COURT FILE NO.: 5469/09 (Simcoe)
DATE: 2012-08-03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Dudley Wyatt Herbert Stetler
Applicant
– and –
Connie Christine Stetler
Respondent
Bryan G. Embree, for the Applicant
Paul Amey, for the Respndent
HEARD: June 19 and 20, 2012
The Honourable Mr. Justice P. J. flynn
REASONS FOR JUDGMENT
Background Facts
[1] The parties were married on July 2, 2001. They agree that their separation date for valuation purposes is February 15, 2009.
[2] When they married, the Respondent brought her daughter Grace into this new marriage. She was two years old, born July 23, 1999. The Applicant willingly stood in the place of a father for Grace and she treated him as her father. The parties then had a child of their own, Faith, born May 15, 2007.
[3] The Applicant had a small construction business and farmed with his father on the family farm.
[4] He owned the matrimonial home in his own name prior to his marriage and remains on title alone.
Issues
[5] The issues which this trial was meant to resolve are:
parenting;
child support; and
equalization of net family property.
Parenting Arrangements
[6] The access issues are complicated by the fact that the parties live across county lines and have a dispute as to the schooling for the children.
[7] Grace who is now 13 years old doesn’t want the Applicant to visit with her and the Applicant accedes to her wishes in this regard.
[8] The Applicant seeks week-about residential care of Faith.
[9] It is my duty to see that the overriding principle of the best interest of these children is met and maintained. Access is the right of the children.
[10] There has been no visitation between the Applicant and Grace since December 26, 2010. At that time, there was some kind of dispute between father and daughter which Grace later complained could have been mended with a simple apology from the Applicant. That did not come.
[11] The evidence shows that the Respondent mother encouraged Grace to continue her visits with the father but both these parents are of the view that is in the child’s best interests that the Respondent have sole custody with reasonable access to the Applicant in accordance with the child’s wishes. I told the parties during argument that it simply cannot be that the parents accede to the wishes of the child. She was eleven and a half when that dispute occurred. I reminded the Applicant that he is the adult and that he must make the first move to resolve the impasse with Grace. But I am content that it is in Grace’s best interests at present that she remain with her mother and have access to the Applicant when she wishes it.
[12] While the Applicant wants shared custody (week-about) of Faith, it is the position of the Respondent that there be no change in the existing time-sharing arrangement which was set out in the December 2010 order of Turnbull J.:
a) Alternate weekends from Friday to Monday;
b) One overnight each week; and
c) Exchange at the LaSalette School.
[13] The Respondent has been the primary caregiver since Faith’s birth in 2007. The existing order grants substantial time-sharing to the father which is exercised regularly. Moreover, Faith seems well adjusted and happy according to both parties.
[14] Both parties have entered into new relationships. In fact, the Respondent married Timothy Lee in January of 2011. The Applicant has entered into a relationship with a woman named Trudy only since June 1, 2012. The Respondent is expecting a third child later this month. She has been certified as a foster parent and her plan is to stay at home full-time with income from foster parenting and be available 100 per cent of the time for her children and those that are sent to her.
[15] Neither new partner was called as a witness nor was there any independent expert witness to assist this court as to whether the father’s proposed change is in the child’s best interest and it is the father here that bears the burden of showing that.
[16] As for the Applicant’s claim for shared custody, Mr. Stetler asks for an order for shared custody of his daughter Faith on a week-about basis. The evidence shows that Faith and Mr. Stetler have a good and loving relationship. He has a bedroom for the child and he testified that he could arrange his work schedule as needed to facilitate having Faith on this basis. He has given up making any claim for access to Grace.
[17] The Applicant says he is transitioning out of construction into full-time farming but didn’t give a timeline to that vague plan of his. He testified that he is always available in spite of his work commitments from his small construction concern. While he set out the possibility that his new partner could be available when he isn’t, she has full time employment in Hamilton and it didn’t seem to me that there was much availability to do babysitting. The only vague plan for the Applicant’s family members with respect to babysitting Faith involve his sister Lori who has three children of her own and is starting Community College in September. The Applicant’s flexibility to be available for child care is poorly defined. Moreover, it is too soon to know about the significance of his new partner in respect of his relationship with his daughter Faith.
