Court File and Parties
Court File No.: Halton 375/14 Date: 2015-09-28 Ontario Court of Justice
Between:
Semona Glace Applicant
— AND —
Sean Nigel Francis Respondent
Before: Justice Victoria Starr
Confirmation Hearing Heard on: June 15, 2015
Reasons for Judgment released on: September 28, 2015
Appearances:
- No appearance by or on behalf of the Applicant, Semona Glace
- Tricia Simon, counsel for the Respondent, Sean Francis
- Sean Nigel Francis, the Respondent
INTRODUCTION AND ISSUES
VICTORIA STARR J.:
[1] In 2013, the Respondent father, who resides in Ontario, stopped paying child support for his then 5-year-old daughter, Ameera. Ameera lives with her mother in England. The mother applied for child support to the Stratford Court in England, and the Stratford Court made a Provisional Order. This is this Court's decision with respect to the Provisional Order for Ameera's support made pursuant to the Interjurisdictional Support Orders Act, 2002, S.O. 2002, c. 13 ("ISOA").
[2] The issues that this Court has to decide are:
a. Should the Stratford Court's finding that the Respondent is the biological father of Ameera and thus owes her a duty of financial support, be confirmed?
b. What is the Respondent (father)'s income for child support purposes?
c. What is the Guideline Table amount payable?
d. Should any additional amount of child support be paid by the Respondent (father) towards the cost of Ameera's nursery care (daycare)?
e. What are the arrears of child support and how should they be paid?
f. Should the Applicant (mother) pay costs to the father of these proceedings?
BACKGROUND
The Parties, their Daughter, and Relationship History
[3] The Respondent (hereinafter "the father") and the Applicant (hereinafter "the mother") became involved in a romantic relationship in the Province of Ontario, Canada. They never resided with one another, however.
[4] The mother became pregnant during the summer of 2008. She then moved to England.
[5] Ameera Francis ("the child") was born September 12, 2008 in the U.K. Ameera is now 7 years old.
[6] The father does not dispute that he is the biological father of Ameera or that he has a duty to support her financially.
[7] The father's evidence is that:
a. After the mother moved to England there was some contact via Skype and the telephone, but this stopped in October 2013;
b. Prior to October 10, 2013, he contributed to Ameera's financial support by transferring an agreed upon amount of $400 (CDN) per month into the mother's bank account;
c. In October 2013, he asked the mother if Ameera could come to Canada for the summer of 2014 to visit with him. The mother said no and thereafter stopped all communication with him; and,
d. On October 10, 2013, he tried to deposit $400 into the mother's account but the payment was returned. He has not been able to make any further bank transfers to the mother since then.
Litigation History
[8] On August 12, 2014, the Stratford Court made a provisional finding of fact; namely, that the Respondent is the father of the child. That court only had evidence from the mother about her income and expenses as the father did not participate in those proceedings. It could not, on the evidence before it, set the level of child support to be paid by the father.
[9] The Provisional Order, together with supporting documentation, was forwarded to this Court for the purpose of facilitating this Court's confirmation of the Provisional Finding of the father's duty to pay child support and to set the level of child support he is to pay.
[10] The father was served with the supporting materials on September 14, 2014. He sought an oral hearing pursuant to sub-rule 37(8) of the Family Law Rules, O Reg 114/99. This request was granted.
[11] This hearing, initially scheduled for October 29, 2014, was adjourned four times at the father's request. It finally proceeded on June 15, 2015.
Evidence Reviewed
[12] In reaching its decision this Court reviewed the documentation sent from England together with the following evidence and document evidence filed by the father:
i. The father's oral evidence given at the hearing on June 15, 2015;
ii. The Answer of the father, dated May 11, 2015;
iii. The father's Financial Statement, sworn May 11, 2015, and,
iv. Affidavit of the father, sworn March 3, 2015 (loose in file);
v. Notice of Assessment of the father for the year 2014 (loose in the file);
vi. Two affidavits of the father, both sworn on the same date, May 11, 2015.
The Legislative Context and General Approach to Child Support in Ontario, Canada
[13] This hearing was conducted pursuant to the procedure set out in Part II -- New Orders of the ISOA (Claimant outside of Ontario).
[14] Pursuant to section 13 of the ISOA, the law of Ontario is to be applied in determining the amount of child support to be paid by the father and subsection 14(1) provides this Court with the authority to make a final support order. Section 11(2) permits the Court to send the designated authority a direction to request such information or documents it needs from the claimant to consider making a support order and to adjourn the hearing until those documents or information have been provided.
[15] Subsection 8(2) of the ISOA sets out that the Provisional Order and documents received from the reciprocating jurisdiction form part of the support application for a new order and subsection 11(1)(b) stipulates that the Provisional Order and documents received from England form part of the information for this court to consider in making its order.
