Court File and Parties

Court File No.: D57572/12 Date: 2013-04-29

Ontario Court of Justice Toronto North Family Court

Between:

Carlton Smith Acting in Person Applicant

- and -

Colleen Tomlinson Acting in Person Respondent

Heard: April 23, 2013

Justice: S.B. Sherr

Reasons for Decision

Part One – Introduction

[1] The parties have both made a claim for child support for their 17-year-old daughter (the child). They both claim to be the primary caregiver of the child.

[2] The applicant (the father) issued his application on September 18, 2012. He claims that the child primarily lives with him and sees the respondent (the mother) on most weekends and for most of the school holidays, including the summer. He states that the mother has not accurately reported her income to the court and actually earns about $120,000 per annum. He asked the court to order the mother to pay him the table amount of child support at this level of income, pursuant to the Child Support Guidelines (the guidelines), effective October 1, 2012.

[3] The mother claimed that the child lived with her for 209 days in the past year and that she is the child's primary caregiver. She said that the child spent each weekend (including on most weekends to Monday morning), the full summer holiday and every school holiday or professional development day with her. She claims that she only earns $40,000 per annum. She asked the court to order the father to pay the guideline table amount of child support based on his annual income of $87,247 per annum. In the alternative, she asked the court to make no order for child support.

[4] The parties filed affidavits and financial statements and were permitted to supplement this with oral evidence at trial. The mother also called her mother (the maternal grandmother) and her husband to give oral evidence. The parties were directed to serve and file all documentary evidence that they intended to rely upon prior to the trial. The mother was permitted to provide the court with additional documentation at trial.

[5] The issues in this trial were:

a) A determination of the child's living arrangements.

b) A determination of whether this is a shared custody case as defined by section 9 of the guidelines.

c) A determination of the mother's income.

d) A determination of the appropriate amount of child support, if any, to be ordered.

e) The start date for child support.

Part Two – Background Facts

[6] The father is 51 years old. The mother is 46 years old.

[7] The parties lived together from 1992 - 1995. They did not marry. They have the one child together.

[8] The father lives in an apartment in Toronto. He is single. He is employed as a Developmental Appraisal Technologist. He has two adult children as well as another child who is 5 years old. He pays child support of $600 per month to the 5-year-old's child's mother.

[9] The mother was married on June 16, 2012 and purchased a home in Oshawa in September of 2012. She lives there with her husband and his son, age 16. The mother is a Registered Practical Nurse. She is employed part-time and runs her own foot-care business, servicing seniors, primarily in senior residences. She has also been attending school part-time for several years. She hopes to become a Registered Nurse. The mother's husband has been unemployed for two years and the mother testified that he has no other source of income. He previously worked as a chef. The mother supports him and his son, who is in grade eleven.

[10] The child has always attended school in Toronto. She is presently in grade twelve and is a good student.

Part Three – Credibility of the Parties

[11] The court had to make credibility findings in this case regarding the living arrangements of the child, the income of the mother and the expenses claimed by both parties.

[12] The father presented his evidence in a clear, logical and organized manner. He did not overstate his evidence or his expenses. He was a credible witness.

[13] There was much to admire about the mother. She is a resourceful and hard worker who has developed a successful business. She has taken on the responsibility of being the sole supporter of her husband and his son. She is trying to upgrade her education. She clearly loves her child. Along with the father, she has done a very good job of raising a child who both parents described in glowing terms.

[14] Unfortunately, the mother was not a credible witness.

[15] The mother presented her evidence in an inconsistent and disorganized manner. At times, she appeared to be making up her evidence as she went along, contradicting herself. At times she was evasive. At other times, she didn't disclose material evidence. She did not provide meaningful financial disclosure, failed to reveal her actual income and overstated her expenses.

[16] Where the father's evidence was in conflict with the mother's, I generally preferred the evidence of the father.

Part Five – The Child's Living Arrangements

[17] The court needed to determine the living arrangements of the child to assess who is responsible for paying child support and whether this is a case of shared custody as defined by section 9 of the guidelines which requires a different support analysis. Section 9 of the guidelines reads as follows:

Shared custody

9. Where a parent or spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year, the amount of the order for the support of a child must be determined by taking into account,

(a) the amounts set out in the applicable tables for each of the parents or spouses;

(b) the increased costs of shared custody arrangements; and

(c) the condition, means, needs and other circumstances of each parent or spouse and of any child for whom support is sought.

