Court File and Parties

ONTARIO COURT OF JUSTICE DATE: 2021 07 07 Thunder Bay Ontario COURT FILE No.: FO 15-01310001

BETWEEN:

Catherine Ann Richardson Applicant/Recipient

— AND —

Christi-Anne Lafrance Respondent/Payor

Before: Justice D.J. MacKinnon

Heard on: April 12, 2021 Reasons for Judgment released on: July 7 2021

Counsel: Catherine Ann Richardson.................................................. self-represented applicant(s) Christi-Anne Lafrance...................................................... self-represented respondent(s)

MacKinnon, J.:

Reasons for Judgment

[1] This is a motion by the payor Ms. Lafrance to retroactively vary child support for the period from August of 2014 to May 25, 2019. The parties have already agreed that support for the child, Liam, ended on his eighteenth birthday which was May 25, 2019, as he was not in school, and the termination order was made by Kunnas J.

[2] The order of support was made on August 28, 2014 by Justice Perron in North Bay. This followed a situation where the payor had custody of the child and was the sole adoptive parent, but had moved with the child to British Columbia, thus depriving Ms. Richardson, her former spouse, of the access she had been having. An order was issued requiring the child to be returned to Ontario, and at that time, Ms. Richardson was granted custody of Liam with access to Ms. Lafrance and support payable by her.

[3] In 2013, Ms. Lafrance had obtained a position with the Crown Attorney’s Office in British Columbia. The lawyers for Ms. Richardson, after the order was made for return of the child to Ontario, wrote a letter to the Deputy Attorney General in British Columbia, the Crown Attorney and Assistant Crown Attorney of Prince George, and to the Smithers Court Services office where the payor worked. The letter sets out the entire family proceeding and suggests that Ms. Lafrance does not obey court orders and the employer needs to impress compliance on her.

[4] This letter was unnecessary. The deadline for return of the child was October 8, 2013 and the letter was sent September 26, 2013. Ms. Lafrance had fully participated in both the proceeding at the Ontario Court of Justice and the appeal before the Superior Court. There was no need for this letter to be sent. There was no indication that Ms. Lafrance was not going to be compliant, and if she wasn’t compliant with the October 8th deadline, the court had granted Ms. Richardson the right to apply ex parte for an apprehension order.

[5] This letter involved the employer of the payor in the family matter. The result of this letter was that Ms. Lafrance lost her job with the Crown Attorney’s office in February of 2014. While she tried to keep the job over the next year, the firing was upheld as she was, at the time, a probationary employee. The final confirmation of the firing may or may not have been known to the court in August of 2014.

[6] The support ordered at that time was based on annual income in 2013 of $67,833.30 for Ms. Lafrance and resulted in payments of $621 per month commencing on September 1, 2014. She never made any voluntary payments. The order also provided that,

The Respondent shall provide to the Applicant a copy of her Income Tax Returns and Notice of Assessment annually by June 1st of each year with the child support payments adjusted accordingly as of that date.

[7] The payor brought an application to vary which was heard on August 29, 2016 along with a summary judgement motion by the recipient. The endorsement by Justice Kunnas says the following:

Noting the affidavits filed, the arguments presented motion for summary judgement is granted + the motion to vary by the respondent does not meet the threshold test that there has been a material change of circumstances affecting or likely to affect the best interests of the child….Motion to vary is dismissed save and except the issue of child support adjourned to 17 October 2pm TBaytime to enable respondent to give and file proof of income and last two years tax returns within 30 days..

[8] On October 17, 2016, the same justice endorsed:

Issue of child support variation respondent is to bring variation on provisional basis in BC within 30 days for ultimate confirmation in Ontario….

Discussion

[9] The Final Order of August 28, 2014 is considered correct at the time it was made. It was based on the payor’s gross income from 2013. It did provide for annual adjustments based on a change of income.

[10] However, it is clear that at the time of the order of August 28, 2014, the fate of Ms. Lafrance’s employment may not have been completely understood. In other words, the letter from the lawyer of the recipient to the employer of the payor was known and the firing. However, it may have been that the final termination was not known.

[11] These changes of circumstance were considered at the time of the decision. The Court of Appeal in the case of Gray v. Rizzi 2016 ONCA 152 in dealing with a similar situation on appeal said the following:

In my view, the trial judge erred in principle by relying on changes in Mario’s (the payor’s) circumstances that pre-dated the making of the Final Order , to grant the Variation Order and, in effect, conducted a correctness review of the Final Order.

