Court File and Parties

Court File No.: 245/11 Date: 2013-07-15

Ontario Court of Justice

Re: Robert Murray Quinn – Applicant and Mary Susan Quinn – Respondent

Before: Justice Roselyn Zisman

Counsel: Jacqueline M. Mills for the Applicant Geoffrey J. Carpenter for the Respondent

Heard On: April 29, 2013 and by written submissions filed May 6 and 17 and July 8, 2013

Introduction

[1] This is a motion to change by the applicant, Robert Murray Quinn ("father") commenced on September 7, 2011 to vary the terms of a separation agreement dated August 31, 2003 to reduce the amount of child support payable and to terminate spousal support. At the time the motion to change was commenced the applicant had been unemployed for six months. The respondent, Mary Susan Quinn ("mother") seeks retroactive child support as of 2009 and prospective child and spousal support or in the alternative, dismissing both motions to change and seeking the father pay any outstanding arrears pursuant to the separation agreement.

[2] The motion to change was adjourned several times as counsel attempted to resolve the issues and determine the applicant's employment prospects. Counsel conducted questioning and agreed that the motion to change would proceed by a focused oral hearing relying on the parties' sworn affidavits and sworn financial statements and subject to further updating examinations in chief and cross examinations. Counsel agreed to provide written submissions.

[3] The issues at trial were:

1. Has there been a material change in circumstances of either party?
2. Is the father intentionally underemployed and if so, how much income should be imputed to him?
3. Should there be an order for retroactive child support?
4. In what amount and on what basis should child support be paid on a prospective basis?
5. Should spousal support be terminated? If not, what amount should be paid?

Background

[4] The parties were married on May 25, 1984 and separated after 18 years of marriage on October 31, 2002.

[5] The father is almost 61 years old and the mother is 57 years old.

[6] The parties have 3 children. Jacqueline who is 27 years old, Holly who is 25 years old and Emily who is 22 years old.

[7] At the time of the separation, Holly resided with the father and Jacqueline and Emily resided with the mother. Despite the fact Jacqueline was already living away from home and attending university, the father agreed to pay the full amount of child support for her.

[8] Both Holly and Jacqueline are now independent. Their post-secondary expenses were shared by the parties except that the father alone paid for Holly's last semester at university and paid for her to obtain a teaching degree.

[9] Emily started university in the fall of 2009. She has completed three years and it is anticipated she will required another year and half to complete her undergraduate degree. She is currently attending university away from home and lives with her mother primarily when not at school. Both parties agree she is entitled to support until she completes her degree.

[10] The parties, each represented by counsel, entered into a separation agreement dated August 31, 2003.

[11] At the time of the separation the father was President of Sayers and Associates Limited Industrial Division and earned approximately $272,000 a year. The mother was employed part-time as a law clerk at St. Andrew Goldfield and earned approximately $40,000 a year.

[12] The relevant terms of the separation agreement are as follows:

(a) The father would pay child support in the amount of $1,344 twice a month ($2,688 a month) for child support based on the split parenting arrangement and a set off calculation;

(b) The father would pay 65% of the section 7 costs and the mother would pay 35% of such expenses; both parties to mutually agree to such expenses in advance;

(c) The parties would exchange income information on May 1st of each year and would then readjust the table amount of child support and the appropriate contributions to the section 7 expenses (but not the 65/35 split);

(d) If the parties failed to make annual adjustment as set out above, the support payments would continue until further agreement or court order;

(e) The father would pay spousal support to the mother in the amount of $2,800 per month (2 monthly payments of $1,400); payment of spousal support to be payable until the mother remarries or cohabits with another man for 3 years;

(f) The spousal support would go up or down in accordance with the income earned by both parties on an annual basis;

(g) The payment of spousal support was subject to variation in the event of a material change in circumstances;

(h) If a party is entitled to a variation, it may be the discharge, variation, suspension, relief or increase, prospectively or retroactively, of an obligation to pay or of any arrears of the amount of any support or maintenance;

(i) The mother would receive the net proceeds of sale of the matrimonial home in the amount of $30,220.18;

(j) The father accepted sole responsibility for a number of debts in the approximate amount of $135,000. The mother accepted sole responsibility for debts in the approximate amount of $3,600. The parties were equally responsible for debts totalling approximately $18,450.

(k) There was no other equalization payment.

[13] The father continued to pay $2,800 a month in spousal support and $2,688 per month in child support, until Jacqueline finished university in 2008. The father testified that the total amount of support was then reduced to $4,800 a month by agreement of the parties. The mother testified that the father just began to pay less and that it was not possible to discuss anything with him.

[14] The separation agreement provided that the parties would exchange income information on May 1st of each year and the child support would be recalculated. Although there was a difference in the evidence of both parties with respect to the exact mechanism of the exchange of income information, they both agreed that income information was exchanged up to at least 2007. The mother's evidence was that she could not recall if income information was exchanged up to 2007 or 2008.

