Court File and Parties
Ontario Court of Justice
Date: 2017-10-24
Court File No.: Toronto DFO-15-13529
Between:
ANGELA POHQUONG Applicant
— AND —
DAVID MARKS Respondent
Before: Justice Alex Finlayson
Heard on: September 26 and 27, 2017, and October 4 and 5, 2017
Reasons for Judgment released on: October 24, 2017
Counsel:
- Jessica Gagné, counsel for the applicant
- David Marks, on his own behalf
ALEX FINLAYSON J.:
PART I: INTRODUCTION
[1] This is my ruling following a focused trial I heard primarily concerning child support for the parties' child, Hanna PohQuong Marks, born September 13, 2009.
[2] The Applicant mother is Angela PohQuong and the Respondent father is David Marks. The parties were married on August 21, 2005, separated on May 13, 2013, and were divorced on June 28, 2014. Hanna is 8 years old.
[3] There were four issues for this focused trial, namely:
(a) the determination of each party's income;
(b) whether either party is owed any amounts for retroactive child support, or for special or extraordinary expenses pursuant to section 7 of the Child Support Guidelines, O. Reg. 391/97, as amended, ("s. 7 expenses");
(c) what is the correct amount of prospective child support and s. 7 expenses; and
(d) the determination of which parent is entitled to claim various tax credits and benefits in particular years.
[4] Soon after their separation, the parties entered into a Separation Agreement dated July 26, 2013. The Separation Agreement provides that Hanna resides with each parent 50% of the time pursuant to a two week rotation and the father pays child support of $231 per month for Hanna. This is a straight set-off of his table child support obligation less the mother's table child support obligation. There are terms requiring the parties to share certain s. 7 expenses, and future s. 7 expenses are to be shared provided there is consent, not to be unreasonably withheld. The Separation Agreement further requires the parties to adjust child support and s. 7 expenses annually based on changes to their incomes. Finally, there is a paragraph in the Separation Agreement that purports to address how the parties will share tax credits and benefits relating to Hannah.
[5] In a nutshell, the parents could not agree about their incomes in each year since the Agreement or about the consequent amounts owing at each annual adjustment as a result. And, as I will explain below, the tax clause in the Separation Agreement is essentially an unenforceable agreement to agree. As the parties could not agree, each asked me to make an order about this too.
[6] At the outset of the trial, the mother tendered a draft Order, which I marked as Exhibit 2. The draft Order requests that I fix arrears of child support at $9,356.55 up to December 31, 2016, that I fix additional arrears at $1,325 for 2017, and that the father pay ongoing child support of $730 per month.
[7] As the evidence unfolded, the mother changed her position concerning the quantum of arrears and the amount of ongoing support that she claims. In her closing submissions, she asked me to make an order fixing her arrears at $7,882 to the end of 2016, and fixing prospective child support of $681 per month. Presumably, there would be arrears in 2017 on this basis too, but I was not given her revised number in closing submissions. I will nevertheless fix the total amount of arrears to date in these reasons.
[8] The father disputes that any amount of retroactive support is owing. He says that actually, he overpaid and wants a credit. However, the evidence revealed this not to be the case.
[9] The father asks that I make an order for retroactive s. 7 expenses. Since the Separation Agreement, the father has paid for 100% of Hanna's cello and mandarin lessons. He claims the mother's contribution to these expenses.
[10] In response, the mother asks me to find that there are no arrears of s. 7 expenses owing to the father. She proposes that prospectively she will pay for 100% of Hanna's swimming and I should order the father to continue to pay for 100% of Hanna's cello and mandarin lessons. Alternatively, she says that all three expenses could be shared by the parties proportionately to their incomes, but I should make this Order prospectively only, and cap the mother's contribution at $1,500 per year.
[11] According to the father, the mother's proposal that she pay for swimming only is unfair, since swimming is a minor expense in relation to cello and mandarin. Furthermore, swimming is about to come to an end as Hannah is close to the top level, whereas cello and mandarin will be ongoing. In a nutshell, the father says that all three expenses are properly shareable, and that they ought to have been shared to date. He says that the mother has unreasonably withheld her consent to these expenses. I agree with the father's approach to the s. 7 expenses.
[12] Regarding the tax credits and benefits, the mother proposes that the parties will alternate claiming the dependent tax credit for Hanna on a go forward basis only. Like her position regarding retroactive s. 7 expenses, she says she ought to be allowed to keep the tax credits and benefits she claimed in the years since the Agreement. She argues that it will cause her hardship if I order otherwise. Furthermore, the mother says that I have no jurisdiction to make an order granting the father relief retroactively. She argues that I have jurisdiction to make a prospective order for the sharing of tax credits and benefits only indirectly by wording the new child order in a certain fashion. And she says that I may only do this based on her consent. Otherwise she argues that I cannot compel the Canada Revenue Agency ("CRA") to apply the credits and benefits to one parent or the other in any particular year.
[13] The father agrees that I cannot make an order compelling the CRA to provide him with the tax relief he seeks. But instead, he asks me to make a retroactive and prospective child support order, worded in such a fashion to make it more likely that the CRA will confer upon him this relief in a related appeal he has launched to the CRA. As I understood the submissions, the mother consents to me doing this prospectively only.
[14] Based on the parties' Separation Agreement, which I have not been asked to vary, I am not prepared to recreate the language in the parties' Separation Agreement. But as both parties have consented to this prospectively, I am making orders that each parent pay the other child support rather than ordering the straight set-off contained in the Separation Agreement.
PART II: PRELIMINARY ISSUES
[15] At a Trial Management Conference before Justice Cohen held June 26, 2017, the parties agreed that their evidence in chief would be tendered by way of affidavit, subject to cross-examination, and they agreed to prepare documents briefs and written opening trial statements for what was supposed to be a focused trial. Both parties were represented by counsel when this Endorsement was agreed to, and each told the Court on June 26, 2017 that they expected to be represented at trial.
[16] While each party supplied an affidavit and financial statement for the trial, neither party prepared the necessary documents briefs nor the written opening trial statements required by the June 26, 2017 Endorsement. The mother blamed the father, saying that he is self-represented and didn't follow the Order, so neither did she. Consequently I asked a number of questions at the outset of the trial to ascertain the parties' positions. I also permitted each party to provide oral evidence in chief in addition to the affidavit evidence filed, prior to cross-examination.
[17] At the outset of the trial, without prior notice, the mother raised a number of evidentiary objections to various paragraphs of, and attachments to the father's affidavit sworn August 28, 2017. For oral reasons given, I declined to strike paragraphs 5, 7, 12, and 16 through 19 of the affidavit. I struck paragraphs 9, and Appendices 5 and 7 to that affidavit, as these portions of the father's materials referred to settlement discussions and a case conference.
