Bemrose v. Fetter, 2007 ONCA 637

CITATION: Bemrose v. Fetter, 2007 ONCA 637

DATE: 20070918

DOCKET: C45530

COURT OF APPEAL FOR ONTARIO

MOLDAVER, GILLESE and LAFORME JJ.A.

BETWEEN:

BEATRICE ANNE BEMROSE

Applicant (Respondent)

and

STEPHEN SPENCE FETTER

Respondent (Appellant)

John W. Chidley‑Hill for the appellant

Judith Holzman for the respondent

Heard: March 26, 2007

On appeal from three orders of Justice Craig Perkins of the Superior Court of Justice, dated September 16, 2005, with reasons reported at 2005 ONSC 27895, [2005] O.J. No. 3362; March 21, 2006, with reasons reported at 2006 ONSC 8201, [2006] O.J. No. 1048; and, May 11, 2006, with reasons reported at [2006] O.J. No. 1880.

GILLESE J.A.:

[1] This family law case illustrates the problems that arise when matters are permitted to proceed without focus or direction.

BACKGROUND

[2] Ms. Bemrose and Mr. Fetter were married in 1987. In 2000, after 13 years of marriage, they separated. They have three children: Rebecca, Elijah and Isaiah. Prior to trial and after some 13 court appearances, the parties resolved custody and access issues. However, a trial was required in order to settle the financial matters that divided them.

[3] The trial took place in January 2003. Both parties were self-represented at trial. The most crucial determination that the trial judge was required to make, for the purpose of establishing child and spousal support, was the parties’ respective incomes.

[4] The trial judge reserved her decision. Approximately four months after trial, she released model reasons for decision.[^1] They were detailed, careful, thoughtful and solidly grounded in the evidence. They contained all the necessary findings of fact and decided all of the issues.

[5] An order reflecting the trial determinations was issued on April 11, 2003 (the “trial Order”). Pursuant to its terms, Mr. Fetter was to pay $248 per month in child support plus 56.4% of the children’s extraordinary expenses and $450 per month in spousal support. The trial Order stipulated that no review of spousal support could be initiated until at least three years after the date of the trial Order.

[6] No appeal was taken from the trial Order.[^2]

[7] Mr. Fetter, an ordained minister, had two sources of income: his employment income from the church that he served, and honoraria for performing weddings and funerals. The usual honorarium was $200 per service. The trial judge found his annual income from honoraria to be $2,500.

[8] Some months after the trial Order had been issued, Mr. Fetter discovered that the financial statement which his accountant had prepared for trial was inaccurate because, through inadvertence, it understated his income from honoraria. He called Ms. Bemrose and asked to meet with her. When they met, he told her that a mistake had been made about the number of funerals he had performed, and he gave her $1,000. He promised to pay any additional amount owing once he knew exactly how much money had not been accounted for.

[9] Ms. Bemrose took the view that Mr. Fetter had perjured himself at the trial. In January 2005, she brought a motion to vary the trial Order by increasing child and spousal support. The motion sought to have the increases made with retroactive effect to 2001 (the “Motion”). In the Motion materials, Ms. Bemrose stated that the reason for bringing the Motion was that, at trial, Mr. Fetter “knowingly gave false testimony about his income” on which the trial judge relied.

[10] The hearing of the Motion took place on June 13 and 14, 2005, and November 21, 2005. It led to seven endorsements and three orders. By order dated September 16, 2005, the motion judge dismissed the Motion to the extent that it had been brought on the grounds of fraud and mistake. However, he granted the Motion on the basis that there had been a change in circumstances from July 1, 2004.

[11] The motion judge reduced the annual income of $40,000 imputed to Ms. Bemrose by the trial judge to $20,000. This change was given retroactive effect to July 1, 2004. As a consequence, Ms. Bemrose’s imputed income for 2004 was $30,000 and for 2005 it was $20,000.

[12] By order dated May 11, 2006, the motion judge held that Mr. Fetter’s income for 2004 and 2005 was $86,600. He determined this figure by adding imputed income arising from the clergy residence deduction to Mr. Fetter’s actual income. In so doing, he used a different method than the one that had been employed by the trial judge.

[13] As a result of these orders (the “Motion Orders”), Mr. Fetter was ordered to pay substantially increased child and spousal support effective January 1, 2004. Specifically, he was ordered to pay child support of $820 per month in 2004 and $923 per month beginning in 2005 and an increased share of the children’s s. 7 special expenses. Spousal support was increased to $1,300 per month, effective January 1, 2004. In addition, Mr. Fetter was ordered to secure his spousal support obligation with a $100,000 life insurance policy.

[14] In a later order, Mr. Fetter was ordered to pay Ms. Bemrose costs of $10,000 (the “costs Order”).

[15] Mr. Fetter appealed the Motion Orders and seeks leave to appeal the costs Order.

[16] Prior to the hearing of this appeal, Mr. Fetter moved for a stay of the Motion Orders pending appeal. By order dated November 23, 2006, this court granted the stay and ordered him to pay $650 per month in spousal support and $771 per month in child support, pending further order of the court (the “Stay Order”).

[17] For the reasons that follow, I would allow the appeal. I would also grant leave to appeal the costs Order and allow the costs appeal.

THE TRIAL DECISION

[18] A summary of the trial judge’s reasons follows.

Mr. Fetter

[19] At the time of the trial, Mr. Fetter was 41 years of age. He had been employed as a United Church minister for fifteen years. His income came from two sources: (1) employment salary from the church that he served and (2) honoraria that he received for performing weddings and funerals.

