Court File and Parties
Toronto (North York) Registry No.: D57015/12
Date: 2013-11-06
Ontario Court of Justice
Between:
Heather Ann Richardson, Applicant
- and -
Glenn Joseph Richardson, Respondent
Before: Justice S.B. Sherr
Counsel:
- J. Wendy Yee Kin Shin, for the Applicant
- Glenn Joseph Richardson, Acting in person
Heard: 5 November 2013
1: Introduction
[1] This trial was about the respondent's (the father) support obligations for the parties' four children, ages 12, 8, 6 and 3 (the children).
[2] The applicant (the mother) asked the court to impute the father's income at $50,000 per annum for the purpose of assessing his support obligations. She asked for an order that support begin as of 1 July 2012 (when she issued her application). She also seeks an order requiring the father to contribute to special expenses of the children since 1 July 2012.
[3] The father asked the court to base his support obligations on an annual income of $20,000, but only on an ongoing basis. The father opposed the mother's request for a contribution to special expenses.
[4] The parties have resolved the parenting issues in this case. The mother has final custody of the children. The father has specified access to them.
2: Background Facts
The mother is 34 years old. The father is 39 years old.
[5] The parties married on 22 July 2006. They separated on 1 March 2010.
[6] The mother is single. The children have lived with her since the parties separated.
[7] The father has lived with a new partner since 2011. They have one child together, who is 2 years old.
[8] The parties jointly ran a roofing company called Richardson Brothers Roofing while they lived together. The father worked full-time as a roofer and the mother handled the administrative duties for the business.
[9] The mother terminated her involvement with the business in April of 2010, shortly after her separation from the father.
[10] The father deposed that he dissolved Richardson Brothers Roofing in 2011. The father has started a new business, RBR Roofing, and performs roofing work through this business.
[11] The father also worked in a warehouse from November of 2012 until May of 2013.
[12] The mother is a stay-at-home parent. She is on public assistance.
[13] From March of 2010 until January of 2011, the father claimed to have voluntarily paid the mother $1,000 per month for the support of the children.
[14] The father deposed that, from January of 2011 until July of 2012, he paid the mother child support of $200 to $500 per month. He also claimed to frequently purchase clothing and other necessities for the children.
[15] The father stopped paying the mother child support once she started this case.
[16] On 4 January 2013, a temporary "without prejudice" order was made that the father pay child support of $259 per month, based on his admission that he was earning $16,000 per annum. This amount was without prejudice to quantum and start date. The father was also ordered to provide specified financial disclosure.
[17] The mother moved to strike the father's pleadings based on his failure to provide full financial disclosure. On 12 April 2013, the court declined to strike the father's pleadings, gave him another opportunity to comply with the financial disclosure order and ordered him to attend questioning at his own expense. He was also ordered to pay the mother costs of $450.
[18] On 3 July 2013, the parties resolved the parenting issues and a trial date was set to decide the child support issues. The father was ordered, once again, to provide financial disclosure.
[19] The father has not voluntarily paid any child support since this case started. He had one small HST refund diverted by the Family Responsibility Office. The father is presently $3,818 in arrears pursuant to the temporary support order.
3: The Father's Income
3.1: Legal Considerations
[20] Section 19 of the Ontario Child Support Guidelines (the guidelines) reads as follows:
19. Imputing income.— (1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances 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;
(b) the parent or spouse is exempt from paying federal or provincial income tax;
(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;
(e) the parent's or spouse's property is not reasonably utilized to generate income;
(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;
(g) the parent or spouse unreasonably deducts expenses from income;
(h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust. O. Reg. 391/97, s. 19(1) ; O. Reg. 446/01, s. 6.
(2) Reasonableness of expenses.— For the purpose of clause (1)( g ), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act (Canada). O. Reg. 391/97, s. 19(2) .
[21] Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. See: Drygala v. Pauli, 61 O.R. (3d) 711 (Ont. C.A.).
[22] The self-employed parent must clearly demonstrate the basis of his or her net income. See Whelan v. O'Connor, 28 R.F.L. (6th) 433 (Ont. Fam. Ct.). 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. See Orser v. Grant, 96 A.C.W.S. (3d) 644 (Ont. S.C.). The self-employed parent should put forward not only adequate, but comprehensive, records of income and expenses, from which the recipient can draw conclusions and the amount of child support can be established. See Meade v. Meade, 31 R.F.L. (5th) 88 (Ont. S.C.).