[18] I indicated that I would rule on the admissibility of paragraph 20 and appendices 10-12 of the father's affidavit sworn August 28, 2017 after hearing all the evidence. This is because the relevance of those portions of the father's material was unclear to me during the preliminary argument. Having now heard the evidence in its totality, paragraph 20 and these appendices heavily focus on what transpired at a mediation that did not result in any agreement between the parties. While the father argues that these sections speak to unreasonable conduct on the mother's part, I find the relevance of these sections of the father's materials to be lacking in relation to the issues I must decide. As these portions of the father's materials primarily focus on discussions in mediation, they are also inadmissible. Although I did not initially strike these portions of the father's materials as requested by mother's counsel at the outset of trial, I did not rely on these portions of the father's materials in any way in deciding the issues before me.
[19] A significant amount of time spent during the trial focused on whether the father had failed to meet his disclosure obligations to the mother since the Separation Agreement was signed. As I will explain below, the father is a salaried employee. However, he owns a condominium and he has a separate basement apartment in his home, both which generate rental income for him. Although the parties undertook annual adjustments to the child support pursuant to the Separation Agreement, a core issue in this trial was whether the father withheld financial disclosure of his rental income and expenses, resulting in underpayments to the mother in the annual adjustments.
[20] As I was not given the written opening statements that were ordered on June 26, 2017, I initially assumed that the mother's claim for retroactivity was going to be disputed by the father, hence the need for this evidence of non-disclosure. However, during the trial, I was told that both parties want me to calculate support retroactively back to the time of the first review in accordance with the review mechanism in the Separation Agreement. What is really in issue is that their respective numbers differ.
[21] I specifically asked the parties whether they would be asking me to vary the Agreement, or merely apply its terms to a factual dispute. This is because if I were being asked to vary the Agreement, then I would be required to first find whether there had been a material change in circumstances. Then if I so found, I would be required to apply section 9 of the Child Support Guidelines. Section 9 requires a more involved analysis than the mathematical exercise of applying a straight set-off calculation. But both parties stated that neither was asking me to vary the Agreement, and both asked me to simply calculate the set-off after determining the parties' incomes. Neither party called the necessary evidence for me to engage in a proper analysis pursuant to s. 9 of the Guidelines in any event.
[22] Given the parties' positions respecting these issues, I need not find that the father has failed to meet his disclosure obligations for the purposes of considering whether to make a retroactive order. However, the father's disclosure remains relevant to three other issues.
[23] The first is whether I ought to disallow the father deductions for rental expenses. As part of her evidence in chief, the mother attached charts of the father's rental income and expenses that he had prepared and supplied to her. The father did not append these charts to his affidavit. Neither party tendered any of the receipts for the expenses, and it was apparent throughout her cross-examination that the mother intended to argue that I ought to 'add-back' all of the rental expenses that the father deducted based on his failure to produce the receipts.
[24] This trial was scheduled for one day on September 26, 2017. The parties called all of their evidence by the end of the first day of trial, but there was insufficient time for me to hear submissions. So I adjourned the submissions to be heard the following day, on September 27, 2017.
[25] On September 27, 2017, the father attended and told me that he had briefed his rental expenses receipts for 2015 and he wished to introduce this further evidence. He also said that he wanted a short adjournment to finish organizing his receipts for the other relevant years. The mother strenuously objected on that basis that the father already closed his case, that she had requested these receipts previously, and that her counsel had already prepared submissions based on the lack of evidence in the record.
[26] I granted the adjournment to October 4, 2017, made a disclosure order respecting the receipts and some missing tax returns, and I permitted the father to call additional evidence, limited to the rental issue. I told the mother's counsel that she could call additional evidence arising out of the father's evidence should she wish. I fixed costs thrown away at $3,500, but reserved them to be dealt with in the overall decision respecting costs.
[27] I proceeded in this fashion because I felt it was necessary to ensure that the process was fair. In making this decision, I was mindful that allowing the case to be split in this fashion is unusual. However, I was also mindful that:
(a) I had a self-represented litigant before me;
(b) I had some evidence of the father's rental income and expenses in chart form before me, but not the receipts; and
(c) The mother intended to ask me to add the father's gross rental income without deduction for any expenses, when there was available evidence as to the true state of affairs. I wanted to ensure I had the best evidence before the Court and not make an order based on a factual fiction.
[28] In making the decision to allow the father to call additional evidence, I was mindful of my duty to deal with cases justly in Rule 2 of the Family Law Rules, O. Reg. 114/99, as amended as well as the Statement of Principles on Self-represented Litigants and Accused Persons (2006) established by the Canadian Judicial Council and endorsed by the Supreme Court of Canada in the recent decision of Pintea v. Johns, 2017 SCC 23.
[29] These principles required me to, among other things, ensure that I not deny the father relief based on an easily rectified deficiency in his case. The father was not disrespectful, frivolous, unreasonable, vexatious, abusive, or making no reasonable effort to prepare his own case. To the contrary, he was respectful, well prepared and presented his case in a persuasive manner. I note that Justice Laura Fryer used these principles as an interpretive aid in Gray v. Gray, 2017 ONSC 5028 (S.C.J.) in deciding whether to exercise her discretion to set aside an order under rule 25(19) of the Family Law Rules. I followed that approach.
[30] Consequently, on the afternoon of October 4, 2017, I heard the balance of the evidence. The father tendered his complete tax returns for 2013-2016 organized in a binder, which had not been tendered previously. I marked the binder of his tax returns as Exhibit 13. The father further prepared a binder of his rental income and expenses with supporting documentation for the years 2013-2016, which I marked as Exhibit 21.
[31] The father ought to have prepared these briefs prior to trial in accordance with the Order of June 26, 2017. But the father is not the only party at fault. Frankly, both parties ought to have followed the Order of June 26, 2017 fully prior to trial. The mother's attempt to justify her own non-compliance with the Order by referencing the father's non-compliance is not persuasive.
[32] Following the receipt of this additional evidence, the mother refined her submissions and focused on specific categories of expenses that she says I ought to disallow and add back to the father's income for child support.
[33] The level of the father's disclosure is also relevant to his credibility. The mother says that the manner in which the father answered questions in cross-examination about his disclosure is not credible, and so I ought not give him the benefit of the doubt when it comes to any rental expenses that he paid for with cash. In other words, the mother's refined position became that I ought to disallow expenses for which the father cannot produce receipts because I cannot trust his oral evidence that he paid for such expenses. Of course, the father disagrees with this approach. For the reasons set out below, I cannot give effect to the mother's submission in this respect.
[34] Finally, the father's disclosure is relevant to costs and I have already reserved costs relating to the mid-trial delay. I am making provision for the exchange of costs submissions if the parties cannot agree.
