ONTARIO
SUPERIOR COURT OF JUSTICE
ORANGEVILLE COURT FILE NO.: 74/08
DATE: 20120713
B E T W E E N:
Richard Coe
Self-represented
Applicant (Husband)
- and -
Kelly Lynn Coe (McKenna)
Self-represented
Respondent (Wife)
HEARD: June 12, 2012 in Orangeville
REASONS FOR JUDGMENT
Daley J.
[ 1 ] This matter came to trial on the applicant's motion to change the final order of Kruzick J. of October 21, 2002.
[ 2 ] The parties had agreed that the issues to be determined at trial were as follows:
(a) the applicant's income for the period of January 1, 2009 to present;
(b) his corresponding child support obligations; and
(c) the release of funds held in trust.
[ 3 ] This matter had come before me, while sitting as a settlement conference judge, on May 17, 2010. At the commencement of the trial of this action, I brought this to the attention of the parties. I read to the parties my endorsement on the court record dated May 17, 2010. As is apparent from the endorsement, the settlement conference was largely taken up with directing disclosure of information and scheduling a trial management conference. Due to the incomplete disclosure at that time, the matter was not considered by me on the merits.
[ 4 ] After explaining to the parties that they were entitled to have the matter tried by another judge, who had not presided on a settlement conference, both parties consented to the matter proceeding before me.
[ 5 ] The parties have two children, Brooke Lillian Heather Coe born May 12, 1997 and Luke Richard Wilbert Cole, born March 26, 1999. The respondent has custody of the children and both reside with her.
[ 6 ] By the order of October 21, 2002, Kruzick J. granted the parties a divorce judgment and ordered that the applicant's income be imputed at $55,000 and that he pay child support to the respondent in respect of their children in the monthly amount of $762.
[ 7 ] The applicant instituted the motion to change the final order of Kruzick J. in June, 2008. Unfortunately, the proceeding has been protracted and difficult for these parties, who conducted this trial without the assistance of counsel.
[ 8 ] The matter came before Quigley J. on June 28, 2010 at which time the respondent was granted leave to respond to the applicant's motion to change. Child support arrears owing as of that date were determined to be $29,000.
[ 9 ] Further, Quigley J. ordered that: "As interim without prejudice surety for the applicant's future obligations, Mr. Ferris, the solicitor, shall retain $40,000 of Mr. Coe’s funds, in trust or held alternate acceptable security."
[ 10 ] The parties were the only witnesses who testified on this trial.
[ 11 ] The applicant testified that prior to the period in question commencing in 2009, he had been unable to comply with the order requiring him to pay child support.
[ 12 ] It was the applicant's position that for the period in question, namely from January 1, 2009 to date, he has had minimal income and well below the imputed amount of $55,000, upon which the outstanding child support obligation had been based.
[ 13 ] The applicant testified that the sum of $40,000 which had been placed in a solicitors’ trust account in accordance with the order of Justice Quigley, was obtained by him from the sale of a farm property in June, 2010.
[ 14 ] He testified that out of the sale proceeds from the sale of that farm he paid off child support arrears and debts. He is currently $30,000 in debt and testified that he presently relies on family and friends as he has no income. He lives in a trailer.
[ 15 ] The applicant testified that he is disabled, although the date of commencement of his disability is unclear on the very limited evidentiary record. He testified that he is unable to lift more than 20 pounds and cannot sit, drive or walk for long periods without encountering significant pain.
[ 16 ] He testified that from time to time he takes medication for pain.
[ 17 ] The applicant testified that he was in receipt of disability benefits from the Ontario Disability Support Plan ("ODSP") from approximately 2009 onwards. In July of 2011, he obtained a short term job as a supervisor, in what I believe was a position with a construction company and following that his benefits payable by ODSP were suspended. He worked in that position in July and August of 2011. He currently owes ODSP approximate $1,500 in what he described as an overpayment.
[ 18 ] Historically his occupation involved the ownership and management of a campground which he acquired in 1988. He described himself as self-employed throughout the past. He has a grade 10 education. He testified further that his current back pain limits his ability to work.
