ONTARIO COURT OF JUSTICE
CITATION: Wilson v. Demarte, 2023 ONCJ 472
DATE: October 24, 2023
COURT FILE No.: Brantford FO-11-457-001
BETWEEN:
Lara Wilson
Applicant
— AND —
Adam Demarte
Respondent
Before Justice A.D. Hilliard
Heard on: February 22, 23, 24 June 15, August 14, 15, 16, 17
Reasons for Judgment released on: October 24, 2023
M. Staats.......................................................................................... counsel for the applicant
Adam Demarte............................................................................................ on his own behalf
Hilliard J.:
Overview:
[1] This is a motion to change commenced by the Applicant, Ms. Lara O’Connor (nee Wilson), seeking orders for child support, both ongoing and retroactive, as well as an order imputing income to the Respondent, Mr. Adam Demarte. Mr. Demarte does not oppose an order that he pay child support, rather he resists his income being imputed at the amount proposed by Ms. O’Connor. He is not entirely opposed to a retroactive adjustment to child support but not to the extent that Ms. O’Connor was seeking at the final hearing.
[2] The hearing of the motion to change took place over eight (8) separate days spanning a period of six (6) months, starting in February and finally being completed in August 2023.[^1] Given the period of time that it took for the hearing to be conducted, some financial disclosure was exchanged between the parties during the adjournment periods. As a result, there was some adjusting of the parties’ positions over the course of the hearing, and reasonably so in my view.
[3] For the reasons that follow, the Applicant’s motion to change is granted in part.
Background:
[4] The parties have one (1) child for whom support is owing and payable. That child, Maquel (birth name Brynn), resides with Ms. O’Connor and is not having any parenting time with Mr. Demarte.
[5] On June 7, 2012, the parties entered into a consent before the Honourable Justice G.B. Edward. That order did not specify an amount of child support to be paid by Mr. Demarte, nor did it indicate what Mr. Demarte’s income was for the purpose of calculating child support.
[6] Paragraph 6 of Justice Edward’s order of June 7, 2012 reads as follows:
“AND THIS COURT FURTHER ORDERS THAT the parties are content with an unwritten child support provision so long as the current financial contribution continues to be made by the Respondent.”
[7] At the time of the final order in 2012, Ms. O’Connor was representing herself. Mr. Demarte had the assistance of counsel.
[8] Mr. Demarte was making child support payments to Ms. O’Connor in 2012 in the amount of $392 per month. That amount was based upon Mr. Demarte’s reported income at the time and was the figure upon which the consent order was based.
[9] Between May 2013 and August 2017, the parties agreed at different times to change the amount of child support Mr. Demarte was paying based on fluctuations in his income. Mr. Demarte and Ms. O’Connor do not agree as to whether the amounts of support paid by Mr. Demarte were in accordance with the Child Support Guidelines, having regard to Mr. Demarte’s income. There were also periods of time when the payment of joint debts was intermingled with the payment of child support by way of unwritten agreement.
[10] In 2013, Mr. Demarte’s driver’s licence was suspended by the Ministry of Transportation. Then in 2014, Mr. Demarte was fired from his job. His termination was a result of falsifying his driving logs. Thereafter Mr. Demarte worked different jobs, mostly as a subcontractor, sometimes for cash, until he became formally self-employed, working first for a corporation started by his partner, Avigail Salinas, and then a corporation which he is the sole shareholder of.
[11] In 2015, Canada Revenue Agency (CRA) froze Mr. Demarte’s bank accounts due to thousands of dollars owing in tax arrears. He then worked exclusively for cash and reported $0 income to CRA for the years 2016, 2017 and 2018. Due to not having an active bank account, Mr. Demarte arranged for child support to be sent via email money transfer (e-transfer) by Ms. Salinas to Ms. O‘Connor.
[12] Mr. Demarte then unilaterally reduced the amount of child support he paid to Ms. O’Connor in August 2017. After a dispute about the child support amounts and the manner in which child support was being sent, from November 2017 to July 2018, Ms. O’Connor rejected or refused to accept e-transfers sent to her as child support payments from Ms. Salinas.
[13] In 2018, Mr. Demarte declared bankruptcy, despite having received a sizeable inheritance from his grandmother’s estate sometime in 2017.
