Court File and Parties
COURT FILE NO.: FC-10-1358-4 DATE: 2017/04/12 SUPERIOR COURT OF JUSTICE
BETWEEN:
TRACEY LYNN VERHEY Applicant – and – BRENT JAMES VERHEY Respondent
Counsel: Rachelle Laforge, counsel for the Applicant Christopher Rutherford, counsel for the Respondent
HEARD: September 20, 2016 and March 23, 2017
Reasons for Decision
OVERVIEW
[1] Brent seeks to vary the child support provisions of the two agreements retroactively to April 1, 2014, an order setting the amount of spousal support retroactively to April 1, 2014, a variation of the postsecondary education provisions of the agreements, a variation of the life insurance obligations and costs.
[2] Tracey opposes any variation and seeks an order confirming the spousal support and child support in line with the parties two 2011 agreements effective January 2013, an order determining Brent’s income; an order imputing income of $104,293.28 in any year where Brent’s income is deemed to be lower than $100,000; an order that any arrears of child and spousal support be paid forthwith; an order that Brent pay 64% of the children’s postsecondary tuition fees; a lump sum amount of spousal support; an order that Brent designate Tracey as the revocable beneficiary of life insurance in the amount of $50,000, costs of $3000 related to Brent’s withdrawal of his claim for spousal support and costs.
[3] On February 2, 2017, in Verhey v. Verhey 2017 ONSC 837, I found that I did not have jurisdiction to vary the spousal support provisions under the Divorce Act or the Family Law Act. I requested that the parties schedule a date before me to advise on how they wish to proceed on the variation of spousal support. On March 23, 2017, the parties attended and agreed that I convert the Motion to Change regarding the spousal support provisions into an originating application under section 15(2) of the Divorce Act. At that time, counsel made submissions with respect to the issue of spousal support. Consequently, I have treated the issue of spousal support as an originating application under section 15.2 of the Divorce Act.
[4] I also found that I did not have jurisdiction under section 17 of the Divorce Act to vary the child support provisions of the two agreements but that I had jurisdiction under section 37 of the Family Law Act.
CONSENT ISSUES
[5] The parties agree that Amanda ceased being a child of the marriage effective May 31, 2015 and that Emily will cease to be a child of the marriage effective May 31, 2017.
WITHDRAWAL OF CLAIM
[6] As part of his Motion to Change, Brent sought spousal support from Tracey. In February 2016, Brent advised that he was no longer pursuing a spousal support claim against Tracey. Tracey seeks her costs with respect to this withdrawn claim. This claim can be addressed in Tracey’s cost submissions.
CONTESTED ISSUES
[7] The remaining issues to be adjudicated are as follows: (a) What is Brent’s annual income for the years 2013, 2014, 2015, 2016 and going forward? (b) Should the Court vary the table child support effective January 1, 2013? If yes, what is the amount of table child support owed by Brent until May 2017? (c) Should the Court vary the parties contribution to the sharing of the children’s postsecondary expenses? If yes, what should be the proportional share of the parties with respect to the children’s post-secondary educational expenses? (d) What should Brent’s spousal support obligation be effective January 1, 2013? (e) Should Brent be ordered to pay a lump sum amount of spousal support to Tracey? (f) What amount of life insurance is required to secure child support for Emily and spousal support for Tracey? (g) Costs.
Background Facts
[8] The parties married on August 3, 1985. There are two children of their marriage namely Amanda, born August 31, 1993 and Emily, born December 17, 1995. The parties separated on November 1, 2008.
[9] Throughout the marriage, Tracey was responsible for the home and cared for their children while Brent was the main income earner. By separation in 2008, Tracey was a stay-at-home mom for 15 years and had not been employed full-time during this period of time.
[10] At the time of the separation, the two children were entitled to support. In the fall of 2011, the parties settled all of the issues arising out of their separation by way of Minutes of Settlement\Separation Agreement (“Minutes of Settlement”) dated September 20, 2011.
[11] On October 5, 2011, Justice Aitken granted a Divorce Order that stated that the Minutes of Settlement shall remain in full force and effect.
[12] In December 2011, the parties signed an Amending Agreement to the Minutes of Settlement amending the contribution to section 7 expenses and reducing the monthly spousal support to Tracey because she had obtained employment after the Divorce Order was granted.
[13] In September 2013, Brent lost his job and received a severance package. Until March 31, 2014, Brent complied with the terms of the agreements.
[14] On April 1, 2014 Brent commenced a Motion to Change seeking to vary the child support and spousal support based on the change in his income. Brent’s position is that as of April 2014 when his severance ran out, he sustained a material change in circumstances permitting him to vary the child and spousal support, the expenses related to postsecondary education and life insurance provisions of the Minutes of Settlement and the Amending Agreement dated December 20, 2011.
