Court File and Parties

KINGSTON COURT FILE NO.: 236/04 DATE: 20200226 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lyne Yeo, Applicant AND Richard Peter Hutcheson, Respondent

BEFORE: Mr. Justice Timothy Minnema

COUNSEL: Rachel Stephenson, for the Applicant E. Barbara Burford, for the Respondent

HEARD: November 25, 2019

Endorsement on Motion to Change (By Respondent)

MINNEMA, J.

[1] This is a Motion to Change (“MTC”) an order dated June 5, 2012, brought by the respondent Richard Hutcheson. The applicant Lyne Yeo has filed a Response to Motion to Change (“RTMTC”) seeking relief of her own. The summary of their positions and pleadings is that they want the court to determine the respondent’s past and ongoing child support and section 7 obligations. The main issue is whether and to what extent income should be imputed.

Background Facts

[2] The respondent is 53 years old. He graduated in 1989 with an Electrical Technician diploma at St. Lawrence College. At some point he began working at Invista (previously DuPont Canada), a nylon manufacturing plant in the City of Kingston.

[3] The parties married on September 28, 1996, separated on August 15, 2003, and entered into a Separation Agreement on October 21, 2003. They were divorced on January 7, 2004. They have three children: Zachary age 22, Kassidy age 20, and Nicholas age 17.

[4] Ms. Yeo started a court application in April of 2004 and in response Mr. Hutcheson filed a claim of his own. In September of that year both were formally withdrawn. The Separation Agreement was then filed with the clerk on October 20, 2004, allowing it to be enforced and varied as if it were an order of this court pursuant to section 35 of the Family Law Act, R.S.O. 1990, c.F.3 as amended (“FLA”).

[5] There have been two previous variation proceedings. The first was in 2005 which ended with separate consent orders, one dealing with table support, the other with custody and access. The second was brought in 2011 and concluded with the June 5, 2012 order made by me that the parties are seeking to vary here. It set the child support owing for the years 2010 and 2011, and set the 2012 and ongoing child support at $1,245 per month for three children based on an imputed income of $64,000. It also set the amount of section 7 expenses owing up until that date. I subsequently made a $5,000 cost order against the respondent on consent which remains outstanding.

[6] As a bit of context, the respondent brought the 2011 MTC after being terminated by Invista. By the time of the hearing his job had been reinstated. The imputed amount was therefore based on what he was expecting to earn at his previous level. According to the Statement of Arrears prepared by the Family Responsibility Office (“FRO”), when the adjustments for 2010 and 2011 were made in September of 2012, the respondent’s arrears jumped to about $13,000 which he began to slowly reduce.

Respondent’s Work and Income - 2015 and 2016

[7] The respondent indicates that he then lost his job with Invista a second time in August of 2015. At that point he was a Spinning Technician. He went through several levels of grievances but was not reinstated. His termination for cause appears to be related to damage to equipment. I am unable to determine from the documentation filed whether his employer viewed the damage as caused deliberately or by ineptitude. The termination letter from the employer said “[w]e have lost trust in your ability to meet our expectations.” The Record of Employment simply indicated “Reason for Termination is Violation of Guidelines.”

[8] Around that time FRO collected the balance of the support arrears by enforcement measures, such that as of October 1, 2015 they were completely paid off.

[9] The respondent indicates that even though he was terminated he began receiving Employment Insurance (“EI”) benefits. FRO garnished these until about July of 2016 when they ran out. With the monies collected being less than the ongoing obligation, support arrears began to accumulate. He indicated that, unable to find a job, he then went on social assistance. A letter from the Ontario Works Program confirms that the respondent started receiving benefits on July 29, 2016. The full amount of the support order therefore began to accumulate as arrears. The respondent withdrew a significant amount of savings from his RRSP in 2016.

[10] Consistent with this account, his Line 150 income for 2015 per his Notice of Assessment (“NOA”) and Income Tax Return (“ITR”) was $59,060, comprised of $53,296 from employment and $5,764 from EI. His Line 150 income per his NOA and ITR for 2016 was $51,078, comprised of $14,128 from EI, $27,450 from RRSP income, $4,591 from Social Assistance, and $4,909 “other income” (likely from vacation or holiday pay per a T4A slip).

Respondent’s Work and Income - 2017

[11] At some point in 2017 the respondent indicates that he started a general contracting business as a sole proprietor under the name “Windsor Construction”, although according to his 2017 Income Tax Return the business name was “Peter Hutcheson”. He claimed a gross income of $10,750 with his only expense being $565 in fuel. His Line 150 income per his NOA and ITR for 2017 was therefore $17,286 comprised of that net amount ($10,185) plus $7,101 from Social Assistance, as he continued to qualify.

Respondent’s Work and Income - 2018

[12] The respondent indicates that in 2018 he continued doing general contracting. He has not provided his full 2018 Income Tax Return, just the summary (first four pages). In particular, the Statement of Business or Professional Activities is missing. His Line 150 income per that partial ITR and his NOA was $12,305, which was comprised of $9,275 net business income ($9,800 gross) and $3,030 from Social Assistance. A letter from Ontario Works indicates that he stopped receiving social assistance the next year, on February 28, 2019, but he says that towards the end it was just medical and dental benefits.

FRO Action

[13] The statement from FRO shows that the amount of child support arrears in view of the above events accumulated to $41,588 by December 1, 2018. It took steps to suspend the respondent’s driver’s licence, and in response he brought two motions, one to file his Financial Statement without his 2017 Notice of Assessment and one for a Refraining Order. Both were granted. As a condition of the Refraining Order a tax refund of $10,534 received by FRO from the Canada Revenue Agency (as a result of the respondent’s late tax filings) was to be held until the end of this proceeding.

