Court File and Parties

Ontario Court of Justice

Date: October 12, 2017

Court File No.: Halton F07-172 E000

Between:

The Director, Family Responsibility Office on behalf of Tori Melburn-Kumar

Applicant

— AND —

Brian Kumar

Payor

Before: Justice Victoria Starr

Heard on: October 6, 10, and 11, 2017

Amended Reasons for Decision at Default Hearing for Temporary Default Order released on: October 12, 2017

Counsel:

• Azra Champsi, for the applicant(s)
• Logan Rathbone, for the respondent(s)

Decision

VICTORIA STARR J.:

Introduction

[1] These reasons relate to the terms of payment that ought to attach to a temporary default order. The payor/respondent seeks to pay an amount well below the level of support set out in the order to be enforced.

Background

[2] On November 29, 2016, Justice Woolcombe of the Superior Court of Justice ordered, on consent, that the respondent pay $5,554 in child support for his two children, $5,000 in spousal support to his former spouse, and starting September 1, 2017, the sum of $1,762 per month towards s.7 educational costs related to private school attendance of the children. In addition, an order for retroactive support was made which compels the respondent to pay the sum of $300,000 over a number of years, in installments of $60,000 due on June 30th of each year, starting June 30, 2017.

[3] Part of the agreement reached between the parties and thus, ordered by the court, was that there would be a mandatory review of support in May 2018, including child and spousal support, section 7 expenses [not including tuition for either the 2017/2018 and 2018/2019 academic years], and security for support. It stipulated that "... until that time the support obligations hereunder cannot be changed regardless of whether or not there is a material change in either party's circumstances".

[4] Less than four days later, when the first payment of $10,554 was due, the respondent failed to pay the full amount he had agreed to pay. In December 2016 he paid the sum of $5,554 and nothing further until the temporary without prejudice default order was made in August 2017.

[5] When the November 26, 2016, agreement and consequent order was made the respondent agreed to an imputation to him of an annual income of $460,732. At that time he was unemployed and his only source of income was from capital gains income earned from a capital trading account with approximately $123,000 in it. His evidence is that his investment and use of the capital would yield a monthly income to him of between 20% to 25% of the capital amount, (over $300,000 annually).

[6] Until October 2015, the respondent was employed as a commission salesperson for Sun Life Financial. He sold various financial instruments, but mainly life insurance policies. Pursuant to his contract with Sun Life, he would receive as a commission an amount equal to the revenue (premiums) Sun Life received for the first year that the policy was in force. However, those amounts were subject to a chargeback. If, for any reason, the clients cancelled the policy or the policy lapsed within the two years after its issuance, he would have to repay Sun Life a portion of the commission he received.

[7] In 2014, he received commission income from the sale of life insurance policies from Sun Life. He remitted the T4s for those amounts and plan to pay the taxes owing quarterly.

[8] In 2015, a number of policies that he had sold in 2014 lapsed or were cancelled. Because of this, Sun Life demanded a chargeback in the amount of $384,000. However, he had already declared the income he received and was assessed on that basis. As a result, the taxes that were owed on that amount were payable and accruing interest.

[9] While he was contracted by Sun Life, his T4 was issued by IDC World Source Insurance Network. After the policies lapsed, he approached IDC regarding the Issuance of a T4 that accurately reflected the income he received (net of the chargeback's) in 2014.

[10] IDC took the position that they could not re-issue a T4 as Sun Life had already filed their corporate returns for 2014 and had issued their financial results for the year. They advise that the only thing they could do is allow for adjustments in future years to offset the amount charged back to Sun Life in 2014 against future commissions. Essentially, they would artificially lower his reported commissions in future years to account for the income he declared in 2014 but had to pay back.

[11] This approach came to a screeching halt on October 2, 2015, when Sun Life terminated his contract with them. That meant that he would never receive a reduction in his income reported in future years due to the "set off" amount for the income he had to pay back.