[14] Ms. O’Connor commenced this motion to change on September 30, 2019. She then amended her motion to change in November 2022 seeking to extend the retroactive claim period.
[15] Although the motion to change originally included claims regarding parenting, those issues were resolved prior to the hearing. The only issues left to be determined at the hearing were child support and section 7 expenses.
Material Change in Circumstances:
[16] The onus is on Ms. O’Connor as the moving party to demonstrate that there has been a material change in circumstances, which must be established prior to the Court determining whether a change should be made to a final order.
[17] This is not a typical case wherein simple reference to Mr. Demarte’s income at the time of the final order and then at the time the motion to change is commenced can determine whether a material change is made out. There is no reference in the final order to Mr. Demarte’s income, nor the amount of child support being paid.
[18] It is also relevant to note that this is not a case where Mr. Demarte has brought the matter back to court to reduce his child support payments based upon a reduction in his income. Rather, Ms. O’Connor has brought this motion to change seeking to have income imputed to Mr. Demarte and child support to be payable based upon that imputed income.
[19] Mr. Demarte’s income has fluctuated significantly since the 2012 Order of Justice Edward. His income as reported to CRA on his income tax returns is as follows:
2013 $40,834
2014 $28,248
2015 $163
2016 $0
2017 $0
2018 $0
2019 $12,100
2020 $25,876
2021 $17,372
2022 $17,373
[20] Mr. Demarte declared bankruptcy in 2018 which relieved him of having to pay his income tax arrears owing for the years 2013 and 2014. The bankruptcy also eliminated all of Mr. Demarte’s consumer debt, which included a significant amount owing on credit cards.
[21] In addition to the significant changes in Mr. Demarte's income, he unilaterally reduced the amount of child support he was sending to Ms. O’Connor in late 2017. This change in the child support amount was not agreed to by Ms. O’Connor and her opposition to this change was clearly communicated to Mr. Demarte.
[22] Based on all of the above, I am satisfied that there has been a material change in circumstances since the making of Justice Edward’s 2012 order.
Imputation of Income:
[23] Although Mr. Demarte was initially resisting income being imputed to him, by closing submissions he conceded that some income should be imputed to him, specifically for the years when he declared $0 on his Income Tax Return. He conceded that if there is to be a retroactive adjustment as far back as 2015 to 2018, income should be imputed to him at full-time minimum wage as he was not actively looking for work for periods of time, choosing to rely on inheritance money received from his mother and grandmother. Mr. Demarte seeks to have any child support payments he did make credited towards any retroactive adjustment.
[24] Ms. O’Connor’s position is that income should be imputed to Mr. Demarte in the range of $60,000 to $80,000 annually. She argues that Mr. Demarte was capable of earning income in that range as a long-haul truck driver. Ms. O’Connor also points out that Mr. Demarte continued to go on lavish trips with Ms. Salinas and her family while he was ostensibly unemployed.
[25] Section 19(1)(a) of the Child Support Guidelines permits the imputation of income in the event that it is determined that a parent is intentionally under- or unemployed. However, as the Court of Appeal reminds trial judges in Drygala v Pauli, section 19 cannot be used to arbitrarily impute income to a payor. There must be some evidence upon which the imputed income is based and the trial judge must demonstrate how the income amount was arrived at.[^2]
[26] In revisiting the issue of the proper approach to imputation of income, the Court of Appeal reiterated in Homsi v Zaya that a trial judge must provide an evidentiary foundation for an order imputing income to a payor. The Court also confirmed that the onus is on the person requesting an imputation of income to establish an evidentiary basis for such a finding.[^3]
[27] There is no evidence that Mr. Demarte has ever made an annual income of $60,000, even during the parties’ relationship. In the past decade, Mr. Demarte’s highest reported income was in 2013, when he earned $40,834. Even when I consider the evidence of Mr. Demarte’s recent self-employment income pre-deductions, his gross income was estimated at approximately $42,000 annually.
[28] Mr. Demarte has never had steady employment as a long-haul truck driver. Although he maintains his AZ licence, Mr. Demarte has not been employed by any company as a long-haul truck driver in the past decade. Furthermore, Mr. Demarte was terminated from his employment in 2014 for falsifying his log after having had his driver’s licence suspended by the Ministry. For years, Mr. Demarte was essentially uninsurable due to the astronomic premiums that would be levied given his driving history.
