Court Information
Court File No.: 677-16
Ontario Court of Justice
Address: 7755 Hurontario Street, Brampton, ON L6W 4T6
Endorsement by Justice A.W.J. Sullivan
Parties
Applicant: Carolyn Cadden (Present)
Counsel for Applicant: Madhulika Dutt (Present)
Respondents: Tara Rombough and Lawrence Roach (Present)
Counsel for Respondents: Self-represented
Decision
[1] Introduction
This is the decision from a focused hearing dealing with child support and the imputing of income to Mr. Roach.
[2] The Child
Ms. Cadden has custody of the child, Lukas Rombough, born […], 2010.
[3] Paternity
Mr. Roach is Lukas' father.
[4] Relief Sought
In Ms. Cadden's Application, filed in July 2016, amongst other relief, she sought section 7 expenses and monthly child support. Today she seeks table child support only from the date of the Application.
[5] Payment History
Mr. Roach has not paid monthly child support to Ms. Cadden from the start of these proceedings but he has paid a total of $730 for various reasons for which he will receive credit.
[6] Principal Issue
The principal issue in today's hearing is fixing Mr. Roach's annual income.
[7] Employment Background
He is a self-employed plumber, having transitioned into this field of work in 2014/15 from a warehouse job in which he earned the highest amount of $58,939 in 2013. He now claims to earn much less than this as outlined below and has other child support obligations besides Lukas.
[8] Evidence
Ms. Cadden gave her main evidence via an Affidavit dated January 14, 2019 and was cross-examined by Mr. Roach on this.
[9] Credibility
Ms. Cadden's testimony was not affected in cross-examination.
[10] Ms. Cadden's Main Evidence
Her main evidence is that Mr. Roach's income from his self-employment through Roach Plumbing Inc. for the years that he has disclosed his income makes no sense whatsoever.
[11] Financial Statement Discrepancy
In his September 2018 Financial Statement filed with the court, Mr. Roach declares self-employment income of $812 per month or $9,744 annually, yet he has annual expenses of $55,674 in his personal Financial Statement with child support payments of $4,200 towards another child.
[12] Mr. Roach's Testimony
Mr. Roach testified that he is the only one earning income in his household. He supports himself, his wife and a young child and pays child support for another child of $665 per month.
[13] The Fundamental Problem
The issue then is as follows. If his income is as low as he declares for 2018 and his expenses are as outlined, how does he make ends meet?
[14] Denial of Other Income
When asked if he has other money coming in he indicated he did not.
[15] Credit Card Debt
When asked if he has a line of credit to manage this debt he indicated that between his Visa and MasterCard, which are both maxed out, that is the only debt that he has.
[16] Credit Card Amounts
When asked what the amounts are on these cards they amounted to approximately $9,000 total.
[17] 2017 Income
When I reviewed Mr. Roach's income from 2017, it was also low again with expenses that far exceeded his income.
[18] Mounting Debt Explanation
When asked how he therefore was managing this mounting debt, he effectively had no answer other than the fact that things were tight and that he was behind in his monthly condo payment but he did not provide a letter from the debt holder about how many months he was behind.
[19] Plumbing Income Claims
In his testimony Mr. Roach deposed that as a plumber who has been working in the field for approximately 4 years full-time, he has not yet reached the level where he would be earning the suggested amount that Ms. Cadden argues should be imputed to him of approximately $60,000.
[20] Market Conditions Argument
He also testified in general that people believe that as a plumber he should be earning more but the reality is according to his experience that less buildings are going up as the mortgage rules have changed and therefore there is less work in his field with new constructions.
[21] Lack of Explanation
Mr. Roach did not provide any explanation in his testimony as to why he might be limited to new constructions in his plumbing work.
[22] Other Child Support Payments
In relation to his ongoing child support payments he did not provide a court order and indicated that it was an agreement written between himself and that mother registered with The Family Responsibility Office. He did not present a Director's Statement from the Family Responsibility Office that would show that he is making this payment.
[23] Cross-Examination Results
During the cross-examination of Mr. Roach, he was given an opportunity to review his two Financial Statements filed with the court and was given an opportunity to explain how his expenses far outpaced his declared income. He was given an opportunity to explain the figures as he has presented them. At the end of the day, his best explanation is that he is not meeting his obligations and that things are tight if not at the tipping point.
[24] Prior Agreement
He did explain that in the past he had an agreement with the mother of Lukas that as he is starting his own company he could only pay $175 per month. He indicated that he did not know that Lukas was living with Ms. Cadden before the application. He also felt that it was not fair that Ms. Cadden is not asking for support from Lukas' mother, Ms. T. Rombough.
[25] Ms. Rombough's Circumstances
It was explained to the court that as she is receiving ODSP and in all likelihood continues to use drugs and as such a request would be useless.