[12] Simply put, in this case the variation application by the payor cannot be an appeal of the order of August 28, 2014. It is not the role of this court to review the decision of Justice Perron, nor to jump that decision and reconsider the circumstances which occurred prior to that date. The order is a watershed.

[13] In a similar manner, the court must view the decision of Justice Kunnas on August 29, 2016 to dismiss the variation application of the payor as a correct decision and not subject to review by this court. It is a second benchmark which limits the consideration of facts only occurring since then.

Should the Court consider a variation?

[14] The order of August 28, 2014 contains the following clause:

16. The Respondent shall provide to the Applicant a copy of her Income Tax Returns and Notice of Assessment annually by June 1st of each year with the child support payments adjusted accordingly as of that date.

[15] There is no evidence that the payor complied with this order. However, it can be said that the order contemplates an annual adjustment of the support payable, based on the income of the payor.

[16] In the Child Support Guidelines, O. Reg. 391/97, the following constitutes a material change of circumstance:

s.14(1) In the case where the amount of child support includes a determination made in accordance with the table, any change in circumstances that would result in a different order for the support of a child or any provision thereof.

[17] A change in the annual income of the payor would result in a different order if the table was being used.

[18] The onus is on Ms Lafrance to show a material change of circumstances since 2016 which necessitates reconsideration of the support order. The court is limited to review of changes of circumstance since August of 2016 only.

Has there been a change in circumstances?

[19] The payor presents her annual income, as found on line 150 of her Income Tax returns:

2016 $19,227 2017 $19,890 2018 $21,416 2019 $33,745

[20] From the time of the original order in 2014, when the income of the payor was $67,833, to 2019 when the annual reported income of the payor was $33,745, there has, on the face of it, been a drop in income and therefore a change of circumstances.

[21] Do these numbers realistically reflect the income of the payor?

[22] The materials filed by the payor show the following incomes and deductions:

(1) 2016 - In 2016, the payor reported the following income: $19,227 from employment, $18,165 from rents and $0.00 from her business. Deducted from her rental income are $22,065 in expenses, resulting in a loss of -$3900. In regard to the business, there is no income recorded, but $8960 in expenses and $7342 in use of home expenses, for a loss of -16,303. (2) 2017 - The employment income for this year was $36,680. Rental income was $20,928 less expenses claimed of $22,671 resulting in a rental loss of $1742. The business again shows no income but losses of $15,048. The rental and business losses reduce income to $19889. (3) 2018 - In 2018 the reported employment income was $21,416, the rental income was $18,382 and again no reported income for the business. The rental income shows a loss which results in income of only $5092. The business shows a loss of $7489. No schedules were filed with the court. (4) 2019 - The tax return for this year has not been provided. The T4 from the Government of British Columbia shows income of $33,745 for that year.

[23] The recipient says that the payor is purposefully under-employed. The payor says that she suffers from PTSD and has had difficulty working. I do not find that the payor is under-employed but that she has struggled to find employment. I find that she has emotional problems but is not currently suffering from PTSD, in accordance with the report filed from her medical professional.

[24] The problematic area for determination of income is the deductions made from income. While Canada Revenue Agency may, for the purposes of taxation, allow certain deductions, it would be unfair to allow unjustified deductions from income for the purposes of child support.

[25] In s.16 of the Child Support Guidelines, O. Reg. 391/97, the regulation states:

Subject to sections 17 to 20, a parent’s or spouse’s annual income is determined by using the sources of Income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.

[26] In s.17(2) the court can do the following in regard to business losses:

Non-recurring losses – Where a parent or spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination of the parent’s or spouse’s annual income under section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of Schedule 111, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses to arrive at such amount as the court considers appropriate.

[27] And further, in s.19 (1)(g) the court may impute income in circumstances where, “the parent or spouse unreasonably deducts expenses from income”.

[28] There are two areas of deduction that are questionable:

a. Deductions from rental income; and b. Deductions for business expenses.

Rental Income Deductions

[29] The anticipation with a rental property is that it will make money or equity for the owner. The payor owned a property in North Bay, Ontario during the time in question, which she rented out.

[30] The onus is on the payor to show that the deductions from income for the rental property are valid, particularly in circumstances where she claims that the property loses money, and that such loss is deducted from her income.

[31] The payor has not provided any receipts or proof of the expenses of the rental property.