[29] I reject Ms. O’Connor’s argument that Mr. Demarte going on trips out of the country with Ms. Salinas while being unemployed is proof of a standard of living that is inconsistent with his reported income. Ms. Salinas’ evidence, which I accept, is that she paid for those trips from her own money and Mr. Demarte did not contribute financially to the cost of their vacations.
[30] I accept that there were periods of time when Mr. Demarte was not actively looking for work. During those periods, I find that it is appropriate that income be imputed to him as he was admittedly relying upon inheritance money to supplement his lack of employment income. I find that Mr. Demarte also relied on the financial generosity of Ms. Salinas. I accept the evidence of Ms. Salinas that Mr. Demarte has borrowed significant sums of money from her over the years of their relationship to support himself.
[31] I also find that income should be imputed to Mr. Demarte during periods of time when he was self-employed but earning less than minimum wage. Mr. Demarte has an obligation to provide support for Maquel and consequently he had a positive obligation to make all reasonable efforts to seek and maintain gainful full-time employment. He is able-bodied with training and experience in delivery driving and driving trucks hauling small loads, such as recreational trailers.
[32] In determining whether what income, if any, should be imputed to Mr. Demarte during the height of the COVID-19 pandemic (March 2020 to July 2021), I have considered that Mr. Demarte is, and for all relevant periods has been, employed as a truck driver. Truck drivers were deemed essential services even during the strictest pandemic lock-downs. On his own evidence, Mr. Demarte chose not to seek employment during the pandemic despite jobs being available for delivery drivers. Furthermore, Mr. Demarte’s evidence was that he chose not to get vaccinated against COVID-19 which further limited his job opportunities. I therefore find that Mr. Demarte’s earning potential was not diminished as a result of the pandemic and that he was deliberately under-employed during that period of time.
[33] I find that Mr. Demarte has an earning potential of $40,000 and income should be imputed to him at that amount.
Period of Retroactivity:
[34] Ms. O’Connor argues that at minimum a retroactive adjustment should go back to August 2017. However, her primary position is that the date of effective notice is August 2017, which she submits would trigger a presumptive retroactive period dating back to August 2014.
[35] Mr. Demarte’s position is that he was not aware of Ms. O’Connor’s request to retroactively adjust support until December 2019. He further argues that it would be unfair to retroactively adjust child support all the way back to 2014 as the parties had agreed on changes to the child support amounts from time to time.
[36] Mr. Demarte does acknowledge that he unilaterally reduced child support payments in August 2017 despite Ms. Wilson’s objections. He also acknowledges that there was a period of time when child support was not paid due to Ms. Wilson failing or refusing to accept support payments. Mr. Demarte concedes that there is retroactive support owing for the nine (9) month period when Ms. Wilson did not receive any child support payments.
[37] In Michel v Graydon, the Supreme Court of Canada reaffirmed the test set out in D.B.S. for the determination of retroactive child support. The Court reiterated that in deciding whether or not to make a retroactive order, a court should consider the payor parent’s interest in certainty in his obligations, balanced against the need for fairness and flexibility. I must also consider whether Ms. O’Connor’s delay in seeking retroactive support was reasonable in the circumstances, the conduct of Mr. Demarte, the circumstances of Maquel, and any hardship that may result from a retroactive award.[^4]
[38] In the Supreme Court’s decision in Colucci v Colucci, the Court clarified the approach to be taken regarding notice, distinguishing between formal notice provided by way of service of an application or motion to change, and effective notice communicating the intention to seek a variation in support. Once a material change in circumstances is established, a presumption arises in favour of a retroactive adjustment to the date that effective notice was given, which may be up to three (3) years before formal notice of the motion to change.[^5]
[39] I accept and agree that retroactive child support is owing and payable for the period November 2017 to July 2018. The issue of fault, insofar as the reason why child support was not received, is irrelevant. Mr. Demarte was obligated to pay child support for Maquel during that period of time, which he acknowledges. The only issue to be determined with regard to that period of time is the amount owing.
[40] I find that as of August 2017 Mr. Demarte was aware or ought to have been aware that there was no longer an agreement as to the amount of child support owing and payable. Ms. Wilson clearly communicated her disagreement about the unilateral reduction of child support to Mr. Demarte, and he indeed conceded in his evidence that he reduced his child support payments despite Ms. Wilson’s objections. I find that August 2017 is the date that effective notice was given.
