ONTARIO COURT OF JUSTICE DATE: 2023 01 19 COURT FILE No.: Brampton 389/18

BETWEEN:

S. SMITH Applicant

— AND —

C. STERLING Respondent

Before Justice A.W.J. Sullivan

Heard on September 26, 2022 and December 1, 2022 Reasons for Judgment released on January 19, 2023

Ms. S. Smith................................................................................................ on her own behalf Mr. C. Sterling............................................................................................. on his own behalf

SULLIVAN J.:

[1] This is the decision from a focused trial on a motion to change commenced by Mr. Sterling October 26, 2021, of the February 22, 2019 Order of J. Cheung.

[2] Both parties represented themselves.

[3] The motion to change is for:

a) A change to the amount paid in monthly child support for the two children in this matter, Sincere, born […], 2013, and Sage born […], 2016;

b) Establishing section 7 costs;

c) Revising the parenting schedule.

[4] Ms. Smith filed a response opposing the motion.

Mr. Sterling's main evidence that I considered relevant:

[5] On the issue of monthly child support Mr. Sterling in the Motion to Change states that the parties have not disclosed income tax information as set out in the last order and that his income for 2020 is lower than the last order.

[6] He claims between $35,500.00 to $39,000.00 for 2020 and in his August 2022 financial statement he claims $35,805.00 for 2021 and estimates $35,400 for 2022. This is down from the income listed at $52,500.00 which places his child support payments at $797.00 per month.

[7] Regarding section 7 costs, the parties have not come to any agreement to these as set out in paragraph 25 of the final order. Some of the events the children do not now follow and he is not receiving proof that these costs are actually incurred except that of daycare that he agrees to.

[8] Parenting time – He argues that both of them have had challenges following the schedule in the last order.

[9] He proposed a different schedule rotating between weeks 1 and 2, with different weekday evening parenting time Week 1 Monday and Wednesday afterschool to 8:00 p.m. and that weekend Friday to Saturday at 6:00 p.m., week 2 Tuesday and Thursday afterschool to 8:00 p.m. And for that weekend Saturday at 1:30 p.m. to Sunday at 7:00 p.m.

[10] In Ms. Smith’s Response to Motion to Change she challenges Mr. Sterling’s true income. She claims his lifestyle betrays his true income in that he bought an Audi SUV in the fall of 2021 and owns two motorbikes and as well owns a condo in Brampton at 9 George Street, unit 1203.

[11] Ms. Smith states that Mr. Sterling operates two businesses, one in construction and the other as a personal fitness trainer. His expenses are low as he lives in the basement of his mother’s home and he is able to write off some of his costs from gross income that needs to be accounted for.

[12] At the time of filing Mr. Sterling was in arrears of $9,338.18 and is inconsistent with his parenting time as he is often working. A FRO Director’s Statement was filed at trial that has Mr. Sterling owing arrears in child support as of November 28, 2022, at $12,546.05.

[13] Mr. Sterling was questioned about his lifestyle since the last order.

[14] He conceded that he had travelled in 2019 for 2 weeks in Europe and in 2020 he travelled to B.C. and in 2021 to the Dominican Republic.

[15] When questioned about how many months out of the year he works full time he stated that he can’t recall.

[16] He admitted to living with his mother in a basement apartment in a home that she owns and in his second financial statement filed in August 2022 he claims to pay his mother $1,400.00 for renting this space with $90.00 a month for utilities. In his first financial statement filed with his Motion to Change in October 2021 he listed no expenses.

[17] He admitted to owing a condo at 9 George Street in Brampton. He listed the value in 2016 when it was purchased at $270,000.00 but not the current value. He listed the mortgage at $192,898.28 and testified that he rents it out for $1700.00 which covers some of the carrying costs but not all. Mr. Sterling did not produce proof of the rent received or any costs other than listing the mortgage on his financial statement.

[18] He admitted to purchasing a used 2017 Audi SUV on October 12, 2021, which was not listed on his first financial statement but was listed in his August 2022 statement. He valued this SUV at $33,000.00.

[19] He was questioned about two different motorbikes that he has parked in his mother’s driveway from time to time. He claims they are registered in the name of an ex-girlfriend but he did not produce the registration that he claims he has proof of.

[20] He did admit to having the use of these bikes and photos of his son sitting on one with the other bike in the background taken in May/July 2020 were filed in the trial and another photo of Mr. Sterling getting on one that he rode over to the children’s home during a visit was also filed.

[21] Ms. Smith was questioned about her claims for section 7 expenses.

