Court File and Parties
Court File No.: Halton 09/207 Date: 2015-03-04 Ontario Court of Justice
Between:
Tara Anne ZAPREFF Applicant
— AND —
Daniel ZEGARAC Respondent
Before: Justice Victoria Starr
Heard on: January 2, 2015
Reasons for Judgment released on: March 4, 2015
Counsel:
- David K. Sherr, counsel for the applicant
- V. Lailla Pavicevic, counsel for the respondent
STARR J.:
INTRODUCTION
[1] This is the Court's decision and reasons with regards to the respondent father, Daniel Zegarac's, motion to vary the amount of child support he was ordered to pay pursuant to the final order of Pawagi J. dated March 13, 2009, and to rescind or reduce the arrears of child support that have accumulated under that order for the period of September 1, 2008 to May 27, 2014.
[2] The applicant mother and support recipient, Tara Anne Zapreff, opposes any variation in the ongoing support during that period as well as any rescission or reduction in child support arrears. She asks that the father's motion be dismissed with costs.
[3] The issues to be decided are:
a) Has there been a material change in the father's circumstances that would justify a change in the support order?
b) If there is a material change in his circumstances, should the court vary the support obligation based on the father's reported income or impute income to him for the period of May 5, 2009 through to May 27, 2014?
c) If income is imputed to the father, what should the amount be?
d) Should the outstanding arrears be reduced or rescinded?
[4] The material before the court on this motion to change is:
a) Change of Information of the respondent, dated May 5, 2009;
b) Response to motion to change of the applicant, dated June 19, 2009;
c) Affidavit of the respondent, sworn December 22, 2014;
d) Updated financial statement of the respondent, sworn December 22, 2014;
e) Affidavit of the applicant, sworn December 4, 2014;
f) Affidavit of the applicant, sworn December 18, 2014;
g) Affidavit of Tanya Nejasmic, sworn December 23, 2014; and
h) Affidavit of the applicant, sworn January 2, 2015.
[5] At the outset of the hearing I asked counsel if either of them wished to cross-examine any of the affiants, both responded that they did not wish to do so. They each proceeded to make oral submissions.
BACKGROUND
[6] The father is 35 years old, born April 26, 1980. He is a certified tradesman, a drywall finisher. The mother is 32 years old, born January 5, 1983. She is unemployed at this time and lives with her new partner. The parties have one child, Lucas James Zegarac, born May 10, 2005. The parties were in an on again off again relationship from January 2005 until April 2008.
[7] The mother commenced the proceedings that gave rise to the final order of Pawagi J. dated March 13, 2009 in May 2008.
[8] The father was served with the application on June 28, 2008. Despite several in person appearances at Court and various extensions given to him by the Court to file responding materials, he did not do so. He did, however, consent to a temporary order made by Justice Baldock on August 13, 2008, requiring him to pay $375 a month in child support starting September 1, 2008.
[9] On March 13, 2009, Justice Pawagi noted the father in default and then made final, the child support provisions set out in the temporary order of Justice Baldock. She ordered the father to pay $375 a month in child support starting September 1, 2008.
[10] The father did not appeal the final order of Justice Pawagi and he did not bring a motion to set it aside. Instead, on May 5, 2009, only two months after the final order was made, he brought this motion to change.
[11] Ongoing child support has been resolved, on consent, by way of a final order dated May 27, 2014. Pursuant to the final order, the father is ordered to pay on-going child support in the amount of $175.00 a month commencing June 15, 2014 and continuing until such time as the parties' son may be adopted by the mother's fiancée. The level of child support is based on an agreed income to the father of $21,900.00.
POSITIONS OF THE PARTIES
[12] The father submits that the arrears should be rescinded or reduced because:
a) The level of support was based on an annual income he has never earned;
b) Since the order was made he has faced significant changes and challenges in both his personal and professional life. These have made it impossible to work at times and at other times have severely limited his ability to work and in turn, ability to pay both ongoing and arrears of child support; and
c) The arrears should be adjusted to reflect the amount that would have been payable in each year based upon his declared income in each of the intervening years. His arrears, on this basis, should be fixed at $969.90 as at May 27, 2014.
[13] The mother asks this court to dismiss the father's motion to change because there has been no material change in circumstances.
[14] Further, if the Court finds that there has been a material change in circumstances, the Court should impute an income of $40,000 to the father for each of the years in question because he is capable of and was earning more than he has declared.
[15] In the alternative, she submits, the father has been, throughout the period in question, intentionally underemployed or unemployed as the circumstances the father relies upon to justify his intentional underemployment and unemployment are either false, do not actually affect his ability to work, existed prior to the March 13, 2009 order, or should not form a valid basis for the exercise of the Court's discretion.
[16] Although the parties framed the central issue on this motion to change as the rescission or reduction of arrears, I do not see the issue that way. In my view, this is a motion to vary support and to also rescind or reduce arrears. The father applied to vary ongoing support in May 2009 and to rescind the arrears that had accumulated under the order up to that point (between September 2008 and May 2009). Thus, to the Court this motion to change involves determining three things: whether child support should be varied effective May 2009 and if so, in what amount; whether to rescind or reduce the arrears that accumulated between September 2008 and May 2009; and whether to rescind or reduce any arrears that accrue as a result of the child support the Court finds ought to have been paid during the period of May 2009 to and including May 2014.
[17] It is also important to note at the outset that while it looks like one, this is not a motion to retroactively vary support. The need in this case to retrospectively determine the father's income and corresponding support obligation only arises because of the almost 6 years that have gone by with no final determination having been made on the motion to change.
LITIGATION HISTORY
[18] As I have already noted, the mother commenced the proceedings that gave rise to the final order of Pawagi J. dated March 13, 2009 in May 2008 and the father was served with the application on June 28, 2008.
[19] According to the endorsement of Justice Pawagi of March 13, 2009, the following occurred in these proceedings:
On August 23, 2008, the father was present in court. Justice Baldock extended the time for the father to serve and file his answer and certain specified materials to September 26, 2008.
By the return date of December 5, 2008, the father had still not served and filed his responding materials. Again however, he was present in court that day. Justice Baldock gave him a final chance to file responding materials by February 23, 2009 and adjourned the matter to March 13, 2009, peremptory on the father.
On March 13, 2009, the father was not at court. His counsel, Mr. McQueen was however. Mr. McQueen advised the court of the following:
i. The father was incarcerated at Maplehurst pending trial;
ii. He could not call the father;
iii. The father must see him;
iv. The father's mother had provided him with some material indicating that the father was seeking custody of the child;
v. The father had not advised him that he had a deadline of February 23, 2009, to file material nor had he advised him that the attendance that day was peremptory on the father.
[20] Justice Pawagi then proceeded to both note the father in default and make a final order along the exact same lines as the temporary order for support made by Justice Baldock.
[21] The portions of the father's evidence that do not conflict with Justice Pawagi's recounting of what occurred, which evidence I accept, is as follows:
a) At the August 13, 2008 court attendance the father was not yet represented by counsel. He consented to the temporary order requiring him to pay $375 a month in child support because he was working and as he did not have a lawyer yet, he did not understand that he would have to continue to make that payment even during the months when he was not working; and
b) On December 30, 2008, the father was placed into custody. He was in custody until the end of March, 2009.
STATUTORY BASIS FOR THE MOTION AND APPROACH
[22] The father's motion to change support is governed by subsection 37(2.1) of the Family Law Act:
Powers of court: child support
(2.1) In the case of an order for support of a child, if the court is satisfied that there has been a change in circumstances within the meaning of the child support guidelines or that evidence not available on the previous hearing has become available, the court may,
(a) discharge, vary or suspend a term of the order, prospectively or retroactively;
(b) relieve the respondent from the payment of part or all of the arrears or any interest due on them; and
(c) make any other order for the support of a child that the court could make on an application under section 33.
[23] In the case of Trang v. Trang, 2013 ONSC 1980, Justice Pazaratz discussed the approach to take in cases where an order for support is made after the payor has been noted in default and later comes forward claiming that the Court set the level of support based on a level of income the payor claims he has never earned. The starting point, Justice Pazaratz states, is that the party seeking the change must establish a "material change in circumstances".
[24] If there has been a material — and unavoidable — change in circumstances, a payor's support obligation may have to change. Willick v. Willick, [1994] 3 S.C.R. 670; G. (W.) v. G. (S.), 2014 ONSC 3258. That is, support levels may have to be adjusted to reflect current ability to pay.
