Court File and Parties

Court File No.: 397/12 Date: 2014-03-07 Ontario Court of Justice

Between:

Kerry Rose Abbott Applicant

— and —

Grahame Benn Abbott Respondent

Before: Justice L.P. Thibideau

Motion heard in: Welland, Ontario on January 13, 15 & 17, 2014

Reasons for Judgment on Motion

Kerry Rose Abbott ........ In Person

L. DeLisio ........ for the Respondent

THIBIDEAU, J.:

Background and Issues

[1] The trial of this motion to change separation agreement brought by the applicant mother on the 25th of October 2012, took place on the 13, 15th and 17th days of January 2014. The mother seeks retroactive child support for three children, Thomas John Abbott, date of birth 24th January 1990; Joseph Patrick Abbott, date of birth 13th December 1991; Daniel Sean Abbott, date of birth 2nd September 1994.

[2] Both parties rely upon the terms of a separation agreement dated July 1997 to support their respective positions, mother also relying upon the provisions of the Ontario Child Support Guidelines. It was agreed at trial that the section 7 expense issues were issues raised by father, but only a shield against any successful claim by mother for retroactive child support, under the agreement or under the guidelines. Absent such a successful claim father does not seek any relief with respect to section 7 expenses. Neither does mother.

[3] The relevant portions of the separation agreement are the following:

a) By paragraph 8 the parents have joint custody of the children, primary residence with mother

b) By paragraphs 13 – 16 inclusive a dispute resolution system was set up and negotiation between the parents as stipulated is a prerequisite to litigation. Neither side relies on these clauses to advance their own case or defend the other's.

c) By paragraph 17 a regime of child support is set up. Father is required to pay, as of the commencement of the agreement, on the 3rd day of July 1997 and weekly thereafter, the sum of $73.33 per child until specific events occur terminating child support for any child.

The child support payments are stated to be net of tax like guideline child support payments. The agreement does not expressly set out the income of either father or mother. However, mother acknowledged at trial that she was aware of the income of father as a police officer in Niagara Region at the time the agreement was signed.

d) By paragraphs 19 to 21 mother and father acknowledge there was no need for spousal support and each regarded the other as self-supporting.

e) Child support is intended to be varied annually in accord with the provisions of paragraphs 23, 24, and 25 of the agreement. The differing interpretations of these three paragraphs by each party is the basis of the disagreement between the parents regarding the proper amount of child support historically. These paragraphs read as follows:

SUPPORT SHALL BE INDEXED TO LOWER OF CONSUMER PRICE INDEX OR HUSBAND'S INCOME

23. The support payments will be varied on each anniversary of this agreement to reflect the lesser of:

(a) the percentage change in the husband's total income from all sources for the then immediately preceding financial year in relation to the husband's income from all sources for 1997. In calculating the husband's income, there will be no inclusion of depreciation, capital cost allowance, capital gain losses, or income tax gross up of dividends;

(b) the percentage increase in accord with the "All Items" Consumer Price Index of the vicinity of Niagara Falls, or if same is not available, the City of Toronto, (not seasonally adjusted) with the base year of 1981 equal to 100 as provided by Statistics Canada. This change in amount will occur on the 1st day of July of each year in which support is payable starting with July 1st 1998 and the change will be equal to 100 percent of the percentage change in the consumer price index for the previous 12 month interval from June to May.

MATERIAL CHANGE IN CIRCUMSTANCES

24. The amount of support in paragraph 12 may be varied by a written and witnessed agreement or by application to the court if there is a material change in circumstances of the parties or the Children, whether such change was foreseeable or not.

25. The material change cannot relate to circumstances or events which are consequences of the parties' co-habitation(s) or marriages subsequent to the date of the agreement. Only the following may constitute a material change in circumstances:

(a) changes in husband's or wife's respective incomes;

(b) changes in the consumer price index for Niagara Falls the (All Items). The index is now 100 based on a base year 1981;

(c) changes in the cost of medical-dental insurance or private school; or

(d) the birth of a child to either party.

[4] Much of the evidence at trial focussed on father's generally increasing income over the years. This is fundamental to mother's claim for retroactive child support. On the other hand there was some evidence of mother's re-education, re-entry into the work force as a qualified nurse with resultant increase in income. However neither party relies upon mother's increase in income as a factor to be taken into account with respect to quantum of retroactive child support.