[41] Although the decision in Colucci does not support the argument Ms. O’Connor made regarding the presumptive period of retroactivity being three (3) years prior to the date of effective notice, in her amended motion to change, Ms. O’Connor is seeking a retroactive adjustment back to 2014. The Court in Colucci does confirm that judges retain the discretion to depart from the presumptive 3 year limitation period from the date of formal notice where the result of applying that limitation would result in unfairness in the particular circumstances of a case.
[42] So the question then remains, should there be a retroactive adjustment of support prior to August 2017? In my view, the answer to that question is no.
[43] After the court order on consent in 2012, the parties had agreed to changes in the child support amounts. Although Ms. O’Connor’s evidence on the hearing was that she was entering into those agreements without legal advice and without Mr. Demarte having provided her any financial disclosure, she nonetheless conceded that she agreed to the changes in child support up to and until August 2017.
[44] I find that Ms. O’Connor’s attempts to portray herself as unsophisticated and uninformed were disingenuous. Ms. O’Connor is clearly the more savvy as between she and Mr. Demarte. She is currently employed by her husband in his financial services business performing administrative tasks, including bookkeeping. In contrast, Mr. Demarte’s evidence is that he is heavily reliant on his partner, Ms. Salinas, to assist him on the administrative side of the business. Ms. Salinas’ evidence corroborates Mr. Demarte’s in this regard.
[45] I reject Ms. O’Connor’s position that she should not be held to her agreements with Mr. Demarte to change the amounts of child support he was paying between the years 2013 and 2017 due to a lack of financial disclosure. I find that Ms. O’Connor could have insisted on Mr. Demarte providing her some proof of his income prior to agreeing to make any changes to the child support amounts paid. She also could have sought advice from a lawyer prior to entering into any agreement with Mr. Demarte. Ms. O’Connor chose to do neither of those things until after the unilateral adjustment to child support in August 2017.
[46] I find that there were informal agreements between Ms. O’Connor and Mr. Demarte to change the amounts of child support paid after the 2012 order of Justice Edward up to and until August 2017. Those agreements were freely entered into by both parties, and I find that Mr. Demarte relied upon the agreements that changed the amounts of support he was to pay from time to time. Extending the period of retroactive adjustment prior to the effective date in this case would create an unfair result.
[47] Therefore, I find that the retroactive adjustment should go back only to August 2017.
Retroactive Child Support Amounts owing:
[48] The evidence on what Mr. Demarte paid and what Ms. O’Connor has received in child support was not entirely clear. However, there is an agreement that whatever amounts Mr. Demarte did pay that were actually received by Ms. O’Connor, Mr. Demarte should receive credit for against any arrears owing.
[49] I have also considered that the Child Support Guideline tables were adjusted in 2020. For the applicable retroactive period (August 2017 to October 2023) there are two different table amounts to be utilized: from August 2017 to December 2019, the 2016 table should be used, which amount is $360 for one child based upon an imputed income of $40,000; and from January 2020 to October 2023, the 2020 table should be used, which amount is $359 based upon an imputed income of $40,000.
[50] Therefore, for the retroactive period of adjustment, Mr. Demarte owed child support payments based upon an imputed income of $40,000 as follows:
2017 (August – December) $1,800 ($360 x 5)
2018 (January – December) $4,320 ($360 x 12)
2019 (January – December) $4,320 ($360 x 12)
2020 (January – December) $4,308 ($359 x 12)
2021 (January – December) $4,308 ($359 x 12)
2022 (January – December) $4,308 ($359 x 12)
2023 (January – October) $3,590 ($359 x 10)
Total owing: $26,954
[51] Although I was provided a few different support calculation scenarios by Ms. O’Connor, I was not provided a year-by-year breakdown of the support amounts actually received by Ms. O’Connor. From my review of the evidence, it does appear, and I accept, that other than a 10-month period in 2019 and the period of time when Ms. O’Connor refused child support payments by e-transfer from Ms. Salinas, Mr. Demarte made monthly child support payments at a minimum based upon what he believed was owing or the applicable court order at the time.