[16] For the general principles and the general approach to follow in cases proceeding under Part II of the ISOA, the decision of Justice S.B. Sherr in the case of Wright v. Christie, [2011] O.J. No. 1131 is of assistance. In that case Justice Sherr, among other things, states, at paragraph 20:
Child support is calculated in Ontario using the Guidelines. The Guidelines provide that the basic amount of child support to be paid (the table amount) depends on the Respondent's income and the number of children…. [i]
[17] In this case, an examination of the mother's updated Financial Statement for a Financial Remedy reveals nursery expenses related to the child. Such expenses, if incurred to enable the mother to work, qualify as a special or extraordinary expense under section 7 of the Guidelines. Thus, in this case, this Court is required to go further than Justice S.B. Sherr in Wright v. Christie, supra. That is, it must go beyond setting the Guideline Table amount of child support and consider whether an additional amount should be paid by the father as his contribution towards the nursery expenses. That analysis is conducted under section 7 of the Guidelines. [ii]
[18] Although he did not have to deal with the issue of section 7 expenses in Wright v. Christie, supra, Sherr, J, in footnote 3 of his decision, discusses the approach to expenses such as child care:
Section 7 of the Child Support Guidelines provides a mechanism for payments over and above the Guideline table amount for special and extraordinary expenses of children. These include expenses for child care incurred as a result of the caregiver's employment, illness, disability or educational needs, medical expenses, post-secondary expenses and extraordinary extra-curricular activities. The claimant for these expenses must demonstrate that they are reasonable and necessary. They are usually shared in proportion to the gross incomes of the parties.
[19] In the case of Titova v. Titov, 2012 CarswellOnt 15666, the Ontario Court of Appeal set out the general approach that the Court is to take when determining whether to order an additional amount for section 7 expenses under the Guidelines. At paragraph 23 the Court states, in part:
In awarding s. 7 special and extraordinary expenses, the trial judge calculates each party's income for child support purposes, determines whether the claimed expenses fall within one of the enumerated categories of s. 7 of the Guidelines, determines whether the claimed expenses are necessary "in relation to the child's best interests" and are reasonable "in relation to the means of the spouses and those of the child and to the family's spending pattern prior to the separation." …… Finally, the court considers what amount, if any, the child should reasonably contribute to the payment of these expenses and then applies any tax deductions or credits.
[20] The onus is on the parent seeking the special or extraordinary expenses (in this case the mother) to prove that the claimed expense falls within one of the categories under section 7 and that the expense is necessary and reasonable, having regard to the parental financial circumstances (see Park v. Thompson, [2005] O.J. No. 1695).
[21] In reaching my decision, I have considered and applied the forgoing legislative framework and guiding principles.
SHOULD THIS COURT CONFIRM PARENTAL STATUS AND DUTY TO SUPPORT THE CHILD?
[22] The father concedes the Stratford Court's finding that he is the biological father of the child and that he has a duty to pay child support to the mother for Ameera. I therefore confirm the Provisional Finding of the Stratford Court in this regard, as well as the Provisional Order that the father make payment for the support of Ameera.
WHAT IS THE FATHER'S INCOME FOR CHILD SUPPORT PURPOSES?
The Evidence
The Father's Employment and Reported Income
[23] The father is a self-employed Master Electrician. He is the sole proprietor of a business called Ultra Enterprises.
[24] The father reports his gross business income, his business expenses, and his net business income on his personal income tax return each year. It is his net business income that is included as personal income for taxation purposes.
[25] In addition to his income from Ultra Enterprises, the father also has income from part-time employment with a hospital. He has worked there for many years and is currently employed as a Nutrition Assistant. This income is also reflected on his personal income tax returns.
[26] My findings with respect to the father's reported Line 150 Income (total income) for the years 2012 through to and including 2014 are set out in the following chart:
| Year | 2014 | 2013 | 2012 |
|---|---|---|---|
| Line 150 Income | $39,300 | $20,197 | $13,503 |
[27] The amount shown on Line 150 of an individual's income tax return is the total of income earned from all sources for the year. The following chart sets out my findings, based on the evidence, of the income the father earned from each income source, which together make up the total Line 150 income shown in the previous table:
[28] The father failed to provide a full accounting of his income and business expenses for 2015. In this regard I note these key flaws in his evidence:
a. In his financial statement sworn May 11, 2015, he deposes that his only source of income is his income from self-employment and he wrote "N/A" as his answer to the statement "I am employed by". In his oral evidence, however, he stated that he continues to work as a Nutrition Assistant at a hospital;
b. Despite continuing to be employed by the hospital, the father's May 11, 2015, financial statement does not reflect any amounts as having been earned in 2015 from this employment. He failed to attach paystubs from that employment to his financial statement. This is in contravention of Rule 13 of the Family Law Rules as that rule and the prescribed form, require the affiant to disclose current income from all sources as well as attach proof of current income such as paystubs.
c. In his May 11, 2015, financial statement, the father also deposes that his current gross income, comprised solely of business income, is $5,000 a month. This equates to $60,000 annually. He explains, however, that this is his gross business income. He does not give a breakdown of his business expenses (actual or projected) for 2015.
| Source of income | 2014 | 2013 | 2012 |
|---|---|---|---|
| Total Income (Line 150) | $39,300 | $20,197 | $13,503 |
| Employment income | $7,747.92 | $7,038.78 | $5,983.18 |
| Child Tax Benefit | $1,200 | $1,100 | $0 |
| Net self-employment income | $29,780.28 | $11,464.12 | $6,947.36 |
| Capital Gains | $22.10 | — | — |
The Respondent's Business Expenses
[29] The father's personal income is largely made up of his net business income. The following chart summarizes my findings with respect to the breakdown of business income and expenses for the years 2009 through to and including 2014.
| Year | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|
| Gross business income | $74,618.83 | $39,944.22 | $27,617.85 | $43,790.25 | $46,220 | $42,000 |
| Business expenses deducted | $44,838.55 | $28,480.10 | $20,670.49 | $39,692.37 | $40,500 | $36,315 |
| Net self-employment income | $29,780.28 | $11,464.12 | $6,947.36 | $4,097.88 | $5,720 | $5,685 |
[30] The two most helpful documents in the father's 2013 and 2014 income tax returns filed are the schedules entitled "Statement of Business and Professional Income" and "Motor Vehicle Expenses (Business)". These are helpful because they provide an itemized list of the expenses the father deducts from his business income with the ultimate effect being a reduction in his personal income, the potential income for child support purposes.
