Court File and Parties
Ontario Court of Justice
Date: 2016-11-22
Court File No.: Toronto DFO 15 13200-00
Between:
Katharine Northcott Applicant
— And —
Ryan Northcott Respondent
Before: Justice E. B. Murray
Heard on: October 26, 2016
Reasons for Judgment released on: November 22, 2016
Representation:
- Katharine Northcott: on her own behalf
- Ryan Northcott: on his own behalf
MURRAY, E. B. J.:
Introduction
[1] Ryan and Katharine Northcott have two children, E., 6 years old, and C., 5 years old. They separated in September 2012, and entered into a separation agreement on March 27, 2014. Katharine registered the agreement with the court for enforcement of its child support provisions on August 26, 2015. In April 2016 Ryan brought a motion to change those provisions.
[2] The agreement provides as follows:
Katharine and Ryan share custody of the children, and the children reside equal time with each parent.
Based on annual income of $75,000 for Ryan and annual income of $53,986 for Katharine, Ryan shall pay Katharine $300 monthly and his proportionate share (58%) of agreed upon special or extraordinary expenses. The $300 payment approximates the difference in the table amounts of support which each parent would pay to the other.
Commencing June 15, 2014, child support shall be reviewed annually after an exchange of tax returns, and an adjustment for the table amount and special expenses payable will take place on July 1st of each year. The agreement also provides that either party may seek a change in child support if there is a material change in circumstances.
[3] Ryan now moves to change child support commencing in 2013, based on what he says are more accurate income figures than those available at the time of the agreement. He says that the result of recalculation will be lower support amounts owing by him for 2013-2015, and an order that Katharine pay him child support of $14 monthly commencing January 1, 2015. He asks that Katharine repay him for any overpayments.
[4] Katharine opposes the motion. Katharine does not accept Ryan's figures as to his income: Ryan is self-employed. She points out that Ryan's gross income has remained approximately the same for the past 3 years; his deductions from gross income have increased. Ryan has warned her in emails sent since the agreement that his income will go down, and she will owe him support. Katharine believes that Ryan has manipulated his deductions to achieve that goal. She points to the fact that Ryan writes "slut money" on his child support cheques to support her submission that he has always resented paying her child support.
[5] Ryan and Katharine represented themselves in the hearing of the motion to change, at which I considered documentary and affidavit evidence as well as viva voce testimony. This is my decision on that motion.
The Facts
[6] Ryan operates as a sole proprietor conducting a business in geospatial mapping; his clients are in the oil and gas industry. Katharine is employed by an insurance company.
[7] Ryan's income as shown on line 150 of his tax return for 2014 was $81,539 and for 2015 was $67,314. Katharine's income as shown on line 150 of her tax return for 2014 was $68,359 and for 2015 was $58,158.
The Law
[8] When a domestic contract is registered with the court, the support provisions in the contract may be enforced or varied as if they were contained in a court order.
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.
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".
A party cannot rely upon an event predating an order or agreement to establish a material change.
A substantial change in the income of a support payor occurring after the agreement or order sought to be varied can constitute a material change.
The onus is on the party seeking to change the order to establish the existence of a material change in circumstances.
[9] If a material change is demonstrated, then a court has the authority to order a change in the prospective support payable commencing at the time that the motion to change was brought.
[10] A court also has discretion to order a retroactive change—that is a change commencing before the date when the motion to change was issued. In a recent case I dealt with the guidance provided by the Court of Appeal about when a retroactive decrease in child support may be ordered.
The Ontario Court of Appeal in Gray v. Rizzi, 2016 ONCA 152, held that the factors set out by the Supreme Court of Canada that apply to motions seeking retroactive increases in child support apply, with minor modifications, to motions seeking retroactive decreases in child support. In setting out the appropriate principles to be applied on such motions, the court quoted extensively from Justice Deborah Chappel in Corcios v. Burgos.