[18] I am told that Faith and Grace have a close relationship in spite of their age difference and the father’s proposal would decrease the time that Grace could spend with her little sister. Both parties have assumed for at least the next year that Grace and Faith should attend the same school. Grace will be in grade eight and Faith in Senior Kindergarten. But the mother resides in Otterville which is across the county line from the father’s residence. The distances are not great. From the father’s residence to LaSalette school is seven minutes and to the one in Norwich is fifteen minutes. While there are school buses available from the father’s residence to the LaSalette School he would not be able to avail himself of that if those children attended the Norwich school. There are buses from the mother’s residence in Otterville to the Norwich school. Faith has no previous school experience and therefore has no attachment to any school, including LaSalette, and while Grace has an attachment to the LaSalette School both of the children have friends in Otterville who attend the Norwich school. I didn’t hear any evidence of friends of the children at LaSalette school although Grace must have some there.
[19] With respect to the custody and access arrangements for the two children, the best that the Applicant can argue is that it “may be” in the best interests of those children to have a split custody regime. I am not satisfied that it is in the best interests of the children. They have stability where they are with their mother. They have lived in the same house with their mother’s new partner, her husband, for at least a year and a half. They have no knowledge of the Applicant’s partner. Grace has not seen her father since Christmastime in 2010 and he seems to have abdicated any decision-making role with respect to access to the child herself. So I am satisfied that the status quo ought to be maintained and that the mother should have the right to place both girls in the Norwich School for the upcoming school year. The distances here are small and accordingly, the pick up and drop off point for the father’s access to Faith and should she desire it, Grace, will be at the Norwich School during the school year and at the Respondent’s home at other times. The current situation is stable and there is no meaningful evidence for any significant change in Faith’s stability.
[20] I am therefore satisfied that is in the best interests of these two children that they remain with their mother, that she have sole custody of them and that they attend the Norwich school.
[21] Grace should have the kind of access that she wishes with the Applicant and the order of Turnbull J. from December of 2010 ought to govern the access that Faith and the Applicant enjoy, with the obvious changes made to reflect the change in schooling.
Child Support
[22] This is one of those cases in which the payor spouse puts his concerns about money ahead of his obligations to his spouse or children. Not only has the Applicant not filed an Income Tax Return for 2011 taxation year, but he claims to have earned no income whatsoever for the first six months of this year. He has a history of having income imputed to him by the courts both in his prior divorce proceedings and in this one. June 26, 2009, Taylor J. imputed annual income of $36,000 to this man. On April 21, 2011, Turnbull J. imputed $18,000 per annum from the first of May 2009 to the first of April 2011 and then $25,000 from the first of May 2011 on. In respect of his prior divorce proceedings his income was imputed at $37,500 in 2006 and on consent imputed at $33,700 in June 2008.
[23] So not only does the Applicant not tell the tax authorities what he earns, but he has not shared that information with the court. He has clearly dragged his feet and simply said “go ahead – guess”.
[24] The Applicant is a man who does not want to disclose his income. In fact I have come to the view that he is hiding his income. I found totally incredulous his evidence that his working on the farm almost full-time for his father produces no income for him, nor do I believe him when he says he has no expectation as to how much income his labour produces. He filed no income tax return for 2011 and says he has made no income for 2012. Apparently, he’s waiting for the corn to come in before he gets payment for both 2011 and 2012. He says he has no inkling as to the basis of his payment by his father, nor any expectation of what will be paid. I find this to be incredible.
[25] The Applicant is quite prepared to concede that his income should be imputed. In fact, he asks that it be imputed at $25,000 per annum, just like Turnbull J. found in April of 2011. But he lays no foundation for that. I find that plea of his to be a ploy to avoid the court imputing greater income to him.
[26] In 2006 the Applicant’s reported income was $18,470. In 2007, it was $24,666. In 2008, it was $11,500. After separation in 2009, his total income was reported at $5,354 and in 2010, $4,012. There is no information about his income for 2011, though he says that information is in the hands of his sister, who is an accountant, but who was not called as a witness. For 2012 he testified that he received no income and provided us no means of computing his income.
