Court File and Parties
Court File No.: D60503/13
Citation: Bennett v. Reeves, 2014 ONCJ 145
Ontario Court of Justice
Toronto North Family Court
Between:
Michele Marie Bennett
Applicant
-and-
Anthony Constantine Reeves
Respondent
Counsel
For the Applicant: Daved Muttart
For the Respondent: Natalia Denchik
Hearing and Decision
Heard: March 21, 2014
Justice: S.B. Sherr
Released: March 25, 2014
Reasons for Decision
Part One – Introduction
[1] This trial was about child and spousal support.
[2] The parties are the parents of a thirteen-year-old boy (the child). They have agreed to share parenting decisions about the child. The child lives with the mother and visits regularly with the father.
[3] The mother seeks child support from the father retroactive to November of 2012 (when the parties separated). She asks the court to impute the father's annual income at $60,000 for support purposes. She also seeks an order that the father pay 50% of the child's special or extraordinary expenses pursuant to section 7 of the child support guidelines (the guidelines).
[4] The father seeks spousal support of between $1,000 and $1,400 per month retroactive to November of 2012. He asks that no time limit be placed on this award.
[5] The father also asked in his trial affidavit filed, that he be awarded child support on the basis that the parties had a shared parenting arrangement that triggered the provisions of section 9 of the guidelines and because he had a far lower income than the mother. It became apparent when the evidence was presented that the child was not spending anywhere close to the threshold 40% parenting time with the father required to trigger the application of section 9. The father wisely abandoned this claim in his closing submissions.
[6] The mother argued that the father is not entitled to spousal support due to his failure to make full financial disclosure. In the alternative, she asked that spousal support be ordered at the low range of the Spousal Support Advisory Guidelines (Ottawa: Department of Justice, 2008), by Carol J. Rogerson and D.A. Rollie Thompson (SSAG), and be time-limited.
[7] On agreement of the parties and pursuant to Rule 2 of the Family Law Rules, this case was presented through a mix of affidavits, financial statements and oral evidence. Both parties testified and were cross-examined. Submissions were then made by counsel.
[8] The issues for this court to determine are as follows:
a) What incomes should be attributed to the parties for the calculation of support?
b) How much child support, if any, should the father pay to the mother?
c) Is the father entitled to spousal support?
d) If the father is entitled to spousal support, what should be the amount and the duration of the award?
e) When should the support obligations start?
Part Two - Background Facts
[9] The parties cohabited from March of 1997 until November 14, 2012. They have the one child together. They were not married.
[10] The mother is 49 years old. She has a Bachelor of Arts degree. She has been employed full-time with her current employer for the past eighteen years. She presently works as an administrative assistant. The child has resided with her since the parties separated.
[11] The father is 45 years old. He worked for a bank and in other customer service and sales positions prior to the child's birth, earning between $32,000 and $35,000 per annum. He stayed at home and cared for the child while the mother worked full-time and supported the family. He continued to remain at home once the child started school. He was unemployed until he recently obtained part-time work (4-8 hours each week) preparing tax returns. This job will only last until the end of April. The father is presently in receipt of social assistance.
[12] The father currently takes the child to school in the mornings and picks him up after school. The child will often stay with the father until 7:30 p.m., when the father returns him to the mother's home. The child also spends about 5 hours on one day each weekend with the father. The father lives with friends and does not have adequate accommodation to facilitate overnight access for the child.
Part Three – Incomes of the Parties
3.1 The Mother's Income
[13] The mother testified that her salary was $49,000 per annum and estimated that she received an annual bonus of about $1,200 per annum. She earned gross income of $51,226 in 2012.
[14] The mother failed to produce evidence of her current income. She did not produce her 2013 T4 statement or up-to-date pay stubs. The court must base an income analysis on the best evidence of current income. See: Vanos v. Vanos, 2010 ONCA 876; Wright v. Christie, 2011 ONCJ 109.
