Court File and Parties

COURT FILE NO.: FS-12-379563-0001 DATE: 20190306 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

YANG BEE BAE Applicant – and – EUN JOO LEE Respondent

Counsel: Self Represented (for the Applicant) Eva Chan for the Respondent

HEARD: October 9 and 10, 2018; written submissions October 12 and 18, 2018.

Kristjanson J.

Overview

[1] This is a trial on a motion to change child support and custody brought by the mother, Euon Joo Lee. The Applicant Father, Yang Gee Bae and the Respondent mother were married in 1996 and separated in 2012. The parties consented to a final order in November, 2015; the mother had custody of the daughter AB and the father had custody of the son, CD; no child support was payable. Seven weeks after the final order the father departed from Canada, leaving his son behind with the mother. The son has lived with the mother since January, 2016. The father has not paid any child support since then. AB is now 20 and studying at a local college. CD is now 15 and in Grade 10. The father has not worked since 2010, and claims no income except OSAP and undisclosed amounts of money received from friends and family. Although he has two university degrees, since 2010 the father has been pursuing further education. He is now 54 years of age, and pursuing his third degree, in veterinary science at a university in St. Kitts. This is not a “reasonable educational need,” and in the context of this case it does not justify his decision not to earn income to pay child support. I therefore impute income for child support purposes, and find the effective abandonment of the son in 2016 constitutes a material change in circumstance for child support claims.

A. Issues

[2] The issues in this case are:

(1) Has there been a material change in circumstances which warrants a variation of the final order of Justice Kiteley dated November 6, 2015 in respect of: (a) child support, including section 7 expenses; and/or (b) the father’s income for child support purposes? (2) Has there been a material change in circumstances regarding the father’s income? If so, what is the father’s income? Should income be imputed for the purposes of child support and section 7 expenses and if so, at what level? (3) Does the father owe retroactive and/or prospective table child support to the mother? (4) What is the mother’s income for the purposes of allocating section 7 expenses? (5) Does the father owe the mother for section 7 expenses since January 1, 2016? How should section 7 expenses be allocated? What should CD’s contribution be to her post-secondary education expenses? (6) Should the father be ordered to pay $9,450 ordered as retroactive support by Justice Kiteley in paragraph 10 of the final order, but stayed pursuant to the order?

PART II: BACKGROUND FACTS

[3] The family immigrated to Canada in 2007. The mother began working as a waitress, and the father worked as a security guard in 2009. After that, the mother continued to work while the father pursued post-secondary education in the sciences in 2010-2011, and 2011-2012. The parties separated in Toronto on May 1, 2011. Mr. Bae brought an application in July 2012 for custody, access, support, and divorce. This was settled by consent order in November, 2015.

1. Final Order of Justice Kiteley November, 2015

[4] On November 6, 2015, Justice Kiteley made a final order with the consent of the parties. Ms. Lee was granted sole custody of AB. Mr. Bae was granted sole custody of CD. Each parent was granted extensive access with the child not in their custody. Justice Kiteley ordered that there would be no ongoing child support payable by either party.

[5] The order indefinitely stayed retroactive child support arrears of $9,450 owed by Mr. Bae to Ms. Lee for AB for the period February 11, 2014 to November 1, 2015. The order based the arrears on Mr. Bae's imputed income of $50,000 per year for 2014 and 2015. However, paragraph 11 further ordered that, should Mr. Bae claim child support for CD in the future, the stay would be lifted and the entire amount of $9,450 would be immediately due and payable forthwith.

2. Events Following Final Order

[6] Although he was granted sole custody of CD by the consent order in November, 2015, within seven weeks Mr. Bae left Canada, effectively abandoning CD. Since then he has not resided in Canada and CD has resided solely with Ms. Lee. At the time, CD was 12 years old and in Grade 7, and AB was 17 years old and in Grade 12. The parties were divorced in December, 2015.

[7] In November or December 2015, Mr. Bae advised Ms. Lee that he had "urgent business" in the U.S. and would be leaving CD with her. I accept Ms. Lee’s evidence that she asked Mr. Bae for custody of CD, and she asked about paying money for the children.

[8] On December 30, 2015 Ms. Lee came home from work and discovered from CD that Mr. Bae had dropped off CD at a friend's house earlier that morning, with no notice, and that Mr. Bae had travelled to the U.S. Ms. Lee's text messages to Mr. Bae over the next year were largely ignored, and she had no knowledge of his plans or a return date.

[9] The mother brought this motion to change in April, 2017.

[10] CD continues to reside with Ms. Lee. In June, 2017 a further consent order gave Ms. Lee interim emergency decision making authority for medical decisions for CD.

[11] In March, 2018 the parties reached partial minutes of settlement. Justice Hood issued a consent final order based on the minutes of settlement. Ms. Lee has sole custody of CD. The order provides that there is no order for custody regarding AB as she was not a minor, and acknowledges that AB continues to reside with the mother while pursuing post-secondary education. Access is to be arranged in accordance with CD’s views and preferences.

PART III: LAW AND ARGUMENT

A. Material change in circumstances

1. Material Change – Child Support

[12] In determining whether there has been a material change in circumstances justifying a variation in child support, I must consider whether the change is material - one that “if known at the time, would likely have resulted in different terms,” and is a change with some degree of continuity, and not merely a temporary set of circumstances: L.M.P. v. L.S., 2011 SCC 64, at paras. 32 and 35; Gray v. Rizzi, 2016 ONCA 152 at para. 39.

[13] Whether or not there is a material change regarding child support is inextricably linked to the unexpected abandonment of CD to the mother, seven weeks after the court order awarding custody and primary residence to the father in November, 2015. Both parties were residing in Toronto. Seven weeks later, the father left Canada. He has not returned, and has not lived with CD since January 1, 2016. Both parties testified that Mr. Bae's decision to leave Toronto indefinitely and force a change of CD's primary residence had not been contemplated by them when they consented to the final order of Justice Kiteley dated November 6, 2015. From the timeline given by Mr. Bae at trial, he had applied to various educational institutes and only received his acceptance to a dentistry school in the U.S. after the final order was made.