[27] I have not had the help of any expert witness but it seems to me that through two separate divorce proceedings, this man’s character is defined. He will not tell the court what his income is and defies us to guess. He is not cooperating at all, nor is he following his duty at law to provide us with updated financial information. Moreover, I must draw an adverse inference from his failure to call his sister (the accountant) and his father who could have corroborated his evidence or given us the truth with respect to the amount of money that his father has paid him and whether or not he intends to collect on his mortgage debt. While there is no scientific reason to do this, I prefer to impute income of $36,000 per annum to the Applicant. He refused to help himself out or prove me wrong and it is his obligation to demonstrate what his income is. Moreover, he is about to take over the farm from his 75 year old father and there is no evidence of any physical or mental impairment to his working full-time and earning a decent living. In fact, he runs a small construction concern, receiving income, some of which he didn’t declare.
[28] The Applicant seeks relief on support for Grace because of what he calls “double dipping”, represented by the support currently being paid by the biological father. Gratuitously, he argues that Grace chose not to see him and he shouldn’t have to pay support because of the biological father’s support. I have imputed $36,000 income against the Applicant for the basis of his support obligation and I have determined that Faith is entitled to the table amount on that basis. With respect to Grace, I am guided by s.5 of the Child Support Guidelines
Where the spouse against whom a child support order is sought stands in the place of a parent for a child, the amount of a child support order is, in respect of that spouse, such amount as the court considers appropriate, having regard to these guidelines and any other parent’s legal duty to support the child.
[29] The unseen biological father of Grace has been fulfilling his obligation to the letter of the law the whole while. This does not give the Applicant a free ride. The Applicant has an obligation to support this child and in my view, the appropriate order is set out in the Supreme Court of Canada case, Chartier v. Chartier, 1999 707 (SCC), 1999 CarswellMan 25, 235 N.R. 1, 168 D.L.R. (4th) 540, 43 R.F.L. (4th) 1, [1999] 1 S.C.R. 242, which says this:
The contribution to be paid by the biological parent should be assessed independently of the obligations of the step-parent. The obligation to support a child arises as soon as that child is determined to be “a child of the marriage”. The obligation of parents for a child are all joint and several. The issue of contribution is one between all of the parents who have obligations toward the child, whether they are biological parents or step-parents; it should not affect a child.
[30] The case law sets out a variety of approaches to solving this problem of determining the amount of support to be paid by one or the other of the parents. In other words, tackling the issue of what principles govern an award of child support against a step-parent under s.5 of the Guidelines.
[31] The Applicant would prefer the so-called “subtraction method” set out in Kadikoff v. Kadikoff (2003), 121 A.C.W.S. (3rd) 1118 (Ont. S.C.J.), but I prefer the method set out in MacArthur v. Demers (1998) 1998 14932 (ON SC), 166 D.L.R. (4th) 172 (Ont. Fam. Ct.) and Kaszas v. Guinta (2001), 2001 28131 (ON SC), 20 R.F.L. (5th) 88 (Ont. S.C.J.), where the support award was based on the table amount of the higher income earning Respondent and the apportionment was based on the spouses’ respective incomes.
[32] Here the unseen biological father clearly has the higher income and that is the amount ($72,000) that ought to be used as the total amount exigible for the purposes of child support. By apportioning it, the Applicant step-father would pay one-third of the amount of support required.
[33] Grace is 13 years old and her biological father is paying $665 per month based on the table amount for income of $72,000. He has paid child support for Grace throughout and has never yet seen the child. Talk about comparators of parents who see their obligation toward their children in different lights.
[34] Because of the way in which Grace’s biological father is fulfilling his duty, the Applicant asks for an order that he not pay any child support for Grace. He says the Respondent is already receiving the proper amount of child support for Grace. Moreover, he asks not only not to pay child support for Grace, but to pay child support based on a lower imputed $25,000 per annum income for Faith.
[35] Considerations of Grace aside, the Applicant ought to be paying $315 per month based on imputed income of $36,000 for Faith under the Child Support Guidelines. As for Grace, considering the Guidelines and the fact that the other parent is complying with his duty, and recognizing the fact that children should benefit from the financial means of all of their parents, it is the Applicant’s obligation to pay a fair amount of support.
