Court File and Parties

Ontario Court of Justice

Date: October 20, 2016

Court File No.: Toronto DFO 13 10398

Between:

Sylvester Witter Applicant

— And —

Jeneka Gong Respondent

Before: Justice E. B. Murray

Heard: September 28, 2016

Reasons for Judgment Released: October 20, 2016

Counsel:

• Mr. Sylvester Witter — on his own behalf
• Ms. Jeneka Gong — on her own behalf

MURRAY, E. B. J.:

Introduction

[1] Sylvester Witter and Jeneka Gong are the parents of one child, T., born September 14, 2010. The parties separated in July 2012, and Witter commenced an action in May 2013. Both parties had lawyers. The litigation was acrimonious.

[2] A major issue of dispute concerned Sylvester's Guideline income. Sylvester was a self-employed IT specialist, who conducted business through a solely-owned corporation, S2 Consultants, in which he was the only employee. Sylvester's position was that his Guideline income was $84,374, the amount he had declared in his tax return in 2014. Jeneka's position was that Sylvester unreasonably deducts personal expenses from gross income, and that when those expenses are added back, his Guideline income was in excess of $120,000 annually.

[3] The parties resolved this issue in a consent providing that child support should be based on an imputed annual income of $96,000, and provided further that:

• Sylvester pay child support of $848 monthly based on this income;
• Sylvester pay a lump sum of $5,000 to satisfy Jeneka's claims for retroactive child support and spousal support by paying 5 payments of $1,000 commencing February 1, 2016;
• Sylvester pay $25 monthly towards arrears of periodic support which have accrued;
• Sylvester pay 60% of the child's s. 7 expenses;
• "Child support shall be non-variable before November 4, 2017".

[4] The parties' settlement was approved by the court in an order made on November 4, 2015.

[5] In a motion commenced just 6 months after that settlement, Sylvester seeks to change the support order, alleging a material change in his circumstances affecting his ability to pay.

[6] Sylvester asks for an order:

1. Reducing the table amount of support he is obligated to pay to $428.70 monthly, based on his stated annual income of $47,500, retroactive to January 1, 2016;
2. Varying the lump sum he is obligated to pay to provide that he pay only $50 monthly;
3. Providing that he pay 46% of the child's s. 7 expenses, retroactive to January 1, 2016.

[7] Jeneka opposes Sylvester's motion. She submits that Sylvester has not demonstrated a material change justifying a reduction in his support obligation. She says that any temporary restriction on Sylvester's mobility does not significantly impact his ability to work as an IT consultant. Further, she says that Sylvester's disclosure is insufficient, and, in any event, his Guideline income is likely in excess of the $96,000 previously imputed to him.

[8] Jeneka, however, raises as a preliminary issue whether the order providing that child support is non-variable before November 4, 2017 precludes Sylvester from bringing a motion to change before that date. Jeneka argues that it does, and moves that Sylvester's motion be dismissed. Sylvester submits that it does not, arguing that no agreement between the parties can take away a party's right to claim a variation based on a material change in circumstances.

[9] Each party was self-represented on this motion.

The Law

[10] The Family Law Act provides that a court may change an order for child support if there has been a material change in circumstances within the meaning of the child support guidelines.

[11] Long-standing caselaw rooted in the Supreme Court of Canada case of Willick v. Willick, (1994) 3 S.C.R. 70, establishes that to ground a change in a support order, a change must be "material". "Material" means a change which "if known at the time, would likely have resulted in different terms".

[12] To be "material", a change must be "substantial" and have "some degree of continuity, and not merely be a temporary set of circumstances".

[13] The onus is on the party seeking to change the order to establish the existence of a material change in circumstances.

[14] Post-Willick, courts usually inquired whether a change that occurred after the order sought to be varied was "foreseen" or "foreseeable", finding that if it was, that the change could not be the basis for a variation. Recently, in L.M.P. v. L.S. (2011) SCC 64, the Supreme Court dealt again with the proper approach to be taken when determining what will constitute a material change of circumstances in motions to vary a final consent support order. The court emphasized that in every case the court was required to "examine the terms of the (original) order and the circumstances of the parties at the time that order was entered into to determine what amounts to a material change". The court held that if a possible change was taken into account by the parties at the time the order was consented to, then it cannot be the basis of a motion to change. The court observed that parties may choose to set out certain circumstances that will or will not give rise to a variation, and that "even significant changes may not be material for the purposes of (a variation motion) if they were actually contemplated by the parties by the terms of the order at the time of the order".

[15] If the parties consent to an order providing that a support obligation is "non-variable", is a party precluded from making a motion to change that support order?