[5] Father, married for 13 years to his new wife, has two children of that relationship, both of whom continue to be dependent children. Father does not rely upon this factor to decrease his exposure to increased child support retroactively. Father has taken the position that he is not able to use the change of circumstance clause to his advantage because the global income in his family does not enable him to present a hardship argument. Likewise mother has a new partner with substantial income.

[6] Despite some intimation by mother to the contrary, there is no real issue as to the validity of the agreement and there are no subsequent court orders altering the agreement prior to trial. Each of mother and father had ongoing legal advice while negotiating the agreement and upon execution of the agreement confirmed by the independent legal advice and financial disclosure sections of the agreement duly executed by both parties. There is no issue as to the actual amount of child support paid over the years by father to mother. The issue is whether or not the amounts paid historically are the proper amounts in accord with the agreement and in accord with law.

Mother's Position

[7] Mother asserts that the amounts paid by father historically are not in accord with the relevant term of the agreement and are not in accord with the Child Support Guidelines upon which she relies as well. Essentially she argues that indexing of payments was made in accord with the inflation rate year to year, but failed to take into account the increase in father's income over the years.

[8] With respect to a start date for retroactivity mother argues the relevant date of informal notification of intention to seek increased support is either 31st of March 2003, the date of a letter from her to father, or the 10th of November 2003, the date of a letter from mother's lawyer to father.

[9] Alternatively mother argues that the informal notice date is the 3rd of September 2012, a letter sent by registered mail from her to father and his lawyer. The formal notice date is the 25th of October 2012, the date of issuance of the motion to change order or agreement.

[10] Finally mother argues that the start date for retroactive support should be the 1st day of July 1998, the date the agreement called for the first yearly change in support, alternatively three years previous to the appropriate informal date.

[11] Mother acknowledges that at the time of signing the agreement she knew that father's income was in the $50,000-plus range annually and her income was about $18,000 per year.

[12] Mother argues that the indexing clause is to be interpreted in a particular way. If in any particular year father's increase in income is less than the cost of living then the cost of living increase would apply. If in any given year father's income was more than the cost of living then the increase would be in accord with the Child Support Guidelines figure appropriate to the increased income of father above the cost of living increase for that particular year.

[13] Each year for a number of years subsequent to 2003 father provided mother with a chart or table prepared by his accountant (Exhibit H of trial record) which set out for each particular year the percentage change in husband's total income, the percentage change in the CPI, the determination that the lesser of each of these two figures was a specific amount, total annual child support paid by father to mother, increase in yearly child support payments from July to June of each year, total annual child support made up of the initial annual child support with accompanying increase on a year by year basis, a specific figure for July to June weekly child support for the aggregate number of children for which support was being paid, and a similar column for the individual child support paid for each child.

[14] In evidence mother said that while she acknowledged receiving the chart on a yearly basis since at least 2003 up to 2012, she was unable to understand it because the actual dollar figure for father's income on a year by year basis is not set out in the chart. In short, the chart provided yearly was not of sufficient clarity and lacked sufficient information for mother to properly understand and therefore react to any increases to father's yearly income over the years. While mother argues the inaccuracy of the chart as to what child support should have been paid, she acknowledges that father did pay in accordance with the chart as provided by him year to year.

[15] The result for mother is this: She says she never really understood the tables received from father but trusted them. Without a base salary set out on the table, or actual salary received in any given year, she could not determine whether or not the guideline approach to child support was worthwhile.

[16] In 2012 her new partner was engaged in marriage breakup involving the issue of child support. Her knowledge of this process at that time caused her to realize that the child support guideline approach to child support would be preferable to the separation agreement approach to child support. This triggered her request for the most recent three years of tax returns, 2009, 2010 and 2011, based on legal advice that she could seek retroactive support for a three year period from date of notification. She also sent a text message to father subsequently asking for 2010 and 2011 tax assessments and T-4's.

[17] She then formed the opinion that her requests to father for information regarding his income and reconsideration of child support pursuant to the agreement in 2003 allowed her to go back further. The result of this was a chart created by her with respect to claimed retroactive child support from 2003 to 2012 as set out in Tab "M" of the trial record. That chart was modified at trial by reason of the fact that two children, Thomas and Joseph, both ceased to be dependent children for child support purposes in the year 2010. The only child eligible for the full years of 2011 and 2012 was the child Daniel.