[36] In this regard, it seems to me that the proper approach is to apportion the income between the biological father and the husband using the table amount for the higher income earner. For Grace, that amounts to a two-third, one-third split between the biological father and the Applicant, and therefore the Applicant’s appropriate shared amount of child support for the child Grace is $222 a month. On imputed income of $36,000 the table Child Support Guideline is $333 per month for one child (Faith), so the total child support required to be paid for these two children is $555 per month.
[37] The Respondent is not claiming any retroactive child support.
Equalization
[38] The difficulty the parties have had in resolving the equalization issue centers on the mortgages placed against the matrimonial home. They have agreed that the value of that home as at the valuation date is $310,000.
[39] A mortgage originally given to the Scotia Bank in the amount of $110,000 was assigned to the Applicant’s father Wyatt Stetler. The Respondent has no difficulty in accepting that as a legitimate debt on the Applicant’s side of the ledger. But another mortgage was placed on the property, again with the father Wyatt as Mortgagee, in the amount of $38,500, which amount the Applicant received from his father Wyatt for the purpose of making an equalization payment on his divorce from Kimberly Elaine Stetler, his former wife.
[40] That $38,500 mortgage was placed on the property on June 1, 1999, immediately after the transfer from the Applicant and his former wife Kimberly Stetler to the Applicant alone. This mortgage to the Applicant’s father is said to be collateral to a promissory note on the same terms and conditions as the mortgage dated May 31, 1999 which note is a demand note and bears interest at 6.5 per cent per annum. The note itself was never produced or made an exhibit in this trial.
[41] The Respondent takes the position that, since there has been neither payment nor demand in the 13 years that this mortgage has been on title, its’ face value ought to be discounted so as to reduce the amount of debt that can be claimed by the Applicant on his Family Property Statement and as against his equalization obligations there under.
[42] The Respondent does not contest that the $38,500 mortgage represents a loan and not a gift.
[43] With interest, the Applicant claims $72,000 was owing on this mortgage at the date of separation.
[44] The Applicant has paid nothing on this mortgage from 1999 on - 13 years - and while his evidence is that he has every intention of repaying this mortgage, it must be taken against him that he did not call his father on this issue. The only other evidence came from the Respondent who said that the note and mortgage were discussed with respect to the amount required to buy out his prior wife and he told the Respondent that he had no intention of paying it, that he just put this mortgage on to please his father. The Applicant’s counsel did not even cross-examine the wife on this issue, nor was the husband recalled in reply to deny her evidence and of concerns, the father, Wyatt, although available in the courthouse, was not called as a witness, an obviously material witness on this issue. I must infer that the father’s evidence would not likely have been helpful to the Applicant.
[45] The Respondent raised the Limitations Act to say that the demand note was statute-barred. If it is, of course, the collateral security, the mortgage, falls away. At the time this promissory note was made, time began to run for the demand note. So it began to run in 1999. That means if the limitation period was six years, it would have expired in 2005 and thereafter the father, Wyatt, would have been barred from suing his son for payment on the mortgage. There is no evidence that he would take that step. Quite to the contrary, every time the Applicant seems to have gotten himself into a box, his father has bailed him out. He is, after all, his only son.
[46] The new Limitations Act, the Limitations Act, 2002 came into force in January 2004, but because the limitation period under the old Act had not yet expired, the old Limitations Act applied and it still expired in 2005.
[47] In 2008, the Limitations Act, 2002 was amended to change the date when time begins to run on a demand note to the time of demand, but that only applies to notes made after January 1, 2004, so the note in question is not saved by the 2008 amendment.
[48] So, on this issue, if it were before me as a defence to a claim by Wyatt against Dudley, I would say that the claim on the note is statute-barred. But I don’t have to go that far because I will come to the same answer in a different way.
[49] The note is a demand note. Hence, the mortgage is a demand mortgage. And no demand has been made, nor is it likely one will be made. If there were a demand made, given the Applicant’s reluctance to part with his money or even disclose it, there is no doubt that the Applicant would raise the limitations issue against his father’s claim. And he would succeed. Moreover, I accept the evidence of the Respondent that the Applicant had no intention of making payments on that mortgage. He simply finds it convenient to use that debt to reduce the amount of any equalization payment he has to the Respondent.
