Court File and Parties
Court File No.: Parry Sound FO-2008-0001 Date: 2012-05-07 Ontario Court of Justice
Between: Catherine Ann Squirrell Applicant
— And —
Timothy Robert Squirrell Respondent
Before: Justice L.J. Klein
Heard on: March 23, 2012
Reasons for Judgment released on: May 7, 2012
Counsel:
- B. Oldham for the applicant(s)
- Timothy Squirrell on his own behalf
KLEIN, J.:
[1] Introduction
The Respondent father, Timothy Squirrell (hereinafter referred to as "Tim"), brought a motion to vary child support payable to the Applicant mother, Catherine Squirrell (hereinafter referred to as "Cathy") for the benefit of the two children of the marriage, namely: Cooper Norman Edward Squirrell, born 12 July 1999 and Tobias Robert Squirrell, born 3 August 2001.
[2] Current Child Support Order
The present child support order which is based on the Amended Separation Agreement dated 20 April 2009 is contained at para. 6.1 of the said agreement and which term replaced the original para. 6.1 of the Separation Agreement dated 30 January 2007. The child support provisions require the Respondent father to pay to the Applicant mother the sum of $225.00 per month per child commencing May 1, 2009.
[3] Basis for Motion
The Respondent's request for a decrease in the amount of child support payable by him is based on a decrease in his annual income earned solely from his work as a self-employed real estate broker.
[4] Applicant's Position
The Applicant mother has resisted the motion for a decrease in the child support provisions on the basis that the parties had negotiated a very specific threshold condition for a variation to be granted in the Amending Agreement dated 20 April 2009 which arose as a result of the Respondent's request for a decrease in his child support obligations due to a decrease in his annual income earned from his profession as a self-employed real estate agent.
[5] Threshold Clause
In that amended agreement a new paragraph 6.4 was added to the Separation Agreement dated January 30, 2007 as follows:
"The only basis for amendment of the quantum of child support payable shall be if one or more of the children decide to reside full-time with either the husband or the wife in the future, or if there is a drastic change in either parent's income."
BACKGROUND
[6] Marriage and Separation
The parties were married on 9 August 1996 and separated in April 2006. There are two children of the marriage, namely: Cooper Norman Edward Squirrell, born 12 July 1999 and Tobias Robert Squirrell, born 3 August 2001. Pursuant to the Separation Agreement of 30 January 2007 the parties agreed that they should share joint custody of the children with each party to maintain a residence for the children and share time with them by mutual agreement.
[7] Original Income Levels
Further at that time the parties negotiated an amount of child support payable by the Respondent to the Applicant based on their respective incomes which at that time were $20,000 per annum for the Applicant and at least $55,000 per annum for the Respondent.
[8] 2009 Amendment
In 2009 they again negotiated an amendment to the original separation agreement decreasing the Respondent's child support obligation to the present total of $450.00 per month and inserting the threshold clause at new paragraph 6.4 at a time where the Respondent was claiming that his annual income was $36,000 (a claim which the Applicant and her counsel did not accept).
[9] Respondent's Claimed Income Decrease
Since executing the original separation agreement the Respondent claims that his annual income has decreased from $55,000 per annum to $23,000 in 2010 despite the fact that his employment changed from his being a commissioned real estate salesman to the "broker of record" for the real estate company that was owned previously by his father. Further he claimed that his income was reduced by his being required to take on more of a fatherly role in the lives of his sons thus reducing his employment to part-time from full-time. Further, he claimed that the local economy has fallen off considerably thus reducing his annual income.
ISSUES
[10] Issues Before the Court
The issues before the court are:
(a) Has the Respondent father proven a change in circumstance within the meaning of s. 14 of the Child Support Guidelines; and
(b) Has Respondent father met the threshold test that is contained in para. 6.4 of the Separation Agreement as amended.
THE LAW
[11] Motion to Change Standard
In a motion to change the moving party only has to show a change in circumstances (not a material change) within the meaning of the Child Support Guidelines or that evidence not available on the previous hearing (negotiation) has become available (subsection 37 (2.1) of the Family Law Act) to successfully change a child support order.
[12] Burden of Proof
Section 14 of the Child Support Guidelines sets out the circumstances that must be proven in order to warrant a variation. The burden of proof lies upon the moving party, on a balance of probabilities, to establish a change in circumstances that would result in a different order.
Jardine-Hynds v. Grant, 2009 ONCJ 133 (Ont C.J.)