[16] Different courts have given different answers to this question. The analysis always starts from the premise that the original order has been reviewed and approved by a court, and is correct in law. A court asked to vary a non-variable order may or may not allow the motion to proceed. However, the fact of the parties' past consent to non-variability will inform the court's assessment of what changes were in their contemplation at the time of the order.

Case Law on Non-Variability Clauses

Shedden v. Shedden, 2012 ONSC 3980

In Shedden v. Shedden, 2012 ONSC 3980, Justice McGee considered a motion to change a non-variable, non-reviewable order for spousal support brought by a former spouse on the grounds of his former wife's remarriage to her long-term boyfriend. The court dismissed the motion, holding as a matter of law that "a final order that the parties agree is to be non-reviewable, non-variable and not subject to a change in circumstances does not permit a variation ….by either party".

Harris v. Harris

In Harris v. Harris, 135 O.A.C. 312, the Ontario Court of Appeal considered a motion brought by a former husband to change a spousal support order made on consent which was non-variable for 30 years. Harris had owned a successful construction business 9 years prior when the order was made; his income had since plummeted. Harris argued that the order was premised on his ability to continue active employment, saying that he could not be expected to pay support after he was no longer able to work. Mrs. Harris opposed the motion, saying that Harris had no right to request a variation, given that the order provided that it was non-variable within a 30 year period. She submitted that she had believed at the time of the order that Harris's assets and income were substantially greater than he admitted, and she had given up her right to full financial disclosure in exchange for security of support for 30 years.

The trial judge dismissed the husband's motion, finding that he was an astute businessman who had the benefit of expert legal advice, that he knew what he was doing when he signed the minutes, and that he should be held to his bargain.

The Court of Appeal upheld the trial judge, saying that the possibility of swings in the economy and the possibility of inability to work because of increasing age were "foreseeable circumstances that must have occurred to him", and that he must have been satisfied that he had the means to comply with the order even if he was not working. The court found that it was open to the trial judge to find that there was no material change.

Adams v. Mustard, (2002) O.J. 3363 (Sup. Ct.)

In Adams v. Mustard, (2002) O.J. 3363 (Sup. Ct.), Justice Mazza considered a motion to change a non-variable consent order for child and spousal support brought by Mr. Adams. Adams was a securities trader who was under investigation by the Securities Commission at the time of the order. After the order was made, the Commission suspended his license. Adams argued that although he had contemplated the possibility of certain penalties being imposed by the Commission, a suspension was an extreme outcome that he could not have reasonably anticipated. Ms. Mustard argued that he was barred from bringing a motion to change because the order was non-variable.

Justice Mazza held that a "non-variable order" did not bar a party from seeking such relief. He observed that the statute granted the court power to hear such motions, and that a party has a fundamental right of access to the court. Justice Mazza found, however, that the "materiality" of the change should be determined based not on Adams' subjective view of what might occur in the future, but on an objective assessment of the possibility that his license could be suspended. Justice Mazza stated that assessment of the foreseeability of a change simply from the moving party's point of view would undermine the compromises that the parties had made in arriving at their agreement, and would be inequitable to the mother. He dismissed the application, finding that Adams had failed to establish a material change.

Serafini v. Serafini, 2015 ONSC 3391

In Serafini v. Serafini, 2015 ONSC 3391 (Sup. Ct.), Justice Kitely dealt with a motion by a father to reduce his support obligation contained in a consent order, made within a year of the order. The order provided that the support payable was non-variable for three years, unless the father's income fell by 20% or more. Justice Kitely, relying on the terms of the consent, found that the father's income had been reduced by more than 20% and reduced his support obligation.

[17] There is an implicit assumption in the reasoning of the courts in these cases: that parties who have agreed to a non-variable support order approved by the court have contemplated that the payor's income may go up or down in the future, and that that fluctuation will not result in a change in support—except as provided for in the order.

The Facts of This Case

[18] Sylvester submits two events as constituting a material change that should allow him to obtain a reduction in his support obligation.

1. S2's contract with Universal Support Systems was terminated on December 16, 2015, due to a "directional change" by their client, Shoppers Drug Mart.

2. Sylvester injured his knee while playing basketball on December 17, 2016. He had day surgery, and went to weekly physiotherapy appointments thereafter. The injury was initially painful, and restricted his ability to sit or stand for long periods. Sylvester's condition improved sufficiently to allow him to return to work at TARM Group in March, 2016. There are still limitations on his ability to sit and stand for long periods, and he has continued some physiotherapy. Sylvester says his income from his engagement with TARM Group is $60,000 annually, but that because he had no income in January and February, his income this year will be only $47,500.

