Court File and Parties

Court File No.: Brampton 33/04 Date: 2016-07-12 Ontario Court of Justice

Between: John Laing, Applicant

— And —

Visnja Hujic, Respondent

Before: Justice Philip J. Clay

Heard on: June 24, 2016

Reasons for Judgment released on: July 12, 2016

Counsel:

• The Applicant represented himself
• Mr. A. Bakaity, counsel for the Respondent

CLAY J.:

SUMMARY HEARING

PROCEDURAL BACKGROUND

[1] The Applicant father ("the father") brought a Motion to Change on October 26, 2014 seeking a change to the order of the Honourable Mr. Justice Dunn dated July 16, 2007. He sought to reduce the amount of child support that he was to pay for the child Hope Laing, born December 26, 2002. The Respondent mother ("mother") filed a Response to Motion to Change in which she sought a retroactive increase in table child support and arrears of s.7 expenses. The father filed an amended Motion to Change seeking a retroactive reduction in child support back to 2011.

[2] I made a temporary order on March 3, 2015 providing for further financial disclosure and I reduced the father's child support on a without prejudice basis. On June 11, 2015 this matter was set down for a summary hearing to be heard on October 16, 2015. That date was adjourned to March 4, 2016 and ultimately to June 24, 2016. Filing deadlines were set.

ISSUES

(1) Was there a material change in circumstances since the final order?

(2) What was the father's income for child support purposes?

(3) Should there be a retroactive adjustment of table child support?

(4) Should there be an order for the payment of s.7 expenses?

THE EVIDENCE

[3] All of the sworn evidence in the Motion to Change Continuing Record was evidence for this hearing.

(1) Material change in circumstances

[4] At the time of the consent final court order of July 16, 2007 the father was found to have an annual income of $94,553.82. He was required to pay child support for the said child in the amount of $834 per month beginning March 26, 2007. The father paid this support until August 26, 2013 when he unilaterally reduced his child support payment to $300 a month effective September 26, 2013.

[5] The father stated that there had been a material change in circumstances in 2011. In his affidavit of September 24, 2015 he set out his recent work history. He had been working for a corporation, Egan Laing Inc., where he was also a shareholder and director. The father alleged that the president of the company, who was his cousin, stopped paying him on a regular basis in 2011 and that the said president engaged in "nefarious practices." The father said that throughout 2011 he was only paid sporadically by the company which had declining business but that he continued to pay the correct amount of child support by accessing credit and ultimately re-mortgaging his house. While his salary resumed in 2012 the company's problems deepened when the president was caught manipulating his uncle's estate. On August 1, 2013 the father was terminated from the position that he had held for 33 years. By January 1, 2014 there were no employees left at the company. In 2015 the company filed for bankruptcy. The father said that the pension was underfunded but he ultimately received a lump sum settlement which he had placed into an annuity that paid him $2,400 a month.

[6] The father stated that he told the mother of his financial difficulties when he reduced the child support from $834 per month to $300 a month. The mother recalled him saying that he simply was taking a vacation from his job. The mother understandably required some disclosure about the circumstances of the father's job loss due to the fact that the father had been a director of this company which had been started by his family. By the time of the hearing the mother had accepted that the father had not engineered his own retirement but that the company had been run into the ground and was bankrupt.

[7] The father took the position that the real material change in circumstances occurred in 2011 when he was underpaid and was not earning enough to pay the ordered child support. He was granted to leave to amend his pleadings. By the time of the hearing the father did not seek a readjustment of child support back to 2011. He simply wanted to refer to the fact that throughout that year he had paid more child support than he could afford on his income. He wanted the court to take that into consideration when considering the mother's request for a retroactive increase in child support back to 2012.

[8] The mother effectively conceded that a material change in circumstances had occurred on August 1, 2013 when the father was terminated from his employment.