[25] Establishing a material change in circumstances generally entails some new facts or circumstances which, if known at the time, would likely have resulted in different terms in the order. The analysis will, as Justice Pazaratz noted in Trang, involve three questions:
a) What was the payor earning then?
b) What is the payor earning now?
c) When did the payor's income change – and why?
[26] With respect to the question of "what was the payor earning then" Justice Pazaratz, at paragraph 43 – 46 of the Trang decision, states:
- The first question – "what was the payor earning then?" – requires a fundamental (and often overlooked) determination:
a. Was the support order based upon the court accepting the payor's "declared" income?
Or,
b. Was the support order based upon the court "imputing" income to the payor?
This preliminary determination is vital to an analysis of whether there has been a material change in circumstances relating to ability to pay. It will affect the onus on the moving party. It will prescribe what new or changed facts the party will have to establish, to convince the court that support should be changed.
If support was initially calculated based on the court's acceptance of a payor's "declared" income, then changes in declared income in subsequent years may be persuasive. If the court was prepared to rely on things like T4 slips and tax returns when it made the original order, T4 slips and tax returns for subsequent years may be sufficient evidence of changed circumstances. This of course would be subject to other considerations, such as the possibility that employment levels or income were deliberately manipulated by the payor.
But if the original support order was based upon "imputed" income, a more comprehensive analysis is required on a motion to change. The court must consider:
e. Why did income have to be imputed in the first instance? Have those circumstances changed? Is it still appropriate or necessary to impute income, to achieve a fair result?
f. How exactly did the court quantify the imputed income? What were the calculations, and are they still applicable?
WHAT WAS THE PAYOR EARNING THEN AND WHAT WAS THE SUPPORT ORDER BASED UPON?
[27] I do not accept the mother's evidence that the father's income was imputed at $40,000 per annum.
[28] Neither of the issued orders (Justices Pawagi or Baldock), nor the endorsement of Justice Pawagi dated March 13, 2009, make any reference whatsoever to the father's income. Neither judge ever uses the word "imputed" or "income".
[29] The portion of the temporary order of Justice Baldock dated August 13, 2008, that deals with child support is paragraph 2. It reads as follows:
Pending further order the Respondent shall pay to the Applicant Mother, Tara Anne Zapreff for the support of one child, Lucas James Zegarac, born May 10, 2005, the amount of $375 per month commencing September 1, 2008, subject to review and reassessment on the return date.
[30] The portion of Justice Pawagi's March 13, 2009 endorsement that deals with child support, provides as follows: "Interim order of Justice Baldock dated August 13, 2008 re child support is to be made final".
[31] The Mother submitted that one must infer that the Court in both instances imputed an income of $40,000 per annum to the father by reference to the Guidelines and the quantum of support ordered by the Court, and by reference to a 23C Affidavit. She argued that this imputation of income is a finding of fact which, given the order was neither appealed nor set aside, should, accordingly, be presumed to be correct. No 23C Affidavit for Uncontested Trial was presented to this Court as evidence, nor was any transcript of the proceedings.
[32] Neither Justice Pawagi's order nor endorsement refer to the evidence before the Court or relied upon by her when making the order. In fact, in her endorsement specifically states that her reasons for the final order were that the father was in default and had agreed in August 2008 to pay $375 a month in child support.
[33] In an effort to determine whether I could infer from the amount ordered in child support that the amount ordered was based upon an income for the father of $40,000, I referred to the December 1, 2011 Guideline Tables. Those Tables show that a payor with one child and a gross annual income of $40,000 would pay Table support of $367, not $375. To yield a payment of $375 for one child the payor would have to have an income of $41,600.
[34] I am required to, and I do, assume that Justice Pawagi's order is correct. Doing so does not however mean that I have to accept that it was based on an imputation of an annual income of $40,000 to the father. I cannot, on the evidence before me, make that finding. Even if income was imputed to the father, I find that it was not a finding based on the merits.
[35] Based on all of the foregoing, I find, on a balance of probabilities, that:
a. Neither Justice Pawagi nor Justice Baldock imputed the father with an annual gross income, $40,000 or otherwise;
b. Justice Pawagi ordered $375 a month on the assumption that the father had an ability to pay support of $375 per month because the evidence before her from the proceedings before Justice Baldock (the consent) indicated the father had previously agreed he had an ability to pay support at that rate in August 2008;
c. The father, in consenting, to pay $375 a month, agreed that he had the ability to pay this amount at that time based on the income he was earning at that time;
d. The father did not agree that his annual income was, would be, or had historically been either $40,000 or $41,600 annually;
e. The amount of $375 in child support equates to what a payor with an income of $41,600 would pay, therefore, I infer as did Justice Pawagi, the father had an ability to pay support at the time he consented to do so, at a rate commensurate with a payor with an income level of $41,600;
f. Justice Pawagi's assumption is assumed to be correct and was only necessary because of the father's failure to put evidence before her to the contrary and establishing that the assumption was no longer correct; and
g. The father's reasons for failing to do so are irrelevant and no justification on a motion to change.
[36] The answer, I find, to the question of what was the father earning then is an assumed income of $41,600.
[37] I turn next to the question of whether, after the order was made and when the father brought his motion to change in May 2009, there had been a material change in circumstances that would make the assumption that the father continued to have an ability to pay child support at the same rate as a payor earning $41,600, inappropriate? To meet this test, all the father is required to do is show that one of the factors which underlay his agreement to pay child support at the rate of $375 a month changed in a material way, after the March 13, 2009 order was made.
MATERIAL CHANGE IN CIRCUMSTANCES
The Evidence
[38] In his Change Information Form sworn May 5, 2009, the father deposed as a change in circumstances that: he was laid off of work with Dixon Drywall from October 2008 to December 2008; he was incarcerated from December 28, 2008 to March 30, 2009; and, by May 5, 2009, he was unemployed.
[39] The father's evidence is that he was laid off of work with Dixon Drywall from October 2008 to December 2008. He does not say why.
[40] He resumed working for Dixon Drywall upon his release from jail in March 2009, but due to the economy and his lengthy absence, and the fact that the work had slowed considerably, he was laid off after several weeks.
[41] He also deposed that he had been offered and accepted work by Ms. Kurry with her business at a salary of $500.00 per week, following his release from jail. However, she had to lay him off as well. This lay off was due, he says, to the harassment of Ms. Kurry by the mother and as a result of an extremely negative internet posting allegedly made by the mother.
[42] The mother, in opposition to the father's alleged change in circumstances, made extensive reference to representations made by his counsel at his criminal hearing held on March 27, 2009. It is clear from a review of the transcript (more fully discussed later in this decision) that the father, through his counsel, advised the Court that he had full time employment waiting for him upon his release from jail.
[43] In reply to the mother's evidence the father deposes that when those representations were made, he believed that he would (as he had often been given work by at Norwest Drywall in the past) have employment with them, and that he was employed by them for a brief period following his release as I have noted above.
The Law
[44] Counsel referred me to a number of cases which stand for the proposition that the Court should not exercise its discretion to vary support or to reduce and rescind arrears when the reasons, for loss of employment, unemployment, or underemployment is due to the payor's own misconduct.
[45] In Costello v. Costello, 2012 ONCJ 399, Justice Zisman, focused on the public policy issue of whether a support payor's child support obligation should be reduced when the reasons for loss of employment are due to his own conduct. At paragraphs 34, 40 – 43, and 60, he says:
In this case, the father lost his employment because he chose to drink and drive and was subsequently arrested and convicted.
I adopt the reasoning of Justice Czutrin in the case of Luckey v. Luckey wherein he stated as follows:
Should the dependent children also have to pay the price of this loss of employment? A court will grant relief of support where the payor loses the ability to provide support for reasons beyond the payor's control.
The courts have long recognized that where a payor parent quits his or her employment for selfish or for "bad faith" reasons, the courts will not grant a variation of support based on a material change in the means of the Applicant.
After all, as the court comments in Ronan v. Douglas Walsh (1994), 5 R.F.L. (4th) 235 at page 238:
.....a payor spouse who has contracted to pay child support in a separation agreement and then quits his or her employment or changed the nature of his or her employment in bad faith should not be able to rely on that change.
In the case of Luckey v. Luckey, the support payor lost his employment because he was convicted of assaulting a co-worker. The court did not vary his support obligation as this was an event over which he had control. The court found that it could not condone the parent's actions of assaulting a co-worker to create legitimate inability to pay support that justified a variation.
Similarly, in the case of Myatt v. Myatt (1993), 45 R.F.L. (3d) 45, a police officer who lost his job as a result of a drug conviction could not rely on such a loss of employment to reduce his support arrears.