[50] I question the whole limitations issue is because neither one of the parties referred to the Real Property Limitations Act, which was enacted to deal with limitation periods dealing with real property. The Limitations Act of 2002 amended in 2008 applies to claims pursued in court proceedings other than a proceedings to which the Real Property Limitations Act applies (s.2(1)) and in the Real Property Limitations Act, R.S.O. c.L15, s.43(1) sets out that:
No action upon a covenant contained in an indenture of mortgage or any other instrument made on or after July 1, 1894 to repay the whole or part of any money secured by a mortgage shall be commenced after the later of, (a) the expiry of 10 years after the day on which the cause of arose; and (b) the expiry of 10 years after the day in which the interest of the person liable on that covenant in the mortgage lands was conveyed or transferred.
As I understand the Respondent’s position, if an action on the promissory note is statute-barred then the mortgage is a non-issue. It is collateral to a note which can’t be enforced and therefore is of no account.
[51] In any event, I am not relying on the Limitations Act and am only concerning myself with the value of the debt. Cade v. Rotstein 2004 24269 (ON CA), 2004 CarswellOnt 363, 181 O.A.C. 226, 50 R.F.L. (5th) 280 (C.A.) stands for the proposition that a trial judge is entitled to value the alleged debt by discounting it to reflect the real situation.
[52] I quote at para 8:
In our view, the trial judge properly followed the approach in Poole v. Poole 2001 28196 (ON SC), [2001] O.J. No. 2154 (Ont. S.C.J.) and Salamon v. Salamon, [1997] O.J. No. 852 (Ont. Gen. Div.) in discounting the value of this alleged debt. We do not accept the submission that the trial judge was not entitled to value the alleged debts in this manner. Courts are frequently called upon to assess the actual worth of a claim, asset or liability and we agree with the statement in Poole, supra at para 35:
Even though debt may have a specified fact value, if the evidence indicates that it is unlikely that the promissory will ever be called upon to pay the debt, the value of the debt should be discounted to reflect that realty.
[53] In Cade v. Rotstein, the Court of Appeal upheld the trial judge’s finding that the advance made by the husband’s parents to the parties should be discounted to 5% of their face value.
[54] Similarly, in Poole, Justice Heeney said this:
While I am satisfied on the evidence that the probability of the Husband ever having to pay this debt to his parents is extremely low, it is difficult to say that there is no possibility whatsoever of it happening. Accordingly, the value of the debt will be discounted to 10% of its face value, of $4,280, for equalization purposes.
[55] In our case, the lender, the Applicant’s father, Wyatt, although available, did not testify. An adverse inference must be drawn against the Applicant on that account. It has been 13 years since the note was made and there has been neither payment nor demand. Moreover, the Applicant’s father has shown a propensity to bail his son out whenever he needed money, for lawyers or private investigators or living expenses, or in the case of the loan at issue here, for the equalization payment on a prior marriage. While the Applicant weakly protests that he intends to pay this bill, he has not shown any inclination to pay one nickel of it, nor has the father taken any steps to collect it or preserve his rights in the face of the limitation. The past defines the future and I would therefore discount the value of this mortgage for equalization purposes to nil.
[56] The Respondent’s $6,000 debt to her nieces arising from her father’s estate in 2006, but not brought to her attention until 2011, makes no change in the equalization payment because her net family property is already at zero. Thus, the end game with respect to equalization is that there is an equalization payment owing by the Applicant to the Respondent of $75,000.
Credibility of Applicant
[57] With respect to the issue of the amount of his income to be imputed, so that support could be determined for the children and with respect to the amount of money truly owing on that mortgage to his father, said to have been used for the purpose of buying out the equalization payment to his former wife, an interesting development occurred. We were told in the opening statement of the Applicant that there would be two witnesses for the Applicant: himself and his father. As it turns out, there were indeed two witnesses for the Applicant, but one of them was not his father. Instead, at the last minute, the Applicant called his sister, Lori, to testify on his behalf. It’s fair to say that her evidence was of no help to me.
