Court File and Parties
COURT FILE NO.: FS-19-13608 DATE: 20230505 ONTARIO SUPERIOR COURT OF JUSTICE
RE: James Greenwood, Applicant (Responding Party) AND: Stefanie Falotico, Respondent (Moving Party)
BEFORE: Kristjanson J.
COUNSEL: Mark Greenstein, Katie Hunter, counsel for the Applicant Sophia Cripouris, counsel for the Respondent
HEARD: At Toronto by videoconference April 27, 2023
Endorsement
Kristjanson, J
[1] The parties have been separated since September 2018. They have a son who is 6 years old. In the Application and Answer, both served in November 2019, both parties sought child support. At the time, the applicant father made more than twice what the respondent made. Yet the Applicant has not paid a penny of child support in the shared parenting arrangement in the 4/12 years since separation. Trial is a year away. On this interim motion, the respondent mother moves for child support since separation, and continuing until trial.
[2] The issues to be determined are the incomes of each party for child support purposes, and the start date for support. The mother argues that support should be awarded retroactive to the date of separation, and income should be imputed to the father for periods when he was on disability, and after his employment disability was terminated by the employer. The mother also argues that pre-tax corporate income should be imputed to the father. The father argues that it is inappropriate to award retroactive support on an interim motion, and no income should be imputed on an interim motion. In this case, where no set-off child support has been paid for 4.5 years, I award retroactive and prospective set-off child support continuing to trial.
Background Facts
[3] This was a challenging and bitter separation. I set out only those facts relevant to child support. The parties signed final minutes of settlement in May 2021, in which they agreed neither owed child support to the other in the shared parenting arrangement, even though in 2020 the mother earned 42% of what the father earned.
[4] The father filed a 14B Motion on consent in December 2021 to convert the minutes of settlement into a final order. Justice O'Brien expressed concern that the minutes provided that child support was not payable, given the significant disparity in incomes. She ordered the parties to file affidavit evidence justifying why no child support should be payable given the Federal Child Support Guidelines. She dismissed the motion to convert the minutes to an order in May 2022.
[5] The parties attended a Case Conference on March 25, 2022, before Justice Shore and received further directions. The father again submitted a 14B motion on consent for the conversion of the minutes of settlement to a final order. On June 1, 2022, Justice Shore dismissed the father’s 14B motion holding: “Some further explanation is needed as to why the Father is not paying child support when he earns more than double the income as the Mother, even if the parents have equal parenting time.”
[6] Two judges refused to convert the minutes of settlement into a court order because they were not satisfied that adequate provision was made for the child. Yet the father still paid not a penny of child support.
[7] At a conference on January 20, 2023, the parties agreed to take out an order reflecting their minutes of settlement with modifications, except for certain paragraphs reserved to trial. The parties agreed to a court order providing the set-off method for determining child support, The determination of income for support purposes was reserved to trial.
[8] On March 23, yet a third judge weighed in on the father’s failure to pay child support. Justice Sharma agreed with the respondent mother that the parties should be making retroactive and on-going child support payments, consistent with the parties’ agreement on January 20, 2023 to pay the set-off amount. His endorsement states:
I directed parties to spend the next 4 weeks determining the amount of retroactive and on-going child support that was due and to have those amounts paid. These amounts should be easily discerned from parties’ prior income tax returns, and hopefully within the next few weeks, the parties’ 2022 incomes will also be known. If there is no agreement, I grant leave to the Respondent Mother to bring a motion for retroactive and on-going child support to be determined, which shall be heard on April 27, 2023 as a 1-hour motion.
[9] The issued and entered order of Justice Sharma provides:
The parties agree that as long as the parenting arrangement is a shared parenting arrangement, child support shall be determined by the application of the set-off, pursuant to s. 9 of the Federal Child Support Guidelines. The determination of income to attribute to each party for child support remains outstanding.
The parties’ proportionate share of special or extraordinary expenses shall be adjusted by May 30 every year and shall be based on their actual incomes per calendar year. Prior year proportions shall remain in effect until the current year proportions are agreed upon by the parties. If a party has underpaid Matteo’s special or extraordinary expenses, that party shall reimburse the other party by June 30 of each year.
