Court File and Parties

Ontario Court of Justice

Date: 2017-03-16

Court File No.: Halton 444/16

Between:

Caitlin E. Sommer Recipient

— And —

Michael Zachajusz Payor

Before: Justice Victoria Starr

Heard on: January 3, 2017

Reasons for Judgment released on: March 16, 2017

Note: No appearance by or on behalf of Michael Zachajusz, even though served with notice.

Reasons for Judgment

VICTORIA STARR J.:

Introduction

[1] This application is about child support and contribution towards section 7 expenses.

[2] The parties are the parents of one child, Tristan Elijah Zachajusz, born February 2, 2013.

[3] The applicant, Caitlin Sommer, seeks an order imputing the respondent (father), Michael Zachajusz with an annual income of $39,930 and setting the level of child support at $359, pursuant to the Child Support Guidelines, O Reg 391/97 ("the Guidelines"). In addition, she asks for an order that the respondent be required to pay the sum of $215 per month on account of three section 7 expenses.

[4] The respondent asks that his child support obligation be set at $104.24 per month based on an annual income of $15,385. He claims that only one of the add on expenses is a true section 7 expense. He asks that his share of that expense be set at 50%.

[5] The issues this court must decide are these:

1. What is the respondent's child support obligation?
2. What are the child's section 7 expenses and what is the respondent's contribution towards them?

Background

[6] The parties were never married. They began dating in 2010 and moved in with one another, here in Ontario, in 2012. After the birth of their son in 2013, they moved to Lethbridge, Alberta.

[7] The parties separated a few months after their arrival in Alberta.

[8] In May 2015 the father moved back to Ontario.

[9] There is an Amended Parenting Order in place that deals with custody and access. That order was made at the Lethbridge, Alberta Family Court by Judge E. D. Brooks, on September 24, 2015. It is silent on the issue of child support.

[10] This application is made by the mother pursuant to the Interjurisdictional Support Orders Act, 2002, S.O. 2002, c. 13 ("ISOA" or "Act").

[11] No one attended at the January 3, 2017 hearing date and the court placed its decision on reserve that day. What follows is the court's decision and reasons.

ISOA – The Legislative Context

[12] This hearing was conducted pursuant to the procedure set out in Part II – New Orders of the ISOA (Claimant outside of Ontario).

[13] Pursuant to section 13, in determining a child's entitlement to support, the Ontario court is required to first apply the law of the jurisdiction in which the child ordinarily resides, but if the child is not entitled to support under that law, the Ontario court shall apply Ontario law. In determining the amount of support for a child, the Ontario court shall apply Ontario law.

[14] There is no dispute that Tristan is entitled to support. He is the biological child of the respondent and a minor. The respondent has a duty to support him. The respondent acknowledges this responsibility and Tristan's entitlement.

[15] Section 14 provides this court with the authority to make a variety of orders at the conclusion of the hearing including a retroactive and final order.

Order

14. (1) On the conclusion of a hearing, the Ontario court may, in respect of a claimant, a child or both,

(a) make a support order;

(b) make a temporary support order and adjourn the hearing to a specified date;

(c) adjourn the hearing to a specified date without making a temporary support order; or

(d) refuse to make a support order. 2002, c. 13, s. 14 (1).

Retroactivity

(2) The Ontario court may make a retroactive support order.

Issue #1: What is the Respondent's Child Support Obligation?

Introduction

[16] The applicant's position is that the respondent should be imputed with an annual income of $39,930, and he should pay table support based on that level of income.

[17] The respondent's position is that he should pay table support of $104.24 based on an annual income of $15,385. That figure is the amount shown as his gross business income on his T1 General Tax Return for 2015. His Line 150 income for that year was $6698.28.

[18] The court's decision on this issue turns on whether the respondent's representations about what he is earning are reliable and on whether he is working to his full potential.

Applicable Legislation and Legal Principles

[19] The purpose of the Guidelines is to establish a fair standard of support that ensures that children continue to benefit from the financial means of both spouses after separation, using a methodology that strives to achieve objectivity, efficiency and consistency. Obodoechina v. Ayetor, [2013] O.J. No. 6066 (Ont. C.J.); Lee v. Lee; Milford v. Catherwood, 2014 ONCJ 276 (Ont. C.J.).