I find that as the father lost his job because of his criminal behaviour, that occurred not just once but twice, he is the author of his own destiny and he should not be able to rely on his own misconduct as an excuse to avoid his obligations to his children. Even though I accept that the father did not commit these offences to avoid his obligation to pay child support, the court should not condone such conduct.
Based on all of these factors, I would not exercise my discretion to vary the father's current support obligation. The father certainly cannot expect a court to exercise its discretion to reduce his child support obligation, when he loses a well paying job because of his own reckless behaviour, fails to abide by court orders for disclosure, fails to provide any proof of any sincere efforts to find alternate employment and when he is content to work part-time for minimal income.
[46] Justice Pazaratz adopted the same approach as Justice Zisman did in Costello, in the case of Rogers v. Rogers, 2013 ONSC 1997. After reviewing Justice Zisman's comments in Costello (supra) he goes on to review several other decisions (the review can be found at paragraphs 56 to 58). He begins the review at paragraph 56 where he states:
- Other courts have taken a similar approach, concluding that where un-employment or under-employment is created by the payor's actions or mis-conduct, support obligations should not be reduced or cancelled. Marucci v. Marucci, [2001] O.J. No. 4888 (Ont. S.C.J.); Sherwood v. Sherwood, [2006] O.J. No. 4860 (Ont. S.C.J.); Alderson v. Alderson, 1992 CarswellAlta 702 (Alta. Q.B.).
[47] At paragraph 59, Justice Pazaratz concludes:
- I find the Applicant is solely responsible for the financial difficulties he now submits as the basis for significantly reducing his support obligations. His unemployment (and eventual underemployment) did not arise through mix-up, honest mistake, bad luck, or even isolated error in judgment. The Applicant knowingly and intentionally made very bad decisions. He broke the law — over and over again. His choices have resulted in unquestionably painful consequences. But why should the Respondent and her children share any portion of that pain? Why should a support recipient suffer from a payor's misconduct?
[48] In Khentov v. Bieler, 2007 CarswellOnt 1832 (Ont. S.C.J.) Justice Czutrin, for the same reasons, found that the payor's incarceration did not justify altering child support arrangements. This same conclusion is also reached by Justice Sherr in the case of Caine v. Ferguson, 2012 ONCJ 139. At paragraph 25 Justice Sherr states:
25 The respondent completely failed to comply with the order and as a result, had his driver's licence suspended. He cannot use his own misconduct as a shield against a support claim or as a justification to reduce support arrears. See: Luckey v. Luckey; Marucci v. Marucci, 2001 CarswellOnt 4349; Sherwood v. Sherwood. The consequences of his actions should be borne by him and not his dependants. See: Baldini v. Baldini.
Analysis
[49] I find that the father was incarcerated between December 2008 and March 2009, and between October, 2010 and August, 2012 and that during these periods he was not employed.
[50] I adopt and follow the principles set out in the foregoing jurisprudence. Given his incarceration related to criminal activity for which he plead guilty and was convicted, and thus, a result of his own misconduct, I find that he cannot use these periods to escape responsibility for child support. I am not prepared to exercise my discretion and consider these periods a constituting a material change in his circumstances or as a justification for being unemployed or later underemployed. I am also not prepared to accept his lack of income during the periods he was incarcerated as a basis for rescinding or reducing arrears accrued during these periods.
[51] I do not accept the father's evidence that he was laid off of work with Dixon Drywall from October 2008 to December 2008 as a reason to change child support or rescind arrears. He gives no reason for the layoff so I have no way of knowing whether it resulted from his own misconduct or a shortage of work. The onus is on him to satisfy me of such things if he wants arrears accumulated during this period rescinded. Further, the timing of this layoff predates the March 13, 2009 order and as such does not qualify as a material change in circumstances.
[52] I accept the father's evidence however that he resumed working for Dixon Drywall upon his release from jail in March 2009 and that he was laid off due to the economy and slow down of work and due to his lengthy absence, after several weeks.
[53] I also accept the father's evidence that he worked briefly for Ms. Kurry following his release from jail in March 2009 but that he was laid off from that job as well. I make no finding with respect to his claim that the mother harassed Ms. Kurry or that she authored the internet posting. I accept that such a posting was put on the internet by someone and I accept the father's evidence that given the nature of Ms. Kurry's business; she laid him off as a result of it.
[54] I accept the father's evidence therefore that he was unemployed as of May 5, 2009 through no particular fault of his own and had no income with which to pay support.
[55] Given my findings, I accept the father's lack of employment by May 5, 2009, as a material change in his circumstances effective May 5, 2009.
[56] During submissions counsel for the father raised other changes in the father's life as potential "material change" candidates such as his shoulder injury and mental health issues. All of these are discussed below either in the context of determining the father's income or in the context of dealing with the father's request to rescind or reduce arrears. I considered whether any of them would satisfy the material change test but as I have not accepted these, for the reasons discussed below as a justification for the father's unemployment or underemployment during the intervening years, none of them would amount to a material change in circumstances.
[57] I turn next therefor to the next question Justice Pazaratz directs should be address, the question of determining the father's income now, or rather, in this case, between May 5, 2009 and May 27, 2014.
WHAT WAS THE FATHER'S INCOME DURING THE RELEVANT PERIODS
Applicable Legislation and Legal Principles
Generally
[58] Both parents have an absolute responsibility to support their children to the extent that they are able to do so. The purpose of the Child Support Guidelines is to establish a fair standard of support that ensures that children continue to benefit from the financial means of both spouses after separation, using a methodology that strives to achieve objectivity, efficiency and consistency. Obodoechina v. Ayetor, [2013] O.J. No. 6066 (Ont. C.J.); Lee v. Lee, [1998 CarswellNfld 222 (Nfld. C.A.)]; Milford v. Catherwood, 2014 ONCJ 276.
[59] Sections 15 to 20 of the Guidelines are the starting point for the calculation of a party's income for child support purposes. Section 15(1) provides that subject to section 15(2), a spouse's annual income is determined by the court in accordance with sections 16 to 20.
[60] Section 16 of the Guidelines provides that subject to sections 17 to 20, a spouse's annual income is determined using the sources of income set out under the heading "total income" (line 150) in the T1 General Form issued by the Canada Revenue Agency, and by then making the adjustments provided for in Schedule III to the Guidelines. Schedule III includes an adjustment for union dues.
[61] Imputing income is one way for the Court to gives effect to the joint and ongoing obligation of parents to support their children. Drygala v. Pauli, [2002] O.J. No. 3731 (Ont. C.A.); Stewart v. Turner, 2014 ONCJ 464; B. (G.T.) v. B. (Z.B.), 2014 ONCJ 382.
[62] Section 19(1) of the Guidelines permits the court to impute income:
19(1) Imputing income
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 underemployed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;
(b) the parent or spouse is exempt from paying federal or provincial income tax;
(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;
(e) the parent's or spouse's property is not reasonably utilized to generate income;
(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;
(g) the parent or spouse unreasonably deducts expenses from income;
(h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
[63] The court can impute such amount of income to a parent as it considers appropriate in the circumstances. The list of circumstances in section 19(1) is by way of example only and is not a closed list. Bak v. Dobell, 2007 ONCA 304, [2007] O.J. No. 1489 (Ont.C.A.); A. (G.) v. B. (K.), 2014 ONSC 3913.
Imputing Income - Section 19(1)(g)
[64] In the case of Favero v. Favero, 2013 ONSC 4216, Chappel J noted at paragraph 103:
- Where a party raises questions regarding the reasonableness of business expenses, the burden of proof is on that party to establish that the expenses are unreasonable. There is a distinction between this onus and the onus on the party claiming the deductions to establish their income. The parent who relies on expenses to reduce their income cannot simply put forth numbers for alleged business expenses with no justification or evidence to support those numbers, and then put the other party to the expense of disclosure motions and questioning in an effort to obtain proof regarding the specifics and actual amounts of the expenses. Rather, that party has an obligation to explain the reasons for the expenses and how they were calculated, and must provide documentary proof of the expenses in an organized manner so that the court can make a proper determination as to the reasonableness of the expense from the standpoint of the child support calculation. This is particularly important in situations where the expenses reported on the party's income tax returns fluctuate from year to year. If the party fails to provide meaningful supporting documentation or other evidence in respect of those deductions, an adverse inference may be drawn by the court in making the income determination.
[65] In order to impute claimed business expenses back into a parent's income pursuant to section 19(1)(g) of the Guidelines, it is not necessary to establish that the party who has claimed the deductions has acted improperly or outside the norm for claiming expenses in the income tax context. Rather, the issue is whether the full deduction of the expense results in a fair representation of the actual disposable income that is available to the party for personal expenses. In determining whether business expenses claimed by a party are unreasonable, the court must balance the business necessity of the expense against the alternative of using those monies for the purposes of child support.
Imputing Income Section 19(1)(a)
[66] In Drygala v. Pauli (supra) the Ontario Court of Appeal set out the following three-part test to be applied in considering a request to impute income:
Is the spouse intentionally underemployed or unemployed?
If so, is this required by virtue of his or her reasonable educational needs, or the needs of the child of the marriage, or arising from reasonable medical needs?
If the answer to #2 is "no", then the court must decide whether to exercise its discretion to impute income and, if so, in what amount.
[67] In the case of Tillmanns v. Tillmanns, 2014 ONSC 6773, Justice Pazaratz reviews the general principles that apply to the imputation of income under section 19(1)(a). These principles, which are adopted by me in this case, are set out below.
[68] There is a duty on the part of the payor to actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their dependants.
[69] Courts have a significant degree of discretion when imputing income.
[70] The onus is on the party seeking to impute income to establish that the other party is intentionally underemployed or unemployed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made.
[71] If the court is not satisfied that the support payer is intentionally underemployed, the inquiry ends there. But once intentional underemployment is established the onus shifts to the payor to show one of the exceptions of reasonableness.
[72] "Intentionally" means a voluntary act. It does not apply to situations beyond one's control. A parent is intentionally underemployed if that parent chooses to earn less than he or she is capable of earning having regard to all of the circumstances.
[73] The court does not need to find a specific intent to evade child support obligations or bad faith in order to impute income. Drygala (supra); Smith (supra); B. (G.T.) (supra).
[74] A parent cannot avoid child support obligations by a self-induced reduction of income.
[75] Where the payor claims they have simply been unable to find employment, the absence of evidence of reasonable job search efforts will usually cause the court to conclude the payor is intentionally underemployed or unemployed.
[76] The court will not excuse a payor from their support obligations or reduce those obligations where the party has persisted in un-remunerative employment, or where they have pursued unrealistic or unproductive career aspirations.
[77] Persistence in non-remunerative employment or self-employment may entitle the court to impute income.
[78] If a party chooses to pursue self-employment as an alternative income earning path the court will examine whether this choice was reasonable in all of the circumstances, and may impute an income if it determines that the decision was not appropriate having regard to the parent's child support obligations.
[79] Reckless behaviour which diminishes income earning capacity may also result in income being imputed.
[80] If a court finds a payor is intentionally underemployed or unemployed, a court cannot arbitrarily allocate an imputed income. There must be an evidentiary basis for the income level to be imputed.
[81] The court must consider many factors including the age, education, experience, skills and health of the party; his or her past earning history; the standard of living during the parties' relationship; and the amount of income the payor could reasonably earn if they worked to capacity. The court can also consider the pattern of income — usually during the three years leading up to termination of employment — to determine an amount that is fair and reasonable.
[82] A person's lifestyle can provide the criteria for imputing income.
[83] Where a party fails to provide full financial disclosure relating to their income, the court is entitled to draw an adverse inference and to impute income to them. A history of deceptive behaviour or unreported income will increase the likelihood of income being imputed.
[84] An adverse inference should not, in and of itself, support imputing any amount income that one party requests. There should be a proportionate connection between the extent of the adverse inference that the Court is being asked to draw and the evidence provided.
THE FATHER'S DECLARED INCOME
Evidence
The Father
[85] The father's evidence is as follows.
[86] He is a drywall finisher by trade.
[87] Since his release from custody, he has struggled financially. He has been on and off social assistance as both his criminal record, lack of driver's licence, and his health issues pose a significant barrier in obtaining and maintaining employment full time or otherwise.
[88] He has never been a high income earner. He has never earned $40,000 or more per year. While his hourly rate has been between $25.00 and $35.00 per hour, his work is seasonal and he is subject to frequent layoffs.
[89] His annual income from 2006 to 2014 is as set out in his income tax returns and notes of assessment and is as follows:
| Year | Income |
|---|---|
| 2006 | $9,844.00 |
| 2007 | $18,562.00 |
| 2008 | $23,401.14 |
| 2009 | $23,434.00 |
| 2010 | $32,132.00 |
| 2011 | $0 |
| 2012 | $7,881.00 |
| 2013 | $7,600.00 |
| 2014 | $7,600.00 (assuming same as 2013) |
[90] He has earned both employment income and self-employment income. This is because over the years, he has worked for a number of companies. For some of the companies, he was simply an employee and would receive a T4 slip. For other companies, he would be provided with piecework where he was responsible for purchasing his own materials, supplies, etc. which he then would deduct from his gross business income.
Analysis – Decision to Impute Income under Section 19(1)(f) and 19(1)(g)
[91] The father gave no meaningful evidence about the nature of his professional business or how it operates, the name the business operates under, the clients of the business, how the business bills its clients, how the business is paid, etc.
[92] The father also failed to give a breakdown of his income in each of the years. That is, he did not say which years he earned employment income and which years he earned self-employment income and which years he earned both. That information is gleaned from the father's income tax returns for the years 2006 through to and including 2013. These documents show the following breakdown of the income reported as follows:
a) 2006: gross and net business incomes of $16,900 and $9,844 (no T4 income)
b) 2007: gross and net business income of $12,960 and $4,369 plus T4 income of $13,851 and RRSP income of $342
c) 2008: gross and net business income of $10,033 and $1,388 (2008) plus T4 of $22,074.71
d) 2009: T4 income of $23,401 plus other employment income of $33.42
e) 2010: T4 income of $29,910 and other employment income of $367.57 plus gross and net business income of $1855.50 and $1855.50
f) 2011: $0.00
g) 2012: gross and net business income of $7,600 and $7,600; and
h) 2013: gross and net business income of $7,600 and $7,600 (estimate).
[93] As is clear from the foregoing, the father reduced his gross business income in 2006, 2007 and 2008, by deducting various business expenses. The only explanation that the father gave for his business expenses is what I have already noted and to say that his income tax returns are professionally prepared by Mohammed Bilal Majeed of Canadian Taxpayer Solutions & Accounting Services Inc. who is well aware of what is and is not a permissible deduction from taxable income. Mohammed Bilal Majeed did not give any evidence at this motion.
[94] The only documentation with respect to the business provided by the father and in particular the only documentation provided by the father with respect to his business expense were was a statement of business activities provided for 2006. This statement was not included in the copy of his 2007, 2008, or 2010 income tax return provided to the Court and mother.
[95] From the statement of business activities it appears that for 2006 the business expenses related to transportation, office supplies, salaries, legal accounting professional fees property taxes, rent, telephone, utilities and other.
[96] On November 6, 2014 I ordered, on consent, that the father produced various documents, including:
a) Best efforts to produce bank account statements and credit card statements from April 1, 2009 until the present or until the accounts were closed;
b) Applications for credit since January 1, 2011;
c) Recent pay stubs, if any.
[97] The father did not produce any recent pay stubs, bank statements or applications for credit. He provided a copy of his vehicle loan. In his sworn financial statement of December 22, 2014 he deposes that he has monthly income from self-employment of $1,500 but provides no details or supporting documentation.
[98] The mother raised questions given the father's lack of disclosure regarding the reasonableness of business expenses. As the court noted in Favero v. Favero (supra), the burden of proving that the deduction of such expenses is unreasonable lies with the mother. However, in this case, the father, who relies on the expenses to reduce his income, has simply put forth numbers for alleged business expenses. He puts them forth with no justification or evidence to support those numbers. The father has an obligation to explain the reasons for the expenses and how they were calculated, and to provide documentary proof of the expenses in an organized manner so that the court can make a proper determination of his income.
[99] The mother submits that in the circumstances the expenses should be fully added back to the father's income and then grossed up. The mother attached as Exhibit "F" to her December 4, 2014 affidavit various DivorceMate calculations showing how she arrived at the forgoing figures, by way of grossing up the Father's declared income plus the written off expenses.
[100] I draw an adverse inference against the father and find that he is not entitled to deduct these expenses to reduce his income for child support purposes. I find that it is appropriate in this case to impute him with additional income equal to the full amounts the father has deducted from his gross business income, as business expenses and to gross up those amounts. I further find that the father's income is, in each of the years in question, was at minimum:
| Year | Income |
|---|---|
| 2006 | $18,044 |
| 2007 | $29,743 |
| 2008 | $34,334 |
| 2009 | $23,401 |
| 2010 | $32,133 |
| 2011 | $0 |
| 2012 | $7,881 |
| 2013 | $7,600 |
| 2014 | $7,600 |
IMPUTING INCOME - SECTION 19(1)(D)
The Mother's Evidence
[101] The Mother's evidence was that the father earns cash income that he does not declare and by not declaring it, is diverting income that would otherwise be included in his income for child support purposes. She believes the father's income is considerably more than that which he has declared and more than the grossed up sums above because of his undeclared cash earnings.
[102] The mother says she knows he earns cash because, among other things:
a) During their relationship the father would brag to her about earning at least $25 per hour;
b) She has personally witnessed him being paid in cash and cashing a cheque at a Money Mart. She would wait in the car, often with Lucas, while he went inside to cash his cheques;
c) Though she has little personal knowledge as to how much the father was actually pulling in, she does know that he was able to qualify for lease applications on apartments in Ontario and British Columbia where they paid rent of up to $1,500 per month on his income alone. On the father's credit, they bought a fair amount of furniture both in Ontario and in British Columbia.
[103] She also says that the father told her that his Uncle George, who is married to his Aunt Nada, owns a construction company and that he gave him both cash and on the books work.
The Father's Evidence
[104] The father challenged the mother's evidence about his cash earnings but not in any concrete way. In this regard he had this to say:
a) The jobs the mother is referring to when she says he would do cash jobs with Jesse D'Auria were union jobs and payments were made by cheque;
b) His Uncle George, whom the mother alleges he works for cash and who allegedly owns a construction company, is a retired Ford worker who is living on his Ford pension. When he was younger, he also did part-time work as a real estate agent. He has never owned a construction company.
c) He does use Money Mart at times as banks have repeatedly closed his accounts due to inactivity and non-payment of monthly service fees.
d) He does not believe the mother has ever witnessed him being paid in cash as union jobs are always paid by cheque.
Analysis
[105] I placed very little weight on the mother's evidence about the father's cash earnings, ability to earn cash because it is very outdated and it did not lend itself to quantification.
[106] I placed significant weight on the father's evidence that: he is paid by cheque (which must be personal as he does not appear to operate an incorporated company, does not appear to operate under a business name that is different from his own, does not have any business bank accounts, and did not produce any business records to substantiate his income or expenses). I also placed significant weight on the fact that he says he does not have any bank accounts and did not produce any banking records for any accounts he has held or credit applications he has made since May 27, 2009, despite agreeing to and being ordered to produce those records. I also placed significant weight on his evidence that he cashes cheques from time to time at Money Mart. It very clear that it would be very easy for the father to receive payment for work done and not declare that income. These factors coupled with the lack of a record keeping and evidence suggest that the father has a significant ability to divert income which would affect the level of child support to be determined under these Guidelines. I cannot however, on the evidence before me, find that he has done so or quantify the amount diverted.
IMPUTING INCOME – 19(1)(A)
Seasonal and Subject to Frequent Lay Offs
The Father's Evidence
[107] The father's evidence is that while he earns between $25 and $35 per hour when employed as a full-time drywaller he cannot maintain full-time employment year-round because the work is seasonal, and, because it is often tied to a particular project, he was subject to frequent layoffs such as when the project or his piece of it is finished.
The Mother's Evidence
[108] The mother's evidence is that in her experience with the father, his ability to work was never hampered by the seasons of the year as there is drywall work which can be done year round.
[109] When they were together, the father was always resourceful in finding work and worked regularly.
[110] He would often go to work early in the morning and return late in the evenings. He worked five days per week and on weekends.
[111] The father never struggled to find work.
[112] The mother also deposed that his employers were, primarily Dixon Drywall and Norwest Drywall.
[113] In addition to work with these companies, the father also picked up odd-jobs when work was not steady from his two primary sources. He and his friend Jesse D'Auria would also drive to job sites and do piece work where they would be paid in cash upon completion. They would go out early in the day and seek out jobs for "the team". They would work long hours together. She has personally travelled along with the Father to job sites and witnessed him obtain jobs on the spot.
[114] In support of her assertion she also submitted two transcripts from criminal proceedings that took place in this court before Justice Zisman. One is from the proceedings which took place on March 27, 2009 and the second from proceedings which took place on November 16, 2009.
[115] The following is revealed from a review of these transcripts.
[116] At his criminal hearing on March 27, 2009, the father's counsel advised the court of the following in his submissions (at page 22):
So he's now in a situation where his whole life has been held back. He's been in jail for this period of time. As I indicated earlier on, he works for Nor-West Drywall. He worked there for three years and he's always guaranteed work with them and in the summer he works for a drywall company called Dixon drywall. He's a drywall finisher and has all the relevant certificates.
[117] At his criminal hearing dated November 16, 2009, the father's counsel (at page 15 – 23 of the transcript), made submissions on sentencing which referred to the father's employment. He submitted an employer letter. He then made the following submissions:
My friend quite rightly barely alluded to it, and that is that he does work 40 hours a week at this drywall company.… But he does occasionally do Saturday work… He receives an income every week. He gets – an income of about, as I understand it, $900 net in his hands a week.
[118] At his criminal hearing dated November 16, 2009, the Crown advised the court in his submissions that (at page 12):
I have contacted the letter provided which is something Drywall – Dixon Drywall Incorporated. I have made efforts and I can advise the court as an officer of the court that the gentleman is working full-time. My information again, as an officer of the court, from the person I spoke to is that the gentleman works full-time, five days a week, weekdays and that there is occasionally some overtime. It would be the Crown's position that if this court saw fit to do an intermittent sentence, the gentleman would simply have to sacrifice those weekends for the time being when he serving a sentence.
Analysis
[119] The father does not give any evidence with respect to, which seasons are at issue, how the change of seasons affects his work etc., what dates he worked and for whom, what the dates of his layoffs and hire backs were, etc. All he provides is a bald statement that his work is seasonal and he is subject to frequent layoffs. He also gives no evidence about how he supports or supported himself and his family during the off season.
[120] This is not a situation where the payor has to dig through his historical records to piece together his work history in order to prove an entitlement to a variation of support. In this case the father started the case only two months after the final order for support was made. He knew or ought to have known that he should be recording such things and maintaining documentation so that he could prove his claim. Given his lack of disclosure and the sheer lack of detail and substance to his evidence, I do not believe the father when he says his work is seasonal.
[121] I accept the mother's evidence over the father's as it is more detailed, made sense (i.e. that there is drywall work to be done year around), and because she is candid. She admits that his jobs would end and that he would have periods where he had to go out and look for work. I also accept the mother's evidence that there is work year around for the father and that he works fulltime because it is corroborated by the statements made by the father though his counsel at the two criminal proceedings for which transcripts were produced.
[122] I find that the nature of the father's work is not seasonal, or it is, the seasons have minimal impact on his ability to obtain new employment.
[123] I find that his work is subject to layoffs from time to time but that it does not or ought not to take him long to find new work or to be hired back. For example, as I have already found, he was laid off and unemployed as of May 5, 2009 but from the transcript of his November 2009 criminal hearing it is clear that at some point between May 5, 2009 and November 16, 2009, he was hired back. As he does not say when, I draw an adverse inference that it was not long afterwards and within 5 months.
[124] I find that the impact of layoffs, if there ever were any further layoffs, on his ability to work and earn an income is and has been minimal and that he is able to find new work quickly.
[125] I do not accept the father's allegation that his work is seasonal or subject to frequent layoffs a justification for his reduced income or unemployment between November 2009 and May 27, 2014.
Shortage of Work / Fewer Job Opportunities
Evidence
[126] The father's evidence is that his employment opportunities are limited by his criminal record. He says that companies will frequently not hire a person with a criminal record as many perform work on government buildings.
[127] The father also says that he has looked for employment but there just are not job opportunities out there.
[128] With respect to his efforts to find he work, he deposed that these include: trying to make telephone calls between 6:30 am and 7:00 am, as the person hiring would usually be on the job site after that; and then going on the road from site to site, looking to see if there are any job openings.
[129] Further he says he has been to numerous sites in Oakville, Mississauga, Burlington, Hamilton and the west end of Toronto, though this is a difficult way to find work given the price of gas and without an income coming in. For example, there is considerable construction along Dundas Street in Oakville, but Fernbrook Homes, Green Park Homes and Mattamy Homes all use unionized companies, and will not hire individuals with criminal records as they also do government work.
[130] The father produced print-outs from the internet website indeed.ca. He says this is a job site, that pulls together job advertisements from major web sites such as monster.ca, etc. The print-outs show that there is exactly one job opportunity within 25 km of Brantford. The site suggested a job opening in Surrey, British Columbia.