[23] 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, 169 A.C.W.S. (3d) 605 (Ont. S.C.); Maimone v. Maimone, [2009] O.J. No. 2140 (Ont. S.C.).
[24] The Ontario Court of Appeal in Drygala v. Pauli, supra, set out the following three questions that should be answered by a court in considering a request to impute income:
- Is the party intentionally under-employed or unemployed?
- If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?
- If not, what income is appropriately imputed?
[25] The onus is on the party seeking to impute income to the other party to establish that the other party is intentionally unemployed or under-employed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made. See Homsi v. Zaya, 2009 ONCA 322, 248 O.A.C. 168 (Ont. C.A.). However, in Graham v. Bruto, 2008 ONCA 260, 165 A.C.W.S. (3d) 103, the court inferred that the failure of the payor to properly disclose their financial information would mitigate the obligation of the recipient to provide an evidentiary basis to impute income.
[26] Absence of a reasonable job search will also usually leave the court with no choice but to find that the payor is intentionally under-employed or unemployed. See Filippetto v. Timpano, 164 A.C.W.S. (3d) 303 (Ont. S.C.).
[27] The court stated in Drygala v. Pauli, supra, that there is no need to find a specific intent to evade child support obligations before income is imputed; the payor is intentionally under-employed if he or she chooses to earn less than what he or she is capable of earning. The court must look at whether the act is voluntary and reasonable.
[28] Once under-employment is established, the onus shifts to the payor to prove one of the exceptions of reasonableness. When an employment decision results in a significant reduction of child support, it needs to be justified in a compelling way. See Riel v. Holland, 67 O.R. (3d) 417 (Ont. C.A.), at paragraph [23].
[29] The payor must prove that any medical excuse for being underemployed is reasonable. See Rilli v. Rilli, 151 A.C.W.S. (3d) 1130 (Ont. S.C.). Cogent medical evidence in the form of detailed medical opinion should be provided by the payor in order to satisfy the court that his/her reasonable health needs justify his/her decision not to work. See Cook v. Burton, 136 A.C.W.S. (3d) 504 (Ont. Fam. Ct.); and Stoangi v. Petersen (Johnson), 150 A.C.W.S. (3d) 171 (Ont. Fam. Ct.).
[30] The third question in Drygala v. Pauli, supra, is: "If there is no reasonable excuse for the payor's under-employment, what income should properly be imputed in the circumstances?" The court must have regard to the payor's capacity to earn income in light of such factors as employment history, age, education, skills, health, available employment opportunities and the standard of living earned during the parties' relationship. The court looks at the amount of income the party could earn if he or she worked to capacity. See Lawson v. Lawson, 81 O.R. (3d) 321 (Ont. C.A.).
3.2: The Mother's Evidence
[31] The mother asks the court to impute an annual income of $50,000 to the father.
[32] The mother deposed that the father earned about $100,000 per annum when she lived with him. She said that she knew this as she was responsible for the administration of Richardson Brothers Roofing. When questioned further, she conceded that this was a gross, and not a net income figure. She estimated that the business expenses were about $80,000 per annum.
[33] The mother deposed that the father continued his business as a roofer in 2011, carrying on business as RBR Roofing. She provided photographs showing the father working on roofs (from his Facebook page) and showing the business logo on a truck he was driving in 2013.
[34] The mother deposed that the father continued to carry on his business in addition to the job he obtained in November of 2012.
[35] The mother deposed that, in 2012 and 2013, she received a number of telephone calls from persons seeking the services of RBR Roofing.
[36] The mother deposed that the father has told her about a number of roofing jobs he has worked at since 2012.
[37] The mother believes that the father is earning more income than when they lived together. She says that the father no longer has an employee, has fewer fixed expenses, no longer keeps records and operates in cash to maximize his profit.
3.3: The Father's Evidence
[38] The father deposed that he has a grade VII education. He has been steadily employed for most of his adult life. He testified that he has worked as a cleaner and in warehouses. He said that he has worked as roofer for about ten years. He said that he started Richardson Brothers Roofing in 2008. He said that, when he lived with the mother, he earned about $20-25,000 per annum from this business.