Discussion and Decision
[26] Scope of Relief
Ms. Cadden is not seeking section 7 costs nor is she seeking monthly child support before her commencement of this Application in July of 2016.
[27] Mr. Roach's Non-Payment
Mr. Roach, when asked why he had not commenced support for Lukas during the course of this application, had no real response other than the fact that he had an agreement with Lukas' mom to only pay $175.
[28] Continued Non-Payment
Mr. Roach has not forwarded even this amount to Ms. Cadden when he became aware that his son is living with her and after receiving this application and during the course of this litigation.
[29] Income-Expense Discrepancy
During this trial, Mr. Roach was given the opportunity to explain the discrepancy between his income and his expenses which he could not adequately explain.
[30] Suggested Income Level
At one point during cross-examination he felt that his income level at about $45,000 was more realistic. This was based on discussions of his different earnings while he worked at Peel Plastics which included overtime in 2013 when he earned his highest at $58,939.
[31] Disclosed Income
Through the course of this trial it is evident that Mr. Roach has disclosed what he believes to be his income through his business statements and his own personal income tax.
[32] Expenses Exceed Income
What is apparent, however, is that despite his declaring difficulties in making ends meet, his expenses far outstrip his declared income.
[33] Inference of Undisclosed Income
This in itself permits me to draw an inference that there must be other income upon which he is relying to make ends meet. This has to be so as he has no other related debts such as lines of credit that have increased year over year with the mounting expenses. I also asked if he is maintaining the support payments that he outlines in his financial statement for his other child in the amount of $665 per month. He indicated that he is making this payment.
[34] Income Based on Support Payments
If this is the case, it would place his income based on the Child Support Guidelines for one child at $71,200. See below:
Lifestyle as Evidence of Income
Lifestyle can provide the criteria for imputing income. Aitken v. Aitken [2003] O.J. No. 2780 (SCJ); Jonas v. Jonas [2002] O.J. No. 2117 (SCJ); Price v. Reid, 2013 ONCJ 373. Where there are no other accurate indicators of income, the court has looked at the cost of the payor's lifestyle and imputed income based on that assessment. Reyes v. Rollo, [2001] O.J. 5110 (SCJ) at para 62. If a payor's lifestyle and or disclosed expenses are incompatible with disclosed income it is a red flag that will encourage a judge to draw an adverse inference (see McLean v. Vassell, [2004] O.J. 3036 (SCJ) at para 22).
In Bak v. Dobell, 2007 ONCA 304 at para. 43, Lang J.A., of the Ontario Court of Appeal, observed that "lifestyle is not income, but rather evidence from which an inference may be drawn that the payor has undisclosed income that may be imputed for the purpose of determining child support."
[35] Prior Earning Capacity
In this decision I must also consider the fact that at one point when Mr. Roach knew of his obligations to support his children he was able to earn more than he is declaring now while he was working at Peel Plastics.
[36] Case Law on Self-Employment
I reviewed with Mr. Roach my understanding of the case law while he was under oath and explained that it was fine for him to start his own company but that his obligations could not suffer and that his income could not fall much below what he was making while working full-time for a company, in this case Peel Plastics. See below:
Self-Employment/Starting a Business
A person making a decision to start a business in which he or she has no experience may result in a finding that he or she is intentionally underemployed: Dang v. Hornby; Ruszczak v. Scherbluck, 2012 ONCJ 14; Charron v. Carriere, 2016 ONSC 4719.
Where a party chooses to pursue self-employment, the court will examine whether this is a reasonable choice in the circumstances: Smith v. Smith, 2012 ONSC 1116.
Imputing Income – Grace Period
When a parent experiences a change in their income, they may be given a "grace period" to adjust to the change and seek out employment in their field at a comparable remuneration before income will be imputed to them. However, if they have been unable to secure comparable employment within a reasonable time frame, they will be required to accept other less remunerative opportunities or options outside of the area of their expertise in order to satisfy their obligation to contribute to the support of their children. Szitsas v. Szitsas, 2012 ONSC 1548.
When a father had already gone long period of time without paying support the court found that he had already exhausted his grace period. McDonald v. Profeiro, 2018 ONCJ 110.
[37] Grace Period Exhausted
In this case Mr. Roach has exhausted any grace period he may have had to increase his level of income to that when he was working at Peel Plastics.
[38] Prior Agreements
I recognize that prior to this case he claims he had an agreement with the mother of his other child and the mother of Lukas.
[39] Income Based on Current Payments
This must be balanced with the statement that he continues to make payments of $665 therefore placing his income at $71,200 based on the current Child Support Guidelines.
[40] Multiple Child Support Obligations
I must also consider the fact that he is currently residing and supporting a younger child and has the obligations towards a second child and that of Lukas. In this regard I have considered the following:
Balancing Needs of Multiple Children
In Lachapelle v. Vezina, 11 R.F.L. (5th) 328 (Ont. S.C.J.), found that the Court is required, in the absence of clear necessity, to balance the needs of each child, whatever their stage of development, to determine what is fair and reasonable in all of the parental circumstances. See also MacDougall v. Rousselle, 2006 CarswellNB 225 (N.B. Q.B.).