[18] The father testified that the child has primarily lived with him in Toronto since she was 5 years old. He said that the child spends most, but not every, weekend with the mother and he picks up the child on Sunday evenings from the home of the maternal grandmother in Mississauga. He said that five or six times each year, the child will spend part of, or the entire weekend with him. He said that the child lives with the mother during the summer, but spent about 10 days with him during the past summer. He also said that the child spent most of the last winter and March school breaks with the mother, but also spent a few days during those periods with him.

[19] The mother testified that the current living arrangement has been in place since the child was 9 years old. She initially testified that the child spent every weekend with her and most often, she returned the child to school on Monday mornings. She later changed this answer, saying that she returned the child to school on Monday mornings half of the time. The maternal grandmother contradicted this evidence, saying that the child was returned to the father every Sunday evening. The mother's husband testified that the child actually spent about one weekend each month with her maternal grandmother and not with her mother.

[20] The mother claimed that the child spent no time at all with the father during the summer or school holidays in the last year and spent all of this time with her. In cross-examination, she admitted that she spent 14 days in Jamaica without the child (later changed to 10 days) during the last winter school break, and the child stayed during that time with the maternal grandmother.

[21] The mother's evidence that she is the child's primary caregiver was also contradicted by a letter she signed on July 30, 2012 to Revenue Canada. This letter states that the father is the custodial parent of the child and that she will not be filing any taxes as it pertains to the child as those rights have been transferred to the father.

[22] I find that the father has been the child's primary caregiver and that the child lives with the father from Sunday evenings until she goes to her mother's home after school on Fridays to spend the weekend with her. The child also spends some weekends with the maternal grandmother and on occasion, some time on weekends with the father. I accept that on occasion, the child spends additional days with the mother on Sunday overnights, statutory holidays and professional development days. I also find that the child primarily lives with the mother during school holidays and the summer months, but that she also spends some time with both the father and the maternal grandmother during these periods.

[23] These findings equate to the child spending between 40-45% of her time with the mother during the course of a year. The evidence indicates that the time will vary between these percentages from year to year. I find that this is a shared custody case as defined by section 9 of the guidelines.

Part Six – Legal Considerations in Section 9 Cases

[24] In Contino v. Leonelli-Contino 2005 SCC 63, [2005] 19 R.F.L. (6th) 272 (SCC), the Supreme Court of Canada set out the following principles when dealing with cases under section 9 of the guidelines that are applicable to this case:

a) Once the payor surpasses the 40% threshold, section 9 creates a different method of determining child support in shared custody cases. There is no onus on the payor to convince the court to order a different amount than the table amount.

b) There is no presumption of a reduction in the table amount for child support in section 9 cases. A court may still order the full table amount after conducting the section 9 analysis.

c) There should be no mathematical formula or multipliers applied to section 9 cases. In particular, the simple set-off only serves as a starting point under subsection 9 (a) of the guidelines, but it has no presumptive value.

d) The court should consider all three factors in section 9. None should necessarily prevail over the others.

e) Section 9 of the guidelines is broad enough to incorporate section 7 guideline expenses directly in the examination of child-related expenses, and expenses can be considered that might not fit within section 7.

[25] In Flick v. Flick, 2011 BCSC 264, the court, citing Contino, identified these additional factors for consideration in a section 9 analysis:

a) The language of section 9 warrants an emphasis on flexibility, fairness and consideration of the overall situation of the parents and the needs of the child.

b) The weight of each factor under section 9 will vary with the particulars of the case.

c) The court retains the discretion to modify the set-off amount where, considering the financial realities of the parents, it would lead to a significant variation in the standard of living experienced by the child as they move from one household to the other.

d) The analysis should be contextual and remain focused on the particular facts of each case.

e) The court has full discretion under subsection 9 (c) to consider "other circumstances".

[26] Once the 40% time threshold is met under section 9, courts aren't required to quantify the time, or award support in accordance with the percentage of time. It might cost the parent with the lower percentage of time just as much to raise the children. See: Stewart v. Stewart, 2007 MBCA 66.

[27] In his article, The TLC of Shared Parenting: Time, Language and Cash, Professor Rollie Thompson summarizes how the Supreme Court in Contino has directed courts to conduct a section 9 analysis as follows:

a) Determine the simple set-off amount – The starting point under subsection 9 (a) is the straight set-off of each parent's table amount for the number of children involved in the shared custody arrangement.

b) Review the child expense budgets - A court must look at the parents' actual spending patterns, based upon child expense budgets, and not just make assumptions about spending. Under subsection 9 (b), a court has two concerns: the over-all increased total costs of child-rearing for both parents, especially duplicated costs; and any disproportionate assumption of spending by one parent or the other. The child-related expenses should be apportioned between the parents based upon their incomes, to verify the set-off and to determine the need for significant adjustments to the set-off amount.

c) Consider the ability of each parent to bear the increased costs of shared custody and the standard of living for the children in each household - In assessing each parent's ability to bear the increased costs of shared custody, a court should look at the incomes of the parents, the disparity in incomes, and their assets and liabilities. Children should not experience a significant variation in the standard of living as they move from one household to another.