[14] CD’s primary residence changed on January 1, 2016 when he began to reside permanently with the mother, despite the court order of November, 2015. This was a material change with respect to CD’s circumstances which could not have been reasonably contemplated by the judge making the original order, and constitutes a material change requiring variation of the child support order.

[15] The original order, which provided that no child support was payable by either party, was dependent entirely on each party having sole custody of one child and access with the other child.

[16] With Mr. Bae's departure to the U.S., Ms. Lee had custody of two children instead of just one, along with the related financial burdens.

[17] Section 17(4) of the Divorce Act provides that:

Before the court makes a variation order in respect of a child support order, the court shall satisfy itself that a change of circumstances as provided for in the applicable guidelines has occurred since the making of the child support order or the last variation order made in respect of that order.

[18] Section 14 of the Federal Child Support Guidelines provides that for the purposes of section 17(4) of the Divorce Act, the following circumstances give rise to varying a child support order:

(a) in the case where the amount of child support includes a determination made in accordance with the applicable table, any change in circumstances that would result in a different child support order or any provision thereof;

[19] I agree that there has been a material change in circumstances with respect to child support, being the change in custody since the final order, which affects the means, needs and circumstances of both children and parents. The order that no child support was payable was premised on each parent having custody of one child and encompassed a set-off of child support obligations. Since January 1, 2016, Ms. Lee has been the only parent financially responsible for the children.

[20] Paragraph 10 of the final order supports this interpretation, as it specifies that Mr. Bae owes retroactive child support for AB for the period of February 1, 2014 until November 1, 2015. That is, Mr. Bae owed support to Ms. Lee for the period when CD was still living 50/50 with each parent, but AB was living full-time with Ms. Lee. This part of the order was stayed, but it also reflects the set-off aspect of the final order; paragraph 11 provides that the stay of those arrears is to be lifted if Mr. Bae seeks child support for CD in the future.

[21] The original determination of child support arrears was made in accordance with the table based on an imputed income of $50,000. Having found a change in circumstances relating to child support, I find that child support should be varied. The next issue is whether the variation should be retroactive to January 1, 2016, when Ms. Lee assumed custody of CD.

B. Should the Child Support Variation be Retroactive to January 1, 2016?

[22] In D.B.S. v S.R.G., 2006 SCC 37 the Supreme Court set out four factors to consider when determining whether a retroactive child support order is appropriate in the circumstances of a given case (paras. 95, 101, 104, 111 and 105). These four factors are:

(1) Is there a reasonable excuse for why child support was not sought earlier? (2) Has there been any (blameworthy) conduct by the payor parent? (3) What are the circumstances of the child? (4) Will there be hardship occasioned by a retroactive award?

[23] I adopt Chapell, J.’s summary of principles governing variation of child support orders as set out in Templeton v. Nutall, 2018 ONSC 815, para. 45:

1. Child support is the right of the child that arises upon the child’s birth and exists independent of any statute or court order. It survives the breakdown of the parents’ relationship.
2. Child support should, as much as possible, provide children with the same standard of living they enjoyed when their parents were together. The amount of child support owed will vary based upon the income of the payor parent.
3. The provincial power to regulate child support matters in contexts not involving divorce remains unfettered. Accordingly, when retroactive child support is sought, the court must consider and apply the relevant provisions of the statutory scheme in which the application is brought.
4. The child support analysis must not lose sight of the fact that child support is the right of the child. Accordingly, the child should not be left to suffer if one or both parents fail to monitor child support payments vigilantly.
5. Ultimately, the goal in addressing child support issues is to ensure that children benefit from the support they are owed when they are owed it. Accordingly, any incentives for payor parents to be deficient in meeting their child support obligations should be eliminated.
6. The specific amounts of child support owed will vary based upon the income of the payor parent.

1. Notice Provided by Ms. Lee

[24] The Supreme Court of Canada stated in paragraph 134 of D.B.S.: "Once a court decides to make a retroactive award, it should generally make the award retroactive to the date when effective notice was given to the payor parent. But where the payor parent engaged in blameworthy conduct, the date when circumstances changed materially (that is, the date when the amount of child support should have increased) will be the presumptive start date of the award."

[25] Mr. Bae's own evidence at trial was that he knew that his children would need financial support from him after he left Toronto, but that he chose to deposit some amounts of money into the children's bank accounts rather than pay support to Ms. Lee directly. He conceded at trial that before he left Toronto on December 30, 2015, he had exchanged texts with Ms. Lee about child support. His excuse for almost three years of non-payment was that Ms. Lee did not provide him with her bank account numbers, and he had “no choice” but to give cash directly to the children. There is no contemporaneous documentary evidence that Mr. Bae asked for the bank account numbers. He did not mail her cheques or bank drafts. He did not volunteer to pay. He took no steps to determine or meet his child support obligations.

[26] I accept that it was reasonable for Ms. Lee to wait until November, 2017 to commence her motion to change the final order. Firstly, the parties had been in court for over three years, from July 2012 until November 2015. The parties had just consented to a final order on November 6, 2015 and Mr. Bae fundamentally changed those terms within 7 weeks. Secondly, the parties had begun talking about changing CD's custody and child support - but Mr. Bae left Toronto, and CD, without resolving these issues with Ms. Lee. Subsequently, Ms. Lee's texts to Mr. Bae went largely unanswered. He refused to disclose his plans or possible return date.

[27] "Effective notice" does not require the recipient to take any legal action. All that is required is that the topic be broached. A parent should not be penalized for treating judicial recourse as a last resort, especially in a case like this, where the father left the children without sharing his plans for how long he would be gone, ignored the mother's texts, and failed to pay child support. As stated by the Supreme Court in D.B.S. at para. 120:

Disputes surrounding retroactive child support will generally arise when informal attempts at determining the proper amount of support have failed. Yet, this does not mean that formal recourse to the judicial system should have been sought earlier. To the contrary, litigation can be costly and hostile, with the ultimate result being that fewer resources — both financial and emotional — are available to help the children when they need them most. If parents are to be encouraged to resolve child support matters efficiently, courts must ensure that parents are not penalized for treating judicial recourse as a last resort.

