Court File and Parties

Ontario Court of Justice

Date: 2016-11-04

Court File No.: Brampton 640-15

Between:

Horace Wallace Applicant

— And —

Katherine Kaulback Respondent

Before: Justice Philip J. Clay

Heard on: September 29 and October 5, 2016

Reasons for Judgment released on: November 4, 2016

Counsel:

• Ms. S. Patel — counsel for the applicant
• Ms. C. Bernard — counsel for the respondent

CLAY J.:

MOTIONS

PROCEDURAL BACKGROUND

[1] The applicant brought an application on July 7, 2015 seeking joint custody of his two biological children with the respondent namely Sherace Kaulback Wallace born July 3, 2007 and Taliyah Kaulback Wallace born June 9, 2014. The respondent filed an answer on September 29, 2015 seeking an order for custody and child support for the said two children and for her daughter Jaden Chevelle Kaulback-Koch born June 20, 2004. She sought an order that the applicant be responsible for paying child support for Jaden also.

[2] On May 10, 2016 I made a temporary residence order in favour of the respondent and a without prejudice order that the applicant pay child support for the two youngest children. I also granted leave for the following motions to be brought on September 29, 2016.

• (1) The applicant's motion for access to Sherace and Taliyah.
• (2) The respondent's motion for a finding that the applicant had demonstrated a settled intention to treat Jaden as a child of his family.
• (3) The respondent's motion for child support for all three children.

[3] Filing deadlines were set for affidavits in support of, and in response to, each motion. The motions and affidavits were filed and the matter was before me on September 29. On consent of the parties, I ordered that argument on the motions would proceed with the settled intention motion first to be followed by the access motion and then the child support motion. In the course of submissions a consent was reached with respect to the access issue. I made an order that day for supervised access to occur through the Peel Supervised Access Program. We did not have sufficient time to complete the motions on September 29 so the child support motion was adjourned for completion on October 5.

SETTLED INTENTION MOTION

THE LAW

[4] The definition of a "child" in the Family Law Act is found in s. 1(1) which reads as follows:

Definitions

1. (1) In this Act,

"child" includes a person whom a parent has demonstrated a settled intention to treat as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody;

[5] The leading case in this area is the decision of the Supreme Court of Canada (SCC) in Chartier v. Chartier (1999), 1 S.C.R. 242. That matter was an appeal from Manitoba in a Divorce Act case. The terms being interpreted were "child of the marriage" and "in loco parentis" as opposed to "settled intention." However, the law is clear that there is no difference in the terms. In Chartier the SCC held that:

A person cannot unilaterally withdraw from a relationship in which he or she stands in the place of a parent. The court must look to the nature of the relationship to determine if a person in fact does stand in the place of a parent to a child.

RESPONDENT'S POSITION

[6] The respondent's affidavit of August 19, 2016 (Vol. 1 Tab 10) stated that the parties had been in a relationship since 2006. Initially they lived separately but he was at her residence most nights. She said that they formally resided together as common law partners in 2011 until they separated in June 2015. She noted that the applicant was trying to assert that they did not live together until much later. Ms. Bernard pointed out that the applicant said he moved in with the respondent when she was his surety for fraud charges. York Region police records show that the applicant was charged with fraud in 2011 so he must have lived with respondent in 2011. These charges were resolved in 2012.

[7] Jaden was born in Nova Scotia which is the respondent's home province and where she was residing at the time. Her biological father is Weldon Koch. He continues to live in Nova Scotia but he does not exercise access and contacts her on an infrequent and inconsistent basis. The respondent obtained custody of Jaden in Nova Scotia in 2012.

[8] The respondent stated that the applicant had been involved with Jaden since she was 2 years old and she is now 12. She stated that prior to the separation Jaden referred to the applicant as "dad" or "daddy." The respondent filed as an exhibit to her affidavit a copy of a Christmas card in which Jaden printed "To Daddy…Love Jaden…" The respondent stated that after Sherace and Taliyah were born the applicant made no distinction in how he treated the girls and he viewed Jaden as one of his three children.

[9] The respondent said that the applicant traveled to Jamaica on a regular basis and for months at a time because he had a business there and was building a home. He said he was going to bring Jaden and Sherace with him to Jamaica and asked the respondent to obtain a letter from Mr. Koch so that she could obtain a passport.