The ‘Pleadings’

[14] The MTC was issued on December 19, 2018 and served the next day. In it the respondent seeks to:

1. Terminate support for Kassidy effective July 1, 2017;
2. Set support for Zachary and Nicholas at $0.00 as of January 1, 2018 based on his annual income of $10,500; and
3. Set the outstanding child support owed at $9,373.78.

[15] The applicant was initially noted in default, but a motion to set that aside was granted, unopposed, with additional time given for her to file responding materials. Her RTMTC is dated February 12, 2019 and seeks first to have the MTC dismissed because the respondent has not paid the outstanding $5,000 costs order, or, in the alternative, to have income imputed to him along with orders that he:

1. Continue to pay table support for Kassidy and Nicholas (she also acknowledged Kassidy was residing with him);
2. Pay the full arrears of child support; and
3. Contribute to expenses for all three children both retroactively and ongoing.

Subsequent Litigation

[16] A case conference was scheduled for May 21, 2019 and adjourned by the respondent’s counsel on consent to August 13, 2019. On that date the applicant’s counsel appeared and adjourned the case conference “at the request of the respondent” to a date to be set by the Trial Coordinator, with the added endorsement “costs thrown away by the applicant to be addressed at the next appearance.” The respondent then brought a motion seeking to have that cost claim dismissed. Affidavits were exchanged from the respective law offices. The case conference was held on September 12, 2019 before Justice Swartz. She set this hearing date with a litigation schedule and made a consent disclosure order. The respondent’s motion seeking to dismiss the costs claim was itself dismissed, and that costs issue was adjourned to be addressed at this hearing. As it was not, the expectation appears to be it will be dealt with along with the overall costs.

Respondent’s Work and Income - 2019

[17] In his first affidavit filed after the case conference the respondent estimated he will have a gross income of $37,728 in 2019. He provided bank records and a copy of his Home Depot account, but nothing else, holding those out as all the evidence of his business activities. He made new assertions in his reply affidavit as follows:

My estimated gross income for 2019 is $37,00.00 (sic – read $37,000). However as seen in the Home Depot statement, I have spent to date this year $8,686.96., which would give me a net income of $28,313.04. I understand that as a self-employed business person, I can deduct my expenses from my gross income. The deductions from Home Deport are for materials. On my financial statement I claimed business expenses of $1,500.00 per month. I have not estimated any further expenses with respect to materials for the rest of the year, such as more materials, my gas, and car insurance, yet. I believe that will result in a further deduction of at least $2,500.00, which I believe is not unreasonable giving me deductions of $11,686.96. My net income is estimated at $25,353.04.

[18] Without corroborating documentation (see further below) there is nothing self-evident about the Home Deport statement and bank records. In his October 29, 2019 Financial Statement, the respondent said his employment income was $30,000 ($2,500 per month) less estimated business expenses of $18,000 ($1,500 per month) and that his personal expenses are an additional $27,564. Taken as a whole, this makes little sense.

Applicant’s Work and Income

[19] The applicant’s income is relevant to the section 7 claim. Her February 12, 2019 Financial Statement indicated that she has been unemployed “[f]or approximately 12 years” and that her income was $1,800 per month in Child Tax Benefits (“CTB”) and $1,969.42 per month in “OSAP funding including grants and loans.” She broke down that latter amount as $23,633 for the year in total comprised as $6,930 loan and $16,703 grants. The total income indicated was $45,233.04. She attached NOAs (but not ITRs) indicating Line 150 Incomes of $3,651 for 2015, $9,340 for 2016 and $2,708 for 2017.

[20] Her November 21, 2019 Financial Statement repeated that she had been unemployed for approximately 12 years and gave the same amount of $1,800 per month for CTB but showed reduced OSAP grants and loans of $1,165.85 per month without a breakdown. Although I do not see where her 2018 NOA has been filed, she referred in her Financial Statement to an income of $16,637.

[21] While prior to July of 2016 the Child Tax Benefits were not included in Line 150 income, the Universal Child Care Benefit (“UCCB”) was (although excluded for child support purposes per paragraph 3 of Schedule III of the Child Support Guidelines (Ontario), O.Reg. 391/97 (“CSG”)). Since July of 2016 the Canada Child Benefit (“CCB”) replaced both the CTB and UCCB and is not taxable; it is not included in Line 150 income. My understanding is that OSAP loans and grants are similarly not included in Line 150 income. While the Line 150 income for 2016 may have included the UCCB, it is not entirely clear without the applicant’s ITRs what the source of the $2,708 was in 2017 or the source of the $16,637 in 2018.

[22] In her affidavit dated November 7, 2019 the applicant said that the last time she worked was in approximately 2006 at Speedy Glass, and after that she was a stay-at-home parent and occasionally had a stay at home daycare. She had intended to return to work in 2016 but Kassidy became ill and required her care. The Applicant is currently a student. She started in pre-health sciences at St. Lawrence College in the fall of 2018. She is currently in a BScN (Bachelor of Nursing) program at Laurentian University/St. Lawrence College.

Means/Needs

[23] Means and needs are relevant to the reasonableness of section 7 expenses. In addition, the respondent has questioned the credibility of the applicant’s earning claims in light of his living situation/spending.

Respondent

[24] The respondent’s December 4, 2018 Financial Statement showed an income of $10,920, but expenses of $17,868. In his October 29, 2019 Financial Statement (noted in paragraph 18 above) he indicated that his business and personal expenses are $15,564 greater than his gross income. He did not explain how he survives.

[25] One oddity is his rent at $1,570, which he explains is subsidized by two subtenants paying him $650 per month each, which leaves him with a net rent of $650 when he adds in responsibility for all the utilities. Both his Financial Statements indicated that he has no assets other than two older vehicles and greater debts leaving him with a negative net worth. The applicant is skeptical of how the respondent, on what he claims to be earning, can afford to go on trips for Zachary’s volleyball competitions (see further below) and one in particular to Vancouver, and how he can afford to pay $300 per month on meals outside the home.