[28] The evidence of both parties is that Mr. Bae left Canada and moved to the United States shortly after the final order. Their discussions about custody and support occurred in November and December of 2015. Although Mr. Bae claims he did not leave Canada until January 2016, he has not disputed Ms. Lee's assertion that CD began residing with her full-time on December 30, 2015. The obligation to pay child support does not begin when Mr. Bae left the country, but rather on what date he effectively gave up custody of the child. Mr. Bae conceded that he had texted about child support with Ms. Lee before he left Toronto on December 30, 2015. The obligation to pay child support commences January 1, 2016.

2. Mr. Bae's Blameworthy Conduct

[29] Mr. Bae has not voluntarily paid child support to Ms. Lee. He knew or ought to have known that Ms. Lee and the children would struggle financially as a result of CD’s change of residence. As the Supreme Court held in D.B.S.:

(1) Blameworthy conduct is anything that privileges the payor’s own interests over his children’s right to an appropriate amount of support (para. 106); (2) Even where a payor parent does nothing active to avoid his obligations, he may still be acting in a blameworthy manner if he “consciously chooses to ignore them” (para. 107); (3) A payor parent who knowingly avoids or diminishes his support obligations to his children should not be allowed to profit from such conduct (para. 107); and (4) Whether a payor parent is engaging in blameworthy conduct is a subjective question, but objective indicators remain helpful in determining whether a payor parent is blameworthy.

[30] Mr. Bae's willingness to prioritize himself above his children's needs, and his stubborn refusal to consider Ms. Lee's financial difficulties as a result of his actions, do not constitute a reasonably held belief that he was meeting his support obligations. Ms. Lee's financial and parenting responsibilities doubled, while his own responsibilities disappeared entirely.

[31] Mr. Bae was not ignorant of the fact that he agreed to be imputed an income of $50,000 per year in the final order. After three years of litigation, Mr. Bae was certainly not ignorant of how child support is calculated based on a payor parent's income. It is unreasonable for him to argue that he was fulfilling his support obligations to the children by depositing a few hundred dollars in their accounts from time to time, instead of paying according to the Child Support Guidelines.

3. Circumstances of the Children

[32] The court should consider the present and past circumstances of the children. CD is a minor. Mr. Bae has had an obligation to support CD since he was granted custody in November, 2015. AB also meets the definition of a "child" for the purposes of child support for the entire period under consideration in this case, that is, retroactive to January 1, 2016. AB was in her last year of high school when Mr. Bae left Toronto. Additionally, AB was enrolled in a full-time program at Sheridan College when Ms. Lee brought her Motion to Change. Ms. Lee has done the best she can on a very limited income. The children will benefit from payment of child support. AB works part-time and has taken out OSAP loans to fund her post-secondary education; she is living at home while she studies.

4. Hardship to the Payor

[33] Mr. Bae is not in a position to claim that a retroactive award would cause him financial hardship. He appears to enjoy a comfortable lifestyle, though one focused entirely on his studies. He resided in his sister's home in Los Angeles for the first half of 2016 and was financially supported entirely by his sister. He flew back to Korea to visit his family for the latter half of 2016 and resided in his parents' home, where again he was financially supported entirely by his family. His evidence in court was that he was not working and was not in school during the entirety of 2016.

[34] August 2018, Mr. Bae took CD to Montreal and Quebec for 10 days for vacation. In contrast, the Mother and the children have lived a frugal life since December 2015.

[35] I take into account the father’s failure to comply with his disclosure obligations; the significant failures to provide basic income information, and what I have found to be misrepresentations about his finances, which means that I cannot rely on Mr. Bae’s statements of his finances. Ms. Bae has proposed a schedule for the payment of arrears. Mr. Bae may pay his arrears at the rate of $500.00 per month.

5. Start Date

[36] In this case, I find that the start date should be the date when the amount of child support should have increased – when Mr. Bae left CD in the care of his mother and left Canada. That is January 1, 2016; Ms. Lee had provided effective notice before this time, when she initiated child support discussions in December, 2016 when Mr. Bae announced he would be leaving Canada.

[37] Mr. Bae knew that child support is tied to residence. He also knew that the parties had agreed on set-off child support; since he would have custody/primary residence for CD, and Ms. Lee would have custody/primary residence for AB, the parties agreed to no child support. Unilaterally changing CD’s residence without addressing the attendant child support obligations was blameworthy conduct. I have considered issues of finality and certainty. In these circumstances, it is fair, just and appropriate that Mr. Bae’s child support obligations for both children be adjusted retroactively to January 1, 2016, and prospectively.

C. Mr. Bae’s Income for Child Support Purposes

[38] Mr. Bae’s income was imputed at a level of $50,000 for 2013 and 2014 for the purposes of the final order. The wife seeks this level or a higher level of imputed income. Mr. Bae seeks to have his income set at zero.

1. Mr. Bae’s Evidence Regarding His Income

[39] Mr. Bae’s Notices of Assessment show line 150 income of $60.00 in 2016 and $0 in 2017.

[40] In January, 2017 Mr. Bae commenced a program in Veterinary Science in St. Kitt’s. He expects to finish in December, 2010. His evidence of 2017 income and expenses is:

(a) Tuition 2017: $71,332.00 (b) Other expenses per financial statement: $20,556.00 (c) Total expenses: $91,888.10 (d) Income: OSAP: $9,405 (e) Discrepancy: -$82,438.10

[41] In 2018, Mr. Bae’s tuition was $70,727.87; his other expenses listed on his financial statement were $9,276.00; his OSAP loan was $9,450; the discrepancy between income and expenses is -$70, 553.87.

[42] Mr. Bae owes OSAP $96,453.20 as of June, 2018.

[43] A letter from Ross University School of Veterinary Medicine confirms that from January 2017 to July, 2018 Mr. Bae had paid USD $90,827 in tuition, or CAD $117,949.94. By the end of December, with additional tuition of USD $18,310, this would be CAD $141,725.30 in tuition for 2017-2018. His other living expenses on his financial statement are $29,832, for total expenses in these two years of $171,557. His income for the same period was $9,450 from OSAP each year, or $18,900, leaving an unexplained deficit of CAD $152,657.