[ 19 ] He sold the campground in 2001 at the time the parties settled all other issues relating to their marital breakup.
[ 20 ] In cross-examination of the applicant he acknowledged that from time to time he rides his motorcycle and that he owns two horses.
[ 21 ] The applicant also acknowledged that prior to the year 2000, he did earn income which was not declared i.e. "under the table" but he denied making any income of that type since that date.
[ 22 ] He testified that his health began deteriorating in 2005.
[ 23 ] As to his income over the period in question, the applicant testified that his earnings were as follows:
Year
Amount
(1)
2009
$12,825.62
(2)
2010
$6,552.00
(3)
2011
$16,892.33
[ 24 ] Although the applicant did not testify with respect to the contents of his most current Financial Statement which was sworn by him on April 27, 2012 and which is contained in the trial record, in that document he stated that his income for the last year i.e. 2011 was $18,480. Thus there is a small discrepancy as to his evidences to his earnings between his Financial Statement and his evidence at trial as to his earnings in 2011.
[ 25 ] The applicant’s income tax returns for the years 2009 to 2011, inclusive, show the income levels for these years as indicated above.
[ 26 ] The applicant further filed as evidence statements as to credit card and line of credit debt which demonstrates that he has current debt is in the order of approximately $29,000.
[ 27 ] The respondent testified and offered very brief evidence as to her current situation and the applicant's employment and earnings.
[ 28 ] She did not testify as to the current circumstances of the children in terms of their needs. Although she did indicate that there are expenses being incurred with respect to their activities, no evidence was offered as to the expenses being incurred nor the nature of the activities in which they are involved. I take it from the respondent's evidence that her new partner contributes to the needs of the children.
[ 29 ] The respondent has suffered from significant health challenges including a brain tumour. She testified that she has been in receipt of Canada Pension disability benefits and has been unable to work for several years. Since her divorce from the applicant she has remarried.
[ 30 ] Apart from a payment by the applicant of $16,000 in respect of child support, which was paid to her in July 2010, from the proceeds of the sale of the applicant's farm, the respondent testified that she has not received regular payment of child support from the applicant since July of 2007.
[ 31 ] The respondent submitted in evidence a series of photographs which she took and some photographs that were taken by a friend of hers. The photographs include a photo taken in June of 2009 of a sign on the applicant's property indicating that he was advertising services including "custom trucking, aggregates, floating, backhauling." This photo was taken at the farm property which the applicant sold in July of 2010. A similar sign was posted at the property currently occupied by the applicant as shown in photographs which were taken in March of 2012.
[ 32 ] The respondent candidly acknowledged that she was not aware of any evidence that the applicant has been receiving income in an amount greater than he had declared in his testimony at this trial or as set out in his tax returns.
[ 33 ] Further, the respondent further testified that while she has some doubts as to the applicant's physical limitations, she is not aware of any evidence that the applicant is purposefully under-employed.
[ 34 ] A schedule of payments from the Family Responsibility Office ("FRO") was submitted in evidence by the parties. This document includes handwritten notations which were made on the document by the respondent. In her handwritten notations, the respondent updated the accruing support amount on a monthly basis at $762 to approximately the date of trial namely June 1, 2012.
[ 35 ] Based on the respondent's calculations as recorded on the FRO statement the total accrued child support amount is $40,108.22. From that sum, the respondent deducted the total amount of $29,297.65 which I understand was paid to the respondent's solicitor in respect of both costs and child support arrears and on that basis the respondent's position is that as of the date of trial the sum of $10,810.57 was due and owing in respect of unpaid child support in accordance with the order of Kruzick J.
[ 36 ] On the very limited and uncontradicted evidence offered by the applicant as to his income from employment from January 1, 2009 to date, I have concluded that he has not earned income at a sufficient level that he would be required to pay child support in accordance with the order of Kruzick J.
[ 37 ] The applicant's child support obligations in accordance with the Federal Child Support Guidelines (" Guidelines ") are determined based upon his income as determined by applying ss. 16-20 of the Guidelines.