[32] While most of the expenses seem routine, I find it difficult to accept the expenses of interest on the mortgage that are deducted each year. This is because the property was eventually seized by the bank for non-payment of the mortgage. One of the only documents provided by the payor related to this is the submission of the lawyer for the bank seeking costs, which sets out that the default of the payment of the mortgage occurred in June 1, 2015. I have no evidence before me, in the face of the default in payment of the mortgage, that the payor paid the interest. The onus is on the payor to justify deductions from income and provide that proof.

[33] The 2019 tax return is not provided. In the financial statement filed by the payor March 23, 2021 which is to December 31, 2020, she indicates that rental income of $18,702 would be reduced to -$15,454, representing expenses it seems of $34,156. The judgment granting foreclosure to the bank was granted, according to the submission regarding costs by the bank’s lawyer, on July 28, 2020. It is difficult to see how such expenses would have accumulated during such a short period of ownership for the year.

[34] It is the responsibility of the payor to demonstrate that the expenses claimed were real, but she has failed to do so. For these reasons, I intend to add the interest deductions back into income for the years 2016 to 2019. The schedule setting out the detailed deductions each year, has only been provided for 2016 and 2017. For each of those years, the interest deduction is exactly the same at $9398.88. I find that the amount of $9399 should be added back into the income of the payor for each year including 2018 and 2019.

Business Income Deductions

[35] In the subject years, the payor indicates no business income, but claims business losses of various amounts as follows:

2016 -16,303 2017 -15,048 2018 - 7,489 2019 - info not provided

[36] The business losses before the partnership are largely unexplained. The onus is on the payor to provide proof that these expenses were legitimately incurred in becoming employed or earning income, and that losses were not the result of actions of the payor, such as errors in judgment. The payor has provided insufficient information related to these losses for the court to assess or accept them.

[37] Ms. Lafrance set up a business which she says she thought was a sole proprietorship but was a partnership with a person, Andrew Creyke. The business was working for the Coroner’s Office for the removal of bodies and generated a positive income. Ms. Lafrance claims that the partner took the funds from the business and she was left with very little. This is another litigation matter of the payor and also involves the police. However, I note that the partnership was not set up until January of 2019 and would have only affected that year.

[38] In this regard then, the losses for 2016 to 2018 will be added back into income for those years.

Income for the Years 2016 to 2019

[39] Given these determinations, the income of the payor for the years 2016 to 2019 is as follows:

2016 - $19,227 (wages) plus $9399 (interest) plus $16,303 (bus.) = $44,929 2017 - $19,890 (wages) plus $9399 (interest) plus $ 15,048 (bus.) = $44,337 2018 - $21,416 (wages) plus $9399 (interest) plus $$7,489 (bus,) = $38,304 2019 - $33,745 (wages) plus $9399 (interest) = $43,144

Decision

[40] In consideration of the evidence in this case, I order as follows:

1. The support payable by the payor Ms. Lafrance to the recipient Ms. Richardson, for the support of Liam Thanh Nicholson Lafrance born May 25, 2001, during the years of 2016 to 2019, in accordance with the British Columbia guidelines, shall be varied as follows: a. 2016 Commencing on September 1, 2016 and on the 1st day of each month thereafter, the support payable by the payor shall be $410.74 per month based on deemed income of $44,929 per year. b. 2017 Commencing January 1, 2017, and on the 1st day of each month thereafter, the support payable by the payor shall be $405.17 per month based on deemed income of $44,337 per year. c. 2018 Commencing January 1, 2018 and on the 1st day of each month thereafter, the support payable by the payor shall be $360.80 per month based on deemed income of $38,304 per year. d. 2019 Commencing January 1, 2019 and on the 1st day of each month thereafter, until the termination of the support on May 25, 2019, the support payable by the payor shall be $405.30 per month based on deemed income of $43,133 per year with the final payment on May 1, 2019.

2. Following a recalculation, the party identified by the Family Responsibility Office which owes a balance, shall pay such balance within sixty days of the date of this decision.

3. The payor attorned to this jurisdiction by bringing her motion here. As a result this decision is not provisional.

4. Any party requesting costs must serve and file their submissions and any written offer made within ten days of the date of release of the decision with reply submissions and any written offers to be served and filed within ten days after that. If no submissions are received within the ten days, I order no costs in the circumstances of the mixed result.

Released: July 7, 2021 Signed: Justice D. MacKinnon