Applicant

[26] As noted, the applicant’s 2018 Financial Statement showed a total income of $45,233 (CCB and OSAP loans and grants) and expenses for her and the children of $61,472. Her November 21, 2019 Financial Statement showed a lesser total income (a reduction in OSAP) of $35,590 and greater expenses of $67,449. In both her Financial Statements her debts exceed her very modest assets, leaving her with a negative net worth; they did not show any real property. Her November 7, 2019 affidavit explained that she has had to rely on financial assistance from her family and added “for example, my parents pay my legal fees and bought my home for me.”

The Children

Nicholas (age 17)

[27] Nicholas resides primarily with the applicant. He will be done high school in June 2020 but will likely go back for another year to upgrade his marks (‘victory lap’) as he struggles with ADHD.

Kassidy (age 20)

[28] In his first affidavit that addressed the children dated December 19, 2018, the respondent claimed that as Kassidy was 18 and had not been in school since June of 2017 she was no longer entitled to support.

[29] In her RTMTC sworn February 12, 2019 the applicant said that Kassidy was enrolled in St. Lawrence College to commence in September 2019, and that she previously had significant health issues that inhibited her ability to be self-supporting. She conceded that Kassidy now resides with the respondent and that child support should reflect the current living arrangements.

[30] In his affidavit dated October 29, 2019, the respondent reiterated that Kassidy was done school in June of 2017 and was not in attendance again until September of 2019 when she enrolled in St. Lawrence College.

[31] In her affidavit of November 7, 2019, the applicant explained Kassidy’s health issues which have required several hospitalizations. She indicated that from the end of high school until the summer of 2018, Kassidy was a dependant and unable to work. In the summer of 2018, Kassidy began living with the respondent although the applicant said she still contributes to her expenses. She says Kassidy started St. Lawrence College in the pre-health sciences program in September of 2019 to try to qualify for the BScN program the next year, adding that Kassidy is unsure where she will reside for the winter term and is considering residence.

[32] The respondent in his reply affidavit dated November 14, 2019 agreed Kassidy became ill in 2017 and did not appear to dispute that she was unable to work.

Zachary (age 22)

[33] Zachary is living independently. He was finishing his undergrad degree at Queen’s University at the time of the hearing, expected to graduate in December of 2019, and had been accepted into a master’s program. He is an accomplished volleyball payer -- on the Canadian Volleyball team -- which requires extensive training and competition at the international level much of which is covered.

Positions

[34] The respondent argues that his table support should be calculated on his actual income going back to 2015. In the alternative he argues that if income is imputed to him, it should be calculated from 2017 forward based on minimum wage for 35 hours per week, which he says would only affect the years 2017 and 2018 as that amount ($25,480 per year) is close to his actual 2019 and current earnings. Indeed, his proposed draft order incorporates that imputation. He disputes section 7 arrears saying that they have not been proven and he was not consulted.

[35] The applicant feels that the respondent should pay half of all section 7 expenses, including post-secondary expenses with his share totalling $12,714 from October 15, 2015 to the date of the hearing. For table support, she is of the view that an income of $64,000 maximum or $40,000 minimum should be imputed to the respondent starting in 2017.

Law and Analysis – Imputation

[36] The applicant bases her imputation claim on intentional under-employment or unemployment (CSG section 19(1)(a)), a failure to provide income information (section 19(1)(f)), and an unreasonable deducting of expenses from income (section 19(1)(g)).

Law – Subsection 19(1)(a)

[37] Subsection 19(1)(a) of the CSGs reads as follows:

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

(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 of the marriage or any child or by the reasonable educational or health needs of the parent or spouse;

[38] This is a three-part test reflected by the subheadings below: see Drygala v. Pauli at paragraph 23. Good recent summaries of the factors to be considered and the steps in the analysis are set out in Tillmans v. Tillmans, 2014 ONSC 6773, Pey v. Pey, 2016 ONSC 1994, and Oyewole v. Adepoju, 2019 ONCJ 111.

Intentional Under-employment or Unemployment

[39] The first part of the test is establishing whether the spouse is intentionally under-employed or unemployed. As a general rule, a payor cannot avoid a support obligation by a self-imposed reduction of income (Drygala at paragraph 38). Choosing to earn less than one is capable of earning is intentional under-employment (Drygala at paragraph 28).

[40] The onus is on the spouse claiming imputation to establish an evidentiary foundation for intentional unemployment or under-employment (Berta v. Berta, 2015 ONCA 918 at paragraph 63). Once established, the burden shifts to the purported unemployed or under-employed spouse to establish that the decision was justified in a compelling way (Riel v. Holland (2003), 67 O.R. (3d) 417 (Ont. C.A.) at paragraph 23) and was reasonable, thoughtful, and highly practical (Pey v. Pey, at paragraphs 88 to 91).

Listed Exceptions: Needs of Any Child, Educational or Health Needs

[41] If there is a finding of intentional under-employment or unemployment, and if applicable, the under-employed or unemployed spouse has the burden of establishing that the decision was required by (1) the needs of any child of the marriage or any child, or by his or her reasonable (2) educational needs or (3) health needs.

Amount of Income Appropriately Imputed

[42] If there is unjustified intentional under-employment or unemployment, the last step is to determine what if any income is appropriately imputed in the circumstances. The onus is on the spouse claiming imputation to establish the evidentiary foundation for the amount sought to be imputed (see Berta above). There must be a rational basis underlying the selection of an amount (Drygala at paragraph 44). Drygala sets out considerations at paragraph 45:

45. When imputing income based on intentional under-employment or unemployment, a court must consider what is reasonable in the circumstances. The factors to be considered have been stated in a number of cases as age, education, experience, skills and health of the parent. … I accept those factors as appropriate and relevant considerations and would add such matters as the availability of job opportunities, the number of hours that could be worked in light of the parent's overall obligations including educational demands and the hourly rate that the parent could reasonably be expected to obtain.