[10] The respondent stated that a couple of years into their relationship the applicant raised the possibility of adopting Jaden. She said they did not proceed because they were unsure if they could do so when her biological father was still alive. The respondent stated that the applicant held himself out to be Jaden's father at Jaden's daycare, her school and to friends and family members. At her daycare and subsequently at her school he was listed as her "stepfather" for emergency contact purposes. The respondent stated that the applicant was the "main disciplinarian" for Jaden and he was said to be very strict. Jaden had to answer him with "yes daddy."

[11] The respondent stated that initially after the separation in 2015 the applicant remained in touch with Jaden by way of text message. The respondent stated that when the applicant commenced these court proceedings seeking access to only his biological children that he unilaterally withdrew from his relationship with Jaden. She was emotionally upset when he did that.

[12] The Office of the Children's Lawyer became involved in this matter and their clinical investigator Tracy Majewski MSW delivered a report on July 18, 2016. In that report she noted that the applicant had told her that:

… he has always loved and cared for Jaden in the past and Jaden has called him "dad". However, Jaden always knew that he was not her biological father as she has a relationship with her father. Mr. Wallace stated that when Jaden went to see her father, Sherace was never a part of the visits and so there is no reason why he should need to visit with Jaden when he has access with his biological children.

[13] Ms. Majewski set up an observation visit with the applicant and all three children. Jaden was upset and crying afterwards and would not talk to the investigator. Ms. Majewski spoke with Jaden a few weeks later. Jaden confirmed that she only saw her biological father for a few days when her mother took her to Nova Scotia in the summers. She did not have his phone number and had no other contact with him. Jaden said that she had thought of the applicant as her father for many years. He treated her in the same manner as he treated her sister Sherace. She called him "daddy." Jaden told Ms. Majewski that for nine years he had told her she was his first born and since the separation he has not been acting like her father.

[14] Ms. Bernard stated that the respondent had made an unconditional commitment to the child and she referred to Chartier in emphasizing that the applicant cannot withdraw from the relationship.

FATHER'S POSITION

[15] The father swore an affidavit on September 23, 2016 (Tab 5, Vol. 2). He said that he thought from conversations with Sherace that Mr. Koch frequently came to the respondent's home as his work brought him to Ontario. He said that to his knowledge Mr. Koch had a very loving relationship with Jaden. He said that to his knowledge Jaden never referred to him as "daddy." He had no response to the Christmas card that Jaden addressed in that way. The applicant denied introducing Jaden as his "first born" or his "daughter." He denied disciplining Jaden. He maintained that there was always a distinction between how he treated Jaden and how he treated his biological children.

[16] The applicant admitted that he vacationed with the whole family including Jaden. He said that as he was romantically involved with the respondent, who requested that Jaden accompany them, he thought it would be "heartless" of him not to do so. He admitted telling Jaden that he would take her to Jamaica one day to see the pigs on his father's farm.

[17] The applicant strenuously denied that he had ever expressed an interest in adopting Jaden. He said that he attended family events when Jaden was present because his own two children were there as well. He felt that he was being "polite and courteous" to her family to be depicted in family photographs with Jaden. He said that he saw Jaden only because of his relationship with her mother. He said that there was no prior discussion with him when the respondent listed him as an emergency contact at daycare or school.

[18] The applicant denied that he assumed a parental role towards Jaden but he admitted that he offered her gifts, friendship, and emotional support during the time that he had a relationship with her mother. He denied that Jaden texted him following his separation from her mother. He said that he valued his time and past with Jaden; however, it was never his desire or intent to replace the role of her own biological father Mr. Koch.

ACCESS MOTION

[19] The Applicant brought a motion for access which was supported by his affidavit of September 23, 2016 (Vol. 2, Tab 4). The mother responded with an affidavit of September 28, 2016 which has now been filed at Vol. 2, Tab 9.

[20] In her report Ms. Majewski, the clinical investigator for the Office of the Children's Lawyer (OCL), recommended that the respondent should have "full custody of the three children and that Sherace and Taliyah should be able to have supervised access with the applicant once per week for a period of two hours." The report also recommended counselling for the applicant and Sherace so that the Applicant "could learn to understand and support Sherace in her feelings about him … and also about the separation from Jaden in access." Ms. Majewski stated that after counselling if the applicant is fully able to commit to this, Jaden could attend for occasional visits as agreed by the parties.