[12] He raised the matter with the Canada Revenue Agency (CRA) and their position was that he had to declare the full amount of income in 2014 and remit the tax payable on that amount. Given this, he filed a notice of objection against his 2014 assessment on December 1, 2015.

[13] On February 23, 2017, he received a letter from CRA confirming that they had denied his objection and were confirming the 2014 assessment. As a result, the amount owing to the CRA for income earned in 2014 was $868,900.51.

[14] In early 2017, IDC sued him. That litigation, it appears, is still ongoing.

[15] His evidence is that at that point, the only source of income he had were the capital gains he was earning on his trading account. While this was not insignificant, it was not sufficient to cover the amount owing to CRA, in addition to servicing his other debts as well as meeting the support payments as ordered by the 2016 order of Justice Woolcombe. His trading account became subsequently depleted. He deposes that even if it had not been, it would have succumbed to the bankruptcy process.

[16] In March 2017, the respondent filed for bankruptcy.

Positions

[17] The respondent seeks an order that he pay $892 per month towards his ongoing child support obligation, $750 towards arrears of child support, and $0.00 towards both his ongoing spousal support obligation and arrears of spousal support. The total payment he asks this court to order as part of a temporary default order is thus, $1,642 per month.

[18] He does not dispute that the arrears due, and owing as at October 6, 2017, are $148,801.74. The presumption that the Director's Statement of Arrears (as orally stated in court) is correct, is therefore not challenged. The total arrears, if one includes the $240,000 of fixed arrears under the order but for which payment has not yet become due, is much higher.

[19] The basis for his position is that he is unemployed with no income, has no assets worth more than the liabilities that attach to them, and thus, no ability to pay. The amount he has proposed is based on what he thinks he will earn if he becomes employed – an annual income of $60,000.

[20] The Director seeks an order that, at the very least, compels the respondent to pay the ongoing child and spousal support amount due, which until August 31, 2017 was $10,554 per month, and starting September 1, 2017, $12,316.60. A three day committal term to attach to any payment for which there is default is also requested.

[21] The Director asserts that the respondent has not demonstrated an inability to pay due to valid reason and has failed to demonstrate that he has accepted responsibility and is placing the needs of the support recipient's ahead of his own.

[22] Both parties agree to an order that directs a three day committal term attach to any payment for which there is default, provided that the Director, proceeds to obtain such an order, on motion made with notice to the respondent.

The Issues

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

(1) Has the respondent rebutted the presumption that he has an inability to pay for valid reason;

(2) What is the appropriate amount to direct the respondent to pay towards his support obligations, pending the final hearing.

Legal Context and Principles

General Principles

[24] This proceeding is governed by the Family Responsibility and Support Arrears Enforcement Act, 1996, SO 1996, c 31 ("FRSAEA").

[25] The two key issues at a default hearing (temporary or final) are the amount owing and the payor's ability to pay the arrears and the ongoing support.

[26] A key provision of the FRSAEA sets out the presumptions that apply at a default hearing. The first is that the Director's statement of arrears is presumed to be accurate for the period in which the order is filed with the Director's office. The second is reflected under s. 41(9),

… unless the contrary is shown, the payor shall be presumed to have the ability to pay the arrears and to make subsequent payments under the [original support] order...

[27] Thus the onus is on the payor to rebut these presumptions. In this case the onus is on the payor to prove that inability to pay. Under s. 41(10) that onus requires the payor to provide "valid reasons" for an inability to pay support arrears or subsequent payments.

