Baldwin v. Funston

85 O.R. (3d) 721

Court of Appeal for Ontario,

McMurtry C.J.O., Juriansz and Rouleau JJ.A.

May 22, 2007

Family law -- Support -- Child support -- Retroactive child support -- Separation agreement not imposing explicit or implicit obligation to provide ongoing financial disclosure -- Trial judge dismissing mother's claim for retroactive child support -- Trial judge erring in finding that father's failure to disclose dramatic increase in his income did not amount to blameworthy conduct -- Blameworthy conduct not determinative factor -- Trial judge carefully considering entire factual matrix and basing her conclusion on holistic consideration of all factors -- Trial judge not erring in concluding that retroactive award would not be appropriate.

The parties entered into a comprehensive separation agreement in 1994. The father began working for a new employer in 1996 and his income had increased dramatically by 2000. He did not disclose his increased income to the mother. In 2003, the mother initiated proceedings claiming retroactive child support. The trial judge found that the separation agreement did not impose an obligation on the father to disclose material increases in his income, that the needs of the children were met during the period covered by the claim and the mother did not incur debt or encroach on her capital to meet those needs, that the father's failure to disclose that his income had materially increased was not blameworthy conduct and that the mother had delayed in bringing the application without justification. She dismissed the mother's claim for retroactive child support. The mother appealed.

Held, the appeal should be dismissed.

The separation agreement did not expressly require the father to disclose his income, and the obligation to do so was not implicit in the agreement. The father had not misled the mother as to his financial circumstances and had not provided her with incomplete financial disclosure at the time they entered into the separation agreement. The trial judge erred in finding that the father's failure to disclose his increased income did not amount to blameworthy conduct. Any conduct that privileges the payor parent's own interests over his or her children's right to an appropriate amount of support should be characterized as blameworthy. While the father's blameworthy conduct militated in favour of a retroactive award, it was not determinative. The trial judge took the correct approach in that she carefully considered the entire factual matrix of the application and based her conclusion on a holistic consideration of all the factors. Her conclusion that a retroactive award was not appropriate was not unreasonable.

APPEAL from the judgment of Sachs J. (2004), 2004 878 (ON SC), 71 O.R. (3d) 588, [2004] O.J. No. 2817 (S.C.J.), dismissing a claim for retroactive child support. [page722]

Cases referred to D.B.S. v. S.R.G., [2006] 2 S.C.R. 231, [2006] S.C.J. No. 37, 2006 SCC 37, 270 D.L.R. (4th) 297, apld Marinangeli v. Marinangeli (2003), 2003 27673 (ON CA), 66 O.R. (3d) 40, [2003] O.J. No. 2819 (C.A.), distd Rules and regulations referred to Federal Child Support Guidelines, SOR/97-175

Orestes Pasparakis, for appellant. Stephen M. Grant and Dawn Bourque, for respondent.

The judgment of the court was delivered by

[1] JURIANSZ J.A.: -- The appellant appeals the dismissal of her claim brought January 29, 2003 for retroactive child support payments for the period from May 1, 1997 to January 1, 2003. Her claim was dismissed on June 29, 2004, before the Supreme Court of Canada dealt with the subject of retroactive child support in D.B.S. v. S.R.G.; L.J.W. v. T.A.R.; Henry v. Henry; Hienstra v. Hienstra, 2006 SCC 37, [2006] 2 S.C.R. 231, [2006] S.C.J. No. 37. This appeal was stayed pending the release of the Supreme Court's decision in D.B.S.

[2] The parties were married in 1983 and have three children. When they separated in 1993, the children were ten, eight and six years old. They entered into a comprehensive separation agreement (the "Separation Agreement") in 1994 and divorced. At the time of the trial of this claim the children were aged 20, 19 and 17.

[3] After the separation, the respondent's ability to work was impaired for some time and his income dropped from $159,000 in 1993 to $60,000 in 1994. The Separation Agreement provided that he would pay child support of $2,010 a month indexed to the Consumer Price Index for Toronto.