[20] Mr. Fetter’s salary for 2002-03 was $56,800. Of that sum, $38,000 was base salary and $18,000 was a housing allowance.[^3] The income tax legislation allowed Mr. Fetter to claim a deduction for his residence allowance.[^4] Of the $18,000 housing allowance that he received, Mr. Fetter was entitled to claim a deduction of $14,400, as that was the total amount which he had paid for rent for the apartment in which he lived.

[21] Mr. Fetter’s gross income for the four years prior to trial, as declared in his tax returns,[^5] was as follows:

1998 - $55,205 ($54,085 salary and clergy residence; $1,125 other income)

1999 - $59,815 ($33,868 salary; $24,746 clergy residence. No honoraria)

2000 - $65,391 ($35,854 salary; $29,536 clergy residence. No honoraria)

2001 - $68,350 ($60,638 salary and residence; $10,535 honoraria; $107 other)

[22] Ms. Bemrose asked the court to find that Mr. Fetter was deliberately underemployed. She pointed to his 2001 income of $68,350, which was $11,550 higher than the salary he was then earning.

[23] The trial judge rejected this argument. She found that the marriage breakdown and resulting stress led to Mr. Fetter’s medical leave and consequent loss of employment. As well, the parties had agreed that he should remain in the region to assist in raising the children. In light of those factors, and in the absence of evidence that he would be likely to receive more than his current income even if he were to seek employment in another church in the region, she found his then-current salary to be the proper basis on which to determine support.

[24] The honoraria that Mr. Fetter received for performing weddings was paid by the church and recorded on his T4 slips. The honoraria that Mr. Fetter received for performing funerals was usually paid by the funeral home, although he was occasionally paid directly by the family of the deceased. After considering Mr. Fetter’s honoraria income over the years leading up to trial, the trial judge found that Mr. Fetter was unlikely to receive more than $2,500 per year of honoraria income.

[25] The trial judge found that the clergy deduction of $14,400 was worth an additional $4,800 in disposable income to Mr. Fetter and she deemed that to be additional income. Adding the deemed additional income of $4,800 to his salary of $56,800 and honoraria income of $2,500, the trial judge found his income for child support purposes to be $64,100.

Ms. Bemrose

[26] At the time of trial, Ms. Bemrose was 44 years of age[^6] and unemployed. In the latter years of the marriage, Ms. Bemrose worked out of the home as a writer and editor. However, after losing a longstanding contract and after the journal she worked for went out of business, Ms. Bemrose did not look for employment because she felt that she needed time to prepare for trial.

[27] The trial judge noted that the information given to the court about Ms. Bemrose’s income contained serious discrepancies. For example, Ms. Bemrose maintained that she earned a gross income of $43,656 in 2001; however, her T-4 showed a gross income of $60,442 for that year. The trial judge also observed that questions had been raised about the level of business expenses that Ms. Bemrose claimed in respect of her income.

[28] In determining Ms. Bemrose’s ability to earn income, the trial judge reviewed Ms. Bemrose’s many educational and work achievements and concluded that her income earning capacity was equal to, if not greater than, that of Mr. Fetter.

[29] A brief review of some of Ms. Bemrose’s achievements explains this finding. Ms. Bemrose:

− is a highly educated woman with undergraduate and graduate university degrees;

− has a great many marketable skills including writing, editing, use of the computer for research and strengths in management and leadership;

− has many years of work experience as a chaplain and editor;

− rescued a housing project from financial difficulty while holding a leadership position in a church;

− was an award-winning pianist;

− has worked also in the secretarial field, doing typesetting, and modelling for art classes;

− completed her Master of Divinity degree at the same theological college as Mr. Fetter;

− although never ordained, was eligible for ordination in the Anglican Church at the same time as Mr. Fetter and later qualified for ordination in the United Church;

− forged a new career as an editor and worked from the home during the marriage as a freelance writer, member of an editorial board and editor of a large respected religious publication;

− was highly regarded as an editor and won numerous awards;

− also worked outside the home during the marriage, providing temporary help for a personnel agency and translating medieval French lyrics;

− during the marriage, returned to university to pursue a doctoral program and, although she ultimately abandoned the program, taught both preaching and liturgy while she was pursuing her doctoral degree;

− while in her second year of the doctoral program, accepted a position as a part-time minister at a United Church where she was chaplain for three years and received glowing performance reviews.

[30] The trial judge found that Ms. Bemrose was intentionally unemployed. Based on her gross business income of about $60,000 in each of the two years prior to trial, the trial judge found that Ms. Bemrose would have no difficulty in finding work and earning an income approaching $60,000. She imputed an annual income of $40,000 to Ms. Bemrose for the purposes of determining child support.

Child Support

[31] After separation, Rebecca’s residence was with Mr. Fetter, Isaiah’s residence was with Ms. Bemrose and Elijah lived about equally with each parent.

[32] In March 2002, the parties agreed that Mr. Fetter would pay $631 a month for child support. They also agreed on a formula to share child expenses, under the terms of which each parent would compensate the other for two of the three children. This reflected that each had primary custody of one child and that custody of the third child was shared. This agreement was embodied in a consent interim court order of Perkins J. effective April 1, 2002.

[33] The trial judge largely followed the existing child support arrangement, altered to reflect the incomes as she had found them. She recognised that each party effectively had two children and set the quantum of child support by offsetting the amount each would pay under the Federal Child Support Guidelines, S.O.R./97-175 (the “Guidelines”) based on the parties’ incomes, as found. Extraordinary expenses were shared proportionate to income, as well.

[34] The trial judge did not accede to Mr. Fetter’s request that pre-trial child support be retroactively varied to reflect the parties’ incomes as found by the court.

