Court File and Parties

Court File No.: D50414/10 Date: October 31, 2016

Ontario Court of Justice

Re: Pedro Alves – Applicant And: Mirva Alves – Respondent

Before: Justice Roselyn Zisman

Counsel:

• Ladan Korhani, for the Applicant
• Pamela Bhardwaj, for the Respondent

Heard On: October 6, 2016

Endorsement

Introduction and Background

[1] This is a Motion to Change brought by the Respondent ("mother") to change the order of June 18, 2010 and a cross motion by the Applicant ("father") to require the mother to pay child support arrears and arrears with respect to section 7 expenses.

[2] The parties have two children Samuel Santiago Alves born October 21, 1996 and Nicholas Alves born October 15, 1998.

[3] The parties separated on January 1, 2001 and divorced on October 18, 2004. The mother subsequently remarried and she has two children from that relationship. The father was also involved in another relationship but is now separated and has two other children. In his initial affidavit the father raised a concern that the mother's counsel was in a conflict of interest as she also represented his former spouse but he did not pursue this issue. In any event, I would not have found this to be a conflict.

[4] The parties were involved in litigation with respect to their sons Samuel and Nicholas and entered in to final order on June 18, 2010. The relevant provisions are as follows:

1. The parties shall have joint custody of the children and the primary residence of the children shall be with the father;

2. The mother shall pay child support to the father of $625.00 per month as of March 1, 2010 and $2,069.58 for soccer fees; the order is based on the mother's income of $41,490;

3. The mother shall pay $5,194.58 on July 1, 2010 which includes the $625.00 monthly as of March 1, 2010 and the soccer fees of $2,065.58;

4. The amount of child support and special expenses shall be adjusted annually commencing January 1, 2011 in accordance with the Child Support Guidelines and no later than June 1, 2011 of each subsequent year. Each party shall deliver to the other the documents and information described in sections 21 and 25 of the Child Support Guidelines including copies of their complete income tax returns and Notices of Assessment.

[5] As of March 1, 2015 Nicholas began to live with his mother which is what prompted her to begin this Motion to Change. Samuel continues to live with his father and is now attending university but living at home.

Court Proceedings

[6] The parties attended before me for a case conference on February 29, 2016. At that time the father was self-represented. It was the father's position that there was an ongoing obligation for the mother to pay the soccer fees of $2,069.58 annually. After reviewing the Order and endorsement of June 18, 2010 I held that the order only required to mother to pay a one-time payment in 2010 of $2,069.58.

[7] Despite the fact that the outstanding court order required both parties to annually exchange their tax returns and Notices of Assessment neither party did so. As a result a disclosure order was made on February 29, 2016.

[8] Specifically the mother was required to provide proof of her 2010 and 2011 income and explain why there was a reduction in her income. The mother had already provided proof of her income for the years 2012 to 2014. The father was required to provide proof as to why he did not accept the mother's explanation for the reduction in her income.

[9] The father was ordered to provide disclosure in accordance with the Request for Information previously served upon him. If the father was unable to provide or refused to provide the discourse he was required to serve and file an affidavit explaining his position.

[10] The parties again attended before me on April 25, 2016 for a continued case conference. The mother provided disclosure of her income which the father indicated he accepted. The parties agreed that the mother pay the father $5,766 for all arrears from July 1, 2010 up to and including December 31, 2014.

[11] The parties agreed that the outstanding issues were as follows:

a) whether or not there was child support owing by the mother for the months of January to March 2015;

b) the ongoing child support obligations on a set-off basis; and

c) any ongoing special expenses.

[12] The Motion to Change was adjourned for argument to July 28, 2016. Mother's counsel had earlier requested an adjournment as she had just completed a 7 day trial but father did not respond. On the day of the motion, father then indicated he was agreeable to the adjournment request as he needed time to file further information regarding his claim for retroactive section 7 expenses. Costs were reserved to be dealt with as part of the final order as it was a wasted attendance and father should have consented to the adjournment request earlier.

[13] The Motion to Change was then adjourned to October 6, 2016. The parties agreed to a timetable for the filing of any further affidavits and I endorsed that no further affidavits or documents would be accepted by the court.

[14] In the interim, the mother was served with a notice to suspend her driver's license and on August 31, 2016 she was granted a refraining order on condition that she pay child support of $481 per month on account of ongoing child support.

[15] The father attended on October 6th, 2016 with counsel, Ms Korhani who had just been retained and was requesting an adjournment. Although the father had filed 2 affidavits, counsel wished to file a further affidavit with respect to his claim for retroactive and ongoing special expenses. Mother's counsel was opposed to the adjournment as the mother was prejudiced by any further delay due to the terms of the refraining order.