[20] Sections 15 to 20 of the Guidelines are the starting point for the calculation of a party's income for child support purposes. Section 15(1) provides that subject to section 15(2), a spouse's annual income is determined by the court in accordance with sections 16 to 20.

[21] Section 16 of the Guidelines provides that subject to sections 17 to 20, a spouse's annual income is determined using the sources of income set out under the heading "total income" (Line 150) in the T1 General Form issued by the Canada Revenue Agency, and by then making the adjustments provided for in Schedule III to the Guidelines.

[22] Both parents have an absolute responsibility to support their children to the extent that they are able to do so. Imputing income under section 19 is one way in which the court can ensure that this responsibility is met. The relevant portions of that section read as follows:

19(1) Imputing income

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 underemployed 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;

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

(f) 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).

[23] The court can impute such amount of income to a parent as it considers appropriate in the circumstances. The list of circumstances in section 19(1) is by way of example only and is not a closed list. Bak v. Dobell, 2007 ONCA 304; A. (G.) v. B. (K.), 2014 ONSC 3913 (Ont. S.C.J.).

[24] In Drygala v. Pauli, the Ontario Court of Appeal set out the following three-part test to be applied in considering a request to impute income:

1. Is the spouse intentionally underemployed or unemployed?
2. If so, is this required by virtue of his or her reasonable educational needs, or the needs of the child of the marriage, or arising from reasonable medical needs?
3. If the answer to #2 is "no", then the court must decide whether to exercise its discretion to impute income and, if so, in what amount.

[25] In the case of Tillmanns v. Tillmanns, 2014 ONSC 6773, Justice Pazaratz reviews the general principles that apply to the imputation of income under section 19(1)(a). The principles most relevant to the case at bar and which are adopted by me, are set out below.

[26] There is a duty on the part of the payor to actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their dependants.

[27] Courts have a significant degree of discretion when imputing income.

[28] The onus is on the party seeking to impute income to establish that the other party is intentionally underemployed or unemployed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made.

[29] If the court is not satisfied that the support payor is intentionally underemployed, the inquiry ends there. But once intentional underemployment is established the onus shifts to the payor to show one of the exceptions of reasonableness.

[30] "Intentionally" means a voluntary act. It does not apply to situations beyond one's control. A parent is intentionally underemployed if that parent chooses to earn less than he or she is capable of earning having regard to all of the circumstances.

[31] The court does not need to find a specific intent to evade child support obligations or bad faith in order to impute income.

[32] A parent cannot avoid child support obligations by a self-induced reduction of income.

[33] The court will not excuse a payor from their support obligations or reduce those obligations where the party has persisted in non-remunerative employment or self-employment. Where a party does so, this may entitle the court to impute income.

[34] If a court finds a payor is intentionally underemployed or unemployed, a court cannot arbitrarily allocate an imputed income. There must be an evidentiary basis for the income level to be imputed.

[35] The court must consider many factors including the age, education, experience, skills and health of the party; his or her past earning history; the standard of living during the parties' relationship; and the amount of income the payor could reasonably earn if they worked to capacity. The court can also consider the pattern of income — usually during the three years leading up to termination of employment — to determine an amount that is fair and reasonable.

[36] A person's lifestyle can provide the criteria for imputing income.

[37] Where a party fails to provide full financial disclosure relating to their income, the court is entitled to draw an adverse inference and to impute income to them. A history of deceptive behaviour or unreported income will increase the likelihood of income being imputed.

[38] An adverse inference should not, in and of itself, support imputing any amount income that one party requests. There should be a proportionate connection between the extent of the adverse inference that the Court is being asked to draw and the evidence provided.