[35] In the result, Mr. Fetter was ordered to pay child support of $248 per month plus 56.4% of the extraordinary expenses, effective January 1, 2003. Ms. Bemrose was to pay 43.6% of the extraordinary expenses.

Spousal Support

[36] The trial judge explored the numerous reasons given by Ms. Bemrose to justify her claim for spousal support and concluded that Ms. Bemrose had not been disadvantaged by the marriage. She noted that there was no medical evidence to support Ms. Bemrose’s claim that she suffered from “benign multiple sclerosis”. She outlined the numerous educational and employment accomplishments that Ms. Bemrose achieved during the marriage, some of which are summarised above.

[37] Although the trial judge concluded that Ms. Bemrose had not been disadvantaged by the marriage, she found that Ms. Bemrose was entitled to spousal support given her debts and medical expenses.

[38] Mr. Fetter was ordered to pay spousal support of $450 per month commencing January 1, 2003. The spousal support order was subject to review, on either party’s application, no sooner than three years from the date of the trial Order.

THE MOTION ORDERS

[39] The motion judge dismissed the Motion to the extent that it had been brought on the basis of perjury. In this regard, the motion judge held that the discrepancies in income did “not come close to the standard of deliberate deceit, ‘fraud’ or ‘perjury’”. Rather, the motion judge found, they were the result of poor record keeping and the stress of the separation and ensuing litigation. The motion judge concluded that the case was no different than thousands of others and “[I]f this case resulted in a reopening of an order made after a trial, no family law trial decision would ever be safe from attack.”

[40] The motion judge also dismissed the Motion insofar as it alleged that the trial judge had made a mistake in the calculation of the clergy residence deduction. That he said, was a matter for an appellate court.

[41] He granted the Motion on the basis of a material change in circumstances beginning July 1, 2004. He gave three reasons for this determination.

[42] The first reason related to Ms. Bemrose. The motion judge began by finding no evidence that Ms. Bemrose’s health had declined after the trial Order was made. However, he stated that she had provided evidence of job search efforts and of the decline in Canadian religious publication editing opportunities. He noted that over two and a half years had elapsed from the time of trial to the time of writing of the reasons with Ms. Bemrose’s qualifications “becoming staler and her job experience becoming sparser.” This, he said, was “neither foreseen nor foreseeable, according to the trial decision.”

[43] The motion judge stated that the expectation of the trial judge that Ms. Bemrose could earn $40,000 was “no longer tenable”. He went on to say:

Nevertheless, the mother is an educated and articulate woman who would be an asset in all manner of office, clerical or even retail jobs. She remains highly employable, though perhaps not in her chosen field. It is time for her to re-evaluate and consider other options. But I do find that there has been a material change in that she has not been able to realize the income imputed to her at trial.

[44] He then imputed a reduced annual income of $20,000 to Ms. Bemrose, beginning July 1, 2004. As a consequence, Ms. Bemrose’s imputed income was $30,000 for 2004 and $20,000 for 2005.

[45] Second, although Mr. Fetter’s income in 2003 was found to be little different than it had been in 2002, the motion judge found that his income had “materially” increased, starting in January of 2004. For 2004, Mr. Fetter’s annual total income was $72,000, including honoraria received for performing weddings and funerals but without allowing for the benefit of the clergy residence deduction.

[46] The motion judge adopted a different method for determining the value of the clergy residence deduction. Rather than using the “cash in hand” method employed by the trial judge, the motion judge calculated the amount of gross income that a taxpayer would have to earn in order to have the same net disposable after-tax income as Mr. Fetter. On that basis, he imputed an annual income of $86,600 to Mr. Fetter. He also ordered that Mr. Fetter’s gross income for child support purposes was to be based on this approach to the clergy residence deduction from 2004 forward.

[47] Third, the motion judge stated that it had been “agreed” that there had been a change of residence for Elijah as of January 1, 2005.

[48] The motion judge then ordered Mr. Fetter to pay substantially increased spousal and child support, with effect from January 1, 2004.

[49] When determining costs, the motion judge held that because Ms. Bemrose had unsuccessfully alleged that Mr. Fetter had been fraudulent, Mr. Fetter was entitled to a full indemnity for that portion of the proceedings that related to the fraud allegations. However, since Ms. Bemrose had been substantially successful in obtaining the relief she sought, the motion judge awarded her substantial indemnity costs for the remaining part of the proceedings before him in the amount of $10,000.

THE FRESH EVIDENCE MOTION

[50] Ms. Bemrose moved for leave to introduce fresh evidence on this appeal. It was said that the proposed fresh evidence was intended to demonstrate that Mr. Fetter (1) had interfered with Ms. Bemrose’s custody of Elijah to “obtain financial betterment”, and (2) for the purposes of the stay motion, had provided the court with financial information that was inconsistent with that which he later provided to the court.

[51] I begin with some general comments about the proffered evidence. It consists solely of Ms. Bemrose’s long, rambling affidavit which is filled with hearsay, sweeping statements and allegations of improper behaviour on the part of Mr. Fetter. There is nothing to substantiate the statements contained in the affidavit. It covers time periods before and after those covered by the orders under appeal. It raises matters which appear to have little, if anything, to do with the matters in issue on appeal. No attempt is made to relate the information to the matters in issue on appeal. Even if admissible, information of this sort presented in this way is not particularly helpful.

[52] The four-part test for admitting fresh evidence on appeal is set out in R. v. Palmer, 1979 SCC 8, [1980] 1 S.C.R. 759 at 775:

▪ The evidence should not be admitted if, through reasonable due diligence, it could have been adduced at trial.

▪ The evidence must be relevant to a decisive or potentially decisive issue.

