Court File and Parties

COURT FILE NO.: FS-18-6967-0001 DATE: 20241115 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jake Zachary Phillips, Applicant AND: Elysha Phillips, Respondent

BEFORE: Justice Kraft

COUNSEL: Maureen Edwards, for the Applicant The Respondent, in person

HEARD: November 14, 2024

Endorsement

Nature of the Motion

[1] This is the applicant father’s motion for temporary child support from the respondent mother for the parties’ son, commencing September 1, 2024. Specifically, the father seeks an order requiring the mother to pay table child support of $2,379 a month based on an imputed income of $300,000 a year for her in accordance with the Child Support Guidelines, O. Reg. 391/97 (“CSG”). He also seeks an order that the mother pay 59% of the child’s s.7 expenses which includes swimming lessons, summer camps, school expenses such a field trips and meal programs, a math tutoring game, non-insured medical and dental expenses.

[2] The mother sought an adjournment of today’s motion and asked the court to hear the father’s child support motion after her motion for expanded parenting time is heard on December 3, 2024.

[3] This is the mother’s second attempt to adjourn the father’s child support motion. The father’s child support motion materials were served on the mother on September 27, 2024. The mother did not file responding materials for the father’s child support motion. This is even though the mother has known since October 8, 2024, that the father’s child support motion was returnable today.

[4] The request for an adjourned was denied.

Issue to be Determined

[5] The issue for me to determine is whether the mother should be ordered to pay temporary child support to the father for their son, who resides primarily with the father and if so, whether she should be imputed with an income of $300,000 as proposed by the father, or in some other amount?

Background and Litigation History

[6] By way of background, the parties separated on August 21, 2018. They have one child, D., who is 7 years old. He is in Grade 2.

[7] The father has re-partnered and has a daughter with his wife, D.’s half-sister.

[8] The parties were engaged in high conflict litigation after they separated. They ultimately reached a consent which was incorporated into the Final order of Czutrin, J, dated March 10, 2021 (“Final Consent Order”).

[9] The Final Consent Order sets out that the parties are to have equal parenting time with D. on an alternating, 2-2-3 schedule during the school year and an equal division of holiday time; the parties are to live within 10 km of each other and not relocate with D. outside of the GTA without consent; the father was to pay the mother child support until December 2020, following which, no table child support would be paid given that the equal time sharing schedule; the father was to be solely responsible for D.’s s.7 expenses for 3 years ending July 27, 2023, after which the parties were to share his s.7 expenses proportionately.

[10] The parties followed the parenting schedule for a number of years.

[11] On November 15, 2023, the mother advised the father that she intended to move to Combermere, Ontario, 300 km away from D.’s school, effective December 1, 2023. She wanted D. to move with her but the father would not consent.

[12] On December 13, 2023, the father brought a Motion to Change to amend the parenting schedule since the mother was moving. The mother brought her own Motion to Change, seeking primary residence of D., sole decision-making responsibility and to set aside the child support waiver provided for in the Final Consent Order.

[13] The mother moved to Combermere and between March 15, 2024 and September 15, 2024, the parties followed a parenting schedule where D. resided with the mother from Friday, after school to Sunday, at 7:00 p.m. on alternate weekends; during the summer months, from Thursdays to Sundays on alternate weekends; and for the remainder of the time, D. resided with the father primarily.

[14] The mother overheld D. after her weekend from September 15, 2024 to October 4, 2024, when she was ordered to return D. to the father in Toronto.

[15] She claims to have overheld him because D. told her that he was abused in the father’s care. The mother reported the disclosure to the Highland Shores Children’s Aid Society.

[16] The father brought an urgent motion for the return of the child which he served on the mother on September 17, 2024. The parties were directed to attend a TBST court on September 23, 2024, at which time Nakonechny, J. set the father’s motion for the return of the child for October 3, 2024. Nakonechny, J. also ordered the father’s motion for child support to be returnable on October 8, 2024.

[17] After the TBST court, the mother brought an ex parte motion in the Pembroke branch of this court and sought a restraining order against the father and sought primary residence of the child. She did not disclose the Endorsement of Nakonechny, J., dated September 23, 2023 to the court in Pembroke.

[18] Hooper, J. of the Pembroke court made the restraining order on a temporary basis to be reviewed by this court.

[19] On October 4, 2024, Des Rosiers, J. made an order vacating Hooper, J.’s order and granted an order for the mother to return the child to Toronto by October 4, 2024.

[20] The mother has now moved back to Toronto and seeks to return to the equal time-sharing parenting schedule that was in place before she moved.