[43] As noted in paragraph 46 of that decision as well as in Lawson v. Lawson (2006), 81 O.R. (3d) 321 (Ont. C.A.) at paragraph 38, the amount of imputed income can also be based on the payor’s previous earning history, applying an appropriate percentage.

Law – Subsections 19(1)(f) and (g)

[44] Subsections 19(1)(f) and (g) the CSGs read as follows:

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

(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; …

[45] Regarding subsection 19(1)(f), the burden is on the party alleging non-disclosure to make out a prima facie case, and once done the burden shifts to the alleged non-discloser to show he or she has made complete disclosure: Terry W. Hainsworth, Child Support Guidelines Service (Toronto: Thomson Reuters Canada Limited, 2017) at 5:10.07. The general approach following a finding that a payor has failed to provide the required information is summarized by Justice Douglas in Whalen-Bryne v. Bryne, 2016 ONSC 1172 at paragraph 55:

55. Ultimately my objective is to find a fair and reasonable figure that is consistent with a preponderance of the evidence and responsive to the Applicant's legitimate concerns regarding the Respondent's failure to comply with his disclosure obligations. The objective should not be to punish the Respondent by imputing to him an income so high that it can be viewed as out of step with the evidence. While an adverse inference can and will be drawn where a party fails to comply with court-ordered disclosure obligations, the inference should still be rooted in the evidence and such extrapolations as can be reasonably inferred from material non-disclosure. [1]

[46] Regarding subsection 19(1)(g), when expenses are deducted unreasonably from income by a self-employed individual, they are generally added back in. While the analysis starts with section 16 and Line 150, the test is whether the annual income fairly reflects the payor’s income for child support purposes and whether there is evidence the deduction is unreasonable (i.e. not incurred to produce income). As to the onus, as noted by Justice Sheard in Alsaid-Ahmad v. Jibrini, 2019 ONSC 4012 at paragraph 65 (citations omitted):

65. A self-employed parent who seeks to reduce his or her gross income by deducting business expenses has the onus to show that those expenses are reasonable. That parent must also present evidence to justify the expenses claimed. The reasonableness of the expense deduction is not solely governed by whether the deduction has been permitted by the CRA.

Analysis: Is it Appropriate to Impute Income to the Respondent Under Subsections 19(1)(a), (f), and/or (g)?

[47] It is not clear on the evidence whether the respondent lost his job at Invista in 2015 because of an intentional act in the workplace or a lack of ability or suitability for the job. In my view the applicant has failed to establish that the cessation of employment at that time was intentional as opposed to “unintentional”: Katarzynski v. Katarzynski, 2012 ONCJ 294 at paragraph 117. Incompetence is not a voluntary act: Dewan v. Dewan, 2012 ONSC 363.

[48] Once that termination occurred, the respondent was a 49-year-old [2] unemployed factory worker whose highest education was a 26-year-old Electrical Technician college diploma. He obviously had some important life choices to make, not the least of which was how to continue to financially support his children.

[49] There is no indication that he had a plan. He went on EI, but there is no evidence that he utilized re-training or re-education during that period. He says he looked for work and did odd jobs, but there is no evidence. He indicates that “unable to find a job” he went on social assistance. Most healthy people can find some job; there is no evidence of what he was looking for or why he was unsuccessful. Although he does not say exactly when, it appears that he started his contracting business early in 2017, as he made more from it that year than the whole of the following year.

[50] There is a lack of evidence with respect to the respondent’s business. There is no indication what skills he has, or has obtained, other than the dated college diploma. There is no evidence of the nature of his contracting work or how busy he is. He wants to suggest a 35 hour week for imputation purposes, yet a self-employed contractor usually has deadlines and control over his or her own schedule. Contracting is not a 7 hour per day, five days a week, weekends off job, unless the respondent decides it is.

[51] His evidence of how he has organized his business borders on the ridiculous. The different types of contracts for construction work can obviously be many and varied. A contract could include materials, or the customer could be billed for them separately. Labour and profit could be based on a set price or an hourly rate. The respondent does not explain his operation. Rather, he unabashedly asserts that there are no written contracts – “[a]ll contracts are verbal in nature” -- and that he is the “first to admit” that he does not keep good records. He provided rounded estimated numbers for expenses without documentation (see paragraph 17 above). He did not explain how in 2016 and 2017 his gross income was about $10,000 with essentially no deductions, but in 2018 when his gross income rose to $37,000, suddenly he had deductions and was buying materials for his customers.

[52] If the respondent chooses to do business in the way business is generally not done – without written quotes, contracts, and invoices – he cannot expect the court in the face of inconsistencies to simply accept his word on minimal income when to do so is clearly to his advantage. His business approach limits proper scrutiny, perhaps by design. It deflects from and impedes attempts to apply common sense to the question of his reasonable income. In fairness, he was not expecting the court to accept his asserted earnings. His proposed draft order concedes some imputation. However, he would like that to be at the lowest level possible (minimum wage) on white collar hours. I will return to the amount to be imputed below.

[53] In my view the respondent is intentionally underemployed and has been since 2017. He could have worked, if not as a contractor then as a contractor’s helper at minimum wage, and still made more than double what he says he earned in 2017 and 2018. In addition, he has failed to provide a comprehensible account of his income information when under a legal obligation to do so, and he has not met his onus of presenting sufficient evidence to justify the expenses he is asserting, or their reasonableness.

Analysis: Was and/or Is the Respondent’s Under-Employment Required by Child Care, Education, or Health?

[54] Turning to the second part of the under-employment analysis from Drygala regarding subsection 19(1)(a), there is no suggestion that the intentional under-employment was required by virtue of the respondent’s further education. He has no child care needs. His health was not raised as an issue.