▪ The evidence must be credible, or reasonably capable of belief.

▪ The evidence must be such that, if believed and considered along with all the other evidence, it could have affected the result at trial.

[53] While it appears that the usual rules for admission of fresh evidence on appeal are relaxed in cases involving the best interests of children,[^7] even on that basis, I do not find the proposed fresh evidence meets any component of the test. As it is largely a recitation of information of the same general nature as that which was before the lower courts, I do not accept that it is “fresh”. On this record, it is not surprising that Elijah may have expressed misgivings about living at his father’s home or that he may be frequently staying at his girlfriend’s home. Elijah’s frequent change of residence was well-known to both the trial judge and the motion judge.

[54] Further, given that little, if any, attempt is made to relate the fresh evidence to the issues, I am unable to see how it relates to a decisive or potentially decisive issue.

[55] The credibility of the evidence is called into question by its rambling nature, the failure to relate the information to the legal issues, a rehashing of matters that have been the subject of factual determinations made in prior legal proceedings and the general nature of the broad and unsubstantiated assertions against Mr. Fetter. For example, Ms. Bemrose asserts that there are more than 40 changes in Mr. Fetter’s financial statement dated December 24, 2006, from that which he filed in June of 2006. However, she does not set out any of the changes, indicate why the changes are significant or explain how this information is relevant to this appeal Given that a person’s financial situation will change in a six-month period, it is to be expected that updated financial statements will be different from those that predate them. The variations appear to be either minor or the result of updating and not an attempt to mislead the court.

[56] Finally, I am of the view that the proposed evidence, even if believed and considered along with all the other evidence, would not have affected the result below.

[57] There are two themes evident in the proffered evidence about Elijah. First, it suggests that Mr. Fetter is improperly manipulating and pressuring Elijah to live with him so that Mr. Fetter can enjoy financial benefit. Second, it discusses Elijah’s living arrangements, demonstrating that he moves residence from one parent to another, is conflicted about the moves, is now living some of the time at his girlfriend’s home and is uncertain about where he may go to university in the fall.

[58] There is nothing new in the type of allegations made against Mr. Fetter. I would note that the judges below made no findings consistent with such allegations and, apart from Ms. Bemrose’s bald assertions, I see no support for them in the record. While the fact that Elijah lives some time at his girlfriend’s home and may attend university in British Columbia is new information, I fail to see its relevance to the issues in this appeal.

[59] In relation to the generalized comments made about Mr. Fetter’s financial statements, I see nothing that calls into question their validity nor do I see how the alleged changes may affect any matters in issue on this appeal.

[60] Accordingly, I would dismiss the fresh evidence motion.

THE ISSUES

[61] I would summarize the many issues raised on this appeal as follows.

1. Spousal Support:

• Did the motion judge exceed his jurisdiction by interfering with the spousal support set by the trial Order before the three-year review period had elapsed?

• Did the motion judge err in finding a material change in circumstances?

• Did the motion judge err in the quantum of spousal support ordered by:

o adopting a new method of calculating the amount of income to be imputed to the appellant based on the clergy residence deduction;

o failing to take into consideration the appellant’s ability to pay; and

o making the increased spousal support order retroactive?

2. Child Support

• Did the motions judge err in the quantum of child support ordered and in making the order retroactive?

3. Costs

• Did the motions judge err in awarding the respondent $10,000 in costs given that her Motion materials made an allegation of fraud against the appellant that was not proven?

SPOUSAL SUPPORT

[62] Mr. Fetter argues that because the trial Order precluded review of spousal support until three years after the trial Order was made (the “review period”) and the review period had not elapsed at the time the Motion was heard, the motion judge did not have jurisdiction to order a variation in spousal support. He says that any change in circumstances could not be considered until after the review period expired.

[63] Alternatively, the appellant submits that even if the motion judge had jurisdiction to vary the trial Order before the review period had elapsed, he erred in making such a variation as there had been no material change in circumstances.

[64] I will deal with each of these arguments in turn.

Jurisdiction

[65] The respondent submits that under s. 17(4.1) of the Divorce Act, R.S.C. 1985 (2nd Supp.), c. 3, the motion judge had jurisdiction to order a variation in spousal support on the basis of a material change in circumstances before the review date. Section 17(4.1) reads as follows:

17(4.1) Before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration.

[66] In my view, the respondent is correct. The trial Order specifies that no review is to take place until three years after the date of the trial Order. It does not purport to oust the court’s jurisdiction to vary spousal support nor, in my view, could it. Section 17 of the Divorce Act creates a mechanism for varying support orders and gives parties the right to apply for a variation in prescribed circumstances. While the trial Order could set a period during which spousal support could not be reviewed, it cannot (and does not purport to) take away the parties’ right to apply for a variation.[^8]

Material Change in Circumstances?

[67] The test for varying a support order was established by the Supreme Court of Canada in Willick v. Willick, 1994 SCC 28, [1994] 3 S.C.R. 670.[^9] A variation motion is not to be treated as though it were an appeal of the original order. It is to be granted only if there is a material change in circumstances, that is,

[A] change, such that, if known at the time, would likely have resulted in different terms. The corollary to this is that if the matter which is relied on as constituting a change was known at the relevant time it cannot be relied on as the basis for variation.[^10]

[68] The motion judge gave three reasons for finding a change in circumstance: a “material” change in Mr. Fetter’s income beginning on January 1, 2004; a change in Elijah’s residence; and, a change in Ms. Bemrose’s financial situation. With respect, in my view, the motion judge erred in finding that those reasons met the threshold of a material change in circumstance.