[4] In 1996, the respondent began working for a new employer and his income increased dramatically to over $1 million a year in 2000. His income at the time of trial was $777,000.

[5] In 1998, when the Federal Child Support Guidelines, SOR/ 97-175 (the "Guidelines") came into effect, the respondent increased his child support payments to $3,000 a month.

[6] In December of 2002, the appellant gave the respondent notice of her claim for retroactive child support along with a request for additional child support. The trial judge dismissed the claim for retroactive child support after making the following findings:

(1) The Separation Agreement did not impose an obligation on the respondent to disclose material increases in his income.

(2) The needs of the children were met during the period covered by the claim for retroactive child support and the appellant did not incur debt or encroach on her capital to meet those needs. [page723]

(3) In the circumstances of this case, the respondent's failure to disclose that his income had materially increased was not blameworthy conduct.

(4) By 1997 the appellant knew that the respondent's financial circumstances had improved considerably since the separation, though she did not know the extent of that improvement. She also never asked the respondent to disclose the extent of that improvement. The trial judge carefully considered the evidence of the appellant but did not find that the appellant's fear of conflict excused her delay in bringing an application for increased child support.

(5) An order for retroactive child support in the amount of $300,000 or more would cause an unfair burden to the respondent and could impair his ability to meet his ongoing support obligations. Such an award would achieve no purpose other than to re-distribute capital from the respondent to the appellant.

[7] Having dismissed the claim for retroactive child support, the trial judge ordered ongoing child support for the two remaining children of the marriage according to the Guidelines based on the respondent's income of $777,000. In addition, she ordered the respondent to pay 95 per cent of the children's educational expenses.

Issues

[8] The appellant submits that the trial judge erred in two respects:

(1) The trial judge erred in interpreting the Separation Agreement and failing to find that the agreement required the respondent to disclose material changes to his income.

(2) The trial judge erred by applying the restrictive Ontario approach to retroactive child support that was overruled by the Supreme Court in D.B.S., supra.

[9] I do not agree with either contention.

Issue one: The separation agreement

[10] As the Supreme Court recognized in D.B.S., supra, at para. 58, the system crafted by Parliament did "not burden the payor parent with an automatic disclosure obligation every time his/her income increases". The question here is whether [page724] the Separation Agreement expressly or implicitly required the respondent to disclose the increase to his income.

[11] The Separation Agreement in this case did not expressly require the respondent to disclose his income. The question is whether the obligation to do so was implicit in the Separation Agreement.

[12] The appellant relies on clause 3.2(a) of the Separation Agreement, located in the section regarding custody and access of the children, that provides:

The parties agree to keep each other fully informed of all major matters affecting the interest and well being of the children and they will confer as often as necessary on matters affecting the children . . .

[13] Although the clause's location in the agreement may not be an overriding consideration, I agree with the trial judge's reasons for distinguishing the case before her from Marinangeli v. Marinangeli (2003), 2003 27673 (ON CA), 66 O.R. (3d) 40, [2003] O.J. No. 2819 (C.A.). In Marinangeli, the appellant's pre-settlement representations, and the almost immediate significant improvement in his financial position after the minutes were signed, provided the factual basis for the implied duty of disclosure. Implication of the duty to disclose was necessary to make the transaction effective. Equivalent circumstances are not present in this case. Rather, as the trial judge found, the respondent had not misled the appellant as to his financial circumstances and had not provided her with incomplete financial disclosure at the time they entered into the Separation Agreement.

[14] I would not interfere with the trial judge's conclusion that it was not an implicit requirement of the Separation Agreement that the respondent discloses the increase in his income.

Issue two: Application of D.B.S.

[15] The appellant submits that the legal regime that applied in Ontario at the time of the trial decision has been displaced by the Supreme Court's subsequent decision in D.B.S., supra. There are, she submits, two reasons why the trial judge's decision should be overturned.

