DATE : February 24, 2021 COURT FILE NO. D21311/18
ONTARIO COURT OF JUSTICE
B E T W E E N:
A.S.
BARRY NUSSBAUM, for the APPLICANT
APPLICANT
- and -
M.L. and L.L.M.L.
THE RESPONDENT, M.L., ACTING IN PERSON PAULINE MALCOM, for the RESPONDENT, L.L.M.L.
RESPONDENTS
HEARD: FEBRUARY 22, 2021
JUSTICE S.B. SHERR
REASONS FOR DECISION
Part One – Introduction
[1] This trial was about child support for M.L. (the child). The child is 10 years old.
[2] The child has lived with her maternal grandmother L.L.M.L. (the maternal grandmother) since September 28, 2016.
[3] The maternal grandmother is seeking child support from the child’s father, A.S. (the father), starting on September 1, 2018. [1] She asks that his annual income be imputed at $50,000. The maternal grandmother also asks the court to make a finding that there is not a shared custody arrangement, as defined in section 9 of the Child Support Guidelines (the guidelines).
[4] The father submits that no income should be imputed to him. He proposes to pay child support, starting on September 1, 2018, based on an annual income of $25,000. [2] He asks to pay any support arrears created by this order at $50 each month. He agrees to a finding that there is not a shared custody arrangement pursuant to section 9 of the guidelines.
[5] No one is seeking child support from the mother.
[6] The parties agreed to a focused trial of this matter. Direct evidence was provided by affidavit and time limits were set for cross-examination of the witnesses. The court heard from the parties and the father’s mother (the paternal grandmother).
[7] The trial was held by videoconference.
[8] The issue for the court to determine is the father’s income for the purpose of the child support calculation. Should income be imputed to him, and if so, how much?
Part Two – Background facts
[9] The father is 58 years old. The mother is 33 years old. They never resided together. The child lived with the mother and the father paid her support of $250 each month.
[10] On September 28, 2016, the mother was arrested and criminally charged with drug trafficking offences. At that time, the Children’s Aid Society of Toronto informally placed the child in the care of the maternal grandmother.
[11] The mother was convicted and served time in jail.
[12] The mother now lives with a friend and is unemployed.
[13] The father has paid the maternal grandmother support of $125 each month since the child started living with her. He claimed that this was pursuant to a verbal agreement with her. The maternal grandmother stated that there was no agreement – rather, this was the amount that the father unilaterally determined that he would pay to her.
[14] The father issued an application for custody of the child on August 29, 2018. He failed to name the maternal grandmother as a party. She brought a motion to be added as a party and on October 3, 2018, Justice Carolyn Jones made that order.
[15] On March 29, 2019, Justice Debra Paulseth ordered, on a temporary basis, that the child’s primary residence be with the maternal grandmother. She ordered specified parenting time for the father and ordered the father to produce financial disclosure.
[16] The case was set for trial on the parenting issues. These issues were settled on a final basis and incorporated into an August 19, 2019 order of Justice Roselyn Zisman.
[17] Justice Zisman ordered that the maternal grandmother, the father and the mother have joint custody of the child. The child’s primary residence is with the maternal grandmother. The father has parenting time with the child overnights on Tuesdays and Thursdays and on alternate weekends. The father agreed to pay total costs of $3,000 to the maternal grandmother and the mother.
[18] On September 23, 2019, the father wrote to the Canada Revenue Agency (CRA) and informed the CRA that he had shared custody of the child. The child’s Canada Child Benefit (CCB), GST credits and Trillium Benefits have been split equally since then between the father and the maternal grandmother.
[19] On November 19, 2019, Justice Jones ordered the father to comply with Justice Paulseth’s financial disclosure order by December 20, 2019. She ordered him to provide further financial disclosure. She also ordered him to pay $300 costs to the maternal grandmother.
[20] On December 19, 2019, the father amended his application to seek retroactive child support against the mother. He also claimed that there was a shared custody arrangement pursuant to section 9 of the guidelines and sought an order for reduced child support.
[21] The case was delayed due to the pandemic.
[22] On September 9, 2020, Justice Jones made a third detailed financial disclosure order regarding the father.
[23] On October 7, 2020, the CRA wrote to the father that the maternal grandmother had disputed his claim that there is a shared custody arrangement. It indicated that his payments would continue while it investigated the matter.