[31] For 2013, the father deducted, among others the following amounts on account of the following business expenses:
a. $1,298.36 - office b. $4,256.02 - supplies c. $846.98 - travel d. $4,380.28 – telephone and utilities e. $7,625.96 – motor vehicle expenses f. $4,072.50 – business use of home expenses
[32] For 2014, the father deducted the following amounts, among others on account of the following business expenses:
a. $10,543.66 – purchases during the year b. $12,782.50 – subcontracts c. $1,991.16 – meals and entertainment d. $811.32 – insurance e. $726.66 - interest f. $135.40 – business tax, fees, licences, dues, memberships, etc. g. $5,053.10 – travel h. $2,725.66 telephone and utilities i. $10,070.69 – motor vehicle
[33] When questioned by the Court about the necessity and reasonableness of the amount deducted on account of subcontract fees, the father's response was limited. He said that he often subcontracts the work because he is not available to do the work himself due to other commitments (personal and business).
The Father's Position
[34] In her factum, the father's counsel submits that the father seeks an order that he pay child support based upon an income of $20,288. Based on that income and the Guideline Table amount payable for one child would be $168 per month. $20,268 is the father's Line 150 income as shown on his 2013 Notice of Assessment. I note that counsel for the father has overlooked the fact that the father's income was reassessed by the Canada Revenue Agency ("CRA"). According to his Notice of Reassessment for 2013, his Line 150 income was $20,197 for that year.
[35] In her oral submissions, the father's counsel requested (in the event that I find determining the father's income for child support purposes pursuant to section 16 of the Guidelines does not lead to the fairest result), that I determine his income using the averaging formula she proposed. [iii]
[36] Counsel submits that the result, based on her formula, is that the father's income for child-support purposes is $38,844.38 which attracts support for one child based on the Guideline Tables in the amount of $346 per month.
The Legislative Framework and General Legal Principles
[37] Section 16 of the Ontario Child Support Guidelines, O. Reg. 391/97 provides that a parent's annual income is determined using the sources of income set out under the heading "Total Income" in the T1 General form issued by the CRA and is adjusted in accordance with Schedule III of the Guidelines.
[38] Section 16 is silent regarding whether this determination is based on the parent's annual income in the past taxation year, the estimated annual income of the current year, or an estimate of probable future income. However, s. 2(3) of the Guidelines provides that, "[w]here, for the purposes of these Guidelines, any amount is determined on the basis of specified information, the most current information must be used."
[39] In Lavergne v. Lavergne, 2007 ABCA 169, 409 A.R. 57, 76 Alta. L.R. (4th) 47, 402 W.A.C. 57, 283 D.L.R. (4th) 390, 40 R.F.L. (6th) 239, [2007] A.J. No. 580, 2007 CarswellAlta 690, the Alberta Court of Appeal stated the following regarding the period in which the determination of annual income should be made:
[17] Looking at the words of the Guidelines in context indicates that, in most circumstances, the payor's current income is to be used to determine the amount of child support. The Guidelines do not state that the past year's income is the basis for calculating support. Section 16 could have, but does not, define annual income as income stated on the previous year's income tax return. Section 16 should be read together with s. 2(3) of the Guidelines which provides (emphasis added):
(3) Most current information. -- Where, for the purpose of these Guidelines, any amount is determined on the basis of specified information, the most current information must be used.
[18] Reading s. 16 with s. 2(3) directs that, for the Guidelines, the most current information about those sources must be used. A court following this directive would end up with an estimate of the payor's current annual income.
[40] Section 16 of the Guidelines is subject to sections 17 to 20 of the Guidelines.
[41] Section 17 provides that where section 16 is not a fair means to determine levels of support, income can be calculated by looking at the pattern in the past three years to determine "an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years."
[42] Both parents have an absolute responsibility to support their children to the extent that they are able to do so. Imputing income is one way for the Court to give effect to the joint and ongoing obligation of parents to support their children. Drygala v. Pauli, [2002] O.J. No. 3731; Stewart v. Turner, 2014 ONCJ 464; B. (G.T.) v. B. (Z.B.), 2014 ONCJ 382.
[43] Section 19(1) of the Guidelines permits the court to impute income. The subsections relevant to this case are:
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;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
(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;
19(2) Reasonableness of expenses. -- For the purpose of clause (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act (Canada).
[44] The court can impute such amount of income to a parent as it considers appropriate in the circumstances.