[16] First, while this court stated in Marinangeli, supra, at para. 72, that the "decision to award retroactive child support is one to be exercised sparingly", the Supreme Court in D.B.S., supra, emphasized that retroactive child support awards should not be regarded as exceptional orders to be made only in exceptional circumstances.

[17] Second, D.B.S., supra, restates the factors to be considered when a court is considering whether to award retroactive child [page725] support. The appellant submits that the trial judge did not apply the D.B.S. analytical framework and that she erred by finding the respondent had not engaged in blameworthy conduct. The appellant also submits that, when making her decision the trial judge took into account irrelevant factors, such as whether the award would constitute a transfer of wealth.

[18] I agree with the appellant's submission that D.B.S., supra, has made some changes to the legal regime that was in effect in Ontario at the time of the trial decision. In light of D.B.S., it is now clear that the trial judge erred in concluding the respondent had not engaged in blameworthy conduct. In D.B.S., Bastarache J. indicated that any conduct that privileges the payor parent's own interests over his or her children's right to an appropriate amount of support should be characterized as blameworthy conduct. While there is a presumption that the payor parent is acting reasonably by complying with the terms of a previous court order or agreement, this presumption may be rebutted where the change in circumstances is sufficiently pronounced. In determining the reasonability of the payor parent's belief that his or her obligations were being met, the court should compare the amount the parent actually paid with how much he or she should have paid.

[19] Applying this approach to this case, the respondent's failure to report the increase in his income must be seen as blameworthy conduct given the magnitude of that increase.

[20] The respondent's blameworthy conduct in failing to report the increase in his income militates in favour of a retroactive award, but it is not determinative. It is only one of four factors Bastarache J. identified, at paras. 100-16, to be considered:

1. Reasonable excuse for why support was not sought earlier

2. Conduct of the payor parent

3. Circumstances of the child

4. Hardship occasioned by a retroactive award[.]

[21] Importantly, Bastarache J. stressed at para. 99 of D.B.S., supra"At all times, a court should strive for a holistic view of the matter and decide each case on the basis of its particular factual matrix."

[22] In my view, the trial judge used an approach consonant with D.B.S., supra. She carefully considered the entire factual matrix of the application. Her conclusion was based on a holistic consideration of all the factors and she bore all of them in mind in concluding that a retroactive award was not appropriate. [page726] While her finding that the respondent had not engaged in blameworthy conduct was an error, and while some of the language may not be reflective of the principles in D.B.S., her findings of fact and her weighing of the various factors is deserving of deference.

[23] In regard to her finding that there was no blameworthy conduct, it is worth observing that the trial judge indicated some disapproval of the respondent's conduct in recognizing the logic that a support recipient should not have to ask a payor parent if there has been a material change in his or her circumstances. It should be noted that the trial judge found there was no allegation that the respondent misled the appellant as to his financial circumstances and that by 1997 the appellant knew his financial circumstances had improved significantly. She also noted that the respondent had never refused the appellant's requests for extra financial assistance except for one request to pay for a trip to Cuba. In her testimony at trial the appellant acknowledged that the amount of the extra financial assistance provided by the respondent was at least $191,852 in addition to his child support payments.

[24] While the trial judge did state the only purpose achieved by an award would be to redistribute capital from the respondent to the appellant, this observation followed her findings that all the reasonable material needs of the children were met and they did not suffer from a lack of financial support, that the appellant did not incur debt or encroach on her capital to meet the children's needs, and that an award in the amount sought would cause an unfair burden for the respondent and impair his ability to meet his ongoing support obligations.

[25] These considerations together with the five and a half year delay in bringing the application, which the trial judge did not find was excused, formed the basis of her decision to deny the appellant's application. I see no reason to interfere.

Disposition

[26] I would dismiss the appeal. The parties may make written submissions regarding costs.

Appeal dismissed. [page727]