[69] Contrary to the finding of the motion judge, Mr. Fetter’s income did not change “materially” from the time of trial to the time the Motion was heard. At the time of trial in 2002, he was an ordained minister earning approximately $69,500 per year.[^11] His income in the four-year period prior to trial, as an ordained minister, ranged from $55,205 to $68,350. At the time of the Motion, he was an ordained minister with an annual income of $72,000. Mr. Fetter was performing the same job, with only a modest increase in income. When that increase is considered in light of the pattern of income identified by the trial judge, I do not view it as material nor can it be said to be a change that if known, would have resulted in different terms.

[70] It appears to me that the motion judge found a material increase because of the income he imputed to Mr. Fetter based on the clergy residence deduction. However, as I explain below, in the circumstances of this case, it was not open to him to depart from the methodology that had been used by the trial judge.

[71] The motion judge also relied on a change in Elijah’s residence when determining there had been a material change in circumstance. Throughout the litigation between these parties, all judges have been aware that Elijah’s residence has alternated between his parents’ homes. Their orders reflect this arrangement.[^12] One court order issued during the relevant time period specifically permits Elijah to choose with whom he will live.[^13] As the possibility that Elijah might choose to reside with the respondent was a matter which was fully known to the trial judge, even if Elijah were residing with Ms. Bemrose at the time of the Motion, that fact could not be relied on as the basis for a variation in spousal support.

[72] I would add that, in any event, it is unclear whether Elijah was residing with Ms. Bemrose at the time of the Motion. In a consent order dated May 2, 2005, it was stated that Elijah’s primary residence “shall be” with Ms. Bemrose. However, while the record is unclear, it appears that the consent order was made without prejudice to Mr. Fetter’s right to argue the matter of Elijah’s residence at the Motion.[^14] Given Elijah’s frequent change of residence, it is not surprising that this matter was reserved for determination at the Motion.

[73] No such determination was made. Rather, it appears that the motion judge assumed that Elijah was residing with the respondent. This may have flowed from his apparent misunderstanding of the trial Order. The trial Order was based on the notion that one child lived with each parent and the third child split his time between the parents. However, at para. 9 of the reasons dated August 8, 2005, the motion judge recites that the trial Order was predicated on the father paying support for two children and the mother paying support for one child.

[74] I turn now to consider the third reason given by the motion judge, namely, Ms. Bemrose’s financial situation.

[75] It appears to me that there was no change in Ms. Bemrose’s situation that had not been contemplated by the trial judge. The trial judge found that Ms. Bemrose had not been disadvantaged by the marriage. In fact, she found that Ms. Bemrose had benefited from the marriage in terms of education and employment. The trial judge found Ms. Bemrose to be intentionally unemployed. Spousal support was ordered only because of Ms. Bemrose’s debts and medication needs. It is important to note that Ms. Bemrose’s position at trial was that she needed to seek out a career change for various reasons, including the decline in religious publishing opportunities.

[76] The motion judge found no change in Ms. Bemrose’s health. Like the trial judge, he noted that she was highly employable. He referred to the decline in religious publication opportunities but that was no different than the situation that existed at trial. Indeed, it was the express reason given by Ms. Bemrose at trial as to why she needed a career change. As at trial, Ms. Bemrose was unemployed.

[77] While Ms. Bemrose’s employment situation remained unchanged, the motion judge found that she had made reasonable efforts to find employment and that it was not foreseen at trial that Ms. Bemrose would be unable to find employment. This is different than the situation at trial where the trial judge found that Ms. Bemrose had made no efforts to find work as she had chosen to focus instead on readying herself for the trial.[^15]

[78] At a fundamental level, it seems to me that the motion judge’s finding cannot stand largely because of the way in which the Motion unfolded. Ms. Bemrose brought the Motion on the basis that Mr. Fetter had perjured himself at trial or that the trial Order was the result of a mistake. Those were the grounds set out in the pleadings. Numerous court appearances and various other motions went on during the same time that the Motion was pending or being heard.[^16] All kinds of affidavits and financial statements were filed and served in those other motions. But, the fact remains, Mr. Fetter understood, based on the pleadings, that the Motion was based on a claim either that he had perjured himself at trial or that the trial Order was the result of a mistake. Mr. Fetter says he was blindsided by the finding at the Motion of a change in circumstances. He was not aware that the Motion could be decided on the basis of a change in circumstances and maintains that he was entitled to proper notice and the opportunity to lead evidence in respect of the various alleged changes. I agree.

[79] It appears that the Motion was brought pursuant to Rule 15(7) of the Family Law Rules as Family Law Rule 15 applies to motions to change final orders or agreements. Rule 15(7)(f) requires that the details of the change asked for and the changed circumstances that are grounds for the change be disclosed. The change of circumstances as found by the motion judge was not listed in the Motion materials as a basis for the Motion. Thus, it is entirely understandable that Mr. Fetter approached the Motion on the grounds that had been pleaded – perjury or mistake. The financial issues that arose appear to flow out of other motions. Mr. Fetter understood that the financial issues to be raised on the Motion related to the (minor) inaccuracies in his trial financial statements. He recognized and accepted that child support was to be recalculated when there were changes to his income. That, however, is not the same thing as understanding that he was facing a claim that spousal and child support were to be changed due to a material change in circumstances.

[80] Consider then the evidence before the motion judge of Ms. Bemrose’s efforts to find employment. Other than one bare assertion in an affidavit that she had “recently” applied for a number of positions but was not considered for them, I could find nothing in the record to support the finding that reasonable efforts to find employment had been made after the trial. Given that Mr. Fetter did not understand that this matter was up for consideration at the Motion, it is readily apparent why there was no challenge to the bald assertion.