[21] It is agreed that the parties have engaged Shely Polak to conduct an updated s.30 parenting assessment. The father completed his intake forms and undertook to pay Shely Polak’s retainer by the end of October 8, 2024. The father’s position is that while the s.30 assessment process is underway, neither party is to bring a motion to change the parenting schedule. The mother’s position is that she brought her motion for expanded parenting time before the parties re-engaged Shely Polak. That motion, again, is returnable before the court on December 3, 2024.

[22] In accordance with Nakonechny, J.’s Order dated September 23, 2024, the father’s motion for a travel consent and for child support was returnable before the court on October 8th, 2024. On that day, the mother sought an adjournment of the father’s motion advising the court that she was about to obtain a legal aid certificate. She also indicated that she intended to bring a motion to expand her parenting time. Accordingly, on October 8, 2024, I made the following order:

a. I adjourned the father’s travel consent motion to October 15, 2024; b. I ordered a case conference to address the child’s parenting schedule to take place on October 24, 2024, with the mother’s motion for expanded parenting time to be addressed by the case conference judge; and c. I returned the father’s child support to today.

[23] The parties advised the court today that the case conference regarding the child’s parenting schedule took place before Shin Doi, J. on October 24, 2024, at which time the mother’s motion for expanded parenting time was scheduled for December 3, 2024. The parties were not able to reach an agreement on D.’s parenting schedule.

Should the Mother pay Child Support to the Father and if so, should income be Imputed to her?

[24] Courts have the jurisdiction to order child support pursuant to the Family Law Act, R.S.O. 1990, c. F.3 (the “Family Law Act”) and the CSG.

[25] In DBS v SRG, 2006 SCC 37, at para. 104, and Michael v Graydon, 2020 SCC 24, at para. 10, the Supreme Court of Canada emphasized the importance of child support, including the following principles:

a. “Child support is the right of the child, which right cannot be bargained away by the parents, and survives the breakdown of the relationship of the child’s parents; and b. The child support owed will vary based upon the income of the payor parent and is not confined to furnishing the ‘necessities of life’”.

[26] Given that D. has been residing in the father’s primary care since March 2024, I find that the mother is obliged to pay the father child support for the child in accordance with her income as per the CSG.

[27] The father seeks a temporary order for child support commencing September 1, 2024.

[28] He argues that the mother’s income should be imputed at $300,000 a year.

[29] Section 19 of the CSG permits the court to impute such an amount of income as it considers appropriate in the circumstances.

[30] The leading case on imputing income is Drygala v. Pauli. Drygala stands for the following principles:

a. Section 19(1)(a) of the Child Support Guidelines permits a court to impute income to a spouse if it considers it appropriate in the circumstances, which circumstances include "the parent or spouse is intentionally under-employed or unemployed." b. There is no need to find a specific intent to evade child support obligations before income can be imputed. Read in context and given its ordinary meaning, "intentionally" in s. 19(1)(a) means a voluntary act. The parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning. That parent is intentionally unemployed when he or she chooses not to work when capable of earning an income. There is no requirement of bad faith in s. 19(1)(a), nor is there language suggestive of such a requirement; at paras. 28-29. c. 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: para. 44.

[31] Section 19 of the CSG includes circumstances where the parent has failed to provide income information when under a technical obligation to do so; Hong v. Nguyen, 2018 ONSC 7357, at para. 14.

[32] In Graham v Bruto, 2008 ONCA 260, the Ontario Court of Appeal inferred that the failure of the payor to properly disclose mitigates the obligation of the recipient to provide an evidentiary basis to impute income; at para. 4.

[33] Where a party fails to provide full financial disclosure relating to their income, the court is entitled to draw an adverse inference and to impute income to them.

[34] The person seeking to impute income to a party has the initial onus to establish an evidentiary basis to support that claim. However, such an onus does not relieve the prospective payor from providing full and complete financial disclosure, so as to ensure the court has complete information. As there are many circumstances in which a party seeking to impute income will not have full financial knowledge or information, courts generally do not set the threshold too high as regards the existence of appropriate circumstances where imputation of income can be considered. Once the party seeking to impute income provides satisfactory evidence suggesting a prima facie case for the imputation of income, the onus shifts to the other party to satisfy the court as to his/her income level; See Babzadeh-Olari v. Villares-Reyes, 2021 ONSC 3558, at para.86, and McKenna v. McKenna, 2015 ONSC 3309.