Issues
(1) What are the incomes of each party for child support purposes? a. Should income be imputed to the father because he was underemployed, and if so, for what time? b. Should all or part of the corporate pre-tax income of the father’s corporation be imputed as income, and if so, how much? (2) From what date should the payment of interim child support commence? (3) Should the father be required to provide life insurance to secure support?
Determination of Income for Interim Child Support
[10] Based solely on Notices of Assessment, the income of the parties for the relevant year are set out below:
| Year | Father | Mother |
|---|---|---|
| 2018 | 108,477 | 37,432 |
| 2019 | 116,147 | 45,306 |
| 2020 | 105,937 | 44,715 |
| 2021 | 82,453 | 59,975 |
| 2022 | 68,651 | 60,255 |
[11] The father’s income plummeted following November 2020. He was on disability leave from his employer, the City of Toronto from November 2020 to November 2022, for health issues he asserts related to the separation. The father’s employer disability benefits terminated November 19, 2022, with notice given by the insurer in October 2022. He continues to receive CPP Disability, and Child Credit, and thus claims his income for child support purposes in 2023 is $20,373. He provided no medical evidence that he cannot return to work for health reasons.
[12] The mother seeks to impute income to the father throughout his disability leave. On an interim motion, I am not prepared to find that the father was underemployed between November 2020 and December 2022: his workplace insurance determined that he was eligible for disability, and provided those benefits for two years.
[13] But I find that the mother has established that the father is underemployed as of January 1, 2023 within the meaning of section 19(1)(a) of the Federal Child Support Guidelines. As stated by Justice S.B. Sherr in Lynch v. Lewis, 2020 ONCJ 2 at paras. 19-22:
[19] Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this obligation, the parties must earn what they are capable of earning. If they fail to do so, they will be found to be intentionally under-employed. See: Drygala v. Pauli.
[20] The onus is on the party seeking to impute income to the other party to establish that the other party is intentionally unemployed or under-employed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made. See: Homsi v. Zaya, 2009 ONCA 322.
[21] Once a party seeking the imputation of income presents the evidentiary basis suggesting a prima facie case, the onus shifts to the individual seeking to defend the income position they are taking. See: Lo v. Lo, 2011 ONSC 7663; Charron v. Carriere, 2016 ONSC 4719.
[22] The court must have regard to the payor’s capacity to earn income in light of such factors as employment history, age, education, skills, health, available employment opportunities and the standard of living earned during the parties’ relationship. The court looks at the amount of income the party could earn if he or she worked to capacity. See: Lawson v. Lawson.
[14] The entirety of the father’s evidence on the failure to return to work when his employer disability benefits terminated is as follows:
I advised my employer of the medical recommendation for me to return to work on April 6, 2022. The City of Toronto has been unsuccessful at restoring my employment…I have retained an employment lawyer to support my efforts to restore my employment with the City of Toronto.
[15] There is no information about the date he retained an employment lawyer, whether he has commenced a wrongful dismissal lawsuit, or a grievance if unionized, or whether and when he searched for other employment. He has not produced his correspondence with the City requesting work, or the City’s denial of his former position, or indeed any position. He has failed to return to work at the City of Toronto, despite being medically cleared to resume work, and makes a bald allegation, with no supporting documentation, that the City of Toronto has had no replacement employment for him since April 2022. Nor has he produced any evidence about any job searches since April 2022, nor anything to establish that his failure to earn income is reasonable in the circumstances. The father has been employed with the City of Toronto since March 2001 – 19 years before his disability. His most recent title was that of Supervisor, Facilities Management.
[16] In his factum, he submits that has not returned to full employment as the City of Toronto “has been unsuccessful in finding him a suitable position since April 6, 2022.” There is no description of positions offered to him, nor what a “suitable” position would be, one year after he was medically cleared to return. After one year, the father is required to accept a position that will allow him to earn what he can to support his child. He no longer has the luxury of choice.