[16] I ordered that mother's Motion to Change with respect to ongoing child support be heard and a new date was set for the father's Motion to Change with respect to his claim for retroactive and ongoing section 7 expenses with timetables for the filing of any further affidavits.

[17] After hearing submissions with respect to mother's Motion to Change I reserved my decision. This is my decision.

Position of the Parties

[18] The parties agree that there has been a change in circumstances as of March 2015 when Nicholas began to reside with the mother.

[19] The parties also agree that the calculation of child support as of March 1, 2015 should be based on a set off basis as each parent has one child residing in their care.

[20] The only contention issue was the amount of income to be attributed to each party as both claimed that income should be imputed to the other party.

[21] The mother seeks income be imputed to the father on the basis that he is capable of earning more income than he is presently earning, that his lifestyle indicates that he must be earning more income or have an undisclosed source of income.

[22] The mother agreed that her present income should be based on her 2014 income namely, $50,414.

[23] It is the father's position that income should not be imputed to him but should be based on his actual income. It was also submitted that income should be imputed to the mother on the basis of her lifestyle and that she did not explain the dramatic changes in her income.

Applicable Legal Principles

[24] Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this legal obligation, a parent must earn what he or she is capable of earning.

[25] Clause (a) of subsection 19 (1) of the child support guidelines states:

19 (1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include,

(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;

[26] In Drygala v. Pauli, the Ontario Court of Appeal stated that the burden of showing that a parent is intentionally unemployed or under-employed lies with the claimant. Once it has been established that a parent is intentionally unemployed or under-employed, the burden shifts to that parent to establish that the reason for the under-employment or unemployment is reasonable. The court also confirmed that a parent is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning. There is no requirement of bad faith.

[27] Further, the court explained that when imputing income based on intentional under-employment or unemployment, a court must consider what is reasonable in the circumstances. Factors that can be considered are age, education, experience, skills and health of the parent.

[28] In Drygala v. Pauli, the court also set out the following three questions that should be answered by the court in considering a request to impute income:

1. Is the party intentionally under-employed or unemployed?
2. If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?
3. If not, what income is appropriately imputed?

Relevant Findings of Fact with Respect to the Father's Income

[29] The father deposes that as of 2005 he suffered a workplace injury and that this affected his income. He deposes that he used up his savings and investments and incurred large debts. He declared bankruptcy in 2013. His current source of income is a monthly workmen's compensation benefit ("WSIB").

[30] The father filed copies of his Notices of Assessment since 2006. His income is declared to be as follows:

Year	Income
2005	$35,179
2006	$6,195
2007	$807
2008	$112,513
2009	$30,381
2010	$32,536
2011	$22,447
2012	$17,065
2013	$17,234
2014	$119,987
2015	$25,728

[31] The father also produced a letter from WSIB confirming that he receives a loss of earning benefit of $1,001.70 biweekly which is non-taxable and yearly indexed and that he will receive this benefit until he turns 65 years.

[32] The father filed a financial statement in this proceeding dated November 27, 2015. The financial statement indicates annual expenses of $58,031.16 and annual income of $25,730.38 that creates a shortfall of $32,300.78. The financial statement also indicates assets of $78,506.31 and debts of $39,535.57 with a net worth of $34,970.74. The primary assets are 2 savings and retirement funds and the bulk of the debts are owed to family and friends and to his trustee in bankruptcy. An updated financial statement was not filed.

[33] The father was served with a Request to Admit on December 18, 2015 to which he did not respond. The information requested was subsequently incorporated into the court order of February 29, 2016.

[34] Although the father filed some information as ordered, namely his Notices of Assessment, he did not file copies of his bank statements, credit card statements, or investment statements. He did not provide proof of his debts, documents related to his WSIB claim, medical information, an updated resume or copies of any job applications. The father's response to this request, as set out in his affidavit sworn April 7, 2016 was that he was the support recipient and therefore the financial information requested was not relevant and he accused the mother's counsel and her articling student of bad faith in making these demands. He also referred to the request for this information in his further affidavit of September 20, 2016 as being an invasion of privacy.

[35] The father's further response was to serve his own Request to Admit on mother's counsel on April 7, 2016 requesting proof the mother's spouses income since 2006.

[36] Despite the several affidavits filed by the father he provides no information about his medical condition, his capacity to work or any explanation as to how he is able meet his expenses from his stated income. He refused to provide any financial disclosure except his Notices of Assessment and a letter confirming is receipt of WSIB monthly income.

[37] The mother alleges that the father told her that he was working as a paralegal in traffic court for cash. In counsel's submissions she agreed that the father had enrolled in a paralegal course but asked the court to take judicial notice of the fact that paralegals must now be licensed.