[13] Procedural Approach
Under Rule 15 a motion to change a final order shall be dealt with on the basis of the documentary evidence filed, unless the court is of the opinion that it cannot properly be dealt with in this fashion. This court was not of that opinion and the parties proceeded by way of affidavit and documentary evidence filed.
ANALYSIS
[14] Context of the Amendment
The impetus for the amendment to the original Separation Agreement was the claim by the Respondent that his annual income was in decline some two years after entering into that agreement. The email exchange which led to that negotiated settlement was included in the Applicant's Response and is instructive as to the mindset of both parties. At that time the Respondent had had his first encounter with the collection capabilities of the Family Responsibility Office. Further, he had been more directly responsible for the day to day care of his sons and the costs attendant therewith. The Applicant was suspicious of the Respondents' reported income given his status as a non-employee of the real estate brokerage. She simply did not believe that the reported income accurately reflected the amount of money that was actually received by the Respondent given the deductions and write-offs that were available to him. Those suspicions remained alive and well in these proceedings. Also apparent in the correspondence was the fact that neither the Respondent nor the Applicant were anxious or even prepared to expend much money to resolve the issue of on-going child support nor did they have the energy to do so. In short, they were suffering from litigation-fatigue.
[15] Intent of the Threshold Clause
It is further apparent that neither of them were wanting to enter into these type of discussions on a frequent basis. This inevitably led to the inclusion of new paragraph 6.4 in the amended agreement. This paragraph was clearly intended by the parties to limit their trips to the courts or their counsel except where there was a drastic change in either parents income. The context for that word "drastic" contemplated the loss of a job or long-term illness and not necessarily the vagaries of economic cycles.
[16] Concerns Regarding Income Reporting
The Respondent is the broker of record for a real estate company once owned by his father. He claims that he receives no benefit, economic or otherwise, from that title. The Applicant is understandably sceptical. Further, the Respondent's female partner is also employed at the same company. With both she and his father cooperating on listings and in the everyday business of buying and selling real estate there is ample opportunity to adjust incomes among the three.
[17] Onus on Self-Employed Person
A self-employed person has the onus of clearly demonstrating the basis of his net income. This includes demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes. Whelan v. O'Connor, [2006] O.J. No. 1660 (Ont. Fam. Ct.) This principle also applies where the person's employment income is derived from a corporation that is controlled by a close family member such as a parent.
Mackenzie v. Flynn 2010 ONCJ 184, [2010] O.J. No. 2145 (Ont. C.J.)
[18] Comprehensive Records Required
The self-employed have an inherent obligation to put forward not only adequate but comprehensive records of income and expenses, from which the support recipient can draw conclusions and the amount of child support can be established.
Meade v. Meade, [2002] O.J. No. 3155 (Ont S.C.)
[19] Onus Regarding Deductions
The onus rests upon the parent seeking to deduct expenses from income to provide meaningful supporting documentation in respect of those deductions, failing which an adverse inference may be drawn.
Orser v. Grant [2000] O.J. No. 1429 (Ont. S.C.)
[20] Respondent's Failure to Discharge Onus
When prompted to explain the manner in which his net income was arrived at, the Respondent could only refer to his and the company's accountant, Dan Ball CA indicating that it was Mr. Ball's job to allocate income. That hardly sounds plausible and certainly is not sufficient to discharge the onus placed upon the Respondent to provide proof of the accuracy of his reported net income and the expenses that were used to reduce the income.
[21] Potential for Income Allocation
In addition to that deficiency, there is the strong suspicion or likelihood that with so many related individuals involved in the real estate business that the potential for income-splitting or income allocation agreements is very high and would require proof that such did not exist in artificially reducing the Respondent's income. Again, that onus rested upon the Respondent and it has not been discharged.
[22] Threshold Test Not Met
The on-going child support of $225 per child per month was negotiated in good faith by the parties with full knowledge that the "bar had been raised" when it came to meeting the threshold test of a drastic change in either parents' income required in para. 6.4 of the amended separation agreement. Further that amount had been arrived at with the firm understanding that the onus of establishing a drastic change clearly rested with the party asserting such a claim. The Respondent has not met that onus.
ORDER
[23] Decision
For these reasons the following order will issue:
(i) The Respondent father's motion will be dismissed.
(ii) If the parties are unable to resolve the issue of costs, they may make written submissions. The Applicant's submissions are to be served and filed on or before May 18, 2012 and the Respondent's submissions are to be served and filed on or before June 1, 2012.
Released: May 7, 2012
Signed: "Justice L.J. Klein"