Circumstance At The Time Of The 2011 Agreements
[15] In September 2011, Brent was employed earning $104,293.28 per year and Tracey was unemployed and both children were residing full time with Tracey. Based on the circumstances, the parties entered into the “Minutes of Settlement” where the parties agreed, inter alia, as follows: (h) Table child support-paragraph 11 Commencing July 1, 2012, child support will be based on Brent’s base income of $100,282.82 plus his employers registered retirement savings plans contributions at $4011.28 for a total of $104,293.28. Therefore Brent will pay monthly child support of $1,456 into monthly’s instalments of $728 on the 15th and 30th of each month; (i) Section 7 expenses-paragraph 12 The parties will share the special or extraordinary expenses related to the children in proportion to the respective incomes. The parties specifically acknowledge that, at present, Tracey does not have income from any other source but her spousal support payments. Pursuant to the terms of this agreement, she is to receive $25,464 per annum in periodic spousal support payments as of January 1, 2012. Therefore, at present, the party’s proportional shares will be as follows: Brent’s share is 76% and Tracey share is 24%. However, if either party expects contribution to an expense from the other, they will first obtain the other party’s consent to the expense in advance in writing. Email is sufficient. (j) With respect to the children’s post-secondary educational expenses-paragraph 15 The parties’ proportionate contribution to post-secondary expenses while a child is living at home will include tuition and all mandatory school fees less any scholarship or bursaries awarded to the child. The child be expected to pay for their own books. If a child lives away from home for post-secondary, the parties review what proportionate share, if any, they will contribute to the cost of the residence, travel and other living expenses in accordance with paragraph 17 below. (k) Adjustment of table child support-paragraph 19 Ongoing child support will be adjusted the month after Brent receives an increase in his base salary such that guideline table support will be based on the new base salary plus 4% of his base (employer RRSP contributions as long as he continues to receive this benefit) (l) Material change in circumstances-paragraph 20 and 21 20. Either Tracey or Brent may seek a change in child support if there is a material change in the condition, means, needs or other circumstances of Tracey, Brent, Amanda or Emily that would affect child support. Tracey will notify Brent in writing within 30 days of such change is occurring which would affect a child’s eligibility for child support. 21. A material change in the condition, means, needs or other circumstances of the parents or the children may be foreseen or unforeseen, foreseeable or unforeseeable, and may include: a. A material change in either party’s 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 these minutes the settlement; 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. (m) Spousal support-Paragraph 30 Commencing January 1, 2012, Brent will pay Tracey spousal support of $2,122 per month which is the midrange of spousal support based on his annual income of $104,294 (base plus employer RRSP contributions) and Tracey’s current employment income of nail. A copy of the support make calculations for the spousal support advisory guidelines is attached to these minutes of settlement as schedule B. These monthly payments will be made in two instalments of $1061 each in the 15th and 30th of each month. (n) Automatic review of spousal support-paragraph 35 At the option of either party, the issues of spousal support, and sharing of bonus funds will be reviewed at the following intervals: a. Immediately upon Tracey earning income from any source other than spousal support; b. January, 2012; c. January, 2017 (o) Material change in circumstances for spousal support-Paragraph 36 Spousal support may be changed if there is a material change in circumstance even if the change was foreseen or foreseeable. The change may be: i. in either party’s financial position, ii. in the child support arrangements, iii. Tracey or Brent’s remarriage, iv. Tracey or Brent’s cohabitation with another person in a relationship resembling marriage for more than three months, v. in either party’s health, or any other similar change. (p) Life insurance for child support-paragraph 52 Brent will maintain a policy of life in which you will name Tracey as your revocable beneficiary in trust for the children. Brent’s policy will be in an amount not less than $150,000. (q) Life insurance for spousal support-paragraph 58 Brent will maintain an additional policy of life insurance in an amount of not less than $150,000 or in he will designate Tracey as irrevocable beneficiary. This policy will be in place as security for spousal support payments. (r) Minutes of settlement to survive divorce-paragraph 91 The parties will sign whatever document is necessary to have a divorce order issued which may include the terms of these minutes of settlement. Once divorced, all the terms of these minutes of settlement will survive and continue in force.
[16] Subsequent to the signing of the Minutes of Settlement, Tracey was able to find employment. Consequently, on December 21, 2011, the parties signed an Amending Agreement to the Minutes of Settlement where they agreed to modify certain provisions of the section 7 expenses and spousal support provisions. The provisions that are relevant are set out with the modifications at paragraphs 12, 26 and 30 as follows:
The parties will share the special or extraordinary expenses related to the children in proportion to the respective incomes. Given the change in circumstances (i.e. Tracey’s employment income) commencing December 1, 2011 the parties proportionate share of any new special and extraordinary expenses will be as follows: Brent share is 64% and Tracey’s share is 36%. However, if either party expects contribution to an expense from the other, they will first obtain the other party’s consent to the expense in advance in writing. Email is sufficient.
Spousal support for September, 2011 to and including November 2011 based on the mid-range of the SAAG’s is set at $2,342 payable in 2 instalments of $1,171 payable on the 15th and 30th of each month. Spousal support for December 2011 was based on the mid-range of the SSAG’s at $1273 as shown as the midrange of support of the SSAG at Tab “A”. He will make these payments in two instalments of $636.50 each on the 15th and 30th of December 2011.
Commencing January 1, 2012, Brent will pay to Tracey the sum of $1081 per month as shown as the mid-range of support at Tab “B”. He will make these payments in two instalments of $540.50 on the 15th and 30th of each month. Brent will deduct these payments from his taxable income and Tracey will include them in her taxable income.
[17] As part of the conditions of his employment as Brent was entitled to bonus income, he agreed that he would pay to Tracey 50% of the gross bonus amount when received.
Changes After The 2011 Agreements
[18] On September 13, 2013, Brent was terminated from his employment. He received a termination package which included $11,068.38 in pay in lieu of notice and $39,354.65 as severance pay resulting in effectively a six month termination package.
[19] Brent applied for and received employment insurance benefits from May 2014 through December 2014. In addition to his employment insurance income in 2014, he earned $5,198.50 working for Hawley Signs between June and November 2014.
[20] On January 19, 2015, Brent started a six month contract with Vega as a wireless network technician with an annual salary of $40,000 which was increased in July 2015 to $48,600. In addition to the salary, Brent had the use of a 2012 GMC Sierra, which use is restricted to work purposes and a corporate credit card to purchase materials and to buy gas for the vehicle. He was also provided a cell phone, work boots, gloves and a work jacket. Effective May 26, 2016, Brent’s salary increased to $50,500.
[21] Brent complied with the terms of the two agreements until March 2014. Commencing April 2014 to July 2014, Brent paid the Family Responsibility Office (“FRO”), the sum of $100 per month towards his joint support obligations.
[22] FRO commenced enforcement proceedings against Brent which resulted in Brent bringing a refraining motion. On August 6, 2014 a refraining order was granted and Brent was ordered to pay $3000 forthwith towards support and $600 per month commencing September 1, 2014. Brent has continued to make these payments.