Analysis
Overview of the Problems with the Father's Proposed Methodology
[45] Counsel advocates the use of the approach outlined in sections 16 and, in the alternative, section 17 of the Guidelines to determine the father's income. Specifically, she suggests that the father's 2013 personal income be used to determine his child support obligation for 2013 and onwards. In the alternative, she asks that the Court consider the pattern of the father's income and expenses and apply a formula for which I know of no precedent.
[46] I reject both approaches suggested by counsel for a host of reasons, the key ones being as follows. First, section 2(3) of the Guidelines and the principles enunciated in Lavergne v. Lavergne, supra, are very clear – use the most current and specified information to determine the father's income. Here, I have evidence of the father's reported 2013 and 2014 income, as well as evidence of the business expenses and income he actually reported in 2013 and 2014. These are the two years for which he owes support. While it makes sense to consider using the father's reported income in 2013 to determine his child support obligation for 2013, it makes no sense to use his 2013 income to determine his 2014 or 2015 support obligation. Doing as counsel suggests would not ensure that Ameera benefits from the financial means of both of her parents as those means increase – a key objective of the Guidelines. [iv]
[47] Secondly, and more importantly, neither a determination of the father's income under section 16 nor 17 of the Guidelines leads to a fair means of determining the father's income and support obligation. Both of these sections are predicated on the presumption that the information about personal and business income and expenses is accurate and reliable. Both also assume that the payor is not underemployed and is, in fact, maximizing his income potential. For the reasons that follow, I have no confidence whatsoever that the father's reported personal income reflects all of the income available for child support purposes. I have also concluded that the father is intentionally underemployed. In these circumstances, the only fair and just way to determine the father's income and a fair, reasonable and just standard of support for Ameera, is to impute additional income to him pursuant to section 19 of the Guidelines. It is to my reasons for imputing the father with income pursuant to s. 19, rather than relying on the evidence of his reported income pursuant to ss. 16 and 17 of the Guidelines, to which I turn next.
Problems with the Evidence about Income and Business Expenses
[48] There are many problems with the father's disclosure and evidence about his personal and business income and expenses. First, the father had a legal obligation pursuant to section 21 of the Guidelines to provide various forms of income disclosure including proof of his year to date income. Similarly, this income disclosure is required pursuant to Rule 13 of the Family Law Rules. I have already discussed a number of ways in which the father did not comply with Rule 13 in the preparation of his sworn financial statement. It is important to highlight the fact that the father did not provide any disclosure with respect to his 2015 year to date income (which includes business income and expenses deducted). Given all of these issues, it is clear that the father did not fully comply with his legal duty to disclose pursuant to either the Guidelines or the Family Law Rules.
[49] Second, much of the information on his financial statement is simply not credible or believable. For example, in that statement:
a. He claims that his personal income in 2014 was $39,300. In that year his gross business income was about $74,000. In his financial statement he deposes that his current monthly income is $5,000 ($60,000 annually) but notes that this is his gross business income before the deduction of business expenses and taxes. Given that his income will be reduced by business expenses and as his current gross business income is projected to be about $14,000 less than his gross business income in 2014, it is safe to assume that his personal income for 2015 will be even less than $39,300. Elsewhere in the statement he deposes that his annual expenses/budget for living expenses is $41,880. As this amount does not include any amount for the income tax he will have to pay on his income, it is safe to assume that for 2015, his expenses will be higher than $41,880. It is simply not possible to pay personal expenses of $41,880 or more annually with less than, or only, $39,300 in before tax income. This leads me to conclude that either: the budget is overstated; the father has far less in business expenses than he reports to the CRA; or, he is earning far more than he has disclosed;
b. He indicates on this statement that he owns a home valued at $15,000 but which has attached to it, a mortgage for $145,000. This evidence is highly suspect as it is not usual that a mortgage would be $130,000 greater than the value of the property. Certainly, if this is the case, the father ought to have explained this anomaly;
c. In the property and debts portion of his financial statement he deposes that he owes about $22,000 in debt (mostly credit card debt and not including his mortgage), and that the monthly payment due on these debts is about $2,500 per month. Yet, in the monthly debt portion of his budget he claims he only pays $500 a month towards debts.
[50] Third, the percentage of business expenses to business income is very high. Without some explanation, this evidence is highly suspicious and not credible. For example, the father reduces the business portion of his income by deducting anywhere between 60.09% to 90.64% in business expenses. More specifically, the percentage is as follows for the years 2009 – 2014:
| Year | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|
| Percentage gross business income to business expenses | 60.09% | 71.3% | 74.84% | 90.64% | 87.62% | 86.46% |
[51] Fourth, the father failed to give any evidence about the business necessity of any of his claimed business expenses. Here are just three examples of how his evidence was deficient in this regard:
a. He provided no documentary evidence whatsoever to substantiate the individual business expenses claimed;
b. He provided no explanation for the inconsistency in the type of business expense claimed from year to year. For example, in 2013, he deducted amounts on account of expenses related to office, supplies and use of home, but no amounts in 2014 on account of these. In 2014, he deducted amounts on account of purchases made during the year, meals and entertainment, interest, insurance, and subcontract fees – all expenses not claimed in 2013;
c. He did not provide any evidence or documentation to prove the expenses are reasonable or necessary. What explanation he did give in his oral evidence – that he sometimes has to subcontract work to others because he is unavailable is inadequate.