Analysis

Why Income Should Be Imputed

[39] I do not find the respondent's representations about his income reliable. I find that he is either earning more than he reports or, if he is not, then he is capable of earning much more than he reports if he works to his full potential. I make these findings based on the following factors:

[40] First, the respondent has been residing in Ontario since May 2015. Minimum wage in Ontario is $11.40 per hour which equates to an annual income of $22,230 based on a 37.5 hour work week and 52 weeks of work a year. The respondent's annual income as reported at Line 150 of his T1 General Return for 2015 was $6,698.28. His gross business income was $15,385. In his financial statement he deposes that his income for 2016 was $18,000. All of these amounts are below the annual income of an individual working full time and earning minimum wage. A prima facie case is made out that he is underemployed. He has offered no explanation as to why he is unable to work full time at a minimum wage job, or why he is not earning an income of at least that which a person working full time at a minimum wage job could earn.

[41] The respondent has not met his onus to show that his underemployment is required by the needs of any child or by his reasonable educational or health needs.

[42] I therefore find that he is intentionally underemployed.

[43] Second, the respondent has not provided adequate disclosure. In his financial statement he states that his 2016 income is $18,000, is made up of $8,000 from employment and $10,000 in other income. He provided no details about the $10,000 in other income. The same applies for the gross business income earned in 2015. Further, with respect to the $8,000 income, he provided no pay slips. Instead, he attached a letter addressed "To whom it may concern". It is dated December 17, 2016, and written by Zenou (Chris) Zachajusz, CFO of Bremen Custom Renovations. In it Mr. Zachajusz confirms that the respondent is employed with Bremen Custom Renovations and that as at December 17, 2016, he had earned a total of approximately $8000. This letter is inadmissible hearsay. The test of necessity and reliability is not met. Chris Zachajusz is the respondent's father or a relative of the respondent. This information ought to have been provided to the court in an affidavit sworn by him. It is not reliable because of the close connection between the respondent and the writer and because the respondent did not provide copies of any pay stubs.

[44] Even if it were admissible, I would have placed little weight on it because of the close connection between the respondent and the writer, and because it's probative value is minimal. For example, there is no explanation whatsoever as to why the respondent's earnings are so low, when he started with the company, the number of hours the respondent worked, the hourly rate paid, what the respondent is employed as, whether he works full time or part-time, etc.

[45] Third, the respondent's representations do not measure up. He does not deny the applicant's claim that he is often paid in cash. This suggests that he has an ability to divert income by underreporting it. In his financial statement the respondent deposes that his household budget is $1,869 a month or $22,308 annually. To be able to pay $22,308 in household expenses in after tax dollars, the respondent would have to be earning significantly more than the gross business income of $15,385 as well as the $6,698.28 he claimed as his personal income in 2015. The same reasoning applies to the $18,000 he claims he earned in 2016. No explanation is given as to how he manages to cover the deficit in his household budget, save and except that he says his girlfriend helped him with financing his vehicle. Based on his ability to underreport cash income and this discrepancy in his budget, I find that he is likely earning more than he says he is.

The Level of Income Imputed

[46] I have imputed the respondent with an annual income of $34,700. In determining that this is the appropriate level of income to impute to him I considered and weighed the following factors:

(a) The respondent's own evidence is that at the time when the parties separated he agreed that he would pay the applicant $300 a month in child support. To be required to pay this level of child support pursuant to the Guideline tables, the respondent would have to be earning at least $34,700 per year. Based on this and the fact that the respondent himself agreed to pay $300 a month I draw the adverse inference that when he is working to his full potential, he can earn, and does earn, an annual income of at least $34,700.

(b) The respondent is not unskilled or inexperienced. He has not challenged the applicant's evidence that he has worked as a car salesman (around 2010), bouncer (in 2015 and onwards), and as a residential painter. He himself admits that he needs a vehicle in order to store his paint and work equipment. His income tax return for 2014 and 2015 show that he is self-employed and operating a business called "Michael Zachajusz Painting". The evidence also shows that he has reported to at least one creditor that he is employed as a manager by Brennen Custom Renovations.

(c) The applicant submitted a number of text messages exchanged between her and the respondent. The respondent admits to sending the messages attributed to him. Based on the content of his text messages and the applicant's evidence, the respondent has historically earned between $17 and $21 per hour as a painter. Based on an hourly wage of $17, the respondent could, if he worked full time, earn as much as $33,150 annually. Based on $21 per hour, he could, if he worked full time, earn as much as $40,950 annually. The level of income I have imputed to him falls within this range, and is at the lower end.

