CITATION: Burley v. Burley, 2009 ONCA 2
DATE: 20090107
DOCKET: C48285
COURT OF APPEAL FOR ONTARIO
Rosenberg, Sharpe and Blair JJ.A.
BETWEEN:
Andrea J. Burley
Applicant (Respondent)
and
Daniel R.C. Burley
Respondent (Appellant)
Rochelle F. Cantor, for the appellant
Rodica David, Q.C., for the respondent
Heard: November 13, 2008
On appeal from the order of Justice M.G.J. Quigley of the Superior Court of Justice in Milton, dated November 19, 2007.
R.A. Blair J.A.:
BACKGROUND
[1] Mr. Burley seeks to set aside the order of Justice M.G.J. Quigley dated November 19, 2007, dismissing his motion to vary spousal support, terminate daycare expenses and reapportion s. 7 payments, all of which arise pursuant to an earlier consent order granted by Justice Tulloch.
[2] The Burleys were married on June 22, 1996 and separated on January 18, 2004. They divorced in August, 2005. They have two children, Abigail and William, presently 9 and 6 years old, respectively. The appellant is a firefighter employed by the Toronto Fire Services. At the time of the motion before Quigley J., the respondent was a student at Wilfrid Laurier University’s Brantford campus, pursuing a Bachelor’s degree.
[3] After some protracted litigation, the parties entered into Minutes of Settlement at a Settlement Conference that took place before Justice Tulloch. They resolved all issues in dispute regarding custody, access, child and spousal support, and equalization of net family property. The agreement, which was embodied in a formal order dated March 9, 2006 (the “2006 Consent Order”), included the following:
a) shared custody of the children, who would continue to have their primary residence with their mother, with liberal access to the appellant as set out in a monthly residency schedule;
b) payment by the appellant to the respondent of:
(i) child support in the amount of $897 per month, based on the appellant’s then declared income of $67,000;
(ii) spousal support in the amount of $1321 per month, to be reviewed in three years; and
(iii) daycare expenses of $732.17 (76% of the s. 7 expenses under federal guidelines).
[4] The appellant has never made these payments in full, notwithstanding his sworn statement in his Change of Information Form filed in support of the variation in April, 2007, that “I am paying spousal support to the Applicant in the amount of $1,321.00 per month and have been paying this amount since April 1, 2006”. He has a long history of non-compliance with support orders in the proceedings. At the time of the Settlement Conference he was $60,000 in arrears, a deficiency he satisfied by conveying his half interest in the matrimonial home to the respondent. He appears to be short, on average, approximately $770 per month in payment of his obligations under the 2006 Consent Order. At the time of the motion to vary in September, 2007, his arrears had accumulated to $11,155.65. By March 3, 2008 – the last figures available – they were $15,928.85. While acknowledging that the appellant was financially pressed, the motion judge viewed the history and continuing pattern of arrears quite negatively. Since filing his notice of appeal, the appellant has made a voluntary assignment in bankruptcy, although the bankruptcy will not discharge his court ordered child and support obligations: the Bankruptcy and Insolvency Act R.S.C. 1985, c. B-3, as amended, s. 178(1)(c).
[5] At the Settlement Conference many things were discussed as the parties worked their way toward an agreement. The appellant argues that the daycare expenses were only to continue for another year because it was anticipated that William would be out of daycare by that time. He further contends that his agreement to pay spousal support was conditional upon the respondent’s representation that she expected to be in full-time attendance at school for the next 3½ years, completing her B.A. and pursuing a law degree – she had applied to law school but had not yet been accepted – and that she would not be working.
[6] Shortly after the Settlement Conference, the respondent began working part-time during the summer at a men’s wear store owned by her father in Oakville. She earned $23,444.85 for the year 2006. In February 2007 – partly because her father had become ill and partly (she maintains) because the appellant’s failure to comply with his support obligations had required her to put her education plans on hold – she began working full- time at the store. At the time the variation motion was heard, she was earning income at the rate of $4,166 per month ($49,992 per annum), according to her updated Financial Statement. The appellant’s declared annual income by that time had increased to $75,838, according to his 2006 income tax return.