[39] The father deposed that the revenues of Richardson Brothers Roofing declined considerably after he separated from the mother. He claimed that he missed the mother's administrative skills. He also said that he was depressed about the separation and couldn't concentrate on work.
[40] The father stated in his direct evidence that he dissolved Richardson Brothers Roofing in 2011. He said that he was unemployed until he obtained his job in November of 2012, unloading and loading trailer trucks. He said that he worked 30 hours per week at this job, earning minimum wage.
[41] The father conceded in examination that he has also done roofing jobs through RBR Roofing since 2012.
[42] The father was laid off by his employer in May of 2013 due to lack of work. He deposed that he has done a few minor roofing jobs since then. He says that he has earned about $10,000 from these jobs in 2013. He estimated that 60% of this income is in cash. He said that he borrows his friend's truck to do these jobs, but his friend will need the truck back by 21 November 2013. He deposed that he will likely apply for public assistance by the end of November.
[43] The father claimed that he was involved in motor vehicle accidents in 2011 and 2012 and he suffered injuries that have impaired his ability to work.
[44] The father filed his notices of assessment from 2009 to 2012 showing the following line 150 income:
| Year | Income |
|---|---|
| 2009 | $522 |
| 2010 | ($2,876) |
| 2011 | $5,055 |
| 2012 | $6,021 |
3.4: Credibility
[45] I preferred the evidence of the mother where it conflicted with the father's.
[46] I found that the mother provided her evidence in a clear, detailed and straight-forward manner.
[47] I did not find the father to be a credible witness. He didn't provide full or timely financial disclosure. The financial disclosure he filed was inconsistent with his declared income. He failed to disclose current income information and only admitted to performing roofing work when confronted with compelling evidence from the mother. The father also leads a lifestyle inconsistent with his declared income.
[48] The father's failure to voluntarily pay the mother any support since she started this case informs the court that he is not acting in good faith. This adversely affects his credibility.
[49] The father's credibility was also hurt by his failure to properly disclose his financial affairs. This resulted in the mother's motion to strike his pleadings in April of 2013. The father, at trial, had still failed to provide the following disclosure ordered by the court:
(a) An updated, sworn financial statement.
(b) His complete income tax returns for the past three years.
(c) Evidence of receipt of employment insurance, social assistance, pension income, WSIB payments, disability payments or current receipt of income.
(d) A job search list.
(e) A medical report from his doctor setting out why he can't work.
(f) Amounts received from his motor vehicle accidents and any motor vehicle insurance claims made.
[50] The father was given a number of opportunities to provide this financial disclosure. The court draws an adverse inference from his failure to do so.
[51] The father also failed to file any current evidence about his roofing business. He filed no documentary evidence about his revenues or expenses in 2012 and 2013. The court draws an adverse inference from his failure to do so.
[52] The financial disclosure the father did provide made little sense. In 2009, he was supporting the mother and four children on a declared income of $522.
[53] The father claimed that he was able to pay child support of at least $1,000 per month from April of 2010 until January of 2011. Yet he claimed that he actually lost money in 2010. He could not explain how he could afford these support payments and support himself.
[54] The father claimed to have paid child support of $200 to $500 per month from January of 2011 until July of 2012, despite only earning $5,055 in 2011 and $6,021 in 2012. He could not explain how he could afford these support payments and support himself. It became clear that he was not reporting his actual income from his roofing business.
[55] The father provided his bank account statements for parts of 2012. The deposits in these bank accounts had no correlation to the father's reported income. In one bank account, the father deposited $20,700 over a 6-month period. In another bank account, he deposited $6,300 over a 9-month period. When confronted with these deposits, the father conceded that he earned $20,000 from employment and his roofing business (despite his tax return declaring income of $6,021). He went on to explain that he made about $7,000 in 2012 gambling at bingo (he had made no mention of this income in any of his prior court filings).
[56] The lifestyle represented by the father's financial statement also did not support his evidence about his income. The father filed a financial statement sworn on 11 September 2012. He deposed that he had annual expenses of $49,424 for the prior year. He could not explain how he financed these expenses based on his reported 2012 income of $6,021.
[57] The father gave evidence that his expenses in the past year were about $27,500. He could not explain how he has maintained these expenses based on his income earned to date in 2013. He deposed that his debts have not increased and that he has not received support or gifts from other persons. His partner only works part-time, as a cleaner, and cannot provide much support.