[44] Mr. Bae’s explanation is that he borrows money from his family and friends.

[45] Mr. Bae’s evidence is that he has provided cash to the children, although the amounts were difficult to understand as his evidence kept changing, and he had no receipts. He testified he provided about $5,000 to CD and $1,000 to AB. He does not have documentary proof of this. He later testified that he estimated he had provided $13,000 to the children over two years, including two computers, clothes, and school supplies. His evidence is that he did not keep receipts for his purchases. Mr. Bae testified about an account he set up for CD from which CD had taken $1,700; however, Mr. Bae concedes that he also could remove money from the account and had done so on occasions when he was in a rush to get money.

[46] Mr. Bae has provided no reliable evidence of his income or means. Mr. Bae provided an RBC bank statement, and swore this was his only bank account. Mr. Bae’s OSAP funds are deposited into that account. There is nothing in the account which shows any expenditures for daily living: there is no evidence of funds used for food, rent, transportation, drug store supplies, or the normal costs of daily living. He states that his family provides him with money, and his family pays his tuition. He did not call any members of his family to provide evidence, and did not tender any documents showing the amounts of money and the terms upon which such money from family was provided to him.

[47] Mr. Bae’s evidence is that he does not have a credit card. When challenged on cross-examination about the purchase of plane tickets from St. Kitts to Toronto, he stated that his friend at school pays for the tickets, and Mr. Bae refunds his friend. He did not provide his friend’s name or proof of airline ticket purchase as requested. Mr. Bae states that his living expenses are paid on his friend’s account, and he pays both insurance and rent in cash. He states that he receives the cash from his sister in Los Angeles and his family in Korea. I draw an adverse inference against Mr. Bae for failing to call his sister, his unnamed friend, or members of his family who allegedly pay his tuition and provide him with money.

[48] Mr. Bae has failed to provide full and frank financial disclosure, as required by Rule 13(6) of the Family Law Rules, O. Reg. 114/99. He claims that his family supports him by paying his tuition directly to the school, but when Ms. Lee made a disclosure request for a tracing of these funds, and the Court ordered him to provide this tracing, Mr. Bae did not comply.

[49] I must evaluate the credibility and reliability of the parties. I do so by referring to facts proved independently of their testimony including documents, and considering whether the evidence is corroborated or contradicted by other evidence. I consider whether questions are answered in a frank and forthright fashion. I consider the motives of the witnesses, the internal consistency of their evidence, and assess overall probabilities and plausibility. In assessing the plausibility of a witness’ story, I must determine what is “in harmony with the preponderance of probabilities, what a practical and informed observer would readily recognize as reasonable in that place and in those conditions”: Faryna v. Chorny, [1952] 2 D.L.R. 354 (B.C.C.A.) at 356-357. I may believe none, part or all of the witness’ evidence, and may attach different weight to different parts of the witness’ evidence: R. v. D. R. Square, [1996] 2 SCR 291 at paragraph 93. Finally, I do not weigh the evidence in isolation, but evaluate credibility on the evidence as a whole.

[50] I find that Mr. Bae’s evidence on his income is not reliable, and he is not a credible witness.

[51] Mr. Bae claims that he has only an RBC bank account and no other bank accounts, nor any credit cards. He has sworn a financial statement to this effect, and gave that evidence. His RBC bank statements show no transaction activity for Mr. Bae's daily living expenses in Saint Kitts, such as food, clothing, transportation, or rent. He claims that he pays cash for everything. However, this claim lacks an air of reality when Mr. Bae's expenses were $20,556 for 2017 and $9,276 for 2018.

[52] Mr. Bae lacks credibility when he claims that his sister provided him with cash for veterinary school, and that he brought this cash to Saint Kitts rather than deposit it into a bank. He lacks credibility when he claims to pay cash to an unnamed "friend" who then uses his credit card to make purchases for Mr. Bae, including plane tickets. Mr. Bae has supposedly provided this friend with thousands of dollars in cash. Again, this lacks an air of reality. A far more likely and reasonable explanation for the lack of transaction history in his RBC statements is that Mr. Bae has a bank account in Saint Kitts, as well as one or more credit cards, and that he has decided to hide them from Ms. Lee and the Court.

[53] The existence of undisclosed accounts is supported by Mr. Bae's evidence at trial when questioned about certain deposits and withdrawals in his RBC account. He claims that he had transferred funds from his TD Bank account when asked about the following deposits: (a) $1,284.20 on January 6, 2017; (b) $1,057.84 on May 18, 2017; and (c) $1,242.00 on November 21, 2017. However, he had previously given evidence that his TD Bank account had been closed in 2016. His evidence is inconsistent, and he did not produce the transactions from his TD bank account that would have aligned with the deposits in the RBC account.

[54] When asked about five international remittances from his RBC account for $2,500 each, Mr. Bae claims that he transferred all of these funds to his unnamed friend, the one with the credit card. In total, he testified that he transferred $12,500.00 to this "friend". Considered objectively, on the balance this story is simply not credible.

[55] Mr. Bae claims he has given thousands of dollars directly to the children, rather than pay child support to Ms. Lee. However, he has only provided bank statements to substantiate a small percentage of his claimed amount. Moreover, he gave evidence at trial that he was fully capable of transferring money out of CD's account as long as he had CD's access card, or CD and his access card.

[56] Given that Mr. Bae had access to these funds, it is impossible to know the exact amount that CD himself withdrew for his own use, although Ms. Lee gave evidence that CD withdrew approximately $1,700 in total from his Youth Account between March 2016, the date Mr. Bae began depositing funds and telling CD to take the money, and January 2018, the date Ms. Lee discovered this was going on and told CD not to withdraw any more money.

[57] Moreover, these deposits to CD's account should not be credited to Mr. Bae as child support. It was the evidence of both parties that CD spent this money on recreational items, such as snacks, junk food, and video game consoles. CD is a child; it is not surprising he spent money on fun and gifts. However, if Mr. Bae had paid this money directly to Ms. Lee as he should have, it would have alleviated her burden with respect to groceries, rent, and other family expenses.