PART III: THE GOVERNING TERMS OF THE SEPARATION AGREEMENT
[35] The relevant portions or paragraphs of the Separation Agreement are:
Part 4: Parenting: As set out above, Hanna resides with each parent 50% of the time and there are various terms that set out a detailed shared parenting Agreement;
Part 5: Child Support: I reproduce certain paragraphs from the Separation Agreement as follows:
5.1 In this section:
(a) "Table" and "income" mean "Table" and "income" as those terms are defined in s. 2(1) of the Guidelines;
(b) "Special or extraordinary expenses" means "special or extraordinary expenses" as this phrase is defined in s. 7(1) of the Guidelines;
(c) "child support" refers to the monthly amount upon which the parties have agreed and may include both Table support and special or extraordinary expenses.
5.2 For purposes of determining child support for Hanna, Angela's annual income not including discretionary bonuses is $80,000.00 and David's annual income in 2012 was $109,635.00.
5.3 The parties share custody of Hanna. In determining the appropriate Table child support to be paid, the parties have consider the Table amounts for each parent, the increased cost of this shared custody arrangement (including appropriate housing, transportation and the duplication of toys, equipment and clothes), and the condition, means, needs and other circumstances of each parent and Hanna.
5.4 To satisfy each party's obligation to pay child support in accordance with the Guidelines, David will pay to Angela as Table child support for Hanna the amount of $231.00 per month commencing July 15, 2013 and on the 15th day of each month thereafter until a change in child support under the sections that follow or a terminating event under section 5.17.
5.7 The parties will adjust the Table amount of child support paid each calendar year based on the parties' actual incomes for that calendar year. By no later than May 15th of each year, Angela and David shall exchange copies of their Income Tax Returns, as filed, and Notices of Assessment upon receipt, for the prior calendar year (the "applicable calendar year"). The parties shall then determine the appropriate Table amount of the parties' child support obligation for the applicable calendar year, in accordance with the Child Support Guidelines. If David has underpaid the Table amount of his child support obligation for the applicable calendar year, he shall provide Angela with the additional amount owing for the applicable calendar year within 30 days. If David has overpaid the Table amount of his child support obligation for the applicable calendar year, he may deduct the overpayment from his current child support over 6 months in equal installments.
5.8 The parties will further adjust the ongoing Table amount of child support payable based upon the parties' respective incomes for the previous calendar year (applicable calendar year). The adjusted Table amount of child support shall be effective June 1st. If the parties do not agree about the adjustment to be made, they will use the section of this Agreement entitled "Dispute Resolution" to resolve the issue.
5.9 Hanna's current special or extraordinary expenses include daycare/private school attendance at the Waldorf Academy.
5.10 Angela will pay 42% of Hanna's special or extraordinary expenses and David will pay 58% of these expenses. The parent who incurred the expenses will delivery proof of these expenses to the other parent within 5 days.
5.11 If the special or extraordinary expense can be claimed as a tax deduction or a tax credit can be claimed on account of the expense, the parties will first discuss with their accountant how these expenses should be claimed on their respective Income Tax returns before determining each party's respective proportionate share of the expense.
5.12 The parties will only contribute to Hanna's additional special or extraordinary expenses if the parties consent to the expenses in advance, in writing. Neither party will unreasonably withhold consent. If the parties cannot agree, they will use the section of this Agreement entitled "Dispute Resolution" to resolve this issue.
5.13 Future special or extraordinary expenses may include the following:
(a) Hanna's secondary school education at a private institution;
(b) post-secondary education costs;
(c) Special classes and lessons not offered by Hanna's school which may include, but are not limited to music lessons and/or language classes;
(d) Extra-curricular activities in addition to those Hanna participates in at school; and
(e) summer camps.
5.14 By June 1st of each year, the parties will do the following:
(a) adjust their respective proportionate share of Hanna's special and extraordinary expenses paid during the previous calendar year based on the parties' actual incomes for that year;
(b) provide reasonable evidence, in writing, of the amounts each party incurred for Hanna's special or extraordinary expenses for the previous calendar year. A party who has not contributed his or her proportionate share of Hanna's special or extraordinary expenses will immediately reimburse the other party; and
(c) adjust their respective proportionate share of Hanna's special and extraordinary expenses going forward based on the parties' actual incomes for the previous calendar year.
5.15 The parties will share equally the cost of any significant gifts for Hanna and, if possible, will present the gift to Hannah together.
5.16 If either party wishes to purchase membership fees and/or annual passes for Hanna for, but not limited to, the Metro Zoo, Art Gallery of Ontario and the Ontario Science Centre, that party will do so at his or her own expense without contribution from the other parent, unless the other parent voluntarily offers to contribute to the cost of same.
5.26 In consultation with their respective accountants, the parties will determine annually who should claim the Canada Child Tax Benefit, the refundable children's GST/HST credits and the eligible dependent credit for Hanna.
PART IV: PRIOR LEGAL PROCEEDINGS
[36] The mother filed the Separation Agreement with the Court on December 21, 2015. It appears that the Director, Family Responsibility Office ("FRO") commenced enforcing it on or around February 15, 2016. The mother then filed a Motion to Change the Separation Agreement on March 7, 2016. At the time, based on the disclosure she then had, she asked for arrears of $1,827.05 and an order fixing prospective child support at $576.61 per month based on the father's annual income of $132,184.00. In his Response to Motion to Change, the father made a claim for various parenting orders, asked the Court to set child support at "TBD" based on his income of $143,415.00 commencing June 1, 2016, and claimed various s. 7 expenses back to 2013.
[37] This Court made the following orders prior to trial:
(a) On July 8, 2016, on consent, Cohen J. ordered the father to pay temporary child support of $714.00 per month, which was a set-off based on the father's "adjusted 2015 income" of $143,415.00 and the mother's "adjusted 2015 income" of $55,203.00;
(b) On December 20, 2016, on consent, Cohen J. made a temporary order that Hannah reside with the parents pursuant to a week-on, week-off schedule and she ordered the parents to bring Hannah to her cello, mandarin and swimming lessons when Hannah was in their care. She also appointed the Children's Lawyer;
(c) On April 7, 2017, on consent, Cohen J. made a final order that Hannah reside with the parents pursuant to a week-on, week-off schedule, that the parents to bring Hannah to her cello, mandarin and swimming lessons when Hannah was in their care, that they ensure that Hannah attends any related "workshops, performances, competitive meets/competitions, etc. associated with" those extra-curricular activities, and that they encourage her participation in the activities. The Consent Order provides that future activities would be agreed upon in consultation with Hannah, with consent not to be unreasonably withheld. The Consent also includes terms relating to travel and other issues that are not relevant to the issues at trial;
(d) On June 26, 2017, Cohen J. converted what was supposed to be a Settlement Conference into a Trial Management Conference as the parties were not settling the financial issues. She made a disclosure order and she made directions regarding the conduct of the focused hearing. As set out above, neither party fully followed those directions.