[58] It became clear that the court could not rely on the father's self-reports of his income. The court finds that he has misrepresented his actual income to avoid his child support obligations.
3.5: Analysis
[59] In assessing the father's income, the mother asked the court to both look at what the father is actually earning and to determine what he is capable of earning.
[60] The court finds that the father is earning the equivalent of about $35,000 per year. This is based on the following:
(a) The court finds that the father is not credible and is significantly understating his income at $20-25,000 per annum.
(b) The father is an experienced roofer who is capable of earning this income.
(c) The father has historically been able to support himself, the mother and the four children on his income as a roofer.
(d) The father was able to pay significant child support after the separation, despite reporting minimal or no income to Revenue Canada.
(e) The father had bank deposits of about $27,000 in 2012 in a 9-month period.
(f) The father has been actively working through his business as a roofer since 2012.
(g) The father is leading a lifestyle of a person earning this level of income. He is affording expenses of at least $27,500 per year (net of any taxes or other mandatory deductions) without incurring further debt.
(h) The father is earning enough income to gamble at bingo (as opposed to paying any child support).
(i) It appears that the father is primarily earning cash income and not reporting it to Revenue Canada. It is appropriate in these circumstances to gross up his income, as he is declaring and paying tax on substantially less income than he is actually earning. This is done to ensure consistency of treatment where a party is found to have arranged his affairs to pay less tax on income. See Sarafinchin v. Sarafinchin, 189 D.L.R. (4th) 741 (Ont. S.C.).
[59a] The court, in the alternative, finds that the father is intentionally under-employed. He admitted that he has not applied for any jobs since he was laid off in May of 2013. He made minimal efforts to find work before then. He has not kept a job search list, despite being directed to do so by the court (the court draws the inference that he is not looking for work because he is earning as much money from his business than he would obtain from employment).
[59b] The father was unable to establish any reasonable excuse for his under-employment. He was given several opportunities to provide medical evidence to support his position that he has medical limitations. He provided the court with no documentary evidence to support this position. He was well enough to perform roofing jobs throughout 2012 and 2013.
[61] The final step is for the court to ascertain what income the father is capable of earning. The court finds that the $50,000 per annum sought by the mother is too high. The father has never earned this level of income.
[62] The father testified that he will apply to be employed as a roofer once he sees his doctor at the end of November and is medically cleared. He said that he would earn $15 to $20 per hour being employed full-time as a roofer. This would project to income of $31,200 to $41,600 per annum.
[63] The court finds that the father is capable of earning $35,000 per annum. This is the income that will be imputed to him, calculated from 1 July 2012 (the application was issued on 3 July 2012).
[64] The child support guideline (guideline) table amount for four children, based on an income of $35,000 per annum, is $830 per month.
4: Claim for Section 7 Expenses
[65] The mother seeks an order that the father pay a proportionate share of the following expenses:
| Expense | Amount |
|---|---|
| Islamic School | $750 per year |
| Kumon Centre | $1,200 per year |
[66] The onus is on the parent seeking the special or extraordinary expenses to prove that the claimed expenses fall within one of the categories under section 7 of the guidelines and that the expenses are necessary and reasonable, having regard to the parental financial circumstances. See Park v. Thompson, 77 O.R. (3d) 601 (Ont. C.A.).
[67] Unlike section 3 of the guidelines, which presumptively provides for the table amount of child support, an order for section 7 expenses involves the exercise of judicial discretion. When exercising its discretion, the court should also consider the objectives of the guidelines, including clause 1(a), which reads as follows:
1. Objectives. — The objectives of this Regulation are,
(a) to establish a fair standard of support for children that ensures that they benefit from the financial means of their parents and, in the case of divorce, from the financial means of both spouses after separation;
[68] The relevant provisions of the guidelines read as follows:
7. Special or extraordinary expenses.— (1) In an order for the support of a child, the court may, on the request of either parent or spouse or of an applicant under section 33 of the Act, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child's best interests and the reasonableness of the expense in relation to the means of the parents or spouses and those of the child and to the spending pattern of the parents or spouses in respect of the child during cohabitation:
(a) child care expenses incurred as a result of the custodial parent's employment, illness, disability or education or training for employment;
(b) that portion of the medical and dental insurance premiums attributable to the child;
(c) health-related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy, prescription drugs, hearing aids, glasses and contact lenses;
(d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child's particular needs;
(e) expenses for post-secondary education; and
(f) extraordinary expenses for extracurricular activities. O. Reg. 391/97, s. 7(1) ; O. Reg. 446/01, s. 2.