[58] From the testimony given at trial, it is clear that Mr. Bae has undisclosed funds that he has used since leaving Toronto in December 2015 to support his lifestyle. Mr. Bae quotes $4,000 USD as the cash he received in 2016 from his sister prior to starting school in Saint Kitts in January 2017. However, it is clear that he has spent more than $4,000 USD in the last two years, on his own evidence. The exact amounts he has spent are unknown. The exact source of this money is also unknown, though likely all or part of it comes from his family. He claims having spent a total of $3,000 in gifts of clothes, shoes, electronics, and allowance for each child in his four visits to Toronto since December 2015, and $13,000 in all.

[59] By contrast, Ms. Lee’s evidence was given in a straight forward manner; she answered questions directly; her evidence did not shift and was not shaken on cross-examination; it was consistent with the documents; it was plausible, internally consistent, and in harmony with what a practical and informed observer would recognize as reasonable in the circumstances. I find her to be a credible witness. Where Mr. Bae’s evidence conflicts with Ms. Lee’s, I accept Ms. Lee’s evidence.

2. Intentional Under-Employment and Reasonable Educational Need

[60] Mr. Bae relies on his pursuit of a veterinary degree as a “reasonable educational need” within the meaning of s. 19(1)(a) of the Child Support Guidelines which justifies his decision to not earn income.

[61] Subsections 19(1)(a), (d), and (f) of the CSG provide that a court may impute income to a spouse in circumstances where:

(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse; (d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines; and (f) the spouse has failed to provide income information when under a legal obligation to do so.

[62] The Court of Appeal has set out a three-part test for imputing income pursuant to section 19(1)(a) of the Child Support Guidelines. The test where a parent relies on a “reasonable educational need” as set out in Drygala v Pauli, [2002] 41868 (ON CA) at paras. 38-41 and refined in Lavie v. Lavie, 2018 ONCA 10 at para. 26 is as follows:

(1) Is a spouse intentionally under-employed or unemployed? There is no requirement of bad faith or intention to evade support obligations inherent in intentional underemployment. The reasons for underemployment are irrelevant. If a parent is earning less than she or he could be, he or she is intentionally underemployed. (2) If a spouse is intentionally under-employed or unemployed, is this required by virtue of his or her reasonable educational needs? (3) If a spouse's educational needs are not reasonable, what income is appropriately imputed to him or her in the circumstances?

[63] In Duffy v. Duffy, 2009 NLCA 48, para. 35, the court sets out the following principles regarding support for children under the Child Support Guidelines:

1. The fundamental obligation of a parent to support his or her children takes precedence over the parent’s own interests and choices.
2. A parent will not be permitted to knowingly avoid or diminish, and may not choose to ignore, his or her obligation to support his or her children.
3. A parent is required to act responsibly when making financial decisions that may affect the level of child support available from that parent.
4. Imputing income to a parent on the basis that the parent is “intentionally under-employed or unemployed” does not incorporate a requirement for proof of bad faith. “Intentionally” in this context clarifies that the provision does not apply to situations beyond the parent’s control.
5. The determination to impute income is discretionary, as the court considers appropriate in the circumstances.
6. Where a parent is intentionally under-employed or unemployed, the court may exercise its discretion not to impute income where that parent establishes the reasonableness of his or her decision.
7. A parent will not be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations or interests. Nor will it be acceptable for a parent to choose to work for future rewards to the detriment of the present needs of his or her children, unless the parent establishes the reasonableness of his or her course of action.
8. A parent must provide proper and full disclosure of financial information. Failure to do so may result in the court drawing an adverse inference and imputing income.

(a) Work and Educational History Prior to the Final Order in 2015

[64] At the time of the final order, Mr. Bae had been a student since 2010. Since January, 2010, his only employment had been as a security guard, in 2009-2010. He gave evidence that his poor English prevented him getting jobs.

[65] Mr. Bae had two post-secondary degrees prior to marriage: (a) a Bachelor of Arts in Political Science from Dankuk University (Seoul, South Korea); (b) a Masters in Business Administration in International Business from George Washington University (District of Columbia, U.S.). In South Korea, he had years of experience working in finance and investments including with Daewoo, a large international corporation. He then ran his own small business.

[66] Mr. Bae claims that he could not find a finance job in Canada because his spoken English was not very good, and that he lost his security guard job for the same reason. In 2010, Mr. Bae decided to pursue some type of medical degree.

[67] In his evidence and closing submissions, Mr. Bae states that his only income since 2010 has been as a security guard, in which he earned $3,609 in 2010.

[68] Mr. Bae then enrolled as a science major at: (a) the University of Western Ontario from May 2010 to April 2011; (b) Ryerson University from September 2011 to April 2012; and (c) University of Toronto (Toronto, ON) from 2012 to 2013. It is unknown where he studied between 2013 and 2015, although Mr. Bae gave evidence that he was a full-time student and not working as at the date of the final order, when he agreed to imputed income of $50,000.00.

(b) Work and Educational History Since the Final Order

[69] Mr. Bae was accepted to a dentistry school in the U.S. at the end of November 2015, just after the final order. He left Toronto to go to the U.S. school; he says he borrowed money from his sister. Ultimately, he did not attend. During 2016 he did not apparently work; his evidence is that he stayed with his sister in California for six months, and then with his family in South Korea.

[70] Mr. Bae then enrolled full-time at Ross University School of Veterinary Medicine in St. Kitt’s in January 2017. He testified that he will complete his degree in December 2020. Assuming he graduates, he would not be in a position to begin earning income until 2021. There is no evidence of what time would be required for licensure requirements for veterinarians, or of income expectations.

[71] In this case, I find that Mr. Bae's pursuit of the veterinary degree is completely unreasonable. He has been a full-time student since 2010 and has made no efforts to enter the job market or provide for his family. Following the 2015 final order, he embarked on studies that will take him to 2021 before he is in a position to earn income – a period of over five years. It is unreasonable to defer any support for five years while pursuing yet another degree. Mr. Bae claims that he is pursuing an advanced degree to be an "example" to his children, at an institution where he pays over $70,000 in tuition per year - yet has failed to provide the most basic child support to help his children with their own educational and living expenses.