[35] As stated above, the mother failed to file responding motion material to the father’s motion for child support. This is despite the fact that the mother was served with the father’s materials on September 27, 2024, and has had more than sufficient time to do so. Further, the mother’s failure to file an updated sworn financial statement is a violation of her obligations to do so under the Family Law Rules, O. Reg. 114/99. Moreover, the mother was ordered to provide financial disclosure to the father by Sharma, J., at a case conference on July 8, 2024 and she has failed to provide a response to the father’s request for information.

[36] The only evidence on record before the court as to the mother’s income is from her sworn financial statement, sworn on February 20, 2024, which she filed in support of her Motion to Change.

[37] This financial statement lists the mother’s current income at that time as $2,856 a year in 2024.

[38] The evidence on which I can rely to impute income to the mother is as follows:

a. The mother is self-employed. Her financial statement lists her as a 100% owner of Trifekta Home Solutions Inc. She advised the court that she is in the business of home renovations. She provided a copy of the unaudited financial statement for Trifecta Home Solutions as an attachment to her sworn financial statement. She did not disclose a T2 for the company. b. The statement of income and deficit on the unaudited financial statement for Trifekta shows revenue of $470,329 and costs of sale of $201,421 in 2022, with a gross margin of $178,888. In 2023, the company’s gross margin was $9,234. The mother did not provide any explanation why her revenue in 2023 was $208,131, down from $470,309, or why her costs of sales in 2023 increased to $198,988. c. The mother’s 2021 Notice of Assessment lists her line 15000 total income at $103,512, and her 2022 Notice of Assessment lists her Line 15000 income at $92,892. Both Notices of Assessment were attached to the mother’s sworn financial statement, which is now about 9 months out of date. d. The father argues that in 2022, the mother earned taxable capital gains of $122,120.26 from self-employment income when she flipped homes; rental income of $11,000 and gross business income of $8,500. The father submits that the mother’s rental income and gross business income were so low because she claims inflated business expenses to reduce her income. e. The father has calculated that if the mother’s losses are disregarded and her tax savings are grossed up, the mother’s income for child support purposes in 2022 would amount to approximately $382,162 and similarly, her income for child support purposes to be $430,176 in 2021. f. The mother’s budget set out in her sworn financial statement lists expenses of $313,428.96, net of tax in her sworn financial statement. Given that the mother has not provided the court with appropriate income disclosure, nor has she explained how she is able to meet her expenses annually, the husband asks the court to impute her with an income of $300,000 a year by using her own budget as a lifestyle analysis. g. There is no evidence on the record about the mother’s current living expenses since she returned to Toronto. h. My review of the mother’s budget shows that she lists both mortgage and property taxes of $7,400 a month, as well as rent of $2,875 a month. Further, the budget lists RESP withdrawals in 2023 of $76,000 plus associated fees of $15,129, for a total of $91,129. The mother lists this as an expense of $7,594.08 a month. This is not a recurring expense since the mother made oral submissions that her RRSPs have now been fully depleted by her, which she used to live on. Finally, the budget lists debt payments for credit card debts of $2,475 a month. This relates to the mother’s credit cards which she claims are maxed out. If the RESP withdrawals are removed from the budget, the mother’s monthly expenses are reduced by $91,128.96, taking her annual expenses to $222,300 from $313,428.96.

[39] In answer to a number of questions from the court, the mother advised the court as follows:

a. Her expenses for the last two years have been extraordinary because she has been carrying the cost of a home she owed up north. b. She cashed in her entire RRSP of about $90,000 to use for her living expenses. c. She has maxed out her credit cards. Her sworn financial statement shows that as at February 17, 2024, her two Visas with CIBC, both personal and corporate, were at $37,000 and $36,000 respectively. d. She purchased a property during Covid in Niagara and it increased in value and she made capital gains but her primary business is home renovating. e. All the monies she made in terms of capital gains were used toward legal fees and is gone. f. She borrowed $100,000 from her step-mother, which is reflected on her sworn financial statement but no documentation substantiating the loan has been produced. g. Her property is now in foreclosure. On November 6, 2024, the Bailiff came and changed the locks on her property. She is in 3 months of mortgage payments arrears starting in July, 2024 to Pillar Mortgages. Her budget on the financial statement, lists her mortgage payments of $7,400 a month. The balance on the Pillar Mortgage was $680,000 on the date of the financial statement. h. She is looking for work and recently had an interview for a graphic design company doing invoicing and sales and expects to be able to earn between $45,000 and $50,000, with potential for advancement. i. She will also look for design work on the side. j. She earned $18,000 in 2024, as reflected in a Record of Employment she claims to have provided the father’s counsel for part time work she did at the Home Hardware up north for design work. She expects her total income in 2024 to be $30,000. Again, there is nothing on the record regarding the mother’s income earned in 2024.

