ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: F1874/10
DATE: 2012-06-18

B E T W E E N:

Kerry Ann Jesty

N. Matthews, for the Applicant

Applicant

• and –

Michael Robert Ogilvie

K. Hughes, for the Respondent

Respondent

HEARD: May 9 and 10, 2012

The Honourable Mr. Justice D. J. Gordon

REASONS FOR DECISION

[ 1 ] The income of a self employed parent was the focus at trial. The issue of his child support obligation and the circumstances of his business necessitate consideration of imputing income.

BACKGROUND

[ 2 ] Kerry Ann Jesty and Michael Robert Ogilvie cohabited in a common law relationship from January, 2004 to August 2007. A child, Wesley Robert Ogilvie, was born on November 26, 2005.

[ 3 ] Ms. Jesty is 32 years of age. She is the bookkeeper at STF Construction, her 2011 income being approximately $53,000.00. She is presently on a maternity leave and receiving employment insurance benefits.

[ 4 ] Mr. Ogilvie is 35 years of age. He is a master electrician, operating a business known as Ogilvie Electric. His net business income in 2011 was $22,744. The business was established in 2003, following completion of his apprenticeship program.

[ 5 ] The separation was acrimonious and necessitated police involvement. Nevertheless, the parties were able to arrange an informal parenting schedule. The matrimonial home was sold with the net sale proceeds still held by the solicitor.

[ 6 ] Partial Minutes of Settlement were presented at the commencement of trial. The primary terms provide custody of Wesley to Ms. Jesty and regular access to Mr. Ogilvie. These parenting terms are quite detailed. The parties also agree to share Wesley’s post-secondary education on a proportionate basis.

[ 7 ] The parties were also able to negotiate a resolution of the property issues. Counsel reported the house sale proceeds are to be released from trust as follows:

a) to Ms. Jesty, $9,450.00;

b) to Mr. Ogilvie, $4,500.00; and

c) the balance, namely $34,903.10, is to be divided equally subject to any retroactive child support award that may be granted.

ISSUES

[ 8 ] The court is asked to determine the following issues:

i) ongoing child support;

ii) retroactive child support, if any;

iii) section 7 Guideline expenses, other than post-secondary education;

iv) life insurance coverage to secure the child support obligation;

v) medical coverage for the child; and

vi) whether the jointly held R.E.S.P. ought to be transferred to Ms. Jesty.

MR. OGILVIE

[ 9 ] Mr. Ogilvie completed his apprenticeship program in 2003. In the fifth and final year, Mr. Ogilvie’s income was $50,000.00 plus benefits. Mr. Ogilvie was then certified as a journeyman electrician. Had he continued as an employee, Mr. Ogilvie indicated his hourly rate would have increased and, presumably, so would his income subject to the availability of overtime work.

[ 10 ] Mr. Ogilvie chose instead to start his own business in 2003. In 2006, he would complete the course entitling certification as a master electrician.

[ 11 ] The business assets include tools and a 1997 Chevrolet Suburban vehicle. Supplies or inventory are acquired on a job by job basis. There are no employees.

[ 12 ] Mr. Ogilvie has disclosed business income as follows (from profit and loss statements):

YEAR GROSS INCOME NET INCOME

2007 $42,764.00 $20,701.00

2008 $33,190.00 $ 2,401.00

2009 $31,791.00 $ 6,034.00

2010 $39,119.00 $11,340.00

2011 $39,241.00 $22,583.00

Statements from prior years were not provided. Mr. Ogilvie anticipates his 2012 income will exceed that in 2011. He acknowledges receiving some cash payments for work that are not always reported, such not exceeding $600.00 per year.

[ 13 ] Mr. Ogilvie reports some difficulty in collecting on some receivables. He has considerable debt and collection agencies are calling him regularly. Several credit cards have been cancelled for non payment. Mr. Ogilvie said everything “snowballed” after the separation. Mr. Ogilvie is also behind in submitting HST payments.