[17] And, as discussed below, in 2022 the father bought a corporation. Although the financial statements are not complete, it appears the business had gross profits of over $400,000 for the year ending March 31, 2023. The father made a shareholder loan to the business of $89,142 in 2022, reflected on the balance sheet as a debt owed (liability) by the company to him. Yet the father does not claim he was self-employed during the period he established the business last year, or at present.
[18] The father has been under an obligation to pay set-off child support since separation. Three judges have told him that given the income disparities, he must pay child support. On this motion, he acknowledges that he must pay child support – yet argues that on an interim motion, no retroactive child support should be set since income determination is a triable issue, or that child support in the alternative be set based on Notices of Assessment only, with no imputation.
[19] Whether or not to order the payment of child support on an interim motion is discretionary. But rarely, if ever, would a court condone a situation where the higher income earner has not paid any child support for 4.5 years. Child support is the right of the child. It does little good when received years after the fact. Kids grow quickly, and have immediate needs.
[20] Here, I find that the father should have secured full-time employment no later than January 1, 2023 – 8 months after he told his employer he was ready to return to work, and three months after he was told his disability benefits would be terminated. The mother has met her onus of establishing the father is underemployed as of January 1, 2023.
[21] Because of the very scant disclosure and bald assertions in his affidavit, not supported by documentary evidence, I find that the father is now able to earn at his 2019 pre-disability level of income, I impute that level of income to the father commencing January 1, 2023.
Imputation: Pre-Tax Corporate Income
[22] Section 18 of the Federal Child Support Guidelines allows a court to add all or part of pre-tax corporate income for the most recent taxation year to a spouse’s income where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under section 16 does not fairly reflect all the money available to the spouse for the payment of child support. While the applicant referred to retained earnings, the issue is attribution of pre-tax corporate income: Reid v. Faubert, 2019 NSCA 42; Nani v. Nani, 2021 ONSC 1368 at paras. 31-34.
[23] In 2022, the father purchased a corporation. The corporation year-end is March 31, 2023. The father has provided pro forma statements indicating that the pre-tax corporate income is $46,329, on revenue of over $400,000. The parties both understood that these are not final financial statements, but estimates. Justice Sharma has ordered the father to complete and produce the corporation’s financial statements.
[24] Until the financial statements are completed, it is premature to attribute all or any of the pre-tax corporate income to the father. It may well be that a judge will conclude that some expenses paid by the corporation will form part of the father’s income for child support purposes. It may be that some or all the pre-tax corporate income will be attributed to the father. Perhaps some corporate income will be allocated to 2022 and some to 2023, given the year end. Maybe rather than pay child support, the father chose to advance money to the company, since a shareholder loan in the amount of $89,142 is reflected on the balance sheet as a debt owed (liability) by the company. But given the timing for filing of corporate financial statements and corporate taxes, these issues cannot be resolved on this interim motion.
Timing for Commencement of Child Support Payments
[25] The parties separated in September 2018. Both parties claimed child support in their pleadings of November 2019. As described above, they signed Minutes of Settlement in 2021 stating no child support was owing: two judges refused to turn that agreement into a court order given the father’s much higher level of income.
[26] The father argues that no retroactive support should be ordered on an interim motion. But no support has been paid since day 1, there is a court order agreeing as to method (set-off), and the mother’s income is much lower. The child deserves support now, not in a year or more after the trial.
[27] I find that notice of intent to seek child support by both parties was first made in November 2019, claiming back to separation. I find a clear need. I do not find hardship, given that the father avoided paying any child support: he has many investments, some of which were no doubt facilitated by his decision not to pay child support. Including his investment in his company in 2022, a company which he claims has no prospect of paying him income. The father is not impecunious, based on his financial statement, and a lump-sum arrears order will not cause hardship.
Life Insurance
[28] The mother seeks an order that the father’s life insurance policy name her as the beneficiary in order to secure child support payments. The Court of Appeal in Katz v Katz, 2014 ONCA 605 has held that the court has broad discretion to impose terms in connection with an interim child support order under section 15.1(4) of the Divorce Act, holding at para. 71: “It is generally accepted that as part of its discretionary power under these sections, a court may impose terms aimed at securing payment of a support order…With respect to a child support order made under the Divorce Act, s. 12 of the Federal Child Support Guidelines gives a court express authority to order a spouse to supply security.” Based on a Divorcemate calculation with income to the father of $116,000 and the mother at 2022 income, the life insurance estimate is about $170,000.00.