[24] The CRA has not yet made its determination about the allocation of the CCB.
[25] On October 29, 2020, the father withdrew his claim for support against the mother. This left the remaining issue of the maternal grandmother’s support claim against the father.
Part Three– The father’s income
3.1 Legal considerations
[26] Section 19 of the guidelines permits the court to impute income to a party if it finds that the party is earning or is capable of earning more income than they claim.
[27] Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this obligation, the parties must earn what they are capable of earning. If they fail to do so, they will be found to be intentionally under-employed. See: Drygala v. Pauli, [2002] O.J. No. 3731 (Ont. CA).
[28] The Ontario Court of Appeal in Drygala v. Pauli set out the following three questions which should be answered by a court in considering a request to impute income:
- Is the party intentionally under-employed or unemployed?
- If so, is the intentional under-employment or unemployment required by virtue of the party’s reasonable education or health needs?
- If not, what income is appropriately imputed?
[29] The onus is on the party seeking to impute income to the other party to establish that the other party is intentionally unemployed or under-employed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made. See: Homsi v. Zaya, 2009 ONCA 322, [2009] O.J. No. 1552. (Ont. C.A.).
[30] Once a party seeking the imputation of income presents the evidentiary basis suggesting a prima facie case, the onus shifts to the individual seeking to defend the income position they are taking. See: Lo v. Lo, 2011 ONSC 7663; Charron v. Carriere, 2016 ONSC 4719.
[31] Absence of a reasonable job search will also usually leave the court with no choice but to find that the payor is intentionally under-employed or unemployed. See: Filippetto v. Timpano, [2008] O.J. No. 417, (Ont. S.C.); T.L. v. D.S., 2019 ONCJ 809.
[32] The court stated in Drygala that there is no need to find a specific intent to evade child support obligations before income is imputed; the payor is intentionally under-employed if he or she chooses to earn less than what he or she is capable of earning.
[33] A self-employed person has the onus of clearly demonstrating the basis of his or her net income. This includes demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes. See Whelan v. O’Connor, [2006] O.J. No. 1660, (Ont. Fam. Ct.).
[34] Self-employed persons have an inherent obligation to put forward not only adequate, but comprehensive records of income and expenses, from which the recipient can draw conclusions and the amount of child support can be established. See: Meade v. Meade (2002), 31 R.F.L. 5th 88 (SCJ).
[35] Once under-employment is established, the onus shifts to the payor to prove one of the exceptions of reasonableness. When an employment decision results in a significant reduction of child support, it needs to be justified in a compelling way. See: Riel v. Holland, at paragraph 23. As a general rule, separated parents have an obligation to financially support their children and they cannot avoid that obligation by a self-induced reduction of income. See: Thompson v. Gilchrist, 2012 ONSC 4137; DePace v. Michienzi, [2000] O.J. No. 453, (Ont. Fam. Ct.).
[36] The third question in Drygala v. Pauli, supra, is: “If there is no reasonable excuse for the payor’s under-employment, what income should properly be imputed in the circumstances?” The court must have regard to the payor’s capacity to earn income in light of such factors as employment history, age, education, skills, health, available employment opportunities and the standard of living enjoyed during the parties’ relationship. The court looks at the amount of income the party could earn if he or she worked to capacity. See: Lawson v. Lawson.
[37] The court will usually draw an adverse inference against a party for his or her failure to comply with their disclosure obligations as provided for in section 21 of the guidelines, and impute income. See Smith v. Pellegrini, [2008] O.J. No. 3616, (Ont. S.C.); Maimone v. Maimone, [2009] O.J. No. 2140, (Ont. S.C.). The parent must make full and complete financial disclosure to ensure that the information required to make a decision on the issue is before the court. Charron v. Carriere, 2016 ONSC 4719.
[38] A person’s lifestyle can provide the basis for imputing income. See: Aitken v. Aitken [2003] O.J. No. 2780 (SCJ); Jonas v. Jonas, [2002] O.J. No. 2117 (SCJ); Price v. Reid, 2013 ONCJ 373.
[39] The economic realities of the pandemic may justify a temporary reduction in the imputation of a party’s income. See: Ferlisi v. Boucher, 2021 ONCJ 48.