[15] The best evidence of the mother's current income was her September 14, 2013 pay stub (Tab 13 of the Continuing Record). This pay stub reflected gross year-to-date income of $39,817. The mother testified that she received her annual bonus in March each year, so this statement would have included that bonus. Extrapolating this income over a full year ($39,817 - $1,200 bonus divided by 8.5 months times 12 months, and then adding back the $1,200 bonus), the mother should have earned gross income in 2013 of about $55,718. This is consistent with the income that she declared that she was earning in her September 17, 2013 financial statement ($56,395 per annum). An annual income of $55,718 will be attributed to the mother for calculating support obligations.
3.2 The Father's Income and Child Support
[16] The father testified that he did not earn any income in 2013. He took a three-month training course in tax preparation in the fall of 2013 (two evenings per week) and has been working part-time earning $11.50 per hour since January of 2014 to supplement his social assistance income. He submitted that the figure of $9,500 per annum should be used for him for the calculation of support obligations.
[17] The mother claimed that the father is earning cash income that he is not reporting to the court or to Revenue Canada. She felt that he is capable of earning a significant income. She asked that his income be imputed at $60,000 per annum for support purposes.
[18] Clause (a) of subsection 19 (1) of the guidelines states:
19 (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;
[19] 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.
[20] The Ontario Court of Appeal in Drygala 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?
[21] In answering the first question in Drygala, the court stated 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 they are capable of earning. The court must look at whether the act is voluntary and reasonable.
[22] The onus is on the applicant to establish that the respondent 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.
[23] 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, at paragraph 23. It must be reasoned, thoughtful and highly practical: See: Hagner v. Hawkins, at paragraph 19.
[24] The evidence established that the father is deliberately under-employed. He has failed to actively search for meaningful employment since the separation on November 14, 2012. He failed to provide the court with a job-search list. He is working nominal hours at this time and he concedes that there is little chance that his current job will continue beyond April of 2014. He has had considerable time to search for work and has not done so. When questioned, he stated that he last applied for a job in September of 2013. He acknowledges that he could find work at a minimum-wage job, but does not want to take one of these jobs as it might interfere with finding a better-paying job. In a similar fact situation in Lavigne v. Maule, [2012] O.J. No. 4521 (Ont. SCJ) the court rejected this as an excuse for not accepting a low paying job and wrote at paragraph 14:
I have concerns about the length of time it is taking Mr. Lavigne to find re-employment. He argued that he should not be expected to take on a low paying job as it would be a problem if prospective employers learned he is willing to work at that level. This argument is less convincing after three years of unemployment with children to support during the last year. In my view his short-term employment expectations need to change. While Mr. Lavigne searches for the elusive job in his area of expertise he still needs to work and support his children. When there are child support responsibilities, parties must earn what they are capable of earning: See: Gobin v. Gobin, 2009 ONCJ 245, at para. 10.
[25] Addressing the second question in Drygala, the father was unable to provide a justifiable excuse for his under-employment. He has no health issues. He had no educational needs that would have interfered with seeking work. His tax preparation course was only two evenings each week, for three months.
[26] This leads to the third question in Drygala – what income should be properly imputed to the father? In assessing how much income to impute, 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.
[27] The mother's request to impute the father's income at $60,000 per annum was unreasonable. There was no evidentiary basis to support a conclusion that the father was capable, at this time, of earning anywhere near that income.
[28] The mother argued that this income should be imputed to the father because he did not adequately explain his monthly budget. The father, in his multiple financial statements filed, showed monthly expenses between $18,000 and $22,500 per annum, while stating he had annual revenue of about $7,500 per annum, leaving an annual deficit between $10,000 and $15,000. He only showed an increase of $5,000 in debts during this period, leaving a deficit between $5,000 and $10,000. The father did not explain this deficit well, stating that perhaps he was not spending all of the money set out in his monthly budgets. However, taking the mother's argument at its highest, this lifestyle argument only shows that the father is supporting expenses of about $22,500 per annum, far short of the income that she seeks to impute to him.