[ 14 ] The reduced income following separation in 2007 was attributed to depression and lack of motivation. No medical evidence was presented. Indeed, Mr. Ogilvie did not even consult a doctor at the time or since for his emotional issues.

CHILD SUPPORT PAYMENTS

[ 15 ] Mr. Ogilvie provided some modest child support to Ms. Jesty following separation and to the present. Although there is some disagreement as to the amounts and the documentation is less than clear, I accept the following to have been paid:

YEAR AMOUNT

2008 $980.00

2009 $900.00

2010 $500.00

2011 $800.00

2012 to date $800.00

[ 16 ] Mr. Ogilvie was also contributing to the mortgage payments until the house was sold. The 2007 records, separation occurring in August, are not helpful and the parties’ evidence was not clear.

[ 17 ] There has been some contribution to the child’s extraordinary expenses. Mr. Ogilvie complains of not being consulted as to activities. He supports Wesley’s involvement but claims a difficulty in contributing to the expense. No evidence was presented as to the actual Section 7 expenses.

ANALYSIS

i) Retroactive Child Support

[ 18 ] Section 19 (1) (a) and (g) , Federal Child Support Guidelines, provide as follows: 19. IMPUTING INCOME – (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:

(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;

(g) the spouse unreasonable deducts expenses from income.

[ 19 ] Ms. Matthews relies on both sub-sections and suggest the deductions be added back into Mr. Ogilvie’s income. This submission would impute income as follows:

2007 $ 65,000.00

2008 $ 75,000.00

2009 $ 78,000.00

2010 $ 88,000.00

2011 $ 80,000.00

2012 $100,000.00

Ms. Matthews seeks a guideline support order on the above-noted income.

[ 20 ] Ms. Hughes argues the appropriate method is to gross up the net income by twenty-five percent. This, she says, would recognize the personal benefit Mr. Ogilvie receives and provide a formula to avoid future dispute.

[ 21 ] The proposal by Ms. Hughes would be reasonable for many self employed persons. However, it fails to address the reasonableness of Mr. Ogilvie’s income and whether he ought to continue his business.

[ 22 ] In my view, the focus is only on section 19 (1) (a) and the concept of intentional underemployment.

[ 23 ] At the outset, I am satisfied that Mr. Ogilvie has made a reasonable attempt at establishing a business and that he is not attempting to deliberately avoid a child support obligation. The evidence, however, clearly demonstrates that Mr. Ogilvie is not going to be a successful business operator.

[ 24 ] In Drygala v. Panli, (2002), 2002 41868 (ON CA) , 29 R.F.L. (5 th ) 293 (Ont.C.A.) , Gillese J.A. considered section 19(1)(a). Applying a contextual approach at para. 28, she concluded:

“The parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning.”

At para. 39, Gillese J.A. added:

“A spouse is not to be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations.”

[ 25 ] This approach was followed in Riel v. Holland, (2003), 2003 3433 (ON CA) , 42 R.F.L. (5 th ) 120 (Ont. C.A.) . The question that arises is simply how long is a support payor entitled to in establishing a business and whether the expectation is realistic.

[ 26 ] Mr. Ogilvie has been in business for nine years. He has had ample time to achieve financial success yet continues to earn minimal income. Apprenticeship income in 2002 was $50,000.00. If Mr. Ogilvie had of continued as an employee, I am satisfied his present income would have exceeded that in 2002.

[ 27 ] The business was established prior to the commencement of the parties’ relationship. It existed on the date of separation. In these circumstances, I would allow Mr. Ogilvie until December 31, 2009, to make the business a success or return to the workforce.

[ 28 ] Mr. Ogilvie has chosen to earn less than he is capable of doing. I am not satisfied with his explanation for 2008 and 2009 and conclude he could have earned greater business income had he applied himself. Commencing in 2010, I would impute employment income. Given the arrears this creates, I use a minimal income level as he had earned previously.

