation of support arrears owing, then the parties may contact the court within fourteen days of the release of these reasons regarding any mathematical errors.

Released: August 28, 2015

Signed: "Justice Sheilagh O'Connell"

[1] The father testified that the Region of York, for example, has 25,000 employees.

[2] See the difference in section 37(2) of the Act, dealing with spousal support, which clearly provides that the change must be a "material" change.