Part Seven – Determining the Income of the Parties

[28] The incomes of the parties must first be determined in conducting a section 9 analysis.

[29] The father's income was easy to determine. He is a T4 employee. He earned $87,247 in 2012. The court will use this figure for the purpose of the section 9 analysis.

[30] The mother's income was much more difficult to determine.

[31] The mother works part-time as a Registered Practical Nurse for the University Health Network and earned income of $30,722 from them in 2012. She continues to earn this level of income from them.

[32] The mother's 2012 income tax return reflects that she withdrew about $50,500 from her RRSP and Pension Plan in 2012. This was included in her line 150 amount. The mother explained that she withdrew these funds to pay for her wedding and towards the down-payment for her house. She said that she is left with nominal funds in these accounts.

[33] I am satisfied that the amounts withdrawn by the mother were one-time withdrawals for specific purposes and limited to the 2012 tax year. They were also withdrawn and spent prior to the period of time for which support is sought (October 1, 2012). The mother was not earning this income after October 1, 2012. The focus of this analysis is on the mother's child support obligation moving forward from then. I find that these sums shouldn't be included in the mother's income for the limited purpose of assessing her support obligation in the fall of 2012.

[34] The parties disagreed about the income that the mother earns from her business.

[35] The father testified that he maintained a close relationship with the mother until two years ago, assisted her with her business, including driving her to customers, and that he was very aware of how much she was earning. He claims that she was earning over $90,000 per annum, mostly in cash, from this business. He said that she worked five to six days per week when operating the business, earning on average $300 cash each day and in addition would often see patients during breaks from her other job at the hospital.

[36] The mother testified that she works for the University Health Network one to three days each week. She has run her business for four years. It is incorporated. She testified that she spends four to five days each week working in this business. She gave several different versions of her annual business income. At one point in her evidence, she said that she earned $60,000 per annum from the business. Shortly after this, she changed this to $20,000 per annum. In her financial statement sworn on March 25, 2013, she declared gross income of $79,488 per annum and net income of $42,780 per annum from the business.

[37] The mother's husband testified that the mother earns about $15,000 per annum from the business. He also minimized the amount of time that she worked at the University Health Network, stating that she only worked there 3 to 5 days each month (the mother's evidence was between 4 to 12 days each month). The maternal grandmother testified that the mother only earned about $100-200 per week ($5,200-$10,400 per annum) from the business. It quickly became evident that the mother's witnesses were trying to minimize her income and were not reliable witnesses.

[38] The mother conceded that 90% of her income from her business is received in cash. She said that in 10% of the cases, the client has a power of attorney and she has to issue an invoice. The mother admitted that she has no records of cash received and couldn't estimate how much she has received in the past year. She said that she has never filed a corporate tax return. She did not provide the court with her 2011 income tax return. She provided a partial 2011 Notice of Assessment which excluded the key summary of her tax calculation. She initially testified that she included her business income in her 2012 income tax return. On further questioning, she conceded that she had included none of her business income in her 2012 return. This informed the court that she is quite prepared to misrepresent her income to income tax authorities. Based on her evidence, I came to the conclusion that she was also misrepresenting her income to the court.

[39] The only business financial statement provided by the mother was the one included in her 2010 income tax return. It became clear in questioning that she was aggressively deducting personal expenses in this statement and that it was of little use in determining her real income.

[40] The mother did provide the court a list of her purported business expenses in 2012. Although she was required to disclose all of the documents that she would be relying upon prior to the trial, she did not do this and brought a box of receipts to trial that she said backed up her expense claims. There were many difficulties with her evidence about her expenses. Without accurate evidence of income earned, the expenses were presented without a proper context - it really didn't help the court determine what her net business income was. It also became clear in her examination that the mother was again aggressively comingling personal expenses with her business expenses.

[41] A self-employed person has the onus of clearly demonstrating the basis of his or her net income. This includes demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes. See: Whelan v. O'Connor. This principle also applies where the person's employment income is derived from a corporation that he or she fully controls. See: MacKenzie v. Flynn, 2010 ONCJ 184, [2010] O.J. No. 2145 (Ont. C.J.). The court will usually draw an adverse inference against a party for his or her failure to comply with their disclosure obligations as provided for in section 21 of the guidelines and impute income. See: Smith v. Pellegrini, 2008 CarswellOnt 5475 (Ont. S.C.); Maimone v. Maimone, 2009 CarswellOnt 2909 (Ont. S.C.).