[22] She filed an affidavit August 15, 2022, in which she provided details of the section 7 costs and proof of payments that she made for 2020 to August 2022.

[23] Mr. Sterling agreed that he owes the costs for the daycare that the children attended but not for gymnastics and dance. He questioned Ms. Smith on whether she complied with paragraph 25 from their last order that states that section 7 costs need to be agreed to first before expecting the other parent to pay for the same. Ms. Smith conceded that she had not just as he also had not done so when he registered the children in martial arts and basketball.

[24] Both agreed that their communication was not the best and that each had not tried to obtain consent as it was a frustrating experience to obtain a straight answer from the other.

[25] It is clear, however, that gymnastics and daycare are listed in the old order. What was needed is proper communication between the parties about payment of these listed costs and notification that the children are attending.

[26] When each was questioned about the change to the parenting schedule there was an agreement that it was not being followed as per the last order and that it needed to be updated to ensure consistency.

[27] Each parent had different suggestions about the weekly schedule that considered the children’s activities and work schedules in order to ensure consistency.

Discussion and Decision

Below is the law I have considered in relation to the claims to vary child support being made:

Changes to Child Support Orders

The moving party only has to show a change in circumstances (not a material change) within the meaning of the Child Support Guidelines or that evidence not available on the previous hearing has become available (subsection 37(2.1) of the FLA) to successfully change a child support order. Section 14 of the Child Support Guidelines sets out the circumstances that must be proven in order to warrant a variation in a child support order:

14. Circumstances for variation. — For the purposes of subsection 37(2.2) of the Act and subsection 17(4) of the Divorce Act (Canada), any one of the following constitutes a change of circumstances that gives rise to the making of a variation order:
    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.
    2. In the case where the amount of child support does not include a determination made in accordance with a table, any change in the condition, means, needs or other circumstances of either parent or spouse or of any child who is entitled to support.
    3. In the case of an order made under the Divorce Act (Canada) before May 1, 1997, the coming into force of section 15.1 of that Act, enacted by section 2 of chapter 1 of the Statutes of Canada, (1997).
    4. In the case of an order made under the Act, the coming into force of subsection 33(11) of the Act.

[28] The burden of proof lies upon the moving party, on a balance of probabilities, to establish a change in circumstances that would result in a different order. Jardine-Hynds v. Grant, 2009 ONCJ 133.

[29] To ascertain whether a change in circumstances has occurred, a court must consider whether the change advanced was “material” – meaning a change that, “if known at the time, would likely have resulted in different terms” – and a change with some degree of continuity, and not merely a temporary set of circumstances; Gray v. Rizzi, 2016 ONCA 152.

[30] In this case the father is also seeking an order to retroactively reduce his arrears. The Ontario Court of Appeal in the case of Gray v. Rizzi, supra, considered the application of the principles of DBS to a claim by a payor for a retroactive decrease in support. The court held that although the principals required some adjustments to suit the circumstances the fundamental factors still apply. D.B.S. v. S.R.G., 2006 Supreme Court of Canada 37.

[31] The court applied the process set out in the case of Corcios v. Burgos;, as follows:

56 First, when applying the adapted D.B.S. principles on a motion to retroactively vary child support, one must always keep in mind the ultimate issue: namely, the best interests of the child: DiFrancesco, at para. 24. As Chappel J. stated, "Ultimately, the goal in addressing child support issues is to ensure that children benefit from the support they are owed when they are owed it, and any incentives for payor parents to be deficient in meeting their child support obligations should be eliminated."

57 Next, a court should distinguish cases where a payor seeks relief from payment of arrears based on current inability to pay from those where arrears accumulated due to a change in the payor's circumstances that affected the payor's ability to make the child support payments when they came due.

58 A payor's request for relief from payment of arrears based on a current inability to pay generally will not result in the rescission or reduction of arrears unless the payor has established, on a balance of probabilities, that he cannot and will not ever be able to pay the arrears. Evidence that the recipient agreed to non-payment of the support is irrelevant, as child support is the right of the child and cannot be bargained away by the recipient parent.

59 Where, however, the payor demonstrates that a change in circumstances took place during the time that arrears were accumulating which rendered the payor unable to make child support payments for a substantial period of time, the court may provide relief by varying the child support order or rescinding arrears. As Chappel J. stated: "[the court] may determine that it is appropriate to retroactively suspend enforcement of the support order during the time when the payor was unable to pay or decrease the amount of child support owed during that time and reduce or rescind the arrears owing accordingly."