Father's Position

[18] Father began by pointing out that the separation agreement was actually prepared by mother's lawyer, varied as per negotiations between the lawyers involved resulting in the final agreement. He indicates that the variations negotiated were minor in nature. Father seeks to make the point that the various provisions with respect to child support and change of child support were paragraphs that were written by mother's lawyer, not father's lawyer, so that there cannot be any allegation that any ambiguity or contradiction resulted from father's lawyer's efforts. The evidence as to which lawyer put what clauses in the agreement is totally unsatisfactory.

[19] Father asserts that the meaning of the agreement is clear and in accord with the chart for child support at Tab H of the trial record. In short, yearly the amount of child support is to be indexed to the lower of the consumer price index or husband's income, with the proviso that where the lower of the two methods of calculation results in a negative figure, for instance in 1999 when father's change in income was minus 0.2%, the change of income base is 0%. That is, child support can never go backwards. Mother acknowledged that this was the understanding at the time of the signing of the agreement. In fact there were three years where there was no increase in child support and no decrease, 2001, 2003 and 2008.

[20] Father asserts that father paid by cheque, not necessarily in accord with the weekly support arrangement in the agreement, but there were never arrears, at least with respect to support as calculated by father. This is not disputed.

[21] There was one accounting point. For the years 1997 to 2003 in fact father paid no increase in child support on a yearly basis. His explanation is that because he was paying a pension loan related to the time period before marriage, and the chart amounts for increase were relatively minor, mother gave him a break with respect to increase in child support payments. In 2003 when child support section 7 expenses became an issue between the parents father paid retroactively the increase in child support in accordance with the chart that he provided to mother. This is not disputed.

[22] Father's evidence is that at no time prior to 2012, when this case commenced, was there a request by mother to change over to guideline support from separation agreement child support. The summary of his evidence with respect to what he or his lawyer knew with respect to mother's position prior to 2012 is simply this: Any communication between him and mother, any communication between his lawyer and mother (mother essentially representing herself throughout the relevant times) referred to section 7 expense issues only and not to basic child support in accord with the agreement. There was no reference to conversion to child support guidelines support. However once child support guidelines were a stated issue in court documentation served upon father he began paying in accordance with the guidelines in July of 2012, resulting in father paying greater guideline support since that time and not the lesser separation agreement child support.

[23] Father gave evidence that despite the current complaints about the chart provided by father to mother on a yearly basis from the accountant, mother never made any complaint about a lack of information contained in the figures provided until after the court action commenced.

RESOLUTION

[24] Mother's assertion that father hid his income from her by not expressly reporting to her each year his line 150 income tax gross income is not borne out in fact. She knew (accurately by evidence at trial) that his income at the date of the separation agreement was in the $50,000 yearly range. She was provided after her first inquiries in 2003 with backdated annual figures showing percentage increase or decrease in income and the yearly CPI figures along with resultant changes to the child support due yearly and weekly. This body of information was sufficient for her, an intelligent recently graduated registered nurse, to easily identify his gross annual income should she have chosen to do so. More importantly the information supplied in the trial record Tab H chart would of itself have informed her of changes in income, percentage up or down, to draw her attention to child support variation. Father cannot be faulted for any lack of disclosure from 2003 onwards.

[25] Mother relies on two pieces of correspondence in 2003 to prove her early intention to address basic child support change issues. The letter of 31st March 2003 trial record Tab F, expressly states that she waived "the yearly increase in support payments" as set out in the father Tab H support chart for 1998 to 2003 inclusive. The letter goes on to clearly set out the issues of concern to mother at the time.

1. Payment of child support by post-dated cheques

2. Proof of life insurance and payment of private life insurance premiums

3. Proportional to income payments by each parent of section 7 expenses

4. Regular visitation by father to the three boys

5. Direct parental contact regarding child issues with no third party involvement

[26] Mother also made it clear in that letter that the issues were not about money, but rather adherence to the agreement and organizing things to benefit mother and the boys. That is, there is no interpretation of that letter that would alert father to the general child support issue.