PART V: ISSUES AND ANALYSIS
A. Legal Principles Concerning the Determination of Income
[38] In this case, sections 2, 15, 16 and 19 of the Guidelines govern the determination of the parties' incomes. More particularly:
(a) Section 2(1) provides that income means annual income determined under sections 15 to 20;
(b) Section 2(3) requires me to use the most current information to determine income;
(c) Section 15(1) provides that income is determined in accordance with ss. 16 to 20;
(d) Section 16 provides that a parent's annual income is determined using that parent's Line 150 income from his or her tax return, adjusted in accordance with Schedule III;
(e) Neither parent relies on sections 17 or 18 in this case, which deal with averaging and the attribution of pre-tax corporate income; and
(f) Section 19 is the statutory authority for me to impute an income to a parent in appropriate circumstances.
[39] Each parent bears the onus of proving his and her income. Where a parent seeks to deduct expenses from gross income, that parent also bears the onus of demonstrating that the deduction should be taken into account in the determination of his or her income. See Wilson v. Wilson, 2011 ONCJ 103 at ¶ 22.
[40] In Reyes v. Rollo (2001), 24 R.F.L. (5th) 120 (S.C.J.) at ¶ 44, Justice Francis Kiteley talked about the level of disclosure necessary to discharge that onus. She said:
It is inherent in the circumstances of those who are self-employed, that they have a positive obligation to put forward not only adequate, but comprehensive records of income and expenses. That does not mean audited statements. But it does mean a package from which the recipient spouse can draw conclusions and the amount of child support can be established. Where disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate or whose response to the obligation to produce is so unhelpful that cumbersome calculations and intensive and costly investigations or examinations are necessary.
[41] While Kiteley J.'s comments concerned a self-employed payor, those comments are equally apt in this case as the mother is paid, in part, as an independent contractor and the father derives some of his income from rent, against which he seeks to deduct expenses.
B. The Mother's Income
[42] The issues concerning the mother's income are straightforward. The mother is a dental hygienist. She works for three different dentists. She was previously paid as an employee for all three dentists until 2016, when one of the dentists began to pay her as an independent contractor.
[43] From 2013-2015, the mother received T4s and filed her taxes entirely as an employee. Commencing in 2016, the mother files taxes as an independent contractor respecting the income from that third dentist. However, she took the position that any expenses she deducted ought to be added back to her income for child support purposes. In the result, she asked that I consider her gross income from all sources as if she were an employee for all three dentists.
[44] Although she was critical of the father for his failure to disclose, I was not given the mother's complete income tax returns in any year. Rather, the mother tendered a chart that included a summary of her Line 150 income, plus the expenses added back in the years 2013 to 2016 which she says that I ought to use to determine her table support for the set-off. To support the numbers on the chart, I was given either notices of assessment or a few pages from her tax returns. I was not given her Statement of Business Activities for 2016. Her income documents were not briefed as Cohen J. had ordered on June 26, 2017.
[45] The mother's chart contains errors. In 2013, 2014 and 2015, the mother failed to deduct the Universal Child Care Benefit she received from her income for the purposes of determining her table amount for the set off in accordance with Schedule III of the Guidelines. Furthermore, in 2013, the mother included a child support payment that she received as part of her 2013 income, which ought not have been included. In 2015, her Line 150 income is misstated by a few dollars.
[46] With these adjustments, the income is:
| Year | Description | Income | Adjustments | Total for Set-Off |
|---|---|---|---|---|
| 2013 | Line 150 | $78,718.00 | Less UCCB ($1,200.00) Less Child Support claimed ($ 231.00) | $77,287.00 |
| 2014 | Line 150 | $60,803.00 | Less UCCB ($1,200.00) | $59,603.00 |
| 2015 | Line 150 | $59,398.00 | Less UCCB ($1,450.00) | $57,948.00 |
| 2016 | Line 150 | $64,298.11 | Plus Business Expenses Added Back $10,657.00 | $74,955.04 |
[47] Neither party asked me to apply a gross-up concerning the mother's deductions for business expenses that I have added back, and so I decline to do so.
C. The Father's Income
(1) Employment Income
[48] The father is employed by CIBC as a director in corporate services. He has been employed in this role for the past 6 years. The father testified that his base salary is currently $118,000 per year. His base salary would have been slightly less in the previous years in question as he received annual increases of about 2% per year. He receives a year-end bonus ranging between $12,000.00 and $25,000.00. This employment income from CIBC is all properly reflected on his tax returns and is not controversial.
[49] The father testified that his income ranged from $109,000.00 to $146,000.00 per year between 2013 and 2016, depending on his bonus and the deductions to his rental income. It is not the father's employment income, but rather his rental income that is the thrust of the dispute between the parties.
(2) The Father's Two Rental Properties
[50] The father is the sole owner of two properties, a condominium on Lakeshore Blvd and a house on Rogers Road. The father owned the condominium solely during the marriage. It was the matrimonial home.
[51] Both parties moved out of the condominium after the separation. The Separation Agreement provides that the father paid the mother an equalization payment of $105,000 in installments over time and he obtained property releases. Although I was not shown a net family property statement, the father testified that he owed the equalization payment because of his equity in the condominium. After the parties moved out post-separation, the father began to rent out the condominium in September of 2013.
[52] The father moved into a home on Rogers Road that he purchased. The house has a finished basement that is approximately 1/3 of the home's footprint. Commencing in 2013, the father began renting out the basement too.
(3) The Father's Disclosure
[53] But for his last minute production of documentation needed to determine the parties' claims, the father's evidence for this trial concerning his income would have been deficient and I find that he did not produce what he ought to have produced to the mother prior to trial.
[54] The father testified that he had provided his tax returns "and/or" his Notices of Assessment to the mother each year. He said that he had "maybe not" produced the entire tax return, but certainly the Notices of Assessment. In cross-examination, he could not recall whether he submitted a tax return or a Notice of Assessment in each specific year since 2013, but he testified that he thought that whatever he had provided was sufficient to do the annual adjustment, because what he supplied included Line 150 income.
[55] Regarding the rental income and expenses, it was the mother, not the father, who supplied me with evidence, although the father was the author of the evidence the mother supplied. To her affidavit for use at trial, the mother attached charts of the father's rental income and expenses for the years 2014 to 2016 that the father had provided to her. There was no chart for 2013 and the parties disagreed about whether the father had prepared and supplied her with a chart for 2013. I find that he did not and accept that she would have attached it had a 2013 chart been supplied.
[56] Neither party supplied the Court with a brief containing the father's rental income or receipts. The father ought to have done this. Instead, he testified that he had provided leases and receipts to the mother, but could not tell me when he provided the receipts. I find that no such receipts were provided to the mother.