(2) Father's income

[9] The father said that he was prepared to pay child support on the amount that he actually earned in the years since he lost his job. At that time the father was 61.75 years old. The company took the position that the father was fired for cause in the Record of Employment. The father was able to obtain a decision from the Ontario Ministry of Labour on August 21, 2014 that held that he was entitled to unpaid wages and from that he was entitled to Employment Insurance. He collected E.I. The father said that he looked for work when on E.I. as all claimants are required to do but he provided no details of his job search. The father spent time pursuing his pension entitlement. Finally in September 2014 the sum of $490,172.86 was transferred into registered instruments with Investor's Group. The father filed that firm's letter of April 23, 2015. It confirmed that the father's income stream from his investments was $28,800 annually. The firm advised that there may be additional assets of approximately $150,000 recovered from Egan-Laing's company pension plan and this was the subject of litigation in Quebec. The father's financial statement of September 24, 2015 set out investment income of $2,400 a month and Canada Pension Plan income of $745.91 monthly for a total annual income of $37,750.92. The Child Support Guidelines mandate a payment of $334 per month on this income. This is the amount that the father was prepared to pay on an ongoing basis.

[10] The mother's position set out in her affidavit of February 28, 2016 was that the father made a decision to have a child later in life. Hope was only 10 years old in August 2013 when the father lost his job. She said that he had an obligation to look for alternate employment. She noted that he had long experience in the business world and a "commendable" resume and skills. Instead of looking for work the father made the voluntary decision to retire in 2013. He then unilaterally reduced his child support based upon this life choice. She said the father was in good health and he had raised no impediments to his ability to work. Her affidavit stated that it was not reasonable for the father to retire at age 61 without even looking for other work. She said that given his income history and his skills and abilities that the father's income should be imputed to be $60,000 a year.

[11] Mr. Bakaity said at the hearing that $65,000 was a fair imputation as in effect this was simply adding a minimum wage income of $23,400 to the father's existing pension income of $37,750 (though those amounts actually add up to $61,150).

(3) Table child support arrears

[12] Mr. Bakaity said that the father had not produced income tax returns despite the requirement under the 2007 order that he do so and despite the mother's requests for same. The father said that the mother also did not produce income tax returns as required by the order.

[13] The mother's affidavit included a table of child support arrears from 2012 forward based upon what the father should have paid on his actual income. It showed arrears of $1,272. It does not use an imputed income for 2014 and 2015 just the actual income. Mr. Bakaity's submissions invited the court to use the actual income for 2012 and 2013 and the imputed income thereafter. No actual arrears figure was provided if that approach was to be taken.

[14] The father noted that in 2011 he only earned $11,150.00 from his employment a figure confirmed by his Notice of Assessment. The mother contests this number and states that an e-mail to her from the company president supports her view that the father was compensated in ways that do not appear on his Notice of Assessment. The father states that he overpaid child support in 2011 but will not seek a credit. He simply wanted the court to find that he had met all of his table child support obligations to September 2013 notwithstanding the very low income that year.

(4) s. 7 expenses

[15] Neither party provided proof of income from the date of the order until the date of the Motion to Change.

[16] The mother prepared a chart in her affidavit which set out the s. 7 costs that she was claiming. They were Oxford Learning Centre for math tutoring and Walter's Music Studio. There was a second chart with the calculation of the father's proportionate share based upon the actual income for the 2012 -2015 years of both parties. Based upon this information the mother claimed s. 7 arrears in the amount of $2,171.88.

[17] The father stated that the mother did not provide him with any information about the child's tutoring with Oxford. He said that Hope did not really require it and he was certainly capable of helping her with her homework during the significant amount of time that he had with his daughter pursuant to the parties' time sharing schedule. The father was aware that his daughter was obtaining tutoring but he stated that he was not asked for his consent and he was not provided with any invoices until the mother's Response was filed. Mr. Bakaity noted that tutoring was an educational expense that was covered by paragraph 14 a) of the order such that no further consent was required. There was no consent for the music which cost a total of $330 in 2014 and $900 in 2015 but was not an ongoing cost in 2016.

ANALYSIS

Material Change

[18] I find that there was a material change in circumstances in this matter on August 1, 2013 when the father was terminated from his employment.

[19] The father requested that the court find that he only earned $11,150 in 2011 and that his continued payment of $834 in child support throughout that year should be taken into account in the determination of any child support arrears. I find that the mother has not established that the father received cash income or some other means of compensation to top up his actual income that year. The e-mail exchange that she had with the company president only stated that if the father paid the correct child support and was not claiming a reduction for 2012 then it did not matter what he earned in 2011. I do not take that to be any proof that the father asked the company to reduce his income in 2011 in order that he could pay less child support. I find the father's statements as to what actually occurred to be credible. The company was in financial trouble in 2011 and it could well be that his income was slashed. In 2012 his income went back up again but it fell in 2013 when he lost his job.