[27] The trial record Tab 6 letter from mother's lawyer dated the 10th of November 2003 did add to the list of concerns. The added items were commencement of indexing of child support to conform to the terms of the agreement and mother's belief that father's income had risen to the point that there was a material change in circumstance required and "therefore child support should be adjusting accordingly". The first new concern is clear and unambiguous – a requirement that father start indexing child support to the lesser of increase or increase in CPI in accord with paragraph 23 of the agreement.

[28] The second concern is ambiguous. Either it is a reinforcement of the indexing argument, and therefore paragraphs 23, 24 and 25 would be in harmony, or not. If not, it was an unclear message to abandon indexing in favour of guideline support. If so, the demands in the lawyer's letter were at best confusing, at worst contradictory. The letter also set out a request for income tax information and documents from 1998 to 2002 to measure father's income changes.

[29] The result was the following:

1. Father made up the 1998-2003 shortfall by a single cheque to mother for the amount in full as per father's calculations for the years 1998 to 2003 along with the first of the yearly charts from father's accountant.

2. Father commenced to pay yearly increases in accord with his calculations based on an increase in income or CPI, yearly.

3. Mother did nothing until 2012 to follow up on the child support demand to abandon the agreement in favour of child guideline child support, if in fact, she made the demand at all. The logical conclusion is that at the time of the issues arising in 2003 and in the intervening time period up to the 13th of July 2012, Tab 1 trial record letter, mother believed that the agreement was being adhered to with respect to regular child support. Father did as well.

4. Father provided mother in late 2003 or early 2004 with an employer's letter, marked as Exhibit A at trial, setting out the first class constables' salary as of 2003, being $66,911.21 per year, with expected salary increases for 2004 of 3.5% and 2005 of 3.25%.

[30] Mother did not deny receiving this letter. Exhibit A was not formally proved and is therefore not a formal exhibit at trial for the truth of its contents. However it is admissible to show that mother had concrete information that she could believe or disbelieve from the employer at the time. This adds to the evidence that contradicts her testimony that she did not have sufficient information regarding father's income until 2012.

[31] On a balance of probabilities test father's argument that he had informal notice and formal notice of mother's request for guideline support in the year 2012, not earlier, is made out.

Principles Governing Retroactive Support

[32] There are factors to be considered when determining whether or not retroactive support should extend beyond three years from date of notice, up to three years from date of notice, or simply from date of notice, or not at all. On the facts of this case the following principles apply. The Court is required to keep in mind that any retroactive award with respect to child support affects the delicate balance between certainty as evidenced by terms of the separation agreement, and flexibility in the area of child support law where the primary consideration is the ability of the custodial parent to obtain financial assistance from the non-custodial parent for the physical and educational well-being of the child.

[33] One size does not fit all. The individual circumstances of each individual case are to be taken into account, balancing one factor against another in order to arrive at a decision. In this particular case the mother argues first that she is asking for enforcement of the provisions of the existing separation agreement, alternatively, she is asking for child guideline support outside the agreement. The ultimate goal in the area of retroactive awards is to ensure children benefit from support they are owed at the time it is owed and to eliminate any incentive for the payor parent to be deficient in making their obligations in a timely fashion.

[34] Retroactive awards should not be looked upon as exceptional orders made in exceptional circumstances. The factual considerations are as follows. Mother seeks a retroactive award going back to one year after the separation agreement was signed, some 15 years before institution of this action. There is no evidence that father did something or failed to do something to cause mother to wait out that time period. She made overtures on some issues in 2003 and subsequently did nothing after father accommodated most of her requests not related to basic child support as set out in the agreement. Father did not lay in the bushes. He provided her, through his accountant, a yearly update of his percentage increase or decrease in gross annual income along with other information related to the actual amount of child support payable as a result of a change in income yearly, all of which was expressed in such a manner that it could easily be understood by mother. Whatever the reason, the delay was not occasioned by a lack of information from father to mother preventing her from assessing her position on a yearly basis. The circumstances surrounding the delay and the length of delay, constitutes unreasonable delay by mother.

Analysis of Father's Conduct

[35] During the trial mother took the position that there was blameworthy conduct by father with respect to his obligations to pay support. The first blameworthiness has been discounted – lack of income information through the years. The second blameworthiness allegation is that father failed to pay his fair share of support for the three children over the years. There are several aspects to this allegation.