[42] The mother fell well short of her obligation to provide the court with meaningful financial disclosure for the business. The evidence she provided was unreliable and not credible. I draw an adverse inference against her.

[43] This left the court with the difficult task of determining the income that the mother is actually earning from the business.

[44] It was puzzling to the court how the mother was able to qualify for her mortgages on the home she purchased in September of 2012 for $388,000. She made a down-payment of $40,000 and obtained a first mortgage for $310,000 and a second mortgage on the property for $38,000. Common sense dictates that an individual who earns $40,000 per annum, has no assets once the down-payment is made, and must support a husband who hasn't worked for over a year would not financially qualify for these mortgages. The monthly amounts that the mother claims that she is paying for the mortgages and property taxes (about $3,000 per month), exceeds what her net income would be, based on the annual income that she says she is earning. The mother did not provide the court with copies of her mortgage applications. She said that she left this information at home.

[45] I find that the most accurate method of determining the mother's income is to look at her lifestyle. Analysis of a payor's lifestyle is a well-recognized method of providing the criteria for imputing income. See: Jonas v. Jonas [2002] O.J. No. 2117 (SCJ). To determine her lifestyle, the court carefully examined the mother's financial statement sworn on March 25, 2013 (the financial statement).

[46] The mother testified that her stated income and expenses in the financial statement had not changed at all since September of 2012, when she bought her home. She further stated that there had been no change in either her assets or debts declared in the financial statement during this period. She testified that the only money she received from third parties, after buying her home, was approximately $2,000 from her mother.

[47] An initial review of the mother's financial statement at trial indicated that she had been spending $9,500 per month from September of 2012 to March of 2013. When specifically asked if she was spending $9,500 each month, the mother said, "absolutely, and sometimes a little bit more".

[48] The mother was unable to explain how she could afford this lifestyle and level of expenses on an income of $40,000 per annum. She acknowledged that she is the sole supporter of her family. Her husband has not worked for two years and has no other source of income. His son does not work or contribute to the household expenses. She only received $2,000 from her mother. The math does not come close to supporting her evidence about her income.

[49] The mother has been able to maintain expenses of $9,500 per month without incurring additional debt. This equates to $114,000 of income over a year. When one considers that courts will usually gross-up this amount (to ensure consistency of treatment, where a party is found to have arranged his or her affairs to pay less tax on income), the father's request to impute the mother's income at $120,000 per annum is not unreasonable. This is the amount of income that will be imputed to the mother for child support purposes.

Part Eight – The Set-Off

[50] In a section 9 analysis, the first step is to calculate the set-off amount in the guidelines based on the incomes of the parties.

[51] The guideline table amount for the mother, based on her imputed income of $120,000 per annum, is $1,037 per month. The guideline table amount for the father, based on his income of $87,247 per annum is $779 per month.

[52] The set-off amount is $258 per month.

Part Nine – The Increased Costs of Shared Custody

[53] The second step in the section 9 analysis is to examine the increased costs of shared custody.

[54] Both parties prepared monthly child expense budgets.

[55] I found the father's budget to be reasonable and believable.

[56] The same could not be said for the mother's budget. It had no air of reality. She claimed exorbitant sums for many items, including food, entertainment, laundry, books and telephone (although she conceded that she has cut off the child's phone for quite some time). When challenged about the laundry expense of $182 per month she claimed for the child (despite owning a washer and dryer), the mother stated that she attributed to this to her increased hydro expenses. She claimed that she was spending $425 per month on books each month for the child, despite the fact that the child is in public school. She claimed that the books her daughter likes cost "$40, $50 and $60 and she buys them every week".

[57] The mother emphasized in her testimony that she was paying for the child's extracurricular activities and her school uniforms. It was only on cross-examination that it was revealed that she had not incurred any of these expenses since 2011.

[58] The mother's evidence about her expenses was unreliable and could not be effectively utilized to assess the increased costs of shared custody.

[59] The evidence filed did reveal some increased costs arising out of the shared custody arrangement. The housing cost for the mother is a duplicated cost as a result of the shared parenting arrangement. The mother obtained a residence that would provide the child with her own room when she stayed with her. I found credible the mother's evidence that she has bought additional clothes for the child. There are also additional costs for food and household supplies arising from the increased time that the child spends with the mother.

[60] That said, the evidence showed that the father pays for more of the child's expenses. She lives with him most of the time. He requires the additional cost of a two-bedroom apartment to accommodate the child as her primary caregiver. He pays for more food and household supplies than the mother. I accept his evidence that he provides the child with her bus fare for the week to go to school.