[32] The court then stated at paragraph 60 of the decision that the following factors should guide a court in determining whether to grant retroactive relief, the date of retroactivity and the quantum of relief:

1. The nature of the obligation to support whether contractual, statutory or judicial;
2. The ongoing needs of the support recipient and the child;
3. Whether there is a reasonable excuse for the payor's delay in applying for relief;
4. The ongoing financial capacity of the payor and, in particular, his ability to make payments towards the outstanding arrears;
5. The conduct of the payor, including whether the payor has made any voluntary payments on account of arrears, whether he has cooperated with the support enforcement authorities, and whether he has complied with obligations and requests for financial disclosure from the support recipient. As stated by Chappel J.: "Behaviour that indicates wilful non-compliance with the terms of the order or failure to work cooperatively to address the child support issue is a factor that militates against even partial rescission or reduction of arrears";
6. Delay on the part of the support recipient, even a long delay, in enforcing the child support obligation does not, in and of itself, constitute a waiver of the right to claim arrears;
7. Any hardship that may be occasioned by a retroactive order reducing arrears or rescinding arrears, or by an order requiring the payment of substantial arrears. As put by Chappel J.:

[I]f a retroactive order reducing child support would result in the child support recipient having to repay money to the child support payor, this may militate against making the order, particularly if the payor has not given the recipient notice of the change in their circumstances, has not provided appropriate disclosure to support their claim for an adjustment to the child support, or has delayed initiating court proceedings to change the order.

Law regarding parenting time and material change:

Application of Principles to Facts of this Case

[33] Mr. Sterling has not met the above test regarding his claim to reduce his child support payments.

[34] The evidence he filed has inconsistent and contrary information that affects his credibility.

[35] He claims in his 2021 filing and his testimony that he works at one job, being a subcontractor doing rebar in the construction industry. This is his only income, and he does not work as a personal fitness instructor.

[36] He lists one property that he owns in Brampton at 9 George Street and that he lives with his mother at her Albright property in Brampton where he rents from her.

[37] As I noted above when he filed his pleadings in October 2021, he listed no expenses and corrected this in his August 2022 financial statement where he also attached his Statement of Business and Professional Activities CRA returns for 2019, 2020, 2021 along with a loan application for the 2017 Audi SUV that he drives.

[38] In a review of the above documents the returns note the business activities as both Contractor and Fitness Instructor. Mr. Sterling testified that this was incorrect and that he is a subcontractor only and when questioned about this he claims he has never seen the reason to change this.

[39] In filing his returns, he lists several deductions from his gross income for the years noted above which he listed at $35,805.00 and $40,000.00, below the $52,500.00 as set out in the last order.

[40] Although I have concerns about some of the claimed deductions, such as rent and depreciation of his vehicle, the main concern I have is with Mr. Sterling’s overall credibility such that I cannot accept that he has had a decrease in his income from the last order.

[41] This I find for the following reasons when I consider documents that Mr. Sterling filed being an application dated and approved October 4, 2021, with CIBC for a $38,428.74 loan for the 2017 Audi SUV that he owns.

[42] This car loan in itself is not extraordinary in the amount. However, at this time of the loan Mr. Sterling is carrying the mortgage on his 9 George St. property as well and he did testify that the $1,700.00 rent that he charges does not cover all mortgage costs, condo fees, taxes, insurance and utilities and therefore he runs a deficient regarding this property.

[43] In his testimony he did break down these costs and agreed that the monthly deficient or out of pocket to him was about $500.00 a month while at the same time paying rent to his mother, which he claims at $1,400.00 per month and $90.00 for utilities.

[44] Although this is the case he is prepared to ask for and obtain further debt for this SUV knowing at the time that he owes child support from the February 2019 order.

[45] It should be remembered that on his business taxes he has claimed operating costs and depreciation of this SUV which essentially is a benefit to him and as well the payment of the mortgage of the condo via the rent charge has allowed Mr. Sterling to gain real value in his overall wealth and this rental income should be considered as part of his annual income for child support purposes. See: regarding accumulation of equity and costs in the process:

The portion of mortgage payments that reduce principal should not be deducted from rental income as it increases the value of the property. See: Siddiqui v. Anwar, 2018 ONSC 219.

[46] The above numbers pose a problem for me regarding Mr. Sterling’s credibility but are only part of the issue of his credibility when I examine the above CIBC car loan application as follows:

1. He indicates that he is an employee (full-time) not self-employed, two separate questions that he had to answer which he did. That his employer is Forma-Con Construction, and his occupation is an iron worker.
2. He lists his address in October 2021 as 43 Marsh Lane in Ajax, ON and that he owns this property with a mortgage of $1,050.00 as a single person.
3. He lists his monthly salary on this application form at $3,482.24 or $41,786.88 per year.
4. He signs this Application on October 12, 2021.