[29] I order that the interim child support order is binding on the estate of the father.
[30] On an interim motion, without evidence of insurability and cost, I would not order that the father secure a policy of insurance. That said, the father’s evidence is that on April 19, 2023, he applied for term life insurance that names the son as the sole beneficiary. Yet child support is payable to the parent, not the child. And life insurance is payable to the recipient (mother), to secure the payments owed to her.
[31] The amount of that insurance is not in evidence. Order to go that the father provide a copy of the application for term life insurance to the mother; that he provide all correspondence to and from the insurer to the mother; and that within five days he contact the insurer, with a copy to the mother, to change the beneficiary to the mother, not the minor child; and that the beneficiary designation not be changed until after the trial decision.
[32] Temporary order to go on as follows, edited with respect to the name and date of birth of the child which should be contained in the order which is taken out:
- The Applicant Father shall pay set-off table child support to the Respondent Mother for their son in the amount of $477.75 per month beginning on May 1, 2023, and on an ongoing basis on the first of each month thereafter based on his imputed income of $116,000 and the Respondent Mother’s actual income of $60,255.
- The parties shall share the child’s section 7 expenses proportionately based on income as set out in this temporary order.
- The Applicant Father shall pay arrears of monthly child support of $21,918.00 to the Respondent Mother within 30 days of this Order calculated as follows: (a) 2018: $646 per month of set-off Table child support x 4 months based on the Applicant Father’s 2018 income of $108,447 and the Respondent Mother’s 2018 income of $37,432 ($2,584); (b) 2019: $616 per month of set-off Table child support x 12 months based on the Applicant Father’ 2019 income of $116,147 and the Respondent Mother’s actual income of $45,306 ($7,392); (c) 2020: $543 per month of set-off Table child support x 12 months based on the Applicant Father’ 2020 income of $105,937 and the Respondent Mother’s 2020 income of $44,715 ($6,516); (d) 2021: $212 per month of set-off Table child support x 12 months based on the Applicant Father’s 2021 income of $82,453 and the Respondent Mother’s 2021 income of $59,975 ($2,544); (e) 2022: $81 per month of set-off Table child support x 12 months based on the Applicant Father’ 2022 income of $68,651 and the Respondent Mother’s 2022 income of $60,255 ($972); and, (f) 2023: $477.45 per month of set-off Table child support x 4 months based on the Applicant Father’ imputed 2023 income of $116,000.00 and the Respondent Mother’s 2022 income of $60,255 ($1,910).
- For as long as child support is to be paid, the payor and recipient, if applicable must provide updated income disclosure to the other party each year, within 30 days of the anniversary of this order, in accordance with section 24.1 of the Federal Child Support Guidelines.
- Unless the support order is withdrawn from the Family Responsibility Office, it shall be enforced by the Director and amounts owing under the order shall be paid to the Director, who shall pay them to the person to whom they are owed.
- This order bears interest at the rate of 4.8 percent per year on any payment or payments in respect of which there is a default from the date of default.
- This child support order is binding upon the estate of Mr. Greenwood.
- Within five days of this Order, Mr. Greenwood shall provide a copy of his April 19, 2023 application for term life insurance to the mother; he shall provide all correspondence to and from the insurer to the mother; and within five days he shall contact the insurer, with a copy to the mother, to change the beneficiary to the mother, not the minor child, and maintain the beneficiary status of the mother until trial.
Costs
[33] The respondent has been largely successful and is presumptively entitled to costs. The respondent shall serve her costs submissions by May 12 (limited to five pages plus Bill of Costs plus Offers to Settle). The applicant shall file his responding costs submissions by May 19 (same limits). Brief reply of 3 pages, if necessary.
Kristjanson J. Released: May 5, 2023