[61] Based on a review of the child budgets, I find that the father pays additional costs for the child (compared to those paid by the mother) in an amount pretty close to the set-off amount of $258 per month.

Part Ten - The Condition, Means, Needs and Other Circumstances of Each Parent

[62] The final step in the section 9 analysis is to closely examine the condition, means, needs and other circumstances of each parent. The court was not presented with a software household standard of living analysis, which is not surprising given that the parties are self-represented. Due to the complexities in preparing a software analysis in this case (and the potential for inputting errors), I was not prepared to embark on preparing the software analysis on my own.

[63] I have taken the following factors into consideration when determining the means, needs and other circumstances of the parents:

a) The mother is now supporting an unemployed husband and his son.

b) The court was provided with little evidence about why the mother's husband is unable to work and contribute to the family's expenses. He has worked in the past as a chef and one would think that he should be able to find some form of employment in the food industry after two years, to contribute to his family's expenses.

c) The mother chose to enter into this arrangement (supporting her husband and his son) knowing that her husband was unemployed and that she has a support responsibility for her daughter.

d) The mother has a student loan of $35,000 and her business owes Revenue Canada over $16,000.

e) The mother chose to pay $30,000 for a wedding and contributed towards the $40,000 down-payment for her house in the past year, despite these debts. It is difficult for her to argue now that she cannot afford to pay child support for her daughter due to her recent financial choices.

f) The mother is a homeowner.

g) The father has minimal assets and rents an apartment.

h) The father has a support obligation of $600 per month for his son.

i) The mother, based on her spending pattern, enjoys a much better lifestyle than the father even if, according to her, she cannot afford this lifestyle. She spends far more monthly for entertainment ($435), clothing ($762) and hair care and beauty ($352 per month) than the father.

j) The mother has never paid child support to the father despite the fact that he has been her primary caregiver. Until 2012, she claimed all of the tax benefits for child. The mother has been financially advantaged by this, and the father has been financially disadvantaged by this. This is reflected in the disparity of their assets and lifestyles.

k) The mother has continued to claim and receive the child tax benefit for the child despite the fact that the child primarily lives with the father, also affecting their respective financial circumstances.

l) The father has paid $500 towards the child's university application fees, without contribution from the mother.

[64] I find that the mother is better able to absorb the increased costs of shared custody than the father.

Part Eleven – Final Child Support Analysis and Start Date

[65] Balancing all of the factors set out above, I find that the mother should pay the father child support of $450 per month. This amount takes into consideration that the table amount of child support is not appropriate due to the increased amounts the mother spends on the child due to the shared custody arrangement. Further, the table amount would be excessive when one examines the additional costs the father pays for the child in comparison to those paid by the mother. However, a straight set-off is also not appropriate given the array of factors set out in paragraph 63 above and my finding that the mother is better able to absorb the increased costs of shared custody than the father.

[66] The father issued his application on September 18, 2012. He has not sought retroactive support. His request to start support starting on October 1, 2012 is fair and will be ordered.

[67] The child will likely be starting university in the fall. At this point, the parties don't know what school she will attend, what her costs will be, or what resources the child will have to contribute to these expenses. It is premature to make a specific award. However, the parties should be aware that they have a responsibility to share the reasonable costs of the child's post-secondary education, after taking into account her reasonable contributions to these costs. They are encouraged to retain counsel to assist them in working out these arrangements as the legal analysis is not simple. They can also use mediation services. Either process is preferable to the financial and emotional cost of litigating this issue.

Part Twelve – Conclusion

[68] A final order will go on the following terms:

a) The mother shall pay the father child support in the sum of $450 per month on the first day of each and every month commencing on October 1, 2012.

b) The parties shall exchange complete copies of their income tax returns and notices of assessment by June 30th of each year, starting in 2014.

c) The parties shall first attempt to negotiate their respective contributions to the child's post-secondary expenses starting in the fall of 2013. If they cannot reach an agreement by August 15, 2013, either has early leave to bring a motion on notice, by Form 14, for a determination of this issue.

d) A support deduction order shall issue.

[69] If either party wishes to seek costs, they shall serve and file written submissions by May 13, 2013, setting out how much they are claiming and how they calculated it. The other party will then have until May 27, 2013 to serve and file a written response to these submissions. The written submissions are not to exceed 3 pages, not including any offer to settle (which should be attached to the submissions) that was made. The submissions should be filed at the trial coordinator's office on the second floor of the courthouse.

Justice S.B. Sherr

Released: April 29, 2013