[57] I do not find the father's explanation about the level of disclosure he supplied to the mother to be credible. Nor was it persuasive when he attempted to justify his failure to provide the complete tax returns in cross-examination by explaining that the mother and Hanna were fully aware of the fact he had tenants and therefore the mother obviously knew that he had rental income. The Separation Agreement and the Rules very clearly require production of the entire tax returns. It was reasonable for the mother to request receipts to test the validity of the deductions the father sought and I accept her evidence that she had done this. The full tax returns and the receipts obviously contain the level of detail that the mother would have needed, at the time of each annual review, to consider her options.
[58] By the end of the first day of the trial, it was obvious that the mother was going to ask me to impute an income to the father based on his lack of disclosure. It was in this context that the father asked to adduce additional evidence on day two before submissions began. It was only as a result of the father's last minute request to tender evidence that I was given his complete tax returns and notices of reassessment for 2013 to 2015, his complete return for 2016, the missing chart for 2013, and receipts to document the expenses. As such, I ultimately had a complete evidentiary record to consider the issues before me. Had the father resisted the mother's request for a retroactive order back to the first review, I would have found the father's conduct respecting his disclosure to be blameworthy.
(4) Rental Expenses To Be Added Back
[59] Section 19(1) of the Guidelines contains a non-exhaustive list of circumstances in which a Court may impute an income to a parent.
[60] In Guy v. Tulloch, MacKinnon J. imputed an income to a chiropractor, who incurred expenses to acquire equity in a building. The space exceeded his practice's needs. MacKinnon J. held that the circumstances listed in s. 19 of the Guidelines are not exhaustive. To the extent that Dr. Tulloch's expenditures related to the acquisition of a capital interest in a building, such expenditures were similar in nature to the circumstances listed in ss. 19(1)(d), (e) and (g) of the Guidelines. In the result, MacKinnon J. added back mortgage principal, plus a portion of the property taxes that did not pertain to the business' use of the premises.
[61] In this case, I too am relying on s. 19(1)(d) and (g), and s. 19(2) of the Guidelines. I am allowing the father to deduct his "hard costs" of the condominium, namely mortgage interest, property taxes and insurance, plus other "soft" expenses like utilities, provided they that are necessary to maintain the stream of rental income. See Appu v. Appu, 2014 ONSC 19 (S.C.J.) ¶11-20; see Eager v. Graves (2002), 29 R.F.L. (5th) 313 (C.A.); and see Wilkinson v. Wilkinson, 2008 ONCJ 96 (C.J.) at ¶ 26. However, as I will explain below, the father has inflated some of his "hard costs" through the manner he has paid the mother her equalization payment, and not all of the expenses he deducts are reasonable within the meaning of s. 19 of the Guidelines.
[62] The analysis respecting the basement apartment is different. The father rents the basement apartment to defray expenses, which benefits him. There are a number of expenses that would remain the same irrespective of the presence of a tenant. For the reasons that follow, I have disallowed a greater number of his claimed expenses relating to the basement apartment.
(i) The Condominium
[63] The father's gross rental income from this property was $13,500 in 2013, $27,000 in 2014 and 2015, and $23,700 in 2016.
[64] Against the income, the father has deducted real estate commission for the rental, mortgage and line of credit interest, property taxes, property insurance, condominium fees, internet, maintenance costs and furniture.
[65] The mother objected to the furniture. The father testified that he provided a semi-furnished condominium when he rented it in 2013 because the tenant came from Germany. He also paid for some bedding and décor for staging.
[66] I find that these are all necessary expenses to generate the rental income except in one respect. The father testified that the mortgage and line of credit attached to this property increased during the period of time he has been generating rental income because he pulled equity out of the property to pay the mother the equalization payment he owed her.
[67] As of February 2013, the line of credit secured against title to the condominium had a 0 balance. The father started to draw on the line of credit to make property payments to the mother pursuant to the Separation Agreement. By 2015, the father had borrowed approximately $83,000.00 from this line of credit. Meanwhile, the father also had a separate line of credit attached to the Rogers Road home with credit of $37,000.00. Similarly, he used that line to pay the property payment to the mother too.
[68] The aggregate of the two lines is approximately $120,000.00. This amount exceeds the amount owing to the mother under the Separation Agreement. I was not given detail about how the excess funds beyond the property payment were spent. I do not know whether those excess funds were somehow spent to generate rental income.
[69] On or around October 29, 2015, the father refinanced the mortgage secured against the condominium. He obtained a new mortgage $440,000.00 and paid out the two lines of credit having an approximate balance of $120,000.00.
[70] I am therefore adding back 100% of the condominium line of credit interest incurred prior to the refinance that the father deducted from the condominium rental income. These add backs are $1,462 in 2013, $3,172 in 2014 and $2,328 in 2015. There is no line of credit interest for 2016, as the two lines were rolled into the new condominium mortgage at that time. As will be set out below, I am also adding back 100% of the Rogers Road line of credit interest deducted between 2013 and the refinance.
[71] Commencing after the refinance, I find that it is necessary to make adjustments to the amount of interest deducted relating to the new mortgage, as a portion of that new mortgage was used to pay out the previous lines of credit, used to pay the mother her equalization payment. That component is not a proper rental expense deduction.
[72] Neither party told me the amount of mortgage interest after the refinance that pertains to this. I am therefore not adding back anything for the months of November and December 2015 as I cannot ascertain the breakdown for the latter two months of the year. In the absence of being supplied with a calculation for 2016 and going forward, my best estimate is that the 27% of the mortgage interest is not a proper deduction. I am therefore adding back 27% of the condominium mortgage interest deducted in 2016. This number is $2,352.78.
[73] The following table contains my findings about the father's gross rental income, and his net rental income with my adjustments, for the condominium for the years in question:
| Year | Gross | Net | Adjustments | Total |
|---|---|---|---|---|
| 2013 | $13,500.00 | ($3,328.38) | Plus add back line of credit interest $1,462.00 | ($1,866.38) |
| 2014 | $27,000.00 | $6,350.50 | Plus add back line of credit interest $3,172.00 | $9,522.00 |
| 2015 | $27,000.00 | $5,237.87 | Plus add back line of credit interest $2,328.00 | $7,565.00 |
| 2016 | $23,700.00 | $481.94 | Plus add back 27% of mortgage interest deducted $2,352.78 | $2,834.72 |
(ii) The Basement Apartment in Rogers Road
[74] As set out above, I am treating the basement apartment in the Rogers Road home in which the father resides differently.
[75] The father's gross rental income from this property was $4,050 in 2013, $8,650 in 2014, $10,625 in 2015 and $8,940 in 2016. After expenses, the father incurred rental losses each year in differing amounts, which in turn operates to reduce his income from employment. The mother takes issue with this.
[76] Against this rental income, the father wrote off mortgage interest, line of credit interest, property taxes, property insurance, utilities, internet, housekeeping, maintenance and certain start-up costs.