[23] FRO garnished various tax refunds from Brent between March 15, 2015 and October 2015 totaling $8,917.79.
[24] Tracey continued to be employed.
[25] Amanda graduated with a degree in criminology from Carleton University in April 2015. From the date of separation until her graduation, Amanda resided with Tracey except for three months and August to November 2012.
[26] Emily will complete her four-year psychology degree at Carleton University in April 2017. She as well as resided with Tracey since separation and continues to do so.
BRENT’S INCOME
[27] Brent’s position is that the termination of his employment in September 2013 was a material change in circumstances. Tracey’s position is that there was no change in circumstance and that, in any event, the court should impute an income to Brent of $104,293.28. Based on all the circumstances of this case, I will not impute an annual income to Brent of $104,293.28 for the reasons set out below.
[28] At the time of the Amending Agreement to the Minutes of Settlement dated December 21, 2011, the basis of the child and spousal support provisions was that Brent was earning $104,293.28 and Tracey was earnings $37,500. Both children were entitled to support and living with Tracey.
[29] Tracey submits that I should impute an annual income to Brent of $104,293.28 and disregard his income as declared on his tax returns. In support of this submission, she raises five points: (a) Brent’s job search was insufficient to discharge his obligation to make reasonable efforts to find employment; (b) Despite Brent’s alleged reduction in income, his net worth has increased since 2013; (c) Despite Brent’s alleged reduction in income, his lifestyle has not changed; (d) Brent is not credible; and (e) Brent fails to cooperate and disregards compliance with existing agreements or court orders.
Legal Framework
[30] On the issue of imputation of income, Section 19 of the Ontario Child Support Guidelines, O. Reg. 391/97, as am. [“Guidelines”] provides:
- 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.
[31] The Court of Appeal in Drygala v. Pauli (2002), 61 O.R. (3d) 771 (C.A.), at para. 23, set out a three-part test for determining whether income should be imputed on the basis of intentional under-employment or unemployment as follows:
- Is the spouse intentionally under-employed or unemployed?
- If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?
- If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?
[32] Though the Court in Drygala dealt with imputing income for the purposes of child support, this test is equally applicable to claims for spousal support as determined in Crowe v. McIntyre, 2014 ONSC 7106.
Is The Spouse Intentionally Under-Employed Or Unemployed?
[33] A spouse is intentionally underemployed if he or she chooses to earn less than he or she is capable of earning having regard to all of the circumstances (Drygala, at para. 28). There is no requirement that the under-employment or unemployment be undertaken in bad faith or with the intention of avoiding support payments (Drygala, at paras. 29-36).
[34] The onus is on the party seeking to impute income to establish an evidentiary basis that the other party is intentionally under-employed or unemployed (Homsi v. Zaya, 2009 ONCA 322, 65 R.F.L. (6th) 17, at para. 28).
[35] When considering the spouse’s capacity to earn income, the court should consider, among others, the following principles: (a) There is a duty on the spouse to “actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their children” (Thompson v. Thompson, 2014 ONSC 5500, at para. 99); (b) A spouse’s capacity to earn income can be influenced by his or her age, education, health, work history, and the availability of work that is within the scope of his or her capabilities (Marquez v. Zaipola, 2013 BCCA 433, 344 B.C.A.C. 133, at para. 37); (c) A spouse can be found intentionally under-employed or unemployed if he or she quits employment for selfish or bad faith reasons, or engages in reckless behaviour that results in a reduction of his or her income earning capacity (Scott v. Chenier, 2015 ONSC 7866, at para. 48); (d) A spouse cannot avoid support obligations by a self-imposed reduction in income (Le Page v. Porter (2002), 7 R.F.L. (5th) 335 (Ont. S.C.), at para. 27); (e) Where a spouse experiences an involuntary loss of employment, courts will grant a “grace period” to allow the spouse to seek out replacement work. However, the absence of a reasonable job search will leave the court with no choice but to find that the spouse is intentionally under-employed or unemployed (Filippetto v. Timpano).
Is The Intentional Under-Employment Or Unemployment Reasonable?
[36] The second step of the Drygala test is generally treated as an overall test of reasonableness. In Jackson v. Mayerle, 2016 ONSC 72, at para. 702, the court held that:
Once intentional underemployment is established, the onus shifts to the payor to show one of the exceptions of reasonableness.
[37] Not all career decisions which result in reduced income will be unreasonable. However, when an employment decision leads to a significant reduction in child support, it must be justified in a compelling way as set out in the Court of Appeal decision Riel v. Holland (2003), 61 O.R. (3d) 417, at para. 23.
[38] In Thompson v. Gilchrist, 2012 ONSC 4137, 27 R.F.L. (7th) 83, at para. 35, the court held that a spouse must demonstrate that the decision was “reasoned, thoughtful and highly practical”
[39] Justice Pazaratz notes in Jackson v. Mayerle, at para. 715:
Parents are required to act responsibly when making financial decisions that may affect the level of child support available. They must not arrange their financial affairs so as to prefer their own interests over those of their children.
What Income Is Properly Imputed?
[40] Where the spouse is intentionally and unreasonably under-employed or unemployed, the court has a large range of discretion to impute as income an amount founded on a rational basis, as detailed in the Court of Appeal case of D.D. v. H.D., 2015 ONCA 409, 335 O.A.C. 376.
[41] The main factors a court should consider are the age, education, skills, and health of the spouse, along with the number of hours that can be worked in light of competing obligations and the hourly rate the spouse could reasonably obtain (Drygala, at para. 45).
[42] A factor to take into consideration in arriving at an amount of income to be imputed is evidence of a spouse’s previous income as was done by the Court of Appeal decision of Lawson v. Lawson (2006), 81 O.R. (3d) 321, at para. 38.
Analysis
Was Brent’s Job Search Insufficient To Discharge His Obligation To Make Reasonable Efforts To Find Employment?