[81] This shifting of grounds, blending of evidence from various motions and proliferation of documentation likely also explains the issue raised by that part of the Motion Order which requires the appellant to secure the spousal support payable with life insurance. There was no term to this effect in the trial Order. That relief had not been sought in the notice of motion or supporting documents filed by the respondent on the Motion. The appellant says that he was never aware that the motion judge was contemplating making such an order nor was he given an opportunity to address the matter. Even if such relief is routinely ordered in conjunction with spousal support orders, if it has not been sought, it ought not to be ordered, at least without first giving the other side the opportunity to speak to the matter.

[82] In these circumstances, it was not open to the motion judge to find a change in Ms. Bemrose’s circumstances. The issue of imputed income was res judicata and her imputed income remains at $40,000 per year.

Conclusion on Spousal Support

[83] In light of my conclusion that there was no material change in circumstances, the motion judge did not have jurisdiction to vary spousal support. Consequently, I would set aside those parts of the Motion Orders that vary spousal support and restore the relevant parts of the trial Order. This means that spousal support of $450 per month was payable from January 1, 2003, forward, with the exception of the period covered by the Stay Order, during which period spousal support was $650 per month. Further, in accordance with the trial Order, spousal support was to be indexed annually. In addition, either party may apply to the court to have the spousal support order reviewed because the review period has elapsed.

[84] In my view, the financial situations of the parties and the endless litigation since trial make the notion of a review highly unattractive. However, having determined that the terms of the trial Order in respect of spousal support are to prevail, it is inappropriate to “pick and choose” among those provisions and the review provision remains. I anticipate that if and when such a review is undertaken, the motion judge will conduct it with due regard to the findings of the trial judge as to the parties’ respective abilities to obtain employment and against a backdrop of realistic goals and expectations for both parties.

[85] I would add a final comment. Even if the threshold for a variation had been met, it was incumbent on the motion judge to consider the appellant’s ability to pay when determining the quantum of spousal support. The Motion Orders increased monthly spousal support from $450 to $1,300. They also significantly increased the appellant’s child support obligations. As the Motion Orders were made with retroactive effect, they instantly created significant arrears for the appellant. On the record, the Motion Orders far exceed the appellant’s ability to pay. His financial statements show no equity and significant debt. His evidence demonstrates that he has no ability to borrow further funds.

[86] It was incumbent on the motion judge to consider not only Ms. Bemrose’s need but also Mr. Fetter’s ability to pay. Although the motion judge stated that he had looked at the “condition, means, needs and other circumstances of the parties and children”, I see no mention of the appellant’s ability to pay. Further, I see no explanation for how or why $1,300 per month was an appropriate quantum of spousal support. Both failures, in my view, are errors.

[87] In light of my conclusion on spousal support, there is no need to deal with the appellant’s submission that the motion judge erred in making the order for spousal support retroactive.

[88] The only other issue raised in the context of spousal support that has not been addressed relates to the method employed by the motion judge when imputing income to the appellant based on the value of the clergy residence deduction. As the appellant’s income is relevant to a determination of child support, this issue is addressed in the following section on child support.

CHILD SUPPORT

[89] It will be recalled that the trial Order established child support based on the following four findings and assumptions:

1. Mr. Fetter’s income for 2002 was $64,100;

2. when calculating Mr. Fetter’s income for the purpose of child support, the effect of the clergy deduction was to be based on the “cash in hand” method;

3. Ms. Bemrose’s income for 2002 was imputed to be $40,000; and

4. child support was based on the assumption that one child was primarily resident with each parent and the third child moved between the homes of the two parents.

[90] The trial Order reflects the fact that the parties’ incomes were subject to change. It spells out that, beginning June 15, 2003, the parties are to exchange financial documentation for purposes of establishing child support.

[91] Three factors must be considered when determining whether the terms in the Motion Orders relating to child support are valid: Mr. Fetter’s income, Ms. Bemrose’s income, and the number of children living with each. I deal with each factor in turn and then consider s. 7 expenses.

Mr. Fetter’s Income

[92] At the Motion, Mr. Fetter offered to pay increased child support for 2002 based on additional income of $5,400 from performing funerals. Accordingly, the motion judge found Mr. Fetter’s 2002 income for purposes of calculating child support was $69,500 - $64,100 as found by the trial judge plus $5,400 additional income. No appeal is taken from this finding and it remains effective.

[93] Nor is any appeal taken from the findings of the motion judge as to Mr. Fetter’s actual income in the years that follow. By actual income, I mean the income that Mr. Fetter received from employment, by way of housing allowance and from honoraria for weddings and funerals. Those findings remain undisturbed.

[94] The appellant argues, however, that the doctrine of res judicata governs the method to be used when calculating the imputed income to be attributed to him as a result of the clergy residence deduction. He maintains that in re-litigating this issue on a variation motion, the respondent was permitted to launch a collateral attack on the trial decision.

[95] I accept the appellant’s submission on this matter. As no appeal was taken from the trial Order, the method for determining the amount of income to be imputed as a result of the clergy residence deduction was res judicata. Consequently, the motion judge lacked jurisdiction to adopt a different method for calculating the value of the clergy residence deduction when determining Mr. Fetter’s income for the purposes of child support.

[96] As a result, for the purposes of calculating child support, the amount of income to be imputed to Mr. Fetter based on the clergy residence deduction ought to be calculated in accordance with the method employed by the trial judge, rather than that of the motion judge.