[21] I reviewed the party's affidavits and noted that both parties were agreeable to beginning access at the Peel Supervised Access Program (PSAP). I heard brief submissions on access and then gave oral reasons as to how the first phase of access could proceed. The parties then completed the documents necessary to have access at PSAP. At this point it was clear that the child support issue would need to be adjourned to October 5. I ordered that the access order was to be settled so that it could be issued on the return. The parties were also to confirm on October 5 the date of their intake interview. The access issue was then further adjourned to January 19, 2017 at 2:15 p.m. in courtroom #202 for a review of access and consideration of an expansion of same. Each party was to file by January 13, 2017 an affidavit to address access to that time and their proposal for future access. The applicant's affidavit was to include the PSAP visit and exchange notes.

[22] On October 5 I was advised that both parties had scheduled intake interviews at PSAP. The September 29 order was issued and a new order was made to address the dates that PSAP was closed over the Christmas school vacation. The applicant shall have access on December 27 and January 2 from 10:00 a.m. to 2:00 p.m. such access to be in the community. The children shall be exchanged at the Peel Regional Police 22 Division station.

CHILD SUPPORT

THE LAW

[23] The respondent sought an order for support of the three children. She only sought support pursuant to s. 3 of the Child Support Guidelines (CSG) often referred to as table child support. She did not seek any special and extraordinary expenses under s. 7 of the CSG.

[24] The child support claim in this matter is brought pursuant to s. 33 of the Family Law Act which reads as follows:

Order for support

33. (1) A court may, on application, order a person to provide support for his or her dependants and determine the amount of support. R.S.O. 1990, c. F.3, s. 33(1).

[25] Sub-section 11 states:

Application of child support guidelines

(11) A court making an order for the support of a child shall do so in accordance with the child support guidelines.

1997, c. 20, s. 3(4).

[26] The CSG are more than just a table look-up. There are sections that deal with the determination of income. In this matter, the applicant was the sole shareholder of a company from which he paid himself as an employee. The respondent's position was that the court should look at the revenue and expenses of the corporation. The respondent also said that the court should impute income to the applicant as the income that he reported was not accurate.

[27] The relevant sections of the CSG are s. 18 and 19 which read in part as follows:

Shareholder, director or officer

18. (1) Where a parent or spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the parent's or spouse's annual income as determined under section 16 does not fairly reflect all the money available to the parent or spouse for the payment of child support, the court may consider the situations described in section 17 and determine the parent's or spouse's annual income to include,

(a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or

(b) an amount commensurate with the services that the parent or spouse provides to the corporation, provided that the amount does not exceed the corporation's pre-tax income. O. Reg. 391/97, s. 18(1).

Imputing income

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,

(c) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;

(d) 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;

Reasonableness of expenses

(2) 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). O. Reg. 391/97, s. 19(2).

RESPONDENT'S POSITION

[28] The respondent filed a Notice of Motion seeking child support for all three children in the amount of $1,168 per month based upon an imputed income to the applicant in the amount of $60,000 per year. She filed an affidavit dated August 23, 2016 in support of that motion (Vol. 2, Tab 2).

[29] There was a detailed disclosure order made on October 21, 2015 and an updated order made on May 10, 2016 at which time the applicant was required to file a financial disclosure brief. The respondent's affidavit addressed what was disclosed and what information she alleged was missing. Ms. Bernard asked the court to draw an adverse inference against the applicant for not providing full financial disclosure.

[30] The respondent's affidavit contained a detailed chart of the disclosure ordered on October 21, 2015 and the disclosure provided by the applicant on May 19, 2016. It also addressed the disclosure from the May 10 2016 order that was still outstanding. The outstanding disclosure included the full 2015 income tax return with attachments and the 2015 corporate tax return. The applicant stated that all of his income came from his self-employment as the owner/operator of Back a Yard Hardscape Inc. which is a landscape business that specializes in installing fencing. The applicant had not disclosed any information that allowed Ms. Bernard to determine his 2015 business revenue less expenses much less the personal income he received in 2015.