[72] Mr. Bae has clearly demonstrated his failure to understand that the fundamental obligation to support children takes precedence over the parent’s own interests. He places his interests and choices first; he ignores his obligation to support his children; and he has not acted responsibly in his financial decisions as they affect child support. Mr. Bae is now 54 years old. At this stage in his life, he is unreasonably pursuing unrealistic additional education at the clear expense of the children. His intentional unemployment is not excused by reasonable educational need. His children need support now.

3. Imputing Income

[73] Having found that Mr. Bae is intentionally underemployed, and it is not for the purposes of a reasonable educational need, the question is what level of income should be imputed.

[74] The imputation of income in the final order is critical to this. At that time of the final order, Mr. Bae was a student, he was not earning income, and he had completed approximately 5 additional years of post-secondary education. Mr. Bae was represented by counsel. He consented to the imputation of income of $50,000 even though he was not working. He had no employment income at the date of the final order, and he remains a full-time student with no employment income today.

[75] When income is imputed in a final order: “this amount is presumed to be correct and the onus will be on the person whose income was imputed to establish why this time their representations about their income should be accepted by the court. This will be a difficult task when income was imputed because the first court concluded that the person should have been working. As set out in Trang, it will not be a material change in circumstances, absent new evidence, when the person is still not working when the motion to change is heard”: McDonald v. Profeiro, 2018 ONCJ 110 per Justice S.B. Sherr.

[76] In light of the unreasonable educational choice, I do not find that there has been a material change that would justify a departure from the prior level of imputed income of $50,000. The father has a lengthy history of pursuing his own education. When he left CD with Ms. Lee, thereby changing CD’s primary residence, he did not pay child support on a voluntary basis. Mr. Bae’s income disclosure has been grossly inadequate; I take this into account, and draw an adverse inference on the basis of the inadequate disclosure. I also take into account his lifestyle as evidence of financial resources available to him.

[77] Ms. Lee has a degree in ceramic arts from Hongik University (Seoul, South Korea). Upon coming to Canada, she almost immediately began working as a waitress, earning minimal income. The family was on Ontario Works in 2009. When her health prevented her from working and her Employment Insurance ended, she went back on Ontario Works. The amounts from Ontario Works was insufficient, so in February 2018 she began renting out one of two bedrooms in her apartment for $500 per month. This forced AB and Ms. Lee to share the living room while CD had the other bedroom. In contrast, Mr. Bae has made no sacrifices to provide for the needs of his children.

[78] Mr. Bae has no basis for varying downward the income imputed to him in the final order. His financial circumstances have not worsened since the final order; they have improved. He no longer has sole custody of a child and the accompanying expenses. As far as can be deduced, he spent 2016 in idleness. Since leaving Toronto, he has had a lifestyle and financial resources from diverted and undisclosed income, and/or substantial gifts from his family.

[79] Ms. Lee argues that the income imputed to Mr. Bae should increase, as follows: (a) $50,000 in 2016; (b) $82,438 in 2017; and (c) $70,554 in 2018 and onwards, in large part based on the funds provided by Mr. Bae’s family. It is clear that Mr. Bae has undisclosed support from his family. However, there is no evidence as to the basis of the money paid to him or on his behalf. For child support purposes, gifts are not included in the presumptive annual income under the Child Support Guidelines. There is no evidence of a family trust.

[80] In Bak v. Dobell, 86 O.R. (3d) 196 (C.A.), 2007 ONCA 304, the Court of Appeal held that courts may consider the circumstances surrounding a gift to determine whether it is appropriate to impute the gifts as income, setting out relevant factors at para. 75:

Those factors will include the regularity of the gifts; the duration of their receipt; whether the gifts were part of the family's income during cohabitation that entrenched a particular lifestyle; the circumstances of the gifts that earmark them as exceptional; whether the gifts do more than provide a basic standard of living; the income generated by the gifts in proportion to the payor's entire income; whether they are paid to support an adult child through a crisis or period of disability; whether the gifts are likely to continue; and the true purpose and nature of the gifts.

[81] Mr. Bae’s family is apparently paying for tuition and some undisclosed level of income while Mr. Bae completes his veterinary degree; there is no evidence as to the terms of family support, whether it will cease when he graduates, whether there is an intention to continue, or anything regarding the family gifts. Mr. Bae’s evidence is that his family is supporting him for the purposes of his academic studies. In the circumstances, I cannot rely on undisclosed family assistance apparently provided for Mr. Bae’s education and his living expenses while studying, to impute income for child support purposes. There is no evidence upon which I could impute the increased level of imputed income sought by Ms. Lee.

[82] I find that Mr. Bae's imputed income should remain at $50,000 per year commencing January 1, 2016.

4. Ms. Lee’s Income for Section 7 purposes

[83] After the final order, Ms. Lee was working as a waitress. Her Notices of Assessment show 2016 line 150 income of $16,139.00, and 2017 income of $13,435. She did not work for approximately 1.5 years due to a serious illness. Ms. Lee had thyroid surgery in May, 2017, and then was on Ontario Works, earning $821 per month. She commenced part-time work July 27, 2018, for 10-11 hours a week, at $212.12 bi-weekly. Ms. Lee’s estimated income in 2018 is $15,813.00.

[84] Mr. Bae argues that Ms. Lee has intentionally underreported her 2016-2017 income, claiming she brought in $3,800 per month from waitressing full time. He also asserts that she began renting a room out in 2012, not in 2018. Ms. Lee denies this.

[85] I do not accept Mr. Bae’s evidence; for the reasons noted above. I accept her evidence.

5. AB’s Circumstances and Post-Secondary Education

[86] As of January 1, 2016, AB was finishing high school and lived with her mother. She graduated high school in June, 2016.

[87] AB was enrolled in a full-time program at Sheridan College from September 2016 to April 2017. During the school year, AB lived at school in Oakville but returned home for all her school breaks and frequent weekends.