[15] Following the execution of the separation agreement, the father's income was slightly lower the first two years and then increased substantially. The mother did not present any evidence of her income from 2004 to 2006 but testified that it had increased also. Neither party took any steps to adjust support based on the changes in their respective incomes. The mother acknowledged that she was aware the father's income had increased but he was difficult to deal with and he would not agree to any changes.

[16] Neither party voluntarily exchanged income information after their 2007 incomes were disclosed. Neither party requested income information from the other until this proceeding was commenced in October 2011. The mother testified that she did not request any income disclosure because she had lost her job and was afraid "to rock the boat". Although she was not aware of the father's exact income she was aware that the father had purchased a property in California, a farm and a condominium in Oakville.

[17] The father was fired for cause from his job in March 2011. Shortly thereafter the mother registered the separation agreement with the Family Responsibility Office as she was concerned the father would not pay support.

[18] The father had always paid the mother by post-dated cheques. The mother acknowledged that over the years except for being late one or two times, he always paid on time. After the father lost his employment, he fell behind a few months in his support payments but caught up after he sold his property in California. The father paid the mother directly from January to August 2011 as he was unaware that the mother had filed the separation agreement with the Family Responsibility Office. The Family Responsibility Office began to enforce the agreement.

[19] The Family Responsibility Office is enforcing the full amount of support required pursuant to the separation agreement despite the fact that Emily is now the only dependent child.

[20] The Family Responsibility Office is also enforcing any special expenses submitted by the mother despite the fact that the separation agreement requires those expenses to be mutually agreed upon before they are incurred.

[21] The statement of arrears filed indicates arrears began to accumulate as of September 2012 and as of April 8, 2013 the arrears are $30,670.24.

Applicant's Employment Income and Financial Circumstances

[22] The father's employment income since 2003 is as follows:

• 2003: $272,394
• 2004: $259,056 (excludes RRSP of $2,009)
• 2005: $483,601 (excludes RRSP of $17,233)
• 2006: $675,605 (excludes RRSP of $8,645)
• 2007: $567,627
• 2008: $552,001
• 2009: $815,663 (excludes RRSP of $83,141)
• 2010: $1,044,844
• 2011: $152,465 (excludes RRSP of $99,858)
• 2012: $253,055
• 2013: $350,000 (projected based on current employment contract)

[23] In March 2011, the father was fired from his well-paying job as Chief Operating Officer/President of Comstock Canada. Prior to his termination the father had his best year of income. The father was earning a base salary of $350,000 plus a discretionary bonus which had been extremely large in recent years.

[24] The father was fired because he breached the Code of Conduct he signed at the time of his employment. The father was not entitled to any severance pay.

[25] The conduct that led to his termination is known as "smoothing" and involved shifting income from one fiscal year to the next so as to "smooth" earnings for the corporation so there would be no significant fluctuations on an annual basis. The father testified that he was aware that "smoothing" was prohibited pursuant to his company's Code of Conduct but it was common practice in the industry and for large publically traded companies. One of the vice-presidents took exception to those actions and as a result an investigation was launched and the father and another vice-president were fired.

[26] The father testified that he sought legal advice, from three different lawyers, with respect to a possible wrongful dismissal claim and was advised that he would not be successful. The father testified that he was not trying to get fired as he had a good job and for the last two years had earned a million dollars.

[27] The father was subject to a one year non-compete clause with Comstock and as a result he had limited options for new employment.

[28] However, in November 2011 he was able to obtain a position with Crossby Dewar Inc. as their Chief Executive Officer. That company was a supplier to Comstock and hired him to solve a specific problem. His employment contract provided for a base salary of $300,000 with the possibility of commission and other expenses being paid by the company.

[29] But the position was in Pickering and the father was commuting from Oakville as he had no housing allowance with Crossby Dewar and if he stayed in a hotel he had to pay for the expense himself. Given that his wages were by then being garnished by the Family Responsibility Office he could not afford such an expense. The father also testified that he had been unable to generate new work for the company and he began to look for other employment.

[30] His employment with Crossby Dewar was mutually terminated. He waived any severance pay he would have been entitled to and the company waived the non-compete clause in his contract. The Record of Employment states that the reason for termination was "Shortage of Work/end of contract or season".

[31] At the time that the father left Crossby Dewar, he had a very strong lead on alternate employment with CFJ Nuclear Contractors Ltd. which ultimately resulted in a new job as their Chief Executive Officer.

[32] The contract with CFJ Nuclear Contractors Ltd. was signed in November 2012. Under that contract, the father is to be paid $350,000 a year with the potential of a bonus. The father receives a housing allowance of $36,000 and a car allowance. During the week he resides in Port Elgin where CFJ is located and then returns to his farm in Port Rowan every week-end where he and his family continue to reside.