[7] There was an issue whether the appellant – who worked seven 24-hour shifts a month as a firefighter – was earning additional undeclared income from a sideline home renovation business he conducted. The motion judge was not able to resolve this issue, but he was troubled by the fact that the appellant had not disclosed the income he declared on a mortgage application which resulted in his being approved for an approximately $400,000 mortgage and by the fact that the appellant “claimed to be unable to make use of his very substantial amount of free time for further income producing pursuits.” He found that the appellant had not made full and frank disclosure. The motion judge declined, nonetheless, to impute additional income to the appellant for the purposes of the motion then before him. But he concluded that “it is necessary to get to the bottom of the issue of the actual amount of income being earned by Mr. Burley”, and granted leave to the respondent “to bring a further motion solely to have the issue of income quantification addressed”. Having declined to impute further income to the appellant, the motion judge also declined to impute income to the respondent beyond the $23,000 amount (her part-time income) shown on her 2006 T-1 tax return. He ordered that the s. 7 expenses be apportioned on a $76,000/$23,000 ratio.
ANALYSIS
[8] The appellant put forward an array of arguments on the appeal. However, they may be distilled down to four central assertions. The appellant argues that the motion judge erred in:
a) failing to find a material change in the circumstances of the parties;
b) assessing the respondent’s income at $23,000 for the purposes of determining her proportionate obligation to contribute to s. 7 expenses and in failing to make other required adjustments in that calculation;
c) characterizing the correspondence and methods of communication used by the appellant as “harassing” and “threatening”, giving rise to a need for a restraining order; and
d) ordering costs on a substantial indemnity basis.
Did the Motion Judge Err in Failing to Find a Material Change in the Circumstances of the Parties?
[9] The appellant’s principal ground of appeal is that the motion judge erred in failing to find a material change in the circumstances of the parties justifying a variation of the 2006 Consent Order. He says this for the following reasons. First, and foremost, he relies on the fact that the respondent is now earning income as a member of the work force, whereas at the time of the Settlement Conference she was a full-time university student planning on continuing her education and entering law school. Second, he argues that the motion judge failed to take into account that there was now a shared parenting arrangement in place – pursuant to a separate order of the court – that gave him more time with the children and that would enable him to provide the daycare services that were to have been, but were not, terminated a year after the 2006 Consent Order. Finally, he contends that the respondent received certain tax benefits in 2006 which constituted a change in circumstances.
[10] Section 17(1) of the Divorce Act, R.S.C., 1985, C.3, as amended, permits the court to vary a support order where there has been a change in circumstances.[^1] The jurisprudence is clear that courts are reluctant to interfere with support orders and will not do so unless the reasons disclose an error in principle or a significant misapprehension of the evidence, or unless the order is clearly wrong. Because of the fact-based and discretionary nature of such an order, judges are to be given considerable deference by appellate courts when such decisions are reviewed. Their discretion is to be exercised, however, in accordance with the four objectives set out in s. 17(7) – which are designed to reflect the principle that the economic consequences of marriage and of separation and divorce are to be equitably shared between the former spouses – namely that the variation order should:
a) recognize any economic advantages or disadvantages to the former spouse arising from the marriage or its breakdown;
b) apportion between the former spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
c) relieve any economic hardship of the former spouses arising from the breakdown of the marriage; and
d) in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.
[11] See Hickey v. Hickey, 1999 CanLII 691 (SCC), [1999] 2 S.C.R. 518, at paras. 10-11.
[12] Moreover, the change in circumstances must be material and not trivial or insignificant: Hickey, at paras. 14 and 20-22; Willick v. Willick, 1994 CanLII 28 (SCC), [1994] 3 S.C.R. 670. In Willick, at p. 688, Sopinka J. said:
In deciding whether the conditions for variation exist, it is common ground that the change must be a material change of circumstances. This means 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. [Emphasis added.]