[52] For the relevant period of retroactivity, the evidence before me supports the following payments being made by Mr. Demarte to Ms. O’Connor for child support:
2017 (August – December) $273.14 ($136.57 x 2)
2018 (January – December) $597 ($199 x 2 + $64 + 135)
2019 (January – December) $398 ($199 x 2)
2020 (January – December) $2,016 ($168 x 12)
2021 (January – December) $2,016 ($168 x 12)
2022 (January – December) $3,135.92 ($168 x 4 + $391.99 x 8)
2023 (January – October) $3,919.90 ($391.99 x 10)
Total paid: $13,027.96
[53] The difference between the total owing based on the retroactive adjustment less what was actually paid is $13,926.04.[^6] That amount shall be ordered payable by Mr. Demarte at $200 per month in addition to his ongoing child support payments until the arrears are fully discharged.
Section 7 expenses:
[54] By the end of the hearing, Mr. Demarte had conceded that he owed a contribution to Maquel’s section 7 expenses as claimed by Ms. O’Connor. This was an appropriate concession.
[55] I have determined that Mr. Demarte’s proportionate share of section 7 expenses is 40%. I arrived at that figure by comparing his imputed income of $40,000 to Ms. O’Connor’s employment income of $63,000. Therefore, an order will go that Mr. Demarte reimburse Ms. O’Connor 40% of the claimed section 7 expenses for Maquel’s glasses, braces, and counselling.
[56] The total amount owing is based on the following breakdown:
2020 – $2,060 (40% of $5,150)
2021 – $49.60 (40% of $124)
2023 – $311.83 (40% of $779.57)
Total – $2,421.43
[57] I am satisfied that this proportionate sharing should continue on an ongoing basis for any of Maquel’s section 7 expenses in the future.
Order:
[58] Final change order to go:
(1) Mr. Demarte’s income for the purpose of child support and section 7 expenses is imputed at $40,000 unless and until Mr. Demarte’s employment income is greater than $40,000, at which time he shall pay child support based upon his actual income.
(2) Ongoing child support will be paid by Mr. Demarte to Ms. O’Connor monthly in the CSG amount of $359 based upon his imputed income, commencing November 1, 2023.
(3) Retroactive child support owing by Mr. Demarte to Ms. O’Connor is fixed in the amount of $13,926.04 as of October 31, 2023 payable at a rate of $200 per month in addition to ongoing child support commencing November 1, 2023 until paid in full.
(4) Retroactive section 7 expense contributions payable by Mr. Demarte to Ms. O’Connor are fixed in the amount of $2,421.43 as of August 2023.
(5) Mr. Demarte shall contribute to Maquel’s section 7 expenses proportionately, which share shall be fixed at 40% given his imputed income of $40,000 and Ms. O’Connor’s employment income of $63,000.
(6) Submissions on costs may be filed as follows:
(a) Ms. O’Connor may file her primary submissions, no longer than three (3) pages in length, double-spaced, 12-point font, exclusive of Bill of Costs and Offer(s) to Settle within 14 days of receipt of this judgment;
(b) Mr. Demarte may file his responding submissions, no longer than three (3) pages in length, double-spaced, 12-point font, exclusive of Bill of Costs and Offer(s) to Settle within 14 days of receipt of the Applicant’s submissions;
(c) Reply by Ms. O’Connor, no longer than two (2) pages in length, double-spaced, 12-point font, within 7 days of receipt of the Respondent’s submissions.
Released: October 24, 2023
Signed: Justice A.D. Hilliard
[^1]: In the intervening period of adjournment after the June 15 appearance, I was appointed to the Superior Court of Justice. Pursuant to the concurrent jurisdiction of the OCJ and SCJ over family matters, I completed this hearing as a matter in the Ontario Court of Justice in August 2023.
[^2]: 2002 CanLII 41868 (ON CA), [2002] OJ No 3731 (CA).
[^3]: 2009 ONCA 322, [2009] OJ No. 1552 (CA) para 28 – 30.
[^4]: 2020 SCC 24, [2019] S.C.J. No. 102 at para 10.
[^5]: 2021 SCC 24
[^6]: If there is an agreement between the parties that Mr. Demarte made other payments to Ms. O’Connor that are not accounted for here, a 14B motion may be filed with a consent for an order amending the credit be given to Mr. Demarte against his child support arrears. Such a 14B motion shall be sent to my attention.