[33] The father testified that his contract has not been approved by Bruce Power Management and that company has specifically not agreed to make any bonus or termination payment to him. He testified that CFJ is a service company that is a supplier to Bruce Power Management and has no assets against which the father could enforce any bonus payment or termination pay. Although the father testified that he did not believe that his employment with CFJ is long term and he anticipated being terminated by the end of the summer at the latest, he agreed in cross-examination that this was speculative and that even if he was terminated he would be entitled to six month severance pay.

[34] The father testified that he has had to sell his assets and has incurred debts. In June 2012, he sold his property in California that he had bought as a possible retirement home and due to the down turn in the real estate market he suffered a loss. There is a conditional sale contract on his Oakville condominium and if the sale proceeds he will only make a profit of about $20,000. He has had his farm property up for sale on and off for about two years and Canada Revenue agency has a lien against it for $147,000. He testified that when he was terminated in March 2011 he did not receive his bonus of $130,000 which he had planned to use to pay his income taxes. He has cashed in his Registered Retirement Savings Plans. He has no other assets. His boat has been re-possessed and his VISA credit card debts of about $51,286 are in collections. He also testified that members of his family have loaned him funds. He testified that if he is forced to go into bankruptcy he would be unable to continue employment as a Chief Executive Officer.

[35] Based on the father's financial statement sworn April 23, 2013 his net worth is negative $ -360,409.17 although this includes about $202,000 of loans from family and friends that are only substantiated by some unsigned promissory notes and copies of some cheques and bank drafts.

[36] The father was pessimistic about his future prospects. He testified that if this contract ends that he would have to look for work out west or obtain a much lower paying job in Ontario. The father testified that he only has a high school education, a certificate as an electrician and has taken other courses in project management.

[37] The father confirmed he is currently residing with his new wife and two step-children. He denied that he had supported them in the last two years.

Respondent's Income and Financial Circumstances

[38] The mother has a college diploma as a legal secretary. She has been employed as a real estate legal secretary, as a corporate legal clerk and as a legal clerk in the mining industry. She was employed for St. Andrew's Goldfields and quit her job after 5 years for another job. She was then employed at Avalon Rare Metals and was laid off in 2009 and unemployed for about 13 months and then obtained her current employment.

[39] The mother testified that her income increased from the time of the separation agreement but provided no income information from 2004 to 2006.

[40] The mother's employment income is as follows:

• 2003: $40,000
• 2007: $114,837
• 2008: $120,000
• 2009: $8,456
• 2010: $66,030
• 2011: $79,542
• 2012: $82,794 (excludes RRSP of $16,982)
• 2013: $88,000 (projected)

[41] In addition, to this income the mother has received spousal support. The mother provided the father each year with a statement for income tax purposes confirming the amount of support she received. The mother produced most of the letters she provided to the father that indicated she received spousal support of $33,600 as required by the terms of the separation agreement for 2004, 2005 and 2011 but received $35,200 in 2006 and $$36,000 for the years 2007, 2008 and 2009. There was no explanation for these increased payments.

[42] The mother has not remarried and denied that she was living with a partner. She confirmed that she has been dating the same person for 9 years but he has his own residence. This issue was not pursued and it was not addressed in submissions.

[43] The mother testified that her lifestyle has been affected by the father paying less support than he should have paid and she would be severely impacted if spousal support was terminated or reduced. The mother testified that she has had to cash in about $25,000 her Registered Retirement Savings Plans and owes about $20,000 on her line of credit. She testified that her home needs repairs and her car will not last forever. She has only been able to take one vacation and one trip to Calgary to see their daughter and has not been able to help the children as much as she would have liked. She testified that she will have to sell her home if she does not receive spousal support and she does not anticipate being able to retire.

[44] Based on her financial statement sworn October 4, 2011 her net worth is $134,315 and based on her financial statement sworn April 23, 2012 her net worth is $196,179.63 (which includes $33,814.24 owed by the father).

Circumstances of the Children

[45] The father testified that as he made more money he contributed more to his daughters' needs consistent with their ages.

[46] Since they were 12 years old he bought and paid for their cell phones as he wanted to be able to be in contact with them.

[47] When the mother lost her job, he paid for Holly's second semester of school and teacher's college and paid for Emily's expenses.

[48] He paid for 4 or 5 trips to Europe for his daughters. In the summer of 2010 he assisted Holly and Jacqueline by buying cars for them, paying for car insurance, paying their rent deposits and helping them buy furniture to set up their apartments and contributing money to a Registered Retirement Savings Plan for them. He produced a chart with corroborating bank statements substantiating he had contributed $60,000 for his daughters. The mother did not dispute these contributions. Both parties contributed to Emily's ongoing special expenses being quite expensive due to counselling and medication costs.

Analysis

1. Has There Been a Material Change in Circumstances to Warrant a Change in the Child Support?

[49] The separation agreement requires that there be a material change in circumstances to vary the child support provisions in the separation agreement. The onus is therefore on the father to demonstrate that, on a balance of probabilities, there has been a change in circumstances that would result in a different order.

[50] I find that the father has met the onus on him to justify a change to his obligation to pay child support pursuant to the separation agreement based on the following factors:

a) at the time of the agreement, the father was earning $272,000 whereas when he commenced this motion to change he was unemployed, his employment income since then decreased but now has increased to $350,000;

b) at the time of the agreement, the father had stable and secure employment but he no longer has secure employment as his current positions have been risky or short term;

c) at the time of the agreement the mother's income was only $40,000 and it has now more than doubled to $88,000; and

d) at the time of the agreement there were 2 dependent children residing with the mother and 1 dependent child residing with the father whereas now there is only 1 dependent child residing with the mother.

2. Is the Father Under-Employed and If So, Should Income Be Imputed to the Father?

[51] Section 19(1) of the Child Support Guidelines permits the court to impute such income as it considers appropriate in the circumstances, which include,

(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;

[52] Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children.

[53] The Ontario Court of Appeal in Drygala v. Pauli set out the following three questions which should be answered by a court in considering a request to impute income:

1. Is the party intentionally under-employed or unemployed?
2. If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs, the needs of the child of the marriage or reasonable health needs?
3. If not, what income is appropriately imputed?

[54] In Drygala v. Pauli, supra, the court interpreted section 19(1)(a) by stating that "intentionally" means a voluntary act and that a parent is intentionally under-employed if that parent choose to earn less than he or she is capable of earning. The court does not need to find a specific intent to evade child support obligations or bad faith.

[55] The onus is on the party seeking to impute income to the other party to establish that the other party is intentionally under-employed or unemployed. Once under-employment is established, the onus shifts to the payor to prove that his decision was reasonable.

[56] If the payor is intentionally under-employed, the court must consider if this by virtue of his or her reasonable educational needs, the needs of the child or reasonable health needs. These considerations do not apply in this case.

[57] If a court finds a payor is intentionally under-employed or unemployed, a court cannot arbitrarily allocate an imputed income. There must be an evidentiary basis for the chosen income. Factors such as age, education, experience, skills, health and availability of job opportunities must be considered.

[58] Counsel for the father submits that the father did not intentionally breach the company's Code of Conduct in the expectation of being fired but simply followed industry standards, did not break the law and therefore should not be considered to be under-employed. Counsel distinguishes the case of Costello and Costello and Rogers v. Rogers as in both of those cases the payor broke the law and were incarcerated and as a result lost their jobs.

[59] It is submitted that the father did not quit his employment for selfish or bad faith reasons and has made every effort to find alternate employment and has continued to attempt to meet his support obligations; he has taken jobs with long commutes with time away from his family.

[60] However, as submitted by counsel for the mother, there is no requirement that the conduct leading to the dismissal be against the law or result in a criminal conviction for an individual to be found to be intentionally under-employed. Rather, the case law is clear that where the under-employment is the result of one's own actions (an event over which the payor had some control) or misconduct, generally the support obligations will not be reduced or cancelled.

[61] Counsel for the mother relies on several cases to support his position that the father should not be entitled to reduce his support obligations based on his own misconduct.

[62] In the case of Aboagye v. Sakyi after being warned twice the payor was fired for cause due to poor performance, frequently being late and absent, using his cell phone during company time and damaging company property. The court held that if the employer was justified in firing the payor then he cannot use his dismissal as a reason to reduce his support obligations. The court imputed income to the payor at the same level he was earning before his dismissal.

[63] In the case of Baldini (Connolly) v. Baldini, ibid, the payor was fired after repeated warnings for doing personal work on company time and using company material without permission. The court also found that the payor did not make reasonable efforts to find new employment and imputed income at the same level he was earning before his dismissal.

[64] In the case of Sherwood v. Sherwood the payor was dismissed for cause from his first job due to unsatisfactory quality of work and insufficient quantity of work and then he voluntarily left the next job he obtained due to stress. But the court found that there was no medical evidence to substantiate an inability to work due to medical reasons and further found that the payor made no efforts to find any other employment. Income was imputed to the payor at the level of income he could have earned at his first job.

[65] In Johazi v. Bennett the court imputed income to the payor who was a security guard and was dismissed as a result of not reporting an incident of violence. The payor received no severance pay and was not planning to bring a claim for wrongful dismissal. In imputing income to the payor and not varying his support obligation the court also relied on the fact that the payor had not provided any substantiation of the reasons for his dismissal and provided inconsistent evidence about his current income.

[66] These cases support the proposition that when a payor is dismissed for cause income will be imputed. However, in almost all of these cases there are also findings that the payors had prior warnings that if they continued in their conduct they would be dismissed and also findings of a lack of any sincere attempts to find employment or inadequate evidence regarding current income.

[67] This case is much more subtle and accordingly much more difficult. The father readily admitted that he was aware that the company's Code of Conduct prohibited "smoothing" but he had engaged in this conduct before with the knowledge of some of the company's executives and it was widely used in the industry despite being against the Code of Conduct. The father had never been warned that engaging in this conduct would lead to dismissal. Unlike the cases relied upon by mother's counsel, the father in this case made genuine attempts to find alternate employment and provided disclosure of his financial circumstances and complete disclosure of his employment income.

[68] Counsel for the mother submitted that there was no corroboration of the father's evidence regarding the industry use of "smoothing", events leading up to his dismissal and his difficulty in obtaining employment. However, I found the father's evidence to be credible and consistent and it was not challenged in cross-examination.

[69] I find that the father lost his employment due to an act of bad judgment as opposed to finding that his conduct amounted to misconduct. Although I agree that the father's act was voluntary in that he was aware that his actions were contrary to the company's Code of Conduct nevertheless his actions must be considered in the context of his own past experience. I do not find that the father was entirely responsible for the loss of his job. The father's income was over a million dollars and it belies common sense that someone would seek to intentionally diminish their income in these circumstances. There was certainly no allegation that he lost his job to evade his support obligations. Although the case law is clear that there is not necessary to prove that the payor acted in bad faith or intentionally intended to evade his support obligations these are still circumstances that a court can consider in determining if income should be imputed. The father has done everything possible to earn an income. There was no evidence that he ignored any job opportunities. He is now earning more income than when the parties separated. In this case based on all of the factors surrounding the father's loss of employment and his efforts to find new employment I do not find that he is intentionally under-employed. I therefore find that the mother has not met the onus on her to prove on a balance of probabilities that the father was under-employed such that income should be imputed to him.

[70] Even if I had found that the father was dismissed as a result of misconduct and income should be imputed to him, I would not have considered that imputing income at his previous salary would have been appropriate taking into consideration that his base salary was only $300,000 and the balance of his salary consists of a substantial but not guaranteed bonus. I also consider that at his age and his specialized experience obtaining a similar executive position is difficult especially in his industry. Although the father earned a substantial income he has no specialized education or qualifications beyond his job experience.

[71] I therefore find that the father's child support obligations should be based on his actual income as of October 2011 being the first return date of his motion to change.

3. How Should Prospective Child Support Be Calculated?

[72] It was initially submitted by father's counsel that support for Emily who resides away from home while attending university should only be for the 4 months of the year that she resides with the mother.

[73] In the opening statement by mother's counsel, he indicated that he was seeking an order for child support for the 5 months that Emily resides with her mother. The father indicated that he did not want to quibble over a month and was agreeable to paying child support for the 5 months Emily lives with her mother and would continue to pay his share of any special expenses.

[74] However, in his written closing submissions mother's counsel submitted that the father paid the full table amount of child support when Jacqueline was away at school and that he should therefore treat Emily in the same way.

[75] Counsel for the mother also submits that the terms of the separation agreement contemplated that the full amount of table support be paid even when a child resides away from home for school as the definition of "reside full-time" includes a child living away from home to attend an educational institute. However, that definition does not stipulate that the full table amount of child support must be paid; it only provides that the custodial parent would be entitled to child support. There is also a requirement that both parties share in the child's post-secondary expenses including residence and other incidental expenses.

[76] Despite the father paying the full amount of support while Jacqueline was away at university, circumstances have changed including the substantial increase in the mother's income and the father's insecure employment situation. It would not be fair or reasonable to require the father to pay full table amount of support and then also be responsible for his share of Emily's housing costs and other incidental expenses while she is away at school. This is not a case where the father has neglected to pay those costs such that the mother might be concerned that she would have to pay Emily's university expenses from the child support payments.

[77] I therefore find that the father's child support obligations should be based on paying full table amount for 5 months of the year until Emily completes university. It is expected that as of September 2013 Emily will need another year and a half to complete her degree. Therefore, child support should terminate as of December 31, 2014 unless the parties otherwise agree in writing. In order to assist the mother with budgeting, the total table amount for the 5 months will be annualized and payable each month throughout the year.

[78] With respect to any ongoing extraordinary expenses, the terms of the separation agreement continue to apply that is, that these expenses are shared in proportion to the parties' income and that any such expenses must be mutually agreed upon before they are incurred. Prior to these court proceedings, the parties appear to have been able to reconcile these expenses and the father paid his appropriate share.

[79] Despite the mother submitting these expenses to the Family Responsibility Office for enforcement, without his prior consent, the father testified that he did not wish to quibble about them and did not object to paying them. There was no evidence presented as to whether or not these expenses were even appropriate section 7 expenses within the meaning of the Child Support Guidelines but in view of the father's agreement there is no requirement to re-adjust or examine any of these expenses. I also note that since these expenses are submitted without the father's prior agreement or his knowledge that this accounts for some of the arrears that have accumulated.

[80] However, if the mother wishes to submit such expenses to the Family Responsibility Office for enforcement on an ongoing basis she must submit proof that the father has agreed to the expense otherwise the Family Responsibility Office in my view has no jurisdiction to enforce payment.

4. Should There Be a Retroactive Claim for Child Support?

[81] The mother seeks a retroactive child support order to 2009. The father opposes any claim for retroactive support.

[82] The criteria for a claim for retroactive child support is set out in the seminal case of D.B.S. v. S.R.G. et al. The court held that generally a claim for an increase in support should be calculated as of the date of "effective notice" that is, when the recipient indicated that an increase in child support was requested and that unless the payor demonstrated bad faith or blameworthy conduct, the award should not be more than three years before formal notice. In this case, effective and formal notice both occurred only in October 2011 in the mother's response to the father's motion to change.

[83] The court further held that the decision to order retroactive support should be based on a consideration of factors and that none of the factors is decisive. The court should strive for a holistic approach and strive to balance the payor's need for certainty with the need for fairness and flexibility. The factors to be considered are:

a) The reasonable excuse for the delay in seeking an increase in support;

b) The conduct of the payor;

c) The circumstances of the child, both past and present;

d) Any undue hardship.

[84] Both counsel have relied on various passages from the DBS, supra, decision to support their respective client's position which I have considered.

[85] Applying the above-noted criteria and the principles in the DBS decision I find the following to be relevant factors:

a) Reason for Delay

[86] I did not find the mother's reasons for the delay in seeking to increase the amount of child support convincing. She testified that she never discussed finances with the father but rather that all correspondence exchanging their income information was with his assistant. But then she testified that the father was impossible to deal with, that he would pay whatever he wanted and that the repercussions of arguing with him were too severe. She never explained how she found him impossible to deal with, if they never discussed finances. She only recalled one discussion regarding the father wanting to reduce support when Jacqueline finished school. If the mother obtained the father's income information from his assistant, then she did not explain why she would not have continued to ask his assistant for that information in the years after 2007. She did not dispute the father's evidence that each year she would present him with a statement confirming the amount of child and spousal support he paid her for income tax purposes and that this is the amount the father claimed. In other words, she was in control and not the father. I find that the mother exaggerated her fear of the father retaliating if she pursued him for more support. There was no an iota of evidence to support this allegation if anything it appears that father supported the mother and children and paid whatever was requested and paid more than required.

[87] The mother then testified that it was costly to go to court but by 2008 the mother was earning over $100,000 plus receiving child and spousal support. Even if the mother did not have the funds to take the father to court, she surely had the funds to hire counsel to correspond with the father and request his financial disclosure in accordance with the terms of the separation agreement or she could have simply sent him a letter requesting this information herself. I have also considered that the mother is a trained law clerk and is employed in that profession.

[88] The mother testified that she received proof of the father's income up to 2007 or 2008. But then when it was pointed out that therefore she was aware the father's income had almost doubled as of 2005 she seemed to waffle and state she wasn't sure and couldn't recall what he made. The mother then testified that she was aware the father earned more income but then so did she. I draw the inference that the mother did not pursue any increase in either child or spousal support as she was content with the amounts being received.

[89] The first date that the mother indicated she was seeking income disclosure and a retroactive support adjustment was in her response to the father's motion to change.

b) Conduct of Payor

[90] At first blush it appears that the father must have engaged in blameworthy conduct in view of the dramatic increase in his income and in view of the fact that he did not reveal that increase to the mother after 2007 or 2008. The father was content to continue to pay support based on the separation agreement.

[91] The father cannot rely on the fact that the mother did not request income information from him or that he in turn did not request income information from her. The separation agreement created a positive duty on both parties to exchange income information. The agreement also stipulates that the current amount of support continues until varied on consent by court order. However, if both parties chose not to avail themselves of this right, should the mother now be entitled claim that the father engaged in blameworthy conduct and permit a claim for retroactive support? I agree with counsel for the father that presumably this clause was inserted to prevent this type of retroactive support claim.

[92] I also find that it was reasonable for the father to assume that the mother was content with the amount of support being paid as she was aware of the father's income had increased and did not request any increased support.

[93] I have also considered that as the father's income for 2009 and 2010 was well in excess of $150,000 and close to or over a million dollars and in all likelihood the table amount of child support would have been deemed to be inappropriate and would probably not have been ordered. I have also considered that the father spent a considerable amount of money to assist his adult daughters and Emily.

c) Circumstances of the Child

[94] There is no evidence that Emily suffered any hardship as a result of the father not increasing his child support payments. The mother did not present any evidence regarding any of Emily's past, present or future needs being unmet.

d) Undue Hardship

[95] I have also considered that any amount of retroactive payment regardless of how it was structured would cause the father an enormous hardship in view of his current financial circumstances. He has sold or is in the process of selling his assets, he has no savings and has large debts to credit card companies and to the Canada Revenue Agency. I accept his evidence that if he is forced to go bankrupt he will even less employable.

[96] I therefore find that the mother's claim for retroactive support to 2009 is dismissed. Any support adjustment will therefore commence as of October 2011 being the first return date of the father's motion to change.

5. Should Spousal Support Be Terminated? If Not, What Amount Should Be Paid?

[97] The father submits that there has been a change in his circumstances in that he cannot afford to pay spousal support any longer. He also submits that he has paid spousal support for long enough and that the mother is in a better financial position than he is and she should be able to support herself.

[98] The mother is not seeking retroactive spousal support but is seeking ongoing spousal support as of June 1, 2013 in the amount of $6,538 per month based on the father's current income.

[99] Subsection 35(1) and (2) of the Family Law Act provides that a contract can be filed with the court and that the provision for support contained in that contract can be varied in accordance with subsection 37. That section provides that a court has the jurisdiction to vary a provision for spousal support in a contract filed with the court.

[100] Subsection 37(2) of the FLA provides that a court has the jurisdiction to vary a provision for spousal support in a contract if there has been a material change in either of the party's circumstances or that evidence not available on the previous hearing has become available.

[101] The onus is on the party seeking a variation to establish such a change. A "material" change in circumstances means a change that, "If known at the time, would have resulted in different terms." Justices Abella and Rothstein speaking for the majority in the case of L.M.P. v. L.S. confirmed the following relevant principles with respect to a variation of a spousal support order:

a) the proper analysis of a variation application is the same whether or not a spousal support order incorporates an agreement that is, the threshold issue is whether or not there has been a material change in circumstances since the making of the order;

b) a material change must have some degree of continuity and not merely be a temporary set of circumstances;

c) what amounts to a material change in circumstances depends on the parties actual circumstances at the time of the order;

d) a term in an agreement that contemplates a specific type of change that will or will not give rise to a variation should be given effect to as it is evidence that the parties considered this particular situation changed circumstances;

e) a general clause in an agreement that support is final or implying it is final is still subject to a court applying an inquiry to determine if there has been a material change in circumstances;

f) once a material change in circumstances has been established, the variation order should properly reflect the objectives of a spousal support order taking into account the material change in circumstances and consider the existence of the separation agreement and its terms as a relevant factor; and

g) a court should limit itself to making the variation that is appropriate in light of the change. A variation should not be approached as if it were an initial application for support, nor is it an appeal of the original order or a new hearing.

[102] Applying these principles to the facts of this case, I find for the same reasons as with respect to the motion to change regarding child support that there has been a material change in circumstances in each party's circumstances with respect to spousal support.

[103] The separation agreement contains the standard variation clause that support can be varied if there is a material change in circumstances. However, there is a specific provision regarding a variation of spousal support namely, that support was to be varied only upon the wife's remarriage or co-habitation for three years. The parties also agreed that the amount of spousal support would increase or decrease in accordance with each party's income. Further, I am also mindful that any variation should not be approached as an initial application for support such that in view of the mother's current income a different spousal support order may have been appropriate.

[104] The court must also consider if the mother continues to be entitled to spousal support and in this regard the objectives of a spousal support order are set out in subsection 33(8) of the FLA as follows:

Purposes of order for support of spouse:

(8) An order for the support of a spouse should,

(a) recognize the spouse's contribution to the relationship and the economic consequences of the relationship for the spouse;

(b) share the economic burden of child support equitably;

(c) make fair provision to assist the spouse to become able to contribute to his or her own support; and

(d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home).

[105] In Bracklow v. Bracklow, the Supreme Court of Canada recognized three basis for an award of spousal support:

1. compensatory based on the economic circumstances of each spouse's role during the marriage;

2. non-compensatory based on need in circumstances where a spouse cannot become self-sufficient; and

3. contractual based on an agreement between the parties.

[106] At the time of the separation, the parties had been married for 18 years and the mother was only working part-time. The parties agreed in their separation agreement that the mother was entitled to indefinite spousal support. It is clear that she would have been entitled to spousal support on both a compensatory and non-compensatory basis.

[107] Although the mother's income has increased substantially since the separation, based on her financial statement she is still in need of spousal support. No evidence was presented to enable the court to make any findings as to whether or not the mother continues to be economically disadvantaged due to her role in the marriage.

[108] In determining the appropriate amount of spousal support, in addition to the factors outlined in subsection 33 (9) of the FLA regarding the financial circumstances of each party, the court can also refer to the Spousal Support Advisory Guidelines (SSAG) with respect to both initial applications for spousal support and on variation hearings. However, caution should be applied when the SSAG calculations are applied to variation applications. A variation of spousal support is much more discretionary and flexible and requires a case by case analysis. There is no automatic increase in spousal support just because a payor's income has increased post-separation. Caution must also be applied in view of the father's income. For example, the mother's counsel submitted a SSAG calculation based on the father's current income of $350,000 and his housing allowance of $36,000 and based on the mother's current income of $88,000. These incomes result in spousal support ranges of monthly amounts of $6,538 (low), $7,675 (mid) and $8,813 (high).

[109] I do not find that amounts in this range of spousal support are appropriate or needed by the mother based on her financial statement. I have considered that the separation agreement provided that the amount of support would be increased or decreased based on the parties' incomes but this provision is not consistent with the purposes of a spousal support order and such an increase was in any event not previously sought by the mother over all of the years since the separation.

[110] The mother provided very little evidence with respect to any of her needs that are not presently being met or would not be met if the current amount of spousal support continued to be paid. I find that at the present time the father has the ability to continue to pay spousal support in the amount of $2,800 per month as stipulated in the separation agreement and that this amount is sufficient to meet the mother's needs.

[111] It may very well be that in the very near future based on the number of years the mother has received spousal support and based on her income and based on the father's job, his age, and financial circumstances that spousal support will need to be further varied. However, based on the facts before the court at this time and in considering that this is not an initial application but a variation I find that continuing the spousal support of $2,800 per month meets the purposes of a spousal support order and the needs of the mother.

Summary

[112] I find that the father's child support obligation should be based on his actual income in 2011 being $152,465. However, in consideration of the financial hardship a re-adjustment to March 1, 2011, when the father lost his employment, would cause the mother, the father's reduction of child support should only commence as of October 1, 2011 being the first date of the father's motion to change.

[113] In 2012 the father's actual income was $253,055 and support will be re-adjusted accordingly.

[114] In 2013 the father's actual income is $350,000. However, he also receives a housing allowance of $36,000. The mother's counsel in his support calculations has included this amount in the father's income but made no submissions on the whether or not it was appropriate to do so. It is submitted by father's counsel that the father receives no personal benefit from the housing allowance nor does it reduce his expenses as he continues to maintain his residence. The housing allowance does not meet the definition of "income" as set out in section 16 of the Child Support Guidelines. It is not analogous to undeclared income and accordingly should not be included in his income for child support purposes.

[115] The father should also be required to pay table child support based on Emily residing with her mother for 5 months of the year up to December 2014 when it is anticipated she will complete her university degree. Any special expenses are to be mutually agreed upon. The mother's motion for retroactive child support is dismissed and the father's motion to terminate spousal support is dismissed but the amount of spousal support is fixed.

Order

[116] ORDER as follows:

Paragraphs 11.1 and 17.2 of the separation agreement dated August 31, 2003 are varied as follows:

1. The Applicant, Robert Murray Quinn will pay to the Respondent, Mary Susan Quinn for the support of Emily Quinn born on April 20, 1991 in accordance with the Child Support Guidelines,

(i) based on an income of $152,465 from October 1, 2011 to December 1, 2011 the amount of $534.00 per month for a total of $1,602.00;

(ii) based on an income of $253,055 from January 1, 2012 to December 1, 2012 the amount of $844.00 per month for a total of $10,128.00; and

(iii) based on an income of $350,000 as of January 1, 2013 the amount of $1,142.00 per month.

(iv) Child support will be payable up to and including December 1, 2014 and terminate at that time unless otherwise agreed to in writing by both parties.

2. The Applicant shall continue to pay to the Respondent spousal support in the amount of $2,800.00 per month. Such amount shall not be increased or decreased unless otherwise agreed to in writing by the parties or by further court order.

3. The Applicant and Respondent shall continue to pay any special expenses for Emily in accordance with their respective incomes. Such expense not be incurred or enforced by the Family Responsibility Office without the prior written consent of the Applicant.

4. The Applicant and Respondent shall provide to each other a copy of their respective income tax returns with all attachments and Notices of Assessment or Notices of Re-Assessment as of June 30, 2014 and each year thereafter as long as the Applicant is obligated to continue to pay child or spousal support.

5. The Applicant and Respondent shall notify each other of any change in their employment or income within 30 days of any such change.

6. Any overpayment by the Applicant shall be deducted from the Respondent's spousal support payment at a rate of no more than $500.00 per month unless the parties otherwise agree in writing or subject to further court order.

7. Support Deduction Order to issue.

[117] I have attached the support calculations I have prepared to arrive at these amounts as they are different than the various calculations prepared by counsel. I have not calculated the amount of any overpayment as I am unaware of the father's ongoing payments. If there are any issues with respect to these calculations or any mathematical errors counsel should contact the judicial secretary to determine how they wish to arrange to make further submissions with respect to the calculations.

[118] If either party is seeking costs, brief written submissions with any offer to settles and a Bill of Costs is to be submitted within 30 days.

Justice Roselyn Zisman

Date: July 15, 2013