[13] Here, the motion judge concluded there had been no material change in circumstances that could bring about a reduction in the spousal support payable to the respondent – at least for the three years ending on March 9, 2009 – in spite of the alteration in the respondent’s working situation. He founded this conclusion on two bases.
[14] First, he rejected the appellant’s submission that the respondent had “represented” during the Settlement Conference that she would not work as a precondition to his paying the amount of spousal support to which he had agreed. Instead, after reviewing the transcript of the meeting with Justice Tulloch, the motion judge found that “what was contemplated in addition to his obligation to pay child support to [the respondent] as the custodial parent of their two children was a three year period during which Mr. Burley would provide spousal support to Ms. Burley to permit her to get back on her own economic feet, and to permit her to get through second year of law school.” He rejected as well the appellant’s contention that it was never contemplated or foreseeable that the respondent would need to take on employment. Rather – the motion judge concluded – it was inevitable that the respondent would have to take on some employment because it could not reasonably have been expected that she could support herself and the two children on the amount she was to receive from the appellant. The need to supplement her income was even more “obvious” should the appellant – as he did – fail to comply with his support obligations. As the motion judge observed in his reasons (at para. 12):
In the face of Mr. Burley’s continuing breach of his obligations under the 2006 Consent Order, his suggestion that the burden imposed on Ms. Burley by those circumstances should now result in the termination of her spousal support is inappropriate and without merit, and even more surprising is his claim that she ought to be required to provide a rebate to him for the limited payments he has made.
[15] The record amply supports the motion judge’s findings and conclusions, and I can find no basis for interfering with his decision in this regard. This is particularly so because the support arrangements are open to be reviewed in March 2009 by virtue of the terms of the 2006 Consent Order.
[16] Second – and following from the foregoing – the motion judge found that “there has been no material change in Mr. Burley’s continuing failure to make all of the payments to Ms. Burley that he has agreed to make at various times.” He noted that at the time of the Settlement Conference arrears had accumulated in excess of $60,000. Tulloch J. had attempted to deal with this situation by encouraging an agreement “that would permit the parties to move forward and permit Mr. Burley to get out from under the burden of those arrears but also establish a new framework for the payment of support going forward that Mr. Burley could and indeed would meet.” Hence the agreement to satisfy past arrears by the transfer of the appellant’s half interest in the matrimonial home to Ms. Burley. However, the appellant fell into arrears under the 2006 Consent Order almost immediately. While the motion judge appears to have mistakenly stated that arrears had accumulated to “some $17,000” by the time he heard the motion, they had risen to almost $12,000 by then.
[17] It is well-recognized that a court has discretion not to entertain an application by a payor spouse who is in continuous default: Dickie v. Dickie, 2007 SCC 8, [2007] 1 S.C.R. 346, at paras. 4 and 6. The motion judge declined to exercise that discretion in this case. However, in these circumstances, I see no error in his reasoning that “Mr. Burley’s continuing non-compliance with [the 2006 Consent Order] must necessarily impact on his right to ask the court to grant the relief he seeks.”
[18] The motion judge was alive to the appellant’s claim that because of the shared parenting arrangement and his availability, he could provide the daycare required. He rejected it, however. He said:
[25] With respect to daycare costs, I accept Ms. Burley’s assertion that it continues to be in the best interests of the children to continue in daycare as recommended by the parties’ previous Parenting Coordinator/Mediator, Ms. Coco Johnson. The claim of Mr. Burley that he is available and can provide all the daycare that the children require is rejected. While he does have a “flexible” work schedule with the Toronto Fire Department, this neither guarantees that he will be available to provide daycare when required, either on a scheduled or last minute basis. More importantly, however, in my view Mr. Burley has been as casual in his provision of time to care for the children as he has been in meeting his financial obligations to Ms. Burley, and it is unrealistic at this time to have any expectation that Mr. Burley could provide the reliable level of daycare for the children that they require.