[52] In the case of Dickey v. Morrel, [2011] O.J. No., Justice Sheilagh O'Connell comments extensively with respect to the obligations of a self-employed person seeking to reduce his income through the deduction of business expenses. At paragraphs 29 and 30 of the decision Justice O'Connell states:
A self-employed person clearly has the onus of demonstrating the basis of his or her net income for child support purposes. This includes demonstrating that the business deductions from gross income should not be taken into account in the calculation of income for support purposes. See Whelan v. O'Connor, 28 R.F.L. (6th) 433, [2006] O.J. No. 1660.
It is also well established in the case law that the self-employed person has an obligation to put forward adequate and comprehensive records of income and expenses, so that a proper determination of the amount of child support can be established. The onus rests on the parent seeking to deduct expenses from income to provide meaningful documentation supporting those deductions, failing which an adverse inference can be drawn. See Meade v. Meade, 31 R.F.L. (5th) 88, [2002] O.J. No. 3155 and Orser v. Grant (2000), 96 A.C.W.S. (3d) 644, [2000] O.J. No. 1429. As Justice Frances P. Kitely summarized in Meade v. Meade, supra:
[81] It is inherent in the circumstances of those who are self-employed or who have irregular income and expenses, that they have a positive obligation to put forward not only adequate, but comprehensive records of income and expenses. That does not mean audited statements. But it does mean a package from which the recipient spouse can draw conclusions and the amount of child support can be established. Where disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate or whose response to the obligation to produce is so unhelpful that cumbersome calculations and intensive and costly investigations or examinations are necessary.
[53] Using the standard of disclosure required in the Family Law Rules, and the Guidelines and in the jurisprudence, the father in this case has failed to provide comprehensive, or even adequate, financial disclosure and information with respect to his business income and expenses. This equally applies to his personal income, expenses and financial circumstances.
[54] There is simply no excuse for the father's failure to comply with his legal obligation to disclose. This matter first came before me on October 28, 2014. Eight months had gone by when the hearing was held as it had been adjourned four times, at the father's request. He has been represented by counsel throughout this entire period. Indeed, his lawyer sent a letter to the court for use by the father at court on October 28, 2014, indicating that she had been retained. The father requested an oral hearing and his counsel was present at the hearing, including when the father gave oral evidence. There was, thus, an opportunity for counsel to correct any deficiencies in the father's evidence through an examination of the father at the hearing itself. The father has had months and ample opportunity to comply with his legal obligation with respect to disclosure. He chose not to do so.
[55] I find therefore that the father has failed to provide income information when under a legal obligation to do so.
[56] The onus rests on the father, the parent seeking to deduct expenses from income, to provide meaningful documentation supporting those deductions. As he has failed to do so, an adverse inference can and should be drawn in favour of the mother, the person seeking support. The adverse inferences I draw are these:
a. The father unreasonably deducts expenses from income; and,
b. His net business income is not a fair representation of the actual disposable income that is available to the father from his business for personal expenses.
[57] For all of the forgoing reasons and in accordance with section 19(1)(f) and 19(1)(g) of the Guidelines, this is an appropriate case for this Court to impute income to the father.
Evidentiary Issues Related to the Father's Employment and Maximization of Income
[58] I rely and place significant weight on a document the father submitted into evidence entitled "Ontario Zone: Schedule of Wage Rate – Labour Program". It is for 2011. [v] The father's counsel submitted that this document shows the fair wage for electricians is $35.19 per hour which equates to about $67,565 annually. I note that this document also refers to this wage as the "Fair Wage". I heard no evidence to suggest that the father cannot earn a "fair wage" of $35.19 per hour or $67,565 annually. I heard no evidence to suggest that the father cannot work full time as an electrician and there was no suggestion that there is any shortage in this type of contract work or work that pays a "Fair Wage" for electricians. In fact, the evidence of the father is that work as an electrician is generally available all year round. In other words, his work is not seasonal. I, thus, find that the father is capable of earning at least $67,565 per year.
[59] The chart below illustrates, and I find, that the father is not earning the $67,565 annually that he is capable of earning. It illustrates the father's evidence about his personal income from self-employment as a Master Electrician over the past 6 years:
| Year | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|
| Net self-employment income | $29,780.28 | $11,464.12 | $6,947.36 | $4,097.88 | $5,720.00 | $5,685.00 |
[60] These findings lead to the conclusion that the father has, for over six years now, persisted in under-remunerative employment. For example, despite his qualification as a Master Electrician and his years of experience as an electrician, the father has earned significantly less than $67,565 annually from his work as an electrician. In fact, in all but 2014 his annual income from this work is significantly less than what an unskilled general labourer earning minimum wage could be expected to earn (between $19,000 and $23,000). Even in 2014, when he earned more than a minimum wage employee, his personal income as an electrician only marginally exceeded that of such individuals.
[61] The father did not submit evidence to show that he is making any attempt to maximize or increase his income. To the contrary, the evidence is that the father's failure to maximize his income potential is the result of a conscious choice that he has made, a voluntary decision on his part to reduce or live with a reduced income. He admitted to subcontracting work available to him to others. He also explained (when asked by the Court why he persists in under-remunerative self-employment rather than to go out and get a job earning $67,565), that he prefers to work for himself because it affords him more flexibility and control over his hours of work and workload. It also allows him to free up his time to do other things. The evidence thus establishes that the father has failed in his duty to actively seek out reasonable employment opportunities that will maximize his income potential so as to meet the needs of Ameera.