First Families First
While courts generally recognize a "first-family-first" principle (which provides that a payor's obligations to the first family take priority over any subsequent obligations), inevitably new obligations to a second family may decrease a payor's ability to pay support for a first family. Fisher v. Fisher, 2008 ONCA 11, 47 R.F.L. (6th) 235 (Ont. C.A.).
Obligations toward second families must be considered in context. For example, where spouses with a child separate, and one remarries and produces another child, the obligations to the second child will affect support for the first family because the payor has an equal obligation to both children.
[41] Current Wife's Employment
Mr. Roach did not explain in much detail why his current wife is not working. I am not suggesting that he asked her to remain at home, however, he did not file a hardship calculation as this was not part of his pleadings but essentially is an issue that he raised in his arguments at trial. See:
Second Spouse's Preference to Remain at Home
The respondent's endorsement of his second wife's preference to remain at home cannot be relied upon to reduce his support obligation to his first family. Dean v. Dean, 2016 CarswellOnt 10492 (Ont. Div. Ct.).
[42] Threat of Homelessness
Mr. Roach in his final submissions indicated that if he was required to pay any more support than the $175 that he agreed to pay for Lukas as noted above, that he would not be able to do so and that he would be on the street.
[43] Implausibility of Financial Evidence
The difficulty I have with the financial evidence that Mr. Roach has filed is that it does not make sense.
[44] Quality of Work Argument
If indeed his income is so low the issue is why he is continuing to work in his new chosen field as a plumber. Effectively he is giving his services for nothing. If this was the case, what quality of service would he be providing each day if he knew that each job he was doing was effectively for free?
[45] Leaks in the Evidence
There would be, I would imagine, many leaks in the quality of his work as there is in the evidence that he has provided today.
[46] Conclusion on Undisclosed Income
I have to conclude that he is earning more money than he has declared.
[47] Sympathy for Multiple Obligations
I am sympathetic to the fact that he has other children that he is supporting. With regards to the child who is living with his current partner, she should also be contributing to the support of that child and I have no evidence why she is not doing so.
[48] Income Consideration
I am prepared to consider the fact that he is paying $665 for one child which would place his income at about $71,200 based on the Guidelines.
[49] Prior Employment History
The evidence I have is that at one point he earned $59,000 through steady employment, albeit with overtime.
[50] Employment Change
He chose to change his employment and although he indicates he had an agreement with the mothers of his other children to do this, it has run its grace period and he should be earning at a higher level in order to pay support.
[51] Permissible Expenses
From his gross income there are certain expenses that he is permitted. Some of this evidence was presented in earlier disclosure and filed in Ms. Cadden's Affidavit. The overall expenses did not seem extraordinary.
[52] Imputed Income Decision
Considering the above, I conclude that it would not be unreasonable to set Mr. Roach's net income in his plumbing work, from which he should pay child support for one child Lukas, at the annual amount of $45,000. This would make his monthly child support payments for Lukas to be $418 commencing August 1st, 2019.
[53] Retroactive Support
Ms. Cadden is seeking support from the date of the Application. Mr. Roach has had notice of this and has only paid a total of $730 which he will be credited for. The application was commenced in July of 2016. Support will be owed from August 1st, 2016.
[54] Arrears Calculation
This would make his arrears owing, less the $730 he has paid, to be $14,186.
[55] Calculation Basis
This calculation is based on the Child Support Guidelines prior to their amendments in November 2017 and since November 2017 to August 1st, 2019 for one child based on the net income of $45,000.
[56] Arrears Payment Plan
Mr. Roach will pay $100 per month towards these arrears. This will take a considerable period of time some 12.5 years to pay down in full. This is quite reasonable as Ms. Cadden has effectively been supporting Lukas and subsidizing Mr. Roach in his support for this child.
Final Order
1) Mr. Lawrence Roach shall pay monthly child support to Ms. Carolyn Cadden in the amount of $418, commencing August 1, 2019, for one child, Lukas M. Rombough, born […], 2010, based on his annual net income of $45,000.
2) Mr. Lawrence Roach owes a total amount of arrears in child support for the child Lukas in the amount of $14,186 as of the date of this Order and as such Mr. Roach will pay $100 per month towards these arrears until paid down in full.
3) A Support Deduction Order shall issue.
4) On the issue of costs, Ms. Cadden through counsel may serve and file via a 14B Motion up to three pages maximum of submissions, Bill of Costs and signed Offers to Settle served before the trial within 15 days of this Order for my consideration.
5) Mr. Roach may respond in the same fashion within 15 days of service of the above-mentioned 14B Motion for costs.
Released: July 10, 2019
_____________________
Justice A.W.J. Sullivan