[47] Why did Mr. Sterling not list the George Street property as potential collateral that he purchased in 2017?

[48] Does he also own the Ajax property that is listed or is he prepared simply to provide false information in this application to gain some advantage.

[49] I find this hurts his credibility in my assessment of his evidence such that I cannot accept that he pays his mother rent which he did not prove independently in his evidence, or the ownership of the motorbikes as discussed above. I accept his explanation that he listed this property to somehow obtain cheaper car insurance.

[50] I am left wondering if he works for himself or is actually an employee and is misleading CRA to gain tax advantage.

[51] I find that Mr. Sterling’s overall financial health is stronger than he lets on and today there remains gaps in the disclosed information and misinformation. This lack of clarity and misinformation leaves him exposed to the court's discretion in imputing greater income to him based on the above findings or rejecting his claim that he earns less income than set out in the last order which I do not accept.

See: This lack of full disclosure and truthfulness of one’s financial affairs is a significant problem:

Nondisclosure is the cancer of family law. This is an apt metaphor. Nondisclosure metastasizes and impacts all participants in the family law process. Lawyers for recipients cannot adequately advise their clients, while lawyers for payors become unwitting participants in a fraud on the court. Judges cannot correctly guide the parties to a fair resolution at family law conferences and cannot make a proper decision at trial. Payees are forced to accept an arbitrary amount of support unilaterally determined by the payor. Children must make do with less. All this to avoid legal obligations, which have been calculated to be a fair quantification of the payor's required financial contributions. In sum, nondisclosure is antithetical to the policy animating the family law regime and to the processes that have been carefully designed to achieve those policy goals. See: Leitch v. Novac, 2020 ONCA 257, par. 44.

Simply stated, disclosure is the linchpin on which fair child support depends and the relevant legal tests must encourage the timely provision of necessary information. See: Colucci v. Colucci, 2021 SCC 24.

Roberts v. Roberts, 2015 ONCA 450, at paras. 36-37:

The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing.

Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage of the opposite party. It also impacts on the administration of justice. Unnecessary judicial time is spent, and the final adjudication is stalled.

Financial disclosure is automatic. It should not require court orders – let alone three – to obtain production.

Imputing Income: Adverse inference for failing to provide disclosure

Where a party fails to provide full financial disclosure relating to their income, the court is entitled to draw an adverse inference and to impute income to them. Szitas v. Szitas, 2012 ONSC 1548; Woofenden v. Woofenden, 2018 ONSC 4583.

[52] Given my above findings and the law, I dismiss Mr. Sterling’s claim to change the support he owes from Justice Cheung’s February 22, 2019, Order.

[53] Ms. Smith did not plead that she sought to impute a greater income to Mr. Sterling which he might have been exposed to if she had.

[54] He owes considerable arrears and must begin to pay down arrears in a meaningful manner in addition to the monthly child support owed. This debt he owes his children should be his priority and if he must sell some of his property to do so then he should. This I cannot order but simply a suggestion. In my review of the FRO Director’s Statement filed, I note that from the start of the order Mr. Sterling has been delinquent in full monthly payments for years now which will eventually lead to a significant FRO enforcement.

[55] I will be ordering that he pay an additional $200.00 each month towards the arrears outstanding until paid down in full and in addition any federal monies he may receive, or windfall, be taken as well by FRO to pay down the debt to the children. In doing so I am not asking him to pay any greater amount just what he was asked to pay in the first place.

Section 7 Issues:

[56] As for the Section 7 expenses issue in this trial I find the following:

a) The old order had set out specific section 7 costs of gymnastics/ballet and daycare with fixed amounts per month that Mr. Sterling owed. The FRO Director's Statement of arrears would have in the total dollar amount owed by Mr. Sterling what he has not paid to date regarding these section 7 costs. These he still owes.

b) The issue between the parties is how they are to adjust any children’s activities from the last order. Apparently, the children have moved to dance and swimming with Mom and martial arts and basketball with Dad. Each has paid for the activities that they registered the children in without a contribution from the other. I find these costs offset each other.

c) What then is needed is to move forward from here in setting agreed to section 7 costs and how to share these.

d) Daycare: The parties agree that the daycare costs are owed as per the last order and included in the FRO arrears as a set amount per month was owed in the last order. Daycare is a section 7 cost that will need to be shared going forward.

e) I will make the following order to bring this issue up to date.