[31] Ms. Bernard did note that in previous years the business statement in the tax return showed that "costs of sales" was about 80% of total revenue. In 2014, the incorporated company had the following statement in its tax return:

• Total Revenue of $168,028
• Less
• Cost of materials $86,515
• Direct wages $10,000
• Trades and sub-contracts $33,387
• Gross profit $38,026
• Less
• Operating expenses $36,251
• Net income $1,775

[32] The applicant declared line 150 income on his personal tax return of $15,000 in 2014. It is not clear to me exactly how that figure was arrived at but it would presumably have included the $10,000 in "direct wages" and the "net profit" of $1,775 shown above.

[33] Ms. Bernard stated that both the costs of sales expenses and the operating expenses appeared to be very high and were not properly explained. She noted that the applicant had operated this business for 10 years and it did not make sense that he would continue to do so if he really earned about half of the income that a person making minimum wage would earn. In 2015, the applicant prepared a T-4 for himself in the amount of $16,500 and he wanted to pay child support based upon that income. The without prejudice order made on May 10, 2016 was based upon that income.

[34] Ms. Bernard turned to the applicant's financial statement of July 29, 2016 in which the applicant had reported ongoing income that annualized to $12,833.28 per year. That same statement listed ongoing personal expenses of $57,275.04. Ms. Bernard pointed out that the applicant was able to pay for his expenses as he only listed debt of $6,148.19.

[35] Ms. Bernard noted that the applicant had done a very poor job of explaining his finances. He appeared to be very casual and careless in the preparation of legal and accounting documents. As but one example she noted the 2013 T-4 statement disclosed that showed the applicant receiving an income from his business in the amount of $31,850. In that same year the business statement shows that the company paid direct wages of $12,000. The respondent stated in her affidavit that this was fraud and that the applicant had been charged (but not convicted) of fraud, with respect to depositing bad cheques, in 2011. She also stated that she assisted with the bookkeeping for the business for several years until 2014. (When the applicant's response affidavit stated that it was the respondent as bookkeeper that created this false T-4. The respondent stated in a reply affidavit that she never created documents for the Canada Revenue Agency).

[36] The respondent stated that the applicant employed 6 staff members and paid them as much as $18 an hour. She filed a confirmatory letter from the company regarding one such employee. The respondent stated that the applicant did not list on his financial statement the 2006 truck that he bought in 2014 for $5,363.65. She alleged that he owned a trailer (she provided a photograph) and that he stored his equipment in several trailers and a shipping container for which he paid rent.

[37] The respondent also alleged that the applicant had a luxurious travel lifestyle. He travelled to Jamaica every winter for a few months. She said that he had a landscaping business there. She filed copies of his passport and his e-mail to the Jamaican government in which he sought a return to Jamaican residency. She also filed a copy of a document listing a Jamaican taxpayer registration number for a landscaping business there. She noted that the applicant told Ms. Majewski that he would like the children to be able to spend 6 months a year with him in Jamaica. She said that the applicant told her he was building a house there.

[38] Ms. Bernard said that leaving aside any income he might earn in Jamaica the applicant could work as an employee in Ontario. She filed Ministry of Labour information showing that the earnings range for an employee of a landscaping contractor was $18.14 to $34.63. Interestingly the applicant paid his employees $18 an hour. Ms. Bernard stated that even if just the mid-range was used that would be $29 per hour which annualized to the $60,000 and that was the income that she wanted the court to impute.

FATHER'S POSITION

[39] The applicant filed an affidavit dated September 23, 2016 in response to the child support motion (Vol. 2, Tab 6). He stated that his annual income is not usually greater than $16,000.

[40] The applicant denied that he withheld any information. He stated that his disclosure brief contained all of the documents in his possession. The applicant stated that all documents to prepare the business statements for the 2015 year were given to his accountant. He acknowledged that his accountant, Noah Taylor, had told Mr. Patel that the statements would be ready by August 12, 2016 but at the time of the motion the information had not been received. The accountant had prepared a T-1 personal tax return for the applicant using the income of $15,000 that the applicant told him he earned that year. Mr. Taylor said in a letter that was excerpted in the father's affidavit that in 2014 and past years the respondent, as the company's bookkeeper had provided with him all of the relevant documents from which to prepare the business statements, the corporate return and the personal return.

[41] The applicant stated that he never worked for cash. He said that the respondent had handled all of the documents. In stating that the business hid or underreported income she is stating that she was responsible for that in every year to and including 2014. He said that nothing had changed in the business in 2015. He had reported income of less than $16,000 because that was what he actually earned after all expenses and deductions were taken into consideration. Mr. Patel said that the onus was on the respondent to prove that his expense claims were too aggressive. He added that a reasonable taxpayer will take advantage of all deductions available to them.