[29] The mother also argued that the father did part-time computer work, ran a business buying and selling items on E-Bay and rented a property in Jamaica. However, she had no evidence to contradict the father's testimony that he stopped the E-Bay business in 2000 (and was really only dabbling at this business, earning about $750 per month), that he has not received rental income from the Jamaica property since 2005 and that the extent of his computer work is that he helped out a friend who gave him a dog as compensation. In fact, the mother acknowledged that it had been many years since the father had earned money on E-Bay or earned rental income. Her allegations about his cash income were speculative.
[30] The real issue is what income the father is capable of earning.
[31] The father has a high-school education. He upgraded that education while working for a bank and received his securities licence. This permitted him to sell mutual funds for a bank. He worked in customer service and sales jobs. Prior to the birth of the child, he earned between $32,000 and $35,000 per annum.
[32] The father presented to the court as articulate and intelligent. He should be an attractive employee if he returns to customer service or sales work.
[33] The court considered that the father is now 45 years old, which may make him less attractive as an entry-level employee to employers.
[34] The father acknowledged that he is familiar with money management. He managed the family's finances. His securities licence has lapsed, but he could renew it, if he completes the course. This would enable him to earn a higher income. He testified that entry level positions in this field pay at $13.50 per hour, which projects to an annual income of about $28,000. The father has taken no steps to take this course, despite having many opportunities to do so.
[35] The father acknowledged that he could be earning a minimum-wage income at this time. This is the lowest amount that should be imputed to him. Considering his education, work history, skills, health and presentation, this court finds that he should be earning at least $28,000 per annum at this time, and this is the income that will be imputed to him for support purposes.
[36] The father shall pay child support to the mother of $228 per month. This is based on the guideline table amount for one child at this income.
[37] The mother provided no evidence that she is incurring special or extraordinary expenses for the child pursuant to section 7 of the guidelines, or that she will incur such expenses in the near future. In the absence of such evidence, the court is not prepared to make a prospective order for contribution to these expenses at this time.
Part Four – Spousal Support
4.1 Entitlement
[38] The applicant's claim for spousal support is framed under section 33 of the Family Law Act. Subsection 33 (8) of the Act sets out the purposes of spousal support and subsection 33 (9) of the Act sets out how to determine the amount of spousal support 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). R.S.O. 1990, c. F.3, s. 33 (8) ; 1999, c. 6, s. 25 (5); 2005, c. 5, s. 27 (9) .
Determination of amount for support of spouses, parents
(9) In determining the amount and duration, if any, of support for a spouse or parent in relation to need, the court shall consider all the circumstances of the parties, including,
(a) the dependant's and respondent's current assets and means;
(b) the assets and means that the dependant and respondent are likely to have in the future;
(c) the dependant's capacity to contribute to his or her own support;
(d) the respondent's capacity to provide support;
(e) the dependant's and respondent's age and physical and mental health;
(f) the dependant's needs, in determining which the court shall have regard to the accustomed standard of living while the parties resided together;
(g) the measures available for the dependant to become able to provide for his or her own support and the length of time and cost involved to enable the dependant to take those measures;
(h) any legal obligation of the respondent or dependant to provide support for another person;
(i) the desirability of the dependant or respondent remaining at home to care for a child;
(j) a contribution by the dependant to the realization of the respondent's career potential;
(k) Repealed: 1997, c. 20, s. 3 (3).
(l) if the dependant is a spouse,
(i) the length of time the dependant and respondent cohabited,
(ii) the effect on the spouse's earning capacity of the responsibilities assumed during cohabitation,
(iii) whether the spouse has undertaken the care of a child who is of the age of eighteen years or over and unable by reason of illness, disability or other cause to withdraw from the charge of his or her parents,
(iv) whether the spouse has undertaken to assist in the continuation of a program of education for a child eighteen years of age or over who is unable for that reason to withdraw from the charge of his or her parents,
(v) any housekeeping, child care or other domestic service performed by the spouse for the family, as if the spouse were devoting the time spent in performing that service in remunerative employment and were contributing the earnings to the family's support,
(v.1) Repealed: 2005, c. 5, s. 27 (12) .