[62] I have considered and applied section 19(1)(a) of the Guidelines, the principles enunciated by Justice Pazaratz in Tillmanns v. Tillmanns, 2014 ONSC 6773, as well as the principles and three-part test the Ontario Court of Appeal directs be applied when considering imputing income under this section, as set out in the case of Drygala v. Pauli, supra. [vi]
[63] Based upon all of the foregoing, I find that the father is intentionally underemployed.
[64] The onus under section 19(1)(a) is on the father to provide sufficient evidence to satisfy the Court that circumstances existed or exist to justify his decision not to maximize his income potential and to earn less than what he is capable of earning– his underemployment. The father did not cite educational or medical needs as the reason for his failure to do so. He did, however, link his desire for flexibility and control over his hours and workload, to his desire to be available to spend more time with his second child and assisting with caregiving responsibilities such as picking the child up early from daycare. The father gave no meaningful or detailed evidence beyond that. For example, he did not give evidence about the child care arrangements for his second child or the division in his household of child-related responsibilities. He did not give any evidence about the needs or circumstances of the child that might necessitate the father maintaining flexible employment or reduced hours to fulfil his caregiving responsibilities. He gave no details about the employment circumstances of the child's mother or her availability and flexibility to assist in meeting the child's needs.
[65] With respect to his reasons for being intentionally underemployed, the father's evidence overall was either non-existent, lacked any detail, or failed to establish a real connection between his reasons, his ability to work and maximize income, and the needs of his 2nd child. None of the reasons he gave either singularly or collectively elevated his reasons above anything more than "desire". The father has not met his onus to show one of the exceptions of reasonableness apply and, as such, this Court is not satisfied that the father's intentional underemployment is justified under the legislation. It is appropriate pursuant to s. 19(1)(a) of the Guidelines to impute income to the father.
[66] Having come to the conclusion that this Court ought to exercise its discretion under sections 19(1)(a), (b) and (c) of the Guidelines to impute income to the father as a means of ensuring that the level of child support is reasonable, fair and just, I turn to the issue of what level of imputed income is appropriate in the circumstances.
What Amount of Income is Appropriate to Impute to the Father?
[67] I have made several adverse inferences in this case in favour of the mother and as well have found that the father is intentionally underemployed. These inferences and findings do not mean that the Court can arbitrarily allocate an imputed income to him. There must be an evidentiary basis for the income level to be imputed.
[68] 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 to determine an amount that is fair and reasonable.
[69] In reaching my conclusion, I also considered and find that this father is relatively young, about 44 years old (born July 3, 1971) and there is no evidence to suggest that his health is anything but good. He is also a highly-qualified and experienced electrician. He is a Master Electrician with, at minimum, over 6 years of experience.
[70] I have also considered the various ways to approach the issue. I considered first the option of adding back all of the father's business expenses to his Line 150 income in 2013 and 2014. This would mean adding back the following amounts to the father's personal income for 2013 and 2014:
- 2014 – $44,838.55
- 2013 – $28,480.10
[71] In 2014 and 2013 the father received income on account of the Child Tax Benefit for his child with his current partner. As this money is intended for the benefit of a second unrelated child, it is inappropriate to include this in the calculation of income to be imputed to him.
[72] The following chart sets out the father's income for support purposes after making the forgoing adjustments:
| Source of income | 2014 | 2013 |
|---|---|---|
| Employment income | $7,747.92 | $7,038.78 |
| Gross business income | $74,618.83 | $39,944.22 |
| Capital Gains | $22.10 | — |
| Total imputed income | $82,366.75 | $49,193 |
[73] I have rejected imputing the foregoing levels of income to the father for several reasons. First, $49,193 falls below the amount that I have found the father is capable of earning. Second, $82,366.75 may be too high as the father must have some legitimate business expense and imputing this amount makes no allowance for this.
[74] Third, the $82,366.75 would be added to his income from the hospital and thus, his income would be much closer to $90,000 annually. The problem with this is that if the father was to increase his business income, this would likely affect his flexibility and availability to continue on with shifts at the hospital.
[75] The fairest approach to set the level of the father's income for 2013, 2014 and onwards is to base the level of support solely upon the income level that the evidence is the minimum an electrician is capable of earning - the Fair Wage rate that electricians on the Federal Government Level Construction Contract list must be paid as a minimum regular hourly wage - $35.19 per hour or $67,565 per year.
[76] This is a fair and appropriate approach in setting the amount of income to impute to the father as it:
(i) Is based upon the father's own evidence about what a full time employed electrician earns annually - $67,565;
(ii) Recognizes that the father may lose some or all of his income from the hospital as a result of having to work increased hours of his business, and,
(iii) Is about $6,000 less than the $74,618.83 income I could have imputed to the father if I followed the alternate approach of adding back all of the business expenses deducted permitted under s. 19(1)(f). By imputing the lesser amount an allowance is made for the fact that the father will have some legitimate business expenses.
[77] For all of these reasons, I impute and find that the father's income for child support purposes is as follows:
a. 2015 - $67,656; b. 2014 – $67,656; and, c. 2013 – $67,656
WHAT IS THE GUIDELINE TABLE AMOUNT PAYABLE?