[20] The father did not begin this Motion to Change until October 28, 2014. He did not ask for a reduction in child support due to 2011 income. In fact he had not told the mother of his 2011 income prior to the disclosure process in this motion. It made no sense for him to ask his employer to pay him "off the books" if he was not going to rely on the reduced income. The father only brought his Amended Motion to Change when he wanted to refer to 2011 income as a factor in the court's approach to arrears and Mr. Bakaity strenuously objected to any reference to an income year that pre-dated the request for an adjustment. I find that to the extent that Mr. Bakaity argued that the father ignored his obligations to his daughter I can look at his consistent payment of court ordered child support to August 2013 as evidence of his intention to comply with the court order notwithstanding his actual income. In 2011 that meant an overpayment on actual income but in 2012 and 2013 it meant an underpayment on actual income.

Father's income

[21] An examination of the entire history of the father's last years with Egan-Laing Inc. made it clear that the father was not at fault for the loss of his job. In fact the circumstances in which that family company fell apart are somewhat complex and are still the subject of litigation in Quebec. There was no doubt that the father had more issues to deal with than are usually the case when a person loses a job. He had to fight for his right to E.I. and to his pension. I accept that when the father was on E.I. he did complete the appropriate documents showing that he was looking for work and he may well have sent out resumes. However I am also persuaded by the evidence that the father did not embark upon a serious and prolonged effort to find other work. He did not try to become a business consultant or to seek any other full or part-time work for which an active, very experienced former business executive might well have been qualified.

[22] Mr. Bakaity argued that as he then had a 10 year old child, the father had an obligation to work and maximize his income. He relied upon the decision of the Ontario Court of Appeal in Beck v. Beckett, 4 R.F.L. (7th) 48. In that case a 53 year old high school educated auto worker took a package from General Motors to preserve his pension. The court found that it was not realistic to find that he could find other work in which he could make the $73,000 that he made at GM but that a minimum wage income should be added to his pension income. That brought him up to $61,528 per year.

[23] In Beck the payor was 53 whereas the father here was over 61 years old. In her affidavit the mother conceded that the father should not be required to work to a "very old age." In court it was noted that if the father worked until Hope attained the age of 18 years he would be 69 years of age. Mr. Bakaity said that employment income should be imputed to at least that age.

[24] In his reply affidavit of April 2, 2016 the father referred to the decision of the Honourable Mr. Justice Nolan in the Superior Court of Justice in case of Dishman v. Dishman, 2010 ONSC 5239, 94 R.F.L. (6th) 217. This matter had similar facts to Beck in that it involved a GM worker taking an early retirement with a package at age 52.5. However, it is otherwise distinguishable from Beck. In Dishman the recipient mother consented to reduced child support based upon retirement income and the issues were whether or not spousal support should be terminated and the interaction between pension retirement estimates and actual retirement. I find the Beck case to be more on point with this case and it is of course a decision of the highest court in the province.

[25] The father argued that he was 61.75 years old when he lost his job of 33 years. He contended that it was reasonable for him to retire at that time. He said that when the parties had a child when he was 51 years old it was foreseeable that he would retire before she became an adult. He did not intend to retire at the age that he did but circumstances left him without a job when he was at an age where finding another good job was not feasible. He noted that he spent a lot of time with his daughter and provided for her financial needs directly quite often. He mentioned that he took over full responsibility for paying for her dental care some 4.5 years before.

[26] It is interesting that Mr. Bakaity argued for an imputation of income to $60,000 per year in the same affidavit that included a chart using the father's actual income of $31,837 in 2014 and $37,613 in 2013 to calculate arrears. It may be that counsel was just trying to be fair in the arrears determination as he also included the high incomes of $101,218 for 2012 and $80,735 for 2013. However, this does leave the court in a bit of a quandary. One would think that the father's best chance of securing a new job would have been in 2013 and 2014 as he had very recent work experience and he was still in his early sixties. Nevertheless it appears from the charts that the imputation of income should not begin until the 2016 year.

[27] Ultimately though Mr. Bakaity did submit that the court should:

(a) keep the child support at $834 as per the order (on income of $94,553.82) if no material change could be found; or

(b) impute something over $60,000 for a period of time.

[28] I find that notwithstanding the significant age difference between Mr. Best and the father here that the reasoning in Beck should apply. When the father lost his job he was in good health and he had a 10 year old child. His decision to retire reduced his income in half. The nature of his work experience was such that he could find work that was not physically demanding. He did not even attempt to get a part-time consulting job. The evidence was that the father did not want to leave his job. He was upset with what had happened to a company that he expected to work for until the end of his working years. There was no evidence as to when he planned to retire if he had not lost his job. It is reasonable to conclude that given that he was healthy and very active, that he had a 10 year old daughter, and that he was subject to a court order to support his daughter's post-secondary education, that his retirement would not have occurred until his daughter was at least 18 years old.

[29] I note also that the father's investment income of $2,400 a month was discretionary. He had over $490,000 in registered assets and he and his financial planner chose to purchase an annuity that paid him $2,400 a month. In order to more properly provide support for his daughter, the father could have made his "pension income" higher during her dependency. He had an obligation to maximize his earning capacity. If he thought it was not reasonable to look for work he could have increased his pension. I can only assume that some actuarial calculation was made and the father's income needs in retirement were factored in. Those needs should have included a higher amount for child support than the $300 per month that the father was paying.

[30] I find that I should impute income to the father. However, I am not persuaded that it should be as much as a fulltime minimum wage income. I find that the sum of $10,000 per year should be added to the father's retirement income. I find that at this stage of his life the father should not be expected to work fulltime in a totally new job. However, with his business experience he could find some sources of income in consulting or some home based business that could generate $10,000 in income annually. I therefore find that the father should be imputed to have an income of $47,750.

[31] I also find that as the income imputation is based upon the father working that it should end at a time when the father might reasonably have retired if had the ability to leave his job at a time of his choosing. Given that he had a child later in life and that all of the evidence showed the father to be a careful planner I find that he would not have retired until Hope attained the age of 18 years which is December 26, 2020. At that time the father will be nearly 69 years old. After that table child support should be based upon his retirement income only.

Table Child support

[32] I find that the father should pay the table amount of $431 per month on the imputed income.

[33] The next question was when the new amount should begin. There was an argument to be made that it should have been when the father's E.I. ran out and he had to make a decision about finding employment or retiring. His E.I. statement showed that he was paid benefits until September 6, 2014. He could not retire until he received his pension pay out which the transfer documents to Investor's Group showed was on September 5, 2014. I would attribute a reasonable amount of time for the father to make his decision and determine his annuity payments, if any. If not for other considerations the new amount of child support should begin January 1, 2015.

[34] There are other considerations though. The first is that father has shown that he met his child support obligations throughout 2011 when he only had an income of $11,015. I accepted his sworn statements that he paid child support by going into debt. Although this drastic income drop seems very unusual there were very unusual developments in the company in and around this time and the company went bankrupt less than four years later and was still in litigation.

[35] The second consideration is that counsel was asked to calculate the arrears for this summary hearing and in so doing the actual income of $37,613 was used for 2015. The father filed a reply affidavit to the chart in the mother's affidavit. I find it would be unfair at this point to add to the father's 2015 income.

[36] I find that the new amount of child support of $431 per month should begin on January 1, 2016.

Child support arrears

[37] For the above noted reasons I accept the calculation of the table child support arrears as set out in the mother's affidavit at $1,272 as at December 31, 2015.

Section 7 expenses

[38] Neither party complied with the terms of the final order with respect to s.7 expenses. They were supposed to exchange income tax returns so that the proportionate share could be determined. They did not. The evidence was that the mother enrolled the child in tutoring and music without any consultation with the father (though he was certainly aware of it at the time and there is no record of any objection to the activities being made). The father's affidavit stated that he paid for many s.7 costs such as dental (it was not clear if he had a plan at the time) snowboarding lessons, swimming lessons, and summer camp. No details were provided and the mother had no chance to respond to this assertion made in his reply affidavit.

[39] The final order contained detailed wording with respect to s.7 expenses. The relevant paragraphs are:

14. The parties will contribute proportionally to their incomes to any special or extra-ordinary expenses incurred by either party for the child. The parties agree that the following expenses, if incurred shall qualify for treatment as special or extraordinary expenses:

a) Education related costs exceeding $50;

b) Health related costs exceeding $50, not covered by either party's extended medical coverage;

c) Dental related costs exceeding $50 not covered by either party's extended dental coverage; and

d) Post-secondary education costs.