[43] Tracey submits that the circumstances regarding Brent’s termination were suspicious. I do not find that the circumstances of his termination were suspicious. I find that Brent was terminated on September 13, 2013 and received a severance package which I have included in the calculation of his income in 2013.
[44] From September 2013 and July 2014, Brent made 75 inquiries for job mostly online. I accept Brent’s evidence that he sought employment starting on September 16, 2013 by his contacts in the industry, through phone email, LinkedIn, searching jobs on Workopolis, using the employment search services at Service Canada and in person meetings.
[45] Brent has not been actively pursuing job searches since obtaining his employment with Vega but is occasionally looking at job boards.
[46] I accept that the reality of job searches today that they are mainly online and there is little if any written communication from prospective employers. I find that Brent had at least 10 face to face discussions with former employers. With Samsung, he progressed to the third or fourth interviews before he was ultimately unsuccessful.
[47] In considering whether the efforts made by Brent in his job search were reasonable, I have considered the fact that his position with HTC was in sales support but that he did not perform direct sales, that he is 51 years of age, but he does not speak French and that both wireless carriers and manufacturers are in the process of limiting their sales staff. His former employer HTC no longer exists as an entity in Canada. Clearly his capacity to earn income has been influenced by his age, work history and the unavailability of the work in his field.
[48] Tracey submits that with less than one year experience in accounting, she was able to secure a new job within three months of being laid off and that she submitted over 150 applications in a three month period while Brent inquired for only 75 jobs in a period of 11 months. However, both parties were seeking employment in different fields and I must consider Brent’s qualifications in his pursuit of full-time employment.
[49] Brent continued to pay his child and spousal support obligations until the end of March 2014 at which time he applied for and was granted employment insurance covering the period of May through December 2014.
[50] This is not a case where Brent quit his employment, had self-imposed reduction in his income or that he did not actively seek out reasonable employment opportunities. I find that inquiring regarding 75 jobs is reasonable. I find that Brent has acted reasonably based on his age, his employment history, his language restriction and the significant changes in his industry. I find that Brent has made reasonable efforts to seek employment.
Has Brent’s Net Worth Increased Since 2013?
[51] Tracey argues that Brent’s line of credit has only increased by the sum of $27,380.07 while his registered retirement savings plan has increased $53,875.86 since 2013.
[52] Tracey argues that Brent’s financials statement shows expenses to be $67,000 per year while’s revenue is only $48,000 per year. In reply, Brent submits that he has funded this shortfall by increasing his line of credit. The line of credit statement shows that on September 12, 2013, the balance in the line of credit was $75,895.21. On September 20, 2013, his employer made a direct deposit to his line of credit of $13,744.07 and again on September 30, 2013 a further payment of $27,434.79, which sums were available as part of his termination package.
[53] By September 30, 2013, the line of credit was down to $35,379.500. By June 30, 2016, the line of credit had increased to $104,175.39 which is an increase of $68,795.89. Dividing that increase over the 33 month period from September 30, 2013 to June 30, 2016 equates to a monthly increase in the line of credit of $2084 per month.
[54] I find that Brent increased his line of credit to cover the monthly shortfall. This is not a case where Brent has covered the shortfall and not increased his debts. It is exactly the opposite were his debts have increased to maintain his expenses.
[55] With respect to the increase in Brent’s registered retirement savings plan, on September 30, 2013, the value of his registered retirement savings plan was $182,620.38. As of September 8, 2016, the value was $252,160.82. Brent made a contribution of $3,250 in 2013 and a contribution of $19,322.12 in 2014, mainly from his savings. There were no contributions to the plan after that date. After reviewing the statements, I find that the increase in the value of the registered retirement savings plan, other than the $19,332.12 contribution, was related to market changes.
[56] I reject Tracey’s submission that Brent’s net worth has increased.
Brent’s Lifestyle Has Not Changed
[57] Tracey submits that Brent’s lifestyle is indicative of a person earning $100,000 year or more. She relies on the fact that he owns a home valued at $323,000, a cottage on the lake with the boat and an ATV and has gone on holidays including a trip to Cuba and a shopping trip to New York. Further, she alleges that Brent covers the expenses for his himself, his fiancée and her son as well as maintaining regular registered retirement plan contributions until January 2015.
[58] Upon a review of the net family property statement attached as schedule C to the Minutes of Settlement, Brent disclosed a 50% interest in the matrimonial home, a 100% interest in a cottage as well as owning a 1995 boat. In comparing those assets with the assets listed in Brent’s financial statement sworn September 8, 2016, he now owns a residence valued at $323,000 with a mortgage of $219,096.12, still has the 1995 boat and has same cottage that he had on the date of separation.
[59] Brent’s financial statement sworn September 8, 2016 indicates he is living with his fiancée who earns $15,000 a year and who contributes a variable amount to the groceries of the house.
[60] As previously found, the significant changes in Brent’s registered retirement savings plan are related to changes in the market rather than contributions to the principal of the plan. Further, Brent has less than $100,000 equity in his home, still has the 1995 boat and his debts have increased.
[61] I accept that Brent went to Cuba in the winter 2014 with his fiancée for 5 or 6 days and that they went cross border shopping on one occasion for one or two days. This was done during Brent’s severance pay period when he was paying child and spousal support.
[62] I do not find that Brent’s lifestyle supports a finding to impute an income to him of $100,000.
Brent Is Not Credible
[63] Tracey points to a contradiction in Brent’s affidavit sworn July 20, 2016 were he indicates that his trip to Cuba was reimbursed by his family but when questioned Brent indicated that he would been offered financial assistance from family and said no. I have reviewed the transcript of the questioning of Brent on February 19, 2016 and he explains that the reason he charged the trip to Cuba was to be able to acquire travel insurance and that he was reimbursed the travel expenses.
[64] Further, Tracey submits that Brent failed to disclose a bank statement of his 2014 financial statement and that he disclosed his 2015 financial statement. Brent’s response was there was nothing in the account and he forgot or does not remember why he did not disclose the statement.