[88] From May 2017 to August 2018 AB lived at home and worked part-time to pay back her OSAP loan and save up for school. It was always AB's intention to return to full-time post-secondary education, and during this period she studied animation and practiced her drawing in order to gain admission into an animation program. The art AB produced in this period of self-study was used as her portfolio to apply to Seneca College's animation program; AB did not attend an arts high school. With her focus on school, Ms. Lee’s evidence is that AB did not have the financial resources during this time to become self-supporting. Ms. Lee also gave evidence that AB will be in school full-time as of January 2019, and will not be working part-time.

[89] As of the date of trial, AB is 20 years old and in her first year at Seneca College for Animation. She has student debt that she needs to repay.

[90] Post-secondary section 7 expenses of $27,869.00 for AB are comprised of:

(a) Sheridan tuition 2016-2017 - $9,403.00 (b) Sheridan residence: $7,300.00 (c) Seneca College tuition and books 2018-2019: $11,166.00.

[91] For the 2016-2017 year at Sheridan, AB received an OSAP loan of $7,689.45 of which $7,574.74 is owing.

[92] AB’s 2016 Notice of Assessment shows line 150 income from her part-time job of $3,815.00. Her 2017 Notice of Assessment shows income of $8,524.00. In 2018, her paystubs show gross income of $12,240.67.

[93] I must consider the amount of child support to be paid in accordance with s. 3(2) of the Federal Child Support Guidelines, whether the table amount or if I do not consider that appropriate, some other amount I consider appropriate “having regard to the condition, means, needs and other circumstances of the child and the financial ability of each spouse to contribute to the support of the child.”

[94] Mr. Bae is to pay retroactive child support under the Child Support Guidelines for AB to January 1, 2016, and continuing child support as she lives at home while studying at Sheridan. I find that AB has remained a child of the marriage within the meaning of the Divorce Act, and did not withdraw from parental control: Martin v Sansome, 2014 ONCA 14, paras. 93-95. She was enrolled full-time for the 2016-2017 academic year; in 2017-2018 AB lived at home, worked part-time to save money for school, and developed her animation portfolio; and is again enrolled full-time for the 2018-2019 academic year in an animation program and lives with Ms. Lee. I find he is to pay table support so long as AB lives at home and is a child of the marriage. During the 8-month period AB was in residence at Seneca with weekends and holidays at home, he is to pay the reduced amount of $250 per month.

[95] Mr. Bae is also to contribute to AB’s post-secondary education. Section 7 of the Child Support Guidelines sets out the special or extraordinary expenses which the court may include in a child support order. Section 7(2) states that the "guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child." I must also consider the means of the child pursuant to s. 3(2)(b) of the Guidelines.

[96] Ricchetti, J. in Roth v. Roth, 2010 ONSC 2532, at para. 16, set out principles applicable to post-secondary expenses as follows:

The following principles can be ascertained when dealing with post-secondary expenses of a child of the marriage:

a) Generally, post-secondary education is considered a necessary expense in the best interests of the children. Certainly, there was no argument to the contrary in this case. b) The reasonableness of the expense considers the means of the spouses or former spouses and the means of the child. c) Children have an obligation to make a reasonable contribution to their own post-secondary education or training. This does not mean that all of a child’s income should necessarily be applied to the costs of the child’s further education. The court should consider whether the child should be entitled to some personal benefit from the fruits of his or her labours. d) Grants, scholarships and bursaries are generally treated as a reduction of the education expense as they involve a net transfer of resources to the child without any obligation of repayment. e) A student loan is not a “benefit”, within the meaning of section 7(3) of the Guidelines that must be automatically taken into account in determining the amount to be ordered in respect of s. 7 expenses. A student loan may constitute, in whole or in part, a “contribution… from the child” to post-secondary education expenses within the meaning of section 7(2) of the Guidelines and thereby exclude or reduce the need for any parental contribution. This turns on the reasonableness of taking account of any such loans in the circumstances of the case. f) In determining the amount of an expense or the contribution thereto under section 7 of the Federal Child Support Guidelines, the guiding principle is that, once the court has determined the appropriate amount of contribution by the spouses or former spouses, the spouses or former spouses should share the expense in proportion to their respective incomes after deducting any contribution from the child, or other liable parent.

[97] I find it reasonable to require AB to contribute $1,000 in 2016, $2,000 in 2017, and $3,000 in 2018 based on her income, loans and means. There is no evidence of grants or bursaries, although AB did take out OSAP loans. Thus, of the $27,869 to October 31, 2018, Mr. Bae and Ms. Lee are responsible for $21,869, payable in proportion to income. This includes the tuition for the 2018-2019 school year.

[98] Given that at age 54, Mr. Bae is still receiving family support for his education and testified at length about the importance of education, I found his closing submission disheartening when he stated that “CD is 20 years old and is therefore a legal adult. Mr. Bae is not responsible for paying her Section 7 expenses.” In fact, I find that Mr. Bae has the legal obligation to contribute to CD’s post-secondary expenses. Mr. Bae is responsible for 80% and Ms. Lee for 20%. Mr. Bae owes Ms. Lee $17,495 for AB’s post-secondary expenses.

[99] Prospectively, AB's section 7 expenses should be paid from the following sources, in order: (1) from AB's grants or bursaries (i.e., any money, including OSAP grants, that does not need to be repaid); (2) $2,000 per year from AB, either from her income or student loans (i.e., the portion of OSAP that AB must repay); and (3) the remaining costs paid by the parties in proportion to their incomes for that calendar year.

[100] The table child support owed for the two children, with $250 per month for the eight months AB was in residence in 2016-2017, is $25,050:

(a) January to August 2016 – two children, $743/month =$5,944; (b) September, 2016 to April, 2017: one child $450 per month, one child $250/month =$5,600; (c) May, 2017- November, 2017 – 2 children/$743 per month = $5201; and (d) December, 2017 – October 31, 2018 – 2 children/$755 per month =$8305.

[101] On a prospective basis from November 1, 2018 forwards, Mr. Bae is to pay $755 per month in table child support for the two children, so long as they remain children of the marriage.

6. CD’s Circumstances

[102] At the time of the consent order CD was 12 years old and in Grade 7. CD is now 15 years old and attends Grade 10. He has required tutoring for math and English in the past, though he is not currently being tutored.