[77] The father admitted in cross-examination that, in the case of mortgage interest, property taxes and insurance, the exact same amount of those expenses would be incurred irrespective of him having a tenant in the basement.
[78] Apart from the interest on the Rogers Road line of credit prior to the refinance, which I have already dealt with above, the father testified that he either deducted 1/3 of the aforementioned expenses to correspond with the basement apartment's proportionate footprint of the house, or 50% of certain consumables, specifically oil/gas, internet and housekeeping.
[79] More particularly, the father deducted 1/3 of all utilities except for the 50% items listed above. He said that his utilities bills would be less without the tenant there, and I am prepared to accept this. Regarding the 50% expenses, he testified that he hires a cleaner annually and so this cost is shared between the two residences. He must heat the whole house and the house heats from the basement up, so he included this as a 50% expense. He shares the internet with the tenant and so this expense too is deducted at 50%. I am prepare to accept this evidence also.
[80] I find that the father has chosen to have a tenant in the basement to help him defray many of the expenses in the residence he occupies. This is a benefit to him. While this may be appropriate for tax purposes, I am disallowing several of the expenses he deducted to the extent that they would be incurred irrespective of the tenant. I am therefore adding back the portion of the mortgage interest, the line of credit interest, property taxes and property insurance that the father deducted. I am allowing the other expenses claimed by the father.
[81] In the result, the following table depicts father's gross rental income, and his net rental income with my adjustments, for the condominium for the years in question:
| Year | Gross | Net | Adjustments | Total |
|---|---|---|---|---|
| 2013 | $4,050.00 | ($3,003.28) | Plus add back 1/3 mortgage interest $ 1,897.00 Plus add back 1/3 line of credit interest $ 68.00 Plus add back 1/3 property taxes $ 273.00 Plus add back 1/3 property insurance $ 305.00 | ($ 476.28) |
| 2014 | $8,650.00 | ($3,218.32) | Plus add back 1/3 mortgage interest $ 4,465.00 Plus add back 1/3 line of credit interest $ 680.00 Plus add back 1/3 property taxes $ 818.00 Plus add back 1/3 property insurance $ 609.00 | $ 3,353.68 |
| 2015 | $10,625.00 | ($1,887.58) | Plus add back 1/3 mortgage interest $ 4,310.00 Plus add back 1/3 line of credit interest $ 535.00 Plus add back 1/3 property taxes $ 837.00 Plus add back 1/3 property insurance $ 722.00 | $ 4,516.42 |
| 2016 | $8,940 | ($1,201.35) | Plus add back 1/3 mortgage interest $ 4,150.00 Plus add back 1/3 property taxes $ 853.00 Plus add back 1/3 property insurance $ 883.00 | $ 4,684.65 |
(iii) Treatment of the Father's Net Rental Losses in 2013
[82] After my adjustments, the father still has a net rental loss of $1,866.38 relating to the condominium in 2013, and a net rental loss of $476.28 relating to the basement apartment in 2013. The mother argues that I ought not allow this result, relying on Hargrove v. Holliday, 2010 ABQB 70 (Q.B.).
[83] In Hargrove v. Holliday, the Court disallowed a payor who owned an investment property, to use losses to reduce his primary employment income, in turn to reduce his child support. However, the ratio in Hargrove v. Holliday is not applicable where there are years of rental surpluses.
[84] Regarding the condominium and the basement apartment (now that I have made adjustments), the father has made money in each year except for 2013, which was his start up year. The effect of my adjustments is to include profits earned in 2014 through 2016 in the father's income for child support. Therefore, the modest losses in his start-up year are appropriate.
(iv) Expenses For Which The Father Did Not Supply Receipts
[85] Even though I have now have a binder of receipts that the father prepared, there are still some expenses for which there is no receipt. The mother argues that I ought to add back any expense to the father's income for which there is no receipt. She argues this based on his credibility, which she says is lacking. She says that he has concealed disclosure and therefore I ought not believe him when he says he paid for an expense in cash or does not have a receipt. I reject this argument for the following reasons.
[86] Just because I have made adverse findings about the father's conduct in relation to disclosure does not mean that I must reject all of his evidence. See Baker-Warren v. Denault, 2009 NSSC 59 (S.C.). I do find the father's evidence concerning the rental income he earned and the expenses he paid for to be credible, even though I have disallowed some of his deductions in determining his income for child support purposes.
[87] The father was candid and detailed about the expenses he incurred and deducted, and in his explanation about why he deducted what he deducted, and regarding how he prepared the charts. The father testified that he made the charts of his rental income and expenses on an ongoing basis, starting in 2014. He began the exercise of documenting income and expenses on a chart because he was unsure about how to report the income for tax purposes initially. In fact, he did not initially file his taxes with rental income in 2013 and 2014 until after getting advice and the documentary evidence reveals that he later made a request for a T1 adjustment. The only chart that the father made retroactively was that for 2013, but he made that chart in 2014. He otherwise updated his charts contemporaneously with incurring expenses. In so doing, he included cash expenses. His accounting was not done for the litigation.
[88] I find that it is significant that the father did not go back and input expenses for which he has no receipts retroactively, guessing based on memory. Rather he told me about how he recorded cash expenses at the time. For example, the father told me about an expense incurred for painting. He said that he paid for it in cash but then entered the amount into the chart right away. In another instance, he had a business card but no receipt and made a notation of the amount he paid. He supplied the business card.
[89] The mother's cross-examination and her own evidence in reply failed to establish that the father entered any items onto the chart fictitiously. Rather the thrust of her argument was simply that any non-receipted expense should be disallowed. She did not persuade me to reject the father's evidence regarding the non-receipted expenses that he said he incurred. Except for the expenses that I have disallowed above, I am satisfied that the father has met his onus of proving the deductions.
(5) Conclusions Respecting the Father's Income
[90] I therefore find the father's income in each year for child support is:
| Year | Description | Income | Adjustments | Total for Set-Off |
|---|---|---|---|---|
| 2013 | Line 150 Income (excluding rental) | $105,651.21 | Less 2013 Rental Loss Condominium ($1,866.38) Adjustment for Basement Apartment ($ 476.28) | $103,308.55 |
| 2014 | Line 150 Income (excluding rental) | $132,184.90 | Add Net Rental Income Condominium $9,522.00 Add Net Rental Income Basement $3,353.68 | $145,060.58 |
| 2015 | Line 150 Income (excluding rental) | $143,143.69 | Add Net Rental Income Condominium $7,565.00 Add Net Rental Income Basement $ 4,516.42 | $155,225.11 |
| 2016 | Line 150 Income (excluding rental) | $139,519.61 | Add Net Rental Income Condominium $2,834.72 Add Net Rental Income Basement $ 4,684.65 | $147,038.98 |
[91] Neither party asked me to apply a gross-up concerning the father's deductions that I have added back, and so I decline to do so.