[65] In the circumstances, I do not find that Brent was not credible. I have accepted his evidence with respect to his termination and his efforts to find employment.
Brent Fails To Cooperate And Disregards Compliance With Existing Agreements Or Court Orders
[66] Tracey submits that Brent has not made full disclosure, has not answered reasonable requests for information about his job search and has not complied with a court order for disclosure.
[67] Brent replies that he has provided complete disclosure and has not been in breach of any court order. On a review of the evidentiary record, I cannot conclude that Brent has not made full disclosure and has not complied with a court order for disclosure.
[68] Brent took the position that he was not required to provide copies of his registered retirement savings plan after an order for disclosure that was made because the registered retirement savings plan statements were not specifically listed in the court order. Whether or not the court order required to specific disclosure of these statements, I am of the view that such statements should have been presented as part of Brent’s ongoing obligation of making full financial disclosure. Full financial disclosure is a basic principle in family law and that court orders are not required to ensure that a party meet their obligation of full and frank disclosure. By taking that position, Brent did not help the case being resolved.
Conclusion
[69] I find the Tracey has not discharged her burden of proof to show that on a balance of probabilities that Brent is intentionally underemployed. I have found that Brent has actively sought out reasonable employment. I have considered Brent’s capacity to earn income based on his age, work history and availability of work within the scope of his capabilities. Brent did not quit his employment and has found employment. Consequently I will not impute an income of $104,293.28 to Brent.
PARTIES’ INCOME FOR SUPPORT PURPOSES
[70] The Guidelines provide that a parent or spouse’s annual income is determined in accordance with section 16 to 20. Initially a parent or spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T 1 General form issued by the Canada Revenue Agency and is adjusted in accordance with schedule III.
[71] Despite’s Brent’s total income in 2013 to be $149,922, Brent submits that I should average his termination package received in 2013 over part of 2013 and 2014. No jurisprudence was provided by Brent to support this submission.
[72] For the year 2013, Brent submits that I should use the figure of $128,450.81. For the year 2013, Tracey’s position is that Brent’s income is $149,992. Brent submits that his termination package which was effectively six month’s salary should be spread over three months in 2013 and three months in 2014. Brent’s position as it is income as $128,458.81 calculated as follows:: Employment income $92,022.19 Minus bonus earned pre-termination $-4687.50 Net $87,334.69 Vacation pay $15,543.60 Three months severance and notice pay $25,580.52 Total $128,458.81.
[73] I find that Brent’s income will be determined in accordance with line 150 of his federal income tax as provided for in the Guidelines. Brent’s income as per his income tax returns are as follows: (a) In 2013, the sum of $149,992; (b) In 2014, the sum of $20,702; (c) In 2015, the sum of $43,255.87; and, (d) In 2016, anticipated income of $48,500.
[74] Tracey’s income as per income tax returns are as follows: (a) In 2013, the sum of $36,388; (b) In 2014, the sum of $42,776; (c) In 2015, the sum of $50,649; and, (d) In 2016, anticipated $49,998.
Calculation of Child Support
[75] In Brent’s pleadings, he has sought a variation of the child support effective April 1, 2014 while Tracey is sought a variation retroactive to January 1, 2013.
[76] The provisions of the Family Law Act R. S. O. 1990, c.F.3, section 37(2) and (3) provide the court with jurisdiction to discharge, vary or suspend the term of an order prospectively or retroactively if the Court is satisfied that there has been a change in circumstances within the meeting of the Child Support Guidelines.
[77] In this case, Brent filed both agreements under section 35 of the Family Law Act which provides the court with jurisdiction to vary a support or maintenance provision contained in a domestic contract related to child support. Consequently, I have jurisdiction to vary the child support if there is been a change in circumstance within the meaning of the child support guidelines. I find that commencing in 2013, there have been change in circumstances that have affected Brent’s obligation to pay child support.
Year 2013
[78] Based on an income of $149,992, I find that Brent should have paid child support commencing January 1, 2013 up to and including December 1, 2013 in the amount of $2,012 per month as table child support. In 2013, Brent paid table child support of $1,456 per month. I find that Brent owes the sum of $556 per month effective January 1, 2013 up to and including December 1, 2013 totaling $6,672 in child support.
Year 2014
[79] Based on an income of $20,702, I find that Brent should have paid child support commencing January 1, 2014 for two children up to and including December 1, 2014 in the amount of $316 per month.
Year 2015
[80] On January 19, 2015, Brent commenced employment with Vega with an initial salary of $40,000. His new employment as a wireless network technician requires him to perform site surveys, respond to customer service call and perform equipment installations. In July 2015, Brent received a pay increase to $48,600. Brent’s total income in 2015 was $43,256.
Brent’s Employment Benefits
[81] Tracey submits that I should include the per diems paid to Brent by his employer, grossed him up for income tax and include them as income in the calculation of Brent’s annual income. Pursuant to a letter dated August 11, 2015 from the vice president of Vega, Mr. Eric Poirier, the terms of the Per diem were described as follows:
The per diem that appears on the Vega paystub is not income. It is for business meals while travelling at a rate of $40 per day when the employee is travelling for more than six hours and 50 km from the base office. The amount for travelling is within Canada revenue agency guidelines for meals without being tax and is not considered income by revenue Canada.
[82] This issue was canvassed in the Supreme Court of Nova Scotia, Family Division, in Brown v. Brown 2006 NSSC 373 where Justice Coady held at paragraph 20 the following:
- I am not prepared to include Mr. Brown’s food per diem as income for child support purposes. Given the amount of travel, and the nature of his employment, I conclude that it would be unreasonable to force him to take his meals in a bag. I find that these funds are for a purpose related to the performance of his duties.
[83] I agree with that reasoning and find that it would not be reasonable in this matter to include the per diem’s as income. They are payable only when Brent is required to travel more than six hours and 50 km away from the base office.