[103] CD’s section 7 expenses of $5,297 since January 2016 are:

(a) Summer camps 2016-2017: $845 (b) Tutoring 2016: $1,995.00 (c) Music Lessons: $700.00 (d) School Fees 2017: $435 (e) Cell phone April, 2017: $248.67 (f) Monthly cell phone bills: $56.50 per month (19 months, April 2017 – October 31, 2018): $1,073.50.

[104] These expenses are all reasonable section 7 expenses. Ms. Lee's evidence was that CD participated in sports and summer camps organized by their church to encourage healthy activities during the summer break. She paid for CD's drum lessons when he expressed interest in music for similar reasons, and because the parties had paid for AB to take private flute lessons when she was younger.

[105] When CD transitioned from junior high to high school, Ms. Lee paid the required school fees for Grade 9 Orientation, a school trip, and other costs. Additionally, she paid for several months of tutoring for math and written English, with the goal of improving his grades. All these expenses are reasonable and in CD's best interests.

[106] The evidence of the parties is that Mr. Bae had paid for the children's cell phones and accompanying monthly cell phone plans prior to his departure and possibly for a period of time after he left. The parties agree that he paid for CD's cell phone and monthly bill prior to 2017. In April 2017, Ms. Lee determined that CD needed a new cell phone and began paying the monthly bill herself. It is reasonable to expect Mr. Bae to contribute to this expense by paying his proportionate share to Ms. Lee.

[107] Mr. Bae has not voluntarily paid child support to Ms. Lee for CD since he left Canada. He owes table child support on his imputed income of $50,000 from January 1, 2016 to the present, included in the amount set out above. His proportion of section 7 expenses to October 31, 2018 is $4,237.00.

D. Claim for Stayed Child Support

[108] Ms. Lee advances a claim for $9,450.00. The November 2015 Order finally stayed child support arrears of $9,450 owed by Mr. Bae to Ms. Lee for the period February 11, 2014 to November 1, 2015. The order provided that the stay was to be lifted if Mr. Bae claimed child support for CD in the future. That condition has not been met. As a result, there is no basis to lift the stay. This claim is dismissed.

E. Costs

[109] Ms. Lee has been largely successful in her claim, and there is a presumption that she is entitled to costs. Ms. Lee is to provide costs submissions of no more than 3 pages, plus her Bill of Costs and Offers to Settle, by March 19. Mr. Bae is to provide responding costs submissions by April 2, together with his Offers to Settle.

PART IV: ORDER

[110] The Order in this matter is as follows, edited for the purposes of publication. The unedited version with the details of the children is provided to the parties separately:

1. The Applicant father shall continue be imputed an income of $50,000.00 per year commencing January 1, 2014 as originally imputed to him on consent in the final order of Madam Justice Kiteley on November 6, 2015, for the purposes of calculating his retroactive and prospective support obligations for table support and section 7 expenses for the two children of the marriage, CD and AB.
2. The Applicant father owes $25,050.00 to the Respondent mother as retroactive child support for CD and AB for the period of January 1, 2016 to October 31, 2018, based on his imputed income as set out in this Order.
3. The Applicant father owes to the Respondent mother $21,732.00 as his proportionate share of section 7 expenses for CD and AB for the period of January 1, 2016 to October 31, 2018, based on the Applicant father's imputed income as set out in this Order and the Respondent mother's income for the relevant tax years.
4. Commencing November 1, 2018 and on the first day of each month thereafter, the Applicant father shall pay $500.00 per month to the Respondent mother as payment on his existing arrears of child support and section 7 expenses. The Applicant father is entitled to make lump sum payments, as he is able, in addition to the $500.00 per month.
5. Commencing November 1, 2018 and on the first day of each month thereafter, the Applicant father shall pay $755 per month to the Respondent mother as Table child support for CD and AB based on his imputed income as set out in this Order.
6. The children's section 7 expenses shall include, but not be limited to: (a) Health, dental, or other medical expenses (e.g., prescription medicine); (b) Post-secondary education expenses; (c) Tutoring; and (d) Monthly cell phone and/or data plans.
7. Commencing November 1, 2018, the Applicant father shall pay 80% and the Respondent mother shall pay 20% of the children's section 7 expenses, except post-secondary education expenses, which are specifically addressed in the next paragraph. The Applicant father shall pay his 80% share of an expense within 30 days of the Respondent mother providing him with an invoice or receipt.
8. Commencing November 1, 2018, each child's post-secondary education expenses shall be paid in the following order: (a) First, from the child's grants or bursaries (i.e., any money, including OSAP grants, that does not need to be repaid); (b) Second, a total of $2,000 per year from the child, either from employment income or student loans (i.e., the portion of OSAP that needs to be repaid); (c) Lastly, the Applicant father shall pay 80% and the Respondent mother shall pay 20% of the child's remaining post-secondary education costs. The parties may pay the educational institution directly, with proof to be provided to the other party; and (d) For each child for which post-secondary section 7 expenses are claimed, the Respondent mother shall provide proof of the child’s line 150 income, OSAP loans and grants annually to the Applicant father by June 1.
9. Unless this Order is withdrawn from the Family Responsibility Office, it shall be enforced by the Director and the amounts owing under the Order shall be paid to the Director, who shall pay them to the person to whom they are owed.
10. This Order bears post-judgment interest at the rate of 3% per annum effective from the date of this Order. Where there is a default in payment, the payment in default shall bear interest only from the date of default.
11. For as long as child support and section 7 expenses are to be paid, the parties, on or before June 1st of each year, commencing 1 June 2019, shall exchange their updated income disclosure to the other party, including income tax returns and Notices of Assessment/Reassessment for the previous tax year, in accordance with section 24.1 of the Child Support Guidelines.
12. Costs are reserved pending the receipt of costs submissions.
13. The approval of the Order as to form and content by the Respondent is dispensed with.

Kristjanson J.

Released: March 6, 2019

COURT FILE NO.: FS-12-379563-001 DATE: 20190307 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

YANG GEE BAE Applicant – and – EUN JOO LEE Respondent

REASONS FOR JUDGMENT

Kristjanson J.

Released: March 6, 2019