Justice Chappel began her analysis by noting as follows.
First, when applying the adapted D.B.S. principles on a motion to retroactively vary child support, one must always keep in mind the ultimate issue: namely, the best interests of the child. As Chappel J. stated, "Ultimately, the goal in addressing child support issues is to ensure that children benefit from the support they are owed when they are owed it, and any incentives for payor parents to be deficient in meeting their child support obligations should be eliminated."
Justice Chappel stated that when "a payor demonstrates that a change in circumstances took place during the time that arrears were accumulated which rendered the payor unable to make support payments for a substantial period of time, the court may provide relief by varying the child support order or rescinding arrears".
Speaking for the Court of Appeal, Justice Brown set out the factors which should guide in a court in determining whether to grant retroactive relief, the date of retroactivity and the amount of the relief.
The nature of the obligation to support, whether contractual, statutory or judicial;
The ongoing needs of the support recipient and the child;
Whether there is a reasonable excuse for the payor's delay in applying for relief;
The ongoing financial capacity of the payor and, in particular, his ability to make payments towards the outstanding arrears;
The conduct of the payor, including whether the payor has made any voluntary payments on account of arrears, whether he has cooperated with the support enforcement authorities, and whether he has complied with obligations and requests for financial disclosure from the support recipient. As stated by Chappel J.: "Behaviour that indicates wilful non-compliance with the terms of the order or failure to work cooperatively to address the child support issue is a factor that militates against even partial rescission or reduction of arrears";
Delay on the part of the support recipient, even a long delay, in enforcing the child support obligation does not, in and of itself, constitute a waiver of the right to claim arrears;
Any hardship that may be occasioned by a retroactive order reducing arrears or rescinding arrears, or by an order requiring the payment of substantial arrears. As put by Chappel J.:
[I]f a retroactive order reducing child support would result in the child support recipient having to repay money to the child support payor, this may militate against making the order, particularly if the payor has not given the recipient notice of the change in their circumstances, has not provided appropriate disclosure to support their claim for an adjustment to the child support, or has delayed initiating court proceedings to change the order.
Justice Brown went on to say:
61 If a retroactive reduction of child support is appropriate in light of these factors and any other relevant considerations, the court must determine the date from which the reduction should take place and the extent of the reduction. Following D.B.S., a retroactive order normally should commence as of the date of effective notice that a request is being made for a child support adjustment. It is generally inappropriate for a retroactive order to extend back more than three years before formal notice is given.
62 Where a payor seeks a retroactive reduction in child support or rescission of arrears, effective notice requires the payor to provide "reasonable proof to support the claim for a change to the [order], so that the recipient can independently assess the situation in a meaningful way and respond appropriately." As put by Chappel J.:
A child support recipient is entitled to expect that the existing order will be complied with, and to arrange their financial affairs respecting their children accordingly, unless they are in receipt of reasonable proof that a relevant change in the payor's circumstances has occurred.
63 This obligation to disclose and negotiate with the recipient parent is ongoing, so that the recipient can assess and react to changes in the payor's financial situation. A payor's failure to comply with his continuing notice and financial disclosure obligations most likely will impact the remedy which the court crafts.
Analysis
Change in Current Support Obligation
[11] Ryan cannot go behind the agreement of March 23, 2014 in seeking a change in his child support obligations.
[12] With respect to any change that may be justified currently, I rely upon the incomes indicated at line 150 of the parties' returns for the most recent taxation year, 2015, as set out at s. 16 of the Guidelines.
[13] Katharine asked that I find that Ryan's income exceeds the amount shown at line 150 of his return. I would be permitted to do so if I found, for example, that Ryan was unreasonably deducting expenses from income. Katharine did not have the assistance of a lawyer, and was unable to do more to call Ryan's deductions from income into question other than point out that his gross income has remained the same over the past three years. I questioned Ryan as to the basis of many of his deductions, and was satisfied that they were not unreasonable deductions from income.