(vi) the effect on the spouse's earnings and career development of the responsibility of caring for a child; and
(m) any other legal right of the dependant to support, other than out of public money.
[39] Spousal support is not merely a consideration of needs and means. In determining the appropriate amount of spousal support, compensatory and non-compensatory considerations should be taken into account in an effort to equitably alleviate the economic consequences of the breakdown of the relationship. See: Rioux v. Rioux, 2009 ONCA 569. Entitlement can be based on compensatory, non-compensatory or contractual grounds. See: Bracklow v. Bracklow.
[40] The mother argued that the father should be disentitled to spousal support due to his failure to make full disclosure – specifically his inability to fully explain his monthly deficit in his financial statements. The evidence did not justify disentitling the father to support on this basis. At best, based on the expenses set out in the father's most recent financial statement, the mother would be able to argue that the father was earning income sufficient to support expenses of $22,500 per annum. This level of income would not disentitle him to support.
[41] The mother's counsel, in submissions, acknowledged that if the father was not disentitled to support on this basis, that he was otherwise entitled to support, the only issues being quantum and duration. The court agrees.
[42] The father is entitled to spousal support on both a compensatory and non-compensatory basis.
[43] The father's compensatory claim was illustrated in the mother's closing submissions. In asking the court to impute an annual income to the father (at a minimum) within $10,000 of her own, the mother argued that she and the father had been on the same career path, at similar incomes, when the father left the workforce to stay at home to care for the child for thirteen years. She estimated that the father's income should currently be behind her income by $10,000 per annum due to the roles he assumed in the relationship. This is the essence of a compensatory spousal support claim. The father, due to the roles assumed during the relationship, has compromised his income-earning capacity. He will always be behind the mother economically, at least on this career path. He has less seniority and less work experience.
[44] The father has suffered other financial losses that support a compensatory support claim. His securities licence lapsed and it would take time to renew it and re-establish himself in this field. He has lost years to contribute to a pension. Given his age and time out of the workforce his opportunities for career advancement are now more limited. With less seniority, any job he obtains will likely be less secure than the mother's if there are layoffs. He might not be able to obtain a job with a benefit package that approximates the mother's.
[45] The mother in her material argued that she assumed much of the child-care responsibilities during the relationship. However, the evidence indicated that the father was the primary caregiver of the child. The mother worked full-time and for long hours and often worked on late shifts and weekends. She acknowledged that the father cared for the child while she was at work. I find that the parties shared in the management of the household – the mother did a lot of the cleaning and laundry and the father handled budgeting and finances.
[46] The mother argued that the father stayed at home and out of the workforce for too long – that at the very least, he should have returned to the workforce when the child was in school full-time. She claimed that she asked the father to return to work once the child started school full-time and he refused. This factor will affect the quantum and duration of the award, but not the father's entitlement to spousal support.
[47] The father also has a non-compensatory claim for spousal support. This was a 16-year relationship. There is a significant discrepancy in the parties' incomes. The father has suffered an economic disadvantage due to the breakdown of the relationship. He was almost completely economically dependent on the mother during the relationship and his dependence continues. I will deal with the limits of his non-compensatory claim in discussing the amount and duration of the support order below.
[48] Lastly, the mother argued (and this court has found) that the father has not taken adequate steps to become self-supporting. The court has addressed this issue by imputing the father's income at $28,000 per annum for support purposes. This factor will also be considered when determining the amount and duration of the award. However, even with the imputation of this level of income, the father is still entitled to spousal support.
4.2 Amount and Duration of Spousal Support
[49] The Ontario Court of Appeal in Fisher v. Fisher, 2008 ONCA 11 stated that the SSAG, while only advisory, are a useful starting point to assess the quantum of spousal support, once entitlement is established. The decision also states that the court should express reasons if it is going to deviate from the SSAG.