[84] Brent also has a GMC Sierra motor vehicle but does not have personal use of the vehicle. Brent is required to log all mileage used by the vehicle which must relate to a specific job. Further, Brent is not required to declare the use of the vehicle as a taxable benefit on his income tax return. In the circumstances, I will not consider the use of the motor vehicle in the calculation of Brent’s income.
[85] Based on Brent’s income of $43,256 and both children continuing to be entitled to table child support, I find that Brent should have paid table child support of $634 per month commencing January 1, 2015 up to and including May 2015 when Amanda completed her criminology degree called University.
[86] Based on his income of $43,256, Brent should have paid commencing June 1, 2015, table child support in the amount of $390 per month for Emily.
Year 2016
[87] On May 26, 2016, Brent’s income increased to $50,500. Brent submits that his annual income in 2016 will be $49,733. In 2016, Tracey will earn $50,004.
[88] I find that based on Brent’s income of $49,733 commencing January 1, 2016 on the first day of each month thereafter, Brent will pay to Tracey table child support of $448 per month up to and including May 2017 at which time child support for Emily shall end.
Calculation of Child Support And Postsecondary Educational Expenses
[89] Effective January 2013 up to and including May 1, 2017, Brent will have paid a total of $54,557.79 of child support broken down as follows: (a) $1456 per month as child support from January 2013 to March 2014 for a total of $21,840; (b) the sum of $100 a month for April, May, June and July 2014 for a total of $400; (c) The sum of $8,917.79 seized by FRO; (d) $3000 paid in August 2014; and (e) $600 a month commencing August 1, 2014 up to and including May 1, 2017 being 34 months for a total of $20,400.
[90] Based on my findings as to Brent’s annual income, I find that Brent should have paid the sum of $47,488 of child support from January 1, 2013 up to and including April 1, 2017 broken down as follows: (a) $2,012 per month for a total of $30,180 for 2013; (b) $316 per month for a total of $3,792 for 2014; (c) $634 for January, February, March, April and May 2015 totalling $3,170; (d) $390 per month for 7 months totalling $2,730 as of June 2015; (e) $448 per month for the year totalling $5,376 for 2016; and (f) $448 per month January through May 2017 totalling $2,240.
[91] Brent is entitled to a credit of $7,069.79 for an overpayment of child support.
Postsecondary Educational Expenses
[92] Brent seeks to vary the obligation contained in the Minutes of Settlement and Amending Agreement where the parties specifically addressed the parties proportional contribution to postsecondary expenses when the child was living at home. Specifically, the parties agreed that if a child was living at home, the parents would contribute proportionally to the post-secondary expenses of each child which would include tuition and all mandatory school fees less any scholarships or bursaries awarded to the child. The child would be required to pay for own books including books, costs of cars, insurance, travel, computer, school supplies and the like.
[93] There was a provision that if a child lived away for post-secondary, certain rules will apply. Except for a period of mid-August 2012 to mid-November 2012 when Amanda lived in Cornwall, both children resided with the mother and attended school in Ottawa.
[94] The Minutes of Settlement provided that Brent would pay 76% of the expenses and Tracey 36%. The Amending Agreement varied that percentage sharing and reduced Brent’s contribution to 64% and increased Tracey’s contribution to 36%.
[95] Brent paid his proportional share of Amanda’s tuition but stopped in August 2013. He has not contributed to Emily’s postsecondary educational cost.
[96] Brent’s position is that each daughter should contribute 33% to all postsecondary educational costs in addition to the cost of their books effective 2014 because the combined income of the parties has changed significantly since December 2011.
[97] Emily, the youngest daughter filed an affidavit dated July 7, 2016. Wherein she makes the following statements that are relevant to the issue of postsecondary educational expenses as follows:
My father told me through high school that if I went to university, he and my mother would cover my tuition cost. I relied on these promises and budgeted accordingly.
Because I was fully aware that only my tuition was paid, I paid for all other post- secondary education expenses such as: computer, school supplies, books, gas for transportation, transportation costs, mobile phone costs, insurance for my car, miscellaneous school related costs. I do not keep track of these costs nor did I submit any receipts since no one asked this of me and I understood these costs to be my sole responsibility.
Conversely, it was clear that my tuition was covered so I did not budget to pay for tuition since I was paying for all other costs. When my first tuition fees were due, I wrote to my father asking for his assistance but he insisted that we meet alone before even discussing the issue. I was not comfortable with this but my father withheld tuition despite my requests and his obligations to do so.
After my father refused to contribute his share of the tuition cost, I was stressed and worried because I had to find the means to pay for this myself. The stress that my father has put on me for what would seem to be minimal costs considering his means was very distracting to me to deal with in my first year of university. I have since had to budget accordingly and work longer hours to cover his proportional share of these costs.
I have had to obtain and rely on OSAP loans and work extra time to try to keep up with the burden of paying for my father’s share of my tuition fees.
To date, I have an unpaid tuition loan of $1271 and have to rely on more loans to finish my fourth year of university.
[98] Tracey’s position is that the parties agreed to a specific scheme on how to deal with post-secondary educational expenses and that the girls were only required to contribute to their books. She seeks an order that Brent pay 64% of the children’s post-secondary tuition fees for the years 2013 through 2017.
[99] Tracey submits that based on L.M.P. v L.S. 2011 SCC 43, that I should consider that in making a variation order, under section 17 of the Divorce Act, I must take into account the material changes in circumstances and consider the existence of the separation agreement and its terms as a relevant factor. However, Section 17 of the Divorce Act is inapplicable in this matter.
[100] Section 7 of the Child Support Guidelines provide as follows:
- Special or extraordinary expenses-(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 expense 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 spouse and those of the child and to the families a spending pattern prior to separation: (e) expenses for post-separation education.
[101] Even though both children are over the age of majority, there has been no request for a variation of the table amount of child support pursuant to s.3 (2) (b) of the Child Support Guidelines. The Court of Appeal in Lewi v Lewi, 2006 O.J. No. 1847, requires the court to look at both section 7 and s.3(2)(b) of the guidelines to determine whether a child over the age of majority to age is able to make a contribution to her own postsecondary educational expenses. The decision is discretionary to the motions judge.