[19] The motion judge’s decision that daycare should continue in the best interests of the children, and not be replaced by leaving the children in the appellant’s care for these purposes, was open to him on the record and should not be interfered with. It follows that the shared parenting arrangement cannot be said to give rise to a material change in circumstances for variation purposes.
[20] Although the motion judge did not specifically consider the assertion that the respondent had received certain tax benefits and other deductions in this context, I do not think they can be said to give rise to a material change in the circumstances either. First, they must have been reasonably anticipated at the time of the 2006 Consent Order. Second, any benefit obtained will have been more or less offset by the appellant’s arrears in spousal support payments.
[21] I would not give effect to the “material change” ground of appeal.
Did the Motion Judge Err in Assessing the Respondent’s Income at $23,000 for Purposes of Determining Her Proportionate Obligation to Contribute to Section 7 Expenses and in Failing to Make Other Required Adjustments?
[22] The respondent’s T-1 General return for 2006 showed that she had earned $23,444.85 during that year. This reflected her income while working part-time in her father’s store when she was still attending Wilfrid Laurier University. By the time of the motion to vary, however, she was working full-time in the store and was earning an annual income of approximately $50,000. Nonetheless, the motion judge determined the parties’ proportionate shares of section 7 expenses for the children based upon a $23,000 income for the respondent and a $76,000 income for the appellant. The appellant submits that he erred in doing so.
[23] In the circumstances of this case, I do not agree.
[24] Section 26.1(2) of the Divorce Act provides that the federal child support guidelines (“the Guidelines”) are “based on the principle that spouses have a joint financial obligation to maintain the children of the marriage in accordance with their relative abilities to contribute to the performance of that obligation.” In terms of a spouse’s proportionate share of s. 7 expenses under the Guidelines, the “guiding principle” is “that the expense is shared by the spouses in proportion to their respective incomes”: Guidelines, s. 7(2). In determining spousal income, the starting point is that “a spouse’s annual income is determined using the sources of income set out under the heading ‘Total income’ in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III”: Guidelines, ss. 15(1) and 16. At the same time, however, s. 2(3) of the Guidelines states:
Where, for the purposes of these Guidelines, any amount is determined on the basis of specified information, the most current information must be used.
[25] The appellant argues that, while the respondent’s 2006 T1 form showed earnings of $23,000, the best information – “the most current information” – before the court demonstrated that she was earning full-time income at the rate of approximately $50,000 per year. The motion judge was required to apply this income, he says. In addition, he submits that the motion judge failed to make two required adjustments in arriving at the spouses’ proportionate shares of s. 7 expenses: (i) he did not deduct spousal support paid to the respondent in adjusting the appellant’s income, as required by Schedule III, s. 3 of the Guidelines; and (ii) he failed to take into account the income tax benefit the respondent enjoyed from deducting child care expenses from her income for tax purposes: Guidelines, s. 7(3).
[26] In determining support for purposes of the Guidelines, the court is to do so on the basis of the information before it: Schaeffer v. Schaeffer, 2001 SKQB 121. However, the court is not required to turn a blind eye when it is satisfied it has not been given an accurate picture of one party’s income. That was the case here. Normally, the motion judge would have been required to apply – and undoubtedly would have applied – the most current and reliable information before him. In this case, however, he had reason to believe that the appellant had not made full and frank disclosure, whereas the respondent had. He was therefore satisfied that he did not have a true picture of the appellant’s income. It was for that reason that he gave the respondent leave to apply again to have the appellant’s true income determined.
[27] The motion judge did not accept the appellant’s assurances that he was no longer engaged in his sideline home renovation business. He was concerned that the appellant had refused to divulge the amount of income he had claimed on his mortgage application. He decided on a compromise in the circumstances. On the one hand, he would not impute income to the appellant beyond the $76,000 reported on his 2006 tax return. On the other hand, he would not impute income to the respondent, either, beyond the $23,000 reported on her 2006 return, which was the most recent tax return and is consistent with s. 16 of the Guidelines. “[F]or the purposes of temporarily fixing their proportionate obligations to contribute to shared expense relating to their children”, he concluded that he would allocate the sharing of s. 7 expenses in proportion to those incomes (emphasis added). He did so pending a further motion by the respondent – if so advised – “to have the issue of income quantification addressed.” He therefore ordered the expenses to be shared on a 77%/23% ratio, rounding up the appellant’s share by one percentage point for ease of reckoning.
[28] The issue of tax-benefit offsets and adjustments to income for purposes of s. 7 calculations is subsumed as well in this approach for temporarily fixing the parents’ respective shares of these costs. As I have already noted, the appellant’s continued default in making his spousal support payments, combined with the motion judge’s finding that he failed to make full income disclosure, more or less offset any tax benefits or other adjustments that might otherwise have been made in respect of the parties’ incomes under the Guidelines.
[29] Given the circumstances, I am not persuaded that the motion judge erred in his approach to apportioning s. 7 expenses.
[30] The appellant raised a number of other alleged errors in written argument. Only two of them need be mentioned.
Did the Motion Judge Err by Characterizing the Correspondence and Methods of Communication Used by the Appellant as “Harassing” and “Threatening” Giving Rise to the Need for a Restraining Order?
[31] First, the appellant attacked the motion judge’s characterization of his correspondence and methods of communicating with the respondent as “harassing” or “threatening”, giving rise to the need for a restraining order. The motion judge found that “Mr. Burley’s continuous harassment of [Ms. Burley] by e-mail, telephone messaging, and personal attendances at her home and at her parents’ home for reasons other than those related to their children” exceeded the communications he was entitled to engage in for purposes of his relationship with the children. He observed that it would be preferable if the parties set up “a regime of regular weekly or bi-weekly scheduled contact … to permit them to exchange necessary communications relating to their children, but without the level of frequency that appears to have become the norm in this case and that has become a source of annoyance to Ms. Burley and her family.”
[32] As I read the motion judge’s reasons and his order, he did not make a restraining order. He urged the parties to agree on an arrangement along the lines he suggested and provided, if they could not, that they could arrange an appointment before him and he would “issue an appropriate order at that time.”
[33] The record supports his findings as to the nature and extent of the appellant’s conduct, and his disposition of the issue was an exercise in good sense in the circumstances.
Did the Motion Judge Err in Awarding Costs on a Substantial Indemnity Basis?
[34] Second, the appellant criticizes the motion judge’s order for fixing costs on a substantial indemnity basis. The costs of a proceeding, and the scale of those costs, are matters within the court’s discretion, however. Rule 24(5)(a) of the Family Law Rules permits the court to take into account a party’s behaviour in relation to the issues from the time they arose. In light of the appellant’s pattern of default, I see no error in the motion judge’s decision to fix costs on a substantial indemnity basis.
DISPOSITION
[35] For the foregoing reasons, I would dismiss the appeal.
[36] Counsel submitted their respective costs outlines, together with offers to settle that were exchanged prior to the hearing of the appeal. The offers to settle were commendable attempts to resolve all outstanding issues between the parties but they are of little guidance in fixing costs because it is difficult to compare them with the issues determined on appeal. In my view, this is not a case for substantial indemnity costs on the appeal.
[37] Both parties’ claims for costs are similar. The respondent is entitled to the costs of the appeal, fixed in the total amount of $17,643.15, including disbursements and GST.
“R.A. Blair J.A.”
“I agree M. Rosenberg J.A.”
“I agree Robert J. Sharpe J.A.”
RELEASED: January 7, 2009
[^1]: Where the variation is made in respect of a child support order, “the court shall satisfy itself that a change of circumstances as provided for in the applicable guidelines has occurred”: s. 17(4). Where the variation is 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”: s. 17(4.1).