[36] First, father has always paid basic child support in accord with his interpretation of paragraph 23 of the separation agreement. That is, each year the percentage increase in father's total income from all sources had to be determined along with the percentage increase in the consumer price index. Once these were obtained the lesser of the two would constitute the proper percentage increase to be applied to basic child support, with a caveat read into the agreement by the parties that there would not be a decrease of basic child support in any given year where the lesser of the two figures was a negative figure. The evidence supports the conclusion that for the years 1998 to 2003 there was no actual basic child support increase paid because of offsetting financial considerations agreed to by the parents. However once challenged by mother in 2003 father immediately paid the "arrears" under the formula for those years.

[37] In fact father was entitled by the terms of this agreement to take this approach. The wording of the material change in circumstances clause set out at paragraphs 24 and 25 of the agreement is such that it required a consensual agreement between the parties to vary the formula as set out in paragraph 23 of the agreement. If not it effectively required one of the parents to seek redress in the court system keeping in mind the contingencies for what constituted a material change in circumstances pursuant to section 25(a)2(d) of the agreement. In her argument mother chose to focus on only one aspect of the changes enumerated – the positive changes in father's income over the years. Mother discounted totally other enumerated changes which would work against her argument – the substantial positive changes in mother's income over the years, particularly after becoming a registered nurse, the changes in the consumer price index which father had already used to determine proper support to be paid, the birth of a child to either party, father and his new partner having two new children in their household. In short, the competing considerations with respect to changes contemplated by s. 25 of the agreement by no means would have caused father to believe that a court determining the issue would focus on the one change negative to his position and ignore the several changes positive to his position.

Section 7 Expenses

[38] Paragraph 26 of the agreement set out that mother and father would contribute equally / proportionately towards post-secondary education costs. Paragraphs 27 to 31 considered parental responsibility for medical and dental expenses. Unfortunately the wording of paragraph 26 with respect to educational expenses is patently ambiguous and the provisions with respect to medical and dental expenses address a scheme of insurance at husband's place of employment (reflecting the reality at the time) but does not take into consideration non-insured or under-insured expenses and how they will be shared as between mother and father.

Unfortunately the agreement fails to address in any way other s. 7 expenses related to extracurricular activities, pre-post-secondary school expenses, etcetera.

[39] The result was that the parties developed an ad hoc arrangement where each paid approximately fifty percent of the extracurricular activities for the children, whether or not they qualified as s. 7 expenses. There was some friction over this from time to time, partly because one parent was paying one set of expenses, and another parent was paying another, but on the whole it worked, at least until 2003 when mother made her concerns known to father. During the course of the trial each parent tried to make the point that they were paying more than the other for the s. 7 expenses over the years not covered by the agreement. Mother, being the custodial parent on site, paid many of the expenses as they'd come up. Father provided evidence that the 50-50 split eventually became advantageous to mother because her income eventually became equal to and then exceeded his in more recent years. In addition he had two new children to pay for, which mother did not.

[40] In fact neither father nor mother has put a convincing case with respect to the eligibility of any particular expense as a s. 7 expense or how any valid s. 7 expense should be shared between them. Father points out that some of the expenses claimed by mother were simply not s. 7 expenses. Mother points out that certain expenses claimed by father were actually gifts to a child on a special occasion, such as a birthday or Christmas. In fact the evidence discloses that many of the "s. 7 expenses" were arbitrary, non-necessary and not actual s. 7 expenses. Rather, they were voluntary payments for objects and services for a child without consultation or consent of the other parent.

[41] However, father's involvement in the expenses for the children over the years does not demonstrate a cavalier attitude, rather it demonstrates an engagement with respect to the payment of those expenses. The conclusion is that father did not isolate himself from the cost of children's activities over the years and was at least reasonable in his approach.

Father's income over the years can be extrapolated from the chart found at trial record Tab H. The percentage CPI increase in the years 1998 through to 2012 range from .4% in 2009 to 3.9% in 2001. Father's change in total income range from +26.8% in 2005 to -16.60% in 2008, with a median of 4.56% (totalling the percentage increase or decrease for each year and dividing by a total of 15 years). The effective result was that in most years the percentage increase in child support corresponded with the percentage increase in the CPI and for those years in which there was a negative change there was no lowering of child support.