[102] In Lewi, supra, the Court of Appeal stated at paragraph 40:
- Moreover, s.7(2) states, as a “guiding principle’, that parents are to share post-separation expenses “after deducting from the expense, the contribution, if any, of the child” on a plain reading, the words “if any” are an express contemplation that a child may be required to contribute nothing toward such expenses. Every child will have access to some type of financial resources, whether savings, earnings from part-time or summer employment or loans. If a child need not make a contribution towards his or her post-secondary education expenses, there can be no implied requirement that a child must fully exhaust his or her financial resources before the court can order parental support. Having said this, I do not wish to be taken as suggesting that the intent is that the child make no contribution. On the contrary, it appears to me that the intent is that the child is to make a contribution; however, the words “if any” are an express contemplation that, in appropriate circumstances, the child may contribute nothing.
Amanda’s Expenses
[103] In 2013\14 Amanda’s postsecondary educational expenses were as follows: (a) Tuition costs $6818.36 (b) Grants $-791 (c) Ontario tuition grant $-1730 Total tuition costs $4297.50 OSAP loan funding $2045 Balance $2252.50
[104] In 2014\15 Amanda’s postsecondary educational expenses were as follows: : (a) Tuition costs $6960.62 (b) Ontario tuition grant $-1780 Total tuition costs $5180.62 OSAP loan funding Zero Balance $5180.62
[105] I find that Amanda’s net tuition expenses for 2014 to be $2,252.50 and in 2015 to be $5,180.62. I find that Amanda has contributed to her share of the postsecondary educational expenses by paying for all of her expenses save and except her tuition.
Emily’s Expenses
[106] Emily earned $11,031 in 2013 and $19,094 in 2014. In 2013\14 Emily’s postsecondary educational expenses were as follows: (a) Tuition costs $8088.18 (b) Grant $-791 (c) Ontario tuition grant $-1730 (d) Permanent disabilities grant $-2000 Total tuition costs $3567.18 OASP loan funding Zero Balance $3567.18
[107] Emily’s 2014\2015 postsecondary educational expenses were as follows: (a) Tuition costs $7824.55 (b) Grant $-791 (c) Ontario tuition grant $-1780 (d) Permanent disabilities grant $-2000 Total tuition costs $3253.55 OSAP loan funding Zero Balance $3253.55
[108] Emily’s 2015-2016 postsecondary educational expenses were as follows: (a) Tuition costs $7338.78 (b) 30% off Ontario tuition $-1830 (c) Grants $-791 (d) Permanent disabilities grant $-2000 Total tuition costs $2717.78 OSAP loan funding $4338 Credit balance $1620.22.
Analysis
[109] I find that in 2014 Emily’s net tuition expenses were $3,567.18, in 2015, the sum of $3,253.55 and in 2016 a credit balance of $1,620. I find that Emily’s contribution to all of her expenses except the tuition expenses are reasonable contribution by her to her postsecondary educational expenses.
[110] I have considered section 7 of the Guidelines and the specific terms of the Minutes of Settlement and the Amending Agreement. In this case, the parties specifically turned their minds to how they would share in the postsecondary expenses for their children. The only change that is occurred since the 2011 agreements was that Brent lost his job in September 2013. The children continue to reside with Tracey, attend school and budget accordingly.
[111] I accept the deference should be given to an agreement reached by the parties and that the Court should only intervene in circumstances were an agreement fails to comply with the objectives of the Guidelines. I will not interfere with the agreements because I find that they comply with the objectives of the Guidelines, the only change is related to Brent’s income and that the children relied on the agreements to budget their postsecondary expenses.
[112] Based on the above, I order that the parties comply with the terms of the 2011 agreements effective August 2014. The parties are to pay their proportional share of said expenses effective that date. I find that Brent’s share of the postsecondary expenses in 2014 was 36%, in 2015 was 46%, in 2016 and 2017 is 49%.
[113] In 2014, Brent owes $1,284.18 and in 2015 he owes $1,496.63 for a total of $2,780.81. He does not owe any contribution as Emily has a credit in 2016.
[114] This amount of $2,780.81 shall be offset against Brent’s overpayment of child support of $7,069.79 resulting in an overpayment by Brent in the amount of $4,288.
SPOUSAL SUPPORT
[115] Brent seeks to set the amount of spousal support payable by him to Tracey effective April 12, 2014 based on his annual income. Tracey opposes any variation of Brent’s obligation to pay spousal support of $1081 per month which has been in effect since January 1, 2012 as she argues that Brent’s income should be imputed to the same level that was the basis of the Amending Agreement. Further, she seek spousal support for 2013 in accordance with the terms of the 2011 agreements.
[116] The applicable legislation section 15.2 of the Divorce Act which provides as follows:
Spousal support order
15.2 (1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.
Interim order
(2) Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interim order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse, pending the determination of the application under subsection (1).
Terms and conditions
(3) The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order as it thinks fit and just.
Factors
(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including (a) the length of time the spouses cohabited; (b) the functions performed by each spouse during cohabitation; and (c) any order, agreement or arrangement relating to support of either spouse.
Spousal misconduct
(5) In making an order under subsection (1) or an interim order under subsection (2), the court shall not take into consideration any misconduct of a spouse in relation to the marriage.
Objectives of spousal support order
(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
[117] Brent is not challenging Tracey’s entitlement to spousal support. The September 20, 2011 Minutes of Settlement provided for a review of spousal support on certain events with the most recent being January 2017. Brent seeks to pay an amount of spousal support in accordance with his annual income commencing with the year 2014 going forward.