[42] The applicant stated that he is dyslexic and that he trusted the respondent to accurately prepare his documents. He stated that she must have created the 2013 T-4 which erroneously did not include the "Inc." in the company name. He also alleged that she created and forged the letter confirming that a Mr. Tavares was an "employee" of the company as the company had no employees, just subcontractors. He noted that he did pay $750 a month in rent for his storage of his equipment but that he fell behind and owed $3,000 for same. He included a notice terminating his lease as of April 15, 2016. He stated that the vehicle he purchased at an auction was purchased for parts. The applicant said that he had fallen behind on the child support payments of $225 per month that were ordered on May 10, 2016 based upon his stated income of $16,000.

ANALYSIS

[43] There are two issues to be decided. The settled intention issue and the table child support issue. The custody and access issues were resolved at the hearing and an order was made on September 29, 2016.

SETTLED INTENTION

[44] Any review of the facts must be done in light of the decision of the Supreme Court of Canada in Chartier. Justice M Bastarache stated:

Whether a person stands in the place of a parent must take into account all factors relevant to that determination, viewed objectively. What must be determined is the nature of the relationship … The court must determine the nature of the relationship by looking at a number of factors, among which, is intention. Intention will not only be expressed formally. The court must also infer intention from actions, and take into consideration that even expressed intentions may sometimes change. The actual fact of forming a new family is a key factor in drawing an inference that the step-parent treats the child as a member of his or her family, i.e., a child of the marriage. The relevant factors in defining the parental relationship include, but are not limited to, whether the child participates in the extended family in the same way as would a biological child; whether the person provides financially for the child (depending on ability to pay); whether the person disciplines the child as a parent; whether the person represents to the child, the family, the world, either explicitly or implicitly, that he or she is responsible as a parent to the child; the nature or existence of the child's relationship with the absent biological parent.

[45] Where there is a conflict in the evidence between the applicant and the respondent I accept the respondent's evidence. Her evidence was internally consistent and supported by the documents filed. The respondent's affidavit and his counsel's submissions attempted at times to shoe-horn the evidence into his theory. He said the child did not call him Daddy but then conceded receiving a Christmas card to that effect. He said that Jaden had an ongoing relationship with her biological father Mr. Koch and that she saw him in Ontario and Nova Scotia. There was no evidence that Mr. Koch ever came to Ontario but there was evidence to support the respondent's statements that Jaden only saw Mr. Koch when she went to Nova Scotia with her mother and grandmother to see their extended family there and the visits with Mr. Koch were of short duration. The respondent had no evidence to support his blanket statement that Jaden kept in touch with Mr. Koch. I accept the mother's evidence that Mr. Koch never contacted Jaden in Ontario.

[46] The parties disagree on the periods of time that they actually cohabited. The respondent did not dispute the applicant's evidence that their relationship began in 2006 and that he stayed at her home frequently between then and the time that they cohabited. I accept the respondent's evidence that the parties cohabited between 2011 and 2015. It was consistent with both of their statements that he moved in when she acted as his surety and the respondent provided proof that this was in 2011. When the respondent first met Jaden she was only a year old. When he moved into her mother's home on an indefinite basis she was 7. I accept the respondent's evidence that he referred to Jaden as his "first born". By the time he moved into the home the parties had a child Sherace who was then 4.

[47] The applicant submits that he did not treat Jaden in the same way as he treated his biological child Sherace. There is no real evidence of that. Both parties filed photographs of their time together. Photographs are rarely that helpful in child related cases to show the closeness of a relationship. They simply show a frozen moment in time. Most people smile for pictures—their expressions do not necessarily indicate their emotions just before or just after the shutter clicked. In this case, the applicant admitted being at his own family's events with both children. He tried to argue that the photos showed him with Sherace, with Jaden in the background because he took his girlfriend's daughter along with him. I find it much more likely that both the respondent and his family treated both of the girls equally.

[48] I note that Mr. Koch never paid child support. He was never a presence in Jaden's life. There were photographs taken of the two of them in Nova Scotia, but Jaden was always accompanied by her mother and/or grandmother. She did not stay with Mr. Koch at his home.