[ 29 ] Accordingly, income for Mr. Ogilvie is imputed as follows:

YEAR INCOME

2008 $20,000.00

2009 $20,000.00

2010 $50,000.00

2011 $50,000.00

The corresponding guideline child support obligation is as follows:

YEAR GUIDELINE AMOUNT ARREARS

AMOUNT PAID

2008 $2,064.00 $980.00 $1,084.00

2009 $2,064.00 $900.00 $1,164.00

2010 $5,544.00 $500.00 $5,044.00

2011 $5,544.00 $800.00 $4,744.00

Total Arrears $12,036.00

This amount shall be deducted from Mr. Ogilvie’s share of the house sale proceeds and be paid to Ms. Jesty.

ii) Ongoing Child Support

[ 30 ] I would continue to impute income to Mr. Ogilvie at the minimal amount of $50,000.00 per annum. Accordingly, guideline child support is payable on that income level, commencing January 1, 2012. As Mr. Ogilvie may have made further payments since trial, I leave it to counsel to calculate any arrears. Annual adjustment shall occur on July 1 each year.

[ 31 ] The parties shall provide annual disclosure as to tax returns and notices of assessment by June 15 each year, commencing June 15, 2012. Mr. Ogilvie is also directed to provide immediate disclosure as to any significant changes in his business or employment efforts as they occur, particularly as to any new employment.

iii) Section 7 Expenses

[ 32 ] As previously mentioned, there is no evidence upon which to calculate any retroactive award.

[ 33 ] Future section 7 expenses shall be shared on a proportionate basis. The parties are to consult each other in advance of incurring any expense and shall not unreasonably withhold consent to the activity or expense. Receipts are to be provided and the net cost is to be shared, as above, after any income tax credit for same.

iv) Life Insurance

[ 34 ] There is, at present, one insurance policy on the life of Mr. Ogilvie. The policy is owned by his father, having been acquired when Mr. Ogilvie was a child. There policy amount is only $10,000.00 and there is an outstanding loan. The court does not have jurisdiction to deal with the policy owner, a non-party.

[ 35 ] In my view, life insurance coverage is important. The availability was not canvassed in evidence. In submissions, Ms. Hughes indicated some concern as Mr. Ogilvie is a smoker.

[ 36 ] I would expect Mr. Ogilvie could obtain a term life insurance policy for $50,000.00, a minimal amount, at a reasonable expense. However, I am reluctant to compel him to do so without knowing if he qualifies. There may, for example, be medical issues.

[ 37 ] Accordingly, I recommend Mr. Ogilvie attempt to arrange life insurance coverage. If there remains a dispute, I will provide further direction upon request of either counsel.

v) Medical Coverage

[ 38 ] Ms. Jesty has a health and medical benefit plan through employment. It includes Wesley. Mr. Ogilvie does not have a plan at present.

[ 39 ] Ms. Jesty incurs some expense as coverage is less than 100 per cent.

[ 40 ] Mr. Ogilvie, through his counsel, has agreed to contribute to such expense on a proportionate basis. I so order.

vi) Registered Education Savings Plan

[ 41 ] Following the birth of Wesley, Mr. Ogilvie’s grandfather opened an R.E.S.P. account and contributed $1,000.00. The plan is in the names of the parties jointly.

[ 42 ] Ms. Jesty request the plan be transferred to her name alone. The basis for this is said to be the strain in their relationship and Mr. Ogilvie’s financial difficulties.

[ 43 ] Mr. Ogilvie opposes the request as the funds came from his grandfather who is now deceased.

[ 44 ] I am not persuaded there is any need to change the R.E.S.P. As it is joint, both parties must sign for Wesley and is secure. Unless a change is made regarding the investment, the plan can sit until Wesley requires the funds. Ms. Jesty’s claim, therefore, is denied.

SUMMARY

[ 45 ] A final order is granted on the terms herein.

[ 46 ] If the parties are unable to agree on the issue of costs, brief written submissions are to be delivered to my chambers in Cayuga within 30 days.

Gordon, J

Released: June 18, 2012