[58] At the beginning of the second day of trial, as the cross-examination of the Applicant was about to continue, Mr. Embree rose to indicate that the Applicant’s father, Wyatt, had been advised by his lawyer not to testify. He sought an adjournment so that that lawyer could come to court to explain the reason why. I was advised by Mr. Embree that it was a medical situation. However, I was also advised that Mr. Wyatt Stetler was outside the courtroom and had been there from the beginning of trial. I denied the Applicant the adjournment for that purpose and told him that after the evidence of his client was finished, he had a choice to make: to call his father or not. Mr. Embree chose not to call Mr. Wyatt Stetler, no doubt on the instructions of his client. Instead, he, called the Applicant’s sister Lori in an attempt to do an end run around some of the evidence that would have been put to the father, Wyatt. All that Lori was able to say was that she had some knowledge from family discussions and meetings about the mortgage situation on the family home. She was also put forward as a witness who could have dealt with or helped with some babysitting of Faith. But as I said earlier, her evidence was virtually useless.
[59] But the matter of the father, Wyatt, not testifying is something that has to be taken into account. He could have told us whether or not the Applicant was being paid for his work on the farm and he could have told us whether or not there actually was an intention ever to collect on the mortgage. But he wasn’t made available for those purposes and I must therefore draw an adverse inference against the Applicant for his failure to call this witness. The corn crop from 2010 was sold in 2011 and the Applicant testified that he worked for free except that his father paid some of his bills. His father also paid one firm of lawyers $25,000 and $17,000 to private investigators for his son. He testified that for the 2011 fiscal period he was paid nothing for the work on the farm and that will come from the sale of that crop. But not only did he not file proper updated Financial Statements, but he brought no documentation whatsoever as to his earnings in 2011 or 2012.
[60] I must take from his failure to call his father that his father would not have supported his version of the financial dealings between them. This man had support obligations from his first marriage and he had the expenses of daily living, including operating the matrimonial home which he kept and lived in with his new partner. I simply refuse to accept that he was being truthful with us. This is a case of a man being blinded by his affection for money, blinded to the extent that all the rest of his obligations can be dammed.
[61] I accept the evidence of the Respondent, without reservation. And wherever it differs in any way at all from the evidence of the Applicant, I accept it and prefer it. Her updated Financial Statement was sworn June 13, 2012. It is Exhibit 10 in these proceedings and she testified that it was true when she made it and is still true. She was not shaken in cross-examination and I accept all of her evidence.
[62] Among the things I accept is that the Applicant did construction jobs for cash without paying any tax as part of the underground economy. The Respondent testified in a straightforward manner and gave clean, crisp answers to the questions, showing no animus whatsoever.
[63] She testified that the F.R.O. arrears by the Applicant with respect to child support stood at almost $7,900 in the second week of June. I also accept her evidence that she just recently discovered the debt she has to her nieces from the administration of the estate on account of her deceased brother’s share of her father’s estate.
Disposition
[64] a) The Respondent shall have sole custody of both children of the marriage, with access to Grace, born July 23, 1999, by the Applicant, in accordance with the child’s wishes and with access to Faith, born May 15, 2007, as set out in the December 2010 Order of Turnbull J., with all necessary modifications made to accommodate the transfer stations to be at the Norwich School, during the school year and at the Respondent’s residence at other times of the year.
b) the Applicant shall pay to the Respondent for the support of the child Grace $222.00 per month and for the support of the child Faith, $333.00, for a total of $555 per month for the two children of the marriage, on the 1st day of each and every month, commencing July 1, 2012; and
c) the Applicant shall pay the sum of $75,000.00 to the Respondent in full satisfaction of his required equalization of net family property.
Costs
[65] The Respondent was entirely successful in this matter and unless I am convinced otherwise by the submissions of the parties, shall have her costs. Those costs will be determined by me after receiving the parties’ written submissions in that regard at my chambers in Kitchener in accordance with the following directions:
i) on or before the 1st of September 2012, the Respondent shall serve and deliver to me at my chambers in Kitchener her Costs Outline, together with her Bill of Costs and any relevant Offer(s) to Settle; and
ii) the Applicant shall in turn serve and file with me at my chambers in Kitchener his Costs Outline and any relevant Offer(s) to Settle by the 24th of September 2012.
P.J. Flynn J.
Date: August 3, 2012
COURT FILE NO.: 5469/09 (Simcoe)
DATE: 2012-08-03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Dudley Wyatt Herbert Stetler
and
Connie Christine Marie Stetler
REASONS FOR JUDGMENT
P.J. Flynn J.
Released: August 3, 2012