[28] The court's broad palate of remedies available when it finds that the payor has failed to pay support without a valid reason are set out in ss. 41(10), which reads as follows:

Powers of court

(10) The court may, unless it is satisfied that the payor is unable for valid reasons to pay the arrears or to make subsequent payments under the order, order that the payor,

(a) pay all or part of the arrears by such periodic or lump sum payments as the court considers just, but an order for partial payment does not rescind any unpaid arrears;

(b) discharge the arrears in full by a specified date;

(c) comply with the order to the extent of the payor's ability to pay;

(d) make a motion to change the support order;

(e) provide security in such form as the court directs for the arrears and subsequent payment;

(f) report periodically to the court, the Director or a person specified in the order;

(g) provide to the court, the Director or a person specified in the order particulars of any future change of address or employment as soon as they occur;

(h) be imprisoned continuously or intermittently until the period specified in the order, which shall not be more than 180 days, has expired, or until the arrears are paid, whichever is sooner; and

(i) on default in any payment ordered under this subsection, be imprisoned continuously or intermittently until the period specified in the order, which shall not be more than 180 days, has expired, or until the payment is made, whichever is sooner.

[29] As the Ontario Court of Appeal stated in Fischer v. Ontario (Director, Family Responsibility Office), 2008 ONCA 825:

Any one of those powers may be exercised by the court unless it is satisfied that the payor is unable for valid reasons to pay the arrears or to make subsequent payments under the order.

Temporary Default Orders

[30] The court's power to make a temporary order and to subsequently change it pending the default hearing is found in ss. 41(14 and (15), which read as follows:

Temporary orders

41(14) The court may make a temporary order against the payor, or a person who was made a party to the hearing under subsection (5), that includes any order that may be made under subsection (10) or (12), as the case may be.

Power to change order

(15) The court that made an order under subsection (10) or (12) may change the order on motion if there is a material change in the payor's or other person's circumstances, as the case may be. 2005, c. 16, s. 24.

[31] Subsection 41(14) does not set out the test the court is to apply when making a temporary default order. This suggests that the court is to make such order as is fair and appropriate based on the evidence before it. Thus, at its highest, the onus on the payor can be as high as that which will be applied at the final default hearing. At its lowest, such as where the payor is prepared to at least pay his ongoing obligation and something towards arrears, the onus on the payor may be as low as putting some evidence before the court for it to believe that the payor has a defence on the merits.

[32] Where the payor seeks a temporary default order that would have him or her pay less than the ongoing amount, the bar must be set higher than the lowest standard applicable. This is because another court has already determined that the level of support is appropriate based on the payor's ability to pay. The judge presiding over a default hearing must be careful as the default order he or she makes may effectively grant the respondent the relief he may not be able to obtain on the merits in any motion to change.

[33] Further, the financial assistance the support order is meant to ensure the payor provides, is often needed for children to live on. Also, the public, the recipient, and the children have an interest in ensuring that support orders are obeyed until and unless they are changed. Finally, when parties are able to breach court orders without remedy or sanction, confidence and respect for the administration of justice is undermined. Thus, when a temporary default order is made for an amount less than that set out in the order to be enforced, there is often significant prejudice to the other stakeholders.

[34] As I noted in my reasons in the case of Martinez-Scott v. Martinez-Sandoval (unreported, released September 29, 2017, copy given to counsel at the outset of this hearing), at paragraphs 38 and 39:

38 In such cases the balance may be struck by applying a higher standard. In my view that standard should be that the payor, on actual evidence before the court, demonstrate that: (1) he has a strong prima facie case on the merits; (2) is acting in good faith; and (3) has filed a sworn financial statement to demonstrate his current financial circumstances.

39 With respect to demonstrating that he has a strong prima facie case, he or she must show strong evidence that goes to the applicable merits of the defense, such as:

a. Evidence to support a variation of the underlying support order - a material change in circumstances which can be expected, if proven, to support reduced support, and an undertaking, if this has not already been done, to take immediate steps to vary the underlying order;

b. Evidence to support an argument rebutting the presumption that the Director's Statement of Arrears is inaccurate, or if the applicant is the recipient, to demonstrate that her calculation of arrears as reflected in the Statement of Money Owed is wrong;

c. Evidence that may arguably rebut the presumption of his or her ability to pay support arising from the support order;

d. Evidence to support an argument that he or she has a valid reason for his or her defaults;

e. Evidence to support an argument that he has accepted responsibility for his or her support obligation and put the child's needs before his or her own; and

f. Evidence to demonstrate that he or she has made and is willing to provide the required disclosure.