[50] There are insufficient circumstances in this case which would lead the court to deviate from the SSAG. The father has both a compensatory and non-compensatory claim for spousal support. He stayed at home and cared for the child for a substantial period of time and incurred an economic disadvantage due to the breakdown of the relationship. Due to his age and time out of the workforce, the father's ability to earn income will continue to be compromised.
[51] The test for imputing income for child support purposes applies equally for spousal support purposes. See: Rilli v. Rilli, [2006] O.J. No. 2142 (SCJ); Perino v. Perino. This means that the mother's income is $55,718 per annum and the father's income is $28,000 per annum for the purpose of the SSAG calculation.
[52] The SSAG software analysis, based on the incomes attributed to the parties and the child living with the mother, sets out the following range of spousal support scenarios:
- Low Range - $447 per month
- Middle Range - $521 per month
- High Range - $596 per month
[53] The SSAG sets out the duration for the award of between 8-16 years from the date of separation, subject to variation and possible review. It should be noted that the "custodial parent formula" is the only formula under the SSAG where the initial award is not indicated as indefinite – specific time ranges are provided. See: The Spousal Support Advisory Guidelines, A New and Improved User's Guide to the Final Version, Department of Justice Canada, March 2010, Chapter FV 8.5. by Carol J. Rogerson and D.A. Rollie Thompson.
[54] The court will award the father spousal support of $480 per month, being between the low and middle ranges of the SSAG, for a duration of 9 years, being near the low end suggested by the SSAG for the following reasons:
a) The amount of the compensatory claim should be discounted as the father could not provide a reasonable explanation as to why he didn't take steps to become self-supporting once the child returned to school. He could have used that opportunity to renew his securities licence. The father acknowledged that the mother asked him to return to work once the child began attending full-time at school. I accept the mother's evidence that she also offered to pay for the father to go back to school in 2011 and upgrade his education and he said no.
b) The father has not taken adequate steps to become economically self-sufficient. He has the legal obligation to use his best efforts to do so.
c) The father's non-compensatory claim was undermined by his questionable economic choices. Despite being on social assistance, he has recently obtained and spent the maximum credit limit on two credit cards. He also recently paid close to $3,500 for a used BMW (paid for from one of the credit cards). When asked why he hadn't taken the course to renew his securities licence, the father said it was due to lack of money. It would have cost $850. It would have been a more appropriate choice to borrow from his credit card to pay for this course than to buy his car. In his most recent financial statement, the father declared that he is spending $735 per month on vehicle expenses. It certainly made the mother and the court question the father's financial choices and how much money he actually needs.
d) The mother has assumed all economic responsibility for the child since the separation.
e) Courts will sometimes order a longer duration of spousal support when a child lives with the recipient, as that spouse will be disadvantaged economically by his or her continuing child care responsibilities. In this case, the child is living with the mother, which supports an order for a shorter duration.
f) The father has the intelligence and skills to improve his income in the future if he chooses to apply himself. It became clear in the evidence that he is reluctant to change his lifestyle. While he doesn't earn much income, he lives with friends and has the opportunity of seeing his child every day. He is not tied down by work obligations. He can't maintain this lifestyle and still expect indefinite support from the mother.
[55] The SSAG software analysis shows that the after-tax cost to the mother of this spousal support payment will be $330 per month. In effect, she will be paying the father $102 per month ($330 - $228) after his child support payment is taken into consideration.
[56] The SSAG provides that if the court considers the formula outcome to be inappropriate, it is to examine whether an appropriate outcome can be achieved by restructuring the duration and amount of the award. Restructuring under the SSAG can be used in at least three different ways:
(a) to front-end load awards by increasing the amount beyond the formula's range for shorter duration;
(b) to extend duration beyond the formula's range by lowering the monthly amount; and
(c) to formulate a lump-sum payment by combining amount and duration.
The idea is to arrive at the same global dollar award in the end.
[57] I considered restructuring the support award as described in par 56. However, I rejected doing so. The award suggested by the SSAG is appropriate for the reasons set out below.