Analysis
[131] The information from the website is hearsay. No one from the website company gave evidence about the way in which the website works, it comprehensiveness, or the reliability of the information on it. The Court has no way of knowing whether the information is credible or trustworthy. I admitted it and considered it none the less but gave no weight to it. Other than the evidence I have described the father gave no other evidence about his efforts to find employment. What he has given is, quite simply, not enough to convince the court on a balance of probabilities, that there are few employment or job opportunities for a drywaller out there.
[132] He also gave no evidence that suggests he has even looked for employment outside of drywall work. I do not accept his evidence that he has made significant efforts to find employment as a drywaller or otherwise. I am not persuaded that his underemployment or unemployment is as a result of companies being unwilling to hire him because of his criminal record. With respect to his criminal record, I would not have accepted this as a justification for his underemployment or unemployment for the same reasons I reject his periods of incarceration as such justification.
Union Membership
The Evidence
[133] The father's evidence is that because he was in custody for an extended period of time, he lost his union membership. He does not currently have the funds to re-join. This too, he claims, places limits his ability to find employment as many employers use unionized workers only.
Analysis
[134] Again, the father fails to provide sufficient evidence. He does not say what it would cost to rejoin the union. I note that in his 2008 income tax return the father claimed the amount of $721.86 in annual union dues. This is not a particularly significant annual payment and seems to me one well worth paying given that it could result in employment paying between $25 and $35 per hour.
[135] In his updated financial statement sworn December 22, 2014, the father shows monthly expenses relating to his vehicle as follows: $250 for gas and oil, $130 for car insurance and license, $30 for repairs and maintenance, $375 car loan payments. The total of these amounts per month, roughly equates to the cost of being a member of a union per year.
[136] To the extent that his lack of union membership limits the father's employment options, this is his own choice and fault and demonstrates sheer poor judgment on his part. His decision not to prioritize the use of his financial resources to enable him to rejoin the union so that he can open up employment opportunities for himself over financing and maintaining a vehicle that he does not need if he has no job or a job that pays more than $7,600 a year (his 2013 and estimated 2014 self-employment earnings), is reckless. I am neither persuaded that this is valid reason for the father's lack of employment nor that this is an appropriate reason to justify a reduction in the arrears that may be owing.
Shoulder Injury
The Law
[137] As Justice Zuker notes at paragraph 125 of his decision in Cole v. Freiwald and Freiwald, 2011 ONCJ 395, a payor alleging inability to work for medical reasons must obviously provide a sufficient evidentiary basis to support his or her claim. In the case of Caine v. Ferguson, 2012 ONCJ 139, Justice Sherr had this to say about the type of evidence that a payor must put before the court in order to succeed at demonstrating that his health issues necessitate his under or unemployment:
- In both Cook v. Burton and Stoangi v. Johnson, the courts set out that cogent medical evidence in the form of a detailed medical opinion should be provided by the payor in order to satisfy the court that health needs justify his or her decision not to work. The medical evidence provided by the respondent was very dated — nothing more recent than 2008 — and lacked any detail. While the respondent may have some minor medical limitations that will affect the amount of income that he can earn, he has not established that they preclude him from working full-time.
[138] I adopt and apply these evidentiary principles to the evidence presented in this case with respect to all of the medical issues the father relied upon to justify his unemployment or underemployment.
The Father's Evidence
[139] The father's evidence was that he has had frequent and recurrent left shoulder dislocations. After a shoulder dislocation, he is normally in pain for approximately one to two weeks and suffers with decreased range of motion. These dislocations occur at least once per month he says. At times, he is able to push his shoulder back into place, while at other times, it must be done at a hospital. These shoulder dislocations are the result of an injury he says occurred quite years ago, long before the March 8, 2009 order, when he was "jumped" by five men. The pain and the frequency of dislocations have increased since his release from custody in 2012. He may be having surgery again but he has some hesitation as the previous surgery was not successful.
[140] These recurring dislocations and their effect on him have, he says, have been a significant challenge in obtaining and maintaining employment as he works as a drywall finisher and the construction industry is very physically demanding. For example, he was scheduled to start a job with G and A Construction. Before he was able to start, he dislocated his shoulder. By the time the injury healed, he was told that they had already found someone else and that they viewed him as a liability.
[141] To corroborate his evidence the father produced various letters written by medical professionals. The first of these letters is one written by his family physician, Dr. Backo-Shannon dated November 26, 2014. The most relevant portions of the letter are as follows:
a) According to the medical history given by the father …. the first shoulder dislocation occurred at about age 21 after a physical altercation. Since that time the father has had recurrent shoulder dislocations that are precipitated at times with benign routine activity;
b) During her tenure as his family physician (since 2012) she has not seen him with an acute shoulder dislocation, though she has prescribed him Tylenol number three in May 2014 to have on hand to help him manage his shoulder pain at the time of dislocation;
c) She referred him to orthopedic specialist, Dr. Axelrod, in August 2013 after the father reported that he had had 3 or 4 episodes of dislocation in July 2013;
d) At this time (November 2014) management of the shoulder pain is awaiting the father's decision on whether to proceed with surgery or not. He is able to work in the meantime, though will experience days off of his laborers work as a drywall or after a dislocation occurs;
e) Not all of these dislocations require medical intervention as the father is able to reset the shoulder himself.
f) Unfortunately, following the shoulder dislocation the father does experience the expected pain and swelling in the joint for about a week afterwards which makes it difficult for him to work at that time.
[142] The father also produced a consultation note written by Dr. Axelrod (orthopedic specialist), to Dr. Backo-Shannon summarizing his involvement and service provided on June 16, 2014. The highlights from this consultation note are as follows:
a) Currently the father states that he dislocates about six times a year.
b) In terms of his social history, he is a self-employed drywaller. He is able to do his job, as his left hand is mostly for holding the trowel. He is healthy, aside from a 14 year pack history. He takes Tylenol #3 for some shoulder pain on a periodic basis. He has no known drug allergies.
c) As the father has already failed a soft tissue Bankart repair, which was done open, the next step for him would be to have a Bristow procedure. The risks and benefits of surgery were explained to him. We gave him a prescription for physiotherapy to see if this would give him any interval improvements in his symptoms.
Analysis
[143] The admissibility of these reports and the medical professionals qualification as experts entitled to give opinion evidence was not challenged and both parties relied upon their contents extensively. Both contain hearsay in that they report statements made to the physicians by the father. I admit the statements about what the father reported to each position as an exception to the hearsay rule, as these are clearly statements made by a party to these proceedings against interest.
[144] I do not accept the father's evidence that the shoulder dislocations occur, on average, once per month, because this evidence is inconsistent with the statement attributed to him by Dr. Axelrod who said he says it occurs about 6 times a year. I accept and find that, on occasion, these dislocations cause significant pain and swelling for the father but that the pain and swelling can and is managed through the use of Tylenol #3.
[145] I do not accept the father's evidence with respect to the degree to which these recurrent shoulder dislocations affect his ability to work. His evidence in this regard is inconsistent with the statements attributed to him by Dr. Axelrod and with their findings regarding the impact it has on his ability to work, particularly Dr. Backo-Shannon's findings. Rather, I find that these dislocations can make it difficult for him to work at the time but that the impact only minimally affect his ability to work. I accept and find that there are occasions when he has to take time off from work. I am not persuaded that any significant periods of unemployment or underemployment on the father's part were or are required as a result of this health issue.
[146] I further find that medical treatment to stabilize the shoulder and decrease the number of dislocations that occur exists both in the form of physiotherapy and an additional surgery. The father gave no evidence with respect to follow up on the recommendations made by these professionals. For example, he did not indicate whether or not he is taking advantage of the prescription for physiotherapy. On his own evidence it is clear that he has not set a date for the surgery. This is confirmed as well in Dr. Backo-Shannon's letter dated November 2014. While I accept there is no guarantee that either of these will be successful, there is evidence to suggest that they may. I find that the father's failure and unwillingness to follow the advice of his physicians in terms of the treatment plan is unreasonable and demonstrates that he is not prepared to do all that he can to maximize his ability to contribute to the support of his son.
Driver's License Suspension
The Evidence
[147] The father's evidence is that his ability to work was limited from July 19, 2010 to October 19, 2010 because his drivers' license was suspended by the Ministry of Transportation. To corroborate his evidence in this regard, he submitted correspondence from the Ministry of Transportation advising him that his license was suspended due to a psychiatric condition.