(1.1) Definition, "extraordinary expenses" .— For the purposes of clauses (1)(d) and (f), "extraordinary expenses" means
(a) expenses that exceed those that the parent or spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that parent's or spouse's income and the amount that the parent or spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate, or
(b) where clause (a) is not applicable, expenses that the court considers are extraordinary taking into account,
(i) the amount of the expense in relation to the income of the parent or spouse requesting the amount, including the amount that the parent or spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate,
(ii) the nature and number of the educational programs and extracurricular activities,
(iii) any special needs and talents of the child,
(iv) the overall cost of the programs and activities, and
(v) any other similar factors that the court considers relevant. O. Reg. 102/06, s. 1.
[69] The mother claims that the Islamic and Kumon school expenses are extraordinary primary education expenses as defined by clause 7(1)(d) and subsection 7(1.1) of the guidelines. The court agrees. These expenses exceed what the mother can reasonably cover, taking into account her income and the applicable guideline table amount.
[70] However, the analysis does not end there. The court must also find that these expenses are reasonable and necessary, taking into account the children's best interests and the means of the parties.
[71] The court accepts that these expenses are in the children's best interests. The children have attended the Islamic school since before the parties separated. The parents had agreed that the children benefitted from attending there. One of the children is significantly behind in math and benefits from additional assistance from the Kumon school. Another child benefits in obtaining reading assistance from the Kumon school.
[72] The mother has obtained family assistance to pay for the Kumon school expenses.
[73] If the father was only required to pay child support for one or two children, the court would likely have ordered the father to make some contribution to these expenses. However, the father has to pay child support for four children on a very modest income. He also needs to support the child living with him. His partner earns modest income. This support order will create significant support arrears that the father will need to repay. Despite the benefits of these programs for these children, the economic reality is that the parties, based on their means, cannot afford them at this time. The decision to send the children to Islamic school was made when there was one household to support. There are now two households to support and the parties have limited means. The court finds that, given the number of children the father must support and the minimal means of the parties, the claimed expenses are not reasonable within the meaning of section 7 of the guidelines.
5: Payment of Arrears
[74] This order will place the father in considerable arrears of support. The father asked the court to allow for repayment of the arrears over a lengthy period of time.
[75] The court recognizes that the father has a limited ability to pay arrears. However, it also recognizes that the father has no one to blame but himself for the accumulation of these arrears. He chose to pay no child support after the mother started this case and to ignore the temporary support order. He chose to underreport his income.
[76] Balancing these factors, the father will be permitted to repay the arrears at the rate of $150 per month until they are repaid. However, he will have to demonstrate good faith to obtain this benefit. If he is more than 30 days late in making any ongoing or arrears payment, the entire amount of arrears shall immediately become due and payable.
6: Conclusion
[77] A final order shall go on the following terms:
(a) The father shall pay the mother the guideline table amount of child support for four children, based on an imputed income of $35,000 per annum, being $830 per month, starting on 1 July 2012.
(b) The father shall pay the arrears created by this order at the rate of $150 per month starting on 1 December 2013. However, if he is more than 30 days late in making any ongoing or arrears child support payment, the entire amount of arrears shall become immediately due and payable.
(c) The Family Responsibility Office is requested to adjust their records in accordance with the terms of this order. They shall credit the father with any payments received, as reflected in their records, since 1 July 2012.
(d) Nothing in this order precludes the Family Responsibility Office from collecting arrears from any lottery or prize winnings, or any government source (such as HST or income tax refunds).
(e) The father shall provide the mother with his complete income tax returns and notices of assessment by 30 June of each year.
(f) A support deduction order shall issue.
(g) The mother's claim for a contribution to section 7 guideline expenses is dismissed.
[78] If the mother wishes to seek costs, she shall serve and file written submissions by November 18, 2013. The father will then have until November 29, 2013 to serve and file a written response to these submissions. The written submissions are not to exceed 2 pages, not including any offer to settle or bill of costs. The submissions should be filed at the trial coordinator's office on the second floor of the courthouse.
Justice Stanley B. Sherr
Released: 6 November 2013