[38] It is the father's position that his sole source of income is his WSIB benefits and he is going into debt. But he refused to provide proof of that debt. The majority of the father's various affidavits relate to issues that predate the outstanding court order, that deal with the mother's arrears that were already settled and with other irrelevant issues.

[39] The father provides many details about all of the expenses he has incurred for his children over the years includes trips to various soccer tournaments in North America and a trip to Portugal.

Analysis of Income to be Imputed to the Father

[40] In submissions, counsel for the father stated that the father had worked in construction and was not able to work. There was no medical proof of an inability to work and the father in his various affidavits did not address the nature of his injuries or the effect on his ability to work. I am not prepared to draw an inference that the father is incapable of any employment just based on his receipt of WSIB benefits.

[41] Based on the father's lack of financial disclosure which includes his refusal to provide any proof of his medical condition or proof of his expenses, debts and ability to finance his deficit, I draw a negative inference as the father's ability to earn an income. I infer that the father has a source of income that is undisclosed or that he is capable of finding some employment and is intentionally unemployed.

[42] For example, the father did not even mention in his affidavits that he was or is enrolled in a paralegal course and his counsel simply submitted that he could not be acting as a paralegal because he is not licensed. It appears that he only agreed that he had registered in a paralegal course because the mother alleged that he told her he was acting as a paralegal for cash. Due to the father's lack of providing a resume or information about his attempts to find employment I have no evidence as to whether or not he completed the course or if he is licensed or what other steps he has taken to obtain employment. However, I do draw the inference that the father is capable of working. The mother also provided proof that the father has written several books and although he has not earned much income in the past from these endeavours nevertheless, this is evidence that he is certainly has skills that could be used to obtain employment.

[43] With respect to determining how much income to impute to the father, the court is severely hampered in doing so due to the father's failure to provide financial disclosure.

[44] Counsel for the mother submits that the court should attribute income to the father based on his lifestyle that is, based on his yearly expenses which would then result in income of $58,031 being attributed to the father.

[45] Counsel for the mother relies on several case for the proposition that a payor's lifestyle, although not income, can be relevant as to whether a court imputes income under section 19(1) of the Guidelines. As indicated by the Ontario Court of Appeal in the case of Bak v. Dobell at para. 41:

Equally clearly, however, a payor's lifestyle often will be relevant to whether a court may impute income under s. 19(1) of the Guidelines. For example, it may be apparent from lifestyle that a payor is receiving undeclared income because he or she has historically worked, lives comfortably with the usual trappings, and yet declares minimal income for tax or child support purposes. In such a case, the recipient who calls evidence of the payor's lifestyle will ask the court to draw the reasonable inference that the payor must have a greater income than he or she has disclosed.

[46] In the alternative, it is submitted that the average of the father's income for the last 3 years, being 2013, 2014 and 2015 be used and that would result in income of $54,164.33 being attributed to him. In the years 2008 and 2014 the father's income was over $100,000.

[47] Counsel for the father submitted that in the years 2008 and 2014 the father received lump sum funds from WSIB but no proof was filed and the father in his affidavits does not specifically indicated the source of these funds but he does make a vague reference to paying legal fees connected to his WSIB claim.

[48] I am prepared to give the father the benefit of the doubt with respect to his income for those years as the income appears to be non-recurring amounts. Further, although I assume the lump sums represent at least in part lost wages I cannot make that finding of fact as the father refused to comply with the court ordered disclosure regarding providing details of his settlement. I find that in this case using an average of the father's income for the last 3 years is not a fair or appropriate method of imputing income.

[49] Although father's counsel initially submitted that the father's income should only be based on his actual income she agreed during the course of her submissions that the WSIB benefits, as they are non-taxable, should be grossed up. Counsel was requested to submit a Divorcemate calculation to indicate the grossed up amount. Counsel then submitted such a calculation that indicates the father's WSIB income of $25,728 when grossed up would be equivalent to $29,770. It is the position of father's counsel that the father's child support obligation should now be calculated on the basis of $29,770.

[50] I find that the mother has met the burden on her to prove that the father is intentionally unemployed or under-employed. The onus then shifts to the father to prove the reason for that under-employment or unemployment.

[51] I find that father has not discharged that burden. I find that the father has chosen not to comply with the disclosure order that would have provided the court with a clearer understanding of the father's income and resources, proof of his alleged debts, an explanation as to how he is meeting his expenses based on the limited income he has disclosed and his current ability to earn an income.

[52] Based on the available evidence and based on the negative inference I draw as a result of the father's incomplete financial disclosure, I find that the father is capable of earning an income that is at least equivalent to the amount of his yearly expenses namely, $58,031 or that he is in fact working and has not declared or diverted income. I therefore find that his child support obligation to the mother should be based on an imputed income of $58,031.