Analysis
[148] I find that the father driver's license was suspended from July 19, 2010 to October 19, 2010 and that this could have impacted on his ability to look for and maintain employment during these three months. However, in 2010, the father had his 2nd best year of declared earnings ($32,133). Given this and the lack of evidence from the father that he was not working or was not able to maintain work during this three month period due to his driver's licence suspension, I find that if there was any impact on his ability to work it was only during a three month period and was minimal.
Psychiatric and Alcohol Abuse Issues
Father's Evidence
[149] The father relied upon a letter written to his family doctor, by psychiatrist Dr. Book of Mental Health Services, Brantford General Hospital. The letter is dated January 5, 2013. The most relevant portions of this letter are as follows:
a) He met with the father on December 13, 2012 after the father was referred for psychiatric review;
b) He does have a history of alcohol abuse in the past, but he has not abused alcohol in some seven years' time;
c) Past psychiatric history is significant for the father being treated with Seroquel in the past, which he did not find helpful. He has had counseling in the past ordered through the courts;
d) Mental status examination revealed a calm, well groomed male who showed normal eye contact and was of average intelligence. Affect was bright and reactive to our conversation. Mood was your rhythmic. He was not suicidal or homicidal. He had no evidence of any formal thought disorder. The patient has reasonable insight and his judgment seems sound at present;
e) This 32-year-old male suffers from: no current psychiatric diagnosis, although a history of alcohol abuse [currently in remission];
f) No follow up appointments are booked for him.
Mother's Evidence
[150] Not attached to the father's affidavit was the August 18, 2010 letter of Dr. Backo-Shannon, which was provided to the court by the mother. The letter is addressed "to whom it may concern" and from its content it is clear that the letter was written with the intention of assisting the father in getting his driver's license restored.
[151] In that letter Dr. Backo-Shannon states:
It is my understanding that Mr. Zegarac driver's license was revoked after a presentation to hospital for psychiatric state. The patient appears to have had a brief psychiatric break due to stressful life incidents at the time. He had suicidal ideation at the time. He was admitted to the psychiatric unit at St. Joseph's hospital overnight and was released the next day without the need for follow-up.
Mr. Zegarac does not report any previous psychiatric history. He does not currently exhibit any symptoms of depression, delusions, hallucinations, nor any homicidal, suicidal or violent ideation. He denies any current drug use or excessive alcohol use.
At this time he does not appear to have any impairment which would restrict him from driving.
[152] Also not attached to the father's affidavit are the notes dated August 17, 2010, to Dr. Backo-Shannon from Dorval Medical Associates Health Team. It appears from the note that this is the health team to whom the father was referred by Dr. Backo Shannon. These notes were provided to the court by the mother. Their notes indicate "no evidence of depression\delusions". These notes also indicate that the father is "working regular job".
Analysis
[153] Counsel for the father submitted that the father's ability to maximize his income and thus to pay support and arrears is limited by the challenges he faces as a result of psychiatric difficulties he has had and his alcohol abuse. She submitted two cases which she indicated signal a court willingness to recognize such issues as justifying a parent's intentional underemployment. The first of these is DiFrancesco v Couto where the court dealt with a payor's struggle with alcoholism. The second was Crowe v McIntyre, 2014 ONSC 7106, where the court dealt with the payor's claim that his Attention Deficit Hyperactivity Disorder affected his ability to maximize income. I considered these cases and accept that in the right circumstances an individual's mental health and issues with alcohol abuse can serve as a justification for why an individual is not capable of maximizing his income.
[154] Again, neither party raised any issue with respect to the admissibility of these letters and notes or that the professional were experts qualified to give opinion evidence, and both parties relied on their contents extensively. These notes and letters also contained hearsay evidence of statements made by the father to the professionals. Again, I have admitted these hearsay statements under the exception to the hearsay rule, as admissions against interest.
[155] The information provided in these letters and consultation notes is at odds with the submissions made by the father's counsel and do not support a finding that the father has had any issues with respect to alcohol abuse since the March 13, 2009 order was made. Also, nowhere does the father depose that he is an alcoholic or that he has had any issues with alcohol abuse since the order was made in 2009. In fact, he clearly told Dr. Book that he had not abused alcohol in 7 years. Most notably, nowhere in the medical notes and letters or in the father's evidence is there any reference to the father's employment historically or at the time of the consultations being in any way impeded by his past alcohol abuse issues. I find that the father has not had any issues with respect to alcohol abuse in over seven years and that his alcohol consumption or lack thereof has not affected his ability to work.
[156] These letters and notes also do not support a finding that the father has had any psychiatric or mental issues that in any way affect or affected his ability to work and earn income since the order was made in 2009. Nowhere does the father depose that he has or has had psychiatric or mental health issues that affect or affected his ability to work and maximize income, or if so, how. The father does not say that he had to take time off from work or time out from searching for employment, and neither do the letters and notes.
[157] I find, based on the contents of these letters and statements that the professionals report the father has made to them, that the only significant psychiatric issue that the father has had since the final order was made on March 13, 2009, is a brief psychiatric break suffered in 2010 for which he was hospitalized for one night and did not require any significant follow-up or care. I find that the only effect the psychiatric break may have had on the father's ability to work was that it resulted in his driver's license being suspended for approximately 3 months.
[158] I find that the father has not provided a sufficient evidentiary basis to support his allegation that his ability to work is limited for medical reasons.
Overall Assessment
[159] The onus was on the father to provide sufficient evidence to satisfy the court that the various circumstances he raised justify his decision not to work, work less, look for alternative or supplementary alternative employment, or justify his unemployed or underemployed status between May 5, 2009 and May 27, 2014. Neither the father's own evidence nor the medical and documentary evidence provided by him did this. His evidence overall was either non-existent, lacked any detail or failed to link the issue to his ability to work and maximize income. None of the circumstances he raised either singularly or collectively satisfied the Court that his failure to maximize his income is justified. I find that the father was intentionally under-employed in each of years in question, 2009 through to and including 2014, as described in clause 19(a) of the Guidelines and that additional income should be imputed to him through this time frame. I turn next to that issue.
HOW MUCH INCOME TO IMPUTE
Evidence
[160] The Mother's evidence was that she knows that the father has earned considerably more than that which he has declared and more than the grossed up sums above based upon his lifestyle. The father denied that his lifestyle, even as depicted by the mother, was lavish or evidence that he earned significantly more than $40,000 annually.
Analysis
[161] It is difficult to assess how much income the father was or was capable of actually earning based on the mother's evidence about his lifestyle. I placed very little weight on the mother's evidence about the father's lifestyle for three reasons: first it is very outdated; second, I did not find it to be evidence of particularly lavish lifestyle; and third, it did not lend itself to quantification.
[162] I placed significant weight on:
a. The father's admission that he can earn between $25 and $35 per hour;
b. The fact that even after adding back grossed up business expenses, the father's best earning years were: $29,793 in 2007, $34,334 in 2008 and $32,133 in 2010. The average of his income for those three years is $32,070; and
c. The representations made at his criminal hearings about the availability work, the number of hours he can work (full time with some overtime) and earn $900 net a week.
[163] I also started with my findings above these additional findings: the father is only 35 years old, in relatively good health, and a certified/qualified and experienced drywall finisher. I then considered that the least amount the father is capable of earning, based on a three year average of his three best earning years is $32,070 and the most the father could earn if he worked full time (37.5 hours) 50 weeks of the year is between $46,875 and $65,625. I took into account some allowance for time off due to job transitioning between lay offs and due to shoulder dislocations. I allowed the father 8.5 weeks off per year on account of such. I then assumed a 37.5 hour work week at a rate of $25 per hour. Using these principles I arrived at an annual income of $41,718.75 ($25 per hour x 37.5 x 43.5 weeks a year). I then rounded that income down to $41,600.
[164] This level of income accords with the level of child support the father agreed was appropriate when he was working full time in 2008 and it accords with a level of child support the mother agreed was appropriate when he was working full time in 2008. It is also within the range of the lowest income the father is capable of earning and the highest income he is capable of earning.
[165] Based on all of these findings and considerations I have decided to impute an annual gross income to the father for support purposes of $41,600 for the period of May 5, 2009 through to May 27, 2014. The father's income will be fixed at $41,600 for child support purposes, commencing May 5, 2009 and ending May 27, 2014. His monthly child support obligation shall remain at $375 starting May 5, 2009 through to and including May 27, 2014.
[166] I turn next to the father's request that the court rescind or reduce arrears.
ARREARS
The Law
[167] The decision to reduce arrears is also discretionary. It is not a strict mathematical exercise. Both counsel referred the Court to and relied extensively on the factors the Court is directed to consider when determining whether to rescind arrears in the Ontario Court of Appeal's decision in DiFrancesco v. Couto (supra). Those factors are set out at paragraph 23 and are:
Nature of the support obligation;
Financial capacity of the payor;
Need of the child and recipient parent;
Unreasonable delay by the recipient in enforcing the support obligation;
Unreasonable delay by the payor in seeking "appropriate relief";
Possibility of undue hardship to the payor.
[168] In Costello (supra), Justice Zisman also considered the conduct of the payor as relevant to the Court's decision to exercise its discretion both to vary the support obligation and rescind arrears, particularly with regards to his history of paying support and making meaningful disclosure. I adopt and follow the principles set out in both of these cases.
Nature of the Support Obligation
[169] The father's support obligation was to pay $375 per month. He was aware of this obligation. I have imputed to him an annual income of $41,600 which is an amount that yields the exact same support obligation as he had pursuant to the final order of Justice Pawagi. The obligation was not an onerous one particularly given that the father was not ordered to and has never contributed financially to the child's section 7 expenses. These have been shouldered by the mother alone.
Delay
[170] In this case there was virtually no delay on the part of anyone and most importantly, on the part of the father. The father, in this case, brought his motion to change within 3 months of the final order being made. Any delay in reaching final resolution is most likely due to the fact that between 2009 and 2014 the father was incarcerated for significant periods of time. He should not, for the reasons I have already given, benefit from this, nor should the child be penalized for it.
Conduct
Nondisclosure
[171] The father produced no bank or credit card records. He produced a car loan statement, but not the application and he produced no credit applications. The father did not produce a breakdown of the expenses he has deducted in each year other than 2006 and he did not outline how such expenses are legitimate. The father produced no documentation to substantiate his job search efforts, work or lay off history and much more.
[172] In his updated sworn financial statement the father claims to earn $1500 per month of self-employment income and provides absolutely no accounting as to how $1500 per month is being earned. No proof of income earned in 2014 is provided. In that sworn statement the father grossly underestimates his spending habits. He includes, for example, no expense for cigarettes, alcohol, entertainment, or clothes, and has estimated very low figures for food and travel.
Non-Payment of Support
[173] Despite repeated representations to the criminal courts that he wanted to work and pay child support and the intermittent sentences afforded to him to do so, the father did not, until the order was made in June 2014, pay support on any voluntary basis. Worse, the father has effectively taken steps to avoid making any payments of support to the mother: he ceased to maintain bank accounts and did not file his income tax returns annually. Based on the date of issue of his notices of assessment for each of the taxation years between 2009 and 2012, it appears that he did not file his 2009, 2010, 2011 or 2012 income tax returns until sometime in 2014. His failure to file in a timely fashion effectively avoided seizures and garnishments during the relevant taxation years. These funds, had they been made available on an annual basis following ordinary annual tax filings would have gone a long way towards assisting the mother with financially supporting the parties' son.
Circumstances of the Child and Mother, both Past and Present
[174] The portions of mother's evidence that the Court found particularly compelling about the impact of the late or nonpayment of support on her and the parties' son and that the Court had no difficulty attributing to the nonpayment of support rather than the father's abuse of the mother and the breakdown of the parties' relationship, are as follows:
a. Both Lucas and she have suffered as a result of the father's shirking of financial responsibility to pay for the support of his child.
b. As an autistic child, Lucas' costs of living are substantial. Private care is expensive. He still needs diapers and the costs of cleaning up after an active but incontinent child are substantial. Lucas also chews his clothes. She does extensive amounts of laundry and pay for more dry cleaning than the average person as a result. She also has to buy more clothes for Lucas than the average child due both his incontinence and his chewing habits.
c. The mother is not working. It is a logical inference that the lack of support by the father has meant that the child's circumstances have been adversely affected.
d. Payment by the father now of arrears would go towards alleviating their ongoing financial hardships, to providing Lucas with the support programs he needs but which she has not been able to afford, and to satisfying the debts which the mother has accrued to reduce their costs of living. Although the father makes an issue of it, it makes no difference to the Court that she resides and has financial assistance as a result from her new partner. It is not his obligation to support the parties' son, it is the mother's and the father's support.
Payor's Financial Capacity and Possible Undue Hardship
[175] I have no reliable evidence from the father that he will suffer undue hardship if ordered to pay the arrears. I have considered the following:
a. He resides in his mother's home;
b. He says he is approximately $50,425 in debt (he did not produce any evidence of this debt save an except for an itemization of what it is in his updated sworn financial statement as follows: car loan [$9688], unpaid child support to the mother [$20,637], debt to family [$12,000], and credit card debts [$8100].
c. The parties have agreed that his current income is $21,900 and his current ongoing support obligation is $175 a month. Pursuant to section 15(2) of the Guidelines I am permitted, based on the fact that the parties both agreed that this is the father's annual income, to accept that this is in fact his current annual income and thus, reflects the income available to pay arrears at present.
d. The father also has no real assets other than his car that he could sell to satisfy the arrears.
[176] While I find that an order for an immediate payment of arrears would create a hardship for the father, this hardship can be adequately addressed by an order that the arrears be repaid in affordable installments. I will make such an order. However, this accommodation is conditional on the father maintaining his ongoing and arrears support payments in good standing.
Analysis
[177] I looked at two time periods in assessing the reduction of support arrears. The first period forms the retroactive portion of the father's motion. This is the period from September 1, 2008 to May 5, 2009 when he started his motion to change in May 2009 (9 months). I considered that the father has or ought to have been earning the same level of income that Justice Pawagi attributed to him and that I have imputed to him in this motion to change. I gave less consideration to his argument that he couldn't afford to pay child support when he was incarcerated as his unemployment is the result of one's own actions (an event over which the payor had control) or misconduct, the support obligations will not be reduced or cancelled. For this period, based on the considerations set out above, I have given him no credit.
[178] The second period of time is from May 5, 2009 until May 27, 2014. This is not a retroactive claim for the reasons I explained earlier in this decision. I considered that in this period there was a three to five month period when the father was laid off (between May 2009 and the end of November 2009) and a three month period when the father had no driver's licence and this would have made it difficult for him to get to and form job sites. I also considered that there was at least one other occasion when he would have had to look for work: following his release from jail in 2012. I have given the father a reduction of $5,000 for this period (equivalent to 12 months of support at the rate of $375 per month). I find that the support arrears should be reduced by $5,000.
[179] The father can afford to make periodic payments towards the arrears, particularly given my finding that he is capable of earning $41,600 annually, in the amount of $500 a month. This would bring his total monthly payment (Table plus arrears) to $675. This amount will not cause him significant hardship particularly if he goes out and works to his full capacity as I have found he is capable of doing. The father will be permitted to repay the arrears as adjusted by this order at the rate of $500 per month until such time as his son is adopted by the mother's current partner. This amount is to be paid in addition to his ongoing support obligation of $175 per month pursuant to the order of Justice Zisman dated May 27, 2014. On the first day of the month following the month in which the son is adopted by the mother's new partner, these payments will increase to $675 per month until the full arrears have been repaid in full.
ORDER
[180] An order will go on the following terms:
a) The father's motion to change child support and reduce outstanding arrears is granted in part as follows:
i. The existing child support arrears as reflected in the records of the Family Responsibility Office shall be reduced by $5,000 as at May 27, 2014.
ii. The father shall pay the remaining child support arrears at as at May 27, 2014, the rate of no less than $500 per month on the first day of each month, starting on April 1, 2015, until such time as the parties' son is adopted by the mother's current partner. On the first day of the month immediately following the occurrence of that event, the father will, instead, begin paying $675 per month towards the arrears of support and this shall continue to do so until such time as the arrears have been repaid in full. However, if he is more than 30 days late in making any arrears support payment, the entire amount of arrears still owing shall immediately become due and payable.
iii. Nothing in this order precludes the Family Responsibility Office from enforcing arrears from any government source (such as income tax or sales tax refunds) or lottery or prize winnings.
iv. A support deduction order shall issue.
[181] If either party seeks costs, they are to try and resolve the issue in advance of the next court date through negotiations. If they cannot, they shall attend at Court on Friday March 6, 2015 at 3:00, with a bill of costs provided to the other party and sent to the Court via the Judicial Secretary, Pam Jazvac, no later than 4:30 p.m. on March 5, 2015, and prepared to argue costs that day.
Released: March 4, 2015
Signed: "Justice Victoria Starr"