[97] Having said that, I wish to add that in the circumstances of this case, I see no error in the approach of the trial judge. The reason for my view lies in the fact that when the trial judge was deciding the respective incomes of the parties, they each enjoyed special tax deductions. Mr. Fetter was entitled to a special deduction in relation to the clergy residence income but, from the record, it appears that Ms. Bemrose was entitled to other special tax deductions because of the type of work that she performed and because it was performed in the home. Both parties took exception to the way in which the other accounted for the special tax advantages of the other. In those circumstances, it appears that the trial judge was attempting to treat “apples like apples”. That is, she realised that both parties had more after-tax money as a consequence of the special tax deductions that they were entitled to take. Having recognized that, she made what she determined was an appropriate adjustment to the appellant’s income by increasing it by the amount which the deductions increased his disposable income. In light of the evidence before the trial judge that both parties made approximately similar amounts of gross income and both had the right to take special deductions, it was open to the trial judge to have imputed no additional income to Mr. Fetter because she added no imputed income to Ms. Bemrose for her special deductions. Thus, I see no unfairness in the trial judge’s approach or the result of that approach in the circumstances of this case.

[98] Finally, I wish to respond to Ms. Bemrose’s argument that because the trial judge gave no reasons to explain the method that she used to calculate the value of the clergy residence deduction, the motions judge was entitled to adopt his own approach.

[99] While I accept that the trial judge did not fully articulate how she derived the figure of $4,800 as the value of the clergy residence deduction for 2002, I do not agree that she gave no reasons to explain the method that she employed. On a full reading of the reasons, it is apparent that the trial judge imputed income based on the additional cash-in-hand that Mr. Fetter would have with which to pay support as a result of claiming a clergy residence deduction of $14,400. At para. 16 of the reasons, the trial judge states that the clergy deduction of $14,400 would “likely be worth an additional $4800 in disposable income to him” [emphasis added]. Moreover, she states that “ … it doesn’t follow that his income must be automatically grossed up by the value of his housing allowance”, making it clear that she rejected the gross-up approach.

[100] In summary, for the purposes of child support, Mr. Fetter’s income for 2002 is, for the reasons already given, $69,500. Thereafter, Mr. Fetter’s income is to be his actual income, as found by the motion judge, plus the value of the clergy residence deduction calculated in accordance with the “cash in hand” method used by the trial judge.

Ms. Bemrose’s Income

[101] As explained above in the section on spousal support, I am of the view that the motion judge lacked jurisdiction to revisit the issue of the income to be imputed to Ms. Bemrose. Consequently, in accordance with the trial Order, for the purposes of determining child support, an annual income of $40,000 is to be imputed to Ms. Bemrose.

Number of Children Resident with Each Parent

[102] Child support for the years 2003 and 2004 is to be in accordance with the assumption of the trial judge, namely, that one child resided with each of the parties and the third child moved between their residences. In light of the order dated May 2, 2005, of Ferguson J., to the effect that Elijah’s primary residence was with Ms. Bemrose and as that order had effect commencing January 1, 2005, child support from January 1, 2005 to June of 2006, when the Motion was heard, is to be calculated on the basis that two children had their primary residence with Ms. Bemrose and one child had her primary residence with Mr. Fetter. Thereafter, child support is to be calculated on the same basis as at trial, namely, that one child resided with each parent and the third child lived equally with both.

[103] In my view, it is preferable to restore the decision of the trial judge on this matter for the following reasons. As discussed above, the state of Elijah’s residence was apparently to be decided at the Motion. It was not. The parties continue to argue about where he lives and for how long. The assumption that Elijah lives equally with both parents reflects the lengthy history of Elijah moving between the two homes. In fact, a fair reading of the record suggests that from the time of separation until today, Elijah has moved between the two homes and the parties have agreed that he should be free to do so. This assumption also attempts to minimize the impetus to manipulate Elijah. It also should minimize return trips to the courthouse which would be required if support were to be re-adjusted each time Elijah moves house.

Section 7 Expenses

[104] The motion judge made many determinations as to the children’s s. 7 special expenses over a number of years. I see no basis on which to interfere with those determinations and they remain effective. However, the parties are to pay their proportionate shares of such expenses based on their incomes calculated in accordance with these reasons.

THE COSTS ORDER

[105] As Mr. Fetter has been successful on appeal, it follows that the costs Order ought to be set aside. Consequently, I need not decide the issues that he has raised in relation to the propriety of that order.

[106] Having said that, some comments on the costs Order are warranted. Although appellate courts are to afford deference to costs awards because of their discretionary nature, I find the costs Order in favour of Ms. Bemrose to be troubling. When Mr. Fetter learned that one small aspect of the financial information which he had provided to the trial court was inaccurate, he immediately disclosed the same to Ms. Bemrose. After volunteering that information, he attempted to remedy the problem by giving Ms. Bemrose $1,000 and committing to pay any additional sum found to be owing once the accounting had been rectified.

[107] In light of the trial judge’s finding that honoraria income from both weddings and funerals was $2,500 per year and, as there was no question about the reliability of the information about honoraria income from weddings, a payment of $1,000 seems eminently reasonable in the circumstances. The ultimate determination that the understatement of income was $5,800 over a two-year period bears that out.

[108] The actions taken by Mr. Fetter in relation to this matter ought to be encouraged by the courts. It was right that he disclose the mistake, once he was aware of it. It was right that he attempt to immediately compensate Ms. Bemrose for the effect such an error would have on child support. The steps that he took ought to have minimized or eliminated the need for recourse to the courts. However, instead of resolving matters, his disclosure led to the Motion being commenced by Ms. Bemrose. The Motion was argued over three days which spanned a three-month period and followed countless related court appearances. The magnitude of the Motion material is disclosed in the motion judge’s reasons for decision dated March 21, 2006, in which he states that with the filing of the parties’ costs submissions, there were 36 volumes of material totalling over 4000 pages before him.

