DATE: 20040813

DOCKET: C41378

COURT OF APPEAL FOR ONTARIO

RE: KIMBERLY HOPE MINER (Applicant/Appellant)– and – ROSS WALLACE MINER (Respondent/Respondent in appeal)

BEFORE: ROSENBERG, ARMSTRONG and BLAIR JJ.A.

COUNSEL: Anthony Keller for the appellant

Alfred Mamo for the respondent

HEARD: August 12, 2004

On appeal from the judgment of Justice Patrick J. Flynn of the Superior Court of Justice dated January 23, 2004.

E N D O R S E M E N T

[1] The appellant argues that the application judge erred in four material ways.

[2] First, she submits that the trial judge erred in failing to impose a positive duty to disclose material changes in his financial position for the purposes of child support adjustments following the 1996 Separation Agreement and, in particular, in the course of negotiating the 2001 Amending Agreement and further, that he erred in not finding that the respondent failed to make such disclosure, thereby misleading the appellant.

[3] Secondly, she submits that the application judge erred in failing to “claw back” to include in the respondent’s income for purposes of calculating Guidelines support for the children, amounts paid by the respondent’s corporation to his current spouse for services rendered to the corporation, pursuant to s. 18(2) of the Child Support Guidelines.

[1] Thirdly, the appellant argues that the application judge erred in failing to average the respondent’s remuneration over the prior three years pursuant to the “pattern of income” provision of s. 17(1) of the Guidelines, for purposes of adjusting support.

[2] It follows from these errors, the appellant submits, that she should have been awarded a payment of retroactive support and an increase in monthly support for the children.

[3] In addition and fourthly, the appellant attacks the cost order, which the application judge granted on a substantial indemnity basis.

[4] With the exception of his disposition with respect to costs, in our view, the appeal must be dismissed.

Disclosure

[5] The non-disclosure argument has its roots in the confusion arising from the fact that Mr. Miner’s personal taxation year and his company’s taxation year-end do not coincide. He pays tax on income received in a calendar year. The corporate year-end is January 31. Taking the contentious year of 2000 as an example, a $75,000 dividend declared on February 1, 1999, does not constitute income in the year 2000 notwithstanding that the dividend is attributable to the corporation’s 1999-2000 fiscal year. There was evidence on the record to support the application judge’s finding that there was no material non-disclosure on the part of Mr. Miner with respect to his year 2000 income and we can find no palpable and overriding error in this regard.

“The Claw Back”

[6] Section 18(2) of the Guidelines provides that monies paid by a closely-held corporation to non-arms length persons, such as spouses, for salary, wages or management fees, form a portion of “all other money available to the spouse” for Guideline purposes “unless the spouse establishes that the payments were reasonable in the circumstances”. The application judge accepted the current spouse’s evidence that the sales bookkeeping and accounting services she provided were legitimate and that the remuneration paid for them was reasonable. There is no basis for interfering with that finding.

The Cascading Mechanism

[7] After negotiations conducted through competent and experienced counsel, the parties agreed on a mechanism for the exchange of financial information, if requested, in August of each year and a recalculation of child support, if appropriate, effective September 1 of the year in question. The effect of this mechanism is that corporate earnings generating income for Mr. Miner may not be taken into account in this mix for some delayed period of time. In our view, however, the parties agreed upon a reasonable mechanism for adjusting child support, designed to minimize costs and legal proceedings, and the application judge was correct in declining to interfere and in declining either to alter the method of calculating changes by invoking the three-year pattern of income provision of s. 17(1) of the Guidelines or by imposing a different timing mechanism for disclosure.

Costs

[8] With respect to costs, the application judge is entitled to considerable deference. However, we do not think the record can support his decision to award costs on a substantial indemnity basis. The appellant contented that the respondent had failed to disclose and had mislead her by misrepresenting his income to her. While serious, we do not think that such allegations as presented in this case constitute the type of allegations of fraud or fraud-like conduct that is so egregious as to attract the imposition of substantial indemnity costs. Accordingly, we would award costs on a partial indemnity basis for the application.

Disposition

[9] In the result, the appeal is dismissed save for the question of costs. In that respect, the order below is varied to award costs of the application on a partial indemnity basis, which we fix in the amount of $10,000 inclusive of fees, disbursements and GST.

[10] The respondent is entitled to his costs of the appeal, fixed at $2,500 all inclusive.

[11] The two sets of costs are to be paid in the manner provided in the order of the application judge.

“M. Rosenberg J.A.”

“R.P. Armstrong J.A.”

“R.A.. Blair J.A.”