Analysis: What Income Should Properly Be Imputed to the Respondent?

[55] Given my finding of unjustified intentional under-employment, lack of disclosure, and unreasonable deducting of expenses, the last question is what income should be appropriately imputed to the respondent in all the circumstances. There is no dispute about the test which is noted above and stated in full at paragraph 44 of Drygala:

44. Section 19 of the Guidelines is not an invitation to the court to arbitrarily select an amount as imputed income. There must be a rational basis underlying the selection of any such figure. The amount selected as an exercise of the court's discretion must be grounded in the evidence.

[56] The applicant seeks to have income imputed to the respondent at $64,000 per year based on what he earned at Invista. I see no rational connection between that job and what he is now able to earn. She has not provided evidence of large employers in this area offering similar well-paid factory-type employment. Her back-up argument is $40,000 per year. While she tried to rationalize that number based on the bank and Home Depot statements, much of that was speculation and hard to follow.

[57] Although I have no evidence as to what an average general contractor earns, the respondent has put forward minimum wage as a measure. At a more realistic 40 hour a week once his business got going, that would result in a yearly income of $29,120. I am also mindful that his disclosed gross income went from $9,800 in 2018 with minimal expenses to $37,728 in 2019 with a suddenly disproportionate unexplained increase in alleged but unproved expenses. The income to expenses ratio (by my calculation) went from 5.3% in 2017 (alleged gross income of $10,750 with $565 in expenses) to 5.4% in 2018 (alleged gross income of $9,800 with $525 in expenses) to 32.8% in 2019 (alleged gross income of $37,728 with $12,375 in expenses). Other than some notations he made on his bank and Home Depot statements, there is nothing establishing that the $12,375 reflects actual business expenses. There is no explanation of the purported complete change in his business approach. With the same expense ratio for 2017 and 2018 applied to his 2019 gross income, the respondent would have earned just over $35,000. I would also note that by the end of 2019 most of the needed networking, tools, and infrastructure to operate his business were presumably in place (although undisclosed in his Financial Statement) and he would have had three years’ experience as a general contractor.

[58] Once the party seeking the imputation of income presents the evidentiary basis suggesting a prima facie case, which the applicant has done here, the onus shifts to the individual seeking to defend the income position they are taking: see Oyewole at paragraph 36. The reason, per Lo v. Lo, 2011 ONSC 7663 at paragraph 57, is that,

[t]he information which can be used or obtained to properly determine the income of that person is in his or her hands and no one else’s. To expect the person seeking imputation of income to bear the entire onus of proving imputation of income would thrust an unfair burden of proof on him or her as they do not have in their possession the information necessary to satisfy that onus; only the putative support payor does.

[59] The respondent is unable to explain his income position because he has chosen to operate essentially under the radar, without receipts, invoices, and records of payment. Given that the respondent’s Line 150 incomes for 2015 and 2016 would eclipse the income I would have imputed for those years, imputation calculations will therefore start in 2017 going forward. I appreciate that a business needs time to grow, although again there is no evidence of a business plan and the respondent had a full year of EI benefits to put something in place. I would impute income to him in a staggered manner: $25,480 for 2017 (minimum wage at 35 hours per week, namely his position), $29,120 for 2018 (the same wage at 40 hours a week as he had time to grow his income), and $35,000 for 2019 and currently (his actual gross income less some modest expenses following the previous business model’s income/expense ratio). I would have also arrived at the $35,000 a year number a different way. The respondent would have been expected by now to be able to increase his pay rate at least incrementally to net something beyond minimum wage.

Variation of Child Support

The Law

[60] This case concerns requests to vary a previous child support order made under Part III of the FLA. Section 37 applies. Per subsection 37(2.1), before the court can make a variation order it must be satisfied that there has been a change in circumstances within the meaning of the CSGs, or that evidence not available at the previous hearing has become available. The criteria for a change in circumstances are set out at section 14 of the CSGs. Once that test has been met, the court may make orders dealing with the ongoing support and the arrears provided that it is done in accordance with the CSGs (subsections 37(2.1) and (2.2) of the FLA).

Change in Circumstances

[61] The applicant quite properly concedes a change in circumstances. Although she incorrectly refers to the Divorce Act, the test in both the federal and provincial guidelines is the same.

Analysis - Table Support

[62] Once the incomes of the parties have been determined and the residence of each entitled child has been decided, the findings related to child support are often more or less a mathematical or accounting exercise as intended by the CSGs. I find, on an uncontested basis, that for the relevant periods in this case the respondent has had a continuing obligation to pay child support to the applicant for Nicholas. The applicant conceded that table support should end for Zachary as of July 2017, and that was not disputed. There is, however, an added wrinkle here regarding Kassidy’s entitlement.

[63] At the time of the Separation Agreement (October 21, 2003) a parent’s obligation to support his or her child was set out in section 31(1) of the FLA. Paragraph 11(c) of the agreement essentially incorporated that wording with some slight variations:

11. (c) Child support shall be payable until one of the following occurs:

i. The child reaches the age of 18 and is no longer enrolled in a substantially full-time program of education;

ii. The child marries;

iii. The child dies; or

iv. The child ceases to live with the wife, providing that a child shall still be considered to be residing with a party if the child is away for the purposes of attending school or to complete a recreational or educational program away from home.

[64] The difficulty with section 31, as it was then, was that it was different than section 2(1) of the Divorce Act which had a more expansive definition of a “child of the marriage” that included adult children who “by reason of illness, disability or other cause” were unable to withdraw from their parents’ charge or to obtain the necessities of life. That Divorce Act definition existed at the time the parties drafted their Separation Agreement and, although they were married, they chose to use the FLA wording.

[65] There is no dispute and I find that Kassidy was ill and unable to work after high school (following June of 2017) and she continued living with and was dependant on the applicant until the summer of 2018, at which time she began residing with the respondent.