[35] With respect to the terms that may be included in any temporary default order, the court can order any of the terms available to it when making a final default order, as it sees fit and appropriate.

Analysis

[36] I dismiss the respondent's request to pay an amount that is less than his ongoing support obligation and grant the Director's request that he pay the ongoing amount. I have done so for 4 reasons, each of which is discussed below.

Reason #1: Not Satisfied Respondent has Strong Defence on the Merits (Prima Facie Case) for Variation

[37] I am not satisfied that the respondent has a strong defense on the merits (prima facie case) for variation of the underlying support order for these reasons: First, I agree with the respondent's counsel, that s. 17 of the Divorce Act sets the test for variation of a consent order and is, as clarified by the Supreme Court of Canada in its decision in the case of L.M.P. v. L.S., 2011 SCC 64, [2011] 3 S.C.R. 775 (a case relied on by the respondent).

[38] Section 17 of the Divorce Act authorizes a court to vary, rescind or suspend prior orders, defines the factors allowing for variation, and sets out the objectives such a variation should serve. As the majority notes, "Notably, unlike on an initial application for spousal support under s. 15.2(4) (c), which specifically directs that a court consider "any order, agreement or arrangement relating to support of either spouse", s. 17(4.1) makes no reference to agreements and simply requires that a court be satisfied "that a change in the condition, means, needs or other circumstances of either former spouse has occurred" since the making of the prior order.

[39] Under either s. 15.2 or s. 17, the parties' mutually acceptable agreement is not ignored, but its treatment will be different because of the different purposes of each provision.

[40] As stated by the Supreme Court of Canada, in L.M.P. v. L.S.: the proper approach under s. 17 to the variation of existing orders is found in Willick v. Willick, [1994] 3 S.C.R. 670, and G. (L.) v. B. (G.), [1995] 3 S.C.R. 370, where it was held that a court must be satisfied that there has been a material change in circumstances since the making of the prior order or variation, meaning a change that, "if known at the time, would likely have resulted in different terms". The threshold variation question is the same whether or not a spousal support order incorporates an agreement, namely, has a material change of circumstances occurred since the making of the order? The terms of the prior order are presumed to have been in compliance with the objectives of the Act at the time the order was made.

[41] In this case, it is difficult to see how the changes the respondent relies on could constitute a material change in circumstances. It appears to me that the initial change relied on – CRA's denial of his Notice of Objection and confirmation of his 2014 assessment and resulting debt to CRA – was a factor known or at least, contemplated, at the time and thus, contemplated.

[42] At the time when the agreement was reached and order made, he was well aware that: He would never receive a reduction in his income to reported in future years due to the "set off" amount for the income he had to pay back. He was well aware of the position of CRA, namely, that he had to declare the full amount of income in 2014 and remit the tax payable on that amount. His notice of objection had been filed with CRA almost a full year earlier, and thus, he was well aware that they might deny his objection and confirm the 2014 assessment; and, that if they did so, the amount owing to the CRA for income earned in 2014 would be about $868,900.51.

[43] Second, in this case the answer to the Willick question seems to me to be plain and clear as it is found in the terms of the order itself. That is, the parties, through their agreement, which has already received prior judicial approval, have provided the answer to the Willick inquiry required to determine if a material change has occurred under s. 17(4.1). At paragraph 9 of Justice Woolcombe's order the direction given is that regardless of whether a change is material, the support obligations will not be changed until the mandatory review in May 2018.

[44] At paragraphs 39 to 42 of the Supreme Court of Canada's decision in L.M.P. v. L.S., the Supreme Court makes it clear that in such circumstances, the court is directed to give effect to these intentions, bearing in mind that the agreement was incorporated into a court order, and that the terms can therefore be presumed, as of that time, to have been in compliance with the objectives of the Divorce Act when the order was made.