(d) Although I accept that the respondent may not always work 37.5 hours a week (as there is no doubt down time in between painting jobs etc.), the evidence is that there are other times when he works longer hours and earns overtime. Also, he is able to (and does) supplement his income by working as a bouncer. The respondent admits in his 2015 text messages that he was then working as a bouncer on Saturdays, and earning $300 a month in additional income.

(e) Without more details and further explanation from the respondent, I conclude that in the end, between the cash income, potential overtime income and his ability to supplement his income with other remunerative work, such as working as a bouncer, the respondent is able to earn, and likely does earn, at least $34,700 annually.

[47] The applicant sought to have the respondent imputed with an annual income of $39,930. Looking at her calculations, the range in hourly rate that the respondent appears to have earned based on her evidence, including the text messages, and the respondent's gross business income and Line 150 income in past years, it seems to me that she has overstated his income. She seeks to have income imputed to him at the highest end of what the evidence indicates he is capable of earning in Ontario. She makes reference to the respondent's father's accountant and his creative accounting practises, but I do not see the relevance of what the respondent's father and his accountant do or do not do. The expenses the respondent deducts from his gross business income are reflected on the Statement of Business and Professional Activities attached to his 2014 and 2015 income tax return. There does not appear to be any creative accounting there. The only business expenses claimed in 2015 are use of vehicle and home. Even when these were added back to his income for 2015, his reported income is still only $15,384.18. No expense where claimed in 2014.

[48] Finally, the respondent has set out in great detail particulars of how the applicant has failed to honour the terms of the amended parenting order. He also sets out how he had to defend himself against allegations that he had sexually abused the child, which defence came at significant legal cost. Further, he asserts that he is living paycheque to paycheque and has a sizable truck payment to make each month. He seems to rely on these things as justification for not paying support or for not paying as much support as he agreed to. While the court has some sympathy for him, particularly given the wrenching expressions of emotional pain and loss he makes in various text messages, none of these factors is relevant to the court's determination of the respondent's child support obligation.

[49] A claim for undue hardship was not advanced and in any event, his plea of poverty (i.e. living pay cheque to pay cheque, having to pay vehicle loan payments) are not persuasive. They are tempered by the fact that he can afford to fund a significant monthly payment towards maintaining insurance on his life. Also by the fact that, for almost two years now, he has left the applicant almost completely on her own to financially support his son. This is because he was very hurt and angry with her. It was inappropriate to express his anger and hurt by reducing the funds available to her to provide for their son.

Table Amount, Commencement Date and Credit Against Arrears

[50] The Guideline table amount payable for one child where the payor has an imputed annual income of $34,700 is $300 a month. This shall be set as the respondent's child support obligation.

[51] The applicant asks that child support be retroactive to May 1, 2015. I find that this is an appropriate date. The evidence shows that the applicant broached the issue of child support and the respondent's contribution towards daycare in May 2015. In the months that followed she repeatedly requested that the respondent honour the agreement they had reached with respect to child support, or agree to a reasonable alternate level of support. The respondent was not prepared to pay either. His resistance and sporadic payment of varying small amounts forced the applicant to go to court. Indeed, he taunts her to take him to court. She did not delay in doing so. I have set May 1, 2015, as the commencement date. This is the obvious date of effective notice.

[52] There is a need to ensure that the respondent is credited for the payments he made after that date. The documentary evidence that both parties have provided shows that the respondent paid the applicant: $300 in or about September or October 2015, $150 in or about August 2015, and $150 on or about April 2016. A credit against the arrears that will result from this order, in the amount of $600, should be given to him.

Issue #2: What Are the Section 7 Expenses and the Respondent's Contribution?

Introduction

[53] The applicant seeks an order that the respondent be required to pay the sum of $215 per month on account of these three section 7 expenses:

(a) Child care through Little Bear Day Homes, the total cost of which is $278 per month or $3336 annually, after deducting subsidies available;

(b) Babysitting, the total cost which is $50 per month or $600 annually;

(c) Premiums to maintain the child as the beneficiary on her extended health and dental care plan, the total cost of which is $102 per month or $1224 annually.