[109] As an ordained minister, Mr. Fetter was particularly vulnerable to the allegation of perjury. He had no choice but to respond and defend himself. He was fully exonerated - the motion judge dismissed the Motion, insofar as it had been brought on the allegation of perjury, and made the finding that the claim of fraud was “unreasonable (not just unsuccessful, but quite untenable for lack of proof)”. Despite that finding, the respondent continued to allege, in the material that she filed on costs of the Motion, that Mr. Fetter was attempting to deceive the court.[^17]

[110] In the light of these factors and the strained financial circumstances of both parties, it appears to me that even if Ms. Bemrose had been successful, she ought to have been denied her costs on the basis of Rule 24(4) of the Family Law Rules. Rule 24(4) provides that a successful party who has acted unreasonably may be deprived of costs.

[111] Having made those observations, in setting costs here and below, I am mindful of the fact that one and sometimes two of the children reside with Ms. Bemrose and, as her actual income comes solely from support, their standard of living may well be affected by such an award. At the same time, this consideration is tempered by the finding of the trial judge that Ms. Bemrose has the ability to find lucrative employment; the fact that she has failed to obtain employment ought not to be used as a reason to reduce the costs to which the successful party is entitled.

DISPOSITION

[112] Accordingly, I would allow the appeal and order that the Motion Orders be varied to conform with these reasons.

[113] I understand that the quantum of child and spousal support that Mr. Fetter has paid may exceed that which this appeal has determined he was obliged to pay. Although this possibility was briefly alluded to at the oral hearing of the appeal, the question of how any overpayment ought to be dealt with was not argued. If the parties are unable to resolve this matter between themselves, they are directed to take the appropriate proceedings in the Family Court to have the matter addressed.

[114] I would grant leave to appeal the costs Order, allow that appeal and set aside the costs Order. Mr. Fetter is entitled to costs of the Motion and this appeal. For the reasons already given, I would fix those costs at $15,000 for the Motion and $10,000 for the appeal. Both such amounts are inclusive of GST and disbursements. To reduce hardship to Ms. Bemrose, I would not require her to pay the costs forthwith. Instead, I would order that Mr. Fetter may set off the costs against his spousal support obligations. I trust that the parties can negotiate a reasonable method for setoff.

RELEASED: “MJM” September 18, 2007

“E.E. Gillese J.A.”

“I agree M.J. Moldaver J.A.”

“I agree H.S. LaForme J.A.”

[^1]: Reported at 2003 ONSC 2406, [2003] O.J. No. 1838 (S.C.J.).

[^2]: Although the respondent filed a notice of appeal, her appeal was dismissed for delay.

[^3]: There is an $800 discrepancy which is unexplained by the trial judge - $38,000 + $18,000 = $56,000, not $56,800. This discrepancy is not significant because Mr. Fetter’s annual salary of $56,800 was not disputed and that figure was used by the trial judge for calculating support.

[^4]: Pursuant to s. 8(1)(c) of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1.

[^5]: His 2002 tax return had not been filed at the time of trial.

[^6]: There is some ambiguity about Ms. Bemrose’s age. In para. 1 of the reasons, the trial judge wrote that Ms. Bemrose was 44 years of age. However, at para. 39 of the reasons, the trial judge states that Ms. Bemrose maintained that she was then 45 years old. Nothing turns on this discrepancy, however.

[^7]: See, for example, child protection cases such as Children’s Aid Society of Peel v. W.(M.J.) (1993), 1995 ONCA 593, 23 O.R. (3d) 174 (C.A.) at 193 and family law cases such as Di Nunzio v. Di Nunzio, [2006] O.J. No. 4430 (Div. Ct.) at para. 2.

[^8]: The distinction between a review of and a variation of a support order was expressed by Laskin J.A. in Andrews v. Andrews (1999), 1999 ONCA 3781, 45 O.R. (3d) 577 at para. 35: “[u]nlike on a variation application, on a review neither spouse has to demonstrate a material change in circumstances. The court determines spousal support – entitlement, amount, and duration – afresh on the facts existing at the review date.” See also Leskun v. Leskun, 2006 SCC 25, [2006] 1 S.C.R. 920 at paras. 37 and 39.

[^9]: Although Willick dealt with a variation of child support, the reasoning in Willick has been applied to variations of spousal support.

[^10]: At 688.

[^11]: This is the $64,100, as found by the trial judge, plus $5,400 of additional income from funerals which he voluntarily disclosed.

[^12]: See, for example, para. 8 of Justice Goodman’s order dated October 8, 2002, which provides that Elijah is to reside with each parent on a “two-week on, two-week off” basis and the trial Order, which is based on the assumption that Elijah’s residence was shared between the parties.

[^13]: Para. 10 of the order of Ferguson J. dated May 2, 2005, provides that if Elijah expresses a clear desire to adjust his residence arrangements, “the parties will honour his request”.

[^14]: See para. 13 of the endorsement of the motion judge dated August 8, 2005.

[^15]: I recognize that failure to find employment, despite reasonable efforts, can constitute a material change in circumstances: Trewin v. Jones (1997), 1997 ONCA 1105, 32 O.R. (3d) 225 (C.A.). However, as I have explained, the circumstances of this case are materially different from those in cases such as Trewin, especially as it was foreseen at trial that employment was dependent on seeking work outside the religious publishing field.

[^16]: The Motion was filed in January 2005. It was heard on June 13 and 14, 2005, and November 21, 2005.

[^17]: The respondent continued to make such allegations thereafter including on her motion for security for costs and in the fresh evidence motion. As these matters took place after the costs Order was made, they are not relevant to the propriety of the costs Order, however.