[118] I have not accepted Tracey submission to impute to Brent an income of $104,293.28 for every year that his declared since is less than $100,000. I have found that Brent’s income will be determined in accordance with the income declared on his T1 general form filed with the Canada Revenue Agency. I find as follows: (a) In 2013, Brent’s income was $149,992 and Tracey’s income was $36,388; (b) In 2014 Brent’s total income was $20,702 while Tracey’s total income was $42,776; (c) In 2015, Brent’s total income was $43,255.87 while Tracey’s income was $50,649; and (d) In 2016, Brent’s income was $48,500 while Tracey’s income was $49,998.
[119] Pursuant to the 2011 agreements, the parties agreed to use the midrange amount of spousal support as determined by the Spousal Support Advisory Guidelines. Tracey has provided a DivorceMate calculation based on the parties 2013 income with Brent paying $2012 a month in table child support. The midrange of support is $2201 per month. That amount is the tax-deductible and taxable amount of spousal support. However, any variation of the spousal support for the year 2013 will not be tax-deductible or taxable by the parties.
[120] I find that there has been a material change in Brent circumstances that his income in 2013 was significantly higher than his income that was the base of spousal support in the 2011 amending agreement. However, the parties have not provided me with the net after cost difference in the support paid pursuant to the amending agreement and the sum of $2201 per month. I order that the parties calculate the difference owing by Brent for spousal support for 2013. Said amount is to be part of the calculation of table child support, postsecondary school expenses and spousal support from January 2013 to May 2017. If the parties cannot agree, they may contact the trial coordinator to schedule a date before me.
[121] Commencing in 2014, Brent’s income was lower than Tracey’s income. Consequently, I find that there would be no spousal support payable by Brent to Tracey effective January 1, 2014.
[122] In this decision, I have determined the quantum of spousal support but I have not terminated Tracey’s entitlement to spousal support. Consequently, in the event of a material change in circumstances, including an increase in Brent’s income, the issue of spousal support may be addressed at that time.
Lump Sum Spousal Support
[123] Tracey submits that pursuant s. 15.2(1) of the Divorce Act, the Court has jurisdiction to make an order for lump sum amount of spousal support. In support of such a submission, she relies on the following factors to be taken into consideration before determining whether a lump sum spousal support order is justified in the circumstances: (a) where difficulties in forcing periodic payments are anticipated; (b) the possibility that the payor’s livelihood is or will become precarious; (c) the availability of sufficient assets from which a lump sum could be paid; (d) where an order for periodic support would only serve to prolong the persistent conflict between the spouses and a clean break is desirable; (e) disparity in financial positions of the parties; (f) where the dependence poses in the process of retraining or upgrading with the ultimate goal of self-sufficiency; (g) to provide “nest egg’ for contingencies of life for the dependent spouse; (h) to provide for the dependence poses immediate needs; and (i) as compensation for loss career opportunities or to enhance the other spouse’s career potential and earning cap.
[124] I have considered the facts of this case and the principles set out by the Court of Appeal in Davis v. Crawford 2011 ONCA 294. I exercise my discretion to not order that Brent pay Tracey a lump sum amount of spousal support based on the following factors: (a) I have found that Brent did not orchestrate his termination from employment, that there was no voluntary reduction in his income and that he has taken reasonable efforts to obtain replacement employment considering his age, work experience, his inability to speak French and the availability of employment in the current work force; (b) prior to the termination of his employment, there was no evidence of any difficulties in the periodic payments being made; (c) while Brent suffered a reduction in his income, his livelihood is not and does not appear to be precarious; (d) I do not find that Brent has the resources to be able to make any lump sum payment; (e) I do not find that there is a need for a clean break; (f) based on the current incomes of the parties, I do not see a significant disparity in the financial positions of the parties; (g) Tracey is not in the process of retraining or upgrading her skills; (h) while it may be desirable for Tracey to have a nest egg for contingencies, that is not possible in these circumstances; (i) while it may be the Tracey’s needs requires immediate attention, the parties yearly incomes are very similar; and (j) while Tracey’s entitlement to spousal support is both compensatory and non-compensatory in nature, I have not terminated her right to support but simply varied the quantum subject to variation in the event of a material change in circumstances.
LIFE INSURANCE
[125] Pursuant to the Minutes of Settlement the child and spousal support were secured by life insurance obligations of $150,000 for child support and $150,000 for spousal support. Despite the terms of the Minutes of Settlement, Brent has designated Emily as a sole beneficiary of 3% of his life insurance policy in the amount of $300,000. His fiancée is the beneficiary of 97% of his $300,000 policy.
[126] Brent’s position is that there has been several material change in circumstances such as Amanda no longer being entitled to child support, there has been a significant change in Brent’s income resulting in a reduction in both child and spousal support. By April 30, 2017, Emily will no longer be entitled to child support. Based on these changes, Brent submits that the life insurance designations need to be varied.
[127] I have considered that the child support for Emily will terminate in May 2017. Further the Minutes of Settlement envisage a review of spousal support in January 2017. Brent suggests that the sum of $30,000 of life insurance should be designated as security for spousal support based on the upcoming review.
[128] Due to the delay in resolving the jurisdictional issue, Emily will no longer be entitled to support as of May 31, 2017. In the circumstances, there is no requirement for Brent to maintain life insurance to secure his table child support and section 7 obligations.
[129] With respect to spousal support, based on my decision there is no ongoing obligation to pay spousal support subject to material change in circumstances. I accept Brent’s position and order that Brent shall designate Tracey as the beneficiary of a policy of life insurance in the amount of $30,000.
COSTS
[130] If the parties are not able to resolve the issue of costs, Brent shall provide his cost submissions not to exceed two pages plus his Bill of Costs and any Offers to Settle by April 27, 2017. Tracey shall provide her cost submissions, not to exceed two pages plus a Bill of Costs and any Offers to Settle by May 12, 2017.
Shelston J. Released: April 12, 2017
COURT FILE NO.: FC-10-1358-4 DATE: 2017/04/12 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: TRACEY LYNN VERHEY Applicant – and – BRENT JAMES VERHEY Respondent REASONS FOR DECISION Shelston J. Released: April 12, 2017