[49] I find that the respondent's evidence is persuasive. This is not a case where the applicant is simply decent to his girlfriend's child. In fact, the applicant treated Jaden the same way as he treated his own two biological children. The parties had a family of three children until the time of the separation. Even after the separation the applicant initially had contact with Jaden. It was only when the applicant sought child support that the applicant unilaterally terminated the father/daughter bond. The Chartier case is clear that unilateral termination post separation will not impact upon the issue of whether during the relationship a person demonstrated a settled intention to treat a child as a member of his family.

CHILD SUPPORT

[50] The respondent stated that the applicant failed to provide full disclosure and therefore an adverse inference should be drawn. The most significant disclosure missing is the 2015 income and expense statements for his business. The respondent states that his accountant has not prepared them. That is not an acceptable excuse. The child support issue has been before the court for over a year. Disclosure orders were made. I find that the applicant's failure to deliver his paper work to his accountant in a timely way is proof of his casual and indifferent approach to the financial aspects of his business.

[51] The applicant stated that the respondent was the bookkeeper until the separation and used to deal with the accountant. She acknowledged that but stated that she did not create legal documents. The 2014 T-4 for $31,000 is somewhat of a mystery. It is inconsistent with any of the other financial documents. Each party was in a position to either create the document or more likely to ask the accountant to create the document. It appears to be related to a need that both parties had at the time to provide proof of income for rent or for a loan of some sort. I do not give it any weight in my determination of the applicant's income.

[52] The respondent bears the onus of proving to the court that the applicant's income is not as it is stated to the Canada Revenue Agency (CRA). I find that she has met that onus. The fact that she cannot prove exactly what the applicant really earns is due to the applicant's documentation. As the bookkeeper for the business it may well be that the respondent was complicit with the applicant in misrepresenting his income to the CRA. As they lived together they both benefited from this misrepresentation. The task before me though is not to find which party was more or less responsible for the state of the bookkeeping and tax filings in past years. It is the three children who are entitled to be supported by the applicant based upon the amount of income the applicant actually has available to him. The respondent has some knowledge of the actual numbers because she was the bookkeeper. I need more than her statements though in order to determine his approximate income.

[53] There are two common ways to examine the income of a self-employed person whom the court finds has not disclosed his income honestly on his tax returns and his financial statements. One way is to examine his expenses both net of income and net of income tax. The other is to examine the lifestyle of the self-employed person and the debt, if any, they have taken on to maintain that lifestyle.

EXPENSES

[54] The applicant's evidence was that his business was installing fencing. It was seasonal work and he hired sub-contractors when he needed them. No documents were filed to support the numbers in the income and expense statements of the business. I note that the ratio of direct sales to total of cost of materials had not changed greatly over the years. The applicant had to buy fencing material and rent or buy equipment to install the fences. This was a mature business. The applicant had operated it for 10 years. The net profit of the business upon which the corporation paid tax in 2014 was only $1,775.00. The income and expense statement for the company set out that direct wages were only $10,000. As noted above the applicant was given a T-4 for $15,000. There is no explanation for the discrepancy. It is clear to me from the evidence that this cannot be the applicant's true income.

[55] The applicant filed in the document brief his T-2 corporate tax return. The gross expenses from the business are listed as $38,184. This included amortization of $1,040 that will be added back as per the CSG. It included office utilities of $13,274 which were unexplained. The evidence was that the applicant installed fences. His bookkeeping was a shambles. It was done by the respondent to some degree before the separation and it now appeared that the applicant dropped off documents at his accountant's the year after the expenses were incurred. Even if "office utilities" encompasses an office rent (which is not stated) the evidence suggests that this business could be run from a home office. The work was done on the job site. The applicant did give evidence that he paid $750 a month for a storage shed. He said he fell $3,000 behind and was evicted in the spring of 2016. I will assume that the $9,000 per year for the shed rent is included in this category as it does not appear anywhere else. I would add back $4,274 to income. ($13,274 - $9,000) from this category into income. The total of the obvious overstatements increased the net income to $6,603 (1,775 + 1,040 + 4,724).

[56] There is no evidence to support any of the applicant's expenses. I will not arbitrarily deduct sums from each line item. However, on the evidence as a whole I find that the stated expenses cannot all be attributed to the operation of this business. Either that or the applicant received some cash income for his fence installations. I cannot accept that the applicant paid himself $10,000, plus received just $6,603 in corporate income for a business that he has operated for 10 years.