[66] Perhaps given the obvious Charter difficulties (equality rights) arising from the different treatment for adult children falling under the provincial legislation as opposed to the federal legislation, and perhaps in response to the Courts who for that reason ‘read in’ the Divorce Act test (for example see Coates v. Watson, 2017 ONCJ 454), section 31 was subsequently amended [3] to essentially bring it in line with the Divorce Act wording.

[67] The MTC and RTMTC were issued after the amendment. As noted, the parties have simply taken opposing positions with respect to Kassidy without specifically addressing the above legislative and contractual context. The respondent seeks to apply the wording of the Separation Agreement and end his support obligation as of June 2017. There are reasons why he might have expected it to govern:

(a) Section 54 of the FLA provides that the parties may enter into a Separation Agreement determining their rights and obligations with respect to child support.

(b) The FLA also provides at subsection 2(10) that a domestic contract dealing with a matter also dealt with in the Act prevails unless the Act provides otherwise. The parties intended, per paragraph 6 of the Separation Agreement, that it would indeed prevail.

(c) While the court may disregard a provision in a domestic contract that is unreasonable having regard to the CSGs (FLA section 56(1.1)) and must on a variation application follow the CSGs (section 37(2.2)), the guidelines address the amount of support. The FLA, including its provisions relating to domestic contracts, addresses entitlement.

(d) Filing of the Separation Agreement under section 35 of the FLA does not turn it into a court order in all circumstances, regardless of its terms. It simply provides a summary procedure for enforcement and variation of that agreement (Jasen v. Karassik, 2009 ONCA 245, leave to appeal refused [2009] S.C.C.A. No. 205).

[68] The applicant on the other hand expected the law in the FLA as it currently reads to be applied. Indeed, there would be an obvious unfairness if she had to shoulder the sole financial responsibility for Kassidy from July of 2017 to August of 2018. Although she did not set me on them, there are several legal paths leading me to the equitable finding of continuous shared responsibility she seeks.

[69] No mention was made -- in the court order, in the pleadings, or in argument -- of the impact the previous variation proceedings had on paragraph 11(c) of the Separation Agreement. However, first and foremost, this is a variation request relating to a previous court order. As T.W. Hainsworth noted in the Ontario Family Law Act Manual, Second Edition (Toronto: 2017 Thomson Reuters Canada Limited (Loose-leaf)) at 35SS1.05:

If the agreement is, in fact, varied by the court in which it is filed, an actual variation order under s. 37 will have been made. Thus, the order would, it is submitted, stand alone as an order of the court (and not merely as a varied provision of a contract). This, it is submitted, is implicit in s. 35(1). An agreement may not be filed without the affidavit of the party deposing that the agreement has not been varied by the court.

In other words, as the change being sought is to an order that did not incorporate paragraph 11(c), section 31 applies regarding the support obligation.

[70] In addition, the Separation Agreement itself, if it were operative, also provides at paragraph 18(c) that upon a material change in circumstances either party may apply for a variation of the “liability to pay”. Entitlement provisions may also be varied.

[71] Lastly, if the Separation Agreement still governed, the remedial subsection 33(4) would apply to a domestic contract filed with the court (see subsection 35(3)). It reads as follows:

33. (4) The court may set aside a provision for support or a waiver of the right to support in a domestic contract and may determine and order support in an application under subsection (1) although the contract contains an express provision excluding the application of this section,

(a) if the provision for support or the waiver of the right to support results in unconscionable circumstances;

(b) if the provision for support is in favour of or the waiver is by or on behalf of a dependant who qualifies for an allowance for support out of public money; or

(c) if there is default in the payment of support under the contract at the time the application is made.

Although only one is required, all three of the subsections have been met here. The provision that purports to end the support for Kassidy when she was unable by reason of illness to withdraw from the charge of her parents is unconscionable. Kassidy was an adult unable to work because of illness and would have ‘qualified’ for support out of public money, regardless of whether or not that was pursued. Lastly, the applicant was in default of paying support under the contract.

[72] In summary, I find that the respondent’s obligation to pay child support for Kassidy ended as of July 31, 2018 when she moved to his home, and not on July 1, 2017 when she completed high-school. The obligation of the parents to contribute to her support continued throughout.

Summary – Child Support

[73] Corcios v. Burgos, 2011 ONSC 3326 sets out the applicable law where a support payor is seeking past adjustments to his or her support obligation. There is nothing in the factors listed in paragraph 55 that deflects from a straight forward calculation here based on income and entitlement. In summary of the above findings, I would therefore set out the amount of child support owing as follows:

Year	Respondent’s Income	Monthly Child Support Payable per the Guidelines	Child Support Owed	Payments Made	Yearly Totals Owing
2016	$51,078	$979 (3 children)	$11,748	$5,772	$5,979
2017	$25,480	$525 x 7 months (3 children) = $3,675 $382 x 5 months (2 children) = $1,910	$5,585	$0	$5,585
2018	$29,120	$446 x 7 months (2 children) = $3,122 $248 x 5 months (1 child) = $1,240	$4,362	$0	$4,362
2019	$35,000	$304	$3,648	$0	$3,648
Total					$19,574

[74] For clarity, the arrears currently being enforced by FRO are rescinded and the respondent shall pay $19,574 to the respondent for retroactive child support as of December 31, 2019. The respondent shall pay ongoing child support of $304 per month commencing January 1, 2020 for one child based on an imputed income of $35,000 per year.