[ 38 ] The only evidence offered as to the applicant's income has been presented by him and is uncontradicted by any evidence offered by the respondent. The applicant also has testified that he has physical limitations as a result of his back problems. While there was no medical evidence offered by him, this evidence is also uncontradicted. Supporting his evidence that he suffers from a disability is evidence that he has been in receipt of payments from ODSP, although payments under this plan are presently suspended.
[ 39 ] The applicant explained in his evidence that in spite of his limitations, he has advertised the services indicated in the photographs produced by the respondent, however, he testified that his income is as it has been stated in his tax returns filed in evidence.
[ 40 ] A court may vary the terms of a child support order whenever a change has occurred that would trigger a different child support order. A change in the payor's income is sufficient justification for a variation order.
[ 41 ] The evidence offered by these parties regarding the applicant's sale of a farm property was very limited and no submissions were offered by either party as to how the proceeds of the sale were to be considered.
[ 42 ] Specifically, no submissions were made with respect to whether the proceeds of the sale of the farm property, which may have involved the disposition of a capital asset by the applicant, should be taken into account in determining his income for the purpose of calculating the appropriate level of child support.
[ 43 ] No viva voce testimony was offered by either witness as to the circumstances surrounding the sale of the farm property. The order of Quigley J. directed that the sum of $40,000 be held in trust pending trial and as security for any child support obligation owed by the applicant. That was a temporary order. In accordance with the terms of that order, the sum of $40,000 has been held in trust by solicitor John Ferris.
[ 44 ] Although neither party testified as to the background relating to the sale of the farm property, I examined the trial record and all of the documentary evidence submitted by the parties.
[ 45 ] Included in the trial record was an affidavit from the applicant dated May 26, 2008 wherein he stated that the property in question had a value as of that time of $444,000 which was subject to a mortgage of $203,000. Also included in the trial record was an unsworn affidavit from June of 2010 filed by the respondent. Given that this document was unsworn and that the respondent offered no viva voce evidence regarding the value of the farm property, and the circumstances surrounding its disposition, I have no evidence from the respondent as to the disposition of the farm.
[ 46 ] I have also considered the tax documentation filed in evidence by the applicant, which is incomplete, in that he has not filed the fully completed T1 General forms as issued by the Canada Revenue Agency covering the years 2009 through 2011, inclusive.
[ 47 ] The tax documentation filed by the applicant specifically for the year 2010 does not allow for any determination as to what monies were received by him upon the disposition of the farm and how those monies were treated for income tax purposes.
[ 48 ] In his most recent Financial Statement which is dated April 27, 2012 and which is included in the trial record, the applicant's shows that he has real estate equity of $50,000 in a property at RR #1, Flesherton. He also declares that monies are owed to him in the sum of $40,000 which presently stand in the trust account of solicitor John Ferris.
[ 49 ] In order to determine how much, if any, child support is owed, the applicant’s annual income must be determined in accordance with ss.15-17 of the Family Law Act , Ontario Regulation 391/97.
[ 50 ] As noted, the evidentiary record available to me is incomplete and does not allow me to adequately consider whether or not the proceeds of sale of the applicant's farm, if a capital asset, should in any way be taken into account and treated as income for the purpose of determining the applicant's child support obligation. This issue has been considered in several decisions of this Court, however, the evidentiary record available to me is wholly insufficient to make any factual determination as to how the proceeds of the sale should be treated.
[ 51 ] The decisions of the Court which have considered whether or not the receipt of monies from capital assets in the form of capital gains on a recurring or nonrecurring basis should be taken into account in determining the quantum child-support payable include: Fung v. Lin , 2001 28193 (ON SC) , [2001] O.J. No. 456; Desjardins v. Bart , [2006] O.J. No. 3971 ; Denofrio v. Denofrio , 2009 41354 (ON SC) , [2009] O.J. No. 3295; Vanos v. Vanos , 2009 55328 (ON SC) , [2009] O.J. No. 4217; St. Armand v. St. Armand , [2006] N.B.J. No. 261.