[57] I find this is an appropriate case to consider s.18 of the CSG. That section allows the court in determining a parent's annual income to include all or part of the pre-tax income of the corporation for the most recent taxation year or an amount commensurate with the services that a parent provides to the corporation, provided that the amount does not exceed the corporation's pre-tax income. The applicant had total revenues of $168,028 in his most recent statement (2014). All of the evidence was to the effect that he was the sole owner and operator of the business. He managed up to six sub-contractors on his job sites. I find that a person would not take on this level of responsibility without at least having the ability to make an income that came close to meeting his personal expenses.

[58] I then looked to the applicant's sworn financial statement. He set out his annual income as $12,833.28. He stated that he had annual expenses of $57,275. They include monthly expenses of $1,510 in rent, $200 in meals outside the home, $1,400 in gas and oil, and $158 in car insurance and licence. It may be that the applicant put some business expenses in his personal expenses column. As the applicant both lived and worked in Brampton it is very unlikely that his $1,400 monthly in gas is truly a personal expense. On the other hand it may well be that the applicant has double counted this cost as in 2014 his business claimed $6,973 in vehicle expenses. He only claims debt of $6,148.10 and he is able to service two credit cards. The financial statement is virtually useless as it does not explain how the applicant can possibly meet his expenses on his stated income.

LIFESTYLE

[59] The applicant travels to Jamaica every winter. He claimed that he lives at his father's home there. The applicant can clearly afford to own and operate a car (though he did not list a car as an asset). The applicant resides alone in a rented detached home. The applicant clearly cannot afford this lifestyle on his stated income of $12,833 or the income of $16,500 that he was prepared to use for child support purposes.

IMPUTATION OF INCOME

[60] I looked at s.19 of the CSG. There are three sub-sections that are applicable to the facts in this matter.

[61] Sub-section 19(1)(c) addresses the diversion of income and (g) addresses the unreasonable deduction of expenses. I find that the applicant cannot support his expenses or his lifestyle on the income that he sets out on his tax return or his sworn financial statement. He must either be paid in unreported cash or he has significantly inflated his expenses.

[62] Another sub-section that permits the court to impute income is (d); when a parent has failed to provide income information when under a legal obligation to do so. The applicant finally served a sworn financial statement on July 29, 2016. It should be noted that he did so when Mr. Patel became his counsel. He has not filed his 2015 income tax return. He has been more than careless with his bookkeeping. The income reported is so low for a mature business with the revenues that his corporation reports that it cannot be relied upon.

[63] The applicant's financial reporting is so unreliable that I have no option but to look at the expenses paid, the lifestyle lived, and impute an income commensurate with it. I find that the imputed income should be $50,000 per year. Such an income is less than the applicant's stated expenses but I find his statement of his expenses to be as unreliable as his statement of income. The corporate expenses are also unreliable but I find that the applicant is unlikely to report more total revenue than he actually receives. On reported, non-cash revenue of $168,028 I find that the applicant must be able to retain at least $50,000 after legitimate expenses. I also find that this would be the approximate amount of income he would require to rent and maintain a detached house, own and operate a car and travel regularly. I note that this is only the income he earns in the six months of the year he is in Canada. Ms. Bernard is not asking the court to impute income for work he could or should be doing in the 6 months he is in Jamaica.

TEMPORARY ORDER

(1) The Applicant Horace Wallace is found to have demonstrated a settled intention to treat the child Jaden Chevelle Kaulback-Koch born June 20, 2004 as a child of his family.

(2) a) The Applicant Horace Wallace shall pay to the Respondent Katherine Kaulback for the support of the children Jaden Chevelle Kaulback-Koch born June 20, 2004, Sherace Kaulback Wallace born July 3, 2007 and Taliyah Kaulback Wallace born June 9, 2014 the sum of $957.00 per month beginning May 20, 2016 and payable on the twentieth day of each and every month thereafter until further order of the court;

b) The said sum is based upon the Applicant's imputed income of $50,000 per year;

c) Support deduction order to issue; and

d) All payments made under the temporary order of May 10, 2016 shall be considered as payments under this order.

(3) This matter remains adjourned until January 19, 2017 at 2:15 p.m. for a review of access and a consideration of expansion of same.

Released: November 4, 2016

Justice P.J. Clay