[14] If a change is made in Ryan's current support obligation, in my view it should be effective as of July 1, 2016 and run up to and including June 2017, following the process set out in the parties' agreement. That process gives the parties sufficient time to make the required disclosure and avoids the prospect of one party or the other having to pay automatic arrears or repay overpayments.
[15] The Supreme Court of Canada has held that support arrangements between parents who have joint custody are not just based on the set-off amounts between what each parent would owe the other under the Guidelines. The set-off amount is the starting point; one should go on from there to consider the conditions, means and other circumstances of the parents and each party's spending pattern. For example, if one parent in a shared custody situation is actually bearing more than his or her proportionate share of the children's costs, that could warrant an order that the parent paying the disproportionate share receive a support payment higher than the set-off amount.
[16] In this case, Katharine says that she and Ryan should pay for organized sports or extra-curricular activities for the children. Ryan says that he does not have the means to do so. Katharine pays all the cost of these activities, over $200 monthly.
[17] I considered taking these expenses into account in deciding my order. I did not, as the parties agreed to a dispute resolution process to be followed if they were unable to agree upon section 7 expenses, a process that was not invoked by Katharine.
[18] My order is that commencing July 1, 2016 and on the first day of each month following, Ryan shall pay to Katharine support in a table amount of $130 monthly, representing the difference between the table amounts payable by each of them (Ryan owing $1,005 monthly and Katharine owing $875 monthly). Ryan shall have credit for amounts paid through the Family Responsibility office from July 1, 2016.
[19] Ryan shall also pay 54% of section 7 expenses for daycare or before and after-school care, speech and language classes for E., as agreed by the parties and other section 7 expenses as set out in the agreement.
[20] I note that the parties' latest financial statements indicate that Katharine's income is increasing. It appears that by the time of the 2017 review that Ryan's support obligation may decrease further, or Katharine may owe him support payments. Katharine may wish to resolve the impasse that the parties have with respect to responsibility for the costs of the children's extra-curricular activities and sports before that time.
Retroactive Claim
[21] Ryan's claim for a change in the order preceding the commencement of his motion to change is a claim for retroactive relief, which I have assessed pursuant to the factors set out in Gray v. Rizzi, supra.
[22] Reason for delay in commencing motion. Although he did not address this directly, it is apparent that Ryan delayed because he was attempting to negotiate with Katharine and her lawyer. That was reasonable, but Ryan did not take a reasonable approach to the negotiation. He insisted on revisiting issues already decided in the agreement, such as his support obligation up to March 23, 2014.
[23] Conduct of the payor. When Katharine did not agree with his position with respect to changing child support prior to the agreement, Ryan failed to pay support for at least 7 months, except for 2 cheques which he labeled "slut money". (Katharine did not cash those cheques.) Section 5.17 of the agreement provides that Ryan was to continue to pay the amount set out in the agreement until it was amended by an amending agreement, court order, or arbitration award. This was blameworthy behavior on Ryan's part.
[24] (Katharine registered with FRO. Ryan has since been compliant.)
[25] Ability of the payor. Ryan had the resources to pay the support when he was in default.
[26] Ongoing needs of the children. Katharine as well as Ryan was responsible for meeting the children's needs during this period. As pointed out above, Katharine was paying all the cost of their organized extra-curricular activities and sports.
[27] Hardship to the recipient. A retroactive decrease in support would require Katharine to pay monies to Ryan. Katharine was entitled to rely upon the agreement prior to the commencement of this action until Ryan took the proper steps to change or review. A retroactive variation would create further debt for her—the exact amount was not addressed in evidence, but it would exceed $1,500. Katharine's debt level is already significantly higher than Ryan's.
[28] Considering all these factors, I do not consider it fair or reasonable to order a retroactive variation in Ryan's support obligation, and I decline to do so.
Released: November 22, 2016
Signed: Justice E. B. Murray