[78] The Guideline Table amount for one child based on a gross annual income of $67,565 is $618.
[79] The Stratford Court did not set a date for the commencement of child support. In Ontario, unless a party applies for a retroactive order (which does not appear to be the case here), it is the date when the application is made. All of the documents sent by the Stratford Court for this court to consider all show the date of August 12, 2013.
[80] The Respondent's evidence is that he paid the sum of $400 CDN per month until October 10, 2013, although the October 10, 2013 payment was returned to him. His evidence is that these payments were made through his TD Canada Trust account.
[81] The father produced bank records for certain months between October 1, 2008 and October 1, 2014. The only two entries for 2013 of $400 are $400 debited from his account on April 1, 2013 and $400 credited to his account on October 10, 2013. Based on this evidence, I conclude that the father ceased making payments regularly sometime before January 1, 2013 and paid nothing after April 1, 2013. I find that the father is not to receive any credit for payment from the date of the application onwards (August 12, 2013) as he made no such payments.
[82] Given the foregoing and the general presumption that the support order should start when proceedings are started I exercise my discretion to order that his child support payments of $618 per month begin on August 12, 2013, and continue on the 12th day of each month thereafter.
ADDITIONAL SUPPORT - SECTION 7 – NURSERY EXPENSE
The Applicant's Income for Section 7 Purposes
[83] As of August 2013, the mother was employed as an administrator/coordinator. She was employed on a temporary basis with London Probation Trust. Her evidence, which was unchallenged and therefore accepted by me, is that she receives £484 per week. I have no information about the mother's actual income in 2013 or thereafter, however.
The Nature of the Expense
[84] The mother's evidence is that as of August 8, 2013, she was paying £671.71 per month on account of nursery care fees, per week.
[85] The mother's evidence is that she receives £81.20 per month in child care benefits and £37.37 per week in Child Tax Credit. She also deposes that she was recently told she is not entitled to help with child care costs as her salary is over £28K and that, as a result, she now owes a significant amount on account of an overpayment of this assistance.
The Father's Position
[86] The father does not challenge the mother's evidence that nursery expense properly falls within s. 7(a) and are, thus, an expense to be shared.
[87] The father challenges the assumption that nursery expense continued after August 2013. Further, his counsel submits, even if the child continued to attend child care, the cost should have been much less starting in September 2013, as the child would have been in school full time by then and should only have required child care, if at all, on a part time basis - before and after school. He also questions whether child care costs have continued based on the mother's evidence that her employment is temporary.
[88] In support of his position that child care was either no longer required as of September 2013, or if it was, the cost reduced significantly as of that date, the father presented a print-out from a website that indicates that the compulsory age for children in England to attend school full time is 5. This document indicates that:
a. The age of nursery school children is between 4 – 5 years;
b. The age for primary school children is 4 – 5 years; and,
c. The school day start and end times in England are as early as 8:40 a.m. for primary age children (aged 5 – 11) until between 3:00 or 3:45 p.m.
Analysis
[89] The website print out that the father submitted as an exhibit to his affidavit is hearsay and it does not meet the threshold test of reliability as I heard no evidence as to the source of this information or the reliability of the information contained on the website page. It is thus, not admissible as evidence for the truth of its contents.
[90] The father's challenges are logical and are sufficient to raise a concern on the part of the Court about the reliability of the mother's evidence as it pertains to the nursery expense incurred after September 2013. The child in this case turned 5 in September 2013, approximately 1 month after the Provisional Order was made. As such, she may have begun attending school full time in September 2013 and, thus, would not have been enrolled in full-time daycare by September 2013. It may be that, due to the fact that she turned 5 in September, she did not start full-time school until September 2014. It may be that the mother's temporary employment ended sometime after August 2013. These are some of the questions raised. As the mother did not participate in the hearing before me, I have no direct way of obtaining the answers I need to decide this issue either on a temporary or financial basis.
[91] There are other reasons which lead me to conclude that I have insufficient information or evidence to decide this issue. Chief among these is that I cannot tell from the paperwork what the net or after-tax cost of child care is to the mother. This is problematic because subsection 7(3) of the Guidelines stipulates that the Court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense. In this case I cannot properly calculate the net cost of child care to be shared by the parties. I do not have copies of the mother's income tax returns and what evidence I do have about the tax credits and benefits is not clear or sufficient for me to determine the net cost of the child care/nursery expenses.
[92] As a result of the lack of information, I cannot determine the issue of the father's share of the nursery expenses at this time. This portion of the hearing will be adjourned with a request that this Court's direction to the designated authority to request more information and certain findings of fact.
WHAT ARE THE CHILD SUPPORT ARREARS AND HOW SHOULD THEY BE PAID?
[93] This order will automatically create child support arrears. I find that the arrears of child support for the period of August 12, 2013 through to and including September 25, 2015 shall be fixed at $16,068 ($618 x 26 months). I accept the father's evidence that he could not pay support for the child from October 10, 2013 onwards because he lost the ability to make the transfers from his account.
[94] The father asks that I set an arrears repayment schedule. I am not prepared to exercise my discretion in this way for these reasons:
a. The father's evidence about his ability to pay arrears is neither credible, trustworthy or reliable;
b. He has some savings (according to his financial statement, at least $2,000 in savings);
c. The father has had the benefit of not paying any support for well over 2 years. This is, in part, due to his requests for adjournments.