D. Arrears of Child Support and Prospective Child Support
[92] Again, I was asked by the parties to apply the Separation Agreement and not vary it. Paragraphs 5.7 and 5.8 of the Separation Agreement provide for annual reviews of "table" support. Neither paragraph actually refers to a set-off. Rather the paragraphs state that the parties will adjust "table" support each year in a certain way. However, in paragraph 5.4 of the Separation Agreement, the initial "table" amount of support referred to is $231.00 per month. In reality, this was not the table amount of support, but a set-off. The verbiage of paragraph 5.3 also makes it clear that this is a set-off. Therefore the annual adjustment paragraphs have to be read in this context of the parties' initial agreement. Furthermore, the parties interim consent Order respecting child support dated July 8, 2016 was based on a set-off pending trial. And finally, both parties asked me to order a set-off.
[93] The initial set-off in the Separation Agreement was based on the father's table support obligation using his 2012 income (this was before he earned rental income) less the mother's table support obligation based on stated income of $80,000.00. The adjustment clauses in the Separation Agreement require a reconciliation of support based on previous year's income, and then that a new amount of support be set prospectively commencing June 1 in the year of the review until the next review. For example, in May 2014, there ought to have been a reconciliation for 2013 using 2013 incomes with a new prospective amount of support being set to commence June 1, 2014, and in 2015, there ought to have been a reconciliation for 2014 using 2014 incomes with a new prospective amount of support being set to commence June 1, 2015, and so on. The parties did these reconciliations, but without the rental income fully accounted for.
[94] Because the Separation Agreement was signed at the end of July 2013 with the first child support payment having been made on July 15, 2013, the first reconciliation in 2014 only reconciles back to July 15, 2013. The father argued that I ought to reconcile for a time prior to July 15, 2013, because he claimed the mother mis-represented her income upon which the Agreement was premised. I am not prepared to make this finding as the evidence did not establish this. In fact, her 2013 income was slightly less than the stated income of $80,000 in the Separation Agreement. Regardless, neither party asked me to set aside the Agreement.
[95] Below, I am providing a table that sets out the set-off for each year, and the amounts owing to the mother, after taking into account the father's payments. The numbers in the table are my findings about these facts.
[96] In giving the father credit for the amounts he paid, I am mindful that it is the father's onus to prove what he paid. The father paid child support to the mother directly through online bank transfers, and then through the FRO commencing in February of 2016. Even after he began paying through the FRO, he still made some adjustment payments directly to the mother outside the FRO in 2016. The father made no direct payments outside the FRO in 2017.
[97] The father prepared a handwritten chart of the payments he says he made. The mother tendered a chart of the payments she says the father paid to her, which includes direct payments and payments through the FRO. The mother also tendered print outs of banking transfers. Both parties' charts contain errors.
[98] My findings regarding what the father paid in set-off child support and annual adjustments to the mother is based on my review of both parties' charts, the bank transfers and the FRO Statement of Arrears. The FRO Statement of Arrears is current as of August 1, 2017 only, and I accept the father's evidence in his handwritten chart that he made an additional payment of $524.00 for September 2017, which I have added to his payments.
[99] Some of the father's early payments reflected on his handwritten chart are net of a deduction he made for certain cell phone bills that he paid. For a few months at some point after the separation, the father apparently paid a cell phone bill for a phone that the mother used. The father unilaterally deducted the cost of the cell phone from his child support. While his chart did not add back the cost of the cell phone bills, he asked me to give him this additional credit.
[100] The mother acknowledged that the cell phone bill was her responsibility, but she objected to him unilaterally setting off the bills from child support. Despite her acknowledgement that the bills were her responsibility to pay, she never paid the father for the cell phone bills.
[101] Not only did I not have complete evidence about the full amount of the bills that the father paid, but I would not have allowed the set-off in any event. It was not appropriate for the father to set-off child support this way. By the same token, the mother's failure to pay her own bills for which she acknowledged responsibility does not reflect well on her. In cross-examination, she acknowledged responsibility for the bill, said that she disagreed with the set-off, but did not provide any evidence about how she proposed, either in the past or now, to pay the father back. In the analysis, the amounts are de minimus and I do not wish to sanction unilateral set-off. If the cell phone bills remain an issue between the parties, they should deal with each other directly about this.
[102] I find that the set-off amounts owing to the mother less the amounts the father paid, up to 2016 are:
| Year | Set-Off Amount | Annualized Amount | Less Amounts Paid | Underpayment / (Overpayment) |
|---|---|---|---|---|
| 2013 | $202.00 | $1,212.00 (6 months only) | $744.85 | $467.15 but reduced to $0.00. |
| 2014 | $684 | $8,208.00 | $2,220.55 | $5,987.45 |
| 2015 | $776 | $9,312.00 | $4,437.67 | $4,874.33 |
| 2016 | $560 | $6,720.00 | $9,109.05 | ($2,389.05) |
[103] I have reduced the amount owing for 2013 to $0.00 because in her evidence, the mother conceded at trial that she was not making a claim for 2013.
[104] At the review in May of 2016, the parties were supposed to use 2015 incomes to set the amount of support to be paid from June 1, 2016 to May 1, 2017. That number ought to have been $776 per month. Then commencing June 1, 2017, the new number to be paid is based on 2016 incomes until the next review. That number is $560.00. Therefore the further arrears for 2017 are:
| Year | Set-Off Amount | Annualized Amount | Less Amounts Paid | Underpayment / (Overpayment) |
|---|---|---|---|---|
| January – May 2017 | $776 | $3,880.00 (January – May 2017) | ||
| June to September 2017 | $560.00 | $2,800 (June – September 2017) | ||
| $5,666 for January to September 2017 | $1,014.00 |
[105] Therefore, I fix arrears at $9,486.73 up to September 30, 2017. From this amount I am deducting the sum of $1,487.64, which is the net amount the mother owes the father for s. 7 expenses, set out in the next section below. Therefore the net amount owing by the father to the mother is $7,999.09.
E. Section 7 Expenses
[106] Each party has made a claim that the other should contribute towards s. 7 expenses that he or she paid for. In the mother's case, she has claimed:
(a) $770.70 for school tuition from 2013, which pre-dates the Separation Agreement. I am not ordering this;
(b) Two different amounts for summer camps, which she abandoned during her oral evidence;
(c) Swimming of $1,040 for 2015; and
(d) Swimming of $1,485 for 2016.
[107] Although swimming is not a named expense within the Separation Agreement, the father testified that he agrees with swimming and so I will make an order that he contribute his pro rata share of swimming.