Order Final:

1. Section 26(A) of the February 22, 2019, Order of J. Cheung regarding daycare, with Mr. Sterling owing $196.00 per month is terminated as of December 31, 2022.

2. As of January 1, 2023, daycare costs as needed for the children shall be a continued monthly section 7 cost to be shared 40% owed by Mr. Sterling, with Ms. Smith providing to Mr. Sterling the monthly daycare invoice for payment within 7 days of receiving the same.

3. Section 26(B) from the February 22, 2019 order is terminated as of December 31, 2021 (being the cost for gymnastics and ballet).

4. Commencing January 1, 2023, if either party seeks a contribution from the other the parties will need to agree to future section 7 activities through an exchange of emails (no more than two (2) activities per child each six months) and share the costs with Mr. Sterling paying 40% and Ms. Smith 60%. Invoices will need to be provided to one another depending on who registers the child(ren) as agreed to by the parents. Once the activity is paid for the party owing their share will pay the other within 7 days of receiving the invoice if not having paid their share in advance.

5. If any of the ongoing daycare costs which is a section 7 cost and agreed to activities as per #4 above is not paid by a parent, the portion of the unpaid invoice for that agreed to section 7 costs may be registered with FRO to enforce as child support owed or a credit as the case may be.

Revised weekly parenting schedule:

On this issue after questioning between the parties an agreement was reached to revise the weekly parenting schedule as follows:

a) The children, Sincere, born […], 2013, and Sage, born […], 2016, shall have parenting time with their father Mr. Sterling every weekend from Saturday at 2:00 p.m. to Sunday at 8:00 p.m. return.

This was based on the holiday schedule in the current order remaining the same (as no one actually requested in pleadings for any changes to the holiday schedule) and both parties agreed to recommit to clause # 10(K) in the February 22, 2019 order which states that parties to maintain a reasonable and flexible position regarding parenting time of the children.

Final Order:

A. Mr. Sterling’s request to change the child support provisions in the February 22, 2019 Order of Justice Cheung is dismissed.

B. Commencing February 1, 2023, and on the 1st of each month thereafter Mr. Sterling shall pay in addition to monthly child support as set out in Justice Cheung’s February 22, 2019 Order an additional $200.00 per month to Ms. Smith to pay down child support and section 7 arrears owed until all arrears are paid in full.

C. In addition, to pay down arrears owing in child support, FRO shall divert any Federal money payable to Mr. Sterling and any lottery winnings or windfall such as an inheritance.

D. A SDO to issue.

E. Section 7 costs:

1. Section 26(A) of the February 22, 2019, order of J. Cheung regarding daycare with Mr. Sterling owing $196.00 per month is terminated as of December 31, 2022.

2. As of January 1, 2023, daycare costs as needed for the children shall be a continued monthly section 7 cost to be shared 40% owed by Mr. Sterling, with Ms. Smith providing to Mr. Sterling the monthly daycare invoice for payment within 7 days of receiving the same.

3. Section 26(B) from the February 22, 2019 Order is terminated as of December 31, 2021, (being the cost for gymnastics and ballet).

4. Commencing January 1, 2023, if either party seeks a contribution from the other the parties will need to agree to future section 7 activities through an exchange of emails (no more than two (2) activities per child each six months) and share the costs with Mr. Sterling paying 40% and Ms. Smith 60%. Invoices will need to be provided to one another depending on who registers the child(ren) as agreed to by the parents. Once the activity is paid for the party owing their share will pay the other within 7 days of receiving the invoice if not having paid their share in advance.

5. If any of the ongoing daycare costs which is a section 7 cost and agreed to activities as per #4 above is not paid by a parent, the portion of the unpaid invoice for that agreed to section 7 costs may be registered with FRO to enforce as child support owed or a credit as the case may be.

F. Parenting time – Weekly – paragraph 3 of the February 22, 2019 order of Justice Cheung is changed to read:

1. The children, Sincere, born […], 2013, and Sage, born […], 2016, shall have parenting time with their father Mr. Sterling every weekend from Saturday at 2:00 p.m. to Sunday at 8:00 p.m. return. This was based on the holiday schedule in the February 22, 2019 order remaining the same and both parties agreed to recommit to clause #10(K) in the February 22, 2019 order which states that the parents are to maintain a reasonable and flexible position regarding parenting time of the children between each household.

January 19, 2023

Signed: Justice A.W.J. Sullivan