Section 7 Expenses

[75] As a quick summary of section 7, the court may order spouses to provide an amount to cover all or any portion of the listed expenses if they meet the two-part test of being both reasonable and necessary. The guiding principle is that the amount of the expense is to be shared by the spouses in proportion to their respective incomes after deducting any contribution from the child. Actual and eligible subsidies, benefits, or income tax deduction or credits relating to the expense must be taken into account. As a bit of context, the Separation Agreement indicates as follows:

12. SPECIAL AND EXTRAORDINARY EXPENSES

a. The parties acknowledge that the children may incur special or extraordinary expenses as defined by the Child Support Guidelines, including, but not limited to:

i. Childcare

ii. Medical or dental expenses not covered by a plan of insurance;

iii. Tuition, or tutoring;

iv. Counselling or therapy.

b. The parties agree to consult one another before incurring a special or extraordinary expense on a child’s behalf. If they cannot agree on whether to incur an expense, or on the cost of such expense, either party is free to commence an application in a court of competent jurisdiction to determine the issue.

c. The parties shall pay for any agreed upon expenses equally, with each paying 50% of the cost.

15. POST-SECONDARY SCHOOL EDUCATION

The parties shall share in the cost of post-secondary school education for the children in proportion to their incomes at the time the expense arises, after deducting any money available directly to the child, including, but not limited to grants, loans, bursaries, scholarships, inheritances, or money earned by the child.

[76] Both parties refer to the agreement to support their arguments, so it is important to identify its role. As already noted, this proceeding seeks a variation of a previous order that did not incorporate or preserve the above provisions. The legislative or regulatory (ie. CSGs) tests apply. Further, FLA subsection 37(2.2) makes it clear that a variation order “shall” be made in accordance with the CSGs, and subsections 37(2.3) and (2.4) limit the court’s ability to deviate from them. The Separation Agreement may, however, be relevant to the exercise of the court’s discretion.

[77] In her factum the applicant states and I agree that she “could be asking for proportionate sharing of the children’s section 7 expenses but she is only seeking a 50/50 contribution from the Respondent to the expenses she has incurred.” The respondent has not contested that split; indeed, it is more advantageous to him than a proportional sharing. Although he says the amounts for Kassidy’s cheerleading are high, he has not disputed that the expenses are in the children’s best interests and necessary. Rather he cites two reasons why he feels he should not have to pay: he maintains that the expenses have not been proven, and he asserts that he was to be consulted before they were incurred and has no obligation otherwise. There is also the question of whether they were reasonable given the means of the parties.

Proof of Expenses

[78] The gold standard for proof of section 7 expenses generally is actual receipts. Despite knowing that this issue was being addressed in court -- indeed she was the one who raised it -- the applicant has not done a thorough job in providing evidence for all her claims. As noted by Justice Sherr in C.L.B. v. A.J.N., 2015 ONCJ 404 at paragraph 102(b), the claiming party has an obligation to provide supporting documentation in an organized and comprehensible manner.

[79] For Zachary, the applicant says that she paid $12,710 to Queen’s University in September of 2015, but there is no receipt. She says that she paid him $8,428 “by cheque or e-transfer” for living expenses. While she itemizes specific amounts for each year, there are no corroborating cheques or e-transfers in evidence. She says that she pays $50 per month ($600 per year) for his car insurance but has not produced a receipt or policy. She has provided receipts for Zachary’s wisdom teeth extraction ($1,957), dental work ($417), knee support apparatus ($425), crutches ($40), and spinal orthosis ($831). The documented amounts therefore total $3,670. The remainder is $21,138, plus $600 a year in car insurance presumably for more than one year. The applicant indicates that she paid in total of $12,428 and is seeking half of that from the respondent. It is not clear how she arrived at that number.

[80] For Kassidy, the applicant says that when the child was ill, she paid $45 for an ambulance, and $3,300 in 2016 and 2017 for fuel, hotel, and parking for out-of-town medical appointments. There are no receipts. She provided an orthodontics receipt for $4,982, but it was from 2012 and she was not pursuing it. She provided receipts for an orthodontic adjustment ($80), and for competitive cheerleading for 2014 and 2015 totalling $7,392. She indicated that she paid $1,045 for post-secondary school and pays $60 and $50 per month respectively for Kassidy’s cell phone and car insurance, all without receipts/policies/plans. The documented amounts total $7,472 (not including the 2012 orthodontics) and the undocumented amounts total $4,440 plus $720 and $600 per year for the cell phone and car insurance for an unknown number of years. The applicant calculates that she paid “at least” $8,000 from 2015 forward and seeks half of that from the respondent.

[81] For Nicholas, the applicant cited $150 for soccer and $565 for driver’s education, with no receipts. She also cited $4,014 for orthodontics and provided as evidence what appears to be a treatment plan, although the respondent in his factum acknowledges having received receipts. She indicates that she paid “at least” $5,000 in total for him and seeks half from the respondent. Oddly, the above totals if accepted are not quite that high ($4,729).

[82] As noted in Delichte v. Rogers (2013), 2013 MBCA 106, 37 R.F.L. (7th) 81 (Man. C.A.) at paragraph 29:

29. When the actual amount of the expense is difficult to ascertain, the expenses may be estimated; however, there must be some evidence to support the estimation of the expenses, otherwise the court cannot determine whether the requesting spouse is able to reasonably cover a totally unknown expense.

[83] There is some evidence to support all the amounts -- being the applicant’s statements in her affidavit -- although certain non-receipted claims are more tenuous than others. For example, in the less tenuous category, the respondent is not denying that Kassidy has a cell phone or that the children drive; he should know. In the more tenuous category are claims for things like living expenses and hotels; it is difficult to accept these without itemization and scrutiny.

[84] As the respondent points out, there is no evidence of who benefitted from the available tax deductions for the educational expenses, and there is a lack of information about Zachary’s own contribution to his post-secondary education expenses. Indeed, the applicant has not done a budget that would factor in bursaries, grants, etc., and Zachary’s earnings. Both Zachary and Kassidy have had use of a sizeable RESP and have had some OSAP assistance.