3.2 Positions and evidence of the parties
[40] The maternal grandmother’s position is that the father is either earning, or is capable of earning, annual income of $50,000.
[41] The maternal grandmother asks the court to draw an adverse inference against the father due to his failure to adequately comply with three financial disclosure orders, his failure to provide a meaningful explanation of his income and his failure to look for employment.
[42] The maternal grandmother deposed that she has known the father for 16 years. She said that he has always held himself out to be an electrician. She said that he owned his own business and would post his business cards on job boards at local businesses. She said that he removed these cards after this case started. She stated that the father was always well-dressed in designer clothing and drove expensive vehicles – currently a Nissan Acura SUV.
[43] The mother filed an affidavit repeating the maternal grandmother’s evidence on this issue.
[44] The father testified that he has been self-employed as a handyman since 2012. He said that prior to the pandemic he was earning between $20,000 and $25,000 annually. He said that he operated his business in cash and did not keep the types of records that the mother has sought. He did not have a bank account prior to March 2019. He said that he only opened an account because he was told to do so for the purpose of this litigation.
[45] The father deposed that he earns his income doing odd jobs, including, painting, cutting grass, cutting hedges, snow shoveling, cleaning eavestroughs, cleaning up gardens or any clean-up job. He gets his work through word-of-mouth. He said that he worked 20 hours each week prior to the pandemic.
[46] The father stated that he has not worked since the start of the pandemic, as his clients do not want him to come into their homes.
[47] The father attested that in 2020 he earned income of $3,333 for January and February. He then received CERB payments of $2,000 each month from March until September. From October to December, he received $1,800 each month for Canada Recovery Benefits (CRB). This came to a total of $22,733.
[48] The father testified that he does not have a job search list because he has never applied for a job. He said that he is unable to look for other work because his parenting time with the child precludes his looking for a regular job. He said that he earns enough to get by.
[49] The father only expects to receive CRB payments of $1,800 each month in 2021. This comes, he said, to $21,600 annually.
[50] The father has also received the CCB of $298.70 each month since September 2019.
[51] The father took the position that he is prepared to have his annual income assessed at $25,000 for support purposes, starting on September 1, 2018 – even if he hasn’t always earned this amount.
[52] The father denied running an electrical business or being an electrician or electrical helper. He described his work history as follows:
a) From 2001 to 2012 he ran a business under the name AMS Contracting. He was licensed as a “Casual Electrical Helper”. He also attempted to become a licensed electrician but failed to obtain an apprenticeship. He claimed that he earned minimal income from his business.
b) In 2012 he did not renew his business license as he could not find an apprenticeship in any electrical related field. He started work as a handyman.
[53] The father deposed that he lives a very frugal lifestyle. He lives in a rental unit with his roommate. They each pay 50% of the rent. He said that he pays 25% of the utilities. He says that he has few assets. He does not own a vehicle. He drives the Nissan SUV which is owned by the paternal grandmother. She pays for the car insurance. He said that the paternal grandmother lent him $1,500 so that he could open his bank account.
[54] The paternal grandmother confirmed the father’s evidence about the vehicle and the loan she gave him to open his bank account.
3.3 Credibility
3.3.1 The mother and the maternal grandmother
[55] The court found the maternal grandmother and the mother to be credible witnesses. They answered questions directly. They did not overstate evidence. They readily conceded that they had little personal knowledge about the father’s ability to earn income at this time.
3.3.2 The father and the paternal grandmother
[56] The court did not find the father to be a credible witness. It finds that he has been earning much more money than he claims.
[57] The father was often evasive in his answers. When confronted with inconsistencies in his evidence, he would either blame his accountant (stating that the accountant made up the figures in his income tax returns and also incorrectly described him as an electrician in those returns), claim that he had not read his income tax returns before signing them, claim that he did not read court documents and just signed what was put in front of him, and often feigned ignorance that he had provided previous inconsistent evidence.
[58] The father testified that he earns between $20,000 and $25,000 annually. His income tax returns report much different incomes for the following years:
2015 - $5,700 2016 - $4,523 2017 - $8,600 2018 - $4,524 2019 - $10,577
[59] When you lie to the CRA about your income, it is going to adversely affect your credibility when you ask the Family court to believe your evidence about your income. [3]
[60] The father also wrongfully claimed to the CRA that he had a shared custody arrangement with the maternal grandmother. This was never the case and has had a drastic impact on the benefits that the maternal grandmother receives. It has more than negated the child support that the father has paid to her.