Evidence with Respect to Mother's Income

[53] The mother worked for the same restaurant for 14 years initially as a server and she was then promoted as a manager in 2013 and earned considerable more income. Due to a change in the management of the restaurant, she was demoted and eventually was forced to leave her job in June 2014.

[54] The mother deposes that she felt betrayed by her employer and fell into a depression and suffered from anxiety. She did not work from June 2014 to June 2015. She received employment insurance until May 2015. As of June 2015 the mother obtained employment in a restaurant as a server but after 2 months the restaurant closed down.

[55] In August 2015 the mother then found a job at another restaurant but only part-time for $9.80 per hour. The mother has continued to work and is now working full time. The pay stub she produced indicates that she is working an average of 48.5 hours a week and that her tips are included in her income. Based on her pay stub her annualized income would be in the range of $50,000.

[56] Based on the mother's Notices of Assessment her income is as follows:

Year	Income
2010	$30,624
2011	$21,651
2012	$48,277
2013	$70,122
2014	$50,414
2015	$23,884

[57] The father in his materials details many prior financial and parenting issues between the parties. The parenting issues are not relevant to the issues on this motion. The issue of any retroactive adjustment in the amount of child support payable by the mother to the father was resolved as the parties agreed that the mother owed the father $5,766 for all arrears owing from July 1, 2010 to December 31, 2014.

Analysis of Income to be Imputed to the Mother

[58] Although father's counsel's initially submitted that the court should also impute income to the mother based on her lifestyle as the expenses in her financial statement greatly exceeded her income, she then seemed to concede that the mother's ongoing child support obligation to the father should be based on her 2014 income namely, $50,414.

[59] The problem with the mother's financial statement is that all of the household expenses are attributed to her whereas the mother resides with her spouse and there was no information as to his contribution to those expenses. The same problem relates to the assets and debts listed on the mother's financial statement.

[60] The mother's financial statement should have clearly indicated that she is residing with her spouse and what portion of the expenses he is paying and should have also clearly specified their respective interest in the assets and each of their obligations for the debts. However, the father in his affidavit deposes that he is aware the mother is living with her spouse and one of his complaints is that she has never disclosed his income. Accordingly, I find that any deficit in her financial statement is attributable to her spouse sharing in the household expenses.

[61] I find that the father has not discharged the onus on him to prove that the mother is intentionally under-employed such that income should be imputed to her.

[62] I agree with the submissions of mother's counsel that the mother's ongoing child support obligation for 2016 should be based on her 2014 income of $50,414. It is reasonable to assume that she will earn this amount based on the 2016 pay stub she produced.

[63] With respect to the mother's child support obligation in 2015, I find it is reasonable to base the amount of child support payable to the father on her actual income for 2015, that is, $23,844 as I find her explanation of her attempts to find new employment to be credible.

[64] I have attached the Divorcemate calculations I have prepared based on my findings to this decision.

Order as Follows

[65] Based on the father's imputed income of $58,031 for 2015 and 2016, he shall to pay to the mother child support of $527.00 per month for Nicholas Alves born October 15, 1998 as of March 1, 2015.

[66] Based on the mother's 2015 income of $25,728 she shall pay to the father child support of $207.00 per month for Samuel Santiago Alves born October 21, 1996 from March 1, 2015 up to and including December 1, 2015 to March 1, 2015.

[67] Based on the mother's imputed 2016 income of $50,414 she shall pay to the father child support of $454.00 per month as of January 1, 2016.

[68] Accordingly, on a set-off basis the father shall pay child support to the mother of $320.00 per month from March 1, 2015 up to and including December 1, 2015 and as of January 1, 2016 the father shall pay to the mother child support of $73.00 per month.

[69] Therefore, the father shall pay to the mother retroactive child support of $4,003.00 from March 1, 2015 up to and including November 1, 2016. As of December 1, 2016 the father shall pay to the mother child support of $73.00 per month.

[70] Support Deduction Order to issue.

[71] The issue of costs will be dealt with at the conclusion of the father's Motion to Change which is scheduled for December 21, 2016.

Justice Roselyn Zisman

Date: October 31, 2016

Footnotes

[1] Neither counsel pursued the issue of child support payable from January to March 2015

[2] Drygala v. Pauli, [2002] O.J. No. 3731 at para. 32 (Ont. C.A.)

[3] Supra at para. 38 and 45

[4] Supra, at para. 23

[5] Bak v. Dobell, 2007 ONCA 304, 86 O.R. (3d) 196; See also Kozicki v. Kozicki, 2013 ONSC 8005; K.G.J. v. A.C., 2008 BCPC 10