15. The Respondent shall provide documentary proof of the above agreed upon special or extra-ordinary expenses she incurs on behalf of the child and the Applicant shall pay his share within 7 days. The parties shall share extracurricular expense as can be agreed upon by the parties, in proportion to their incomes.

[40] The parties will be held to the consent order that they made. I find that the father was well aware of the tutoring and while he might not have been provided with an invoice in a timely manner, as he should have been, he was bound by the order to pay for educational expenses over $50. The mother's chart shows the father's proportionate share of tutoring to be $1,056 in 2013 and $801.36 in 2014. There were no tutoring costs for 2015 and 2016.

[41] I will not order payment of the music costs. Unlike tutoring there was no advance consent for this. The mother had to approach the father and to provide him with details. Her failure to do so means that she did not comply with the order and no retroactive payment will be made. It is to be noted that the costs that the father stated that he incurred without notifying the mother are also not the subject of reimbursement.

[42] The total cost for retroactive s.7 expenses is $1,857.35 ($1,056.00 + $801.35).

[43] The new proportionate contribution does not need to be in the order that follows these reasons as it will change every year after proper disclosure in accordance with the final order. However, as I have imputed income I note that father's income in 2016 is $47,750 and the mother's 2015 income was $49,800 so the father's proportionate share becomes 49%.

COSTS

[44] There was divided success in this Motion to Change. I note the following:

(a) the father did have his child support reduced but not to his actual income;

(b) the mother did have income imputed but it was at least $13,000 per year less than she requested and the imputation of income will only be for five years;

(c) The s.7 costs awarded were less than the amount sought;

(d) The child support arrears were as sought by the mother; and

(e) Both parties co-operated with disclosure and the organization of a summary hearing to reduce costs.

[45] I am concerned though that the father unilaterally reduced child support payments from $834 per month to $300 a month in September 2013 without so much as providing the mother with a written explanation (or if there was one it was not filed). The father did not file his Motion to Change, until October 26, 2014, a full year after his unilateral action. When he finally brought the matter to court he had yet to produce his 2014 Notice of Assessment.

[46] I find that this court must send a message to payors who take unilateral steps to reduce support payments. The mother in this case was entitled to the child support pursuant to the final order until another order was made reducing it. That finally happened on March 3, 2015 on a without prejudice basis. The mother did not receive proper disclosure in a timely way until it was ordered by the court. That should not have been necessary. I find that the mother should receive costs fixed in the amount of $2,500 for her counsel's time in obtaining the proper disclosure to make an informed decision as to whether there should be a change to the child support amount.

ORDER

[47] The final order of the Honourable Mr. Justice P.W. Dunn dated July 16, 2007 shall be amended where inconsistent with the terms of this order.

(1) a) The Applicant father shall pay to the Respondent mother for the support of the child Hope Laing, born December 26, 2002, the amount of $431.00 per month beginning January 1, 2016 and ending on December 31, 2020; and

b) This support is based upon the Respondent father's imputed income of $47,750.00.

(2) a) Beginning January 1, 2021 the Respondent father shall pay to the Applicant mother for the then adult child support based upon the income disclosed in his 2019 Notice of Assessment;

b) The terms of the said final order shall apply with respect to the exchange of income tax information; and

c) After contacting the Applicant father, the Respondent mother shall inform the Family Responsibility Office of the father's 2019 income and the CSG table child support amount if the said child is still eligible for support and the F.R.O. will adjust their records to the new amount and advise the father accordingly.

(3) a) The arrears of table child support as at December 31, 2015 shall be reduced to $1,272.00;

b) The arrears of s.7 expenses as at December 31, 2015 are fixed at $1,857.35; and

c) The Respondent father shall pay the total arrears of $3,129.35 at the rate of $150.00 per month beginning September 1, 2016 and payable on the first day of each and every month until fully paid.

(4) The Applicant father shall pay to the Respondent mother her costs of this Motion to Change fixed in the amount of $2,500.00.

(5) Mr. Bakaity shall take out this order without approval of the draft by the Applicant father.

Released: July 12, 2016

Justice P.J. Clay