[61] The father acknowledged that he often holds himself out as an electrician but the people he works for knows that he is not one.
[62] If the father had claimed a reduction in income due to the pandemic, the court would have been understanding. However, he decided to take his claim much further and said that he could not work at all because his clients will not allow him into their homes. This is not credible. He provided no explanation as to why he couldn’t continue to do the outdoor work he claimed to have done prior to the pandemic, such as painting, cutting grass, cutting hedges, snow shoveling, cleaning eavestroughs, cleaning up gardens or any clean-up jobs.
[63] The father’s credibility was also adversely impacted by his failure to provide adequate financial disclosure – disclosure that was ordered three times. He filed income tax returns but did not file the source documentation necessary for it to be meaningful. He left the Statement of Business or Professional Affairs blank on several of his tax returns.
[64] The father gave inconsistent evidence about his business records. At one point, he claimed that he operated entirely in cash and had no records. However, in cross-examination he claimed that “racoons, or maybe rats had eaten and destroyed his records”. He couldn’t remember when. He had not mentioned this in several prior affidavits. This evidence was not credible.
[65] In an affidavit dated October 3, 2018, the father claimed:
“….sometimes I get paid by cash, I, A.S. get my mother to cash my cheques for me because I do not have a bank account.
At trial, the father claimed that his mother has never cashed his cheques and that this statement made in his affidavit was a mistake made by someone else. [4] This was not credible.
[66] The paternal grandmother was also not a credible witness. She was combative and refused to answer questions that she didn’t like. She had deposed that she had only assisted the father by letting him use the Nissan SUV, paying his car insurance and giving him $1,500 cash to open a bank account. When presented with evidence that she had also paid his $3,000 costs order she refused to admit that this was assistance – claiming that she was only helping him. “There is a difference between assisting and helping”, she said.
[67] The paternal grandmother threatened that if any of her assistance to the father was added to his income, she would take back the Nissan SUV and the child would suffer because there would be no one to take her to school.
3.4 Analysis
[68] The father asks the court to believe his evidence about his earnings, despite operating in cash, not complying with three financial disclosure orders, not reporting his actual income to the CRA and wrongfully informing the CRA that there was a shared custody arrangement.
[69] The court believes none of the father’s evidence.
[70] The difficulty comes in assessing how much income the father is actually earning. However, this difficulty only arises due to the father’s failure to provide a meaningful financial picture. An adverse inference is made against him.
[71] The father claimed that he was earning between $20,000 and $25,000 each year before the pandemic, only working 20 hours each week. The court does not accept the father’s evidence that he only worked 20 hours each week. At even 35 hours each week, the father’s annual income projects to between $35,000 and $43,750 each year.
[72] In the alternative, the court finds that the father is deliberately underemployed or unemployed. He admitted that he has not looked for a job in a long time. He appears to have no intention to do this.
[73] When asked why he did not look for a job when he was only working 20 hours each week the father answered that he was content with the money he earned – it was enough for him to get by. This is not a good enough answer when you have a child to support.
[74] The father also used his parenting time as an excuse not to look for work. The court finds that this would be only a minor limitation on his ability to work. He has the child for two overnights each week and the child is in school all day. There are many days he can work when the child is not in his care.
[75] The father said that he has received more from CERB and CRB payments than he did working.
[76] Although he is 58 years old, the father has no health limitations. He did not provide a viable excuse for not looking for work.
[77] The maternal grandmother produced job listings for a handyman from the Government of Canada Job Bank. The job qualifications in the job listings match the father’s qualifications. The average wage for a handyman in Toronto is $19.23 per hour. This equates to an annual income of about $40,000. This falls within the range of the income the court finds that the father is likely earning.
[78] The court will impute the father’s annual income at $40,000 for the period from September 1, 2018 to March 15, 2020 - when the pandemic began.
[79] The court considered reducing the imputation of the father’s income once the pandemic began, recognizing that it likely had some impairment on his ability to earn income. However, a closer examination of the evidence informs the court that no adjustment should be made.
[80] The father received CERB payments of $500 each week from April to September 2020. This equates to annual income of $26,000. Under the CERB program, the father was entitled to earn up to $1,000 each month, in addition to these benefits. The court finds that the father likely earned this much (or more) during this period. If he did not earn this amount, the court imputes this income to him because he was capable of earning it.