39 Parties may either contemplate that a specific type of change will or will not give rise to variation. When a given change is specified in the agreement incorporated into the order as giving rise to, or not giving rise to, variation (either expressly or by necessary implication), the answer to the Willick question may well be found in the terms of the order itself. That is, the parties, through their agreement, which has already received prior judicial approval, have provided the answer to the Willick inquiry required to determine if a material change has occurred under s. 17(4.1). Even significant changes may not be material for the purposes of s. 17(4.1) if they were actually contemplated by the parties by the terms of the order at the time of the order. The degree of specificity with which the terms of the order provide for a particular change is evidence of whether the parties or court contemplated the situation raised on an application for variation, and whether the order was intended to capture the particular changed circumstances. Courts should give effect to these intentions, bearing in mind that the agreement was incorporated into a court order, and that the terms can therefore be presumed, as of that time, to have been in compliance with the objectives of the Divorce Act when the order was made.

40 Alternatively, an agreement incorporated into an order may include a general provision stating that it is subject to variation upon a material change of circumstances, such as the agreement and subsequent order in Hickey v. Hickey, [1999] 2 S.C.R. 518. In such a case, the agreement incorporated into the s. 15.2 order does not expressly give the court any additional information as to whether a particular change would have resulted in different terms if known at the time of that order. The presence of such a provision will require a court to examine the terms of the s. 15.2 order and the circumstances of the parties at the time that order was entered into to determine what amounts to a material change.

41 Finally, an agreement incorporated into a s.15.2 order may simply include a general term providing that it is final, or finality may be necessarily implied. But even where an agreement incorporated into an order includes a term providing that it is final, the court's jurisdiction under s. 17 cannot be ousted (Miglin; G. (L.); Leskun). A provision indicating that the order is final merely states the obvious: the order of the court is final subject to s. 17 of the Divorce Act. Courts will always apply the Willick inquiry to determine if a material change of circumstances exists.

42 Ultimately, courts are tasked with determining if a material change of circumstances has occurred so as to justify a variation of a s. 15.2 order under s.17. The analysis is always grounded in the actual circumstances of the parties and the terms of the s. 15.2 order; what meaning a court will give any general statement of finality found in an order will be a question to be resolved on that basis. As we have explained, in some situations, the agreement incorporated into the order may help shape what is meant by a "material change of circumstances". Where a s.15.2 order deals with a specific change, it assists courts by answering the Willick inquiry through its terms. Conversely, when the order is general, or simply purports to be final, these less specific terms provide less assistance to courts in answering the Willick inquiry. Sometimes, in such cases, the circumstances of the parties may be such that courts will give little weight to a general statement of finality and conclude that a material change exists. However, at other times, in such cases, the circumstances of the parties may also be such that the courts will give effect to a general statement of finality and conclude that a material change does not exist.

[45] Third, there are many cases which stand for the proposition that the Court should not exercise its discretion to vary support or to reduce and rescind arrears when the reasons, for loss of employment, unemployment, or underemployment is due to the payor's own misconduct [see: Costello v. Costello, 2012 ONCJ 399, Rogers v. Rogers, 2013 ONSC 1997, Myatt v. Myatt (1993), 45 R.F.L. (3d) 45, Khentov v. Bieler, 2007 CarswellOnt 1832 (Ont. S.C.J.)].

[46] In Rogers v. Rogers, Justice Pazaratz, after reviewing Justice Zisman's comments in Costello (supra) goes on to review several other decisions (the review can be found at paragraphs 56 to 58). He begins the review at paragraph 56 where he states:

56. Other courts have taken a similar approach, concluding that where un-employment or under-employment is created by the payor's actions or misconduct, support obligations should not be reduced or cancelled. Marucci v. Marucci, [2001] O.J. No. 4888 (Ont. S.C.J.); [Sherwood v. Sherwood], [2006] O.J. No. 4860 (Ont. S.C.J.); Alderson v. Alderson, 1992 CarswellAlta 702 (Alta. Q.B.).