[ 52 ] Given the very limited and inadequate evidence relating to the disposition of the farm property, the net proceeds of the sale of the property and the treatment of those proceeds, I cannot properly determine whether the disposition of this property was the disposition of a capital asset and whether or not the proceeds should in any way be taken into account in determining the applicant's income for child-support purposes.
[ 53 ] Section 19 of the Federal Child Support Guidelines allows the court to impute income to a spouse as it considers appropriate in the circumstances for the purpose of determining income as a basis for the payment of child support. Again, given the paucity of evidence available with respect to the disposition of the farm property, I am unable to impute income to the applicant relating to the proceeds of sale of the farm.
[ 54 ] On the record available to me, I conclude that commencing in January January 1, 2009, the applicant has not earned income at the imputed level of $55,000 per year upon which the order of Kruzick J. was based.
[ 55 ] As to the applicant's actual income from employment, for child support calculation purposes, I find that his income was as stated in his tax returns for the years 2009 and 2010 namely in the amounts of $12,825.62 and $6,552.00 respectively. As to his income in 2011, I accept his sworn Financial Statement, signed April 27, 2012 wherein he declares his income for 2011 at $18,480.
[ 56 ] In my view the applicant's child support obligation must be reassessed from January 1, 2009 to date.
[ 57 ] Both parties agreed that the schedule of child support payments calculated in accordance with the order of Kruzick J., which was produced by FRO, and marked as Exhibit “9” on the trial, accurately recorded the accruing monthly child support amount in accordance with that order and the payments on account that had been made in respect of child support.
[ 58 ] In accordance with the issues for trial as outlined above, which were expressly provided for in the order of Goodman J. of February 27, 2012, the applicant's child support obligation must be examined for the period in question based on his income earned in those years, as determined above.
[ 59 ] According to the FRO statement, as of January 1, 2009 the applicant owed child support in the amount of $11,489.11.
[ 60 ] Applying his income for 2009, as I have determined that, in the sum of $12,835.62, the applicant's child support obligation for 2009 would be $176 per month for a total annual amount of $2,112. According to the FRO statement the applicant paid $872.89 in child support in 2009 leaving a balance owing of $1,239.11.
[ 61 ] With respect to the applicant's child support obligation in 2010, given the applicant's earnings as I have determined them at $6,552, no child support would be payable pursuant to the Guidelines.
[ 62 ] According to Exhibit “9,” the FRO statement as updated in her hand writing by the respondent, which the both parties agreed is accurate, the total sum of $29,297.65 was paid by the applicant in favour of the respondent in July of 2010, directly to the respondent's solicitor instead of to FRO. This sum was made up of $16,000 in respect of child support arrears and $13,297.65 in respect of legal costs paid to the respondent's solicitor.
[ 63 ] As it is unclear as to whether the legal costs included in that sum are costs that were to be collected by FRO, I have only accounted for the sum of $16,000 as actual child support, in calculating the applicant's liability to pay child support in 2010.
[ 64 ] As I have determined that his income was below the minimum threshold requiring payment of child support, the applicant is entitled to a credit of $16,000 in respect of his child support liability for the year 2010.
[ 65 ] With respect to the applicant's child support obligation for the year 2011, as noted, I have determined that his income for that year was $18,480. This would require a monthly payment of $286 in respect of child support for an annual amount totalling $3,432. The applicant paid no child support in 2011.
[ 66 ] As to 2012, the applicant denies having earned any income this year and has paid no child support. However, the applicant, in his sworn financial statement of April 27, 2012, states that he receives monthly income from self-employment of $1,640. This is contrary to his evidence at trial that he had no income this year. In the circumstances, I find that the applicant does have monthly income as stated in his Financial Statement, in that amount.
[ 67 ] Calculating the present liability of the applicant to pay child support, on the income for the years 2009 to the date of trial, as I have determined it above, and crediting the applicant with the payments noted starting with the arrears amount at the beginning of January 2009 of $11,489.11, I have determined that there is a credit owing to the applicant with respect to overpayment of child support on his reassessed income for the years in question of $160.22. However, as I have determined that the applicant has monthly income in 2012 in the amount of $1,640, he has a child support obligation, in accordance with the Federal Child Support Guidelines of $303 per month, and given that he has made no payments thus far this year up to July 1, 2012, he owes arrears of child support of $2,121 subject to the credit noted of $160.22 leaves a balance outstanding at this time of $1,960.78.