Prior Consultation

[85] The respondent suggests that it was understood between the parties, as reflected in the Separation Agreement, that he would not have to pay for any expenses unless he agreed to them in advance. I do not read it that way. While there was a requirement to consult, his refusing to pay support voluntarily made consultation redundant. The applicant needed to be able to meet the children’s needs.

[86] The applicant in turn refers to the Separation Agreement to maintain that there was an understanding that certain expenses (those listed in in paragraph 12 a.) would never require prior consultation. To the contrary, that subparagraph only identifies what may be a special or extraordinary expense.

[87] Section 7 itself does not require prior consultation for allowable expenses, but a failure or refusal by a claiming parent to discuss an expense with the other parent in advance bears on the court’s exercise of its discretion in determining whether it is reasonable: see Bland v. Bland (1999), 1999 ABQB 236, 48 R.F.L. (4th) 250 (Alta Q.B.), and T.W. Hainsworth, Child Support Guidelines Service, (Toronto: 2017 Thomson Reuters Canada Limited (Loose-leaf)) at 2:4.05. As noted in Douglas v. Mitchell, 2009 ONSC 3371 at paragraph 40, “[a]s desirable as it is for a custodial parent to consult the non-custodial parent and engage him or her in negotiations on the issue of special expenses before incurring them and applying to the court for an order compelling the other parent to contribute, there are too many factors that may militate against such engagement for the court to make it a pre-requisite for obtaining an order.”

[88] In my view, in the face of a pattern of default by the respondent, the applicant cannot be faulted for concluding that consultation would have been meaningless. Failure to consult alone in such circumstances should not eliminate to the payor’s obligation to make a fair contribution. While desirable, the kind of reasonable discussion about what the parties can afford between them as contemplated in Z.(A) v. W.(J), 2004 ONCJ 151 at paragraph 30, is not always possible.

Reasonableness

[89] The applicant in argument said that she incurred the section 7 expenses on the understanding that the respondent would be contributing. That is somewhat inconsistent with her waiting years to make a demand or to pursue them. The applicant further argues that the expenses claimed are globally reasonable being roughly in line with the amounts determined by me in the June 5, 2012 order. However, at that time the respondent had just been reinstated at Invista.

[90] Given her limited resources, the applicant clearly has had some outside help from her family to pay for the expenses. The question is whether they are reasonable for the parties to have incurred in view of their combined means, regardless of who paid. When the respondent had an imputed income of $25,480 in 2017 and the applicant had essentially no income, he had limited room to contribute over and above $5,585 in table child support. While all the expenses may be in the children’s best interests and necessary, even a 50/50 sharing may not be reasonable if a third party is paying them at a level the parties between them would not be able to afford.

Summary – Section 7 Expenses

[91] When I total up all the expenses that have been properly documented plus Nicholas’ driver’s education, one year of car insurance for Zachary and Kassidy, and one year of cell phone for Kassidy, the number comes roughly to $17,600. This does not include undocumented post-secondary expenses, making Zachary’s education tax credits and employment largely redundant. Half of that number would be $8,800. I find that this is a reasonable amount given a rough weighing of all the factors and evidence touched on above. It works out to about $2,200 per year which, while a heavier burden for the respondent when his imputed income was $25,480, was more modest at incomes of $29,120 and $35,000. Order to go that the respondent shall pay $8,800 for section 7 expenses up to December 31, 2019.

The Outstanding Costs Order

[92] As noted, the applicant’s first position in her RTMTC was that the respondent’s MTC should be dismissed because he has failed to pay the outstanding costs order of $5,000. I decline to do so. In my view that needed to be pursued with vigor prior to the full hearing of the MTC and RTMTC on their merits, and not as almost an afterthought in her factum without argument or legal authority. To grant that relief now would, in effect, cast aside the work done by the parties (and the court) on the substantive issues, possibly requiring a repeat. The relief the applicant was herself pursuing (section 7 expenses) was inseparably interwoven with the issues raised by the respondent. She also inconsistently requested that those very same costs be made enforceable by FRO. I decline to make that order as well. It was not pled. No legal pathway for changing a previous court order that was made on consent was laid out.

Decision

[93] Orders to go as set out above. The monies being held by FRO can now be released to the applicant with the appropriate credit given. If counsel can work out a payment schedule for the remaining arrears on consent, that can be added to the issued order. The parties shall by June 1 each year exchange copies of their previous years’ Income Tax Returns and Notices of Assessment.

[94] Success appears to be divided. However, if the parties want to address me on costs, I will accept brief written submissions from each provided they are served and filed within fifteen days. Those submissions, if required, shall be no more than three pages, double spaced, in addition to any relevant offers and draft bills of costs. Both parties are also permitted to make a one page costs reply within five days after receiving the other’s submissions.

Mr. Justice Timothy Minnema Date: February 26, 2020

KINGSTON COURT FILE NO.: 236/04 DATE: 20200226 ONTARIO SUPERIOR COURT OF JUSTICE RE: Lyne Yeo, Applicant AND Richard Peter Hutcheson, Respondent BEFORE: Mr. Justice Timothy Minnema COUNSEL: Rachel Stephenson, for the Applicant E. Barbara Burford, for the Respondent ENDORSEMENT On MOTION TO CHANGE (BY RESPONDENT) Mr. Justice Timothy Minnema

Released: February 26, 2020

[1] This decision has unrelated supplemental reasons (Whalen-Bryne v. Bryne, 2016 ONSC 6158) and was subject to an appeal on different issues (Whalen-Bryne v. Bryne, 2017 ONCA 729).

[2] The applicant in her factum, without evidence, said that the respondent was 46 years old at the time. My calculation is based on his date of birth set out in the 2004 application.

[3] The Stronger, Fairer Ontario Act (Budget Measures), 2017 S.O. 2017, c. 34 (Bill 177), Schedule 15, effective December 14, 2017.