[47] At paragraph 59, Justice Pazaratz concludes:

59. I find the Applicant is solely responsible for the financial difficulties he now submits as the basis for significantly reducing his support obligations. His unemployment (and eventual underemployment) did not arise through mix-up, honest mistake, bad luck, or even isolated error in judgment. The Applicant knowingly and intentionally made very bad decisions. He broke the law — over and over again. His choices have resulted in unquestionably painful consequences. But why should the Respondent and her children share any portion of that pain? Why should a support recipient suffer from a payor's misconduct?

[48] Some of the grounds relied upon by the respondent to demonstrate a material change in his circumstances (ie. loss of CPA designation, criminal charge for which he pled guilty, depleting his capital trading account and only remaining source of income immediately prior to applying for bankruptcy), and their consequences in terms of changing his circumstances, are the result of his own misconduct or unreasonable behaviour. In light of this and the jurisprudence, I find his prima facie case, if he even has one, is weak.

Reason #2: Not Satisfied the Respondent has a Valid Reason for Non-Payment of Support

[49] I am also not persuaded that the respondent has a valid reason for his non-payment of support (ongoing or arrears). The necessity to prove this is discussed by Justice Carolyn Jones of this court in the case of Director, Family Responsibility Office v. de Francesco, [2012] O.J. No. 6338 (OCJ), and by Justice P. Bishop of the Superior Court of Justice in the case relied upon by the Director, Labrash v. Labrash, 2002 CarswellOnt 90, [2002] O.J. No. 140, 110 A.C.W.S. (3d) 1091 (SCJ).

[50] In de Francesco, Justice Jones explored the notion of valid reasons for non-payment of child support in Ontario. At paragraph 21 of her reasons she stated:

21 Valid reasons, within the meaning of s. 41(10) of the Act, imply reasons for which the payor cannot be faulted or for which the payor does not bear responsibility in the culpable sense. The court would expect some evidence of circumstances where, despite reasonable, diligent and legitimate efforts by the support payor to comply with the support order, the support payor has been unable to do so for reasons that are not connected with an unwillingness to pay, a lack of effort, a failure to prioritize the support obligation or a deliberate neglect, failure or avoidance on the part of the payor. Evidence relating to the past and present circumstances of the payor, including his financial circumstances since the time of the first default under the order, the manner in which he has applied his available income and assets, and his efforts to secure employment or income during the time that the arrears have arisen will have some bearing upon the determination of the legitimacy of the reasons the payor puts forward for his default under the support order. Circumstances that are beyond the control of the payor, resulting in the payor's inability to pay, would be valid reasons. An illness on the part of the payor, including a mental disorder, rendering the payor completely unable to work on either a full or part-time basis, as in the case before the court, would amount to a valid reason for the payor's failure to pay.

[51] In this case the main reason why the respondent cannot honour his support obligations is that his trading account has been depleted and thus, he has lost the ability to generate income from it. He gave no evidence as to why he depleted the capital in the account, when he did so, or what he did with the funds. I infer from the lack of explanation and from the fact that he clearly depleted the capital prior to making an application for bankruptcy that the loss of this source of revenue was within his control.

[52] He claims that is of no consequence because it would have succumbed to the bankruptcy process. I do not know what the effect of that would be. For example, does it mean the account would have been collapsed so that creditors could be paid? Does it mean that the capital gain income would have been garnisheed to pay off creditors? It seems to me that the latter would have been the more prudent approach, from a creditor perspective because according to the respondent, the account was generating $20,000 - $30,000 or more a month in income, a significant portion of which could have been applied to pay down the debt owed to the creditors.

[53] The respondent also relies on the loss of his Chartered Professional Accountant designation in August 2017. This was the consequence of disciplinary proceedings against him. It can hardly be said that he had no control over this, or that his inability to pay based on this reason results from an event for which the payor does not bear responsibility in the culpable sense. I do not find that this is a valid reason to explain his inability to pay.

[54] The respondent was charged with three counts of Uttering Forged Documents under the Criminal Code of Canada. These charges date back to 2014. Two counts were subsequently withdrawn. The respondent pled guilty to one count and received a conditional discharge sentence. He claims he pled guilty because he understood that the sentence he would receive as a result of the joint submissions of his counsel and the Crown, would not lead to a conviction, only a finding of guilt. He claims that this plea and sentence have prevented him from becoming gainfully employed because potential employers do not ask about convictions but rather if the applicant has ever been charged with a criminal offence. Because he is compelled to answer yes, he is not considered. Again, the actions which lead to the criminal charges, subsequent plea and sentence, were all within his control. Further, his inability to pay based on this reason results from an event for which he bears responsibility in the culpable sense. I do not find that this is a valid reason to explain his inability to pay.

Reason #3: Not Satisfied Respondent has Taken Responsibility and Put His Children's Needs Ahead of His Own

[55] The respondent continues to lead a very lavish lifestyle. His financial statement shows a monthly budget of 18,529.60. Of this, about $12,006.67 is spent on paying the mortgage for a home worth about 1.7 million and $3,411 in transportation expenses (he owns a Porsche and leases a second car). Together, just the monthly mortgage and transportation costs exceed his total monthly support obligations. He claims he is covering these expenses through loans he has obtained and with the financial assistance he receives from his fiancée.

[56] Clearly the respondent has ready access to financing and is able to access such financing readily and easily. If he did not or was not, there is no way he could maintain the vehicles, the home he lives in, or finance his lifestyle. Avoiding power of sale, repossession or the sale of his assets, and paying the lease and car loan on his two vehicles, so that he does not lose them, is his priority, not paying support. This demonstrates his failure to prioritize the support obligation.

[57] I am very disturbed by the lack of accounting with respect to the $123,000 that was in his trading account. He clearly depleted these funds while applying none of them, except perhaps the one and only payment he made towards his support obligation prior to depleting it, of $5,554 paid in December 2016. His failure to use any portion of that amount whatsoever to pay his arrears of support or to cover his upcoming monthly support obligations (for example, he could have used it to pay his support obligation up front), clearly demonstrates to me that he has not taken responsibility and has not put the needs of the children or his support obligations ahead of his own. His failure to pay any meaningful portion or all of these funds towards his support obligation, past and future, amounts to a deliberate neglect, failure and avoidance on the part of the payor.

Reason #4: Credibility and Reliability an Issue - Not Satisfied No Ability to Pay

[58] For the same reasons that I am not satisfied the respondent has accepted responsibility and placed the needs of the children ahead of his own, I am not satisfied that the respondent had and has no ability to pay, at minimum, the ongoing spousal and child support amounts due. I cannot ignore the fact that the respondent has been found by the disciplinary board of the Certified Management Accountants of Ontario to have breached the Professional Misconduct and Code of Professional Ethics. Also, he has pled guilty and been sentenced by the court on a charge of Uttering Forged Document. The latter is an offence related to honesty and integrity. He also made a promise to the recipient and the court when he agreed to pay what was ordered and when he agreed that no change, not even a material one, would justify changing the existing support obligations prior to May 2018.

[59] These all call for caution when accepting the respondent's word or promises. In this case, I question the respondent's credibility and the reliability of the information he has put before me with respect to his ability to pay ongoing support and arrears. Something is very fishy here. These are four examples that lead me to question the integrity of his evidence and motives:

(a) There was $123,000 in a capital trading account that yields 20 – 25% return monthly (in excess of $300,000 annually), yet the respondent depleted this capital, and gave no real explanation about why he did so, or where the money went;

(b) He filed for bankruptcy about 4 months after agreeing to pay support at the agreed upon level and on the condition that there will be no variation until May 2018, and knowing that if CRA dismissed his notice of objection and confirmed his 2014 notice of assessment, he would not be able to pay all that he owes;

(c) The respondent appears to have ready access to credit as he continues to be able to borrow money. This is so despite being in bankruptcy proceedings and his evidence to this court that: (a) he has nothing to offer in terms of security because he owns no asset whose value exceed the liabilities that attach to it; (b) no current source of income; and (c) only likely to find a job where he will earn $60,000 annually. This suggests that he is either not being forthright with this court, or, with those who are loaning him money. Although I acknowledge that the people loaning him money may be friends and family, none the less, he has been borrowing large sums. His financial statement shows a loan owed to his father of $274,000, a loan from Robin Kumar of $35,000, and a loan from Terry Allen of $35,000. He also borrowed the $9,000 he needed to cover his support obligation so that he could be in a position to proceed with this hearing;

(d) He claims his fiancée is also assisting him financially, but then submits a sworn financial statement that is missing key information, that could help the court assess the merits of this claim. That is he did not complete "Schedule B – Other Income Earners in the Home", thus depriving the court of the ability to know what his fiancée's income is and what ability she has to contribute towards his monthly expenses budgeted at over $18,000 a month.

(e) He argues a complete inability to pay on the basis that he has no income whatsoever, yet proposes that he pay child support equivalent to that for two children where the payor earns an annual income of $60,000. He deposed that he has no job, has made efforts to find one, and has not been able to find one despite his efforts. Where is this money to come from?

[60] All of this suggests to me that he is not being truthful when he claims he has no ability to pay ongoing support and arrears.

Conclusion

[61] For all these reasons I dismiss the respondent's request to pay reduced support pending the final hearing in this matter and confirm his obligation under the current order to pay both spousal, child, and section 7 expenses. I make no order with respect to payment on account of arrears. My priority is to make sure that the respondent honours his ongoing obligation and the ongoing needs of the recipient and the children for support, at the level agreed upon and ordered by Justice Woolcombe.

Order

(1) Temporary default order dated August 22, 2017, is varied such that on a temporary basis and pending the final default hearing in this matter, the respondent shall pay:

(a) The sum of $12,316 per month, commencing September 8, 2017 and on the 8th day of each month thereafter up to and including June 8, 2018. This amount is comprised of: $5,554 on account of his ongoing child support obligation; $5,000 on account of his ongoing spousal support obligation; and, $1,760 on account of his ongoing obligation to contribute to s. 7 expenses (private school tuition). If the final default hearing has not been concluded by September 8, 2018, payment of this amount shall resume on September 8, 2018 and continue on the 8th day of each month thereafter until and including on June 8, 2019;

(b) The sum of $10,554 commencing July 8, 2018 and on August 8, 2018; on account of his ongoing obligation to pay child support in the amount of $5,554 per month, and spousal support in the amount of $5,000 per month. If the final default hearing has not been concluded by July 8, 2019, payment of this amount shall be made on July 8, 2019 and August 8, 2019;

(2) For each payment for which the respondent defaults, he shall be incarcerated for a period of 3 days for each and every instance of default. The total period of incarceration shall not exceed 180 days. A warrant of committal shall not issue, however, unless the Director obtains such an order, on motion brought on proper notice to the respondent.

(3) The Director may bring a motion on written and proper notice to the respondent, returnable on November 22, 2017 at 11:00 a.m. for a warrant of committal to issue incarcerating the respondent in the event that he has not brought himself in compliance with this temporary default order, by November 8, 2017.

(4) Default hearing adjourned to November 22, 2017, at 11:00 a.m., to monitor motion to change proceeding in the Superior Court of Justice, for hearing of any motion brought by the Director for a warrant of committal, and to possibly set a date for a final default hearing;

(5) The Judicial Secretary is requested to email a copy of these reasons to both counsel, forthwith.

Released: October 11, 2017

Amended Reasons Released: October 12, 2017

Signed: Justice Victoria Starr