[ 68 ] I find that the applicant has a continuing obligation to pay child support on a monthly basis in the sum of $303 and he shall continue to make those payments until ordered otherwise. The monthly payments shall be paid to FRO.
[ 69 ] The applicant shall provide to the respondent by May 1 of each year particulars of his income earned in the prior year including a copy of his tax return as filed with the Canada Revenue Agency and in due course with a copy of his notices of assessment or reassessment each year.
[ 70 ] With respect to the monies standing in trust, with the solicitor, in the sum of $40,000, the respondent acknowledged that this money is the property of the applicant and that the monies were directed to be held in trust by Quigley J. as security against his ongoing obligation to pay child support.
[ 71 ] I have reviewed Quigley J.'s endorsement in respect of his order and it is clear that these monies were to be held in trust pending trial as security with respect to the applicant's ongoing obligation to pay child support.
[ 72 ] As is apparent from the FRO statement, although the applicant's historical income for the years 2009 through 2011, inclusive, has been reassessed, there has been a history of non-payment of child support by the applicant. In view of the contradictory evidence offered by the applicant as to his income in 2012, namely his trial evidence, where he indicated he had not earned any income this year and his Financial Statement wherein he indicates that in 2012 he has a monthly income of $1,640, I am left with serious concerns as to the truthfulness of the applicant as to his current income. In view of his failure to pay any child support in 2012, where he declares income as set forth in his Financial Statement, I have given consideration to s. 34 of the Family Law Act and in particular s. 34 (1) (e) which provides as follows:
Powers of court
- (1) In an application under section 33, the court may make an interim or final order,
(e) requiring that some or all of the money payable under the order be paid into court or to another appropriate person or agency for the dependant’s benefit;
[ 73 ] Given the applicant's evidence relating to his poor employment history, the sale of the farm property in 2010, and his disability, I am of the view that this is a proper case for security being put in place for the applicant's future child support obligations. On his current income, as declared in his Financial Statement, the applicant has a monthly child support obligation of $303 or $3,636 per year. I have concluded that an appropriate sum for security in the circumstances would be $10,000.
[ 74 ] In the result, I order that the sum of $10,000, of the $40,000 held in trust, be paid into court to the credit of this action as security for the applicant's ongoing and future child support obligations. With respect to the balance remaining in the solicitor's trust account of $30,000, the monies standing in the trust account net of the amount outstanding at this time of $1,960.78, namely $28,039.22 shall be paid out of the trust account to the applicant.
[ 75 ] As the solicitor, who is presently holding these funds in trust was not before the court and has had no notice of this proceeding, I direct that the solicitor, John Ferris, release to the applicant the sum of $28,039.22 standing in trust. The sum of $10,000 shall be paid into court by solicitor John Ferris to the credit of this action to stand as security for the applicant’s ongoing liability to pay child support. The solicitor shall also pay to the respondent directly the sum of $1,960.78 representing the arrears of child support presently owing.
[ 76 ] In the event the solicitor wishes to make any submissions regarding this before the release of the funds as ordered, he may make an appointment with the trial coordinator of the Court at Brampton, upon notice to both the applicant and the respondent, and may appear and make submissions with respect to the release of the monies held in trust.
[ 77 ] A copy of these reasons shall be forthwith sent to solicitor, John Ferris and to FRO.
[ 78 ] A Support Deduction Order shall issue in these terms.
[ 79 ] As to the issue of costs, if the parties cannot resolve the issue of costs, they shall each file submissions on costs to be delivered to the court at Orangeville within 15 days. The submissions shall be no longer than two pages plus a costs outline.
Daley J.
Released: July 13, 2012
ORANGEVILLE COURT FILE NO.: 74/08
DATE: 20120713
ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Richard Coe Applicant - and – Kelly Lynn Coe (McKenna) Respondent REASONS FOR JUDGMENT Daley J.
Released: July 13, 2012