We do not have figures for mother's income over the years, however the evidence discloses that when the agreement was entered into she was a receptionist for a chiropractor making less than $20,000 a year. By 2001 she was a registered nurse and is currently Director of Care at a care facility. Income figures for mother are available as follows:

2009 - $89,216.00

2010 - $103,892.00

2011 - $93,276.00

2012 - $101,061.00

Assumedly mother had income from 2001 to 2008 inclusive in keeping with her qualifications as a registered nurse.

[42] In 2013 her income was $93,600.00 and her partner's income was $73,000.00, resulting in a global family income of $166,600.00. For 2013 father's income was approximately $103,000.00 and his wife's income was $88,000.00, for a global family income of $191,000.00. For a few years now the incomes of each of the parents and each of the global incomes in the households has been similar and well above the national average.

[43] There is no dispute that there is now only one child requiring support from the parents, Daniel, who is currently at Niagara College until May of 2014. It is not clear whether or not he will leave post-secondary education at that time. The child Joseph is employed and the child Thomas lives with friends and is employed.

[44] Father has been paying in accordance with the guidelines since shortly after the institution of the action and is prepared to admit that he's responsible for payment for child support for eligible children retroactively for a three year period prior to 2012.

Court's Findings

[45] A detailed examination or evaluation of the facts of this particular case leads to the conclusion that mother's position with respect to retroactive support is not supported by the evidence, and father's position of acceptance of responsibility for a three year period prior to notification in 2012 is the appropriate position.

[46] Father has been engaged with the children since separation. Father has adhered to the terms of the agreement as he interpreted it, which interpretation was reasonable in the circumstances. Once mother made it clear that she was seeking child support that equated to the child support guidelines – whether pursuant to the agreement material change in circumstance clause or simply in accord with the guidelines – father responded by qualified acceptance of that position which was reasonable.

[47] Mother's position that father's disclosure of income over the years was deficient is not accepted by the Court. The chart presentation on a yearly basis began in 2003, father obtained and presented to mother third party proof of his basic pay and terms of payment as a police constable and there is absolutely no evidence that the yearly charts provided by father to mother with respect to his income were in any inaccurate. That being so it is logical to accept father's evidence that in each year after 2003 he provided mother with a copy of the chart as updated and a photocopy of the last years' income tax assessment notice.

[48] The result is the amounts of support claimed by mother on the retroactive basis as set out in the table in Tab M of the trial record, totalling $64,443.00 for actual support payments and $19,501.00 for interest on arrears, later orally modified by reason of the fact that two of the three children ceased to be eligible for support in 2010, is not accepted. There is no dispute that father has been paying guideline support for one child since July 1st 2012. There is no dispute that father has overpaid support (paying for three children instead of one, for half of 2010, and 2011). Father underpaid in 2009, overpaid in 2010 and 2011, and since 2012 has been paying in accordance with the child support guidelines. Mother's figures and father's figures are not identical, but given the findings of fact in this case they are not markedly dissimilar.

Final Order

[49] The accounting set forth in Exhibit #6 filed by father showing debits and credits for the years 2003 to 2012, particularly for the years 2009 to 2012 inclusive, are accepted by the court resulting in father owing mother a total amount of $2,318.00 for arrears of child support for the three year period prior to 2012 as of the beginning of trial. There are no arrears from January 1st 2012 to the present. Total arrears up to 13 January 2014 are fixed at $2,318.00.

[50] The ongoing support for one child is fixed at $904.00 a month as guideline support based upon father's 2012 income of $103,212.00 per year, with the result that father will continue to pay support for the child Daniel Shawn Abbott at the rate of $904.00 a month commencing on the 1st day of February 2014 to and including the 1st day of June 2014. Thereafter father shall pay to mother guideline child support commencing on the 1st of July 2014 and monthly thereafter, the proper amount in accord with father's income for the previous year, 2013, with review annually. Such support payments shall remain in effect for so long as Daniel is a dependent child pursuant to s. 31 of the Family Law Act, Ontario.

[51] Each party may make submissions as to costs including provision of bill of costs within 21 days of this judgment.

Dated at Welland, Ontario

This 7th day of March, 2014

The Honourable Justice L.P. Thibideau