[19] Jeneka questions whether the letter that Sylvester produced from TARM purporting to confirm his employment is real, or whether it is a smokescreen for other more profitable work being done by Sylvester. She points out that the letter is not on a letterhead and references a post office box in Sylvester's neighborhood as an address. She has done a corporate search and says that there is no such company as the TARM Group.

[20] There is a lack of clarity as to Sylvester's relationship with TARM. The letter purportedly from TARM says that he is employed full-time and working "remotely and in-office". In his submissions before me, Sylvester stated that he was working part-time; that he did not know who owned or directed TARM; and that he did not know where the TARM office was located, having never been there.

[21] There is evidence suggesting that Sylvester has income not declared by him in his sworn financial statement.

• In Sylvester's submissions, in reply to an allegation made by Jeneka, Sylvester admitted that he is renting out the condo owned by him, and that he and his wife have recently moved to a larger unit in the Distillery District. There is no evidence as to the rental income he receives and the costs of the new unit.

• Bank records from S2 show that Sylvester received payments of $18,950 from Universal Support Systems in February 2016, 2 months after the contract with S2 was terminated. Sylvester did not explain these payments. This raises a question as to whether Sylvester is receiving professional income from sources other than TARM, sources which he has not declared.

[22] Further, Sylvester did not produce tax returns for S2, as required by the Guidelines. The financial statement of the company for December 31, 2015, indicates two entries which raise the question of whether Sylvester is accessing or is able to access funds which should be included in his Guideline income:

• over $50,000 "due from Director" is shown as a company asset;
• over $25,000 is shown as "retained earnings".

[23] Comparing Sylvester's financial statement sworn in the prior litigation and the financial statement sworn in support of the motion to change, it is also apparent that Sylvester has increased his spending considerably. He now spends approximately $1,400 more monthly than he was spending during the prior litigation. New expenses include payments for a leased car of over $600 monthly.

[24] Sylvester retains the significant assets he owned before the November 4, 2015 order—his condominium in the Distillery District in Toronto, and an RRSP of approximately $20,000.

[25] Sylvester testified that he has significant debt which impedes his ability to make the support payments agreed upon. There is, however, no evidence that there has been a significant increase in debt since the order of November 4, 2015 (although Sylvester did file notices indicating that he is behind in servicing some of this debt). Some of the debt Sylvester specifically complains of (e.g., his legal fees for the prior litigation with Jeneka, fees he paid for the Montessori school which he insisted T. should attend) was clearly incurred before the order was made.

Analysis

[26] Sylvester has not established what in the circumstances of this case constitute a material change in circumstances that would permit a review of his child support obligation before November 4, 2017.

[27] When the parties executed their consent to the November 4, 2015 order, each had the benefit of independent legal advice from experienced counsel.

[28] They limited the period of non-variability to two years. It would have been open to them to place further limits on the non-variability condition, such as allowing a variation if Sylvester's income increased or decreased by more than a certain percentage; they did not do so.

[29] I assume that each party intended to honor the agreement and comply with the order when it was entered into. That being so, the parties must have contemplated the possibility that there could be an increase or decrease in Sylvester's income over the 2 year period in question. Sylvester himself, as an experienced self-employed IT professional, would have been aware of the possibility that a contract could be terminated, and that it could take time to secure a new contract.

[30] Sylvester would also have been aware that if he enjoyed greater financial success during that period, that he was protected from motions by Jeneka asking for an increase.

[31] Each party valued certainty over the possibility of some short-term benefit or loss.

[32] I find that it was within Sylvester's contemplation that he might, over the two year period in question, be obligated to pay child support at a level that exceeds the amount indicated by his income. Accepting Sylvester's evidence about his reduced income, that is what has come to pass. He cannot now say that this circumstance was not within his contemplation. Based on the evidence before me, I find that Sylvester's current projected annual income for 2016 appears to be at least approximately $66,000 ($47,500 from TARM, plus the $18,950 received in February from Universal). This is approximately 20% less than the $84,374 that Sylvester says he earned in 2015.

[33] In my view, it does not matter whether the temporary dip in his income has been caused by short term restrictions on his functioning stemming from his basketball injury, or by delays in his obtaining a new contract. Sylvester cannot rely on an eventuality that he took into account in order to justify a change in the support order.

[34] I dismiss Sylvester's motion to change.

[35] The parties shall make submissions with respect to any costs claimed on November 22, 2016 at 10 a.m.

Released: October 20, 2016

Signed: Justice E. B. Murray