[58] There would be some advantage to the father if he received a larger amount of support for a shorter period of time. He could use this additional support to upgrade his education while working. If he could do this, he would likely be able to increase his income more quickly. However, the court is skeptical that the father will actively seek work or upgrade his education while working. There is nothing in his history that indicates that this will happen. Further, the court is not confident, based on his recent economic choices, that the father would use additional support at this time in a responsible manner – to further his income-earning capacity. Restructuring in this manner would also place additional economic pressure on the mother, who is financially responsible for the child.
[59] Conversely, there is a limited advantage to the mother in restructuring the award to pay less now, for a longer period of time. She can afford this award without much difficulty. This order will permit her to sooner have finality with the father.
[60] I also considered whether to order a review of the spousal support obligation. I am mindful that in Leskun v. Leskun, 2006 SCC 25, the Supreme Court of Canada cautioned against the use of review orders and stated that if they were to be used, they should be carefully circumscribed.
[61] The detriments of ordering a review order in this case exceed any benefits. The parties need certainty and to avoid the financial and emotional cost of further court action. The support amounts ordered do not justify coming back to court to address the spousal support issue unless there is a material change in circumstances.
Part Five – Start Date of Support
[62] The parties both requested retroactive support orders at trial. Neither pleaded this relief. In the absence of such pleading, I am not prepared to grant this relief. See: Rodaro v. Royal Bank of Canada.
[63] I accept that after the separation, it would have taken the father a period of time before he could have earned the income imputed to him. I find that he should have commenced employment at the income imputed to him, at the latest, by January 1, 2014. His child support obligation will start on that date.
[64] I also find it appropriate to start the mother's spousal support obligation on that date. The start date for spousal support isn't as significant, since spousal support will be of fixed duration. Given that the mother has assumed full economic responsibility for childcare since the separation, the court does not feel that it is appropriate to burden the mother with an immediate debt of significance. She already has a negative net worth of $10,200.
[65] The court does not have confidence that the father will pay the child support order. There will be an order that only one support payment will flow in this matter. This will be a payment of $252 per month from the mother to the father, which is the offset of the two support awards. The support deduction order should reflect this.
[66] This order shall create immediate support arrears for the mother of $756 (3 months @ $252 per month). The mother may repay these arrears at the rate of $108 per month starting on May 1, 2014 until they are repaid. This means that they will be paid by the end of November of 2014.
Part Six – Conclusion
[67] A final order shall go on the following terms:
a) The father shall pay the mother the guideline table amount of child support for one child, based on his imputed income of $28,000 per annum, in the sum of $228 per month, starting on January 1, 2014.
b) The mother shall pay the father time-limited spousal support in the sum of $480 per month, starting on January 1, 2014, for a duration of nine years, after which time spousal support shall terminate.
c) The two support awards shall be set off, so that the mother will pay the father the difference between the two support awards in the sum of $252 per month, so long as spousal support is payable. The support deduction order shall reflect this.
d) The support arrears created by this order (being the monthly setoff amount of $252 for 3 months = $756) shall be repaid by the mother at the rate of $108 per month starting on May 1, 2014, until they are repaid.
e) The parties shall exchange their complete income tax returns, notices of assessment and last three pay stubs by June 30th each year, starting in 2015.
f) The father shall immediately notify the mother when he obtains full-time employment, together with documentary proof of his income.
[68] The parties shall have 10 days to make written submissions if they believe that there are any mathematical or inputting errors in the software analysis that will be sent to them with this decision. The other party will then have 7 days to make written response. The order shall not be taken out until this time period elapses, or until the court addresses any submissions made.
[69] If either party seeks costs, they are to make written submissions by April 15, 2014. The other party will then have until April 25, 2014 to make written response. The submissions should not exceed three pages, not including any bill of costs or offer to settle.
[70] Written submissions regarding the software calculations or costs are to be delivered to the trial coordinator's office on the second floor of the courthouse.
Justice S.B. Sherr
Released: March 25, 2014