[81] Starting in October 2020, the father began receiving the CRB payments. These are also $500 each week. The difference from the CERB program is that with the CRB, income tax is deducted at source. The father, under the CRB program is not required to rebate these payments unless he earns more than $38,000 annually (excluding the CRB payments). Over that amount, he has to return 50 cents on every dollar earned. The court finds that the father has earned or is capable of earning total annual income of $40,000 since the pandemic began.
[82] The guidelines table amount for one child based on an annual income of $40,000 is $359 each month.
[83] The father shall be credited for the $125 monthly payments he has made to the maternal grandmother since September 1, 2018.
[84] The support arrears created by this order are $7,020, calculated at follows:
September 1, 2018 to February 28, 2020 – 30 months @ $359 each month = $10,770 Less support credits - $125 each month @ 30 months = $3,750
[84] The father’s request to pay these arrears at $50 each month is inadequate. The court will permit him to pay the arrears created by this order at the rate of $150 each month, starting on April 1, 2021. However, if he is more than 30 days late on any ongoing or arrears payments, the entire amount then owing shall immediately become due and payable. This will give the father almost four years to pay his support debt to the maternal grandmother.
Part Five – Shared custody arrangement
[85] The parties agree that the father does not have a shared custody arrangement pursuant to section 9 of the guidelines. [5] He has the child with him for less than 40% of the time over the course of the year.
[86] This court has no jurisdiction to direct the CRA on how to pay child benefits.
[87] However, the maternal grandmother should send a copy of this decision to the CRA. It is this court’s finding that the father wrongfully informed the CRA that there was a shared custody arrangement pursuant to section 9 of the guidelines. He has been paid half the benefits that the maternal grandmother has badly needed. She is surviving on the reduced benefits being paid to her and her widow’s pension.
[88] Essentially, the father has obtained benefits that have exceeded the support he has paid to the maternal grandmother.
[89] The court is hopeful that the CRA will adjust their payments to the father and the maternal grandmother, retroactive to the date that the father made his application to split these benefits.
Part Six – Conclusion
[90] The court makes a final order as follows:
a) The court finds that there is not a shared custody arrangement as defined in section 9 of the guidelines.
b) The father shall pay child support to the maternal grandmother in the amount of $359 each month starting on September 1, 2018. This is the guidelines table amount for one child based on an imputed annual income of $40,000 to the father.
c) The father shall be credited with child support payments of $125 each month, starting on September 1, 2018.
d) The arrears are fixed at $7,020, as calculated in this decision.
e) The father will be permitted to pay the arrears created by this order at the rate of $150 each month, starting on April 1, 2021. However, if he is more than 30 days late on any ongoing or arrears payments, the entire amount then owing shall immediately become due and payable.
f) The father shall provide the maternal grandmother with complete copies of his income tax returns and notices of assessment by June 30th each year.
g) A support deduction order shall issue.
[91] If either party seeks their costs, they shall serve and file their written costs submissions by March 10, 2021. The other party will then have until March 24, 2021 to respond (not to make their own costs submissions). The costs submissions shall not exceed three pages, not including any offer to settle or bill of costs. The costs submissions should be delivered or emailed to the trial coordinator’s office on the second floor of the courthouse.
[92] The court thanks counsel for their professional presentation of this trial.
Released: February 24, 2021
Justice S.B. Sherr
[1] The maternal grandmother had sought retroactive support to October 1, 2016. She withdrew this claim in her closing submissions.
[2] In his draft order prepared for this trial, the father sought a court order that he pay $125 each month, and only on an ongoing basis. At the outset of the trial, he changed his position to seek an order that he pay support of $200 each month. In closing submissions, he agreed that the support order should start on September 1, 2018 – three days after he started this application.
[3] The father also admitted that he has never remitted HST to the government for his services. He expressed ignorance that he had to do this.
[4] The paternal grandmother also denied cashing the father’s cheques.
[5] Section 9 of the guidelines reads as follows: Shared custody
9 Where a spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year, the amount of the child support order must be determined by taking into account
(a) the amounts set out in the applicable tables for each of the spouses;
(b) the increased costs of shared custody arrangements; and
(c) the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought.