Court File and Parties

Court File No.: Brampton 1521/11 Date: 2013-05-15 Ontario Court of Justice

Between:

Melissa Taylor Applicant

— And —

Frank Robert Hitchman Respondent

Before: Justice L.S. Parent

Heard on: April 30, 2013

Reasons for Judgment released on: May 15, 2013

Counsel:

• Melissa Taylor on her own behalf
• Arman E. Hoque for the respondent

Judgment

PARENT, J.:

Issues Before the Court

[1] The only issues before the court are as follows:

1. Retroactive child support for the years 2009, 2010 and 2011; and
2. Section 7 expenses, namely the private school tuition for the child for the 2012-2013 academic year.

[2] The balance of the issues claimed in the Application dated October 25th, 2011 have been resolved by a final order of Dunn, J dated February 8th, 2013 which provides that the Respondent pay to the Applicant child support in the amount of $719.00 per month commencing February 1, 2012 based on an annual income of $80,000.00 and a payment of $6,175.00 towards school incidentals at a rate of $100.00 per month commencing February 1, 2013. The Respondent has filed, on March 28, 2013, a Motion to Change this order.

Background

[3] The parties are the parents of one child, a daughter who is currently 17 years of age. The Applicant is the biological mother of the child and the Respondent is the step-father of the child. Although there is contradictory evidence as to whether or not the parties resided in a common-law relationship and if so, during which periods of time, there is no dispute between the parties that the Respondent stood in place of a parent to the child.

The Applicant's Position at Trial

[4] The Applicant seeks the following final order from the court, namely:

1. That the Respondent repay her 70% of the child's 2012-2013 private school tuition fees; and
2. That the Respondent pay child support in accordance with the Child Support Guidelines in accordance with his salary of $80,000.00 commencing January 1st, 2009 to December 31st, 2011.

The Respondent/Father's Position at Trial

[5] The Respondent seeks a final order from the court dismissing the Applicant's claims.

[6] The Respondent acknowledges his obligation to provide child support for the child however claims that this obligation does not require him to make a financial payment given that his income is below the income levels prescribed by the Child Support Guidelines. Furthermore, the Respondent maintains that his financial situation has been in this state prior to and for the years 2009, 2010 and 2011.

[7] The Respondent's position is that the enrolment of the child in a private school is not a section 7 expenses which should be shared between the parties given that this expense is not reasonable given their respective financial circumstances.

Issues

[8] The issues to be determined by the court are as follows:

1. Should income be imputed to the Respondent so as to trigger a payment amount in accordance with the Child Support Guidelines and if so, at what amount?
2. Should the Respondent's child support obligation be made retroactive to January 1st, 2009 to December 31st, 2011 and if so, at what amount?
3. Is the child's 2012-2013 private school tuition an expense captured under section 7 of the Child Support Guidelines?
4. If the private school tuition is a section 7 expense, what should be each parent's contribution?

Evidence of the Applicant

[9] The Applicant testified that the parties' relationship ended in 2009 when, what she has described as having been physically assaulted by the Respondent, occurred. At that time, she made the decision that the relationship was over and that she would only communicate with him when necessary.

[10] The Applicant testified that the Respondent has the ability to pay child support and contribute to the daughter's private school tuition fees. She testified that throughout the relationship and following their separation, the Respondent owned various properties including a variety store, a building, a home which he sold and thereafter a new home purchased a year ago at a worth of $500,000 and his current business owned since 2006, namely "Frankie Shilow Haulage" which includes ownership of a dump truck.

[11] The Applicant testified that the Respondent has reported incomes of $67,633.00 in 2009, $97,000.00 in 2010 and $78,723.08 in 2011. She has filed a Financial Statement sworn by the Respondent on February 19th, 2013 as Exhibit 1 which indicates a current income of $96,000.00.

[12] The Applicant testified that she began asking the Respondent to contribute to the child's financial needs in 2009. The Respondent's response to her request was that he could not afford any payments since he had other expenses to pay such as truck and mortgage payments.

[13] The Applicant testified that she has never received any monies from the Respondent as support. She testified that on November 30th, 2011 or 2012, the Respondent approached her outside of her car at the child's school and showed her an envelope. She testified that the Respondent indicated that he had support cheques for her however he was not going to give them to her unless she allowed him to see his daughter.

[14] It is not a disputed fact that the Respondent does not have a relationship with his daughter. He blames the Applicant for the absence of a relationship. The Applicant indicates that the child does not wish to see the Respondent.

[15] The Applicant testified that her daughter is currently enrolled in Grade 12 at private school in the Greater Toronto Area. She has been attending this school for the past 6 years. The Applicant testified that her daughter does exceptionally well at school, that she is on the Honour Roll and plans to go on to post-secondary education in the Fall of 2013.

[16] The Applicant testified that the Respondent was aware of the child's enrolment in private school. She testified that he was in attendance at the initial intake interview. She testified that she requested a contribution from him prior to the ending of their relationship and following their separation. She testified that the Respondent refused to contribution to these fees. She denies that the agreement was that the Respondent would only pay for the child's expenses outside of the tuition fees.

[17] The Applicant does acknowledge that the Respondent did provide money orders totalling $4,100.00 to the school in the past 6 years. She testified however that there has not been a recent contribution.

[18] The Applicant testified that she currently earns $52,000.00 per year.

Evidence of the Respondent

[19] The Respondent testified that the parties did live together during their relationship and that this ended in May 2010 when the Applicant left the home with her daughter. He testified that he did not know the Applicant's reason for ending their relationship and her and the child's whereabouts for some time following her departure from their home.

[20] The Respondent testified that he has been, since 2001, the sole proprietor of a small construction business called "Frankie Shilow Haulage". Prior to this the Respondent confirmed the evidence of the Applicant by acknowledging that he owned a variety store, a commercial building, and a home. He testified that his business is seasonal and its main function is excavation work. He testified that he keeps doing what he is doing because he likes to be independent and can provide for his family.

[21] The Respondent testified that, throughout their relationship, he was the sole provider for all expenses for his family. The Respondent testified that he has always financially contributed to his children, which includes his four biological children from prior relationships. He testified that he has even continued to provide financially for two of his children who are now adults as well as sponsoring his 17 year old son to relocate from Jamaica to live with him in Canada.

[22] The Respondent testified that he would pay for all living expenses for the Applicant and the child while they were together. He testified that he would take the family on vacations, such as a cruise, solely at his expense. He testified that the reason the Applicant was able to move out in 2010 was because she saved so much money during their relationship that she was able to purchase her own home.

[23] The Respondent testified that he is not a "deadbeat dad", that in fact he has over the years and as recently as 2011/2012 tried to give the Applicant support cheques and money orders however she has refused to accept them. The Respondent testified that he provided some money for the child's recent trip to Europe however could not recall how much. The Respondent acknowledges that he was aware of the Applicant's efforts to enrol the child in private school. He testified that he did not agree with the decision but supported it. He testified that the agreement he reached with the Applicant was that his sole responsibility towards this expense would be payment of the child's account for school expenses but not the tuition. He testified that he made those contributions until May 2010 when the relationship ended.

[24] The Respondent further testified that he is remarried and is currently sponsoring his spouse to relocate from the United States to live with him in Canada.

[25] The Respondent testified that in 2009, his net income was between $28,000.00 to $30,000.00.

[26] The Respondent testified that he made a mistake when completing the Financial Statement filed as Exhibit 1. He testified that he did not understand that he should have declared his net income and not the gross income of his business. The Respondent filed his 2011 Income Tax Return and Notice of Assessment in these proceedings. These documents show a gross business income of $78,723.00 and a net income of $8,393.00 for the year.

[27] The Respondent did not correct or explain any of the expenses listed at Part 2 of his Financial Statement (Ex. 1) during his testimony. These expenses total $7,830.32 per month or $93,963.84 per year. The Respondent did indicate that he is carrying debt and Part 4 of his Financial Statement (ex. 1) indicates a loan of $2,500.00 and outstanding credit card balances of $31,480.00. The document does not provide any details regarding these debts. The document however does indicate that the Respondent is making monthly payments of $925.00.

[28] The Respondent testified that his current income is identical to his income in 2011 as the weather has affected his business. The Respondent has not filed nor disclosed any of his 2012 financial documents to the Applicant or to this court. He indicated during his cross-examination that these documents are not yet available. The Respondent testified that he operates his business from his home however he spends most of his time on job sites.

Question 1 - Should Income Be Imputed to the Respondent?

[29] The Respondent acknowledges that he has a child support obligation towards his daughter. The Respondent's position is that his current income does not cross the income threshold which would require him to contribute to the child's financial needs in accordance with the Child Support Guidelines.

[30] The Applicant's position is that the Respondent earns $80,000.00 per year and should contribute child support in accordance with this income level as prescribed by the Child Support Guidelines.

[31] Section 19(1) of the Child Support Guidelines permits the court to impute income to a parent in appropriate circumstances such as when a parent unreasonably deducts expenses from income. The onus is on the Applicant to satisfy the court as to the appropriate amount to impute.

[32] Section 19(2) of the Child Support Guidelines provides that the determination as to whether an expense is reasonably deducted from a payor's income is not solely governed by whether it is properly deducted for income tax purposes. In this case, the Respondent bears the onus of justifying that any deduction for business expenses is, indeed, for legitimate business purposes.

[33] The Respondent did not produce a statement of his business income and expenses. He merely testified that his net income for 2011 was $8,393.00 and his gross income was $78,723.00. During his examination-in-chief, the Respondent did not provide any explanation, other than that these expenses, totalling $70,330.00, had been accepted by Revenue Canada.

[34] It is clear that caution should be used when exercising judicial discretion to impute income. In the decision of Osmar v. Osmar (2000), 8 R.F.L. (5th) 368, para 5, Mr. Justice Aston says:

There is a substantial body of case-law under s. 19(1)(g) of the Guidelines, not all of it consistent. It is fair to conclude that judicial discretion in this area makes the determination of income more of an art than a science. In my view, the Guidelines require the court to examine expenses from the perspective of balancing the business necessity against the alternative of using those funds for child support. The court should respect the right of self-employed persons to run their business as they see fit, but may, nevertheless, question whether particular expenditures ought to be indirectly subsidized by lower child support

[35] In applying the approach outlined by Aston, J. the court may also look at a parent's lifestyle in order to assist the court in the determination of the appropriate amount of income to impute (Jonas v. Jonas [2002] O.J. No. 2117 (Ont. S.C.J.)).

[36] The Respondent has testified that 2010 was the "best year" of his business. He did not provide any further evidence of his income, gross or net, during the years 2009, 2010 and 2011 despite being aware that the issue of retroactive child support was before the court for determination.

[37] The Applicant has testified that the Respondent has declared his income in 2010 to be $97,000.00 and in 2011 to be $78,723.08.

[38] The testimony of the Respondent and the evidence produced at trial is clear that his post separation and current lifestyle, which includes prior and continuing financial obligations to his other children and his current spouse, cannot be sustained on his testimony of his net income per year. If this evidence was accepted by the court, the result would be that the Respondent would be incurring debt in excess of $70,000.00 per year yet this is not supported by the information provided by the Respondent at trial.

[39] I am satisfied from the evidence heard at trial that an income level higher than the Respondent's declared 2011 net income of $8,393.00 must be imputed to him. I am not satisfied that the Applicant has met her burden that this income be set at $80,000.00. I am however satisfied that an income of $50,000.00 is an appropriate level of income to be imputed to the Respondent for the years 2009, 2010 and 2011 for the purposes of child support.

Question 2 - Should the Respondent's Child Support Obligation Be Made Retroactive?

[40] The Applicant seeks an order requiring the Respondent to pay child support retroactively for the period between January 1st, 2009 to December 31st, 2011.

[41] The evidence of the parties with regard to the beginning and the end of their relationship was contradictory during the trial.

[42] The Applicant testified that she ended their relationship in 2009 when she was physically pinned down by him. The Applicant testified that she did not call the police following this incident. The Respondent denies having physically touched the Applicant as she has described.

[43] The Respondent testified that the Applicant ended the relationship, without any notice to him, by leaving their home in May 2010. He testified that he did not know the Applicant's and the child's whereabouts for a significant period of time following her departure.

[44] The court has jurisdiction to order retroactive child support payments. The leading decision in this area is D.B.S. and S.R.G. v. T.A.R. and L.J.W., (2006) 2006 SCC 37, 2 S.C.R. 231, hereinafter referred to as D.B.S. The majority decision of the Supreme Court of Canada provided two principles in this area, namely that both parents have an obligation to ensure that their child receives the appropriate amount of support in a timely manner and that court, when faced with a retroactive claim, must balance the payor's interest in relying on the status quo with the need for fairness and flexibility.

[45] The Court set out four factors to be considered in a claim seeking a retroactive award:

1. The reason for the delay in bringing the claim;
2. The conduct of the payor parent;
3. The circumstances of the child; and
4. Any hardship that may be caused by a retroactive award.

Factor 1 - The Reason for the Delay in Bringing the Claim

[46] The Applicant testified that she sought support from the Respondent following their separation. Her testimony was unclear as to when these efforts began however she testified that her requests were consistent and always refused by the Respondent on the basis that he had other expenses to pay. She testified that when she left the relationship, she decided that she was only going to contact the Respondent when necessary. The court record is clear however that she initiated the current Application before the court on October 25th, 2011.

Factor 2 - The Conduct of the Payor Parent

[47] The Respondent, through his testimony, acknowledged that the Applicant sought support from him. He acknowledged that, at times following their separation, he paid monies to the child's school and attempted to provide child support to the Applicant however she refused. He testified that the most recent efforts were in 2011/2012.

Factor 3 - The Circumstances of the Child

[48] There is no dispute between the parties that the circumstances of the child establish a need for support. The Applicant testified as to this need. The Respondent acknowledged this need however his position is that his contribution must be in accordance with his ability to pay.

Factor 4 - Any Hardship That May Be Caused by a Retroactive Award

[49] The Applicant is seeking a retroactive order covering support for a period of three years. This is a significant period of time. However, the evidence at trial is that requests were made throughout this period and refused by the Respondent.

[50] In D.B.S., the Court held that if a retroactive award is appropriate it should usually commence on the date of "effective notice". This date is when the recipient advised the payor that support should be paid. I am satisfied from the evidence that notice was provided by the Applicant to the Respondent effective in May 2010. This date captures the latest date claimed by the Respondent to be the end of the parties' relationship as well as the ongoing efforts by the Applicant to obtain child support. Accordingly, I find that child support should have been paid by the Respondent to the Applicant for the period between June 1st, 2010 to December 31st, 2011.

[51] Given the evidence of the parties and the reasons expressed in my consideration of issue #1, I am satisfied that child support should be paid by the Respondent to the Applicant effective June 1st, 2010 to December 31st, 2011 at the Respondent's annual income level of $50,000.00. Although no submissions were made by counsel for the Respondent or the Applicant as to the amount of support payable, the court is aware that the Child Support Guidelines in place for the period in question, namely the 2006 Guidelines, are different than the current tables. A review of these Guidelines indicates that a payment of $462.00 per month would have been payable at a payor's annual income of $50,000.00 during the period of June 1st, 2010 to December 31st, 2011. Accordingly, arrears of support for this 19 month period are fixed at $8,778.00.

Question 3 - Is the Child's Private School Tuition a Section 7 Expense?

[52] Section 7(1) of the Child Support Guidelines provides as follows:

In an order for the support of a child, the court may, on the request of either parent, 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 and those of the child and to the spending pattern of the parents in respect of the child during cohabitation:

…. (d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child's particular needs;

[53] There is no dispute between the parties that the private school tuition fees are an expense captured by section 7(1)(g). The dispute between the parties is whether or not this expense is necessary and reasonable given their respective financial circumstances.

[54] The decision in Correia v. Correia, 2002 MBQB 172 sets out a number of factors to be taken into account in determining the reasonableness of a s. 7 expense. Justice Allen noted the following:

1. the combined income of the parties;
2. the fact that two households must be maintained;
3. the extent of the expense in relation to the parties' combined level of income;
4. the debt position of the parties;
5. any prospects for a decline or increase in the parties' means in the near future; and
6. whether the non-custodial parent was consulted regarding the expenditure prior to the expense being incurred.

[55] The Applicant's testimony is that the child has been enrolled in her current private school since 2006. She is currently in her last year, namely Grade 12 and has been on the Honour Roll for the past several years. The Applicant testified that prior to her enrolment at this school, the child attended public school. The Applicant produced a Globe and Mail article entitled "Private schools: what's the return on investment?" as Exhibit 2. The Applicant maintains that her child's enrolment in this school is in her child's best interest and has ensured that she is on track to succeed in her post-secondary education goals and beyond.

[56] The Applicant testified that she has solely been responsible for the tuition fees associated with the private school since 2006. She testified that she made arrangements with the school to pay by installments.

[57] The Applicant is only seeking contribution to the tuition costs of the 2012-2013 academic year. The Applicant testified that in 2012, she did not make monthly payments as she had done in the past. She testified that she did this based on the indication from the Respondent that he would be paying the tuition fees for this upcoming year. The Applicant testified that she was contacted by school staff in early September 2012 advising her that her daughter's enrolment was in jeopardy as the tuition fees of $22,600.00 had not been paid. The Applicant requested additional time to pay which was granted. She testified that she borrowed the funds and made a full payment on December 31st, 2012, thereby avoiding interest and late payment fees.

[58] The Respondent testified that he was aware and attended at the initial interview which occurred prior to the child's enrolment in her current school. He testified that he did not agree with the decision however supported it. He testified that his support was demonstrated by his continuing to pay for all household expenses while the parties lived together in addition to paying the child's school expenses outside of the tuition fees. He testified that he stopped paying for these expenses when the Applicant ended the relationship in 2010.

[59] The Respondent, in his testimony, did not dispute the Applicant's assertion that the child's attendance at school was beneficial to her. His position is that this expense is unreasonable given the parties' financial circumstances.

[60] I find that the private school expense is reasonable in the circumstances. The Respondent has testified that, although he did not agree with the decision of the child attending private school, he supported it financially while the parties were together, according to his own evidence until May 2010, by assuming sole responsibility for the family day-to-day living expenses, both basic and otherwise, in addition to contributing to the expenses outside of the child's tuition fees. The mere fact that the parties have separated does not in my view remove the fact that the Respondent, by his behaviour, accepted that this expense was necessary in the child's best interest and reasonable in relation to their means and pattern of spending during their relationship.

[61] Given the parties' separation, do any of the factors outlined by the Court in Correia v. Correia (supra) impact on the determination that the private school expenses continues to be a reasonable and necessary expense?

[62] In examining the evidence at trial, it would appear that the parties' incomes and assets were either maintained or increased following their separation. Furthermore, the parties were able to continue to meet their ongoing financial commitments. The Applicant testified that she was able to purchase a home following the separation and continues to provide for her child's needs. The Respondent testified he sold a home and purchased a new one, he has been able to remarry and sponsor his spouse to assist her in relocating to Canada from the United States, he has been able to sponsor his 17 year old son from a prior relationship to assist him in relocating to Canada from Jamaica, and he has continued to financially assist his other adult children. The Respondent testified that he receives no financial contribution from his current spouse.

[63] I therefore conclude that the 2012-2013 private school tuition fees for the child in the amount of $22,600.00 are an expense which falls within the ambit of section 7 of the Child Support Guidelines.

Question 4 - What Should Be Each Parent's Contribution?

[64] Section 7(2) of the Child Support Guidelines states:

The guiding principle in determining the amount of an expenses referred to in subsection (1) is that the expense is shared by the parents in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.

Section 7(3) of the Child Support Guidelines states:

..in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.

[65] The Applicant testified that she does not receive any tax deduction or credit for the child's private school tuition costs. The Applicant has testified that the child does not have any part-time or full-time employment and that she is not contributing to her private school tuition fees.

[66] Relying therefore on my finding that the Respondent's annual income is to be imputed for child support purposes at $50,000.00 and the Applicant's testimony indicating her current income as $52,000.00 per year, the proportionate share of each party is 49% for the Respondent and 51% for the Applicant.

[67] The Applicant sought a 70% contribution by the Respondent to tuition expense at trial. I find that this request is not reasonable given the evidence.

Order

[68] For the reasons expressed above, I make the following final order:

1. An annual income of $50,000.00 is hereby imputed to the Respondent for child support purposes for the years 2009, 2010 and 2011;

2. Arrears of support payable by the Respondent to the Applicant for the period between June 1st, 2010 to December 31st, 2011 inclusive are hereby fixed at $8,778.00. This amount is calculated at $462.00 per month for the nineteen (19) month period. The arrears will be paid at the rate of $500.00 per month with the first payment due on May 31st, 2013 and thereafter commencing on June 15th, 2013 and on the 15th day of each month thereafter until they are paid in full;

3. The Respondent shall pay to the Applicant the amount of $11,074.00 which represents 49% of the child's 2012-2013 private school tuition fees payable by way of a lump sum payment of $3,074.00 on May 31st, 2013 and thereafter by monthly payments of $250.00 per month commencing June 1st, 2013 and on the 1st day of each month thereafter until they are paid in full; and

4. A Support Deduction Order will issue.

Should the Applicant and counsel for the Respondent wish to address me on the issue of costs, please contact my legal assistant, Laurie Findlay, at (905) 456-4833 within ten (10) days of the date of this order to arrange a teleconference to discuss a timetable for this issue.

Released: May 15, 2013

Signed: "Justice L.S. Parent"