[40] These statements made by the mother in answers to questions from the court were not made by her under oath and are not part of the formal record. If her statements regarding her property being in foreclosure are accurate, then once the property is sold, the mother’s monthly budget would be reduced by $7,400 a month, or a further $88,800 a year, reducing her annual budget to $133,500.

[41] As stated in Bak v. Dobell, 2007 ONCA 304, “a payor's lifestyle often will be relevant to whether a court may impute income under s. 19(1) of the Guidelines. For example, it may be apparent from lifestyle that a payor is receiving undeclared income because he or she has historically worked, lives comfortably with the usual trappings, and yet declares minimal income for tax or child support purposes. In such a case, the recipient who calls evidence of the payor's lifestyle will ask the court to draw the reasonable inference that the payor must have a greater income than he or she has disclosed.”

[42] Needless to say, the quality of financial information from the mother at this stage is not ideal. There are many questions that remain outstanding to determine the mother’s income.

[43] At the motion stage, there is an element of “rough justice” that the Court must partake in to ascertain an income of the mother for child support purposes: both the applicant and respondent for support purposes: Seifi v. Hanji, 2021 ONSC 3419.

[44] Given the evidence on the record, I am not prepared to impute the mother with an annual income of $300,000. I have clear evidence of her ability to earn at least $100,000 a year based on her 2021 and 2022 Notices of Assessment. If her budget is reduced by the depletion of her RRSP which she claims was a one-time event which occurred in 2023 and by the mortgage payments which should no longer be an expense once her property is sold, the lifestyle analysis would result in her having to earn a gross income less than the $300,000 a year proposed by the father.

[45] Considering her past Notices of Assessment, the budget listed in her sworn financial statement, and in drawing an adverse inference against her failure to produce income disclosure, I impute the mother with an income of $185,000 a year on a temporary without prejudice basis, to be adjusted retroactively and prospectively at trial. An income of $185,000 gross a year would net the mother approximately $120,000 of net disposable income a year, which more or less meets her budget if the RRSP depletion is removed as well as the mortgage expenses.

[46] Pursuant to the Final Consent Order, the parties were to share D.’s s.7 expenses equally. The father’s affidavit, filed in support of the motion lists D.’s s.7 expenses as swimming, math tutoring/program called Prodigy, summer camps, field trips and meal programs at school and uninsured medical/dental expenses. He deposes that the mother has failed to pay her 50% share of D.’s s.7 expenses and is in arrears of $1,873.37.

[47] The father is not seeking payment of the s.7 expense arrears right now. He is seeking an order that the mother pay 59% of D.’s s.7 expenses commencing September 1, 2024, which represents her proportionate responsibility for D.’s s.7 expenses if her income is imputed at $300,000 a year.

[48] Using this level of income for the mother, and the father’s T4 income of $239,962, the mother’s proportionate responsibility toward D.’s s.7 expenses would be 38% and the father’s obligation would be 62%.

ORDER

[49] This court makes the following order:

a. On a temporary, without prejudice basis, the mother shall pay the father table child support for the child, D., in the sum of $1,551 a month commencing September 1, 2024 and on the first day of each following month, based on an imputed income for her of $185,000 a year, until further order of the court or agreement of the parties. b. On a temporary, without prejudice basis, the mother shall pay 38% and the father shall pay 62% of the child’s s.7 expenses commencing September 1, 2024. The mother shall pay the father her proportionate share of the child’s s.7 expenses within 15 days of being served with a receipt for D.’s s.7 expenses, provided her consent is obtained before any such s.7 expense(s) are incurred. c. SDO to issue. d. The child support payments referred to in (a.) and (b.) above are entirely without prejudice to either party’s positions regarding the mother’s income for support purposes. e. Within 20 days from the release of this Endorsement, the mother shall produce the following: i. A complete, updated sworn financial statement with supporting documentation for all entries; ii. her complete income tax return for 2023 including Notices of Assessment within 20 days; iii. the financial statements of her businesses; iv. a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom she does not deal at arm’s length; and v. Complete T2 forms filed for her company for the last three taxation years. f. The parties shall endeavour to agree to the costs of this motion. If they cannot agree, the father shall serve and file written costs submissions of no more than 3 pages, not including any offers to settle or bill of costs within 10 days of the release of this endorsement. The mother shall serve and file responding costs submissions of no more than 3 pages within 7 days of being served with the father’s costs submissions, not including offers to settle or a bill of costs. The father shall file reply costs submissions, if any, of no more than 1 page within 5 days of being served with the mother’s costs submissions.

Kraft, J. Date: November 15, 2024