[54] The respondent agrees to pay ½ the cost of child care through Little Bear Day Homes in the amount of $139 per month. He asks that the applicant's claim for contribution from him towards the $600 a year in babysitting costs and the $1224 per year in premium costs related to extended health care coverage, be dismissed.

[55] The court's decision on this issue turns on whether the applicant has met her onus to show that the babysitting costs are incurred as a result of her employment, illness, disability or education or training for employment needs. With respect to the extended health care plan premiums, the court's decision turns on whether the applicant has met her onus to show that the amount she claims is the portion of the insurance premiums attributable to the child.

Legal Considerations

[56] The onus is on the parent seeking the special or extraordinary expenses to prove that the claimed expenses fall within one of the categories under section 7 and that the expenses are necessary and reasonable, having regard to the parental financial circumstances. See: Park v. Thompson (2005).

[57] In awarding section 7 expenses, the trial judge calculates each party's income for child support purposes, determines whether the claimed expenses fall within one of the enumerated categories of section 7 of the Guidelines, determines whether the claimed expenses are necessary "in relation to the child's best interests" and are reasonable "in relation to the means of the spouses and those of the child and to the family's spending pattern prior to the separation." If the expenses fall under clauses 7(1)(d) or (f) of the Guidelines, the trial judge determines whether the expenses are "extraordinary". Finally, the court considers what amount, if any, the child should reasonably contribute to the payment of these expenses and then applies any tax deductions or credits. See: Titova v. Titov, 2012 ONCA 864 (Ont. C.A.).

[58] Unlike section 3 of the Guidelines which presumptively provides for the table amount of child support, an order for section 7 expenses involves the exercise of judicial discretion. When exercising its discretion, the court should also consider the objectives of the guidelines, including clause 1(a), which reads as follows:

1(a) "to establish a fair standard for children that they benefit from the financial means of their parents and, in the case of divorce, from the financial means of both spouses after separation;"

[59] The provisions of section 7 of the Guidelines that are relevant in this case read as follows:

7. (1) In a child support order the court may, on either spouse's request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child's best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family's spending pattern prior to the separation:

(a) child care expenses incurred as a result of the custodial parent's employment, illness, disability or education or training for employment;

(b) that portion of the medical and dental insurance premiums attributable to the child;

Analysis

Percentage Shares

[60] The applicant's unchallenged evidence is that her annual income for the purposes of apportioning responsibility for the net cost of section 7 expenses is $44,485.64. This level of income is higher than her Line 150 Total Income on her T1 General tax return and notice of assessment. It is corroborated by the information on her pay slips. I find that her annual income for the purpose of apportioning responsibility for section 7 expenses is $44,485.64.

[61] The respondent suggests that section 7 expenses be shared equally. I assume that that request was premised on the assumption that I would order child support of only $104.24 per month. As I have not done so, I have considered whether I should deviate from the usual approach of directing that each party pay his or her proportionate share. I see no reason in this case to do so.

[62] Using an income to the applicant of $44,485.64 and an income to the respondent imputed at $34,700, the total of the parties' combined incomes is $79,185.64. Of this total, the respondent's percentage share is 43.8%. This shall be his proportionate share of section 7 expenses.

Child Care

[63] I have no difficulty finding that child care provided by Little Bear Day Homes is a valid s. 7 expense. The mother's evidence is that the annual cost is $3,336 and that this is the net amount after deducting available subsidies. She has provided sufficient documentation to corroborate this expense and her estimate of its future cost. The respondent has not challenged her evidence as to necessity or reasonableness of the expenses. He agrees to share it. I therefore find that the annual cost of $3,336 is to be shared.