[95] In all the circumstances, I find that the father has the ability to pay the arrears. I am prepared to grant the Respondent some time to arrange his finances so that he can pay the arrears. For this reason, I have ordered that arrears of child support are to be paid in full on or before November 12, 2015.
COSTS
[96] The father seeks costs of these proceedings payable by the mother. I find that he is not entitled to costs. In reaching this conclusion, I have turned my mind to and considered the factors set out in Rule 2 and Rule 24 of the Family Law Rules.
[97] The father is not entitled to costs for these reasons:
a) To the extent that there is a successful party, it is the mother, not the father and so the presumption that the successful party is entitled to costs does not apply to the father's claim. The father has not put into evidence anything that would rebut this presumption;
b) The father's position in, and conduct of, the litigation has been unreasonable. He was less than candid and honest with the Court; delayed the timely disposition of these proceedings and, thus, the determination of what is an important issue for his daughter; and, has failed to comply with his disclosure obligations.
[98] In these circumstances the appropriate exercise of my discretion is to dismiss the father's claim for costs.
THE ORDER
[99] For all of the forgoing reasons a final order will go on the following terms:
The finding of the Stratford Court that the Respondent, Sean Nigel Francis is the biological father of the child, Ameera Francis, born September 12, 2008, and that he has an obligation to support this dependant by paying child support, is confirmed.
The Respondent shall pay the Applicant, child support for the child, Ameera Francis, born September 12, 2008, in the amount of $618 per month commencing on August 12, 2013 and continuing on the 12th day of each month thereafter. This is the Guideline Table amount for one child based upon an imputed annual income to the Respondent of $67,656;
The arrears of child support created by this order are fixed as at September 28, 2015 at $16,068 CDN. These arrears shall be paid in full on or before November 12, 2015;
The Respondent's claim for costs against the Applicant is dismissed.
The portion of this hearing which relates to the Applicant's claim for contribution from the Respondent towards nursery expenses is adjourned.
This Court directs the designated authority, pursuant to section 11(2) of the ISOA to request of the appropriate authority in the reciprocating jurisdiction to provide the following additional information:
a. What was the net annual cost (after application of tax benefits, credits, subsidies etc...) of the child's nursery in 2013 and 2014?
b. What is the projected or actual net nursery cost for the child for 2015?
c. Is the child continuing to attend at nursery full time? If not, when did full time attendance stop?
d. What was the Applicant's gross annual income in 2013, 2014?
e. What is the Applicant's actual or projected income for 2015?
Released: September 28, 2015
Signed: Justice Victoria Starr
Footnotes
[i] The Guidelines referred to by Justice S.B. Sherr and which apply in this case are the Ontario Child Support Guidelines, O. Reg. 391/97 (the "Guidelines"). In this case sections 3(1) and 3(3) of the Guidelines, set out the approach that Justice Sherr summarizes. It provides:
3(1) Presumptive rule Unless otherwise provided under these Guidelines, the amount of a child support order for children under the age of majority is
(a) the amount set out in the applicable table, according to the number of children under the age of majority to whom the order relates and the income of the spouse against whom the order is sought; and
(b) the amount, if any, determined under section 7.
3(3) Applicable table The applicable table is
(a) if the spouse against whom an order is sought resides in Canada
(i) the table for the province in which that spouse ordinarily resides at the time the application for the child support order, or for a variation order in respect of a child support order, is made or the amount is to be recalculated under section 25.1 of the Act.
[ii] The relevant portions of section 7 of the Guidelines are these:
7(1) Special or extraordinary expenses In an order for the support of a child, the court may, on the request of either parent or spouse or of an Applicant under section 33 of the Act, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child's best interests and the reasonableness of the expense in relation to the means of the parents or spouses and those of the child and to the spending pattern of the parents or spouses in respect of the child during cohabitation:
(a) child care expenses incurred as a result of the custodial parent's employment, illness, disability or education or training for employment;
…….. 7(2) Sharing of expense
The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the parents or spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.
7(3) Subsidies, tax deductions, etc.
Subject to subsection (4), in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.
7(4) Universal child care benefit
In determining the amount of an expense referred to in subsection (1), the court shall not take into account any universal child care benefit or any eligibility to claim that benefit.
[iii] The formula counsel proposed is:
Calculate the average of the father's gross business income for 2009, 2010, and 2011;
Calculate the average of the business expenses for 2009, 2010, and 2011;
Calculate the percentage that the average of the business expenses represents of the average business income;
Take the average percentage in c above and multiply that by the Respondent's business income in 2014;
Deduct from the father's business income in 2014, the result from (d) above;
Use the total from e as the father's net business income for support purposes.
[iv] See: Obodoechina v. Ayetor, [2013] O.J. No. 6066; [Lee v. Lee, 1998 CarswellNfld 222; Milford v. Catherwood, 2014 ONCJ 276.
[v] I admitted this document into evidence and rely upon it despite the fact that it is hearsay because it is from the Government of Canada website and I find it is thus credible and reliable, and, because it is necessary given the shortcomings in the father's evidence about what electricians can generally earn.
[vi] That test is:
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.