[108] The percentages are 73% (father) – 23% (mother) in 2015 and 66% (father) – 34% (mother) for 2016. Therefore the father owes the mother $759.20 for 2015 and $980.10 for 2016 for a total of $1,739.30. I am applying this as a credit to the s. 7 expenses that I find the mother owes the father.
[109] The father claims the cost of cello lessons and related expenses, and mandarin lessons in various years since the Separation Agreement.
[110] I find that these expenses fit within the categories of expenses envisioned by ss. 7(1)(d) and (f) of the Guidelines, they are necessary in relation to the child's best interests and reasonable in relation to the means of the parties and to the parties spending during their cohabitation. I also find that they fit within the definition of "extraordinary expenses".
[111] I am frankly at a loss to understand the mother's position respecting why she should not be required to share these expenses in the past, but only into the future. At paragraph 5.13 of their Separation Agreement, both parents anticipated that Hanna's future special or extraordinary expenses may include "music lessons and/or language classes". Since the Separation Agreement, the parents twice agreed that Hanna participate in these classes in a consent Orders of this Court. There is no rational basis as to why these expenses would be shared prospectively but not retroactively as the mother asks.
[112] These expense go beyond what is normally included in table support, such that they should be shared. I am taking into account that I am also considering the parties' respective financial resources in ordering that these expenses be shared. I am taking the father's evidence about Hanna's participation in cello into account. In the case of mandarin, I also find that these lessons are for enrichment. The father testified that he speaks mandarin.
[113] The cost of mandarin and cello in 2015 were $2,154 and $1,952 respectively. The cost of mandarin and cello in 2016 were $920 and $4,484.72 respectively. The cost of cello in 2017 was $1,310.47. Based on the mother's share of 23% in 2015, 34% in 2016 and 34% in 2017 until the next review, the mother owes the father $944.38 for cello and mandarin for 2015, $1,837.60 for cello and mandarin in 2016, and $445.56 for cello in 2017, for a total of $3,227.54.
[114] After deducting the father's share of swimming of $1,739.30, the mother owes the father $1,487.64 and this is the number I have deducted from the arrears owing to the mother that I fixed.
F. Tax Benefits and Credits
[115] Paragraph 5.23 of the Separation Agreement provides that the parties will determine annually in consultation with their accountant who should claim the Canada Child tax benefit, the refundable children's GST/HST credits and the eligible dependent credit for Hannah. This was not done.
[116] Instead, the father attempted to make the claim for 2014 and 2015, but was rejected. The father tendered letters from the CRA dated July 25, 2016 and February 24, 2017 indicating that his claim for the eligible dependent credit for Hanna was denied because he was required to make support payments for Hanna in 2014 and 2015. He is now appealing with CRA. He did not apply for 2016.
[117] Regarding the mother, I was not given her full returns to ascertain which years the mother made these claims. In her affidavit sworn August 23, 2017, she deposed that she was successful in claiming the eligible dependent tax credit for 2014 only in 2016. I do not have evidence what the mother did respecting 2015.
[118] What is clear is that neither party followed their Separation Agreement, namely to discuss and agree about the issue in a common sense fashion. Instead, they both come to Court and ask me to make Orders that I do not have jurisdiction to order.
[119] The father wants me to make an order that the tax credits and benefits should be alternated. The mother is prepared to consent to this prospectively, but not retroactively. She testifies that if the tax benefits she already received are reversed, then the financial impact will be greater to her than to the father. The mother did not quantify this for me and called no other evidence about this.
[120] I cannot find as the father invited me to find that the parties agreed to alternate the tax credits and benefits. This is very clearly not what the Separation Agreement states.
[121] Even if I had so found, I lack jurisdiction to make this order. This is a matter for the CRA to determine. The Separation Agreement as drafted does not make provision for the father to pay child support to the mother, and for the mother to pay child support to the father. Rather it provides for a net payment from the father to the mother after calculating the set-off. This is insufficient for CRA's purposes. See Verones v. R, 2012 TCC 291.
[122] Based on the father's consent (he wants me to do this more broadly) and the mother's consent that I do so prospectively only, I am prepared to make an order that provides for the payment of child support from each parent to the other going forward. I decline to do so retroactively, as there is no agreement between the parties and I was told that I am not varying the Separation Agreement.
[123] I also decline to make any further orders directing how the tax benefits and credits will be shared in this new child support regime going forward, nor do I propose to make any comment respecting how they ought to have been shared in the past. The father is free to pursue his appeal with the CRA if he sees fit.
[124] However, as the mother has agreed to share the benefits and credits prospectively and she has consented to me wording the child support order in a certain way to achieve this, the parents really need to start communicating with each other. The parents should have the discussion as they agreed to have in 2013 when the signed the Separation Agreement, and figure out who is going to make the claim for the future years and how they will alternate making the claims.
PART VI: ORDER
[125] I make the following orders:
(a) The Respondent, David Marks, shall pay to the Applicant, Angela PohQuong arrears of child support and s. 7 expenses for the child, Hanna PohQuong Marks, born September 13, 2009, fixed at $7,999.09. This covers all child support arrears and resolves both parties' claims for s. 7 expenses up to September 30, 2017;
(b) Commencing October 15, 2017 and on the 15th day of each month thereafter, the Respondent, David Marks, shall pay to the Applicant, Angela PohQuong child support for the child, Hanna PohQuong Marks, born September 13, 2009, in the amount of $1,241 per month based on his adjusted annual income for 2016 of $147,039.00;
(c) Commencing October 15, 2017 and on the 15th day of each month thereafter, the Applicant, Angela PohQuong shall pay to the Respondent, David Marks, child support for the child, Hanna PohQuong Marks, born September 13, 2009, in the amount of $681 per month based on her adjusted annual income for 2016 of $74,955;
(d) If the Respondent, David Marks, has already made an additional payment or payments to the Applicant, Angela PohQuong, after September 30, 2017, then any such payment(s) shall be credited to the ongoing support I have ordered to commence October 15, 2017 payment;
(e) Commencing October 1, 2017, the parties shall share the cost of Hanna's swimming, and cello and mandarin lessons, pursuant to s. 7 of the Child Support Guidelines. The father's percentage share of these expenses is 66% and the mother's percentage share is 34% pending the next review;
(f) Two Support Deduction Orders shall issue as I have ordered the Respondent to pay child support to the Applicant and the Applicant to pay child support to the Respondent; and
(g) Except as set out herein, the terms of the Separation Agreement dated July 26, 2013 are not varied. The parents shall continue to reconcile support as set out in their Separation Agreement and otherwise follow the terms that are not varied by this Order or any prior Order of this Court.
[126] If either party is claiming costs, then submissions shall be made in writing. The mother may file costs submissions, limited to 3 pages plus a Bill of Costs and any case law, by November 7, 2017. The father may reply by November 21, 2017.
Released: October 24, 2017
Signed: Justice Alex Finlayson