[64] The applicant has asked that the respondent's obligation to contribute towards section 7 expenses start on May 1, 2015. The problem with respect to Little Bear Day Homes is that the respondent, based on the evidence before me, appears to have already paid his share of the expenses up to November 2, 2015. In this regard I note the following: The documentation before me from Little Bear Day Homes shows that the respondent paid some of his share of the expenses up to November 2, 2015. It shows that as at November 2, 2015, he owed $495.50. The documentation from the respondent shows that he paid $495.50 to Little Bear Day Homes on or about February 26, 2016. I find therefore that as far as what he owed as at November 2, 2015, he has cleared that debt.

[65] I have no evidence that the respondent has contributed towards the child care expenses incurred after November 2015. Therefore, I have set the start date for his contribution towards this expense as November 1, 2015.

[66] For these reasons I find that, commencing November 1, 2015, the respondent's 43.8% of the total cost of $3336 annually is $121.76 monthly. This is the amount I have ordered below payable in addition to the $300 a month child support table amount.

Babysitting

[67] I am not able, on the evidence before me, to find that the babysitting cost is a section 7 expense. The applicant has not provided receipts for that care or an explanation as to when and how the need for babysitting arises on top of full time day care. I cannot find that this expense is reasonable and necessary to enable the applicant to work. The applicant's claim for contribution from the respondent towards babysitting costs is dismissed.

Extended Health and Dental Plan Premiums

[68] I am also unable to find, on the evidence before me, that the $102 the applicant pays in premiums per month to maintain extended medical and dental care coverage, represents the portion of the premium attributable to the child. The document that she has produced lists only her as the beneficiary of the plan. There is no reference to the child. Further, more than once it makes specific reference to the plan being an "individual benefits plan". One would have thought, that if this expense related to the portion of any premiums the applicant has to pay to maintain medical and dental coverage for the child, that the reference would have been to something more akin to "family benefits plan" or that the child's name would have been listed as one of the beneficiaries. Further, it seems to me that even if the child is a beneficiary under the plan, the amount claimed is the total of the premium, not the portion attributable to the child. The respondent is required to contribute to the portion of the premiums which relates to the applicant.

[69] It may very well be that the applicant is able to provide extended health care coverage for the child. If she does, then this is a proper section 7 expense to which the respondent shall be required to contribute. Therefore, while I dismiss the applicant's claim for a specified contribution from the respondent towards the premiums, I have made an order below that directs that upon presentation of documentary proof from the applicant of the portion of any premium she pays towards an extended health and dental benefits plan attributable to the child, the respondent shall pay his proportionate 43.8% share, starting on the first day of the month immediately following the applicant's presentation of such evidence.

Conclusion and Order

[70] For all of these reasons this court makes the following final order:

(1) Commencing May 1, 2015, and continuing on the first day of each month thereafter, the respondent shall pay to the applicant, child support in the amount of $300 per month. This is child support for the child, Tristan Elijah Zachajusz, born February 2, 2013. This level of child support is based on an imputed annual income to the respondent of $34,700. It is the Guideline table amount for one child based on that level of income;

(2) When calculating the respondent's arrears of child support, he shall receive a credit of $600 on account of direct payments made to the applicant between May 2015 and October 2015. This credit shall be in addition to any amounts over and above $600 that the applicant acknowledges receipt of.

(3) In addition to the forgoing child support payment, commencing November 1, 2015 and continuing on the first day of each month thereafter, the respondent shall pay to the applicant as his 43.8% proportionate share of the child's section 7 expenses, the sum of $121.76 per month. This is his proportionate share of the total cost and future estimated cost of child care, $3336 annually. This percentage is based on an annual income to the applicant of $44,485.64 and an imputed annual income to the respondent of $34,700.

(4) Upon presentation of documentary proof from the applicant of the portion of any premium she pays towards an extended health and dental benefits plan attributable to the child, the respondent shall be required to pay his proportionate 43.8% share. He shall begin paying his share starting on the first day of the month immediately following that in which the applicant's presents such evidence.

(5) The balance of the applicant's claims are dismissed.

(6) Court services is requested to:

(a) Prepare, issue and enter this order; and,

(b) Take the necessary steps that must now be taken pursuant to the Interjurisdictional Support Orders Act.

(7) Separate SDO to issue.

Released: March 16, 2017

Signed: Justice Victoria Starr